Exhibit 10.19


 


FOURTH AMENDMENT

TO

SECOND AMENDED AND RESTATED 

LOAN AND SECURITY AGREEMENT


 


THIS FOURTH AMENDMENT to Second Amended and Restated Loan and
Security Agreement (this “Amendment”) is entered into this 13th day of August,
2008, by and between Silicon Valley Bank (“Bank”) and QUICKLOGIC
CORPORATION, a Delaware corporation (“Borrower”) whose address is
1277 Orleans Drive, Sunnyvale, California 94089-1138


 


RECITALS


 


A.            Borrower and Bank have previously entered
into that certain Second Amended and Restated Loan and Security Agreement dated
as of June 30, 2006 (as amended by that First Amendment to Second Amended
and Restated Loan and Security Agreement dated June 27, 2007, that Second
Amendment to Second Amended and Restated Loan and Security Agreement dated June 27,
2008, and that Third Amendment to Second Amended and Restated Loan and Security
Agreement dated July 31, 2008 and as the same may from time to time be
further amended, modified, supplemented or restated, collectively, the “Loan
Agreement”).


 


B.            Bank has extended credit to Borrower for the
purposes permitted in the Loan Agreement.


 


C.            Borrower has requested that Bank amend the
Loan Agreement to (i) increase the Committed Non-Formula Revolving Line, (ii) extend
the Revolving Line Maturity Date, and (iii) make certain other
modifications to the Loan Agreement as more fully set forth herein.


 


D.            Bank has agreed to so amend certain
provisions of the Loan Agreement, but only to the extent, in accordance with
the terms, subject to the conditions and in reliance upon the representations
and warranties set forth below.


 


AGREEMENT


 


NOW, THEREFORE,
in consideration of the foregoing recitals and other good and valuable
consideration, the receipt and adequacy of which is hereby acknowledged, and
intending to be legally bound, the parties hereto agree as follows:


 


1.             Definitions. 
Capitalized terms used but not defined in this Amendment shall have the
meanings given to them in the Loan Agreement.


 


2.             Amendments to Loan Agreement.


 


2.1          Section 2.1.2 (Advances). Section 2.1.2  of the Loan
Agreement is hereby amended in its entirety to read as follows:


 


“2.1.2     Requesting Advances.


 


(a)           Subject
to the prior satisfaction of all other applicable conditions to the making of
an Advance set forth in this Agreement, each Advance shall be made upon
Borrower’s irrevocable written notice delivered to Bank, by original 


 


1

















 


document, facsimile or
electronic delivery, in the form of a Payment/Advance Form attached as Exhibit B
(the “Notice of Borrowing”), each executed by
a Responsible Officer of Borrower or his or her designee or without written
instructions if the Advances are necessary to meet Obligations which have
become due.  Bank will credit Advances to
Borrower’s deposit account.  Each Advance
shall, at Borrower’s option in accordance with the terms of this Agreement, be
either in the form of a Prime Rate Advance or a LIBOR Advance.  Bank may make Advances under this Agreement
without instructions if the Advances are necessary to meet Obligations which
have become due.  Bank may rely on any
telephone notice given by a person whom Bank believes is a Responsible Officer
or designee. Borrower will indemnify Bank for any loss Bank suffers due to such
reliance.  Such Notice of Borrowing must
be received by Bank prior to 11:00 a.m. Pacific time, (i) at least three (3) Business
Days prior to the requested Funding Date, in the case of LIBOR Advances, and (ii) at least
one (1) Business Day prior to the requested Funding Date, in the case of
Prime Rate Advances, specifying:


 


(1)           the amount of the Advance, which, if a LIBOR Advance is requested,
shall be in an aggregate minimum principal amount of $500,000 or in any
integral multiple of $100,000 in excess thereof;


 


(2)           the requested Funding Date;


 


(3)           whether the Advance is to be comprised of LIBOR Advances or Prime Rate
Advances; and


 


(4)           the duration of the Interest Period applicable to any such LIBOR
Advances included in such notice; provided that
if the Notice of Borrowing shall fail to specify the duration of the Interest
Period for any Advance comprised of LIBOR Advances, such Interest Period shall
be one (1) month.


 


The proceeds of all such Advances will then
be made available to Borrower on the Funding Date by Bank by transfer to the
Deposit Account designated by Borrower and, subsequently, by wire transfer to
such other account as Borrower may instruct in the Notice of Borrowing.  No Advances shall be deemed made to Borrower,
and no interest shall accrue on any such Advance, until the related funds have
been deposited in the Deposit Account designated by Borrower.


 


(b)           Conversion and Continuation Elections.


 


(i)            So long as (x) no Event of Default or
Default exists; (y) Borrower shall not have sent any notice of termination
of this Agreement; and (z) Borrower shall have complied with such
customary procedures as Bank has established from time to time for Borrower’s
requests for LIBOR Advances, Borrower may, upon irrevocable written notice to
Bank:


 


(1)           elect to convert on any Business Day, Prime Rate Advances in an amount
equal to $500,000 or any integral multiple of $100,000 in excess thereof into
LIBOR Advances;


 


2

















 


(2)           elect to continue on any Interest Payment Date any LIBOR Advances
maturing on such Interest Payment Date (or any part thereof in an amount equal
to $500,000 or any integral multiple of $100,000 in excess thereof); provided that if the aggregate amount of LIBOR Advances
shall have been reduced, by payment, prepayment, or conversion of part thereof,
to be less than $500,000, such LIBOR Advances shall automatically convert into
Prime Rate Advances, and on and after such date the right of Borrower to
continue such Advances as, and convert such Advances into, LIBOR Advances shall
terminate; or


 


(3)           elect to convert on any Interest Payment Date any LIBOR Advances
maturing on such Interest Payment Date (or any part thereof in an amount equal
to $500,000 or any integral multiple of $100,000 in excess thereof) into Prime
Rate Advances.


 


(ii)            Borrower shall deliver a Notice of
Conversion/Continuation in accordance with Section 10
to be received by Bank prior to 11:00 a.m. Pacific time at least (i) three (3) Business
Days in advance of the Conversion Date or Continuation Date, if any Advances
are to be converted into or continued as LIBOR Advances; and (ii) one (1) Business
Day in advance of the Conversion Date, if any Advances are to be converted into
Prime Rate Advances, in each case specifying the:


 


(1)           proposed
Conversion Date or Continuation Date;


 


(2)           aggregate
amount of the Advances to be converted or continued which, if any Advances are
to be converted into or continued as LIBOR Advances, shall be in an aggregate
minimum principal amount of $500,000 or in any integral multiple of $100,000 in
excess thereof;


 


(3)           nature
of the proposed conversion or continuation; and


 


(4)           duration
of the requested Interest Period.


 


(iii)           If upon the expiration of any Interest Period applicable to any LIBOR
Advances, Borrower shall have timely failed to select a new Interest Period to
be applicable to such LIBOR Advances, Borrower shall be deemed to have elected
to convert such LIBOR Advances into Prime Rate Advances.


