Exhibit 10.43

 

FIFTH MODIFICATION TO AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT

 

This Fifth Modification to Amended and Restated Loan and Security Agreement (the
“Modification”) is entered into as of February 27, 2004 by and between
Broadvision, Inc., a Delaware corporation (“Borrower”), and Silicon Valley Bank,
a California-chartered bank (“Bank”).

 

1.                                       DESCRIPTION OF EXISTING INDEBTEDNESS. 
AMONG OTHER INDEBTEDNESS WHICH MAY BE OWING BY BORROWER TO BANK, BORROWER IS
INDEBTED TO BANK PURSUANT TO THAT CERTAIN AMENDED AND RESTATED LOAN AND SECURITY
AGREEMENT DATED AS OF MARCH 31, 2002, AS AMENDED BY THAT CERTAIN MODIFICATION TO
AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT DATED AS OF FEBRUARY 28, 2003,
THAT CERTAIN SECOND MODIFICATION TO AMENDED AND RESTATED LOAN AND SECURITY
AGREEMENT DATED AS OF JUNE 30, 2003, THAT CERTAIN THIRD MODIFICATION TO AMENDED
AND RESTATED LOAN AND SECURITY AGREEMENT DATED AS OF JUNE 30, 2003 AND THAT
CERTAIN FOURTH MODIFICATION TO AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
DATED AS OF JANUARY 21, 2004 (AS MAY BE FURTHER AMENDED FROM TIME TO TIME, THE
“LOAN AGREEMENT”).  THE LOAN AGREEMENT PROVIDES FOR, AMONG OTHER THINGS, A
COMMITTED REVOLVING LINE IN THE PRINCIPAL AMOUNT OF TWENTY-SEVEN MILLION TWO
HUNDRED FIFTY THOUSAND DOLLARS ($27,250,000). CAPITALIZED TERMS USED BUT NOT
OTHERWISE DEFINED HEREIN SHALL HAVE THE RESPECTIVE MEANINGS ACCORDED TO THEM IN
THE LOAN AGREEMENT; PROVIDED THAT HEREINAFTER ALL INDEBTEDNESS OWING BY BORROWER
TO BANK UNDER THE LOAN AGREEMENT SHALL BE REFERRED TO AS THE “INDEBTEDNESS.”

 

2.                                       DESCRIPTION OF COLLATERAL.  REPAYMENT
OF THE INDEBTEDNESS IS SECURED BY THE COLLATERAL AS DESCRIBED IN THE LOAN
AGREEMENT AND HEREIN.  HEREINAFTER, ALL DOCUMENTS SECURING REPAYMENT OF THE
INDEBTEDNESS, TOGETHER WITH ALL OTHER DOCUMENTS EVIDENCING OR SECURING THE
INDEBTEDNESS, SHALL BE REFERRED TO AS THE “EXISTING LOAN DOCUMENTS.”

 

3.                                       DESCRIPTION OF CHANGES TO TERMS OF
EXISTING LOAN DOCUMENTS.

 

3.1                                 EQUIPMENT ADVANCES.  A NEW SECTION 2.1.5 IS
HEREBY ADDED TO READ IN FULL AS FOLLOWS:

 

(a)                                  Subject to the terms and conditions of this
Agreement, Bank agrees to lend to Borrower equipment advances (the “Equipment
Advances”) in an aggregate amount not to exceed the Committed Equipment Line. 
The Equipment Advances may be used for any purpose.  Each Equipment Advance,
when repaid, may not be re-borrowed. All Equipment Advances shall be made during
the twelve-month period ending on the Commitment Termination Date, and Bank’s
obligation to make Equipment Advances shall terminate on the earlier of (i) the
occurrence and continuance of an Event of Default, or (ii) the Commitment
Termination Date.  Each Equipment Advance shall be for an amount greater than or
equal to $25,000.00, and there shall be no more than five Equipment Advances
hereunder.

 

(b)                                 To obtain an Equipment Advance, Borrower
must notify Bank by facsimile or telephone by 12:00 p.m., Pacific Time, at least
one (1) Business Day before the proposed Funding Date.  Borrower must promptly
confirm the notification by delivering to Bank a completed Loan Payment/Advance
Request Form in the form attached hereto as Exhibit B.  On the Funding Date,
Bank will specify the Payment Dates on which the Equipment Advance will be
repaid, and Bank will disburse such Equipment Advance by internal transfer to
Borrower’s deposit account with Bank.  Bank may make Equipment Advances under
this Agreement based on instructions from a Responsible Officer or his or her
designee.  Bank may rely on any telephone notice given by a person whom Bank

 

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reasonably believes is a Responsible Officer or designee. Borrower will
indemnify Bank for any loss Bank suffers due to such reliance.

