Exhibit 10.10.5

THIRD AMENDMENT TO SECOND AMENDED AND RESTATED
LOAN AGREEMENT

          THIS THIRD AMENDMENT tO SECOND AMENDED aND RESTATED LOAN
AGREEMENT(“Amendment”) is made and entered into as of February 9, 2006 by and
between LOGICVISION, INC., a Delaware corporation (“Borrower”), and COMERICA
BANK, successor by merger to Comerica Bank-California  (“Bank”).

RECITALS

          A.          Borrower and Bank have entered into that certain Second
Amended and Restated Loan Agreement dated as of February 9, 2004, as amended by
that certain First Amendment to Second Amended and Restated Loan Agreement dated
as of December 29, 2004 and that certain Second Amendment to Second Amended and
Restated Loan Agreement dated as of January 31, 2005 (collectively, the “Loan
Agreement”) pursuant to which Bank has agreed to extend and make available to
Borrower certain credit facilities.

          B.          Borrower desires that Bank amend the Loan Agreement upon
the terms and conditions more fully set forth herein.

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

          D.          This Amendment, the Loan Agreement and the other Loan
Documents (as defined in the Loan Agreement), together with all other documents
entered into or delivered pursuant to any of the foregoing, in each case as
originally executed or as the same may from time to time be modified, amended,
supplemented, restated or superseded are hereinafter collectively referred to as
the “Loan Documents.”

AGREEMENT

          Now, THEREFORE, in consideration of the foregoing recitals and the
mutual covenants herein set forth and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, and intending to
be legally bound, Borrower and Bank hereby agree to amend the Loan Agreement as
follows:

                       1.          Definitions.  Unless otherwise defined
herein, all terms defined in the Loan Agreement have the same meaning when used
herein.

                       2.          Limited Waiver.  Subject to the terms and
conditions set forth herein and in reliance upon the representations and
warranties of Borrower set forth herein, Bank hereby waives the violation of the
following financial covenants for the indicated periods:

Financial Covenant

 

Frequency

 

Actual ($ 000’s)/
Time Period

 

Required ($ 000’s)

 

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Unrestricted Cash (Section 6.7)

 

 

Quarterly

 

 

$14,175/September 30, 2005

 

 

$20,000 (minimum)

 

Unrestricted Cash (Section 6.7)

 

 

Quarterly

 

 

$10,696/December 31, 2005

 

 

$20,000 (minimum)

 

Maximum Net Loss (minimum net profit) (Section 6.10)

 

 

Rolling 2Q

 

 

($5,473)/December 31, 2005

 

 

+$1 (minimum)

 

          This waiver is one-time only, is limited precisely as written, and
shall not be deemed to be a consent to the breach of the above-referenced
covenants for any other time period, or the breach of any other covenant.

                       3.          Amendments to Loan Agreement.

                                    a.          The definition of “Credit
Extension” contained in Section 1.1 of the Loan Agreement is hereby amended and
restated in its entirety to read as follows:

          “Credit Extension” means each Advance, Letter of Credit, Exchange
Contract, or any other extension of credit by Bank for the benefit of Borrower
hereunder.

                                    b.          The definition of “Revolving
Line” contained in Section 1.1 of the Loan Agreement is hereby amended and
restated in its entirety to read as follows:

          “Revolving Line” means a credit extension of up to One Million Dollars
($1,000,000).

                                    c.          The definition of “Revolving
Maturity Date” contained in Section 1.1 of the Loan Agreement is hereby amended
and restated in its entirety to read as follows:

          “Revolving Maturity Date” means February 28, 2007.

                                    d.          Section 2.1(b) of the Loan
Agreement is hereby deleted.

                                    e.          Section 2.1(d) of the Loan
Agreement is amended (a) by deleting “$1,000,000” in the tenth line thereof and
substituting “$2,000,000” therefor and (b) by deleting “$100,000” in the
thirteenth line thereof and substituting “$200,000” therefor.