 


(iv)           Any LIBOR Advances shall, at Bank’s option, convert into Prime Rate
Advances in the event that (i) an Event of Default or Default shall exist,
or (ii) the aggregate principal amount of the Prime Rate Advances which
have been previously converted to LIBOR Advances, or the aggregate principal
amount of existing LIBOR Advances continued, as the case may be, at the
beginning of an Interest Period shall at any time during such Interest Period
exceed the Committed Non-Formula Revolving Line.  Borrower agrees to pay Bank, upon demand by
Bank (or Bank may, at its option, charge the Borrower’s Deposit Account or any
other account Borrower maintains with Bank) any 


 


3

















 


amounts required to
compensate Bank for any loss (including loss of anticipated profits), cost, or
expense incurred by Bank, as a result of the conversion of LIBOR Advances to
Prime Rate Advances pursuant to any of the foregoing.


 


(v)            Notwithstanding anything to the contrary
contained herein, Bank shall not be required to purchase United States Dollar
deposits in the London interbank market or other applicable LIBOR market to
fund any LIBOR Advances, but the provisions hereof shall be deemed to apply as
if Bank had purchased such deposits to fund the LIBOR Advances.”


 


2.2          Section 2.1.6 (Prepayment and Repayment).  Section 2.1.6 is amended in
its entirety and replaced with the following:


 


“2.1.6     Prepayment and Repayment.


 


“(a)         Prepayment and Repayment of Prime Rate
Advances.  Borrower may prepay any or
all amounts owing under the Committed Non-Formula Revolving Line without
penalty or premium by paying all principal and accrued interest as of the date
of prepayment.


 


(b)           Prepayment
and Repayment of LIBOR Advances. 
Borrower may, upon three (3) business days written notice to Bank,
prepay any or all amounts owing under the Committed Non-Formula Revolving Line
provided Borrower pays, on the date of the prepayment (i) all accrued and
unpaid interest with respect to the prepaid portion of the Committed
Non-Formula Revolving Line through the date the prepayment is made; (ii) 
the amount of the Committed Non-Formula Revolving Line which Borrower elected
to prepay plus any other amounts due and payable to Bank on such date, pursuant
to this Agreement;  and (iii) all
other sums owing to Bank, including
Bank Expenses, and all other fees and expenses incurred pursuant to Section 3.4(a), that shall have become due and
payable hereunder with respect to this Agreement.”


 


2.3          Section 2.1.7 (Equipment Advances).  Section 2.1.7
is amended in its entirety and replaced with the following:


 


“2.1.7    [Intentionally Omitted.]”


 


2.4          Section 2.1.8 (Second Equipment Advances).  Section 2.1.8 is amended in its entirety
and replaced with the following:


 


“2.1.8    [Intentionally Omitted.]”


 


2.5          Section 2.3  (Interest Rate; Payments).  Section 2.3 is amended in its entirety
and replaced with the following:


 


“(a)         Choice
of Advances.  Each Advance shall, at Borrower’s option in
accordance with the terms of this Agreement, be either in the form of a Prime
Rate Advance or a LIBOR Advance; provided that
in no event shall Borrower maintain at any time LIBOR Advances having more than
five (5) different 


 


4

















 


Interest Periods. Borrower
shall pay interest accrued on the Advances at the rates and in the manner set
forth in Section 2.3(b)(i).


 


(b)           Interest
Computation.  Interest on the Credit Extensions and all
fees payable hereunder shall be computed on the basis of a 360-day year and the
actual number of days elapsed in the period during which such interest accrues.  In computing interest on any Credit
Extension, the date of the making of such Credit Extension shall be included
and the date of payment shall be excluded; provided, however,
that if any Credit Extension is repaid on the same day on which it is made,
such day shall be included in computing interest on such Credit Extension.


 


(c)           Interest
Rates.  Each
Advance shall bear interest on the outstanding principal amount thereof from
the date when made, continued or converted until paid in full at a rate per annum equal to (A) with respect to Prime Rate
Advances, the greater of: (y) six percent (6.00%) and (z) the Prime
Rate plus the Prime Rate Margin, or (B) the LIBOR Rate plus the LIBOR Rate
Margin, as the case may be.  On and after
the expiration of any Interest Period applicable to any LIBOR Advance
outstanding on the date of occurrence of an Event of Default or acceleration of
the Obligations, the Effective Amount of such LIBOR Advance shall, during the
continuance of such Event of Default or after acceleration, bear interest in accordance
with Section 2.3(d).


 


(d)           Default
Interest.  Except as otherwise provided in Section 2.3(b)(i), after an Event of Default,
Obligations shall bear interest five percent (5.00%) above the rate effective
immediately before the Event of Default (the “Default Rate”).  Payment or acceptance of the increased
interest provided in this Section 2.3(d) is
not a permitted alternative to timely payment and shall not constitute a waiver
of any Event of Default or otherwise prejudice or limit any rights or remedies
of Bank.


 


(e)           Payments. 
Interest due on each Advance shall be paid in arrears each Interest
Payment Date.  Interest shall also be
paid on the date of any prepayment of any Advance pursuant to this Agreement
for the portion of any Advance so prepaid and upon payment (including
prepayment) in full thereof.  All accrued
but unpaid interest on the Advances shall be due and payable on the Revolving
Maturity Date. Bank may debit any of Borrower’s deposit accounts for principal
and interest payments owing under this Agreement or any amounts Borrower owes
Bank.  Bank will promptly notify Borrower
when it debits Borrower’s accounts. 
Debits initiated by the Bank shall generally be made prior to 12:00 noon
Pacific time. Payments received after 12:00 noon Pacific time are considered
received at the opening of business on the next Business Day.  When a payment is due on a day that is not a
Business Day, the payment is due the next Business Day and additional fees or
interest accrue, however solely making such payment on the next Business Day
shall not result in an Event of Default.


 


(f)            Prime
Rate Advances.  Each change in the interest rate of the Prime
Rate Advances based on changes in the Prime Rate shall be effective on the
effective date of such change and to the extent of such change.  Bank shall use its best efforts to give
Borrower prompt notice of any such change in the 


 


5

















 


Prime Rate; provided, however, that any failure by Bank to provide
Borrower with notice hereunder shall not affect Bank’s right to make changes in
the interest rate of the Prime Rate Advances based on changes in the Prime
Rate.


 


(g)           LIBOR
Advances.  The interest rate applicable to each LIBOR
Advance shall be determined in accordance with Section 3.3(a) hereunder.
Subject to Sections  3.3
and 3.4, such rate shall apply during the
entire Interest Period applicable to such LIBOR Advance, and interest
calculated thereon shall be payable on the Interest Payment Date applicable to
such LIBOR Advance.”


 


2.6          Section 2.4  (Fees). 
Section 2.4(c) is amended in its entirety and replaced with
the following:


 


“(c)         Line of Credit Fee.  A fee equal to $25,000 (the “Line of Credit Fee”) due, payable and fully earned on August 13,
2008.”


