**Exhibit 10.27**

 

 

 

 

 

** **

**AMENDED AND RESTATED**

**LOAN ANDSECURITY AGREEMENT**

**Broadvision,Inc.**

 

 

 

 

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**AMENDED AND RESTATED**

**LOAN AND SECURITY AGREEMENT**

**TABLE OF CONTENTS**
| **Heading** |                             |                                                               |                                |   |
|-------------|----------------------------------|--------------------------------------------------------------------|-------------------------------------|--------|
|        |                             |                                                               |                                |   |
| 1.          | ACCOUNTING AND OTHER TERMS.      |                                                               |                                |   |
|        |                             |                                                               |                                |   |
| 2.          | LOAN  AND TERMS OF PAYMENT.      |                                                               |                                |   |
|        | 2.1                              | Promise to Pay.                                                    |                                |   |   |
|        |                             | 2.1.1                                                              | Revolving  Advances.                |   |   |   |
|        |                             | 2.1.2                                                              | Cash Management  Services Sublimit. |   |   |   |
|        |                             | 2.1.3                                                              | Foreign Exchange Sublimit.          |   |   |   |
|        |                             | 2.1.4                                                              | Letters of Credit Sublimit.         |   |   |   |
|        |                             | 2.1.5                                                              | Term Loans.                         |   |   |   |
|        | 2.2                              | Overadvances.                                                      |                                |   |   |
|        | 2.3                              | Interest  Rate, Payments.                                          |                                |   |   |
|        |                             | 2.3.1                                                              | Debit of Borrower’s  Accounts. |   |   |   |
|        | 2.4                              | Fees.                                                              |                                |   |   |
|        |                             |                                                               |                                |   |
| 3.          | CONDITIONS  OF LOANS.            |                                                               |                                |   |
|        | 3.1                              | Conditions  Precedent to Initial Credit Extension.                 |                                |   |   |
|        | 3.2                              | Conditions  Precedent to all Credit Extensions.                    |                                |   |   |
|        |                             |                                                               |                                |   |
| 4.          | CREATION OF SECURITY  INTEREST.  |                                                               |                                |   |
|        |                             |                                                               |                                |   |
| 5.          | REPRESENTATIONS AND  WARRANTIES. |                                                               |                                |   |
|        | 5.1                              | Due Organization and  Authorization.                               |                                |   |   |
|        | 5.2                              | Collateral.                                                        |                                |   |   |
|        | 5.3                              | Litigation.                                                        |                                |   |   |
|        | 5.4                              | No  Material Adverse Change in Financial Statements.               |                                |   |   |
|        | 5.5                              | Solvency.                                                          |                                |   |   |
|        | 5.6                              | Regulatory  Compliance.                                            |                                |   |   |
|        | 5.7                              | Investments.                                                       |                                |   |   |
|        | 5.8                              | Full Disclosure.                                                   |                                |   |   |
|        |                             |                                                               |                                |   |
| 6.          | AFFIRMATIVE  COVENANTS.          |                                                               |                                |   |
|        | 6.1                              | Government  Compliance.                                            |                                |   |   |
|        | 6.2                              | Financial  Statements, Reports, Certificates.                      |                                |   |   |
|        | 6.3                              | Inventory;  Returns.                                               |                                |   |   |
|        | 6.4                              | Taxes.                                                             |                                |   |   |
|        | 6.5                              | Insurance.                                                         |                                |   |   |
|        | 6.6                              | Deposits.                                                          |                                |   |   |
|        | 6.7                              | Financial  Covenant.                                               |                                |   |   |
|        | 6.8                              | Registration  of Intellectual Property Rights.                     |                                |   |   |
|        | 6.9                              | Further  Assurances.                                               |                                |   |   |
|        |                             |                                                               |                                |   |
| 7.          | NEGATIVE  COVENANTS.             |                                                               |                                |   |
|        | 7.1                              | Dispositions.                                                      |                                |   |   |
|        | 7.2                              | Changes  in Business, Ownership, Management or Business Locations. |                                |   |   |
|        | 7.3                              | Mergers  or Acquisitions.                                          |                                |   |   |
|        | 7.4                              | Indebtedness.                                                      |                                |   |   |
|             |                                  |                                                                    |                                     |        |  |  |  |

 

 

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|   | 7.5                                           | Encumbrances.                              |   |   |   |
|--------|-----------------------------------------------|--------------------------------------------|--------|--------|--------|
|   | 7.6                                           | Distributions; Investments.                |   |   |   |
|   | 7.7                                           | Transactions with  Affiliates.             |   |   |   |
|   | 7.8                                           | Subordinated  Debt.                        |   |   |   |
|   | 7.9                                           | Compliance.                                |   |   |   |
|   |                                          |                                       |   |   |
| 8.     | EVENTS OF  DEFAULT.                           |                                       |   |   |
|   | 8.1                                           | Payment Default.                           |   |   |   |
|   | 8.2                                           | Covenant  Default.                         |   |   |   |
|   | 8.3                                           | Material  Adverse Change.                  |   |   |   |
|   | 8.4                                           | Attachment.                                |   |   |   |
|   | 8.5                                           | Insolvency.                                |   |   |   |
|   | 8.6                                           | Other  Agreements.                         |   |   |   |
|   | 8.7                                           | Judgments.                                 |   |   |   |
|   | 8.8                                           | Misrepresentations.                        |   |   |   |
|   |                                          |                                       |   |   |
| 9.     | BANK’S RIGHTS AND REMEDIES.              |                                       |   |   |
|   | 9.1                                           | Rights  and Remedies.                      |   |   |   |
|   | 9.2                                           | Power of  Attorney.                        |   |   |   |
|   | 9.3                                           | Accounts  Collection.                      |   |   |   |
|   | 9.4                                           | Bank Expenses.                             |   |   |   |
|   | 9.5                                           | Bank’s Liability for  Collateral.     |   |   |   |
|   | 9.6                                           | Remedies  Cumulative.                      |   |   |   |
|   | 9.7                                           | Demand Waiver.                             |   |   |   |
|   |                                          |                                       |   |   |
| 10.    | NOTICES.                                      |                                       |   |   |
|   |                                          |                                       |   |   |
| 11.    | CHOICE OF  LAW , VENUE AND JURY TRIAL WAIVER. |                                       |   |   |
|   |                                          |                                       |   |   |
| 12.    | GENERAL  PROVISIONS                           |                                       |   |   |
|   | 12.1                                          | Successors  and Assigns.                   |   |   |   |
|   | 12.2                                          | Indemnification.                           |   |   |   |
|   | 12.3                                          | Time of Essence.                           |   |   |   |
|   | 12.4                                          | Severability of Provision.                 |   |   |   |
|   | 12.5                                          | Amendments in  Writing, Integration.       |   |   |   |
|   | 12.6                                          | Counterparts.                              |   |   |   |
|   | 12.7                                          | Survival.                                  |   |   |   |
|   | 12.8                                          | Confidentiality.                           |   |   |   |
|   | 12.9                                          | Attorneys’ Fees,  Costs and Expenses. |   |   |   |
|   |                                          |                                       |   |   |   |
| 13.    | DEFINITIONS.                                  |                                       |   |   |
|   | 13.1                                          | Definitions.                               |   |   |   |
|        |                                               |                                            |        |        |        |  |

 

**EXHIBITS**

Exhibit A — Description of Collateral

Exhibit B — Payment/Advance Request Form

Exhibit C — Form of Compliance Certificate

 

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**AMENDED AND RESTATED**

**LOAN AND SECURITY AGREEMENT**

                **This AMENDED AND RESTATED LOAN ANDSECURITY AGREEMENT** (the “Agreement”) dated as of March 31, 2002,between SILICON VALLEY BANK, a California-chartered bank (“Bank”) whose addressis 3003 Tasman Drive, Santa Clara, California 95054, and BROADVISION, INC., aDelaware corporation (“Borrower”) whose address is 585 Broadway, Redwood City,California 94063, provides the terms on which Bank will lend to Borrower andBorrower will borrow from Bank.

**RECITALS**

                A.            Borrower and Bank are parties to that certain Loan andSecurity Agreement dated as of July 2, 1997 (the “Original Agreement”), asamended and modified from time to time, including, without limitation, by thatcertain First Amendment to Loan and Security Agreement dated as of February 5,1998, that certain Second Amendment to Loan and Security Agreement dated as ofApril 7, 1998, that certain Amendment to Loan and Security Agreement dated asof May 4, 1999, that certain Loan Modification Agreement dated as of August 30,1999, that certain Second Loan Modification Agreement dated as of May 3, 2000,that certain Third Loan Modification Agreement dated as of May 11, 2001, thatcertain Fourth Loan Modification Agreement dated as of August 3, 2001, and thatcertain Loan Modification Agreement dated as of November 1, 2001 (collectively,the “Amendments and Modifications”).

                B.            Bank and Borrower desire to replace and supplant in fullthe Original Agreement, as amended and modified from time to time (including,without limitation, by the Amendments and Modifications), with this Agreement.

