EXHIBIT 10.1


 


LOAN MODIFICATION AGREEMENT


 


This Loan Modification
Agreement is entered into as of June 27, 2005, by and between Quicklogic
Corporation (the “Borrower”) and Silicon Valley Bank (“Bank”).


 


1.                                       DESCRIPTION
OF EXISTING OBLIGATIONS:  Among other
Obligations which may be owing by Borrower to Bank, Borrower is indebted to
Bank pursuant to, among other documents, an Amended and Restated Loan and
Security Agreement, dated June 20, 2003 (as may be amended, restated, or
otherwise modified from time to time, the “Loan Agreement”). The Loan Agreement
provides for, among other things, a Committed
Equipment Line in the original principal amount of Two Million One
Hundred Sixty Seven Thousand Nine Hundred Twenty Five and 83/100 Dollars
($2,167,925.83) and a Committed Non-Formula Line and Committed Formula Line in
the original principal amount not to exceed Eight Million Dollars ($8,000,000)
in the aggregate.  The Loan Agreement has been modified pursuant
to, among other documents, a Loan Modification Agreement dated June 28, 2004,
pursuant to which, among other things, a Committed Equipment Line 2 was
incorporated in the original principal amount of Two Million Dollars
($2,000,000).  Defined terms used
but not otherwise defined herein shall have the same meanings as set forth in
the Loan Agreement.


 


Hereinafter, all indebtedness owing by Borrower to Bank shall be
referred to as the “Obligations.”


 


2.                                       DESCRIPTION
OF COLLATERAL. Repayment of the Obligations is secured by the Collateral as
described in the Loan Agreement.


 


Hereinafter, the
above-described security documents and guaranties, together with all other
documents securing repayment of the Obligations shall be referred to as the “Security
Documents”.  Hereinafter, the Security
Documents, together with all other documents evidencing or securing the
Obligations shall be referred to as the “Existing Loan Documents”.


 


3.                                       DESCRIPTION
OF CHANGE IN TERMS.


 


A.                                   Modification(s) to Loan Agreement.


 


1.                                       Sub letter
(b) under Section 2.1.1 entitled “Formula Revolving Advances” is hereby by
deleted in its entirety and replaced with “Intentionally Omitted”.


 


2.                                       Sub
letter (a) of Section 2.1.3 entitled “Letters of Credit” is hereby amended to
read as follows:


 


(a)            Bank
will issue Letters of Credit for Borrower’s account not to exceed the
Availability.


 


3.                                       Section
2.1.4 entitled “Foreign Exchange Sublimit” is hereby amended in part to provide
that the FX Reserve may not exceed the Availability.


 


4.                                       Section
2.1.5 entitled “Cash Management Services Sublimit” is hereby amended in part to
provide that Borrower may use for Bank’s Cash Management Services up to an
amount equal to the Availability.


 


5.                                       Section
2.1.12 entitled “Equipment Advance 3” is hereby incorporated to read as
follows:


 


(a)            Through June 26, 2006 (the “Equipment
Availability End Date 3”), Bank will make advances (“Equipment Soft Cost
Advance 3” and, collectively “Equipment Soft Cost Advances 3”) not to exceed


 





















 


$2,250,00
of the Committed Equipment Line 3.  The
Equipment Soft Cost Advance 3 may only be used to finance software licenses
(including approximately $1,500,000 related to the licensing of Cadence Design
tools), mask sets, foreign domiciled equipment, leasehold improvements and may
include sale tax, freight discounts, warranty charges, shipping and installation
expenses (“Soft Costs”).  Through the
Equipment Availability End Date 3, Bank will make advances (“Equipment Hardware
Advance 3” and, collectively, “Equipment Hardware Advances 3”; together with
Equipment Soft Cost Advances 3 are referred to as “Equipment Advances 3”) not
to exceed the Committed Equipment Line 3 (reduced by the amount of any
Equipment Soft Cost Advance 3). 
Equipment Hardware Advances 3 may only be used to finance eligible
Equipment and shall exclude Soft Costs. 
Equipment Hardware Advance 3 and Equipment Soft Cost Advance 3 shall be
limited to equipment purchased within 90 days of the date of the requested
Equipment Advances 3 and may not exceed 100% of the equipment invoice.  Each Equipment Advance 3 must be greater than
$50,000 and is limited to one Equipment Advance 3 per month.