 


2.7          Section 2.4  (Fees). 
Section 2.4 is amended to hereby add the following clause (e):


 


“(e)         Unused Line Fee.  A fee payable quarterly, in arrears, on a
calendar year basis, in an amount equal to one-quarter of one percent (0.25%)
per annum of the average unused portion of the Committed Non-Formula Revolving
Line, as determined by Bank.”


 


2.8          Section 3 (Conditions).  Section 3 is amended to hereby
add the following new Sections 3.3 and 3.4:


 


“3.3       Special Provisions Governing LIBOR Advances. Notwithstanding any other provision of this
Agreement to the contrary, the following provisions shall govern with respect
to LIBOR Advances as to the matters covered:


 


(a)          Determination of Applicable Interest Rate.  As
soon as practicable on each Interest Rate Determination Date, Bank shall determine
(which determination shall, absent manifest error in calculation, be final,
conclusive and binding upon all parties) the interest rate that shall apply to
the LIBOR Advances for which an interest rate is then being determined for the
applicable Interest Period and shall promptly give notice thereof (in writing
or by telephone confirmed in writing) to Borrower.


 


(b)          Inability to Determine Applicable Interest
Rate.  In the event that Bank shall have determined
(which determination shall be final and conclusive and binding upon all parties
hereto), on any Interest Rate Determination Date with respect to any LIBOR
Advance, that by reason of circumstances affecting the London interbank market
adequate and fair means do not exist for ascertaining the interest rate
applicable to such Advance on the basis provided for in the definition of
LIBOR, Bank shall on such date give notice (by facsimile or by telephone
confirmed in writing) to Borrower of such determination, whereupon (i) no
Advances may be made as, or converted to, LIBOR Advances until such time as
Bank notifies Borrower that the 


 


6

















 


circumstances giving rise to
such notice no longer exist, and (ii) any Notice of Borrowing or Notice of
Conversion/Continuation given by Borrower with respect to Advances in respect
of which such determination was made shall be deemed to be (y) rescinded
by Borrower, and (z) a request for a Prime Rate Advance.


 


(c)          Compensation for Breakage or Non-Commencement
of Interest Periods.  Borrower shall compensate Bank, upon written
request by Bank (which request shall set forth the manner and method of
computing such compensation), for all reasonable losses, expenses and
liabilities, if any (including any interest paid by Bank to lenders of funds
borrowed by it to make or carry its LIBOR Advances and any loss, expense or
liability incurred by Bank in connection with the liquidation or re-employment
of such funds) such that Bank may incur: (i) if for any reason (other than
a default by Bank or due to any failure of Bank to fund LIBOR Advances due to
impracticability or illegality under Sections 3.4(d) and
3.4(e)) a borrowing or a conversion to
or continuation of any LIBOR Advance does not occur on a date specified in a
Notice of Borrowing or a Notice of Conversion/Continuation, as the case may be,
or (ii) if any principal payment or any conversion of any of its LIBOR
Advances occurs under Section 3.4(a),
on a date prior to the last day of an Interest Period applicable to that
Advance.


 


(d)          Assumptions Concerning Funding of LIBOR
Advances.  Calculation of all amounts payable to Bank
under this Section 3.3 and under Section 2.12 shall be made as though Bank had actually
funded each of its relevant LIBOR Advances through the purchase of a Eurodollar
deposit bearing interest at the rate obtained pursuant to the definition of
LIBOR Rate in an amount equal to the amount of such LIBOR Advance and having a
maturity comparable to the relevant Interest Period; provided,
however, that Bank may fund each of its LIBOR Advances in any manner
it sees fit and the foregoing assumptions shall be utilized only for the
purposes of calculating amounts payable under this Section 3.3
and under Section 2.1.2.


 


(e)          LIBOR Advances After Default. 
After the occurrence and during the continuance of an Event of Default, (i) Borrower
may not elect to have an Advance be made or continued as, or converted to, a
LIBOR Advance after the expiration of any Interest Period then in effect for
such Advance and (ii) subject to the provisions of Section 3.3(c),
any Notice of Conversion/Continuation given by Borrower with respect to a
requested conversion/continuation that has not yet occurred shall be deemed to
be rescinded by Borrower and be deemed a request to convert or continue
Advances referred to therein as Prime Rate Advances.


 


“3.4       Additional Requirements/Provisions Regarding LIBOR Advances.


 


(a)          If
for any reason (including voluntary or mandatory prepayment or acceleration),
Bank receives all or part of the principal amount of a LIBOR Advance prior to
the last day of the Interest Period for such Advance, Borrower shall
immediately notify Borrower’s account officer at Bank and, on demand by Bank,
pay Bank the amount (if any) by which (i) the additional interest which 


 


7

















 


would have been payable on the amount so received had it not been
received until the last day of such Interest Period exceeds (ii) the
interest which would have been recoverable by Bank by placing the amount so
received on deposit in the certificate of deposit markets, the offshore
currency markets, or United States Treasury investment products, as the case
may be, for a period starting on the date on which it was so received and
ending on the last day of such Interest Period at the interest rate determined
by Bank in its reasonable discretion. 
Bank’s determination as to such amount shall be conclusive absent
manifest error.


 


(b)          Borrower
shall pay Bank, upon demand by Bank, from time to time such amounts as Bank may
determine to be necessary to compensate it for any costs incurred by Bank that
Bank determines are attributable to its making or maintaining of any amount
receivable by Bank hereunder in respect of any Advances relating thereto (such
increases in costs and reductions in amounts receivable being herein called “Additional Costs”), in each case resulting from any
Regulatory Change which:


 


(i)             changes
the basis of taxation of any amounts payable to Bank under this Agreement in
respect of any Advances (other than changes which affect taxes measured by or
imposed on the overall net income of Bank by the jurisdiction in which Bank has
its principal office);


 


(ii)            imposes
or modifies any reserve, special deposit or similar requirements relating to
any extensions of credit or other assets of, or any deposits with, or other
liabilities of Bank (including any Advances or any deposits referred to in the
definition of LIBOR); or


 


(iii)           imposes
any other condition affecting this Agreement (or any of such extensions of
credit or liabilities).


 


Bank will notify Borrower of
any event occurring after the Closing Date which will entitle Bank to
compensation pursuant to this Section 3.4
as promptly as practicable after it obtains knowledge thereof and determines to
request such compensation.  Bank will
furnish Borrower with a statement setting forth the basis and amount of each
request by Bank for compensation under this Section 3.4.  Determinations and allocations by Bank for
purposes of this Section 3.4 of the effect of
any Regulatory Change on its costs of maintaining its obligations to make
Advances, of making or maintaining Advances, or on amounts receivable by it in
respect of Advances, and of the additional amounts required to compensate Bank
in respect of any Additional Costs, shall be conclusive absent manifest error.


