exv10w1






Exhibit 10.1




Bank of Montreal

Loan Authorization Agreement




Dated: July 25, 2008




The Company referred to below has applied for, and Bank of Montreal, Chicago, Illinois (“Lender”)
has approved, the establishment of, a loan authorization account (“Loan Account”) from which the
Company may from time to time request loans and may request letters of credit up to the maximum
amount of credit shown below (the “Maximum Credit”). Interest on such loans is computed at a
variable rate which may change daily based upon changes in the Lender’s Prime Rate (as hereinafter
defined). The Company may make principal payments at any time and in any amount without premium or
penalty. The request by the Company for, and the making by the Lender of, any loan against the
Loan Account or the issuance by the Lender of any letters of credit pursuant hereto shall
constitute an agreement between the Company and the Lender as follows:




			
	Name of Company:	 	Lighting Science Group Corporation, a Delaware corporation






			
	Address:	 	Lighting Science Group Corporation

2100 McKinney Avenue, Suite 1515

Dallas, Texas 75201

Fax: (214) 382-3631

Attn.: Vice President-Finance





	 	 	 	 	 
	Type of Loan Account:

	 	þ
	 	Revolving, which means as principal is repaid, the Company may reborrow
subject to this Agreement.
	 
	 	 	 	 
	 

	 	o
	 	Multiple Advances, which means that the Company may not reborrow any
amounts that have been repaid but may still borrow the difference between the
Maximum Credit and the principal amounts of prior borrowings.







			
	Amount of Maximum Credit:	 	$20,000,000






			
	Each Loan Requested Shall Be At Least:	 	$100,000






			
	Variable Interest Rate:	 	The interest rate applicable prior to the Maturity Date equals the rate per annum
announced by the Lender from time to time as its prime commercial rate (the “Prime
Rate”) plus 0.50%.






			
	Maturity Date:	 	The Loan Account terminates, and Loans are payable, On Written Demand,
provided that the Company shall have fourteen (14) business days to honor any
demand for payment hereunder, and if no written demand is made, no later than
July 25, 2009.





Periodic Statement reflecting accrued interest will be sent and interest will be payable Monthly as
provided below in this Agreement.



	 	 	 	 	 
	Payments shall be due at the Lender’s principal office in
Chicago, Illinois, paid to the order of the Lender, and made by:

	 	o
	 	Debit to Harris N.A. Account #___;
	 

	 	o
þ
	 	By Check

By Fed Wire:
	 

	 	 	 	Pay to the order of Harris N.A., Chicago, IL

ABA 071000288






 









 






	 	 	 	 	 
	 

	 	 	 	To the account of: Bank of Montreal,
Chicago Branch
	 

	 	 	 	Account#: 183-320-1
	 

	 	 	 	Reference: Lighting Science Group Corporation






If Letters of Credit may be requested, check here: þ and attach Letter of Credit Rider following
signature page hereof.




	1.	 	Using the Account. All loans and advances from the Loan Account are referred to in this
Agreement as “Loans”. Loan requests must be by telephone and confirmed in writing (including
by facsimile) and shall be sent to the Company’s Bank of Montreal Account Officer or Client
Services Officer no later than 1:00 p.m. on the date of the proposed borrowing in order to be
honored the same day. Loan proceeds shall be credited to the Company’s deposit account at the
Lender unless the Lender is directed otherwise by special written directions from the Company.
The amount of each Loan requested shall be at least the minimum amount shown above, and the
Lender shall have the right to refuse to honor any Loan requested by the Company which is less
than the minimum amount, even if the Lender has previously honored a Loan request for less
than the minimum amount. The Company shall not request any Loan or letter of credit which,
when taken together with the Loans and principal amount of letters of credit then outstanding,
would exceed the Maximum Credit. If Loans or letters of credit are secured directly or
indirectly by securities traded on a national exchange or by other “margin stock” (as defined
by the Federal Reserve Board in Regulation U), then the Company promises to furnish the Lender
a duly executed and completed Form U-1 statement and agrees that the proceeds of Loans or
other extensions of credit from the Loan Account will not be used to purchase or carry stock,
convertible bonds or warrants unless the Company has obtained the prior written consent of the
Lender. In no event shall the proceeds of any Loans be utilized to finance participation in a
hostile tender offer or similar transaction or to finance an acquisition of securities in
anticipation of such a hostile transaction.
	 