 

(c)                                  Bank’s obligation to make the Equipment
Advances will terminate if, in 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 this Agreement.

 

3.2                                 INTEREST ON REVOLVING ADVANCES.  SECTION
2.3(A) OF THE LOAN AGREEMENT IS HEREBY AMENDED TO READ IN FULL AS FOLLOWS:

 

(a)                                  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 and the Deferred Amount (if any) 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-half percent
(0.50%); provided, however, that if Borrower fails to maintain minimum revenues
(on a rolling six-month basis) of at least $40,000,000.00 for each six-month
period commencing on March 31, 2004, Revolving Advances shall accrue interest at
the per annum rate of the Prime Rate plus three-quarters of one percent (0.75%)
and the Deferred Amount, if any, shall accrue interest at the per annum rate of
the Prime Rate plus one and one-quarter percent (1.25%).  Term Loan #1 shall
accrue interest on the aggregate principal balance thereof from time to time
outstanding at a per annum rate equal to the Prime Rate.  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
percent (1.25%).  After an Event of Default, Obligations shall accrue interest
at a rate equal to three percent (3.00%) above the respective rates effective
for such Obligations immediately before the 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.

 

3.3                                 INTEREST ON EQUIPMENT ADVANCES.  A NEW
SECTION 2.3.2 IS HEREBY ADDED TO READ IN FULL AS FOLLOWS:

 

(a)                                  Borrower will repay each of the Equipment
Advances in accordance with this Section 2.3.2.  Each Equipment Advance shall
amortize and be payable in equal monthly payments of principal over the
Repayment Period for such Equipment Advance, plus accrued and unpaid interest
thereon (each, a “Scheduled Payment”), commencing on the first day of the
calendar month following the Funding Date of such Equipment Advance and
continuing thereafter during the Repayment Period on the first day of each
calendar month (each, a “Payment Date”) until the Equipment Maturity Date for
such Equipment Advance, at which time all unpaid principal and accrued interest
shall be due and payable in full.  When a payment is due on a day that is not a
Business Day, the payment shall be due on the next Business Day and additional
interest and fees shall accrue to such date.  Payments received after 12:00
noon, Pacific Time, are considered received at the opening of business on the
next Business Day.  Each Equipment Advance may be prepaid at any time without
premium or penalty upon the prior written consent of Bank.

 

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(b)                                 Each Equipment Advance will bear interest at
the per annum rate of interest equal to the Prime Rate plus three-quarters of
one percent (0.75%).  Any amounts outstanding during the continuance of an Event
of Default shall bear interest at a per annum rate equal to five percent (5.00%)
in excess of the rate otherwise from time to time in effect but for the
occurrence of the Event of Default.  If any change in the law increases Bank’s
expenses or decreases its return from the Equipment Advances (other than a
change in law that results in such increase or decrease solely because such
change increases the taxes payable by Bank upon its net revenues), Borrower will
pay Bank upon request the amount of such increase of expenses or an amount equal
to the difference between Bank’s anticipated return from the Equipment Advances
and the decreased return actually received by Bank (as the case may be).

 

(c)                                  If the Equipment Advances are accelerated
following the occurrence of an Event of Default, then Borrower will immediately
pay to Bank, without duplication, (i) all unpaid Scheduled Payments (including
principal and interest), (ii) the principal amount of all remaining Scheduled
Payments, (iii) all accrued and unpaid interest, including the default rate of
interest, to the date of the prepayment, and (iv) all other sums, if any, that
shall have become due and payable with respect to the Equipment Advances.

