Document:

exv10w6

CONFIDENTIAL TREATMENT REQUESTED

Exhibit 10.6

SECURITY AGREEMENT

     THIS
SECURITY AGREEMENT (this “Security Agreement”) is executed as of April 14, 2010, by
Irvine Sensors Corporation, a Delaware corporation
(“Debtor”), whose address is 3001 Red Hill
Avenue, Building 4, Suite 108, Costa Mesa, California 92626, and Timothy Looney (“Secured Party”),
whose address is set forth on Exhibit C.

RECITALS

     A. Debtor has executed that certain Secured Promissory Note of even date herewith (the
“Note”), in the principal amount of $2,500,000, payable to the order of Secured Party.

     B. This Security Agreement is integral to the transactions contemplated by the Note, and the
execution and delivery hereof are conditions precedent to Secured Party’s willingness to accept the
Note and extend credit under the Note.

     ACCORDINGLY, for good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, Debtor and Secured Party hereby agree as follows:

     1. REFERENCE TO LOAN DOCUMENTS. This Security Agreement is one of the “Loan Documents”
referred to in the Note.

     2. CERTAIN DEFINITIONS. Unless otherwise defined herein, or the context hereof otherwise
requires, each term defined in either of the Note or in the UCC is used in this Security Agreement
with the same meaning; provided that, if the definition given to such term in the Note conflicts
with the definition given to such term in the UCC, the Note definition shall control to the extent
legally allowable; and if any definition given to such term in Chapter 9 of the UCC conflicts with
the definition given to such term in any other chapter of the UCC, the Chapter 9 definition shall
prevail. As used herein, the following terms have the meanings indicated:

     Collateral has the meaning set forth in Section 4 hereof.

     Collateral Obligor means any person or entity obligated with respect to any of the Collateral,
whether as an account debtor, obligor on an instrument, issuer of securities, or otherwise.

     Copyrights has the meaning set forth in Section 4 hereof.

     Intellectual Property has the meaning set forth in Section 4 hereof.

     Obligation means, collectively, all indebtedness, liabilities, and obligations of Debtor to
Secured Party arising under the Note and the other Loan Documents. The Obligation shall include,
without limitation, future, as well as existing, indebtedness, liabilities, and obligations owed by
Debtor to Secured Party arising under the Note and the other Loan Documents.

     Patents has the meaning set forth in Section 4 hereof.

     Permitted Liens means the liens and security interests permitted by the Note.

 

 

     Security Interest means the security interest granted and the pledge and assignment made under
Section 3 hereof.

     Trademarks has the meaning set forth in Section 4 hereof.

     UCC means the Uniform Commercial Code, including each such provision as it may subsequently be
renumbered, as enacted in the State of California or other applicable jurisdiction, as amended at
the time in question.

     3. SECURITY INTEREST. In order to secure the full and complete payment and performance of the
Obligation when due, Debtor hereby grants to Secured Party a Security Interest in all of Debtor’s
rights, titles, and interests in and to the Collateral and pledges, collaterally transfers, and
assigns the Collateral to Secured Party, all upon and subject to the terms and conditions of this
Security Agreement. Such Security Interest is granted and pledge and assignment are made as
security only and shall not subject Secured Party to, or transfer or in any way affect or modify,
any obligation of Debtor with respect to any of the Collateral or any transaction involving or
giving rise thereto. If the grant, pledge, or collateral transfer or assignment of any specific
item of the Collateral is expressly prohibited by any contract or by law, then the Security
Interest created hereby nonetheless remains effective to the extent allowed by such contract, the
UCC or other applicable laws, but is otherwise limited by that prohibition.

     4. COLLATERAL. As used herein, the term “Collateral” means the following items and types of
property, wherever located, now owned or in the future acquired by Debtor, and all proceeds and
products thereof, and any substitutes or replacements therefor:

          (a) All personal property and fixture property of every kind and nature including, without
limitation, all accounts, chattel paper (whether tangible or electronic), goods (including
inventory, equipment, and any accessions thereto), software, instruments, investment property,
documents, deposit accounts, money, commercial tort claims, letters of credit or letter-of-credit
rights, supporting obligations, tax refunds, and general intangibles (including payment
intangibles);

          (b) (i) All copyrights (whether statutory or common law, registered or unregistered), works
protectable by copyright, copyright registrations, copyright licenses, and copyright applications
of Debtor, including, without limitation, all of Debtor’s right, title, and interest in and to all
copyrights registered in the United States Copyright Office or anywhere else in the world and also
including, without limitation, the copyrights set forth on Exhibit B; (ii) all renewals,
extensions, and modifications thereof; (iii) all income, licenses, royalties, damages, profits, and
payments relating to or payable under any of the foregoing; (iv) the right to sue for past,
present, or future infringements of any of the foregoing; and (v) all other rights and benefits
relating to any of the foregoing throughout the world; in each case, whether now owned or hereafter
acquired by Debtor (the “Copyrights”);

          (c) (i) All patents, patent applications, patent licenses, and patentable inventions of
Debtor, including, without limitation, registrations, recordings, and applications thereof in the
United States Patent and Trademark Office or in any similar office or agency of the United States,
any state thereof or any other country or any political subdivision thereof, including, without
limitation, those set forth on Exhibit B, and all of the inventions and improvements described and
claimed therein; (ii) all continuations, divisions, renewals, extensions, modifications,
substitutions, reexaminations, continuations-in-part, or reissues of any of the foregoing; (iii)
all income, royalties, profits, damages,
awards, and payments relating to or payable under any of the foregoing; (iv) the right to sue
for past, present, and future infringements of any of the foregoing; and (v) all other rights and
benefits relating to

 

 

any of the foregoing throughout the world; in each case, whether now owned or
hereafter acquired by Debtor (the “Patents”);

