Exhibit 10.1
Financing Agreement
This Financing Agreement is made and entered into by and between Summit
Financial Resources, L.P., 2455 East Parley’s Way, Suite 200, Salt Lake City,
Utah 84109, Attention: Senior Portfolio Manager, and Irvine Sensors Corporation,
a Delaware corporation, 3001 Red Hill Avenue, Building 4, Suite 108, Costa Mesa,
California 92626, Attention: John Stuart.
For good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties agree as follows:
1. Definitions. Terms defined in the singular shall have the same meaning when
used in the plural and vice versa. Terms defined in the UCC shall have the
meanings set forth in the UCC, except as otherwise defined herein. As used
herein, the term:
“Acceptable Account” means an Account of Client conforming to the
representations, warranties, and requirements of Section 14, Acceptable
Accounts.
“Accounts” shall have the meaning set forth in the definition of Collateral.
“Account Debtor” means any person or entity obligated for payment of an Account.
“Account Due Date” means Ninety (90) days from the date of the invoice
evidencing the Account.
“Advance” means an advance of any portion of the Purchase Price to or on behalf
of Client.
“Advance Rate” means Eighty Percent (80%), or such other Percent as may be
determined from time to time by Summit in its sole discretion.
“Agreement” means this Financing Agreement, together with any amendments,
addenda, and modifications.
“Authorized Overadvance” means an Overadvance authorized in writing by Summit.
“Banking Business Day” means any day not a Saturday, Sunday, legal holiday in
the State of Utah, or day on which national banks in the State of Utah are
authorized to close.
“Chargeback Account” means an outstanding Purchased Account which is past the
Account Due Date or is determined to no longer be an Acceptable Account.
“Client” means Irvine Sensors Corporation, a corporation organized and existing
under the laws of the State of Delaware, its successors and assigns.
“Collateral” means the following personal property of Client, wherever located,
now owned or existing or hereafter acquired or created, all additions and
accessions thereto, all replacements, insurance or condemnation proceeds, all
documents covering any of the Collateral, all leases of any of the Collateral,
all rents, revenues, issues, profits and proceeds arising from the sale, lease,
license, encumbrance, collection, or any other temporary or permanent
disposition of any of the Collateral or any interest therein, all amendments,
modifications, renewals, extensions, and replacements thereof, and all products
and proceeds thereof: (a) all inventory (the “Inventory”); (b) all accounts (the
“Accounts”); (c) all equipment, goods and motor vehicles (collectively, the
“Equipment”); (d) all general intangibles, excluding any and all patents,
trademarks and copyrights (registered or unregistered), trade secrets, domain
names and addresses, and intellectual property licenses; (e) any and all
promissory notes and instruments payable to or owing to Client or held by
Client; any and all leases under which Client is the lessor; any and all chattel
paper in favor of, owing to, or held by Client, including, without limitation,
any and all conditional sale contracts or other sales agreements, whether Client
is the original party or the assignee; and any and all security agreements,
collateral and titles to motor vehicles which secure any of the foregoing
obligations; (f) all deposit accounts, including without limitation, all
interest, dividends or distributions accrued or to accrue thereon, whether or
not due; (g) all investment property, including all interest, dividends or
distributions accrued or to accrue thereon, whether or not due; (h) all
documents; (i) all letter-of-credit rights; (j) all supporting obligations; and
(k) all balances, deposits, debts or any other amounts or obligations of Summit
owing to Client, including, without limitation, any Reserve, whether or not due.

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“Collateral Management Fee” means One and One-Tenth Percent (1.1%) of the face
amount of each Purchased Account for the first period of Thirty (30) days or
portion thereof that the Purchased Account remains outstanding and Fifty-Five
Hundredths Percent (0.55%) of the face amount of each Purchased Account for each
successive period of Fifteen (15) days or portion thereof thereafter that the
Purchased Account remains outstanding until payment in full is applied to the
Purchased Account, due and payable monthly in arrears.
“Collected Payments” means collections and payments received by Summit on
Accounts of Client, less all interest, Fees and Charges, amounts due and payable
to Summit by Client, deductions and setoffs. Credits for Collected Payments
shall be provisional and subject to final payment and collection of the
deposited item. For purposes of calculating interest owing, Collected Payments
delivered to a bank or other agent on behalf of Summit shall be deemed received
Three (3) Banking Business Days after the date of receipt of advice by Summit
from the bank or agent that the Collected Payments have been credited to the
account of Summit.
“Daily Funds Rate” means the prime rate as announced in the Wall Street Journal
plus Two Percent (2%) divided by 360. The initial prime rate shall be the prime
rate in effect on the date of this Agreement. The Daily Funds Rate may be
adjusted from time to time as of the date of any change in the prime rate.
“Default Rate” means the Daily Funds Rate plus Ten Percent (10%) per annum.
“Equipment” shall have the meaning set forth in the definition of Collateral.
“Event of Default” shall have the meaning set forth in Section 26, Default and
Remedies.
“Fees and Charges” means the Origination Fee, the Renewal Fees, the Collateral
Management Fees, the Supplemental Fee, and the Other Charges.
“Financing Period” means an initial period of one (1) year commencing on the
date of this Agreement and thereafter successive periods of one (1) year each
commencing upon completion of each prior Financing Period.
“Inventory” shall have the meaning set forth in the definition of Collateral.
“Maximum Credit Line” means Two Million Dollars ($2,000,000.00) or such other
amount as may be determined from time to time by Summit in its sole discretion.
“Monthly Minimum” means Two Thousand Dollars ($2,000.00).
“Origination Fee” means One Percent (1%) of the Maximum Credit Line. The
Origination Fee shall be due and payable upon execution of this Agreement. In
the event the Maximum Credit Line is increased during the first year of this
Agreement, an additional Origination Fee shall be charged on the amount of the
increase, prorated from the date of the increase to the anniversary date of this
Agreement. Any additional Origination Fee shall be due and payable on the
effective date of the increase in the Maximum Credit Line. In the event of a
decrease in the Maximum Credit Line, no refund or credit shall be given for any
Origination Fee which has been paid.

