Exhibit 10.1


 


DEBT CONVERSION AGREEMENT


 


THIS DEBT CONVERSION AGREEMENT (this “Agreement”) is entered into as of
December 20, 2005, by and among BROADVISION,
INC., a Delaware corporation (the “Company”), and HONU HOLDINGS LLC (“Purchaser”).


RECITALS


WHEREAS, Purchaser holds a Senior Secured
Convertible Promissory Note of the Company in the aggregate principal amount of
$15,359,999.00 and with accrued interest as of the date of this Agreement of $181,545.19,
and additional interest accruing at the rate of $2,104.11 per day (the “Note”);
and


WHEREAS, the Company has authorized the sale and
issuance pursuant to this Agreement of an aggregate of 34,500,000 shares of its Common Stock (the “Shares”) at a purchase
price of $.45 per share; and


WHEREAS, Purchaser desires to purchase the
Shares, on the terms and conditions set forth herein, in exchange for total
consideration of $15,525,000.00, consisting of the cancellation of all of the
unpaid principal under the Note and $165,001.00 of accrued and unpaid interest under
the Note (the “Cancelled Interest”), with the balance of the accrued and unpaid
interest to be paid in cash; and


WHEREAS, the Company desires to issue and sell
the Shares to Purchaser on the terms and conditions set forth herein; and


WHEREAS, in connection with such purchase and
sale, Purchaser and the Company desire to enter into an Amended and Restated
Registration Rights Agreement with respect to the Shares, a mutually
satisfactory form of which has been reviewed by the parties (the “Registration
Rights Agreement”);


NOW, THEREFORE, the parties agree as follows:


SECTION 1.  AGREEMENT TO SELL AND PURCHASE


1.1          Authorization
of Shares.  The Company has authorized the sale and
issuance to Purchaser of the Shares, which have the rights, preferences,
privileges and restrictions set forth in the Certificate of Incorporation of
the Company, as amended as of the date of this Agreement and in the form as
provided to the Purchaser.


1.2          Sale
And Purchase.  Subject to the terms and conditions of this
Agreement, at the Closing the Company hereby agrees to issue and sell the
Shares to Purchaser and Purchaser agrees to purchase the Shares from the
Company in consideration for the cancellation of (a) all of the unpaid
principal under the Note and (b) the Cancelled Interest.


 


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SECTION 2.  CLOSING, DELIVERY AND PAYMENT


2.1          Closing. 
The closing of the sale and purchase of the Shares under this Agreement
(the “Closing”) shall take place at 10:30 a.m. on December 30, 2005, at the
offices of Cooley Godward LLP, 101
California Street, 5th Floor, San Francisco, California 94111 or at such other
time or place as the Company and Purchaser may mutually agree (such date is
hereinafter referred to as the “Closing Date”).


2.2          Deliveries.  At
the Closing, subject to the terms hereof, Purchaser will deliver to the Company
the original Note marked “Cancelled,” together with a document in form and
substance satisfactory to the Company evidencing the cancellation of the
Cancelled Interest. At or as soon as practicable following the Closing, subject
to the terms and conditions hereof, the Company will deliver to Purchaser a
certificate representing the Shares and a check in the amount of all accrued
and unpaid interest under the Note other than the Cancelled Interest.


SECTION 3.  REPRESENTATIONS AND WARRANTIES OF THE COMPANY


The Company hereby represents and warrants to
Purchaser as follows:


3.1          Organization,
Good Standing And Corporate Power.  The Company
is a corporation duly organized, validly existing and in good standing under
the laws of the State of Delaware.  The
Company has all requisite corporate power and authority to execute and deliver
this Agreement and to
issue and sell the Shares.


3.2          Capitalization. 
The authorized capital stock of the Company, as of the date of this
Agreement, consists of 2,000,000,000 shares of Common Stock, 34,428,665 shares
of which are issued and outstanding, and 10,000,000 shares of preferred stock,
none of which are issued and outstanding.


3.3          Authorization;
Binding Obligations.  All corporate action on the part of the
Company, its officers, directors and stockholders necessary for the
authorization of this Agreement, the
performance of all obligations of the Company hereunder at the Closing and the
authorization, sale, issuance and delivery of the Shares pursuant hereto has
been taken or will be taken prior to the Closing.


