Exhibit 10.1

AMENDMENT NO. 1 AND LIMITED WAIVER

TO

LOAN AND SECURITY AGREEMENT

THIS AMENDMENT NO. 1 AND LIMITED WAIVER TO LOAN AND SECURITY AGREEMENT (this
“First Amendment”), dated as of March 31, 2010, is entered into by and between
VIRAGE LOGIC CORPORATION, a Delaware corporation (“Borrower”), and SILICON
VALLEY BANK, a California banking corporation (“Bank”). Capitalized terms used
herein without definition shall have the same meanings given them in the Loan
Agreement (as defined below).

RECITALS

A. Borrower and Bank have entered into that certain Loan and Security Agreement
dated as of December 1, 2009 (as amended to date, and as may be further amended,
modified, supplemented or restated from time to time, the “Loan Agreement”),
pursuant to which Bank has agreed to extend and make available to Borrower
certain advances of money.

B. Borrower is currently in default of the Loan Agreement for failing to comply
with the covenants set forth in Sections 6.2(b), (c) and (d) of the Loan
Agreement for the fiscal periods ending December 31, 2009, January 31, 2010 and
February 28, 2010 and Section 6.2(a)(ii) to date (collectively, the “Existing
Defaults”) and has requested that Bank waive the Existing Defaults.

C. Further, Borrower desires that Bank amend the Loan Agreement to extend the
delivery dates of certain post-closing items and postpone the requirements of
Borrower to comply with the covenants set forth in Sections 6.2 and 6.7 of the
Loan Agreement upon the terms and conditions more fully set forth herein.

D. Subject to the representations and warranties of Borrower herein and upon the
terms and conditions set forth in this First Amendment, Bank is willing to waive
the Existing Defaults and so amend the Loan Agreement.

AGREEMENT

NOW, THEREFORE, in consideration of the foregoing Recitals and the covenants and
agreements contained herein and in the other Loan Documents and intending to be
legally bound, the parties hereto agree as follows:

1. LIMITED WAIVER. Bank hereby agrees, subject to the satisfaction of the
conditions set forth in Section 5 hereof, to waive the Existing Defaults.

2. AMENDMENTS TO LOAN AGREEMENT. Subject to the satisfaction of the conditions
set forth in Section 5 hereof, the Loan Agreement is hereby amended as follows:

2.1 Amendment to Section 3.4 (Post-Closing Conditions). Bank hereby acknowledges
that it has timely received (i) insurance certificates with respect to the
Domestic

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Subsidiaries acquired in connection with the Atlas Acquisition and Platinum
Acquisition and (ii) an executed control agreement for Borrower’s accounts at
UBS Financial Services, Inc., both as required by Section 3.4 of the Loan
Agreement prior to the effectiveness of this Amendment. Section 3.4 of the Loan
Agreement is now hereby amended and restated in its entirety to read as follows:

“3.4 Post-Closing Conditions.

(a) On or before the earlier of the delivery date of the initial Notice of
Borrowing or June 30, 2010, Bank shall have received, in form and substance
satisfactory to Bank, (i) all requirements necessary to perfect Bank’s security
interest with respect to the assets of the Domestic Subsidiaries acquired in
connection with the Atlas Acquisition and Platinum Acquisition and any other
requirements necessary to perfect Bank’s security interest in their respective
assets, including without limitation, landlord agreements, intellectual property
security agreements, control agreements and equity certificates (if any) of the
Guarantors with assignment executed in blank (including all of the Subsidiaries
of the Borrower), (ii) an updated or a separate Perfection Certificate to
reflect the Atlas Acquisition and Platinum Acquisition, (iii) an opinion with
respect to the Domestic Subsidiaries (other than ARC International Nashua, Inc.)
acquired in connection with the Atlas Acquisition and Platinum Acquisition and
(iv) executed officer’s certificates for the Domestic Subsidiaries (other than
ARC International Nashua, Inc.) acquired in connection with the Atlas
Acquisition and Platinum Acquisition including the ratified resolutions and
other attachments thereto.

