Document:

exv10w1

Exhibit 10.1

PROMISSORY NOTE

			
	 	 	 
	$7,000,000	 	 
	New York, New York
	 	February 13, 2009

     FOR VALUE RECEIVED, the undersigned, LIGHTING SCIENCE GROUP CORPORATION, a Delaware
corporation (“Borrower”), promises to pay to the order of PEGASUS PARTNERS IV, L.P., a Delaware
limited partnership (“Lender”), the sum of SEVEN MILLION DOLLARS ($7,000,000) or so much thereof as
may be outstanding hereunder, together with interest.

     1. Interest Rate. Interest shall accrue on the unpaid principal balance of this Note
from the date hereof at 8% per annum.

     2. Default Rate. All past due principal of and accrued interest on this Note shall
bear interest from maturity (stated, by acceleration, or otherwise) until paid at the rate of 18%
per annum.

     3. Advances. On the date hereof Lender will loan Borrower $3,000,000. On and after
February 27, 2009, upon the receipt of notice of an additional borrowing from Borrower, Lender
will loan Borrower up to an additional $4,000,000. The notice of additional borrowing must be
provided prior to the Maturity Date and must set forth Borrower’s confirmation of the covenant set
forth in Paragraph 17 below.

     4. Repayments. The principal and interest of this Note shall be due and payable on
June 30, 2009 (the “Maturity Date”).

     5. Prepayments. The unpaid principal balance of this Note may be prepaid in whole or
in part at any time without premium or penalty. Subject to Paragraph 16, the net cash proceeds of
any Offering shall be applied to payment of: (i) the unpaid principal amount of this Note,
together with accrued interest thereon; (ii) the unpaid principal amount of Borrower’s outstanding
unsecured bridge loans, together with accrued interest thereon; (iii) the anticipated cash needs
of Borrower during 2009, net of other available financings; and (iv) Borrower’s outstanding
borrowings that are guaranteed by Lender or an affiliate of Lender.

     6. Events of Default and Remedies. The entire unpaid principal balance of and all
accrued interest on this Note shall immediately become due and payable, without notice or demand
which are hereby waived, upon the occurrence of any one or more of the following events of default
(individually or collectively, herein called a “Default”):

     (a) The failure or refusal of Borrower to pay all or any part of the principal of or
accrued interest on this Note as and when same becomes due and payable in accordance with
the terms hereof; or

     (b) Borrower shall: (i) become insolvent within the meaning of the Bankruptcy Code of
the United States, as amended, (ii) admit in writing its inability to pay or otherwise fail
to pay its or his or her debts generally as they become due, (iii) voluntarily seek consent
to, or acquiesce in the benefit or benefits of any Debtor Relief Law, or (iv) be made the
subject of any proceeding provided for by any Debtor Relief Law that could suspend or
otherwise affect any of the rights of the holder hereof. As used herein, “Debtor Relief
Laws” means the Bankruptcy Code of the United States, as amended and all other applicable
liquidation, conservatorship, bankruptcy, moratorium, rearrangement, receivership,
insolvency, reorganization or similar debtor relief laws from time to time in effect
affecting the rights of creditors generally; or

 

 

     (c) The nonpayment when due of any material indebtedness owed by Borrower, or the
occurrence of any event under any document or instrument evidencing, securing, or executed
in connection with any such indebtedness which could give the holder thereof the right to
declare such indebtedness or any part thereof due prior to its scheduled maturity; or

     (d) The discovery by the holder hereof that any statement, representation, or warranty
made by Borrower in any writing, document, or instrument ever delivered to the holder hereof
in connection herewith was at the time made false, misleading, or erroneous in any material
respect.

