Document:

ex10-57.htm

 Exhibit 10.57

 

 

LIGHTING SCIENCE GROUP CORPORATION

EMPLOYMENT AGREEMENT

 

THIS EMPLOYMENT AGREEMENT (this "Agreement") is made as of September 23, 2014 between Lighting Science Group Corporation, a Delaware corporation (the "Company"), and Wayne Nesbit ("Executive").

 

WHEREAS, Company and Executive are mutually desirous that Company employ Executive, and Executive accepts such employment, upon the terms and conditions hereinafter set forth.

 

NOW, THEREFORE, in consideration of the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

 

1.      Employment.     The Company shall employ Executive, and Executive hereby accepts employment with the Company, upon the terms and conditions set forth in this Agreement for the period beginning on September 23, 2014 (the “Start Date”) and ending as provided in Section 4 hereof (the "Employment Period"). Executive shall not perform any services for the Company prior to the Start Date.

 

	 	
2.
	
Position and Duties.

 

(a)     During the Employment Period, Executive shall serve as the Chief Operations Officer of the Company and shall. render such administrative, financial and other executive and managerial services to the Company and its Subsidiaries which are consistent with Executive's position as the Chief Executive Officer may from time to time direct, including taking a leadership role encompassing the areas of supply chain management, vendor relationship management, product sourcing, product costs, planning, inventory management, operations, logistics, and quality control.

 

(b)     During the Employment Period, Executive shall report to the Chief Executive Officer and shall devote his full business time and attention (except for permitted vacation periods and reasonable periods of illness or other incapacity) to the business and affairs of the Company and its Subsidiaries. Executive shall perform his duties, responsibilities and functions to the Company and its Subsidiaries hereunder to the best of his abilities in a diligent, trustworthy, professional and efficient manner and shall comply with the Company's and its Subsidiaries' policies and procedures. In performing his duties and exercising his authority under the Agreement, Executive shall support and implement the business and strategic plans approved from time to time by the board of managers of the Company (the "Board") and shall support and cooperate with the Company's and its Subsidiaries' efforts to expand their businesses and operate profitably and in conformity with the business and strategic plans approved by the Board. So long as Executive is employed by the Company, Executive shall not, without the prior written consent of the Board, accept other employment or perform other services for compensation. The Company acknowledges, however, that Executive has been, and for so long as such service does not interfere with his duties and obligations to the Company hereunder, shall be permitted to continue to be involved in: 1) Real estate leasing ventures and property management, as an investor and advisor; 2) A c-corp currently in formation, bearing the name of “Christmas Crossfit Ventures” or a similar name, which is engaged in the manufacture/ and sale of products for the Crossfit-specific fitness market, as a primary investor, director and business adviser; and 3) “Technology Spirits,” a distillation company, as an investor, advisor, and relationship manager.

  

 

1 

 

 

(c)     For purposes of this Agreement, "Subsidiaries" shall mean any corporation or other entity of which the securities or other ownership interests having the voting power to elect a majority of the board of directors or other governing body are, at the time of determination, owned by the Company, directly or through one or more Subsidiaries.

 

	 	
3.
	
Compensation and Benefits.

 

(a)     During the Employment Period, Executive's base salary shall be $300,000 per annum or such higher rate as the Board may determine from time to time (as so adjusted from time to time, the "Base Salary"), which salary shall be payable by the Company in regular installments in accordance with the Company's general payroll practices in effect from time to time. During the Employment Period, Executive shall be entitled to participate in all of the Company's employee benefit programs for which senior executive employees of the Company and its Subsidiaries are generally eligible, and Executive shall be entitled to 4 weeks of paid vacation each calendar year in accordance with the Company's policies, which, subject to applicable law, if not taken during any year may not be carried forward to any subsequent calendar year and no compensation shall be payable in lieu thereof.

 

(b)     During the Employment Period, the Company shall reimburse Executive for all reasonable and documented business expenses incurred by him in the course of performing his duties and responsibilities under this Agreement which are consistent with the Company's policies in effect from time to time with respect to travel, entertainment and other business expenses, subject to the Company's requirements with respect to reporting and documentation of such expenses. 

 

(c)     The Company shall reimburse Executive for up to $15,000 of reasonable and documented relocation expenses in connection with Executive’s relocation to Satellite Beach (or the surrounding area), which shall include, without limitation, expenses accrued for temporary living while in the process of searching for permanent housing. This benefit shall be valid for twelve (12) months following the start of the contract. Additionally, the Company shall reimburse Executive for reasonable and documented expenses in connection with one trip for him to the area in advance of the Start Date.

 

(d)     In addition to the Base Salary, during the Employment Period, Executive shall be eligible to receive a performance bonus based upon a bonus plan to be determined annually by the Board (or the compensation committee thereof). Executive shall have an opportunity to earn an annual bonus, based on criteria that will be presented by the Board (or the compensation committee thereof) to Executive promptly following the first meeting of the Board during each fiscal-year. The Company shall use commercially reasonable efforts to pay any annual bonus to which Executive is entitled in accordance with the applicable bonus plan determined by the Board on or before the last day of the fiscal year to which such annual bonus relates, and in no event shall any such annual bonus be paid after March 15th of the calendar year following the fiscal year to which such annual bonus relates. On an annual basis, the level of Executive’s bonus shall be the sum of:

 

 

2 

 

  

	 	
1.
	
Up to 50% of Base Salary, based on criteria determined by the Board in its sole discretion related to Executive's performance during the year, paid 50% in cash and 50% in restricted stock units of the Company’s common stock (“restricted stock units”).

 

	 	
2.
	
Up to 100% of Base Salary, based on criteria determined by the Board in its sole discretion related to the Company's operating results during such year, paid 100% in restricted stock units.

 

	 	
3.
	
Bonus restricted stock unit awards. Any restricted stock unit awards pursuant to (1) and (2) above shall be made pursuant to a Restricted Stock Award Agreement, substantially in the form annexed hereto as Exhibit “A”, and shall provide, inter alia, that it shall be priced on the date of bonus payment, and will vest in 2 equal increments on the first two anniversaries of the award (but in the event that a vesting according to the above schedule would be after the fifth anniversary of the Start Date, such vesting shall be accelerated to the last business day proceeding the fifth anniversary of the Start Date). At the Executive’s option, on each vesting date the Executive may sell up to a third of the stock vesting on such date back to the Company, and the Company shall purchase such stock at a price equal to the published closing price of the Company’s publicly traded common shares on such date. In the event that the Company’s shares are not publicly traded as of such date, the purchase price of such stock shall be equal to its “Fair Market Value,” as of such date. As used herein, “Fair Market Value” of the aforementioned stock shall mean the fair market value thereof as determined in good faith by the Company’s Board of Directors. Notwithstanding the foregoing, in the event that the Executive disagrees with the Fair Market Value determined by the Board and notifies the Board of such disagreement within one week of its determination, the Executive and the Board shall mutually select an independent appraiser and such appraiser shall determine the Fair Market Value of the aforementioned stock, taking into account all relevant circumstances at such time. The Fair Market Value determined by such independent appraiser shall be final and binding on all parties. The fees and expenses of the independent appraiser shall be borne by the Executive, provided, however, that if the independent appraiser finally concludes that the Fair Market Value exceeds the initial Fair Market Value proposed by the Board by more than 10%, then the fees and expenses of the independent appraiser shall instead be borne solely by the Company. 

 

 

3 

 

 

(e)     Executive shall be eligible to participate in the Company’s stock option program, subject to the terms and conditions of the Lighting Science Group Corporation Amended and Restated Equity-Based Compensation Plan (the “Plan”). Within thirty (30) days after the beginning of the Employment Period, Executive will be granted an employee stock option to purchase a 12,300,000 of shares of the Company’s common stock, which grant shall be made pursuant to a Stock Option Agreement, substantially in the form annexed hereto as Exhibits “B” and “C”, which shall provide, inter alia, that the exercise price for the granted options shall equal the closing price-per-share of the Company’s publicly-traded common stock on the date of the grant. Unless vested or accelerated sooner in accordance with the terms of the Plan, this grant will vest, and become exercisable, in four equal tranches over a 4 year period, with the first vesting on the first anniversary of the grant date (one year following the grant date), and the remaining tranches vesting annually thereafter (so that the final tranche vests on the fourth anniversary of the grant date), and will be subject to the terms and conditions of the Plan and the stock option award agreement. This grant is subject to final approval by the Compensation Committee of LSG’s Board of Directors. In addition, to the extent that the foregoing grant exceeds the maximum number of options permitted to be granted under the Plan to any individual during a single year (the “Maximum Number”), the Company shall present to its shareholders, for their approval at the Company’s first Annual Shareholders’ Meeting following the Executive’s Start Date, a proposal to amend the Plan so as to raise the Maximum Number to at least 12,300,000. Furthermore, to the extent the foregoing grant of options exceeds that number of options covered by the Company’s current Form S-8, the Company shall file a Form S-8 to cover such grant in its entirety, subject to the prior approval of the Company’s Board of Directors.

 

(f)     LOCK-UP LETTER: In the event that a request is made by an underwriter in connection with a proposed underwriting agreement or an offering of securities of the Company (“Securities”), or otherwise, that the Executive execute a Lock-Up Letter restricting or prohibiting his offer or sale of Securities, and/or containing other provisions that are typically included in such Lock-up Letter, he shall comply with such request in a timely manner, provided that it does not impose a lock-up period that is longer than that imposed on other executive officers of the Company, without any additional compensation therefor. 

 

(g)     All amounts payable to Executive as compensation hereunder shall be subject to all required and customary withholding by the Company and its Subsidiaries.

 

	 	
4.
	
Term.

  

(a)     The Employment Period shall begin on September 23, 2014 and end on the fifth anniversary of such date; provided, that (i) the Employment Period shall terminate prior to such date immediately upon Executive's resignation (with or without Good Reason, as defined below), death or Disability and (ii) the Employment Period may be terminated by the Company at any time prior to such date for Cause (as defined below) or without Cause. Except as otherwise provided herein, any termination of the Employment Period by the Company shall be effective as specified in a written notice from the Company to Executive.

 

(b)     If the Employment Period is terminated by the Company without Cause or upon Executive's resignation with Good Reason:

  

 

4 

 

 

(i)     Executive shall be entitled to continue to receive his Base Salary payable in regular installments, as special severance payments (the "Severance Payments"), (i) through the date of termination and (ii) following the date of termination, from the date of termination for period of the lesser of a) one (1) year, or b) the length of the Employment Period, (the "Severance Period"), payable in accordance with the Company standard payroll practices as in effect on the date of termination, provided that to the extent that the payments of any amount constitutes "nonqualified deferred compensation" for purposes of Code Section 409A (as defined in Section 26(a) hereof), any such payment scheduled to occur during the first sixty (60) days following the date of termination shall not be paid until the sixtieth (60th) day following the date of termination and shall include payment of any amount that was otherwise scheduled to be paid prior thereto; in the case of clause (ii), if and only if Executive has executed and delivered to the Company the General Release substantially in form and substance as set forth in Exhibit “D” attached hereto and the General Release has become effective (and is no longer subject to revocation, if applicable) within sixty (60) days following the date of termination, and only so long as Executive has not breached the provisions of the General Release or breached the provisions of Sections 5, 6 and 7 hereof and does not apply for unemployment compensation chargeable to the Company or any Subsidiary during the Severance Period. If the Company is a "public company" and the Executive is a "specified employee" as Code Section 409A defines these terms, any amounts that are not exempt from Code Section 409A that are payable to Executive during the first six (6) months and one (1) day following the date of termination pursuant to this Section 4(b) shall be deferred until the date which is six (6) months and one (1) day following such termination, and if such payments are required to be so deferred the first payment shall be in an amount equal to the total amount to which Executive would otherwise have been entitled during the period following the date of termination of employment if deferral had not been required; and

 

(ii)     Executive shall not be entitled to any other salary, compensation or benefits after termination of the Employment Period, except for reimbursement of business expenses in accordance with Section 3(c), as specifically provided for in the Company's employee benefit plans or as otherwise expressly required by applicable law.

 

(c)     If the Employment Period is terminated by the Company for Cause or is terminated pursuant to clause (a)(i) above (other than termination by Executive with Good Reason), Executive shall only be entitled to receive his Base Salary through the date of termination and shall not be entitled to any other salary, compensation or benefits from the Company or its Subsidiaries thereafter, except as otherwise specifically provided for under the Company's employee benefit plans or as otherwise expressly required by applicable law.

 

(d)     Except as otherwise expressly provided herein, all of Executive's rights to salary, bonuses, employee benefits and other compensation hereunder which would have accrued or become payable after the termination or expiration of the Employment Period shall cease upon such termination or expiration, other than those expressly required under applicable law (such as COBRA). The Company may offset any amounts Executive owes it or its Subsidiaries against any amounts it or its Subsidiaries owes Executive hereunder so long as such amounts are not "deferred compensation" for purposes of Code Section 409A.

  

 

5 

 

 

(e)     For purposes of this Agreement, "Cause" shall mean with respect to Executive one or more of the following: (i) being convicted or pleading guilty or nolo contendere to any felony or other crime involving dishonesty, disloyalty or fraud with respect to the Company or any of its Subsidiaries or any of their customers or suppliers, or otherwise, (ii) reporting to work under the influence of alcohol (unless related to lawful consumption of alcohol in the ordinary course of the Business) or illegal drugs, (iii) the use of illegal drugs (whether or not at the workplace), (iv) improper actions causing the Company or any of its Subsidiaries substantial public disgrace or disrepute or substantial economic harm, (v) substantial and repeated failure to perform duties as reasonably directed by the Chief Executive Officer that causes, or could reasonably be expected to cause, harm to the Company or its Subsidiaries and which Executive fails to cure, if curable, within ten (10) business days of receipt of written notice of such event, (vi) any improper act or omission aiding or abetting a competitor, supplier or customer of the Company or any of its Subsidiaries to the material disadvantage or detriment of the Company and its Subsidiaries, (vii) breach of fiduciary duty, gross negligence or willful misconduct with respect to the Company or any of its Subsidiaries or (viii) any other material breach of this Agreement or any other written agreement between Executive and the Company or any of its affiliates, or any breach by Executive of Sections 5, 6 or 7 of this Agreement, in each case of this clause (viii), if curable, which Executive fails to cure within thirty (30) days of receipt of written notice of such event.

 

(f)     For purposes of this Agreement, "Disability" shall mean Executive's inability to perform the essential duties, responsibilities and functions of his position with the Company and its Subsidiaries for 40 days or more (whether or not consecutive) in any 12-month period or any 30 consecutive-day period as a result of any mental or physical illness, disability or incapacity even with reasonable accommodations for such illness, disability or incapacity provided by the Company and its Subsidiaries, as determined by a physician satisfactory to both Executive and the Company (and, if they cannot agree, then one to be selected and mutually accepted by their respective doctors).

 

(g)     For purposes of this Agreement, "Good Reason" shall mean if Executive resigns from employment with the Company and its Subsidiaries prior to the end of the Employment Period as a result of (i) the Company's reduction of the amount of the Base Salary, (ii) material diminution in Executive's duties, title or position, or (iii) the Company's material breach of this Agreement; provided that (a) written notice of Executive's resignation for Good Reason must be delivered to the Company within thirty (30) days after the occurrence of any such event in order for Executive's resignation with Good Reason to be effective hereunder; (b) the Company shall have thirty (30) days after receipt of such notice during which the Company may remedy the occurrence giving rise to the claim for Good Reason termination, if applicable, and, if the Company cures such occurrence within such thirty (30)-day period, there shall be no Good Reason; and (c) Executive must actually resign within sixty (60) days following the event constituting Good Reason.

  

 

6 

 

 

(h)     Upon termination of Executive's employment upon the death of the Executive or upon Executive's becoming disabled pursuant to Section 4(f), the Company will be obligated to pay, and Executive shall be entitled to receive (i) all of the accrued compensation and vested benefits earned but not paid through termination and (ii) to the extent applicable, any benefits to which the Executive is entitled under any short-term or long- term disability plan or program with respect to any Disability, subject to the payment timing and other restrictions as may be set forth in such plan or program. For purposes of this Section 4(h), Executive's designated beneficiary will be such individual beneficiary or trust, located at such address, as Executive may designate by notice to the Company from time to time or, if Executive fails to give notice to the Company of such a beneficiary, Executive's estate.

 

	 	
5.
	
Confidential Information.

 

(a)     “Confidential Information” means all nonpublic information concerning or arising from the Company’s or its Subsidiaries’ business, including, without specific limitation, (a) internal business information (including, without limitation, information relating to present and future strategic and staffing plans and practices, business, marketing, promotional and sales plans, practices and programs, training practices and programs, cost, rate and pricing structures and accounting and business methods); (b) identities of, individual requirements of, specific contractual arrangements with, and information about, Company's or its Subsidiaries’ investors, suppliers, clients and customers and their confidential information, suppliers, clients and customers; (c) compilations of data (including, without limitation, the form or format of information that may comprise or include information otherwise not deemed confidential as provided in the following paragraph) and analyses, processes, methods, techniques, systems, formulae, research, records, reports, manuals, documentation, models, equipment, schematics, data and data bases relating thereto; (d) computer software (including, without limitation, operating systems, applications and program listings), documentation, data and data bases; (e) trade secrets, inventions, designs, developments, devices, methods and processes (whether or not patentable or reduced to practice); and (f) all other information concerning the Company’s or its Subsidiaries’ concepts, prospects, customers, employees, contractors, vendors, suppliers, earnings, products, services, equipment, systems, and/or prospective and executed contracts and other business arrangements.

 

(b)     Executive acknowledges that the Confidential Information is the property of the Company or such Subsidiary. Therefore, Executive agrees that he shall not disclose to any person or entity or use for his own purposes any Confidential Information or any confidential or proprietary information of other persons or entities in the possession of the Company and its Subsidiaries ("Third Party Information"), without the prior written consent of the Board, unless and to the extent that the Confidential Information or Third Party Information becomes generally known to and available for use by the public other than as a result of Executive's acts or omissions. Executive shall deliver to the Company at the termination or expiration of the Employment Period, or at any other time the Company may request, all memoranda, notes, plans, records, reports, computer files, disks and tapes, printouts and software and other documents and data (and copies thereof) embodying or relating to Third Party Information, Confidential Information, Work Product (as defined below) or the business of the Company or any other Subsidiaries which he may then possess or have under his control.

