Document:

Exhibit 10.73

 

Exhibit 10.73

IRVINE SENSORS CORPORATION

BINDING DEBT EXCHANGE LETTER OF INTENT

April 1, 2008

     This Letter of Intent is intended to be binding upon the parties hereto and is subject only to
the execution of the definitive agreements to document this transaction and the approval of Nasdaq.
The following summarizes the principal terms of the debt exchange financing of Irvine Sensors
Corporation (the “Company”).

KEY PROVISIONS

	 	 	 
	Investors

	 	Longview Fund, L.P. and/or Alpha Capital Anstalt (the
“Investors”)
	 
	 	 
	Security

	 	Series A 10% Cumulative Convertible Preferred Stock of the
Company (the “Series A Stock”). Each share of Series A
Stock is initially convertible into 100 shares of the
Company’s Common Stock (“Common Stock”), subject to
adjustment as set forth below.
	 
	 	 
	Price per share

	 	The purchase price for the Series A Stock and its “Stated
Value” shall be $30.00 per share. The closing bid price for
one share of the Company’s Common Stock as of March 31, 2008
was $0.26 (or $26 for 100 shares of Common Stock).
The purchase price for the Series A Stock shall be payable
by the cancellation of a like amount of the Company’s
principle and interest on the term loans payable to the
Investors.
	 
	 	 
	Size of transaction

	 	 $4.0 million
	 
	 	 
	Expected closing date

	 	April 8, 2008 or as soon thereafter as reasonably practicable
	 
	 	 
	Stock Purchase and
Exchange Agreement

	 	The Company will enter into a Stock Purchase and Exchange
Agreement to facilitate the purchase of the Series A Stock,
which will contain representations and warranties consistent
with those contained in the Company’s prior financings with
the Investors. The Company shall also include an obligation
to deliver a clearance letter from its counsel to its
transfer agent confirming that holding period of the
conversion of the Series A Stock shall tack back to the
original date of the term loan being converted for the
Series A Stock, provided that no further consideration is
being provided in connection with such conversion.

1

 

	 	 	 
	Finders

	 	Each of the Company and the Investors shall represent and
warrant that it has no obligation to pay any finder’s fee
and shall indemnify the other parties to this transaction
for any breach thereof.
	 
	 	 
	Legal fees

	 	The Company will pay the legal fees of the Investors to
accomplish this transaction.
	 
	 	 
	Closing conditions

	 	The Closing is subject only to (i) the execution of
definitive legal documents, which shall be reasonably
acceptable to the Company and the Investors; and (ii) the
confirmation by Nasdaq that this Debt Exchange, as well as
the proposed $5 million financing in accordance with the
Series B Financing Term Sheet, will not require stockholder
approval, except to the extent specifically required herein
or in such Term Sheet.
	 
	 	 
	TERMS OF SERIES A STOCK
	 
	 	 
	Dividend provisions

	 	10 % cumulative dividends per annum on the Stated Value.
	 
	 	 
	 

	 	Dividends shall be cumulative, and shall compound monthly.
	 
	 	 
	 

	 	The Holders of outstanding shares of Series A Stock shall be
entitled to receive preferential dividends in cash out of
any funds of the Company legally available therefor before
any dividend or other distribution will be paid or declared
and set apart for payment on any shares of any Common Stock,
or other class of stock presently authorized or to be
authorized (the Common Stock, and such other stock being
hereinafter collectively the “Junior Stock”) at the rate of
10% per annum on the Stated Value.
	 
	 	 
	 

	 	Dividends shall be payable when and if declared by the
Company’s Board of Directors; however, accumulated dividends
shall be payable in cash on December 31, 2009, and
thereafter shall be payable annually on December 31 of each
subsequent year or such later time as may be approved in
writing by the holders of 80% of the shares of Series A
Stock then outstanding. Dividends shall be payable in cash
or in kind at the election of the holder of the Series A
Stock.
	 
	 	 
	 

	 	Upon an Event of Default (generally the same default events
as contained in the last round of the Company’s debt
financing, as well as a Cross Default (which has not been
waived) under any of the existing financing documents with
the Investors), the cumulative dividend rate shall increase
to 20% during while such Event of Default remains
outstanding.

2

 

	 	 	 
	 

	 	An Event of Default will also include the
Company’s failure to obtain the stockholder approval of an
increase in the authorized but unissued capital stock of the
Company by June 30, 2008 sufficient to permit the conversion
in full of the Series A Stock, if necessary. An Event of
Default shall result in a cross default in the existing loan
documents with the Investors. The Company’s officers and
directors will agree to vote in favor of such increase in
the authorized capital stock.
	 
