Document:

O.M. Participation Agreement and Addendum

 Exhibit 10.13 
  
 PARTICIPATION AGREEMENT 
  
  
 This Participation Agreement (this
“Agreement”) is made by and between The Old Evangeline Downs, L.L.C. d/b/a Races and Aces (“Evangeline Downs”), whose location address is 2685 Office Park Drive, Port Allen, LA 70767, and O.M. Operating, L.L.C. (“O.M.
Operating”), whose address is 688 Highway 10, Washington, LA 70589: 
  
 IT
IS HEREBY AGREED THAT: 
  

	1.	 	This Agreement will allow O.M. Operating to operate the video gaming devices at the Races and Aces Off-Track Betting facility owned and operated by Evangeline Downs in Port Allen,
Louisiana (the “Location”). There will be up to one hundred (100) video gaming devices in operation at the Location (the “Equipment”), with any change in the number of machines in operation to be mutually agreed upon by both
parties hereto. 

  

	2.	 	The term of this Agreement shall commence upon the latter of (i) the installation by O.M. Operating of the Equipment at the Location, or (ii) upon machine activation by the
Louisiana State Police, whenever that shall occur. 

  

	3.	 	The term of this Agreement shall run for a period of one (1) year from the date of commencement. Notwithstanding any provisions for the early termination of this Agreement, O.M.
Operating shall have the right to operate the Equipment at the subject Location pursuant to the terms of this Agreement for a minimum of ninety (90) days from the date the Equipment is activated by the Louisiana State Police. Subject only to the
above, however, if any time during the term of this Agreement (following the minimum 90 day period set forth above, Evangeline Downs obtains its own license to operate video gaming devices, then Evangeline Downs shall have the right to terminate
this Agreement, effective fourteen (14) days following the receipt of written notice of such intention by O.M. Operating at the address indicated above. Following each year this Agreement remains in effect, the parties shall have the option of
extending this Agreement for an additional one-year term, subject to the same terms and conditions set forth herein. 

  
 If either Evangeline Downs or O.M. Operating breaches any of its material obligations under this Agreement (the “Material Breach”), the
non-defaulting party may terminate this Agreement if the party in default fails to cure the Material Breach within ten (10) calendar days following notice from the non-defaulting party reasonably describing the Material Breach. 
  
 If O.M. Operating (a) fails to maintain the video gaming devices in efficient
operating condition and good working order, (b) fails to provide customary maintenance and repair of such video gaming devices in accordance with the generally accepted standards of the gaming industry, or (c) breaches its warranty obligations as
provided in paragraph 7 below, then Evangeline Downs may, in addition to the termination of this Agreement, (i) amend the Purchase Agreement to reduce the purchase price of the video gaming 

 devices to an amount mutually agreeable to the parties, or (ii) otherwise modify the terms of the
Purchase Agreement as agreed by the parties. 
  

	4.	 	During the term of this Agreement, O.M. Operating and Evangeline Downs shall each receive a certain percentage of the “Net Location Profit” derived from the Equipment on
the premises of the Location. The percentage of Net Location Profit each party shall receive during this Agreement shall vary based on the “Average Net Win Per Game Per Day” (or “Avg. NWPG”) earned by the Equipment at the
Location for each thirty (30) days period this agreement is in effect. Such profits will be divided based on the following schedule: 

  

	 avg. NWPG

	  	 Evang. Downs sh.

	  	 O.M. share

			
	 $125.00 or more per day
	  	80%	  	20%
			
	 $100.00 to $124.99 per day
	  	75%	  	25%
			
	 $75.00 to $99.99 per day
	  	70%	  	30%
			
	 $50.00 to 74.99 per day
	  	65%	  	35%
			
	 $49.99 or less per day
	  	60%	  	40%

  

	5.	 	O.M. Operating will be responsible for collecting money from the Equipment at the Location and for counting proceeds from such devices on a regular basis. O.M. Operating will be
responsible for operating the sweep account in connection with such winnings and shall have responsibility for making payment of all franchise fees (22.5% of Net Win, or whatever rate is dictated by the State as the current tax rate) payable to the
State of Louisiana from the operation of such machines. During the term of this Agreement, O.M. Operating shall fully protect, indemnify, defend and save harmless Evangeline Downs for any and all Expenses (as hereinafter defined) incurred by
Evangeline Dows as a result of O.M. Operating’s failure to pay any State of Louisiana franchise tax liability. As used in this Agreement, “Expenses” shall mean any expenses or costs, including without limitation, attorney’s fees,
judgments, punitive or exemplary damages, fines, taxes, amounts paid in settlement, and any other costs and expenses incurred in connection with the operation of video gaming devices at the Location. 

  

	6.	 	Throughout the term of this Agreement, O.M. Operating will provide Evangeline Downs their share of the Net Location Profit on a monthly basis, with the proceeds to be delivered by
the 10th day of the month following the month of operation. Evangeline Downs will receive a copy of all CVT daily
receipts on a daily basis, and Evangeline Downs may, at its discretion, audit drop procedures, expenses, and any other financial information which bears on the financial performance of the Location and/or the Equipment. 