	 	 	Loans and letters of credit will be made available from the Loan Account subject to the
Lender’s approval on a case-by-case basis as and when Loans and letters of credit are
requested by the Company.
	 
	 	 	All Loans and letters of credit shall be made against and evidenced by the Company’s
promissory note payable to the order of the Lender in the principal amount of $20,000,000,
such note to be in the form of Exhibit A attached hereto (the “Note”). The Lender agrees
that notwithstanding the fact that the Note is in the principal amount of $20,000,000, it
shall evidence only the actual unpaid principal balance of Loans made under the Loan Account
and the unpaid reimbursement obligations under letters of credit issued pursuant hereto. All
Loans and other extensions of credit made against the Note and the status of all amounts
evidenced by the Note shall be recorded by the Lender on its books and records or, at its
option in any instance, endorsed on a schedule to the Note and the unpaid principal balance
and status and rates so recorded or endorsed by the Lender shall be prima facie evidence in
any court or other proceeding brought to enforce the Note of the principal amount remaining
unpaid thereon, the status of the Loans and other extensions of credit evidenced thereby and
the interest rates applicable thereto, absent manifest error; provided that the failure of
the Lender to record any of the foregoing shall not limit or otherwise affect the obligation
of the Company to repay the principal amount of the Note together with accrued interest
thereon. The Lender agrees that if it transfers or assigns the Note, the Lender will stamp
thereon a statement of the actual principal amount evidenced thereby at the time of
transfer. The Company agrees that in any action or proceeding instituted to collect or
enforce collection of the Note, the amount shown as owing the Lender on its records shall be prima facie evidence of the unpaid balance of principal and interest on
the Note, absent manifest error.





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	2.	 	Interest. The Company shall pay the Lender interest on the unpaid principal balance of Loans
in accordance with the terms of this Agreement. Except as set forth herein, accrued interest
will be billed monthly, and is due by the later of the last day of each month and the 15th day
after the Company’s receipt of such bill (each, an “Interest Payment Date”). Interest for
each billing period is computed by applying a daily periodic rate based on the Lender’s Prime
Rate plus 0.50% to each day’s ending Loan balance. Interest shall be computed on the basis of
a year of 365 days for the actual number of days elapsed. The Lender’s Prime Rate reflects
market rates of interest as well as other factors, and it is not necessarily the Lender’s best
or lowest rate. The daily Loan balance shall be computed by taking the principal balance of
Loans at the beginning of each day, adding any Loans posted to the Loan Account that day, and
subtracting any principal payments posted to the Loan Account as of that day. Interest begins
to accrue on the date a Loan is posted to the Loan Account. The principal balance of Loans
which remains unpaid after fourteen (14) business days after written demand for repayment
shall bear interest until paid in full at a post-maturity rate of 2% per annum above the
interest rate otherwise applicable to the Loans (determined as aforesaid). The interest rate
payable under this Agreement shall be subject, however, to the limitation that such interest
rate shall never exceed the highest rate which the Company may contract to pay under
applicable law. Interest on the Loans shall, at the option of the Company and subject to the
following terms and conditions, be payable either (i) in immediately available funds on each
Interest Payment Date in accordance with this paragraph 2, or (ii) by adding such interest to
the unpaid principal balance of the Loans on each Interest Payment Date, in which event such
interest shall become a like amount of the principal of the Note (a borrowing of a Loan of
like amount) which the Company hereby promises to pay as hereinafter set forth, or (iii) by
any combination of the methods described in the immediately preceding clauses (i) and (ii)
selected by the Company which results in such methods being applied in the satisfaction in
full of all interest due on the Loans on such Interest Payment Date:






     (i) Unless the Company notifies the Lender that the Company intends to pay the interest
due on the Loans on each Interest Payment Date with funds not borrowed under this Agreement,
the Company shall be deemed to have irrevocably requested a Loan on each Interest Payment
Date in the amount of the interest then due on the Loans, in each case subject to the
provisions of this Agreement (other than the requirement that a Loan be in a certain minimum
amount), which new Loan shall be applied to pay the interest then due on the Loans. In the
event the Company has elected to pay the interest due on the Loans with funds not borrowed
under this Agreement and the Company fails to make any such payment within twenty (20) days
after the applicable Interest Payment Date the Lender may in its sole discretion deem the
Company to have irrevocably requested a Loan in the amount of the interest then due on the
Loans, in each case subject to the provisions of this Agreement (other than the requirement
that a Loan be in a certain minimum amount) which new Loans shall be applied to pay the
interest then due on the Loans.