(b) Borrower shall use best efforts to deliver to Bank, on or before the earlier
of the delivery date of the initial Notice of Borrowing or June 30, 2010,
executed landlords’ consents (in form and substance reasonably satisfactory to
Bank) with respect to the 47100 Bayside Parkway, Fremont, California 94538 and
1341 N. Northlake Way, Seattle, Washington 98103 locations, each in favor of
Bank.”

2.2 Amendment to Section 6.2 (Financial Statements, Reports, Certificates).
Section 6.2 of the Loan Agreement is hereby amended and restated in its entirety
to read as follows:

“6.2 Financial Statements, Reports, Certificates.

(a) Deliver to Bank: (i) as soon as available, but no later than five (5) days
after filing with the Securities Exchange Commission, Borrower’s 10-K, 10-Q, and
8-K reports (provided however, in no event shall audited annual financial
statements be delivered later than 150 days of fiscal year end), except that
Borrower shall be required to deliver its 10-Q reports to Bank beginning the
earlier of the delivery date of the initial Notice of Borrowing or June 30, 2010
but not before such date; (ii) a Compliance Certificate together with delivery
of the 10-K and 10-Q reports setting forth calculations showing compliance with
the financial covenants set forth herein; (iii) no later than January 31st after
the end of each fiscal year, annual financial projections for the following
fiscal year (on a quarterly basis) as approved by Borrower’s board of directors,
together with any related business forecasts used in the preparation of such
annual financial projections; (iv) a prompt report of any legal actions pending
or threatened against

 

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Borrower or any Subsidiary that could result in damages or costs to Borrower or
any Subsidiary of $250,000 or more; (v) budgets, sales projections, operating
plans or other financial information Bank reasonably requests; and (vi) within
five (5) days after the same are sent or received, copies of all correspondence,
reports, documents and other filings with any Governmental Authority regarding
compliance with or maintenance of Governmental Approvals or Requirements of Law
or that could reasonably be expected to have a material effect on any of the
Governmental Approvals or otherwise on the operations of Borrower or any of its
Subsidiaries.

Borrower’s 10-K, 10-Q, and 8-K reports required to be delivered pursuant to
Section 6.2(a)(i) shall be deemed to have been delivered on the date on which
Borrower posts such report or provides a link thereto on Borrower’s or another
website on the Internet; provided, that Borrower shall provide copies to Bank of
the Compliance Certificates required by Section 6.2(a)(ii).

(b) Beginning the earlier of the delivery date of the initial Notice of
Borrowing or June 30, 2010, deliver to Bank a duly completed Transaction Report
signed by a Responsible Officer, with aged listings of accounts receivable and
accounts payable (by invoice date), within thirty (30) days after the last day
of each month, unless no amounts are outstanding under the Revolving Line,
within thirty (30) days after the last day of each fiscal quarter, but in any
event prior to an Advance.

(c) Beginning the earlier of the delivery date of the initial Notice of
Borrowing or June 30, 2010, deliver to Bank its monthly financial statements
together with a duly completed Compliance Certificate signed by a Responsible
Officer setting forth calculations showing compliance with the financial
covenants set forth in this Agreement within thirty (30) days after the last day
of each month, unless no amounts are outstanding under the Revolving Line, then
within thirty (30) days after the last day of each fiscal quarter, but in any
event prior to an Advance.

(d) Beginning the earlier of the delivery date of the initial Notice of
Borrowing or June 30, 2010, within 30 days after the last day of each quarter,
deliver to Bank a cash balance report, including account statements detailing
cash management types of investments held and maturity dates.

(e) Allow Bank to audit Borrower’s Collateral at Borrower’s expense. Such audits
shall be conducted no more often than once every six months unless an Event of
Default has occurred and is continuing.”

2.3 Amendment to Section 6.7 (Financial Covenants). Section 6.7 of the Loan
Agreement is hereby amended and restated in its entirety to read as follows:

“6.7 Financial Covenants.