     Upon the occurrence of a Default, the holder of this Note may: (a) offset against this Note
any sum or sums owed by the holder hereof to Borrower and (b) proceed to protect and enforce its
rights either by suit in equity and/or by action at law, or by other appropriate proceedings,
whether for the specific performance of any covenant or agreement contained in this Note or any
document or instrument executed and delivered by Borrower in connection with this Note or in aid of
the exercise of any power or right granted by this Note or any document or instrument executed and
delivered by Borrower in connection with this Note or to enforce any other legal or equitable right
of the holder of this Note.

     7. Cumulative Rights. No delay on the part of the holder of this Note in the
exercise of any power or right under this Note, or under any document or instrument executed in
connection herewith, shall operate as a waiver thereof, nor shall a single or partial exercise of
any other power or right. Enforcement by the holder of this Note of any security for the payment
hereof shall not constitute any election by it of remedies so as to preclude the exercise of any
other remedy available to it.

     8. Waiver. Borrower, and each surety, endorser, guarantor, and other party ever
liable for the payment of any sum of money payable on this Note jointly and severally waive
demand, presentment, protest, notice of nonpayment, notice of intention to accelerate, notice of
acceleration, notice of protest, and any and all lack of diligence or delay in collection or the
filing of suit hereon which may occur, and agree that their liability on this Note shall not be
affected by any renewal or extension in the time of payment hereof, by any indulgences, or by any
release or change in any security for the payment of this Note, and hereby consent to any and all
renewals, extensions, indulgences, releases, or changes, regardless of the number of such
renewals, extensions, indulgences, releases, or changes.

     9. Attorneys’ Fees and Costs. In the event a Default shall occur, and in the event
that thereafter this Note is placed in the hands of an attorney for collection, or in the event
this Note is collected in whole or in part through legal proceedings of any nature, then and in
any such case Borrower promises to pay all costs of collection, including, but not limited to,
reasonable attorneys’ fees incurred by the holder hereof on account of such collection, whether or
not suit is filed.

     10. Notices. Any notice or demand given hereunder by the holder shall be deemed to
have been given and received (a) when actually received by Borrower, if delivered in person or by
courier or messenger, or (b) two Business Days (hereinafter defined) after a letter containing
such notice, certified or registered, with postage prepaid, addressed to Borrower, is deposited in
the United States Mail. The address of Borrower is 120 Hancock Lane, Westampton, New Jersey 08060
or such other address as Borrower shall advise the holder hereof by certified or registered
letter.

     11. Governing Law. The laws of New York shall govern the construction, validity,
enforcement and interpretation of this Note, except to the extent federal laws otherwise govern
the validity, construction, enforcement and interpretation hereof.

2

 

     12. Headings. The headings of the sections of this Note are inserted for convenience
only and shall not be deemed to constitute a part hereof.

     13. Successors and Assigns. All of the covenants, stipulations, promises and
agreements in this Note contained by or on behalf of Borrower shall bind its successors and
assigns, whether so expressed or not; provided, that Borrower may not, without the prior written
consent of the holder hereof, assign any rights, duties, or obligations under this Note.

     14. Maximum Interest Rate. Regardless of any provision contained herein, or in any
other document executed in connection herewith, the holder hereof shall never be entitled to
receive, collect or apply, as interest hereon, any amount in excess of the maximum rate of
interest permitted to be charged from time to time by applicable law, and in the event the holder
hereof ever receives, collects or applies, as interest, any such excess, such amount which would
be excessive interest shall be deemed a partial prepayment of the principal hereof and treated
hereunder as such; and, if the principal hereof is paid in full, any remaining excess shall
forthwith be paid to Borrower. In determining whether or not the interest paid or payable, under
any specified contingency, exceeds the highest lawful rate, Borrower and the holder hereof shall,
to the maximum extent permitted under applicable law, (a) characterize any nonprincipal payment as
an expense, fee, or premium rather than as interest, (b) exclude voluntary prepayments and the
effects thereof, and (c) spread the total amount of interest throughout the entire contemplated
term hereof; provided that if the indebtedness evidenced hereby is paid and performed in full
prior to the end of the full contemplated term thereof, and if the interest received for the
actual period of existence thereof exceeds the maximum lawful rate, the holder hereof shall refund
to Borrower the amount of such excess or credit the amount of such excess against the principal
hereof, and in such event, the holder hereof shall not be subject to any penalties provided by any
laws for contracting for, charging, or receiving interest in excess of the maximum lawful rate.

