EXHIBIT 10.32


 


SECOND AMENDMENT TO AMENDED AND RESTATED

LOAN AND SECURITY AGREEMENT


 


This Second Amendment
to Amended and Restated Loan and Security Agreement (“Amendment”) is made and
entered 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 into
that certain Amended and Restated Loan and Security Agreement dated as of
September 27, 2002, as amended by an Amendment to Loan and Security Agreement
dated as of February 20, 2003 (the “Loan Agreement”) pursuant to which Bank has
agreed to extend and make available to Borrower certain credit facilities.


 


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


 


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


 


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modified, amended, supplemented, restated or superseded are hereinafter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


 


Agreement


 


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


 


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


 


2.             Amendments to Loan Agreement.


 


a.             The
following defined terms contained in Section 1.1 of the Loan Agreement are
hereby amended and restated in their entirety to read as follows:


 


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


 


1

















 


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


 


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


 


“Equipment Maturity Date” means August 1, 2006.


 


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


 


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


 


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


 


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


 


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


 


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


 


c.             The
following new Section 2.1(bb) is hereby added to the Loan Agreement immediately
after Section 2.1(b) thereof:


 


“(bb)       Equipment
Advances.


 


(i)            Subject to and upon the terms and
conditions of this Agreement, at any time from the date hereof through August
31, 2004, Bank agrees to make advances (each an “Equipment Advance” and,
collectively, the “Equipment Advances”) to Borrower in an aggregate amount not
to exceed the Equipment Line.  Each
Equipment Advance shall not exceed one hundred percent (100%) of the paid
invoice amount of equipment approved by Bank from time to time (which Borrower
shall, in any case, have purchased within 90 days of the date of the
corresponding Equipment Advance), excluding taxes, insurance, shipping,
warranty charges, freight discounts, installation, and maintenance expense. Notwithstanding the foregoing, (i) no


 












(1) 364 days from the date of
the amendment.


 


2

















 


more than 50% of the Equipment Line may be
used to finance software and other soft costs, (ii) no Equipment Advance shall
be 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 Second
Amendment Effective Date in the initial Equipment Advance.


 


(ii)           Interest
shall accrue from the date of each Equipment Advance at the rate specified in
Section 2.3(a)(ii), and shall be payable monthly on the last day of each
month so long as any Equipment Advances are outstanding.  Any Equipment Advances that are outstanding
on September 1, 2004 shall be payable in twenty-four (24) equal monthly
installments of principal, plus all accrued interest, beginning on September 1,
2004, and continuing on the first day of each month thereafter through the
Equipment Maturity Date, at which time all amounts owing under the Equipment
Line and any other amounts owing under this Agreement shall be immediately due
and payable.  Equipment Advances, once
repaid, may not be reborrowed.  Borrower
may prepay any Equipment Advances without penalty or premium except as
otherwise provided in the LIBOR Addendum.


 


(iii)          When
Borrower desires to obtain an Equipment Advance, Borrower shall notify Bank
(which notice shall be irrevocable) by facsimile transmission to be received no
later than 3:00 p.m. Pacific time three (3) Business Days before the day
on 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 Responsible
Officer or its designee and include a copy of the invoice for any Equipment to
be financed.”


 


d.             Section
2.3(a)(ii) of the Loan Agreement is hereby amended and restated in its entirety
to read as follows:


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


 


e.             Section
2.3(a)(iii) of the Loan Agreement is hereby amended and restated in its
entirety to read as follows:


 


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


 


f.              Section
2.5 of the Loan Agreement is hereby amended by adding the following new
subsections (d) and (e):


 


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


 


3

















 


sole and absolute
discretion to extend the Revolving Maturity Date then in effect for an
additional 364 days.


 


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


 


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


 


“6.11       Maximum
Quarterly Net Loss.  Borrower’s net
income for each fiscal quarter shall be at least $1.00; provided that,
commencing with the fiscal quarter ending December 31, 2003, Borrower may have
a net loss not to exceed $500,000 for not more than one fiscal quarter during
the term hereof.  For purposes of this
Section 6.11, net loss and net income shall be calculated on standard GAAP
principles for net income and net loss, adding back any non-cash, non-recurring
expenses such as non-cash stock compensation expenses, cash and non-cash
restructuring charges, cash patent expense costs, amortization and impairment
of intangible assets, and legal expenses related to the patent infringement
suit against Genesis (as described in the Schedule).”