 

3.4                                 REPORTING REQUIREMENTS.  SECTION 6.2 OF THE
LOAN AGREEMENT IS HEREBY AMENDED TO READ IN FULL AS FOLLOWS:

 

6.2                                 FINANCIAL STATEMENTS, REPORTS, CERTIFICATES.

 

(a) Borrower will deliver to Bank:  (i) as soon as available, but no later than
45 days after the last day of each calendar quarter, company-prepared unaudited
balance sheets and income statements covering the operations of Borrower and its
Subsidiaries during the period, certified by a Responsible Officer and in a form
acceptable to Bank; (ii) as soon as available but no later than 120 days after
the last day of Borrower’s fiscal year, audited financial statements for
Borrower, and its Subsidiaries prepared under GAAP, consistently applied,
together with an unqualified opinion on the financial statements from an
independent certified public accounting firm reasonably acceptable to Bank;
(iii) a prompt 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 $250,000 or more; and (iv) prompt notice of any material
change in the composition of the Intellectual Property, including any subsequent
ownership right of Borrower or any Subsidiary in or to any Copyright, Patent or
Trademark not shown in any intellectual property security agreement between
Borrower and Bank or knowledge of an event that could reasonably be expected to
materially adversely affect the value of the Intellectual Property.

 

(b)  Within 45 days after the last day of each calendar quarter, Borrower will
deliver to Bank a Compliance Certificate in the form of Exhibit C, signed by a
Responsible Officer.

 

(c)  Borrower will allow Bank to audit the Collateral at Borrower’s expense. 
Such audits shall be conducted one every twelve months, commencing no later than
April 30, 2003, unless an Event of Default has occurred and is continuing (in
which case the foregoing limitation on frequency will not apply).

 

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3.5                                 DEPOSITS.  SECTION 6.6 OF THE LOAN AGREEMENT
IS HEREBY AMENDED TO READ IN FULL AS FOLLOWS:

 

6.6                                 Deposits.

 

Until all Obligations are paid in full, Borrower will maintain in accounts with
Bank and its Affiliates an amount equal to at least $30,000,000 (as of each
quarter-end) or $25,000,000 (at all other times) of Borrower’s Unrestricted
Cash, net of all borrowings under this Agreement.  In addition, Borrower will at
all times maintain an operating account with Bank.

 

3.6                                 FINANCIAL COVENANTS.

 

(A)                                  THE FINANCIAL COVENANT SET FORTH IN
SECTION 6.7(A) OF THE LOAN AGREEMENT IS HEREBY DELETED IN FULL.

 

(B)                                 BANK HEREBY WAIVES BORROWER’S FAILURE TO
COMPLY WITH THE COVENANT SET FORTH IN SECTION 6.7(A) OF THE LOAN AGREEMENT FOR
THE PERIOD OF FEBRUARY 9-27, 2004.

 

3.7                                 DEFINITIONS.  THE FOLLOWING DEFINITIONS ARE
HEREBY AMENDED AS FOLLOWS:

 

“ADVANCES” ARE THE AGGREGATE OF (I) THE THEN-OUTSTANDING PRINCIPAL BALANCE OF
ALL REVOLVING ADVANCES, (II) ALL AMOUNTS UTILIZED UNDER THE CASH MANAGEMENT
SERVICES SUBLIMIT, (III) THE THEN-OUTSTANDING PRINCIPAL BALANCE OF THE EQUIPMENT
ADVANCES, (IV) THE FACE AMOUNT OF ALL OUTSTANDING LETTERS OF CREDIT (INCLUDING
DRAWN BUT UNREIMBURSED LETTERS OF CREDIT), AND (V) ALL AMOUNTS UTILIZED UNDER
THE FX SUBLIMIT.

 

“COMMITTED EQUIPMENT LINE” IS $500,000 OF EQUIPMENT ADVANCES.

 

“COMMITMENT TERMINATION DATE” IS FEBRUARY 26, 2005.

 

“CREDIT EXTENSION” IS EACH REVOLVING ADVANCE, EQUIPMENT ADVANCE, CASH MANAGEMENT
SERVICE, LETTER OF CREDIT, FX FORWARD CONTRACT OR ANY OTHER EXTENSION OF CREDIT
MADE BY BANK TO BORROWER OR FOR BORROWER’S BENEFIT.

 

“EQUIPMENT” IS ALL PRESENT AND FUTURE MACHINERY, EQUIPMENT, TENANT IMPROVEMENTS,
FURNITURE, FIXTURES, VEHICLES, TOOLS, PARTS AND ATTACHMENTS IN WHICH BORROWER
HAS ANY INTEREST.

 

“EQUIPMENT ADVANCE” IS DEFINED IN SECTION 2.1.5.

