Contract
Exhibit 99.1
THIS WARRANT AND THE COMMON SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS OR BLUE SKY
LAWS. THIS WARRANT AND THE COMMON SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT 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.
| Right to Purchase 500,000 shares of Common Stock of Irvine Sensors Corporation (subject to adjustment as provided herein) |
CLASS B COMMON STOCK PURCHASE WARRANT
| No. 2007-B-001 | Issue Date: August 15, 2007 |
IRVINE SENSORS CORPORATION, a corporation organized under the laws of the State of Delaware
(the “Company”), hereby certifies that, for value received, LONGVIEW FUND, L.P., 000 Xxxxxxxxxx
Xxxxxx, 00xx Xxxxx, Xxx Xxxxxxxxx, XX 00000, Fax: (000) 000-0000, or its assigns (the “Holder”), is
entitled, subject to the terms set forth below, to purchase from the Company at any time after
December 29, 2007 until 5:00 p.m., Eastern time on the fifth (5th) anniversary of the
Issue Date (the “Expiration Date”), up to 500,000 fully paid and nonassessable shares of Common
Stock at a per share purchase price of $1.46. The aforedescribed purchase price per share, as
adjusted from time to time as herein provided, is referred to herein as the “Purchase Price.” The
number and character of such shares of Common Stock and the Purchase Price are subject to
adjustment as provided herein. The Company may reduce the Purchase Price without the consent of
the Holder. Capitalized terms used and not otherwise defined herein shall have the meanings set
forth in that certain Loan Agreement (the “Loan Agreement”), dated July 19, 2007, entered into by
the Company and Holders of the Class B Warrants.
As used herein the following terms, unless the context otherwise requires, have the following
respective meanings:
(a) The term “Company” shall include Irvine Sensors Corporation and any corporation which
shall succeed or assume the obligations of Irvine Sensors Corporation hereunder.
(b) The term “Common Stock” includes (a) the Company’s Common Stock, $.01 par value per share,
as authorized on the date of the Loan Agreement, and (b) any other securities into which or for
which any of the securities described in (a) may be converted or exchanged pursuant to a plan of
recapitalization, reorganization, merger, sale of assets or otherwise.
(c) The term “Other Securities” refers to any stock (other than Common Stock) and other
securities of the Company or any other person (corporate or otherwise) which the holder of the
Warrant at any time shall be entitled to receive, or shall have received, on the exercise of the
Warrant, in lieu of or in addition to Common Stock, or which at any time shall be issuable or shall
have been issued in exchange for or in replacement of Common Stock or Other Securities pursuant to
Section 5 or otherwise.
(d) The term “Warrant Shares” shall mean the Common Stock issuable upon exercise of this
Warrant.
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1. Exercise of Warrant.
1.1. Number of Shares Issuable upon Exercise. From and after the Issue Date through
and including the Expiration Date, the Holder hereof shall be entitled to receive, upon exercise of
this Warrant in whole in accordance with the terms of Subsection 1.2 or upon exercise of this
Warrant in part in accordance with Subsection 1.3, shares of Common Stock of the Company, subject
to adjustment pursuant to Sections 3 and 4 and subject to the limitations set forth in Section 10.
1.2. Full Exercise. Subject to the limitations set forth in Section 10, this Warrant
may be exercised in full by the Holder hereof by delivery to the principal office of the Company of
an original or facsimile copy of the form of subscription attached as Exhibit A hereto (the
“Subscription Form”) duly executed by such Holder, accompanied by payment, in cash, wire transfer
or by certified or official bank check payable to the order of the Company, in the amount obtained
by multiplying the number of shares of Common Stock for which this Warrant is then exercisable by
the Purchase Price then in effect. Notwithstanding anything to the contrary set forth herein, upon
exercise of any portion of this Warrant in accordance with the terms hereof, the Holder shall not
be required to physically surrender this warrant to the Company until after all the Warrants have
been exercised unless the Holder has provided the Company with prior written notice (which notice
may be included in an exercise notice) requesting physical surrender and reissue of this Warrant.
The Holder and the Company shall maintain records showing the principal, exercise amounts and dates
of such exercises or shall use such other method, reasonably satisfactory to the Holder and the
Company, so as not to require physical surrender of this Warrant upon conversion.
