**Exhibit10.9**

 

SECOND AMENDMENTTOLOAN AND SECURITY AGREEMENT

 

This Second Amendment to Loan and Security Agreementis entered into as of January 30, 2003 (the “Amendment”), by and betweenCOMERICA BANK – CALIFORNIA (“Bank”), and TRIPATH TECHNOLOGY INC. (“Borrower”).

 

RECITALS

 

Borrower and Bank are parties to that certain Loan andSecurity Agreement dated as of July 12, 2002, as amended, including withoutlimitation by that certain First Amendment to Loan and Security Agreement datedas of August 23, 2002 (collectively, the “Agreement”).  The parties desire to amend the Agreement inaccordance with the terms of this Amendment.

 

NOW, THEREFORE, the parties agree as follows:

 

# 1.                                       Subsection(i) of the defined term “Eligible Accounts” in Section 1.1 of the Agreement ishereby amended to read as follows:

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(i)                                     Accountswith respect to an account debtor, including Subsidiaries and Affiliates, whosetotal obligations to Borrower exceed twenty percent (20%) of all Accounts (the“Concentration Limit”), to the extent such obligations exceed theaforementioned percentage except as approved in writing by the Bank, providedthat the Concentration Limit shall be 50% for Komatsu Semiconductor Corp.,Quanta Computer Inc., Solectron Technology Singapore PTE LTD, World Vantage Tech(Holdings) LTD, and Dynax Electronics (HK) LTD and 35% for Macnica, Inc. (suchexceptions are reviewable on an ongoing basis);

 

# 2.                                       Thefollowing defined term in Section 1.1 of the Agreement is hereby amendedto read as follows:

 

“Eligible Foreign Accounts”means Accounts with respect to which the account debtor does not have itsprincipal place of business in the United States and that (i) are supported byone or more letters of credit in an amount and of a tenor, and issued by afinancial institution, acceptable to Bank, or (ii) are supported by creditinsurance acceptable to Bank, (iii) are Accounts on which the account debtor isapproved in writing by Bank, including without limitation Komatsu SemiconductorCorp., Quanta Computer Inc., Solectron Technology Singapore PTE LTD, andMacnica, Inc. (provided that the advance rate on such accounts shall be 60%unless supported by a letter of credit or credit insurance as set forth insubsections (i) or (ii) hereof) (such exceptions are reviewable on an ongoingbasis); or (iv) are Accounts with respect to which the account debtor is DynaxElectronics (HK) LTD which are secured by letters of credit acceptable to Bank(the letters of credit shall name Bank as beneficiary and be issued byinstitutions approved by Bank’s International Department).

 

# 3.                                       Thefirst paragraph of Section 6.3 of the Agreement is hereby amended in itsentirety to read as follows:

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6.3                                 FinancialStatements, Reports, Certificates. Borrower shall deliver the following to Bank:  (a) as soon as available, but in any event within forty five (45)days after the end of each quarter, a company prepared consolidated balancesheet, income, and cash flow statement covering Borrower’s consolidatedoperations during such period, prepared in accordance with GAAP, consistentlyapplied, in a form reasonably acceptable to Bank and certified by a ResponsibleOfficer; (b) as soon as available, but in any event within one hundred

 

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twenty (120) days after the end of Borrower’s fiscalyear, audited consolidated financial statements of Borrower prepared inaccordance with GAAP, consistently applied, together with an unqualifiedopinion on such financial statements of an independent certified publicaccounting firm reasonably acceptable to Bank; (c) if applicable, copies of allstatements, reports and notices sent or made available generally by Borrower toits security holders or to any holders of Subordinated Debt and all reports onForms 10-K and 10-Q filed with the Securities and Exchange Commission; (d)promptly upon receipt of notice thereof, a report of any legal actions pendingor threatened against Borrower or any Subsidiary that could result in damagesor costs to Borrower or any Subsidiary of Fifty Thousand Dollars ($50,000) ormore; and (e) such budgets, sales projections, operating plans or otherfinancial information as Bank may reasonably request from time to timegenerally prepared by Borrower in the ordinary course of business.

