Exhibit 10.1





Exhibit 10.1




AGREEMENT, CONSENT AND WAIVER




This Agreement, Consent and Waiver (this “Agreement”) is made and entered into this 9th day of
April, 2010 (the “Effective Date”), by and between Irvine Sensors Corporation (the “Company”) and
Longview Fund, L.P. (“Longview”). The Company and Longview are sometimes collectively referred to
as the “Parties” and are singularly referred to as a “Party.”



RECITALS




WHEREAS, in July 2007, the Company entered into the following agreements with Longview,
pursuant to which the Company borrowed $2.0 million from Longview: (i) the Loan Agreement between
the Company and Longview (the “Loan Agreement”), and (ii) the Secured Promissory Note payable to
Longview in the original principal amount of $2.0 million (the “Note”);



WHEREAS, in October 2008, approximately $1,651,100 of the principal due under the Note was
retired in connection with a UCC foreclosure sale of substantially all of the assets of the
Company’s wholly-owned subsidiary, Optex Systems, Inc. (“Optex”);



WHEREAS, in March 2009, in connection with the sale of a majority of the Company’s patent
portfolio to a patent acquisition company, the outstanding principal of the Note was further
reduced to $188,400, and the Note became payable on September 30, 2010;



WHEREAS, in April 2008 and April 2009, the Company sold and issued shares of Series A-1 10%
Cumulative Convertible Preferred Stock (the “Series A-1 Stock”) and Series A-2 10% Cumulative
Convertible Preferred Stock (the “Series A-2 Stock” and, together with the Series A-1 Stock, the
“Preferred Stock”), respectively, with cumulative dividends of 10% per annum payable on the Series
A-1 Stock (the “Series A-1 Dividend”) and Series A-2 Stock (the “Series A-2 Dividend”) beginning on
December 30, 2009 and December 30, 2010, respectively;



WHEREAS, as of the Effective Date, the Board of Directors of the Company (the “Board”) has not
declared the Series A-1 Dividend;



WHEREAS, on March 26, 2010, the Company, John C. Carson and John J. Stuart, Jr. entered into a
Settlement and Release Agreement (the “Settlement Agreement”) with Timothy Looney, Barbara Looney
and TWL Group, L.P. (collectively, “Looney”) pursuant to which the Company and Messrs. Carson and
Stuart, on the one hand, and Looney, on the other hand, settled and released all claims and agreed
to dismiss all litigation against each other relating to the Company’s acquisition of Optex in
December 2005, and various transactions related thereto, in exchange for the payment to Mr.
Looney of $50,000 and the issuance to Mr. Looney of a secured promissory note in the principal
amount of $2,500,000 (the “Looney Note” and, collectively, the “Looney Settlement”); and



WHEREAS, as a condition to the effectiveness of the Settlement Agreement and the transactions
contemplated thereby, Longview must consent to the Looney Settlement and
Looney Note, and must waive certain of its rights arising in connection with the issuance of
the Looney Note and related security agreements.


 


 









 





AGREEMENT




NOW, THEREFORE, in consideration of the premises and the mutual covenants and obligations
contained herein, and for other good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the Parties agree as follows:



1. Note Repayment. Upon the closing of an equity or debt financing (or a series of
equity or debt financings) which results in gross proceeds to the Company in the aggregate in
excess of $1,500,000.00 (the “Financing”), the Company shall remit to Longview a payment, by wire
transfer of immediately available funds, the total principal outstanding and all interest accrued
under the Note, as of such payment date, in complete satisfaction of the Note (the “Note
Repayment”), and upon receipt of funds underlying the Note Repayment, Longview shall immediately
return the original Note to the Company for cancellation. Upon the Company’s satisfaction of its
obligations under this Section 1, the Note shall be cancelled, terminated and extinguished
in its entirety and the Company shall have no further obligation thereunder.



2. Buyout or Sale of Preferred Stock. Longview agrees that if the Company arranges
for a third-party investor to buy the outstanding Preferred Stock from Longview for cash at its
Stated Value (as defined in the respective Certificates of Designations) and such investor delivers
a binding term sheet (the “LOI”) on or prior to June 1, 2010 to Longview for such buyout, Longview
shall sell all of its Preferred Stock to such investor on such terms and shall also sell all of its
Waiver Securities (as defined below) to such investor at a price per share equal to $0.30 (the
“Buyout”); provided that the closing of such Buyout shall occur no later than July 15, 2010. The
foregoing notwithstanding, Longview shall continue to have the right to convert the Preferred Stock
beneficially owned by it, in accordance with the terms of the applicable Certificate of
Designations governing such Preferred Stock, and to sell on the open market the Common Stock issued
upon conversion of such Preferred Stock until such point as Longview shall no longer beneficially
own any Preferred Stock (the “Complete Sale”).