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“Other Charges” means the following fees and charges:
a. Any Payment Conversion Fees.
b. All other charges and fees which may be charged by Summit pursuant to this
Agreement, other than the Origination Fee, Renewal Fees, Collateral Management
Fee, and Supplemental Fee.
“Outstanding Advances” means Advances for which Summit has not received
Collected Payments in full and includes Advances against Chargeback Accounts for
which Collected Payments in full have not been received and the full re-purchase
price has not been paid.
“Overadvance” means (a) the amount by which the Outstanding Advances exceed the
Maximum Credit Line, or (b) the amount by which the Outstanding Advances exceed
Purchased Accounts which are not Chargeback Accounts multiplied by the Advance
Rate.
“Payment Conversion Fee” means Ten Percent (10%) of any payment received by
Client on a Purchased Account which is not tendered to Summit as required in
this Agreement.
“Purchase Price” of an Account means the face amount of the Account less all
interest and Fees and Charges.
“Purchased Account” means an Account that has been purchased by Summit pursuant
to Section 2, Purchase of Accounts.
“Qualified Bank Financing” means financing provided directly by a full service
commercial bank whose deposits are insured by the Federal Deposit Insurance
Corporation in the form of a revolving line of credit for which the primary
collateral is Client’s Accounts. Financing provided by a subsidiary, affiliate
or division of such a bank does not qualify as Qualified Bank Financing.
“Renewal Fee” means One Percent (1%) of the Maximum Credit Line. The Renewal Fee
shall be due and payable upon each anniversary of the Agreement. In the event
the Maximum Credit Line is increased after the first year of this Agreement, an
additional Renewal Fee shall be charged on the amount of the increase, prorated
from the date of increase to the next anniversary date of this Agreement. Any
additional Renewal Fee shall be due and payable on the effective date of the
increase in the Maximum Credit Line. In the event of a decrease in the Maximum
Credit Line, no refund or credit shall be given for any Renewal Fee which has
been paid.
“Reserve” means such amount as may be determined from time to time by Summit in
its sole discretion.
“Settlement Date” means dates set by Summit, which dates shall be at least
weekly.
“Summit” means Summit Financial Resources, L.P., a Hawaii limited partnership,
its successors and assigns.
“Supplemental Fee” means the amount by which the Monthly Minimum exceeds amount
of interest on Advances and Collateral Management Fees each calendar month,
prorated for the first and last months of this Agreement.
“UCC” means the Uniform Commercial Code, as adopted now or in the future in the
State of Utah.

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2. Purchase of Account.
Client shall request purchase of Accounts by submitting to Summit a Schedule of
Accounts and Bill of Sale, copies of the invoices listed on the Schedule of
Accounts and Bill of Sale, supporting documentation for such invoices as
requested by Summit, and such other documentation as required by Summit. Summit
shall notify Client which Accounts are purchased by providing reports to Client.
Unless otherwise agreed in writing by Summit, upon purchase by Summit of any
Account, Client shall thereafter offer all Accounts owing by that Account Debtor
for purchase by Summit. Summit may also require that all Accounts owing by that
Account Debtor which Summit declines to purchase nonetheless be subject to
Section 13 Collection Procedures and be paid to Summit.
Summit may purchase from Client such Acceptable Accounts as Summit elects. All
purchases shall be subject to the terms and conditions of this Agreement. THE
OBLIGATION OF SUMMIT TO PURCHASE ACCOUNTS FROM CLIENT IS DISCRETIONARY AND
SUMMIT SHALL HAVE NO OBLIGATION TO PURCHASE ANY ACCOUNT FROM CLIENT,
NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS AGREEMENT. Summit may decline
to purchase any Account submitted by Client for any reason or for no reason,
without notice, regardless of any course of conduct or past purchases of
Accounts by Summit. Each purchase by Summit shall be a true purchase with
transfer of all legal and equitable title and shall not be deemed to be a loan
agreement or secured transaction. Client shall thereafter have no right, title
or interest in or to Purchased Accounts. Client shall make appropriate entries
on its books and records disclosing the sale of Purchased Accounts to Summit.
Summit shall be the sole and exclusive purchaser of Client’s Accounts. Client
will not sell, factor or otherwise finance its Accounts and shall not grant any
other security interest in its Accounts or Inventory.
3. Purchase Price of Accounts.
The Purchase Price shall be payable as follows: (i) an amount equal to the face
amount of the Account multiplied by the Advance Rate shall be payable upon
purchase of the Account by Summit; and (ii) the balance of the Purchase Price
shall be payable after receipt of Collected Payments in full for the Purchased
Account, such balance to be paid on the next Settlement Date; provided, however,
that notwithstanding anything to the contrary in this Agreement, Summit shall
not be obligated to make any Advance if, after making the Advance, the amount of
all Outstanding Advances will exceed the Maximum Credit Line.
Payment shall be made in accordance with any written instructions of Client
which are agreed to by Summit. Absent other instructions, payment shall be made
by mailing a check to Client.
4. Interest, Fees and Charges.
Interest shall accrue on Outstanding Advances, both before and after judgment,
from the date of disbursement until receipt of Collected Payments, at the Daily
Funds Rate. Upon occurrence of an Event of Default, interest on Outstanding
Advances shall thereafter accrue, both before and after judgment, at the Default
Rate until receipt of Collected Payments.
In addition, Client shall pay Summit the Fees and Charges. The Collateral
Management Fees are for monitoring of the Collateral, collection of the
Accounts, and administration of this Agreement. The Collateral Management Fees
are not intended to be and shall not be construed to be interest.
Interest and Fees and Charges may be deducted from Advances or from Collected
Payments.