	 	 
	Liquidation preference

	 	Upon the dissolution, liquidation or winding-up of the
Company, whether voluntary or involuntary, the Holders of
the Series A Stock shall be entitled to receive, and before
any payment or distribution shall be made on the Junior
Stock, out of the assets of the Company available for
distribution to stockholders, the Stated Value per share of
Series A Stock plus all accrued and unpaid dividends
thereon.
	 
	 	 
	 

	 	The redemption of any other class of preferred stock or
consolidation or merger of the Company or sale of all or
substantially all of its assets shall be deemed to be a
liquidation or winding up for purposes of the liquidation
preference; provided however, this provision may be waived
by the holders of 80% of the Series A Stock.
	 
	 	 
	Redemption

	 	The Series A Stock shall not be redeemable by the Investors.

Provided that there is not an Event of Default outstanding
that has not been waived, the Company will have the right,
upon 30 calendar days’ prior written notice, to redeem the
Series A Stock at the Stated Value per share of Series A
Stock, plus any accrued but unpaid dividends. 

The redemption price must be paid to the Investors in cash.
	 
	 	 
	Conversion

	 	Each share of Series A Stock shall initially be convertible
at any time at option of holder into 100 shares of Common
Stock.
	 
	 	 
	 

	 	The number of shares issuable upon conversion of the Series
A Stock shall be equal to: (i) the sum of (A) the Stated
Value per share being converted, and (B) at the Holder’s
election, accrued and unpaid dividends on such share,
divided by (ii) the Conversion Price.
	 
	 	 
	 

	 	The Conversion Price per share of Series A Stock shall
initially be the Stated Value ($30.00) but will be subject
to antidilution adjustments, including price dilution if

3

 

	 	 	 
	 

	 	the
Company issues securities in the future for less than the
Conversion Price; provided however, without obtaining
stockholder approval, in no event will Conversion Price be
reduced below $26.00 (the closing bid price for 100 shares
of Common Stock as of March 31, 2008).
	 
	 	 
	 

	 	Blocker: The Company and Holder may not effect a conversion
that would result in the Holder having a beneficial
ownership of Common Stock which would be in excess of the
sum of (i) the number of shares of Common Stock beneficially
owned by the Holder and its affiliates on such Conversion
Date, and (ii) the number of shares of Common Stock issuable
upon the conversion of the Obligation Amount with respect to
which the determination of this proviso is being made on
such Conversion Date, which would result in beneficial
ownership by the Holder and its affiliates of more than
4.99% of the outstanding shares of Common Stock of the
Company. For the purposes of the proviso to the immediately
preceding sentence, beneficial ownership shall be determined
in accordance with Section 13(d) of the Securities Exchange
Act of 1934, as amended, and Regulation 13d-3 thereunder.
Subject to the foregoing, the Holder shall not be limited to
successive exercises which would result in the aggregate
issuance of more than 4.99%. The Holder may revoke the
conversion limitation described in this Paragraph, in whole
or in part, upon 61 days prior notice to the Company. The
Holder may waive the conversion limitation described in this
Section in whole or in part, upon and effective after 61
days prior written notice to the Company to increase such
percentage to up to 9.99% of the Company’s outstanding
Common Stock as of the Conversion Date.
	 
	 	 
	 

	 	Share Cap: At no time may any share of Series A Stock be
converted into Common Stock to the extent that such issuance
would exceed the Company’s authorized capital stock. The
Company will undertake in the Stock Purchase and Exchange
Agreement to use its best efforts to obtain stockholder
approval of an increase in the number of shares of Common
Stock authorized under the Company’s Certificate of
Incorporation, as amended. The failure to obtain such
approval by June 30, 2008 shall be an Event of Default. The
Company represents that it currently has sufficient
authorized capital stock for the conversion of the $4.0
million of Series A Stock into Common Stock based on the
initial Conversion Price.

4

 

	 	 	 
	 

	 	Buy-in: If the Company fails to deliver the Common Stock
issuable upon conversion of the Series A Stock within seven
business days, then the Company shall pay in cash to the
Holder (in addition to any remedies available to or elected
by the Holder) an amount by which (A) the Holder’s total
purchase price (including brokerage commissions, if any) for
the shares of Common Stock so purchased exceeds (B) the
aggregate Stated Value of the shares of Series A Stock for
which such conversion was not timely honored, together with
interest thereon at a rate of 15% per annum, accruing until
such amount and any accrued interest thereon is paid in full
(which amount shall be paid as liquidated damages and not as
a penalty).
	 
	 	 
	 

	 	Liquidated damages: If the Company fails to deliver shares
of Common Stock upon conversion within the time period
required in the Certificate of Designation, the Company will
be required to pay liquidated damages equal to $100 per
business day after the required delivery date for each
$10,000 of the obligation amount converted; provided
however, that the maximum aggregate amount of liquidated
damages payable for any and all such occurrences shall not
exceed 15% of the original purchase price for the Series A
Stock. The Company can rescind any conversion, but any
liquidated damages associated with such rescinded conversion
will still be due through the date of the rescission action.
	 
