SUBSCRIPTION AGREEMENT (Series A-2 — Debt Exchange)
Exhibit
10.4
SUBSCRIPTION
AGREEMENT
(Series A-2 — Debt Exchange)
(Series A-2 — Debt Exchange)
THIS SUBSCRIPTION AGREEMENT (this
“Agreement”) dated as
of March 18,
2009, by and between Irvine Sensors Corporation, a Delaware
corporation (the “Company”) and the
Purchasers identified on the signature page hereto (each a
“Purchaser” and collectively, the
“Purchasers”).
WHEREAS, the Company and the Purchasers are executing and
delivering this Agreement in reliance upon an exemption from
securities registration afforded by the provisions of
Section 3(a)(9), 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”).
WHEREAS, the Company currently has outstanding
Series 1 Senior Subordinated Secured Convertible Notes
dated as of December 30, 2005 in favor of the Purchasers
(the “Series 1 Notes”).
WHEREAS, in connection herewith, the Purchasers desire to
purchase shares of
Series A-2
10% Cumulative Convertible Preferred Stock (the
“Series A-2
Stock”) as described in a Certificate of
Designations of Rights, Preferences, Privileges and Limitations
attached hereto as Exhibit A
(“Certificate of Designations”) in
exchange solely for a portion of the Series 1 Notes through
the cancellation of part of the principal and interest under the
Series 1 Notes, as more fully described herein. Each share
of
Series A-2
Stock issuable hereunder is initially convertible into
100 shares of the Company’s Common Stock (the
“Common Shares”). The
Series A-2
Stock being sold to the Purchasers hereunder and the Common
Shares that are issuable upon conversion of such
Series A-2
Stock hereunder shall be referred to hereunder as the
“Securities.”
NOW, THEREFORE, in consideration of the mutual covenants
and other agreements contained in this Agreement the Company and
the Purchasers hereby agree as follows:
1. The Closing.
(a) Closing Date. The “Closing
Date” shall be the date on which the Company issues
the
Series A-2
Stock to the Purchasers pursuant to Section 1(c) below. The
consummation of the transactions contemplated herein shall take
place at the offices of Grushko & Xxxxxxx, P.C.,
000 Xxxxx Xxxxxx, Xxxxx 0000, Xxx Xxxx, Xxx Xxxx
00000, upon the satisfaction or waiver of all conditions to
closing set forth in Section 1(c) below.
(b) Closing. Subject only to the
satisfaction or waiver of the conditions set forth in
Section 1(c) below, on the Closing Date, each Purchaser
shall purchase at a purchase price per share of $40.00 (the
“Purchase Price”) that number of shares
of
Series A-2
Stock determined by multiplying such Purchaser’s Pro Rata
Portion (as defined below) by the quotient obtained by dividing
$1,000,000 by the Purchase Price. The aggregate Purchase Price
shall be paid solely by surrendering such Purchaser’s
evidence of the Series 1 Notes in exchange for such shares
of
Series A-2
Stock by cancelling the applicable portion of the principal and
interest under such Purchaser’s evidence of the
Series 1 Notes. For purposes of this Agreement,
Longview’s “Pro Rata Portion” shall
equal 90.1627% and Alpha Capital’s “Pro Rata
Portion” shall equal 9.8373%.
(c) Conditions to Closing. The obligation
of the Company to issue, and the obligation of the Purchasers to
accept, the
Series A-2
Stock in exchange for a portion of the Series 1 Notes shall
be conditioned upon (i) the earlier to occur of either
(1) the determination by the Supreme Court of the State of
New York that Optex Systems, Inc. is the substantially
prevailing party in its Complaint filed January 22, 2009
against TWL Group, LP for declaratory relief that the
October 14, 2008 public foreclosure sale of the collateral
conducted by Optex Systems, Inc. (the “Foreclosure
Sale”) was commercially reasonable and in
compliance with New York law, or (2) it being otherwise
determined by a court of law that Optex Systems, Inc. is the
substantially prevailing party in any Complaint filed by Xxxxxxx
Xxxxxx, TWL Group, LP or their Affiliates related to the
revocability of the Foreclosure Sale, or (3) Xxxxxxx
Xxxxxx, TWL Group, LP or their Affiliates entering into an
irrevocable settlement agreement with Purchasers related to the
Foreclosure Sale, or (4) any Complaint filed by Xxxxxxx
Xxxxxx, TWL Group, LP or their Affiliates related to the
Foreclosure Sale is abandoned or dismissed, in either case with
prejudice against the reinstitution of any claim in connection
with the Foreclosure Sale; (ii) approval by the
Company’s
stockholders of the issuance of the
Series A-2
Stock prior to December 31, 2009; (iii) the filing of
the Certificate of Designations with the Secretary of State of
the State of Delaware; (iv) the issuance to the Purchasers
of a certificate representing the number of shares of
Series A-2
Stock calculated pursuant to Section 1(b) above; and
(v) the truth and accuracy of the representations and
warranties of the Company set forth in Section 3 of this
Agreement and the continuing truth and accuracy of such
representations and warranties as of the Closing Date, except
for such changes as would not have a Material Adverse Effect (as
defined below). In the event that the condition set forth in
clause (ii) above has not been satisfied by
December 31, 2009, then Lenders shall no longer have any
obligation to purchase from the Company, and the Company shall
no longer have any obligation to issue to Lenders, any preferred
stock described in this Agreement.
