Exhibit 9
[PEQUOT VENTURES]
September 26, 2006
VIA FACSIMILE AND OVERNIGHT COURIER
Irvine Sensors Corporation
0000 Xxx Xxxx Xxxxxx
Xxxxx Xxxx, Xxxxxxxxxx 00000
Attn: Xxxx X. Xxxxxx, Xx.
Re: Event Notice/Event of Default
Ladies and Gentlemen:
Reference is made to (i) the Securities Purchase Agreement, dated as of December
30, 2005 (the "Agreement"), by and among Irvine Sensors Corporation (the
"Company") the purchasers listed on the signature pages thereto (including the
undersigned), (ii) the Senior Subordinated Secured Convertible Notes dated of
even date therewith (the "Notes") in the aggregate principal amount of
$10,000,000 issued pursuant thereto, and (iii) the notice of Event of Default
delivered to the Company on August 2, 2006 by the undersigned (the "Default
Notice"). Any capitalized term used herein and not defined herein shall have the
meaning assigned to it in the Agreement and the Notes.
In addition to the Events of Default referred to in the Default Notice, there
have been other and further defaults by the Company, including, but not limited
to, (i) the Company's failure to comply with its obligations to (x) engage an
independent compensation consultant pursuant to Section 4.21 of the Agreement
and (y) use commercially reasonable efforts to resolve the material weakness
identified in the Company's Form 10-K filed with the Commission on December 12,
2005 pursuant to Section 4.23 of the Agreement, (ii) the termination of Xxx
Carleone's employment with the Company, and (iii) the Notices of Default
referred to in the letter from Square 1 Bank to the Company dated September 18,
2006 and the other matters referenced therein.
Pursuant to Section 8(b) of the Notes, this letter shall constitute an Event
Notice to the Company. Unless this Event Notice is earlier revoked in writing by
the undersigned, please make arrangement for the payment of the Event Price as
provided in the Notes. If you wish to review the exact amount of the Event
Price, please contact us at your earliest convenience.
We fully reserve all of our respective rights and remedies under the Agreement,
the Notes and otherwise. This Event Notice neither constitutes, nor shall it be
deemed to constitute, either a waiver of any default not specified herein which
may exist on the date hereof, or an election of any right or remedy by the
undersigned. The undersigned reserve the right to pursue any right or
remedy they may have against the Company, the Subsidiaries, or other obligors
with respect to the subject obligation, subsequent to, or contemporaneously
with, the pursuit of any other right or remedy. Partial payment of the Event
Price may, at the option of the undersigned, be accepted and applied on account
of the due and unpaid balance. If so accepted, however, such partial payment
shall be without waiver of or prejudice to any rights or remedies available to
the undersigned on account of unpaid amounts and shall not constitute a defense
in any collection proceedings. Nothing contained herein shall entitle the
Company or any other party to further notice or demand.
[Signature Page Follows]
Very truly yours,
Pequot Private Equity Fund III, L.P.
By: Pequot Capital Management, Inc., its Investment Manager
By: /s/ Xxxxxx Xxxxxxxxx
Name: Xxxxxx Xxxxxxxxx
Title: CFO, Pequot Ventures
Pequot Offshore Private Equity Partners III, L.P.
By: Pequot Capital Management, Inc., its Investment Manager
By: /s/ Xxxxxx Xxxxxxxxx
Name: Xxxxxx Xxxxxxxxx
Title: CFO, Pequot Ventures
cc: Xxxxxx & Whitney LLP
00 Xxxxxxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxx 00000-0000
Attn: Xxxxx Xxxxxxxx, Esq.
cc: Proskauer Rose LLP
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxx X. Xxxxxxx, Esq.
