This Intercreditor Agreement is made and entered
into between Summit Financial Resources, L.P., a Hawaii limited
partnership (“Summit”), Alpha Capital Anstalt, a
company organized and existing under the laws of Liechtenstein
(“Alpha”), Longview Fund L.P., a California limited
partnership (“Longview”), and Michael S. Rudolph, an
individual and as collateral agent for Alpha and Longview
(“Collateral Agent”) (Alpha, Longview, and Collateral
Agent are collectively referred to as “Lender”), and is
acknowledged and consented to by Irvine Sensors Corporation, a
Delaware corporation (“Client”).
1. Summit is
entering into a financing agreement with Client (the “Summit
Financing”).
2. Lender is
currently providing certain financing to Client (the “Lender
Financing”).
3. Summit and
Lender desire to enter into this Intercreditor Agreement in order
to (i) agree to and confirm the relative rights and payment of
their respective indebtedness and (ii) agree to certain other
rights, priorities, and interests.
For good and valuable consideration, the receipt
and sufficiency of which is hereby acknowledged, Summit and Lender
hereby agree as follows:
1. Definitions . Terms used in the
singular shall have the same meaning when used in the plural and
vice versa. In addition to the terms defined above, as used herein,
the term:
a. “Default Rights and
Remedies” means any and all rights and remedies granted in,
arising from, or relating to any agreement, instrument, or document
and any and all rights and remedies now or hereafter existing by
statute, at law, or in equity, which may be exercised only upon the
occurrence of a breach or event of default.
b. “Encumbrance” means any and
all security interests, liens, mortgages, deeds of trust,
assignments, and any other right, title or interest in, to, or on
any property of Client and/or any guarantor (whether obtained by
agreement or by judicial process), including real property,
personal property, intellectual property, and intangible
property.
c. “Summit Collateral” means
(i) any and all collateral securing the Summit Financing,
wherever located, now owned or hereafter acquired, presently
existing or created in the future, including real property,
personal property, intellectual property, and intangible property,
and (ii) any and all balances, deposits, debts, or any other
amount of obligations of Summit owing to Client, including, without
limitation, any reserve, whether or not due.
Irvine Sensors
Corporation
6/11/2009
2. Consent to Loans . Lender hereby
consents to Client entering into the agreements evidencing the
Summit Financing. Lender waives any provision in any agreement
between Lender and Client which prohibits, restricts, or limits the
right of Client to enter into the agreements evidencing the Summit
Financing.
a. Summit agrees, in connection with the
initial funding under the Summit Financing, to tender to Lender the
sum of two hundred forty-five thousand two hundred nine and 50/100
dollars ($245,209.50) (the “Lender Payment”) by wire
transfer as follows:
Citibank,
N.A.
ABA# 021-000-089
A/C Credit Suisse
A/C# 4080-4003
F/F/C Longview Fund, L.P A/C 706940
Attn: Equity Finance/Prime Broker Services
b. Lender agrees to apply the Lender
Payment to the obligations owing under the Lender Financing. Lender
further agrees and acknowledges that in the event the Summit
Financing does not close for any reason, or the amount available to
pay to Lender from the initial funding under the Summit Financing
is not sufficient to pay the full amount of the Lender Payment,
Summit shall be excused from any obligation to tender the Lender
Payment to Lender and the subordinations provided in Section 4
below shall be of no effect until Lender receives the full amount
of the Lender payment.
c. Client hereby authorizes and instructs
Summit to disburse all amounts under the Summit Financing directly
to Lender as necessary to pay to Lender the Lender Payment. Client
acknowledges and agrees that such payment by Summit shall
constitute an advance under the Summit Financing for which Client
is obligated to repay pursuant to the terms and conditions of the
Summit Financing.
4. Priority of Encumbrances. Upon
Lender’s receipt of the Lender Payment from Summit or
otherwise, and irrespective of the time, order, manner, or method
of creation, attachment or perfection of the Encumbrances granted
to Summit or Lender, the time, place or manner of the filing of
their respective financing statements or other method of
perfection, the time, place or manner of recording of any
instrument, whether Summit or Lender or any bailee or agent thereof
holds possession of any or all of the property or assets of Client,
the dating, execution or delivery of any agreement, documents or
instrument granting Summit or Lender the Encumbrance, the giving or
failure to give notice of the acquisition or expected acquisition
of any purchase money security interest or other Encumbrance, and
any provision of the Uniform Commercial Code or any other
applicable statute or common law to the contrary:
a. Any and all Encumbrances in favor of
Summit in or on any Summit Collateral, now existing or hereafter
created, shall have priority over any and all Encumbrances in favor
of Lender in or on any Summit Collateral, now existing or hereafter
created. Lender hereby subordinates any and all Encumbrances in
favor of Lender in or on any Summit Collateral, now existing or
hereafter created, to any and all Encumbrances in favor of Summit
in or on any Summit Collateral, now existing or hereafter
created.
Irvine Sensors
Corporation
6/11/2009
2
5. Limitation of Subordination .
The subordination of Lender’s Encumbrances in or on any
Summit Collateral to any and all Encumbrances in favor of Summit in
or on any Summit Collateral, as provided in Section 4 above,
shall only be effective up to the maximum principal amount of two
million dollars ($2,000,000.00), plus the amount of all interest,
fees, costs, and expenses owing by Client under the Summit
Financing.
6. Exercise of Default Rights and
Remedies . Lender agrees that it will not exercise any Default
Rights and Remedies concerning the Lender Financing, including any
Default Rights and Remedies against any of the Summit Collateral,
without first giving Summit at least thirty (30) days written
notice of the default on the Lender Financing, which notice shall
specify the nature and terms of the default on the Lender
Financing.
7. Prohibition of Prepayment of Lender
Financing . Lender covenants and agrees that it will not
receive or accept any prepayment of the Lender Financing so long as
any amount is outstanding and unpaid on the Summit Financing,
without the prior written consent of Summit, which consent shall
not be unreasonably withheld. Lender acknowledges that the
agreements evidencing the Summit Financing will prohibit Client
from making any such prepayment. However, if Lender receives any
prepayment in violation of this covenant, such payments shall be
received in trust for Summit and shall be immediately tendered to
Summit to be applied toward payment of the Summit Financing.
Subject to Section&
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