REGISTRATION RIGHTS AGREEMENT
This
Registration Rights Agreement (this “Agreement”) is
made and entered into as of May 12, 2005, by and among Lighting Science Group
Corporation, a Delaware corporation (the “Company”), and
the persons and entities listed on Exhibit
A hereto
(each, a “Purchaser” and,
collectively, the “Purchasers”).
WHEREAS,
upon the terms and subject to the conditions of the Securities Purchase
Agreement, dated as of the date hereof (the “Purchase
Agreement”), the
Company has agreed to issue and sell to the Purchasers the Company’s 6%
Convertible Preferred Stock, par value $0.001 per share (the “Preferred
Stock”), and
Warrants to purchase shares of its Common Stock; and
WHEREAS,
to induce the Purchasers to execute and deliver the Purchase Agreement and to
purchase the Preferred Stock and the Warrants, the Company has agreed to provide
certain registration rights under the Securities Act of 1933, as amended, with
respect to the Conversion Shares, the Warrant Shares and the PIK Dividend
Shares.
NOW,
THEREFORE, in consideration of the representations, warranties and agreements
contained herein and other good and valuable consideration, the receipt and
legal adequacy of which are hereby acknowledged by the parties, the Company and
the Purchasers hereby agree as follows:
1. Definitions.
Capitalized
terms used but not otherwise defined herein shall have the meanings given such
terms in the Purchase Agreement. As used in this Agreement, the following terms
shall have the following meanings:
“Affiliate” means,
with respect to any Person, any other Person that directly or indirectly
controls or is controlled by or under common control with such Person. For the
purposes of this definition, “control,” when
used with respect to any Person, means the possession, direct or indirect, of
the power to direct or cause the direction of the management and policies of
such Person, whether through the ownership of voting securities, by contract or
otherwise; and the terms “affiliated,”
“controlling” and
“controlled” have
meanings correlative to the foregoing.
“Blackout
Period” shall
have the meaning set forth in Section 3(m).
“Board” shall
have the meaning set forth in Section 3(m).
“Business
Day” means
any day except Saturday, Sunday and any day which is a legal holiday or a day on
which banking institutions in the State of Texas generally are authorized or
required by law or other government actions to close.
“Commission” means
the Securities and Exchange Commission.
“Common
Stock” means
the Company’s Common Stock, $0.001 par value.
“Conversion
Shares” shall
have the meaning set forth in the definition of “Registrable
Securities.”
“Effectiveness
Date” means
with respect to the Registration Statement the earlier of (i) the 90th day
following the Closing Date (or the 150th day
following the Closing Date in the event that the Registration Statement is
reviewed by the Commission), before which the Company will use its best efforts
to cause the Registration Statement to become effective, and (ii) the
5th Business
Day after the date on which the Commission informs the Company (a) that the
Commission will not review the Registration Statement, or (b) that the Company
may request the acceleration of the effectiveness of the Registration Statement.
“Effectiveness
Period” shall
have the meaning set forth in Section 2.
“Event” shall
have the meaning set forth in Section 8(d).
“Exchange
Act” means
the Securities Exchange Act of 1934, as amended.
“Holder” means,
collectively, each holder from time to time of Registrable Securities including,
without limitation, each Purchaser and its assignees. To the extent this
Agreement refers to an election, consent, waiver, request or approval of or by
the Holder, such reference shall mean an election, consent, waiver, request or
approval by the holders of a majority in interest of the then-outstanding
Registrable Securities (on an as exercised basis).
“Indemnified
Party” shall
have the meaning set forth in Section 6(c).
“Indemnifying
Party” shall
have the meaning set forth in Section 6(c).
“Liquidated
Damages” shall
have the meaning set forth in Section 8(d).
“Losses” shall
have the meaning set forth in Section 6(a).
“Person” means
an individual or a corporation, partnership, trust, incorporated or
unincorporated association, joint venture, limited liability company, joint
stock company, government (or an agency or political subdivision thereof) or
other entity of any kind.
“PIK
Dividend Shares” shall
have the meaning set forth in the definition of “Registrable
Securities.”
“Proceeding” means
an action, claim, suit, investigation or proceeding (including, without
limitation, an investigation or partial proceeding, such as a deposition),
whether commenced or threatened.
“Prospectus” means
the prospectus included in the Registration Statement (including, without
limitation, a prospectus that includes any information previously omitted from a
prospectus filed as part of an effective registration statement in reliance upon
Rule 430A promulgated under the Securities Act), as amended or supplemented by
any prospectus supplement, with respect to the terms of the offering of any
portion of the Registrable Securities covered by the Registration Statement, and
all other amendments and supplements to the Prospectus, including post-effective
amendments, and all material incorporated by reference in such
Prospectus.
