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Exhibit 10.1 FORM OF SUBSCRIPTION AGREEMENT THIS
SUBSCRIPTION AGREEMENT (this " Agreement "), dated as of
, 2008, by and among Irvine Sensors Corporation, a Delaware
corporation (the " Company "), and the subscriber identified
on the signature page hereto (" Subscriber ").
WHEREAS , the Company is offering secured promissory notes
in the aggregate principal amount of $1,000,000 in such
denominations as the Company deems advisable (the " Notes ")
and, as additional consideration for the Notes, the Company shall
issue shares of its $0.01 par value common stock (" Common
Stock ") to each Subscriber with a value equal to 25% of the
principal amount of the Notes purchased by such Subscriber, based
on the fair market value of the Common Stock (as determined in
accordance with Nasdaq’s rules) (the " Market
Value ") as of the date of issuance of the Notes (the "
Initial Shares ") and the Company may also issue an
additional number of shares of its common stock to each investor
equal to 12.5% or 25% of the principal amount of the Notes
purchased by such Subscriber, based on the Market Value of the
Common Stock (determined as described below) (together with the
Initial Shares, the " Shares "). The Company will
issue the Initial Shares to the investors upon the earlier of
(i) the closing of a Qualified Financing (as defined herein),
or (ii) seven months following the issuance date of the Notes
or as soon as practicable thereafter as permitted by The NASDAQ
Stock Market, LLC (" Nasdaq "). The Notes and Shares will
only be offered and sold to a limited number of subscribers who are
" Accredited Investors ," as such term is defined
hereinafter, in accordance with the terms and conditions set forth
in the confidential private placement memorandum dated
August 29, 2008 (the " Confidential Placement
Memorandum " or the " Memorandum ") that was furnished
by the Company to the Subscriber. Capitalized terms used but not
otherwise defined in this Agreement shall have the meanings
ascribed to such terms in the Memorandum. WHEREAS , the
Company and the Subscriber are executing and delivering this
Agreement in reliance upon an exemption from securities
registration afforded by the provisions of Section 4(2) and/or
Regulation D (" Regulation D ") as promulgated by
the United States Securities and Exchange Commission (the "
Commission ") under the Securities Act of 1933, as amended
(the " 1933 Act "), and similar exemptions under applicable
state securities laws. WHEREAS , the parties desire that,
upon the terms and subject to the conditions contained herein, the
Company shall issue and sell to the Subscriber, as provided herein,
and the Subscriber, shall purchase the Note, in the form attached
hereto as Exhibit A , and the Shares. The Subscriber
desires to acquire Note in the original principal amount set forth
on the signature page hereto pursuant to the Confidential Placement
Memorandum and the terms and conditions of this Agreement. The Note
and the Shares are collectively referred to herein as the "
Securities ." NOW, THEREFORE , in consideration of
the mutual covenants and other agreements contained in this
Agreement the Company and the Subscriber hereby agree as follows:
1. (a) Subscription . In accordance with the terms and
conditions of the Confidential Placement Memorandum, the
Subscriber, intending to be legally bound, hereby irrevocably
subscribes for and agrees to purchase Note in the original
principal amount set forth on the signature page hereto and to pay
the original principal amount in immediately available funds
contemporaneously with the execution and delivery of this
Subscription Agreement. The execution and delivery of this
Agreement by the Subscriber will not constitute an agreement
between the Subscriber and the Company until this Agreement has
been accepted by the Company evidenced by receipt by the Subscriber
of an acceptance page of this Agreement signed by the Company, and
then subject to the terms and conditions of this Agreement. The
Subscriber understands that acceptance or rejection, in whole or in
part, by the Company and/or the Placement Agent (as defined herein)
of the subscription and agreement of the Subscriber to purchase the
Note is within the sole and absolute discretion of the Company
and/or the Placement Agent. Likewise, the Subscriber understands
acknowledges and agrees that acceptance by the Company and/or the
Placement Agent of any subscription of a Subscriber, in whole or in
part, is predicated upon the representations and warranties of the
Subscriber as set forth hereinafter and that SUBSCRIPTIONS, ONCE
RECEIVED BY THE COMPANY AND/OR THE PLACEMENT AGENT, ARE IRREVOCABLE
BY THE SUBSCRIBER, AND, THEREFORE, MAY NOT BE WITHDRAWN .
(b) Closing Date . The closing of the purchase and
sale of the Notes hereunder and under other Subscription Agreements
(the " Closing ") shall be held at the offices of Dorsey
& Whitney LLP, 38 Technology Drive, Suite 100, Irvine,
California 92618 after subscriptions for the Securities have been
accepted by the Company (the date of the Closing being hereinafter
referred to as the " Closing Date "). Subscriptions will not
be refunded unless the Company rejects Subscriber’s
subscription, in whole or in part. (c) Deliveries. The
Subscriber shall deliver at the Closing the Omnibus Signature Page
which the Company shall be authorized, upon satisfaction of the
conditions set forth in Section 7 hereof, to attach to an
execution version of the Secured Promissory Note, the Intercreditor
Agreement, and the Collateral Agent Agreement, all in substantially
the form attached to the Confidential Placement Memorandum with
such minor modifications thereto, if any, as the Company deems are
necessary and appropriate and are approved by the Placement Agent.
