Exhibit 10.13
UNSECURED SUBORDINATED PROMISSORY NOTE
$400,000.00 Principal Amount Issue Date December 29, 2006
1. Principal and Interest . For value received, IRVINE SENSORS CORPORATION, a Delaware corporation (" Maker" ), hereby promises to pay to the order of TIMOTHY LOONEY, an individual (" Payee" ), whose address is 4306 Savannah, Parker, Texas, 75002, or such other address as the holder of this Unsecured Subordinated Promissory Note (this " Note" ) may designate in writing, the principal sum of $400,000.00, together with interest on the unpaid principal balance from time to time remaining at a rate per annum (calculated on the basis of actual days elapsed, but computed as if each calendar year consisted of 360 days) which shall from day to day be equal to 11%.
2. Payment . The principal of and accrued interest on this Note shall be due and payable in full on the earlier of December 29, 2007, and the date the Senior Debt (hereinafter defined) is indefeasibly paid in full. Payment shall be deemed made at the time the holder of this Note receives such payment, subject to the condition subsequent that any check or similar instrument is honored as drawn on sufficient funds. All amounts paid hereunder shall be applied first to accrued and unpaid interest and then to principal.
3. Representations and Warranties . Maker represents and warrants to Payee as follows:
(a) Existence, Etc . Maker is a corporation duly organized validly existing and in good standing under the laws of the state of its organization and is duly qualified to do business and is in good standing in each other state where the failure to be so qualified and in good standing could reasonably be expected to have a material adverse effect on the business, operations or condition (financial or otherwise) of Maker or on the ability of Maker to perform or comply with the terms and conditions of this note (such a material adverse effect being herein called a " Material Adverse Effect" ).
(b) Power and Authority . Maker has all requisite power and authority to own or lease its properties, to conduct its business as now conducted and to execute, deliver and perform the Note.
(c) Authorization and Enforceability . The execution, delivery and performance of the Note has been duly authorized by all necessary corporate action of Maker and requires no consent of any person or entity that has not been obtained, and the Note constitutes a valid and binding obligation of Maker, enforceable in accordance with its terms, except as such enforceability may be limited by Debtor Relief Laws (hereinafter defined) and by general principles of equity. (d) No Violation . The execution, delivery and performance of the Note does not and will not violate Maker' s charter, bylaws, or other organizational documents, any laws applicable to Maker or any agreement to which Maker is a party or by which Maker is bound, except for violations of laws or agreements that could not reasonably be expected to have a
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Material Adverse Effect. No consent or approval of any person or entity is required in connection with such execution, delivery and performance, except as has been obtained and is in full force and effect.
(e) General . All financial statements, reports and other information heretofore delivered by Maker to Payee, taken as a whole, do not contain any untrue statements of a material fact or omit to state any material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading.
4. Prepayment . Maker shall have the right to prepay all or any portion of the principal hereof at any time without premium or penalty; provided, however, that with any prepayment Maker shall also pay all accrued but unpaid interest on the principal being prepaid. 5. Late Charge . If any payment of principal or interest hereunder is not paid when due, including upon acceleration hereof, interest under this Note shall accrue from the date of the default until paid at a rate equal to the lesser of 18% per annum or the highest interest rate permitted by law (" Default Rate" ). All payments of such late charges shall be made in lawful money of the United States of America.
6. Subordination . Notwithstanding anything contained herein that may be to the contrary, the payment of this Note and the rights and remedies of Payee and any other holder of this Note under this Note are subordinate to the payment of the Senior Debt, as defined in that certain Subordination Agreement of even date herewith, among Payee, Longview Fund L.P. and Alpha Capital Anstalt, and are otherwise subject to such Subordination Agreement.
7. Event of Default . Any one or more of the following events or occurrences shall constitute an event of default under this Note (" Event of Default" ):
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