                                    f.          Section 6.6 of the Loan
Agreement (“Principal Depository”) is hereby amended and restated in its
entirety to read as follows:

          “6.6          Principal Depository.  Borrower shall maintain its
principal depository, operating, and investment accounts with Bank or Bank’s
Affiliates.”

                                    g.          Section 6.7 of the Loan
Agreement (“Unrestricted Cash”) is hereby amended and restated in its entirety
to read as follows:

          “6.7          Unrestricted Cash.  Borrower shall maintain a balance of
unrestricted cash and cash equivalents (including securities which have a
maturity of two years or less if they are considered “Available for Sale” or
“Held-to-Maturity” Investments” under GAAP and Financial Accounting Standards
Board 115), minus Indebtedness to Bank, of at least Five Million Dollars
($5,000,000) during each fiscal quarter.”

                                    h.          Section 6.8 of the Loan
Agreement (“Total Liabilities-Tangible Net Worth”) is hereby amended and
restated in its entirety to read as follows:

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          “6.8          Total Liabilities-Tangible Net Worth.  Borrower shall
maintain, as of the last day of each fiscal quarter, a ratio of Total
Liabilities less Deferred Revenue to Tangible Net Worth of not more than 1.00 to
1.00.”

                                    i.          Section 6.10 of the Loan
Agreement (Quarterly Net Loss; Profitability) is hereby deleted.

                                    j.          Section 7.3 of the Loan
Agreement is amended by deleting “Ten Million Dollars ($10,000,000)” from clause
(iv) thereof and substituting therefor “One Million Dollars ($1,000,000)”.

                                    k.           Section 7.13 of the Loan
Agreement is amended by deleting “Four Million Dollars ($4,000,000)” therefrom
and substituting therefor “Seven Hundred and Fifty Thousand Dollars ($750,000)”.

                                    l.          The Bank’s address set forth in
Section 10 of the Loan Agreement is hereby amended as follows:

 

“If to Bank:

 

Comerica Bank

 

 

 

75 East Trimble Road

 

 

 

Mail Code 4770

 

 

 

San Jose, CA  95131

 

 

 

FAX:  (408) 556-5091

 

 

 

 

 

with a copy to:

 

Comerica Bank

 

 

 

Technology & Life Sciences Division

 

 

 

226 Airport Parkway

 

 

 

1st Floor, M/C 4120

 

 

 

San Jose, CA 95110

 

 

 

Attn:  Guy Simpson

 

 

 

FAX:  (408) 451-8569”

                                    m.          Section 11 of the Loan Agreement
is hereby amended and restated in its entirety to read as follows:

          “11.           CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER; JUDICIAL
REFERENCE.

                            This Agreement shall be governed by, and construed
in accordance with, the internal laws of the State of California, without regard
to principles of conflicts of law.  Each of Borrower and Bank hereby submits to
the exclusive jurisdiction of the state and Federal courts located in the County
of Santa Clara, State of California.  THE UNDERSIGNED ACKNOWLEDGE THAT THE RIGHT
TO TRIAL BY JURY IS A CONSTITUTIONAL ONE, BUT THAT IT MAY BE WAIVED UNDER
CERTAIN CIRCUMSTANCES.  TO THE EXTENT PERMITTED BY LAW, EACH PARTY, AFTER
CONSULTING (OR HAVING HAD THE OPPORTUNITY TO CONSULT) WITH COUNSEL OF ITS
CHOICE, KNOWINGLY AND VOLUNTARILY, AND FOR THE MUTUAL BENEFIT OF ALL PARTIES,
WAIVES ANY RIGHT TO TRIAL BY JURY IN THE EVENT OF LITIGATION ARISING OUT OF OR
RELATED TO THIS AGREEMENT OR ANY OTHER DOCUMENT, INSTRUMENT OR AGREEMENT BETWEEN
THE UNDERSIGNED PARTIES.