  

	7.	 	Upon the installation of the video gaming devices at the Location, O.M. Operating shall warrant the merchantability and quality of the video gaming devices.

  

 -2- 

 During the term of this Agreement, O.M. Operating or its representative shall provide machine maintenance
in accordance with the generally accepted standards of the gaming industry. O.M. Operating agrees (i) to employ high quality equipment and techniques, (ii) to maintain the video gaming devices in efficient operating condition and good working order,
and (iii) to provide customary inventories of supplies and repair of parts for such video gaming devices. O.M. Operating will provide experience and qualified personnel and supervisory staff acceptable to Evangeline Downs and will perform all of its
obligations under this Agreement in an efficient and workmanlike manner in accordance with the accepted standards of the video gaming industry. O.M. Operating shall receive a fee of $1,500.00 per month to perform the above-described maintenance
obligations. O.M. Operating and Evangeline Downs shall share in said expenses proportionately based on each party’s respective percentage of the Net Location Profit for each month. 
  

	8.	 	O.M. Operating will be responsible for hiring all employees in the game room operation, and all such employees will be employed by O.M. Operating. Employee compensation shall be
mutually agreed upon by O.M. Operating and Evangeline Downs. 

  

	9.	 	O.M. Operating will be responsible for conducting all daily activities and upholding policies concerning the game room operation in an efficient and productive manner in accordance
with the accepted standards of the video gaming industry during the term of this Agreement, as well as for assuring compliance with all state gaming regulations applicable to video gaming. The parties will meet regularly to discuss the operations at
said location, however, final approval for any decisions regarding the operations at such Location must be granted by O.M. Operating. All advertising, the subject matter of which is in any way targeted at video gaming, is to be mutually agreed upon
by both parties prior to being put into effect, although Evangeline Downs shall be responsible for the expense of all such advertising. O.M. Operating shall retain authority to make or approve any decisions concerning the subject location which
affects their video gaming licensing. 

  

	10.	 	Throughout the term of this Agreement, the Equipment is and shall remain the sole personal property of O.M. Operating, or, until such time as Evangeline Downs purchases the
Equipment pursuant to the Purchase Agreement between the parties, shall never be a fixture, or become by agreement, act of law, or otherwise, security for any obligation of or property of Evangeline Downs. In the event of breach of this agreement by
Evangeline Downs, O.M. Operating may, without legal action, enter upon the premises and recover the Equipment and/or terminate this Agreement. Upon the conclusion of this Agreement, all parts inventory related to the Equipment shall remain the
property of O.M. Operating unless and until O.M. Operating agrees to the sale and conveyance of such Equipment by Evangeline Downs as contemplated herein and in the Purchase Agreement between the parties referred to herein. These remedies are in
addition to any other remedies available to O.M. Operating at law or in equity. 

  

	11.	 	During the term of this Agreement, O.M. Operating agrees to protect, defend, indemnify and hold harmless Evangeline Downs from and against any and all claims, demands, and causes of
action, liability, judgments, damages, costs and expenses, including reasonable 

  

 -3- 

 attorney’s fees, arising out of or caused by any acts, errors or omissions, negligent (actual or
alleged) or willful conduct by O.M. Operating, its agents, officers, directors, licensees, employees, invitees, or any other party in connection with O.M. Operating’s presence on and use of Evangeline Down’s facilities, without regard to
the negligence of any party including, without limitation, those arising in connection with a default by Evangeline Downs or any terms or conditions herein or injuries to O.M. Operating’s employees. O. M. Operating’s obligation to
indemnify hereunder shall survive the expiration of earlier termination of this Agreement only with respect to claims arising during, or which occurred during the term of this Agreement. O.M. Operating shall carry property, casualty and liability
insurance for Equipment, with extended coverage naming Evangeline Downs as a co-insured in accordance with Exhibit “A” attached hereto and made a part hereof. 
  

	12.	 	This Agreement, together with the definitions and terms set forth herein, constitutes the entire agreement of the parties, supersedes any prior understandings, whether oral or
written, shall not be modified or assigned without the prior written approval of the parties, shall inure to the benefit and be binding upon the parties, their legal representatives, successors and assigns, and shall be governed by the law of the
State of Louisiana. All corporate or other necessary acts have been taken to carry out the terms of this Agreement and the signatories hereto are duly authorized and empowered to execute this Agreement as a binding and legally enforceable contract.

  

	13.	 	Terms and Definitions 

  

	 	a)	 	Net Location Profit – The sum of the “Net Win” for all video gaming devices at the location for a given month, less “Location Expenses,” less the
“Franchise Fee” owed the State of Louisiana for the operation of video gaming devices. This is the bottom line figure that will be used when calculating the profits to be divided among the parties pursuant to this agreement. It is
expressly understood and agreed that O.M. Operating shall have no liability with respect to purse distributions or supplements to the horsemen associated with Evangeline Downs’ horse racing and betting operations. 