	 	 
	Automatic conversion

	 	The Series A Stock shall be automatically converted into
Common Stock in accordance with the conversion provisions
stated above (and shall be subject to the same limitations)
on the date upon which the Company obtains the vote or
consent of at least 80% of the then outstanding shares of
Series A Stock to such conversion.
	 
	 	 
	Antidilution provision

	 	The Series A Stock shall be entitled to proportional
antidilution protection for stock splits, stock dividends,
etc.
	 
	 	 
	 

	 	In addition, the Conversion Price will be reduced on a full
ratchet basis in the event of any dilutive issuance, other
than standard exempted issuances contained in the existing
financing documents. Notwithstanding, the foregoing, the
Conversion Price may not be reduced below the Fair Market
Value without stockholder approval. While the Company will
use its commercially reasonably best effects to obtain the
stockholder approval, there will not be any penalty or
negative impact on the Series A Stock if the stockholder
vote is not obtained.

5

 

	 	 	 
	Voting rights and
protective provisions

	 	The Series A Stock shall not be voting stock, and shall only
have voting rights to the extent required by law. Without
the prior consent of 80% of the then outstanding Series A
Stock the Company (i) may not make certain amendments to the
Certificate of Incorporation, (ii) issue additional shares
of Series A Stock (other than for accrued dividends on the
Series A Stock); or (iii) issue any securities (other than
Exempted Securities) at a price per share that would trigger
a ratchet adjustment to the Conversion Price where either
(A) the Company has insufficient authorized capital to
permit the conversion in full of such Series A Stock after
giving effect to such full ratchet adjustment, or (B) if
such full ratchet adjustment requires stockholder approval,
which approval has not been obtained.

	 	 	 	 	 	 	 	 	 	 	 
	Agreed & Accepted:	 	 	 	Agreed & Accepted:	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	LONGVIEW FUND, L.P.	 	 	 	IRVINE SENSORS CORPORATION	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:

	 	/s/ S. MICHAEL RUDOLPH
 

	 	 
	 	By:
	 	/s/ JOHN J. STUART, JR.
 

	 	 
	Title:

	 	CFO – Investment Advisor
	 	 	 	Title:
	 	Sr. VP & CFO	 	 
	Date:

	 	4/1/08
	 	 	 	Date:
	 	April 1, 2008	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	ALPHA CAPITAL ANSTALT	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:

	 	/s/ KONRAD ACKERMAN
 

	 	 	 	 	 	 	 	 
	Title:

	 	Director	 	 	 	 	 	 	 	 
	Date:
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 

[Signature Page to Binding Debt Exchange Letter of Intent]

62008 EMPLOYEE PROFIT SHARING PLAN FRAMEWORD DOCUMENT

    BROADVISION

    Framework
      for FY 2008

    Employee
      Profit-Sharing Plan (EPSP)

     

    
      	
              Plan
                objective:

            	
              The
                program is designed to retain our talented employees by sharing company
                profitability once a certain threshold has been met and maintained
                on a
                sustainable basis.  It is also intended to underscore the
                commitment to turning around our company by aligning and rewarding
                behavior that leads to achieving a profitable business model and
                other
                company objectives.

            
	 
              	 
              
	
              Plan
                duration:

            	
              January
                1 ~ December 31 2008

            
	 
              	 
              
	
              Plan
                details:

            	
              1. EPSP
                award pool allocation methodology approved by BOD Compensation Committee
                at the beginning of the year and implemented by management on a quarterly
                basis.

              2. Eligible
                persons are active, full-time or more than seventy-five percent (>75%)
                part-time employees who maintain a satisfactory standing during the
                entirety of each quarter and who remain an employee at the time of
                each
                quarterly payout.  The company reserves the right to make
                certain exclusions or exceptions regarding eligibility on a case-by-case
                basis.

              3. Part-time
                or on-leave employees are eligible for a pro-rated amount based on
                the
                number of actual regular hours worked.

              4. Payouts
                are targeted at a certain percentage of each individual's base salary,
                set
                and/or adjusted with management discretion.

              5. Payment
                is made on the first regularly scheduled pay date after the announcement
                of quarterly earnings, or on such other date as deemed appropriate
                by
                management.

              6. All
                amounts earned but not paid under the plan (reductions from any "merit
                factor", resignations with positive profit-sharing accruals, etc)
                are
                eliminated, going back into company earnings.

              7. Award
                pool allocation will be determined as a percentage of profits; after
                close
                of each quarter, management, in its sole discretion, will set the
                percentage for the corresponding quarter.

              8. Payouts
                are subject to adjustment by management, and the CEO has final
                determination of all profitability payments.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00140-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00140-of-00352.parquet"}]]