          (d) (i) All trademarks, trademark licenses, trade names, corporate names, company names,
business names, fictitious business names, trade styles, service marks, certification marks,
collective marks, logos, other business identifiers, all registrations, recordings, and
applications thereof, including, without limitation, registrations, recordings, and applications in
the United States Patent and Trademark Office or in any similar office or agency of the United
States, any state thereof or any other country or any political subdivision thereof, including,
without limitation, those set forth on Exhibit B; (ii) all reissues, extensions, and renewals
thereof; (iii) all income, royalties, damages, and payments now or hereafter relating to or payable
under any of the foregoing, including, without limitation, damages or payments for past or future
infringements of any of the foregoing; (iv) the right to sue for past, present, and future
infringements of any of the foregoing; (v) all rights corresponding to any of the foregoing
throughout the world; and (vi) all goodwill associated with and symbolized by any of the foregoing,
in each case, whether now owned or hereafter acquired by Debtor (the “Trademarks”, and collectively
with the Copyrights and the Patents, the “Intellectual Property”);

          (e) All present and future distributions, income, increases, profits, combinations,
reclassifications, improvements, and products of, accessions, attachments, and other additions to,
tools, parts, and equipment used in connection with, and substitutes and replacements for, all or
part of the Collateral described above;

          (f) All present and future accounts, contract rights, general intangibles, chattel paper,
documents, instruments, cash and noncash proceeds, and other rights arising from or by virtue of,
or from the voluntary or involuntary sale or other disposition of, or collections with respect to,
or insurance proceeds payable with respect to, or proceeds payable by virtue of warranty or other
claims against the manufacturer of, or claims against any other person or entity with respect to,
all or any part of the Collateral heretofore described in this clause or otherwise; and

          (g) All present and future security for the payment to Debtor of any of the Collateral
described above and goods which gave or will give rise to any such Collateral or are evidenced,
identified, or represented therein or thereby.

     The description of the Collateral contained in this Section 4 shall not be deemed to permit
any action prohibited by this Security Agreement or by the terms incorporated in this Security
Agreement. Furthermore, notwithstanding any contrary provision, Debtor agrees that, if, but for
the application of this paragraph, granting a Security Interest in the Collateral would constitute
a fraudulent conveyance under 11 U.S.C. § 548 or a fraudulent conveyance or transfer under any
state fraudulent conveyance, fraudulent transfer, or similar law in effect from time to time (each
a “fraudulent conveyance”), then the Security Interest remains enforceable to the maximum extent
possible without causing such Security Interest to be a fraudulent conveyance, and this Security
Agreement is automatically amended to carry out the intent of this paragraph. For the sake of
clarity, the Debtor and Secured Party acknowledge and agree that Collateral does not include the
interests owned by Optex 1, Inc. in certain Intellectual Property that is co-owned by Optex 1, Inc.
and Debtor.

     5. REPRESENTATIONS AND WARRANTIES. Debtor represents and warrants to Secured Party as of the
date hereof that:

          (a) Loan Documents. Certain representations and warranties in the Loan Documents are
applicable to it or its assets or operations, and each such representation and warranty is true and
correct.

 

 

          (b) Binding Obligation/ Perfection. This Security Agreement creates a legal, valid,
and binding Security Interest in and to the Collateral in favor of Secured Party and enforceable
against Debtor except as the enforceability thereof may be limited by bankruptcy, insolvency,
moratorium, reorganization or similar laws affecting the enforcement of creditors’ rights
generally, and except for judicial limitations on the enforcement of the remedy of specific
performance and other equitable remedies. For Collateral in which the Security Interest may be
perfected by the filing of Financing Statements, once those Financing Statements have been properly
filed in the jurisdiction described on Exhibit A hereto, the Security Interest in that Collateral
will be fully perfected, subject only to Permitted Liens. Other than the Financing Statements and
with respect to this Security Agreement, there are no other financing statements or control
agreements covering any Collateral, other than those evidencing Permitted Liens. The creation of
the Security Interest does not require the consent of any person or entity that has not been
obtained.

          (c) Debtor Information. Debtor’s exact legal name, mailing address, jurisdiction of
organization, type of entity, and state issued organizational identification number are as set
forth on Exhibit A hereto.

          (d) Location/ Fixtures. (i) Debtor’s place of business and chief executive office is
where Debtor is entitled to receive notices hereunder; the present and foreseeable location of
Debtor’s books and records concerning any of the Collateral that is accounts is as set forth on
Exhibit A hereto, and the location of all other Collateral, including, without limitation, Debtor’s
inventory and equipment is as set forth on Exhibit A hereto; and, except as noted on Exhibit A
hereto, all such books, records, and Collateral are in Debtor’s possession.

          (e) Governmental Authority. No authorization, approval, or other action by, and no
notice to or filing with, any governmental authority is required for the pledge by Debtor of the
Collateral pursuant to this Security Agreement or for the execution, delivery, or performance of
this Security Agreement by Debtor.

          (f) Liens. Debtor owns all existing Collateral free and clear of all liens, except
Permitted Liens.

          (g) Intellectual Property.

     (i) All of Debtor’s interests in the Debtor’s issued Patents, Patent
applications, registered Trademarks, Trademark applications, registered Copyrights,
and Copyright applications are identified on Exhibit B hereto (the “Registered IP”).

     (ii) Debtor is the owner of the Registered IP included in the Collateral, free
and clear of any liens other than (A) any Permitted Liens or (B) any licenses
permitted by Section 8(c).

     6. COVENANTS. Until the Obligation is paid and performed in full, Debtor covenants and agrees
with Secured Party that Debtor will:

          (a) Loan Documents. (i) In all material respects, comply with, perform, and be bound
by all covenants and agreements in the Loan Documents that are applicable to it, its assets, or its
operations, each of which is hereby ratified and confirmed.