3.4          Offering
Valid.  Assuming the accuracy of the representations
and warranties of Purchaser contained in Section 4.2 hereof, the offer,
sale and issuance of the Shares will be exempt from the registration
requirements of the Securities Act of 1933, as amended (the “Securities Act”),
and will have been registered or qualified (or are exempt from registration and
qualification) under the registration, permit or qualification requirements of
all applicable state securities laws. 
Neither the Company nor any agent on its behalf has solicited or will
solicit any offers to sell or has offered to sell or will offer to sell all or
any part of the Shares to any person or persons so as to bring the sale of such
Shares by the Company within the registration provisions of the Securities Act
or any state securities laws.


3.5          Rights
Offering.  The Company has obtained all necessary
corporate approvals to commence and, upon compliance with all applicable legal
requirements, consummate the offering to all stockholders of the Company on a pro rata basis of rights to acquire 


 


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approximately 202,200,000
shares of the Company’s Common Stock (including shares attributable to
Purchaser and its affiliates) for cash at the same price per share at which
Purchaser is acquiring the Shares (the “Rights Offering”).


SECTION
4.  REPRESENTATIONS
AND WARRANTIES OF PURCHASER


Purchaser hereby represents and warrants to the Company as follows:


4.1          Requisite Power And Authority. 
Purchaser has all necessary power and authority under all applicable
provisions of law to execute and deliver this Agreement and
to carry out their provisions.  All
action on Purchaser’s part required for the lawful execution and delivery of
this Agreement have been or will be effectively
taken prior to the Closing.


4.2          Investment
Representations.  Purchaser understands that the Shares have
not been registered under the Securities Act. 
Purchaser also understands that the Shares are being offered and sold
pursuant to an exemption from registration contained in the Securities Act
based in part upon Purchaser’s representations contained in this Agreement.  Purchaser hereby represents and warrants as
follows:


(a)           Purchaser
Bears Economic Risk.  Purchaser is capable of evaluating the merits
and risks of its investment in the Company and has the capacity to protect its
own interests.  Purchaser must bear the
economic risk of this investment indefinitely unless the Shares are registered
pursuant to the Securities Act, or an exemption from registration is
available.  Purchaser also understands
that there is no assurance that any exemption from registration under the
Securities Act will be available and that, even if available, such exemption
may not allow Purchaser to transfer all or any portion of the Shares under the
circumstances, in the amounts or at the times Purchaser might propose.


(b)           Acquisition
For Own Account.  Purchaser is acquiring the Shares for
Purchaser’s own account for investment only, and not with a view towards their
distribution.


(c)           Purchaser
Can Protect Its Interest.  Purchaser represents that by
reason of Purchaser’s business or financial experience, Purchaser has the
capacity to protect its own interests in connection with the transactions
contemplated in this Agreement.  Further,
Purchaser is aware of no publication of any advertisement in connection with
the transactions contemplated in this Agreement.


(d)           Rule
144.  Purchaser acknowledges and agrees that the
Shares must be held indefinitely unless they are subsequently registered under
the Securities Act or an exemption from such registration is available.  Purchaser has been advised or is aware of the
provisions of Rule 144 promulgated under the Securities Act, which permits
limited resale of shares purchased in a private placement subject to the
satisfaction of certain conditions, including, among other things: the
availability of certain current public information about the Company, the
resale occurring not less than one year after a party has purchased and paid
for the security to be sold, the sale being through an unsolicited “broker’s
transaction” or in transactions directly with a market maker (as said term is
defined under the Securities Exchange Act of 1934, as amended (the “Exchange
Act”)) and the number of shares being sold during any three-month period
not exceeding specified limitations.


 


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(e)           Residence. 
Purchaser resides in the State of California.


4.3          Legends. 
To the extent applicable, each certificate or other document evidencing
any of the Shares shall be endorsed with the legends set forth below:


(a)           the following legend under the Securities
Act:


THESE SECURITIES
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED.  THEY MAY NOT BE SOLD, OFFERED FOR SALE,
PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
AS TO THE SECURITIES UNDER SAID ACT OR AN OPINION OF COUNSEL SATISFACTORY TO
THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.


(b)           any legend imposed or required by the
Company’s Bylaws or applicable state Securities laws.


SECTION 5.  CONDITIONS TO CLOSING


5.1          Conditions
To Purchaser’s Obligations At The Closing.  Purchaser’s
obligations to purchase the Shares at the Closing are subject to the
satisfaction, at or prior to the Closing, of the following conditions:


(a)           Representations
And Warranties True; Performance Of Obligations.  The
representations and warranties made by the Company in Section 3 hereof
shall be true and correct in all material respects as of the Closing Date with
the same force and effect as if they had been made as of the Closing Date, and
the Company shall have performed all obligations and conditions herein required
to be performed or observed by it on or prior to the Closing.