 

“EQUIPMENT MATURITY DATE” IS, AS TO EACH EQUIPMENT ADVANCE, THE LAST DAY OF THE
REPAYMENT PERIOD FOR SUCH EQUIPMENT ADVANCE OR, IF EARLIER, THE DATE OF
ACCELERATION OF THE EQUIPMENT ADVANCE BY BANK FOLLOWING AN EVENT OF DEFAULT.

 

“FUNDING DATE” IS A DATE ON WHICH AN EQUIPMENT ADVANCE IS MADE TO OR ON ACCOUNT
OF BORROWER.

 

“PRIME RATE” IS BANK’S MOST RECENTLY ANNOUNCED “PRIME RATE,” EVEN IF IT IS NOT
THE LOWEST RATE AT WHICH BANK MAKES LOANS OR OTHERWISE EXTENDS CREDIT.  THE
PRIME RATE MAY CHANGE FROM TIME TO TIME OVER THE TERM OF

 

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THIS AGREEMENT, BUT IN NO EVENT SHALL THE PRIME RATE AT ANY TIME BE LOWER THAN
FOUR PERCENT (4%) FOR PURPOSES OF THIS AGREEMENT.

 

“REPAYMENT PERIOD”  AS TO EACH EQUIPMENT ADVANCE IS 36 MONTHS.

 

“REVOLVING MATURITY DATE”  IS FEBRUARY 26, 2005.

 

“SCHEDULED PAYMENTS” IS DESCRIBED IN SECTION 2.3.2(A).

 

3.8                                 AMENDED EXHIBIT C.  EXHIBIT C TO THE LOAN
AGREEMENT IS HEREBY AMENDED TO READ IN FULL AS ATTACHED HERETO AS ATTACHMENT
NO. 1.

 

4.                                       CONSISTENT CHANGES.  THE EXISTING LOAN
DOCUMENTS ARE HEREBY AMENDED WHEREVER NECESSARY TO REFLECT THE CHANGES DESCRIBED
IN SECTION 3 HEREOF.

 

5.                                       NO DEFENSES OF BORROWER.  BORROWER
AGREES THAT, AS OF THE DATE HEREOF, IT HAS NO DEFENSES AGAINST THE OBLIGATIONS
TO PAY ANY AMOUNTS OF THE INDEBTEDNESS.

 

6.                                       CONTINUING VALIDITY.  BORROWER
UNDERSTANDS AND AGREES THAT IN MODIFYING THE EXISTING LOAN DOCUMENTS, BANK IS
RELYING UPON BORROWER’S REPRESENTATIONS, WARRANTIES AND AGREEMENTS, ALL AS SET
FORTH IN THE EXISTING LOAN DOCUMENTS.  EXCEPT AS EXPRESSLY MODIFIED PURSUANT TO
THIS FIFTH MODIFICATION, THE TERMS OF THE EXISTING LOAN DOCUMENTS REMAIN
UNCHANGED AND IN FULL FORCE AND EFFECT, AND HEREAFTER THE EXISTING LOAN
DOCUMENTS SHALL INCLUDE THE TERMS OF THIS FIFTH MODIFICATION AS IF SET FORTH
THEREIN IN FULL.  BANK’S AGREEMENT TO MODIFICATIONS TO THE EXISTING LOAN
DOCUMENTS PURSUANT TO THIS FIFTH MODIFICATION SHALL IN NO WAY OBLIGATE BANK TO
MAKE ANY FUTURE MODIFICATIONS TO THE EXISTING LOAN DOCUMENTS.  NOTHING IN THIS
FIFTH MODIFICATION SHALL CONSTITUTE A SATISFACTION OF THE INDEBTEDNESS OR ANY
PORTION THEREOF.  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, AND NO MAKER, ENDORSER OR GUARANTOR WILL
BE RELEASED BY VIRTUE OF THIS FIFTH MODIFICATION.  THE TERMS OF THIS PARAGRAPH
APPLY NOT ONLY TO THIS FIFTH MODIFICATION, BUT ALSO TO ALL SUBSEQUENT LOAN
MODIFICATION AGREEMENTS.