“Registrable
Securities” means
(i) the shares of Common Stock issued and issuable pursuant to the conversion of
the Preferred Stock, and upon any stock split, stock dividend, recapitalization
or similar event with respect to such shares of Common Stock and any other
securities issued in exchange of or replacement of such shares of Common Stock
(collectively, the “Conversion
Shares”); until
in the case of any of the Conversion Shares (a) a Registration Statement
covering such Conversion Share has been declared effective by the Commission and
continues to be effective during the Effectiveness Period, or (b) such
Conversion Share is sold in compliance with Rule 144 or may be sold pursuant to
Rule 144(k), after which time such Conversion Share shall not be a Registrable
Security; (ii) the shares of Common Stock issued and issuable pursuant to the
exercise of the Warrants, and upon any stock split, stock dividend,
recapitalization or similar event with respect to such shares of Common Stock
and any other securities issued in exchange of or replacement of such shares of
Common Stock (collectively, the “Warrant
Shares”); until
in the case of any of the Warrant Shares (a) a Registration Statement covering
such Warrant Share has been declared effective by the Commission and continues
to be effective during the Effectiveness Period, or (b) such Warrant Share is
sold in compliance with Rule 144 or may be sold pursuant to Rule 144(k), after
which time such Warrant Share shall not be a Registrable Security; and (iii) the
shares of Common Stock issued and issuable in payment of dividends on the
Preferred Stock, and upon any stock split, stock dividend, recapitalization or
similar event with respect to such shares of Common Stock and any other
securities issued in exchange of or replacement of such shares of Common Stock
(collectively, the “PIK
Dividend Shares”); until
in the case of any of the PIK Dividend Shares (a) a Registration Statement
covering such PIK Dividend Share has been declared effective by the Commission
and continues to be effective during the Effectiveness Period, or (b) such PIK
Dividend Share is sold in compliance with Rule 144 or may be sold pursuant to
Rule 144(k), after which time such PIK Dividend Share shall not be a Registrable
Security.
“Registration
Statement” means
the registration statement, including the Prospectus, amendments and supplements
to such registration statement or Prospectus, including pre- and post-effective
amendments, all exhibits thereto, and all material incorporated by reference in
such registration statement, for the resale of the Conversion Shares, the
Warrant Shares and the PIK Dividend Shares required to be filed by the Company
with the Commission pursuant to this Agreement.
“Required
Filing Date” means
the 60th day
immediately following the Closing Date.
“Rule
144” means
Rule 144 promulgated by the Commission pursuant to the Securities Act, as such
Rule may be amended from time to time, or any similar rule or regulation
hereafter adopted by the Commission having substantially the same effect as such
Rule.
“Rule
158” means
Rule 158 promulgated by the Commission pursuant to the Securities Act, as such
Rule may be amended from time to time, or any similar rule or regulation
hereafter adopted by the Commission having substantially the same effect as such
Rule.
“Rule
415” means
Rule 415 promulgated by the Commission pursuant to the Securities Act, as such
Rule may be amended from time to time, or any similar rule or regulation
hereafter adopted by the Commission having substantially the same effect as such
Rule.
“Securities
Act” means
the Securities Act of 1933, as amended.
“Special
Counsel” means
any one firm of special counsel to Holder, for which Holder will be reimbursed
by the Company pursuant to Section 5 of this Agreement and Section 8.1 of the
Purchase Agreement.
“Warrant
Shares” shall
have the meaning set forth in the definition of “Registrable
Securities.”
2. Registration. On or
prior to the Required Filing Date, the Company shall prepare and file with the
Commission a Registration Statement covering the resale of the Registrable
Securities for an offering to be made on a continuous basis pursuant to Rule
415. The Registration Statement shall be on Form SB-2 or Form S-1 (except if the
Company is then eligible to register for resale the Registrable Securities on
Form S-3, in which case such registration shall be on Form S-3) and shall
contain (except if otherwise directed by the Purchasers) the “Plan
of Distribution”
substantially in the form attached hereto as Exhibit
G. The
Company shall (i) not permit any securities other than the Registrable
Securities to be included in the Registration Statement, (ii) use its best
efforts to cause the Registration Statement to be declared effective under the
Securities Act (including filing with the Commission a request for acceleration
of effectiveness in accordance with Rule 12dl-2 promulgated under the Exchange
Act within five (5) Business Days after the date that the Company is notified
(orally or in writing, whichever is earlier) by the Commission that the
Registration Statement will not be “reviewed,” or not be subject to further
review) as soon as possible after the filing thereof, but in any event prior to
the Effectiveness Date, and (iii) keep such Registration Statement continuously
effective under the Securities Act for a period of two years from the Closing
Date (the “Effectiveness
Period”).
3. Registration
Procedures; Company’s Obligations.
In
connection with the registration of the Registrable Securities, the Company
shall:
(a) Prepare
and file with the Commission on or prior to the Required Filing Date, a
Registration Statement on Form SB-2 or Form S-1 (or if the Company is then
eligible to register for resale the Registrable Securities on Form S-3, then
such registration shall be on Form S-3) in accordance with the method or methods
of distribution thereof as specified by the Holder (except if otherwise directed
by the Holder), and use its best efforts to cause the Registration Statement to
become effective and remain effective as provided herein.
(b) (i) Prepare
and file with the Commission such amendments, including post-effective
amendments, to the Registration Statement as may be necessary to keep the
Registration Statement continuously effective as to the applicable Registrable
Securities for the Effectiveness Period in order to register for resale under
the Securities Act all of the Registrable Securities; (ii) cause the related
Prospectus to be amended or supplemented by any required Prospectus supplement,
and as so supplemented or amended to be filed pursuant to Rule 424 (or any
similar provisions then in force) promulgated under the Securities Act; (iii)
respond promptly to any comments received from the Commission with respect to
the Registration Statement or any amendment thereto and promptly provide the
Holder true and complete copies of all correspondence from and to the Commission
relating to the Registration Statement; and (iv) comply in all material respects
with the provisions of the Securities Act and the Exchange Act with respect to
the disposition of all Registrable Securities covered by the Registration
Statement during the applicable period in accordance with the intended methods
of disposition by the Holder set forth in the Registration Statement as so
amended or in such Prospectus as so supplemented.