 


(c)          If
Bank shall determine that the adoption or implementation of any applicable law,
rule, regulation, or treaty regarding capital adequacy, or any change therein,
or any change in the interpretation or administration thereof by any
governmental authority, central bank, or comparable agency charged with the
interpretation or administration thereof, or compliance by Bank (or its
applicable lending office) with any respect or directive regarding capital
adequacy (whether or not having the force of law) of any such authority,
central 


 


8

















 


bank, or comparable agency, has or would have the effect of reducing
the rate of return on capital of Bank or any person or entity controlling Bank
(a “Parent”) as a consequence of its
obligations hereunder to a level below that which Bank (or its Parent) could
have achieved but for such adoption, change, or compliance (taking into
consideration policies with respect to capital adequacy) by an amount deemed by
Bank to be material, then from time to time, within fifteen (15) days after
demand by Bank, Borrower shall pay to Bank such additional amount or amounts as
will compensate Bank for such reduction. 
A statement of Bank claiming compensation under this Section 3.4(c) and setting forth the additional
amount or amounts to be paid to it hereunder shall be conclusive absent
manifest error.


 


(d)          If,
at any time, Bank, in its sole and absolute discretion, determines that (i) the
amount of LIBOR Advances for periods equal to the corresponding Interest
Periods are not available to Bank in the offshore currency interbank markets,
or (ii) LIBOR does not accurately reflect the cost to Bank of lending the
LIBOR Advances, then Bank shall promptly give notice thereof to Borrower.  Upon the giving of such notice, Bank’s
obligation to make the LIBOR Advances shall terminate; provided,
however, Advances shall not terminate if Bank and Borrower agree in
writing to a different interest rate applicable to LIBOR Advances.


 


(e)          If it
shall become unlawful for Bank to continue to fund or maintain any LIBOR
Advances, or to perform its obligations hereunder, upon demand by Bank,
Borrower shall prepay the Advances in full with accrued interest thereon and
all other amounts payable by Borrower hereunder (including, without limitation,
any amount payable in connection with such prepayment pursuant to Section 3.4(a)). 
Notwithstanding the foregoing, to the extent a determination by Bank as
described above relates to a LIBOR Advance then being requested by Borrower
pursuant to a Notice of Borrowing or a Notice of Conversion/Continuation,
Borrower shall have the option, subject to the provisions of Section 3.3(c), to (i) rescind such Notice of
Borrowing or Notice of Conversion/Continuation by giving notice
(electronically, by facsimile or by telephone confirmed in writing) to Bank of
such rescission on the date on which Bank gives notice of its determination as
described above, or (ii) modify such Notice of Borrowing or Notice of
Conversion/Continuation to obtain a Prime Rate Advance or to have outstanding
Advances converted into or continued as Prime Rate Advances by giving notice
(electronically, by facsimile or by telephone confirmed in writing) to Bank of such
modification on the date on which Bank gives notice of its determination as
described above.”


 


2.9          Section 5.9 (Use of Proceeds).  Section 5.9 is amended in
its entirety and replaced with the following:


 


“5.9        Use of Proceeds. 
Borrower shall use the proceeds of the Credit Extensions for general
corporate purposes and as additional working capital.  Borrower shall not use any proceeds of the
Credit Extensions for personal, family, household or agricultural purposes.”


 


9

















 


2.10        Section 6.7 (Deposit and Investment Accounts).  Section 6.7
is amended in its entirety and replaced with the following:


 


“6.7        Deposit and Investment Accounts.


 


                Borrower will maintain 95% of its cash and
Cash Equivalents held in the United States or its territories, in depository,
investment and operating accounts with Bank and Bank’s affiliates which shall
be held in the form of cash and such other investments as are consistent with
Borrower’s investment policy as approved by its Board of Directors.”


 


2.11        Section 6.8 (Financial Covenants).  Section 6.8
is amended in its entirety and replaced with the following:


 


“6.8        Financial Covenants. 
Borrower will maintain as of the last day of each month:


 


                (a)           Tangible Net Worth.  A
Tangible Net Worth of at least $17,000,000.


 


                (b)           Quick Ratio (Adjusted).  A
ratio of Quick Assets to Obligations of at least 2.00 to 1.00.”


 


2.12        Section 6.9 (Protection of Intellectual Property Right).  Section 6.9
is amended in its entirety and replaced with the following:


 


“6.9       Protection of Intellectual
Property Right.


 


Borrower shall:  (a) protect, defend and maintain the
validity and enforceability of its material intellectual property; (b) promptly
advise Bank in writing of material infringements of its intellectual property;
and (c) not allow any intellectual property material to Borrower’s
business to be abandoned, forfeited or dedicated to the public without Bank’s
written consent.  Notwithstanding
anything to the contrary contained in this section, Borrower confirms that on June 28,
2004, Bank and Borrower entered into a Negative Pledge Agreement in which
Borrower agreed, subject to certain exceptions, not to encumber its
Intellectual Property.”


 


2.13        Section 6.10 (Control Agreements).  Section 6.10
is amended in its entirety and replaced with the following:


 


“6.10     Control Agreements.


 


With respect to deposit
accounts or investment accounts maintained at domestic financial institutions
other than Bank, within 10 Business Days of the opening of any such deposit
account or investment account, Borrower will execute and deliver to Bank,
control agreements in form satisfactory to Bank in order for Bank to perfect
its security interest in Borrower’s deposit accounts or investment accounts.”


 


10
















 


2.14                        Section 9.1(a) (Rights and Remedies).  Section 9.1(a) is amended in its
entirety and replaced with the following:


 


“(a)                            Declare all Obligations, immediately due and
payable (but if an event of Default described in Section 8.5
occurs, all Obligations are immediately due and payable without any action by
Bank).”


 


2.15                        Section 10 (Notices).  Section 10 is amended in its entirety
and replaced with the following:


 


“10.                     Notices.


 


All notices, consents,
requests, approvals, demands, or other communication (collectively, “Communication”) by any party to this Agreement or any other
Loan Document must be in writing and shall be deemed to have been validly
served, given, or delivered: (a) upon the earlier of actual receipt and
three (3) Business Days after deposit in the U.S. mail, first class,
registered or certified mail return receipt requested, with proper postage
prepaid; (b) upon transmission, when sent by electronic mail or facsimile
transmission; (c) one (1) Business Day after deposit with a reputable
overnight courier with all charges prepaid; or (d) when delivered, if
hand-delivered by messenger, all of which shall be addressed to the party to be
notified and sent to the address, facsimile number, or email address indicated
below.  Bank or Borrower may change its
address or facsimile number by giving the other party written notice thereof in
accordance with the terms of this Section 10.


 


	
  If to Borrower:

  	
  Quicklogic Corporation

  
	
   

  	
  1277 Orleans Drive, Sunnyvale

  
	
   

  	
  California 94089-1138

  
	
   

  	
  Attn: Patricia Hart

  
	
   

  	
  Fax: (408) 990-4040

  
	
   

  	
  Email:  phart@quicklogic.com

  



 


	
  If to Bank:

  	
  Silicon Valley Bank

  
	
   

  	
  3003 Tasman Drive

  
	
   

  	
  Santa Clara, California 95054

  
	
   

  	
  Attn: Rick Freeman

  
	
   

  	
  Fax: (415) 856-0810

  
	
   

  	
  Email:  rfreeman@svb.com

  



 


2.16                        Section 13 (Definitions).


 


2.16.1              The following terms and
their respective definitions set forth in Section 13.1 are amended in
their entirety and replaced with the following:


 


“Advance” or “Advances” is a
Prime Rate Advance, a LIBOR Advance, or both, as the context requires.