2. Purchasers’ Representations and
Warranties. Each Purchaser hereby represents and
warrants to and agrees with the Company only as to such
Purchaser that:
(a) Information on Company. The Purchaser
has been furnished with or has had access at the XXXXX Website
of the Commission to the Company’s
Form 10-K
for the year ended September 28, 2008, and all periodic
reports filed with the Commission thereafter, but not later than
five days before the date of this Agreement (hereinafter
referred to as the “Reports”). In
addition, the Purchaser has received in writing from the Company
such other information concerning its operations, financial
condition and other matters as the Purchaser has requested in
writing (such other information is collectively, the
“Other Written Information”), and
considered all factors such Purchaser deems material in deciding
on the advisability of investing in the
Series A-2
Stock.
(b) Information on Purchaser. The
Purchaser is, and will be at the time of issuance of the
Series A-2
Stock, 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,
with its representatives, has such knowledge and experience in
financial, tax and other business matters as to enable the
Purchaser 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
Purchaser is not a broker-dealer under Section 15 of the
Exchange Act. The Purchaser has the authority and is duly and
legally qualified to purchase and own the Securities. The
Purchaser 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
Purchaser is accurate.
(c) Purchase of Securities. The Purchaser
is acquiring the Securities in the ordinary course of its
business as principal for its own account for investment only
and not with a view toward, or for resale in connection with,
the public sale or any distribution thereof. Such Purchaser does
not have any agreement or understanding, directly or indirectly,
with any Person to distribute any of the Securities. The
Purchaser acquired the Series 1 Notes for purposes of
investment only in order to earn a profit in the form of
interest. The Purchaser is not providing any consideration other
than the Series 1 Notes in connection with the exchange of
such Series 1 Notes for the
Series A-2
Stock.
(d) Compliance with Securities Act. The
Purchaser 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 in part on the accuracy of the representations and
warranties of Purchaser contained herein), and that such
Securities must be held indefinitely unless a subsequent
disposition is registered under the 1933 Act or any
applicable state securities laws or is exempt from such
registration. Notwithstanding anything to the contrary contained
in this Agreement, such Purchaser may transfer (without
restriction and without the need for an opinion of counsel) the
Securities to its Affiliates (as defined below) provided that
each such Affiliate is an “accredited investor” under
Regulation D and such Affiliate agrees to be bound by the
terms and conditions of this Agreement. For the purposes of this
Agreement, an “Affiliate” of any person
or entity means any other person or entity directly or
indirectly controlling, controlled by or under direct or
indirect common control with such person or entity. The term
“Affiliate” when employed in connection with the
Company includes each Subsidiary (as defined in
Section 3(a)) of the Company. For purposes of this
definition, “control” means the power to
direct the management and policies of such person or firm,
directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise.
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(e) Restrictive Legend. The shares of
Series A-2
Stock issuable hereunder shall bear the following or similar
legend:
“THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY
STATE SECURITIES LAWS OR BLUE SKY LAWS. SUCH SHARES 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 BLUE SKY LAWS, OR AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO IRVINE SENSORS CORPORATION THAT SUCH
REGISTRATION IS NOT REQUIRED.”
(f) Communication of Offer. The offer to
sell the Securities was directly communicated to the Purchaser
by the Company. At no time was the Purchaser presented with or
solicited by any leaflet, newspaper or magazine article, radio
or television advertisement, or any other form of general
advertising or solicited or invited to attend a promotional
meeting otherwise than in connection and concurrently with such
communicated offer.
(g) Authority; Enforceability. If the
Purchaser 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
otherwise to carry out its obligations hereunder and thereunder.
This Agreement and other agreements delivered together with this
Agreement or in connection herewith have been duly authorized,
executed and delivered by the Purchaser 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 Purchaser has
full corporate power and authority necessary to enter into this
Agreement and such other agreements and to perform its
obligations hereunder and under all other agreements entered
into by the Purchaser relating hereto.
(h) No Governmental Review. Each
Purchaser 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
suitability of the investment in the Securities nor have such
authorities passed upon or endorsed the merits of the offering
of the Securities.
(i) Correctness of Representations. Each
Purchaser represents as to such Purchaser that the foregoing
representations and warranties are true and correct as of the
date hereof and, unless a Purchaser otherwise notifies the
Company prior to the Closing Date shall be true and correct as
of the Closing Date.
(j) Survival. The foregoing
representations and warranties shall survive the Closing Date.