(c) Notify
the Holder of Registrable Securities to be sold and any Special Counsel promptly
(and, in the case of (i)(A) below, not less than three (3) Business Days prior
to such filing and, in the case of (i)(C) below, no later than the first
Business Day following the date on which the Registration Statement becomes
effective) and (if requested by any such Person) confirm such notice in writing
no later than three (3) Business Days following the day (i)(A) when a Prospectus
or any Prospectus supplement or post-effective amendment to the Registration
Statement is proposed to be filed, (B) when the Commission notifies the Company
whether there will be a “review” of such Registration Statement and whenever the
Commission comments in writing on such Registration Statement, and (C) with
respect to the Registration Statement or any post-effective amendment, when the
same has become effective; (ii) of any request by the Commission or any other
Federal or state governmental authority for amendments or supplements to the
Registration Statement or Prospectus or for additional information; (iii) of the
issuance by the Commission of any stop order suspending the effectiveness of the
Registration Statement covering any or all of the Registrable Securities or the
initiation of any Proceedings for that purpose; (iv) of the receipt by the
Company of any notification with respect to the suspension of the qualification
or exemption from qualification of any of the Registrable Securities for sale in
any jurisdiction, or the initiation or threatening of any Proceeding for such
purpose; and (v) of the occurrence of any event that makes any statement made in
the Registration Statement or Prospectus or any document incorporated or deemed
to be incorporated therein by reference untrue in any material respect or that
requires any revisions to the Registration Statement, Prospectus or other
documents so that, in the case of the Registration Statement or the Prospectus,
as the case may be, it will not contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances under which they
were made, not misleading.
The
Company shall promptly furnish to the Special Counsel, without charge, (i) any
correspondence from the Commission or the Commission’s staff to the Company or
its representatives relating to any Registration Statement, and (ii) promptly
after the same is prepared and filed with the Commission, a copy of any written
response to the correspondence received from the Commission.
(d) Use its
best efforts to avoid the issuance of, or, if issued, obtain the withdrawal of,
(i) any order suspending the effectiveness of the Registration Statement, or
(ii) any suspension of the qualification (or exemption from qualification) of
any of the Registrable Securities
for sale in any U.S. jurisdiction, at the earliest practicable
moment.
(e) If
requested by the Holder, (i) promptly incorporate in a Prospectus supplement or
post-effective amendment to the Registration Statement such information as the
Company reasonably agrees should be included therein, and (ii) make all required
filings of such Prospectus supplement or such post-effective amendment as soon
as practicable after the Company has received notification of the matters to be
incorporated in such Prospectus supplement or post-effective
amendment.
(f) Furnish
to the Holder and any Special Counsel, without charge, at least one conformed
copy of each Registration Statement and each amendment thereto, including
financial statements and schedules, all documents incorporated or deemed to be
incorporated therein by reference, and all exhibits to the extent requested by
such Person (including those previously furnished or incorporated by reference)
promptly after the filing of such documents with the Commission.
(g) Promptly
deliver to the Holder and any Special Counsel, without charge, as many copies of
the Registration Statement, Prospectus or Prospectuses (including each form of
prospectus) and each amendment or supplement thereto as such Persons may
reasonably request; and the Company hereby consents to the use of such
Prospectus and each amendment or supplement thereto by the selling Holder in
connection with the offering and sale of the Registrable Securities covered by
such Prospectus and any amendment or supplement thereto. Should the Holder offer
or sell the Registrable Securities, such Holder agrees to comply with all
applicable securities laws.
(h) Prior to
any public offering of Registrable Securities, use its best efforts to register
or qualify or cooperate with the selling Holder and any Special Counsel in
connection with the registration or qualification (or exemption from such
registration or qualification) of such Registrable Securities for offer and sale
under the securities or Blue Sky laws of such jurisdictions within the United
States as the Holder reasonably requests in writing, to keep each such
registration or qualification (or exemption therefrom) effective during the
Effectiveness Period and to do any and all other acts or things necessary or
advisable to enable the disposition in such jurisdictions of the Registrable
Securities covered by a Registration Statement; provided,
however, that
the Company shall not be required to qualify generally to do business in any
jurisdiction where it is not then so qualified or to take any action that would
subject it to general service of process in any such jurisdiction where it is
not then so subject or subject the Company to any tax in any such jurisdiction
where it is not then so subject.
(i) Cooperate
with the Holder to facilitate the timely preparation and delivery of
certificates representing Registrable Securities to be sold pursuant to a
Registration Statement and to enable such Registrable Securities to be in such
denominations and registered in such names as the Holder may request at least
two (2) Business Days prior to any sale of Registrable Securities.
(j) Upon the
occurrence of any event contemplated by Section 3(c)(v), promptly prepare a
supplement or amendment, including a post-effective amendment, to the
Registration Statement or a supplement to the related Prospectus or any document
incorporated or deemed to be incorporated therein by reference, and file any
other required document so that, as thereafter delivered, neither the
Registration Statement nor such Prospectus will contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading.
(k) Use its
best efforts to cause all Registrable Securities relating to such Registration
Statement to be listed on any securities exchange, quotation system, market or
over-the-counter bulletin board, if any, on which the same securities issued by
the Company are then listed as and when required pursuant to the Purchase
Agreement.
(l) Comply in
all material respects with all applicable rules and regulations of the
Commission and make generally available to its security holders earning
statements satisfying the provisions of Section 11(a) of the Securities Act and
Rule 158 not later than forty-five (45) days after the end of any twelve (12)
month period (or ninety (90) days after the end of any twelve (12) month period
if such period is a fiscal year) commencing on the first day of the first fiscal
quarter of the Company after the effective date of the Registration Statement,
which statement shall conform to the requirements of Rule 158.