  

 

7 

 

 

(c)     Executive shall be prohibited from using or disclosing any confidential information or trade secrets that Executive may have learned through any prior employment, provided that Executive is not otherwise prohibited from using or disclosing such information pursuant to any agreement to which Executive is party. If at any time during the Employment Period with the Company or any Subsidiary, Executive believes he is being asked to engage in work that will, or will be likely to, jeopardize any confidentiality or other obligations Executive may have to former employers, Executive shall immediately advise the Board so that Executive's duties can be modified appropriately. Executive represents and warrants to the Company that Executive took nothing with him which belonged to any former employer when Executive left his prior employment positions and that Executive has nothing that contains any information which belongs to any former employer. If at any time Executive discovers this is incorrect, Executive shall promptly return any such materials to Executive's former employer. The Company does not want any such materials, and Executive shall not be permitted to use or refer to any such materials in the performance of Executive's duties hereunder.

 

6.     Intellectual Property, Inventions and Patents.     Executive acknowledges that all discoveries, concepts, ideas, inventions, innovations, improvements, developments, methods, novel apparatuses, processes, production methods, information, compositions of matter, software, firmware, designs, analyses, drawings, reports, logos, trade secrets, patent applications, copyrightable work and mask work (whether or not including any Confidential Information) and all registrations or applications related thereto, all other proprietary information and all similar or related information (whether or not patentable or registrable under copyright, trademark or similar statutes, subject to trade secret protection, or any other analogous protection) which relate to the Company's or any of its Subsidiaries' actual or demonstrably anticipated business, research and development or existing or demonstrably anticipated future products or services and which are conceived, developed or made by Executive (whether alone or jointly with others) while employed by the Company or its immediate predecessor and its Subsidiaries, whether before or after the date of this Agreement ("Work Product"), belong to the Company or such Subsidiary, and Executive hereby assigns and agrees to assign to the Company the same. Except to the extent that any such items developed prior to the date hereof did not relate to the Business (as defined below), such items shall not be Work Product. Executive shall promptly disclose any such Work Product to the Board and, at the Company's expense, perform all actions reasonably requested by the Board (whether during or after the Employment Period) to establish and confirm such ownership (including, without limitation, assignments, consents, powers of attorney and other instruments). Executive acknowledges that all copyrightable Work Product shall be deemed to constitute "works made for hire" under the U.S. Copyright Act of 1976, as amended. To the extent that any copyrightable Work Product or any part thereof may not, by operation of law, be a work made for hire, Executive hereby assigns to Company all right, title and interest in and to such Work Product and any and all parts thereof.

 

	 	
7.
	
Non-Compete, Non-Solicitation.

 

(a)     In further consideration of the compensation to be paid to Executive hereunder, Executive acknowledges that during the course of his employment with the Company and its Subsidiaries he shall become familiar with the Company's trade secrets and with other Confidential Information concerning the Company and its Subsidiaries and that his services have been and shall continue to be of special, unique and extraordinary value to the Company and its Subsidiaries, and therefore, Executive agrees that, during Executive's employment with the Company and/or any of its Subsidiaries and for one (1) year following the termination of Executive's employment (the "Noncompete Period"), he shall not directly or indirectly own any interest in, manage, control, participate in, consult with, render services for, be employed in an executive, managerial or administrative capacity by, or in any manner engage in any business or entity selling or offering for sale products or services competitive with the Business (as defined below) of the Company or its Subsidiaries, as such Businesses exists or is in process during the Employment Period or on the date of the termination or expiration of the Employment Period, within any geographical area in which the Company or its Subsidiaries engages or has made substantial, executable plans to engage in such Business. Such business (the “Business”) shall mean the research, development, manufacture, or sale of LED lighting devices, including but not limited to, LED lighting components, LED retrofit lamps, LED luminaires, LED fixtures and/or LED lighting systems, and shall not include any business or businesses of any parent entity or owner of the Company. Nothing herein shall prohibit Executive from being a passive owner of not more than 2% of the outstanding stock of any class of a corporation which is publicly traded, so long as Executive has no active participation in the business of such corporation.

  

 

8 

 

 

(b)     In addition, during the Noncompete Period, Executive shall not directly or indirectly through another person or entity (i) induce or attempt to induce any employee of the Company or any Subsidiary to leave the employ of the Company or such Subsidiary, or in any way interfere with the relationship between the Company or any Subsidiary and any employee thereof, (ii) hire any person who was an employee of the Company or any Subsidiary at any time during the Employment Period or the six (6) months prior to the commencement of the Employment Period, or (iii) induce or attempt to induce any customer, supplier, licensee, licensor, franchisee or other business relation of the Company or any Subsidiary to cease doing business with the Company or such Subsidiary, or in any way interfere with the relationship between any such customer, supplier, licensee or business relation and the Company or any Subsidiary (including, without limitation, making any negative or disparaging statements or communications regarding the Company or its Subsidiaries).

 

8.     Enforcement. If, at the time of enforcement of Sections 5, 6or 7 of this Agreement, a court holds that the restrictions stated herein are unreasonable under circumstances then existing, the parties hereto agree that the maximum period, scope or geographical area reasonable under such circumstances shall be substituted for the stated period, scope or area and that the court shall be allowed to revise the restrictions contained herein to cover the maximum period, scope and area permitted by law. Because Executive's services are unique and because Executive has access to Confidential Information and Work Product, the parties hereto agree that the Company and its Subsidiaries would suffer irreparable harm from a breach of Sections 5, 6 or 7 by Executive and that money damages would not be an adequate remedy for any such breach of this Agreement. Therefore, in the event a breach or threatened breach of this Agreement, the Company and its Subsidiaries or their successors or assigns, in addition to other rights and remedies existing in their favor, shall be entitled to seek specific performance and/or injunctive or other equitable relief from a court of competent jurisdiction in order to enforce, or prevent any violations of, the provisions hereof (without posting a bond or other security). In addition, in the event of a breach or violation by Executive of Section 7, the Noncompete Period shall be automatically extended by the amount of time between the initial occurrence of the breach or violation and when such breach or violation has been duly cured. Executive acknowledges that the restrictions contained in Section 7 are reasonable and that he has reviewed the provisions of this Agreement with his legal counsel.

 

9.     Executive's Representations. Executive hereby represents and warrants to the Company that (i) the execution, delivery and performance of this Agreement by Executive do not and shall not conflict with, breach, violate or cause a default under any contract, agreement, instrument, order, judgment or decree to which Executive is a party or by which he is bound, (ii) Executive is not a party to or bound by any employment agreement, noncompete agreement or confidentiality agreement with any other person or entity, and (iii) upon the execution and delivery of this Agreement by the Company, this Agreement shall be the valid and binding obligation of Executive, enforceable in accordance with its terms.

  

 

9 

 

 

10.     Survival. Sections 4 through 24, inclusive, shall survive and continue in full force in accordance with their terms notwithstanding the expiration or termination of the Employment Period.

 

11.     Notices. Any notice provided for in this Agreement shall be in writing and shall be either personally delivered, sent by reputable overnight courier service or mailed by first class mail, return receipt requested, to the recipient at the address below indicated:

 

Notices to Executive: 

 

Wayne Nesbit

301 Fayetteville – 2806

Raleigh, NC 27601

 

Notices to the Company:

 

Lighting Science Group Corporation 

1227 South Patrick Drive

Satellite Beach, FL 32937

Attention: Chief Executive Officer

 

or such other address or to the attention of such other person as the recipient party shall have specified by prior written notice to the sending party. Any notice under this Agreement shall be deemed to have been given when so delivered, sent or mailed.

 

12.     Severability. Whenever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other provision of this Agreement or any action in any other jurisdiction, but this Agreement shall be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision had never been contained herein.

 

13.     Complete Agreement.     This Agreement and those documents expressly referred to herein and other documents of even date herewith embody the complete agreement and understanding among the parties and supersede and preempt any prior understandings, agreements or representations by or among the parties, written or oral, which may have related to the subject matter hereof in any way.

 

14.     No Strict Construction.     The language used in this Agreement shall be deemed to be the language chosen by the parties hereto to express their mutual intent, and no rule of strict construction shall be applied against any party.

  

 

10 

 

 

15.     Counterparts. This Agreement may be executed in separate counterparts and via facsimile or other electronic transmission, each of which is deemed to be an original and all of which taken together constitute one and the same agreement.

 

16.     Successors and Assigns. This Agreement is intended to bind and inure to the benefit of and be enforceable by Executive, the Company and their respective heirs, successors and assigns, except that Executive may not assign his rights or delegate his duties or obligations hereunder without the prior written consent of the Company.

 

17.     Choice of Law.     All issues and questions concerning the construction, validity, enforcement and interpretation of this Agreement and the exhibits and schedules hereto shall be governed by, and construed in accordance with, the laws of the State of Florida, without giving effect to any choice of law or conflict of law rules or provisions (whether of the State of Florida or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Florida.

 

18.     Amendment and Waiver.     The provisions of this Agreement may be amended or waived only with the prior written consent of the Company and Executive, and no course of conduct or course of dealing or failure or delay by any party hereto in enforcing or exercising any of the provisions of this Agreement (including, without limitation, the Company's right to terminate the Employment Period for Cause) shall affect the validity, binding effect or enforceability of this Agreement or be deemed to be an implied waiver of any provision of this Agreement.

 

19.     Insurance. The Company may, at its discretion, apply for and procure in its own name and for its own benefit life and/or disability insurance on Executive in any amount or amounts considered advisable. Executive agrees to cooperate in any medical or other examination, supply any information and execute and deliver any applications or other instruments in writing as may be reasonably necessary to obtain and constitute such insurance. Executive hereby represents that he has no reason to believe that his life is not insurable at rates now prevailing for healthy men of his age.

 

20.     Tax Withholding.     The Company and its Subsidiaries, to the extent required by applicable law, shall be entitled to deduct or withhold from any amounts owing from the Company or any of its Subsidiaries to Executive any federal, state, local or foreign withholding taxes, excise tax, or employment taxes ("Taxes") imposed with respect to Executive's compensation or other payments from the Company or any of its Subsidiaries or Executive's ownership interest in the Company (including, without limitation, wages, bonuses, dividends, the receipt or exercise of equity options and/or the receipt or vesting of restricted equity). In the event that the Company or its Subsidiaries do not make any such deductions or withholdings, Executive shall indemnify the Company and its Subsidiaries for any amounts paid with respect to any such Taxes; provided, however, that Executive shall not in any instance be liable hereunder for the employer portion of any such Taxes.

  

 

11 

 

 

21.     Consent to Jurisdiction.     EACH OF THE PARTIES IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE MIDDLE DISTRICT OF FLORIDA, FOR THE PURPOSES OF ANY SUIT, ACTION OR OTHER PROCEEDING ARISING OUT OF THIS AGREEMENT, ANY RELATED AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY OR THEREBY. EACH OF THE PARTIES HERETO FURTHER AGREES THAT SERVICE OF ANY PROCESS, SUMMONS, NOTICE OR DOCUMENT BY U.S. REGISTERED MAIL TO SUCH PARTY'S RESPECTIVE ADDRESS SET FORTH ABOVE SHALL BE EFFECTIVE SERVICE OF PROCESS FOR ANY ACTION, SUIT OR PROCEEDING IN FLORIDA WITH RESPECT TO ANY MATTERS TO WHICH IT HAS SUBMITTED TO JURISDICTION IN THIS SECTION 21. EACH OF THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY OBJECTION TO THE LAYING OF VENUE OF ANY ACTION, SUIT OR PROCEEDING ARISING OUT OF THIS AGREEMENT, ANY RELATED DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY IN THE UNITED STATES DISTRICT COURT FOR THE MIDDLE DISTRICT OF FLORIDA, AND HEREBY AND THEREBY FURTHER IRREVOCABLY AND UNCONDITIONALLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY SUCH COURT THAT ANY SUCH ACTION, SUIT OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.

 

22.     Waiver of Jury Trial.     AS A SPECIFICALLY BARGAINED FOR INDUCEMENT FOR EACH OF THE PARTIES HERETO TO ENTER INTO THISAGREEMENT (AFTER HAVING THE OPPORTUNITY TO CONSULT WITH COUNSEL), EACH PARTY HERETO EXPRESSLY WAIVES THE RIGHT TO TRIAL BY JURY IN ANY LAWSUIT OR PROCEEDING RELATING TO OR ARISING IN ANY WAY FROM THIS AGREEMENT OR THE MATTERS CONTEMPLATED HEREBY.

 

23.     Corporate Opportunity.      During the Employment Period, Executive shall submit to the Board all business, commercial and investment opportunities or offers presented to Executive or of which Executive becomes aware which relate to the businesses of the Company or its Subsidiaries, as such businesses exist or are in process during the Employment Period or on the date of the termination or expiration of the Employment Period, within any geographical area in which the Company or its Subsidiaries engage or plan to engage in such businesses at any time during the Employment Period ("Corporate Opportunities"). Unless approved by the Board, Executive shall not accept or pursue, directly or indirectly, any Corporate Opportunities on Executive's own behalf.

 

24.     Executive's Cooperation.      During the Employment Period and thereafter, Executive shall cooperate with the Company and its Subsidiaries in any internal investigation, any administrative, regulatory or judicial investigation or proceeding or any dispute with a third party as reasonably requested by the Company (including, without limitation, Executive being available to the Company upon reasonable notice for interviews and factual investigations, appearing at the Company's request to give testimony without requiring service of a subpoena or other legal process, volunteering to the Company all pertinent information and turning over to the Company all relevant documents which are or may come into Executive's possession, all at times and on schedules that are reasonably consistent with Executive's other permitted activities and commitments). In the event the Company requires Executive's cooperation in accordance with this Section 24 following the termination of the Employment Period and at any time when the Company is not paying Severance Payments, Executive shall only be obligated to provide up to 24 hours of cooperation annually at no less than 8 hour intervals. At all times, the Company shall reimburse Executive solely for reasonable out-of-pocket travel expenses (including lodging and meals) upon submission of receipts, and any other expenses Executive incurs with the Company's prior written approval. Following the termination of the Employment Period and at any time when the Company is not paying Severance Payments, any additional cooperation beyond 24 hours annually shall be conditioned on the Company's agreement to pay Executive, in addition to reasonable and documented out-of- pocket expenses, a consulting fee of $150 per hour.

  

 

12 

 

 

	 	
25.
	
Section 409A Compliance.

 (a)     The intent of the parties is that payments and benefits under this Agreement comply with Internal Revenue Code Section 409A and the regulations and guidance promulgated thereunder (collectively "Code Section 409A") and, accordingly, to the maximum extent permitted, this Agreement shall be interpreted to be in compliance therewith. In no event whatsoever shall the Company be liable for any additional tax, interest, or penalty that may be imposed on the Executive by Code Section 409A or any other damages for failing to comply with Code Section 409A. If, nonetheless, this Agreement either fails to satisfy the requirements of Code Section 409A or is not exempt from the application of Code Section 409A, then the parties hereby agree to amend or to clarify this Agreement in a timely manner so that this Agreement either satisfies the requirements of Code Section 409A or is exempt from the application of Code Section 409A, provided, however, that any such amendment or clarification shall be made in good faith and shall, to the maximum extent reasonably possible, maintain the original intent and economic benefit to the Executive and the Company of the applicable provision without violating the provisions of Code Section 409A.

 

(b)     A termination of employment shall not be deemed to have occurred for purposes of any provision of this Agreement providing for the payment of any amounts or benefits upon or following a termination of employment unless such termination is also a "separation from service" within the meaning of Code Section 409A and, for purposes of any such provision of this Agreement, references to a "termination," "termination of employment" or like terms shall mean "separation from service."

 

(c)     All expenses or other reimbursements under this agreement and hereof shall be made on or prior to the last day of the taxable year following the taxable year in which such expenses were incurred by the Executive (provided that if any such reimbursements constitute taxable income to the Executive, such reimbursements shall be paid no later than March 15th of the calendar year following the calendar year in which the expenses to be reimbursed were incurred), and no such reimbursement or expenses eligible for reimbursement in any taxable year shall in any way affect the expenses eligible for reimbursement in any other taxable year.

 

(d)     For purposes of Code Section 409A, the Executive's right to receive any installment payments pursuant to this Agreement shall be treated as a right to receive a series of separate and distinct payments.

 

(e)     Whenever a payment under this Agreement specifies a payment period with reference to a number of days (e.g., "payment shall be made within thirty (30) days following the date of termination"), the actual date of payment within the specified period shall be within the sole discretion of the Company.

 

(f)     In no event shall any payments under this Agreement that constitute "deferred compensation" for purposes of Code Section 409A be offset by any other payment, pursuant to this Agreement or otherwise.

 

*     *     *     *     *

  

 

13 

 

 

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first written above.

 

 

	
 
	
LIGHTING SCIENCE GROUP CORPORATION 
	
 

	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 

	
 
	
By: 
	
/s/ Ed Bednarcik 
	
 

	
 
	
Name: 
	
Ed Bednarcik 
	
 

	
 
	
Its: 
	
CEO 
	
 

 

 

	
 
	
WAYNE NESBIT 
	
 

	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 

	
 
	
 Signature:
	
/s/ Wayne Nesbit 
	
 

 

 

Signature Page - Employment Agreement

 

 

 

 

 

Exhibit A

 

 

Form of Restricted Stock Award Agreement

 

 

	

 
	
Lighting Science Group Corporation
2012 Amended & Restated Equity-Based Compensation Plan
Restricted Stock Award Agreement

 

THE SHARES ISSUABLE PURSUANT TO THIS AGREEMENT ARE SUBJECT TO THE PROVISIONS OF THE COMPANY’S 2012 AMENDED AND RESTATED EQUITY-BASED COMPENSATION PLAN AND THIS AGREEMENT IS ENTERED INTO PURSUANT THERETO. 