  

	 	b)	 	Net Win – The sum of the money collected by the video gaming devices at the location for a given month. This figure represents dollars in minus dollars out of the video
gaming devices before any taxes or expenses are deducted. This number shall be calculated according to the monthly drop records at the location. 

  

	 	c)	 	Average Net Win per Device per Day – Net Win divided by the number of machines in operation at the location, divided by the number of days in the reporting period. This
figure will be used to determine the proportion of Net Location Profits to be paid the respective parties set forth in Paragraph 4 above. 

  

	 	d)	 	Location Expenses – The sum of money paid for the location, on a monthly basis, for Manager’s salary, salary for Machine Attendants (4) with benefits, salary for
Cashiers (4) with benefits, the monthly expense for Technical service and support for video gaming devices. Miscellaneous expenses (for such items as accounting 

  

 -4- 

 expense, insurance expense, money transfer expense, drop expense, etc.), pay for Security guards (4) with
benefits, Armored car expense, Marketing expense, monthly Device Owner Fee, and expense for complimentary services (food and liquor). This list represents the exclusive list of expenses to be deducted from the Net Win, along with the Franchise Fee,
to derive Net Location Profit. Additionally, during the first month of operations during this Agreement, Evangeline Downs agrees to share in any necessary and reasonable expenses incurred by O.M. Operating prior to commencing operations at the
Location. Such “start-up” costs shall be expensed from the first month’s winnings in the calculation of the Net Location Profit for said month. 
  

Further, it is expressly understood and agreed that in the event Evangeline Downs is not licensed to operate video gaming devices, or for any reason
whatsoever, is unable to purchase the Equipment from O.M. Operating under the expiration of the first ninety (90) days of this Agreement, the Net Location Profit shall be split 60/40 with O.M. Operating receiving 40% until the time Evangeline Downs
receives its operators license. For the first month following the first ninety (90) days of this Agreement, and for each month thereafter during the term of this Agreement, and any extensions hereof. 
  
  

	 THE OLD EVANGELINE DOWNS, L.L.C.
	 	O.M. OPERATING, L.L.C
				
	 BY:
	 	 /S/    DAVID A.
YOUNT

	 	BY:	 	 /S/    JOHN JUREWICZ

	 	 	 General Manager
	 	 	 	President
		
	 Date: March 25, 2003
	 	Date: March 25, 2003

  
  

 -5- 

 Exhibit 10.13 
 ADDENDUM TO PARTICIPATION AGREEMENT 
  
  

This Addendum to Participation Agreement (“Addendum”), attached to and made a part of a Participation Agreement (“Agreement”) made
by and between The Old Evangeline Downs, L.L.C. d/b/a Races and Aces (“Evangeline Downs”), O.M. Operating, L.L.C. (“O.M. Operating”), which Agreement is dated March 25, 2003. It is expressly agreed that this Addendum shall
constitute, supplement and be considered a part of the Participation Agreement between the parties, shall satisfy the requirements of form set forth in said Agreement, and shall inure to the benefit and be binding upon the parties, their legal
representatives, successors and assigns, and shall be governed by the law of the State of Louisiana. All corporate or other necessary acts have been taken to carry out the terms of this Addendum and the signatories hereto are duly authorized and
empowered to execute this Agreement as a binding and legally enforceable contract. 
  
 IT IS HEREBY AGREED THAT: 
  

	1.	 	Evangeline Downs certifies that it has applied for, and currently has pending, an application for an Operating License to operate video gaming devices before the Louisiana Gaming
Control Board. 

  

	2.	 	Evangeline Downs further agrees that during the pendency of its application for a video gaming operator’s license from the Louisiana Gaming Control Board, it will take no
action to adversely affect its application for such licensing, nor will it voluntarily withdraw such application for any purpose. Evangeline Downs agrees that it will continue, in good faith, to pursue such licensing on its own behalf in a thorough
and expeditious manner. 

  

	3.	 	Notwithstanding the minimum ninety (90) day period of operation of video gaming devices set forth in Paragraph 3 of the Participation Agreement between the parties, Evangeline Downs
hereby agrees that effective immediately upon its receipt of a valid video gaming operator’s license from the Louisiana Gaming Control Board, it will assume responsibility for payment of O.M. Operating’s obligation to Delta Diversions,
Inc. dba AMA Distributors, for the purchase of Equipment to be installed at the Location. 

	4.	 	This obligation shall also include any monthly payments on Equipment as well as $64,363.75 prepaid for taxes and freight. 

  
  

	 THE OLD EVANGELINE DOWNS, L.L.C.
	 	O.M. OPERATING, L.L.C
				
	 BY:
	 	 /S/    DAVID A.
YOUNT

	 	BY:	 	 /S/    JOHN JUREWICZ

	 	 	 General Manager
	 	 	 	President
		
	 Date: March 25, 2003
	 	Date: March 25, 2003

  

 -2-Form of Warrant

 EXHIBIT 4.3 
  

WARRANT TO PURCHASE COMMON STOCK 
  
 THIS WARRANT AND THE SECURITIES ISSUABLE HEREUNDER HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS. THEY MAY NOT BE
SOLD, OFFERED FOR SALE, PLEDGED OR OTHERWISE TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR THE AVAILABILITY OF AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT AND ANY
APPLICABLE STATE SECURITIES LAWS. 
  