(a) Beginning the earlier of the delivery date of the initial Notice of
Borrowing or June 30, 2010, Borrower shall maintain a consolidated Liquidity
Ratio of at least 1.50:1.00 as of the last day of each month, unless no amounts
are outstanding under the Revolving Line, then as of the last day of each
quarter.

 

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(b) Beginning the earlier of the delivery date of the initial Notice of
Borrowing or June 30, 2010, Borrower shall maintain as of the last day of each
fiscal quarter, consolidated EBITDA of at least the following:

 

Period

   Minimum EBITDA  

March 31, 2010

   $ (500,000 ) 

June 30, 2010

   $ 1   

September 30, 2010 and each quarter thereafter

   $ 1,000,000   

(c) On the earlier of the delivery date of the initial Notice of Borrowing or
June 30, 2010 and at all times thereafter, Borrower shall maintain consolidated
domestic unrestricted cash of Borrower of at least $10,000,000; provided,
however, if Borrower requests an initial Advance prior to March 30, 2010,
Borrower shall maintain at all times between the date of such request and
June 29, 2010, consolidated domestic unrestricted cash of Borrower of at least
$15,000,000.”

2.4 Amendment to Section 13 (Definitions). The definition of “EBITDA” in
Section 13 of the Loan Agreement is hereby amended and restated as follows:

““EBITDA” shall mean (a) net income, plus to the extent deducted in the
calculation of net income (and without duplication), (b) interest expense, plus
(c) depreciation expense and amortization expense, plus (d) income tax expense,
plus (e) stock compensation expense, plus (f) one time restructuring expenses of
up to $5,000,000 related to the Atlas Acquisition and Platinum Acquisition
incurred prior to June 30, 2010.”

2.5 Amendment to Exhibit C (Compliance Certificate). Exhibit C of the Loan
Agreement is hereby amended and restated in its entirety and attached hereto as
Exhibit C.

3. BORROWER REPRESENTATIONS AND WARRANTIES. Borrower represents and warrants
that:

(a) immediately upon giving effect to this First Amendment (i) the
representations and warranties contained in the Loan Documents are true,
accurate and complete in all material respects as of the date hereof (except to
the extent such representations and warranties relate to an earlier date, in
which case they are true and correct as of such date), and (ii) no Event of
Default has occurred and is continuing;

(b) Borrower has the corporate power and authority to execute and deliver this
First Amendment and to perform its obligations under the Loan Agreement, as
amended by this First Amendment;

 

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(c) the certificate of incorporation, bylaws and other organizational documents
of Borrower delivered to Bank on the Effective Date remain true, accurate and
complete and have not been amended, supplemented or restated and are and
continue to be in full force and effect;

(d) the execution and delivery by Borrower of this First Amendment and the
performance by Borrower of its obligations under the Loan Agreement, as amended
by this First Amendment, have been duly authorized by all necessary corporate
action on the part of Borrower;

(e) this First Amendment has been duly executed and delivered by Borrower and is
the binding obligation of Borrower, enforceable against it in accordance with
its terms, except as such enforceability may be limited by bankruptcy,
insolvency, reorganization, liquidation, moratorium or other similar laws of
general application and equitable principles relating to or affecting creditors’
rights; and

(f) as of the date hereof, it has no defenses against the obligations to pay any
amounts under the Obligations. Borrower acknowledges that Bank has acted in good
faith and has conducted in a commercially reasonable manner its relationships
with Borrower in connection with this First Amendment and in connection with the
Loan Documents.

Borrower understands and acknowledges that Bank is entering into this First
Amendment in reliance upon, and in partial consideration for, the above
representations and warranties, and agrees that such reliance is reasonable and
appropriate.