 

This Agreement is made and entered into as of the Grant Date specified below by and between Lighting Science Group Corporation, a Delaware corporation (the “Company”) and you, the “Grantee” identified below. 

 

WHEREAS, the Company in order to induce you to enter into and/or continue employment with the Company and to contribute to the success of the Company, agrees to grant you an equity interest in the Company through a grant of Restricted Stock of the Company;

 

WHEREAS, the Company adopted the Lighting Science Group Corporation 2012 Amended and Restated Equity-Based Compensation Plan as it may be amended from time to time (the “Plan”) under which the Company is authorized to grant Restricted Stock to certain employees, consultants, and directors of the Company;

 

WHEREAS, the Plan shall be deemed a part of this Restricted Stock Award Agreement (the “Agreement”) as if fully set forth herein; and

 

WHEREAS, you desire to accept the Restricted Stock granted pursuant to the Agreement. 

 

NOW, THEREFORE, in consideration of the mutual covenants set forth herein and for other valuable consideration hereinafter set forth, the parties agree as follows:

 

	  	  	
Company

Initials

Confirming

	
Grantee
	  	  
	
Grant Date 
	  	  
	
Number Of Shares 
	  	  
	
Number Of Shares 

[print]
	  	  

 

	
1.
	
Grant of Award. Subject to the terms and conditions herein, the Company hereby grants to you, effective as of the “Grant Date” specified above, as a matter of separate inducement and not in lieu of any salary or other compensation for your services for the Company, an award of the “Number Of Shares” of Restricted Stock specified above (the “Awarded Shares”), subject to the terms and conditions of this Agreement. 

  

 

 

 

 

	
2.
	
Subject to Plan. This Agreement is subject to the terms and conditions of the Plan, and the terms of the Plan shall control to the extent not otherwise inconsistent with the provisions of this Agreement. To the extent the terms of the Plan are inconsistent with the provisions of this Agreement, the Plan shall control. The capitalized terms used herein that are defined in the Plan shall have the meanings assigned to them in the Plan. This Agreement is subject to any rules promulgated pursuant to the Plan by the Board or the Committee and communicated to the Grantee in writing. 

 

	
3.
	
Vesting. Except as specifically provided in this Agreement, the Awarded Shares shall be vested as follows: one half (50%) of the Awarded Shares shall vest on the first anniversary of the Grant Date and the remaining one half (50%) of the Awarded Shares shall vest on the second anniversary of the Grant Date, provided that such vesting shall occur only if the Grantee has continued to serve as an employee of the Company through such vesting date. 

 

	
4.
	
On each vesting date, Grantee may, at his/her option, sell back to the Company up to a third of the Awarded Shares vesting on such vesting date, and the Company shall purchase such stock at a price equal to the published closing price of the Company’s publicly traded common shares on such date.

 

	
5.
	
Forfeiture of Awarded Shares and Disgorgement. 

 

	 	
a.
	
Awarded Shares that are not vested in accordance with Section 3 shall be forfeited on the date of the Grantee’s termination of employment with the Company. Upon forfeiture, all of the Grantee’s rights with respect to the forfeited Awarded Shares shall cease and terminate, without any further obligations on the part of the Company. 

 

	 	
b.
	
Notwithstanding any provisions in this Agreement to the contrary, in the event that the Grantee violates the provisions of Sections 10 or 11 of this Agreement, the unvested Awarded Shares shall be immediately forfeited and this Agreement (other than the provisions of this Section 4) will be terminated on that date;

 

	
6.
	
Restrictions on Unvested Shares. Subject to the provisions of the Plan and the terms of this Agreement, from the Grant Date until the date the Awarded Shares have vested, the Grantee shall not be permitted to sell, transfer, pledge, hypothecate, margin, assign or otherwise encumber any of the Awarded Shares. 

 

	
7.
	
Legend. The following legend (or a substantially similar one) shall be placed on all certificates representing Awarded Shares:

 

	 	
1.
	
On the face of the certificate:

 

	 	
a.
	
Transfer of this stock is restricted in accordance with conditions printed on the reverse of this certificate.

 

	 	
2.
	
On the reverse of the certificate:

 

	 	
a.
	
The shares of stock evidenced by this certificate are subject to and transferable only in accordance with the terms and conditions of that certain Lighting Science Group Corporation 2012 Amended and Restated Equity-Based Compensation Plan, a copy of which is on file at the principal office of the Company in Satellite Beach, Florida and that certain Restricted Stock Award Agreement dated as of [Grant Date], by and between the Company and [Grantee]. No transfer or pledge of the shares evidenced hereby may be made except in accordance with and subject to the provisions of said Plan and Award Agreement. By acceptance of this certificate, any holder, transferee or pledgee hereof agrees to be bound by all of the provisions of said Plan and Award Agreement.

  

 

 

 

 

	 	
3.
	
All Awarded Shares owned by the Grantee shall be subject to the terms of this Agreement and shall be represented by a certificate or certificates bearing the foregoing legend. 

 

	 	
4.
	
At such time, and from time to time, as Executive may wish to sell all or a portion of the restricted shares issued hereunder, the Company’s counsel shall reasonably cooperate with Executive and his attorneys and advisors in issuing an opinion letter(s), at no cost to Executive, allowing for such sale on an unrestricted basis, where such is permitted by law.

 

	
8.
	
Delivery of Certificates. Certificates for Awarded Shares shall be retained in the physical possession of the Company until such Awarded Shares are free of restriction under this Agreement. Certificates for Awarded Shares shall be delivered to the Grantee promptly after, and only after, such shares have vested (without forfeiture pursuant to Section 4 above). 

 

	
9.
	
Voting. Subject to Section 4 and Section 5 above, the Grantee, as record holder of the Awarded Shares, has all of the rights of a stockholder of the Company, including the right to vote the shares, and the right to receive any dividends thereon; provided, however, that this Section 8 shall not create any voting right where the holders of such Awarded Shares otherwise have no such right. 

 

	
10.
	
Recapitalization or Reorganization. 

 

	 	
a.
	
The existence of this Agreement and the grant of the Awarded Shares shall not affect in any way the right or power of the Board or the stockholders of the Company to make or authorize any adjustment, recapitalization, reorganization or other change in the Company’s capital structure or its business, any merger or consolidation of the Company, any issue of debt or equity securities ahead of or affecting the Company’s common stock, par value $0.001 per share (the “Stock”), or the rights thereof, the dissolution or liquidation of the Company or any sale, lease, exchange or other disposition of all or any part of its assets or business or any other corporate act or proceeding. 

 

	 	
b.
	
The terms of this Agreement and the number of shares of Awarded Shares shall be subject to adjustment from time to time, in accordance with the following provisions:

 

	 	
i.
	
If at any time, or from time to time, the Company shall subdivide as a whole (by reclassification, by a Stock split, by the issuance of a distribution on Stock payable in Stock, or otherwise) the number of shares of Stock then outstanding into a greater number of shares of Stock, then the number of Awarded Shares shall be increased proportionately. 

 

	 	
ii.
	
If at any time, or from time to time, the Company shall consolidate as a whole (by reclassification, reverse Stock split, or otherwise) the number of shares of Stock then outstanding into a lesser number of shares of Stock, the number of Awarded Shares shall be decreased proportionately. 

 

 

 

 

  

	 	
iii.
	
Whenever the number of Awarded Shares are required to be adjusted as provided in this Section 9, the Committee shall promptly prepare and provide Grantee with a notice setting forth, in reasonable detail, the event requiring adjustment, the amount of the adjustment, the method by which such adjustment was calculated, and the change in price and the number of Awarded Shares after giving effect to the adjustments.

 

	 	
iv.
	
Adjustments under Subsections 9.b.(i) and (ii) shall be made by the Committee, and its determination as to what adjustments shall be made and the extent thereof shall be final, binding, and conclusive. No fractional interest shall be issued under this Agreement on account of any such adjustments. 

 

	 	
c.
	
In the event of changes in the outstanding Stock by reason of recapitalization, reorganizations, mergers, consolidations, combinations, exchanges or other relevant changes in capitalization occurring after the Grant Date and not otherwise provided for by this Section 9, the Awarded Shares and this Agreement shall be subject to adjustment by the Committee at its discretion as to the number of Awarded Shares. 

 

	 	
d.
	
Except as hereinbefore expressly provided, the issuance by the Company of shares of stock of any class or securities convertible into shares of stock of any class, for cash, property, labor or services, upon direct sale, upon the exercise of rights or warrants to subscribe therefore, or upon conversion of shares or obligations of the Company convertible into such shares or other securities, and in any case whether or not for fair value, shall not affect, and no adjustment by reason thereof shall be made with respect to, the number of Awarded Shares. 

 

	
11.
	
Limitation on Rights Conferred under this Agreement. Nothing herein shall require the Company to issue any shares with respect to this Agreement if that issuance would, in the opinion of counsel for the Company, constitute a violation of the Securities Act or any similar or superseding statute or statutes, any other applicable statute or regulation, or the rules of any applicable securities exchange or securities association, as then in effect. The Company may, as a condition precedent to settlement of this Award, require from the Grantee (or in the event of his death, his legal representatives, heirs, legatees, or distributees) representations, if any, concerning the holder’s intentions with regard to the retention or disposition of the shares of Stock being acquired pursuant to this Agreement and such written covenants and agreements, if any, as to the manner of disposal of such shares as, in the opinion of counsel to the Company, may be necessary to ensure that any disposition by that holder (or in the event of the holder’s death, his legal representatives, heirs, legatees, or distributees) is not a violation of the Securities Act or any similar or superseding statute or statutes, any other applicable state or federal statute or regulation, or any rule of any applicable securities exchange or securities association, as then in effect. 

 

	
12.
	
The Grantee’s Acknowledgments. The Grantee hereby agrees to accept as binding, conclusive, and final all decisions or interpretations of the Committee or the Board, as appropriate, upon any questions arising under this Agreement. 

 

	
13.
	
Law Governing. This Agreement shall be governed by, construed, and enforced in accordance with the laws of the State of Delaware (excluding any conflict of laws rule or principle of Delaware law that might refer the governance, construction, or interpretation of this agreement to the laws of another state). 

 

	
14.
	
No Right to Continue Service or Employment. Nothing herein shall be construed to confer upon the Grantee the right to continue to serve as a member of the Company’s Scientific Advisory Board or otherwise provide services to the Company or any Subsidiary, whether as an employee or as a consultant or as an outside director, or interfere with or restrict in any way the right of the Company or any Subsidiary to terminate the Grantee as a member of the SAB or as an employee, consultant or outside director at any time. 

  

 

 

 

 

	
15.
	
Legal Construction. In the event that any one or more of the terms, provisions, or agreements that are contained in this Agreement shall be held by a court of competent jurisdiction to be invalid, illegal, or unenforceable in any respect for any reason, the invalid, illegal, or unenforceable term, provision, or agreement shall not affect any other term, provision, or agreement that is contained in this Agreement and this Agreement shall be construed in all respects as if the invalid, illegal, or unenforceable term, provision, or agreement had never been contained herein. 

 

	
16.
	
Covenants and Agreements as Independent Agreements. Each of the covenants and agreements that are set forth in this Agreement shall be construed as a covenant and agreement independent of any other provision of this Agreement. The existence of any claim or cause of action of the Grantee against the Company, whether predicated on this Agreement or otherwise, shall not constitute a defense to the enforcement by the Company of the covenants and agreements that are set forth in this Agreement. 

 

	
17.
	
Entire Agreement. With the exception of that certain employment agreement between the Executive and the Company, dated as of September 15, 2014, this Agreement supersedes any and all other prior understandings and agreements, either oral or in writing, between the parties -- with respect to the subject matter hereof and constitute the sole and only agreements between the parties with respect to the said subject matter. All prior negotiations and agreements between the parties with respect to the subject matter hereof are merged into this Agreement. Each party to this Agreement acknowledges that no representations, inducements, promises, or agreements, orally or otherwise, have been made by any party or by anyone acting on behalf of any party, which are not embodied in this Agreement or the Plan and that any agreement, statement or promise that is not contained in this Agreement or the Plan shall not be valid or binding or of any force or effect. 

 

	
18.
	
Parties Bound. The terms, provisions, and agreements that are contained in this Agreement shall apply to, be binding upon, and inure to the benefit of the parties and their respective heirs, executors, administrators, legal representatives, and permitted successors and assigns, subject to the limitation on assignment expressly set forth herein. No person or entity shall be permitted to acquire any Awarded Shares without first executing and delivering an agreement in the form satisfactory to the Company making such person or entity subject to the restrictions on transfer contained herein. 

 

	
19.
	
Modification. No change or modification of this Agreement shall be valid or binding upon the parties unless the change or modification is in writing and signed by the parties. Notwithstanding the preceding sentence, the Company may amend the Plan to the extent permitted by the Plan. 

 

	
20.
	
Headings. The headings that are used in this Agreement are used for reference and convenience purposes only and do not constitute substantive matters to be considered in construing the terms and provisions of this Agreement. 

 

	
21.
	
Gender and Number. Words of any gender used in this Agreement shall be held and construed to include any other gender, and words in the singular number shall be held to include the plural, and vice versa, unless the context requires otherwise. 

 

	
22.
	
Notice. Any notice required or permitted to be delivered hereunder shall be by next day courier (such as Federal Express, DHL, UPS or the like) addressed to the respective address specified in the signature block below or as a party hereto may later provide by notice in writing. Notice shall be deemed given on the day of delivery. Notices to Grantee shall be addressed to the attention of Grantee’s name and notices to the Company shall be addressed to the attention of the General Counsel of the Company.

  

 

 

 

 

	
23.
	
Tax Requirements. The Grantee is hereby advised to consult immediately with his own tax advisor regarding the tax consequences of this Agreement, the method and timing for filing an election to include this Agreement in income under Section 83(b) of the Code, and the tax consequences of such election. By execution of this Agreement, the Grantee agrees that if the Grantee makes such an election, the Grantee shall provide the Company with written notice of such election in accordance with the regulations promulgated under Section 83(b) of the Code. The Grantee shall be solely responsible for the tax consequences of this Agreement and the receipt of Awarded Shares; provided, however, the Company and any Subsidiary is authorized to withhold from the Awarded Shares, amounts of withholding and other taxes due or potentially payable in connection with any transaction involving this Agreement, and to take such other action as the Committee may deem advisable to enable the Company and the Grantee to satisfy obligations for the payment of withholding taxes and other tax obligations relating to this Agreement. This authority shall include authority to withhold or receive Stock or other property and to make cash payments in respect thereof in satisfaction of the Grantee’s tax obligations, either on a mandatory or elective basis in the discretion of the Committee. The Company may, in its sole discretion, withhold any such taxes from any other cash remuneration otherwise paid by the Company to the Grantee. 

 

*     *     *     *

 

IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its duly authorized officer, and the Grantee, to evidence his consent and approval of all the terms hereof, has duly executed this Agreement, on the date(s) set forth below. 

 

	
Lighting Science Group Corporation
	
Parties
	
Grantee: 

	  	
Signature
	
 

	  	
Printed Name
	  
	  	
Title
	X
	  	
Date
	  
	  	
Address
	  

	  	
Telephone
	  

  

 

 

 

 

Exhibit B

 

 Form of Incentive Stock Option Agreement

 

	
 
	
Changing the way the world experiences light

 

THE SHARES ISSUABLE PURSUANT TO THIS AGREEMENT ARE SUBJECT TO THE PROVISIONS OF THE COMPANY’S 2012 AMENDED AND RESTATED EQUITY-BASED COMPENSATION PLAN AND THIS AGREEMENT IS ENTERED INTO PURSUANT THERETO.

 

 

LIGHTING SCIENCE GROUP CORPORATION
2012 AMENDED AND RESTATED EQUITY-BASED COMPENSATION PLAN
EMPLOYEE INCENTIVE STOCK OPTION AGREEMENT

 

This Agreement is made and entered into as of the Grant Date (as defined below) by and between Lighting Science Group Corporation, a Delaware corporation (the “Company”) and Wayne Nesbit (the “Optionee”):

 

WHEREAS, the Company in order to induce you to enter into and/or continue in service to the Company and to contribute to the success of the Company, and in connection with that certain Employment Terms and Conditions agreement to be entered into between the Company and the Optionee in connection herewith, agrees to grant you an option to acquire a priority interest in the Company through the purchase of shares of stock of the Company;

 

WHEREAS, the Company adopted the Lighting Science Group Corporation 2012 Amended and Restated Equity-Based Compensation Plan as it may be amended from time to time (the “Plan”) under which the Company is authorized to grant stock options to certain employees of the Company;

 

WHEREAS, a copy of the Plan has been furnished to you and shall be deemed a part of this common stock option agreement (the “Agreement”) as if fully set forth herein; and

 

WHEREAS, you desire to accept the option created pursuant to the Agreement.

 

NOW, THEREFORE, in consideration of the mutual covenants set forth herein and for other valuable consideration hereinafter set forth, the parties agree as follows:

 

	 	
1.
	
The Grant. Subject to the conditions set forth below, the Company hereby grants to you, effective as of__________, 2014 (“Grant Date”), as a matter of separate inducement and not in lieu of any salary or other compensation for your services for the Company, the right and option to purchase (the “Option”), in accordance with the terms and conditions set forth herein and in the Plan, an aggregate of ______________________________(_________) shares of the Company’s common stock, par value $0.001 per share (the “Stock” and the shares of Stock subject to the Option the “Option Shares”), at the Exercise Price (as hereinafter defined). As used herein, the term “Exercise Price” shall mean a price equal to ___________________($_____) per share, subject to the adjustments and limitations set forth herein and in the Plan. The Exercise Price as of the Grant Date shall not be less than the Fair Market Value of the Stock (or less than one hundred ten percent (110%) of the Fair Market Value in the case of a ten percent (10%) or more stockholder as provided in Section 422 of the Code). To the extent allowed by law, the Option granted hereunder is intended to constitute an Option which is designed pursuant to Section 422 of the Code, subject to any required stockholder approval on or before December 31, 2015. You should consult with your tax advisor concerning the proper reporting of any federal, state or local tax liability that may arise as a result of the grant or exercise of the Option.

  

 

 

 

 

	 	
2.
	