3. Company Representations and
Warranties. Except as set forth in a disclosure
schedule delivered to the Purchasers on the date hereof (the
“Disclosure Schedule”), the Company
represents and warrants to and agrees with each Purchaser that:
(a) Due Incorporation. The Company is a
corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation
and has the requisite corporate power to own its properties and
to carry on its business as disclosed in the Reports. The
Company is duly qualified as a foreign corporation to do
business and is in good standing in each jurisdiction where the
nature of the business conducted or property owned by it makes
such qualification necessary, other than those jurisdictions in
which the failure to so qualify would not have a Material
Adverse Effect. For purpose of this Agreement, a
“Material Adverse Effect” shall mean a
material adverse effect on the financial condition, results of
operations, properties or business of the Company taken
individually, or in the aggregate, as a whole. For purposes of
this Agreement, “Subsidiary” means, with
respect to any entity at any date, any corporation, limited or
general partnership, limited liability company, trust, estate,
association, joint venture or other business entity) of which
more than 50% of (i) the outstanding capital stock having
(in the absence of contingencies) ordinary voting power to elect
a majority of the board of directors or other managing body of
such entity, (ii) in the case of a partnership or limited
liability company, the interest in the capital or profits of
such partnership or limited liability company or (iii) in
the case of a trust, estate, association, joint venture or other
entity, the beneficial interest in such trust, estate,
association or other entity business is, at the
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time of determination, owned or controlled directly or
indirectly through one or more intermediaries, by such entity.
All the Company’s Subsidiaries as of the date hereof are
set forth on Schedule 3(a) hereto.
(b) Outstanding Stock. All issued and
outstanding shares of capital stock of the Company and each
Subsidiary have been duly authorized and validly issued and are
fully paid and nonassessable.
(c) Authority; Enforceability. This
Agreement and any other agreements delivered to Purchasers
together with this Agreement or in connection herewith to which
the Company is a party (collectively “Transaction
Documents”) have been duly authorized, executed and
delivered by the Company and are valid and binding agreements
enforceable against the Company 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. The Company and
Subsidiaries have full corporate power and authority necessary
to enter into and deliver the Transaction Documents and to
perform their obligations thereunder.
(d) Additional Issuances. There are no
outstanding agreements or preemptive or similar rights affecting
the Company’s common stock or equity and no outstanding
rights, warrants or options to acquire, or instruments
convertible into or exchangeable for, or agreements or
understandings with respect to the sale or issuance of any
shares of common stock or equity of the Company or Subsidiaries
or other equity interest in any of the Subsidiaries of the
Company except as described on Schedule 3(d). The
Common Stock of the Company on a fully diluted basis outstanding
as of the last Business Day preceding the date hereof is set
forth on Schedule 3(d). “Business
Day” and “trading day”
shall mean any day that the New York Stock Exchange is open for
trading for three or more hours. On February 3, 2009, the
Company completed its bridge offering of $1,000,000 through the
issuance of secured promissory notes. Prior to the Closing Date,
the Purchasers may convert the Series 1 Notes into shares
of the Company’s Common Stock, or the Company may repay the
Series 1 Notes in cash, in accordance with the terms of
such Series 1 Notes. The first two sentences of
Section 5.4 of that certain Memorandum of Understanding for
Settlement and Debt Conversion, dated as of September 19,
2008 among the Company and the Purchasers, are deleted.
(e) Consents. No consent, approval,
authorization or order of any court, governmental agency or body
or arbitrator having jurisdiction over the Company or any of its
Affiliates is required for the execution by the Company of the
Transaction Documents and compliance and performance by the
Company of its obligations under the Transaction Documents,
including, without limitation, the issuance and sale of the
Securities, except for the filing by the Company of a Notice of
Sale of Securities on Form D with the Commission under
Regulation D of the Securities Act, stockholder approval,
the notice by the Company to NCM regarding listing of additional
shares, and applicable Blue Sky filings. The Transaction
Documents and the Company’s performance of its obligations
thereunder have been approved unanimously by the Company’s
directors.
(f) No Violation or Conflict. Except as
set forth on Schedule 3(f) or in the Other Written
Information, neither the issuance and sale of the Securities nor
the performance of the Company’s obligations under this
Agreement and all other agreements entered into by the Company
relating thereto by the Company will:
(i) violate, conflict with, result in a breach of, or
constitute a default (or an event which with the giving of
notice or the lapse of time or both would be reasonably likely
to constitute a default) under (A) the certificate of
incorporation, charter or bylaws of the Company, (B) to the
Company’s knowledge, any decree, judgment, order, law,
treaty, rule, regulation or determination applicable to the
Company of any court, governmental agency or body, or arbitrator
having jurisdiction over the Company or any of its Subsidiaries
or over the properties or assets of the Company or any of its
Subsidiaries, (C) the terms of any bond, debenture, note or
any other evidence of indebtedness, or any agreement, stock
option or other similar plan, indenture, lease, mortgage, deed
of trust or other instrument to which the Company or any of its
Subsidiaries is a party, by which the Company or any of its
Subsidiaries is bound, or to which any of the properties of the
Company or any of its Subsidiaries is subject, or (D) the
terms of any
“lock-up”
or similar provision of any underwriting or similar agreement to
which the Company, or any of its Subsidiaries is a party except
the violation, conflict, breach, or default of which would not
have a Material Adverse Effect on the Company; or
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(ii) result in the creation or imposition of any lien,
charge or encumbrance upon the Securities or any of the assets
of the Company or any of its Subsidiaries; or
(iii) result in the activation of any anti-dilution rights
or a reset or repricing of any debt or security instrument of
any other creditor or equity holder of the Company, nor result
in the acceleration of the due date of any obligation of the
Company.
