Exhibit 10.2
Intercreditor Agreement
This Intercreditor Agreement is made and entered into between Summit Financial
Resources, L.P., a Hawaii limited partnership (“Summit”), Alpha Capital Anstalt,
a company organized and existing under the laws of Liechtenstein (“Alpha”),
Longview Fund L.P., a California limited partnership (“Longview”), and Michael
S. Rudolph, an individual and as collateral agent for Alpha and Longview
(“Collateral Agent”) (Alpha, Longview, and Collateral Agent are collectively
referred to as “Lender”), and is acknowledged and consented to by Irvine Sensors
Corporation, a Delaware corporation (“Client”).
RECITALS
1. Summit is entering into a financing agreement with Client (the “Summit
Financing”).
2. Lender is currently providing certain financing to Client (the “Lender
Financing”).
3. Summit and Lender desire to enter into this Intercreditor Agreement in order
to (i) agree to and confirm the relative rights and payment of their respective
indebtedness and (ii) agree to certain other rights, priorities, and interests.
AGREEMENT
For good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, Summit and Lender hereby agree as follows:
1. Definitions. Terms used in the singular shall have the same meaning when used
in the plural and vice versa. In addition to the terms defined above, as used
herein, the term:
a. “Default Rights and Remedies” means any and all rights and remedies granted
in, arising from, or relating to any agreement, instrument, or document and any
and all rights and remedies now or hereafter existing by statute, at law, or in
equity, which may be exercised only upon the occurrence of a breach or event of
default.
b. “Encumbrance” means any and all security interests, liens, mortgages, deeds
of trust, assignments, and any other right, title or interest in, to, or on any
property of Client and/or any guarantor (whether obtained by agreement or by
judicial process), including real property, personal property, intellectual
property, and intangible property.
c. “Summit Collateral” means (i) any and all collateral securing the Summit
Financing, wherever located, now owned or hereafter acquired, presently existing
or created in the future, including real property, personal property,
intellectual property, and intangible property, and (ii) any and all balances,
deposits, debts, or any other amount of obligations of Summit owing to Client,
including, without limitation, any reserve, whether or not due.
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2. Consent to Loans. Lender hereby consents to Client entering into the
agreements evidencing the Summit Financing. Lender waives any provision in any
agreement between Lender and Client which prohibits, restricts, or limits the
right of Client to enter into the agreements evidencing the Summit Financing.
3. Lender Payment.
a. Summit agrees, in connection with the initial funding under the Summit
Financing, to tender to Lender the sum of two hundred forty-five thousand two
hundred nine and 50/100 dollars ($245,209.50) (the “Lender Payment”) by wire
transfer as follows:
Citibank, N.A.
ABA# 021-000-089
A/C Credit Suisse
A/C# 4080-4003
F/F/C Longview Fund, L.P A/C 706940
Attn: Equity Finance/Prime Broker Services
b. Lender agrees to apply the Lender Payment to the obligations owing under the
Lender Financing. Lender further agrees and acknowledges that in the event the
Summit Financing does not close for any reason, or the amount available to pay
to Lender from the initial funding under the Summit Financing is not sufficient
to pay the full amount of the Lender Payment, Summit shall be excused from any
obligation to tender the Lender Payment to Lender and the subordinations
provided in Section 4 below shall be of no effect until Lender receives the full
amount of the Lender payment.
c. Client hereby authorizes and instructs Summit to disburse all amounts under
the Summit Financing directly to Lender as necessary to pay to Lender the Lender
Payment. Client acknowledges and agrees that such payment by Summit shall
constitute an advance under the Summit Financing for which Client is obligated
to repay pursuant to the terms and conditions of the Summit Financing.
4. Priority of Encumbrances. Upon Lender’s receipt of the Lender Payment from
Summit or otherwise, and irrespective of the time, order, manner, or method of
creation, attachment or perfection of the Encumbrances granted to Summit or
Lender, the time, place or manner of the filing of their respective financing
statements or other method of perfection, the time, place or manner of recording
of any instrument, whether Summit or Lender or any bailee or agent thereof holds
possession of any or all of the property or assets of Client, the dating,
execution or delivery of any agreement, documents or instrument granting Summit
or Lender the Encumbrance, the giving or failure to give notice of the
acquisition or expected acquisition of any purchase money security interest or
other Encumbrance, and any provision of the Uniform Commercial Code or any other
applicable statute or common law to the contrary:
a. Any and all Encumbrances in favor of Summit in or on any Summit Collateral,
now existing or hereafter created, shall have priority over any and all
Encumbrances in favor of Lender in or on any Summit Collateral, now existing or
hereafter created. Lender hereby subordinates any and all Encumbrances in favor
of Lender in or on any Summit Collateral, now existing or hereafter created, to
any and all Encumbrances in favor of Summit in or on any Summit Collateral, now
existing or hereafter created.
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5. Limitation of Subordination. The subordination of Lender’s Encumbrances in or
on any Summit Collateral to any and all Encumbrances in favor of Summit in or on
any Summit Collateral, as provided in Section 4 above, shall only be effective