     15. Business Day; Payments. As used herein, (a) “Business Day” means any day other
than Saturday, Sunday or other day on which the Federal Reserve Bank of New York is closed and
(b) “Nonbusiness Day” means every day that is not a Business Day. The principal of, or accrued
interest on, this Note shall be due and payable in lawful money of the United States of America,
in New York, New York at the office of Lender, 505 Park Avenue, 21st Floor, New York,
New York 10022, in funds which are or will be available for immediate use by Lender at such office
at or before 12:00 p.m., Eastern time (daylight or standard, as applicable) on the day payment
hereof is due. In any case where a payment of principal or interest hereon is due on a
Nonbusiness Day, Borrower shall be entitled to delay such payment until the next succeeding
Business Day, but interest shall continue to accrue until the payment is, in fact, made.

     16. Rollover Right. In addition to the right of set-off following default set forth
in Paragraph 6 above, Lender shall have the right to: (i) subscribe (to the full extent of the
principal and accrued interest under this Note) on the same terms and conditions as are offered to
independent, third party investors in any debt or equity offering of Borrower consummated prior to
the Maturity Date and (ii) offset any sums payable by Lender to Borrower thereunder against any
sums payable by Borrower pursuant to this Note.

     17. Offering. Borrower will use its best efforts to conduct a rights offering during
the second fiscal quarter of 2009 for preferred or common stock the net proceeds of which would
raise approximately $30 million (“Offering”).

     18. Consent to Jurisdiction. BORROWER IRREVOCABLY AGREES THAT, SUBJECT TO LENDER’S
SOLE AND ABSOLUTE ELECTION, ALL ACTIONS OR

3

 

PROCEEDINGS IN ANY WAY ARISING OUT OF, FROM OR RELATED TO THIS NOTE WILL BE LITIGATED IN
COURTS HAVING SITUS WITHIN NEW YORK, NEW YORK. BORROWER HEREBY CONSENTS AND SUBMITS TO THE
JURISDICTION OF ANY COURT LOCATED WITHIN NEW YORK, NEW YORK, WAIVES PERSONAL SERVICE OF PROCESS
UPON BORROWER AND AGREES THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE BY CERTIFIED MAIL DIRECTED
TO BORROWER AT THE ADDRESS STATED IN PARAGRAPH 10 HEREOF AND SERVICE SO MADE WILL BE DEEMED TO BE
COMPLETED UPON ACTUAL RECEIPT.

     19. Waiver of Jury Trial. BORROWER HEREBY EXPRESSLY WAIVES ANY RIGHT TO A TRIAL BY
JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS NOTE OR UNDER ANY
AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN
CONNECTION WITH THIS NOTE, AND AGREES THAT ANY SUCH ACTION OR PROCEEDING WILL BE TRIED BEFORE A
COURT AND NOT BEFORE A JURY. BORROWER AGREES THAT IT WILL NOT ASSERT ANY CLAIM AGAINST LENDER ON
ANY THEORY OF LIABILITY, FOR SPECIAL, INDIRECT, CONSEQUENTIAL, INCIDENTAL OR PUNITIVE DAMAGES.

     20. ENTIRETIES. THIS NOTE, TOGETHER WITH THE OTHER DOCUMENTS AND INSTRUMENTS
EXECUTED AND DELIVERED IN CONNECTION HEREWITH, REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES
AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF
THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS OF THE PARTIES.

     IN WITNESS WHEREOF, the undersigned has executed this Note as of the day and year first above
written.