     (ii) Each payment of interest by a borrowing of a Loan shall be evidenced by the Note,
shall bear interest from the date made at a rate per annum equal at all times to the rate
then applicable to the Loans, payable on written demand, provided that the Company shall
have fourteen (14) business days to honor any such demand for payment, but if no demand is
made then such interest shall be payable on the later of the last day of each calendar month
and fifteen (15) days after the Company’s receipt of the monthly interest statement
(commencing on the first of such dates following such issuance) and, subject to the
provisions of paragraph 9 herein, on written demand.




     (iii) In no event shall the unpaid principal balance of all Loans and letters of
credit, including, without limitation, each borrowing of a Loan to pay interest then due on
the Loans, exceed the Maximum Credit.




	3.	 	Fees. The Company agrees to pay to the Lender a non-refundable Closing Fee in the amount of
$40,000.





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	4.	 	Guaranty. Pegasus Partners IV, L.P. (the “Guarantor”) shall at all times guarantee (the
”Guaranty”) all Loans and reimbursement obligations in connection with letters of credit
issued pursuant to this Agreement.






	5.	 	Maturity Date; Payments. The Company shall pay to the Lender the principal balance of
outstanding Loans together with any accrued interest On Written Demand, provided that
the Company shall have fourteen (14) business days to honor any demand for payment hereunder
and if no written demand is made, not later than one (1) year from the date hereof, and shall
post cash collateral in an amount equal to 105% of the sum of the aggregate undrawn stated
amount of the letters of credit and any unreimbursed draws thereunder On Written Demand,
provided that the Company shall have fourteen (14) business days to honor any demand for
cash collateral hereunder.  Payments received by the Lender on the
Loans shall be applied first to accrued interest and then to the principal balance of
outstanding Loans unless otherwise directed. If any payment from the Company under this
Agreement becomes due on a Saturday, Sunday, or a day which is a legal holiday for banks or
other financial institutions in the State of Illinois, such payment shall be made on the next
bank business day and any such extension shall be included in computing interest under this
Agreement.






	6.	 	Periodic Statements. The Lender will furnish the Company with a monthly statement for each
billing period which has any transaction or balance.






	7.	 	Financial Statements. So long as this Agreement is in effect, the Company agrees to furnish
financial information of the Company to the Lender upon reasonable request of the Lender from
time to time. Such information shall be furnished as soon as reasonably possible, but in any
event within 30 days after request by the Lender (to the extent that such financial
information is readily available or can be prepared within such 30-day period, otherwise as
soon as practicable thereafter). Without limiting the foregoing, the Company shall deliver:






     As soon as available, and in any event within 150 days after the close of
fiscal year 2008 and within 120 days after the close of each fiscal year of the
Company thereafter, a copy of the consolidated balance sheet of the Company and its
subsidiaries as of the close of each fiscal year and the consolidated statements of
income, retained earnings and cash flows of the Company and its subsidiaries for
such period, and accompanying notes thereto, each in reasonable detail showing in
comparative form the figures for the previous fiscal year, accompanied by an
unqualified opinion thereon of Turner Stone and Co. or RSM McGladrey & Pullen or
another firm of independent public accountants of recognized national standing,
selected by the Company and reasonably satisfactory to the Lender, to the effect
that the financial statements have been prepared in accordance with GAAP and present
fairly in all material respects in accordance with GAAP the consolidated financial
condition of the Company and its Subsidiaries as of the close of such fiscal year
and the results of their operations and cash flows for the fiscal year then ended.




