Exhibit 10.56

 

Silicon Valley Bank

 

Amendment to Loan Agreement

 

Borrower:

BroadVision, Inc.

 

 

Dated:

June 28, 2005

 

THIS AMENDMENT TO LOAN AGREEMENT (this “Amendment”) is entered into between
SILICON VALLEY BANK (“Bank”) and the borrower named above (referred to herein as
the “Borrower”).

 

Reference is made to that certain Amended and Restated Loan and Security
Agreement dated as of March 31, 2002 between Bank and Borrower, as amended or
otherwise modified from time to time (referred to herein as the “Loan
Agreement”).  (Capitalized terms used but not defined in this Amendment, shall
have the meanings set forth in the Loan Agreement.)

 

Effective as of the date hereof, unless otherwise indicated below to the
contrary, the parties hereto hereby agree as follows:

 

1.             Limited Waiver.  Borrower has failed to satisfy the minimum cash
covenant as set forth in Section 6.7(A) of the Loan Agreement from April 1, 2005
through and including the date hereof together with violations thereof for
isolated days prior to April 1, 2005; and Borrower has further failed to satisfy
the revenue financial covenant set forth in Section 6.7(B) for the period ending
March 31, 2005 (collectively referred to as the “Existing Violations”). Borrower
has requested that Bank waive the Events of Default arising from the Existing
Violations.  Bank is agreeable to the requests of the Borrower, subject to the
terms and conditions hereof, and therefore Bank hereby waives the Events of
Default arising from the Existing Violations.  It is understood by the parties
hereto, however, that such waiver does not constitute a waiver or suspension of
any other provision or term of the Loan Agreement or any related document, nor
an agreement to waive or suspend compliance, in the future, with any financial
covenant or any other provision or term of the Loan Agreement or any related
document.

 

2.             Termination of Equipment Advance Availability.  The Amendment to
Loan Agreement dated June 28, 2005 by and between Bank and Borrower contained an
extension of the Committed Equipment Line credit facility then having a
Commitment Termination Date of February 25, 2006.  The parties hereto hereby
agree that no further Equipment Advances shall be made under the Committed
Equipment Line and accordingly the Commitment Termination Date shall be deemed
modified to be the date hereof.  All outstanding Equipment Advances shall
continue to be repaid in accordance with the terms and provisions of the Loan
Agreement.

 

3.             Modified Section 2.1.1; Elimination of Sublimits.  Effective as
of July 1, 2005 and thereafter, Section 2.1.1 of the Loan Agreement is hereby
amended in its entirety to read as follows:

 

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“2.1.1 REVOLVING CREDIT FACILITY.

 

(A)           BANK WILL MAKE ADVANCES (INDIVIDUALLY REFERRED TO HEREIN AS A
“REVOLVING ADVANCE AND COLLECTIVELY REFERRED TO AS THE “REVOLVING ADVANCES”) NOT
EXCEEDING AT ANY TIME OUTSTANDING THE LESSER OF (A) THE COMMITTED REVOLVING LINE
OR (B) THE BORROWING BASE (SUCH LESSER AMOUNT AS DETERMINED FROM TIME TO TIME
BEING REFERRED TO AS THE “FORMULA AMOUNT”), WITH IT BEING UNDERSTOOD THAT ALL
REVOLVING ADVANCES MADE PRIOR TO JULY 1, 2005 AND REMAINING OUTSTANDING AS OF
SUCH DATE SHALL BE SUBJECT TO THE FORMULA AMOUNT LIMITATION AS OF JULY 1, 2005. 
AMOUNTS BORROWED UNDER THIS SECTION 2.1.1 MAY BE REPAID AND REBORROWED DURING
THE TERM OF THIS AGREEMENT.  FURTHER, AS OF ANY DATE, IF THE AMOUNT OF REVOLVING
ADVANCES OUTSTANDING EXCEEDS THE FORMULA AMOUNT, THEN BORROWER SHALL IMMEDIATELY
REPAY ANY EXCESS TO BANK.

 

(B)           PRIOR TO THE MAKING OF A REVOLVING ADVANCE HEREUNDER, (I) BORROWER
SHALL PROVIDE AT LEAST THIRTY DAYS’ WRITTEN NOTICE TO BANK; (II) BANK SHALL
CONDUCT A COLLATERAL AUDIT HAVING RESULTS ACCEPTABLE TO BANK; AND (III) BORROWER
SHALL PROVIDE A COMPLETED BORROWING BASE CERTIFICATE AND ACCOUNTS RECEIVABLE AND
ACCOUNTS PAYABLE AGINGS, IN FORM AND SUBSTANCE ACCEPTABLE TO BANK.  FURTHER, TO
OBTAIN ANY REVOLVING ADVANCE, BORROWER MUST NOTIFY BANK BY FACSIMILE OR
TELEPHONE BY 12:00 P.M. PACIFIC TIME ON THE BUSINESS DAY SUCH ADVANCE IS TO BE
MADE.  BORROWER MUST PROMPTLY CONFIRM THE NOTIFICATION BY DELIVERING TO BANK THE
PAYMENT/ADVANCE FORM ATTACHED AS EXHIBIT B.  BANK WILL CREDIT REVOLVING ADVANCES
TO BORROWER’S DEPOSIT ACCOUNT ON THE BUSINESS DAY A REVOLVING ADVANCE IS MADE. 
BANK MAY MAKE REVOLVING ADVANCES UNDER THIS AGREEMENT BASED ON INSTRUCTIONS FROM
A RESPONSIBLE OFFICER OR HIS OR HER DESIGNEE OR 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.