	 	 	 	 	 	 	 
	 	 	LIGHTING SCIENCE GROUP CORPORATION	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Stephen Hamilton	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	Stephen Hamilton	 	 
	 

	 	Title:
	 	Vice President – Finance	 	 

4exv10w2

Exhibit 10.2

LIGHTING SCIENCE GROUP CORPORATION

2100 McKinney Ave., Suite 1515

Dallas, Texas 75201

February 13, 2009

Pegasus Partners IV, L.P.

505 Park Avenue, 22nd Floor

New York, New York 10022

			
	RE:	 	Promissory Note in Favor of Pegasus Partners IV, L.P.

Ladies and Gentlemen:

This letter agreement (this “Letter Agreement”) is delivered to Pegasus Partners IV, L.P., a
Delaware limited partnership (“Pegasus”), in connection with the making of that certain Promissory
Note, executed as of the date hereof by Lighting Science Group Corporation, a Delaware corporation
(the “Company”), and payable to the order of Pegasus (the “Promissory Note”).

In connection with, and in consideration of, the agreements contained herein and in the Promissory
Note, the Company and Pegasus hereby agree as follows:

	 	1.	 	The Company agrees to use its best efforts to conduct a rights offering during the
second fiscal quarter of 2009 (the “Offering”) for preferred or common stock of the
Company, the net proceeds of which would raise approximately Thirty Million Dollars ($30
million), upon the terms in that certain Summary of Terms attached hereto as Exhibit
A. The parties acknowledge and agree that the bracketed items and blanks contained in
the attached Summary of Terms will be completed in good faith based upon market conditions
at the time of the Offering.
	 
	 	2.	 	Subject to Paragraph 16 of the Promissory Note, the net cash proceeds of any Offering
shall be applied to payment of: (i) the unpaid principal amount of the Promissory Note,
together with accrued interest thereon; (ii) the unpaid principal amount of the Company’s
outstanding unsecured bridge loans, together with accrued interest thereon; (iii) the
anticipated cash needs of the Company during 2009, net of other available financings; and
(iv) the Company’s outstanding borrowings that are guaranteed by Pegasus or an affiliate of
Pegasus.

This Letter Agreement may be executed by facsimile signature and in any number of counterparts,
each of which shall be deemed an original, but all of which together shall constitute one and the
same instrument.

 

 

If the above correctly sets forth the parties’ agreement, please execute this Letter Agreement in
the space provided below.

	 	 	 	 	 
	 	Very truly yours,

LIGHTING SCIENCE GROUP CORPORATION

 	 
	 
	 	By:  	/s/ Stephen Hamilton
 	 
	 	 	Name:  	Stephen Hamilton 	 
	 	 	Title:  	Vice President — Finance 	 
	 

ACCEPTED AND AGREED THIS 13th DAY OF FEBRUARY, 2009

	 	 	 	 	 
	PEGASUS PARTNERS IV, L.P.

 	 	 
	By:  	PEGASUS INVESTORS IV, LP,
 its general partner
 	 	 
	 	 	 	 
	By:  	 PEGASUS INVESTORS IV GP, L.L.C.,
 its general partner
 	 	 
	 
	 	 	 
	By:  	/s/ Richard Weinberg
 	 	 
	 	Name:  	Richard Weinberg 	 	 
	 	Title:  	Vice President 	 	 

Signature Page to Letter Agreement

 

	 	 	 	 	 

Exhibit A

Summary of Terms

 

 

SUMMARY OF TERMS

RIGHTS OFFERING OF SERIES D PREFERRED STOCK

OF

LIGHTING SCIENCE GROUP CORPORATION (the “Company”)

FEBRUARY 13, 2009

I. SUMMARY OF TERMS OF RIGHTS TO BE OFFERED

	 	 	 
	Term of Offering:

	 	The offering will remain open for a
period of 30 days. The offering
will commence upon the effectiveness
of a registration statement filed
pursuant to the Securities Act of
1933, as amended.
	 