Exercise.

 

(a)     For purposes of this Agreement, the Option Shares shall be deemed “Nonvested Shares” unless and until they have become “Vested Shares.” The Option shall in all events terminate at the close of business on the tenth (10th) anniversary of the date of this Agreement. Subject to other terms and conditions set forth herein, the Option may be exercised in cumulative installments as follows:

 

	
On or After the Following Vesting Date
	
Cumulative Percentage of Shares as to 

Which Option is Exercisable

	
First Anniversary of the Grant Date
	
25%

	
Second Anniversary of the Grant Date
	
50%

	
Third Anniversary of the Grant Date
	
75%

	
Fourth Anniversary of the Grant Date
	
100%

 

Option Shares shall constitute Vested Shares once they are exercisable.

 

(b)     Subject to the relevant provisions and limitations contained herein and in the Plan, you may exercise the Option to purchase all or a portion of the applicable number of Vested Shares at any time prior to the termination of the Option pursuant to this Option Agreement. In no event shall you be entitled to exercise the Option for any Nonvested Shares or for a fraction of a Vested Share.

 

(c)     Notwithstanding any other provision of this Agreement, as of the business day immediately preceding a Change in Control, all Nonvested Shares shall become Vested Shares.

 

(d)     Any exercise by you of the Option shall be in writing addressed to the Secretary of the Company at its principal place of business. Exercise of the Option shall be made by delivery to the Company by you (or other person entitled to exercise the Option as provided hereunder) of (i) an executed “Notice of Exercise of Stock Option and Record of Stock Transfer,” in the form attached hereto as Exhibit A and incorporated herein by reference, and (ii) payment of the aggregate purchase price for shares purchased pursuant to the exercise.

  

 

 

 

 

(e)     Payment of the Exercise Price may be made, at your election, in cash, by certified or official bank check or by wire transfer of immediately available funds, or subject to the Company’s approval by delivery to the Company of a number of shares of Stock having a fair market value as of the date of exercise equal to the Exercise Price.

 

(f)     In the event that you shall cease to be employed by the Company or any Subsidiary or parent thereof for any reason other than as a result of a Cause termination, your death or your Disability, or a termination of your employment by the Company without Cause, the Option may only be exercised within 90 days after the date on which you ceased to be so employed, and only to the same extent that you were entitled to exercise the Option on the date on which you ceased to be so employed and had not previously done so.

 

(g)     In the event that you shall cease to be employed by the Company or any Subsidiary or parent thereof due to a Cause termination, no portion of the Option shall continue to be exercisable as of your date of termination.

 

(h)     In the event that the Company terminates your employment without Cause, the Option, with respect to your unexercised Vested Shares, may only be exercised within the 90 days after the date on which you ceased to be so employed. The Option, with respect to all other Nonvested Shares, shall immediately be forfeited.

 

(i)     In the event that you shall cease to be employed by the Company or any Subsidiary or parent thereof by reason of Disability, the Option may only be exercised within one year after the date you ceased to be so employed, and only to the same extent that you were entitled to exercise the Option on the date on which you ceased to be so employed by reason of such Disability and had not previously done so.

 

(j)     In the event that you shall die while employed by the Company or any Subsidiary or parent thereof, the Option may be exercised at any time prior to its termination as provided in Section 2(a). In such event, the Option may be exercised during such period by the executor or administrator of your estate or by any person who shall have acquired the Option through bequest or inheritance, but only to the same extent that you were entitled to exercise the Option immediately prior to the time of your death and you had not previously done so.

 

(k)     If you are on leave of absence for any reason, the Company may, in its sole discretion, determine that you will be considered to still be in the employ of or providing services for the Company, provided that rights to the Option Shares will be limited to the extent to which those rights were earned or vested when the leave or absence began (except to the extent vesting credit is required by applicable law). Notwithstanding the foregoing, you shall only be treated as continuing in the employ of the Company while you are on a leave of absence if the period of your leave does not exceed three months, or if longer, so long as your rights to reemployment with the Company are provided by either statute or contract. If your period of leave exceeds three months and your right to reemployment is not provided either by statute or contract, your employment with the Company will be deemed to terminate on the first day immediately following such three-month period (and your right to exercise the Option following your termination of employment will be governed by Section 2(g), (h), (i) and (j) as applicable).

  

 

 

 

 

(l)     The terms and provisions of the employment agreement, if any, between you and the Company or any Subsidiary (the “Employment Agreement”) that relate to or affect the Option are incorporated herein by reference. Notwithstanding the foregoing provisions of this Section 2, in the event of any conflict or inconsistency between the terms and conditions of this Section 2 and the terms and conditions of the Employment Agreement, the terms and conditions of the Employment Agreement shall be controlling.

 

	 	
3.
	
Transferability. The Option, and any rights or interests therein will be transferable by you only by will or the laws of descent and distribution.

 

	 	
4.
	
Registration. From time to time, the Board and appropriate officers of the Company shall and are authorized to take whatever actions are necessary to file required documents with governmental authorities, stock exchanges, and other appropriate persons to make shares of Stock available for issuance pursuant to the exercise of Options and subsequent lapse of restrictions. 

 

	 	
5.
	
Withholding Taxes. The Committee may, in its discretion, require you to pay to the Company at the time of the exercise of an Option or thereafter, the amount that the Committee deems necessary to satisfy the Company’s current or future obligation to withhold federal, state or local income or other taxes that you incur by exercising an Option. In connection with such an event requiring tax withholding, you may, subject to the provisions of this Section 5, (a) direct the Company to withhold from the shares of Stock to be issued to you the number of shares necessary to satisfy the Company’s obligation to withhold taxes, that determination to be based on the shares’ fair market value as of the date of exercise; (b) deliver to the Company sufficient shares of Stock (based upon the fair market value as of the date of such delivery) to satisfy the Company’s tax withholding obligation, which tax withholding obligation is based on the shares’ fair market value as of the date of exercise; or (c) deliver sufficient cash to the Company to satisfy its tax withholding obligations. If you elect to use a Stock withholding feature you must make the election at the time and in the manner that the Committee prescribes. The Committee may, at its sole option, deny your request to satisfy withholding obligations through Stock instead of cash. In the event the Committee subsequently determines that the aggregate fair market value (as determined above) of any shares of Stock withheld or delivered as payment of any tax withholding obligation is insufficient to discharge that tax withholding obligation, then you shall pay to the Company, immediately upon the Committee’s request, the amount of that deficiency in the form of payment requested by the Committee.

 

	 	
6.
	
Adjustments. The terms of the Option shall be subject to adjustment from time to time, in accordance with the following provisions:

 

(a)     If at any time, or from time to time, the Company shall subdivide as a whole (by reclassification, by a Stock split, by the issuance of a distribution on Stock payable in Stock or otherwise) the number of shares of Stock then outstanding into a greater number of shares of Stock, then (i) the number of shares of Stock (or other kind of securities) that may be acquired under the Option shall be increased proportionately and (ii) the price (including exercise price) for each share of Stock (or other kind of shares or securities) subject to then outstanding Options shall be reduced proportionately, without changing the aggregate purchase price or value as to which outstanding Options remain exercisable or subject to restrictions.

  

 

 

 

 

(b)     If at any time, or from time to time, the Company shall consolidate as a whole (by reclassification, reverse Stock split or otherwise) the number of shares of Stock then outstanding into a lesser number of shares of Stock, (i) the number of shares of Stock (or other kind of shares or securities) that may be acquired under the Option shall be decreased proportionately and (ii) the price (including exercise price) for each share of Stock (or other kind of shares or securities) subject to then outstanding Options shall be increased proportionately, without changing the aggregate purchase price or value as to which outstanding Options remain exercisable or subject to restrictions.

 

(c)     Whenever the number of shares of Stock subject to the Option and the price for each share of Stock subject to the Option are required to be adjusted as provided in this Section 6, the Committee shall promptly prepare a notice setting forth, in reasonable detail, the event requiring adjustment, the amount of the adjustment, the method by which such adjustment was calculated, and the change in price and the number of shares of Stock, other securities, cash, or property purchasable and held by you pursuant to the exercise of the Option or subject to the Option after giving effect to the adjustments. The Committee shall promptly give you such a notice.

 

(d)     Adjustments under this Section 6 shall be made by the Committee, and its determination as to what adjustments shall be made and the extent thereof shall be final, binding, and conclusive. No fractional interest shall be issued under the Plan on account of any such adjustments.

 

	 	
7.
	
Furnish Information. You agree to furnish to the Company all information requested by the Company to enable it to comply with any reporting or other requirement imposed upon the Company by or under any applicable statute or regulation.

 

	 	
8.
	
Remedies. The Company shall be entitled to recover from you reasonable attorneys’ fees incurred in connection with the enforcement of the terms and provisions of this Agreement whether by an action to enforce specific performance or for damages for its breach or otherwise.

 

	 	
9.
	
No Liability for Good Faith Determinations. The Company and the members of the Committee and the Board shall not be liable for any act, omission or determination taken or made in good faith with respect to this Agreement or the Option granted hereunder. 

 

	 	
10.
	
Execution of Receipts and Releases. Any payment of cash or any issuance or transfer of shares of Stock or other property to you, or to your legal representative, heir, legatee or distributee, in accordance with the provisions hereof, shall, to the extent thereof, be in full satisfaction of all claims of such persons hereunder. The Company may require you or your legal representative, heir, legatee or distributee, as a condition precedent to such payment or issuance, to execute a release and receipt therefore in such form as it shall determine. 

  

 

 

 

 

	 	
11.
	
No Guarantee of Interests. The Board and the Company do not guarantee the Stock of the Company from loss or depreciation. 

 

	 	
12.
	
Company Records. Records of the Company regarding your service and other matters may be relied on by the parties as conclusive evidence of the contents thereof unless either party can demonstrate to the contrary. 

 

	
 
	
13.
	
 

 

	 	
14.
	
Notice. All notices required or permitted under this Agreement must be in writing and personally delivered or sent by mail and shall be deemed to be delivered on the date on which it is actually received by the person to whom it is properly addressed or if earlier the date it is deposited, postage paid in the United States mail. A notice shall be effective when actually received by the appropriate Company representative, in writing and in conformance with this Agreement and the Plan. 

 

	 	
15.
	
Waiver of Notice. Any person entitled to notice hereunder may, by written form, waive such notice.

 

	 	
16.
	
Information Confidential. As partial consideration for the granting of this Option, you agree that you will keep confidential all information and knowledge that you have relating to the manner and amount of your participation in the Plan; provided, however, that such information may be disclosed as required by law and may be given in confidence to your spouse, tax and financial advisors, or a financial institution to the extent that such information is necessary to obtain a loan.

 

	 	
17.
	
Successors. This Agreement shall be binding upon you, your legal representatives, heirs, legatees and distributees, and upon the Company, its successors and assigns.

 

	 	
18.
	
Headings. The titles and headings of paragraphs are included for convenience of reference only and are not to be considered in construction of the provisions hereof.

 

	 	
19.
	
Governing Law. All questions arising with respect to the provisions of this Agreement shall be determined by application of the laws of the State of Delaware except to the extent Delaware law is preempted by federal law and without application of Delaware’s choice of law provisions. 

 

	 	
20.
	
Word Usage. Words used in the masculine shall apply to the feminine where applicable, and wherever the context of this Agreement dictates, the plural shall be read as the singular and the singular as the plural.

 

	 	
21.
	
No Assignment. You may not assign this Agreement or any of your rights under this Agreement without the Company’s prior written consent, and any purported or attempted assignment without such prior written consent shall be void.

  

 

 

 

 

	 	
22.
	
Specific Performance. The parties acknowledge that remedies at law will be inadequate remedies for breach of this Agreement and consequently agree that this Agreement shall be enforceable by specific performance. The remedy of specific performance shall be cumulative of all of the rights and remedies at law or in equity of the parties under this Agreement.

 

	 	
23.
	
Relationship to the Plan. This Agreement is subject to all the terms, conditions, limitations and restrictions contained in the Plan. In the event of any conflict or inconsistency between the terms hereof and the terms of the Plan, the terms of the Plan shall be controlling.

 

23.     Option Amendment. The Option may be amended by the Board of the Company or by the Committee at any time (a) if the Board or the Committee determines, in its sole discretion, that amendment is necessary or advisable in light of any addition to or change in any federal or state, tax or securities law or other law or regulation, which change occurs after the Grant Date and by its terms applies to the Option; or (b) other than in the circumstances described in clause (a) or provided in the Plan, with your consent. The foregoing notwithstanding, the Committee may, in its sole discretion, cancel the Option at any time prior to your exercise of the Option if, in the opinion of the Committee, you engage in activities contrary to the interests of the Company.

 

24.     Termination for Cause. For purposes of this Agreement, “Cause” shall have the definition ascribed to it in Section 4(e) of that certain employment agreement between you and the Company, dated as of September 15, 2014.

 

(a)

 

Any termination of your employment by the Company for Cause shall be communicated to you in a written notice of termination which shall set forth in reasonable detail the facts and circumstances, if any, claimed to provide a basis for such termination. For purposes of this definition of Cause, the Company shall mean Lighting Science Group Corporation, a Delaware corporation, or if a Change of Control occurs and on or after the date of the Change of Control Lighting Science Group Corporation is merged, reorganized or otherwise consolidated with or into another Person, the Person surviving the merger, reorganization or consolidation.

 

25.     Incentive Stock Option. The portion, and only such portion, of this Option, if any, which is attributable to Option Shares which become purchasable during a calendar year, together with the portion of any other option attributable to any shares which become purchasable, pursuant to any other plan maintained by the Company pursuant to section 422 of the Code, during such calendar year which together have a Fair Market Value, as of the Grant Date in the case of Option Shares or the date of grant with respect to shares obtainable pursuant to another plan maintained by the Company pursuant to Section 422 of the Code, which exceeds $100,000, shall constitute a portion of the Option or options which shall be reclassified as options which are not Incentive Stock Options pursuant to Section 422(d) of the Code.

  

 

 

 

 

26.     Disqualifying Disposition. In the event that Stock acquired upon exercise of this Option is disposed of by the Optionee in a “Disqualifying Disposition,” the Optionee shall notify the Company in writing within thirty (30) days after such disposition of the date and terms of such disposition. For purposes hereof, “Disqualifying Disposition” shall mean a disposition of Stock that is acquired upon the exercise of this Option (and that is not deemed granted pursuant to a option which is not an Incentive Stock Option under Section 25) prior to the expiration of either two (2) years from the Grant Date of this Option or one (1) year from the transfer of shares to the Optionee pursuant to the exercise of this Option.

 

27.     Entire Agreement. This Agreement constitutes the entire agreement between the parties concerning the grant of stock and/or options to the Optionee. If Optionee was previously offered or promised stock grants and/or options (the “prior grants”) that were never issued and/or the Optionee was previously given agreements with respect to the prior grants that were never signed, then this Agreement supersedes the prior grants and any other offers and/or promises relating to the prior grants, and this Option is granted to the Optionee in lieu of the prior grants. 

 

 

 

* * * * * * * *

 

 

 

 

 

Please indicate your acceptance of all the terms and conditions of the award and the Plan by signing and returning a copy of this Agreement. This Agreement may be executed in two or more counterparts, all of which when taken together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party, it being understood that all parties need not sign the same counterpart. In the event that any signature is delivered by facsimile transmission or by e-mail delivery of a “.pdf” or other electronic format data file, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile, “.pdf” or other electronic format signature page were an original thereof.

 

 

	
 
	
LIGHTING SCIENCE GROUP CORPORATION 

	
 
	
 
	
 

	
 
	
 
	
 

	
 
	
 
	
 

	
 
	
By: 
	
 

	
 
	
 
	
 

	
 
	
Name: 
	
 

	
 
	
 
	
 

	
 
	
Title: 
	
 

	
ACCEPTED: 
	
 

	 	 
	 	 
	Signature of Optionee	 
	 	 
	 	 
	
Name of Optionee (Please Print) 
	
 

	 	 
	
Date: _________________, 201__ 
	
 

   

 

 

 

 

EXHIBIT A

 

LIGHTING SCIENCE GROUP CORPORATION
2012 AMENDED AND RESTATED EQUITY-BASED COMPENSATION PLAN

 

Notice of Exercise of Option and
Record of Stock Transfer

 

PLEASE PRINT:

 

	
1.     TODAY’S DATE:  
	
 

	
2.     OPTION HOLDER: 
	
 

	
NAME: 
	
 

	
MAILING ADDRESS: 
	
 

	
 
	
 

	
 
	
 

	
SOCIAL SECURITY NUMBER: 
	
 

 

TO:     Attention:                                                                          

 

	 	
Re:
	
Notice of Exercise of Option for Lighting Science Group Corporation (the “Company”) Common Stock par value $.001 per share (“Stock”) pursuant to the Lighting Science Group Corporation 2012 Amended and Restated Equity-Based Compensation Plan (the “Plan”)

 

I hereby exercise my option to acquire _______ shares of Stock, at my exercise price per share of $___________________. Enclosed is the original of my Stock Option Agreement evidencing my Option hereby exercised. Any capitalized terms not defined herein shall have the meaning set forth in the Plan.

 

Select and complete the appropriate payment provision from the following alternatives.

 

	
____1.
	
My personal check in the amount of $__________ (the exercise price per share times the number of option shares exercised) as payment in full of the total exercise price has been attached hereto.

 

	
____2.
	
I desire to pay the exercise price in full with shares of Stock that I currently own. Certificates representing __________ shares of Stock of the Company, duly endorsed for transfer to the Company have been attached.

 

	
____3.
	
I desire to pay part of the exercise price with shares of Stock that I currently own. My personal check for $__________ and certificates representing __________ shares of Stock, duly endorsed for transfer to the Company have been attached hereto. 

 

I understand that any election pursuant to Items 2-3 above is subject to approval by the Committee administering the Plan.

  

 

 

 

 

I hereby represent that I have previously received a Stock Option Agreement and a copy of the Plan from the Company and that I understand the terms and restrictions described herein and therein and agree to be bound by the terms of each such document.