 AMENDED AND RESTATED

 WARRANT TO PURCHASE COMMON STOCK 
  

	 Number of Shares:
	  	[200,000] shares
	 Warrant Price:
	  	$2.25
	 Issuance Date:
	  	June 30, 2003
	 Expiration Date:
	  	June 30, 2006

  
  
 This Warrant amends and restates in its entirety that certain Warrant to Purchase Common Stock dated as of June 30, 2003 (the “Original
Warrant”) issued by the Company to Holder (as such terms are defined below), for the sole purpose of modifying Section 1.3 thereof to clarify the original intent of the parties. The Original Warrant is hereby superseded and is of no
further force and effect. 
  
 THIS WARRANT CERTIFIES THAT
for value received,
[                                        
            ] or its registered assigns (hereinafter called the “Holder”) is entitled to purchase from Irvine Sensors Corporation (hereinafter called the
“Company”), the above referenced number of fully paid and nonassessable shares (the “Shares”) of common stock (the “Common Stock”), of Company, at the Warrant Price per Share
referenced above; the number of shares purchasable upon exercise of this Warrant referenced above being subject to adjustment from time to time as described herein. This Warrant is issued in connection with that certain Stock Purchase Agreement
dated as of June 27 2003, by and between the Company and purchasers thereto (the “Stock Purchase Agreement”) whereby the Holder was issued its pro rata portion of 750,000 shares of the Company’s Common Stock. The
exercise of this Warrant shall be subject to the provisions, limitations and restrictions contained herein. 
  
 1.    Term and Exercise. 
  
 1.1    Term.    This Warrant is exercisable in whole or in part (but not as to any fractional share of Common Stock), at any time and from time to time
prior to 5:00 p.m. on the Expiration Date set forth above. 
  
 1.2    Warrant Price. 
  
 The
Warrant shall be exercisable at $2.25 per share (the “Warrant Price”). 
  
 1.3    Number of Warrant Shares 
  
 The maximum number of Shares of Common Stock exercisable pursuant to this Warrant is              Shares. However, notwithstanding anything herein to
the contrary, in no event shall the Holder be permitted to exercise this Warrant for a number of whole Shares that, when aggregated with the number of shares of the Company’s Common Stock beneficially owned by it and/or the deemed beneficial
owner of the underlying shares, the beneficial ownership (as calculated pursuant to Rule 13d-3 of the Securities Exchange Act of 1934, as amended) of the Company’s Common Stock of such Holder and/or the deemed beneficial owner of the underlying
shares is more than 9.99% of the Company’s Common Stock then outstanding. 
  
 1.4    Procedure for Exercise of Warrant.    Holder may exercise this Warrant by delivering the following to the principal office of the Company in accordance with Section 5.1
hereof: (a) a duly executed Notice of Exercise in substantially the form attached as Schedule A, (b) payment of the Warrant Price then in effect for each of the Shares being purchased, as designated in the Notice of Exercise, and (c) this Warrant.
Payment of the Warrant Price may be in cash, certified or official bank check payable to the order of the Company, or wire transfer of funds to the Company’s account (or any combination of any of the foregoing) in the amount of the Warrant
Price for each share being purchased. Notwithstanding any provisions herein to the contrary, if the Current Market Price (as defined below) is greater than the Warrant Price as of the day of exercise, the Holder may elect to receive, without the
payment by the Holder of any additional consideration, shares of Common Stock equal to the value of the “spread” on the Shares (or the portion thereof being canceled) by surrender of this Warrant at the principal office of the Company in
accordance with Section 5.1, together with the Notice of Exercise, in which event the Company shall issue to the Holder hereof a number of shares of Common Stock computed using the following formula: 
  
 X = Y x (CMP-WP) 
 CMP 
  

	 Where:
	  	X	 	=	  	the number of shares of Common Stock to be issued to the Holder pursuant to this net exercise
	 	  	Y	 	=	  	the number of shares of Common Stock purchasable under the Warrant or, if only a portion of the Warrant is being exercised, that portion of the Warrant requested to be
exercised
	 	  	CMP	 	=	  	the Current Market Price (as of the date of such calculation) of one share of Common Stock
	 	  	WP	 	=	  	the Warrant Price (as adjusted as of the date of such calculation)

  
 For purposes of this Warrant, the
“Current Market Price” of one share of the Company’s Common Stock as of a particular date shall be determined as follows: (a) if traded on a national securities exchange or through the Nasdaq SmallCap Market, the Current
Market Price shall be deemed to 
  

 Page 1 

 be the volume weighted average trading price of the Common Stock on such exchange as of five business days immediately
prior to the date of exercise indicated in the Notice of Exercise (or if no reported sales took place on such day, the last date on which any such sales took place prior to the date of exercise); (b) if traded over-the-counter but not on the Nasdaq
SmallCap Market, the Current Market Price shall be deemed to be the average of the closing bid and asked prices as of five business days immediately prior to the date of exercise indicated in the Notice of Exercise; and (c) if there is no active
public market, the Current Market Price shall be the fair market value of the Common Stock as of the date of exercise, as determined in good faith by the Board of Directors of the Company; provided that such five trading day period shall be extended
by the number of trading days during such period on which trading in the Company’s Common Stock is suspended, by, or not traded on the Nasdaq SmallCap Stock Market or a subsequent market on which the Common Stock is then listed. 
  