                NOW, THEREFORE, the partiesagree as follows:

# **1.             ACCOUNTING AND OTHERTERMS.**

**               **Accounting terms not defined in this Agreement will beconstrued in accordance with GAAP. Calculations and determinations must be madein accordance with GAAP.  The term“financial statements” includes the notes and schedules.  The terms “including” and “includes” alwaysmean “including (or includes) without limitation,” in this or any LoanDocument.

# **2.             LOAN AND TERMS OFPAYMENT.**

## **2.1          Promise to Pay.**

                Borrower promisesto pay Bank the unpaid principal amount of all Credit Extensions and intereston the unpaid principal amount of all Credit Extensions.

### **2.1.1       RevolvingAdvances.**

####                 (a)  Bank willmake Revolving Advances not exceeding at any time the Committed RevolvingLine minus the sum of (A) the Cash Management Services Sublimit, (B) thethen-outstanding principal balance of all Revolving Advances, (C) the FXSublimit, and (D) the amount of all outstanding Letters of Credit (includingdrawn but unreimbursed Letters of Credit). Amounts borrowed under this Section 2.1.1 may be repaid and reborrowedthrough the Revolving Maturity Date.

####                 (b)  To obtaina Revolving Advance, Borrower must notify Bank by facsimile or telephone by12:00 p.m., Pacific Time, one Business Day prior to the day on which theRevolving Advance is to be made. Borrower must promptly confirm the notification by delivering to Bank acompleted Loan 

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#### Payment/AdvanceRequest Form in the form attached as Exhibit B.  Bank will credit Revolving Advances to Borrower’s depositaccount.  Bank may make RevolvingAdvances under this Agreement based on instructions from a Responsible Officeror his or her designee, or without instructions if the Revolving Advances arenecessary to meet Obligations which have become due.  Bank may rely on any telephone notice given by a person whom Bankreasonably believes is a Responsible Officer or designee. Borrower willindemnify Bank for any loss Bank suffers due to such reliance.

####                 (c)  TheCommitted Revolving Line terminates on the Revolving Maturity Date, when allRevolving Advances, and all accrued and unpaid interest thereon, areimmediately due and payable, provided, however, that Borrower mayelect to amortize up to $5,000,000 of the Committed Revolving Line (the“Deferred Amount”) over the thirty-six (36) month period beginning on theRevolving Maturity Date (the “Deferral Period”) by providing Bank writtennotice of such election at least 10 days prior to the Revolving MaturityDate.  The Deferred Amount, if any,shall be payable on the first Business Day of each month during the DeferralPeriod until the last day of such period (the “Deferral Maturity Date”) inthirty-six (36) equal installments of principal plus interest.

####                 (d)  Bank’sobligation to lend the undisbursed portion of the Committed Revolving Line orany other credit available hereunder to Borrower will terminate if, in Bank’ssole discretion, there has been a Material Adverse Change or there has occurredany material adverse deviation from the most recent business plan of Borrowerpresented to and accepted by Bank prior to the execution of this Agreement.

### **2.1.2       CashManagement Services Sublimit.**

####                 Borrower may use up to $25,000,000 of the amountsavailable under Section 2.1.1(a) (the “Cash Management Services Sublimit”)for Bank’s Cash Management Services, which may include merchant services,direct deposit of payroll, automated clearing house transactions, controlleddisbursement accounts, business credit card and check cashing servicesidentified in various cash management services agreements related to suchservices (the “Cash Management Services”). The Cash Management Services Sublimitwill reduce, on a dollar-for-dollar basis, the amount otherwise available to beborrowed under the Committed Revolving Line.  Any amounts Bank pays on behalf of Borrower, and any amounts thatare not paid by Borrower, for any Cash Management Services will be treated asRevolving Advances under the Committed Revolving Line and will accrue interestat the rate for Revolving Advances. Borrower agrees to execute any further documentation in connection withthe Cash Management Services as Bank may request.

### **2.1.3       ForeignExchange Sublimit.**

                To the extent thatthe FX Sublimit (as defined herein) is not exceeded, then Borrower may enterinto foreign exchange forward contracts with the Bank under which Borrowercommits to purchase from or sell to Bank a set amount of foreign currency morethan one Business Day after the contract date (the “FX Forward Contract”).  The FX Sublimit (“FX Sublimit “) shall be anamount equal to 10% of the face amount of all outstanding FX Forward Contracts;provided, however, that at no time shall the FX Sublimit exceedthe maximum amount available under the Committed Revolving Line (as adjustedfrom time to time pursuant to paragraph (a) of Section 2.1.1).  The aggregate amount of the FX Sublimitshall at all times reduce, on a dollar-for-dollar basis, the amount availableunder the Committed Revolving Line. Bank may terminate the FX Forward Contractsif an Event of Default occurs.

### **2.1.4       Lettersof Credit Sublimit.**

####                 Bank will issue Letters ofCredit for Borrower’s account in an aggregate face amount not exceeding theCommitted Revolving Line minus (i) the outstanding principal balance of theRevolving Advances, (ii) the Cash Management Sublimit, and (iii) the FXSublimit; provided, however, that the face amount of outstandingLetters of Credit (including drawn but unreimbursed Letters of Credit) may atno 

 

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#### time exceed the CommittedRevolving Line.  Each Letter of Creditwill have an expiry date of not later than 180 days after the RevolvingMaturity Date, but Borrower’s reimbursement obligation will be secured by cashon terms acceptable to Bank at any time after the Revolving Maturity Date ifthe term of this Agreement is not extended by Bank.  Borrower agrees to execute any further documentation inconnection with the Letters of Credit as Bank may reasonably request.

### **2.1.5       Term Loans.**

####                 (a)           Borroweracknowledges and agrees that, as of the Closing Date, Borrower owes Bank theoutstanding principal sum of $1,690,300 under a leasehold facility (hereinafter“Term Loan #1”), under which Borrower must pay to Bank installments ofprincipal plus interest on the first Business Day of each month until the TermLoan #1 Maturity Date.  Borrower’s finalpayment on the Term Loan #1 Maturity Date shall include all outstanding TermLoan #1 principal and accrued interest.

                (b)           Borrower acknowledges and agreesthat, as of the Closing Date, Borrower owes Bank the outstanding principal sumof $1,964,200 under another leasehold facility (hereinafter “Term Loan #2”),under which Borrower must pay to Bank installments of principal plus intereston the first Business Day of each month until the Term Loan #2 MaturityDate.  Borrower’s final payment on theTerm Loan #2 Maturity Date shall include all outstanding Term Loan #2 principaland accrued interest.

## **2.2          Overadvances.**

**               **If the amount of principal of all Obligations underSections 2.1.1, 2.1.2, 2.1.3 and 2.1.4 at any time exceed the CommittedRevolving Line, then Borrower will be in an Overadvance to the extent of suchexcess principal amount.  If Borrower isin an Overadvance, then Borrower shall immediately repay to Bank the amount bywhich the sum of all outstanding principal exceeds the Committed Revolving Lineand Borrower shall also repay accrued interest on such amounts.

## **2.3          InterestRate, Payments.**

                (a)           RevolvingAdvances shall accrue interest on the aggregate principal balance thereof fromtime to time outstanding at a per annum rate equal to the Prime Rate.  Term Loan #1 shall accrue interest on theaggregate principal balance thereof from time to time outstanding at a perannum rate equal to the Prime Rate. Term Loan #2 shall accrue interest on the aggregate principal balancethereof from time to time outstanding at a per annum rate equal to the PrimeRate plus one and one-quarter percent (1.25%). The Deferred Amount, if any, shall accrue interest on the aggregateprincipal balance thereof from time to time outstanding at a per annum rateequal to the Prime Rate plus one-half percent (0.50%).  After an Event of Default, Obligations shallaccrue interest at a rate equal to three percent (3.00%) above the rateeffective immediately before the Event of Default. The interest rate increasesor decreases when the Prime Rate changes. Interest is computed on a 360-day year for the actual number of dayselapsed.

 

                (b)           Payments.  Interest on outstanding Revolving Advancesshall be due and payable on the 1st Business Day of each month.  Interest on amounts outstanding under TermLoan #1 shall be due and payable on the 1st Business Day of each month.  Interest on amounts outstanding under TermLoan #2 shall be due and payable on the 1st day of each month.  Payments received after 12:00 noon, PacificTime, are considered received at the opening of business on the next BusinessDay.  When a payment is due on a daythat is not a Business Day, the payment is due on the next Business Day andadditional fees and interest shall accrue from the initial due date.

 

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### **2.3.1       Debitof Borrower’s Accounts.**

Bank may debit any ofBorrower’s deposit accounts, including Account Number 273417670, for principaland interest payments, and any other amounts Borrower owes Bank when due.  Bank will notify Borrower when it debitsBorrower’s accounts.  These debits arenot a set-off.

## **2.4          Fees.**

                (a)   Borrowerwill pay all Bank Expenses (including reasonable attorneys’ fees and reasonableexpenses) incurred through and after the date of this Agreement.  All Bank Expenses are due and payable upondemand from Bank.

 

                (b)   Borrowerwill pay the Commitment Fee on or before the Closing Date.