(g) The Securities. The Securities upon
issuance:
(i) are, or will be, free and clear of any security
interests, liens, claims or other encumbrances, subject to
restrictions upon transfer under the 1933 Act and any
applicable state securities laws;
(ii) have been, or will be, duly and validly authorized and
on the date of conversion of the
Series A-2
Stock and issuance of the Common Shares upon conversion therefor
will be duly and validly issued, fully paid and nonassessable;
(iii) will not have been issued or sold in violation of any
preemptive or other similar rights of the holders of any
securities of the Company;
(iv) will not subject the holders thereof to personal
liability by reason of being such holders; and
(v) will have been issued in reliance upon an exemption
from the registration requirements of and will not result in a
violation of Section 5 under the 1933 Act, provided
that the representations and warranties of the Purchasers
hereunder shall remain true on the date of issuance of the
Securities.
(h) Reporting Company. The Company is a
publicly-held company subject to reporting obligations pursuant
to Section 13 of the Securities Exchange Act of 1934, as
amended (the “1934 Act”) and has a
class of common stock registered pursuant to Section 12(g)
of the 1934 Act. Pursuant to the provisions of the
1934 Act, the Company has timely filed all reports and
other materials required to be filed thereunder with the
Commission during the preceding twelve months.
(i) Information Concerning Company. The
Reports contain all material information relating to the Company
and its operations and financial condition as of their
respective dates which information is required to be disclosed
therein. Since the date of the latest financial statements
included in the Reports, and except as modified in the Other
Written Information or in the Schedules hereto, there has been
no material adverse change in the Company’s business,
financial condition or affairs not disclosed in the Reports (it
being understood that by signing this Agreement, the Purchasers
shall be deemed to have agreed in writing to receiving such
Other Written Information and Schedules). The Reports do not
contain any 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 not misleading in light of the
circumstances when made.
(j) No Market Manipulation. The Company
will not take, directly or indirectly, any action designed to,
or that might reasonably be expected to, cause or result in
stabilization or manipulation of the price of the Common Stock
of the Company to facilitate the sale or resale of the
Securities or affect the price at which the Securities may be
issued or resold.
(k) Listing. As of the date of this
Agreement, the Company’s common stock is listed on the
Nasdaq Capital Market under the symbol IRSN.
(l) Stop Transfer. The Securities, when
issued, will be restricted securities. The Company will not
issue any stop transfer order or other order impeding the sale,
resale or delivery of any of the Securities, except as may be
required in order to facilitate compliance with applicable
federal or state securities laws and unless contemporaneous
notice of such instruction is given to the Purchaser.
(m) Not an Integrated Offering. Neither
the Company, nor any of its Affiliates, nor to its knowledge,
any person acting on its or their behalf, has directly or
indirectly made any offers or sales of any security or solicited
any offers to buy any security under circumstances that would
cause the offer of the Securities pursuant to this Agreement to
be integrated with prior offerings by the Company for purposes
of the 1933 Act or the rules and regulations of the NCM
which would impair the exemptions relied upon in this Offering
or the Company’s ability to
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timely comply with its obligations hereunder. Nor will the
Company or any of its Affiliates take any action or steps that
would cause the offer or issuance of the Securities to be
integrated with other offerings which would impair the
exemptions relied upon in this Offering or the Company’s
ability to timely comply with its obligations hereunder. The
Company will not conduct any offering other than the
transactions contemplated hereby that will be integrated with
the offer or issuance of the Securities, which would impair the
exemptions relied upon in this Offering or the Company’s
ability to timely comply with its obligations hereunder.
(n) No General Solicitation. Neither the
Company, nor any of its Affiliates, nor to its knowledge, any
person acting on its or their behalf, has engaged in any form of
general solicitation or general advertising (within the meaning
of Regulation D under the 0000 Xxx) in connection with
the offer or sale of the Securities.
(o) Dilution. The Company’s
executive officers and directors understand the nature of the
Securities being sold hereby and recognize that the issuance of
the Securities will have a potential dilutive effect on the
equity holdings of other holders of the Company’s equity or
rights to receive equity of the Company. The board of directors
of the Company has unanimously concluded, in its good faith
business judgment, that the issuance of the Securities is in the
best interests of the Company. The Company specifically
acknowledges that its obligation to issue the Common Shares upon
conversion of the
Series A-2
Stock is binding upon the Company and enforceable regardless of
the dilution such issuance may have on the ownership interests
of other stockholders of the Company or parties entitled to
receive equity of the Company.
(p) No Disputes with Accountants. There
are no disputes of any kind presently existing, or reasonably
anticipated by the Company to arise, between the Company and the
accountants formerly or presently employed by the Company,
including but not limited to disputes or conflicts over payment
owed to such accountants.
