exv4w1






Exhibit 4.1




CERTIFICATE OF DESIGNATION

OF

PREFERRED STOCK

OF

LIGHTING SCIENCE GROUP CORPORATION

 




To Be Designated

Series C Preferred Stock




 

 




Pursuant to Section 151(g) of the

General Corporation Law of the State of Delaware




 






     The undersigned DOES HEREBY CERTIFY that the following resolution was duly adopted by the
Board of Directors (the “Board of Directors”) of Lighting Science Group Corporation, a
Delaware corporation (the “Corporation”), at a meeting duly convened and held, at which a
quorum was present and acting throughout:



     RESOLVED, that pursuant to the authority conferred on the Board of Directors by the
Corporation’s Certificate of Incorporation, the issuance of a series of preferred stock, par value
$0.001 per share, of the Corporation which shall consist of 251,739 shares of preferred stock be,
and the same hereby is, authorized; and the Chairman and Chief Executive Officer of the Corporation
be, and he hereby is, authorized and directed to execute and file with the Secretary of State of
the State of Delaware a Certificate of Designation of Preferred Stock of the Corporation fixing the
designations, powers, preferences and rights of the shares of such series, and the qualifications,
limitations or restrictions thereof (in addition to the designations, powers, preferences and
rights, and the qualifications, limitations or restrictions thereof, set forth in the Certificate
of Incorporation which may be applicable to the Corporation’s preferred stock), as follows:



     1. Number of Shares; Designation. A total of 251,739 shares of preferred stock, par value
$0.001 per share, of the Corporation are hereby designated as Series C Preferred Stock (the
“Series”). Shares of the Series (“Preferred Shares”) will be issued pursuant to the
terms of the Letter Agreement, dated as of December 31, 2008 by and between the Corporation and
Morrison & Foerster LLP and the Letter Agreement dated as of December 31, 2008 by and between the
Corporation and Haynes and Boone, LLP, a copy of which will be provided to any stockholder of the
Corporation upon request therefor.



     2. Rank. The Series shall, with respect to rights (including to redemption payments) upon
liquidation, dissolution or winding-up of the affairs of the Corporation, rank:




	 	(i)	 	Senior and prior to the Common Stock, par value $0.001 per share, of
the Corporation (the “Common Stock”), and any additional series of
preferred stock which may in the future be issued by the Corporation
and are designated in the amendment to the Certificate of
Incorporation or the certificate of designation establishing such
additional preferred stock as ranking junior to the Preferred Shares.
Any shares of the Corporation’s Capital Stock which are junior to the
Preferred Shares with respect to rights (including to redemption
payments) upon liquidation, dissolution or winding-up of the affairs
of the Corporation are hereinafter referred to as “Junior Liquidation
Shares.”





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	 	(ii)	 	Pari passu with the 6% Convertible Preferred Stock of the Corporation
(the “6% Preferred”) and any additional series of preferred stock
which may in the future be issued by the Corporation and are
designated in the amendment to the Certificate of Incorporation or
the certificate of designation establishing such additional preferred
stock as ranking equal to the Preferred Shares or which do not state
they are Junior Liquidation Shares or Senior Liquidation Shares (as
defined below). Any shares of the Corporation’s Capital Stock which
are equal to the Preferred Shares with respect to rights (including
to redemption payments) upon liquidation, dissolution or winding-up
of the affairs of the Corporation are hereinafter referred to as
“Parity Liquidation Shares.”
	 
	 	(iii)	 	Junior to any additional series of preferred stock which may in the
future be issued by the Corporation and are designated in the
amendment to the Certificate of Incorporation or the certificate of
designation establishing such additional preferred stock as ranking
senior to the Preferred Shares. Any shares of the Corporation’s
Capital Stock which are senior to the Preferred Shares with respect
to rights (including to redemption payments) upon liquidation,
dissolution or winding-up of the affairs of the Corporation are
hereinafter referred to as “Senior Liquidation Shares.”





     3. Dividends. Dividends may be declared and paid on the Preferred Shares from funds legally
available therefor as and when determined by the Board of Directors. The Series shall, with
respect to the payment of dividends, rank pari passu with the Common Stock; provided, however, that
for the avoidance of doubt the 8% accrual on the Preferred Shares payable upon a Liquidation Event
shall nonetheless have the priority set forth in paragraph 4 below.