 

# 4.                                       Sections6.9 and 6.10 of the Agreement are hereby amended in their entirety to read asfollows:

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6.9                                 TangibleNet Worth.  At all times, measuredas of the last day of each month, beginning with the month ending January 31,2003, Borrower shall maintain a Tangible Net Worth of at least $12,000,000,provided that such required amount shall increase by 50% of Borrower’squarterly net profit after tax after January 30, 2003 and by 25% of any netproceeds received by Borrower in any given quarter from the sale and issuanceof its equity securities after January 30, 2003.

 

## 6.10                           Revenue.  Borrower shall show quarterly revenue of atleast the following amounts for each of the following quarters:

 

| **Quarter  End Date** |   | **Minimum  Revenue for such  Quarter** |      |
|-----------------------|--------|----------------------------------------|-----------|
| 3/31/03               |   | $                                      | 2,400,000 |   |
| 6/30/03               |   | $                                      | 4,320,000 |   |

 

# 5.                                       Anew Section 6.13 is hereby added to the Agreement to read as follows:

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6.13                           NewEquity.  On or before April 30,2003, Borrower shall receive cash proceeds from the sale and issuance of itsequity securities to investors satisfactory to Bank in an amount of at leastSeven Million Five Hundred Thousand Dollars ($7,500,000).

 

# 6.                                       ExhibitD to the Agreement is hereby amended and replaced in its entirety by ExhibitD attached hereto.

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# 7.                                       Bankwaives Borrower’s failure to comply with (i) Section 6.9 of the Agreement, asin effect prior to the date of this Amendment, for the months ended on October31, 2002, November 30, 2002, and December 31, 2002 and (ii) Section 6.10 of theAgreement, as in effect prior to the date of this Amendment, for the quarterended December 31, 2002.  Bank does notwaive any other failure by Borrower to perform its Obligations under the LoanDocuments, and Bank does not waive any obligations Borrower may have under theAgreement (as amended by this Amendment) after December 31, 2002.  This waiver is not a continuing waiver withrespect to any failure to perform any Obligation after December 31, 2002.

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# 8.                                       Unlessotherwise defined, all initially capitalized terms in this Amendment shall beas defined in the Agreement.  The Agreement,as amended hereby, shall be and remain in full force and effect in accordancewith

 

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# itsrespective terms and hereby is ratified and confirmed in all respects.  Except as expressly set forth herein, theexecution, delivery, and performance of this Amendment shall not operate as awaiver of, or as an amendment of, any right, power, or remedy of Bank under theAgreement, as in effect prior to the date hereof.  Borrower ratifies and reaffirms the continuing effectiveness ofall promissory notes, guaranties, security agreements, mortgages, deeds oftrust, environmental agreements, and all other instruments, documents andagreements entered into in connection with the Agreement.

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# 9.                                       Borrowerrepresents and warrants that the representations and warranties contained inthe Agreement are true and correct as of the date of this Amendment, and thatno Event of Default has occurred and is continuing.

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# 10.                                 ThisAmendment may be executed in two or more counterparts, each of which shall bedeemed an original, but all of which together shall constitute one instrument.

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# 11.                                 Asa condition to the effectiveness of this Amendment, Bank shall have received,in form and substance satisfactory to Bank, the following:

 

### (a)                                  thisAmendment, duly executed by Borrower;

 

### (b)                                 acertificate of the Secretary of Borrower with respect to incumbency andresolutions authorizing the execution and delivery of this Amendment;

 

### (c)                                  anamount equal to all Bank Expenses incurred through the date of this Amendment;and

 

### (d)                                 suchother documents, and completion of such other matters, as Bank may reasonablydeem necessary or appropriate.

 

IN WITNESS WHEREOF, the undersigned have executed thisAmendment as of the first date above written.

 
|   | TRIPATH TECHNOLOGY INC.         |
|--------|---------------------------------|
|   |                            |
|   | By:                             |   |
|   |                            |
|   | Title:                          |   |
|   |                            |
|   | COMERICA BANK – CALIFORNIA |
|   |                            |
|   | By:                             |   |
|   |                            |
|   | Title:                          |   |
|        |                                 |  |  |

 

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**EXHIBIT D**

 

**COMPLIANCE CERTIFICATE**

 

TO:                                                                            COMERICABANK - CALIFORNIA

 

FROM:                                                         TRIPATHTECHNOLOGY INC.