 1.5    Delivery of Certificate and New
Warrant.    In the event of any exercise of the rights represented by this Warrant, a certificate or certificates for the shares of Common Stock so purchased, registered in the name of the Holder or such other name or
names as may be designated by the Holder, together with any other securities or other property which the Holder is entitled to receive upon exercise of this Warrant, shall be delivered to the Holder hereof, at the Company’s expense, within a
reasonable time, not exceeding fifteen (15) calendar days, after the rights represented by this Warrant shall have been so exercised; and, unless this Warrant has expired, a new Warrant representing the number of Shares (except a remaining
fractional share), if any, with respect to which this Warrant shall not then have been exercised shall also be issued to the Holder hereof within such time. The person in whose name any certificate for shares of Common Stock is issued upon exercise
of this Warrant shall for all purposes be deemed to have become the holder of record of such shares on the date on which the Warrant was surrendered and payment of the Warrant Price was received by the Company, irrespective of the date of delivery
of such certificate, except that, if the date of such surrender and payment is on a date when the stock transfer books of the Company are closed, such person shall be deemed to have become the holder of such Shares at the close of business on the
next succeeding date on which the stock transfer books are open. 
  
 1.6    Restrictive Legend.    Each certificate for Shares shall bear a restrictive legend in substantially the form as follows, together with any additional legend required by (a)
any applicable state securities laws and (b) any securities exchange upon which such Shares may, at the time of such exercise, be listed): 
  
 “The shares represented by this certificate have not been registered under the Securities Act of 1933, as amended and may not be sold, offered for
sale, transferred or pledged in the absence of such registration or an exemption therefrom under such Act.” 
  
 Any certificate issued at any time in exchange or substitution for any certificate bearing such legend shall also bear such legend unless, in the opinion of counsel for
the Holder thereof (which counsel shall be reasonably satisfactory to counsel for the Company), the securities represented thereby are not, at such time, required by law to bear such legend. 
  
 1.7    Fractional Shares.    No
fractional Shares shall be issuable upon exercise or conversion of the Warrant and the number of Shares to be issued shall be rounded down to the nearest whole Share. If a fractional share interest arises upon any exercise or conversion of the
Warrant, the Company shall eliminate such fractional share interest by paying to Holder an amount computed by multiplying the fractional interest by the Current Market Price of a full Share. 
  
 1.8    Redemption.    If during
the term of this Warrant (a) shares of the Company’s Common Stock have traded over $3.00 per share as reported by the Nasdaq Stock Market (or comparable trading market) for thirty (30) consecutive business days and (b) the shares issuable
pursuant to this Warrant have been registered with the Securities and Exchange Commission on an effective registration statement on Form S-3, the Company may, at its option, redeem the entire Warrant for $0.01 (the “Redemption
Price”). If the Company desires to exercise its right to redeem the Warrant, it shall deliver notice to the Holder, specifying (a) the Redemption Price, (b) the date the redemption is to be effective, which date shall be no earlier than
ten (10) business days after the date on which notice is deemed given in accordance with Section 5.1 hereof (the “Redemption Date”), (c) the place where the Holder shall deliver the Warrant and (d) that the right to exercise
the Warrant shall terminate at 5:00 p.m. on the business day immediately preceding the Redemption Date. 
  
 On and after the Redemption Date, the Warrant shall expire and become void, and Holder shall have no further rights under the Warrant except to receive, upon surrender of the Warrant, the Redemption Price. The Company
shall, promptly after presentation and surrender to the Company by or on behalf of the Holder thereof of the Warrant to be redeemed, deliver to Holder a sum of cash equal to the Redemption Price. 
  
 2.    Representations, Warranties and Covenants.

  
 2.1    Representations and
Warranties. 
  
 (a)    The Company is
a corporation duly organized, validly existing and in good standing under the laws of its state of incorporation and has all necessary power and authority to perform its obligations under this Warrant; 
  
 (b)    The execution, delivery and performance of this
Warrant has been duly authorized by all necessary actions on the part of the Company and constitutes the legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms; and 
  
 (c)    This Warrant does not violate and is not in
conflict with any of the provisions of the Company’s Certificate of Incorporation, Certificates of Designation, Bylaws and any resolutions of the Company’s Board of Directors or stockholders, or any agreement of the Company, and no event
has occurred and no condition or circumstance exists that might (with or without notice or lapse of time) constitute or result directly or indirectly in such a violation or conflict. 
  