1.3. Partial Exercise. Subject to the limitations set forth in Section 10, this
Warrant may be exercised in part (but not for a fractional share) by surrender of this Warrant in
the manner and at the place provided in Subsection 1.2 except that the amount payable by the Holder
on such partial exercise shall be the amount obtained by multiplying (a) the number of whole shares
of Common Stock designated by the Holder in the Subscription Form by (b) the Purchase Price then in
effect. On any such partial exercise and assuming delivery of the original Warrant to the Company,
the Company, at its expense, will forthwith issue and deliver to or upon the order of the Holder
hereof a new Warrant of like tenor, in the name of the Holder hereof or as such Holder (upon
payment by such Holder of any applicable transfer taxes and compliance with the other provisions
herein) may request, for the whole number of shares of Common Stock for which such Warrant may
still be exercised.
1.4. Fair Market Value. Fair Market Value of a share of Common Stock as of a
particular date (the “Determination Date”) shall mean:
(a) If the Company’s Common Stock is traded on an exchange or is quoted on the NASDAQ Global
Market, the NASDAQ Global Select Market, the NASDAQ Capital Market or the American Stock Exchange,
LLC, then the closing or last sale price, respectively, reported for the last business day
immediately preceding the Determination Date;
(b) If the Company’s Common Stock is not traded on an exchange or on the NASDAQ Global Market,
the NASDAQ Global Select Market, the NASDAQ Capital Market or the American Stock Exchange, Inc.,
but is traded in the over-the-counter market, then the average of the closing bid and ask prices
reported for the last business day immediately preceding the Determination Date; or
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(c) Except as provided in clause (d) below, if the Company’s Common Stock is not publicly
traded, then as the Holder and the Company agree, or in the absence of such an agreement, by
arbitration in accordance with the rules then standing of the American Arbitration Association,
before a single arbitrator to be chosen from a panel of persons qualified by education and training
to pass on the matter to be decided; or
(d) If the Determination Date is the date of a liquidation, dissolution or winding up, or any
event deemed to be a liquidation, dissolution or winding up pursuant to the Company’s charter, then
all amounts to be payable per share to holders of the Common Stock pursuant to the charter in the
event of such liquidation, dissolution or winding up, plus all other amounts to be payable per
share in respect of the Common Stock in liquidation under the charter, assuming for the purposes of
this clause (d) that all of the shares of Common Stock then issuable upon exercise of all of the
Warrants are outstanding at the Determination Date.
1.5. Company Acknowledgment. The Company will, at the time of the exercise of the
Warrant, upon the request of the Holder hereof acknowledge in writing its continuing obligation to
afford to such Holder any rights to which such Holder shall continue to be entitled after such
exercise in accordance with the provisions of this Warrant. If the Holder shall fail to make any
such request, such failure shall not affect the continuing obligation of the Company to afford to
such Holder any such rights.
1.6. Trustee for Warrant Holders. In the event that a bank or trust company shall have
been appointed as trustee for the Holder of the Warrants pursuant to Subsection 3.2, such bank or
trust company shall have all the powers and duties of a warrant agent (as hereinafter described)
and shall accept, in its own name for the account of the Company or such successor person as may be
entitled thereto, all amounts otherwise payable to the Company or such successor, as the case may
be, on exercise of this Warrant pursuant to this Section 1.