 

The undersigned authorized officer of TRIPATHTECHNOLOGY INC. hereby certifies that in accordance with the terms andconditions 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) allrepresentations and warranties of Borrower stated in the Agreement are true andcorrect in all material respects as of the date hereof (provided, however, thatthose representations and warranties expressly referring to another date aretrue and correct in all material respects as of such date).  Attached herewith are the required documentssupporting the above certification.  TheOfficer further certifies that these are prepared in accordance with GenerallyAccepted Accounting Principles (GAAP) and are consistently applied from oneperiod 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** |   |
|----------------------------------------------------------------------------|--------|--------------------------|--------|--------|--------|--------------|--------|
|                                                                       |   |                     |   |   |   |         |   |   |
| Financial  statements                                                      |   | Quarterly within 45 days |   |   |   | Yes          | No     |   |
| Annual (CPA  Audited)                                                      |   | FYE within 120 days      |   |   |   | Yes          | No     |   |
| 10K and 10Q                                                                |   | (If applicable)          |   |   |   | Yes          | No     |   |
| A/R Audit                                                                  |   | Semi-Annual              |   |   |   | Yes          | No     |   |
| A/R & A/P  Agings, Borrowing Base Cert.                                |   | Monthly within 15 days   |   |   |   | Yes          | No     |   |
| Total amount of  Borrower’s cash and investments                      |   | Amount:  $          |   |   |   | Yes          | No     |   |
| Total amount of  Borrower’s cash and investments maintained with Bank |   | Amount:  $          |   |   |   | Yes          | No     |   |

 
| **Financial  Covenant**       |   | **Required** | ** ** | **Actual** | ** ** | **Complies** | ** ** |
|-------------------------------|--------|--------------|------------|------------|------------|--------------|------------|
|                          |   |         |       |       |       |         |       |   |
| Measured on a  Monthly Basis: |   |         |       |       |       |         |       |   |
| Minimum Quick  Ratio          |   | 1.50:1.00    |       | :1.00      |       | Yes          | No         |   |
| Minimum Tangible  Net Worth   |   | $12,000,000* |       | $          |       |         | Yes        | No |   |
| Minimum  Quarterly Revenue    |   | **           |       | $          |       |         | Yes        | No |   |
| $7.5MM Equity  Event          |   | 4/30/03      |       |       |       | Yes          | No         |   |

 

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*such required amount shall increase by 50% ofBorrower’s quarterly net profit after tax after January 30, 2003 and by 25% ofany proceeds received by Borrower in any given quarter from the sale andissuance of its debt or equity securities after January 30, 2003

 

**3/31/03, $2,400,000; 6/30/03, $4,320,000

 
| **Comments  Regarding Exceptions:**   See Attached. |   | **BANK  USE ONLY** |
|----------------------------------------------------------|--------|--------------------|
|                                                     |   |               |
|                                                     |   | Received by:       |   |
| Sincerely,                                               |   |               | AUTHORIZED SIGNER |
|                                                     |   |               |
|                                                     |   | Date:              |   |
|                                                     |   |               |
|                                                     |   | Verified:          |   |
| SIGNATURE                                                |   |               | AUTHORIZED SIGNER |
|                                                     |   |               |
|                                                     |   | Date:              |   |
| TITLE                                                    |   |               |
|                                                     |   | Compliance Status  | Yes | No |
|                                                     |   |               |
| DATE                                                     |   |               |
|                                                          |        |                    |  |  |  |  |  |

 

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**CORPORATE RESOLUTIONS TO BORROW**

 

**Borrower**:                                        TRIPATHTECHNOLOGY INC.

 

I, the undersigned Secretary or Assistant Secretary ofTRIPATH TECHNOLOGY INC. (the “Corporation”), HEREBY CERTIFY that theCorporation is organized and existing under and by virtue of the laws ofDelaware.

