**EXHIBIT 10.32**

 

**SECOND AMENDMENT TO AMENDED AND RESTATEDLOAN AND SECURITY AGREEMENT**

 

**This Second Amendmentto Amended and Restated Loan and Security Agreement (*“Amendment”*)** is made andentered into as of March 2, 2004 by and between  **Silicon Image, Inc**., a Delaware corporation (“***Borrower***”), and **Comerica Bank**, successor by merger to Comerica Bank-California  (“***Bank***”).

 

**RECITALS**

 

**A.**            Borrower and Bank have entered intothat certain Amended and Restated Loan and Security Agreement dated as ofSeptember 27, 2002, as amended by an Amendment to Loan and Security Agreementdated as of February 20, 2003 (the “***Loan Agreement***”) pursuant to which Bank hasagreed to extend and make available to Borrower certain credit facilities.

 

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

 

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

 

**D.**            This Amendment, the Loan Agreementand the other Loan Documents (as defined in the Loan Agreement), together withall other documents entered into or delivered pursuant to any of the foregoing,in each case as originally executed or as the same may from time to time bemodified, amended, supplemented, restated or superseded are hereinaftercollectively referred to as the “***Loan Documents***.”

 

**Agreement**

 

**Now, Therefore**,in consideration of the foregoing recitals and the mutual covenants herein setforth and for other good and valuable consideration, the receipt andsufficiency of which are hereby acknowledged, and intending to be legallybound, Borrower and Bank hereby agree to amend the Loan Agreement as follows:

 

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

 

**2.             Amendments to Loan Agreement.**

 

**a.**             Thefollowing defined terms contained in Section 1.1 of the Loan Agreement arehereby amended and restated in their entirety to read as follows:

 

“Borrowing Base” means an amount equal to (x) eightypercent (80%) of Eligible Accounts less (y) a reserve for price concessions, ineach case as determined by Bank with reference to the most recent BorrowingBase Certificate delivered by Borrower.

 

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“Equipment Advance” has the meaning set forth inSection 2.1(bb).

 

“Equipment Line” means a credit extension of up toThree Million Dollars ($3,000,000).

 

“Equipment Maturity Date” means August 1, 2006.

 

“LIBOR Addendum” means the Amended and Restated LIBORAddendum to Loan and Security Agreement dated as of the Second AmendmentEffective Date.

 

“Revolving Line” means a credit extension of up to TenMillion Dollars ($10,000,000).

 

“Revolving Maturity Date” means March 1, 2005.(1)

 

“Second Amendment Effective Date” means March 2, 2004.

 

**b.**             Section2.1(b) of the Loan Agreement is hereby amended and restated in its entirety toread as follows:

 

“(b)         OracleEquipment Advance.  On or aboutFebruary 20, 2003, Bank made a one-time equipment advance to Borrower (the“Oracle Equipment Advance”) which Borrower used to finance software licensedfrom Oracle Corporation.  Interest onthe Oracle Equipment Advance shall accrue from the date thereof at the ratespecified in Section 2.3(a)(iv) and shall be payable monthly on the last day ofeach month so long as the Oracle Equipment Advance is outstanding.  The Oracle Equipment Advance is payable intwenty-four (24) equal monthly installments of principal, plus all accruedinterest, beginning on March 1, 2003, and continuing on the first day of eachmonth thereafter through February 1, 2005, at which time the remainingoutstanding principal, plus all accrued interest, on account of the OracleEquipment Advance shall be due and payable to Bank. The Oracle EquipmentAdvance, once repaid, may not be reborrowed. Borrower may prepay the Oracle Equipment Advance without penalty orpremium.”

 

**c.**             Thefollowing new Section 2.1(bb) is hereby added to the Loan Agreement immediatelyafter Section 2.1(b) thereof:

 

“(bb)       EquipmentAdvances.