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5. Recourse Purchases.
Unless specifically designated otherwise in writing by Summit, all Accounts
shall be purchased with recourse and shall become a Chargeback Account if not
paid in full by the Account Due Date.
6. Re-Purchase Obligation and Chargeback Accounts.
If a Purchased Account is not paid in full by the Account Due Date, or if at any
time Summit determines that the Purchased Account is no longer an Acceptable
Account, the Purchased Account shall thereupon automatically be a Chargeback
Account without any action by Summit.
Client shall immediately re-purchase all Chargeback Accounts by paying Summit
the amount of the outstanding Advance against the Chargeback Account, plus
accrued interest, and Collateral Management Fees thereon.
Interest shall accrue on Chargeback Accounts at the Default Rate until the
re-purchase amount is paid in full.
7. Overadvance.
Authorized Overadvances shall be due upon demand by Summit. Authorized
Overadvances shall accrue interest at the Daily Funds Rate plus Three Percent
(3%) per annum.
If at any time an Overadvance exists which is not an Authorized Overadvance,
Client shall immediately make payment to Summit of an amount equal to the
Overadvance. If such payment is not immediately made, interest shall accrue on
the Overadvance at the Default Rate regardless of whether Summit waives the
Event of Default caused by such non-payment.
8. Reserve.
Summit may fund the Reserve by withholding amounts owing to Client for Advances
or deducting amounts from Collected Payments.
Upon non-renewal of the Financing Period, termination of the right of Client to
submit Accounts to Summit as provided in Section 19, Renewal of Financing Period
and Termination of Financing, and payment of all amounts owing to Summit by
Client, any balance of the Reserve shall be paid to Client, provided that if
Summit has reasonable grounds to believe that any collections or other payments
received by Summit may be dishonored, voided, or preferential, or claims may be
made against Summit for which Client would be liable, Summit may continue to
hold the Reserve so long as such matters are outstanding and unresolved.
Summit shall be free to use the Reserve as working capital or as Summit
otherwise determines. Summit shall have no obligation to segregate, not
commingle, or otherwise account for the use of the Reserve. Client shall not be
entitled to any interest on the Reserve. The Reserve shall be a debt owed to
Client by Summit, payable in accordance with the terms and conditions of this
Agreement.
9. Application of Payments and Collections.
Summit may apply payments and recoveries first to Fees and Charges, second to
outstanding and accrued interest, and third to Outstanding Advances.
10. Setoff and Deduction by Summit.
As to all amounts owing to Summit by Client, Summit may (i) deduct such amount
from Collected Payments received on Accounts, (ii) setoff and deduct such amount
against Advances or any amount owing by Summit to Client, (iii) demand payment
from Client whereupon Client shall promptly pay such amount to Summit, or
(iv) exercise any combination of the alternatives set forth in this Section or
available under this Agreement, at law, or in equity.

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11. Excess Interest.
It is the intent of the parties to comply with any usury law applicable to this
Agreement and to all amounts owing pursuant to this Agreement and it is
understood and agreed that in no event and upon no contingency shall Client or
any guarantor be required to pay interest in excess of the rate allowed by any
laws of any state which are determined to be applicable and governing. The
intention of the parties being to conform strictly to any applicable usury laws,
this Agreement shall be held to be subject to reduction to the amount allowed
under any applicable and governing usury laws as now or hereafter construed by
the courts having jurisdiction. In the event Summit receives any interest under
this Agreement in excess of any highest permissible rate under any applicable
and governing law, such excess interest (including simple interest thereon at
the highest permissible rate which is applicable and governing) shall be
promptly applied to the amounts owing by Client hereunder and then to
Outstanding Advances. To the extent such excess interest is greater than such
amounts, Summit shall promptly remit such overage to Client.
12. Reports and Audits.
Upon request, which request may be made as frequently as determined by Summit,
Client will promptly submit to Summit a current Account Debtor list, which shall
include the name, address, contact person name, phone number and fax number for
each active Account Debtor and such other records and reports concerning its
Accounts, Inventory, the Collateral, and operations as may be requested by
Summit.
Client shall, at any reasonable time and from time to time, permit Summit or any
representative of Summit to conduct field audits, examine, audit, and make
copies of and extracts from the records and books of, and visit and inspect the
Collateral, properties and assets of, Client, and to discuss the affairs,
finances, and Accounts of Client with any of Client’s officers, directors, and
partners and with Client’s independent accountants.
13. Collection Procedures.
a. Unless directed otherwise in writing by Summit, Client shall promptly mail an
invoice to each Account Debtor on each Purchased Account, which invoice shall be
stamped or printed with a notice, in a form acceptable to Summit, stating that
the Account is payable to Summit and providing payment instructions. Except as
agreed otherwise in writing by Summit, Summit shall have the exclusive right to
collect and to receive all payments on all Purchased Accounts. Client shall not
otherwise bill for, submit any invoice, or otherwise attempt to collect any
Purchased Account, except as authorized in writing by Summit. Summit is
authorized to notify Account Debtors of the assignment and purchase of Client’s
Accounts and to direct Account Debtors to make all payments on Purchased
Accounts directly to Summit.
b. Client authorizes Summit to contact Account Debtors concerning verification
and payment of Accounts and to settle or compromise any Account, in the sole
discretion of Summit subject only to acting in good faith. Client hereby waives
and releases any and all claims relating to or arising out of any act or
omission by Summit in the verification and collection of the Accounts, excluding
those based on gross negligence or intentional misconduct.
c. All collections of Purchased Accounts shall be handled by Summit. Collection
of Accounts in a commercially reasonable manner does not require, and Summit is
not obligated, to commence any legal action, including the sending of an
attorney’s demand letter, to collect any Account. Client acknowledges and agrees
that Summit is not a collection agency and will not provide debt collection
services for Client’s Accounts. If any Purchased Account is not timely paid,
Summit may, but is not obligated to, engage a collection agency, attorney or
other service provider to collect Purchased Accounts. All commissions, fees and
charges of any such collection agency, attorney or other service provider shall
be paid by Client. CLIENT HEREBY WAIVES AND RELEASES ANY AND ALL CLAIMS RELATING
TO OR ARISING OUT OF ANY ACT OR OMISSION BY SUMMIT IN THE COLLECTION OF
PURCHASED ACCOUNTS, GROSS NEGLIGENCE AND INTENTIONAL MISCONDUCT EXCEPTED.