	8.	 	Representations and Warranties. In consideration of establishing and maintaining the Loan
Account, the Company hereby represents and warrants to the Lender that: (a) the Company is a
corporation duly organized, validly existing, and in good standing under the laws of its state of
incorporation; (b) the execution, delivery, and performance by the Company of this
Agreement, the Note and all documents executed in connection therewith and any and all
Applications delivered in connection with the issuance of letters of credit hereunder
(collectively, the “Loan Documents”) are within its powers, have been duly authorized by all
necessary action, and do not contravene the Company’s articles of incorporation or





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	 	 	bylaws or
any law or material contractual restriction binding on or affecting the Company; (c) no
authorization or approval or other action by, and no notice to or filing with, any
governmental authority or regulatory body is required for the Company’s due execution,
delivery, and performance of this Agreement or the other Loan Documents; (d) this Agreement
is and the other Loan Documents when executed and delivered by the Company will be, the
Company’s legal, valid, and binding obligation enforceable against the Company in accordance
with its terms except as such enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar state or federal debtor relief laws from time to time
in effect which affect the enforcement of creditors’ rights in general and the availability
of equitable remedies; (e) the Company is not engaged in the business of extending credit
for the purpose of purchasing or carrying margin stock (within the meaning of Regulation U
issued by the Board of Governors of the Federal Reserve System), and no proceeds of the
Loans will be used to purchase or carry any margin stock or to extend credit to others for
the purpose of purchasing or carrying any margin stock; (f) except as disclosed in the
Company’s public filings, there is no pending or threatened action or proceeding affecting
the Company before any court, governmental agency or arbitrator, which could reasonably be
expected to materially and adversely affect the Company’s financial condition or operations
or which purports to affect the legality, validity, or enforceability of this Agreement or
any other Loan Documents; and (g) no credit extended hereunder shall be utilized to finance
participation in a hostile tender offer or similar transaction or to finance an acquisition
of securities in anticipation of such a hostile transaction.






	9.	 	Demand Obligation; Enforcement. The Loans are payable “On Written Demand”, provided
that the Company shall have fourteen (14) business days to honor any demand for payment
hereunder. Accordingly, the Lender can demand payment in full of the Loans and can demand the
posting of cash collateral with respect to the letters of credit in accordance with Section 5
of this Agreement at any time in its sole discretion even if the Company has complied with all
of the terms of this Agreement.
	 
	 	 	No delay by the Lender in the exercise of any right or remedy shall operate as a waiver
thereof, and no single or partial exercise by the Lender of any right or remedy shall
preclude any other or further exercise thereof or the exercise of any other right or remedy.
The Company agrees to pay to the Lender all reasonable and documented expenses incurred or
paid by the Lender in connection with the establishment and maintenance of the Loan Account
and the collection of the Loans and any amounts due with respect to letters of credit and
any court costs and other reasonable amounts due under this Agreement, including, without
limitation, reasonable attorneys’ fees. The Lender shall have the right at any time to
set-off the balance of any deposit account that the Company may at any time maintain with
the Lender against any amounts at any time due and owing under this Agreement.






	10.	 	Termination; Renewal. The availability of additional Loans and letters of credit under this
Agreement will automatically terminate On Written Demand. The Lender reserves the
right at any time without notice to terminate the Loan Account, suspend the Company’s
borrowing privileges or refuse any Loan or letter of credit request even though the Company
has complied with all of the terms under this Agreement. The Company may terminate this
Agreement at any time effective upon receipt by the Lender of at least 15 days prior written notice. No termination under this Section shall affect the Lender’s rights or
the Company’s obligations regarding payment or default under this Agreement. Such
termination shall not affect the Company’s obligation to pay all Loans and other obligations
and the interest accrued through the date of final payment. The Lender may also elect to
honor Loan and letter of credit requests after 




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	 	 	termination of this Agreement, and the
Company agrees that any of such shall constitute a Loan to the Company or a letter of credit
issued at the request of the Company under this Agreement.






	11.	 	Notices. The Lender may rely on instructions from the Company with respect to any matters
relating to this Agreement or the Loan Account, including telephone loan requests (including
by facsimile) which are made by persons whom the Lender reasonably believes to be the persons
authorized by the Company to make such loan requests. All notices and statements to be
furnished by the Lender shall be sufficient if delivered to any such person at the billing
address for the Loan Account shown on the records of the Lender. All notices from the Company
shall be sent to the Lender at 115 South LaSalle Street, Chicago, Illinois 60603, Attention:
Client Services, Department 17 West. The Company waives presentment and notice of dishonor.
This Agreement constitutes the entire understanding of the parties with respect to the subject
matter hereof and any prior agreements, whether written or oral, with respect thereto are
superseded hereby. No amendment or waiver of any provision of this Agreement or the Note or
any other Loan Document, nor consent to any departure by the Company therefrom, shall in any
event be effective unless the same shall be in writing and signed by the Lender. If any part
of this Agreement is unenforceable, that will not make any other part unenforceable. This
Agreement shall be governed by the laws of the State of New York.