3. Contingent Issuance of Common Stock and Warrant. In the event that either the LOI
has not been delivered on or prior to June 1, 2010, or the Buyout has not closed on or prior to
July 15, 2010 or a Complete Sale has not occurred on or prior to July 15, 2010 (each, a
“Contingency Date”), the Company hereby agrees, without any further action by Longview, including
the payment of any additional consideration:




(a) to issue to Longview equity securities, with terms that are no better than
non-voting common stock and that are junior to the Company’s Series B Convertible Preferred
Stock, convertible into 1,000,0000 shares of the Company’s Common Stock (subject to
appropriate adjustment in the event of any stock dividend, stock split, combination or
similar recapitalization affecting such shares) (the “Contingent Securities”); and


 


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(b) to issue to Longview a two-year warrant to purchase 1,000,000 shares of the
Company’s Common Stock (subject to appropriate adjustment in the event of any stock
dividend, stock split, combination or similar recapitalization affecting such shares)
at an exercise price per share equal to $0.30, the last consolidated closing bid price of
the Company’s Common Stock prior to the execution of this Agreement by the Company and
Longview as determined in accordance with Nasdaq Marketplace Rules (the “Contingent
Warrant”).



In the event the Company’s obligations under this Section 3 arise, the Parties shall
enter into agreements underlying the issuance of the Contingent Securities and the Contingent
Warrant, on such terms as the Parties mutually agree and as negotiated in good faith,
provided, however, that (i) the Contingent Securities shall be subject to a blocker
which would preclude conversion into Common Stock resulting in beneficial ownership by the holder
and its affiliates of more than 4.99% of the outstanding shares of Common Stock of the Company (the
“Blocker”) and shall not be convertible for a period of six (6) months after the date of issuance
of such Contingent Securities, and (ii) the Contingent Warrant shall (w) include the term and
conversion price as stated in Section 3(b) above, (x) contain a cashless or net exercise
provision, (y) include a Blocker, and (z) shall not be exercisable for a period of six (6) months
after the date of issuance of such Contingent Warrant.



4. Preferred Stock Dividend Waiver. On behalf of itself, its successors and its
assigns, Longview hereby waives in full, both retroactively and prospectively, any right to receive
any Series A-1 Dividends or Series A-2 Dividends that have accumulated or will accumulate through
July 15, 2010 pursuant to the applicable Certificate of Designations governing the rights,
preferences and privileges of the Series A-1 Stock and Series A-2 Stock (the “Accumulated
Dividends”). For purposes of clarity, upon execution of this Agreement Longview forever and
irrevocably forfeits its right to receive Accumulated Dividends, in any form and in any amount, on
the Series A-1 Stock or the Series A-2 Stock. In consideration of the foregoing waiver, the
Company hereby agrees, without any further action by Longview, including the payment of any
additional consideration, to issue to Longview equity securities, with terms that are no better
than non-voting common stock and that are junior to the Company’s Series B Convertible Preferred
Stock, convertible into 2,750,000 shares of the Company’s Common Stock (subject to appropriate
adjustment in the event of any stock dividend, stock split, combination or similar recapitalization
affecting such shares) (the “Waiver Securities”). The issuance of such Waiver Securities shall be
on such terms as the Parties mutually agree and as negotiated in good faith, provided,
however, that (i) the Waiver Securities shall be subject to a Blocker and (ii) the Company
shall use commercially reasonable efforts to issue the Waiver Securities no later than fifteen (15)
business days after the Effective Date.