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d. Client shall promptly and completely respond to all requests from Summit for
any information or records requested to assist in collection of Accounts. If
Client fails to respond to any request within Fifteen (15) days, Summit may deem
the Account to no longer be an Acceptable Account.
e. Upon inquiry from an Account Debtor or upon request of Summit, Client shall
notify the Account Debtor to make payment directly to Summit.
f. Any payments received by Client on Purchased Accounts shall be held in trust
by Client for Summit. In the event an Account Debtor makes payment to Client on
any Purchased Account, Client shall immediately notify Summit of the payment and
deliver the payment to Summit. If payment is made in cash, such payment shall be
immediately delivered to Summit. If payment is made by check or similar
instrument, such instrument shall be immediately delivered to Summit in the form
received without negotiation. If payment is made by electronic funds transfer,
Client shall immediately forward such payment to Summit by electronic funds
transfer.
If any payment received by Client on any Account is deposited or negotiated by
Client, or if Client fails to tender the payment to Summit within Five
(5) Banking Business Days of receipt by Client, Client shall promptly pay Summit
the Payment Conversion Fee.
Client acknowledges and agrees that it has no right, title or interest
whatsoever in the funds constituting payment of Purchased Accounts, that said
funds are the sole and exclusive property of Summit, and that any use of or
interference with said funds by Client will result in civil and criminal
liability.
g. Client shall immediately notify Summit of any dispute concerning any
Purchased Account and of any bankruptcy filing, lien, garnishment or other legal
action concerning any Purchased Account or Account Debtor.
h. Summit may, but has no duty to, and Client hereby authorizes Summit to,
execute and file, on behalf of Client or in Summit’s name, mechanic’s liens and
all other notices and documents to create, perfect, preserve,
foreclose and/or release any lien for work performed or materials provided to
improve real property.  Except as otherwise instructed by Summit, Client is
authorized to file any such mechanic’s liens and other notices and documents in
Client’s discretion.
14. Acceptable Accounts.
An Acceptable Account must meet all of the following requirements and conditions
unless waived in writing by Summit.
a. Client has sole and unconditional good title to the Account and the Account
and any goods sold to create the Account are free from any other security
interest, assignment, lien or other encumbrance of any type.
b. The Account is a bona fide obligation of the Account Debtor for the amount
identified on the records of Client and there have been no payments, deductions,
credits, payment terms, or other modifications or reductions in the amount owing
on such Account except as reported to Summit in writing prior to making an
Advance based on the Account.
c. The Account must be submitted to Summit within Sixty (60) days of the date
the goods are sold or the services performed giving rise to the Account are
completed.

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d. There are no defenses or setoffs to payment of the Account which can be
asserted by way of defense or counterclaim against Client or Summit.
e. The Account will be timely paid in full by the Account Debtor.
f. There have been no extensions, modifications, or other agreements relating to
payment of such Account except as reported to Summit in writing prior to making
an Advance.
g. Any services performed or goods sold which give rise to the Account have been
completed and delivered and have been rendered or sold in compliance with all
applicable laws, ordinances, rules and regulations and were performed or sold in
the ordinary course of Client’s business.
h. The Account Debtor is located or authorized to do business within the United
States or the Account has been insured under a policy of credit insurance from
an insurer and upon terms acceptable to Summit.
i. No proceeding has been commenced or petition filed under any bankruptcy or
insolvency law by or against the Account Debtor; no receiver, trustee or
custodian has been appointed for any part of the property of the Account Debtor;
and no property of the Account Debtor has been assigned for the benefit of
creditors.
j. Neither the Account, nor any invoice, credit application, bill, billing
memorandum, correspondence, or any other document relating to an Account,
contracts for or charges interest or any other charge in excess of the maximum
non-usurious rate allowed pursuant to applicable law.
k. The Account is not past the Account Due Date.
l. If the total of the outstanding Purchased Accounts owing by any single
Account Debtor equals Sixty Percent (60%) or more of the total outstanding
Purchased Accounts owing by all Account Debtors, the portion of the Purchased
Accounts owing by that single Account Debtor in excess of this limit shall not
be Acceptable Accounts.
m. If Twenty-Five Percent (25%) or more of the outstanding Accounts owing by an
Account Debtor are past the Account Due Date, none of the Accounts owing by that
Account Debtor shall be Acceptable Accounts.
n. For all Accounts arising under any contract, purchase order, or any other
agreement with the United States Government, or any agency, branch, division, or
subdivision thereof, (i) the Account Debtor has acknowledged and consented to
Client’s assignment of Accounts to Summit and has agreed, in a form acceptable
to Summit, to remit payments directly to Summit, and (ii) Summit has verified,
as necessary in Summit’s sole discretion, that the Account is a bona fide
obligation of the Account Debtor for the amount identified on the records of
Client and that the Account will be timely paid in full by the Account Debtor.
15. Grant of Security Interest.
Client hereby grants Summit a security interest in the Collateral. Client and
Summit acknowledge their mutual intent that all security interests contemplated
herein are given as a contemporaneous exchange for new value to Client,
regardless of when Advances to Client are actually made or when the Collateral
is acquired.
The Collateral shall secure all of Client’s present and future debts,
obligations, and liabilities of whatever nature to Summit, including, without
limitation, (a) all obligations of Client under this Agreement, and
(b) transactions in which the documents evidencing the indebtedness refer to
this grant of security interest as providing security therefore.