(m) If (i)
there is material non-public information regarding the Company which the
Company’s Board of Directors (the “Board”)
reasonably determines not to be in the Company’s best interest to disclose and
which the Company is not otherwise required to disclose, or (ii) there is a
significant business opportunity (including, but not limited to, the acquisition
or disposition of assets (other than in the ordinary course of business) or any
merger, consolidation, tender offer or other similar transaction) available to
the Company which the Board reasonably determines not to be in the Company’s
best interest to disclose and which the Company would be required to disclose
under the Registration Statement, then the Company may suspend effectiveness of
a Registration Statement and suspend the sale of Registrable Securities under a
Registration Statement one (1) time every three (3) months or three (3) times in
any twelve month period, provided that the Company may not suspend its
obligation for more than thirty (30) days in the aggregate in any twelve month
period if suspension is for any of the reasons listed above or sixty (60) days
in the aggregate in any twelve month period for any other reason (each, a
“Blackout
Period”);
provided,
however, that no
such suspension shall be permitted for more than twenty (20) consecutive days,
arising out of the same set of facts, circumstances or
transactions.
(n) Within
two (2) Business Days after the Registration Statement which includes the
Registrable Securities is ordered effective by the Commission, the Company shall
deliver, and shall cause legal counsel for the Company to deliver, to the
transfer agent for such Registrable Securities (with copies to the Holder whose
Registrable Securities are included in such Registration Statement) confirmation
that the Registration Statement has been declared effective by the Commission in
the form attached hereto as Exhibit
H.
4. Registration
Procedures; Holder’s Obligations
In
connection with the registration of the Registrable Securities, the Holder
shall:
(a) If the
Registration Statement refers to the Holder by name or otherwise as the holder
of any securities of the Company, have the right to require (if such reference
to the Holder by name or otherwise is not required by the Securities Act or any
similar federal statute then in force) the deletion of the reference to the
Holder in any amendment or supplement to the Registration Statement that will be
filed or prepared subsequent to the time that such reference ceases to be
required.
(b) (i) not
sell any Registrable Securities under the Registration Statement until it has
received copies of the Prospectus as then amended or supplemented as
contemplated in Section 3(g) and notice from the Company that such Registration
Statement and any post-effective amendments thereto have become effective as
contemplated by Section 3(c), (ii) comply with the prospectus delivery
requirements of the Securities Act as applicable to it in connection with sales
of Registrable Securities pursuant to the Registration Statement, and (iii)
furnish to the Company information regarding such Holder and the distribution of
such Registrable Securities as is required by law to be disclosed in the
Registration Statement, and the Company may exclude from such registration the
Registrable Securities of the Holder if it fails to furnish such information
within a reasonable time prior to the filing of each Registration Statement,
supplemented Prospectus and/or amended Registration Statement.
(c) upon
receipt of a notice from the Company of the occurrence of any event of the kind
described in Section 3(c)(ii), 3(c)(iii), 3(c)(iv), 3(c)(v) or 3(m), forthwith
discontinue disposition of such Registrable Securities under the Registration
Statement until the Holder’s receipt of the copies of the supplemented
Prospectus and/or amended Registration Statement contemplated by Section 3(j),
or until it is advised in writing by the Company that the use of the applicable
Prospectus may be resumed, and, in either case, has received copies of any
additional or supplemental filings that are incorporated or deemed to be
incorporated by reference in such Prospectus or Registration
Statement.
Each
Holder hereby (i) acknowledges to the Company that the Commission currently
takes the position that coverage of short sales of shares of Common Stock
“against the box” made prior to the Effectiveness Date with any security covered
by any Prospectus is a violation of Section 5 of the Securities Act, as set
forth in Item 65, Section 5 under Section A, of the Manual of Publicly Available
Telephone Interpretations, dated June 1997, compiled by the Office of Chief
Counsel, Division of Corporation Finance, (ii) agrees (on behalf of itself or
any Person over which it has direct control) not to use any of the securities
covered by any Prospectus to cover any short sales, hedging or similar
transactions with the same economic effect as a short sale, made prior to the
Effectiveness Date, and (iii) agrees to comply with Regulation M under the
federal securities laws.
5. Registration
Expenses
All
reasonable fees and expenses incident to the performance of or compliance with
this Agreement by the Company shall be borne by the Company whether or not the
Registration Statement is filed or becomes effective and whether or not any
Registrable Securities are sold pursuant to the Registration Statement. The fees
and expenses referred to in the foregoing sentence shall include, without
limitation, the following: (i) all registration and filing fees (including,
without limitation, fees and expenses (A) with respect to filings required to be
made with each securities exchange or other market on which Registrable
Securities are required hereunder to be listed, (B) with respect to filings
required to be made with the Commission, and (C) in compliance with state
securities or Blue Sky laws); (ii) printing expenses (including, without
limitation, expenses of printing certificates for Registrable Securities and of
printing prospectuses if the printing of prospectuses is requested by the
holders of a majority of the Registrable Securities included in the Registration
Statement); (iii) messenger, telephone and delivery expenses of the Company;
(iv) fees and disbursements of counsel for the Company; and (v) fees and
expenses of all other Persons retained by the Company in connection with the
consummation of the transactions contemplated by this Agreement, including,
without limitation, the Company’s independent public accountants (including the
expenses of any comfort letters or costs associated with the delivery by
independent public accountants of a comfort letter or comfort letters). In
addition, the Company shall be responsible for all of its internal expenses
incurred in connection with the consummation of the transactions contemplated by
this Agreement (including, without limitation, all salaries and expenses of its
officers and employees performing legal or accounting duties), the expense of
any annual audit, and the fees and expenses incurred in connection with the
listing of the Registrable Securities on any securities exchange as required
hereunder.
