THE
SECURITIES REPRESENTED BY THIS WARRANT HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE
SECURITIES LAWS. THE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT
AND MAY NOT BE OFFERED, SOLD, TRANSFERRED OR ASSIGNED IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OR AN OPINION OF COUNSEL, REASONABLY SATISFACTORY TO THE
COMPANY, THAT REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT
OR APPLICABLE STATE SECURITIES LAWS UNLESS SOLD PURSUANT TO RULE
144 UNDER THE SECURITIES ACT.
LIGHTING SCIENCE GROUP
CORPORATION
Warrant
To Purchase Common Stock
|
|
|
|
|
|
|
|
|
Warrant No.:
___
|
|
Number of Shares:
942,857
|
|
Issuance
Date:
, 2008
|
|
|
THIS CERTIFIES
THAT, for value received, Pegasus Partners IV, L.P. or its
transferees, successors, affiliates and assigns (the “
Holder ”) is entitled to purchase from Lighting
Science Group Corporation, a Delaware corporation (the “
Company ”), at any time after the Issuance Date
(defined below) and before the Expiration Date (defined below) at
$7.00 per share (the “ Exercise Price ”) nine
hundred forty two thousand eight hundred fifty seven (942,857)
fully paid nonassessable shares of Common Stock (defined below)
(the “ Warrant Shares ”), all subject to
adjustment and upon the terms and conditions provided
herein.
The
following terms as used in this Warrant have the following
meanings:
(a)
“ Business Day ” means any day other than
Saturday, Sunday or federal holiday.
(b)
“ Common Stock ” means (i) the
Company’s common stock, $.001 par value per share, and (ii)
any capital stock into which the Common Stock is changed or any
capital stock resulting from a reclassification of the Common
Stock.
(c)
“ Exercise Price ” is equal to $7.00, subject to
adjustment as detailed in Section 2(c) of this Warrant.
(d)
“ Expiration Date ” means the fifth anniversary
of the Issuance Date or, if such date falls on a day that is not a
Business Day or a day on which trading does not take
place
1
on the
principal exchange or automated quotation system on which the
Common Stock is traded, the next Business Day.
(e)
“ Issuance Date ” means July 25,
2008.
(f)
“ Person ” means a natural person or entity, or
a government or any division, department or agency
thereof.
(g)
“ Securities Act ” means the Securities Act of
1933, as amended.
(h)
“ Warrant ” means this Warrant and all Warrants
issued in exchange, transfer or replacement thereof.
(i)
“Warrant Shares” has the meaning attributed to
it in the preamble of this Warrant.
Section 2.
Exercise of Warrant .
(a) This
Warrant may be exercised by the Holder registered on the books of
the Company, in whole or in part, at any time on any Business Day
after the Issuance Date and prior to 11:59 p.m. Eastern Time
on the Expiration Date by: (i) delivery of a written notice,
in the form attached as Exhibit A (the “
Exercise Notice ”), of Holder’s election to
exercise this Warrant, specifying the number of Warrant Shares to
be purchased, (ii) payment to the Company of an amount equal
to the Exercise Price multiplied by the number of Warrant Shares
being purchased (a) in cash or wire transfer of immediately
available funds or (b) by means of a cashless exercise
pursuant to Section 2(c) (such cash, wire transfer or cashless
exercise referred to herein as the “ Payment ”)
and (iii) the surrender to a nationally recognized courier for
overnight delivery to the Company, as soon as practicable following
such date, of this Warrant, (or an indemnification undertaking with
respect to this Warrant in the case of its loss, theft or
destruction in such form and substance as reasonably satisfactory
to the Company).
The Company shall,
not later than the fifth Business Day (the “ Delivery
Date ”) following receipt of an Exercise Notice, the
Payment and this Warrant or such indemnification (collectively, the
“ Exercise Documents ”), arrange for its
transfer agent, on or before the Delivery Date, to issue and
surrender to a nationally recognized courier for overnight delivery
to the address specified in the Exercise Notice, a certificate,
registered in the name of the Holder, for the number of shares of
Common Stock to which the Holder is entitled. Upon delivery of the
Exercise Notice and the Payment, the Holder shall be deemed for all
corporate purposes to have become the holder of record of the
Warrant Shares with respect to which this Warrant has been
exercised on the Delivery Date, irrespective of the date of
delivery of the certificates evidencing the Warrant
Shares.