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Client’s obligations under this Agreement may also be secured by other
collateral as may be evidenced by other documentation apart from this Agreement.
16. Representations, Warranties and Covenants of Client.
Client represents, warrants, and covenants that:
a. Client is a corporation organized and existing in good standing under the
laws of the State of Delaware.
b. The complete and exact name of Client is Irvine Sensors Corporation. The
organizational number of Client assigned by its state of organization is
2149404. During the five years preceding the date of this Agreement: (a) Client
has not been known by or used any legal, fictitious or trade name; (b) Client
has not changed its name in any respect; (c) Client has not been the surviving
entity of a merger or consolidation; and (d) Client has not acquired all or
substantially all of the assets of any person or entity.
c. The execution, delivery and performance by Client of this Agreement have been
duly authorized by all necessary action on the part of Client, and are not
inconsistent with any organizational documents of Client, do not and will not
contravene any provision of, or constitute a default under, any indenture,
mortgage, contract or other instrument to which Client is a party or by which it
is bound, and upon execution and delivery hereof, this Agreement will constitute
a legal, valid and binding agreement and obligation of Client, enforceable in
accordance with its terms.
d. All financial statements of Client, and of any guarantor of Client’s
obligations under this Agreement, fully and fairly present the financial
condition of Client and any guarantor as of the date thereof and the results of
operations for the period or periods covered thereby. Since the date of such
financial statements there has been no material adverse change in the financial
condition of Client or any guarantor. Client agrees to submit financial
statements for Client to Summit and Client shall cause any guarantor to submit
financial statements for such guarantor to Summit as may be requested by Summit,
all such financial statements to fully and fairly present the financial
condition of Client or such guarantor, as the case may be, and to be in a form
and from a firm acceptable to Summit.
e. Client shall conduct its business in a lawful manner and in compliance with
all applicable federal, state, and local laws, ordinances, rules, regulations,
and orders and shall pay when due all lawfully imposed taxes upon its property,
business and income. No later than the fifth day of each month, Client shall
certify in writing to Summit, in a form acceptable to Summit, that all federal,
state, and other taxes and assessments owing during the prior month have been
paid in full. Such certification shall be accompanied by proof of payment in a
form acceptable to Summit.
f. This Agreement, the financial statements referred to herein, and all other
statements furnished by Client to Summit in connection herewith contain no
untrue statement of a material fact and omit no material fact necessary to make
the statements contained therein or herein not misleading. Client represents and
warrants that it has not failed to disclose in writing to Summit any fact that
materially and adversely affects, or is reasonably likely to materially and
adversely affect, Client’s business, operations, properties, prospects, profits,
condition (financial or otherwise), or ability to perform this Agreement.
g. No change of control of Client or any guarantor shall occur except with prior
written consent of Summit.

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Change of control means (1) in the case of a corporation, any sale, assignment,
or other transfer of more than Twenty-Five Percent (25%) of the stock of such
corporation or the persons who are the directors of such corporation as of the
date of this Agreement fail to constitute a majority of the Board of Directors
of such corporation, or the president or any other executive officer of such
corporation resigns, is terminated, or otherwise ceases to function in such
position; (2) in the case of a general or limited partnership, any sale,
assignment, or other transfer of more than Twenty-Five Percent (25%) of the
general partnership interests of such partnership, any of the persons or
entities who are a general partner of such partnership as of the date of this
Agreement ceases to be a general partner of such partnership, the occurrence of
any change of control in any general partner in such partnership, or any general
manager or person holding a similar position in such partnership resigns, is
terminated, or otherwise ceases to function in such position; or (3) in the case
of a limited liability company, any of the persons or entities who are members
of such limited liability company as of the date of this Agreement ceases to be
a member of such limited liability company, any managing member or manager of
such limited liability company resigns, is terminated, or otherwise ceases to
function in such position, or the occurrence of any change of control in any
such member, managing member or manager of such limited liability company.
17. Representations, Warranties and Covenants Concerning Collateral.
Client represents, warrants, and covenants concerning the Collateral as follows:
a. All Purchased Accounts are Acceptable Accounts.
b. Client is the sole owner of the Collateral.
c. The Inventory and Accounts are not subject to, and will be kept free and
clear of, any security interest, lien, assignment, or other encumbrance of any
nature whatsoever except for current taxes and assessments which are not
delinquent, the security interests created by this Agreement, and assignments
and security interests created and disclosed in writing to Summit prior to
execution of this Agreement.
d. Summit is authorized to file UCC Financing Statements concerning the
Collateral. Client agrees to execute any notices of assignment and other
documents reasonably requested by Summit for perfection or enforcement of the
rights and interests of Summit, and to give good faith, diligent cooperation to
Summit, and to perform such other acts reasonably requested by Summit for
perfection and enforcement of the rights and interests of Summit. Summit is
authorized to file, record, or otherwise utilize such documents as it deems
necessary to perfect and/or enforce any security interest or lien granted
hereunder.
e. The place of business of Client, or, if Client has more than one place of
business, the location of its chief executive office, is located in the State of
California. During the five years preceding the date of this Agreement, this
location has not been located outside the State of California. This location
will not be moved from the State of California without at least Thirty (30) days
prior written notice to Summit.
f. The Collateral and all records of Client pertaining to the Collateral are
located in the State of California. During the five years preceding the date of
this Agreement, the Collateral and all records of Client pertaining to the
Collateral have not been located outside the State of California.
g. Client shall keep the Equipment, if any, in good repair and be responsible
for any loss or damage to the Equipment. Client shall pay when due all taxes,
license fees and other charges on the Equipment. Client shall not sell, misuse,
conceal, or in any way dispose of the Equipment or permit it to be used
unlawfully or for hire or contrary to the provisions of any insurance coverage.
Risk of loss of the Equipment shall be on Client at all times unless Summit
takes possession of the Equipment. Loss of or damage to the Equipment or any
part thereof shall not release Client from any of the obligations secured by the
Equipment.