          (b) Information/Record of Collateral. Maintain, at the place where Debtor is entitled
to receive notices under the Loan Documents, a current record of where all material Collateral is
located,

          
 

 

permit representatives of Secured Party at any time, upon reasonable prior written notice
during normal business hours to inspect and make abstracts from such records (provided, that so
long as no Default exists, Secured Party shall conduct such inspections no more frequently than
annually), and furnish to Secured Party, at such intervals as Secured Party may reasonably request,
such documents, lists, descriptions, certificates, and other information as may be reasonably
necessary or proper to keep Secured Party informed with respect to the identity, location, and
status of the Collateral.

          (c) Exhibits. Notwithstanding any other provision herein, Debtor’s failure to describe
any Collateral required to be listed on any exhibit hereto shall not impair Secured Party’s
Security Interest therein.

          (d) Obligations. Notwithstanding anything contained herein to the contrary, (i)
Debtor shall remain liable under the contracts, agreements, documents, and instruments included in
the Collateral to the extent set forth therein to perform all of its duties and obligations
thereunder to the same extent as if this Security Agreement had not been executed, and (ii) unless
and until Secured Party forecloses thereon and becomes the owner thereof pursuant to the exercise
of its remedies hereunder, Secured Party shall not have any liability or obligation under any of
such contracts, agreements, documents and instruments, and Secured Party shall not be obligated to
perform any of the obligations or duties of Debtor thereunder or to take any action to collect or
enforce any claim for payment assigned thereunder.

          (e) Notices. (i) Except as may be otherwise expressly permitted under the terms of
the Loan Documents, promptly notify Secured Party of (A) any claim, action, or proceeding affecting
title to all or any of the Collateral or the Security Interest; (B) any material damage to or loss
of any material Collateral, and (C) the occurrence of any other event or condition (including,
without limitation, matters as to lien priority) that could have a material adverse effect on the
Collateral (taken as a whole) or the Security Interest created hereunder; and (ii) give Secured
Party thirty (30) days written notice before any proposed (A) relocation of its principal place of
business or chief executive office, (B) change of its name or identity; (C) relocation of the
place where its books and records concerning its accounts are kept; (D) relocation of any
Collateral (other than delivery of inventory in the ordinary course of business to third party
contractors for processing and sales of inventory in the ordinary course of business or as
permitted by the Loan Documents) to a location not described on the attached Exhibit A, and (E)
change of its jurisdiction of organization or organizational identification number, as applicable.
Prior to making any of the changes contemplated in clause (ii) preceding, Debtor shall execute and
deliver all such additional documents and perform all additional acts as Secured Party may
reasonably request in order to continue or maintain the existence and priority of the Security
Interest in all of the Collateral.

          (f) Further Assurances. At Debtor’s expense and Secured Party’s request (i) after a
Default, file or cause to be filed such applications and take such other actions as Secured Party
may reasonably request to obtain the consent or approval of any governmental authority to Secured
Party’s rights hereunder, including, without limitation, the right to sell all the Collateral upon
a Default without
additional consent or approval from such governmental authority (and, because Debtor agrees
that Secured Party’s remedies at law for failure of Debtor to comply with this provision would be
inadequate and that such failure would not be adequately compensable in damages, Debtor agrees that
its covenants in this provision may be specifically enforced); (ii) from time to time, either
before or after a Default, promptly execute and deliver to Secured Party all such other
assignments, certificates, supplemental documents, and financing statements, and do all other acts
or things as Secured Party may reasonably request in order to more fully create, evidence, perfect,
continue, and preserve the priority of the Security Interest and to carry out the provisions of
this Security Agreement; and (iii) either before or after a Default, pay all filing fees in
connection with any financing, continuation, or termination statement or other instrument with
respect to the Security Interest.

 

 

          (g) Encumbrances. Not create, permit, or suffer to exist, and shall defend the
Collateral against, any lien or other encumbrance on the Collateral other than Permitted Liens, and
shall defend Debtor’s rights in the Collateral and Secured Party’s Security Interest in, the
Collateral against the claims and demands of all persons or entities except those holding or
claiming Permitted Liens. Debtor shall do nothing to impair the rights of Secured Party in the
Collateral.

          (h) Collection of Accounts. In accordance with prudent business practices, endeavor
to collect or cause to be collected from each account debtor under its accounts, as and when due,
any and all amounts owing under such accounts.

          (i) Intellectual Property.

     (i) Give Secured Party prompt written notice if Debtor shall obtain rights to
or become entitled to the benefit of any additional issued patents, registered
trademarks or registered copyrights (or makes application therefor) that are not
identified on Exhibit B hereto;

     (ii) If a Default exists, use its reasonable efforts to obtain any consents,
waivers, or agreements necessary to enable Secured Party to exercise its rights and
remedies with respect to the Intellectual Property.

     (iii) Not transfer, assign or otherwise dispose of any of the Intellectual
Property included in the Collateral except as permitted in the Note.

     7. DEFAULT; REMEDIES. If a Default exists, Secured Party may, at its election (but subject to
the terms and conditions of the Loan Documents), exercise any and all rights available to a secured
party under the UCC, in addition to any and all other rights afforded by the Loan Documents, at
law, in equity, or otherwise, including, without limitation, (a) requiring Debtor to assemble all
or part of the Collateral and make it available to Secured Party at a place to be designated by
Secured Party which is reasonably convenient to Debtor and Secured Party, (b) surrendering any
policies of insurance on all or part of the Collateral and receiving and applying the unearned
premiums as a credit on the Obligation, (c) applying by appropriate judicial proceedings for
appointment of a receiver for all or part of the Collateral (and Debtor hereby consents to any such
appointment), and (d) applying to the Obligation any cash held by Secured Party under this Security
Agreement.

          (a) Notice. Reasonable notification of the time and place of any public sale of the
Collateral, or reasonable notification of the time after which any private sale or other intended
disposition of the Collateral is to be made, shall be sent to Debtor and to any other person or
entity entitled to notice under the UCC; provided that, if any of the Collateral threatens to
decline speedily in
value or is of the type customarily sold on a recognized market, Secured Party may sell or
otherwise dispose of the Collateral without notification, advertisement, or other notice of any
kind. It is agreed that notice sent or given not less than five Business Days prior to the taking
of the action to which the notice relates is reasonable notification and notice for the purposes of
this subparagraph.