 


“Business Day” is any day other than a Saturday, Sunday or
other day on which banking institutions in the State of California are
authorized or required by law or other governmental action to close, except
that if any determination of a 


 


11

















 


“Business
Day” shall relate to a LIBOR Advance, the term “Business Day” shall also mean a
day on which dealings are carried on in the London interbank market.


 


“Committed Non-Formula Revolving Line” is Non-Formula
Advances of up to $6,000,000.


 


“Credit Extension” is each Non-Formula Advance, Letter of
Credit, Exchange Contract, or any other extension of credit by Bank for
Borrower’s benefit.


 


“Equipment”
is all “equipment” as defined in the Code with such additions to such term as
may hereafter be made, and includes without limitation all machinery,
equipment, tenant improvements, furniture, fixtures, goods, vehicles (including
motor vehicles and trailers), and any interest in any of the foregoing.


 


 “Inventory” is
all “inventory” as defined in the Code in effect on the date hereof with such
additions to such term as may hereafter be made, and includes without
limitation all merchandise, raw materials, parts, supplies, packing and
shipping materials, work in process and finished products, including without
limitation such inventory as is temporarily out of Borrower’s custody or
possession or in transit and including any returned goods any returned goods
and other proceeds (including insurance proceeds) and any documents of title
representing any of the above.


 


“Quick Assets”
is, on any date, Borrower’s unrestricted cash, Cash Equivalents, net billed
accounts receivable, and investments with maturities of fewer than 12 months
and long-term investments with maturities of more than 12 months held at Bank
or its affiliates, determined according to GAAP.”


 


“Revolving Maturity Date” is June 30, 2010.


 


“Tangible Net Worth” is, on any date, the consolidated total
assets of Borrower and its Subsidiaries minus, (i) any amounts
attributable to (a) goodwill, (b) intangible items such as
unamortized debt discount and expense, Patents, trade and service marks and
names, and Copyrights, (ii) Total Liabilities.


 


The following
terms and their respective definitions are added to Section 13.1 in the
appropriate alphabetical order:


 


“Cash
Equivalents” means (a) marketable direct obligations
issued or unconditionally guaranteed by the United States or any agency or any
State thereof having maturities of not more than one (1) year from the
date of acquisition; (b) commercial paper maturing no more than one (1) year
after its creation and having the highest rating from either Standard &
Poor’s Ratings Group or Moody’s Investors Service, Inc., (c) Bank’s
certificates of deposit issued maturing no more than one (1) year after
issue;  and (d) money market funds at
least ninety-five percent (95%) of the assets of which constitute Cash
Equivalents of the kinds described in clauses (a) through (c) of this
definition.


 


12

















 


“Continuation Date”
means any date on which Borrower elects to continue a LIBOR Advance into
another Interest Period.


 


“Conversion Date” means any date on
which Borrower elects to convert a Prime Rate Advance to a LIBOR Advance or a
LIBOR Advance to a Prime Rate Advance.


 


 “Effective Amount”
means with respect to any Advances on any date, the aggregate outstanding
principal amount thereof after giving effect to any borrowing and prepayments
or repayments thereof occurring on such date.


 


“General
Intangibles” is all “general intangibles” as defined in the Code in
effect on the date hereof with such additions to such term as may hereafter be
made, and includes without limitation, all copyright rights, copyright
applications, copyright registrations and like protections in each work of
authorship and derivative work, whether published or unpublished, any patents,
trademarks, service marks and, to the extent permitted under applicable law,
any applications therefor, whether registered or not, any trade secret rights,
including any rights to unpatented inventions, payment intangibles, royalties,
contract rights, goodwill, franchise agreements, purchase orders, customer
lists, route lists, telephone numbers, domain names, claims, income and other
tax refunds, security and other deposits, options to purchase or sell real or
personal property, rights in all litigation presently or hereafter pending
(whether in contract, tort or otherwise), insurance policies (including without
limitation key man, property damage, and business interruption insurance),
payments of insurance and rights to payment of any kind.


 


“Interest Payment Date” means (i) with respect to any
LIBOR Advance, the last day of each Interest Period applicable to such LIBOR
Advance, provided, however,
if any Interest Period is longer than three (3) months, then interest on
the applicable LIBOR Advance shall be payable at three (3) month intervals
after the commencement of the applicable Interest Period and on the last day of
such Interest Period; and (ii) with respect to Prime Rate Advances, the
first (1st) day of each month (or, if the first day of the month does not fall
on a Business Day, then on the first Business Day following such date), and
each date a Prime Rate Advance is converted into a LIBOR Advance to the extent
of the amount converted to a LIBOR Advance.


 


“Interest Period”
means, as to any LIBOR Advance, the period commencing on the date of such LIBOR
Advance, or on the conversion/continuation date on which the LIBOR Advance is
converted into or continued as a LIBOR Advance, and ending on the date that is one
(1), two (2), three (3), six (6), nine (9), or twelve (12)  months
thereafter, in each case as
Borrower may elect in the applicable Notice of Borrowing or Notice of
Conversion/Continuation; provided, however,
that (a) no Interest Period with respect to any LIBOR Advance shall end
later than the Revolving Maturity Date, (b) the last day of an Interest
Period shall be determined in accordance with the practices of the LIBOR
interbank market as from time to time in effect, (c) if any Interest
Period would otherwise end on a day that is not a Business Day, that Interest
Period shall be extended to the following Business Day unless, in the 


 


13

















 


case of a LIBOR Advance, the result of such
extension would be to carry such Interest Period into another calendar month,
in which event such Interest Period shall end on the preceding Business Day, (d) any
Interest Period pertaining to a LIBOR Advance that begins on the last Business
Day of a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest Period)
shall end on the last Business Day of the calendar month at the end of such
Interest Period, and (e) interest shall accrue from and include the first
Business Day of an Interest Period but exclude the last Business Day of such
Interest Period.


 


“Interest Rate
Determination Date” means each date for calculating the LIBOR for
purposes of determining the interest rate in respect of an Interest
Period.  The Interest Rate Determination
Date shall be the second Business Day prior to the first day of the related
Interest Period for a LIBOR Advance.


 


“LIBOR Rate”
means, for each Interest Period in respect of LIBOR Advances comprising part of
the same Advances, an interest rate per annum
(rounded upward to the nearest 1/16th of one percent (0.0625%)) equal to LIBOR
for such Interest Period divided by one (1) minus the Reserve Requirement for such Interest Period.


 


“LIBOR Rate Margin”
is three and one half percent (3.50%).