                            In the event the jury trial waiver set forth above
is not enforceable, the parties elect to proceed under the following Judicial
Reference Provision.

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                                 (a)          With the exception of the items
specified in clause (b), below, any controversy, dispute or claim (each, a
“Claim”) between the parties arising out of or relating to this Agreement or any
other document, instrument or agreement between the undersigned parties
(collectively in this Section, the “Comerica Documents”), will be resolved by a
reference proceeding in California in accordance with the provisions of Sections
638 et seq. of the California Code of Civil Procedure (“CCP”), or their
successor sections, which shall constitute the exclusive remedy for the
resolution of any Claim, including whether the Claim is subject to the reference
proceeding. Except as otherwise provided in the Comerica Documents, venue for
the reference proceeding will be in the state or federal court in the county or
district where the real property involved in the action, if any, is located or
in the state or federal court in the county or district where venue is otherwise
appropriate under applicable law (the “Court”).

                                 (b)          The matters that shall not be
subject to a reference are the following: (i) nonjudicial foreclosure of any
security interests in real or personal property, (ii) exercise of self-help
remedies (including, without limitation, set-off), (iii) appointment of a
receiver and (iv) temporary, provisional or ancillary remedies (including,
without limitation, writs of attachment, writs of possession, temporary
restraining orders or preliminary injunctions). This reference provision does
not limit the right of any party to exercise or oppose any of the rights and
remedies described in clauses (i) and (ii) or to seek or oppose from a court of
competent jurisdiction any of the items described in clauses (iii) and (iv). The
exercise of, or opposition to, any of those items does not waive the right of
any party to a reference pursuant to this reference provision as provided
herein.

                                 (c)          The referee shall be a retired
judge or justice selected by mutual written agreement of the parties. If the
parties do not agree within ten (10) days of a written request to do so by any
party, then, upon request of any party, the referee shall be selected by the
Presiding Judge of the Court (or his or her representative). A request for
appointment of a referee may be heard on an ex parte or expedited basis, and the
parties agree that irreparable harm would result if ex parte relief is not
granted.  Pursuant to CCP § 170.6, each party shall have one peremptory
challenge to the referee selected by the Presiding Judge of the Court (or his or
her representative).

                                 (d)          The parties agree that time is of
the essence in conducting the reference proceedings. Accordingly, the referee
shall be requested, subject to change in the time periods specified herein for
good cause shown, to (i) set the matter for a status and trial-setting
conference within fifteen (15) days after the date of selection of the referee,
(ii) if practicable, try all issues of law or fact within one hundred twenty
(120) days after the date of the conference and (iii) report a statement of
decision within twenty (20) days after the matter has been submitted for
decision.

                                 (e)          The referee will have power to
expand or limit the amount and duration of discovery.  The referee may set or
extend discovery deadlines or cutoffs for good cause, including a party’s
failure to provide requested discovery for any reason whatsoever. Unless
otherwise ordered based upon good cause shown, no party shall be entitled to
“priority” in conducting discovery, depositions may be taken by either party
upon seven (7) days written notice, and all other discovery shall be responded
to within fifteen (15) days after service. All disputes relating to discovery
which cannot be resolved by the parties shall be submitted to the referee whose
decision shall be final and binding.

                                 (f)          Except as expressly set forth
herein, the referee shall determine the manner in which the reference proceeding
is conducted including the time and place of hearings, the order of presentation
of evidence, and all other questions that arise with respect to the course of
the reference proceeding.  All proceedings and hearings conducted before the
referee, except for trial, shall be conducted without a court reporter, except
that when any party so requests, a court reporter will be used at any hearing
conducted before the referee, and the referee will be provided a courtesy copy
of the transcript. The party making such a request shall have the obligation to
arrange for and pay the court reporter. Subject to the referee’s power to award
costs to the prevailing party, the parties will equally share the cost of the
referee and the court reporter at trial.