          (b) Condition of Collateral; Warranties. Secured Party has no obligation to clean-up
or otherwise prepare the Collateral for sale. Secured Party may sell the Collateral without giving
any warranties as to the Collateral. Secured Party may specifically disclaim any warranties of
title or the like. This procedure will not be considered adversely to affect the commercial
reasonableness of any sale of the Collateral.

 

 

          (c) Compliance with Other Laws. Secured Party may comply with any applicable state or
federal laws in connection with a disposition of the Collateral and compliance will not be
considered to adversely affect the commercial reasonableness of any sale of the Collateral.

          (d) Application of Proceeds. Secured Party shall apply the proceeds of any sale or
other disposition of the Collateral under this Section 7 in the following order: first, to the
payment of all expenses incurred in retaking, holding, and preparing any of the Collateral for
sale(s) or other disposition, in arranging for such sale(s) or other disposition, and in actually
selling or disposing of the same (all of which are part of the Obligation); second, toward
repayment of amounts expended by Secured Party under Section 8; and third, toward payment of the
balance of the Obligation in the order and manner as Secured Party determines in its sole
discretion. Any surplus remaining shall be delivered to Debtor or as a court of competent
jurisdiction may direct. If the proceeds are insufficient to pay the Obligation in full, then
Debtor shall remain liable for any deficiency.

     (e) Sales on Credit. If Secured Party sells any of the Collateral upon credit, Debtor
will be credited only with payments actually made by the purchaser, received by the Secured Party,
and applied to the indebtedness of the purchaser. In the event the purchaser fails to pay for the
Collateral, Secured Party may resell the Collateral and Debtor shall be credited with the proceeds
of the sale.

     8. OTHER RIGHTS OF SECURED PARTY.

          (a) Performance. If Debtor fails to pay when due all taxes on any of the Collateral
in the manner required by the Loan Documents, or fails to preserve the priority of the Security
Interest in any of the Collateral, or fails to keep the Collateral insured as required by the Loan
Documents, or otherwise fails to perform any of its obligations under the Loan Documents with
respect to the Collateral, then Secured Party may, at its option, but without being required to do
so, and upon prior written notice to Debtor if no Default otherwise exists, pay such taxes,
prosecute or defend any suits in relation to the Collateral, or insure and keep insured the
Collateral in any amount deemed appropriate by Secured Party, or take all other action which Debtor
is required, but has failed or refused, to take under the Loan Documents. Any sum which may be
expended or paid by Secured Party under this subparagraph (including, without limitation, court
costs and reasonable attorneys’ fees) shall be payable by Debtor to Secured Party upon demand and
shall be part of the Obligation.

          (b) Collection. If a Default exists and upon written notice from Secured Party, each
Collateral Obligor with respect to any payments on any of the Collateral (including, without
limitation, insurance proceeds payable by reason of loss or damage to any of the Collateral) is
hereby authorized and directed by Debtor to make payment directly to Secured Party, regardless of
whether Debtor was previously making collections thereon. Until such notice is given, Debtor is
authorized to retain and expend all payments made on Collateral. If a Default exists, Secured
Party shall have the right in its own
name or in the name of Debtor to compromise or extend time of payment with respect to all or
any portion of the Collateral for such amounts and upon such terms as Secured Party may determine;
to demand, collect, receive, receipt for, sue for, compound, and give acquittances for any and all
amounts due or to become due with respect to Collateral; to take control of cash and other proceeds
of any Collateral; to endorse the name of Debtor on any notes, acceptances, checks, drafts, money
orders, or other evidences of payment on Collateral that may come into the possession of Secured
Party; to sign the name of Debtor on any invoice or bill of lading relating to any Collateral, on
any drafts against Collateral Obligors or other persons or entities making payment with respect to
Collateral, on assignments and verifications of accounts or other Collateral and on notices to
Collateral Obligors making payment with respect to Collateral; to send requests for verification of
obligations to any Collateral Obligor; and to do all other acts and things necessary to carry out
the intent of this Security Agreement. If a Default exists and any Collateral Obligor fails or
refuses to make payment on any Collateral when due, Secured Party is

 

 

authorized, in its sole
discretion, either in its own name or in the name of Debtor, to take such action as Secured Party
shall deem appropriate for the collection of any amounts owed with respect to Collateral or upon
which a delinquency exists. Regardless of any other provision hereof, however, Secured Party shall
never be liable for its failure to collect, or for its failure to exercise diligence in the
collection of, any amounts owed with respect to Collateral, nor shall it be under any duty
whatsoever to anyone except Debtor to account for funds that it shall actually receive hereunder.

          (c) Intellectual Property. For purposes of enabling Secured Party to exercise its
rights and remedies under this Security Agreement and enabling Secured Party and its successors and
assigns to enjoy the full benefits of the Collateral, Debtor hereby grants to Secured Party an
irrevocable, nonexclusive license (exercisable without payment of royalty or other compensation to
Debtor) to use, license, or sublicense any of Debtor’s rights in the Intellectual Property to the
extent such rights are transferable but only during such time as a Default exists. During the
existence of a Default, Debtor shall provide Secured Party with reasonable access to all media in
which any of the Intellectual Property may be recorded or stored and all computer programs used for
the completion or printout thereof. This license shall also inure to the benefit of all
successors, assigns, and transferees of Secured Party. If a Default exists, Secured Party may
require that Debtor assign all of its right, title, and interest in and to the Intellectual
Property or any part thereof to Secured Party or such other person or entity as Secured Party may
designate pursuant to documents satisfactory to Secured Party. If no Default exists, then Debtor
shall have the exclusive right and license to use the Intellectual Property in the ordinary course
of business and the exclusive right to grant to other persons or entities licenses and sublicenses
with respect to the Intellectual Property.