(q) Subsidiary Representations. The
Company makes each of the representations contained in
Sections 3(a), (b), (c), (d), (e), (f) and (p) of
this Agreement, as same may relate to each Subsidiary of the
Company, with the same qualifications to each such
representation.
(r) DTC Status/Transfer Agent. The
Company’s transfer agent is eligible to participate in and
the Common Stock is eligible for transfer through DWAC pursuant
to the Depository Trust Company Automated Securities
Transfer Programs, subject to any restrictions imposed by
securities laws. The name, address, telephone number, fax
number, contact person and email address of the Company transfer
agent are set forth on Schedule 3(r) hereto.
(s) Correctness of Representations. The
Company represents that the foregoing representations and
warranties are true and correct as of the date hereof in all
material respects, and, unless the Company otherwise notifies
the Purchasers prior to the Closing Date, shall be true and
correct in all material respects as of the Closing Date.
(t) Bankruptcy. The Company has no plan
to file for protection under any federal or state bankruptcy or
debtor protection law or regulation.
(u) Survival. The foregoing
representations and warranties shall survive the Closing Date.
4. Regulation D Offering/Legal
Opinion. The offer and issuance of the Securities
to the Purchasers is being made pursuant to the exemption from
the registration provisions of the 1933 Act afforded by
Section 3(a)(9), Section 4(2) or Section 4(6) of
the 1933 Act
and/or
Rule 506 of Regulation D promulgated thereunder.
Provided that the representations and warranties of the
Purchasers contained herein are true and accurate on the Closing
Date and that no facts have changed since the date of this
Agreement, the Company will provide on the Closing Date an
opinion reasonably acceptable to such Purchasers from the
Company’s legal counsel in the form annexed hereto as
Exhibit B opining on the availability of an
exemption from registration under the 1933 Act as it
relates to the offer and issuance of the Securities and other
matters reasonably requested by the Purchasers. The Company will
provide, at the Company’s expense, such other legal
opinions in the future as are reasonably necessary for the
issuance and resale of the Common Stock issuable upon conversion
of the
Series A-2
Stock pursuant to an effective registration statement,
Rule 144, as amended, under the 1933 Act
(“Rule 144”) or an exemption from
registration.
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5. Covenants of the Company. The Company
covenants and agrees with the Purchasers as follows:
(a) Stop Orders. The Company will advise
the Purchasers, within twenty-four hours after the Company
receives notice of issuance by the Commission, Nasdaq Capital
Market, Nasdaq Global Market, Nasdaq Global Select Market, or
New York Stock Exchange (whichever of the foregoing is at the
time the principal trading exchange or market for the Common
Stock (the “Principal Market”)) or any
other trading or listing market, any state securities commission
or any other regulatory authority of any stop order or of any
order preventing or suspending any offering of any Securities,
or of the suspension of the qualification of the Securities for
offering or sale in any jurisdiction, or the initiation of any
proceeding for any such purpose.
(b) Market Regulations. The Company shall
notify the Commission, Principal Market and applicable state
authorities, in accordance with their requirements, of the
transactions contemplated by this Agreement, and shall take all
other necessary action and proceedings as may be required and
permitted by applicable law, rule and regulation, for the legal
and valid issuance of the Securities to the Purchasers and
promptly provide copies thereof to Purchasers.
(c) Reservation. Prior to the Closing
Date, the Company will reserve from its authorized but unissued
Common Stock, on behalf of the Purchasers, 150% of the amount of
Common Stock required to allow conversion of all of the
Series A-2
Stock issued pursuant to this Agreement at the conversion price
in effect on the Closing Date (“Required
Reservation”). Failure to have reserved the
Required Reservation on or prior to the Closing Date (or such
later date as may be approved with the consent of the holders of
Series A-2
Stock) shall be a material default of the Company’s
obligations under this Agreement and an Event of Default under
the Certificate of Designations.
(d) Confidentiality/Public
Announcement. From the date of this Agreement and
until the sooner of (i) three (3) years after the
Closing Date, or (ii) until all the Common Shares have been
resold or transferred by all the Purchasers pursuant to the
Registration Statement or pursuant to Rule 144, without
regard to volume limitations, the Company agrees that except in
connection with a
Form 8-K,
Form 10-K,
Form 10-Q,
Form D, Principal Market notices, Proxy or the Registration
Statement, it will not disclose publicly or privately the
identity of the Purchasers unless expressly agreed to in writing
by a Purchaser (which approval will not be unreasonably withheld
or delayed) or only to the extent required by law and then only
upon five days prior notice to Purchaser. Notwithstanding the
foregoing, the Company and Purchasers agree that a copy of this
Agreement may be required to be filed with the Commission. In
any event and subject to the foregoing, the Company undertakes
to file a
Form 8-K
or make a public announcement describing the Offering not later
than the fourth business day after the date this Agreement is
fully executed. In the
Form 8-K
or public announcement, the Company will specifically disclose
the amount of Common Stock outstanding immediately after the
Closing.