	 	 
	Type of Security Underlying
Subscription Right:

	 	Series D Non-Convertible Preferred
Stock (the “Series D Preferred”) and
attached Warrants (the “Warrants”).
	 
	 	 
	Purchase Price:

	 	Each whole subscription right will
entitle the holder to purchase one
share of Series D Preferred and one
Warrant to purchase Common Stock for
$[___] (the “Original Purchase
Price”).
	 
	 	 
	Eligible Participants:

	 	Holders of record of the Company’s
(i) Common Stock, (ii) 6%
Convertible Preferred Stock, (iii)
Series B Preferred Stock, and (iv)
Warrants will receive one
subscription right for every one
share of Common Stock issued or
issuable to such holder on the
record date. In addition, each
employee of the Company will be
entitled to participate in the
offering for an amount of up to 10%
(in the aggregate) of the rights
offered to the above security
holders; provided, that the source
of the allocation of these rights
would be determined at the time of
the offering. Each Eligible
Participant will also have the right
to subscribe for an over-allocation
of up 200% of the original number of
rights issued to such Eligible
Participant. Eligible Participants
that subscribe for any shares
pursuant to such over-allocation
right will receive compensation
customary to that payable pursuant
to a back stop arrangement.
	 
	 	 
	Transfer of Subscription Right:

	 	Except with respect to transfers by
Eligible Participants to their
respective affiliates, the
subscription rights will not be
transferable.

 

 

II. SUMMARY OF TERMS OF SERIES D PREFERRED STOCK

	 	 	 
	Dividends:

	 	The Series D Preferred will be
entitled to a cumulative annual
dividend of 25%. 17% of such
dividend (the “Exercise Price
Accrual”) will be credited for the
account of the holder and would be
available at any time to the holder
solely for purposes of satisfying
the exercise price payable upon
exercise of the Warrants issued in
conjunction therewith.
Notwithstanding the foregoing, in no
event will the holders of Series D
Preferred be entitled to an
aggregate Exercise Price Accrual
that is greater than 100% of the
aggregate exercise price of the
Warrants. In the event that all or
any portion of the Warrants are
exercised by a holder thereof prior
to the eighth anniversary of the
date of issuance (the “Redemption
Date”), the cumulative annual
dividend on an equal number of
shares of Series D Preferred held by
such holder would immediately be
reduced to 8% (the “Liquidation
Preference Accrual”).
	 
	 	 
	Liquidation Preference:

	 	In the event of any liquidation,
dissolution, winding up or Change of
Control (as defined below) of the
Company (a “Liquidation Event”),
holders of the Series D Preferred
will be subordinated to the
liquidation preferences of the
holders of the Company’s 6%
Convertible Preferred Stock, Series
B Preferred Stock and Series C
Preferred Stock but will be entitled
to receive, in preference to the
holders of Common Stock, an amount
for each share of Series D Preferred
(the “Liquidation Amount”) equal to
the Original Purchase Price plus the
accrued and unpaid Liquidation
Preference Accrual as if such holder
had held the Series D Preferred
until the Redemption Date. If,
after payment of the full amount of
the liquidation preferences of the
holders of the 6% Convertible
Preferred Stock, Series B Preferred
Stock and Series C Preferred Stock,
the assets of the Company are
insufficient to permit payment of
the full Liquidation Amount to all
holders of Series D Preferred, then
the available assets will be
distributed ratably to the holders
of the Series D Preferred in
proportion to the Liquidation Amount
each such holder would otherwise be
entitled to receive. In addition,
upon the occurrence of a Liquidation
Event,

 

 

	 	 	 
	 

	 	the accrued and unaccrued
Exercise Price Accrual (reduced by
any amounts applied by the holder to
the payment of the exercise price in
conjunction with any Warrants
exercised by such holder prior to
the date of the Liquidation Event)
will be credited for the account of
each holder of Series D Preferred as
if such holder had held the Series D
Preferred until the Redemption Date.
	 