 2.2    Issuance of Shares.    The Company covenants and agrees that all
shares of Common Stock that may be issued upon the exercise of the rights represented by this Warrant will, upon issuance, be validly issued, fully paid and nonassessable, and free from all taxes, liens and charges with respect to the issue thereof.
The Company further covenants and agrees that it will pay when due and payable any and all federal and state taxes which may be payable in respect of the issue of this Warrant or any Common Stock or certificates therefor issuable upon the exercise
of this Warrant. The Company further covenants and agrees that the Company will at all times have authorized and reserved, free from preemptive rights, a sufficient number of shares of Common Stock to provide for the exercise in full of the rights
represented by this Warrant. If at any time the number of authorized but unissued shares of Common Stock of the Company shall not be sufficient to effect the exercise of the Warrant in full, subject to the limitations set forth in Section 1.3
hereto, then the Company will take all such corporate action as may, in the opinion of counsel to the Company, be necessary or advisable to increase the number of its authorized shares of Common Stock as shall be sufficient to permit the exercise of
the Warrant in full, subject to the limitations set forth in Section 1.3 hereto, including without limitation, using its best efforts to obtain any necessary stockholder approval of such increase. The Company further covenants and agrees that if any
shares of capital stock to be reserved for the purpose of the issuance of shares upon the exercise of this Warrant require registration with or approval of any governmental authority under any federal or state law before such shares may be validly
issued or delivered upon exercise, then the Company will in good faith and as expeditiously as possible endeavor to secure such registration or approval, as the case may be. If and so long as the Common Stock issuable upon the exercise of this
Warrant is listed on any national securities exchange or the Nasdaq Stock Market, the Company will, if permitted by the rules of such exchange or market, list and keep listed on such exchange or market, upon official notice of issuance, all shares
of such Common Stock issuable upon exercise of this Warrant. 
  
  

 Page 2 

 3.    Other Adjustments. 
  
 3.1    Subdivision or Combination of
Shares.    In case the Company shall at any time subdivide its outstanding Common Stock into a greater number of shares, the Warrant Price in effect immediately prior to such subdivision shall be proportionately reduced
and the number of Shares obtainable upon exercise of this Warrant shall be proportionately increased. Conversely, in case the outstanding Common Stock of the Company shall be combined into a smaller number of shares, the Warrant Price in effect
immediately prior to such combination shall be proportionately increased and the number of Shares obtainable upon exercise of this Warrant shall be proportionately decreased. 
  
 3.2    Dividends in Common Stock, Other Stock or Property.    If at any time or
from time to time the holders of Common Stock (or any shares of stock or other securities at the time receivable upon the exercise of this Warrant) shall have received or become entitled to receive, without payment therefor: 
  
 (a)    Common Stock, options or any shares or other
securities which are at any time directly or indirectly convertible into or exchangeable for Common Stock, or any rights or options to subscribe for, purchase or otherwise acquire any of the foregoing by way of dividend or other distribution;

  
 (b)    any cash paid or payable other than
as a regular cash dividend; or 
  
 (c)    Common Stock or additional shares or other securities or property (including cash) by way of spin-off, split-up, reclassification, combination of shares or similar corporate rearrangement (other than Common Stock
issued as a stock split or adjustments in respect of which shall be covered by the terms of Section 3.1 above) and additional shares, other securities or property issued in connection with a Change (as defined below) (which shall be covered by the
terms of Section 3.3 below), then and in each such case, the Holder hereof shall, upon the exercise of this Warrant, be entitled to receive, in addition to the number of shares of Common Stock receivable thereupon, and without payment of any
additional consideration therefor, the amount of stock and other securities and property (including cash in the cases referred to in clause (b) above and this clause (c)) which such Holder would hold on the date of such exercise had such Holder been
the holder of record of such Common Stock as of the date on which holders of Common Stock received or became entitled to receive such shares or all other additional stock and other securities and property. 
  
 3.3    Reorganization, Reclassification, Consolidation,
Merger or Sale.    If any recapitalization, reclassification or reorganization of the share capital of the Company, or any consolidation or merger of the Company with another corporation, or the sale of all or
substantially all of its shares and/or assets or other transaction (including, without limitation, a sale of substantially all of its assets followed by a liquidation) shall be effected in such a way that holders of Common Stock shall be entitled to
receive shares, securities or other assets or property (a “Change”), then, as a condition of such Change, lawful and adequate provisions shall be made by the Company whereby the Holder hereof shall thereafter have the right
to purchase and receive (in lieu of the Common Stock of the Company immediately theretofore purchasable and receivable upon the exercise of the rights represented hereby) such shares, securities or other assets or property as may be issued or
payable with respect to or in exchange for the number of outstanding Common Stock which such Holder would have been entitled to receive had such Holder exercised this Warrant immediately prior to the consummation of such Change. The Company or its
successor shall promptly issue to Holder a new Warrant for such new securities or other property. The new Warrant shall provide for adjustments which shall be as nearly equivalent as may be practicable to give effect to the adjustments provided for
in this Section 3 including, without limitation, adjustments to the Warrant Price and to the number of securities or property issuable upon exercise of the new Warrant. The provisions of this Section 3.3 shall similarly apply to successive Changes.
 