up to the maximum principal amount of two million dollars ($2,000,000.00), plus
the amount of all interest, fees, costs, and expenses owing by Client under the
Summit Financing.
6. Exercise of Default Rights and Remedies. Lender agrees that it will not
exercise any Default Rights and Remedies concerning the Lender Financing,
including any Default Rights and Remedies against any of the Summit Collateral,
without first giving Summit at least thirty (30) days written notice of the
default on the Lender Financing, which notice shall specify the nature and terms
of the default on the Lender Financing.
7. Prohibition of Prepayment of Lender Financing. Lender covenants and agrees
that it will not receive or accept any prepayment of the Lender Financing so
long as any amount is outstanding and unpaid on the Summit Financing, without
the prior written consent of Summit, which consent shall not be unreasonably
withheld. Lender acknowledges that the agreements evidencing the Summit
Financing will prohibit Client from making any such prepayment. However, if
Lender receives any prepayment in violation of this covenant, such payments
shall be received in trust for Summit and shall be immediately tendered to
Summit to be applied toward payment of the Summit Financing. Subject to
Section 8 below, the foregoing prohibitions of prepayment of the Lender
Financing shall not prohibit or in any way restrict or limit Client from making
the regularly scheduled principal and interest payments under the Lender
Financing.
8. Subordination of Payment upon Default. Upon the occurrence of an event of
default or breach under the Summit Financing or the occurrence of an event
which, with the passage of time or giving of notice or both, would constitute an
event of default or breach under the Summit Financing, and the giving of written
notice of such event of default or breach to
Lender by Summit, then:
a. The right of Lender to receive any payment, whether of principal or interest,
on the Lender Financing shall thereupon be subordinated to the right of Summit
to receive payment on the Summit Financing.
b. Lender covenants that it will not receive or accept any payments from or on
behalf of Client, any guarantor, or any other obligor on the Lender Financing
without the prior written consent of Summit. However, if Lender receives any
payments from or on behalf of Client, any guarantor, or any other obligor in
violation of this covenant, such payments shall be received in trust for Summit
and shall be immediately tendered to Summit to be applied toward payment of the
Summit Financing.
9. No Waiver of Other Rights. This Intercreditor Agreement is intended solely
for the purpose of defining the relative rights of Summit and Lender and nothing
contained herein is intended to nor shall impair the obligations of Client, any
guarantor, or any other obligors, to pay Summit or Lender, as the case may be,
the principal and interest on the Summit Financing and the Lender Financing as
and when the same shall become due and payable in accordance with their terms,
subject to the rights of Summit created by this Intercreditor Agreement.
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10. Nonavoidability and Perfection. The subordinations and priorities provided
herein are applicable regardless of whether the Encumbrance to which another
Encumbrance is subordinated is perfected or is voidable for any reason. Lender
acknowledges that Summit may not initially perfect its security interest in
titled motor vehicles and may not do so in the future.
11 . Non-Reliance, No Duty to Notify. Summit and Lender each expressly
acknowledge that, except as expressly provided in this Intercreditor Agreement,
neither they nor any of their officers, directors, partners, employees,
representatives, agents, attorneys or affiliates, has made any representations
or warranties to each other and that no act by Summit or Lender hereafter taken,
including any review of the affairs of Client, shall be deemed to constitute any
representation or warranty by Summit or Lender. Summit and Lender each represent
that they have, independently and without reliance upon the other and based on
such documents and information as each has deemed appropriate, made its own
appraisal of and investigation into the business, operations, property,
financial and other condition and creditworthiness of Client and made its own
decision to enter into this Intercreditor Agreement. Summit and Lender each also
represent that it will, independently and without reliance upon the other and
based on the documents and information as each shall deem appropriate at the
time, continue to make its own credit analysis, appraisals and decisions in
taking or not taking action under this Intercreditor Agreement, and in regard to
the Summit Financing and the Lender Financing, and to make such investigation as
it deems necessary to inform itself as to the business, operations, property,
financial and other condition and creditworthiness of Client. Neither Summit nor
Lender shall have any duty or responsibility to provide the other with any
credit or other information concerning the business, operations, property,
financial and other condition or creditworthiness of Client that may come into
their possession.
Neither Summit nor Lender shall have any duty or obligation to notify the other
of any event of default or breach on the Summit Financing or the Lender
Financing nor of any material adverse change affecting the Summit Financing, the
Lender Financing, Client, any guarantor, or any other obligor. Summit and Lender
will attempt to notify each other of the occurrence of an event of default under
the Summit Financing or Lender Financing but failure to do so shall not
constitute a breach or default under this Intercreditor Agreement and no
liability shall result from failure to provide such notice.
12. Notices. All notices hereunder shall be in writing and may be sent by