	12.	 	Consent to Jurisdiction. The Company submits to the non-exclusive jurisdiction of the
United States District Court for the Southern District of New York and of any New York State
Court sitting in New York County, New York, for purposes of all legal proceedings arising out
of or relating to this Agreement or the transactions contemplated hereby.






	13.	 	Jury Trial Waiver. The Company and the Lender waive any and all right to trial by
jury in any legal proceeding arising out of or relating to this Agreement or the transactions
contemplated hereby.






	14.	 	Counterparts. This Agreement may be executed in any number of counterparts, and by
the different parties on different counterpart signature pages, all of which taken together
shall constitute one and the same agreement. Any of the parties hereto may execute this
Agreement by signing any such counterpart and each of such counterparts shall for all purposes
be deemed to be an original. Delivery of execution counterparts of this Agreement and the
Loan Documents by telecopy or by e-mail transmission of an Adobe portable document format file
(also known as “PDF” file) shall be effective as originals.






	15.	 	Costs and Expenses. The Company agrees to pay all actual and documented expenses, legal
and/or otherwise (including court costs and reasonable attorneys’ fees) paid or incurred by
the Lender in endeavoring to collect obligations of the Company in connection with the
transactions contemplated in this Agreement and the Loan Documents, or any part thereof, and
in protecting, defending or enforcing this Agreement or any of the Loan Documents in any
litigation, bankruptcy or insolvency proceedings or otherwise.






	16.	 	Confidentiality. So long as this Agreement is in existence and for twelve (12) months
thereafter, the Lender agrees to take reasonable precautions to maintain the confidentiality
of any confidential, proprietary and/or non-public materials, documents and information that
the Company or Guarantor delivers to the Lender (provided that any and all information relating to the Guarantor’s capital commitments and
any financial information delivered to the Lender pursuant to Section 7 herein or Section 12
of the Guaranty will automatically be deemed to be confidential), except that the Lender may
disclose such information (a)




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	 	 	to its officers, directors, employees, affiliates and agents,
including legal counsel, accountants, auditors and other professional advisors on a
confidential basis and who have reason to have access to such information (it being
understood that the Lender shall be responsible for any breach of this confidentiality
undertaking by any such persons or entities); (b) to any party to the Loan Documents from
time to time; (c) pursuant to the order of any court or administrative agency; (d) upon the
request of any governmental authority exercising regulatory authority over the Lender; (e)
which ceases to be confidential, other than by an act or omission of the Lender, or which
becomes available to the Lender on a non-confidential basis; (f) to the extent reasonably
required in connection with any litigation relating to any Loan Documents or transactions
contemplated thereby, or otherwise as required by applicable law; (g) to the extent
reasonably required for the exercise of any rights or remedies under the Loan Documents; or
(h) with the consent of the Company or Guarantor, as applicable.






	17.	 	Assignments. The Lender shall have the right at any time to assign or grant or sell
participations to one or more other commercial banks or other financial institutions any Loan
and/or Loan Document, provided that the Lender shall not assign or grant or sell
participations in any Loan and/or Loan Document (other than assignments to its affiliates)
until the Lender first gives the Company prior written notice of such assignment or
participation and fourteen (14) business days to pay off any Loan subject to the assignment or
participation. The Company may not assign its rights under this Agreement or the other Loan
Documents without the Lender’s prior written consent.





* * * * *




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	 	 	The Company agrees to the terms set forth above.
	 
	 	 	This Agreement is dated as of the date first written above.






	 	 	 	 	 	 	 
	 	 	Lighting Science Group Corporation	 	 
	 
	 	 	 	 	 	 
	 

	 	By:   /s/ Stephen Hamilton	 	 
	 
	 	
 
	 	 
	 
	 	Printed Name:	 	 	 
	 

	 	Its:
	 	 

	 	 
	 
	 	
 
	 	 






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	 	 	Accepted and agreed as of the date first written above.