5. Nasdaq Compliance; Waiver of Anti-dilution Rights. Notwithstanding anything
contained herein to the contrary, in the event that the Nasdaq Stock Market objects to the
Company’s issuance of the Contingent Securities, the Contingent Warrant or the Waiver Securities,
the Parties shall negotiate in good faith to modify this Agreement so as to effect as closely as
possible the original intent of the Parties in entering into this Agreement, and, if required, the
Company shall seek stockholder approval for such issuances at its annual stockholders meeting in
July 2010. Longview hereby agrees (i) that the entry into this Agreement does not trigger
anti-dilution rights under the Preferred Stock, any warrant held by Longview or any other
instrument or agreement between the Parties (the “Anti-Dilution Rights”), (ii) to waive all
Anti-Dilution Rights that may arise with respect to the Financing, but



 


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only to the extent that the price per share realized in such Financing is not lower than the
exercise price per share of the Contingent Warrant and only if the Financing closes on or prior to
July 15, 2010, and (iii) to waive all Anti-Dilution Rights with respect to the issuance of the
Contingent Securities and the Waiver Securities. In the event the exercise price of the Contingent
Warrant is lower than the conversion price of the Preferred Stock on the Contingency Date, this
Agreement is not a waiver of any of Longview’s Anti-Dilution Rights.



6. Consent to Looney Settlement. Longview hereby consents to (i) the Looney
Settlement, (ii) the issuance of the Looney Note and (iii) the Company’s execution of the security
agreements related thereto, and Longview agrees to evidence such consent by delivering to the
Company and Looney, no later than April 9, 2010, a consent in the form reasonably acceptable to the
Company, Longview and Looney.



7. Company Representations and Warranties.




(a) Power and Authority; Due Execution. The Company has (i) full corporate
power, authority and legal right to execute, deliver and perform its obligations under this
Agreement, (ii) taken all necessary actions to authorize the execution, delivery and
performance by the Company of this Agreement (other than the filing of any Certificate of
Designations that may be required for authorization of the Contingent Securities or Waiver
Securities, which will be filed with the Delaware Secretary of State no later than May 20,
2010), and (iii) caused the Agreement to be duly executed and delivered on behalf of the
Company.




(b) Legal, Valid, Binding Obligation. This Agreement constitutes the legal,
valid, and binding obligation of the Company, enforceable against the Company in accordance
with its terms, subject to limitations as to enforceability which might result from
bankruptcy, insolvency, moratorium and other similar laws affecting creditors’ rights
generally and subject to limitations on the availability of equitable remedies.




(c) Organization, Existence, Good Standing. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the state of Delaware,
(ii) has the power and authority and the legal right to own, lease and operate its property
and to conduct the business in which it is currently engaged, and (iii) is duly qualified to
do business and is in good standing as a foreign entity in each other jurisdiction where its
ownership, lease or operation of property or the conduct of its business requires such
qualification, except where the failure to be so qualified would not have a material adverse
effect on the Company and its subsidiaries, taken as a whole.




(d) Consents. Except as have been obtained and except as required by the Nasdaq
Stock Market or Nasdaq Marketplace Rules, no consent, permit, license, approval or
authorization of, or registration, declaration or filing with or notice to, any governmental
authority, bureau or agency or any other person or entity is required in connection with the
execution, delivery or performance by the Company of this Agreement.


 


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(e) No Violation. The Company’s execution of this Agreement does not violate,
result in a breach of, or constitute a default under the certificate of incorporation,
charter or bylaws of the Company, or the terms of any bond, debenture, note or any other
evidence of indebtedness, or any agreement, indenture, lease, mortgage, deed of trust or
other instrument to which the Company is a party or by which the Company is bound, nor
result in the activation of any anti-dilution rights or a reset or repricing of any debt or
security instrument of any other creditor or equity holder of the Company. No default or
event of default has occurred and is continuing under (i) the Loan Agreement, (ii) the Note,
(iii) the rights, preferences and privileges of the Preferred Stock, including, but not
limited to, the payment of any dividend thereunder through July 15, 2010 by virtue of
Section 4 of this Agreement, and (iv) any other agreements or instruments between the
Parties, that has not been waived.




(f) Holding Period. The holding period for the shares of Common Stock issuable
upon conversion of the Contingent Securities and the Waiver Securities (provided that no
further consideration be delivered in connection with such conversion and no modifications
are subsequently made to the Contingent Securities or the Waiver Securities, as applicable,
after the issuance date thereof) will tack back to the date of issuance of the Contingent
Securities and the Waiver Securities, as applicable (unless after the date hereof the
Securities and Exchange Commission adopts rules or interpretive guidance to the contrary).