 


“LIBOR” means,
for any Interest Rate Determination Date with respect to an Interest Period for
any Advance to be made, continued as or converted into a LIBOR Advance, the
rate of interest per annum determined by Bank to be the per annum rate of
interest at which deposits in United States Dollars are offered to Bank in the
London interbank market (rounded upward, if necessary, to the nearest 1/100th
of one percent (0.01%)) in which Bank customarily participates at 11:00 a.m.
(local time in such interbank market) two (2) Business Days prior to the
first day of such Interest Period for a period approximately equal to such
Interest Period and in an amount approximately equal to the amount of such Advance.


 


“LIBOR Advance”
means an Advance that bears interest based at the LIBOR Rate.


 


“Line of Credit Fee” shall have the meaning set forth for
such term in Section 2.4(c).


 


“Notice of Borrowing” shall have the meaning set forth for
such term in Section 2.1.2(a).


 


“Notice of Conversion/Continuation” means a notice given by
Borrower to Bank in accordance with Section 2.1.2,
substantially in the form of Exhibit E, with appropriate
insertions.


 


“Prime Rate Advance” means a Non-Formula Advances that bears
interest at the rate set forth in Section 2.3(b)(i)(A).


 


14

















 


“Prime Rate Margin” is one percent (1.00%).


 


“Payment/Advance Form” means a Notice of Borrowing given by
Borrower to Bank in accordance with Section 2.1.2,
substantially in the form of Exhibit B, with appropriate
insertions.


 


“Regulatory Change” means, with respect to Bank, any change
on or after the date of this Agreement in United States federal, state, or
foreign laws or regulations, including Regulation D, or the adoption or making
on or after such date of any interpretations, directives, or requests applying
to a class of lenders including Bank, of or under any United States federal or
state, or any foreign laws or regulations (whether or not having the force of
law) by any court or governmental or monetary authority charged with the
interpretation or administration thereof.


 


“Reserve Requirement” means, for any Interest Period, the
average maximum rate at which reserves (including any marginal, supplemental,
or emergency reserves) are required to be maintained during such Interest
Period under Regulation D against “Eurocurrency liabilities” (as such term is
used in Regulation D) by member banks of the Federal Reserve System.  Without limiting the effect of the foregoing,
the Reserve Requirement shall reflect any other reserves required to be
maintained by Bank by reason of any Regulatory Change against (a) any
category of liabilities which includes deposits by reference to which the LIBOR
Rate is to be determined as provided in the definition of LIBOR or (b) any
category of extensions of credit or other assets which include Advances.


 


2.16.2              The following terms and their respective definitions set forth
in Section 13.1 are deleted in their entirety:


 


“Committed Equipment Line”


 


“Current Liabilities”


 


“Deferred
Revenue”


 


“Eligible Equipment”


 


“Equipment Advance”


 


“Equipment Availability End Date”


 


“Equipment Advance(s)”


 


“Equipment Line Fee”


 


“Financed Equipment”


 


“Fixed Rate Advances”


 


15

















 


“Second Equipment Availability End Date”


 


“Second  Equipment Advance”


 


“Second  Equipment Line Closing
Date”


 


“Second  Equipment Line”


 


“Second  Equipment Line Maturity
Date”


 


“Treasury Rate”


 


“Treasury Note Maturity”


 


2.17                        Exhibit A (Collateral
Description). The Collateral
Description attached as Exhibit A to the Loan Agreement is hereby
amended in its entirety and replaced with the form of Exhibit A
attached to this Amendment.


 


2.18                        Exhibit B (Notice of
Borrowing).  The Payment/Advance Form attached as Exhibit B
to the Loan Agreement is hereby amended in its entirety and replaced with the
form of Exhibit B attached to this Amendment.


 


2.19                        Exhibit C (Compliance
Certificate).  The Compliance Certificate attached as Exhibit C
to the Loan Agreement is hereby amended in its entirety and replaced with the
form of Exhibit C attached to this Amendment.


 


2.20                        Exhibit E (Notice of
Conversion/Continuation).  The Notice of Conversion/Continuation
following attached to this Amendment is hereby added as Exhibit E
to the Loan Agreement.


 


3.                                      Limitation of Amendments.


 


3.1                               The amendments set forth in Section 2, above, are effective for
the purposes set forth herein and shall be limited precisely as written and
shall not be deemed to (a) be a consent to any amendment, waiver or
modification of any other term or condition of any Loan Document, or (b) otherwise
prejudice any right or remedy which Bank may now have or may have in the future
under or in connection with any Loan Document.


 


3.2                               This Amendment shall be construed in
connection with and as part of the Loan Documents and all terms, conditions,
representations, warranties, covenants and agreements set forth in the Loan
Documents, except as herein amended, are hereby ratified and confirmed and
shall remain in full force and effect.


 


4.                                      Representations and Warranties.  To
induce Bank to enter into this Amendment, Borrower hereby represents and
warrants to Bank as follows:


 


4.1                               Immediately after giving effect to this
Amendment (a) 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 (b) no
Event of Default has occurred and is continuing;


 


16

















 


4.2                               Borrower has the power and authority to
execute and deliver this Amendment and to perform its obligations under the Loan
Agreement, as amended by this Amendment;


 


4.3                               The organizational documents of Borrower
delivered to Bank on the Closing 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;


 


4.4                               The execution and delivery by Borrower of
this Amendment and the performance by Borrower of its obligations under the
Loan Agreement, as amended by this Amendment, have been duly authorized;


 


4.5                               The execution and delivery by Borrower of this
Amendment and the performance by Borrower of its obligations under the Loan
Agreement, as amended by this Amendment, do not and will not contravene (a) any
law or regulation binding on or affecting Borrower, (b) any contractual
restriction with a Person binding on Borrower, (c) any order, judgment or
decree of any court or other governmental or public body or authority, or
subdivision thereof, binding on Borrower, or (d) the organizational
documents of Borrower;


 


4.6                               The execution and delivery by Borrower of
this Amendment and the performance by Borrower of its obligations under the
Loan Agreement, as amended by this Amendment, do not require any order,
consent, approval, license, authorization or validation of, or filing,
recording or registration with, or exemption by any governmental or public body
or authority, or subdivision thereof, binding on either Borrower, except as
already has been obtained or made; and


 


4.7                               This Amendment has been duly executed and
delivered by Borrower and is the binding obligation of Borrower, enforceable
against Borrower 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.


 


5.                                      Counterparts.  This
Amendment may be executed in any number of counterparts and all of such
counterparts taken together shall be deemed to constitute one and the same
instrument.


 


6.                                      Effectiveness.  This
Amendment shall be deemed effective upon (a) the due execution and
delivery to Bank of this Amendment by each party hereto, (b) Borrower’s
repayment in full in cash of all outstanding Equipment Advances and Second
Equipment Advances, (c) Borrower’s payment of the Line of Credit Fee.


 


[Signature page follows.]