     4. Liquidation.



     (a) The liquidation value per Preferred Share, in case of the voluntary or involuntary
liquidation, dissolution or winding-up of the affairs of the Corporation, shall be an amount equal
to (i) $12.75 per share (the “Purchase Price”), subject to adjustment in the event of a
stock split, stock dividend or similar event applicable to the Series, plus (ii) an amount accruing
at the rate of 8% per annum on the Purchase Price, from the date of original issuance and
compounding annually (the sum of the foregoing clauses (i) and (ii) being hereinafter referred to
as the “Liquidation Value”).
 



     (b) In the event of any voluntary or involuntary liquidation, dissolution or winding-up of the
Corporation (a “Liquidation Event”), the Holders (i) shall not be entitled to receive the
Liquidation Value of the shares held by them until the liquidation value of all Senior Liquidation
Shares shall have been paid in full, and (ii) shall be entitled to receive the Liquidation Value of
such shares held by them in preference to and in priority over any distributions upon the Junior
Liquidation Shares. Upon payment in full of the Liquidation Value to which the Holders are
entitled, the Holders will not be entitled to any further participation in any distribution of
assets by the Corporation. If the assets of the Corporation are not sufficient to pay in full the
Liquidation Value payable to the Holders and the liquidation value payable to the holders of any
Parity Liquidation Shares, the holders of all such shares shall share ratably in such distribution
of assets in accordance with the amounts that would be payable on the distribution if the amounts
to which the Holders and the holders of Parity Liquidation Shares are entitled were paid in full.



     (c) For purposes of this paragraph 4, a Change of Control shall be treated as a Liquidation
Event and shall entitle each Holder to receive, upon the consummation of such Change of Control,
and at such Holder’s option, cash in an amount equal to the Liquidation Value of such Holder’s
Preferred Shares. Additionally, for purposes of this paragraph 4, a repurchase of any Preferred
Shares by the Corporation shall be treated as a Liquidation Event and shall entitle each Holder of
such repurchased



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Preferred Shares to receive, upon the consummation of the repurchase, cash in an amount equal
to the Liquidation Value of such Holder’s Preferred Shares.




     (d) The Corporation shall, no later than the date on which a Liquidation Event occurs, deliver
written notice of any Liquidation Event to the Holders, stating the payment date or dates when and
the place or places where the amounts distributable in such circumstances shall be payable, not
less than 30 days prior to any payment date stated therein, to each Holder.



     5. Conversion. Holders of the Preferred Shares shall have no right to exchange or convert
such shares into any other securities.
 



     6. Status of Shares. All Preferred Shares that are at any time repurchased by the Corporation
and subsequently canceled by the Board of Directors, shall be retired and shall not be subject to
reissuance.



     7. Voting Rights. Each holder of shares of the Series shall be entitled to 15 votes per
Preferred Share and shall have voting rights and powers equal to the voting rights and powers of
the Common Stock (except as otherwise expressly provided herein or as required by law), voting
together with the Common Stock as a single class and shall be entitled to notice of any
stockholders’ meeting in accordance with the Bylaws of the Corporation. Fractional votes shall not,
however, be permitted, and any fractional voting rights (after aggregating all shares into which
shares of the Series held by each holder could be converted) shall be rounded to the nearest whole
number (with one-half being rounded upward). Notwithstanding the foregoing, no holder of shares of
the Series shall be entitled to vote on any matters until ninety (90) days after the date of
issuance of any Preferred Shares.



     8. Restrictions and Limitations.



     So long as any Preferred Shares remain outstanding, the Corporation shall not, without the
vote or written consent by the holders of at least a majority of the outstanding Preferred Shares,
voting together as a single class:




	 	(i)	 	Redeem, purchase or otherwise acquire for value (or pay into or set
aside for a sinking or other analogous fund for such purpose) any
share or shares of its Capital Stock, except for (a) a transaction in
which all outstanding shares of Preferred Stock are concurrently
redeemed, purchased or otherwise acquired, (b) conversion into or
exchange for shares of Capital Stock of the Corporation that are both
(x) Junior Liquidation Shares, and (y) no greater than pari passu with
the Preferred Shares with respect to the payment of dividends, or (c)
the redemption of the 6% Preferred when due pursuant to the terms of
this Restated Certificate of Incorporation; provided, however, that
this restriction shall not apply to the repurchase of shares of Common
Stock from employees, officers, directors, consultants or other
persons performing services for the Corporation or any subsidiary
pursuant to agreements under which the Corporation has the option to
repurchase such shares at cost or at cost plus interest at a rate not
to exceed nine percent (9%) per annum, or, if lower than cost, at fair
market value, upon the occurrence of certain events, such as the
termination of employment; and provided further, that the total amount
applied to the repurchase of shares of Common Stock shall not exceed
$100,000 during any twelve month period;
	 