 

                (c)   Borrowerwill pay an annual fee for Letters of Credit (the “Letter of Credit Fee”) equalto one-half percent (0.50%) of the face amount of each Letter of Credit,including without limitation Letters of Credit outstanding as of the ClosingDate.  Such Letter of Credit Fee will bedue and payable on the date of issuance of each Letter of Credit and on eachyearly anniversary thereof, and is not refundable in the event that a Letter ofCredit is prematurely cancelled or otherwise terminated.

 

# **3.             CONDITIONS OF LOANS.**

## **3.1          Conditions Precedent to Initial CreditExtension.**

                Bank’s obligationto make the initial Credit Extension is subject to the following conditionsprecedent:

####                 (a)   Bankshall have received the agreements, documents and fees that it requires.

####                 (b)   An auditof the Collateral shall have been completed, and Bank shall have determined, inits sole discretion, that the results thereof are acceptable to Bank.

####                 (c)   Bankshall have received from Borrower signed control agreements, in form andsubstance acceptable to Bank, from all holders of investment properties ordeposit accounts in which Borrower has an interest.

####                 (d)   Bankshall have received a copy of Borrower’s board-approved 2002 forecasts.

####                 (e)   Bankshall have received from Borrower evidence reasonably satisfactory to Bankshowing Bank as loss payee on all of Borrower’s insurance policies pursuant toSection 6.5.

####                 (f)   Borrowershall have an aggregate balance of $20,000,000 in all of its accounts with theBank.

## **3.2          Conditions Precedent to all CreditExtensions.**

                Bank’s obligationsto make each Credit Extension, including the initial Credit Extension, issubject to the following:

####                 (a)   timelyreceipt of any Loan Payment/Advance Request Form; and

####                 (b)   the representations and warranties in Section 5 must betrue in all material respects on the date of the Loan Payment/Advance RequestForm and the Loan Supplement, and on the effective date of each CreditExtension, and no Event of Default may have occurred and be continuing, orresult from the 

 

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#### Credit Extension. EachCredit Extension is Borrower’s representation and warranty on that date thatthe representations and warranties of Section 5 remain true in allmaterial respects.

# **4.             CREATION OFSECURITY INTEREST.**

                Borrower grantsBank a continuing security interest in all presently existing and lateracquired Collateral to secure all Obligations and the performance of each ofBorrower’s duties under the Loan Documents. Except for Permitted Liens, any security interest will be a firstpriority security interest in the Collateral. Bank may place a “hold” on any deposit account pledged as Collateral. Ifthis Agreement is terminated, Bank’s lien and security interest in theCollateral will continue until Borrower fully satisfies its Obligations.

# **5.             REPRESENTATIONSAND WARRANTIES.**

                Borrowerrepresents and warrants as follows:

## **5.1          Due Organization and Authorization.**

                Borrower and eachSubsidiary is duly existing and in good standing in its jurisdiction offormation and is qualified and licensed to do business in, and in good standingin, each jurisdiction in which the conduct of its business or its ownership ofproperty requires that it be qualified, except where the failure to do so couldnot reasonably be expected to cause a Material Adverse Change.  Borrower is a Delaware corporation.

                The execution,delivery and performance by Borrower of the Loan Documents have been dulyauthorized, and do not conflict with Borrower’s formation documents, norconstitute an event of default under any material agreement by which Borroweris bound. Borrower is not in default under any agreement to which or by whichit is bound in which the default could reasonably be expected to cause aMaterial Adverse Change.

## **5.2          Collateral.**

                Borrower has goodtitle to its Collateral, free of Liens except Permitted Liens.  The Accounts are bona fide, existingobligations, and the service or property that is the subject of each Accounthas been performed or delivered to the account debtor or its agent forimmediate shipment to and unconditional acceptance by the account debtor.  Borrower has no notice of any actual orimminent Insolvency Proceeding of any account. All Inventory is in all material respects of good and marketablequality, free from material defects. Borrower owns or possesses adequate rights to use all of its respectiveIntellectual Property, except for non-exclusive licenses granted to itsrespective customers in the ordinary course of business.  To the best of Borrower’s knowledge, eachPatent is valid and enforceable, no part of the Intellectual Property has beenjudged invalid or unenforceable (in whole or in part), and Borrower has noknowledge that any claim has been made that any part of the IntellectualProperty violates the rights of any third party, except to the extent suchclaim, if the subject of an unfavorable decision, ruling or finding, could notreasonably be expected to cause a Material Adverse Change.

## **5.3          Litigation.**

                Exceptas shown in the Schedules, there are no actions or proceedings pending or, tothe knowledge of Borrower’s Responsible Officers, threatened by or againstBorrower or any Subsidiary in which an adverse decision could reasonably beexpected to cause a Material Adverse Change.

 

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## **5.4          No Material Adverse Change inFinancial Statements.**

                All separate or consolidatedfinancial statements for Borrower and any Subsidiary delivered to Bank fairlypresent in all material respects such entity’s separate and consolidatedfinancial condition and separate and consolidated results of operations.  There has not been any materialdeterioration in Borrower’s consolidated financial condition since the date ofthe most recent financial statements submitted to Bank.

## **5.5          Solvency.**

                The fair salablevalue of Borrower’s assets (including goodwill minus disposition costs) exceedsthe fair value of its liabilities. Borrower is not left with unreasonably smallcapital after the transactions contemplated in this Agreement, and Borrower isable to pay its debts (including trade debts) as they mature.

## **5.6          RegulatoryCompliance.**

                Neither Borrowernor any Subsidiary, is an “investment company” or a company “controlled” by an“investment company” under the Investment Company Act.  Neither Borrower nor any Subsidiary, isengaged, as one of its material activities, in extending credit for marginstock (under Regulations T and U promulgated by the Board of Governors ofthe Federal Reserve System).  Borrowerhas complied in all material respects with the Federal Fair Labor StandardsAct.  Borrower has not violated anylaws, ordinances or rules, the violation of which could reasonably be expectedto cause a Material Adverse Change. None of Borrower’s or any Subsidiary’s properties or assets has beenused by Borrower, or any Subsidiary or, to the best of Borrower’s knowledge, byprevious Persons, in disposing, producing, storing, treating or transportingany hazardous substance other than in a legal manner in compliance with allenvironmental laws and regulations. Each of Borrower and each Subsidiary has timely filed all required taxreturns and paid, or made adequate provision to pay, all material taxes, exceptthose being contested in good faith with adequate reserves under GAAP.  Each of Borrower and each Subsidiary hasobtained all consents, approvals and authorizations of, made all declarationsor filings with, and given all notices to, all government authorities that arenecessary to continue its business as currently conducted, except where thefailure to do so could not reasonably be expected to cause a Material AdverseChange.

## **5.7          Investments.**

                Borrower owns nostock, partnership interest or other equity securities except for PermittedInvestments.

## **5.8          FullDisclosure.**

                No written representation,warranty or other statement of Borrower in any certificate or written statementgiven to Bank (taken together with all such written certificates and writtenstatements to Bank) contains any untrue statement of a material fact or omitsto state a material fact necessary to make the statements contained in thecertificates or statements not misleading, it being recognized by Bank that theprojections and forecasts provided by Borrower in good faith and based uponreasonable assumptions are not viewed as facts and that actual results duringthe period or periods covered by such projections and forecasts may differ fromthe projected and forecasted results.

 

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## **6.             AFFIRMATIVECOVENANTS.**

                Borrower will do all of the following for so long asBank has an obligation to lend, or there are outstanding Obligations:

## **6.1          GovernmentCompliance.**

                Borrower willmaintain its and all Subsidiaries’ legal existence and good standing in itsrespective jurisdictions of formation and maintain qualification in eachjurisdiction in which the failure to so qualify could reasonably be expected toresult in a Material Adverse Change. Borrower will comply, and cause each Subsidiary to comply, with alllaws, ordinances and regulations to which it is subject, noncompliance withwhich would reasonably be expected to have a material adverse effect onBorrower’s business or operations or could reasonably be expected to cause aMaterial Adverse Change.

## **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 dayof each calendar quarter, company-prepared unaudited balance sheets and incomestatements covering the operations of Borrower and its Subsidiaries during theperiod, certified by a Responsible Officer and in a form acceptable to Bank;(ii) as soon as available but no later than 90 days after the last day ofBorrower’s fiscal year, audited financial statements for Borrower, and itsSubsidiaries prepared under GAAP, consistently applied, together with anunqualified opinion on the financial statements from an independent certifiedpublic accounting firm reasonably acceptable to Bank; (iii) a prompt report ofany legal actions pending or threatened against Borrower or any Subsidiary thatcould result in damages or costs to Borrower or any Subsidiary of $250,000 ormore; (iv) annual financial projections of the Borrower, within 45 days afterthe end of each fiscal year of Borrower; and (v) prompt notice of any materialchange in the composition of the Intellectual Property, including anysubsequent ownership right of Borrower or any Subsidiary in or to anyCopyright, Patent or Trademark not shown in any intellectual property securityagreement between Borrower and Bank or knowledge of an event that couldreasonably be expected to materially adversely affect the value of theIntellectual Property.