(e) Non-Public Information. The Company
covenants and agrees that neither it nor any other person acting
on its behalf will provide any Purchaser with any information
that the Company believes constitutes material non-public
information, unless prior thereto such Purchaser shall have
agreed in writing to receive such information or has designated
an agent of Purchaser to receive such information on its behalf.
The Company understands and confirms that each Purchaser shall
be relying on the foregoing representations in effecting
transactions in securities of the Company.
(f) Offering Restrictions. Until the
expiration of the “Exclusion Period,”
which shall be until the earlier of (i) 180 days
following the Closing Date or (ii) the date on which the
Company repays its debt obligations to the Purchasers, except
for the Excepted Issuances (as defined in the Certificate of
Designations) and any debt or equity offering with net proceeds
to the Company of at least $2,000,000, the Company will not
enter into an agreement to nor issue any equity, convertible
debt or other securities convertible into Common Stock or equity
of the Company nor modify any of the foregoing which may be
outstanding at anytime, without the prior written consent of the
Purchasers, which consent may be withheld for any reason. For so
long as the
Series A-2
Stock remains outstanding, except for the Excepted Issuances (as
defined in the Certificate of Designations) and any debt or
equity offering with net proceeds to the Company of at least
$2,000,000, the Company will not enter into any equity line of
credit or similar bank financing agreement, nor issue nor agree
to issue any floating or variable priced equity linked
instruments nor any of the foregoing or equity with price reset
rights, except with the consent of the Purchasers. The
restriction described in the previous sentence shall only apply
for 365 calendar days following the date hereof.
7
(g) Delivery of Unlegended Shares. Within
three (3) business days (such third business day being the
“Unlegended Shares Delivery Date”) after the
business day on which the Company has received (i) a notice
that Common Shares held by a Purchaser have been sold pursuant
to Rule 144, (ii) a representation that the
requirements of Rule 144 have been satisfied, and
(iii) the original share certificates representing the
Common Shares that have been sold, and (iv) customary
representation letters of the Purchaser
and/or
Purchaser’s broker regarding compliance with the
requirements of Rule 144, the Company at its expense,
(y) shall deliver, and shall cause legal counsel selected
by the Company to deliver to its transfer agent (with copies to
Purchaser) an appropriate instruction and opinion of such
counsel, directing the delivery of shares of Common Stock
without any legends including the legend set forth in
Section 2(e) above (the “Unlegended
Shares”); and (z) cause the transmission of the
certificates representing the Unlegended Shares together with a
legended certificate representing the balance of the submitted
Common Shares certificate, if any, to the Purchaser at the
address specified in the notice of sale, via express courier, by
electronic transfer or otherwise on or before the Unlegended
Shares Delivery Date. In lieu of delivering physical
certificates representing the Unlegended Shares, if the
Company’s transfer agent is participating in the Depository
Trust Company (“DTC”) Fast Automated
Securities Transfer program, upon request of a Purchaser, so
long as the certificates therefor do not bear a legend and such
Purchaser is not obligated to return such certificate for the
placement of a legend thereon, the Company shall cause its
transfer agent to electronically transmit the Unlegended Shares
by crediting the account of Purchaser’s prime broker with
DTC through its Deposit Withdrawal Agent Commission system. Such
delivery must be made on or before the Unlegended Shares
Delivery Date.
6. Broker.
The Company on the one hand, and each Purchaser (for himself
only) on the other hand, agrees to indemnify the other against
and hold the other harmless from any and all liabilities to any
persons claiming brokerage commissions or finder’s fees on
account of services purported to have been rendered on behalf of
the indemnifying party in connection with this Agreement or the
transactions contemplated hereby and arising out of such
party’s actions. The Company and each Purchaser represents
that there are no parties entitled to receive fees, commissions,
or similar payments in connection with the sale of the
Series A-2
Stock to the Purchasers.
7. Covenants of the Company and Purchaser Regarding
Indemnification.
(a) The Company agrees to indemnify, hold harmless,
reimburse and defend the Purchasers, the Purchasers’
officers, directors, agents, Affiliates, control persons, and
principal shareholders, against any claim, cost, expense,
liability, obligation, loss or damage (including reasonable
legal fees) of any nature, incurred by or imposed upon the
Purchaser or any such person which results, arises out of or is
based upon (i) any material misrepresentation by Company or
breach of any warranty by Company in this Agreement or in any
Exhibits or Schedules attached hereto, or other agreement
delivered pursuant hereto; or (ii) after any applicable
notice
and/or cure
periods, any breach or default in performance by the Company of
any covenant or undertaking to be performed by the Company
hereunder, or any other agreement entered into by the Company
and Purchaser relating hereto; or (iii) any claim filed by
Xxxxxxx Xxxxxx, TWL Group, LP or their Affiliates in a court of
law directly related to this Agreement.
(b) In no event shall the liability of any Purchaser or
permitted successor hereunder or under any other agreement
delivered in connection herewith be greater in amount than the
dollar amount of the net proceeds actually received by such
Purchaser upon the sale of the Common Shares.
(c) The Purchaser’s indemnification rights and rights
of enforcement and the right to receive indemnification related
payments will continue to be due and exercisable pursuant to the
terms of the documents giving rise to such rights.