 


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


 


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


 


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


 


“6.3   
Financial Statements, 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 balance sheet, income, and cash flow
statement covering Borrower’s consolidated operations during such period,
prepared in accordance with GAAP, consistently applied, in a form acceptable to
Bank and certified by a Responsible Officer; (b) as soon as available, but in
any event within ninety (90) days after the end of Borrower’s fiscal year,
audited consolidated financial statements of Borrower prepared in accordance
with GAAP, consistently applied, together with an unqualified opinion on such
financial statements of an independent certified public accounting firm
reasonably acceptable to Bank; (c) if applicable, copies of all statements,
reports and notices sent or made available generally by Borrower to its
security holders or to any holders of Subordinated Debt and all reports on
Forms 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 pending
or threatened against Borrower or any Subsidiary that could result in damages
or costs to Borrower or any Subsidiary of One Million Dollars ($1,000,000) or
more; and (e) such budgets, sales projections, operating plans or other
financial information as Bank may reasonably request from time to time
generally prepared by Borrower in the ordinary course of business.”


 


4

















 


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


 


“6.5   
Inventory; Returns.    Borrower
shall keep all Inventory in good and marketable condition, free from all
material defects except for Inventory for which adequate reserves have been
made. Returns and allowances, if any, as between Borrower and its account
debtors shall be on the same basis and in accordance with the usual customary
practices of Borrower, as they exist at the time of the execution and delivery
of this Agreement. Borrower shall promptly notify Bank of all returns and
recoveries and of all disputes and claims, where the return, recovery, dispute
or claim involves more than One Million Dollars ($1,000,000).”


 


3.             Ratification and Reaffirmation of
Liens.  Borrower hereby ratifies and reaffirms the validity
and enforceability of all of the liens and security interests heretofore
granted pursuant to the Loan Documents, as collateral security for the
Obligations, 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 the
date hereof.


 


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


 


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


 


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


 


5

















 


effectiveness of this
Amendment, Bank shall have received, in form and substance satisfactory to
Bank, the following:


 


(a)           this
Amendment, duly executed by Borrower;


 


(b)           the
LIBOR Addendum, duly executed by Borrower;


 


(c)           the
Revolving Line Renewal Fee and the Equipment Line Commitment Fee described in
Section 2(f) above;


 


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


 


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


 


[signature page to follow]


 


6

















 


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


 


 


	
   

  	
  Borrower:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  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

  



 


7

















 


EXHIBIT C


 


BORROWING BASE
CERTIFICATE


 


	
  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 and
warrants that the foregoing is true, complete and correct, and that the
information reflected in this Borrowing Base Certificate complies with the
representations and warranties set forth in the Loan and Security Agreement
between the undersigned and Comerica Bank.


 


	
  SILICON
  IMAGE, INC.

  
	
   

  
	
   

  
	
  By:

  	
  /s/ Bob
  Gargus

  	
   

  
	
  Authorized
  Signer

  	
   

  



 


 

















 


Exhibit D


 


COMPLIANCE CERTIFICATE


TO:                                                                            COMERICA BANK


 


FROM:                                                         SILICON IMAGE, INC.


 


The undersigned authorized officer of SILICON IMAGE, INC. hereby
certifies that in accordance with the terms and conditions of the Amended and
Restated 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) all
representations and warranties of Borrower stated in the Agreement are true and
correct as of the date hereof.  Attached
herewith are the required documents supporting the above certification.  The Officer further certifies that these are
prepared in accordance with Generally Accepted Accounting Principles (GAAP) and
are consistently applied from one period to the next except as explained in an
accompanying letter or footnotes.


 


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


 


	
  Reporting
  Covenant

  	
   

  	
  Required

  	
   

  	
  Complies

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  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

  



 












* Borrower’s net income for
each fiscal quarter shall be at least $1.00. 
For purposes of Section 6.11, net loss and net income shall be
calculated on standard GAAP principles for net income and net loss, adding back
any non-cash, non-recurring expenses such as non-cash stock compensation
expenses, cash and non-cash restructuring charges, cash patent expense costs,
amortization and impairment of intangible assets, and legal expenses related to
the 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