 

####                 (b)   Within 45 days after the last day of each calendar quarter andconcurrently with the delivery of the audited annual financial statements,Borrower will deliver to Bank with the quarterly financial statements and theannual financial statements a Compliance Certificate in the form ofExhibit C, signed by a Responsible Officer.

 

####                 (c)   Borrower will allow Bank to audit the Collateral at Borrower’sexpense.  The first such audit shall becompleted on or before the Closing Date, and subsequent audits will beconducted no more often than every six months unless an Event of Default hasoccurred and is continuing (in which case the foregoing limitation on frequencywill not apply).

 

## **6.3          Inventory;Returns.**

                Borrower will keepall Inventory in good and marketable condition, free from materialdefects.  Returns and allowances betweenBorrower and its account debtors will follow Borrower’s customary practices asthey exist at execution of this Agreement. Borrower must promptly notify Bank when the aggregate value of allreturns, recoveries, disputes and claims with respect to a single customer involvesmore than $50,000.

## **6.4          Taxes.**

                Borrower will make, and causeeach Subsidiary to make, timely payment of all material federal, state, andlocal taxes or assessments (other than taxes and assessments which Borrower iscontesting in 

 

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good faith, with adequate reserves maintained in accordance with GAAP)and will deliver to Bank, on demand, appropriate certificates attesting to thepayment.

## **6.5          Insurance.**

                Borrower will keepits business and the Collateral insured for risks and in amounts as Bank mayreasonably request.  Insurance policieswill be in forms, with companies, and in amounts that are reasonablysatisfactory to Bank.  All propertypolicies will have a lender’s loss payable endorsement showing Bank as anadditional loss payee, all liability policies will show the Bank as anadditional insured, and all policies will provide that the insurer must giveBank at least 20 days notice before canceling its policy.  At Bank’s reasonable request, Borrower willdeliver certificates of insurance and evidence of all premium payments.Proceeds payable under any policy will, at Bank’s option, be payable to Bank onaccount of the Obligations.  So long asno Event of Default has occurred and is continuing, Borrower shall have theoption of applying the proceeds of any casualty policy to the replacement orrepair of destroyed or damaged property; provided that, at the occurrence andduring the continuance of an Event of Default, all proceeds payable under anysuch casualty policy shall, at the option of Bank, be payable to Bank onaccount of the Obligations.

## **6.6          Deposits.**

                Borrower will atall times, beginning on the first day following the thirty day periodimmediately following the Closing Date and ending on the later of the RevolvingMaturity Date and the Deferral Maturity Date (if applicable), maintain, in theaggregate, a minimum of Thirty Million Dollars ($30,000,000) in accounts withBank and its Affiliates; provided, however, beginning on the Closing Date theminimum shall be $20,000,000 to increase to $30,000,000 within thirty (30) daysof the Closing Date.  In addition,Borrower will at all times maintain an operating account with Bank.

## **6.7          FinancialCovenant.**

                Borrower will atall times until the later of the Revolving Maturity Date and the DeferralMaturity Date (if applicable) maintain a minimum of Eighty Million Dollars($80,000,000) on Borrower’s balance sheet as Unrestricted Cash, cashequivalents and long-term investments (exclusive of equities holdings).

## **6.8          Registration of Intellectual PropertyRights.**

                Within 30 days ofthe Closing Date, Borrower will register with the United States Patent andTrademark Office or the United States Copyright Office (as the case may be) itsIntellectual Property and additional Intellectual Property rights developed oracquired, including revisions or additions with any product before the sale orlicensing of the product to any third party, unless Borrower reasonablydetermines that such registration would not be commercially reasonable.  Borrower will: (i) protect, defend andmaintain the validity and enforceability of its Intellectual Property whencommercially reasonable; (ii) promptly advise Bank in writing of materialinfringements of its Intellectual Property of which Borrower becomes aware; and(iii) not allow any Intellectual Property material to Borrower’s businessto be abandoned, forfeited or dedicated to the public without Bank’s writtenconsent, which consent will not be unreasonably withheld.

## **6.9          FurtherAssurances.**

                Borrower will execute all furtherinstruments and take all further actions as Bank reasonably requests to perfector continue Bank’s security interest in the Collateral and to effect thepurposes of this Agreement, including without limitation providing Bank withcontrol agreements, in form and substance acceptable to Bank, for any and alldeposit and securities accounts maintained by Borrower.

 

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## **7.             NEGATIVECOVENANTS.**

                For so long asBank has an obligation to lend or there are any outstanding Obligations,Borrower will not do any of the following without Bank’s prior written consent,which will not be unreasonably withheld:

## **7.1          Dispositions.**

                Borrower will notconvey, sell, lease, transfer or otherwise dispose of (collectively “Transfer”),or permit any of its Subsidiaries to Transfer, all or any part of its businessor property, except for Transfers (i) of Inventory in the ordinary courseof business, (ii) of non-exclusive licenses and similar arrangements forthe use of the property of Borrower or its Subsidiaries in the ordinary courseof business, or (iii) of worn–out or obsolete Equipment.

## **7.2          Changes in Business, Ownership,Management or Business Locations.**

                Borrower will notengage in, or permit any of its Subsidiaries to engage in, any business otherthan the businesses currently engaged in by Borrower or businesses reasonablyrelated thereto.  There shall not be amaterial change in Borrower’s ownership of greater than 35%.  Borrower will not, without at least 30 daysprior written notice, relocate its chief executive office or add any newoffices or business locations in which Borrower maintains or stores over$20,000 in Borrower’s assets or property.

## **7.3          Mergersor Acquisitions.**

                Borrower will notmerge or consolidate, or permit any of its Subsidiaries to merge orconsolidate, with any other Person, or acquire, or permit any of itsSubsidiaries to acquire, all or substantially all of the capital stock orproperty of another Person except where such transactions do not exceed ten percent(10%) of Borrower’s then-current market capitalization and no Event of Defaulthas occurred and is continuing or would exist after giving effect to thetransaction.  A Subsidiary may merge orconsolidate into another Subsidiary or into Borrower, so long as Borrowerremains the obligor of all Obligations.

## **7.4          Indebtedness.**

                Borrower will notcreate, incur, assume or be liable for any Indebtedness, or permit anySubsidiary to do so, other than Permitted Indebtedness.

## **7.5          Encumbrances.**

                Borrower will not create,incur or allow to exist any Lien on any of its properties, or assign or conveyany right to receive income (including the sale of any Accounts), or permit anyof its Subsidiaries to do so, except for Permitted Liens, or permit anyCollateral not to be subject to the first priority security interest hereingranted to Bank, subject to Permitted Liens.

## **7.6          Distributions;Investments.**

                Except as provided in Section7.3, Borrower will not directly or indirectly acquire or own any Person, ormake any Investment in any Person (other than Permitted Investments) or permitany of its Subsidiaries to do so, or pay any dividends or make any distributionor payment related to, or redeem, retire or purchase any of, its capital stock,except for repurchases of stock from former employees and directors of Borrowerunder the terms of applicable repurchase agreements in an aggregate amount notto exceed $2,000,000 in the aggregate in any fiscal year, provided that noEvent of Default has occurred, is continuing or would exist after giving effectto the repurchases.

 

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## **7.7          Transactionswith Affiliates.**

                Borrower will notdirectly or indirectly enter into or permit any material transaction with anyAffiliate, except transactions that are in the ordinary course of Borrower’sbusiness, on terms less favorable to Borrower or equally favorable to Borrowerthan would be obtained in an arm’s length transaction with a non-affiliatedPerson.

## **7.8          SubordinatedDebt.**

                Borrower will notmake or permit any payment on any Subordinated Debt except under the expressterms of the Subordinated Debt, or amend any provision in any document relatingto the Subordinated Debt, without Bank’s prior written consent.

## **7.9          Compliance.**

                Borrower will notbecome an “investment company” or a company controlled by an “investmentcompany,” under the Investment Company Act of 1940, or undertake as one of itsmaterial activities extending credit to purchase or carry margin stock, or usethe proceeds of any Credit Extension for that purpose; fail to meet the minimumfunding requirements of ERISA, permit a Reportable Event or ProhibitedTransaction (as defined in ERISA) to occur; fail to comply with the FederalFair Labor Standards Act or violate any other law or regulation, if theviolation could reasonably be expected to have a material adverse effect onBorrower’s business or operations or would reasonably be expected to cause aMaterial Adverse Change, or permit any of its Subsidiaries to do so.

## **8.             EVENTSOF DEFAULT.**

## **8.1          PaymentDefault.**

                Borrower fails topay any of the Obligations within three Business Days after their duedate.  During the three-day period, thefailure to cure the default is not itself an Event of Default (but Bank shallhave no obligation to make a Credit Extension during the three-day period).