1.7 Delivery of Stock Certificates, etc. on Exercise; Restrictive Legend.
The Holder hereof shall be deemed to be the record owner of the shares of Common Stock purchased
upon exercise of this Warrant as of the date on which this Warrant shall have been exercised by
delivery of an exercise notice pursuant to Section 14 herein and payment in accordance with such
exercise notice except that, if the date of such surrender and payment is on a date when the stock
transfer books of the Company are closed, such Holder shall be deemed to have become the record
owner of such shares at the close of business on the next succeeding date on which the stock
transfer books are open. As soon as practicable after the exercise of this Warrant in full or in
part, and in any event within five (5) business days thereafter (“Warrant Share Delivery Date”),
the Company at its expense (including the payment by it of any applicable issue taxes) will cause
to be issued in the name of and delivered to the Holder hereof, or as such Holder (upon payment by
such Holder of any applicable transfer taxes and compliance with the other provisions herein) may
direct in compliance with applicable securities laws, a certificate or certificates for the number
of duly and validly issued, fully paid and nonassessable shares of Common Stock (or Other
Securities) to which such Holder shall be entitled on such exercise, plus, in lieu of any
fractional share to which such Holder would otherwise be entitled, cash equal to such fraction
multiplied by the then Fair Market Value of one full share of Common Stock, together with any other
stock or other securities and property (including cash, where applicable) to which such Holder is
entitled upon such exercise pursuant to Section 1 or otherwise. The Company understands that a
delay in the delivery of the Warrant Shares after the Warrant Share Delivery Date could result in
economic loss to the Holder. As compensation to the Holder for such loss, the Company agrees to
pay (as liquidated damages and not as a penalty) to the Holder for late issuance of Warrant Shares
upon exercise of this Warrant the amount of $100 per business day after the Warrant Share Delivery
Date for each $10,000 of Purchase Price of Warrant Shares for which this Warrant is exercised which
are not timely delivered. The Company shall make any payments incurred under this Section in
accordance with Section 1.9 herein upon demand.
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Furthermore, in addition to any other remedies
which may be available to the Holder, in the event that the Company fails for any reason to effect
delivery of the Warrant Shares by the Warrant Share Delivery Date, the Holder may revoke all or
part of the relevant Warrant exercise by delivery of a written notice to such effect to the Company whereupon the Company and the Holder shall each be restored to
their respective positions immediately prior to the exercise of the relevant portion of this
Warrant, except that the liquidated damages described above shall be payable through the date
notice of revocation or rescission is given to the Company. Each certificate for Warrant Shares
shall bear a restrictive legend in substantially the form as follows, together with any additional
legend required by (i) any applicable state securities laws and (ii) any securities exchange upon
which such Warrant Shares may, at the time of such exercise, be listed):
“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.”
Any certificate issued at any time in exchange or substitution for any certificate bearing
such legend shall also bear such legend unless, in the opinion of counsel for the Holder thereof
(which counsel shall be reasonably satisfactory to counsel for the Company), the securities
represented thereby are not, at such time, required by law to bear such legend.
1.8. Delivery of Unlegended Shares.
(a) Within five (5) business days (such fifth business day being the “Unlegended Shares
Delivery Date”) after the business day on which the Company has received (i) a notice that Warrant
Shares have been sold pursuant to a registration statement (if any) or in compliance with Rule 144
under the 1933 Act, (ii) a representation that the prospectus delivery requirements, or the
requirements of Rule 144, as applicable and if required, have been satisfied, (iii) copies of the
front and back of the share certificates that Holder has delivered to the Company’s transfer agent
representing the shares of Common Stock that have been sold, and (iv) in the case of sales under
Rule 144, customary representation letters of the Holder and/or Holder’s broker regarding
compliance with the requirements of Rule 144 and a copy of the Form 144 filed by the Holder (if
required to be filed prior to such sale), 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
Holder’s broker) an appropriate instruction and opinion of such counsel, directing the delivery of
shares of Common Stock without any 1933 Act legends including the legend set forth in Section 3 of
the Loan Agreement, reissuable pursuant to any effective and current registration statement or
pursuant to Rule 144 under the 1933 Act (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 Warrant Shares certificate, if any, to the Holder 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.
(b) 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 Holder, so long as the certificates therefor do not
bear a legend and the Holder is not obligated to return such certificate for the placement of a
legend thereon, the Company must cause its transfer agent on or before the Unlegended Shares
Delivery Date to electronically transmit the Unlegended Shares by crediting the account of Holder’s
prime Broker with DTC through its Deposit Withdrawal Agent Commission system.
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(c) The Company understands that a delay in the delivery of the Unlegended Shares after the
Unlegended Shares Delivery Date could result in economic loss to Holder. As compensation to Holder
for such loss, the Company agrees to pay late payment fees (as liquidated damages and not as a
penalty) to the Holder for late delivery of Unlegended Shares in the amount of $1.00 per business
day after the Unlegended Shares Delivery Date for each $100 of Purchase Price of the Unlegended
Shares subject to the delivery default. If during any 360 day period, the Company fails to deliver
Unlegended Shares as required by this Section 1.8 for an aggregate of thirty (30) days, then each
Holder or assignee holding Securities subject to such default may, at its option, require the
Company, to the extent permissible under law, to redeem all or any portion of the Warrant Shares
subject to such default at a price per share equal to 120% of the Purchase Price of such Warrant
Shares (“Unlegended Redemption Amount”).
