Document:

ex10-5.htm

Exhibit 10.5

 

 

September 11, 2015

 

 

ACF FinCo I LP, as assignee of FCC, LLC

580 White Plains Road, Suite 610

Tarrytown, NY 10580

Attn: Oleh Szczupak

Fax: (914) 418-1217

 

	
RE:
	
Consents regarding issuance of Series J Convertible Preferred Stock and Series K Preferred Stock and amendment to the Amended and Restated Series J Certificate of Designation; Agreements with respect to Specified Customer provisions in Loan Agreement

 

Ladies and Gentlemen:

 

Reference is made to that certain Loan and Security Agreement dated as of April 25, 2014, as amended by that certain First Amendment to Loan and Security Agreement dated as of September 19, 2014, that certain Second Amendment to Loan and Security Agreement dated January 30, 2015, and that certain Third Amendment to Loan and Security Agreement dated September 11, 2015 (the “Third Amendment” and as amended, the “Loan Agreement”; capitalized terms used herein but not defined shall have the meanings assigned to such terms in the Loan Agreement), among Lighting Science Group Corporation, a Delaware corporation (“LSG”), BioLogical Illumination, LLC, a Delaware limited liability company (“BioLogical”; LSG and BioLogical are hereinafter referred to collectively as “Borrowers”), the various financial institutions from time to time party thereto as lenders (collectively, the “Lenders”) and ACF FinCo I LP, as assignee of FCC, LLC, in its capacity as agent for Lenders (in such capacity, “Agent”). Capitalized terms used herein shall, unless otherwise provided herein, have the respective meanings set forth in the Loan Agreement.

 

Borrowers hereby advise Agent and Lenders that LSG desires to issue and sell additional Equity Interests pursuant to the terms of the Preferred Stock Subscription and Support Agreement, in the form attached hereto as Schedule I (the “Subscription and Support Agreement”), which Equity Interests shall consist of (a) one share of LSG’s Series J Convertible Preferred Stock (the “Series J Preferred Shares”), which are convertible into shares of common stock, $0.001 par value per share, of LSG (“Common Stock”), and which shall be governed by the Amended and Restated Certificate of Designation of Series J Convertible Preferred Stock, in the form attached hereto as Schedule II-A (as amended through the date hereof, the “Amended Series J Certificate of Designation”), and (b) a warrant to purchase 2,650 shares of Common Stock at an exercise price of $0.001 per share of Common Stock in the form attached hereto as Schedule III (the “Series J Warrants” and together with the Series J Preferred Shares, collectively the “Series J Securities”). The issuance and sale of Series J Securities shall take place at one or more closings to certain investors approved by LSG from the period commencing on or about September 11, 2015 through March 31, 2016 (the “Series J Securities Issuance Period”), the aggregate amount of Series J Securities issued and sold from time to time during the Securities J Issuance Period shall not exceed 15,000 Series J Securities, and the gross cash proceeds of each Series J Security shall equal or exceed $1,000 (the “Initial Series J Issuance”). In addition, pursuant to Section 14 of the Amended and Restated Certificate of Designation of Series H Convertible Preferred Stock (the “Series H Certificate of Designation”), the Amended and Restated Certificate of Designation of Series I Convertible Preferred Stock (the “Series I Certificate of Designation”) and the Amended Series J Certificate of Designation (collectively, the “Certificates of Designation”), LSG is required to issue and sell Series J Securities to Exercising Holders (as defined in the Certificates of Designation) on the terms and conditions set forth in the Certificates of Designation (the “Preemptive Rights Provisions”). Further, pursuant to the Preemptive Rights Provisions in Section 14 of the Certificates of Designation, Borrowers hereby advise Agent and Lenders that it intends to issue and sell Series J Securities to each of LJH Partners, L.P. and The Moelis Family Trust of not greater than 62 Series J Securities in exchange for gross cash proceeds of not less than $62,000.00, as a result of the issuance of certain Series J Securities in January 2015 (the “Preemptive Rights Sale”). The Initial Series J Issuance, the Preemptive Rights Sale and the future issuance of Series J Securities pursuant to the Preemptive Right Provisions in Section 14 of the Certificates of Designation as a result of the Initial Series J Issuance, are collectively the “Series J Issuance”.