	 	 
	 

	 	“Change of Control” means (a) the
sale, conveyance or disposition of
all or substantially all of the
assets of the Company (other than
pursuant to a joint venture
arrangement or other transaction in
which the Company receives at least
fifty percent (50%) of the voting
equity in another entity or a
general partnership); (b) the
effectuation of a transaction or
series of related transactions in
which more than fifty percent (50%)
of the voting power of the Company
is disposed of (other than as a
direct result of normal,
uncoordinated trading activities in
the Common Stock generally); (c) the
consolidation, merger or other
business combination of the Company
with or into any other entity,
immediately following which the
prior stockholders of the Company
fail to own, directly or indirectly,
at least fifty percent (50%) of the
voting equity of the surviving
entity; (d) a transaction or series
of transactions in which any Person
or “group” (as such term is used in
Sections 13(d) and 14(d) of the
Exchange Act) acquires more than
fifty percent (50%) of the voting
equity of the Company; (e) the
replacement of a majority of the
Board of Directors with individuals
who were not nominated or elected by
at least a majority of the directors
at the time of such replacement; or
(f) a transaction or series of
transactions that constitutes or
results in a “going private
transaction” (as defined in Section
13(e) of the Exchange Act and the
regulations of the Commission issued
thereunder).
	 
	 	 
	Redemption:

	 	The Series D Preferred will not be
callable by the Company prior to the
Redemption Date. Upon the
Redemption Date, the Series D
Preferred will be redeemed by the
Company, and the Company will pay
each holder of Series D Preferred an
amount equal to the Original
Purchase Price plus the Liquidation
Preference Accrual (reduced by any
amounts applied by the holder to the
payment of the exercise price in

 

 

	 	 	 
	 

	 	conjunction with any Warrants
exercised by such holder prior to
the Redemption Date). Upon any
Change of Control occurring prior to
the Redemption Date, the Series D
Preferred will be redeemed by the
Company, and the Company will pay
each holder of Series D Preferred
the Liquidation Amount.
	 
	 	 
	 

	 	Upon any such redemption, the
aggregate amount of the Exercise
Price Accrual (reduced by any
amounts applied by the holder to the
payment of the exercise price in
conjunction with any Warrants
exercised by such holder prior to
the Redemption Date) will remain
credited for the account of the
holder and all unexercised Warrants
held by such holder will remain
outstanding.
	 
	 	 
	Conversion:

	 	The Series D Preferred will not be
convertible into any other
securities of the Company.
	 
	 	 
	Voting Rights

	 	Except as required by law, the
holders of the Series D Preferred
will not have voting rights.

III. SUMMARY OF TERMS OF WARRANTS

	 	 	 
	Exercise Price:

	 	$6.00 per share of Common Stock.
	 
	 	 
	Term:

	 	Warrants will be exercisable at any
time after the date of issuance and
will have a term of 12 years.
	 
	 	 
	Exercise:

	 	Warrants will be exercisable by
paying an amount equal to the
Exercise Price multiplied by the
number of Warrant Shares. The
Exercise Price will be payable by
means of a cash payment; provided,
that the aggregate amount payable
upon exercise of the Warrants will
be reduced by: (i) the Exercise
Price Accrual that is credited to
the account of the holder as of the
date of exercise, if any; (ii) at
the holder’s option, any portion of
the Liquidation Preference Accrual
otherwise payable to the holder as
of the date of exercise; and (iii)
at the holder’s option and upon
surrender of a certificate or
certificates representing shares of
Series D Preferred Stock, the
Original Purchase Price multiplied
by the number of shares of Series D
Preferred Stock surrendered.

 

 

	 	 	 
	Transfer:

	 	The Warrants will only be
transferable if the corresponding
shares of Series D Preferred are
also transferred.

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