 

(i)            Subject to and upon the terms andconditions of this Agreement, at any time from the date hereof through August31, 2004, Bank agrees to make advances (each an “Equipment Advance” and,collectively, the “Equipment Advances”) to Borrower in an aggregate amount notto exceed the Equipment Line.  EachEquipment Advance shall not exceed one hundred percent (100%) of the paidinvoice amount of equipment approved by Bank from time to time (which Borrowershall, in any case, have purchased within 90 days of the date of thecorresponding Equipment Advance), excluding taxes, insurance, shipping,warranty charges, freight discounts, installation, and maintenance expense. Notwithstanding the foregoing, (i) no

 

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(1) 364 days from the date ofthe amendment.

 

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more than 50% of the Equipment Line may beused to finance software and other soft costs, (ii) no Equipment Advance shallbe in an amount of less than Two Hundred Fifty Thousand Dollars ($250,000), and(iii) Bank will finance equipment purchased up to 180 days prior to the SecondAmendment Effective Date in the initial Equipment Advance.

 

(ii)           Interestshall accrue from the date of each Equipment Advance at the rate specified inSection 2.3(a)(ii), and shall be payable monthly on the last day of eachmonth so long as any Equipment Advances are outstanding.  Any Equipment Advances that are outstandingon September 1, 2004 shall be payable in twenty-four (24) equal monthlyinstallments of principal, plus all accrued interest, beginning on September 1,2004, and continuing on the first day of each month thereafter through theEquipment Maturity Date, at which time all amounts owing under the EquipmentLine and any other amounts owing under this Agreement shall be immediately dueand payable.  Equipment Advances, oncerepaid, may not be reborrowed.  Borrowermay prepay any Equipment Advances without penalty or premium except asotherwise provided in the LIBOR Addendum.

 

(iii)          WhenBorrower desires to obtain an Equipment Advance, Borrower shall notify Bank(which notice shall be irrevocable) by facsimile transmission to be received nolater than 3:00 p.m. Pacific time three (3) Business Days before the dayon which the Equipment Advance is to be made. Such notice shall be substantially in the form of Exhibit B.  The notice shall be signed by a ResponsibleOfficer or its designee and include a copy of the invoice for any Equipment tobe financed.”

 

**d.**             Section2.3(a)(ii) of the Loan Agreement is hereby amended and restated in its entiretyto read as follows:

“(ii)         EquipmentAdvances.  Except as set forth inSection 2.3(b), each Equipment Advance, which shall be a Prime Rate OptionAdvance or a LIBOR Option Advance as elected by Borrower pursuant to the termsset forth in the LIBOR Addendum, shall bear interest on the outstanding DailyBalance thereof, at the applicable rate set forth in the LIBOR Addendum.”

 

**e.**             Section2.3(a)(iii) of the Loan Agreement is hereby amended and restated in itsentirety to read as follows:

 

“(ii)         TermAdvances.  Except as set forth inSection 2.3(b), each Term Advance, which shall be a Prime Rate Option Advanceor a LIBOR Option Advance as elected by Borrower pursuant to the terms set forthin the LIBOR Addendum, shall bear interest on the outstanding Daily Balancethereof, at the applicable rate set forth in the LIBOR Addendum.”

 

**f.**              Section2.5 of the Loan Agreement is hereby amended by adding the following newsubsections (d) and (e):

 

“(d)         RevolvingLine Renewal Fee.  (i) On or beforethe Second Amendment Effective Date, a Revolving Line Renewal Fee equal to$25,000, which shall be nonrefundable as of the Second Amendment EffectiveDate; and (ii) on or before the Revolving Maturity Date and each anniversarythereof, a Revolving Line Renewal Fee equal to 0.25% times the Revolving Linein effect immediately after such date, which fee shall be payable only if Bankelects in its

 

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sole and absolutediscretion to extend the Revolving Maturity Date then in effect for anadditional 364 days.

 

(e)           EquipmentLine Commitment Fee.  On or beforethe Second Amendment Effective Date, a one-time Equipment Line Commitment Feeequal to $7,500, which shall be nonrefundable as of the Second AmendmentEffective Date.”