## **8.2          CovenantDefault.**

                (a)           Borrower fails to perform anyobligation under Section 6.6 or Section 6.7, or violates any of the covenantsin Article 7 of this Agreement, or

                (b)           Borrower fails or neglects toperform, keep or observe any other material term, provision, condition,covenant or agreement in this Agreement, in any other Loan Documents or in anyother present or future agreement between Borrower and Bank and, as to anydefault under such other term, provision, condition, agreement or covenant thatcan be cured, has failed to cure the default within ten (10) days after theoccurrence thereof; provided, however, that if the default cannot by its naturebe cured within the ten-day period, and such default is likely to be curedwithin a reasonable time thereafter, then Borrower shall have an additionalreasonable time period (which shall not in any case exceed ten additional days)to cure such default.  During theten-day period and (if applicable) the additional ten-day period, the failureto cure the default is not itself an Event of Default (but Bank shall have noobligation to make a Credit Extension during such periods).

## **8.3          MaterialAdverse Change.**

                There occurs (i) a materialadverse change in the business, operations or condition (financial orotherwise) of the Borrower, (ii) a material impairment of the prospect ofrepayment of any portion of the 

 

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Obligations, or (iii) a material impairment to the value orpriority of Bank’s security interest in the Collateral (or any material portionthereof), all as determined by Bank in good faith.

## **8.4          Attachment.**

                Any materialportion of Borrower’s assets is attached, seized or levied on, or comes into possessionof a trustee or receiver, and the attachment, seizure or levy is not removed,or the possession by a trustee or receiver is not terminated, in ten days; orBorrower is enjoined, restrained or prevented by court order from conducting amaterial part of its respective businesses; or a judgment or other claimbecomes a Lien on a material portion of Borrower’s assets; or a notice of lien,levy or assessment is filed against a material portion of Borrower’s assets byany government agency and not paid within ten days after Borrower receivesnotice thereof.  None of the foregoingis an Event of Default if stayed or if a bond is posted pending contest byBorrower (but Bank shall have no obligation to make a Credit Extension duringsuch stay period or pending contest).

## **8.5          Insolvency.**

                Borrower becomesinsolvent or begins an Insolvency Proceeding, or an Insolvency Proceeding isbegun against Borrower and is not dismissed or stayed within 30 days (but Bankshall have no obligation to make a Credit Extension before any InsolvencyProceeding is dismissed).

## **8.6          OtherAgreements.**

                There is a defaultin any agreement between Borrower and a third party that gives the third partythe right to accelerate any Indebtedness exceeding $100,000 or that couldreasonably be expected to cause a Material Adverse Change.

## **8.7          Judgments.**

                A moneyjudgment(s) in the aggregate of at least $250,000 is rendered against Borrowerand is unsatisfied and unstayed for ten days (but Bank shall have no obligationto make a Credit Extension before the judgment is stayed or satisfied).

## **8.8          Misrepresentations.**

                Borrower or anyPerson acting for Borrower, makes any material misrepresentation or materialmisstatement now or later in any warranty or representation in this Agreementor in any writing delivered to Bank or in order to induce Bank to enter thisAgreement or any Loan Document.

## **9.             BANK’SRIGHTS AND REMEDIES.**

## **9.1          Rightsand Remedies.**

                When an Event ofDefault occurs and any period for cure has expired Bank may, without notice ordemand, do any or all of the following:

                (a)   Declare all Obligations immediately due andpayable (but if an Event of Default described in Section 8.5 occurs allObligations are immediately due and payable without any action by Bank);

                (b)   Stop advancing money or extending credit for Borrower’s benefitunder this Agreement or under any other agreement between Borrower and Bank;

 

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                (c)   Settle or adjust disputes and claimsdirectly with account debtors for amounts, on terms and in any order that Bankconsiders advisable;

                (d)   Make any payments and do any acts that Bankconsiders necessary or reasonable to protect its security interest in theCollateral; and in furtherance thereof, (i) Borrower will assemble theCollateral if Bank requires and make it available as Bank designates; (ii) Bankmay enter premises where the Collateral is located, take and maintainpossession of any part of the Collateral, and pay, purchase, contest orcompromise any Lien which appears to be prior or superior to its securityinterest and pay all expenses incurred; and (iii) Borrower grants Bank alicense to enter and occupy any of its premises, without charge, to exerciseany of Bank’s rights or remedies;

                (e)   Apply to the Obligations any(i) balances and deposits of Borrower that Bank holds, and(ii) amounts held by Bank owing to or for the credit or the account ofBorrower;

                (f)   Ship, reclaim, recover, store, finish,maintain, repair, prepare for sale, advertise for sale, and sell theCollateral; and in furtherance thereof, (i) Bank is granted a non-exclusive,royalty-free license or other right to use, without charge, Borrower’s labels,Patents, Copyrights, Mask Works, rights of use of any name, trade secrets,trade names, Trademarks, service marks and advertising matter, or any similarproperty as it pertains to the Collateral, in completing production of,advertising for sale and selling any Collateral; and (ii) Borrower’s rightsunder all licenses and all franchise agreements inure to Bank’s benefit inconnection with the foregoing; and

                (g)   Dispose of the Collateral according to theCode.

## **9.2          Power ofAttorney.**

                Borrowerirrevocably appoints and constitutes Bank as its lawful attorney-in-fact, withfull power and in the name of Borrower, to do all of the following upon theoccurrence and continuation of an Event of Default:  (i)  endorse Borrower’s name on any checks or other forms ofpayment or security; (ii) sign Borrower’s name on any invoice or bill of ladingfor any Account or drafts against account debtors, (iii) make, settle andadjust all claims under Borrower’s insurance policies; (iv) settle andadjust disputes and claims about the Accounts directly with account debtors,for amounts and on terms Bank determines reasonable; and (v) transfer theCollateral into the name of Bank or a third party as the Code permits.  Notwithstanding the foregoing, Bank mayexercise the power of attorney to sign Borrower’s name on any documents necessaryto perfect or continue the perfection of any security interest regardless ofwhether an Event of Default has occurred. Bank’s appointment as Borrower’s attorney-in-fact, and all of Bank’srights and powers, are coupled with an interest and irrevocable until allObligations have been fully repaid and performed and Bank’s obligation toprovide Credit Extensions terminates.

## **9.3          AccountsCollection.**

                When an Event ofDefault occurs and continues, Bank may notify any Person owing Borrower moneyof Bank’s security interest in the funds and verify the amount of theAccount.  Borrower must collect allpayments in trust for Bank and, if requested by Bank, immediately deliver thepayments to Bank in the form received from the account debtor, with properendorsements for deposit.

## **9.4          Bank Expenses.**

                If Borrower fails to pay anyamount or furnish any required proof of payment to third persons, Bank may makeall or part of the payment or obtain insurance policies required inSection 6.5, and take any action under the policies that Bank deemsprudent.  Any amounts paid by Bank areBank Expenses and immediately due and payable, bearing interest at thethen-applicable rate and secured by the 

 

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Collateral.  No payments by Bankare deemed an agreement to make similar payments in the future or constituteBank’s waiver of any Event of Default.

## **9.5          Bank’sLiability for Collateral.**

                If Bank complieswith reasonable banking practices and the Code, except as required byapplicable law, it shall not be liable for: (i) the safekeeping of theCollateral; (ii) any loss or damage to the Collateral; (iii) anydiminution in the value of the Collateral; or (iv) any act or default of anycarrier, warehouseman, bailee, or other person.  Borrower bears all risk of loss, damage or destruction of theCollateral.

## **9.6          RemediesCumulative.**

                Bank’s rights andremedies under this Agreement, the other Loan Documents and all otheragreements are cumulative.  Bank has allrights and remedies provided under the Code, by law and in equity. Bank’sexercise of one right or remedy is not an election, and Bank’s waiver of anyEvent of Default is not a continuing waiver. Bank’s delay is not a waiver,election or acquiescence. No waiver is effective unless signed by Bank, andthen is only effective for the specific instance and purpose for which it wasgiven.

## **9.7          Demand Waiver.**

                Borrower waivesdemand, notice of default or dishonor, notice of payment and nonpayment, noticeof any default, nonpayment at maturity, release, compromise, settlement, extensionor renewal of accounts, documents, instruments, chattel paper and guarantiesheld by Bank on which Borrower is liable.

## **10.          NOTICES.**

                All notices ordemands by any party about this Agreement or any other related agreement mustbe in writing and be personally delivered or sent by an overnight deliveryservice, by certified mail, (postage prepaid, return receipt requested) or bytelefacsimile to the addresses set forth at the beginning of thisAgreement.  A party may change itsnotice address by giving the other party written notice thereof.

## **11.          CHOICE OF LAW , VENUE AND JURY TRIALWAIVER.**

                California lawgoverns the Loan Documents without regard to principles of conflicts oflaw.  Borrower and Bank each submit tothe exclusive jurisdiction of the State and Federal courts in Santa ClaraCounty, California.

**BORROWERAND BANK EACH WAIVE THEIR RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTIONARISING OUT OF ANY OF THE LOAN DOCUMENTS OR ANY CONTEMPLATED TRANSACTION,INCLUDING CONTRACT, TORT, BREACH OF DUTY AND ALL OTHER CLAIMS. THIS WAIVER IS AMATERIAL INDUCEMENT FOR BOTH PARTIES TO ENTER INTO THIS AGREEMENT.  EACH PARTY HAS REVIEWED THIS WAIVER WITH ITSCOUNSEL.**

## **12.          GENERALPROVISIONS**

## **12.1        Successorsand Assigns.**

                This Agreement binds and is forthe benefit of the successors and permitted assigns of each party.  Borrower may not assign this Agreement orany rights under it without Bank’s prior written consent, which may be grantedor withheld in Bank’s discretion.  Bankhas the right, without the consent of or 

 

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notice to Borrower, to sell, transfer, negotiate or grantparticipations in all or any part of, or any interest in, Bank’s obligations,rights and benefits under this Agreement.