          (d) Use and Operation of Collateral. Should any Collateral come into the possession
of Secured Party while a Default exists, Secured Party may use or operate such Collateral for the
purpose of preserving it or its value pursuant to the order of a court of appropriate jurisdiction
or in accordance with any other rights held by Secured Party in respect of such Collateral. Debtor
covenants to promptly reimburse and pay to Secured Party, at Secured Party’s request, the amount of
all reasonable expenses (including, without limitation, the cost of any insurance and payment of
taxes or other charges) incurred by Secured Party in connection with its custody and preservation
of Collateral, and all such expenses, costs, taxes and other charges shall be payable by Debtor to
Secured Party upon demand and shall become part of the Obligation. However, the risk of accidental
loss or damage to, or diminution in value of, Collateral is on Debtor, and Secured Party shall have
no liability whatever for failure to obtain or maintain insurance, nor to determine whether any
insurance ever in force is adequate as to amount or as to the risks insured. With respect to
Collateral that is in the possession of Secured Party, Secured Party shall have no duty to fix or
preserve rights against prior parties to such Collateral and shall never be liable for any failure
to use diligence to collect any amount payable in respect of such Collateral, but
shall be liable only to account to Debtor for what it may actually collect or receive thereon.
The provisions of this subparagraph are only applicable during the existence of a Default.

          (e) Power of Attorney. Debtor hereby irrevocably constitutes and appoints Secured
Party and any officer or agent thereof, with full power of substitution, as its true and lawful
attorney-in-fact with full power and authority in the name of Debtor or in its own name, while a
Default exists, to take any and all action and to execute any and all documents and instruments
which Secured Party at any time and from time to time deems necessary or desirable to accomplish
the purposes of this Security Agreement and, without limiting the generality of the foregoing,
Debtor hereby gives Secured Party the power and right on behalf of Debtor and in its own name to do
any of the following while a Default exists, without notice to or the consent of Debtor:

     (i) to use the Intellectual Property or to grant or issue any exclusive or
non-exclusive license under the Intellectual Property to anyone else, and to perform
any act

 

 

necessary for the Secured Party to assign, pledge, convey, or otherwise
transfer title in or dispose of the Intellectual Property to any other person or
entity;

     (ii) to demand, sue for, collect, or receive, in the name of Debtor or in its
own name, any money or property at any time payable or receivable on account of or
in exchange for any of the Collateral and, in connection therewith, endorse checks,
notes, drafts, acceptances, money orders, documents of title or any other
instruments for the payment of money under the Collateral or any policy of
insurance;

     (iii) to pay or discharge taxes, liens, or other encumbrances levied or placed
on or threatened against the Collateral;

     (iv) to notify post office authorities to change the address for delivery of
Debtor to an address designated by Secured Party and to receive, open, and dispose
of mail addressed to Debtor; and

     (v) (A) to direct account debtors and any other parties liable for any payment
under any of the Collateral to make payment of any and all monies due and to become
due thereunder directly to Secured Party or as Secured Party shall direct; (B) to
receive payment of and receipt for any and all monies, claims, and other amounts due
and to become due at any time in respect of or arising out of any Collateral; (C) to
sign and endorse any invoices, freight or express bills, bills of lading, storage or
warehouse receipts, drafts against debtors, assignments, proxies, stock powers,
verifications, and notices in connection with accounts and other documents relating
to the Collateral; (D) to commence and prosecute any suit, action, or proceeding at
law or in equity in any court of competent jurisdiction to collect the Collateral or
any part thereof and to enforce any other right in respect of any Collateral; (E) to
defend any suit, action, or proceeding brought against Debtor with respect to any
Collateral; (F) to settle, compromise, or adjust any suit, action, or proceeding
described above and, in connection therewith, to give such discharges or releases as
Secured Party may deem appropriate; (G) to exchange any of the Collateral for other
property upon any merger, consolidation, reorganization, recapitalization, or other
readjustment of the issuer thereof and, in connection therewith, deposit any of the
Collateral with any committee, depositary, transfer agent, registrar, or other
designated agency upon such terms as Secured Party may determine; (H) to add or
release any guarantor, indorser, surety, or other party to any of the Collateral;
(I) to renew, extend, or otherwise change the terms and conditions of any of the
Collateral; (J)
to endorse Debtor’s name on all applications, documents, papers, and
instruments necessary or desirable in order for Secured Party to use or maintain any
of the Intellectual Property; (K) to make, settle, compromise or adjust any claims
under or pertaining to any of the Collateral (including claims under any policy of
insurance); (L) to file on behalf of Debtor any financing statements or continuation
statements with respect to the Security Interests created hereby, and to do any and
all acts and things to protect and preserve the Collateral, including, without
limitation, the protection and prosecution of all rights included in the Collateral;
and (M) to sell, transfer, pledge, convey, make any agreement with respect to or
otherwise deal with any of the Collateral as fully and completely as though Secured
Party were the absolute owner thereof for all purposes, and to do, at Secured
Party’s option and Debtor’s expense, at any time, or from time to time, all acts and
things which Secured Party deems necessary to protect, preserve, maintain, or
realize upon the Collateral and Secured Party’s Security Interest therein.

 

 

This power of attorney is a power coupled with an interest and shall be irrevocable unless or until
all principal and interest payable under the Note have been repaid in full. Secured Party shall be
under no duty to exercise or withhold the exercise of any of the rights, powers, privileges, and
options expressly or implicitly granted to Secured Party in this Security Agreement, and shall not
be liable for any failure to do so or any delay in doing so. Neither Secured Party nor any person
or entity designated by Secured Party shall be liable for any act or omission or for any error of
judgment or any mistake of fact or law. This power of attorney is conferred on Secured Party
solely to protect, preserve, maintain, and realize upon its Security Interest in the Collateral.
Secured Party shall not be responsible for any decline in the value of the Collateral and shall not
be required to take any steps to preserve rights against prior parties or to protect, preserve, or
maintain any Lien given to secure the Collateral.