(d) Damages payable in connection with Sections 1.7 and 1.8 will be due on the tenth Trading
Day after such liquidated damages began to accrue and in the case of Section 1.10, the tenth
Trading Day after the Company has received such notice, and thereafter on the monthly anniversary
of each such date.
1.9 Limitation on Liquidated Damages. Liquidated damages calculable under Section
1.8 of this Warrant shall not accrue for the same days that liquidated damages are accruing under
Section 1.7 above in relation to the same Warrant Shares. The maximum amount of liquidated damages
or other payments in connection with Sections 1.7and 1.8 shall not exceed $300,000. Liquidated
damages or other amounts payable under Sections 1.7 and 1.8 must be paid in cash or other
immediately available funds.
1.10 Buy-In. In additional to any other rights available to the Holder, if the
Company fails to deliver to a Holder the Warrant Shares as required pursuant to this Warrant,
within five (5) business days after the Warrant Share Delivery Date and the Holder, or a broker on
the Holder’s behalf, is required to purchase (in an open market transaction) shares of Common Stock
to deliver in satisfaction of a sale by such Holder of the Warrant Shares which the Holder was
entitled to receive from the Company (a “Buy-In”), then the Company shall pay in cash to the Holder
(in addition to any remedies available to or elected by the Holder) the amount by which (A) the
Holder’s total purchase price (including brokerage commissions, if any) for the shares of Common
Stock so purchased exceeds (B) the aggregate Purchase Price of the Warrant Shares required to have
been delivered together with interest thereon at a rate of 15% per annum, accruing until such
amount and any accrued interest thereon is paid in full (which amount shall be paid as liquidated
damages and not as a penalty). For example, if a Holder purchases shares of Common Stock having a
total purchase price of $11,000 to cover a Buy-In with respect to $10,000 of Purchase Price of
Warrant Shares to have been received upon exercise of this Warrant, the Company shall be required
to pay the Holder $1,000. The Holder shall provide the Company written notice indicating the
amounts payable to the Holder in respect of the Buy-In.
1.11 Injunction. In the event a Holder shall have validly exercised this Warrant
accordance with its terms and shall request delivery of Warrant Shares as described in Sections 1.7
or 1.8, and the Company is required hereunder to deliver such Warrant Shares, the Company may not
refuse to deliver such Warrant Shares based on any claim that such Holder or any one associated or
affiliated with such Holder has been engaged in any violation of law or terms of the Loan Agreement
(other than Holders’ representations necessary to comply with applicable state and federal
securities laws), unless an injunction or temporary restraining order from a court, on notice,
restraining and or enjoining delivery of such Warrant Shares or exercise of all or part of said
Warrant shall have been sought and obtained by the
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Company or at the Company’s request, and the
Company has posted a surety bond for the benefit of such Holder in the amount of 120% of the amount
of the aggregate Purchase Price of the Warrant Shares which are subject to the injunction or
temporary restraining order, which bond shall remain in effect until the
completion of arbitration/litigation of the dispute and the proceeds of which shall be payable
to such Holder to the extent Holder obtains judgment in Holder’s favor.
2. Cashless Exercise.
(a) If a registration statement is effective and the Holder may sell all of the Warrant Shares
issuable upon exercise of all outstanding Warrants pursuant to such registration statement, this
Warrant may be exercisable in whole or in part for only cash, wire transfer or by certified or
official bank check payable to the order of the Company equal to the applicable aggregate Purchase
Price, as set forth in Section 1 above. If no such Registration Statement is available, then
commencing ninety days after the Issue Date, this Warrant may also be exercised at the option of
the Holder either in (i) cash, wire transfer or by certified or official bank check payable to the
order of the Company equal to the applicable aggregate Purchase Price, (ii) by net exercise of the
Warrants in accordance with Section (b) below or (iii) by a combination of any of the foregoing
methods, for the number of Warrant Shares specified in such form (as such exercise number shall be
adjusted or limited to reflect any adjustment or limitation in the total number of shares of Common
Stock issuable to the Holder per the terms of this Warrant) and the Holder shall thereupon be
entitled to receive the number of duly authorized, validly issued, fully-paid and non-assessable
shares of Common Stock (or Other Securities) determined as provided herein.