8. Longview Representations and Warranties.




(a) Power and Authority; Due Execution. Longview has (i) the full power,
authority and legal right to execute, deliver and perform its obligations under this
Agreement, (ii) taken all necessary actions to authorize the execution, delivery and
performance by Longview of this Agreement, and (iii) caused the Agreement to be duly
executed and delivered on behalf of Longview.




(b) Legal, Valid, Binding Obligation. This Agreement constitutes the legal,
valid, and binding obligation of Longview, enforceable against Longview in accordance with
its terms, subject to limitations as to enforceability which might result from bankruptcy,
insolvency, moratorium and other similar laws affecting creditors’ rights generally and
subject to limitations on the availability of equitable remedies.




(c) Organization, Existence, Good Standing. Longview is duly formed, validly
existing and in good standing under the laws of its formation, (ii) has the power and
authority and the legal right to own, lease and operate its property and to conduct the
business in which it is currently engaged, and (iii) is duly qualified to do business and is
in good standing as a foreign entity in each other jurisdiction where its ownership, lease
or operation of property or the conduct of its business requires such qualification, except
where the failure to be so qualified would not have a material adverse effect on Longview.




(d) Consents. Except as have been obtained, no consent, permit, license,
approval or authorization of, or registration, declaration or filing with or notice to, any
governmental authority, bureau or agency or any other person or entity is required in
connection with the execution, delivery or performance by Longview of this Agreement.


 


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(e) Waiver of Default. To the best of Longview’s knowledge, no default or
event of default has occurred and is continuing under (i) the Loan Agreement, (ii) the Note,
(iii) the rights, preferences and privileges of the Preferred Stock, including, but not
limited to, the payment of any dividend thereunder through July 15, 2010, and (iv) any other
agreements or instruments between the Parties, that has not been waived.



9. Indemnification. The Company agrees to indemnify, hold harmless, reimburse and
defend Longview and each of its officers, directors, representatives, employees, associated
persons, agents, contractors, attorneys, affiliates, parents, subsidiaries and all persons acting
by, through and under each of them (collectively, the “Longview Persons”), against any claim, cost,
expense, liability, obligation, loss or damage (including reasonable legal fees) of any nature,
incurred by or imposed upon Longview or any such Longview Person (i) which results, arises out of
or is based upon any material misrepresentation by the Company or breach of any warranty by Company
in this Agreement or (ii) which results from any litigation by Timothy Looney or TWL Group LP
against Longview or any such Longview Person based upon this Agreement, except to the extent that
such litigation arises out of any act or omission by Longview or to the extent this Agreement
constitutes a breach of any settlement agreement or other agreements between Longview and Timothy
Looney or TWL Group LP.



10. Release.




(a) Other than obligations of Longview created by this Agreement, the Company on behalf
of itself and each of the Company’s officers, directors, representatives, employees,
associated persons, agents, contractors, attorneys, affiliates, parents, subsidiaries and
all persons acting by, through and under each of them (collectively, the “Company Parties”),
hereby fully and without limitation, releases, covenants not to sue, and forever discharges
Longview and each of its officers, directors, representatives, employees, associated
persons, agents, contractors, attorneys, affiliates, parents, subsidiaries and all persons
acting by, through and under each of them (collectively, the “Longview Parties”), from any
and all manner of action, claims, liens, demands, liabilities, causes of action, charges,
complaints, suits (judicial, administrative or otherwise), damages, debts, obligations of
any nature, past or present, whether in law or in equity, whether founded upon contract
(expressed or implied), tort, statute or regulation (State, Federal or local), common law
and/or any other theory or basis, from the beginning of the world to the date hereof,
whether known or unknown, that the Company Parties now have, or may ever have, against the
Longview Parties that arise out of or are in any way relate to any acts or omissions by any
of the Longview Parties occurring prior to the Effective Date (the “Claims”).




(b) The Company specifically understands and agrees that all of its rights under
California Civil Code Section 1542 are intentionally and expressly waived and relinquished
hereby. Section 1542 provides:




“A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT
KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE,
WHICH IF KNOWN BY HIM MIGHT HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR.”


 


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(c) The Company represents that it has not abandoned, reverted, assigned or transferred
to any person or entity the Claims, or any part thereof, and stipulates that this is a full,
complete, unconditional and final settlement of the Claims.