     (f) Indemnification. Debtor hereby assumes all liability for the Collateral, for the
Security Interest, and for any use, possession, maintenance, and management of, all or any of the
Collateral, including, without limitation, any transfer taxes arising as a result of, or in
connection with, the transactions contemplated herein, and agrees to assume liability for, and to
indemnify and hold Secured Party harmless from and against, any and all claims, causes of action,
or liability, for injuries to or deaths of persons or entities and damage to property, howsoever
arising from or incident to such use, possession, maintenance, and management, whether such persons
or entities be agents or employees of Debtor or of third parties, or such damage be to property of
Debtor or of others; provided, however, that the indemnity set forth in this Section 8(f) will not
apply to any such claims, causes of action or liability caused by the gross negligence or willful
misconduct of Secured Party.

     9. MISCELLANEOUS.

          (a) Continuing Security Interest. This Security Agreement creates a continuing
security interest in the Collateral and shall (i) remain in full force and effect until the
Obligation is paid and performed in full; and (ii) inure to the benefit of and be enforceable by
Secured Party and its successors, transferees, and assigns. Without limiting the generality of the
foregoing clause (ii), Secured Party may assign or otherwise transfer any of their respective
rights under this Security Agreement to any other person or entity upon ten business days prior
written notice to Debtor provided that the assignee agrees to be bound by the terms and conditions
of the Loan Documents. To the extent of such assignment or transfer, such person or entity shall
thereupon become vested with all the rights and benefits in respect thereof granted herein or
otherwise to Secured Party. Upon payment in full of the Obligation, Debtor shall be entitled to
the return, upon its request and at its expense, of (i) any confidential information provided to
Secured Party or its agents or assignees pursuant to the Loan
Documents and (ii) such of the Collateral as shall not have been sold or otherwise applied
pursuant to the terms hereof.

          (b) Term. Upon the full and final payment and performance of the Obligation, this
Security Agreement shall automatically terminate; provided that no Collateral Obligor, if any, on
any of the Collateral shall ever be obligated to make inquiry as to the termination of this
Security Agreement, but shall be fully protected in making payment directly to Secured Party during
a Default until actual notice of such total payment of the Obligation is received by such
Collateral Obligor.

          (c) Actions Not Releases. The Security Interest and Debtor’s obligations and Secured
Party’s rights hereunder shall not be released, diminished, impaired, or adversely affected by the
occurrence of any one or more of the following events: (i) the taking or accepting of any other
security or assurance for any or all of the Obligation; (ii) any release, surrender, exchange,
subordination, or loss of any security or assurance at any time existing in connection with any or
all of the Obligation; (iii) the modification of, amendment to, or waiver of compliance with any
terms of any of the other Loan Documents without the notification or consent of Debtor, except as
required therein (the right to such notification or consent being herein specifically waived by
Debtor); (iv) the insolvency, bankruptcy, or

 

 

lack of corporate or trust power of any party at any
time liable for the payment of any or all of the Obligation, whether now existing or hereafter
occurring; (v) any renewal, extension, or rearrangement of the payment of any or all of the
Obligation, either with or without notice to or consent of Debtor, or any adjustment, indulgence,
forbearance, or compromise that may be granted or given by Secured Party to Debtor; (vi) any
neglect, delay, omission, failure, or refusal of Secured Party to take or prosecute any action in
connection with any other agreement, document, guaranty, or instrument evidencing, securing, or
assuring the payment of all or any of the Obligation; (vii) any failure of Secured Party to notify
Debtor of any renewal, extension, or assignment of the Obligation or any part thereof, or the
release of any Collateral or other security, or of any other action taken or refrained from being
taken by Secured Party against Debtor or any new agreement between or among Secured Party and
Debtor, it being understood that except as expressly provided herein or required by law, Secured
Party shall not be required to give Debtor any notice of any kind under any circumstances
whatsoever with respect to or in connection with the Obligation, including, without limitation,
notice of acceptance of this Security Agreement or any Collateral ever delivered to or for the
account of Secured Party hereunder; (viii) the illegality, invalidity, or unenforceability of all
or any part of the Obligation against any party obligated with respect thereto by reason of the
fact that the Obligation, or the interest paid or payable with respect thereto, exceeds the amount
permitted by applicable laws, the act of creating the Obligation, or any part thereof, is ultra
vires, or the officers, partners, or trustees creating same acted in excess of their authority, or
for any other reason; or (ix) if any payment by any party obligated with respect thereto is held to
constitute a preference under applicable laws or for any other reason Secured Party is required to
refund such payment or pay the amount thereof to someone else.

          (d) Waivers. Except to the extent expressly otherwise provided herein or in other
Loan Documents and to the fullest extent permitted by applicable laws, Debtor waives (i) any right
to require Secured Party to proceed against any other person or entity, to exhaust its rights in
Collateral, or to pursue any other right which Secured Party may have; (ii) with respect to the
Obligation, presentment and demand for payment, protest, notice of protest and nonpayment, and
notice of the intention to accelerate; and (iii) all rights of marshaling in respect of any and all
of the Collateral.

          (e) Financing Statement; Authorization. Debtor hereby irrevocably authorizes Secured
Party at any time and from time to time to file in any UCC jurisdiction any initial financing
statements and amendments thereto (without the requirement for Debtor’s signature thereon) that (i)
indicate the Collateral (A) as all assets of Debtor or words of similar effect, regardless of
whether any
particular asset comprised in the Collateral falls within the scope of Article 9 of the UCC of
the state or such jurisdiction or whether such assets are included in the Collateral hereunder, or
(B) as being of an equal or lesser scope or with greater detail, and (ii) contain any other
information required by Article 9 of the UCC of the state or such jurisdiction for the sufficiency
or filing office acceptance of any financing statement or amendment, including whether the Company
is an organization, the type of organization, and any organization identification number issued to
Debtor. Debtor agrees to furnish any such information to Secured Party promptly upon request.