	 	 	 	 	 	 	 
	 	 	Bank of Montreal	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 
	 	
 
	 	 
	 
	 	Printed Name:	 	 	 	 
	 

	 	Its:
	 	 

	 	 
	 
	 	
 
	 	 







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Letter of Credit Rider




          This Letter of Credit Rider is hereby made an integral part of and deemed by the parties
hereto to be incorporated within the foregoing Bank of Montreal Loan Authorization Agreement, dated
as of July 25, 2008 (the “Agreement”), between Bank of Montreal, Chicago, Illinois
(“Lender”) and Lighting Science Group Corporation, a Delaware corporation (“Company”).



          In consideration of the agreement by the Lender to consider issuing a letter of credit applied
for by the Company pursuant to the Agreement, the parties hereto agree as follows:




	1.	 	The Company may, in addition to requesting that the Lender make Loans under the Agreement,
also request that the Lender issue letters of credit (the “Letters of Credit”) for the account
of the Company under the Agreement in a stated amount not to exceed $20,000,000 at any one
time. The Maximum Credit under the Agreement shall be deemed utilized by an amount equal to
the sum of (i) the aggregate undrawn stated amount of the Letters of Credit plus (ii) any
unreimbursed draws thereunder (such sum, the “L/C Obligations”); provided, that the Maximum
Credit shall not be deemed utilized to the extent any such Letters of Credit have been cash
collateralized in an amount not less than 105% of the amount of L/C Obligations outstanding at
such time.






	2.	 	The issuance of the Letters of Credit under the Agreement shall be at the Lender’s sole
discretion and shall be subject to such terms and conditions as the Company and the Lender
shall mutually agree upon at the issuance thereof. The Company shall request a Letter of
Credit by completing an application and indemnity agreement therefor (an “Application”) on the
standard form of the Lender then in use for such type of Letters of Credit.






	3.	 	No Letters of Credit will be issued by the Lender under the Agreement with a termination date
later than the earlier of (i) one year from its date of issuance (although such Letter of
Credit may have an automatic renewal feature) and (ii) the Maturity Date, if any, under the
Application.






	4.	 	The Company shall pay to the Lender a fee for the Letters of Credit at the rate set forth in
the Application therefor (computed on the basis of a 365 day year for the actual number of
days elapsed). In addition, the Company shall pay to the Lender its standard issuance,
drawing, negotiation, amendment, and other administrative fees relating to the Letters of
Credit at the rates in effect from time to time.






	5.	 	Letter of Credit fees or L/C Obligations shall, at the option of the Company and subject to
the following terms and conditions, be payable either (i) in immediately available funds on
the date a Letter of Credit is drawn upon (the “L/C Payment Date”), or (ii) by adding such
Letter of Credit fees or L/C Obligations to the unpaid principal balance of the Loans on each
L/C Payment Date, in which event such fees and reimbursement obligations shall become a like
amount of the principal of the Note (a borrowing of a Loan of like amount) which the Company
hereby promises to pay in accordance with the Agreement, or (iii) by any combination of the
methods described in the immediately preceding clauses (i) and (ii) selected by the Company
which results in such methods being applied in the satisfaction in full of all Letter of
Credit fees or L/C Obligations due on such L/C Payment Date:






     (i) Unless the Company notifies the Lender that the Company intends to pay the Letter
of Credit fees or L/C Obligations due on each L/C Payment Date with funds not borrowed under
the



 









 







Agreement, the Company shall be deemed to have irrevocably requested a Loan on each L/C
Payment Date in the amount of the fees and reimbursement obligations then due on the Letters
of Credit, in each case subject to the provisions of the Agreement (other than the
requirement that a Loan be in a certain minimum amount), which new Loan shall be applied to
pay the fees and reimbursement obligations then due on the Letters of Credit. In the event
the Company has elected to pay the Letter of Credit fees and L/C Obligations with funds not
borrowed under the Agreement and the Company fails to make any such payment within twenty
(20) days after the applicable L/C Payment Date the Lender may in its sole discretion deem
the Company to have irrevocably requested a Loan on each L/C Payment Date in the amount of
the fees and reimbursement obligations then due on the Letters of Credit, in each case
subject to the provisions of the Agreement (other than the requirement that a Loan be in a
certain minimum amount), which new Loan shall be applied to pay the fees and reimbursement
obligations then due on the Letters of Credit.




