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.
FORM OF SECURED PROMISSORY
NOTE
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PN-
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_____, 2009
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$
_____
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Costa Mesa,
California
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1. Principal and Interest . For
value received, IRVINE SENSORS CORPORATION, a Delaware corporation
(“ Company ”), hereby promises to pay to
the order of
, a
(“ Payee ”), whose address is as set
forth below, or such other address as the holder of this Secured
Promissory Note (this “ Note ”) may
designate in writing, the principal sum of $
, together with interest on the unpaid principal balance from time
to time remaining at a rate per annum (calculated on the basis of
actual days elapsed, but computed as if each calendar year
consisted of 365 days) which shall from day to day be equal to
12%. The principal of and accrued interest on this Note shall be
due and payable in full six (6) months from the date hereof.
This Note is part of an offering of up to $1,000,000 in principal
balance being made by the Company (the “
Offering ”) and the other purchasers of notes
in such Offering are referred to as the “ Other
Payees ” and all the notes issued in such Offering,
including this Note are referred to as the “
Notes ”.
2. Security and Priority . The Payee and
each of the Other Payees shall be a party to that certain
Intercreditor Agreement with Longview Fund L.P. and Alpha Capital
Anstalt (the “ Original Lenders ”),
pursuant to which the Original Lenders have subordinated certain of
their obligations to the repayment of all amounts owed for
principal, interest and any other amounts owed to the Payee and
each of the other Payees are entitled to under the Notes. The Notes
are secured by a Security Agreement in substantially all assets of
the Company on the terms set forth in the Security Agreement. The
lien in the collateral under the Security Agreement is senior to
the lien of the Original Lenders and all collateral is being held
in the name of the collateral agent under that certain Collateral
Agent Agreement.
3. Equity Securities . As
consideration for making the advance under this Note, the Company
shall issue shares (the “ Shares ”) of
its Common Stock to Payee with a value equal to 25% of the
principal amount of the Note, based on the greater of (i) $0.40,
(ii) the last reported closing sale price of the
Company’s Common Stock on the Nasdaq Capital Market
immediately prior to the issuance of the Notes and (iii) the
consolidated closing bid price of the Company’s Common Stock
on the Nasdaq Capital Market immediately prior to the issuance of
the Notes (the “ Market Value ”). The
Shares will be issued to Payee as soon as reasonably practicable
following the earlier of (i) 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 (the “
J.P. Turner Financing ”) or (ii) seven
months following the issuance date of the Note or as soon as
practicable thereafter as permitted by the NASDAQ Stock Market, LLC
(“ Nasdaq ”). Notwithstanding the
foregoing, the Company may, at its discretion, issue the Shares
earlier than the foregoing if permitted by Nasdaq and if it can
legally do so.
4. Prepayment . Company shall have
the right to prepay all or any portion of the principal hereof at
any time without premium or penalty; provided, however, that with
any prepayment Company shall also pay all accrued but unpaid
interest on the principal being prepaid.
5. Default . Holders with more than
50% of the principal balance of all of the Notes issued in
connection with the Offering shall have the right upon the
occurrence of any of the following events to declare an event of
default and elect to accelerate the amount owing hereunder
(individually, “an Event of Default ” and
collectively, “ Events of Default
”):
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