## **12.2        Indemnification.**

                Borrower willindemnify, defend and hold harmless Bank and its officers, employees, andagents against:  (i) all obligations,demands, claims, and liabilities asserted by any other party in connection withthe transactions contemplated by the Loan Documents; and (ii) all losses andBank Expenses incurred or paid by Bank from, following or consequential totransactions between Bank and Borrower (including reasonable attorneys fees andexpenses), except for losses caused by Bank’s gross negligence or willfulmisconduct.

## **12.3        Time of Essence.**

                Time is of theessence for the performance of all obligations in this Agreement.

## **12.4        Severabilityof Provision.**

                Each provision ofthis Agreement is severable from every other provision in determining theenforceability of any provision.

## **12.5        Amendmentsin Writing, Integration.**

                All amendments tothis Agreement must be in writing and signed by Borrower and Bank.  This Agreement represents the entireagreement about this subject matter, and supersedes prior negotiations oragreements, including, without limitation, the Original Agreement and theAmendments and Modifications.  All prioragreements, understandings, representations, warranties and negotiationsbetween the parties about the subject matter of this Agreement, including,without limitation, the Original Agreement and the Amendments andModifications, merge into this Agreement and the other Loan Documents.

## **12.6        Counterparts.**

                This Agreement maybe executed in any number of counterparts and by different parties on separatecounterparts, each of which, when executed and delivered, are an original, andall of which, taken together, constitute one Agreement.

## **12.7        Survival.**

                All covenants,representations and warranties made in this Agreement continue in full force while  any Obligations remain outstanding.  The obligations of Borrower inSection 12.2 to indemnify Bank will survive until all statutes oflimitations for actions that may be brought against Bank have run.

## **12.8        Confidentiality.**

                In handling any confidentialinformation, Bank will exercise the same degree of care that it exercises forits own proprietary information, and disclosure of information may be made byBank: (i) to Bank’s subsidiaries or affiliates in connection with theirbusiness with Borrower; (ii) to prospective transferees or purchasers ofany interest in the Loan Documents; (iii) as required by law, regulation,subpoena or other order; (iv) as required in connection with Bank’sexamination or audit; and (v) as Bank considers appropriate in exercisingremedies under this Agreement. Confidential information does not include information that either:  (i) is in the public domain or in Bank’spossession when disclosed to 

 

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Bank, or becomes part of the public domain after disclosure to Bank; or(ii) is disclosed to Bank by a third party, if Bank does not know that thethird party is prohibited from disclosing the information.

## **12.9        Attorneys’Fees, Costs and Expenses.**

In any action or proceeding between Borrower and Bankarising out of the Loan Documents, the prevailing party will be entitled torecover its reasonable attorneys’ fees and other reasonable costs and expensesincurred, in addition to any other relief to which it may be entitled.

## **13.          DEFINITIONS.**

## **13.1        Definitions.**

                In this Agreement:

                “**Accounts**”are all existing and later arising accounts, contract rights and otherobligations owed to Borrower in connection with its sale or lease of goods(including the licensing of software and other technology) or provision ofservices,all credit insurance, guaranties, other security and all merchandisereturned or reclaimed by Borrower, and Borrower’s Books relating to any of theforegoing.

                “**Advances**”are the aggregate of (i) all amounts utilized under the Cash ManagementServices Sublimit, (ii) the then-outstanding principal balance of all RevolvingAdvances, (iii) all amounts utilized under the FX Sublimit, and (iv) Letters ofCredit.

                “**Affiliate**”of a Person is a Person that owns or directly or indirectly controls thePerson, any Person that controls or is controlled by or is under common controlwith the Person, and each of that Person’s senior executive officers,directors, partners and, for any Person that is a limited liability company,that Person’s managers and members.

                “**Amendmentsand Modifications**” is defined in the recital section hereto.

                “**BankExpenses**” are all audit fees and expenses and reasonable costs andexpenses (including reasonable attorneys’ fees and expenses) for preparing,negotiating, administering, defending and enforcing the Loan Documents(including appeals and Insolvency Proceedings).

                “**Borrower’sBooks**” are all of Borrower’s books and records, including ledgers,records regarding Borrower’s assets or liabilities, the Collateral, businessoperations or financial condition and all computer programs or discs or anyequipment containing the information.

                “**Business Day**”is any day that is not a Saturday, Sunday or other day on which the Bank isclosed.

**                “Cash Management Services”** are defined in Section 2.1.2.

                **“CashManagement Services Sublimit”** is defined in Section 2.1.2.

                “**Closing Date**”is the date of this Agreement.

                “**Code**”is the Uniform Commercial Code, as applicable.

                “**Collateral**” is the propertydescribed on Exhibit A.

 

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                “**CommittedRevolving Line**” is $25,000,000.

                “**CommitmentFee**” is $50,000.

                “**ContingentObligation**” is, for any Person, any direct or indirect liability,contingent or not, of that Person for (i) any indebtedness, lease,dividend, letter of credit or other obligation of another such as an obligationdirectly or indirectly guaranteed, endorsed, co–made, discounted or soldwith recourse by that Person, or for which that Person is directly orindirectly liable; (ii) any obligations for undrawn letters of credit forthe account of that Person; and (iii) all obligations from any interestrate, currency or commodity swap agreement, interest rate cap or collaragreement, or other agreement or arrangement designated to protect a Personagainst fluctuation in interest rates, currency exchange rates or commodityprices;  but “Contingent Obligation”does not include endorsements in the ordinary course of business.  The amount of a Contingent Obligation is thestated or determined amount of the primary obligation for which the ContingentObligation is made or, if not determinable, the maximum reasonably anticipatedliability for it determined by the Person in good faith; but the amount may notexceed the maximum of the obligations under the guarantee or other supportarrangement.

                “**Copyrights**”are all copyright rights, applications or registrations and like protections ineach work or authorship or derivative work, whether published or not (whetheror not it is a trade secret) now or later existing, created, acquired or held.

                “**CreditExtension**” is each Revolving Advance, Cash Management Service, FXForward Contract, Letter of Credit, term loan or any other extension of creditmade by Bank to Borrower or for Borrower’s benefit.

                “**Dollars**”and “**$**”is United States dollars.

                “**Equipment**”is all present and future machinery, equipment, tenant improvements, furniture,fixtures, vehicles, tools, parts and attachments in which Borrower has anyinterest.

**               **“**ERISA**” is the Employment Retirement IncomeSecurity Act of 1974, and its regulations.

                “**Event ofDefault**” is the occurrence of any event described in Article 8 butdoes not include any cure period provided therein.

                “**FX ForwardContract**” is defined in Section 2.1.3.

                “**FX Sublimit**”is defined in Section 2.1.3.

                “**GAAP**”is generally accepted accounting principles, consistently applied over theperiod(s) in question.

**               **“**Indebtedness**” is (a) indebtedness forborrowed money or the deferred price of property or services, such asreimbursement and other obligations for surety bonds and letters of credit, (b)obligations evidenced by notes, bonds, debentures or similar instruments, (c)capital lease obligations and (d) Contingent Obligations.

                “**Insolvency Proceedings**” areproceedings by or against any Person under the United States Bankruptcy Code orany other bankruptcy or insolvency law, including assignments for the benefitof creditors, compositions, extensions generally with its creditors, orproceedings seeking reorganization, arrangement or other relief.

 

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                “**Intellectual****Property**”is:

                (a)   Copyrights, Trademarks, Patents and MaskWorks, including all amendments, renewals, extensions and licenses or otherrights to use same, and all license fees and royalties from the use of same;

                (b)   Any trade secrets and any intellectualproperty rights in computer software and computer software products now orlater existing, created, acquired or held;

                (c)   All design rights which may be available toBorrower now or later created, acquired or held;

                (d)   Any claims for damages (past, present orfuture) for infringement of any of the rights above, with the right, but notthe obligation, to sue and collect damages for use or infringement of the intellectualproperty rights above; and

                (e)   All proceeds and products of the foregoing,including all insurance, indemnity and warranty payments.

                “**Inventory**”is present and future inventory in which Borrower has any interest, includingmerchandise, raw materials, parts, supplies, packing and shipping materials,work in process and finished products intended for sale or lease or to befurnished under a contract of service, of every kind and description now orlater owned by or in the custody or possession, actual or constructive, ofBorrower, including inventory temporarily out of its custody or possession orin transit and including returns on any accounts or other proceeds (includinginsurance proceeds) from the sale or disposition of any of the foregoing andany documents of title.

                “**Investment**”is any beneficial ownership (including stock, partnership interest or othersecurities)  of any Person, or any loan,advance or capital contribution to any Person.