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                                 (g)          The referee shall be required to
determine all issues in accordance with existing case law and the statutory laws
of the State of California. The rules of evidence applicable to proceedings at
law in the State of California will be applicable to the reference proceeding.
The referee shall be empowered to enter equitable as well as legal relief, enter
equitable orders that will be binding on the parties and rule on any motion
which would be authorized in a court proceeding, including without limitation
motions for summary judgment or summary adjudication. The referee shall issue a
decision at the close of the reference proceeding which disposes of all claims
of the parties that are the subject of the reference.  Pursuant to CCP § 644,
such decision shall be entered by the Court as a judgment or an order in the
same manner as if the action had been tried by the Court and any such decision
will be final, binding and conclusive.  The parties reserve the right to appeal
from the final judgment or order or from any appealable decision or order
entered by the referee.  The parties reserve the right to findings of fact,
conclusions of laws, a written statement of decision, and the right to move for
a new trial or a different judgment, which new trial, if granted, is also to be
a reference proceeding under this provision.

                                 (h)          If the enabling legislation which
provides for appointment of a referee is repealed (and no successor statute is
enacted), any dispute between the parties that would otherwise be determined by
reference procedure will be resolved and determined by arbitration.   The
arbitration will be conducted by a retired judge or justice, in accordance with
the California Arbitration Act §1280 through §1294.2 of the CCP as amended from
time to time. The limitations with respect to discovery set forth above shall
apply to any such arbitration proceeding.

                                 (i)          THE PARTIES RECOGNIZE AND AGREE
THAT ALL CONTROVERSIES, DISPUTES AND CLAIMS RESOLVED UNDER THIS REFERENCE
PROVISION WILL BE DECIDED BY A REFEREE AND NOT BY A JURY. AFTER CONSULTING (OR
HAVING HAD THE OPPORTUNITY TO CONSULT) WITH COUNSEL OF ITS OWN CHOICE, EACH
PARTY KNOWINGLY AND VOLUNTARILY, AND FOR THE MUTUAL BENEFIT OF ALL PARTIES,
AGREES THAT THIS REFERENCE PROVISION WILL APPLY TO ANY CONTROVERSY, DISPUTE OR
CLAIM BETWEEN OR AMONG THEM ARISING OUT OF OR IN ANY WAY RELATED TO, THIS
AGREEMENTOR THE OTHER COMERICA DOCUMENTS.”

                                              n.          Exhibit C to the Loan
Agreement is hereby deleted in its entirety and replaced with Exhibit C attached
hereto.

                                 4.          Representations And Warranties. 
Borrower represents and warrants that its representations and warranties in the
Loan Documents continue to be true and complete in all material respects as of
the date hereof after giving effect to this Amendment (except to the extent such
specifically relate to another date) and that the execution, delivery and
performance of this Amendment are duly authorized, do not require the consent or
approval of any governmental body or regulatory authority and are not in
contravention of or in conflict with any law or regulation or any term or
provision of any other agreement entered into by Borrower.  Borrower further
represents and warrants that, as of the date hereof after giving effect to this
Amendment, no Event of Default has occurred and is continuing.

                                 5.          Full Force And Effect; Entire
Agreement.  Except to the extent expressly provided in this Amendment, the terms
and conditions of the Loan Agreement and the other Loan Documents shall remain
in full force and effect.  This Amendment and the other Loan Documents
constitute and contain the entire agreement of the parties hereto and supersede
any and all prior agreements, negotiations,

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correspondence, understandings and communications between the parties, whether
written or oral, respecting the subject matter hereof.  The parties hereto
further agree that the Loan Documents comprise the entire agreement of the
parties thereto and supersede any and all prior agreements, negotiations,
correspondence, understandings and other communications between the parties
thereto, whether written or oral respecting the extension of credit by Bank to
Borrower and/or its affiliates.  Except as expressly set forth herein, the
execution, delivery and performance of this Amendment shall not operate as a
waiver of, or as an amendment of, any right, power or remedy of Bank under the
Loan Agreement or any other Loan Document as in effect prior to the date hereof.