4. LIMITATION. The limited waiver and amendments set forth in this First
Amendment shall be limited precisely as written and shall not be deemed (a) to
be a forbearance, waiver or modification of any other term or condition of the
Loan Agreement or of any other instrument or agreement referred to therein or to
prejudice any right or remedy which Bank may now have or may have in the future
under or in connection with the Loan Agreement or any instrument or agreement
referred to therein; (b) to be a consent to any future amendment or
modification, forbearance or waiver to any instrument or agreement the execution
and delivery of which is consented to hereby, or to any waiver of any of the
provisions thereof; or (c) to limit or impair Bank’s right to demand strict
performance of all terms and covenants as of any date. Except as expressly
amended hereby, the Loan Agreement shall continue in full force and effect.

5. EFFECTIVENESS. This Amendment shall become effective as of January 1, 2010
upon the satisfaction of all the following conditions precedent:

5.1 Amendment. Borrower and Bank shall have duly executed and delivered this
First Amendment to Bank.

5.2 Reaffirmation of Guaranty. The Guarantors shall have duly executed and
delivered the Reaffirmation of Guaranty, attached as Schedule 1 hereto.

 

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5.3 Payment of Bank Expenses. Borrower shall have paid all Bank Expenses
(including all reasonable attorneys’ fees and reasonable expenses) incurred
through the date of this First Amendment.

6. COUNTERPARTS. This First Amendment may be signed in any number of
counterparts, and by different parties hereto in separate counterparts, with the
same effect as if the signatures to each such counterpart were upon a single
instrument. All counterparts shall be deemed an original of this First
Amendment.

7. INTEGRATION. This First Amendment and any documents executed in connection
herewith or pursuant hereto contain the entire agreement between the parties
with respect to the subject matter hereof and supersede all prior agreements,
understandings, offers and negotiations, oral or written, with respect thereto
and no extrinsic evidence whatsoever may be introduced in any judicial or
arbitration proceeding, if any, involving this First Amendment; except that any
financing statements or other agreements or instruments filed by Bank with
respect to Borrower shall remain in full force and effect.

8. GOVERNING LAW; VENUE. THIS AMENDMENT SHALL BE GOVERNED BY AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA.
Borrower and Bank submit to the exclusive jurisdiction of the state and federal
courts in Santa Clara County, California.

[Signature page follows]

 

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IN WITNESS WHEREOF, the parties hereto have caused this First Amendment to be
executed as of the date first written above.

 

BORROWER:  

VIRAGE LOGIC CORPORATION,

a Delaware corporation

  By  

 

  Name:  

 

  Title:  

 

BANK:   SILICON VALLEY BANK   By  

 

  Name:  

 

  Title:  

 

 

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SCHEDULE 1

REAFFIRMATION OF GUARANTY

This Reaffirmation of Guaranty is entered into as of March 31, 2010 by each of
the undersigned (each a “Guarantor”, and together, the “Guarantors”) in favor of
Silicon Valley Bank (“Bank”).

Whereas, the Guarantors executed and delivered to Bank an Unconditional Secured
Guaranty, dated as of December 1, 2009 (as may be amended, restated,
supplemented or otherwise modified from time to time, the “Guaranty”), with
respect to the obligations of Virage Logic Corporation, a Delaware corporation
(“Borrower”), under that certain Loan and Security Agreement by and between
Borrower and Bank, dated as of December 1, 2009 (as may be amended, restated,
supplemented or otherwise modified from time to time, the “Loan Agreement”); and

Whereas, Borrower and Bank are amending the Loan Agreement pursuant to that
certain Amendment No. 1 and Limited Waiver to Loan and Security Agreement, dated
as of the date hereof (the “Amendment”), to extend the delivery date of certain
post-closing items under the Loan Agreement. Capitalized terms used herein
without definition shall have the same meanings given them in the Loan
Agreement.

Now therefore, for valuable consideration, receipt of which is acknowledged,
each Guarantor hereby agrees as follows:

1. Reaffirmation of Guaranty. Such Guarantor hereby ratifies and reaffirms its
obligations under the Guaranty and agrees that none of the modifications or
waivers to the Loan Agreement as set forth in the Amendment shall impair such
Guarantor’s obligations under the Guaranty or Bank’s rights under the Guaranty.