  
 4.    Ownership and Transfer.

  
 4.1    Ownership of This
Warrant.    The Company may deem and treat the person in whose name this Warrant is registered as the holder and owner hereof (notwithstanding any notations of ownership or writing hereon made by anyone other than the
Company) for all purposes and shall not be affected by any notice to the contrary until presentation of this Warrant for registration of transfer as provided in this Section 4. 
  
 4.2    Transfer and Replacement.    This Warrant and all rights hereunder are
transferable in whole or in part upon the books of the Company by the Holder hereof in person or by duly authorized attorney, and a new Warrant or Warrants, of the same tenor as this Warrant but registered in the name of the transferee or
transferees (and in the name of the Holder, if a partial transfer is effected) shall be made and delivered by the Company upon surrender of this Warrant duly endorsed, at the office of the Company in accordance with Section 5.1 hereof. Upon receipt
by the Company of evidence reasonably satisfactory to it of the loss, theft or destruction, and, in such case, of indemnity or security reasonably satisfactory to it, and upon surrender of this Warrant if mutilated, the Company will make and deliver
a new Warrant of like tenor, in lieu of this Warrant; provided that if the Holder hereof is an instrumentality of a state or local government or an institutional holder or a nominee for such an instrumentality or institutional holder an irrevocable
agreement of indemnity by such Holder shall be sufficient for all purposes of this Warrant, and no evidence of loss or theft or destruction shall be necessary. This Warrant shall be promptly cancelled by the Company upon the surrender hereof in
connection with any transfer or replacement. Except as otherwise provided above, in the case of the loss, theft or destruction of a Warrant, the Company shall pay all expenses, taxes and other charges payable in connection with any transfer or
replacement of this Warrant, other than stock transfer taxes (if any) payable in connection with a transfer of this Warrant, which shall be payable by the Holder. Holder will not transfer this Warrant and the rights hereunder except in compliance
with federal and state securities laws and except after providing evidence of such compliance reasonably satisfactory to the Company. 
  
 5.    Miscellaneous Provisions. 
  
 5.1    Notices.    Any notice or other document required or permitted to be given or delivered to the Holder
shall be delivered or forwarded to the Holder at c/o Mercator Group, LLC, 555 South Flower Street, Suite 4500, Los Angeles, California 90071, Attention: President (Facsimile No. 213/553-9285, with a copy to Sheppard, Mullin, Richter & Hampton,
LLC, 333 South Hope Street, 48th Floor, Los Angeles, California 90071, Attention: David Ulich (Facsimile No.
213/620-1398), or to such other address or number as shall have been furnished to the Company in writing by the Holder. Any notice or other document required or permitted to be given or delivered to the Company shall be delivered or forwarded to the
Company at 3001 Redhill Ave., Costa Mesa, California 92626, Attention: Chief Financial Officer (Facsimile No. 714/ 444-8773, with a copy to Dorsey & Whitney LLP, 38 Technology Drive, Irvine, California 92618, Attention: Ellen S. Bancroft, Esq.
(Facsimile No. 714/424-5554), or to such other address or number as shall have been furnished to Holder in writing by the Company. 
  
 5.2    All notices, requests and approvals required by this Warrant shall be in writing and shall be conclusively deemed to be given (a) when
hand-delivered to the other party, (b) when received if sent by facsimile at the address and number set forth above; provided that notices given by facsimile shall not be effective, unless either (i) a duplicate copy of such facsimile notice is
promptly given by depositing the same in the mail, postage prepaid and addressed to the party as set forth below or (ii) the receiving party delivers a written confirmation of receipt for such notice by any other method permitted under this
paragraph; and further provided that any notice given by facsimile received after 5:00 p.m. (recipient’s time) or on a non-business day shall be deemed received on the next business day; (c) five (5) business days after deposit in the United
States mail, certified, return receipt requested, postage prepaid, and addressed to the party as set forth in Section 5.1 above; or (d) the next business day after deposit with an international overnight delivery service, postage prepaid, addressed
to the party as set forth below with next business day delivery guaranteed; provided that the sending party receives confirmation of delivery from the delivery service provider. 
  
 5.3    No Rights as Stockholder; Limitation of Liability.    This Warrant shall
not entitle the Holder to any of the rights of a stockholder of the 
  

 Page 3 

 Company except upon exercise in accordance with the terms hereof. No provision hereof, in the absence of affirmative
action by the Holder to purchase shares of Common Stock, and no mere enumeration herein of the rights or privileges of the Holder, shall give rise to any liability of the Holder for the Warrant Price hereunder or as a stockholder of the Company,
whether such liability is asserted by the Company or by creditors of the Company. 
  
 5.4    Governing Law.    This Warrant shall be governed by and construed in accordance with the laws of the State of California as applied to agreements among California residents
made and to be performed entirely within the State of California, without giving effect to the conflict of law principles thereof. 
  