(b)           Legal
Investment.  On the Closing Date, the sale and issuance of
the Shares shall be legally permitted by all laws and regulations to which Purchaser
and the Company are subject.


(c)           Consents,
Permits, And Waivers.  The Company shall have obtained
any and all consents, permits and waivers necessary or appropriate for
consummation of the transactions contemplated by this Agreement (except for such as may be properly obtained subsequent to
the Closing).


(d)           Registration
Rights Agreement.  The Company shall have executed and delivered
the Registration Rights Agreement.


5.2          Conditions
To Obligations Of The Company.  The Company’s
obligation to issue and sell the Shares at each Closing is subject to the
satisfaction, on or prior to the Closing, of the following conditions:


(a)           Representations
And Warranties True.  The representations and warranties made by
the Purchaser in Section 4 hereof shall be true and correct in all material 


 


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respects at the
date of the Closing, with the same force and effect as if they had been made on
and as of said date.


(b)           Consents,
Permits, And Waivers.  Either (i) the consummation of
the purchase and sale contemplated by this Agreement without approval by the
Company’s stockholders shall be permitted under applicable listing standards of
the Nasdaq Stock Market or (ii) the Company’s Common Stock shall have been delisted
from the Nasdaq Stock Market, and the Company shall have obtained any and all other
consents, permits and waivers necessary or appropriate for consummation of the
transactions contemplated by this Agreement (except for
such as may be properly obtained subsequent to the Closing).


(c)           Registration
Rights Agreement.  Purchaser shall have executed and delivered
the Registration Rights Agreement.


SECTION 6.  COVENANTS


6.1          Nasdaq
Matters.  Prior to December 30, 2005, the Company shall
either (a) secure from the Nasdaq Stock Market such waiver or other
communication as shall satisfy the Company that the purchase and sale
contemplated by this Agreement without approval by the Company’s stockholders
is permitted under applicable listing standards of the Nasdaq Stock Market or
(b) take such action as may be necessary to cause the Company’s Common Stock to
be delisted from the Nasdaq Stock Market effective prior to December 30, 2005,
so as to render such Nasdaq Stock Market requirements inapplicable.


6.2          Company’s
Effectuation of Rights Offering.  Following the
Closing, the Company shall use all commercially reasonable efforts to effect
the Rights Offering in an expeditious manner, including filing a registration
statement, taking all necessary and appropriate steps to cause the SEC to
declare the registration statement effective and distributing the Rights
Offering materials to all holders of the Company’s Common Stock.


6.3          Purchaser’s Cooperation in Rights
Offering; Waiver of Rights.  Purchaser, on
behalf of itself and its affiliates, agrees to use all commercially reasonable
efforts to cooperate with the Company to timely provide information to the
Company in connection with the Rights Offering and to otherwise support and facilitate
the Rights Offering process.  Purchaser hereby
waives any and all rights that Purchaser may now have, or in the future may
acquire, to purchase shares of the Company’s Common Stock in connection with
the Rights Offering, whether by virtue of Purchaser’s ownership of shares of
the Company’s Common Stock or otherwise.


6.4          Reporting Requirements.  With a view to making available the benefits
of certain rules and regulations of the SEC that may at any time permit the
sale of the Shares to the public without registration or pursuant to a registration
statement, the Company agrees to use reasonable best efforts to:


(a)           make and keep public information
available, as those terms are understood and defined in Rule 144 under the
Securities Act;


(b)           file with the SEC in a timely manner all
reports and other documents required of the Company under the Securities Act
and the Exchange Act; and


 


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(c)           so long as Purchaser owns any shares of
Common Stock issued pursuant to the terms of this Agreement, to furnish to
Purchaser upon request (i) a written statement by the Company as to
whether it is in compliance with the reporting requirements of Rule 144,
the Securities Act and the Exchange Act, or whether it is qualified as a
registrant whose securities may be resold pursuant to SEC Form S-3, and
(ii) a copy of the most recent annual or quarterly report of the Company
and such other reports and documents so filed by the Company.


SECTION 7.  MISCELLANEOUS


7.1          Governing
Law.  This Agreement shall be governed in all
respects by the laws of the State of California as such laws are applied to
agreements between California residents entered into and performed entirely in
California.