2. Continuing Effect and Absence of Defenses. Such Guarantor acknowledges that
the Guaranty is still in full force and effect and that such Guarantor has no
defenses, other than actual payment of the guaranteed obligations, to
enforcement of the Guaranty. Such Guarantor waives any and all defenses to
enforcement of its Guaranty that might otherwise be available as a result of the
amendment of the Loan Agreement.

3. Representations and Warranties. Such Guarantor represents and warrants that,
after giving effect to the Amendment, all representations and warranties in the
Guaranty are true, accurate and complete as if made the date hereof.

[Signature page follows]

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IN WITNESS WHEREOF, the undersigned Guarantors have executed this Reaffirmation
of Guaranty as of the date first written above.

 

VIRAGE LOGIC INTERNATIONAL By  

 

Name:  

 

Title:  

 

ARC INTERNATIONAL U.S. HOLDINGS, INC. By  

 

Name:  

 

Title:  

 

ARC INTERNATIONAL INTELLECTUAL PROPERTY, INC. By  

 

Name:  

 

Title:  

 

ARC INTERNATIONAL I.P., INC. By  

 

Name:  

 

Title:  

 

ALARITY CORPORATION By  

 

Name:  

 

Title:  

 

SONIC FOCUS INC. By  

 

Name:  

 

Title:  

 

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EXHIBIT C

COMPLIANCE CERTIFICATE

 

TO:    SILICON VALLEY BANK    Date:                         FROM:    VIRAGE
LOGIC CORPORATION      

The undersigned authorized officer of VIRAGE LOGIC CORPORATION (“Borrower”)
certifies that under the terms and conditions of the Loan and Security Agreement
(as amended, modified, supplemented or restated from time to time, the
“Agreement”) between Borrower and SILICON VALLEY BANK (“Bank”), (1) Borrower is
in complete compliance for the period ending                      with all
required covenants except as noted below, (2) there are no Events of Default,
(3) all representations and warranties in the Agreement are true and correct in
all material respects on this date except as noted below; provided, however,
that such materiality qualifier shall not be applicable to any representations
and warranties that already are qualified or modified by materiality in the text
thereof; and provided, further that those representations and warranties
expressly referring to a specific date shall be true, accurate and complete in
all material respects as of such date, (4) Borrower, and each of its
Subsidiaries, has timely filed all required tax returns and reports, and
Borrower has timely paid all foreign, federal, state and local taxes,
assessments, deposits and contributions owed by Borrower except as otherwise
permitted pursuant to the terms of Section 5.10 of the Agreement, and (5) no
Liens have been levied or claims made against Borrower or any of its
Subsidiaries relating to unpaid employee payroll or benefits of which Borrower
has not previously provided written notification to Bank. Attached are the
required documents supporting the certification. The undersigned certifies that
these are prepared in accordance with GAAP consistently applied from one period
to the next except as explained in an accompanying letter or footnotes. The
undersigned acknowledges that no borrowings may be requested at any time or date
of determination that Borrower is not in compliance with any of the terms of the
Agreement, and that compliance is determined not just at the date this
certificate is delivered. Capitalized terms used but not otherwise defined
herein shall have the meanings given them in the Agreement.

Please indicate compliance status by circling Yes/No under “Complies” column.

 

Reporting Covenant

  

Required

   Complies Transaction Report (for purposes of reporting sales, credit memos
and other collateral adjustments)    Monthly within 30 days, unless no Advances
are outstanding, then quarterly within 30 days; commencing the earlier of
initial Advance or 6/30/2010    Yes     No     Monthly unaudited financial
statements with Compliance Certificate    Monthly within 30 days, unless no
Advances are outstanding, then quarterly within 30 days; commencing the earlier
of initial Advance or 6/30/2010    Yes     No     Annual financial statement
(CPA Audited)    FYE within 150 days    Yes     No     Financial projections,
and/or financial information used in the preparation thereof    No later than
1/31st of FYE    Yes    No     10-Q, 10-K and 8-K if not available on EDGAR   
Within 5 days after filing with SEC    Yes    No     A/R & A/P Agings Report   
Monthly within 30 days, unless no Advances are outstanding, then quarterly
within 30 days; commencing the earlier of initial Advance or 6/30/2010   
Yes    No     Cash balance report    Quarterly within 30 days; commencing the
earlier of initial Advance or 6/30/2010    Yes    No    