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h. Client agrees to insure the Equipment and Inventory, at Client’s expense,
against loss, damage, theft, and such other risks as Summit may request to the
full insurable value thereof with insurance companies and policies satisfactory
to Summit. Summit shall be named as an additional insured and loss payee under
such policies. All such policies shall provide for a minimum Ten (10) days
written cancellation notice to Summit. Upon request, policies or certificates
attesting to such coverage shall be delivered to Summit. Insurance proceeds may
be applied by Summit toward payment of any obligation secured by this Agreement,
whether or not due, in such order of application as Summit may elect.
i. So long as no Event of Default has occurred, Client shall have the right to
sell or otherwise dispose of the Inventory in the ordinary course of business.
No other disposition of the Inventory may be made without the prior written
consent of Summit.
18. Assignment of Rights Concerning Collateral.
Client hereby assigns to Summit all of its interest in and rights to any
Inventory which may be returned by Account Debtors, all rights as an unpaid
vendor or lienor, all rights of stoppage in transit, repletion and reclamation
relating thereto, all rights in and to all security therefor and guarantees
thereof, all rights against third parties with respect thereto, and all rights
under the UCC and any other law, statute, regulation or agreement.
19. Renewal of Financing Period and Termination of Financing.
Each Financing Period shall automatically renew for an additional Financing
Period unless Client or Summit provides written notice of non-renewal at least
Sixty (60) days prior to the end of the current Financing Period.
If Client elects to terminate a Financing Period at any time other than the last
day of a Financing Period, except to replace this financing with Qualified Bank
Financing as provided herein after Seven (7) months from the date hereof, or if
an Event of Default terminates the financing of Client’s Accounts, Client shall
pay Summit a termination fee equal to the greater of (a) Two Percent (2%) of the
Maximum Credit Line, or (b) the Supplemental Fee for the remainder of the
Financing Period, which termination fee shall be due and payable in full upon
such termination.
Client must provide at least Sixty (60) days written notice to Summit of intent
to replace this financing with Qualified Bank Financing, which notice shall
itemize the material financial terms of the Qualified Bank Financing. Within
Thirty (30) days of receipt of such notice, Summit may provide written notice to
Client that Summit will match the material financial terms of the Qualified Bank
Financing whereupon Summit and Client shall amend this Agreement to match the
material financial terms of the Qualified Bank Financing and this Agreement
shall remain in force.
Upon such non-renewal or termination, all other terms and provisions of this
Agreement, including, without limitation, the security interests granted in
favor of Summit, shall remain in full force and effect until all amounts owing
to Summit hereunder have been finally paid in full, except that Client shall be
excused from the covenants herein providing that Summit shall be the sole and
exclusive purchaser and source of financing for Client’s Accounts.
Upon expiration of the final Financing Period or any other termination, at the
election of Summit, all outstanding Purchased Accounts will immediately be
Chargeback Accounts and all amounts owing to Summit by Client pursuant to this
Agreement shall, without notice of such election, accelerate and become
immediately due and payable in full.

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20. Right to Perform for Client.
Summit may, in its sole discretion, elect to discharge any security interest,
lien or other encumbrance upon any Accounts, elect to pay any subcontractor,
vendor, materialman, laborer, or other person to whom Client is obligated,
whether or not any mechanic’s lien or other encumbrance has been asserted, and
elect to pay any insurance charges payable by Client or provide insurance as
required herein if Client fails to do so. Any such payments and all expenses
incurred in connection therewith shall be immediately due and payable by Client.
Summit shall have no obligation to discharge any such security interest, lien or
other encumbrance or pay such insurance charges or provide such insurance.
21. Power of Attorney to Endorse Checks.
Client does hereby make, constitute and appoint Summit, and its designees, as
its true and lawful attorneys-in-fact, with full power of substitution, with
full power to endorse the name of Client upon any checks or other forms of
payment on Accounts and to effect the deposit and collection thereof. This power
of attorney is irrevocable and coupled with an interest. Such power may be
exercised at any time. Client does hereby make, constitute, and appoint Summit,
and its designees, as Client’s true and lawful attorneys in fact, with full
power of substitution, such power to be exercised only upon the occurrence of an
Event of Default, to: (a) receive, open, and dispose of all mail addressed to
Client; (b) cause mail relating to Accounts of Client to be delivered to a
designated address of Summit where Summit may open all such mail and remove
therefrom any payment of such Accounts; and (c) Summit may do any and all other
things necessary or proper to carry out the intent of this Agreement and to
perfect and protect the rights of Summit created under this Agreement. This
power of attorney is irrevocable and coupled with an interest. Exercise of any
of the foregoing powers shall be in the sole discretion of Summit without any
duty to do so.
22. Disclosure of Information.
Client hereby consents to Summit disclosing to any financial institution or
investor providing financing for Summit or participating in this financing, any
and all information, knowledge, reports and records, including, without
limitation, financial statements, concerning Client or any guarantor.
23. Interest on Unpaid Amounts and Late Fees.
In the event Client fails to pay any amount owing to Summit when due, Client
agrees to pay interest on such amount from the due date until paid, both before
and after judgment, at the Default Rate.
24. No Third Party Beneficiary.
This Agreement is made for the sole and exclusive benefit of Summit and Client
and is not intended to benefit any third party. No such third party may claim
any right or benefit or seek to enforce any term or provision of this Agreement.
25. Indemnification.
CLIENT AGREES TO INDEMNIFY SUMMIT FOR ANY AND ALL CLAIMS WHICH MAY BE ASSERTED
AND FOR LIABILITIES AND DAMAGES WHICH MAY BE AWARDED AGAINST SUMMIT, AND FOR ALL
REASONABLE ATTORNEYS FEES, LEGAL EXPENSES AND OTHER EXPENSES INCURRED IN
DEFENDING SUCH CLAIMS, ARISING FROM OR RELATING IN ANY MANNER TO THE PURCHASE,
FINANCING AND/OR COLLECTION OF ACCOUNTS PURSUANT TO THE TERMS OF THIS AGREEMENT,
EXCLUDING CLAIMS BASED ON THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF SUMMIT.
SUMMIT SHALL HAVE SOLE AND COMPLETE CONTROL OF THE DEFENSE OF ANY SUCH CLAIMS,
AND IS HEREBY GIVEN AUTHORITY TO SETTLE OR OTHERWISE COMPROMISE ANY SUCH CLAIMS
AS SUMMIT, IN GOOD FAITH, DETERMINES SHALL BE IN ITS BEST INTERESTS.