certified mail, return receipt requested. Notices so mailed shall be deemed
received when deposited in a United States post office box, postage prepaid,
properly addressed to Summit or Lender at the mailing address stated herein or
to such other address as Summit or Lender may from time to time specify in
writing. Any notice so addressed and otherwise delivered shall be deemed given
when actually received by the addressee.
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Mailing Addresses:
Summit:
Summit Financial Resources, L.P.
2455 East Parley’s Way, Suite 200
Salt Lake City, Utah 84109
Attention: Senior Portfolio Manager
Lender:
Michael S. Rudolph
Transamerica Pyramid 600
Montgomery Street, 44th Floor
San Francisco, California 94111
With a copy to:
Grushko & Mittman
551 Fifth Avenue, Suite 1601
New York, New York 10176
Attention: Edward Grushko
13. Indemnification. Client shall indemnify Summit and Lender for any and all
claims and liabilities, and for damages which may be awarded against or incurred
by Summit and/or Lender, and for all reasonable attorneys’ fees, legal expenses,
and other out-of-pocket expenses incurred in defending such claims, arising from
or related in any manner to the negotiation, execution, or performance by Summit
and/or Lender of this Intercreditor Agreement or any of the agreements,
documents, obligations, or transactions contemplated by this Intercreditor
Agreement.
Summit and Lender shall have the sole and complete control of the defense of any
such claim involving Summit and Lender respectively. Summit and Lender are
hereby authorized to settle or otherwise compromise any such claims as Summit or
Lender in good faith determines shall be in its best interests.
14. Binding Effect. This Intercreditor Agreement shall apply to and govern all
renewals, amendments, restatements, and replacements of any and all agreements,
instruments, and documents evidencing or relating to the Summit Financing and
the Lender Financing, including any which increase the amount of the financing
or loan, increase the interest rate thereon, and/or extend or modify the payment
terms.
15. No Agency or Joint Venture. Nothing in this Intercreditor Agreement shall be
construed to create any agency relationship between Summit and Lender. Neither
Summit nor Lender shall have any authority to act for or bind the other. Nothing
in this Intercreditor Agreement shall be construed to create any joint venture,
partnership, or fiduciary relationship between Summit and Lender.
16. Attorney’s Fees in the Event of Default. Upon the occurrence of an event of
default or breach hereunder, the non-defaulting party shall be entitled to
recover reasonable attorneys fees and legal expenses incurred as a result of
such default or breach and in exercising any rights and remedies.
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17. Governing Law. This Intercreditor Agreement shall be governed by and
construed in accordance with the laws of the State of Utah.
18. Jury Waiver, Exclusive Jurisdiction of Utah Courts. THE PARTIES HERETO
HEREBY IRREVOCABLY WAIVE 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 INTERCREDITOR AGREEMENT.
Lender acknowledges that by execution and delivery of this Intercreditor
Agreement, Lender has transacted business in the State of Utah and Lender
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 Intercreditor 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 INTERCREDITOR AGREEMENT AND/OR
THE TRANSACTIONS CONTEMPLATED HEREBY. NO LAWSUIT, PROCEEDING, OR ANY OTHER
ACTION RELATING TO OR ARISING UNDER THIS INTERCREDITOR AGREEMENT AND/OR THE
TRANSACTIONS CONTEMPLATED HEREBY MAY BE COMMENCED OR PROSECUTED IN ANY OTHER
FORUM EXCEPT AS EXPRESSLY AGREED IN WRITING BY SUMMIT.
19. Severability of Invalid Provisions. Any provision of this Intercreditor
Agreement which is prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction only, be ineffective only 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.
20. Warranty of Signing Representative. The representative signing this
Intercreditor Agreement on behalf of Summit and Lender each represents and
warrants that he or she has been duly authorized to execute and deliver this
Intercreditor Agreement and that upon execution and delivery hereof by all
parties hereto, this Intercreditor Agreement will be binding and enforceable in
accordance with its terms against such party for whom such representative has
signed.
21. Duplicate Originals. Two or more duplicate originals of this Intercreditor
Agreement may be signed by the parties, each duplicate of which shall be an
original but all of which together shall constitute one and the same agreement.
22. Integrated Agreement and Subsequent Amendment. This Intercreditor Agreement
constitutes the entire agreement between Summit and Lender and may not be
altered or amended except by written agreement signed by Summit and Lender. All
other prior and contemporaneous agreements, arrangements, and understandings
between the parties hereto as to the subject matter hereof are rescinded.
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Dated: June 16, 2009.

            Summit Financial Resources, L.P.
      By:   /s/ Mark J. Picillo         Name:   Mark J. Picillo        Title:  
Senior Vice President        Alpha Capital Anstalt
      By:   /s/ Konrad Ackerman         Name:   Konrad Ackerman         Title:  
Director        Longview Fund L.P.
      By:   /s/ S. Michael Rudolph         Name:   S. Michael Rudolph       
Title:   Chief Financial Officer — Investment Adviser            /s/ Michael S.
Rudolph       Michael S. Rudolph  

Consented and agreed to as of June 16, 2009:
Irvine Sensors Corporation

              By:   /s/ John J. Stuart, Jr.              
 
  Name:   John J. Stuart, Jr.    
 
  Title:   Senior Vice President and Chief Financial Officer    

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