                “**Letter ofCredit**” is described in Section 2.1.4.

                “**Lien**”is a mortgage, lien, deed of trust, charge, pledge, security interest or otherencumbrance.

                “**LoanDocuments**” are, collectively, this Agreement, any note or notes andany other present or future agreement between Borrower to or for the benefit ofBank in connection with this Agreement, all as amended, extended or restated.

                “**Mask Works**”are all mask works or similar rights available for the protection ofsemiconductor chips, now owned or later acquired.

                “**MaterialAdverse Change**” is described in Section 8.3.

                “**Obligations**”are debts, principal, interest, Bank Expenses and other amounts that Borrowerowes to Bank now or later, including cash management services, letters ofcredit and foreign exchange contracts (if any) and including interest accruingafter Insolvency Proceedings begin, and debts, liabilities or obligations ofBorrower assigned to Bank.

                “**OriginalAgreement**” is defined in the recital section hereto.

                “**Overadvance**” is described inSection 2.2.

**               **“**Patents**” are patents, patent applications andlike protections, including improvements, divisions, continuations, renewals,reissues, extensions and continuations–in–part of the same.

 

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                “**Permitted Indebtedness**” is:

                (a)   Borrower’s indebtedness to Bank under thisAgreement or any other Loan Document;

                (b)   Indebtedness existing on the Closing Datethat is acceptable to Bank and shown on the Schedules;

                (c)   Subordinated Debt;

                (d)   Indebtedness to trade creditors incurred inthe ordinary course of business;

                (e)   Indebtedness secured by Permitted Liens;

                (f)   Extensions, refinancings, modifications,amendments and restatements of any items of Permitted Indebtedness, providedthat the principal amount thereof is not increased or the terms thereof are notmodified to impose more burdensome terms upon Borrower or its Subsidiaries, asthe case may be;

                (g)   Indebtedness of Borrower to any Subsidiaryand Contingent Obligations of any Subsidiary with respect to obligations ofBorrower (provided that the primary obligations are not prohibited hereby), andIndebtedness of any Subsidiary to any other Subsidiary and ContingentObligations of any Subsidiary with respect to obligations of any otherSubsidiary (provided that the primary obligations are not prohibited hereby),provided that the aggregate of all such amounts does not exceed $1,000,000; and

                (h)   Other Indebtedness not exceeding $1,000,000in the aggregate outstanding at any one time.

                “**Permitted Investments**” are:

                (a)   Investments existing on the Closing Datethat are acceptable to Bank and shown on the Schedules;

                (b)   (i)  marketable direct obligationsissued or unconditionally guaranteed by the United States or its agency or anyState maturing within two years from its acquisition, (ii) commercialpaper maturing no more than 1 year after its creation and having the highestrating from either Standard & Poor’s Corporation or Moody’s InvestorsService, Inc., and (iii) Bank’s certificates of deposit issued maturing nomore than 1 year after issue;

                (c)   individual Investments not exceeding$300,000 which, in the aggregate for such year, do not  exceed $1,000,000 provided, however, thatBorrower must notify Bank before making any such Investment and such Investmentmust not result in the occurrence of an Event of Default; and

                (d)   checking, savings, money market andinvestment accounts with Bank or an Affiliate of Bank.

                (e)   Investments consisting of notes receivableof, or prepaid royalties and other credit extensions, to customers and supplierswho are not Affiliates, in the ordinary course of business; provided that thisparagraph shall not apply to Investments of Borrower in any Subsidiary;

                (f)   Investments of Subsidiaries in or otherSubsidiaries to Borrower and Investments by Borrower in Subsidiaries not toexceed $1,000,000 in the aggregate in any fiscal year;

                (g)   Investments, in the aggregate not to exceed $1,000,000,consisting of loans to employees, officers or directors relating to (i) thepurchase of equity securities of Borrower or its Subsidiaries pursuant 

 

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to Borrower’s employee stock purchase plans or agreements or (ii)Borrower’s compensation or relocation plans or agreements, each as approved ingood faith by Borrower’s board of directors;

                (h)   Investments consisting of the endorsementof negotiable instruments for deposit or collection or similar transactions inthe ordinary course of Borrower’s business;

                (i)   Joint venture or strategic alliances in theordinary course of Borrower’s business consisting of the licensing oftechnology, the development of technology or the providing of technicalsupport, provided that any cash investments by Borrower do not exceed$1,000,000 in the aggregate in any fiscal year; and

                (j)   Investments (including debt obligations)received in connection with the bankruptcy or reorganization of customers orsuppliers and in settlement of delinquent obligations of, and other disputeswith, customers or suppliers arising in the ordinary course of business.

                “**Permitted Liens**” are:

                (a)   Liens existing on the Closing Date that areacceptable to Bank and shown on the Schedules or arising under this Agreementor other Loan Documents;

                (b)   Liens for taxes, fees, assessments or othergovernment charges or levies, either not delinquent or being contested in goodfaith and for which Borrower maintains adequate reserves on its Books, ifthey have no priority over any of Bank’s security interests;

                (c)   Purchase money Liens (i) on Equipmentacquired or held by Borrower or its Subsidiaries, or (ii) existing onequipment when acquired, if the Lien is confined to the property andimprovements and the proceeds of the equipment;

                (d)   Licenses or sublicenses granted in theordinary course of Borrower’s business and any interest or title of a licensoror under any license or sublicense, if the licenses and sublicensespermit granting Bank a security interest;

                (e)   Leases or subleases granted in the ordinarycourse of Borrower’s business, including in connection with Borrower’s leasedpremises or leased property;

                (f)   Liens incurred in the extension, renewal orrefinancing of the indebtedness secured by Liens described in (a) through (c),but any extension, renewal or replacement Lien must be limited to the propertyencumbered by the existing Lien and the principal amount of the indebtedness sosecured may not increase.

                (g)   Liens arising from judgments, decrees andattachments not constituting an Event of Default;

                (h)   Liens in connection with equipment leases;

                (i)   Liens securing claims or demands ofmaterialmen, mechanics, carriers, warehousemen, landlords and other likepersons or entities imposed without action of such parties, *provided*that the payment thereof is not yet required;

                (j)   Liens incurred or deposits made in theordinary course of Borrower’s business in connection with worker’scompensation, unemployment insurance, social security and other like laws;

                (k)   Easements, reservations, rights-of-way, restrictions, minordefects or irregularities in title and other similar charges or encumbrancesaffecting real property not interfering in any material respect with theordinary conduct of Borrower’s business;

 

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                (l)   Liens in favor of customs and revenueauthorities arising as a matter of law to secure payment of customs duties inconnection with the importation of goods;

                (m)   Liens in connection with Subordinated Debt;and

                (n)   Other Liens not described above arising inthe ordinary course of business and not having or not reasonably likely to havea material adverse effect on Borrower and its Subsidiaries taken as a whole.

                “**Person**”is any individual, sole proprietorship, partnership, limited liability company,joint venture, company association, trust, unincorporated organization,association, corporation, institution, public benefit corporation, firm, jointstock company, estate, entity or government agency.

                “**Prime Rate**”is Bank’s most recently announced “prime rate,” even if it is not the lowestrate at which Bank makes loans or otherwise extends credit.

                “**Responsible****Officer**”is each of the Chief Executive Officer and the Chief Financial Officer ofBorrower.

                “**RevolvingAdvance**” or “**Revolving Advances**” is a principal advance(or advances) of funds under the Committed Revolving Line.

                “**RevolvingMaturity Date**” is March 2, 2003.

                “**Schedules**”are the attached schedules of exceptions.

                “**SubordinatedDebt**” is debt incurred by Borrower that is subordinated toBorrower’s Indebtedness owed to Bank and that is reflected in a writtenagreement in a manner and form acceptable to Bank and approved by Bank inwriting.

                “**Subsidiary**”is, for Borrower, any business entity of which more than 20% of the votingstock or other equity interests is owned or controlled, directly or indirectly,by Borrower or one or more Affiliates of Borrower.

                “**Term Loan #1**”is defined in Section 2.1.5(a).

                “**Term Loan #2**”is defined in Section 2.1.5(b).

                “**Term Loan #1Maturity Date**” is March 31, 2005.

                “**Term Loan #2Maturity Date**” is September 30, 2006.

                “**Trademarks**”are trademark and servicemark rights, registered or not, applications toregister and registrations and like protections, and the entire goodwill of thebusiness of Borrower connected with the trademarks.

                “**Unrestricted Cash**” is allcash that (i) is not subject to any Lien or (ii) does not otherwise fall withinthe definition of “restricted cash” as determined under GAAP.