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26. Default and Remedies.
Time is of the essence of this Agreement. The occurrence of any of the following
events shall constitute a default under this Agreement and be termed an “Event
of Default”:
a. Failure by Client to pay any amount to Summit when due.
b. Client fails in the payment or performance of any obligation, covenant,
agreement, or liability created by this Agreement.
c. Any representation, warranty, or financial statement made by or on behalf of
Client, or any guarantor, proves to have been materially false or materially
misleading when made or furnished.
d. Any default or event which, with the giving of notice or the passage of time
or both, would constitute a default, occurs on any indebtedness of Client or any
guarantor.
e. Client or any guarantor becomes dissolved or terminated, dies, or experiences
a business failure.
f. A receiver, trustee, or custodian is appointed for any part of Client’s or
any guarantor’s property, or any part of Client’s or any guarantor’s property is
assigned for the benefit of creditors.
g. Any proceeding is commenced or petition filed under any bankruptcy or
insolvency law by or against Client or any guarantor.
h. Any judgment is entered against Client or any guarantor which may materially
affect Client’s or any guarantor’s financial condition.
i. Client or any guarantor becomes insolvent or unable to pay its debts as they
mature.
j. The Purchased Accounts become, for any reason whatsoever, substantially
delinquent or uncollectible.
Waiver of any Event of Default shall not constitute a waiver of any subsequent
Event of Default.
Upon the occurrence of any Event of Default and at any time thereafter, at the
election of Summit and without notice of such election, Summit may immediately
terminate the right of Client to request Advances, treat all outstanding
Purchased Accounts as Chargeback Accounts, and all obligations of Client to
Summit shall accelerate and become immediately due and payable in full and
Summit shall have all rights and remedies created by or arising from this
Agreement and the following rights and remedies, in addition to all other rights
and remedies existing at law, in equity, or by statute:
a. Summit shall have all the rights and remedies available under the UCC.
b. Summit shall have the right to enter upon any premises where the Collateral
or records pertaining thereto may be and take possession of the Collateral and
records relating thereto.
c. Upon request of Summit, Client shall, at the expense of Client, assemble the
Collateral and records relating thereto at a place designated by Summit and
tender the Collateral and records to Summit.
d. Without notice to Client, Summit may obtain the appointment of a receiver of
the business, property and assets of Client and Client hereby consents to the
appointment of Summit or such person as Summit may designate as such receiver.

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e. Summit may sell, lease or otherwise dispose of any or all of the Collateral
and, after deducting the reasonable costs and out-of-pocket expenses incurred by
Summit, including, without limitation, (i) reasonable attorneys fees and legal
expenses, (ii) transportation and storage costs, (iii) costs of advertising sale
of the Collateral, (iv) sale commissions, (v) sales tax, (vi) costs for
improving or repairing the Collateral, and (vii) costs for preservation and
protection of the Collateral, and apply the remainder against, or to hold as a
reserve against, the obligations secured by this Agreement.
Client and any guarantors shall be liable for all deficiencies owing on any
obligations secured by the Collateral after liquidation of the Collateral.
Upon occurrence of an Event of Default, the interest rate on obligations of
Client owing to Summit shall be increased to the Default Rate. After the
occurrence of an Event of Default, Summit shall retain the exclusive right to
collect outstanding Chargeback Accounts, regardless of whether the Chargeback
Account has been repurchased by Client, until all obligations owing to Summit by
Client have been paid in full.
The rights and remedies herein conferred are cumulative and not exclusive of any
other rights or remedies and shall be in addition to every other right, power
and remedy herein specifically granted or existing at law, in equity, or by
statute which Summit might otherwise have and may be exercised from time to time
and as often and in such order as may be deemed expedient by Summit. No delay or
omission by Summit in the exercise of any such right, power or remedy or in the
pursuance of any remedy shall impair any such right, power or remedy or be
construed to be a waiver of any Event of Default or to be an acquiescence
therein.
27. Payment of Expenses and Attorneys Fees.
Client shall pay all reasonable expenses of Summit relating to the negotiation,
documentation, and administration of this Agreement, including, without
limitation, title insurance, recording fees, filing fees, fees of collection
services, reasonable attorneys fees and legal expenses, returned check fees,
photocopies, postage, audit and field examination fees and costs, inspection
fees, wire transfer fees, and overnight delivery expenses, whether incurred in
making Advances, in future amendments or modifications to this Agreement, or in
ongoing administration of this financing.
Upon occurrence of an Event of Default, Client agrees to pay all costs and
expenses, including reasonable attorney fees and legal expenses, incurred by
Summit in enforcing or exercising any remedies under this Agreement or any other
rights and remedies.
Client agrees to pay all expenses, including reasonable attorney fees and legal
expenses, incurred by Summit in any bankruptcy proceedings of any type involving
Client, any guarantor, this Agreement, the Purchased Accounts, or the
Collateral, including, without limitation, expenses incurred in modifying or
lifting the automatic stay, determining adequate protection, use of cash
collateral or relating to any plan of reorganization.
28. Bankruptcy Considerations.
Client covenants that it will notify Summit of any voluntary or involuntary
bankruptcy petition under the United States Bankruptcy Code filed by or against
Client or any guarantor, or any assignment for the benefit of creditors by
Client or any guarantor, within Twenty-Four (24) hours of any such filing or
assignment. Failure to notify Summit of any such bankruptcy filing or assignment
within Twenty-Four (24) hours shall constitute an Event of Default.
Client acknowledges that this Agreement is a contract to extend debt financing
or financial accommodations to or for the benefit of Client within the meaning
of 11 U.S.C. §365(c)(2) and, as such, may not be assumed or assigned. Summit
shall be under no obligation to provide any financing under this Agreement from
and after the filing of any voluntary or involuntary petition against Client.