8. Miscellaneous.
(a) Notices. All notices, demands,
requests, consents, approvals, and other communications required
or permitted hereunder shall be in writing and, unless otherwise
specified herein, shall be (i) personally served,
(ii) deposited in the mail, registered or certified, return
receipt requested, postage prepaid, (iii) delivered by
reputable overnight courier service with charges prepaid, or
(iv) transmitted by hand delivery, electronic mail, or
facsimile, addressed as set forth below or to such other address
as such party shall have specified most recently by written
notice. Any notice or other communication required or permitted
to be given hereunder shall be deemed
8
effective (a) upon hand delivery or delivery by electronic
mail or facsimile, with accurate confirmation generated by the
transmitting facsimile machine, at the address or number
designated below (if delivered on a business day during normal
business hours where such notice is to be received), or the
first business day following such delivery (if delivered other
than on a business day during normal business hours where such
notice is to be received) or (b) on the second business day
following the date of mailing by express courier service, fully
prepaid, addressed to such address, or upon actual receipt of
such mailing, whichever shall first occur. The addresses for
such communications shall be: (i) if to the Company, to:
Irvine Sensors Corporation, 0000 Xxx Xxxx Xxxxxx, Xxxxx Xxxx, XX
00000, Attn: Chief Financial Officer, facsimile:
(000) 000-0000,
with a copy by facsimile only to: Xxxxxx & Xxxxxxx
LLP, 00 Xxxxxxxxxx Xxxxx, Xxxxxx, XX 00000, Attn: Xxxxx X.
Xxxxxxxx, Esq., facsimile:
(000) 000-0000,
and (ii) if to the Purchasers, to: the one or more
addresses and facsimile numbers indicated on the signature pages
hereto, with an additional copy by facsimile only to:
Grushko & Xxxxxxx, P.C., 000 Xxxxx Xxxxxx,
Xxxxx 0000, Xxx Xxxx, Xxx Xxxx 00000, facsimile:
(000) 000-0000.
(b) Entire Agreement; Assignment; Waiver.
This Agreement and other documents delivered in
connection herewith represent the entire agreement between the
parties hereto with respect to the subject matter hereof and may
be amended only by a writing executed by both parties. Neither
the Company nor the Purchasers have relied on any
representations not contained or referred to in this Agreement
and the documents delivered herewith. No right or obligation of
the Company shall be assigned or waived without prior notice to
and the written consent of the Purchasers.
(c) Counterparts/Execution. This
Agreement may be executed in any number of counterparts and by
the different signatories hereto on separate counterparts, each
of which, when so executed, shall be deemed an original, but all
such counterparts shall constitute but one and the same
instrument. This Agreement may be executed by facsimile
signature and delivered by facsimile transmission.
(d) Law Governing this Agreement. This
Agreement shall be governed by and construed in accordance with
the laws of the State of New York without regard to principles
of conflicts of laws. Any action brought by either party against
the other concerning the transactions contemplated by this
Agreement shall be brought only in the state courts of New York
or in the federal courts located in the State of New York.
The parties and the individuals executing this Agreement and
other agreements referred to herein or delivered in connection
herewith on behalf of the Company agree to submit to the
jurisdiction of such courts and waive trial by jury. The
prevailing party shall be entitled to recover from the other
party its reasonable attorney’s fees and costs. In the
event that any provision of this Agreement or any other
agreement delivered in connection herewith is invalid or
unenforceable under any applicable statute or rule of law, then
such provision shall be deemed inoperative to the extent that it
may conflict therewith and shall be deemed modified to conform
with such statute or rule of law. Any such provision which may
prove invalid or unenforceable under any law shall not affect
the validity or enforceability of any other provision of any
agreement.
(e) Specific Enforcement, Consent to Jurisdiction.
The Company and each Purchaser acknowledge and agree
that irreparable damage would occur in the event that any of the
provisions of this Agreement were not performed in accordance
with their specific terms or were otherwise breached. It is
accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent or cure breaches of the
provisions of this Agreement and to enforce specifically the
terms and provisions hereof, this being in addition to any other
remedy to which any of them may be entitled by law or equity.
Subject to Section 8(d) hereof, each of the Company, the
Purchasers and any signatory hereto in his personal capacity
hereby waives, and agrees not to assert in any such suit, action
or proceeding, any claim that it is not personally subject to
the jurisdiction in New York 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. Nothing
in this Section shall affect or limit any right to serve process
in any other manner permitted by law.
(f) Independent Nature of Purchasers.