 

20

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                                INWITNESS WHEREOF, each of the parties hereto has caused its duly authorizedrepresentative to execute and deliver this Agreement on the date first setforth above.

 
| BANK:                        |                   | BORROWER:               |
|------------------------------|------------------------|-------------------------|
|                         |                   |                    |
| SILICON VALLEY  BANK,        |                   | BROADVISION,  INC.      |
| a  California-chartered bank |                   | a Delaware  corporation |
|                         |                   |                    |
|                         |                   |                    |
|                         |                   |                    |   |   |
|                         |                   |                    |   |   |
| By:                          | /s/ Heather  Hamilton  |                    | By: | /s/ Terence A.  Davis |
|                         |                   |                    |   |   |
| Name:                        |                   |                    | Name: |   |
|                         |                   |                    |   |   |
| Title:                       | Senior Vice  President |                    | Title: | V.P. Finance,  Treasurer |

 

21

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**EXHIBIT A**

                The Collateralconsists of all of Borrower’s right, title and interest in and to thefollowing:

                All goods andequipment now owned or hereafter acquired, including without limitation allmachinery, fixtures, vehicles (including motor vehicles and trailers), and anyinterest in any of the foregoing, and all attachments, accessories, accessions,replacements, substitutions, additions, and improvements to any of theforegoing, wherever located;

                All inventory, nowowned or hereafter acquired, including without limitation all merchandise, rawmaterials, parts, supplies, packing and shipping materials, work-in-process andfinished products, including such inventory as is temporarily out of Borrower’scustody or possession or in transit and also including any returns upon anyaccounts or other proceeds (including insurance proceeds) resulting from thesale or disposition of any of the foregoing, and any documents of titlerepresenting any of the above;

                All contractrights and general intangibles now owned or hereafter acquired, including withoutlimitation goodwill, trademarks, servicemarks, trade styles, trade names,patents, patent applications, leases, license agreements, franchise agreements,blueprints, drawings, purchase orders, customer lists, route lists,infringements, claims, computer programs, computer discs, computer tapes,literature, reports, catalogs, design rights, income tax refunds, payments ofinsurance and rights to payment of any kind;

                All now existingand hereafter arising accounts, contract rights, royalties, license rights andall other forms of obligations owing to Borrower arising out of the sale orlease of goods, the licensing of technology or the rendering of services byBorrower, whether or not earned by performance, and any and all creditinsurance, guaranties and other security therefor, as well as all merchandisereturned to or reclaimed by Borrower;

                All documents,cash, deposit accounts, securities, securities entitlements, securitiesaccounts, investment property, financial assets, letters of credit, certificatesof deposit, instruments and chattel paper now owned or hereafter acquired, andBorrower’s Books relating to the foregoing;

                All copyrightrights, copyright applications, copyright registrations and like protections ineach work of authorship and derivative work thereof, whether published orunpublished, now owned or hereafter acquired; all trade secret rights,including all rights to unpatented inventions, know–how, operatingmanuals, license rights and agreements and confidential information, now owned orhereafter acquired; all mask work or similar rights available for theprotection of semiconductor chips, now owned or hereafter acquired; all claimsfor damages by way of any past, present and future infringement of any of theforegoing;

                All of Borrower’sIntellectual Property; and

                All of Borrower’s Books relatingto the foregoing and any and all claims, rights and interests in any of theabove and all substitutions for, additions and accessions to and proceedsthereof.

 

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**EXHIBIT B**

**Loan Payment/Advance Request Form**

 

| **Fax  To:** |   |   | **Date:** |   |
|--------------|--------|--------|-----------|--------|

 

 

o   Loan Payment:

BROADVISION, INC.

 
| From Account # |                 |   | To Account # |             |
|----------------|----------------------|--------|--------------|------------------|
|           | (Deposit Account  #) |   |         | (Loan Account #) |

 
| Principal $ |   | and/or Interest  $ |   |
|-------------|--------|--------------------|--------|

 

All Borrower’s representation and warranties in theLoan and Security Agreement are true, correct and complete in all materialrespects to on the date of the telephone transfer request for and advance, butthose representations and warranties expressly referring to another date shallbe true, correct and complete in all material respects as of the date:

 
| **Authorized Signature:** |   |   | Phone Number: |   |
|---------------------------|--------|--------|---------------|--------|

 

 

o  **Loan Advance:**

**Complete*OutgoingWire Request* section below if all or a portion of the funds fromthis loan advance are for an outgoing wire.**

 
| From Account # |             |   | To Account # |                 |
|----------------|------------------|--------|--------------|----------------------|
|           | (Loan Account #) |   |         | (Deposit Account  #) |

 
| Amount of  Revolving Advance $ |   |
|--------------------------------|--------|

 

All Borrower’s representation and warranties in theLoan and Security Agreementare true,correct and complete in all material respects to on the date of the telephonetransfer request for and advance, but those representations and warrantiesexpressly referring to another date shall be true, correct and complete in allmaterial respects as of the date:

 
| **Authorized Signature:** |   |   | Phone Number: |   |
|---------------------------|--------|--------|---------------|--------|

 

 

 

**OutgoingWire Request**

**Complete only if all or a portion of funds from the *loan advance*above are to be wired.**

Deadline for same day processing is 12:00 p.m., P.T.

 
| Beneficiary Name:                  |                 |   | Amount of Wire: $                                 |   |
|------------------------------------|----------------------|--------|---------------------------------------------------|--------|
| Beneficiary Bank:                  |                 |   | Account Number:                                   |   |
| City and Sate:                     |                 |   |                                              |   |
| Beneficiary Bank Transit  (ABA) #: | __ __ __ __ __ __ __ |   | Beneficiary Bank Code  (Swift, Sort, Chip, etc.): |   |
|                                    |                      |        |                                                   |        |  |  |

 

**(ForInternational Wire Only)**

 
| Intermediary Bank:     |   |   | Transit (ABA) #: |   |
|------------------------|--------|--------|------------------|--------|
| For Further Credit to: |   |
| Special Instruction:   |   |
|                        |        |        |                  |        |  |

* *

*Bysigning below, I (we) acknowledge and agree that my (our) funds transferrequest shall be processed in accordance with and subject to the terms andconditions set forth in the agreements(s) covering funds transfer service(s),which agreements(s) were previously received and executed by me (us).*

 
| Authorized Signature: |   |   | 2nd Signature (If Required): |   |
|-----------------------|--------|--------|------------------------------|--------|
| Print Name/Title:     |   |   | Print Name/Title:            |   |
| Telephone #           |   |   | Telephone #                  |   |
|                       |        |        |                              |        |  |  |  |  |

 

 

 

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**EXHIBIT C**

COMPLIANCE CERTIFICATE
| TO:    |   | SILICON VALLEY BANK |
|--------|--------|---------------------|
| FROM:  |   | BROADVISION,  INC.  |
| DATED: |   |                |

 

                The undersigned authorizedofficer of Broadvision, Inc. (“Borrower”) certifies that under the terms andconditions of the Amended and Restated Loan and Security Agreement dated as ofMarch    , 2002 between Borrower and Bank (the “Agreement”),(i) Borrower is in complete compliance for the period ending on the datefirst set forth above with all required covenants except as noted below and(ii) all representations and warranties in the Agreement are true andcorrect in all material respects on this date. Attached are the required documents supporting the certification.  The Officer certifies that these areprepared in accordance with Generally Accepted Accounting Principles (GAAP)consistently applied from one period to the next except as explained in anaccompanying letter or footnotes.  TheOfficer acknowledges that no borrowings may be requested at any time or date ofdetermination that Borrower is not in compliance with any of the terms of theAgreement, and that compliance is determined not just at the date thiscertificate is delivered.

**Please indicate compliance status bycircling Yes/No under “Complies” column.**
| **Reporting  Covenants**                                           |   |                      | **Required** |   |   | **Complies** |
|--------------------------------------------------------------------|--------|---------------------------|--------------|--------|--------|--------------|
|                                                               |   |                      |         |   |   |         |
| Interim  financial statements + CC                                 |   | Quarterly  within 45 days |         | Yes    |   | No           |
| Annual  audited financial statements + CC                          |   | Within  90 days of FYE    |         | Yes    |   | No           |
| Annual  financial projections                                      |   | Within  45 days of FYE    |         | Yes    |   | No           |
|                                                               |   |                      |         |   |   |         |
| **Financial  Covenants**                                           |   |                      | **Required** |   |   | **Complies** |
|                                                               |   |                      |         |   |   |         |
| Minimum balance of Unrestricted Cash and cash  equivalents         |   | $80,000,000               |         | Yes    |   | No           |
|                                                               |   |                      |         |   |   |         |
| Have there been updates to Borrower’s  intellectual property? |   |                      |         | Yes    |   | No           |

 

 
| **Comments  Regarding Exceptions:**  See Attached. |   | **BANK USE ONLY**   |
|---------------------------------------------------------|--------|---------------------|
|                                                    |   |                |
| Sincerely,                                              |   | Received by:        |   |
|                                                    |   |                | authorized signer |
| Broadvision,  Inc.,                                     |   |                |
| a Delaware  corporation                                 |   | Date:               |   |
|                                                    |   |                |
|                                                    |   | Verified:           |   |
|                                                    |   |                | authorized signer |
| SIGNATURE                                               |   |                |
|                                                    |   | Date:               |   |
|                                                    |   |                |
| TITLE                                                   |   | Compliance  Status: | Yes | No |
|                                                    |   |                |   |   |
|                                                    |   |                |   |   |
| DATE                                                    |   |                |   |   |
|                                                         |        |                     |  |  |  |  |  |  |

 

 

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