 

 

 

 

September 11, 2015

ACF FinCo I LP

Page 2 

 

In addition, as consideration for the posting of the Geveran Appeal Bond by Pegasus Fund IV, L.P. (“Pegasus IV”), Borrowers hereby advise Agent and Lenders that LSG desires to issue to Pegasus IV Equity Interests pursuant to the terms of the Subscription and Support Agreement, which Equity Interests shall consist of (a) one share of LSG’s Series K Preferred Stock (the “Series K Preferred Shares”), which shall be governed by the Certificate of Designation of Series K Preferred Stock, in the form attached hereto as Schedule IV (the “Series K Certificate of Designation”), and (b) a warrant to purchase 735 shares of Common Stock at an exercise price per share of Common Stock equal to the closing sales price of Common Stock as quoted on the OTC Bulletin Board, OTC pink markets or similar quotation service on the date immediately prior to the date of issuance, in the form attached hereto as Schedule V (the “Series K Warrants” and together with the Series K Preferred Shares, collectively the “Series K Securities”). Up to 25,000 Series K Securities shall be issued to Pegasus IV substantially concurrently with the execution of the Specified Appeal Bond Documents (the “Initial Series K Issuance”). In addition, pursuant to the Subscription and Support Agreement, LSG has agreed to conduct a rights offering that provides the holders of record of Common Stock and securities convertible into or exchangeable for shares of Common Stock the right to purchase a pro rata share of the number of Series K Securities issued to Pegasus IV (the “Rights Offering”). The Initial Series K Issuance and the issuance of Series K Securities pursuant to the Rights Offering, is collectively the “Series K Issuance”). 

 

In addition, Borrowers hereby advise Agent and Lenders that LSG desires to amend the Amended Series J Certificate of Designation to increase the authorized number of Series J Preferred Shares from 70,000 Series J Preferred Shares to 85,100 Series J Preferred Shares, pursuant to the form of Certificate of Increase attached hereto as Schedule II-B (the “Series J Certificate of Increase”).

 

Borrowers hereby request that, and subject to the satisfaction of the conditions set forth below, Agent and Lenders hereby: (a) waive the requirements of Sections 8(n)(b) of the Loan Agreement with respect to the Series J Issuance and the Series K Issuance, (b) consent to the Series K Issuance and the adoption of the Series K Certificate of Designation in accordance with Section 8(h) of the Loan Agreement, (c) consents to the adoption of the Series J Certificate of Increase and the Series K Certificate of Designation in accordance with Section 8(i) of the Loan Agreement, and (e) with respect to any Series J Securities or Series K Securities issued as part of the Series J Issuance or the Series K Issuance, respectively, on or after the date hereof, agree to receive less than five (5) Business Days’ prior written notice of any such issuance, notwithstanding Section 8(n)(a) of the Loan Agreement; provided however that, LSG shall provide at least one (1) Business Day prior written notice of such issuance, which notice shall specify the parties to whom such securities are to be issued, and the total amount (if applicable) which shall be realized from the issuance of such securities. 

 

 

 

 

September 11, 2015

ACF FinCo I LP

Page 3

   

Borrowers also hereby advise Agent and Lenders that the preliminary results of a periodic product line review conducted by Specified Customer (the “Line Review”) indicate that Specified Customer may significantly reduce its business with Borrowers, which may include ceasing to purchase certain items from Borrowers, in the future. Notwithstanding the final results of the Line Review (“Line Review Result”) which is expected to be disclosed in an award letter (the “Award Letter”) delivered to Borrowers by Specified Customer, each of Agent and the Lenders hereby acknowledges and agrees that the Line Review Result described in the Award Letter, and any direct or indirect impact of such Line Review Result on the ongoing operations of the Obligors’ business, shall not (a) constitute a material adverse change in any Borrower’s business, any Borrower’s financial or operational condition or any Borrower’s business prospects as described in Section 4(a)(viii) and/or Section 9(d)(viii) of the Loan Agreement, (b) cause the representation to be made by Borrowers under Section 4(a)(viii) of the Loan Agreement to be untrue in any material respect, (c) trigger any obligation of Borrowers to notify Agent pursuant to Section 9(d)(viii) of the Loan Agreement, (d) constitute a material adverse change in any Borrower’s financial condition or operations or in any Borrower’s business prospects as compared to the state of facts existing on the Agreement Date, pursuant to Section 2(e)(ii) of the Loan Agreement, (e) constitute an act, omission, event or circumstance which has or could reasonably be expected to have a materially adverse effect on any Borrower or any other Obligor pursuant to Section 13(a)(xv) of the Loan Agreement, or (f) constitute a Specified Customer Default. Each of Agent and Lenders hereby further acknowledges and agrees that Borrowers’ Agent has fulfilled its obligations under Section 9(b)(x) of the Loan Agreement with respect to the preliminary results of the Line Review. Notwithstanding the foregoing, Borrowers hereby agree to provide Agent with a copy of the Award Letter within two (2) Business Days’ of Borrowers’ receipt thereof. The waivers set forth herein shall not establish any course of dealing regarding, support any expectation on the part of any Obligor regarding, nor affect the interpretation of, any provision of the Loan Agreement with respect to any matter other than, to the limited extent described above, the Line Review Result described in the Award Letter.