 

**g.**             Section6.11 of the Loan Agreement is hereby amended and restated in its entirety toread as follows:

 

“6.11       MaximumQuarterly Net Loss.  Borrower’s netincome for each fiscal quarter shall be at least $1.00; provided that,commencing with the fiscal quarter ending December 31, 2003, Borrower may havea net loss not to exceed $500,000 for not more than one fiscal quarter duringthe term hereof.  For purposes of thisSection 6.11, net loss and net income shall be calculated on standard GAAPprinciples for net income and net loss, adding back any non-cash, non-recurringexpenses such as non-cash stock compensation expenses, cash and non-cashrestructuring charges, cash patent expense costs, amortization and impairmentof intangible assets, and legal expenses related to the patent infringementsuit against Genesis (as described in the Schedule).”

 

**h.**             ExhibitC to the Loan Agreement is hereby deleted in its entirety and replaced withExhibit C attached hereto.

 

**i.**              ExhibitD to the Loan Agreement is hereby deleted in its entirety and replaced withExhibit D attached hereto.

 

**j.**              Section6.3 of the Loan Agreement is hereby amended and restated in its entirety toread as follows:

 

“6.3   Financial Statements, Reports, Certificates.    Borrower shall deliver the following to Bank: (a) as soon asavailable, but in any event within forty five (45) days after the end of eachquarter, a company prepared consolidated balance sheet, income, and cash flowstatement covering Borrower’s consolidated operations during such period,prepared in accordance with GAAP, consistently applied, in a form acceptable toBank and certified by a Responsible Officer; (b) as soon as available, but inany event within ninety (90) days after the end of Borrower’s fiscal year,audited consolidated financial statements of Borrower prepared in accordancewith GAAP, consistently applied, together with an unqualified opinion on suchfinancial statements of an independent certified public accounting firmreasonably acceptable to Bank; (c) if applicable, copies of all statements,reports and notices sent or made available generally by Borrower to itssecurity 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 One Million Dollars ($1,000,000) 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.”

 

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**k.**            Section6.5 of the Loan Agreement is hereby amended and restated in its entirety toread as follows:

 

“6.5   Inventory; Returns.    Borrowershall keep all Inventory in good and marketable condition, free from allmaterial defects except for Inventory for which adequate reserves have beenmade. Returns and allowances, if any, as between Borrower and its accountdebtors shall be on the same basis and in accordance with the usual customarypractices of Borrower, as they exist at the time of the execution and deliveryof this Agreement. Borrower shall promptly notify Bank of all returns andrecoveries and of all disputes and claims, where the return, recovery, disputeor claim involves more than One Million Dollars ($1,000,000).”

 

**3.             Ratification and Reaffirmation ofLiens.**  Borrower hereby ratifies and reaffirms the validityand enforceability of all of the liens and security interests heretoforegranted pursuant to the Loan Documents, as collateral security for theObligations, and acknowledges that all of such liens and security interests,and all Collateral heretofore pledged as security for the Obligations,continues to be and remains Collateral for the Obligations from and after thedate hereof.

 

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

 

**5.             Full Force And Effect; EntireAgreement.**  Except to the extent expressly provided inthis Amendment, the terms and conditions of the Loan Agreement and the otherLoan Documents shall remain in full force and effect.  This Amendment and the other Loan Documents constitute andcontain the entire agreement of the parties hereto and supersede any and allprior agreements, negotiations, correspondence, understandings andcommunications between the parties, whether written or oral, respecting thesubject matter hereof.  The partieshereto further agree that the Loan Documents comprise the entire agreement ofthe parties thereto and supersede any and all prior agreements, negotiations,correspondence, understandings and other communications between the partiesthereto, whether written or oral respecting the extension of credit by Bank toBorrower and/or its affiliates.  Exceptas expressly set forth herein, the execution, delivery and performance of this Amendmentshall not operate as a waiver of, or as an amendment of, any right, power orremedy of Bank under the Loan Agreement or any other Loan Document as in effectprior to the date hereof.

