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