          (f) Amendments. This Security Agreement may be amended only by an instrument in
writing executed jointly by Debtor and Secured Party, and supplemented only by documents delivered
or to be delivered in accordance with the express terms hereof.

          (g) Multiple Counterparts. This Security Agreement has been executed in a number of
identical counterparts, each of which shall be deemed an original for all purposes and all of which
constitute, collectively, one agreement; but, in making proof of this Security Agreement, it shall
not be necessary to produce or account for more than one such counterpart.

 

 

          (h) Parties Bound; Assignment. This Security Agreement shall be binding on Debtor and
Debtor’s heirs, legal representatives, successors, and assigns and shall inure to the benefit of
Secured Party and Secured Party’s successors and assigns; provided that Debtor may not, without the
prior written consent of Secured Party, assign any rights, duties, or obligations hereunder.

          (i) GOVERNING LAW. THE SUBSTANTIVE LAWS OF THE STATE OF CALIFORNIA
APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE, EXCEPT TO THE EXTENT
THE LAWS OF ANOTHER JURISDICTION GOVERN THE CREATION, PERFECTION, VALIDITY, OR ENFORCEMENT OF LIENS
UNDER THIS SECURITY AGREEMENT, AND THE APPLICABLE FEDERAL LAWS OF THE UNITED STATES OF AMERICA,
SHALL GOVERN THE VALIDITY, CONSTRUCTION, ENFORCEMENT AND INTERPRETATION OF THIS SECURITY AGREEMENT
AND ALL OF THE OTHER LOAN DOCUMENTS.

Remainder of Page Intentionally Blank.

Signature Page to Follow.

 

 

          EXECUTED as of the date first stated in this Security Agreement.

	 	 	 	 	 
	 	DEBTOR:
 	 
	 
	 	IRVINE SENSORS CORPORATION

 	 
	 	By:  	/c/ John J. Stuart, Jr.
 	 
	 	 	Name:  	John J. Stuart, Jr. 	 
	 	 	Title:  	Sr. Vice President & CFO 	 
	 

	 	 	 	 	 

	 

	 	SECURED PARTY:	 	 
	 
	 

	 	/c/ Timothy Looney
 

Timothy Looney
	 	 

Signature Page to Security Agreement

 

 

EXHIBIT A

DEBTOR INFORMATION AND LOCATION OF COLLATERAL

	 	 	 	 	 	 	 

	A.

	 	Exact Legal Name of Debtor:
	 	Irvine Sensors Corporation

	 
	B.

	 	Mailing Address of Debtor:
	 	3001 Red Hill Avenue, Building 4, Suite 108
Costa Mesa, California 92626

	 
	C.

	 	Type of Entity:
	 	Corporation

	 
	D.

	 	Jurisdiction of Organization:
	 	Delaware

	 
	E.
	 	State Issued Organizational Identification Number:
	 	2149404
	 
	F.

	 	Location of Books and Records:
	 	3001 Red Hill Avenue, Building 4, Suite 108
Costa Mesa, California 92626

	 
	G.

	 	Location(s) of Collateral:
	 	3001 Red Hill Avenue, Building 4, Suite 108
Costa Mesa, California 92626

	 
	 

	 	 	 	Certain of Debtor’s assets that are co-owned
by Optics 1, Inc. pursuant to that teaming
agreement between Optics 1, Inc. and Debtor
may be located at the offices of Optics 1,
Inc. located at 1050 Holt Avenue, Manchester,
New Hampshire 03109.

	 
	H.

	 	Jurisdiction(s) for Filing Financing Statements:
	 	Delaware

 

 

EXHIBIT B

	A.	 	Registered Copyrights and Copyright Applications:
	 
	 	 	None
	 
	B.	 	Issued Patents and Patent Applications:
	 
	 	 	Issued patents were sold in 2009 as disclosed in the Irvine Sensors periodic disclosures.
Patent Applications:

	 	 	 
	USPTO	 	 
	Serial #	 	Title
	[*********]

	 	[***********]
	[*********]

	 	[***********]
	[*********]

	 	[***********]
	[*********]

	 	[***********]
	[*********]

	 	[***********]
	#

	 	[***********]
	[*********]

	 	[***********]
	[*********]

	 	[***********]
	[*********]

	 	[***********]
	[*********]

	 	[***********]
	[*********]

	 	[***********]
	[*********]

	 	[***********]
	[*********]

	 	[***********]
	[*********]

	 	[***********]
	[*********]

	 	[***********]
	[*********]

	 	[***********]
	[*********]

	 	[***********]
	[*********]

	 	[***********]
	[*********]

	 	[***********]
	[*********]

	 	[***********]
	[*********]

	 	[***********]
	#

	 	[***********]
	[*********]

	 	[***********]
	[*********]

	 	[***********]
	[*********]

	 	[***********]
	[*********]

	 	[***********]
	[*********]

	 	[***********]
	[*********]

	 	[***********]
	[*********]

	 	[***********]
	[*********]

	 	[***********]
	[*********]

	 	[***********]

 

			
	#	 	Recently filed, awaiting serial # assignment.
	 
	*	 	Confidential treatment requested pursuant to
Rule 24b-2 under the Securities Exchange Act of 1934. In accordance with Rule
24b-2, these confidential portions have been omitted from this exhibit and
filed separately with the Securities and Exchange Commission.

 

 

	C.	 	Registered Trademarks and Trademark Applications:

Registered Trademarks:

	 	 	 
	Registration #	 	Trademark
	3302416

	 	NEO-STACK
	3087338

	 	PMTV
	3714810

	 	TOWHAWK

Trademark Applications:

None

 

 

EXHIBIT C

Address of Secured Party

4306 Savannah

Parker, TX 75002

Attn: Timothy Looneyexv10w7

CONFIDENTIAL TREATMENT REQUESTED

Exhibit 10.7

INTELLECTUAL PROPERTY SECURITY AGREEMENT

     This Intellectual Property Security Agreement is entered into as of April 14, 2010 by and
between TIMOTHY LOONEY (“Lender”) and IRVINE SENSORS CORPORATION, a Delaware corporation
(“Grantor”).