 


17

















 


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


 


	
  BANK

  	
  BORROWER

  
	
   

  	
   

  
	
  SILICON VALLEY BANK

  	
  QUICKLOGIC CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
  BY:

  	
     /s/ Rick Freeman

  	
   

  	
  BY:

  	
     /s/ Carl M. Mills  

  
	
  NAME: 

  	
  Rick Freeman  

  	
   

  	
  NAME: 

  	
  Carl M. Mills

  
	
  TITLE: 

  	
  Relationship Manager

  	
   

  	
  TITLE:

  	
  Vice President Finance & CFO

  
							



 

















 


EXHIBIT A


 


COLLATERAL DESCRIPTION


 


QUICKLOGIC CORPORATION


 


The Collateral consists
of all of Borrower’s right, title and interest in and to the following:


 


All goods, Accounts
(including health-care receivables), Equipment, Inventory, contract rights or
rights to payment of money, leases, license agreements, franchise agreements,
General Intangibles, commercial tort claims, documents, instruments (including
any promissory notes), chattel paper (whether tangible or electronic), cash,
deposit accounts, fixtures, letters of credit rights (whether or not the letter
of credit is evidenced by a writing), securities, and all other investment
property, supporting obligations, and financial assets, whether now owned or
hereafter acquired, wherever located; and


 


All Borrower’s Books
relating to the foregoing, and any and all claims, rights and interests in any
of the above and all substitutions for, additions, attachments, accessories,
accessions and improvements to and replacements, products, proceeds and
insurance proceeds of any or all of the foregoing; and


 


Pursuant to the terms of
a certain negative pledge arrangement with Bank, Borrower has agreed not to
encumber any of its copyright rights, copyright applications, copyright
registrations and like protections in each work of authorship and derivative
work, whether published or unpublished, any patents, patent applications and
like protections, including improvements, divisions, continuations, renewals,
reissues, extensions, and continuations-in-part of the same, trademarks,
service marks and, to the extent permitted under applicable law, any
applications therefor, whether registered or not, and the goodwill of the
business of Borrower connected with and symbolized thereby, know-how, operating
manuals, trade secret rights, rights to unpatented inventions, and any claims
for damage by way of any past, present, or future infringement of any of the
foregoing, without Bank’s prior written consent.


 

















 


EXHIBIT B


 


FORM OF NOTICE OF BORROWING


 


QUICKLOGIC CORPORATION


 


Date:                               


 


	
  TO:

  	
   

  	
  SILICON
  VALLEY BANK

  
	
   

  	
   

  	
  3003
  Tasman Drive

  
	
   

  	
   

  	
  Santa
  Clara, CA 95054

  
	
   

  	
   

  	
  Attention:
  Corporate Services Department

  
	
   

  	
   

  	
   

  
	
  RE:

  	
   

  	
  Second
  Amended and Restated Loan and Security Agreement dated as of June 30,
  2006 (as amended, modified, supplemented or restated from time to time, the “Loan Agreement”), by and between Quicklogic Corporation (“Borrower”), and Silicon Valley Bank (the “Bank”)

  



 


Ladies and Gentlemen:


 


The undersigned refers to the Loan Agreement, the terms defined therein
and used herein as so defined, and hereby gives you notice irrevocably,
pursuant to Section 2.1.2(a) of the
Loan Agreement, of the borrowing of an Advance.


 


1.                                      The Funding
Date, which shall be a Business Day, of the requested borrowing is                               .


 


2.                                      The aggregate
amount of the requested borrowing is $                          .


 


3.                                      The requested
Advance shall consist of $                      
of Prime Rate Advances and $            
of LIBOR Advances.


 


4.                                      The duration of
the Interest Period for the LIBOR Advances included in the requested Advance
shall be                     
months.


 


The undersigned hereby certifies that the following statements are true
on the date hereof, and will be true on the date of the proposed Advance before
and after giving effect thereto, and to the application of the proceeds
therefrom, as applicable:


 


(a)                                  all representations and warranties of
Borrower contained in the Loan Agreement are true, accurate and complete in all
material respects as of the date hereof;


 


(b)                                  no Default or Event of Default has occurred
and is continuing, or would result from such proposed Advance; and


 


(c)                                  the requested Advance will not cause the
aggregate principal amount of the outstanding Advances to exceed, as of the
designated Funding Date, (i) the Committed Non-Formula Revolving Line
minus (ii) the amount of all outstanding Letters of Credit (including
drawn but unreimbursed Letters of Credit), minus (iii) the aggregate
outstanding Advances.


 

















 


	
  BORROWER

  	
   

  	
  QUICKLOGIC
  CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
  For
  internal Bank use only

  	
   

  	
   

  
						



 


	
  LIBOR Pricing Date

  	
   

  	
  LIBOR

  	
   

  	
  LIBOR Variance

  	
   

  	
  Maturity Date

  
	
   

  	
   

  	
   

  	
   

  	
                 %

  	
   

  	
   

  



 
















 


EXHIBIT C


 


FORM OF COMPLIANCE CERTIFICATE


 


QUICKLOGIC CORPORATION


 


	
  TO:

  	
  SILICON
  VALLEY BANK

  	
   

  
	
   

  	
  3003
  Tasman Drive

  	
   

  
	
   

  	
  Santa
  Clara, CA 95054

  	
   

  
	
   

  	
   

  	
   

  
	
  FROM:

  	
  QUICKLOGIC
  CORPORATION

  	
   

  
	
   

  	
  1227
  Orleans Drive

  	
   

  
	
   

  	
  Sunnyvale,
  CA 94089-1138

  	
   

  



 


The
undersigned authorized officer of QuickLogic Corporation (“Borrower”) certifies
that under the terms and conditions of the Loan and Security Agreement between
Borrower and Bank (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 in the Agreement are true and correct in all
material respects on this date, except for representations and warranties made
as of a specific earlier date, which are to be true and correct in all material
respects as of such earlier date. 
Attached are the required documents supporting the certification.  The Officer certifies that these are prepared
in accordance with Generally Accepted Accounting Principles (GAAP) consistently
applied from one period to the next except as explained in an accompanying
letter, footnotes or year end adjustments. 
The Officer 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.


 


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


 


	
  Reporting
  and Financial Covenants

  	
   

  	
  Required

  	
   

  	
  Complies

  
	
  Monthly
  financial statements + CC

  	
   

  	
  Monthly
  within 45 days

  	
   

  	
  o Yes

  	
   

  	
  o No

  
	
  Annual
  (Audited)

  	
   

  	
  Annual
  within 120 of FYE

  	
   

  	
  o Yes

  	
   

  	
  o No

  
	
  Board
  Approved Projections

  	
   

  	
  Prior
  to December 20th

  	
   

  	
  o Yes

  	
   

  	
  o No

  
	
  Accounts
  Payable and Accounts Receivable Listings

  	
   

  	
  Within
  30 days of the end of each month

  	
   

  	
  o Yes

  	
   

  	
  o No

  
	
  10-Q,
  10-K, and 8-K

  	
   

  	
  Within
  5 days after filing with SEC

  	
   

  	
  o Yes

  	
   

  	
  o No

  
	
  Minimum
  Tangible Net Worth

  	
   

  	
  Monthly;
  $17,000,000

  	
   

  	
  o Yes

  	
   

  	
  o No

  
	
  Quick
  Ratio Adjusted

  	
   

  	
  2.00
  to 1.00

  	
   

  	
  o Yes

  	
   

  	
  o No

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Have there been updates to Borrower’s intellectual property, if
  appropriate?