(b) Subject to Subsection 2(a) hereof, if the Fair Market Value of one share of Common Stock
is greater than the Purchase Price (at the date of calculation as set forth below), in lieu of
exercising this Warrant for cash, the Holder may elect to receive shares equal to the value (as
determined below) of this Warrant (or the portion thereof being cancelled) by surrender of this
Warrant at the principal office of the Company together with the properly endorsed Subscription
Form in which event the Company shall issue to the holder a number of shares of Common Stock
computed using the following formula:
X=Y (A-B)
A
Where X=
|
the number of shares of Common Stock to be issued to the Holder | |
Y=
|
the number of shares of Common Stock purchasable under the Warrant or, if only a portion of the Warrant is being exercised, the portion of the Warrant being exercised (at the date of such calculation) | |
A=
|
the average of the closing sale prices of one share of Common Stock for the five (5) Trading Days immediately prior to (but not including) the Exercise Date | |
B=
|
Purchase Price (as adjusted to the date of such calculation) |
(c) For purposes of Rule 144 promulgated under the 1933 Act, it is intended, understood and
acknowledged that the Warrant Shares issued in a solely cashless exercise transaction shall be
deemed to have been acquired by the Holder, and the holding period for the Warrant Shares shall be
deemed to have commenced, on the date this Warrant was acquired by the Holder; provided that the
holding period requirements under Rule 144 have not been amended to the contrary, after the Issue
Date.
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3. Adjustment for Reorganization, Consolidation, Merger, etc.
3.1. Reorganization, Consolidation, Merger, etc. In case at any time or from time to
time, the Company shall (a) effect a reorganization, (b) consolidate with or merge into any other
person or (c) transfer all or substantially all of its properties or assets to any other person
under any plan or arrangement contemplating the dissolution of the Company, in which holders of
Common Stock shall be entitled to receive shares, securities or other assets or property, then, in
each such case, as a condition to the consummation of such a transaction, proper and adequate
provision shall be made by the Company whereby the Holder of this Warrant, on the exercise hereof
as provided in Section 1, at any time after the consummation of such reorganization, consolidation
or merger or the effective date of such dissolution, as the case may be, shall receive, in lieu of
the Common Stock (or Other Securities) issuable on such exercise prior to such consummation or such
effective date, the stock and other securities and property (including cash) to which such Holder
would have been entitled upon such consummation or in connection with such dissolution, as the case
may be, if such Holder had so exercised this Warrant, immediately prior thereto, all subject to
further adjustment thereafter as provided in Section 4.
3.2. Dissolution. In the event of any dissolution of the Company following the
transfer of all or substantially all of its properties or assets, the Company, prior to such
dissolution, shall at its expense deliver or cause to be delivered the stock and other securities
and property (including cash, where applicable) receivable by the Holder of the Warrants after the
effective date of such dissolution pursuant to this Section 3 to a bank or trust company (a
“Trustee”) having its principal office in New York, NY, as trustee for the Holder of the Warrants.
3.3. Continuation of Terms. Upon any reorganization, consolidation, merger or
transfer (and any dissolution following any transfer) referred to in this Section 3, this Warrant
shall continue in full force and effect and the terms hereof shall be applicable to the Other
Securities and property receivable on the exercise of this Warrant after the consummation of such
reorganization, consolidation or merger or the effective date of dissolution following any such
transfer, as the case may be, and shall be binding upon the issuer of any Other Securities,
including, in the case of any such transfer, the person acquiring all or substantially all of the
properties or assets of the Company, whether or not such person shall have expressly assumed the
terms of this Warrant as provided in Section 4. In the event this Warrant does not continue in
full force and effect after the consummation of the transaction described in this Section 3, then
only in such event will the Company’s securities and property (including cash, where applicable)
receivable by the Holder of the Warrants be delivered to the Trustee as contemplated by Section
3.2.