                                 6.          Counterparts; Effectiveness.  This
Amendment may be executed in any number of counterparts, each of which when so
delivered shall be deemed an original, but all such counterparts taken together
shall constitute but one and the same instrument.  This Amendment is effective
as of the date first above written; provided that, as a condition to the
effectiveness of this Amendment, Bank shall have received, in form and substance
satisfactory to Bank, the following:

                                              (a)          this Amendment, duly
executed by Borrower;

                                              (b)          an amendment fee
equal to $3,500, which shall be nonrefundable;

                                              (c)          all reasonable Bank
Expenses incurred through the date of this Amendment, including but not limited
to, reasonable attorneys’ fees incurred in connection with this Amendment; and

                                              (d)          such other documents,
and completion of such other matters, as Bank may reasonably deem necessary or
appropriate.

(Remainder of page intentionally left blank)

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          IN WITNESS WHEREOF, each of the parties hereto has caused this
Amendment to be executed and delivered by its duly authorized officer as of the
date first written above.

 

BORROWER:

 

 

 

 

LOGICVISION, INC.,

 

a Delaware corporation

 

 

 

 

 

 

 

By: 

/s/ Bruce M. Jaffe

 

 

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Name:

Bruce M. Jaffe

 

Title:

Vice President and Chief Financial Officer

 

 

 

 

 

 

 

B ANK:

 

 

 

COMERICA BANK

 

 

 

 

 

 

 

By: 

/s/ Guy Simpson

 

 

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Name:

Guy Simpson

 

Title: 

Vice President

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EXHIBIT C

COMPLIANCE CERTIFICATE

TO:       COMERICA BANK
FROM: LogicVision, Inc.

          The undersigned authorized officer of LogicVision, Inc. hereby
certifies that in accordance with the terms and conditions of the Second Amended
and Restated Loan Agreement dated as of February 9, 2004 between Borrower and
Bank, as amended (the “Agreement”), (i) Borrower is in complete compliance for
the period ending _______________ with all required covenants except as noted
below and (ii) all representations and warranties of Borrower stated in the
Agreement are true and correct as of the date hereof.  Attached herewith are the
required documents supporting the above certification.  The Officer further
certifies that these are prepared in accordance with Generally Accepted
Accounting Principles (GAAP) and are consistently applied from one period to the
next except as explained in an accompanying letter or footnotes.

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

Reporting Covenant

 

Required

 

Complies

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Company prepared financial statements
(Consolidated and Consolidating)

 

Quarterly within 45 days

 

Yes

No

Annual
(CPA Audited; Consolidated and Consolidating)

 

FYE within 90 days

 

Yes

No

10K and 10Q

 

On the date of delivery to the Securities Exchange Commission

 

Yes

No

Company prepared cash balance statement

 

Monthly within 30 days

 

Yes

No

Financial Covenant

 

Required

 

Actual

 

Complies

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Maintain on a Quarterly Basis:

 

 

 

 

 

 

 

Minimum Unrestricted Cash

 

$5,00,000

 

$__________

 

Yes

No

Total Liabilities / Tangible Net Worth

 

1.00 : 1.00

 

_______: 1.00

 

Yes

No

Comments Regarding Exceptions:  See Attached.

 

BANK USE ONLY

 

 

Received by:

 

 

 

 

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Sincerely,

 

 

AUTHORIZED SIGNER

 

 

 

 

 

 

Date:

 

 

 

 

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Verified:

 

SIGNATURE

 

 

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AUTHORIZED SIGNER

 

 

 

 

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Date:

 

TITLE

 

 

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Compliance
Status                                                  Yes         No

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DATE

 

 

 

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