 

7.                                       CONDITION PRECEDENT TO EFFECTIVENESS. 
BEFORE THIS FIFTH MODIFICATION, AND BANK’S AND BORROWER’S RESPECTIVE RIGHTS AND
OBLIGATIONS HEREUNDER, SHALL BE EFFECTIVE BORROWER SHALL HAVE PAID TO BANK ALL
BANK EXPENSES INCURRED BY BANK IN CONNECTION WITH ITS ENTERING INTO THIS FIFTH
MODIFICATION.  BORROWER WILL PAY BANK A LOAN FEE FOR THIS FIFTH AMENDMENT AS
FOLLOWS:  (I) FOR THE EQUIPMENT ADVANCES, $5,000.00 ON THE DATE HEREOF; AND (II)
FOR THE RENEWAL OF THE REVOLVING ADVANCES, $34,062.50 ON THE DATE HEREOF AND
 $34,062.50 ON AUGUST 27, 2004.

 

 

IN WITNESS WHEREOF, each of the parties hereto has caused its duly authorized
representative to execute and deliver this Fifth Modification as of the date
first set forth above.

 

 

BORROWER:

 

BANK:

 

 

 

BROADVISION, INC.,

 

SILICON VALLEY BANK,

a Delaware corporation

 

a California-chartered bank

 

 

 

By:

    /s/ William E. Meyer

 

By:

    /s/ Armand Zand

Name:

William E. Meyer

 

Name:

Armand Zand

Title:

Chief Financial Officer

 

Title:

Vice President

 

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ATTACHMENT NO. 1

 

REVISED FORM OF

 

EXHIBIT C

 

COMPLIANCE CERTIFICATE

 

TO:

 

SILICON VALLEY BANK

FROM:

 

BROADVISION, INC.

DATED:

 

 

 

 

The undersigned authorized officer (the “Officer”) of Broadvision, Inc.
(“Borrower”) certifies that, under the terms and conditions of the Amended and
Restated Loan and Security Agreement dated as of March 31, 2002 between Borrower
and Bank (as amended from time to time, the “Agreement”): (i) Borrower is in
complete compliance for the period ending on the date first set forth above with
all required covenants except as noted below and (ii) all representations and
warranties in the Agreement are true and correct in all material respects on
this date.  In addition, the Officer certifies that Borrower and each Subsidiary
(a) has timely filed all required tax returns and paid, or made adequate
provision to pay, all material taxes, except those being contested in good faith
with adequate reserves under Generally Accepted Accounting Principles (GAAP) and
(b) does not have any legal actions pending or threatened against Borrower or
any Subsidiary which Borrower has not previously notified in writing to Bank. 
Attached are the required documents supporting the certification.  The Officer
certifies that these are prepared in accordance with GAAP consistently applied
from one period to the next except as explained in an accompanying letter or
footnotes.  The Officer acknowledges that no borrowings may be requested at any
time or date of determination that Borrower is not in compliance with any of the
terms of the Agreement, and that compliance is determined not just at the date
this certificate is delivered.

 

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

 

Reporting Covenants

 

Required

 

 

 

Complies

 

 

 

 

 

 

 

 

 

1.  Interim financial statements + CC

 

Quarterly within 45 days

 

 

 

Yes

 

No

2.  Annual audited financial statements + CC

 

Within 120 days of FYE

 

 

 

Yes

 

No

 

Financial Covenant

 

Required

 

Actual

 

Complies

 

 

 

 

 

 

 

 

 

Minimum Net Income

 

$1.00 for each quarter

 

 

 

Yes

 

No

 

Deposit Covenant

 

Required

 

Actual

 

Complies

 

 

 

 

 

 

 

 

 

Deposits with Bank and its Affiliates

 

An amount equal to at least $30,000,000 of Borrower’s Unrestricted Cash, net of
all borrowings under the Agreement, at each quarter-end and $25,000,000 at all
other times

 

 

 

Yes

 

No

 

 

 

 

 

 

 

 

 

Have there been updates to Borrower’s intellectual property?

 

 

 

 

 

Yes

 

No

 

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Comments Regarding Exceptions:  See Attached.

 

 

 

BANK USE ONLY

 

 

Received by:

 

 

 

authorized signer

Sincerely,

 

Date:

 

 

 

 

Broadvision, Inc.,

 

Verified:

 

a Delaware corporation

 

authorized signer

 

 

 

 

 

 

Signature

 

Date:

 

 

 

 

Title

 

Compliance Status:

Yes

No

 

 

 

 

 

Date

 

 

 

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