exv10w9






Exhibit 10.9




FORM OF UNSECURED CONVERTIBLE DEBENTURE




FORM OF CONVERTIBLE DEBENTURE



 






THE TRANSFER OF THIS DEBENTURE AND THE COMMON STOCK ISSUABLE UPON CONVERSION HEREOF IS SUBJECT
TO RESTRICTIONS CONTAINED HEREIN. THIS DEBENTURE AND THE COMMON STOCK ISSUABLE UPON
CONVERSION HEREOF HAS BEEN ISSUED IN RELIANCE UPON THE REPRESENTATION OF PAYEE THAT IT HAS
BEEN ACQUIRED FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TOWARDS THE RESALE OR OTHER
DISTRIBUTION THEREOF. THIS DEBENTURE AND THE COMMON STOCK ISSUABLE UPON CONVERSION HEREOF
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES
LAWS AND MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED IN
THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER SAID ACT AND ANY APPLICABLE STATE
SECURITIES LAWS, OR AN OPINION OF COUNSEL SATISFACTORY TO COMPANY THAT SUCH REGISTRATION IS
NOT REQUIRED.



UNSECURED CONVERTIBLE DEBENTURE



	 	 	 

	PN-

	 	                    , 2010
	$                    

	 	COSTA MESA, CALIFORNIA






     1. Principal. For value received, IRVINE SENSORS CORPORATION, a Delaware corporation
(“Company”), hereby promises to pay to the
order of                                         , an individual (“Payee”),
whose address is as set forth below, or such other address as the holder of this Unsecured
Convertible Debenture (this “Debenture”) may designate in writing, the principal sum of $                    .
This Debenture is part of an offering of Units consisting of Debentures and associated warrants
and unsecured non-convertible debentures being made by the Company (the “Offering”) and the other
purchasers of debentures in such Offering are referred to as the “Other Payees”.



     2. Interest. This Debenture shall bear simple interest at a rate per annum of 20% of
the original principal value of this Debenture, which interest shall accrue and be payable
quarterly in arrears and shall be convertible at the election of the Company into shares of the
Company’s $0.01 par value Common Stock (“Common Stock”) at a conversion price (the “Conversion
Price”) equal to the greater of (a) the fair market value of the Common Stock (as determined in
accordance with the rules of The NASDAQ Stock Market, LLC) (the “Market Value”) as of the date of
issuance of this Debenture and (b) $0.40 per share (as adjusted for stock splits and
recapitalizations).



     3. Maturity. Subject to the conversion provision set forth in Section 4 hereof, the
principal of this Debenture shall be due and payable in full on the anniversary of the date hereof
(the “Maturity Date”).



     4. Conversion.




          (i) Optional Conversion. To the extent outstanding, up to the original
principal amount of this Debenture may be converted in whole or in part at the option of the
Payee at any time after the issuance date hereof, and prior to prepayment being tendered by
the Company or the Maturity Date, into shares of Common Stock at the Conversion Price (as
adjusted for stock splits and recapitalizations).



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          (ii) Mechanics of Conversion. Upon conversion of any portion of the principal
balance of this Debenture, Payee shall surrender this Debenture, duly endorsed, together
with the Payee’s duly executed form of subscription attached hereto as Exhibit A, at
the principal offices of the Company. At its expense, the Company will, as soon as
practicable thereafter, issue and deliver to Payee a legended
certificate for the number of shares of Common Stock to which Payee is entitled upon such conversion, together with any
cash or a check payable to Payee for any amounts payable as described in Section 4(iii)
below and a new Debenture evidencing the unconverted principal balance of the Debenture.
Upon conversion of any portion of this Debenture into Common Stock, the Company will be
forever released from all its obligations and liabilities under the converted portion of
this Debenture, including without limitation the obligation to pay the principal amount and
accrued interest that is so converted.




          (iii) Fractional Shares. No fractional shares of capital stock shall be issued
upon conversion of this Debenture. In lieu of any fractional share to which Payee would
otherwise be entitled, the Company shall pay to Payee the amount of the outstanding
principal balance and/or accrued interest due that is not so converted, such payment to be
in cash or by check.




          (iv) No Rights as Stockholder. Payee understands that Payee shall not have any
of the rights of a stockholder with respect to the shares of Common Stock issuable upon
conversion of any principal or accrued interest of this Debenture, until such principal or
accrued interest is converted into capital stock of the Company as provided herein.