6. Indemnification
(a) Indemnification
by the Company. The
Company shall, notwithstanding any termination of this Agreement, indemnify and
hold harmless each Purchaser, its permitted assignees, officers, directors,
agents, brokers (including brokers who offer and sell Registrable Securities as
principal as a result of a pledge or any failure to perform under a margin call
of Common Stock), investment advisors and employees, each Person who controls
any such Purchaser or permitted assignee (within the meaning of Section 15 of
the Securities Act or Section 20 of the Exchange Act) and the officers,
directors, agents and employees of each such controlling Person, and the
respective successors, assigns, estate and personal representatives of each of
the foregoing, to the fullest extent permitted by applicable law, from and
against any and all claims, losses, damages, liabilities, penalties, judgments,
costs (including, without limitation, costs of investigation) and expenses
(including, without limitation, reasonable attorneys’ fees and expenses)
(collectively, “Losses”), as
incurred, arising out of or relating to any untrue or alleged untrue statement
of a material fact contained in the Registration Statement, any Prospectus, as
supplemented or amended, if applicable, or arising out of or relating to any
omission or alleged omission of a material fact required to be stated therein or
necessary to make the statements therein (in the case of any Prospectus or
supplement thereto, in the light of the circumstances under which they were
made) not misleading, except (i) to the extent, but only to the extent, that
such untrue statements or omissions are based solely upon information regarding
the Holder furnished in writing to the Company by the Holder expressly for use
therein, which information was reviewed and expressly approved by the Holder or
Special Counsel expressly for use in the Registration Statement, such Prospectus
or in any amendment or supplement thereto, or (ii) as a result of the failure of
the Holder to deliver a Prospectus, as amended or supplemented, to a purchaser
in connection with an offer or sale. The Company shall notify the Holder
promptly of the institution, threat or assertion of any Proceeding of which the
Company is aware in connection with the transactions contemplated by this
Agreement. Such indemnity shall remain in full force and effect regardless of
any investigation made by or on behalf of an Indemnified Party (as defined in
Section 6(c) hereof) and shall survive the transfer of the Registrable
Securities by the Holder.
(b) Indemnification
by Purchaser. Each
Purchaser and its permitted assignees shall, severally and not jointly,
indemnify and hold harmless the Company, its directors, officers, agents and
employees, each Person who controls the Company (within the meaning of Section
15 of the Securities Act and Section 20 of the Exchange Act), and the directors,
officers, agents or employees of such controlling Persons, and the respective
successors, assigns, estate and personal representatives of each of the
foregoing, to the fullest extent permitted by applicable law, from and against
any and all Losses, as incurred, arising out of or relating to (i) the failure
of the Holder to deliver a Prospectus, as amended or supplemented, to a
purchaser in connection with a purchase or sale, (ii) the Holder’s use of a
representation or prospectus other than the Prospectus, as amended or
supplemented, in connection with a purchase or sale, or (iii) any untrue or
alleged untrue statement of a material fact contained in the Registration
Statement, any Prospectus, as supplemented or amended, if applicable, or arising
out of or relating to any omission or alleged omission of a material fact
required to be stated therein or necessary to make the statements therein (in
the case of any Prospectus or supplement thereto, in the light of the
circumstances under which they were made) not misleading, to the extent, but
only to the extent, that (A) such untrue statement or omission is contained in
or omitted from any information so furnished in writing by the Holder or the
Special Counsel to the Company specifically for inclusion in the Registration
Statement or such Prospectus, and (B) such information was reasonably relied
upon by the Company for use in the Registration Statement, such Prospectus or,
to the extent that such information relates to the Holder or the Holder’s
proposed method of distribution of Registrable Securities, was reviewed and
expressly approved in writing by the Holder expressly for use in the
Registration Statement, such Prospectus or such form of Prospectus Supplement.
Notwithstanding anything to the contrary contained herein, the Holder shall be
liable under this Section 6(b) for only that amount as does not exceed the net
proceeds to the Holder as a result of the sale of Registrable Securities
pursuant to such Registration Statement.
(c) Conduct
of Indemnification Proceedings. If any
Proceeding shall be brought or asserted against any Person entitled to indemnity
pursuant to Section 6(a) or 6(b) hereunder (an “Indemnified
Party”), such
Indemnified Party promptly shall notify the Person from whom indemnity is sought
(the “Indemnifying
Party) in
writing, and the Indemnifying Party shall assume the defense thereof, including
the employment of counsel reasonably satisfactory to the Indemnified Party and
the payment of all fees and expenses incurred in connection with defense
thereof; provided, that
the failure of any Indemnified Party to give such notice shall not relieve the
Indemnifying Party of its obligations or liabilities pursuant to this Agreement,
except (and only) to the extent that it shall be finally determined by a court
of competent jurisdiction (which determination is not subject to appeal or
further review) that such failure shall have materially and adversely prejudiced
the Indemnifying Party.