(b) Unless
the rights represented by this Warrant have expired or been fully
exercised, the Company shall, as soon as practicable and in no
event later than five Business Days after receipt of the Exercise
Documents and at its own expense, issue a new Warrant identical in
all respects to this Warrant, except it shall represent rights to
purchase the number of Warrant Shares purchasable immediately prior
to exercise, less the number purchased.
2
(c) In
lieu of exercising this Warrant by means of paying via cash or wire
transfer, the Holder may elect to make the Payment by means of
receiving shares equal to the value of this Warrant (or portion
thereof being exercised) by surrender of this Warrant at the
principal office of the Company together with the Notice of
Exercise attached hereto as Exhibit A, duly completed to
indicate a net issuance exercise and executed by the Holder, in
which event the Company shall issue to the Holder a number of
shares of Common Stock of the Company computed using the following
formula:
where X = the
number of shares issued to the Holder;
Y = the number of shares purchasable (or portion
thereof) under this Warrant that are being exercised at the date of
the calculation;
A = the current market price of the common stock
of the Company at the date of the calculation; and
B = the Exercise Price on the date of the
calculation
(d) No
fractional shares of Common Stock are to be issued upon the
exercise of this Warrant, but rather the number of shares of Common
Stock issued shall be rounded up or down to the nearest whole
number.
Section 3.
Covenants as to Common Stock . The Company hereby covenants
and agrees as follows:
(a) This
Warrant is, and any Warrants issued in substitution for or in
replacement of this Warrant upon issuance will be, duly authorized,
executed and delivered.
(b) All
Warrant Shares upon issuance will be validly issued, fully paid and
nonassessable and free from all liens and charges with respect to
the issue thereof.
(c) As
long as this Warrant may be exercised, the Company will have
authorized and reserved at least the number of shares of Common
Stock needed to provide for the exercise of the rights then
represented by this Warrant.
Section 4.
Warrant Holder Not Deemed a Shareholder . Except as
specifically provided in Section 2(a), nothing contained in
this Warrant shall be construed to (a) grant the Holder any
rights to vote or receive dividends or be deemed the holder of
shares of the Company for any purpose, (b) confer upon the
Holder any of the rights of a shareholder of the Company or any
right to vote, give or withhold consent to any corporate action
(whether any reorganization, issue of stock, reclassification of
stock, consolidation, merger, conveyance or otherwise), receive
notice of meetings, receive dividends or subscription rights, or
otherwise, or (c) impose any liabilities on the Holder to
purchase any securities or as a shareholder of the Company, whether
asserted by the Company or creditors of the Company, prior to the
issuance of the Warrant Shares.
3
Section 5.
Representations of Holder . The Holder, by the acceptance
hereof, represents that it is acquiring this Warrant and the
Warrant Shares for its own account for investment only and not with
a view towards, or for resale in connection with, the public sale
or distribution of this Warrant or the Warrant Shares, except
pursuant to sales registered or exempted under the Securities Act.
The Holder further represents, by acceptance hereof, that, as of
this date, Holder is an “accredited investor” as
defined in Rule 501(a)(1) of Regulation D promulgated
under the Securities Act (an “Accredited Investor" ).
Upon exercise of this Warrant, the Holder shall, if requested by
the Company, confirm in writing, in a form satisfactory to the
Company, that the Warrant Shares are being acquired solely for the
Holder’s own account and not as a nominee for any other
party, for investment, and not with a view toward distribution or
resale and that Holder is an Accredited Investor. If Holder cannot
make such representations because they would be factually
incorrect, it shall be a condition to Holder’s exercise of
this Warrant that the Company receive such other representations as
the Company considers reasonably necessary to assure the Company
that the issuance of its securities upon exercise of this Warrant
shall not violate any federal or state securities laws. The Company
shall not be penalized or disadvantaged by a Holder’s
inability to exercise this Warrant due to its inability to make the
required representations in connection with the exercise of this
Warrant.
Section 6.
Ownership and Transfer .
