LSG Appoint Edward Bednarcik as Newest Chief Executive Officer

Appointment of Edward Bednarcik as Chief Executive Officerof Lighting Science (LSG)

On August 28, 2014, the Board of Directors of the Company (the “Board”) appointed Edward Bednarcik as Chief Executive Officer of the Company, effective September 8, 2014. In connection with Mr. Bednarcik’s appointment, Richard H. Davis, Jr. will resign from his position as Interim Chief Executive Officer, effective September 8, 2014.

Mr. Bednarcik, 57, previously served as chief executive officer and president of VideoIQ, an enterprise software company, from 2011 to January 2014, when VideoIQ was sold to Avigilon Corp., a company that is publicly traded on the Toronto Stock Exchange. From 2007 to 2011, Mr. Bednarcik served as chief executive officer and president of Wright Line LLC, a supplier of innovative data center solutions for government and commercial customers. Mr. Bednarcik transitioned out of his position at Wright Line LLC after the company was sold to Eaton Corporation Plc, a company that is publicly traded on the New York Stock Exchange, in August 2010. Mr. Bednarcik was vice president and general manager of A123 Systems, LLC, a company focused on high power Lithium Ion battery solutions for hybrid electric vehicle transportation, from 2005 to 2007. From 1997 to 2005, Mr. Bednarcik was with American Power Conversion Corporation, a provider of integrated solutions to large- and small-scale data centers, where he served as general manager of the network solutions division from 1997 to 1999, vice president and general manager of the business network solutions group from 2000 to 2002 and vice president of global sales from 2003 to 2005. Since 2012, Mr. Bednarcik has served on the board of directors and audit and compensation committees of Raritan Inc., a privately held company providing power distribution solutions to enterprise clients globally. Mr. Bednarcik holds a Bachelor of Science degree from the University of Rhode Island.

The terms of Mr. Bednarcik’s employment are governed by an Employment Agreement, dated as of August 28, 2014, between the Company and Mr. Bednarcik (the “Employment Agreement”), which was approved by the Board on August 28, 2014. The Employment Agreement has a five-year term (the “Employment Period”). The Employment Agreement provides that, during the Employment Period, Mr. Bednarcik is entitled to (a) an annual base salary of $400,000 (the “Base Salary”) and benefits generally available to other senior executives of the Company and
(b) reimbursement for reasonable housing in the Brevard County area in the amount of up to $3,000 per month and a car allowance in the amount of up to $600 per month, as long as the headquarters of the Company is located in the Brevard County area. Mr. Bednarcik is also eligible to receive a performance bonus with respect to each calendar year (or partial calendar year) during the Employment Period based upon a bonus plan to be determined annually by the Board (or the compensation committee of the Board) and criteria that will be presented by the Board (or the compensation committee of the Board) to Mr. Bednarcik promptly following the first meeting of the Board during each fiscal year (such criteria, with respect to any calendar year, the “Applicable Plan”). The level of such performance bonus will be the sum of (x) up to 50% of the Base Salary, based on Mr. Bednarcik’s satisfaction of the criteria specified in the Applicable Plan, which bonus will be paid 50% in cash and 50% in restricted stock units of Common Stock (“Restricted Stock Units”), with 50% of such Restricted Stock Units vesting immediately and 50% of such Restricted Stock Units vesting over a two-year period, in two equal increments on the first two anniversaries of the award, and (y) up to 100% of the Base Salary, based on the Board’s evaluation, in its sole discretion, of the Company’s operating results during such year as measured against criteria specified in the Applicable Plan, which bonus will be paid 25% in cash and 75% in Restricted Stock Units, with 100% of such Restricted Stock Units vesting over a two-year period, in two equal increments on the first two anniversaries of the award. The Employment Agreement provides that, at Mr. Bednarcik’s option, on each Restricted Stock Unit vesting date he may sell up to one-third of the stock vesting on such date back to the Company, and the Company will purchase such stock at a price equal to the published closing price of the Common Stock on such date.

Pursuant to the Employment Agreement, Mr. Bednarcik is also entitled to a grant of an employee stock option to purchase 15,500,000 of shares of Common Stock (the “Option”). Unless vested or accelerated sooner in accordance with the terms of the Company’s 2012 Amended and Restated Equity-Based Compensation Plan (the “Plan”), the Option will vest and become exercisable in four equal tranches over a four-year period, with the first tranche vesting on September 8, 2015, and the remaining tranches vesting annually thereafter. The Option will be subject to the terms and conditions of the Plan and a stock option award agreement. Furthermore, to the extent that the foregoing Option grant exceeds the maximum number of options to purchase Common Stock permitted to be granted under the Plan to any individual during a single year (the “Maximum Number”), the Company will present to its stockholders, for their approval at the Company’s first Annual Meeting of Stockholders following Mr. Bednarcik’s start date, a proposal to amend the Plan so as to raise the Maximum Number to at least 15,500,000, and to the extent that the Option grant to Mr. Bednarcik exceeds the number of shares of Common Stock underlying options registered pursuant to the Company’s Registration Statements on Form S-8 currently on file with the SEC, the Company will file an additional Registration Statement on Form S-8 to register the shares of Common Stock underlying the Option.

The Employment Agreement contains customary confidentiality and non-competition provisions. If Mr. Bednarcik’s employment is terminated by the Company without “cause,” or if he resigns for “good reason,” the Company would be required to continue to pay him the Base Salary for a period of one (1) year following the date of termination, subject to Mr. Bednarcik’s execution of a general release. If Mr. Bednarcik’s employment is terminated for “cause,” (a) any shares underlying the Restricted Stock Units that are not then vested will be forfeited on the date of such termination and (b) no portion of the Option will continue to be exercisable as of the date of such termination.

Election of Pegasus Designees

As of August 28, 2014, the date of the Company’s Annual Meeting of Stockholders (the “Annual Meeting”), and pursuant to the Amended and Restated Certificate of Designation of Series I Convertible Preferred Stock, Pegasus had the right to elect five directors to serve on the Board. On August 28, 2014 and pursuant to these rights, Pegasus elected Craig Cogut, Richard H. Davis, Jr., Jonathan Rosenbaum and Seth Bernstein as directors of the Company (each, a “Series I Director”) to serve on behalf of the holders of the Company’s Series I Convertible Preferred Stock, par value $0.001 per share (the “Series I Preferred Stock”), leaving one position vacant. Each Series I Director may serve a term expiring at the next Annual Meeting of Stockholders in 2015 and until the election and qualification of his successor or his earlier resignation or removal.

04 Sep