2. Shares . As consideration for the Notes, the
Company shall issue the Initial Shares of the Common Stock to
Subscriber with a value equal to 25% of the principal amount of the
Note, based on the Market Value of the Common Stock as of the date
of issuance of the Note. The Initial Shares will be issued to
Subscriber upon the earlier of (i) the closing of a Qualified
Financing or (ii) seven months following the issuance date of
the Note or as soon as practicable thereafter as permitted by the
Nasdaq. In the event that the Note has not been paid in full on or
before the six month anniversary of the issuance date of the Note
(the "Six Month Anniversary Date"), the Company shall issue an
additional number of shares of the Common Stock to Subscriber with
a value equal to 12.5% of the principal amount of the Note, based
on the greater of (i) the Market Value of the Common Stock as
of the first business day immediately following the Six Month
Anniversary Date or (ii) the Market Value of the Common Stock
as of the date of issuance of the Note (the "Six Month Shares"). In
the event a Qualified Financing has closed prior to the Six Month
Anniversary Date, the Six Month Shares will be issued to Subscriber
upon the first business day immediately following the Six Month
Anniversary Date or as soon as practicable thereafter as permitted
by Nasdaq. In the event that a Qualified Financing has not closed
prior to the Six Month Anniversary Date, the Six Month Shares will
be issued to Subscriber upon the earlier of (i) the closing of
a Qualified Financing or (ii) seven months following the
issuance date of the Notes or as soon as practicable thereafter as
permitted by Nasdaq. In the event that the Note has not been paid
in full on or before the twelve month anniversary of the issuance
date of the Note (the "Twelve Month Anniversary Date"), the Company
shall issue an additional number of shares of the Common Stock to
Subscriber with a value equal to 12.5% of the principal amount of
the Note, based on the greater of (i) the Market Value of the
Company’s Common Stock as of the first business day
immediately following the Twelve Month Anniversary Date or
(ii) the Market Value of the Common Stock as of the date of
issuance of the Note. The Twelve Month Shares will be issued to
such investors upon the first business day immediately following
the date of the Twelve Month Anniversary Issuance or as soon as
practicable thereafter as permitted by Nasdaq. For purposes of this
Agreement, a "Qualified Financing" shall mean the closing of an
equity private placement to be conducted by J.P. Turner &
Company, L.L.C. with gross proceeds of at least $2.0 million.
3. Subscriber’s Representations and Warranties .
The Subscriber hereby represents and warrants to and agrees with
the Company that: (a) Information on Company . The
Subscriber acknowledges receipt of the Confidential Placement
Memorandum. The Subscriber has had access at the EDGAR Website of
the Commission to the Company’s Annual Report on Form 10-K
for the year ended September 30, 2007, and all periodic and
current reports filed with the Commission thereafter (hereinafter
referred to as the " Reports "). The Subscriber has had the
opportunity to review information regarding the Company, its
business, operations, financial condition and the terms and
conditions of the Securities, and considered all factors Subscriber
deems material in deciding on the advisability of investing in the
Securities. The offer to sell the Securities to the Subscriber was
communicated to the Subscriber by the Company in such manner that
the Subscriber was able to ask questions of and received answers
from the Company or a person acting on the Company’s behalf
concerning the terms and conditions of this transaction as well as
to obtain any information requested by the Subscriber. Any
questions raised by the Subscriber or its representatives
concerning the transactions contemplated by this Agreement have
been answered to the satisfaction of the Subscriber and its
representatives. The Subscriber can fend for itself, can bear the
economic risk of its investment and has such knowledge and
experience in financial or business matters that it is capable of
evaluating the merits and risks of the investment in the
Securities. Except as set forth in the Confidential Placement
Memorandum or this Agreement, no representations or warranties have
been made to the Subscriber by the Company or any agent, employee
or affiliate of the Company and in entering into this Agreement,
the Subscriber is not relying on any information, other than that
which is contained in the Confidential Placement Memorandum and the
results of any independent investigation by the Subscriber.