 


(b)           Each (a) Equipment Soft Cost Advance 3
shall amortize immediately and be payable in 30 equal monthly installments of
principal plus accrued interest and (b) Equipment Hard Cost Advance 3 shall
amortize immediately and be payable in 36 equal monthly installments of
principal plus accrued interest beginning 30 days following the date of such
Equipment Advance 3 and continuing on the same day of each month
thereafter.  The final payment on the
applicable Equipment Advance 3 Maturity Date shall include all outstanding
principal and all accrued unpaid interest. 
Equipment Advances 3 when repaid may not be reborrowed.


 


(c)            To obtain an Equipment Advance 3,
Borrower must notify Bank (the notice is irrevocable) by facsimile no later
than 12:00 p.m. Pacific time 1 Business Day before the day on which the
Equipment Advance 3 is to be made.  The
notice in the form of Exhibit B (Payment/Advance Form) must be signed by a
Responsible Officer or designee and include a copy of the invoice for the
Equipment being financed.


 


6.                                       Effective
as of the date hereof, sub sections (i) and (ii) under sub letter (a) under
Section 2.3 entitled “Interest Rate, Payments” is hereby amended to read as
follows:


 


(i) Formula Advances accrue interest on the
outstanding principal balance at a per annum rate equal to the greater of (a)
one half of one percentage point (0.50%) above the Prime Rate or (b) 5.00%;
(ii) Non-Formula Advances accrue interest on the outstanding principal balance
at a per annum rate equal to the greater of (c) one and one half percentage
points (1.50%) above the Prime Rate or (d) 5.00%;


 


7.                                       Effective
as of the date hereof, sub letter (a) (vi) under Section 2.3 entitled “Interest
Rate, Payments” is hereby incorporated to read as follows:


 


(vi)                              Equipment
Advances 3 accrue interest on the outstanding principal balance at a per annum
rate of one and three quarter percentage points (1.75%) above the Prime Rate.


 





















 


8.             Sub
letter (b) of Section 2.3 entitled “Interest Rate, Payments” is hereby amended
in part to provide that interest due on the Committed Formula Revolving Line
and the Committed-Non Formula Line is payable on the 26th of each
month.


 


9.             Sub
letter (c) of Section 6.2 entitled “Financial Statements, Reports, Certificates”
is hereby amended to read as follows:


 


(c)          Within
45 days after the last day of each month, Borrower will deliver to Bank a
Borrowing Base Certificate signed by a Responsible Officer in the form of
Exhibit D, with aged listings of accounts receivable and accounts payable.


 


10.           Sub
letter (i) entitled “Tangible Net Worth” under Section 6.7 entitled “Financial
Covenants” hereby amended to read as follows:


 


(i)             Tangible
Net Worth.  A Tangible Net Worth of at
least $31,000,000.


 


11.           For
clarification purposes, Section 6.8 entitled “Intentionally Omitted” is hereby
amended and replaced with “Protection of Intellectual Property Right” and is to
read as follows:


 


Borrower will (i) protect, defend and
maintain the validity and enforceability of the material Intellectual Property
and promptly advise Bank in writing of material infringements and (ii) not
allow any material Intellectual Property 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 (i) a Negative Pledge Agreement in which Borrower agreed,
subject to certain exceptions, not to encumber its Intellectual Property and
(ii) a Loan Modification Agreement dated June 28, 2004 in which the definition
of Collateral was amended to reflect that Intellectual Property created,
modified acquired or obtained on or after June 28, 2004 (but not before such
date) shall not be deemed as part of the Collateral.