An
Indemnified Party shall have the right to employ separate counsel in any such
Proceeding and to participate in the defense thereof, but the fees and expenses
of such counsel shall be at the expense of such Indemnified Party or Parties
unless: (i) the Indemnifying Party has agreed in writing to pay such fees and
expenses; or (ii) the Indemnifying Party shall have failed promptly to assume
the defense of such Proceeding and to employ counsel reasonably satisfactory to
such Indemnified Party in any such Proceeding; or (iii) the named parties to any
such Proceeding (including any impleaded parties) include both such Indemnified
Party and the Indemnifying Party, and such Indemnified Party shall have been
advised by counsel that a conflict of interest is likely to exist if the same
counsel were to represent such Indemnified Party and the Indemnifying Party (in
which case, if such Indemnified Party notifies the Indemnifying Party in writing
that it elects to employ separate counsel at the expense of the Indemnifying
Party, the Indemnifying Party shall not have the right to assume the defense
thereof and such counsel shall be at the expense of the Indemnifying Party). The
Indemnifying Party shall not be liable for any settlement of any such Proceeding
effected without its written consent, which consent shall not be unreasonably
withheld, conditioned or delayed. No Indemnifying Party shall, without the prior
written consent of the Indemnified Party, which consent shall not unreasonably
be withheld, conditioned or delayed, effect any settlement of any pending
Proceeding in respect of which any Indemnified Party is a party, unless such
settlement includes an unconditional release of such Indemnified Party from all
liability on claims that are the subject matter of such Proceeding.
All
reasonable fees and expenses of the Indemnified Party (including reasonable fees
and expenses to the extent incurred in connection with investigating or
preparing to defend such Proceeding in a manner not inconsistent with this
Section) shall be paid to the Indemnified Party, as incurred, within ten (10)
Business Days of written notice thereof to the Indemnifying Party (regardless of
whether it is ultimately determined that an Indemnified Party is not entitled to
indemnification hereunder; provided, that
the Indemnifying Party may require such Indemnified Party to undertake to
reimburse all such fees and expenses to the extent it is finally judicially
determined that such Indemnified Party is not entitled to indemnification
hereunder or pursuant to applicable law).
(d) Contribution. If a
claim for indemnification under Section 6(a) or 6(b) is unavailable to an
Indemnified Party because of a failure or refusal of a governmental authority to
enforce such indemnification in accordance with its terms (by reason of public
policy or otherwise), then each Indemnifying Party, in lieu of indemnifying such
Indemnified Party, shall contribute to the amount paid or payable by such
Indemnified Party as a result of such Losses, in such proportion as is
appropriate to reflect the relative fault of the Indemnifying Party and
Indemnified Party in connection with the actions, statements or omissions that
resulted in such Losses as well as any other relevant equitable considerations.
The relative fault of such Indemnifying Party and Indemnified Party shall be
determined by reference to, among other things, whether any action in question,
including any untrue or alleged untrue statement of a material fact or omission
or alleged omission of a material fact, has been taken or made by, or relates to
information supplied by, such Indemnifying Party or Indemnified Party, and
the parties’
relative intent, knowledge, access to information and opportunity to correct or
prevent such action, statement or omission. The amount paid or payable by a
party as a result of any Losses shall be deemed to include, subject to the
limitations set forth in Section 6(c), any reasonable attorneys’ or other
reasonable fees or expenses incurred by such party in connection with any
Proceeding to the extent such party would have been indemnified for such fees or
expenses if the indemnification provided for under Section 6(a) or 6(b) was
available to such party in accordance with its terms. Notwithstanding anything
to the contrary contained herein, the Holder shall be liable or required to
contribute under this Section 6(d) for only that amount as does not exceed the
net proceeds to the Holder as a result of the sale of Registrable Securities
pursuant to the Registration Statement.
The
parties hereto agree that it would not be just and equitable if contribution
pursuant to this Section 6(d) were determined by pro rata allocation or by any
other method of allocation that does not take into account the equitable
considerations referred to in the immediately preceding paragraph. No Person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any Person who was
not guilty of such fraudulent misrepresentation.
The
indemnity and contribution agreements contained in this Section are in addition
to any liability that the Indemnifying Parties may have to the Indemnified
Parties.
7. Rule
144.
As long
as the Holder owns Registrable Securities, the Company covenants to timely file
(or obtain extensions in respect thereof and file within the applicable grace
period) all reports required to be filed by the Company after the date hereof
pursuant to Section 13(a) or 15(d) of the Exchange Act. As long as the Holder
owns Registrable Securities, if the Company is not required to file reports
pursuant to Section 13(a) or 15(d) of the Exchange Act, it will prepare and
furnish to the Holder and make publicly available in accordance with Rule 144(c)
promulgated under the Securities Act annual and quarterly financial statements,
together with a discussion and analysis of such financial statements in form and
substance substantially similar to those that would otherwise be required to be
included in reports required by Section 13(a) or 15(d) of the Exchange Act, as
well as any other information required thereby, in the time period that such
filings would have been required to have been made under the Exchange Act. The
Company further covenants that it will take such further action as the Holder
may reasonably request, all to the extent required from time to time to enable
the Holder to sell Conversion Shares, Warrant Shares and PIK Dividend Shares
without registration under the Securities Act within the limitation of the
exemptions provided by Rule 144 promulgated under the Securities Act, including
providing any legal opinions of counsel to the Company referred to in the
Purchase Agreement. Upon the request of any Holder, the Company shall deliver to
such Holder a written certification of a duly authorized officer as to whether
it has complied with such requirements.
8. Miscellaneous.
(a) Remedies. The
remedies provided in this Agreement and the Purchase Agreement are cumulative
and not exclusive of any remedies provided by law. In the event of a breach by
the Company or by the Holder of any of their obligations under this Agreement,
the Holder or the Company, as the case may be, in addition to being entitled to
exercise all rights granted by law and under this Agreement, including recovery
of damages, will be entitled to specific performance of its rights under
this Agreement.
The Company and the Holder agree that monetary damages would not
provide adequate
compensation for any losses incurred by reason of a breach by it of any of the
provisions of this Agreement and hereby further agrees that, in the event of any
action for specific performance in respect of such breach, it shall waive the
defense that a remedy at law would be adequate.