3.4 Share Issuance. Until the Expiration Date, if the Company shall issue or agree to
issue any Common Stock except for the Excepted Issuances (as defined below), prior to the complete
exercise of this Warrant, for a consideration less than the Purchase Price that would be in effect
at the time of such agreement or issuance, then, and thereafter successively upon each such
agreement or issuance, the Purchase Price shall be reduced to such other lower price. For purposes
of this adjustment, except for the Excepted Issuances, the issuance or agreement to issue any
security or debt instrument of the Company carrying the right to convert such security or debt
instrument into Common Stock or of any warrant, right or option to purchase Common Stock shall
result in an adjustment to the Purchase Price upon such agreement or issuance of the
above-described security, debt instrument, warrant, right, or option and again at any time upon any
subsequent issuances of shares of Common Stock upon exercise of such conversion or purchase rights
provided that such issuance is at a price lower than the Purchase Price in effect upon such
issuance. The Holder is granted, at the Holder’s election, registration rights, if any, granted in
connection with such other issue. “Excepted Issuances” shall have the same meaning as given such
term in a certain Class A Warrant issued by the Company to Longview Fund, L.P. on December 29,
2006 (other than clause (xi) of such term unless the proceeds of such underwritten public
offering will fully retire the debt obligations the Company owes to the Holder).
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4. Extraordinary Events Regarding Common Stock. In the event that the Company shall
(a) issue additional shares of the Common Stock as a dividend or other distribution on outstanding
Common Stock, (b) subdivide its outstanding shares of Common Stock, or (c) combine its outstanding
shares of the Common Stock into a smaller number of shares of the Common Stock, then, in each such
event, the Purchase Price shall, simultaneously with the happening of such event, be adjusted by
multiplying the then Purchase Price by a fraction, the numerator of which shall be the number of
shares of Common Stock outstanding immediately prior to such event and the denominator of which
shall be the number of shares of Common Stock outstanding immediately after such event, and the
product so obtained shall thereafter be the Purchase Price then in effect. The Purchase Price, as
so adjusted, shall be readjusted in the same manner upon the happening of any successive event or
events described herein in this Section 4. The number of shares of Common Stock that the Holder of
this Warrant shall thereafter, on the exercise hereof as provided in Section 1, be entitled to
receive shall be adjusted to a number determined by multiplying the number of shares of Common
Stock that would otherwise (but for the provisions of this Section 4) be issuable on such exercise
by a fraction of which (a) the numerator is the Purchase Price that would otherwise (but for the
provisions of this Section 4) be in effect, and (b) the denominator is the Purchase Price in effect
on the date of such exercise.
5. Certificate as to Adjustments. In each case of any adjustment or readjustment in
the shares of Common Stock (or Other Securities) issuable on the exercise of the Warrants, the
Company at its expense will promptly cause its Chief Financial Officer or other appropriate
designee to compute such adjustment or readjustment in accordance with the terms of the Warrant and
prepare a certificate setting forth such adjustment or readjustment and showing in detail the facts
upon which such adjustment or readjustment is based, including a statement of (a) the consideration
received or receivable by the Company for any additional shares of Common Stock (or Other
Securities) issued or sold or deemed to have been issued or sold, (b) the number of shares of
Common Stock (or Other Securities) outstanding or deemed to be outstanding, and (c) the Purchase
Price and the number of shares of Common Stock to be received upon exercise of this Warrant, in
effect immediately prior to such adjustment or readjustment and as adjusted or readjusted as
provided in this Warrant. The Company will forthwith mail a copy of each such certificate to the
Holder of the Warrant and any Warrant Agent of the Company (appointed pursuant to Section 10
hereof).
6. Reservation of Stock, etc. Issuable on Exercise of Warrant; Financial Statements.
The Company will at all times reserve and keep available, solely for issuance and delivery on the
exercise of the Warrants, all shares of Common Stock (or Other Securities) from time to time
issuable on the exercise of the Warrant. This Warrant entitles the Holder hereof to receive copies
of all financial and other information distributed or required to be distributed to the holders of
the Company’s Common Stock.