(a) The
Company shall maintain at its principal executive offices (or such
other office or agency of the Company as it may designate by notice
to the holder hereof), a register for this Warrant, in which the
Company shall record the name and address of the Person in whose
name this Warrant has been issued, as well as the name and address
of each transferee who has acquired this Warrant in accordance with
applicable law and the terms of this Warrant. The Company may treat
the Person in whose name this Warrant is registered on the register
as the owner and holder thereof for all purposes, notwithstanding
any notice to the contrary, but in all events recognizing any
transfers made in accordance with the terms of this
Warrant.
(b) This
Warrant may only be offered, sold, transferred or assigned in
compliance with the Securities Act and applicable state securities
laws.
(c) Subject
to the terms of this Section 6, upon surrender of this Warrant
to the Company at its principal office or at the office of its
transfer agent, if any, with the Assignment Form annexed hereto as
Exhibit B duly executed and funds sufficient to pay any
transfer tax, the Company shall, without charge, execute and
deliver a new Warrant in the name of the assignee evidencing the
portion of the Warrant certificate so transferred shall be issued
to the transferee and a new Warrant certificate evidencing the
remaining portion of the Warrant certificate not so transferred, if
any, shall be issued to the transferring Holder. The delivery of
the new Warrant certificate by the Company to the transferee
thereof shall be deemed to constitute acceptance by such transferee
of all of the rights and obligations of a holder of a Warrant
certificate. Subject to the terms of this Section 6, this
Warrant may be divided or combined with other warrants which carry
the same rights upon presentation hereof at the principal office of
the Company together with a written notice specifying the names and
denominations in which new Warrants are to be issued and signed by
the Warrant Holder hereof.
4
Section 7.
Adjustment of Exercise Price and Number of Shares . The
Exercise Price and the number of Warrant Shares shall be adjusted
from time to time as follows:
(a)
Stock Splits . If the Company subdivides (by any stock
split, recapitalization or otherwise) its outstanding shares of
Common Stock into a greater number of shares, the Exercise Price in
effect immediately prior to the subdivision will be proportionately
reduced and the number of Warrant Shares will be proportionately
increased. If the Company combines (by combination, reverse stock
split or otherwise) its outstanding shares of Common Stock into a
smaller number of shares, the Exercise Price in effect immediately
prior to the combination will be proportionately increased and the
number of Warrant Shares will be proportionately decreased. Any
adjustment under this Section shall become effective at the close
of business on the date the subdivision or combination becomes
effective.
(b)
Stock Dividends . If the Company declares a dividend or any
other distribution upon the Common Stock that is payable in shares
of Common Stock or securities convertible into shares of Common
Stock, the number of Warrant Shares will be proportionately
increased and the Exercise Price in effect immediately prior to the
declaration of the dividend or distribution will be reduced to the
quotient obtained by dividing (i) the number of shares of
Common Stock outstanding immediately prior to the declaration
multiplied by the then effective Exercise Price by (ii) the
total number of shares of Common Stock outstanding immediately
after the declaration.
(c)
Adjustment for Property Dividends . If the Company declares
a dividend or any other distribution upon the Common Stock that is
payable in any of its assets (including cash) or debt securities or
any rights, options or warrants to purchase debt securities, assets
or other securities of the Company (other than Common Stock and
other than any dividend or distribution upon a merger or
consolidation or sale to which Section 8 applies) (a “
Property Dividend ”), then and in each such event the
Exercise Price for this Warrant in effect immediately prior to the
close of business on the date for the determination of the holders
of Common Stock entitled to receive such dividend or distribution
shall be decreased by the fair market value (as determined in good
faith by the Board of Directors of the Company, whose determination
shall be conclusive and evidenced by a Board Resolution filed with
the Warrant Agent) of such Property Dividend so distributed for
each share of Common Stock.
Any adjustment
under this Section 7(c) shall, become effective immediately prior
to the opening of business on the day after the date for the
determination of the holders of Common Stock entitled to receive
Property Dividend. If the Board of Directors determines the fair
market value of any Property Dividend for purposes of this Section
7(c) by reference to the actual or when issued trading market for
any securities comprising such Property Dividend, it must in doing
so consider the prices in such market over the same period used in
computing the Current Market Price per share of Common
Stock.
For purposes of
clarity, if a declared Property Dividend would have reduced the
Exercise Price to an amount below $0, the Exercise Price will be
reduced to $0 and any remaining fair market value that would have
resulted in a re
|