 

**6.             Counterparts; Effectiveness.** This Amendment may be executed in any number of counterparts, each of whichwhen so delivered shall be deemed an original, but all such counterparts takentogether shall constitute but one and the same instrument.  This Amendment is effective as of the datefirst above written; provided that, as a condition to the

 

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effectiveness of thisAmendment, Bank shall have received, in form and substance satisfactory toBank, the following:

 

(a)           thisAmendment, duly executed by Borrower;

 

(b)           theLIBOR Addendum, duly executed by Borrower;

 

(c)           theRevolving Line Renewal Fee and the Equipment Line Commitment Fee described inSection 2(f) above;

 

(d)           allreasonable Bank Expenses incurred through the date of this Amendment, includingbut not limited to, reasonable attorneys’ fees incurred in connection with thisAmendment; and

 

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

 

[signature page to follow]

 

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**In Witness Whereof**,each of the parties hereto has caused this Amendment to be executed anddelivered by its duly authorized officer as of the date first written above.

 

 
|   | **Borrower**:             |
|--------|---------------------------|
|   |                      |
|   |                      |
|   | **Silicon Image,  Inc.,** |
|   | a Delaware  corporation   |
|   |                      |
|   |                      |
|   | By:                       | /s/ Bob  Gargus |
|   | Name: BOB  GARGUS         |
|   | Title: CFO                |
|   |                      |
|   |                      |
|   | **Bank:**                 |
|   |                      |
|   | **Comerica Bank**         |
|   |                      |
|   |                      |
|   | By:                       | /s/ Guy  Simpson |
|   | Name: Guy  Simpson        |
|   | Title: VICE  PRESIDENT    |

 

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EXHIBIT C

 

BORROWING BASECERTIFICATE

 
| Borrower:  SILICON IMAGE, INC.   | Lender:  Comerica Bank |
|---------------------------------------|-----------------------------|
|                                  |                        |
| Commitment  Amount:  $10,000,000 |                        |

 
| ACCOUNTS RECEIVABLE                                   |                                                                       |   |   |   |   |
|-------------------------------------------------------|----------------------------------------------------------------------------|--------|--------|--------|--------|
| 1.                                                    | Accounts Receivable Book Value as of         |   |   |   | $      |   |   |
| 2.                                                    | Additions (please explain on reverse)                                      |   |   |   | $      |   |   |
| 3.                                                    | TOTAL ACCOUNTS RECEIVABLE                                                  |   |   |   | $      |   |   |
|                                                  |                                                                       |   |   |   |   |   |
| ACCOUNTS RECEIVABLE DEDUCTIONS (without  duplication) |                                                                       |   |   |   |   |
| 4.                                                    | Amounts over 90 days due                                                   |   | $      |   |   |   |   |
| 5.                                                    | Balance of 25% over 90 day accounts                                        |   | $      |   |   |   |   |
| 6.                                                    | Concentration Limits                                                       |   |   |   |   |   |
| 7.                                                    | Foreign Accounts                                                           |   | $      |   |   |   |   |
| 8.                                                    | Governmental Accounts                                                      |   | $      |   |   |   |   |
| 9.                                                    | Contra Accounts                                                            |   | $      |   |   |   |   |
| 10.                                                   | Demo Accounts                                                              |   | $      |   |   |   |   |
| 11.                                                   | Intercompany/Employee Accounts                                             |   | $      |   |   |   |   |
| 12.                                                   | Other (please explain on reverse)                                          |   | $      |   |   |   |   |
| 13.                                                   | TOTAL ACCOUNTS RECEIVABLE DEDUCTIONS                                       |   |   |   | $      |   |   |
| 14.                                                   | Eligible Accounts (#3 minus #13)                                           |   |   |   | $      |   |   |
| 15.                                                   | LOAN VALUE OF ACCOUNTS (80% of #14)                                        |   |   |   | $      |   |   |
| 16.                                                   | Reserve for Price Concessions                                              |   |   |   | $      |   |   |
| 17.                                                   | NET LOAN VALUE OF ACCOUNTS (#15 - #16)                                     |   |   |   | $      |   |   |
|                                                  |                                                                       |   |   |   |   |   |
| BALANCES                                              |                                                                       |   |   |   |   |   |
| 18.                                                   | Maximum Loan Amount                                                        |   |   |   | $      | 10,000,000 |   |
| 19.                                                   | Total Funds Available [Lesser of #18 or  #17]                              |   |   |   | $      |   |   |
| 20.                                                   | Present balance owing on Line of Credit                                    |   |   |   | $      |   |   |
| 21.                                                   | Outstanding under Sublimits (Letters of  Credit)                           |   |   |   | $      |   |   |
| 22.                                                   | RESERVE POSITION (#19 minus #20 and #21)                                   |   |   |   | $      |   |   |