 

(C)           THE COMMITTED REVOLVING LINE TERMINATES ON THE REVOLVING MATURITY
DATE, WHEN ALL REVOLVING ADVANCES, AND ALL ACCRUED AND UNPAID INTEREST THEREON,
ARE IMMEDIATELY DUE AND PAYABLE.

 

(d)           Bank’s obligation to lend the undisbursed portion of the Committed
Revolving Line or any other credit available hereunder to Borrower will
terminate if, in the Bank’s sole discretion, there has been a Material Adverse
Change or there has occurred any material adverse deviation from the most recent
business plan of Borrower presented to and accepted by Bank prior to the
execution of the Amendment to Loan Agreement dated June 28, 2005.”

 

Further, it is hereby agreed that Sections 2.1.2, 2.1.3 and 2.1.4 of the Loan
Agreement are hereby deemed of no further force or effect and that no credit
accommodations under such Sections shall be extended.

 

4.             Modified Section 2.3(a). Section 2.3(a) of the Loan Agreement is
hereby amended to read as follows:

 

“2.3(a)   Prior to July 1, 2005, Revolving Advances shall accrue interest on the
aggregate principal balance thereof from time to time outstanding at a per annum
rate equal to the Prime Rate, provided that if the Revolving Advances are
outstanding for more than one Business Day, the applicable interest shall be
equal to a per annum rate equal to the Prime Rate plus ten percentage points
(10%).  On and after July 1, 2005, Revolving Advances shall accrue interest on
the aggregate principal balance thereof from time to time outstanding at a per
annum rate equal to the Prime Rate plus one

 

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percentage point (1.00%), provided that if the Revolving Advances are
outstanding for more than one Business Day, the applicable interest shall be
equal to a per annum rate equal to the Prime Rate plus ten percentage points
(10%).  Term Loan #2 shall accrue interest on the aggregate principal balance
thereof from time to time outstanding at a per annum rate equal to the Prime
Rate plus one and one-quarter percentage points (1.25%).  The interest rate
applicable to Equipment Advances is set forth in Section 2.3.2(b) hereof.  After
an Event of Default, Obligations shall accrue interest at a rate equal to three
percentage points (3.00%) above the respective rates effective for such
Obligations immediately before such Event of Default.  The interest rate shall
increase or decrease when the Prime Rate changes.  Interest is computed on a
360-day year for the actual number of days elapsed. ”

 

5.             Modified Section 5.2.  Effective as of July 1, 2005, Section 5.2
of the Loan Agreement is hereby amended to add the following as an additional
sentence at the end of such section:

 

“Borrower has no notice of any actual or imminent Insolvency Proceeding of any
account debtor whose accounts are an Eligible Account in any Borrowing Base
Certificate.”

 

6.             Modified Section 6.2(c).  Effective as of July 1, 2005,
Section 6.2(c) of the Loan Agreement is hereby amended to read as follows:

 

“(c)  Bank shall have the right to audit the Collateral at Borrower’s expense
prior to the making of a Revolving Advance on and after July 1, 2005 (and with
such audit with results acceptable to Bank being a condition to the making of
any such Revolving Advance); and Bank shall have the right to conduct further
audits of the Collateral at Borrower’s expense at such intervals as Bank in its
good faith business judgment determines.”

 

7.             New Subsection 6.2(d).  Effective as of July 1, 2005, a new
Subsection 6.2(d) of the Loan Agreement is hereby added to following immediately
after Subsection 6.2(c) and shall read as follows:

 

“(d)         At such times as Revolving Advances are outstanding, within 30 days
after the last day of each month, Borrower will deliver to Bank a borrowing base
certificate signed by a Responsible Officer and in form acceptable to Bank
together with aged listings of accounts receivable and accounts payable. 
Further, prior to the making of a Revolving Advance when no such Advances are
then outstanding, Borrower shall deliver to Bank the a borrowing base
certificate as referenced above together with aged listings of accounts
receivable and accounts payable in sufficient time, but not less than thirty
days prior to the proposed Revolving Advance, in order for the Bank to process
the Revolving Advance request as Bank shall reasonably determine.”

 

8.             Revised Financial Covenants.  Section 6.7 of the Loan Agreement
is hereby amended to read as follows:

 

“6.7         Borrower, on a consolidated basis, will maintain the following
financial covenants:

 

(A) Borrower, at all times, will maintain at or through Bank unrestricted cash
or cash equivalents in a minimum aggregate amount of $5,000,000, exclusive of
any loan proceeds made by Bank to Borrower.