(b) No
Inconsistent Agreements. Neither
the Company nor any of its Affiliates has as of the date hereof entered into,
nor shall the Company or any of its Affiliates, on or after the date of this
Agreement, enter into, any agreement with respect to its securities that is
inconsistent with the rights granted to the Holder in this Agreement or
otherwise conflicts with the provisions hereof. Without limiting the generality
of the foregoing, without the written consent of the Holder, the Company shall
not grant to any Person the right to request the Company to register any
securities of the Company under the Securities Act if the rights so granted are
inconsistent with the rights granted to the Holder set forth herein, or
otherwise prevent the Company with complying with all of its obligations
hereunder.
(c) No
Piggyback on Registrations. Neither
the Company nor any of its security holders (other than the Holder in such
capacity pursuant hereto) may include securities of the Company in the
Registration Statement based upon piggyback registration rights provided by the
Company to such Holder, except for
those Holders of Common Stock who execute a Lock-Up Agreement with the Company
and who are not “Affiliates” of the Company. An “Affiliate” means an officer,
director or 10% stockholder of the Company.
(d) Failure
to File Registration Statement and Other Events. The
Company and the Holder agree that the Holder will suffer damages if the
Registration Statement is not filed on or prior to the Required Filing Date or
is not declared effective by the Commission on or prior to the Effectiveness
Date and maintained in the manner contemplated herein during the Effectiveness
Period or if certain other events occur. The Company and the Holder further
agree that it would not be feasible to ascertain the extent of such damages with
precision. Accordingly, if (i) the Registration Statement is not filed on or
prior to the Required Filing Date, or is not declared effective by the
Commission on or prior to the Effectiveness Date, or (ii) the Company fails to
file with the Commission a request for acceleration in accordance with Rule
12dl-2 promulgated under the Exchange Act within five (5) Business Days after
the date that the Company is notified (orally or in writing, whichever is
earlier) by the Commission that a Registration Statement will not be “reviewed,”
or not subject to further review, or (iii) the Registration Statement is filed
with and declared effective by the Commission but thereafter (otherwise than as
permitted by item (iv) below) ceases to be effective or available as to all
Registrable Securities for 30 days during the Effectiveness Period, without
being succeeded within a reasonable period by a subsequent Registration
Statement filed with and declared effective by the Commission, or (iv) the
Company suspends the use of the Prospectus forming a part of such Registration
Statement for more than thirty (30) days in any period of 365 consecutive days
if the Company suspends in reliance on its ability to do so due to the existence
of a development that, in the good faith discretion of the Board, makes it
appropriate to so suspend or which renders the Company unable to comply with the
Commission requirements, or the Company suspends the use of the Prospectus
forming a part of such Registration Statement for more than sixty (60) days in
any period of 365 consecutive days for any other reason, or (v) during the
Effectiveness Period, trading in the Common Stock shall be suspended for any
reason for more than three (3) Business Days in the aggregate, or (vi) the
Company breaches in a material respect any covenant or other material term or
condition in the Transaction Documents (other than a representation or warranty
contained therein) or any other agreement, document, certificate or other
instrument delivered in connection with the transactions contemplated hereby and
thereby, and such breach continues for a period of thirty (30) days after
written notice thereof to the Company, or (vii) the Company has breached Section
3(n) of this Agreement (any such failure or breach being referred to as an
“Event”), the
Company shall pay as liquidated damages for such failure or breach and not as a
penalty (the “Liquidated
Damages”) to the
Holder an amount equal to two percent (2%) of the purchase price of the
Preferred Stock and the Warrants paid by the initial Holder pursuant to the
Purchase Agreement for each thirty (30) day period, pro rated for any period
less than thirty (30) days, following the Event until the applicable Event has
been cured. Payments to be made pursuant to this Section 8(d) shall be due and
payable in cash in arrears at the end of each thirty (30) day period. The
parties agree that the Liquidated Damages represent a reasonable estimate on the
part of the parties, as of the date of this Agreement, of the amount of damages
that may be incurred by the Holder if the Registration Statement is not filed on
or prior to the Required Filing Date or has not been declared effective by the
Commission on or prior to the Effectiveness Date and maintained in the manner
contemplated herein during the Effectiveness Period or if any other Event as
described herein has occurred.
(e) Consent
to Jurisdiction. The
Company and each Purchaser (i) hereby irrevocably submit to the exclusive
jurisdiction of the United States District Court for the Northern District of
Texas and the courts of the State of Texas located in Dallas County for the
purposes of any suit, action or proceeding arising out of or relating to this
Agreement or the Purchase Agreement, and (ii) hereby waive, and agree not to
assert in any such suit, action or proceeding, any claim that it is not
personally subject to the jurisdiction of such court, that the suit, action or
proceeding is brought in an inconvenient forum or that the venue of the suit,
action or proceeding is improper. The Company and each Purchaser consent to
process being served in any such suit, action or proceeding by mailing a copy
thereof to such party at the address in effect for notices to it under this
Agreement and agrees that such service shall constitute good and sufficient
service of process and notice thereof. Nothing in this Section 8(e) shall affect
or limit any right to serve process in any other manner permitted by
law.
(f) Amendments
and Waivers. The
provisions of this Agreement, including the provisions of this sentence, may not
be amended, modified or supplemented, and waivers or consents to departures from
the provisions hereof may not be given, unless the same shall be in writing and
signed by the Company and the Purchasers.