Page 2
(b) Information on Subscriber . The Subscriber is,
and will be at the time of issuance of the Securities, an "
accredited investor ", as such term is defined in
Regulation D promulgated by the Commission under the 1933 Act,
is experienced in investments and business matters, has made
investments of a speculative nature and has purchased securities of
United States publicly-owned companies in private placements in the
past and has such knowledge and experience in financial, tax and
other business matters as to enable the Subscriber to utilize the
information made available by the Company to evaluate the merits
and risks of and to make an informed investment decision with
respect to the proposed purchase, which represents a speculative
investment. The Subscriber is not a broker-dealer under
Section 15 of the Exchange Act or an officer, director or
affiliate of the Company. The Subscriber has the authority and is
duly and legally qualified to purchase and own the Securities. The
Subscriber is able to bear the risk of such investment for an
indefinite period and to afford a complete loss thereof. The
information set forth on the signature page hereto regarding the
Subscriber is accurate. The information set forth in
Schedule 1 hereto is correct in all respects. (c)
Purchase of Securities . The Subscriber is acquiring the
Securities in the ordinary course of its business as principal for
its own account, and not as nominee, for investment only and not
with a view toward, or for resale in connection with, the public
sale or any distribution thereof. The Subscriber does not have any
contract, undertaking, agreement, understanding or arrangement,
directly or indirectly, with any Person to distribute, sell,
transfer or pledge to such Person, or anyone else, all or any part
of the Securities, and the Subscriber has no present plan to enter
into any such contract, undertaking, agreement, understanding or
arrangement. The Subscriber further agrees to execute and deliver
any further investment certificates as counsel to the Company deems
necessary or advisable to comply with state or federal securities
laws. The Subscriber understands that it shall not have any of the
rights of a stockholder with respect to the Shares until the Shares
are issued as provided herein. (d) Compliance with
Securities Act . The Subscriber understands and agrees that the
Securities have not been registered under the 1933 Act or any
applicable state securities laws, by reason of their issuance in a
transaction that does not require registration under the 1933 Act
(based on the accuracy of the representations and warranties of the
Subscriber contained herein), and that such Securities may not be
sold, assigned or transferred and must be held indefinitely in the
absence of (i) an effective registration statement under the
Act and applicable state securities laws with respect thereto or
(ii) an opinion of counsel satisfactory to the Company that
such registration is not required. The Subscriber understands that
the Company is under no obligation to register the Securities.
(e) Notes Legend . The Notes shall bear the following
or similar legend (in addition to such other restrictive legends as
are required or deemed advisable under any applicable law or any
other agreement to which the Company is a party): "THE TRANSFER OF
THIS NOTE IS SUBJECT TO RESTRICTIONS CONTAINED HEREIN. THIS NOTE
HAS BEEN ISSUED IN RELIANCE UPON THE REPRESENTATION OF PAYEE THAT
IT HAS BEEN ACQUIRED FOR INVESTMENT PURPOSES AND NOT WITH A VIEW
TOWARDS THE RESALE OR OTHER DISTRIBUTION THEREOF. THIS NOTE HAS NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD, OFFERED FOR SALE,
PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT UNDER SAID ACT AND ANY APPLICABLE
STATE SECURITIES LAWS, OR AN OPINION OF COUNSEL SATISFACTORY TO
COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED."
Page 3
(f) Shares Legend . The stock certificates for the
Shares shall bear the following or similar legend (in addition to
such other restrictive legends as are required or deemed advisable
under any applicable law or any other agreement to which the
Company is a party): "THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT")
OR ANY STATE SECURITIES LAWS, AND MAY NOT BE SOLD, TRANSFERRED,
ASSIGNED OR HYPOTHECATED UNLESS (A) THERE IS AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE ACT, AND APPLICABLE STATE
SECURITIES LAWS, COVERING ANY SUCH TRANSACTION INVOLVING SAID
SECURITIES OR (B) THE COMPANY HAS RECEIVED AN OPINION OF
COUNSEL SATISFACTORY TO THE COMPANY STATING THAT SUCH TRANSACTION
IS EXEMPT FROM REGISTRATION." (g) Communication of
Offer . The offer to sell the Securities was directly
communicated to the Subscriber by the Company. At no time was the
Subscriber presented with or solicited by any leaflet,
advertisement, article, notice or other communication published in
any newspaper, magazine, or similar media or broadcast over
television or radio, or any other form of general advertising, or
solicited or invited to attend a promotional meeting or any seminar
or meeting by any general solicitation or general advertising.
(h) Authority; Enforceability . If the Subscriber is
an entity, it is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization
with the requisite corporate, limited liability company or
partnership power and authority to enter into and to consummate the
transactions contemplated by this Agreement and the Notes and
otherwise to carry out its obligations hereunder. This Agreement,
the Notes and other agreements delivered together with this
Agreement or in connection herewith have been duly authorized,
executed and delivered by the Subscriber and are valid and binding
agreements enforceable in accordance with their terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or
affecting creditors’ rights generally and to general
principles of equity; and Subscriber has full corporate power and
authority necessary to enter into this Agreement, the Notes and
such other agreements and to perform its obligations hereunder,
thereunder and under all other agreements entered into by the
Subscriber relating hereto and thereto. (i) No
Governmental Review . The Subscriber understands that no United
States federal or state agency or any other governmental or state
agency has passed on or made recommendations or endorsement of the
Securities or the fairness or suitability of the investment in the
Securities nor have such authorities passed upon or endorsed the
merits of the offering of the Securities. The Subscriber
understands that neither legal counsel to the Company, the
Placement Agent, nor its counsel has independently verified the
information concerning the Company included in the Memorandum or
herein, all of which has been provided by the Company, nor has such
legal counsel passed upon the adequacy or accuracy of the
Memorandum. No independent third party, such as an investment
banking firm, the Placement Agent, or other expert in evaluating
businesses or securities, has made an evaluation of the economic
potential of the Company. (j) Certain Trading
Activities . The Subscriber has not directly or indirectly, nor
has any Person acting at the direction of the Subscriber, engaged
in any transactions in the securities of the Company (including,
without limitation, any Short Sales involving the Company&r
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