 

 

	
 
	
 
	
 

	
 
	
(Signature) 
	
 

  

Receipt of Notice Acknowledged:

 

	
 
	
 
	
 

	
Date: 
	
 
	
 

	
 
	
 
	
 

	
Receipt of Payment in Full Acknowledged: 
	
 
	
 

	
 
	
 
	
 

	
 
	
 
	
 

	
 
	
 
	
 

	
Date: 
	
 
	
 

	
 
	
 
	
 

	
Receipt of Committee Approval if Election under Items 2-4.
	
 
	
 

	
 
	
 
	
 

	
 
	
 
	
 

	
 
	
 
	
 

	
Date: 
	
 
	
 

 

NOTE: If exercising the stock option represented by the enclosed Stock Option Agreement to purchase less than all of the shares to which the option relates, the original agreement will be returned with an appropriate notation evidencing the shares for which the Option has been exercised.

 

 

 

 

 

RECEIPT

 

Receipt is hereby acknowledged of the delivery to me by Lighting Science Group Corporation, on the __________ day of ___________________________, 20___ of Stock Certificates for __________ shares of Stock purchased by me pursuant to the terms and conditions of the Lighting Science Group Corporation 2012 Amended and Restated Equity-Based Compensation Plan referred to above, which shares were transferred to me on the Company’s stock record books on the ________ day of ____________________, 20___.

 

 

	
 
	
 
	
 

	
 
	
(Signature) 
	
 

 

 

 

 

 

Exhibit C

 

Form of Non-Qualified Stock Option Agreement

 

	
 
	
Changing the way the world experiences light 

 

THE SHARES ISSUABLE PURSUANT TO THIS AGREEMENT ARE SUBJECT TO THE PROVISIONS OF THE COMPANY’S 2012 AMENDED AND RESTATED EQUITY-BASED COMPENSATION PLAN AND THIS AGREEMENT IS ENTERED INTO PURSUANT THERETO.

 

 

LIGHTING SCIENCE GROUP CORPORATION
2012 AMENDED AND RESTATED EQUITY-BASED COMPENSATION PLAN
NONQUALIFIED STOCK OPTION AGREEMENT

 

This Agreement is made and entered into as of the Grant Date (as defined below) by and between Lighting Science Group Corporation, a Delaware corporation (the “Company”) and Wayne Nesbit (the “Optionee”):

 

WHEREAS, the Company in order to induce you to enter into and continue in service to the Company and to contribute to the success of the Company, and in connection with that certain Employment Terms and Conditions agreement to be entered into between the Company and the Optionee in connection herewith, agrees to grant you an option to acquire a priority interest in the Company through the purchase of shares of stock of the Company;

 

WHEREAS, the Company adopted the Lighting Science Group Corporation 2012 Amended and Restated Equity-Based Compensation Plan as it may be amended from time to time (the “Plan”) under which the Company is authorized to grant stock options to certain employees, contractors and directors of the Company;

 

WHEREAS, a copy of the Plan has been furnished to you and shall be deemed a part of this common stock option agreement (the “Agreement”) as if fully set forth herein; and

 

WHEREAS, you desire to accept the option created pursuant to the Agreement.

 

NOW, THEREFORE, in consideration of the mutual covenants set forth herein and for other valuable consideration hereinafter set forth, the parties agree as follows:

 

	 	
1.
	
The Grant. Subject to the conditions set forth below and execution by the Optionee of that certain Employment Terms and Conditions agreement in connection herewith, the Company hereby grants to you, effective as of _____________ (“Grant Date”), as a matter of separate inducement and not in lieu of any salary or other compensation for your services for the Company, the right and option to purchase (the “Option”), in accordance with the terms and conditions set forth herein and in the Plan, an aggregate of ______________________ (_______) shares of the Company’s common stock, par value $0.001 per share (the “Stock” and the shares of Stock subject to the Option the “Option Shares”), at the Exercise Price (as hereinafter defined). As used herein, the term “Exercise Price” shall mean a price equal to ___________________ ($_____) per share, subject to the adjustments and limitations set forth herein and in the Plan. The Exercise Price as of the Grant Date shall not be less than the Fair Market Value of the Stock. The Option granted hereunder is intended to comply with the provisions governing nonqualified stock options under the Final Treasury Regulations issued on April 17, 2007, in order to exempt this Option from the application of Section 409A of the Code. You should consult with your tax advisor concerning the proper reporting of any federal, state or local tax liability that may arise as a result of the grant or exercise of the Option.

  

 

 

 

 

	 	
2.
	
Exercise.

 

(a)     For purposes of this Agreement, the Option Shares shall be deemed “Nonvested Shares” unless and until they have become “Vested Shares.” The Option shall in all events terminate at the close of business on the tenth (10th) anniversary of the date of this Agreement. Subject to other terms and conditions set forth herein, the Option may be exercised in cumulative installments as follows:

 

	
On or After Each of the Following Vesting Dates
	
Cumulative Percentage of Shares as to 

Which Option is Exercisable

	
First Anniversary of the Grant Date
	
25%

	
Second Anniversary of the Grant Date
	
50%

	
Third Anniversary of the Grant Date
	
75%

	
Fourth Anniversary of the Grant Date
	
100%

 

Option Shares shall constitute Vested Shares once they are exercisable.

 

(b)     Subject to the relevant provisions and limitations contained herein and in the Plan, you may exercise the Option to purchase all or a portion of the applicable number of Vested Shares at any time prior to the termination of the Option pursuant to this Option Agreement. In no event shall you be entitled to exercise the Option for any Nonvested Shares or for a fraction of a Vested Share.

 

(c)     Notwithstanding any other provision of this Agreement, as of the business day immediately preceding a Change in Control, all Nonvested Shares shall become Vested Shares. 

 

(d)     Notwithstanding any other provision of this Agreement upon your termination of employment (or, if you are a consultant, termination of services to the Company as a consultant) due to your Retirement as determined by the Board in their sole and absolute discretion, all Nonvested Shares shall become Vested Shares.

  

 

 

 

 

(e)     Any exercise by you of the Option shall be in writing addressed to the Secretary of the Company at its principal place of business. Exercise of the Option shall be made by delivery to the Company by you (or other person entitled to exercise the Option as provided hereunder) of (i) an executed “Notice of Exercise of Stock Option and Record of Stock Transfer,” in the form attached hereto as Exhibit A and incorporated herein by reference, and (ii) payment of the aggregate purchase price for shares purchased pursuant to the exercise.

 

(f)     Payment of the Exercise Price may be made, at your election, in cash, by certified or official bank check or by wire transfer of immediately available funds, or subject to the Company’s approval by delivery to the Company of a number of shares of Stock having a fair market value as of the date of exercise equal to the Exercise Price.

 

(g)     In the event that you shall cease to be employed by (or, with respect to consultants, cease to provide services to) the Company or any Subsidiary or parent thereof for any reason other than as a result of a Cause termination, your death, your Disability, or a termination of your employment (or, with respect to consultants, termination of your services as a consultant) by the Company without Cause, the Option may only be exercised within 90 days after the date on which you ceased to be so employed (or, with respect to consultants, ceased to so provide services), and only to the same extent that you were entitled to exercise the Option on the date on which you ceased to be so employed (or provide services) and had not previously done so.

 

(h)     In the event that you shall cease to be employed by (or, with respect to consultants, cease to provide services to) the Company or any Subsidiary or parent thereof due to a Cause termination, no portion of the Option shall continue to be exercisable as of your date of termination.

 

(i)     In the event that the Company terminates your employment (or, with respect to consultants, terminates your services as a consultant) without Cause, the Option, with respect to your unexercised Vested Shares, may only be exercised within the one year period immediately following the date on which you ceased to be employed (or, with respect to consultants, ceased to provide services as a consultant). The Option, with respect to all Nonvested Shares, shall immediately be forfeited.

 

(j)     In the event that you shall cease to be employed by (or, with respect to consultants, cease to provide services to) the Company or any Subsidiary or parent thereof by reason of Disability, the Option may only be exercised within one year after the date you ceased to be so employed (or, with respect to consultants, ceased to provide services as a consultant), and only to the same extent that you were entitled to exercise the Option on the date on which you ceased to be so employed (or provided services) by reason of such Disability and had not previously done so.

 

(k)     In the event that you shall die while employed by (or, with respect to consultants, providing services to) the Company or any Subsidiary or parent thereof, the Option may be exercised at any time prior to its termination as provided in Section 2(a). In such event, the Option may be exercised during such period by the executor or administrator of your estate or by any person who shall have acquired the Option through bequest or inheritance, but only to the same extent that you were entitled to exercise the Option immediately prior to the time of your death and you had not previously done so.

  

 

 

 

 

(l)     If you are on leave of absence for any reason, the Company may, in its sole discretion, determine that you will be considered to still be in the employ of or providing services for the Company, provided that rights to the Option Shares will be limited to the extent to which those rights were earned or vested when the leave or absence began. Notwithstanding the foregoing, you shall only be treated as continuing in the employ of or providing services to the Company while you are on a leave of absence if the period of your leave does not exceed three months, or if longer, so long as your rights to reemployment with the Company are provided by either statute or contract. If your period of leave exceeds three months and your right to reemployment is not provided either by statute or contract, your employment (or with respect to consultants, your services) with the Company will be deemed to terminate on the first day immediately following such three-month period (and your right to exercise the Option following your termination of employment or services will be governed by Section 2(g), (h), (i) and (j) as applicable).

 

(m)     The terms and provisions of the employment agreement, if any, between you and the Company or any Subsidiary (the “Employment Agreement”) that relate to or affect the Option are incorporated herein by reference. Notwithstanding the foregoing provisions of this Section 2, in the event of any conflict or inconsistency between the terms and conditions of this Section 2 and the terms and conditions of the Employment Agreement, the terms and conditions of the Employment Agreement shall be controlling.

 

Transferability. The Option, and any rights or interests therein will be transferable by you only by will or the laws of descent and distribution. 

 

	 	
4.
	
Registration. From time to time, the Board and appropriate officers of the Company shall and are authorized to take whatever actions are necessary to file required documents with governmental authorities, stock exchanges, and other appropriate persons to make shares of Stock available for issuance pursuant to the exercise of Options and subsequent lapse of restrictions. 

 

	 	
5.
	
Withholding Taxes. The Committee may, in its discretion, require you to pay to the Company at the time of the exercise of an Option or thereafter, the amount that the Committee deems necessary to satisfy the Company’s current or future obligation to withhold federal, state or local income or other taxes that you incur by exercising an Option. In connection with such an event requiring tax withholding, you may, subject to the provisions of this Section 5, (a) direct the Company to withhold from the shares of Stock to be issued to you the number of shares necessary to satisfy the Company’s obligation to withhold taxes, that determination to be based on the shares’ fair market value as of the date of exercise; (b) deliver to the Company sufficient shares of Stock (based upon the fair market value as of the date of such delivery) to satisfy the Company’s tax withholding obligation, which tax withholding obligation is based on the shares’ fair market value as of the date of exercise; or (c) deliver sufficient cash to the Company to satisfy its tax withholding obligations. If you elect to use a Stock withholding feature you must make the election at the time and in the manner that the Committee prescribes. The Committee may, at its sole option, deny your request to satisfy withholding obligations through Stock instead of cash. In the event the Committee subsequently determines that the aggregate fair market value (as determined above) of any shares of Stock withheld or delivered as payment of any tax withholding obligation is insufficient to discharge that tax withholding obligation, then you shall pay to the Company, immediately upon the Committee’s request, the amount of that deficiency in the form of payment requested by the Committee.

  

 

 

 

 

	 	
6.
	
Adjustments. The terms of the Option shall be subject to adjustment from time to time, in accordance with the following provisions:

 

(a)     If at any time, or from time to time, the Company shall subdivide as a whole (by reclassification, by a Stock split, by the issuance of a distribution on Stock payable in Stock or otherwise) the number of shares of Stock then outstanding into a greater number of shares of Stock, then (i) the number of shares of Stock (or other kind of securities) that may be acquired under the Option shall be increased proportionately and (ii) the price (including exercise price) for each share of Stock (or other kind of shares or securities) subject to then outstanding Options shall be reduced proportionately, without changing the aggregate purchase price or value as to which outstanding Options remain exercisable or subject to restrictions.

 

(b)     If at any time, or from time to time, the Company shall consolidate as a whole (by reclassification, reverse Stock split or otherwise) the number of shares of Stock then outstanding into a lesser number of shares of Stock, (i) the number of shares of Stock (or other kind of shares or securities) that may be acquired under the Option shall be decreased proportionately and (ii) the price (including exercise price) for each share of Stock (or other kind of shares or securities) subject to then outstanding Options shall be increased proportionately, without changing the aggregate purchase price or value as to which outstanding Options remain exercisable or subject to restrictions.

 

(c)     Whenever the number of shares of Stock subject to the Option and the price for each share of Stock subject to the Option are required to be adjusted as provided in this Section 6, the Committee shall promptly prepare a notice setting forth, in reasonable detail, the event requiring adjustment, the amount of the adjustment, the method by which such adjustment was calculated, and the change in price and the number of shares of Stock, other securities, cash, or property purchasable and held by you pursuant to the exercise of the Option or subject to the Option after giving effect to the adjustments. The Committee shall promptly give you such a notice.

 

(d)     Adjustments under this Section 6 shall be made by the Committee, and its determination as to what adjustments shall be made and the extent thereof shall be final, binding, and conclusive. No fractional interest shall be issued under the Plan on account of any such adjustments.

 

	 	
7.
	
Furnish Information. You agree to furnish to the Company all information requested by the Company to enable it to comply with any reporting or other requirement imposed upon the Company by or under any applicable statute or regulation.

 

	 	
8.
	
Remedies. The Company shall be entitled to recover from you reasonable attorneys’ fees incurred in connection with the enforcement of the terms and provisions of this Agreement whether by an action to enforce specific performance or for damages for its breach or otherwise.

  

 

 

 

 

	 	
9.
	
No Liability for Good Faith Determinations. The Company and the members of the Committee and the Board shall not be liable for any act, omission or determination taken or made in good faith with respect to this Agreement or the Option granted hereunder. 

 

	 	
10.
	
Execution of Receipts and Releases. Any payment of cash or any issuance or transfer of shares of Stock or other property to you, or to your legal representative, heir, legatee or distributee, in accordance with the provisions hereof, shall, to the extent thereof, be in full satisfaction of all claims of such persons hereunder. The Company may require you or your legal representative, heir, legatee or distributee, as a condition precedent to such payment or issuance, to execute a release and receipt therefore in such form as it shall determine. 

 

	 	
11.
	
No Guarantee of Interests. The Board and the Company do not guarantee the Stock of the Company from loss or depreciation. 

 

	 	
12.
	
Company Records. Records of the Company regarding your service and other matters may be relied on by the parties as conclusive evidence of the contents thereof unless either party can demonstrate to the contrary. 

 

	 	
13.
	
Notice. All notices required or permitted under this Agreement must be in writing and personally delivered or sent by mail and shall be deemed to be delivered on the date on which it is actually received by the person to whom it is properly addressed or if earlier the date it is deposited, postage paid in the United States mail. A notice shall be effective when actually received by the appropriate Company representative, in writing and in conformance with this Agreement and the Plan. 

 

	 	
14.
	
Waiver of Notice. Any person entitled to notice hereunder may, by written form, waive such notice.

 

	 	
15.
	
Information Confidential. As partial consideration for the granting of this Option, you agree that you will keep confidential all information and knowledge that you have relating to the manner and amount of your participation in the Plan; provided, however, that such information may be disclosed as required by law and may be given in confidence to your spouse, tax and financial advisors, or a financial institution to the extent that such information is necessary to obtain a loan.

 

	 	
16.
	
Successors. This Agreement shall be binding upon you, your legal representatives, heirs, legatees and distributees, and upon the Company, its successors and assigns.

 

	 	
17.
	
Headings. The titles and headings of paragraphs are included for convenience of reference only and are not to be considered in construction of the provisions hereof.

 

	 	
18.
	
Governing Law. All questions arising with respect to the provisions of this Agreement shall be determined by application of the laws of the State of Delaware except to the extent Delaware law is preempted by federal law and without application of Delaware’s choice of law provisions. 

  

 

 

 

 

	 	
19.
	
Word Usage. Words used in the masculine shall apply to the feminine where applicable, and wherever the context of this Agreement dictates, the plural shall be read as the singular and the singular as the plural.

 

	 	
20.
	
No Assignment. You may not assign this Agreement or any of your rights under this Agreement without the Company’s prior written consent, and any purported or attempted assignment without such prior written consent shall be void.

 

	 	
21.
	
Specific Performance. The parties acknowledge that remedies at law will be inadequate remedies for breach of this Agreement and consequently agree that this Agreement shall be enforceable by specific performance. The remedy of specific performance shall be cumulative of all of the rights and remedies at law or in equity of the parties under this Agreement.

 

	 	
22.
	
Relationship to the Plan. This Agreement is subject to all the terms, conditions, limitations and restrictions contained in the Plan. In the event of any conflict or inconsistency between the terms hereof and the terms of the Plan, the terms of the Plan shall be controlling.

 

23.     Option Amendment. The Option may be amended by the Board of the Company or by the Committee at any time (a) if the Board or the Committee determines, in its sole discretion, that amendment is necessary or advisable in light of any addition to or change in any federal or state, tax or securities law or other law or regulation, which change occurs after the Grant Date and by its terms applies to the Option; or (b) other than in the circumstances described in clause (a) or provided in the Plan, with your consent. The foregoing notwithstanding, the Committee may, in its sole discretion, cancel the Option at any time prior to your exercise of the Option if, in the opinion of the Committee, you engage in activities contrary to the interests of the Company.

 

24.     Termination for Cause. For purposes of this Agreement, “Cause” shall have the definition ascribed to it in Section 4(e) of that certain employment agreement between you and the Company, dated as of September 15, 2014.

Any termination of your employment (or services as a consultant) by the Company for Cause shall be communicated to you in a written notice of termination which shall set forth in reasonable detail the facts and circumstances, if any, claimed to provide a basis for such termination. For purposes of this definition of Cause, the Company shall mean Lighting Science Group Corporation, a Delaware corporation, or if a Change of Control occurs and on or after the date of the Change of Control Lighting Science Group Corporation is merged, reorganized or otherwise consolidated with or into another Person, the Person surviving the merger, reorganization or consolidation.

