**Exhibit 10.35**

 

**MODIFICATION TO AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT**

 

ThisModification to amended and Restated Loan and Security Agreement (the“Modification”) is entered into as of February 28, 2003, by and betweenBroadvision, Inc., a Delaware corporation (the “Borrower”) and Silicon ValleyBank, a California-chartered bank (“Bank”).

 

1.                                       DESCRIPTIONOF EXISTING INDEBTEDNESS. Among other indebtedness which may be owing byBorrower to Bank, Borrower is indebted to Bank pursuant to that certain Amendedand Restated Loan and Security Agreement dated as of March 31, 2002 (asmay be amended from time to time, the “Loan Agreement”). The Loan Agreementprovides for, among other things, a Committed Revolving Line in the originalprincipal amount of Twenty-Five Million Dollars ($25,000,000). Capitalizedterms used but not otherwise defined herein shall have the respective meaningsaccorded to them in the Loan Agreement; provided, that hereinafter allIndebtedness owing by Borrower to Bank under the Loan Agreement shall bereferred to as the “Indebtedness.”

 

2.                                       DESCRIPTIONOF COLLATERAL AND GUARANTIES. Repayment of the Indebtedness is secured bythe Collateral as described in the Loan Agreement and herein. Hereinafter, alldocuments securing repayment of the Indebtedness, together with all otherdocuments evidencing or securing the Indebtedness, shall be referred to as the“Existing Loan Documents.”

 

3.                                       DESCRIPTIONOF CHANGE IN TERMS OF EXISTING LOAN DOCUMENTS.

 

3.1                                 Intereston Revolving Advances. Section 2.3 of the Loan Agreement is hereby amendedto read in full as follows:

 

2.3                                 InterestRates, Payments.

 

(a)  Revolving Advances shall accrue interest on theaggregate principal balance thereof from time to time outstanding at a perannum rate equal to the Prime Rate, and the Deferred Amount (if any) shallaccrue interest on the aggregate principal balance thereof from time to timeoutstanding at a per annum rate equal to the Prime Rate plus one-half percent(0.50%); provided, however, that if Borrower fails to maintain the followingminimum revenues (on a rolling six-month basis) for the corresponding six-monthperiods, Revolving Advances shall accrue interest at the per annum rate of thePrime Rate plus three-quarters percent (.075%) and the Deferred Amount, if any,shall accrue interest at the per annum rate of the Prime Rate plus one andone-quarter percent (1.25%): (i) $54,000,000 for the six months endingMarch 31, 2003; (ii) $51,000,000 for the six months ending June 30,2003; (iii) $55,000,000 for the six months ending September 30, 2003; (iv)$60,000,000 for the six months ending December 31, 2003; and (v)$63,000,000 for every six-month period thereafter.  Term Loan #1 shall accrue interest on the aggregate principalbalance thereof from time to time outstanding at a per annum rate equal to thePrime Rate.  Term Loan #2 shall accrueinterest on the aggregate principal balance thereof from time to timeoutstanding at a per annum rate equal to the Prime Rate plus one andone-quarter percent (1.25%). After an Event of Default, Obligations shallaccrue interest at a rate equal to three percent (3.00%) above the respectiverates effective for such Obligations immediately before the Event of Default.The interest rate shall increase or decrease when the Prime Rate changes.Interest is computed on a 360-day year for the actual number of days elapsed.

 

(b)  Interest on outstanding Revolving Advances andoutstanding Additional Revolving Advances shall be due and payable on the 1stBusiness Day of each month.  Interest onamounts outstanding under Term Loan #1 and Term Loan #2 shall be due andpayable on the 1st Business Day of each month. Payments received after 12:00 noon, Pacific Time, are consideredreceived at the opening of business on the next Business Day. When a payment isdue on a day that is not a Business Day, the payment is due on the nextBusiness Day and additional fees and interest shall accrue from the initial duedate.

 

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3.2                                 ReportingRequirements. Section 6.2 of the Loan Agreement is hereby amended to readin full as follows:

 

6.2                                 FinancialStatements, Reports, Certificates.

 

(a)  Borrower will deliver to Bank: (i) as soon as available,but no later than 45 days after the last day of each calendar quarter,company-prepared unaudited balance sheets and income statements covering theoperations of Borrower and its Subsidiaries during the period, certified by aResponsible Officer and in a form acceptable to Bank; (ii) as soon as availablebut no later than 120 days after the last day of Borrower’s fiscal year,audited financial statements for Borrower, and its Subsidiaries prepared underGAAP, consistently applied, together with an unqualified opinion on thefinancial statements from an independent certified public accounting firmreasonably acceptable to Bank; (iii) a prompt report of any legal actionspending or threatened against Borrower or any Subsidiary that could result indamages or costs to Borrower or any Subsidiary of $250,000 or more; (iv) within45 days after the end of each calendar quarter, a complete schedule of allaccounts receivable and accounts payable agings, as well as a deferred revenueschedule; and (v) prompt notice of any material change in the composition ofthe Intellectual Property, including any subsequent ownership right of Borroweror any Subsidiary in or to any Copyright, Patent or Trademark not shown in anyintellectual property security agreement between Borrower and Bank or knowledgeof an event that could reasonably be expected to materially adversely affectthe value of the Intellectual Property.