7. Assignment; Exchange of Warrant. Subject to compliance with applicable securities
laws, this Warrant, and the rights evidenced hereby, may be transferred by any registered holder
hereof (a “Transferor”); provided that the transferee(s) agrees in writing to be bound by the terms
and subject to the conditions of this Warrant and the Loan Agreement. On the surrender for exchange
of this Warrant, with the Transferor’s endorsement in the form of Exhibit B attached hereto (the
“Transferor Endorsement Form”) and together with an opinion of counsel reasonably satisfactory to
the Company that the transfer of this Warrant will be in compliance with applicable securities
laws, the Company at its expense, but with payment by the Transferor of any applicable transfer
taxes, will issue and deliver to or on the order of the Transferor thereof a new Warrant or
Warrants of like tenor, in the name of the Transferor and/or the transferee(s) specified in such
Transferor Endorsement Form (each a “Transferee”), calling in the aggregate on the face or faces
thereof for the number of shares of Common
Stock called for on the face or faces of the Warrant so surrendered by the Transferor. The
Holder represents and warrants that such transfers shall not result in a public distribution of the
Warrant.
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8. Replacement of Warrant. On receipt of evidence reasonably satisfactory to the
Company of the loss, theft, destruction or mutilation of this Warrant and, in the case of any such
loss, theft or destruction of this Warrant, on delivery of an indemnity agreement or security
reasonably satisfactory in form and amount to the Company or, in the case of any such mutilation,
on surrender and cancellation of this Warrant, the Company at its expense, will execute and
deliver, in lieu thereof, a new Warrant of like tenor.
9. Maximum Exercise. The Holder shall not be entitled to exercise this Warrant on an
exercise date in connection with that number of Shares of Common Stock which would be in excess of
the sum of (i) the number of shares of Common Stock beneficially owned by the Holder and its
affiliates on an exercise date, and (ii) the number of shares of Common Stock issuable upon the
exercise of this Warrant with respect to which the determination of this limitation is being made
on an exercise date, with respect to which the determination of this limitation is being made on an
exercise date, which would result in beneficial ownership by the Holder and its affiliates of more
than 4.99% of the outstanding Common Stock on such date. For the purposes of the immediately
preceding sentence, beneficial ownership shall be determined in accordance with Section 13(d) of
the Securities Exchange Act of 1934, as amended, and Regulation 13d-3 thereunder. Subject to the
foregoing, the Holder shall not be limited to aggregate exercises which would result in the
issuance of more than 4.99%. The 4.99% limitation described in this paragraph may be increased
upon sixty-one (61) days prior written notice from the Holder to the Company to up to 9.99%. The
Holder may allocate which of the equity of the Company deemed beneficially owned by the Holder
shall be included in the 4.99% (or if waived, 9.99%) amount described above and which shall be
allocated to the excess above 4.99% (or if waived 9.99%) provided such allocations are consistent
with applicable law.
10. Warrant Agent. The Company may, by written notice to the Holder of the Warrant,
appoint an agent (a “Warrant Agent”) for the purpose of issuing Common Stock (or Other Securities)
on the exercise of this Warrant pursuant to Section 1, exchanging this Warrant pursuant to Section
7, and replacing this Warrant pursuant to Section 8, or any of the foregoing, and thereafter any
such issuance, exchange or replacement, as the case may be, shall be made at such office by such
Warrant Agent.
11. Transfer on the Company’s Books. Until this Warrant is transferred on the books
of the Company, the Company may treat the registered holder hereof as the absolute owner hereof and
the Holder hereunder for all purposes, notwithstanding any notice to the contrary.
12. 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 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,
0
Xxxxx Xxxx, XX 00000, Attn: Chief Financial Officer, telecopier: (000) 000-0000, with a copy
by telecopier only to: Xxxxxx & Xxxxxxx LLP, 00 Xxxxxxxxxx Xxxxx, Xxxxxx, XX 00000, Attn: Xxxxx X.