          (v) Conversion Limitation. The Payee may not convert the principal, and the
Company may not convert the accrued interest, of this Debenture in amounts that would result
in the sum of (i) the number of shares of Common Stock beneficially owned by the Payee and
its affiliates on such conversion date, and (ii) the number of shares of Common Stock
issuable upon the conversion of such principal amount and/or accrued interest with respect
to which the determination of this Section 4(v) is being made on such conversion date
resulting in beneficial ownership by the Payee and its affiliates of more than 4.99% of the
outstanding shares of Common Stock of the Company. For the purposes of this Section 4(v),
beneficial ownership shall be determined in accordance with Section 13(d) of the Securities
Exchange Act of 1934, as amended, and Regulation 13d-3 thereunder. Subject to the
foregoing, the Payee shall not be limited to successive conversions which would result in
the aggregate issuance of more than 4.99%. The Payee may revoke the conversion limitation
described in this Section 4(v), in whole or in part, upon 61 days prior notice to the
Company. The Payee may allocate which of the equity of the Company deemed beneficially
owned by the Payee shall be included in the 4.99% amount described above and which shall be
allocated to the excess above 4.99%. The Payee may waive the conversion limitation
described in this Section 4(v) in whole or in part, upon and effective after 61 days prior
written notice to the Company to increase such percentage to up to 9.99%.



     5. Prepayment. Subject to the conversion provision set forth in Section 4 above, all
payments shall be made in lawful money of the United States of America at the principal office of
the Company, or at such other place as the Payee hereof may from time to time designate in writing
to the Company. The Company shall have the right to prepay in cash all or any portion of the
principal hereof at any time prior to maturity for an amount equal to 110% of the principal so
prepaid.



     6. Certain Adjustments. The Conversion Price is subject to adjustment from time to
time as set forth in this Section 6:




          (i) Splits and Subdivisions. In the event the Company should at any time or
from time to time fix a record date for the effectuation of a split or subdivision of the
outstanding shares of Common Stock into a greater number of shares, then, as of such record
date (or the date of such split or subdivision if no record date is fixed), the Conversion
Price shall be appropriately decreased.




          (ii) Combination of Shares. If the number of shares of Common Stock
outstanding at any time after the date hereof is decreased by a combination of the
outstanding shares of Common Stock, the Conversion Price shall be appropriately increased.



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          (iii) Reclassification or Reorganization. If the shares of Common Stock
issuable upon the conversion of this Debenture shall be changed into the same or different
number of shares of any class or classes of stock, whether by capital reorganization,
reclassification or otherwise (other than a split or subdivision provided for in Section
6(i) above or a combination of shares provided for in Section 6(ii) above), then and in each
such event the Payee shall be entitled to receive upon the conversion of this Debenture the
kind and amount of shares of stock and other securities and property receivable upon such
reorganization, reclassification or other change, to which a holder of the number of shares
of Common Stock issuable upon the conversion of this Debenture would have received if this
Debenture had been converted immediately prior to such reorganization, reclassification or
other change, all subject to further adjustment as provided herein.



     7. Default. The Payee shall have the right upon the occurrence of any of the following
events to declare an event of default and elect to accelerate the amount owing hereunder
(individually, an “Event of Default” and collectively, “Events of Default”):




          (i) the termination of existence of Company, whether by dissolution or otherwise, or
the appointment of a receiver or custodian for the Company or any part of its property if
such appointment is not terminated or dismissed within thirty (30) days;




          (ii) the institution against Company of any proceedings under the United States
Bankruptcy Code or any other federal or state bankruptcy, reorganization, receivership or
other similar law affecting the rights of creditors generally, which proceeding is not
dismissed within sixty (60) days of filing;




          (iii) the commencement by Company of any voluntary proceedings under the United States
Bankruptcy Code or any other federal or state bankruptcy, reorganization, receivership or
other similar law affecting the rights of creditors generally;




          (iv) the failure to pay interest on the Debenture in accordance with Section 2
hereunder; or




          (v) an assignment by Company for the benefit of its creditors or an admission in
writing by the Company of its inability to pay its debts as they become due.



     8. Cumulative Rights. No delay on the part of Payee in the exercise of any power or
right under this Debenture shall operate as a waiver thereof, nor shall a single or partial
exercise of any other power or right. Enforcement by the Payee of any right or remedy for the
payment hereof shall not constitute any election by the Payee of remedies so as to preclude the
exercise of any other remedy available to the Payee.



     9. Waivers. Except as otherwise set forth in this Debenture, the Company, for itself
and its legal representatives, successors and assigns, expressly waives presentment, protest,
demand, notice of dishonor, notice of nonpayment, notice of maturity, notice of protest,
presentment for the purpose of accelerating maturity, and diligence in collection.



     10. Modifications in Writing. No waiver or modification of any of the terms or
provisions of this Debenture shall be valid or binding unless set forth in a writing signed by the
Company and Payee, and then only to the extent therein specifically set forth.