	 	(ii)	 	alter, modify or amend (whether by merger or otherwise) the terms of the Series in any
way;





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	 	(iii)	 	create (whether by merger or otherwise) any new series or class of
Capital Stock ranking pari passu with or having a preference over
the Series as to redemption or distribution of assets upon a
Liquidation Event;
	 
	 	(iv)	 	increase (whether by merger or otherwise) the authorized number of shares of the Series;
	 
	 	(v)	 	re-issue (whether by merger or otherwise) any Preferred Shares which
have been converted in accordance with the terms hereof;
	 
	 	(vi)	 	issue (whether by merger or otherwise) any securities of the
Corporation ranking pari passu with or senior to Preferred Shares as
to rights upon a Liquidation Event;
	 
	 	(vii)	 	issue (whether by merger or otherwise) any shares of the Series
except pursuant to the terms of the Exchange and Contribution
Agreement;
	 
	 	(viii)	 	enter into any definitive agreement or commitment with respect to
any of the foregoing; or
	 
	 	(ix)	 	cause or permit any Subsidiary to engage in or enter into any
definitive agreement or commitment with respect to any of the
foregoing.





     In the event that the Holders of at least a majority of the outstanding Preferred Shares agree
to allow the Corporation to alter or change the rights, preferences or privileges of the Series
pursuant to applicable law, no such change shall be effective to the extent that, by its terms,
such change applies to less than all of the Preferred Shares then outstanding.



     9. Certain Definitions. As used in this Certificate, the following terms shall have the
following respective meanings:







     “Affiliate” of any specified person means any other person directly or indirectly
controlling or controlled by or under common control with such specified person. For purposes of
this definition, “control” when used with respect to any person means the power to direct
the management and policies of such person, directly or indirectly, whether through the ownership
of voting securities or otherwise; and the term “controlling” and “controlled”
having meanings correlative to the foregoing.
 



     “Capital Stock” of any person or entity means any and all shares, interests, rights to
purchase, warrants, options, participations or other equivalents of or interests in the common
stock or preferred stock of such person or entity, including, without limitation, partnership and
membership interests.



     “Change of Control” means the existence or occurrence of any of the following: (a) the
sale, conveyance or disposition of all or substantially all of the assets of the Corporation (other
than pursuant to a joint venture arrangement or other transaction in which the Corporation receives
at least fifty percent (50%) of the voting equity in another entity or a general partnership); (b)
the effectuation of a transaction or series of related transactions in which more than fifty
percent (50%) of the voting power of the Corporation is disposed of (other than as a direct result
of normal, uncoordinated trading activities in the Common Stock generally); (c) the consolidation,
merger or other business combination of the Corporation with or into any other entity, immediately
following which the prior stockholders of the Corporation fail to own, directly or indirectly, at
least fifty percent (50%) of the voting equity of the surviving entity; (d) a transaction or series
of transactions in which any Person or “group” (as such term is used in Sections 13(d) and 14(d) of
the Exchange Act) acquires more than fifty percent (50%) of the voting equity of the Corporation;
(e) the replacement of a majority of the Board of Directors with



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individuals who were not nominated or elected by at least a majority of the directors at the
time of such replacement; or (f) a transaction or series of transactions that constitutes or
results in a “going private transaction” (as defined in Section 13(e) of the Exchange Act and the
regulations of the Commission issued thereunder).

 



     “Holder” means any holder of Preferred Shares, all of such holders being the
“Holders.”



[signature page follows]




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     IN WITNESS WHEREOF, the Corporation has caused this Certificate to be duly executed on its
behalf by its undersigned Chairman and Chief Executive Officer as of December 31, 2008.



	 	 	 	 	 
	 	 	 
	 	By:  	     /s/ Govi Rao
 	 
	 	 	Name:  	Govi Rao 	 
	 	 	Title:  	Chairman, Chief Executive Officer 	 
	 



Signature Page to Certificate of Designation of Series C Preferred Stock