 5.5    Binding Effect on Successors.    This Warrant shall be binding upon any corporation succeeding the
Company by merger, consolidation or acquisition of all or substantially all of the Company’s assets and/or securities. All of the obligations of the Company relating to the Shares issuable upon the exercise of this Warrant shall survive the
exercise and termination of this Warrant. All of the covenants and agreements of the Company shall inure to the benefit of the successors and assigns of the 
  
 5.6    Waiver, Amendments and Headings.    This Warrant and any provision hereof may be changed, waived,
discharged or terminated only by an instrument in writing signed by both parties (either generally or in a particular instance and either retroactively or prospectively). The headings in this Warrant are for purposes of reference only and shall not
affect the meaning or construction of any of the provisions hereof. 
  
  
  
  

 Page 4 

  
 WARRANT TO PURCHASE COMMON
STOCK 
  
 IN WITNESS WHEREOF, the Company has caused this Warrant to be
signed by its duly authorized officer this 30th day of June, 2003. 
  
 COMPANY: 

	IRVINE SENSORS CORPORATION
		
	 By
	 	

  

		
	 Print Name:
	 	 John J. Stuart, Jr.         

  

		
	 Title:
	 	 Chief Financial Officer        

  
  

 SCHEDULE A 
  

FORM OF NOTICE OF EXERCISE 
  
 [To be signed only upon exercise of the Warrant] 
  
 TO BE EXECUTED BY THE REGISTERED HOLDER 
 TO EXERCISE THE WITHIN WARRANT 
  
 The undersigned hereby elects
to purchase                  shares of Common Stock (the “Shares”) of Irvine Sensors Corporation (the “Company”) under the Warrant to Purchase Common
Stock dated                         , which the undersigned is entitled to purchase pursuant to the terms of such Warrant, and
[check one]: 
  

	 ̈	 	Cash Exercise.    The undersigned has delivered $                , the
aggregate Warrant Price for              Shares purchased herewith, in full in cash or by certified or official bank check or wire transfer; 

  

	 ̈	 	Net Exercise.    In exchange for the issuance of                  Shares,
the undersigned hereby agrees to surrender the right to purchase                  shares of Common Stock pursuant to the net exercise provisions set forth in Section 1.2
of the Warrant. 

  
 Please issue a certificate or
certificates representing such shares of Common Stock in the name of the undersigned or in such other name as is specified below and in the denominations as is set forth below: 
  

	 	

 [Type Name of Holder as it should appear on
the stock certificate] 
  

	 	

 [Requested Denominations—if no
denomination is specified, a single certificate will be issued] 
  
 The initial address of such Holder to be entered on the books of the Company shall be: 
  

	 	

  

	 	

  

	 	

  
 The undersigned hereby represents and warrants that the undersigned is acquiring such shares for his own account for investment purposes only, and not for resale or with a view to distribution of such shares or any
part thereof. 
  

		
	 By:
	 	

  

		
	 Print Name:
	 	

  

		
	 Title:
	 	

  

		
	 Dated:
	 	

  

 FORM OF ASSIGNMENT 
 (ENTIRE) 
  
 [To be
signed only upon transfer of entire Warrant] 
  
 TO BE
EXECUTED BY THE REGISTERED HOLDER 
 TO TRANSFER THE WITHIN WARRANT 
  
 FOR VALUE RECEIVED
                                        
     hereby sells, assigns and transfers unto
                                        
     all rights of the undersigned under and pursuant to the within Warrant, and the undersigned does hereby irrevocably constitute and appoint
                                        
     Attorney to transfer the said Warrant on the books of Irvine Sensors Corporation, with full power of substitution. 
  

	
	  
	

	[Type Name of Holder]

  

		
	 By:
	 	  

		
	 Title:
	 	  

		
	 	 	 
		
	Dated:	 	  

  
 NOTICE 
  
 The signature to the foregoing Assignment must correspond exactly to the name as written
upon the face of the within Warrant, without alteration or enlargement or any change whatsoever. 
  
  

 FORM OF ASSIGNMENT 
 (PARTIAL) 
  
 [To be
signed only upon partial transfer of Warrant] 
  
 TO BE
EXECUTED BY THE REGISTERED HOLDER 
 TO TRANSFER THE WITHIN WARRANT 
  
 FOR VALUE RECEIVED
                                        
     hereby sells, assigns and transfers unto
                                        
     (i) the rights of the undersigned to purchase                      shares of Common Stock of Irvine Sensors
Corporation (the “Company”) under and pursuant to the within Warrant, and (ii) on a non-exclusive basis, all other rights of the undersigned under and pursuant to the within Warrant, it being understood that the undersigned shall retain,
severally (and not jointly) with the transferee(s) named herein, all rights assigned on such non-exclusive basis. The undersigned does hereby irrevocably constitute and appoint
                                        
     Attorney to transfer the said Warrant on the books of the Company, with full power of substitution. 
  

	
	  
	

	[Type Name of Holder]

  

		
	 By:
	 	  

		
	 Title:
	 	  

		
	 	 	 
		
	Dated:	 	  

  
 NOTICE 
  
 The signature to the foregoing Assignment must correspond exactly to the name as written
upon the face of the within Warrant, without alteration or enlargement or any change whatsoever.

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