EXHIBIT 11
September 27, 2006
By Facsimile and Overnight Courier
----------------------------------
Pequot Offshore Private Equity Partners III, L.P.
c/o Pequot Capital Management, Inc.
000 Xxxxx Xxxx Xxxx
Xxxxxxxx, XX 00000
Attn: Xxxxx Xxxxx, Xxxxxx Xxxxxxxxx
Re: Subordination Agreement dated as of December 30, 2005 between Pequot
Offshore Private Equity Partners III, L.P., and Square 1 Bank (the "Agreement")
Dear Messrs. Xxxxx and Xxxxxxxxx:
This letter constitutes a Payment Blockage Notice as defined in the Agreement.
Pursuant to the terms of the Agreement, Pequot may not exercise any remedy with
respect to Borrower nor receive any payment, other than as specifically set
forth in the Agreement, from the date of this notice through the period
specified in the Agreement.
The attached September 15, 2006 Notice of Default to Irvine Sensors Corporation
(the "Borrower") formally notified the Borrower of its default under section
6.7(b) of the Loan and Security Agreement between the Borrower and Square 1
Bank.
Please contact the undersigned if you have any questions.
Very truly yours,
/s/ Xxxxxxx Xxxxxxx
Xxxxxxx Xxxxxxx
Senior Vice President
Regional Manager
cc: Proskauer Rose LLP
0000 Xxxxxxxx
Xxx Xxxx, XX 00000-0000
Attn: Xxxx X. Xxxxxxx, Esq.
Square 1 Bank
000 Xxxxxxxxx Xx. Xxx. 000
Xxxxxx, XX 00000
Office (919)-314-3040
Fax (000)-000-0000
September 15, 2006
Xxxx Xxxxxx
Chief Financial Officer
Irvine Sensors Corporation
0000 Xxx Xxxx Xxxxxx, Xxxxxxxx 0, Xxxxx 000
Xxxxx Xxxx, XX 00000-0000
Re: Square 1 Bank Loan and Security Agreement Violation
Dear Xxxx:
With reference to the Loan and Security Agreement between Irvine Sensors
Corporation ("Borrower") and Square 1 Bank ("Bank") dated December 30th, 2005
(as amended, the "Agreement"), the Borrower is in violation of the Debt Service
Coverage Ratio financial covenant, as more particularly described in Section
6.7(b) of the Agreement, for the period ending July 31, 2006. Under the terms of
the Agreement, Borrower is required to meet a Debt Service Coverage Ratio of 1.2
to 1.00. For the period ending July 31, 2006 the Debt Service Coverage Ratio was
(0.94):1.00.
Borrower is also in default under Section 8.6 of the Agreement as a result of
Borrower's default under the Pequot Notes referenced in Borrower's Form 10-Q
filed with the Securities and Exchange Commission on August 21, 2006.
This letter constitutes a notice of default and does not modify the Agreement or
constitute a waiver of any current or future violation of the terms and
conditions of the Agreement, including, without limitation, those referenced in
that certain letter sent by the Bank on August 2, 2006. Please be advised that
the Bank will not advance to Borrower any additional funds under the Agreement
during the continuance of the default described in this letter, Bank reserves
the right to exercise its rights and remedies against Borrower in connection
with this breach or any other breach.
Very truly yours,
/s/ Xxxxxxx Xxxxxxx
Xxxxxxx Xxxxxxx
Senior Vice President
Regional Manager
Square 1 Bank
000 Xxxxxxxxx Xx. Xxx. 000
Xxxxxx, XX 00000
Office (919)-314-3040
Fax (000)-000-0000
September 27, 2006
Pequot Private Equity Fund III, L.P.
c/o Pequot Capital Management, Inc.
000 Xxxxx Xxxx Xxxx
Xxxxxxxx, XX 00000
Attn: Xxxxx Xxxxx; Xxxxxx Xxxxxxxxx
Re: Subordination Agreement dated as of December 30, 2005 between Pequot
Private Equity Fund III, L.P., and Square 1 Bank (the "Agreement")
Dear Messrs. Xxxxx and Xxxxxxxxx:
This letter constitutes a Payment Blockage Notice as defined in the Agreement.
Pursuant to the terms of the Agreement, Pequot may not exercise any remedy with
respect to Borrower nor receive any payment, other than as specifically set
forth in the Agreement, from the date of this notice through the period
specified in the Agreement.
The attached September 15, 2006 Notice of Default to Irvine Sensors Corporation
(the "Borrower") formally notified the Borrower of its default under section
6.7(b) of the Loan and Security Agreement between the Borrower and Square 1
Bank.
Please contact the undersigned if you have any questions.
Very truly yours,
/s/ Xxxxxxx Xxxxxxx
Xxxxxxx Xxxxxxx
Senior Vice President
Regional Manager
cc: Proskauer Rose LLP
0000 Xxxxxxxx
Xxx Xxxx, XX 00000-0000
Attn: Xxxx X. Xxxxxxx, Esq.
Square 1 Bank
000 Xxxxxxxxx Xx. Xxx. 000
Xxxxxx, XX 00000
Office (919)-314-3040
Fax (000)-000-0000
September 15, 2006
Xxxx Xxxxxx
Chief Financial Officer
Irvine Sensors Corporation
0000 Xxx Xxxx Xxxxxx, Xxxxxxxx 0, Xxxxx 000
Xxxxx Xxxx, XX 00000-0000
Re: Square 1 Bank Loan and Security Agreement Violation
Dear Xxxx:
With reference to the Loan and Security Agreement between Irvine Sensors
Corporation ("Borrower") and Square 1 Bank ("Bank") dated December 30th, 2005
(as amended, the "Agreement"), the Borrower is in violation of the Debt Service
Coverage Ratio financial covenant, as more particularly described in Section
6.7(b) of the Agreement, for the period ending July 31, 2006. Under the terms of
the Agreement, Borrower is required to meet a Debt Service Coverage Ratio of 1.2
to 1.00. For the period ending July 31, 2006 the Debt Service Coverage Ratio was
(0.94):1.00.
Borrower is also in default under Section 8.6 of the Agreement as a result of
Borrower's default under the Pequot Notes referenced in Borrower's Form 10-Q
filed with the Securities and Exchange Commission on August 21, 2006.
This letter constitutes a notice of default and does not modify the Agreement or
constitute a waiver of any current or future violation of the terms and
conditions of the Agreement, including, without limitation, those referenced in
that certain letter sent by the Bank on August 2, 2006. Please be advised that
the Bank will not advance to Borrower any additional funds under the Agreement
during the continuance of the default described in this letter. Bank reserves
the right to exercise its rights and remedies against Borrower in connection
with this breach or any other breach.
Very truly yours,
/s/ Xxxxxxx Xxxxxxx
Xxxxxxx Xxxxxxx
Senior Vice President
Regional Manager
Square 1 Bank
000 Xxxxxxxxx Xx. Xxx. 000
Xxxxxx, XX 00000
Office (919)-314-3040
Fax (000)-000-0000