 

I FURTHER CERTIFY that at a meeting of the Directorsof the Corporation duly called and held, at which a quorum was present andvoting, (or by other duly authorized corporate action in lieu of a meeting),the following resolutions were adopted.

 

BE IT RESOLVED, that **any one (1)** of the followingnamed officers, employees, or agents of this Corporation, whose actualsignatures are shown below:

 
| **NAMES** |   | **POSITIONS** |   | **ACTUAL  SIGNATURES** |   |
|-----------|--------|---------------|--------|------------------------|--------|
|      |   |          |   |                   |   |
|      |   |          |   |                   |   |
|      |   |          |   |                   |   |
|      |   |          |   |                   |   |
|      |   |          |   |                   |   |
|      |   |          |   |                   |   |

 

acting for an on behalf of this Corporation and as its act and deed be,and they hereby are, authorized and empowered:

 

**Borrow Money.** To borrow from time to time from COMERICA BANK - CALIFORNIA(“Bank”), on such terms as may be agreed upon between the officers, employees,or agents of the Corporation and Bank, such sum or sums of money as in theirjudgment should be borrowed, without limitation.

 

**Execute Loan Documents.**  To execute and deliver to Bank that certainSecond Amendment to Loan and Security Agreement dated as of January 30, 2003(the “Amendment”) and any documents related to the Amendment or to that certainLoan and Security Agreement dated as of July 12, 2002, as amended (collectivelywith the Amendment, the “Loan Documents”), and also to execute and deliver toBank one or more amendments, renewals, extensions, modifications,consolidations, or substitutions for the Loan Documents.

 

**Grant Security**.  To grant a security interest to Bank in the Collateral describedin the Loan Documents, which security interest shall secure all of theCorporation’s obligations to Bank, as described in the Loan Documents andotherwise.

 

**Letters of Credit.**  To execute letters of credit applicationsand other related documents pertaining to Bank’s issuance of letters of credit.

 

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**Negotiate Items.**  To draw, endorse, and discount with Bank all drafts, tradeacceptances, promissory notes, or other evidences of indebtedness payable to orbelonging to the Corporation or in which the Corporation may have an interest,and either to receive cash for the same or to cause such proceeds to becredited to the account of the Corporation with Bank, or to cause such otherdisposition of the proceeds derived therefrom as they may deem advisable.

 

**Further Acts**.  In the case of lines of credit, to designate additional oralternate individuals as being authorized to request advances thereunder, andin all cases, to do and perform such other acts and things, to pay any and allfees and costs, and to execute and deliver such other documents and agreementsas they may in their discretion deem reasonably necessary or proper in order tocarry into effect the provisions of these Resolutions.

 

BE IT FURTHER RESOLVED, that any and all actsauthorized pursuant to these resolutions and performed prior to the passage ofthese resolutions are hereby ratified and approved, that these Resolutionsshall remain in full force and effect and Bank may rely on these Resolutionsuntil written notice of their revocation shall have been delivered to andreceived by Bank.  Any such notice shallnot affect any of the Corporation’s agreements or commitments in effect at thetime notice is given.

 

I FURTHER CERTIFY that the officers, employees, andagents named above are duly elected, appointed, or employed by or for theCorporation, as the case may be, and occupy the positions set forth oppositetheir respective names; that the foregoing Resolutions now stand of record onthe books of the Corporation; and that the Resolutions are in full force andeffect and have not been modified or revoked in any manner whatsoever.

 

I FURTHER CERTIFY that true and correct current copiesof the Certificate of Incorporation of the Corporation, as amended, have beendelivered to Bank as of the date hereof.

 

IN WITNESS WHEREOF, I have hereunto set my hand onJanuary 30, 2003 and attest that the signatures set opposite the names listedabove are their genuine signatures.

 
|   | CERTIFIED TO AND ATTESTED BY: |
|--------|-------------------------------|
|   |                          |
|   |                          |
|   | X                             |   |

 

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