11. Miscellaneous.




(a) Notices. All notices, demands, requests, consents, approvals, and other
communications required or permitted hereunder shall be in writing and, unless otherwise
specified herein, shall be (i) personally served, (ii) deposited in the mail, registered or
certified, return receipt requested, postage prepaid, (iii) delivered by reputable overnight
courier service with charges prepaid, or (iv) transmitted by hand delivery, electronic mail,
or facsimile, addressed as set forth below or to such other address as such Party shall have
specified most recently by written notice. Any notice or other communication required or
permitted to be given hereunder shall be deemed 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, 3001 Red
Hill Avenue, Costa Mesa, CA 92650, Attn: Chief Financial Officer, facsimile: (714) 444-8773,
with a copy by facsimile only to: Dorsey & Whitney LLP, 38 Technology Drive, Suite 100,
Irvine, CA 92618, Attn: Ellen S. Bancroft, Esq., facsimile: (949) 271-5318, and (ii) if to
Longview, to: Longview Fund, L.P., 505 Sansome Street, Suite 1275, San Francisco, CA 94111,
Attn: S. Michael Rudolph, facsimile: (415) 981-5301, with an additional copy by facsimile
only to: Grushko & Mittman, P.C., 551 Fifth Avenue, Suite 1601, New York, New York 10176,
facsimile: (212) 697-3575.




(b) Entire Agreement; Assignment; Waiver. This Agreement represents the entire
agreement between the Parties with respect to the subject matter hereof and may be amended
only by a writing executed by both Parties. Neither the Company nor Longview have relied on
any representations not contained or referred to in this Agreement. No right or obligation
of the Company shall be assigned or waived without prior notice to and the written consent
of Longview.




(c) Counterparts/Execution. This Agreement may be executed in any number of
counterparts each of which, when so executed, shall be deemed an original, but all such
counterparts shall constitute but one and the same instrument. This Agreement may be
executed by facsimile signature and delivered by facsimile transmission.


 


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(d) Law Governing this Agreement. This Agreement shall be governed by and
construed in accordance with the laws of the State of California without regard to
principles of conflicts of laws. Any action brought by either Party against the other
concerning the transactions contemplated by this Agreement shall be brought only in the
state courts of California or in the federal courts located in the State of California. The
parties executing this Agreement and other agreements referred to herein or delivered in
connection herewith on behalf of the Company agree to submit to the jurisdiction of such
courts and waive trial by jury. In the event that any provision of this Agreement or any
other agreement delivered in connection herewith is invalid or unenforceable under any
applicable statute or rule of law, then such provision shall be deemed inoperative to the
extent that it may conflict therewith and shall be deemed modified to conform with such
statute or rule of law. Any such provision which may prove invalid or unenforceable under
any law shall not affect the validity or enforceability of any other provision of any
agreement.




(e) Specific Enforcement. The Company and Longview acknowledge and agree that
irreparable damage would occur in the event that any of the provisions of this Agreement
were not performed in accordance with their specific terms or were otherwise breached. It
is accordingly agreed that the Parties shall be entitled to an injunction or injunctions to
prevent or cure breaches of the provisions of this Agreement and to enforce specifically the
terms and provisions hereof, this being in addition to any other remedy to which any of them
may be entitled by law or equity.




(f) Fees and Expenses. Upon the earlier of (i) five (5) business days after
the closing of the Financing and (ii) July 15, 2010, the Company shall pay the reasonable
fees and expenses of Grushko & Mittman, P.C., legal counsel for Longview, arising from the
drafting and negotiation of this Agreement, in the amount of $15,000.




(g) Further Assurances. Each Party agrees to cooperate fully with the other
Party and to execute such further instruments, documents and agreements and to give such
further written assurances as may be reasonably requested by any other Party to carry into
effect the intents and purposes of this Agreement.



[Signature Page Follows]




 


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IN WITNESS WHEREOF, this Agreement has been duly executed by each of the parties hereto as of
the Effective Date.



	 	 	 	 	 
	 	IRVINE SENSORS CORPORATION

 	 
	 	By  	/s/ John J. Stuart, Jr.
 	 
	 	 	Print Name: John J. Stuart, Jr. 	 
	 	 	Title: Chief Financial Officer 	 
	 
	 	LONGVIEW FUND, L.P.

 	 
	 	By  	/s/ S. Michael Rudolph
 	 
	 	 	Print Name: S. Michael Rudolph 	 
	 	 	Title: CFO — Viking Asset Management, LLC 	 
	 



[Signature Page to Agreement, Consent and Waiver]