  	
   

  	
  o Yes

  	
   

  	
  o No

  



 


The following financial covenant analys[is][es] and information set
forth in Schedule 1 attached hereto are 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.”)


 

















 


[Signature page follows]


 


	
  QUICKLOGIC
  CORPORATION

  	
   

  	
  BANK USE ONLY

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By: 

  	
   

  	
   

  	
  Received by: 

  	
   

  
	
   

  	
   

  	
   

  
	
  Name: 

  	
   

  	
   

  	
  AUTHORIZED SIGNER

  
	
   

  	
   

  	
   

  
	
  Title: 

  	
   

  	
   

  	
  Date: 

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Verified:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  AUTHORIZED SIGNER

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Date: 

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Compliance Status:        o Yes   o No

  
											



 

















 


Schedule 1 to Compliance Certificate


 


Financial Covenants of Borrower


 


	
  Dated:

  	
  ________________

  	
   

  
	
   

  	
   

  	
   

  
	
  I.

  	
  Tangible Net Worth (Section 6.8(a))

  



 


	
  Required:

  	
  $17,000,000

  	
   

  	
   

  	
   

  



 


Actual:


 


	
  A.

  	
  Value of Line I. (Tangible Net Worth)

  	
  $

  	
  ________

  
	
   

  	
   

  	
   

  	
   

  
	
  Is line A equal to or greater than $17,000,000?

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  o

  	
  No, not in compliance

  	
  o

  	
   Yes, in compliance

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  II.

  	
  Adjusted Quick Ratio (Section 6.8(b))

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Required:

  	
  2:00:1.00

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Actual:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  A.

  	
  Aggregate value of the unrestricted cash and cash equivalents of
  Borrower and its Subsidiaries

  	
  $

  	
  ________

  
	
   

  	
   

  	
   

  	
   

  
	
  B.

  	
  Aggregate value of the net billed accounts receivable of Borrower and
  its Subsidiaries

  	
  $

  	
  ________

  
	
   

  	
   

  	
   

  	
   

  
	
  C.

  	
  Aggregate value of the Investments with maturities of fewer than 12
  months of Borrower and it Subsidiaries held at Bank or its affiliates

  	
  $

  	
  ________

  
	
   

  	
   

  	
   

  	
   

  
	
  D.

  	
  Quick Assets (the sum of lines A through C)

  	
  $

  	
  ________

  
	
   

  	
   

  	
   

  	
   

  
	
  E.

  	
  Aggregate value of Obligations to Bank

  	
  $

  	
  ________

  
	
   

  	
   

  	
   

  	
   

  
	
  F.

  	
  Quick Ratio (line D divided by line E)

  	
   

  	
  ________

  
	
   

  	
   

  	
   

  	
   

  
	
  G.

  	
  Aggregate value of all amounts received or invoiced by Borrower in
  advance of performance under contracts and not yet recognized as revenue

  	
  $

  	
  ________

  
	
   

  	
   

  	
   

  	
   

  
	
  H.

  	
  Line E minus line G

  	
  $

  	
  ________

  
	
   

  	
   

  	
   

  	
   

  
	
  I.

  	
  Adjusted Quick Ratio (line D divided by line H)

  	
   

  	
  ________

  
							



 


Is
line I equal to or greater than 2.00:1:00?


 


	
   

  	
  o

  	
  No, not in compliance

  	
  o

  	
   Yes, in compliance

  	
   

  



 

















 


EXHIBIT E


 


FORM OF NOTICE OF CONVERSION/CONTINUATION


 


QUICKLOGIC CORPORATION


 


	
   

  	
  Date:
  

  	
  ________________

  	
   

  



 


	
  TO:

  	
  SILICON
  VALLEY BANK

  
	
   

  	
  3003 Tasman Drive

  
	
   

  	
  Santa Clara, CA 95054

  
	
   

  	
  Attention:

  
	
   

  	
   

  
	
  RE:

  	
  Second
  Amended and Restated Loan and Security Agreement dated as of June 30, 2006
  (as amended, modified, supplemented or restated from time to time, the “Loan Agreement”), by and between Quicklogic Corporation (“Borrower”), and Silicon Valley Bank (the “Bank”)

  



 


Ladies
and Gentlemen:


 


The undersigned refers to
the Loan Agreement, the terms defined therein being used herein as therein
defined, and hereby gives you notice irrevocably, pursuant to Section 2.1.2(b) of the Loan Agreement, of the [conversion]
[continuation] of the Advances specified herein, that:


 


1.                                      The date of the [conversion] [continuation]
is                                            ,
20      .


 


2.                                      The aggregate amount of the proposed Advances
to be [converted] is $                             or [continued] is $              .


 


3.                                      The Advances are to be [converted into]
[continued as] [LIBOR] [Prime Rate] Advances.


 


4.                                      The duration of the Interest Period for the
LIBOR Advances included in the [conversion] [continuation] shall be            
months.


 


The
undersigned, on behalf of Borrower, hereby certifies that the following
statements are true on the date hereof, and will be true on the date of the
proposed [conversion] [continuation], before and after giving effect thereto
and to the application of the proceeds therefrom:


 


(a)                                  all representations and warranties of
Borrower stated in the Loan Agreement are true, accurate and complete in all
material respects as of the date hereof; and


 


(b)                                  no Default or Event of Default has occurred
and is continuing, or would result from such proposed [conversion] [continuation].


 

















 


	
  BORROWER

  	
  QUICKLOGIC
  CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:  

  	
   

  
	
   

  	
  Name:  

  	
   

  
	
   

  	
  Title:  

  	
   

  
					



 


 


For
internal Bank use only


 


	
  LIBOR
  Pricing Date

  	
   

  	
  LIBOR

  	
   

  	
  LIBOR Variance

  	
   

  	
  Maturity Date

  
	
   

  	
   

  	
   

  	
   

  	
              %

  	
   

  	
   

  



 

















 





 


SILICON VALLEY BANK


 


PRO FORMA INVOICE FOR LOAN CHARGES


 


	
  BORROWER:

  	
  QuickLogic
  Corporation

  	
   

  
	
   

  	
   

  	
   

  
	
  LOAN
  OFFICER:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  DATE:

  	
  August 13, 2008

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Loan
  Fee

  	
  $                

  
	
   

  	
   

  	
   

  
	
   

  	
  Documentation
  Fee

  	
  $                

  
	
   

  	
   

  	
   

  
	
   

  	
  TOTAL
  FEES DUE

  	
  $        

  



 


{  }  A check for the total amount is attached.


 


{  }  Debit DDA #                                      for the total amount.


 


 


BORROWER:


 


 


	
   

  	
   

  
	
  Authorized
  Signer

  	
  (Date)

  	
   

  
			



 


 


SILICON
VALLEY BANK


 


	
   

  	
   

  
	
  Loan
  Officer Signature

  	
  (Date)