 

Borrowers, Agent and Lenders also hereby agree that, notwithstanding any other provision of the Loan Agreement to the contrary, the issuance and sale of any Series J Securities during the Series J Securities Issuance Period shall constitute a single Curative Equity Contribution under the Loan Agreement and the cash proceeds of each such Series J Issuance shall be included in the calculation of EBITDA for purposes of determining compliance with the Fixed Charge Coverage Ratio covenant set forth in Item 21(b) of the Schedule with respect to any period of determination ending on or before December 31, 2016; provided, that such cash proceeds are forwarded directly to a lockbox designated by Agent and applied to the Obligations, and provided, further that, to the extent such cash proceeds exceed the amount of the outstanding Obligations as of the date of such application, the excess amount of cash proceeds shall be used by Borrowers for general working capital purposes. For the avoidance of doubt, (a) in no event shall any cash proceeds from any Series J Issuance be used for repayment of the Term Loan Debt, (b) in no event shall the application of cash proceeds received from any Series J Issuance permanently reduce the Maximum Line Amount under the Loan Agreement, and (c) the application of cash proceeds from any Series J Issuance during the Series J Securities Issuance Period shall be deemed to constitute a single Curative Equity Contribution under the Loan Agreement. 

 

 

 

 

September 11, 2015

ACF FinCo I LP

Page 4 

 

None of the foregoing waivers is intended to be, and none shall be deemed to be, a waiver or modification of any provision of the Loan Agreement except as expressly set forth herein (for the avoidance of doubt, including without limitation, a waiver of any Default that may arise under clause (a)(i), (a)(ii), (a)(v), (a)(vi), (a)(vii) or (a)(xiii) of Section 13 of the Loan Agreement, following receipt of the final results of the Line Review) Without limiting the generality of the foregoing, this letter agreement shall in no way modify the provisions of Section 8(c) of the Loan Agreement, Section 8(i) of the Loan Agreement or Section 8(n) of the Loan Agreement, other than to the extent that Agent has provided its consent to certain items as set forth herein. For the avoidance of doubt, Borrowers and Guarantor hereby acknowledge that any future issuance of Series J Preferred Shares or Series K Preferred Shares, except to the extent expressly permitted hereunder, shall not be permitted by Section 8(n) of the Loan Agreement without the consent of Agent and Lenders, as the terms of the Series J Preferred Shares and Series K Preferred Shares are more restrictive or burdensome to LSG than the terms of any equity interests in effect on the Agreement Date. The effectiveness of the consent and waivers contained herein is subject to Agent's receipt of (i) a duly executed consent and waiver with respect to the Term Loan Agreement in form and substance satisfactory to Agent with respect to the consent items described herein, (ii) a duly executed Third Amendment among Borrowers, Agent and Lenders with respect to the Loan Agreement, in form and substance satisfactory to Agent, and (iii) an opinion letter (in form and substance satisfactory to Agent) from counsel to Borrowers addressing such matters as Agent shall request in connection with the Series J Issuance and the Series K Issuance. In consideration of Agent's and Lenders' willingness to enter into this agreement, Borrowers hereby agree to promptly (but in any event within one (1) Business Day after receipt of the file stamped copy thereof) provide Agent with a recorded copy of each of the Amended Series J Certificate of Designation, the Series K Certificate of Designation, and the Series J Certificate of Increase, as certified by the Secretary of State of the State of Delaware.

 

By its signature hereto, each Borrower and Guarantor hereby (a) ratifies and reaffirms the Obligations, each of the Loan Documents and all of such Borrower's or Guarantor's covenants, duties, indebtedness and liabilities under the Loan Documents; (b) acknowledges and stipulates that: the Loan Agreement and the other Loan Documents executed by such Borrower or Guarantor are legal, valid and binding obligations of such Borrower or Guarantor that are enforceable against such Borrower or Guarantor in accordance with the terms thereof; all of the Obligations are owing and payable without defense, offset or counterclaim (and to the extent there exists any such defense, offset or counterclaim on the date hereof, the same is hereby waived by each Borrower and Guarantor); and the security interests and liens granted by such Borrower or Guarantor in favor of Agent are duly perfected, first priority security interests and liens; and (c) represents and warrants to Agent and Lenders, to induce Agent and Lenders to enter into this agreement, that (i) no Default exists on the date hereof or would result from the effectiveness of this agreement or the consummation of the actions described herein, (ii) the execution, delivery and performance of this agreement have been duly authorized by all requisite company action on the part of such Borrower or Guarantor and this agreement has been duly executed and delivered by such Borrower or Guarantor, (iii) all of the representations and warranties made by such Borrower or Guarantor in the Loan Documents are true and correct on and as of the date hereof, and (iv) Borrowers have provided a copy of the Loan Agreement to each of LSGC Holdings III LLC and Pegasus IV which are, as of the date hereof, the anticipated initial investors of the Series J Securities and the Series K Securities, respectively, and have discussed the provisions (including, without limitation, restrictions upon redemptions, distributions and issuance of Equity Interests) of the Loan Agreement with such Persons. 