     11. Notices. All notices required or permitted hereunder shall be in writing and shall
be deemed effectively given: (i) upon personal delivery to the party to be notified; (ii) when sent
by confirmed facsimile if sent during the normal business hours of the recipient, if not, then on
the next business day; (iii) one (1) business day after deposit with a nationally recognized
overnight courier designating next business day delivery; or (iv) five (5) days after having been
sent by registered or certified mail, return receipt requested, postage prepaid. All communications
shall



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be sent to the address or facsimile number as set forth on the signature page hereof or at
such other address as such party may designate by ten (10) days’ advance written notice to the
other parties.




     12. Entire Agreement; Severability. This Debenture constitutes the full and entire
understanding, promise and agreement between the Company and Payee with respect to the subject
matter hereof, and it supersedes, merges and renders void every other prior written and/or oral
understanding, promise or agreement between the Company and Payee. If one or more provisions of
this Debenture are held to be unenforceable under applicable law, such provision shall be excluded
from this Debenture, the balance of the Debenture shall be interpreted as if such provision were so
excluded and shall be enforceable in accordance with its terms, and the parties shall use good
faith to negotiate a substitute, valid and enforceable provision that replaces the excluded
provision and that most nearly effects the parties’ intent in entering into this Debenture.


THIS DEBENTURE REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS OF THE PARTIES.




     13. Governing Law. This Debenture is being executed and delivered and is intended to
be performed, in the State of California, and the laws of such state shall govern the construction,
validity, enforcement and interpretation hereof, except to the extent federal laws otherwise govern
the validity, construction, enforcement and interpretation hereof.



     14. Headings. The headings of the paragraphs of this Debenture are inserted for
convenience only and shall not be deemed to constitute a part hereof.



     15. Successors and Assigns. All of the promises and agreements in this Debenture
contained by or on behalf of the Company shall bind its successors and assigns, whether so
expressed or not; provided, however, that the Company may not, without the prior written consent of
Payee, assign any rights, duties, or obligations under this Debenture.



     16. Counterparts. This instrument may be executed in counterparts and delivered by
facsimile, each of which shall be deemed an original, but all of which together shall constitute
one and the same instrument.



[Signatures appear on the following page.]



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     IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed as of the date
first set forth above.



	 	 	 	 	 
	 	COMPANY:

IRVINE SENSORS CORPORATION

 	 
	 	By:  	 	 
	 	Name:  	 	John J. Stuart, Jr. 	 
	 	Title:  	 	Chief Financial Officer
	 
	 	Address:  	 	
       3001 Red Hill Ave.

       Costa Mesa, CA  92626 	 
	 	Fax No.:  	 	714-444-8773 	 
	 



	 

	ACKNOWLEDGED AND AGREED:

	 

	PAYEE:

	 

	Acknowledgement contained
in the Omnibus 

Signature
Page in the Subscription
Agreement

	 

	Name:

	Address:







[Signature Page — Unsecured Convertible Debenture]





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EXHIBIT A TO UNSECURED CONVERTIBLE DEBENTURE




FORM OF SUBSCRIPTION



(To be signed only on conversion of Unsecured Convertible Debenture)


To:   IRVINE SENSORS CORPORATION




     The undersigned, pursuant to the provisions set forth in the attached Unsecured Convertible
Debenture, hereby irrevocably elects to convert $                     of the principal balance of such Unsecured
Convertible Debenture into
                     shares of the Common Stock of the Company.



     Please
issue a certificate or certificates representing                      shares of Common Stock in the
name of the undersigned or in such other name or names as are specified below:



 




(Name)




 





 




(Address)




     The undersigned represents that the undersigned is an “accredited investor” as defined in
Regulation D promulgated under the Securities Act of 1933, as amended, and that the aforesaid
shares are being acquired for the account of the undersigned for investment and not with a view to,
or for resale in connection with, the distribution thereof and that the undersigned has no present
intention of distributing or reselling such shares, all except as in compliance with applicable
securities laws. The undersigned further represents that the aforesaid conversion complies with
Section 4(v) of the Unsecured Convertible Debenture.



	 	 	 

	 

	 	 
	 

	 	(Signature must conform in all respects to name of
the Payee as specified on the face of the Unsecured
Convertible Debenture)
	 
	 	 
	 
	 	 
	 

	 	 
	 

	 	(Print Name)
	 
	 	 
	 

	 	 
	 
	 	 
	 
	 	 
	 

	 	 
	 

	 	(Address)






	 	 	 	 	 

	Dated:
	 	 	 	 
	 

	 	 

	 	 







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