 

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(B)  Borrower will, on a quarterly basis, earn revenues of at least
$15,000,000.”

 

9.             Modified Definition.  The following defined term is hereby
amended to read as follows:

 

“ ‘Committed Revolving Line’ shall mean the following through and including
June 30, 2005:  (A) Twenty Million Dollars ($20,000,000) provided that Borrower
maintains at all times at Bank at least Ten Million Dollars ($10,000,000) in
unrestricted cash or cash equivalents, exclusive of any loan proceeds from Bank
and (B) Fifteen Million Dollars ($15,000,000) provided that Borrower maintains
at all times at Bank at least Five Million Dollars ($5,000,000) in unrestricted
cash or cash equivalents, exclusive of any loan proceeds from Bank.  Beginning
July 1, 2005 and thereafter, ‘Committed Revolving Line’ shall mean Twenty
Million Dollars ($20,000,000)”.

 

10.          New Definitions.  Effective as of July 1, 2005, the following
defined terms are hereby added to the Loan Agreement in Section 13.1 thereof,
shall be inserted therein in their appropriate alphabetical order and shall read
as follows:

 

“ ‘Borrowing Base’ is (i) 80% of Eligible Accounts as determined by Bank from
Borrower’s most recent borrowing base certificate; provided, however, that Bank
may lower the percentage of the borrowing base after performing an audit of
Borrower’s Collateral.

 

‘Eligible Accounts’ are Accounts in the ordinary course of Borrower’s business
that meet all Borrower’s representations and warranties in Section 5.2 hereof
(and subject to the exclusions noted below); but Bank may change eligibility
standards from time to time.  Unless Bank agrees otherwise in writing, Eligible
Accounts will not include:

 

(a)  Accounts that the account debtor has not paid within 90 days of invoice
date;

 

(b)  Accounts for an account debtor, 50% or more of whose Accounts have not been
paid within 90 days of invoice date;

 

(c)  Credit balances over 90 days from invoice date;

 

(d)  Accounts for an account debtor, including Affiliates, whose total
obligations to Borrower exceed 25% of all Accounts, for the amounts that exceed
that percentage, unless the Bank approves in writing;

 

(e)  Accounts for which the account debtor does not have its principal place of
business in the United States;

 

(f)  Accounts for which the account debtor is a federal, state or local
government entity or any department, agency, or instrumentality (unless there
has been compliance, to Bank’s satisfaction, with the United States Assignment
of Claims Act);

 

(g)  Accounts for which Borrower owes the account debtor, but only up to the
amount owed (sometimes called “contra” accounts, accounts payable, customer
deposits or credit accounts), with the foregoing also including Accounts subject
to potential offsets (up to the amount thereof) arising from deferred revenue;

 

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.(h)  Accounts for demonstration or promotional equipment, or in which goods are
consigned, sales guaranteed, sale or return, sale on approval, bill and hold, or
other terms if account debtor’s payment may be conditional;

 

(i)  Accounts for which the account debtor is Borrower’s Affiliate, officer,
employee, or agent, provided that entities that are third party sales
representative organizations are not considered Affiliates solely by virtue of
such sales representative capacity and business relationship;

 

(j)  Accounts in which the account debtor disputes liability or makes any claim
and Bank believes there may be a basis for dispute (but only up to the disputed
or claimed amount), or if the Account Debtor is subject to an Insolvency
Proceeding, or becomes insolvent, or goes out of business; and

 

(k)  Accounts for which Bank reasonably determines collection to be doubtful. ”

 

11.          Fees and Expenses.  Borrower shall pay to Bank a loan fee in the
amount of $10,000 concurrently herewith, which shall be in addition to interest
and to all other amounts payable under the Loan Agreement, and which shall be
non-refundable.  Further, Borrower shall pay to Bank all Bank Expenses incurred
in connection herewith, all as more fully set forth in the Loan Agreement,
including, without limitation, all legal fees and expenses incurred in
connection herewith.

 

12.          Representations True.  Borrower represents and warrants to Bank
that all representations and warranties in the Loan Agreement, as modified
hereby, are true and correct.

 

13.          General Provisions.  This Amendment, the Loan Agreement, any prior
written amendments and modifications to the Loan Agreement signed by Bank and
the Borrower, and the other written documents and agreements between Bank and
the Borrower set forth in full all of the representations and agreements of the
parties with respect to the subject matter hereof and supersede all prior
discussions, representations, agreements and understandings between the parties
with respect to the subject hereof.  Except as herein expressly modified, all of
the terms and provisions of the Loan Agreement, and all other documents and
agreements between Bank and the Borrower shall continue in full force and effect
and the same are hereby ratified and confirmed.  This Amendment may be executed
in any number of counterparts, which when taken together shall constitute one
and the same agreement.

 

IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the
date first written above.

 

 

Borrower:

Silicon:

 

 

 

 

BROADVISION, INC.

SILICON VALLEY BANK

 

 

 

 

 

 

 

By

  /s/ William E. Meyer

 

By

  /s/ Nick Tsiagkas

 

 

Title

Chief Financial Officer

 

Title

 Relationship Manager

 

 

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