 

25.     Entire Agreement. This Agreement constitutes the entire agreement between the parties concerning the grant of stock and/or options to the Optionee. If Optionee was previously offered or promised stock grants and/or options (the “prior grants”) that were never issued and/or the Optionee was previously given agreements with respect to the prior grants that were never signed, then this Agreement supersedes the prior grants and any other offers and/or promises relating to the prior grants, and this Option is granted to the Optionee in lieu of the prior grants. 

 

 

 

* * * * * * * *

 

 

 

 

 

Please indicate your acceptance of all the terms and conditions of the award and the Plan by signing and returning a copy of this Agreement. This Agreement may be executed in two or more counterparts, all of which when taken together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party, it being understood that all parties need not sign the same counterpart. In the event that any signature is delivered by facsimile transmission or by e-mail delivery of a “.pdf” or other electronic format data file, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile, “.pdf” or other electronic format signature page were an original thereof.

 

 

	
 
	
LIGHTING SCIENCE GROUP CORPORATION 

	
 
	
 
	
 

	
 
	
 
	
 

	
 
	
 
	
 

	
 
	
By: 
	
 

	
 
	
 
	
 

	
 
	
Name: 
	
 

	
 
	
 
	
 

	
 
	
Title: 
	
 

	
ACCEPTED: 
	
 

	 	 
	 	 
	Signature of Optionee	 
	 	 
	 	 
	
Name of Optionee (Please Print) 
	
 

	 	 
	
Date: _________________, 201__ 
	
 

 

 

 

 

 

EXHIBIT A

 

LIGHTING SCIENCE GROUP CORPORATION
2012 AMENDED AND RESTATED EQUITY-BASED COMPENSATION PLAN

 

Notice of Exercise of Option and
Record of Stock Transfer

 

PLEASE PRINT:

  

	
1.     TODAY’S DATE:                                                                                                                    
	
 

	
2.     OPTION HOLDER: 
	
 

	
NAME: 
	
 

	
MAILING ADDRESS: 
	
 

	
 
	
 

	
 
	
 

	
SOCIAL SECURITY NUMBER: 
	
 

 

TO:     Attention:                                                                          

 

	 	
Re:
	
Notice of Exercise of Option for Lighting Science Group Corporation (the “Company”) Common Stock par value $.001 per share (“Stock”) pursuant to the Lighting Science Group Corporation 2012 Amended and Restated Equity-Based Compensation Plan (the “Plan”)

 

I hereby exercise my option to acquire _______ shares of Stock, at my exercise price per share of $___________________. Enclosed is the original of my Stock Option Agreement evidencing my Option hereby exercised. Any capitalized terms not defined herein shall have the meaning set forth in the Plan.

 

Select and complete the appropriate payment provision from the following alternatives.

 

	
____1.
	
My personal check in the amount of $__________ (the exercise price per share times the number of option shares exercised) as payment in full of the total exercise price has been attached hereto.

 

	
____2.
	
I desire to pay the exercise price in full with shares of Stock that I currently own. Certificates representing __________ shares of Stock of the Company, duly endorsed for transfer to the Company have been attached.

 

	
____3.
	
I desire to pay part of the exercise price with shares of Stock that I currently own. My personal check for $__________ and certificates representing __________ shares of Stock, duly endorsed for transfer to the Company have been attached hereto. 

 

I understand that any election pursuant to Items 2-3 above is subject to approval by the Committee administering the Plan.

  

 

 

 

 

I hereby represent that I have previously received a Stock Option Agreement and a copy of the Plan from the Company and that I understand the terms and restrictions described herein and therein and agree to be bound by the terms of each such document.

 

 

	
 
	
 
	
 

	
 
	
(Signature) 
	
 

  

Receipt of Notice Acknowledged:

 

	
 
	
 
	
 

	
Date: 
	
 
	
 

	
 
	
 
	
 

	
Receipt of Payment in Full Acknowledged: 
	
 
	
 

	
 
	
 
	
 

	
 
	
 
	
 

	
 
	
 
	
 

	
Date: 
	
 
	
 

	
 
	
 
	
 

	
Receipt of Committee Approval if Election under Items 2-4.
	
 
	
 

	
 
	
 
	
 

	
 
	
 
	
 

	
 
	
 
	
 

	
Date: 
	
 
	
 

 

NOTE: If exercising the stock option represented by the enclosed Stock Option Agreement to purchase less than all of the shares to which the option relates, the original agreement will be returned with an appropriate notation evidencing the shares for which the Option has been exercised.

 

 

 

 

 

RECEIPT

 

Receipt is hereby acknowledged of the delivery to me by Lighting Science Group Corporation, on the __________ day of ___________________________, 20___ of Stock Certificates for __________ shares of Stock purchased by me pursuant to the terms and conditions of the Lighting Science Group Corporation 2012 Amended and Restated Equity-Based Compensation Plan referred to above, which shares were transferred to me on the Company’s stock record books on the ________ day of ____________________, 20___.

 

 

	
 
	
 
	
 

	
 
	
(Signature) 
	
 

    

 

 

 

 

Exhibit D

 

 

GENERAL RELEASE

 

 

I, ______________________, in consideration of and subject to the performance by Lighting Science Group Corporation, a Delaware corporation (together with its subsidiaries, the "Company"), of its obligations under the Employment Agreement, dated as of _____________________ (the "Agreement"), do hereby release and forever discharge as of the date hereof the Company and its affiliates and all present and former directors, officers, agents, representatives, employees, successors and assigns of the Company and its affiliates and the Company's direct or indirect owners (collectively, the "Released Parties") to the extent provided below.

 

 

	 	
1.
	
I understand that any payments or benefits paid or granted to me under Section 4(b) of the Agreement represent, in part, consideration for signing this General Release and are not salary, wages or benefits to which I was already entitled. I understand and agree that I will not receive the payments and benefits specified in Section 4(b) of the Agreement unless I execute this General Release and do not revoke this General Release within the time period permitted hereafter or breach this General Release. I also acknowledge and represent that I have received all payments and benefits that I am entitled to receive (as of the date hereof) by virtue of any employment by the Company.

 

	 	
2.
	
Except as provided in Section 4 below and except for the provisions of the Agreement which expressly survive the termination of my employment with the Company, I knowingly and voluntarily (for myself, my heirs, executors, administrators and assigns) release and forever discharge the Company and the other Released Parties from any and all claims, suits, controversies, actions, causes of action, cross-claims, counter-claims, demands, debts, compensatory damages, liquidated damages, punitive or exemplary damages, other damages, claims for costs and attorneys' fees, or liabilities of any nature whatsoever in law and in equity, both past and present (through the date this General Release becomes effective and enforceable) and whether known or unknown, suspected, or claimed against the Company or any of the Released Parties which I, my spouse, or any of my heirs, executors, administrators or assigns, may have, which arise out of or are connected with my employment with, or my separation or termination from, the Company (including, but not limited to, any allegation, claim or violation, arising under: Title VII of the Civil Rights Act of 1964, as amended; the Civil Rights Act of 1991; the Age Discrimination in Employment Act of 1967, as amended (including the Older Workers Benefit Protection Act); the Equal Pay Act of 1963, as amended; the Americans with Disabilities Act of 1990; the Family and Medical Leave Act of 1993; the Worker Adjustment Retraining and Notification Act; the Employee Retirement Income Security Act of 1974; any applicable Executive Order Programs; the Fair Labor Standards Act; or their state or local counterparts; the Florida Civil Rights Act; the Florida Whistle-Blower’s Act; Florida Statute Section 440.205 of the Worker’s Compensation Act (“Coercion of Employees”); or under any other federal, state or local civil or human rights law, or under any other local, state, or federal law, regulation or ordinance; or under any public policy, contract or tort, or under common law; or arising under any policies, practices or procedures of the Company; or any claim for wrongful discharge, breach of contract, infliction of emotional distress, defamation; or any claim for costs, fees, or other expenses, including attorneys' fees incurred in these matters) (all of the foregoing collectively referred to herein as the "Claims").

  

 

 

 

 

	 	
3.
	
I represent that I have made no assignment or transfer of any right, claim, demand, cause of action, or other matter covered by Section 2 above.

 

	 	
4.
	
I agree that this General Release does not waive or release any rights or claims that I may have under the Age Discrimination in Employment Act of 1967 which arise after the date I execute this General Release. I acknowledge and agree that my separation from employment with the Company in compliance with the terms of the Agreement shall not serve as the basis for any claim or action (including, without limitation, any claim under the Age Discrimination in Employment Act of 1967).

 

	 	
5.
	
I agree that I am waiving all rights to sue or obtain equitable, remedial or punitive relief from any or all Released Parties of any kind whatsoever, including, without limitation, reinstatement, back pay, front pay, attorneys' fees and any form of injunctive relief. Notwithstanding the above, I further acknowledge that I am not waiving and am not being required to waive any right that cannot be waived under law, including the right to file an administrative charge or participate in an administrative investigation or proceeding; provided, however, that I disclaim and waive any right to share or participate in any monetary award resulting from the prosecution of such charge or investigation or proceeding.

 

	 	
6.
	
In signing this General Release, I acknowledge and intend that it shall be effective as a bar to each and every one of the Claims hereinabove mentioned or implied. I expressly consent that this General Release shall be given full force and effect according to each and all of its express terms and provisions, including those relating to unknown and unsuspected Claims (notwithstanding any state statute that expressly limits the effectiveness of a general release of unknown, unsuspected and unanticipated Claims), if any, as well as those relating to any other Claims hereinabove mentioned or implied. I acknowledge and agree that this waiver is an essential and material term of this General Release and that without such waiver the Company would not have agreed to the terms of the Agreement. I further agree that in the event I should bring a Claim seeking damages against the Company, or in the event I should seek to recover against the Company in any Claim brought by a governmental agency on my behalf, this General Release shall serve as a complete defense to such Claims to the maximum extent permitted by law. I further agree that I am not aware of any pending claim of the type described in Section 2 above as of the execution of this General Release.

 

	 	
7.
	
I agree that neither this General Release, nor the furnishing of the consideration for this General Release, shall be deemed or construed at any time to be an admission by the Company, any Released Party or myself of any improper or unlawful conduct.

 

	 	
8.
	
I agree that I will forfeit all amounts payable by the Company pursuant to the Agreement if I challenge the validity of this General Release. I also agree that if I violate this General Release by suing the Company or the other Released Parties, I will pay all costs and expenses of defending against the suit incurred by the Released Parties, including reasonable attorneys' fees, and return all payments received by me pursuant to the Agreement; provided, however, in the event I initiate a claim under the Age Discrimination in Employment Act of 1967, as amended, such return of payments shall not be required unless and until I successfully invalidate this General Release.

 

 

 

 

 

	 	
9.
	
I agree that this General Release and the Agreement are confidential and agree not to disclose any information regarding the terms of this General Release or the Agreement, except to my immediate family and any tax, legal or other counsel I have consulted regarding the meaning or effect hereof or as required by law, and I will instruct each of the foregoing not to disclose the same to anyone. Notwithstanding anything herein to the contrary, each of the parties (and each affiliate and person acting on behalf of any such party) agree that each party (and each employee, representative, and other agent of such party) may disclose to any and all persons, without limitation of any kind, the tax treatment and tax structure of this transaction contemplated in the Agreement and all materials of any kind (including opinions or other tax analyses) that are provided to such party or such person relating to such tax treatment and tax structure, except to the extent necessary to comply with any applicable federal or state securities laws. This authorization is not intended to permit disclosure of any other information including (without limitation) (i) any portion of any materials to the extent not related to the tax treatment or tax structure of this transaction, (ii) the identities of participants or potential participants in the Agreement, (iii) any financial information (except to the extent such information is related to the tax treatment or tax structure of this transaction), or (iv) any other term or detail not relevant to the tax treatment or the tax structure of this transaction.

 

	 	
10.
	
Any non-disclosure provision in this General Release does not prohibit or restrict me (or my attorney) from responding to any inquiry about this General Release or its underlying facts and circumstances by the Securities and Exchange Commission (SEC), the Financial Industry Regulatory Authority (FINRA), any other self-regulatory organization or governmental entity.

 

	 	
11.
	
I agree to reasonably cooperate with the Company in any internal investigation, any administrative, regulatory, or judicial proceeding or any dispute with a third party. I understand and agree that my cooperation may include, but not be limited to, making myself available to the Company upon reasonable notice for interviews and factual investigations; appearing at the Company's request to give testimony without requiring service of a subpoena or other legal process; volunteering to the Company pertinent information; and turning over to the Company all relevant documents which are or may come into my possession all at times and on schedules that are reasonably consistent with my other permitted activities and commitments. I understand that in the event the Company asks for my cooperation in accordance with this provision, the Company will reimburse me solely for reasonable travel expenses, (including lodging and meals), upon my submission of receipts, and any other expenses I incur with the Company's prior written approval. At any time that the Company is not paying me Severance Payments pursuant to the Agreement, I am only obligated to provide up to 24 hours of cooperation annually at no less than 8 hour intervals. At any time that the Company is not paying me Severance Payments pursuant to the Agreement, any additional cooperation beyond 24 hours annually shall be conditioned on the Company's agreement to pay me, in addition to reasonable and documented out-of-pocket expenses, a consulting fee of $150 per hour.

 

 

 

 

 

	 	
12.
	
I agree not to disparage the Company, its past and present investors, officers, directors or employees or its affiliates and to keep all confidential and proprietary information about the past or present business affairs of the Company and its affiliates confidential unless a prior written release from the Company is obtained. I further agree that as of the date hereof, I have returned to the Company any and all property, tangible or intangible, relating to its business, which I possessed or had control over at any time (including, but not limited to, company-provided credit cards, building or office access cards, keys, computer equipment, manuals, files, documents, records, software, customer data base and other data) and that I shall not retain any copies, compilations, extracts, excerpts, summaries or other notes of any such manuals, files, documents, records, software, customer data base or other data.

 

	 	
13.
	
Notwithstanding anything in this General Release to the contrary, this General Release shall not relinquish, diminish, or in any way affect any rights or claims arising out of any breach by the Company or by any Released Party of the Agreement after the date hereof.

 

	 	
14.
	
Whenever possible, each provision of this General Release shall be interpreted in, such manner as to be effective and valid under applicable law, but if any provision of this General Release is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other provision or any other jurisdiction, but this General Release shall be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision had never been contained herein.

 

BY SIGNING THIS GENERAL RELEASE, I REPRESENT AND AGREE THAT:

 

	 	
(a)
	
I HAVE READ IT CAREFULLY;

 

	
 
	
(b)
	
I UNDERSTAND ALL OF ITS TERMS AND KNOW THAT I AM GIVING UP IMPORTANT RIGHTS, INCLUDING BUT NOT LIMITED TO, RIGHTS UNDER THE AGE DISCRIMINATION IN EMPLOYMENT ACT OF 1967, AS AMENDED, TITLE VII OF THE CIVIL RIGHTS ACT OF 1964, AS AMENDED; THE EQUAL PAY ACT OF 1963, THE AMERICANS WITH DISABILITIES ACT OF 1990; AND THE     EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED;

 

	 	
(c)
	
I VOLUNTARILY CONSENT TO EVERYTHING IN IT;

 

	 	
(d)
	
I HAVE BEEN ADVISED TO CONSULT WITH AN ATTORNEY BEFORE EXECUTING IT AND I HAVE DONE SO OR, AFTER CAREFUL READING AND CONSIDERATION I HAVE CHOSEN NOT TO DO SO OF MY OWN VOLITION;

 

	
 
	
(e)
	
I HAVE HAD AT LEAST [21 // 45] DAYS FROM THE DATE OF MY RECEIPT OF THIS RELEASE SUBSTANTIALLY IN ITS FINAL FORM ON     ,TO CONSIDER IT AND THE CHANGES MADE SINCE THE          ,     , VERSION OF THIS RELEASE ARE NOT MATERIAL AND WILL NOT RESTART THE REQUIRED [21 // 45]-DAY PERIOD;

  

 

 

 

 

	
 
	
(f)
	
THE CHANGES TO THE AGREEMENT SINCE     ,     EITHER ARE NOT MATERIAL OR WERE MADE AT MY REQUEST.

 

	 	
(g)
	
I UNDERSTAND THAT I HAVE SEVEN DAYS AFTER THE EXECUTION OF THIS RELEASE TO REVOKE IT AND THAT THIS RELEASE SHALL NOT BECOME EFFECTIVE OR ENFORCEABLE UNTIL THE REVOCATION PERIOD HAS EXPIRED;

 

	 	
(h)
	
I HAVE SIGNED THIS GENERAL RELEASE KNOWINGLY AND VOLUNTARILY AND WITH THE ADVICE OF ANY COUNSEL RETAINED TO ADVISE ME WITH RESPECT TO IT; AND

 

	 	
(i)
	
I AGREE THAT THE PROVISIONS OF THIS GENERAL RELEASE MAY NOT BE AMENDED, WAIVED, CHANGED OR MODIFIED EXCEPT BY AN INSTRUMENT IN WRITING SIGNED BY AN AUTHORIZED REPRESENTATIVE OF THE COMPANY AND BY ME.

 

 

	
DATE:EX 10.6 ARC RCA II 12.31.2014

Exhibit 10.6

FORM OF INDEMNIFICATION AGREEMENT

THIS INDEMNIFICATION AGREEMENT (“Agreement”) is made and entered into as of the 31st day of December, 2014, by and between American Realty Capital - Retail Centers of America II, Inc., a Maryland corporation (the “Company”), and William M. Kahane, Robert T. Cassato, B.J. Penn, Nicholas S. Schorsch, Kase Abusharkh, Patrick Goulding, Nicholas Radesca, Peter M. Budko, American Realty Capital II Advisors, LLC, AR Capital, LLC and RCS Capital Corporation (each, an “Indemnitee”).
WHEREAS, at the request of the Company, Indemnitee currently serves as a director, officer or service provider of the Company and may, therefore, be subjected to claims, suits or proceedings arising as a result of his or her service; and
WHEREAS, as an inducement to Indemnitee to continue to serve as such director, officer or service provider, the Company has agreed to indemnify and to advance expenses and costs incurred by Indemnitee in connection with any such claims, suits or proceedings; and
WHEREAS, the parties by this Agreement desire to set forth their agreement regarding indemnification and advance of expenses;
NOW, THEREFORE, in consideration of the premises and the covenants contained herein, the Company and Indemnitee do hereby covenant and agree as follows:
Section 1.Definitions.  For purposes of this Agreement:

(a)“Applicable Legal Rate” means a fixed rate of interest equal to the applicable federal rate for mid-term debt instruments as of the day that it is determined that Indemnitee must repay any advanced expenses.  