 


12.           The
following defined terms under Section 13.1 entitled “Definitions” are hereby amended and/or incorporated
to read as follows:


 


“Committed Equipment
Line 3” is a
Credit Extension of up to $3,000,000.


 


“Credit Extension” is each Advance, Equipment Advance, Equipment
Advance 2, Equipment Advance 3, Letter of Credit, Exchange Contract, Term Loan
A, Term Loan B, Term Loan C and Term Loan D, or any other extension of credit
by Bank for Borrower’s benefit.


 


“Equipment Advance 3” is defined under Section
2.1.12.


 


“Equipment
Advance 3 Maturity Date” is as to any Equipment Soft Cost Advances 3, a date
which is 30 months from such Equipment Soft Cost Advance 3, however, no longer
than December 26, 2008 and as to any Equipment Hard Cost Advance 3, 36 months
from such Equipment Hard Cost Advance 3, however, no longer than June 26, 2009.


 





















 


“Equipment Availability End Date 3” is defined under Section
2.1.12.


 


“Equipment Hardware Advance 3” is defined under Section
2.1.12.


 


“Equipment Soft Cost Advance 3” is defined under Section
2.1.12.


 


“Prime
Rate” is Bank’s most recently announced “prime rate” even if it is not Bank’s
lowest rate.


 


“Revolving Maturity Date” is June 26, 2006.


 


4.                                       CONSISTENT
CHANGES.  The Existing Loan Documents
are hereby amended wherever necessary to reflect the changes described above.


 


5.                                       NO
DEFENSES OF BORROWER.  Borrower (and
each guarantor and pledgor signing below) agrees that, as of the date hereof,
it has no defenses against paying any of the Obligations.


 


6.                                       PAYMENT
OF LOAN FEE.  Borrower shall pay Bank
fees in the amount Forty Thousand Dollars ($40,000) (the “Revolving Line
Renewal Fee”) and Fifteen Thousand Dollars ($15,000) (the “Equipment Fee”) (the
Revolving Line Renewal Fee and the Equipment Fee are collectively referred to
as the “Loan Fee”) plus all out-of-pocket expenses.


 


7.                                       CONTINUING
VALIDITY.  Borrower (and each
guarantor and pledgor signing below) understands and agrees that in modifying
the existing Indebtedness, Bank is relying upon Borrower’s representations,
warranties, and agreements, as set forth in the Existing Loan Documents.  Except as expressly modified pursuant to this
Loan Modification Agreement, the terms of the Existing Loan Documents remain
unchanged and in full force and effect. 
Bank’s agreement to modifications to the existing Obligations pursuant
to this Loan Modification Agreement in no way shall obligate Bank to make any
future modifications to the Obligations. 
Nothing in this Loan Modification Agreement shall constitute a
satisfaction of the Obligations.  It is
the intention of Bank and Borrower to retain as liable parties all makers and
endorsers of Existing Loan Documents, unless the party is expressly released by
Bank in writing.  Unless expressly
released herein, no maker, endorser, or guarantor will be released by virtue of
this Loan Modification Agreement.  The
terms of this paragraph apply not only to this Loan Modification Agreement, but
also to all subsequent loan modification agreements.


 


8.                                       CONDITIONS.  The effectiveness of this Loan Modification
Agreement is conditioned upon payment of the Loan Fee.


 


This Loan Modification Agreement is executed
as of the date first written above.


 


	
  BORROWER:

  	
  BANK:

  
	
   

  	
   

  
	
  QUICKLOGIC
  CORPORATION

  	
  SILICON VALLEY
  BANK

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   /s/ Carl M. Mills

  	
   

  	
  By:

  	
  /s/ Matthew Maloney

  	
   

  
	
   

  	
   

  
	
  Name: Carl M. Mills

  	
  Name: Matthew Maloney

  
	
   

  	
   

  
	
  Title:

  	
  Vice President, Finance and

  	
  Title: Senior Vice-President

  
	
   

  	
  Chief Financial Officer