 

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

 

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

 

3.3                                 Deposits.Section 6.6 of the Loan Agreement is hereby amended to read in full as follows:

 

6.6                                 Deposits.

 

Borrower willat all times, until all Obligations are paid in full, maintain in accounts withBank and its Affiliates an amount equal to the greater of  (i) $60,000,000 and (ii) 75% of Borrower’sUnrestricted Cash. In addition, Borrower will at all times maintain anoperating account with Bank.

 

3.4                                 FinancialCovenants. Section 6.7 of the Loan Agreement is hereby amended to read infull as follows:

 

6.7                                 FinancialCovenants.

 

(a)  Until all Obligations are paid in full, Borrower willmaintain on Borrower’s balance sheet as Unrestricted Cash, cash equivalents andlong-term investments (exclusive of equities holdings) the following minimum amounts: (i) $80,000,000through September 30, 2003; (ii) $75,000,000 through December 31,2003; and (iii) $70,000,000 thereafter.

 

(b)  Until all Obligations are paid in full, Borrower shallmaintain minimum quarterly net income (calculated in accordance with GAAP butnot including charges related to the impairment of Goodwill or Intangibles) foreach of Borrower’s fiscal quarters as follows: (i) <$1,000,000> for thefiscal quarter ending March 31, 2003; and (ii) $1.00 for each fiscalquarter thereafter.

 

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3.5                                 Definitions.  The following definitions in Section 13.1 ofthe Loan Agreement are hereby amended to read in full as follows:

 

“**Prime Rate**”is the Bank’s most recently announced “prime rate” even if that is not thelowest rate at which the Bank makes loans or otherwise extends credit;provided, however, that for purposes of this Agreement the Prime Rate shallnever be less than 4.25%.

 

“**Revolving MaturityDate**” is February 27, 2004.

 

3.6                                 AmendedExhibit C.  Exhibit C of the LoanAgreement is hereby amended to read in full as attached hereto as AttachmentNo. 1.

 

4.                                       CONSISTENTCHANGES.  The Existing LoanDocuments are hereby amended wherever necessary to reflect the changes  described in Section 3 hereof.

 

5.                                       NODEFENSES OF BORROWER.  Borroweragrees that, as of the date hereof, it has no defenses against the obligationsto pay any amounts of the indebtedness.

 

6.                                       CONTINUINGVALIDITY.  Borrower understands andagrees that in modifying the Existing Loan Documents, Bank is relying uponBorrower’s representations, warranties, and agreements, as set forth in theExisting Loan Documents.  Except asexpressly modified pursuant to this Modification, the terms of the Existing LoanDocuments remain unchanged and in full force and effect, and hereafter theExisting Loan Documents shall include the terms of this Modification as if setforth therein in full.  Bank’s agreementto  modifications to the Existing LoanDocuments pursuant to this Modification shall in no way obligate Bank to makeany future modifications to the Existing Loan Documents.  Nothing in this Modification shallconstitute a satisfaction of the Indebtedness or any portion thereof.  It is the intention of Bank and Borrower toretain as liable parties all makers and endorsers of Existing Loan Documents,unless the party is expressly released by Bank in writing.  No maker, endorser, or guarantor will bereleased by virtue of this Modification. The terms of this paragraph apply not only to this Modification, butalso to all subsequent loan modification agreements.

 

7.                                       CONDITIONPRECEDENT TO EFFECTIVENESS.  Beforethis Modification, and Bank’s and Borrower’s respective rights and obligationshereunder, shall be effective Borrower shall have paid to Bank a commitment feeof $50,000.00, plus all expenses incurred by Bank in connection with itsentering into this Modification.