     (ii) Each payment of Letter of Credit fees or L/C Obligations by a borrowing of a Loan
shall be evidenced by the Note, shall bear interest from the date made at a rate per annum
equal at all times to the Prime Rate, as applicable, payable on the later of the last day of
each calendar month and fifteen (15) days after the Company’s receipt of the monthly
interest statement (commencing on the first of such dates following such issuance) and,
subject to the provisions of paragraph 5 of the Agreement, on demand.




     (iii) In no event shall the unpaid principal balance of all Loans and the stated face
amount of all Letters of Credit then outstanding, including, without limitation, each
borrowing of a Loan to pay interest then due on the Loans or to pay Letter of Credit fees or
L/C Obligations, exceed the Maximum Credit.




	6.	 	The representations and warranties of the Company in the Agreement shall be deemed to be made
by the Company on each day an Application is executed by the Company, and shall be deemed to
refer to each Application in the same manner and to the same extent as they refer to the
Agreement and the Note.






	7.	 	At any time during the term of the Agreement, the Lender may require that the Company deliver
to the Lender, and the Company hereby agrees to deliver to the Lender upon its written request
therefor at any such time (provided that the Company shall have fourteen (14) business days to
honor any such request), cash collateral to secure the Company’s obligations under the
Applications in an amount not less than 105% of the amount of L/C Obligations outstanding at
such time. At any time when the availability of additional Loans under the Agreement
terminates pursuant to the terms thereof, the Company will no longer be permitted to request
the issuance of Letters of Credit thereunder.






	8.	 	The Lender may, at its option, elect to issue Letters of Credit at such of its branches or
offices as the Lender may from time to time elect.




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	 	 	This Letter of Credit Rider is entered into as of date first written above. 





	 	 	 	 	 	 	 
	 	 	Lighting Science Group Corporation	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 
	 	
 
	 	 
	 

	 	Printed Name:	 	 	 	 
	 

	 	Its:
	 	 

	 	 
	 
	 	
 
	 	 





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	 	 	Bank of Montreal	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 
	 	
 
	 	 
	 
	 	Printed Name:	 	 	 	 
	 

	 	Its:
	 	 

	 	 
	 
	 	
 
	 	 







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Exhibit A




Demand Note




			
	 

$20,000,000
	 	July 25, 2008






          On Written Demand, provided that the undersigned shall have fourteen (14)
business days to honor any written demand for payment hereunder (or, if no written demand is made,
on July 25, 2009), for value received, the undersigned, Lighting Science Group
Corporation, a Delaware corporation, promises to pay to the order of Bank of Montreal
(the “Lender”) at its offices at 115 South LaSalle Street, Chicago, Illinois, the principal
sum of Twenty Million and 00/100 Dollars ($20,000,000) or, if less, the principal amount of Loans
and reimbursement obligations with respect to letters of credit (as and to the extent required
pursuant to application and reimbursement agreements therefore) outstanding under the Bank of
Montreal Loan Authorization Agreement referred to below together with interest payable at the times
and at the rates and in the manner set forth in the Bank of Montreal Loan Authorization Agreement
referred to below.



          This Note evidences borrowings by and other extensions of credit for the account of the
undersigned under that certain Bank of Montreal Loan Authorization Agreement dated as of July 25,
2008, between the undersigned and the Lender; and this Note and the holder hereof are entitled to
all the benefits provided for under the Bank of Montreal Loan Authorization Agreement, to which
reference is hereby made for a statement thereof. The undersigned hereby waives presentment and
notice of dishonor. The undersigned agrees to pay to the holder hereof all court costs and other
reasonable expenses, legal or otherwise, incurred or paid by such holder in connection with the
collection of this Note. It is agreed that this Note and the rights and remedies of the holder
hereof shall be construed in accordance with and governed by the laws of the State of New York.



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	 	 	Lighting Science Group Corporation	 	 
	 
	 	 	 	 	 	 
	 

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	 	Printed Name:	 	 	 	 
	 

	 	Its:
	 	 

	 	 
	 
	 	
 
	 	 







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