(b)“Change in Control” means a change in control of the Company occurring after the Effective Date of a nature that would be required to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A (or in response to any similar item on any similar schedule or form) promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), whether or not the Company is then subject to such reporting requirement; provided, however, that, without limitation, such a Change in Control shall be deemed to have occurred if, after the Effective Date (i) any “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 15% or more of the combined voting power of all of the Company’s then-outstanding securities entitled to vote generally in the election of directors without the prior approval of at least two-thirds of the members of the Board of Directors in office immediately prior to such person’s attaining such percentage interest; (ii) the Company is a party to a merger, consolidation, sale of assets, plan of liquidation or other reorganization not approved by at least two-thirds of the members of the Board of Directors then in office, as a consequence of which members of the Board of Directors in office immediately prior to such transaction or event constitute less than a majority of the Board of Directors thereafter; or (iii) at any time, a majority of the members of the Board of Directors are not individuals (A) who were directors as of the Effective Date or (B) whose election by the Board of Directors or nomination for election by the Company’s stockholders was approved by the affirmative vote of at least two-thirds of the directors then in office who were directors as of the Effective Date or whose election for nomination for election was previously so approved.

1

(c)“Corporate Status” means the status of a person as a present or former director, officer, employee or agent of the Company or as a director, trustee, officer, partner, manager, managing member, fiduciary, employee or agent of any other foreign or domestic corporation, partnership, limited liability company, joint venture, trust, employee benefit plan or other enterprise that such person is or was serving in such capacity at the request of the Company.  As a clarification and without limiting the circumstances in which Indemnitee may be serving at the request of the Company, service by Indemnitee shall be deemed to be at the request of the Company if Indemnitee serves or served as a director, trustee, officer, partner, manager, managing member, fiduciary, employee or agent of any corporation, partnership, limited liability company, joint venture, trust, employee benefit plan or other enterprise (i) of which a majority of the voting power or equity interest is owned directly or indirectly by the Company or (ii) the management of which is controlled directly or indirectly by the Company.

(d)“Disinterested Director” means a director of the Company who is not and was not a party to the Proceeding in respect of which indemnification and/or advance of Expenses is sought by Indemnitee.

(e)“Effective Date” means the date set forth in the first paragraph of this Agreement.

(f)“Expenses” means any and all reasonable and out-of-pocket attorneys’ fees and costs, retainers, court costs, transcript costs, fees of experts, witness fees, travel expenses, duplicating costs, printing and binding costs, telephone charges, postage, delivery service fees, federal, state, local or foreign taxes imposed on Indemnitee as a result of the actual or deemed receipt of any payments under this Agreement, ERISA excise taxes and penalties and any other disbursements or expenses incurred in connection with prosecuting, defending, preparing to prosecute or defend, investigating, being or preparing to be a witness in or otherwise participating in a Proceeding.  Expenses shall also include Expenses incurred in connection with any appeal resulting from any Proceeding including, without limitation, the premium for, security for and other costs relating to any cost bond supersedeas bond or other appeal bond or its equivalent.  

(g)“Independent Counsel” means a law firm, or a member of a law firm, that is experienced in matters of corporation law and neither is, nor in the past five years has been, retained to represent:  (i) the Company or Indemnitee in any matter material to either such party (other than with respect to matters concerning Indemnitee under this Agreement or of other indemnitees under similar indemnification agreements), or (ii) any other party to or participant or witness in the Proceeding giving rise to a claim for indemnification or advance of Expenses hereunder.  Notwithstanding the foregoing, the term “Independent Counsel” shall not include any person who, under the applicable standards of professional conduct then prevailing, would have a conflict of interest in representing either the Company or Indemnitee in an action to determine Indemnitee’s rights under this Agreement.  

(h)“Proceeding” means any threatened, pending or completed action, suit, arbitration, alternate dispute resolution mechanism, investigation, inquiry, administrative hearing or any other proceeding, whether brought by or in the right of the Company or otherwise and whether of a civil (including intentional or unintentional tort claims), criminal, administrative or investigative (formal or informal) nature, including any appeal therefrom, except one pending or completed on or before the Effective Date, unless otherwise specifically agreed in writing by the Company and Indemnitee.  If Indemnitee reasonably believes that a given situation may lead to or culminate in the institution of a Proceeding, such situation shall also be considered a Proceeding.

2

Section 2.Services by Indemnitee.  Indemnitee will serve as a director, officer or service provider of the Company.  However, this Agreement shall not impose any independent obligation on Indemnitee or the Company to continue Indemnitee’s service to the Company.  This Agreement shall not be deemed an employment contract between the Company (or any other entity) and Indemnitee.

Section 3.General.  Subject to the limitations in Section 5, the Company shall indemnify, and advance Expenses to, Indemnitee (a) as provided in this Agreement and (b) as otherwise permitted by Maryland law in effect on the Effective Date and as amended from time to time; provided, however, that no change in Maryland law shall have the effect of reducing the benefits available to Indemnitee hereunder based on Maryland law as in effect on the Effective Date.  Subject to the limitations in Section 5, the rights of Indemnitee provided in this Section 3 shall include, without limitation, the rights set forth in the other sections of this Agreement, including any additional indemnification permitted by Section 2-418(g) of the Maryland General Corporation Law (the “MGCL”).

Section 4.Standard for Indemnification.  Subject to the limitations in Section 5, if, by reason of Indemnitee’s Corporate Status, Indemnitee is, or is threatened to be, made a party to any Proceeding, the Company shall indemnify Indemnitee against all judgments, penalties, fines and amounts paid in settlement and all Expenses actually and reasonably incurred by Indemnitee or on Indemnitee’s behalf in connection with any such Proceeding unless it is established by clear and convincing evidence that (a) the act or omission of Indemnitee was material to the matter giving rise to the Proceeding and (i) was committed in bad faith or (ii) was the result of active and deliberate dishonesty, (b) Indemnitee actually received an improper personal benefit in money, property or services or (c) in the case of any criminal Proceeding, Indemnitee had reasonable cause to believe that his or her conduct was unlawful.

Section 5.Certain Limits on Indemnification.  Notwithstanding any other provision of this Agreement (other than Section 6), Indemnitee shall not be entitled to:

(a)    indemnification for any loss or liability unless all of the following conditions are met:  (i) Indemnitee has determined, in good faith, that the course of conduct that caused the loss or liability was in the best interests of the Company; (ii) Indemnitee was acting on behalf of or performing services for the Company; (iii) such loss or liability was not the result of (A) gross negligence or willful misconduct, in the case that the Indemnitee is an independent director of the Company or (B) negligence or misconduct, in the case that the Indemnitee is not an independent director of the Company; and (iv) such indemnification is recoverable only out of the Company’s net assets and not from the Company’s stockholders; 
(b)    indemnification for any loss or liability arising from an alleged violation of federal or state securities laws unless one or more of the following conditions are met:  (i) there has been a successful adjudication on the merits of each count involving alleged material securities law violations as to Indemnitee; (ii) such claims have been dismissed with prejudice on the merits by a court of competent jurisdiction as to Indemnitee; or (iii) a court of competent jurisdiction approves a settlement of the claims against Indemnitee and finds that indemnification of the settlement and the related costs should be made, and the court considering the request for indemnification has been advised of the position of the Securities and Exchange Commission and of the published position of any state securities regulatory authority in which securities of the Company were offered or sold as to indemnification for violations of securities laws; 
(c)    indemnification hereunder if the Proceeding was one by or in the right of the Company and Indemnitee is adjudged to be liable to the Company;

3

(d)    indemnification hereunder if Indemnitee is adjudged to be liable on the basis that personal benefit was improperly received in any Proceeding charging improper personal benefit to Indemnitee, whether or not involving action in the Indemnitee’s Corporate Status; or
(e)    indemnification or advance of Expenses hereunder if the Proceeding was brought by Indemnitee, unless:  (i) the Proceeding was brought to enforce indemnification under this Agreement, and then only to the extent in accordance with and as authorized by Section 12 of this Agreement, or (ii) the Company’s charter or Bylaws, a resolution of the stockholders entitled to vote generally in the election of directors or of the Board of Directors or an agreement approved by the Board of Directors to which the Company is a party expressly provide otherwise.
Section 6.Court-Ordered Indemnification.  Subject to the limitations in Section 5(a) and (b), a court of appropriate jurisdiction, upon application of Indemnitee and such notice as the court shall require, may order indemnification of Indemnitee by the Company in the following circumstances:

(a)if such determines that Indemnitee is entitled to reimbursement under Section 2-418(d)(1) of the MGCL, the court shall order indemnification, in which case Indemnitee shall be entitled to recover the Expenses of securing such reimbursement; or

(b)if such court determines that Indemnitee is fairly and reasonably entitled to indemnification in view of all the relevant circumstances, whether or not Indemnitee (i) has met the standards of conduct set forth in Section 2-418(b) of the MGCL or (ii) has been adjudged liable for receipt of an improper personal benefit under Section 2-418(c) of the MGCL, the court may order such indemnification as the court shall deem proper.  However, indemnification with respect to any Proceeding by or in the right of the Company or in which liability shall have been adjudged in the circumstances described in Section 2-418(c) of the MGCL shall be limited to Expenses.

Section 7.Indemnification for Expenses of an Indemnitee Who is Wholly or Partly Successful.  Subject to the limitations in Section 5, to the extent that Indemnitee was or is, by reason of his or her Corporate Status, made a party to (or otherwise becomes a participant in) any Proceeding and is successful, on the merits or otherwise, in the defense of such Proceeding, Indemnitee shall be indemnified for all Expenses actually and reasonably incurred by Indemnitee or on Indemnitee’s behalf in connection therewith.  If Indemnitee is not wholly successful in such Proceeding but is successful, on the merits or otherwise, as to one or more but less than all claims, issues or matters in such Proceeding, the Company shall indemnify Indemnitee under this Section 7 for all Expenses actually and reasonably incurred by Indemnitee or on Indemnitee’s behalf in connection with each such claim, issue or matter, allocated on a reasonable and proportionate basis.  For purposes of this Section 7, and without limitation, the termination of any claim, issue or matter in such a Proceeding by dismissal, with or without prejudice, shall be deemed to be a successful result as to such claim, issue or matter.

Section 8.Advance of Expenses for an Indemnitee.  If, by reason of Indemnitee’s Corporate Status, Indemnitee is, or is threatened to be, made a party to any Proceeding, the Company shall, without requiring a preliminary determination of Indemnitee’s ultimate entitlement to indemnification hereunder, advance all reasonable Expenses incurred by or on behalf of Indemnitee in connection with (a) such Proceeding which is initiated by a third party who is not a stockholder of the Company, or (b) such Proceeding which is initiated by a stockholder of the Company acting in his or her capacity as such and for which a court of competent jurisdiction specifically approves such advancement, and which relates to acts or omissions with respect to the performance of duties or services on behalf of the Company, within 

4

ten days after the receipt by the Company of a statement or statements requesting such advance or advances from time to time, whether prior to or after final disposition of such Proceeding.  Such statement or statements shall reasonably evidence the Expenses incurred by Indemnitee and shall include or be preceded or accompanied by a written affirmation by Indemnitee of Indemnitee’s good faith belief that the standard of conduct necessary for indemnification by the Company as authorized by law and by this Agreement has been met and a written undertaking by or on behalf of Indemnitee, in substantially the form attached hereto as Exhibit A or in such form as may be required under applicable law as in effect at the time of the execution thereof, to reimburse the portion of any Expenses advanced to Indemnitee, together with the Applicable Legal Rate of interest thereon, relating to claims, issues or matters in the Proceeding as to which it shall ultimately be established, by clear and convincing evidence, that the standard of conduct has not been met by Indemnitee and which have not been successfully resolved as described in Section 7 of this Agreement.  To the extent that Expenses advanced to Indemnitee do not relate to a specific claim, issue or matter in the Proceeding, such Expenses shall be allocated on a reasonable and proportionate basis.  The undertaking required by this Section 8 shall be an unlimited general obligation by or on behalf of Indemnitee and shall be accepted without reference to Indemnitee’s financial ability to repay such advanced Expenses and without any requirement to post security therefor.

Section 9.Indemnification and Advance of Expenses as a Witness or Other Participant.  Subject to the limitations in Section 5, to the extent that Indemnitee is or may be, by reason of Indemnitee’s Corporate Status, made a witness or otherwise asked to participate in any Proceeding, whether instituted by the Company or any other party, and to which Indemnitee is not a party, Indemnitee shall be advanced all reasonable Expenses and indemnified against all Expenses actually and reasonably incurred by Indemnitee or on Indemnitee’s behalf in connection therewith within ten days after the receipt by the Company of a statement or statements requesting any such advance or indemnification from time to time, whether prior to or after final disposition of such Proceeding.  Such statement or statements shall reasonably evidence the Expenses incurred by Indemnitee.

Section 10.Procedure for Determination of Entitlement to Indemnification.

(a)To obtain indemnification under this Agreement, Indemnitee shall submit to the Company a written request, including therein or therewith such documentation and information as is reasonably available to Indemnitee and is reasonably necessary to determine whether and to what extent Indemnitee is entitled to indemnification.  Indemnitee may submit one or more such requests from time to time and at such time(s) as Indemnitee deems appropriate in Indemnitee’s sole discretion.  The officer of the Company receiving any such request from Indemnitee shall, promptly upon receipt of such a request for indemnification, advise the Board of Directors in writing that Indemnitee has requested indemnification.

(b)Upon written request by Indemnitee for indemnification pursuant to Section 10(a) above, a determination, if required by applicable law, with respect to Indemnitee’s entitlement thereto shall promptly be made in the specific case:  (i) if a Change in Control shall have occurred, by Independent Counsel, in a written opinion to the Board of Directors, a copy of which shall be delivered to Indemnitee, which Independent Counsel shall be selected by Indemnitee and approved by the Board of Directors in accordance with Section 2-418(e)(2)(ii) of the MGCL, which approval shall not be unreasonably withheld; or (ii) if a Change in Control shall not have occurred, (A) by the Board of Directors by a majority vote of a quorum consisting of Disinterested Directors or, if such a quorum cannot be obtained, then by a majority vote of a duly authorized committee of the Board of Directors consisting solely of one or more Disinterested Directors, (B) if Independent Counsel has been selected by the Board of Directors in accordance with Section 2-418(e)(2)(ii) of the MGCL and approved by Indemnitee, which 

5

approval shall not be unreasonably withheld, by Independent Counsel, in a written opinion to the Board of Directors, a copy of which shall be delivered to Indemnitee or (C) if so directed by a majority of the members of the Board of Directors, by the stockholders of the Company.  If it is so determined that Indemnitee is entitled to indemnification, payment to Indemnitee shall be made within ten days after such determination.  Indemnitee shall cooperate with the person, persons or entity making such determination with respect to Indemnitee’s entitlement to indemnification, including providing to such person, persons or entity upon reasonable advance request any documentation or information which is not privileged or otherwise protected from disclosure and which is reasonably available to Indemnitee and reasonably necessary to such determination in the discretion of the Board of Directors or Independent Counsel if retained pursuant to clause (ii)(B) of this Section 10(b).  Any Expenses incurred by Indemnitee in so cooperating with the person, persons or entity making such determination shall be borne by the Company (irrespective of the determination as to Indemnitee’s entitlement to indemnification) and the Company shall indemnify and hold Indemnitee harmless therefrom.

(c)The Company shall pay the reasonable fees and expenses of Independent Counsel, if one is appointed.

Section 11.Presumptions and Effect of Certain Proceedings.

(a)In making any determination with respect to entitlement to indemnification hereunder, the person or persons or entity making such determination shall presume that Indemnitee is entitled to indemnification under this Agreement if Indemnitee has submitted a request for indemnification in accordance with Section 10(a) of this Agreement, and the Company shall have the burden of proof to overcome that presumption in connection with the making of any determination contrary to that presumption.  

(b)The termination of any Proceeding or of any claim, issue or matter therein, by judgment, order, settlement or conviction, upon a plea of nolo contendere or its equivalent, or entry of an order of probation prior to judgment, does not create a presumption that Indemnitee did not meet the requisite standard of conduct described herein for indemnification.

(c)The knowledge and/or actions, or failure to act, of any other director, officer, employee or agent of the Company or any other director, trustee, officer, partner, manager, managing member, fiduciary, employee or agent of any other foreign or domestic corporation, partnership, limited liability company, joint venture, trust, employee benefit plan or other enterprise shall not be imputed to Indemnitee for purposes of determining any other right to indemnification under this Agreement.

Section 12.Remedies of Indemnitee.

(a)If (i) a determination is made pursuant to Section 10(b) of this Agreement that Indemnitee is not entitled to indemnification under this Agreement, (ii) advance of Expenses is not timely made pursuant to Sections 8 or 9 of this Agreement, (iii) no determination of entitlement to indemnification shall have been made pursuant to Section 10(b) of this Agreement within 60 days after receipt by the Company of the request for indemnification, (iv) payment of indemnification is not made pursuant to Sections 7 or 9 of this Agreement within ten days after receipt by the Company of a written request therefor, or (v) payment of indemnification pursuant to any other section of this Agreement or the charter or Bylaws of the Company is not made within ten days after a determination has been made that Indemnitee is entitled to indemnification, Indemnitee shall be entitled to an adjudication in an appropriate court located in the State of Maryland, or in any other court of competent jurisdiction, of Indemnitee’s 

6

entitlement to such indemnification or advance of Expenses.  Alternatively, Indemnitee, at Indemnitee’s option, may seek an award in arbitration to be conducted by a single arbitrator pursuant to the Commercial Arbitration Rules of the American Arbitration Association.  Indemnitee shall commence a proceeding seeking an adjudication or an award in arbitration within 180 days following the date on which Indemnitee first has the right to commence such proceeding pursuant to this Section 12(a); provided, however, that the foregoing clause shall not apply to a proceeding brought by Indemnitee to enforce his or her rights under Section 7 of this Agreement.  Except as set forth herein, the provisions of Maryland law (without regard to its conflicts of laws rules) shall apply to any such arbitration.  The Company shall not oppose Indemnitee’s right to seek any such adjudication or award in arbitration.