 

 

 

 

September 11, 2015

ACF FinCo I LP

Page 5 

 

In consideration of Agent's and Lenders' willingness to enter into this agreement, Borrowers jointly and severally agree to pay to Agent and Lenders, on demand, all costs and expenses (including, without limitation, taxes and legal fees and expenses) incurred by Agent and Lenders in connection with the preparation, negotiation and execution of this agreement and any other Loan Documents executed pursuant hereto and any and all amendments, modifications, and supplements thereto. Except as otherwise expressly provided in this agreement, nothing herein shall be deemed to amend or modify any provision of the Loan Agreement or any of the other Loan Documents, each of which shall remain in full force and effect. This agreement is not intended to be, nor shall it be construed to create, a novation or accord and satisfaction, and the Loan Agreement shall continue in full force and effect. This agreement shall be governed by and construed in accordance with the internal laws of the State of Georgia and shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns. This agreement may be executed in any number of counterparts and by different parties to this agreement on separate counterparts, each of which, when so executed, shall be deemed an original, but all such counterparts shall constitute one and the same agreement. Any manually executed signature page hereto that is delivered by facsimile or other electronic transmission shall be deemed to be an original signature hereto. To the fullest extent permitted by applicable law, the parties hereto each hereby waives the right to trial by jury in any action, suit, counterclaim or proceeding arising out of or related to this agreement.

 

To induce Agent and Lenders to enter into this letter agreement, each Borrower and Guarantor hereby RELEASES, ACQUITS AND FOREVER DISCHARGES Agent and each Lender, and all officers, directors, agents, employees, successors and assigns of Agent or any Lender, from any and all liabilities, claims, demands, actions or causes of action of any kind or nature (if there be any), whether absolute or contingent, disputed or undisputed, at law or in equity, or known or unknown, that any Borrower or Guarantor now has or ever had against Agent or any Lender arising under or in connection with any of the Loan Documents or otherwise. Each Borrower and Guarantor represents and warrants to Agent and Lenders that such Borrower or Guarantor has not transferred or assigned to any Person any claim that such Borrower or Guarantor ever had or claimed to have against Agent or any Lender.

 

 

[Remainder of Page Intentionally Left Blank;

Signature Page Follows.]

 

 

 

 

 

	
 
	
Very Truly Yours,
	
 

	 	 	 
	 	LIGHTING SCIENCE GROUP CORPORATION	 
	
 
	
 
	
 
	
 

	 	 	 	 
	
 
	
 
	
 
	
 

	
 
	
By: 
	
/s/ Ed Bednarcik
	
 

	
 
	
 
	
Name:      Ed Bednarcik  
	
 

	
 
	
 
	
Title:        Chief Executive Officer      
	
 

	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	BIOLOGICAL ILLUMINATION, LLC	 
	 	 	 
	 	 	 
	 	 	 
	 	By: 	/s/ Phil Ragona	 
	 	 	Name:      Phil Ragona 	 
	 	 	Title:        Executive Vice President and Secretary	 
	 	 	 	 
	 	 	 	 
	 	LSGC, LLC	 
	 	 	 
	 	 	 
	 	 	 
	 	By:	/s/ Phil Ragona 	 
	 	 	Name:      Phil Ragona  	 
	 	 	Title:        Executive Vice President and Secretary	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	Accepted and Agreed as of September 11, 2015	 
	 	 	 
	 	 	 
	 	ACF FINCO I LP, as assignee of FCC, LLC, as a Lender 	 
	 	and Agent for the Lenders	 
	 	 	 	 
	 	 	 	 
	 	By:	/s/ Oleh Szczupak	 
	 	 	Name:      Oleh Szczupak   	 
	 	 	Title:        Vice Presidentex10-6.htm

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: 

 

 

 

 

  

	
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

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