Xxxxxxxx, Esq., telecopier: (000) 000-0000, and (ii) if to the Holder, to: Longview Fund, L.P., 000
Xxxxxxxxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxxxxxxx, XX 00000, Attn: S. Xxxxxxx Xxxxxxx,
telecopier: (000) 000-0000, with an additional copy by telecopier only to: Grushko & Xxxxxxx, P.C.,
000 Xxxxx Xxxxxx, Xxxxx 0000, Xxx Xxxx, Xxx Xxxx 00000, telecopier: (000) 000-0000.
13. Miscellaneous. This Warrant and any term hereof may be changed, waived,
discharged or terminated only by an instrument in writing signed by the party against which
enforcement of such change, waiver, discharge or termination is sought. This Warrant shall be
construed and enforced in accordance with and governed by the laws of New York. Any dispute
relating to this Warrant shall be adjudicated in New York County in the State of New York. The
headings in this Warrant are for purposes of reference only, and shall not limit or otherwise
affect any of the terms hereof. The invalidity or unenforceability of any provision hereof shall
in no way affect the validity or enforceability of any other provision.
10
IN WITNESS WHEREOF, the Company has executed this Warrant as of the date first written above.
| IRVINE SENSORS CORPORATION |
||||
| By: | /s/ XXXX X. XXXXXX | |||
| Name: | Xxxx X. Xxxxxx | |||
| Title: | President and CEO | |||
[Signature Page to
Longview Class B Warrant for $2.0 Million Loan]
Longview Class B Warrant for $2.0 Million Loan]
11
Exhibit A
FORM OF SUBSCRIPTION
(to be signed only on exercise of Warrant)
FORM OF SUBSCRIPTION
(to be signed only on exercise of Warrant)
TO: IRVINE SENSORS CORPORATION
The undersigned, pursuant to the provisions set forth in the attached Warrant (No. ), hereby
irrevocably elects to purchase (check applicable box):
shares of the Common Stock covered by such Warrant; or
shares of Common Stock covered by such Warrant pursuant to the cashless exercise
procedure set forth in Section 2.
The undersigned herewith makes payment of the full purchase price for such shares at the price per
share provided for in such Warrant, which is $ . Such payment takes the form of (check
applicable box or boxes):
$ in lawful money of the United States; and/or
the cancellation of such portion of the attached Warrant as is exercisable for a total of
shares of Common Stock (using a Fair Market Value of $ per share for purposes of
this calculation) in accordance with the cashless exercise procedure set forth in Section 2.
The undersigned requests that the certificates for such shares be issued in the name of, and
delivered to whose address is
Number of Shares of Common Stock Beneficially Owned on the date of exercise: Less than five percent
(5%) of the outstanding Common Stock of Irvine Sensors Corporation.
The undersigned represents and warrants to the Company that in giving effect to the exercise
evidenced hereby, the undersigned will not own in excess of the number of shares of Common Stock
permitted to be owned under Section 9 of this Warrant to which this notice relates.
The undersigned hereby represents and warrants that the undersigned is an “accredited investor” as
defined in Regulation D promulgated under the Securities Act of 1933, as amended, and that the
undersigned is acquiring the Warrant Shares for its own account for investment purposes only, and
not for resale or with a view to distribution of such Warrant Shares or any part thereof.
The undersigned represents and warrants that all offers and sales by the undersigned of the
securities issuable upon exercise of the within Warrant shall be made pursuant to registration of
the Common Stock under the Securities Act of 1933, as amended (the “Securities Act”), or pursuant
to an exemption from registration under the Securities Act.
Dated:
|
||||||
| (Signature must conform to name of Holder as specified on the face of the Warrant) | ||||||
| (Address) |
12
Exhibit B
FORM OF TRANSFEROR ENDORSEMENT
(To be signed only on transfer of Warrant)
(To be signed only on transfer of Warrant)
For value received, the undersigned hereby sells, assigns, and transfers unto the person(s)
named below under the heading “Transferees” the right represented by the within Warrant to purchase
the percentage and number of shares of Common Stock of IRVINE SENSORS CORPORATION to which the
within Warrant relates specified under the headings “Percentage Transferred” and “Number
Transferred,” respectively, opposite the name(s) of such person(s) and irrevocably constitutes and
appoints ____________ Attorney to transfer its respective right on the books of IRVINE SENSORS
CORPORATION with full power of substitution in the premises.
| Transferees | Percentage Transferred | Number Transferred | ||||||
Dated: ______, _________
|
||
| (Signature must conform to name of Holder as specified on the face of the Warrant) | ||
Signed in the presence of: |
||
(Name)
|
||
| (address) | ||
ACCEPTED AND AGREED:
|
||
[TRANSFEREE]
|
||
| (address) | ||
(Name) |