(b)In any judicial proceeding or arbitration commenced pursuant to this Section 12, Indemnitee shall be presumed to be entitled to indemnification or advance of Expenses, as the case may be, under this Agreement and the Company shall have the burden of proving that Indemnitee is not entitled to indemnification or advance of Expenses, as the case may be.  If Indemnitee commences a judicial proceeding or arbitration pursuant to this Section 12, Indemnitee shall not be required to reimburse the Company for any advances pursuant to Section 8 of this Agreement until a final determination is made with respect to Indemnitee’s entitlement to indemnification (as to which all rights of appeal have been exhausted or lapsed).  The Company shall, to the fullest extent not prohibited by law, be precluded from asserting in any judicial proceeding or arbitration commenced pursuant to this Section 12 that the procedures and presumptions of this Agreement are not valid, binding and enforceable and shall stipulate in any such court or before any such arbitrator that the Company is bound by all of the provisions of this Agreement.

(c)If a determination shall have been made pursuant to Section 10(b) of this Agreement that Indemnitee is entitled to indemnification, the Company shall be bound by such determination in any judicial proceeding or arbitration commenced pursuant to this Section 12, absent a misstatement by Indemnitee of a material fact, or an omission of a material fact necessary to make Indemnitee’s statement not materially misleading, in connection with the request for indemnification.

(d)In the event that Indemnitee is successful in seeking, pursuant to this Section 12, a judicial adjudication of or an award in arbitration to enforce Indemnitee’s rights under, or to recover damages for breach of, this Agreement, Indemnitee shall be entitled to recover from the Company, and shall be indemnified by the Company for, any and all Expenses actually and reasonably incurred by him or her in such judicial adjudication or arbitration.  If it shall be determined in such judicial adjudication or arbitration that Indemnitee is entitled to receive part but not all of the indemnification or advance of Expenses sought, the Expenses incurred by Indemnitee in connection with such judicial adjudication or arbitration shall be appropriately prorated. 

(e)Interest shall be paid by the Company to Indemnitee at the maximum rate allowed to be charged for judgments under the Courts and Judicial Proceedings Article of the Annotated Code of Maryland for amounts which the Company pays or is obligated to pay for the period (i) commencing with either the tenth day after the date on which the Company was requested to advance Expenses in accordance with Sections 8 or 9 of this Agreement or the 60th day after the date on which the Company was requested to make the determination of entitlement to indemnification under Section 10(b) of this Agreement, as applicable, and (ii) and ending on the date such payment is made to Indemnitee by the Company.

7

Section 13.Defense of the Underlying Proceeding.

(a)Indemnitee shall notify the Company promptly in writing upon being served with any summons, citation, subpoena, complaint, indictment, request or other document relating to any Proceeding which may result in the right to indemnification or the advance of Expenses hereunder and shall include with such notice a description of the nature of the Proceeding and a summary of the facts underlying the Proceeding.  The failure to give any such notice shall not disqualify Indemnitee from the right, or otherwise affect in any manner any right of Indemnitee, to indemnification or the advance of Expenses under this Agreement unless the Company’s ability to defend in such Proceeding or to obtain proceeds under any insurance policy is materially and adversely prejudiced thereby, and then only to the extent the Company is thereby actually so prejudiced.

(b)Subject to the provisions of the last sentence of this Section 13(b) and of Section 13(c) below, the Company shall have the right to defend Indemnitee in any Proceeding which may give rise to indemnification hereunder; provided, however, that the Company shall notify Indemnitee of any such decision to defend within 15 calendar days following receipt of notice of any such Proceeding under Section 13(a) above.  The Company shall not, without the prior written consent of Indemnitee, which shall not be unreasonably withheld or delayed, consent to the entry of any judgment against Indemnitee or enter into any settlement or compromise which (i) includes an admission of fault of Indemnitee, (ii) does not include, as an unconditional term thereof, the full release of Indemnitee from all liability in respect of such Proceeding, which release shall be in form and substance reasonably satisfactory to Indemnitee, or (iii) would impose any Expense, judgment, fine, penalty or limitation on Indemnitee.  This Section 13(b) shall not apply to a Proceeding brought by Indemnitee under Section 12 of this Agreement.

(c)Notwithstanding the provisions of Section 13(b) above, if in a Proceeding to which Indemnitee is a party by reason of Indemnitee’s Corporate Status, (i) Indemnitee reasonably concludes, based upon an opinion of counsel approved by the Company, which approval shall not be unreasonably withheld, that Indemnitee may have separate defenses or counterclaims to assert with respect to any issue which may not be consistent with other defendants in such Proceeding, (ii) Indemnitee reasonably concludes, based upon an opinion of counsel approved by the Company, which approval shall not be unreasonably withheld, that an actual or apparent conflict of interest or potential conflict of interest exists between Indemnitee and the Company, or (iii) if the Company fails to assume the defense of such Proceeding in a timely manner, Indemnitee shall be entitled to be represented by separate legal counsel of Indemnitee’s choice, subject to the prior approval of the Company, which approval shall not be unreasonably withheld, at the expense of the Company.  In addition, if the Company fails to comply with any of its obligations under this Agreement or in the event that the Company or any other person takes any action to declare this Agreement void or unenforceable, or institutes any Proceeding to deny or to recover from Indemnitee the benefits intended to be provided to Indemnitee hereunder, Indemnitee shall have the right to retain counsel of Indemnitee’s choice, subject to the prior approval of the Company, which approval shall not be unreasonably withheld, at the expense of the Company (subject to Section 12(d) of this Agreement), to represent Indemnitee in connection with any such matter.

Section 14.Non-Exclusivity; Survival of Rights; Subrogation.

(a)The rights of indemnification and advance of Expenses as provided by this Agreement shall not be deemed exclusive of any other rights to which Indemnitee may at any time be entitled under applicable law, the charter or Bylaws of the Company, any agreement or a resolution of the stockholders entitled to vote generally in the election of directors or of the Board of Directors, or otherwise.  Unless consented to in writing by Indemnitee, no amendment, alteration or repeal of this 

8

Agreement or of any provision hereof shall limit or restrict any right of Indemnitee under this Agreement in respect of any action taken or omitted by such Indemnitee in his or her Corporate Status prior to such amendment, alteration or repeal, regardless of whether a claim with respect to such action or inaction is raised prior or subsequent to such amendment, alteration or repeal.  No right or remedy herein conferred is intended to be exclusive of any other right or remedy, and every other right or remedy shall be cumulative and in addition to every other right or remedy given hereunder or now or hereafter existing at law or in equity or otherwise.  The assertion of any right or remedy hereunder, or otherwise, shall not prohibit the concurrent assertion or employment of any other right or remedy.

(b)In the event of any payment under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee, who shall execute all papers required and take all action necessary to secure such rights, including execution of such documents as are necessary to enable the Company to bring suit to enforce such rights.

Section 15.Insurance.  The Company will use its reasonable best efforts to acquire directors and officers liability insurance, on terms and conditions deemed appropriate by the Board of Directors, with the advice of counsel, covering Indemnitee or any claim made against Indemnitee by reason of his or her Corporate Status and covering the Company for any indemnification or advance of Expenses made by the Company to Indemnitee for any claims made against Indemnitee by reason of his or her Corporate Status.  Without in any way limiting any other obligation under this Agreement, the Company shall indemnify Indemnitee for any payment by Indemnitee arising out of the amount of any deductible or retention and the amount of any excess of the aggregate of all judgments, penalties, fines, settlements and Expenses incurred by Indemnitee in connection with a Proceeding over the coverage of any insurance referred to in the previous sentence.  The purchase, establishment and maintenance of any such insurance shall not in any way limit or affect the rights or obligations of the Company or Indemnitee under this Agreement except as expressly provided herein, and the execution and delivery of this Agreement by the Company and Indemnitee shall not in any way limit or affect the rights or obligations of the Company under any such insurance policies.  If, at the time the Company receives notice from any source of a Proceeding to which Indemnitee is a party or a participant (as a witness or otherwise), the Company has director and officer liability insurance in effect, the Company shall give prompt notice of such Proceeding to the insurers in accordance with the procedures set forth in the respective policies.

Section 16.Coordination of Payments.  The Company shall not be liable under this Agreement to make any payment of amounts otherwise indemnifiable or payable or reimbursable as Expenses hereunder if and to the extent that Indemnitee has otherwise actually received such payment under any insurance policy, contract, agreement or otherwise.

Section 17.Reports to Stockholders.  To the extent required by the MGCL, the Company shall report in writing to its stockholders the payment of any amounts for indemnification of, or advance of Expenses to, Indemnitee under this Agreement arising out of a Proceeding by or in the right of the Company with the notice of the meeting of stockholders of the Company next following the date of the payment of any such indemnification or advance of Expenses or prior to such meeting.

Section 18.Duration of Agreement; Binding Effect.

(a)This Agreement shall continue until and terminate on the later of (i) the date that Indemnitee shall have ceased to serve as a director, officer, employee or agent of the Company or as a director, trustee, officer, partner, manager, managing member, fiduciary, employee or agent of any other foreign or domestic corporation, real estate investment trust, partnership, limited liability company, joint 

9

venture, trust, employee benefit plan or other enterprise that such person is or was serving in such capacity at the request of the Company and (ii) the date that Indemnitee is no longer subject to any actual or possible Proceeding (including any rights of appeal thereto and any Proceeding commenced by Indemnitee pursuant to Section 12 of this Agreement).

(b)The indemnification and advance of Expenses provided by, or granted pursuant to, this Agreement shall be binding upon and be enforceable by the parties hereto and their respective successors and assigns (including any direct or indirect successor by purchase, merger, consolidation or otherwise to all or substantially all of the business or assets of the Company), shall continue as to an Indemnitee who has ceased to be a director, officer, employee or agent of the Company or a director, trustee, officer, partner, manager, managing member, fiduciary, employee or agent of any other foreign or domestic corporation, partnership, limited liability company, joint venture, trust, employee benefit plan or other enterprise that such person is or was serving in such capacity at the request of the Company, and shall inure to the benefit of Indemnitee and Indemnitee’s spouse, assigns, heirs, devisees, executors and administrators and other legal representatives.

(c)The Company shall require and cause any successor (whether direct or indirect by purchase, merger, consolidation or otherwise) to all, substantially all or a substantial part, of the business and/or assets of the Company, by written agreement in form and substance satisfactory to Indemnitee, expressly to assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform if no such succession had taken place.

(d)The Company and Indemnitee agree that a monetary remedy for breach of this Agreement, at some later date, may be inadequate, impracticable and difficult of proof, and further agree that such breach may cause Indemnitee irreparable harm.  Accordingly, the parties hereto agree that Indemnitee may enforce this Agreement by seeking injunctive relief and/or specific performance hereof, without any necessity of showing actual damage or irreparable harm and that by seeking injunctive relief and/or specific performance, Indemnitee shall not be precluded from seeking or obtaining any other relief to which Indemnitee may be entitled.  Indemnitee shall further be entitled to such specific performance and injunctive relief, including temporary restraining orders, preliminary injunctions and permanent injunctions, without the necessity of posting bonds or other undertakings in connection therewith.  The Company acknowledges that, in the absence of a waiver, a bond or undertaking may be required of Indemnitee by a court, and the Company hereby waives any such requirement of such a bond or undertaking.

Section 19.Severability.  If any provision or provisions of this Agreement shall be held to be invalid, illegal or unenforceable for any reason whatsoever:  (a) the validity, legality and enforceability of the remaining provisions of this Agreement (including, without limitation, each portion of any Section, paragraph or sentence of this Agreement containing any such provision held to be invalid, illegal or unenforceable that is not itself invalid, illegal or unenforceable) shall not in any way be affected or impaired thereby and shall remain enforceable to the fullest extent permitted by law; (b) such provision or provisions shall be deemed reformed to the extent necessary to conform to applicable law and to give the maximum effect to the intent of the parties hereto; and (c) to the fullest extent possible, the provisions of this Agreement (including, without limitation, each portion of any Section, paragraph or sentence of this Agreement containing any such provision held to be invalid, illegal or unenforceable, that is not itself invalid, illegal or unenforceable) shall be construed so as to give effect to the intent manifested thereby.

Section 20.Identical Counterparts.  This Agreement may be executed in one or more counterparts, each of which shall for all purposes be deemed to be an original but all of which together 

10

shall constitute one and the same Agreement.  One such counterpart signed by the party against whom enforceability is sought shall be sufficient to evidence the existence of this Agreement.

Section 21.Headings.  The headings of the paragraphs of this Agreement are inserted for convenience only and shall not be deemed to constitute part of this Agreement or to affect the construction thereof.

Section 22.Modification and Waiver.  No supplement, modification or amendment of this Agreement shall be binding unless executed in writing by both of the parties hereto.  No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provisions hereof (whether or not similar) nor shall such waiver constitute a continuing waiver.

Section 23.Notices.  All notices, requests, demands and other communications hereunder shall be in writing and shall be deemed to have been duly given if (i) delivered by hand and receipted for by the party to whom said notice or other communication shall have been directed, on the day of such delivery, or (ii) mailed by certified or registered mail with postage prepaid, on the third business day after the date on which it is so mailed:

(a)If to Indemnitee, to the address set forth on the signature page hereto.

(b)If to the Company, to:

American Realty Capital - Retail Centers of America II, Inc.
405 Park Avenue, 14th Floor
New York, NY 10022
Attn:  General Counsel

or to such other address as may have been furnished in writing to Indemnitee by the Company or to the Company by Indemnitee, as the case may be.

Section 24.Governing Law.  This Agreement shall be governed by, and construed and enforced in accordance with, the laws of the State of Maryland, without regard to its conflicts of laws rules.

[SIGNATURE PAGE FOLLOWS]

11

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written.
  American Realty Capital - Retail Centers of America II, Inc.

By:  _/s/ William M. Kahane            
        Name: William M. Kahane
        Title: Chief Executive Officer

INDEMNITEE
   /s/ Nicholas S. Schorsch                
Name: Nicholas S. Schorsch

INDEMNITEE
   /s/ William M. Kahane                
Name: William M. Kahane

INDEMNITEE
   /s/ Peter M. Budko                
Name: Peter M. Budko

INDEMNITEE
   /s/ Robert T. Cassato                
Name: Robert T. Cassato

INDEMNITEE
   /s/ Nicholas Radesca                
Name: Nicholas Radesca    

INDEMNITEE
   /s/ B.J. Penn                    
Name: B.J. Penn

INDEMNITEE
   /s/ Kase Abusharkh                
Name: Kase Abusharkh

12

INDEMNITEE
   /s/ Patrick Goulding                
Name: Patrick Goulding

INDEMNITEE

AMERICAN REALTY CAPITAL RETAIL II    
ADVISORS, LLC

Member:

AMERICAN REALTY CAPITAL RETAIL II SPECIAL     LIMITED PARTNERSHIP, LLC
By: American Realty Capital IV, LLC, its sole member
By: AR Capital, LLC, its sole member

By:  _/s/ William M. Kahane            
Name: William M. Kahane
Title: Manager

INDEMNITEE

AR CAPITAL, LLC

By:  _/s/ William M. Kahane            
Name: William M. Kahane
Title: Manager

INDEMNITEE

RCS Capital CORPORATION

By:  _/s/ James A. Tanaka                
Name: James A. Tanaka
Title: Authorized Signatory

13

EXHIBIT A
AFFIRMATION AND UNDERTAKING TO REPAY EXPENSES ADVANCED
To:  The Board of Directors of American Realty Capital - Retail Centers of America II, Inc. 

Re:  Affirmation and Undertaking

Ladies and Gentlemen:

This Affirmation and Undertaking is being provided pursuant to that certain Indemnification Agreement, dated the _____ day of _______________, 2014, by and between American Realty Capital - Retail Centers of America II, Inc., a Maryland corporation (the “Company”), and the undersigned Indemnitee (the “Indemnification Agreement”), pursuant to which I am entitled to advance of Expenses in connection with [Description of Proceeding] (the “Proceeding”).
Terms used herein and not otherwise defined shall have the meanings specified in the Indemnification Agreement.
I am subject to the Proceeding by reason of my Corporate Status or by reason of alleged actions or omissions by me in such capacity.  I hereby affirm my good faith belief that at all times, insofar as I was involved as a director of the Company, in any of the facts or events giving rise to the Proceeding, I (1) did not act with bad faith or active or deliberate dishonesty, (2) did not receive any improper personal benefit in money, property or services and (3) in the case of any criminal proceeding, had no reasonable cause to believe that any act or omission by me was unlawful.
In consideration of the advance of Expenses by the Company for reasonable attorneys’ fees and related Expenses incurred by me in connection with the Proceeding (the “Advanced Expenses”), I hereby agree that if, in connection with the Proceeding, it is established that (1) an act or omission by me was material to the matter giving rise to the Proceeding and (a) was committed in bad faith or (b) was the result of active and deliberate dishonesty or (2) I actually received an improper personal benefit in money, property or services or (3) in the case of any criminal proceeding, I had reasonable cause to believe that the act or omission was unlawful, then I shall promptly reimburse the portion of the Advanced Expenses, together with the Applicable Legal Rate of interest thereon, relating to the claims, issues or matters in the Proceeding as to which the foregoing findings have been established.  
IN WITNESS WHEREOF, I have executed this Affirmation and Undertaking on this _____ day of _______________, 20____.

_____________________________
Name:

14

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00242-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00242-of-00352.parquet"}]]