 

Financial Covenant

  

Required

   Actual    Complies

I.      Minimum Liquidity Ratio

   1.50:1.00              :1.00    Yes    No    

II.     Minimum EBITDA

   SEE SCHEDULE I ATTACHED HERETO    $                 Yes    No    

III.   Minimum domestic unrestricted cash of Borrower

   $10,000,000 at all times; provided, however, $15,000,000 through 6/29/10 if
initial Advance is requested before 3/30/10    $                 Yes    No    

 

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The following financial covenant information set forth in Schedule 1 attached
hereto is true and accurate as of the date of this Certificate.

The following are the exceptions with respect to the certification above (if no
exceptions exist, state “No exceptions to note”):

 

 

 

 

 

 

 

VIRAGE LOGIC CORPORATION

    BANK USE ONLY By:  

 

    Received by:  

 

Name:  

 

      AUTHORIZED SIGNER Title:  

 

   

 

Date:

 

 

      Verified:  

 

        AUTHORIZED SIGNER       Date:  

 

      Compliance Status:            Yes         No

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Schedule 1 to Compliance Certificate

In the event of a conflict between this Schedule and the Loan Agreement, the
terms of the Loan Agreement shall govern.

Dated:                     

I. Beginning the earlier of the delivery date of the initial Notice of Borrowing
or June 30, 2010, maintain a minimum consolidated Liquidity Ratio of at least
1.50:1.00 (tested monthly; provided, however, if no amounts are outstanding
under the Revolving Line, then tested quarterly)

Actual:

 

A.

   Domestic unrestricted cash and Cash Equivalents under Bank’s “control” (as
defined under the Code)    $             

B.

   Domestic short and long term investments    $             

C.

   Eligible Accounts    $             

D.

   Liquidity (A+B+C)    $             

E.

   All outstanding consolidated indebtedness    $             

F.

   Line D divided by Line E    $             

Is line F equal to or greater than 1.50:1.00?

 

 

             No, not in compliance

                Yes, in compliance   

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II. Beginning the earlier of the delivery date of the initial Notice of
Borrowing or June 30, 2010, maintain minimum consolidated EBITDA of at least the
following (tested quarterly)

 

Period

   Minimum EBITDA  

March 31, 2010

   $ (500,000 ) 

June 30, 2010

   $ 1   

September 30, 2010 and each quarter thereafter

   $ 1,000,000   

Actual:

 

A.    Net income of Borrower for the current quarter    $             B.    To
the extent included in the determination of Net Income      

1.      income tax expense

   $               

2.      depreciation expense

   $               

3.      amortization expense

   $               

4.      net interest expense

   $               

6.      stock-based compensation expense

   $               

7.       one time restructuring expenses of up to $5,000,000 related to the
Atlas Acquisition and Platinum Acquisition incurred prior to June 30, 2010

   $               

8.      the sum of lines II.B.1 through II.B.7

   $             C.    EBITDA (line II.A plus line II.B.8)    $            

Is line II.C equal to or greater than $             ?

 

 

             No, not in compliance

                Yes, in compliance   

III. Beginning the earlier of the delivery date of the initial Notice of
Borrowing or June 30, 2010, maintain at all times, consolidated domestic
unrestricted cash of Borrower of at least $10,000,000; provided, however, if
Borrower requests an initial Advance prior to March 30, 2010, Borrower shall
maintain at all times between the date of such request and June 29, 2010,
consolidated domestic unrestricted cash of Borrower of at least $15,000,000.

Actual:

 

A.

   Consolidated domestic unrestricted cash of Borrower    $             

Is line III(A) equal to or greater than the amounts required above?

 

 

             No, not in compliance

                Yes, in compliance