 

*The undersigned represents andwarrants that the foregoing is true, complete and correct, and that theinformation reflected in this Borrowing Base Certificate complies with therepresentations and warranties set forth in the Loan and Security Agreementbetween the undersigned and Comerica Bank.*

 
| SILICON  IMAGE, INC. |
|----------------------|
|                 |
|                 |
| By:                  | /s/ Bob  Gargus |   |
| Authorized  Signer   |   |

 

 

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Exhibit D

 

COMPLIANCE CERTIFICATE

TO:                                                                            COMERICA BANK

 

FROM:                                                         SILICON IMAGE, INC.

 

The undersigned authorized officer of SILICON IMAGE, INC. herebycertifies that in accordance with the terms and conditions of the Amended andRestated Loan and Security Agreement between Borrower and Bank, as amended (the“Agreement”), (i) Borrower is in complete compliance for the period ending                  with all required covenants except as noted below and (ii) allrepresentations and warranties of Borrower stated in the Agreement are true andcorrect as of the date hereof.  Attachedherewith are the required documents supporting the above certification.  The Officer further certifies that these areprepared in accordance with Generally Accepted Accounting Principles (GAAP) andare consistently applied from one period to the next except as explained in anaccompanying letter or footnotes.

 

**Please indicate compliance status bycircling Yes/No under “Complies” column.**

 
| **Reporting  Covenant**                                                    |   | **Required**                                                           |   | **Complies** |
|----------------------------------------------------------------------------|--------|------------------------------------------------------------------------|--------|--------------|
|                                                                       |   |                                                                   |   |         |   |   |
| Quarterly financial  statements                                            |   | Quarterly  within 45 days                                              |   | Yes          |   | No |
| Annual (CPA  Audited)                                                      |   | FYE within  90 days                                                    |   | Yes          |   | No |
| 10K and 10Q                                                                |   | (as  applicable)                                                       |   | Yes          |   | No |
| A/R &  A/P Agings, Borrowing Base Cert.                                |   | Monthly  within 20 days when borrowing                                 |   | 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** |
|--------------------------------------------------|--------|--------------|--------|---------------------------------------------------------------------------|--------|--------------|
|                                             |   |         |   |                                                                      |   |         |   |   |
| On a  quarterly basis:                           |   |         |   |                                                                      |   |         |   |   |
| Adjusted Quick  Ratio                            |   | 1.50:1.00    |   |        :1.00                           |   | Yes          |   | No |
| Tangible Net  Worth                              |   | $30,000,000  |   | $             |   | Yes          |   | No |
| Net Loss /  Net Income                           |   | *            |   | $             |   | Yes          |   | No |
| Maximum Annual Capital & Lease  Expenditures |   | $5,000,000   |   | $             |   | Yes          |   | No |

 

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* Borrower’s net income foreach fiscal quarter shall be at least $1.00. For purposes of Section 6.11, net loss and net income shall becalculated on standard GAAP principles for net income and net loss, adding backany non-cash, non-recurring expenses such as non-cash stock compensationexpenses, cash and non-cash restructuring charges, cash patent expense costs,amortization and impairment of intangible assets, and legal expenses related tothe patent infringement suit against Genesis (as described in the Schedule).

 
| **Comments Regarding Exceptions:**  See Attached. |               |
|--------------------------------------------------------|--------------------|
|                                                   | No                 |
|                                                   | Received by:       |   |
| Sincerely,                                             | AUTHORIZED SIGNER  |
|                                                   |               |
|                                                   | Date:              |   |
|                                                   |               |
| /s/ Bob  Gargus                                        |               | Verified: |   |
| SIGNATURE                                              | AUTHORIZED SIGNER  |
|                                                   |               |
| CFO                                                    |               | Date: |   |
| TITLE                                                  |               |
|                                                   | Compliance  Status | Yes |
| 3/2/04                                                 |               |   |
| DATE                                                   |               |
|                                                        |                    |  |  |  |  |  |  |  |

 

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