The Company acknowledges that the obligations of
each Purchaser under the Transaction Documents are several and
not joint with the obligations of any other Purchaser, and no
Purchaser shall be responsible in any way for the performance of
the obligations of any other Purchaser under the Transaction
Documents. The Company acknowledges that the decision of each
Purchaser to purchase Securities has been made by such Purchaser
independently of any other Purchaser and independently of any
9
information, materials, statements or opinions as to the
business, affairs, operations, assets, properties, liabilities,
results of operations, condition (financial or otherwise) or
prospects of the Company which may have been made or given by
any other Purchaser or by any agent or employee of any other
Purchaser, and no Purchaser or any of its agents or employees
shall have any liability to any Purchaser (or any other person)
relating to or arising from any such information, materials,
statements or opinions. The Company acknowledges that nothing
contained in any Transaction Document, and no action taken by
any Purchaser pursuant hereto or thereto shall be deemed to
constitute the Purchasers as a partnership, an association, a
joint venture or any other kind of entity, or create a
presumption that the Purchasers are in any way acting in concert
or as a group with respect to such obligations or the
transactions contemplated by the Transaction Documents. The
Company acknowledges that each Purchaser shall be entitled to
independently protect and enforce its rights, including without
limitation, the rights arising out of the Transaction Documents,
and it shall not be necessary for any other Purchaser to be
joined as an additional party in any proceeding for such
purpose. The Company acknowledges that it has elected to provide
all Purchasers with the same terms and Transaction Documents for
the convenience of the Company and not because Company was
required or requested to do so by the Purchasers. The Company
acknowledges that such procedure with respect to the Transaction
Documents in no way creates a presumption that the Purchasers
are in any way acting in concert or as a group with respect to
the Transaction Documents or the transactions contemplated
thereby.
(g) Consent. As used in the Agreement,
“consent of the Purchasers” or similar language means
the consent of holders of not less than 80% of the
Series A-2
Stock then outstanding.
(h) Equal Treatment. No consideration
shall be offered or paid to any person to amend or consent to a
waiver or modification of any provision of the Transaction
Documents unless the same consideration is also offered and paid
to all the parties to the Transaction Documents.
(i) No Waiver. Nothing in the
Transaction Documents shall be deemed a waiver, extension or
modification by Purchasers of any of their rights under any
other agreement between or among them and the Company. Nothing
in the Transaction Documents shall be deemed extension of any
time period, waiver or forebearance of any obligation of the
Company in any such other agreement. All such other agreements
remain in full force and effect. Without limiting the foregoing,
the Purchasers are specifically not waiving any anti-dilution,
ratchet or similar rights in connection with the Company.
(j) Expenses. The Company shall pay
Purchasers’ legal expenses in connection with this
Agreement and the release of Purchasers’ security interest
in certain assets of the Company in the amount of $25,000.
[THIS
SPACE INTENTIONALLY LEFT BLANK]
10
SIGNATURE
PAGE TO SUBSCRIPTION AGREEMENT (A)
Please acknowledge your acceptance of the foregoing Subscription
Agreement by signing and returning a copy to the undersigned
whereupon it shall become a binding agreement between us.
IRVINE SENSORS CORPORATION,
a Delaware corporation
| By: |
/s/ XXXX X. XXXXXX
|
Name: Xxxx X. Xxxxxx
| Title: | Senior Vice President and |
Chief Financial Officer
Dated: March 18, 2009
|
No. of Shares |
Debt Exchanged |
|||||||||||||||||||
|
of Series A-2 |
||||||||||||||||||||
|
Stock |
Total Purchase |
|||||||||||||||||||
| Purchaser | Purchased | Price | Principal | Interest | ||||||||||||||||
|
LONGVIEW FUND, LP
000 Xxxxxxxxxx Xxxxxx, 00xx Xxxxx Xxx Xxxxxxxxx, XX 00000 Fax: (000) 000-0000 |
||||||||||||||||||||
|
By: /s/ S. XXXXXXX XXXXXXX
|
||||||||||||||||||||
|
(Signature)
|
||||||||||||||||||||
|
Print Name: S. Xxxxxxx Xxxxxxx
|
||||||||||||||||||||
|
Title: CFO-Investment Advisor
|
||||||||||||||||||||
C-11
SIGNATURE
PAGE TO SUBSCRIPTION AGREEMENT (B)
Please acknowledge your acceptance of the foregoing Stock
Purchase Agreement by signing and returning a copy to the
undersigned whereupon it shall become a binding agreement
between us.
IRVINE SENSORS CORPORATION
a Delaware corporation
| By: |
/s/ XXXX X. XXXXXX
|
Name: Xxxx X. Xxxxxx
| Title: | Senior Vice President and |
Chief Financial Officer
Dated: March 18, 2009
|
No. of Shares |
Debt Exchanged |
|||||||||||||||||||
|
of Series A-2 |
||||||||||||||||||||
|
Stock |
Total Purchase |
|||||||||||||||||||
| Purchaser | Purchased | Price | Principal | Interest | ||||||||||||||||
|
ALPHA CAPITAL ANSTALT
|
$ | |||||||||||||||||||
|
Xxxxxxxxx 0
0000 Xxxxxxxxxxx Xxxxx, Xxxxxxxxxxxx Fax: 000-00-00000000 |
||||||||||||||||||||
|
By: /s/ XXXXXX XXXXXXXX
|
||||||||||||||||||||
|
(Signature)
|
||||||||||||||||||||
|
Print Name: Xxxxxx Xxxxxxxx
|
||||||||||||||||||||
|
Title: Director
|
||||||||||||||||||||
C-12