 

IN WITNESS WHEREOF, each of the parties hereto hascaused its duly authorized representative to execute and deliver thisModification as of the date first set forth above.

 
| **BORROWER:**                                  |            | **BANK:**                                             |
|------------------------------------------------|-----------------|-------------------------------------------------------|
|                                           |            |                                                  |
| **BROADVISION, INC.,  a Delaware corporation** |            | **SILICON VALLEY BANK,  a California-chartered bank** |
|                                           |            |                                                  |
|                                           |            |                                                  |
| By:                                            | /s/ [ILLEGIBLE] |                                                  |   | By: | /s/ [ILLEGIBLE] |
| Name:                                          |            | [ILLEGIBLE]                                           |   |   | Name: | [ILLEGIBLE] |
| Title:                                         |            | President & CEO                                   |   |   | Title: | SVP |
|                                                |                 |                                                       |  |  |  |  |  |  |  |  |

 

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**ATTACHMENT NO. 1**

** **

# **REVISED FORM OF**

** **

# **EXHIBIT C**

 

# COMPLIANCECERTIFICATE

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

 

The undersigned authorized officer of Broadvision,Inc. (“Borrower”) certifies that under the terms and conditions of the Amendedand Restated Loan and Security Agreement dated as of March 1, 2002 betweenBorrower and Bank (as amended from time to time, the “Agreement”), (i) Borroweris in complete compliance for the period ending on the date first set forthabove with all required covenants except as noted below and (ii) allrepresentations and warranties in the Agreement are true and correct in allmaterial 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 by circlingYes/No under “Complies” column.**

 
| **Reporting Covenants**                            |                                                                                          | **Required**                               |   | **Complies**                                   |
|----------------------------------------------------|-----------------------------------------------------------------------------------------------|--------------------------------------------|--------|------------------------------------------------|
|                                               |                                                                                          |                                       |   |                                           |   |
| 1.   Interim financial statements + CC        |                                                                                          | Quarterly  within 45 days                  |   | Yes                                            | No |
| 2.   Annual audited financial statements + CC |                                                                                          | Within 120  days of FYE                    |   | Yes                                            | No |
| 3.   Schedule of A/R + A/P Agings             |                                                                                          | Quarterly  within 45 days                  |   | Yes                                            | No |
| 4.   Deferred Revenue Schedule                |                                                                                          | Quarterly  within 45 days                  |   | Yes                                            | No |
|                                               |                                                                                          |                                       |   |                                           |   |
| **Financial Covenants**                            |                                                                                          | **Required**                               |   | **Complies**                                   |
|                                               |                                                                                          |                                       |   |                                           |   |
| 1.                                                 | Minimum  unrestricted balance sheet cash                                                      |                                       | (i)    | $80,000,000 through 9/30/03                    |   | Yes | No |
|                                               |                                                                                          |                                       | (ii)   | $75,000,000 through 12/31/03                   |   | Yes | No |
|                                               |                                                                                          |                                       | (iii)  | $70,000,000 through thereafter                 |   | Yes | No |
|                                               |                                                                                          |                                       |   |                                           |   |   |   |
| 2.                                                 | Minimum Net Income (per GAAP less charges  related to impairment of Goodwill and Intangibles) |                                       | (i)    | <$1,000,000> for quarter ending  3/31/03 |   | Yes | No |
|                                               | (ii)                                                                                          | $1.00 for each calendar quarter thereafter |   | Yes                                            | No |
|                                               |                                                                                          |                                       |   |                                           |   |
| **Deposit Covenant**                               |                                                                                          | **Required**                               |   | **Complies**                                   |
|                                               |                                                                                          |                                       |   |                                           |   |
| Deposits with Bank and its Affiliates              |                                                                                          | An amount equal to the greater of          |   |                                           |   |
|                                               |                                                                                          |                                       | (i)    | $60,000,000  or                                |   |   |   |
|                                               |                                                                                          |                                       | (ii)   | 75% of  Borrower’s Unrestricted Cash      |   | Yes | No |

 

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| Have there been updates to Borrower’s intellectual property? | Yes               | No                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|-------------------------------------------------------------------|-------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                              |              |
| **Comments Regarding Exceptions:**  See Attached.            | **BANK USE ONLY** |
|                                                              |              | Received by:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |
|                                                              |              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              | AUTHORIZED  SIGNER |
|                                                              |              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| Sincerely,                                                        |              | Date:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |
|                                                              |              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| Broadvision, Inc.,                                                |              | Verified:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |
| a Delaware corporation                                            |              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              | AUTHORIZED  SIGNER |
|                                                              |              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|                                                              |              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| SIGNATURE                                                         |              | Date:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |
|                                                              |              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| TITLE                                                             |              | Compliance Status:                                                                                                  Yes                    No |
|                                                              |              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| DATE                                                              |              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|                                                                   |                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |  |  |  |  |  |  |

 

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