7.2          Successors
And Assigns.  Except as otherwise expressly provided
herein, the provisions of this Agreement shall inure to the benefit of, and be
binding upon, the successors, assigns, heirs, executors and administrators of
the parties hereto.


7.3          Entire
Agreement.  This Agreement and the other documents
delivered pursuant hereto constitute the full and entire understanding and
agreement between the parties with regard to the subject matter hereof and no
party shall be liable or bound to any other in any manner by any
representations, warranties, covenants and agreements except as specifically
set forth herein and therein.


7.4          Severability. 
In case any provision of this Agreement shall be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.


7.5          Amendment
And Waiver.  This Agreement may be amended or modified
only upon the written consent of the Company and Purchaser.


7.6          Notices. 
All notices required or permitted hereunder shall be in writing and
shall be deemed effectively given: (a) upon personal delivery to the party to
be notified; (b) when sent by confirmed telex or facsimile if sent during
normal business hours of the recipient, if not, then on the next business day;
(c) five days after having been sent by registered or certified mail, return
receipt requested, postage prepaid; or (d) one day after deposit with a
nationally recognized overnight courier, specifying next day delivery, with
written verification of receipt.  All
communications shall be sent to the Company and Purchaser at the addresses set
forth on the signature page of this Agreement or at such other address as the
Company or Purchaser may designate by ten days advance written notice to the
other parties hereto.


7.7          Expenses. 
Each party shall pay all costs and expenses that it incurs with respect
to the negotiation, execution, delivery and performance of this Agreement;
provided, however in the event the sale of Shares is consummated, the Company
shall pay the costs and expenses, including attorneys fees, of Purchaser,
associated with the transactions contemplated by this Agreement.


 


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7.8          Titles
And Subtitles.  The titles of the sections and subsections of
this Agreement are for convenience of reference only and shall not, by
themselves, determine the construction of this Agreement.


7.9          Counterparts. 
This Agreement may be executed in any number of counterparts, each of
which shall be an original, but all of which together shall constitute one
instrument.


7.10        Broker’s
Fees.  Each party hereto represents and warrants
that no agent, broker, investment banker, person or firm acting on behalf of or
under the authority of such party hereto is or will be entitled to any broker’s
or finder’s fee or any other commission directly or indirectly in connection
with the transactions contemplated herein. 
Each party hereto further agrees to indemnify each other party for any
claims, losses or expenses incurred by such other party as a result of the representation
in this Section 7.10 being untrue.


 


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IN WITNESS WHEREOF, the parties hereto have executed this DEBT CONVERSION  AGREEMENT as of the date set forth in the first paragraph
hereof.


COMPANY:


 


BROADVISION, INC.


 


 


 


	
  By:

  	
  /S/ WILLIAM E. MEYER

  
	
   

  	
  William E. Meyer

  
	
   

  	
  Executive Vice President and

  
	
   

  	
  Chief Financial Officer

  



 


PURCHASER:


HONU HOLDINGS LLC


 


 


 


	
  By:

  	
  /S/ PEHONG CHEN

  
	
   

  	
  Pehong Chen

  
	
   

  	
  Manager

  



 


	
  Address:

  	
   

  	
  Honu Holdings
  LLC

  
	
   

  	
   

  	
  c/o Cooley Godward LLP

  
	
   

  	
   

  	
  101 California Street, Fifth Floor

  
	
   

  	
   

  	
  San Francisco, CA 94111-5800

  
	
   

  	
   

  	
  Attn: Kenneth L. Guernsey

  



 


 


WAIVER OF
RIGHTS OFFERING PARTICIPATION


 


In consideration of the Company’s execution of the
foregoing Agreement, each of the undersigned hereby waives any and all rights
that the undersigned may now have, or in the future may acquire, to purchase shares
of the Company’s Common Stock in connection with the Rights Offering, whether
by virtue of the undersigned’s ownership of shares of the Company’s Common Stock
or otherwise.


 


	
   

  	
   

  	
   

  	
  THE
  CHEN FAMILY TRUST

  
	
   

  	
   

  	
   

  	
  U/A/D
  JANUARY 15, 1993

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  /S/ PEHONG CHEN

  	
   

  	
  By:

  	
  /S/ PEHONG CHEN

  
	
  PEHONG
  CHEN

  	
   

  	
   

  	
  Pehong Chen

  
	
   

  	
   

  	
   

  	
   

  	
  Trustee

  



 


 


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