RECITALS

     A. Lender has agreed to extend certain credit to Grantor as evidenced by that certain
Secured Promissory Note dated as of the date hereof, in the principal amount of $2,500,000,
executed by Grantor, payable to the order of Lender (the “Note”), and as secured by that certain
Security Agreement dated as of the date hereof, executed by Grantor in favor of Lender (the
“Security Agreement”). Unless otherwise defined herein, defined terms used herein shall have the
meanings given such terms in the Security Agreement.

     B. Pursuant to the terms of the Security Agreement, Grantor has granted to Lender a security
interest in all of Grantor’s right, title and interest, whether presently existing or hereafter
acquired, in, to and under all of the Collateral, including the Copyrights, Patents and Trademarks
comprising the Intellectual Property.

     NOW, THEREFORE, for good and valuable consideration, receipt of which is hereby acknowledged,
and intending to be legally bound, as collateral security for the prompt and complete payment when
due of the Obligation, Grantor hereby represents, warrants, covenants and agrees as follows:

AGREEMENT

     To secure the Obligation, Grantor grants and pledges to Lender a security interest in all
of Grantor’s right, title and interest in, to and under its Intellectual Property (including
without limitation those Copyrights, Patents and Trademarks listed on Schedules A, B and C hereto),
and including without limitation all proceeds thereof (such as, by way of example but not by way of
limitation, license royalties and proceeds of infringement suits), the right to sue for past,
present and future infringements, all rights corresponding thereto throughout the world and all
re-issues, divisions continuations, renewals, extensions and continuations-in-part thereof.

     This security interest is granted in conjunction with the security interest granted to Lender
under the Security Agreement. The rights and remedies of Lender with respect to the security
interest granted hereby are in addition to those set forth in the Security Agreement and the other
Loan Documents (as defined in the Note), and those which are now or hereafter available to Lender
as a matter of law or equity. Each right, power and remedy of Lender provided for herein or in the
Security Agreement or any of the Loan Documents, or now or hereafter existing at law or in equity,
shall be cumulative and concurrent and shall be in addition to every right, power or remedy
provided for herein and the exercise by Lender of any one or more of the rights, powers or remedies
provided for in this Intellectual Property Security Agreement, the Security Agreement or any of the
other Loan Documents, or now or hereafter existing at law or in equity, shall not preclude the
simultaneous or later exercise by any person, including Lender, or any or all other rights, powers
or remedies.

 

 

     Grantor represents and warrants that Exhibits A, B and C attached hereto set forth any and all
Copyrights, Patents and Trademarks which have been registered by Grantor or as to which Grantor has
filed an application for registration with either the United States Patent and Trademark Office or
the United States Copyright Office, as applicable.

     This Intellectual Property Security Agreement may be executed in two or more counterparts,
each of which shall be deemed an original but all of which together shall constitute the same
instrument.

     IN WITNESS WHEREOF, the parties have caused this Intellectual Property Security Agreement to
be duly executed by its officers thereunto duly authorized as of the first date written above.

	 	 	 	 	 	 	 

	 	 	GRANTOR:

	 	 	 	 	 	 	 

	Address of Grantor:
	 	 	 	 	 	 
	 	 	IRVINE SENSORS CORPORATION
	3001 Red Hill Ave., Bldg. 4-108
	 	 	 	 	 	 
	Costa Mesa, CA 92626

	 	By:
	 	/c/ John J. Stuart, Jr.
 

	 	 
	Attn: Chief Executive Officer

	 	Title:
	 	Sr. Vice President & CFO	 	 
	 
	 	 	 	 	 	 

	 	 	 	 	 	 	 

	 

	 	LENDER:	 	 	 	 
	Address:
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	4206 Savannah

	 	/c/ Timothy Looney	 	 
	 	 	   
	Parker, TX 75002	 	Timothy Looney

 

 

EXHIBIT A

COPYRIGHTS

None

 

 

EXHIBIT B

PATENTS

None issued.

Pending Patent Applications:

	 	 	 
	USPTO	 	 
	Serial #	 	Title
	[*********]

	 	[***********]
	[*********]

	 	[***********]
	[*********]

	 	[***********]
	[*********]

	 	[***********]
	[*********]

	 	[***********]
	#

	 	[***********]
	[*********]

	 	[***********]
	[*********]

	 	[***********]
	[*********]

	 	[***********]
	[*********]

	 	[***********]
	[*********]

	 	[***********]
	[*********]

	 	[***********]
	[*********]

	 	[***********]
	[*********]

	 	[***********]
	[*********]

	 	[***********]
	[*********]

	 	[***********]
	[*********]

	 	[***********]
	[*********]

	 	[***********]
	[*********]

	 	[***********]
	[*********]

	 	[***********]
	[*********]

	 	[***********]
	#

	 	[***********]
	[*********]

	 	[***********]
	[*********]

	 	[***********]
	[*********]

	 	[***********]
	[*********]

	 	[***********]
	[*********]

	 	[***********]
	[*********]

	 	[***********]
	[*********]

	 	[***********]
	[*********]

	 	[***********]
	[*********]

	 	[***********]

 

			
	 
	 
	#	 	Recently filed, awaiting serial # assignment.
	 

			
	*	 	Confidential treatment requested pursuant to
Rule 24b-2 under the Securities Exchange Act of 1934. In accordance with Rule
24b-2, these confidential portions have been omitted from this exhibit and
filed separately with the Securities and Exchange Commission.

 

 

EXHIBIT C

TRADEMARKS

Registered Trademarks:

	 	 	 
	Registration #	 	Trademark
	3302416

	 	NEO-STACK
	3087338

	 	PMTV
	3714810

	 	TOWHAWK

Trademark Applications:

None

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