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29. Limitation of Consequential Damages.
Summit and its general and limited partners, the partners, members, officers and
directors thereof, and the employees, representatives, agents, and attorneys of
Summit, shall not be liable to Client or any guarantor for consequential damages
arising from or relating to any breach of contract, tort, or other wrong in
connection with the negotiation, documentation, administration of this Agreement
or collection of the Accounts.
30. Force Majeure.
In the event Summit is unable to carryout its obligations under this Agreement
due to reasons beyond its reasonable control, it is agreed that the obligations
of Summit hereunder shall be suspended during the continuance of such inability,
Summit shall not be liable for damages, and Client shall not be entitled to any
refund of amounts paid, provided that such cause shall be remedied as far as
reasonably possible with all reasonable dispatch.
31. Revival Clause.
If the incurring of any debt by Client or the payment of any money or transfer
of property to Summit by or on behalf of Client or any guarantor (including
collection of any Account) should for any reason subsequently be determined to
be “voidable” or “avoidable” in whole or in part within the meaning of any state
or federal law (collectively “voidable transfers”), including, without
limitation, fraudulent conveyances or preferential transfers under the United
States Bankruptcy Code or any other federal or state law, and Summit is required
to repay or restore any voidable transfers or the amount or any portion thereof,
or upon the advice of counsel for Summit is advised to do so, then, as to any
such amount or property repaid or restored, including all reasonable costs,
expenses, and attorneys fees of Summit related thereto, the liability of Client
and any guarantor shall automatically be revived, reinstated and restored and
shall exist as though the voidable transfers had never been made.
32. Joint and Several Liability.
Client and any guarantors shall each be jointly and severally liable for all
obligations and liabilities arising under this Agreement and the other
agreements, documents, obligations, and transactions contemplated by this
Agreement.
33. Severability of Invalid Provisions, Headings, Interpretations of Agreement.
Any provision of this Agreement which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
All references in this Agreement to the singular shall be deemed to include the
plural when the context so requires, and visa versa. References in the
collective or conjunctive shall also include the disjunctive unless the context
otherwise clearly requires a different interpretation.
34. Notices.
All notices which are expressly required to be in writing may be mailed, postage
prepaid, addressed to the address stated at the beginning of this Agreement, or
to such other address which is provided in accordance with this Section. Any
notice so mailed shall be deemed given Three (3) days after mailing. Any notice
otherwise delivered shall be deemed given when received by the addressee. Any
notice which is not expressly required to be given in writing may be given
orally.

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35. Survival of Representations, Warranties and Covenants.
All agreements, representations, warranties and covenants made herein by Client
shall survive the execution and delivery of this Agreement and any bankruptcy
proceedings involving Client and shall continue in effect so long as any
obligation to Summit contemplated by this Agreement is outstanding and unpaid,
notwithstanding any termination of this Agreement.
36. Jury Waiver, Exclusive Jurisdiction of Utah Courts.
CLIENT HEREBY IRREVOCABLY WAIVES ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION,
PROCEEDING, CLAIM OR COUNTERCLAIM, WHETHER IN CONTRACT OR IN TORT, AT LAW OR IN
EQUITY, ARISING OUT OF OR IN ANY WAY RELATED TO THIS AGREEMENT.
Client acknowledges that by execution and delivery of this Agreement, Client has
transacted business in the State of Utah and Client hereby voluntarily submits
to, consents to, and waives any defense to the jurisdiction of courts located in
the State of Utah as to all matters relating to or arising from this Agreement.
EXCEPT AS EXPRESSLY AGREED IN WRITING BY SUMMIT, THE STATE AND FEDERAL COURTS
LOCATED IN THE STATE OF UTAH SHALL HAVE SOLE AND EXCLUSIVE JURISDICTION OF ANY
AND ALL CLAIMS, DISPUTES, AND CONTROVERSIES ARISING UNDER OR RELATING TO THIS
AGREEMENT. NO LAWSUIT, PROCEEDING, ALTERNATIVE DISPUTE RESOLUTION, OR ANY OTHER
ACTION RELATING TO OR ARISING UNDER THIS AGREEMENT MAY BE COMMENCED OR
PROSECUTED IN ANY OTHER FORUM, EXCEPT AS EXPRESSLY AGREED IN WRITING BY SUMMIT.
37. Assignability.
This Agreement is not assignable or transferable by Client and any such
purported assignment or transfer is void. This Agreement shall be binding upon
the successors of Client. Client acknowledges and agrees that Summit may assign
all or any portion of this Agreement, including, without limitation, assignment
of the rights, benefits and remedies of Summit hereunder without any assignment
of the duties, obligations or liabilities of Summit hereunder, and may sell
participations in this financing.
38. Integrated Agreement, Amendment, Headings, Governing Law.
This Agreement replaces and supersedes any prior agreement between Client and
Summit. This Agreement and the documents identified or contemplated herein
constitute the entire agreement between Summit and Client as to the subject
matter hereof and may not be altered or amended except by written agreement
signed by Summit and Client. No provision hereof may be waived by Summit except
upon written waiver executed by Summit. This Agreement shall be governed by and
construed in accordance with the laws of the State of Utah and this Agreement
shall be deemed to have been executed by the parties in the State of Utah. This
Agreement shall not be deemed to have been entered into until accepted by Summit
at its chief executive office in Salt Lake City, Utah and shall be performed by
Summit and the financing administered by Summit in Salt Lake City, Utah.
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Dated: June 16, 2009.

                      Summit Financial Resources, L.P.    
 
               
 
  By:       /s/ Mark J. Picillo                  
 
      Name:   Mark J. Picillo     
 
               
 
      Title:   SVP     
 
               
 
                    Irvine Sensors Corporation    
 
               
 
  By:       /s/ John J. Stuart, Jr.                   
 
      Name:   John J. Stuart, Jr.     
 
               
 
      Title:   Sr. VP & Chief Financial Officer     
 
               

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