(g) Notices. Any and
all notices or other communications or deliveries required or permitted to be
provided hereunder shall be in writing and shall be deemed given and effective
on the earlier of (i) the date of transmission, if such notice or communication
is delivered via facsimile at the facsimile telephone number specified for
notice prior to 5:00 p.m., Central Time, on a Business Day, (ii) the first
Business Day after the date of transmission, if such notice or communication is
delivered via facsimile at the facsimile telephone number specified for notice
later than 5:00 p.m., Central Time, on any date and earlier than 11:59 p.m.,
Central Time, on such date, (iii) the Business Day following the date of
mailing, if sent by nationally recognized overnight courier service, or (iv)
actual receipt by the party to whom such notice is required to be given.
(x) if to the
Company:
Lighting
Science Group Corporation
0000
XxXxxxxx Xxxxxx
Xxxxx
0000
Xxxxxx,
Xxxxx 00000
Attention:
Xx. Xxx Xxxx, Chairman & CEO
Telecopier:
(000) 000-0000
with a
copy to:
Xxxxxx
Xxxxx LLP
0000 X
Xxxxxx, XX
Xxxxxxxxxx,
X.X. 00000
Attention:
Xxxxx Xxxxxxxxx, Esq.
Telecopier:
(000) 000-0000
(y) if to any
Purchaser:
At the
address of such Purchaser set forth on Exhibit
A to this
Agreement.
or to
such other address or addresses or facsimile number or numbers as any such party
may most recently have designated in writing to the other parties hereto by such
notice.
(h) Successors
and Assigns. This
Agreement shall be binding upon and inure to the benefit of the parties and
their successors and permitted assigns and shall inure to the benefit of the
Holder and its successors and assigns. The Company may not assign this Agreement
or any of its respective rights or obligations hereunder without the prior
written consent of the Purchasers, except in connection with an acquisition of
the Company. Each Purchaser may assign its rights hereunder in the manner and to
the Persons as permitted under the Purchase Agreement.
(i) Assignment
of Registration Rights. The
rights of the Holder hereunder, including the right to have the Company register
for resale Registrable Securities in accordance with the terms of this
Agreement, shall be assignable by each Holder to any transferee of the Holder of
all or a portion of the
shares of Registrable Securities if: (i) the Holder agrees in writing with the
transferee or assignee to assign such rights, and a copy of such agreement is
furnished to the Company within a reasonable time after such assignment; (ii)
the Company is, within a reasonable time after such transfer or assignment,
furnished with written notice of (A) the name and address of such transferee or
assignee, and (B) the securities with respect to which such registration rights
are being transferred or assigned; (iii) following such transfer or assignment
the further disposition of such securities by the transferee or assignees is
restricted under the Securities Act and applicable state securities laws; (iv)
at or before the time the Company receives the written notice contemplated by
clause (ii) of this Section, the transferee or assignee agrees in writing with
the Company to be bound by all of the provisions of this Agreement; and (v) such
transfer shall have been made in accordance with the applicable requirements of
the Purchase Agreement and shall be for no less than 10% of the Registrable
Securities. In addition, the Holder shall have the right to assign its rights
hereunder to any other Person with the prior written consent of the Company,
which consent shall not be unreasonably withheld, conditioned or delayed. The
rights to assignment shall apply to the Holder (and to subsequent) successors
and assigns. In the event of an assignment pursuant to this Section 8(i), the
Purchaser shall pay all incremental costs and expenses incurred by the Company
in connection with filing a Registration Statement (or an amendment to the
Registration Statement) to register the shares of Registrable Securities
assigned to any assignee or transferee of the Purchaser.
(j) Counterparts. This
Agreement may be executed in any number of counterparts, each of which when so
executed shall be deemed to be an original, and all of which taken together
shall constitute one and the same Agreement. In the event that any signature is
delivered by facsimile transmission, such signature shall create a valid binding
obligation of the party executing (or on whose behalf such signature is
executed) the same with the same force and effect as if such facsimile signature
were the original thereof.
(k) Governing
Law. This
Agreement shall be governed by and construed in accordance with the laws of the
State of Delaware, without regard to principles of conflicts of law thereof.
This Agreement shall not be interpreted or construed with any presumption
against the party causing this Agreement to be drafted.
(l) Cumulative
Remedies. The
remedies provided herein are cumulative and not exclusive of any remedies
provided by law.
(m) Termination. This
Agreement shall terminate on the date on which all remaining Registrable
Securities may be sold without restriction pursuant to Rule 144(k) of the
Securities Act.
(n) Severability. If any
term, provision, covenant or restriction of this Agreement is held to be
invalid, illegal, void or unenforceable in any respect, the remainder of the
terms, provisions, covenants and restrictions set forth herein shall remain in
full force and effect and shall in no way be affected, impaired or invalidated,
and the parties hereto shall use their reasonable efforts to find and employ an
alternative means to achieve the same or substantially the same result as that
contemplated by such term, provision, covenant or restriction. It is hereby
stipulated and declared to be the
intention of the parties that they would have executed the remaining terms,
provisions, covenants and restrictions without including any of such that may be
hereafter declared invalid, illegal, void or unenforceable.
(o) Headings. The
headings herein are for convenience only, do not constitute a part of this
Agreement and shall not be deemed to limit or affect any of the provisions
hereof.
[Remainder
of page intentionally left blank. Signature pages to follow.]
IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their respective authorized persons as of the date first indicated
above.
LIGHTING
SCIENCE GROUP CORPORATION
By:
Xxx Xxxx,
Chairman
& CEO
[Signatures
of Purchasers to follow on next pages.]
PURCHASER
NAME:
By:__________________________
Name:
Title:
Tax ID
#:
Full
Address:
Facsimile
#:
Telephone
#:
Attn: