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                               BROADVISION, INC.

                          LOAN AND SECURITY AGREEMENT

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                               TABLE OF CONTENTS

                                                                            Page


1.   DEFINITIONS AND CONSTRUCTION .........................................   1
     1.1       Definitions ................................................   1
     1.2       Accounting Terms ...........................................   7

2.   LOAN AND TERMS OF PAYMENT ...........................................    7
     2.1       Advances ...................................................   7
     2.2       Prepayment Fee .............................................   8
     2.3       Interest Rates, Payments, and Calculations .................   8
     2.4       Crediting Payments .........................................   8
     2.5       Fees .......................................................   9
     2.6       Additional Costs ...........................................   9
     2.7       Term .......................................................   9

3.   CONDITIONS OF LOANS .................................................   10
     3.1       Conditions Precedent to Initial Advance ....................  10
     3.2       Conditions Precedent to all Advances .......................  10

4.   CREATION OF SECURITY INTEREST ........................................  10
     4.1       Grant of Security Interest .................................  10
     4.2       Delivery of Additional Documentation Required ..............  11
     4.3       Right to Inspect ...........................................  11

5.   REPRESENTATIONS AND WARRANTIES .......................................  11
     5.1       Due Organization and Qualification .........................  11
     5.2       Due Authorization; No Conflict .............................  11
     5.3       No Prior Encumbrances ......................................  11
     5.4       Merchantable Inventory .....................................  11
     5.5       Name; Location of Chief Executive Office ...................  11
     5.6       Litigation .................................................  12
     5.7       No Material Adverse Change in Financial Statements .........  12
     5.8       Solvency ...................................................  12
     5.9       Regulatory Compliance ......................................  12
     5.10      Environmental Condition ....................................  12
     5.11      Taxes ......................................................  12
     5.12      Subsidiaries ...............................................  13
     5.13      Government Consents ........................................  13
     5.14      Full Disclosure ............................................  13

6.   AFFIRMATIVE COVENANTS ................................................  13
     6.1       Good Standing ..............................................  13
     6.2       Government Compliance ......................................  13
     6.3       Financial Statements, Reports, Certificates ................  13
     6.4       Inventory; Returns .........................................  14
     6.5       Taxes ......................................................  14
     6.6       Insurance ..................................................  14
     6.7       Principal Depository .......................................  14
     6.9       Quick Ratio ................................................  15
     6.10      Tangible Net Worth. ........................................  15
     6.11      Registration of Intellectual Property Rights ...............  15
     6.12      Further Assurances .........................................  15


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7.   NEGATIVE COVENANTS ...................................................  15
     7.1       Dispositions ...............................................  15
     7.2       Change in Business .........................................  16
     7.3       Mergers or Acquisitions ....................................  16
     7.4       Indebtedness ...............................................  16
     7.5       Encumbrances ...............................................  16
     7.6       Distributions ..............................................  16
     7.7       Investments ................................................  16
     7.8       Transactions with Affiliates ...............................  16
     7.9       Intellectual Property Agreements ...........................  16
     7.10      Subordinated Debt ..........................................  16
     7.11      Inventory ..................................................  16
     7.12      Compliance .................................................  16

8.   EVENTS OF DEFAULT ....................................................  17
     8.1       Payment Default ............................................  17
     8.2       Covenant Default ...........................................  17
     8.3       Material Adverse Change ....................................  17
     8.4       Attachment .................................................  17
     8.5       Insolvency .................................................  17
     8.6       Other Agreements ...........................................  18
     8.7       Subordinated Debt ..........................................  18
     8.8       Judgments ..................................................  18
     8.9       Misrepresentations .........................................  18

9.   BANK'S RIGHTS AND REMEDIES ...........................................  18
     9.1       Rights and Remedies ........................................  18
     9.2       Power of Attorney ..........................................  19
     9.3       Accounts Collection ........................................  19
     9.4       Bank Expenses ..............................................  19
     9.5       Bank's Liability for Collateral ............................  20
     9.6       Remedies Cumulative ........................................  20
     9.7       Demand; Protest ............................................  20

10.  NOTICES ..............................................................  20

11.  CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER ...........................  21

12.  GENERAL PROVISIONS ...................................................  21
     12.1      Successors and Assigns .....................................  21
     12.2      Indemnification ............................................  21
     12.3      Time of Essence ............................................  21
     12.4      Severability of Provisions .................................  21
     12.5      Amendments in Writing, Integration .........................  21
     12.6      Counterparts ...............................................  21
     12.7      Survival ...................................................  22

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         This LOAN AND SECURITY AGREEMENT is entered into as of July 2, 1997, by
and between SILICON VALLEY BANK ("Bank") and BROADVISION, INC. ("Borrower").

                                    RECITALS

         Borrower  wishes to obtain credit from time to time from Bank, and Bank
desires to extend  credit to Borrower.  This  Agreement  sets forth the terms on
which Bank will advance credit to Borrower,  and Borrower will repay the amounts
owing to Bank.

                                   AGREEMENT

         The parties agree as follows:

         1.       DEFINITIONS AND CONSTRUCTION

                  1.1  Definitions.  As used in this  Agreement,  the  following
terms shall have the following definitions:


                           "Accounts" means all presently existing and hereafter
arising accounts,  contract rights,  and all other forms of obligations owing to
Borrower  arising  out of  the  sale  or  lease  of  goods  (including,  without
limitation,  the licensing of software and other technology) or the rendering of
services  by  Borrower,  whether or not earned by  performance,  and any and all
credit  insurance,  guaranties,  and  other  security  therefor,  as well as all
merchandise  returned to or reclaimed by Borrower and Borrower's  Books relating
to any of the foregoing.

                           "Advance" or "Advances"  means Equipment  Advances or
Leasehold Advances.

                           "Affiliate"  means,  with respect to any Person,  any
Person that owns or controls directly or indirectly such Person, any Person that
controls or is  controlled by or is under common  control with such Person,  and
each of such Person's senior executive officers, directors, and partners.

                           "Bank  Expenses"  means  all:   reasonable  costs  or
expenses  (including  reasonable  attorneys'  fees  and  expenses)  incurred  in
connection with the preparation, negotiation, administration, and enforcement of
the Loan Documents;  and Bank's reasonable attorneys' fees and expenses incurred
in amending,  enforcing  or defending  the Loan  Documents  (including  fees and
expenses of appeal), whether or not suit is brought.

                           "Borrower's  Books" means all of Borrower's books and
records including: ledgers; records concerning Borrower's assets or liabilities,
the Collateral,  business  operations or financial  condition;  and all computer
programs, or tape files, and the equipment, containing such information.

                           "Business  Day" means any day that is not a Saturday,
Sunday, or other day on which banks in the State of California are authorized or
required to close.

                           "Closing Date" means the date of this Agreement.

                           "Code" means the California Uniform Commercial Code.

                           "Collateral"  means the property described on Exhibit
A attached hereto.

                           "Committed   Line"   means  Three   Million   Dollars
($3,000,000).

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                           "Contingent  Obligation"  means,  as  applied  to any
Person,  any direct or indirect  liability,  contingent  or  otherwise,  of that
Person with respect to (i) any indebtedness,  lease, dividend,  letter of credit
or  other  obligation  of  another,  including,  without  limitation,  any  such
obligation directly or indirectly guaranteed, endorsed, co-made or discounted or
sold with  recourse  by that  Person,  or in  respect  of which  that  Person is
otherwise  directly or indirectly  liable;  (ii) any obligations with respect to
undrawn  letters of credit issued for the account of that Person;  and (iii) all
obligations  arising  under  any  interest  rate,  currency  or  commodity  swap
agreement, interest rate cap agreement, interest rate collar agreement, or other
agreement or arrangement  designated to protect a Person against  fluctuation in
interest rates, currency exchange rates or commodity prices; provided,  however,
that the  term  "Contingent  Obligation"  shall  not  include  endorsements  for
collection  or deposit in the  ordinary  course of  business.  The amount of any
Contingent  Obligation  shall be deemed to be an amount  equal to the  stated or
determined amount of the primary  obligation in respect of which such Contingent
Obligation  is made or, if not stated or  determinable,  the maximum  reasonably
anticipated  liability in respect  thereof as  determined by such Person in good
faith;  provided,  however,  that such amount  shall not in any event exceed the
maximum  amount  of  the  obligations  under  the  guarantee  or  other  support
arrangement.

                           "Copyrights"  means  any  and all  copyright  rights,
copyright  applications,  copyright  registrations  and like protections in each
work or authorship and derivative work thereof, whether published or unpublished
and whether or not the same also  constitutes a trade  secret,  now or hereafter
existing, created, acquired or held.

                           "Current  Liabilities"  means,  as of any  applicable
date, all amounts that should,  in accordance  with GAAP, be included as current
liabilities on the consolidated  balance sheet of Borrower and its Subsidiaries,
as at  such  date,  plus,  to the  extent  not  already  included  therein,  all
outstanding Advances made under this Agreement,  including all Indebtedness that
is payable upon demand or within one year from the date of determination thereof
unless such Indebtedness is renewable or extendable at the option of Borrower or
any Subsidiary to a date more than one year from the date of determination,  but
excluding Subordinated Debt.

                           "Daily  Balance" means the amount of the  Obligations
owed at the end of a given day.

                           "Debt Service  Coverage" means, as of the last day of
each fiscal quarter, on a consolidated basis determined in accordance with GAAP,
the  ratio  of (a) an  amount  equal  to the sum of (i) net  income,  plus  (ii)
depreciation and amortization of intangible assets and other non-cash charges to
income,  to (b) an amount equal to (i) the sum of all scheduled  repayments  for
such period and mandatory prepayments of principal on account of long-term Debt,
plus (ii) interest expense.

                           "Eligible Equipment" means computer equipment, office
equipment and furnishings and other machines and other  equipment as approved by
Bank in its sole discretion (i) in which the Bank has a valid perfected security
interest,  and (ii) delivered to Borrower by the  manufacturer  or vendor after,
upon or not more than ninety  (90) days prior to the date of the  Closing  Date,
which equipment is new and has not previously been used by any Person.

                           "Equipment"  means all present and future  machinery,
equipment, tenant improvements,  furniture, fixtures, vehicles, tools, parts and
attachments in which Borrower has any interest.

                           "Equipment  Advance" or "Equipment  Advances" means a
cash advance or cash advances under the Equipment Facility.

                           "Equipment  Facility"  means the facility under which
Borrower may request Bank to issue cash advances, as specified in Section 2.1(a)
hereof.

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                           "Equipment  Maturity  Date"  means  the date  that is
thirty-six (36) months after the Facility Availability Date.

                           "ERISA"  means  the  Employment   Retirement   Income
Security Act of 1974, as amended, and the regulations thereunder.

                           "Facility Availability Date" means December 31, 1997.

                           "GAAP" means generally accepted accounting principles
as in effect from time to time.

                           "Indebtedness"   means  (a)  all   indebtedness   for
borrowed money or the deferred purchase price of property or services, including
without  limitation  reimbursement  and other obligations with respect to surety
bonds and letters of credit,  (b) all  obligations  evidenced  by notes,  bonds,
debentures or similar instruments, (c) all capital lease obligations and (d) all
Contingent Obligations.

                           "Insolvency    Proceeding"   means   any   proceeding
commenced by or against any person or entity  under any  provision of the United
States Bankruptcy Code, as amended,  or under any other bankruptcy or insolvency
law,  including  assignments  for the benefit of  creditors,  formal or informal
moratoria, compositions,  extension generally with its creditors, or proceedings
seeking reorganization, arrangement, or other relief.

                           "Intellectual  Property Collateral" means any and all
right, title and interest of Borrower in the following:

                           (a) Copyrights, Trademarks and Patents;

                           (b)  Any  and  all  trade  secrets,  and  any and all
intellectual property rights in computer software and computer software products
now or hereafter existing, created, acquired or held;

                           (c) Any and all design  rights which may be available
to Borrower now or hereafter existing, created, acquired or held;

                           (d) Any and all  claims  for  damages by way of past,
present and future  infringement of any of the rights  included above,  with the
right, but not the obligation,  to sue for and collect such damages for said use
or infringement of the intellectual property rights identified above;

                           (e) All  licenses  or other  rights to use any of the
Copyrights,  Patents or Trademarks,  and all license fees and royalties  arising
from such use to the extent permitted by such license or rights;

                           (f) All amendments, renewals and extensions of any of
the Copyrights, Trademarks or Patents; and


                           (g)  All  proceeds  and  products  of the  foregoing,
including  without  limitation all payments under  insurance or any indemnity or
warranty payable in respect of any of the foregoing.

                           "Inventory" means all present and future inventory in
which Borrower has any interest,  including merchandise,  raw materials,  parts,
supplies,  packing and shipping materials, work in process and finished products
intended  for sale or lease or to be furnished  under a contract of service,  of
every  kind  and  description  now or at any time  hereafter  owned by or in the
custody or

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possession,  actual or constructive, of Borrower, including such inventory as is
temporarily  out of its custody or  possession  or in transit and  including any
returns  upon any  accounts or other  proceeds,  including  insurance  proceeds,
resulting from the sale or disposition of any of the foregoing and any documents
of title  representing any of the above, and Borrower's Books relating to any of
the foregoing.

                           "Investment"   means  any  beneficial   ownership  of
(including stock,  partnership  interest or other securities) any Person, or any
loan, advance or capital contribution to any Person.

                           "IRC" means the  Internal  Revenue  Code of 1986,  as
amended, and the regulations thereunder.

                           "Leasehold  Advance" or "Leasehold  Advances" means a
cash advance or cash advances under the Leasehold Facility.

                           "Leasehold  Facility"  means the facility under which
Borrower may request Bank to issue cash advances, as specified in Section 2.1(b)
hereof.

                           "Leasehold      Improvements"     means     leasehold
improvements,  equipment  specifically  designed or  manufactured  for Borrower,
office furnishings, limited use property and other similar property.

                           "Leasehold  Maturity  Date"  means  the date  that is
eighty-four (84) months after the Facility Availability Date.

                           "Lien"  means  any  mortgage,  lien,  deed of  trust,
charge, pledge, security interest or other encumbrance.

                           "Loan Documents" means, collectively, this Agreement,
any note or notes  executed by Borrower,  and any other  agreement  entered into
between  Borrower and Bank in connection with this Agreement,  all as amended or
extended from time to time.

                           "Material  Adverse  Effect" means a material  adverse
effect on (i) the business  operations or condition  (financial or otherwise) of
Borrower and its  Subsidiaries  taken as a whole or (ii) the ability of Borrower
to repay the  Obligations or otherwise  perform its  obligations  under the Loan
Documents.

                           "Negotiable   Collateral"  means  all  of  Borrower's
present  and  future  letters  of  credit of which it is a  beneficiary,  notes,
drafts,  instruments,  securities,  documents of title,  and chattel paper,  and
Borrower's Books relating to any of the foregoing.

                           "Obligations"  means all debt,  principal,  interest,
Bank  Expenses  and other  amounts  owed to Bank by  Borrower  pursuant  to this
Agreement or any other  agreement,  whether  absolute or  contingent,  due or to
become due, now  existing or  hereafter  arising,  including  any interest  that
accrues after the  commencement  of an Insolvency  Proceeding  and including any
debt, liability,  or obligation owing from Borrower to others that Bank may have
obtained by assignment or otherwise.

                           "Patents" means all patents,  patent applications and
like  protections   including  without   limitation   improvements,   divisions,
continuations,  renewals, reissues,  extensions and continuations-in-part of the
same.

                           "Payment  Date" means the first (lst) calendar day of
each month.

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                           "Periodic Payments" means all installments or similar
recurring payments that Borrower may now or hereafter become obligated to pay to
Bank pursuant to the terms and provisions of any instrument, or agreement now or
hereafter in existence between Borrower and Bank.

                           "Permitted Indebtedness" means:

                           (a) Indebtedness of Borrower in favor of Bank arising
under this Agreement or any other Loan Document;

                           (b)  Indebtedness  existing on the  Closing  Date and
disclosed in the Schedule;

                           (c) Subordinated Debt;

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

                           (f) Indebtedness secured by Permitted Liens;

                           (g) Capital leases or indebtedness incurred solely to
purchase Equipment, other than Equipment financed hereunder, which is secured in
accordance  with clause (c) of  "Permitted  Liens" below and is not in excess of
the lesser of the purchase  price of such  Equipment or the fair market value of
such Equipment on the date of acquisition; and

                           (h)    Extensions,    refinancings,    modifications,
amendments and restatements of any of items of Permitted Indebtedness (g) above,
provided that the principal amount thereof is not increased or the terms thereof
are  not  modified  to  impose  more  burdensome  terms  upon  Borrower  or  its
Subsidiary, as the case may be.

                           "Permitted Investment" means:

                           (a)   Investments   existing  on  the  Closing   Date
disclosed in the Schedule; and


                           (b)  (i)  marketable  direct  obligations  issued  or
unconditionally  guaranteed by the United States of America or any agency or any
State thereof maturing within one (1) year from the date of acquisition thereof,
(ii)  commercial  paper  maturing  no more  than one (1)  year  from the date of
creation thereof and currently having the highest rating  obtainable from either
Standard & Poor's  Corporation  or Moody's  Investors  Service,  Inc., and (iii)
certificates  of  deposit  maturing  no more  than one (1) year from the date of
investment therein issued by Bank.

                           "Permitted Liens" means the following:

                           (a)  Any  Liens  existing  on the  Closing  Date  and
disclosed  in the  Schedule or arising  under this  Agreement  or the other Loan
Documents;

                           (b)  Liens  for  taxes,  fees,  assessments  or other
governmental charges or levies, either not delinquent or being contested in good
faith by appropriate proceedings, provided the same have no priority over any of
Bank's security interests;

                           (c) Liens (i) upon or in any  Equipment  or Leasehold
Improvements (other than Equipment or Leasehold Improvements financed hereunder)
acquired or held by Borrower or any of its  Subsidiaries  to secure the purchase
price of such  Equipment  or  indebtedness  incurred  solely for the  purpose of
financing the acquisition of such Equipment or Leasehold  Improvements,  or (ii)
existing

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on such Equipment or Leasehold  Improvements  (other than Equipment or Leasehold
Improvements  financed hereunder) at the time of its acquisition,  provided that
the Lien is  confined  solely  to the  property  so  acquired  and  improvements
thereon, and the proceeds of such Equipment;

                           (d)  Liens  securing  capital  lease  obligations  on
assets  subject  to such  capital  leases  except  for  Equipment  or  Leasehold
Improvements financed hereunder;

                           (d) Liens incurred in connection  with the extension,
renewal  or  refinancing  of the  indebtedness  secured  by  Liens  of the  type
described in clauses (a) through (c) above, provided that any extension, renewal
or replacement Lien shall be limited to the property  encumbered by the existing
Lien and the principal  amount of the  indebtedness  being extended,  renewed or
refinanced does not increase.

                           "Person" means any individual,  sole  proprietorship,
partnership,  limited liability company,  joint venture,  trust,  unincorporated
organization, association, corporation, institution, public benefit corporation,
firm, joint stock company, estate, entity or governmental agency.

                           "Prime Rate" means the variable rate of interest, per
annum, most recently announced by Bank, as its "prime rate," whether or not such
announced rate is the lowest rate available from Bank.

                           "Quick Assets" means, as of any applicable  date, the
unrestricted   cash;   unrestricted   cash-equivalents;   net,  billed  accounts
receivable and  investments  with  maturities of fewer than one year of Borrower
determined in accordance with GAAP.

                           "Responsible   Officer"   means  each  of  the  Chief
Executive Officer, the Chief Financial Officer and the Controller of Borrower.

                           "Schedule" means the schedule of exceptions  attached
hereto, if any.

                           "Subordinated   Debt"  means  any  debt  incurred  by
Borrower  that is  subordinated  to the debt owing by  Borrower to Bank on terms
acceptable to Bank (and identified as being such by Borrower and Bank).

                           "Subsidiary"  means any corporation or partnership in
which (i) any general partnership interest or (ii) more than 50% of the stock of
which  by the  terms  thereof  ordinary  voting  power  to  elect  the  Board of
Directors, managers or trustees of the entity shall, at the time as of which any
determination is being made, be owned by Borrower, either directly or through an
Affiliate.

                           "Tangible  Net  Worth"  means at any date as of which
the  amount  thereof  shall be  determined,  the  consolidated  total  assets of
Borrower and its Subsidiaries  minus,  without  duplication,  (i) the sum of any
amounts  attributable to (a) goodwill,  (b) intangible items such as unamortized
debt  discount  and  expense,  patents,  trade  and  service  marks  and  names,
copyrights  and research  and  development  expenses  except  prepaid  expenses,
Leasehold  Improvements,  and (c) all reserves not already deducted from assets,
and (ii) cost overruns in excess of One Hundred Thousand Dollars ($100,000) over
Borrower's budget for Leasehold Improvements, and (ii) Total Liabilities.

                           "Total Liabilities" means at any date as of which the
amount thereof shall be determined,  all obligations that should,  in accordance
with GAAP be  classified as  liabilities  on the  consolidated  balance sheet of
Borrower, including in any event all Indebtedness.

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<PAGE>

                           "Trademarks"  means  any  trademark  and  servicemark
rights, whether registered or not, applications to register and registrations of
the same and like  protections,  and the  entire  goodwill  of the  business  of
Borrower connected with and symbolized by such trademarks.

                  1.2 Accounting  Terms.  All accounting  terms not specifically
defined herein shall be construed in accordance  with GAAP and all  calculations
made  hereunder  shall be made in accordance  with GAAP.  When used herein,  the
terms "financial statements" shall include the notes and schedules thereto.

         2.       LOAN AND TERMS OF PAYMENT

                  2.1      Advances.

                           (a) Equipment Advances. Subject to and upon the terms
and conditions of this Agreement,  Bank agrees, at any time from the date hereof
through the Facility  Availability  Date, to make Equipment Advances to Borrower
in an aggregate principal amount of up to the Committed Line minus the aggregate
amount of all outstanding  Leasehold  Advances.  Prior to or on the date of each
Equipment  Advance,  Borrower  shall  provide  invoices  and other  documents as
requested  by  Bank,  in form  and  content  reasonably  satisfactory  to  Bank,
demonstrating  that  the  Equipment  Advance  (i)  shall be used to  finance  or
refinance, as the case may be, Eligible Equipment, and (ii) shall not exceed one
hundred percent (100%) of the cost of such Eligible Equipment, excluding any and
all installation, freight or warranty expenses or sales taxes, and (iii) that no
more than twentyfive  percent (25%) of the value of any such Eligible  Equipment
for each Equipment Advance is comprised of software  licenses,  taxes,  freight,
installation,  or other soft costs.  Amounts  borrowed  pursuant to this Section
2.1(a) may not be reborrowed once repaid.

                           (b) Leasehold Advances. Subject to and upon the terms
and conditions of this Agreement,  Bank agrees, at any time from the date hereof
through the Facility  Availability  Date, to make Leasehold Advances to Borrower
in an aggregate principal amount of up to the Committed Line minus the aggregate
amount of all  outstanding  Equipment  Advances.  Prior to or on the date of the
initial  Leasehold  Advance,  Borrower  shall  provide  Bank a copy of its final
Leasehold  Improvements  budget.  Each  Leasehold  Advance  (i) shall be used to
finance  Leasehold  Improvements,  and (ii) shall not exceed one hundred percent
(100%) of the cost of such Leasehold Improvements.  Amounts borrowed pursuant to
this Section 2.1(b) may not be reborrowed once repaid.

                           (c) Procedures. Whenever Borrower desires an Advance,
Borrower shall notify Bank by facsimile  transmission or telephone no later than
3:00 p.m.  California  time,  one (1)  Business  Day before the day on which the
Advance  is  requested  to be made.  Each such  notification  shall be  promptly
confirmed  by a  Payment/Advance  Form in  substantially  the form of  Exhibit B
hereto.  The  notice  shall be signed by a  Responsible  Officer  and,  as to an
Equipment  Advance,  include a copy of the invoice for the Eligible Equipment to
be financed.  Bank is authorized to make Advances  under this  Agreement,  based
upon instructions  received from a Responsible  Officer, or without instructions
if in Bank's  discretion such Advances are necessary to meet  Obligations  which
have  become  due and  remain  unpaid.  Bank  shall be  entitled  to rely on any
telephonic  notice  given  by a  person  who Bank  reasonably  believes  to be a
Responsible Officer, and Borrower shall indemnify and hold Bank harmless for any
damages or loss suffered by Bank as a result of such reliance.  Bank will credit
the amount of  Advances  made  under  this  Section  2.1 to  Borrower's  deposit
account.

                           (c) Interest  and  Principal.  Interest  shall accrue
from the date of each Advance at the rate specified in Section 2.3(a), and shall
be payable  monthly on the Payment Date of each month through the month in which
the Facility  Availability  Date falls.  Bank shall, at its option,  charge such
interest, all Bank Expenses, and all Periodic Payments against any of Borrower's
deposit  accounts or against the  Committed  Line,  in which case those  amounts
shall  thereafter  accrue  interest at the rate then applicable  hereunder.  Any
interest not paid when due shall be compounded by

                                       7
<PAGE>

becoming a part of the Obligations,  and such interest shall  thereafter  accrue
interest at the rate then applicable hereunder.  All Equipment Advances that are
outstanding on the Facility Availability Date will be payable in thirty-six (36)
equal monthly installments of principal,  plus accrued interest,  on the Payment
Date for each month through the Equipment  Maturity Date. All Leasehold Advances
that are  outstanding  on the  Facility  Availability  Date will be  payable  in
eighty-four (84) equal monthly installments of principal, plus accrued interest,
on the Payment Date for each month through the Leasehold Maturity Date.

                           (d) Maturity.  The Equipment Facility shall terminate
on the Equipment  Maturity Date, at which time all  Obligations  owing under the
Equipment Facility shall be immediately due and payable.  The Leasehold Facility
shall  terminate on the Leasehold  Maturity Date, at which time all  Obligations
owing under this Section 2.1 and all other amounts under this Agreement shall be
immediately due and payable.

                  2.2 Prepayment Fee. In the event Borrower prepays, in whole or
in part,  any  outstanding  obligations  hereunder,  Borrower shall pay to Bank,
concurrently with such payment, a prepayment fee commensurate with interest rate
protection,  as  assessed  by Bank,  under the fixed  rate  option  set forth in
Section  2.3(a).  Borrower  agrees that such fee is compensation to the Bank for
lost  profits in  connection  with such  prepayment  and does not  constitute  a
penalty.  Bank's  determination  of such  amount  shall  be made by Bank in good
faith,  in its sole  discretion,  and shall be deemed  correct  absent  manifest
error.

                  2.3 Interest Rates, Payments, and Calculations.

                           (a)  Interest  Rate.  Except as set forth in  Section
2.3(b) and subject to the following  sentence,  all  outstanding  Advances shall
bear interest at a floating rate equal to the Prime Rate. Except as set forth in
Section  2.3(b),  Borrower  shall  have a  one-time  option  as to the  Advances
outstanding  on the  Facility  Maturity  Date,  to elect  that  all  outstanding
Advances  shall  bear  interest  at a rate equal to three and  one-tenth  (3.10)
percentage  points above the thirty-six (36) month,  and eighty-four (84) month,
Treasury  Note  Yield to  maturity  for the  Equipment  Facility  and the  Lease
Facility,  respectively, as such rate is quoted by Bank. Such fixed rate option,
once  elected,  shall  continue  for the  term  of the  Equipment  Facility  and
Leasehold Facility, respectively.

                           (b)  Default  Rate.   All   Obligations   shall  bear
interest,  from and after the occurrence of an Event of Default, at a rate equal
to five (5)  percentage  points above the interest rate  applicable  immediately
prior to the occurrence of the Event of Default.

                           (c)  Payments.  Interest  hereunder  shall be due and
payable on the Payment Date of each month during the term hereof. Bank shall, at
its option, charge such interest,  all Bank Expenses,  and all Periodic Payments
against any of Borrower's  deposit  accounts or against the  Committed  Line, in
which case those  amounts  shall  thereafter  accrue  interest  at the rate then
applicable  hereunder.  Any  interest not paid when due shall be  compounded  by
becoming a part of the Obligations,  and such interest shall  thereafter  accrue
interest at the rate then applicable hereunder.

                           (d)  Computation.  In the  event  the  Prime  Rate is
changed from time to time hereafter,  the applicable rate of interest  hereunder
shall be increased or decreased  effective as of 12:01 a.m. on the day the Prime
Rate is  changed,  by an amount  equal to such  change in the  Prime  Rate.  All
interest chargeable under the Loan Documents shall be computed on the basis of a
three hundred sixty (360) day year for the actual number of days elapsed.

                  2.4 Crediting Payments. Prior to the occurrence of an Event of
Default,  Bank shall  credit a wire  transfer  of funds,  check or other item of
payment to such deposit account or Obligation as Borrower  specifies.  After the
occurrence of an Event of Default, the receipt by Bank of any wire

                                       8
<PAGE>

transfer of funds,  check, or other item of payment shall be immediately applied
to conditionally  reduce  Obligations,  but shall not be considered a payment on
account unless such payment is of immediately  available federal funds or unless
and until such check or other item of  payment  is honored  when  presented  for
payment.  Notwithstanding  anything to the contrary  contained herein,  any wire
transfer or payment  received by Bank after 12:00 noon  California time shall be
deemed  to have been  received  by Bank as of the  opening  of  business  on the
immediately  following Business Day. Whenever any payment to Bank under the Loan
Documents  would otherwise be due (except by reason of  acceleration)  on a date
that is not a  Business  Day,  such  payment  shall  instead  be due on the next
Business Day, and additional fees or interest,  as the case may be, shall accrue
and be payable for the period of such extension.

                  2.5 Fees. Borrower shall pay to Bank the following:

                           (a) Financial  Examination and Appraisal Fees. Bank's
customary fees and  out-of-pocket  expenses for each appraisal of Collateral and
financial  analysis and  examination of Borrower  performed from time to time by
Bank or its agents; and

                           (b) Bank  Expenses.  Upon the date  hereof,  all Bank
Expenses incurred through the Closing Date, including reasonable attorneys' fees
and  expenses,  and,  after  the  date  hereof,  all  Bank  Expenses,  including
reasonable attorneys' fees and expenses, as and when they become due.

                  2.6  Additional   Costs.  In  case  any  change  in  any  law,
regulation,  treaty or official  directive or the  interpretation or application
thereof  by  any  court  or  any   governmental   authority   charged  with  the
administration  thereof or the  compliance  with any guideline or request of any
central bank or other governmental authority (whether or not having the force of
law), in each case after the date of this Agreement:

                           (a) subjects Bank to any tax with respect to payments
of principal or interest or any other amounts  payable  hereunder by Borrower or
otherwise with respect to the transactions contemplated hereby (except for taxes
on the overall net income of Bank imposed by the United States of America or any
political subdivision thereof);

                           (b) imposes, modifies or deems applicable any deposit
insurance,  reserve,  special deposit or similar requirement against assets held
by, or deposits in or for the account of, or loans by, Bank; or

                           (c)  imposes  upon  Bank  any  other  condition  with
respect to its performance under this Agreement,

and the result of any of the  foregoing is to increase the cost to Bank,  reduce
the income  receivable  by Bank or impose any expense  upon Bank with respect to
any loans,  Bank shall notify Borrower  thereof.  Borrower agrees to pay to Bank
the amount of such increase in cost,  reduction in income or additional  expense
as and when such cost,  reduction  or expense is  incurred or  determined,  upon
presentation  by Bank of a  statement  of the amount and  setting  forth  Bank's
calculation  thereof,  all in reasonable detail, which statement shall be deemed
true and correct absent manifest error.

                  2.7 Term. This Agreement shall become effective on the Closing
Date and, subject to Section 12.7, shall continue in full force and effect for a
term ending on the Leasehold Maturity Date.  Notwithstanding the foregoing, Bank
shall have the right to terminate its  obligation  to make  Advances  under this
Agreement  immediately  and without  notice upon the  occurrence  and during the
continuance of an Event of Default.  Notwithstanding termination, Bank's Lien on
the  Collateral  shall  remain  in  effect  for so long as any  Obligations  are
outstanding.

                                       9
<PAGE>

         3.       CONDITIONS OF LOANS

                  3.1 Conditions Precedent to Initial Advance. The obligation of
Bank to make the initial Advance is subject to the condition precedent that Bank
shall have received, in form and substance satisfactory to Bank, the following:

                           (a) this Agreement;

                           (b) a  certificate  of the Secretary of Borrower with
respect to incumbency and resolutions  authorizing the execution and delivery of
this Agreement;

                           (c) an intellectual property security agreement;

                           (d) financing statements (Forms UCC-1);

                           (e) insurance certificate;

                           (f) a copy of Borrower's final Leasehold Improvements
budget;

                           (g)  payment of the fees and Bank  Expenses  then due
specified in Section 2.5 hereof; and

                           (h) such  other  documents,  and  completion  of such
other matters, as Bank may reasonably deem necessary or appropriate.

                  3.2  Conditions  Precedent to all Advances.  The obligation of
Bank to make each Advance,  including the initial Advance, is further subject to
the following conditions:

                           (a)  timely  receipt  by Bank of the  Payment/Advance
Form as provided in Section 2.1;

                           (b)  timely  receipt  of the  invoices  and/or  other
documents specified in Section 2.1 hereof; and

                           (c) the representations  and warranties  contained in
Section 5 shall be true and  correct in all  material  respects on and as of the
date of such  Payment/Advance  Form and on the effective date of each Advance as
though  made at and as of each such  date,  and no Event of  Default  shall have
occurred and be  continuing,  or would result from such  Advance.  The making of
each Advance shall be deemed to be a representation  and warranty by Borrower on
the date of such  Advance as to the  accuracy  of the facts  referred to in this
Section 3.2(c).

         4.       CREATION OF SECURITY INTEREST

                  4.1 Grant of Security Interest. Borrower grants and pledges to
Bank a continuing  security  interest in all  presently  existing and  hereafter
acquired or arising  Collateral in order to secure  prompt  repayment of any and
all Obligations and in order to secure prompt performance by Borrower of each of
its  covenants and duties under the Loan  Documents.  Except as set forth in the
Schedule,  such security interest  constitutes a valid,  first priority security
interest in the  presently  existing  Collateral,  and will  constitute a valid,
first priority security  interest in Collateral  acquired after the date hereof,
in each case, to the extent that a security  interest in such  Collateral can be
perfected by the filing of a financing  statement  or, in the case of Collateral
consisting of instruments,  documents, chattel paper or certificated securities,
to the extent  that Bank takes  possession  of such  Collateral.  Bank agrees to
execute and deliver to Borrower from time to time  agreements to subordinate its
Lien as Borrower may request and as are necessary to give to other lenders which
finance new Equipment

                                       10
<PAGE>

for Borrower a first priority security interest in the new Equipment financed so
long as the Liens and the  Indebtedness  incurred with respect to such Equipment
financing are permitted under this Agreement.

                  4.2 Delivery of Additional  Documentation  Required.  Borrower
shall from time to time execute and deliver to Bank, at the request of Bank, all
Negotiable  Collateral,  all financing  statements and other documents that Bank
may reasonably  request,  in form  satisfactory to Bank, to perfect and continue
perfected  Bank's  security  interests in the  Collateral  and in order to fully
consummate all of the transactions contemplated under the Loan Documents.

                  4.3  Right to  Inspect.  Bank  (through  any of its  officers,
employees,  or agents) shall have the right, upon reasonable prior notice,  from
time to time during Borrower's usual business hours, to inspect Borrower's Books
and to make copies  thereof and to check,  test,  and appraise the Collateral in
order to verify Borrower's  financial condition or the amount,  condition of, or
any other matter relating to, the Collateral.

         5.       REPRESENTATIONS AND WARRANTIES

                  Borrower represents and warrants as follows:

                  5.1 Due  Organization  and  Oualification.  Borrower  and each
Subsidiary is a corporation duly existing and in good standing under the laws of
its state of incorporation  and qualified and licensed to do business in, and is
in good  standing  in,  any state in which the  conduct of its  business  or its
ownership of property requires that it be so qualified.

                  5.2 Due Authorization;  No Conflict. The execution,  delivery,
and performance of the Loan Documents are within  Borrower's  powers,  have been
duly  authorized,  and are not in conflict  with nor  constitute a breach of any
provision  contained in Borrower's  Certificate of Incorporation or Bylaws,  nor
will they  constitute an event of default under any material  agreement to which
Borrower  is a party or by which  Borrower  is bound;  except to the extent that
certain  intellectual  property agreements prohibit the assignment of the rights
thereunder to a third party without the Borrower's or other party's  consent and
the  Loan Documents  constitute an assignment.  Borrower is not in default under
any  agreement  to which it is a party or by which it is  bound,  which  default
could have a Material Adverse Effect.

                  5.3 No Prior Encumbrances.  Borrower has good and indefeasible
title to the Collateral, free and clear of Liens, except for Permitted Liens.

                  5.4 Merchantable  Inventory.  All Inventory is in all material
respects of good and marketable quality, free from all material defects.

                  5.5  Name;  Location  of Chief  Executive  Office.  Except  as
disclosed in the Schedule,  Borrower has not done business  under any name other
than that specified on the signature page hereof.  The chief executive office of
Borrower is located at the address indicated in Section 10 hereof.

                  5.6 Intellectual  Property.  Borrower is the sole owner of the
Intellectual Property Collateral,  except for non-exclusive  licenses granted by
Borrower  to its  customers  in the  ordinary  course of  business.  Each of the
Patents  is valid  and  enforceable,  and no part of the  Intellectual  Property
Collateral has been judged invalid or unenforceable, in whole or in part, and no
claim  has  been  made  that any part of the  Intellectual  Property  Collateral
violates the rights of any third party.  Except for and upon the filing with the
United  States  Patent and  Trademark  Office  with  respect to the  Patents and
Trademarks  and the  Register  of  Copyrights  with  respect  to the  Copyrights
necessary to perfect the security interests created hereunder, and except as has
been already made or obtained,  no  authorization,  approval or other action by,
and no notice to or filing with, any United States

                                       11
<PAGE>

governmental  authority or United States  regulatory body is required either (i)
for the grant by Borrower of the  security  interest  granted  hereby or for the
execution,  delivery or  performance of Loan Documents by Borrower in the United
States or (ii) for the  perfection  in the United States or the exercise by Bank
of its rights and remedies hereunder.

                  5.7 Litigation. Except as set forth in the Schedule, there are
no actions or  proceedings  pending by or  against  Borrower  or any  Subsidiary
before any court or  administrative  agency in which an adverse  decision  could
have a  Material  Adverse  Effect or a  material  adverse  effect on  Borrower's
interest or Bank's security  interest in the Collateral.  Borrower does not have
knowledge of any such pending or threatened actions or proceedings.

                  5.8 No Material  Adverse Change in Financial  Statements.  All
consolidated  financial  statements  related to Borrower and any Subsidiary that
have been delivered by Borrower to Bank fairly present in all material  respects
Borrower's   consolidated  financial  condition  as  of  the  date  thereof  and
Borrower's  consolidated  results of operations for the period then ended. There
has not been a material adverse change in the consolidated  financial  condition
of  Borrower  since  the date of the most  recent of such  financial  statements
submitted to Bank.

                  5.9  Solvency.  The fair saleable  value of Borrower's  assets
(including  good will minus  disposition  costs)  exceeds  the fair value of its
liabilities;  Borrower is not left with  unreasonably  small  capital  after the
transactions  contemplated  by this  Agreement;  and Borrower is able to pay its
debts (including trade debts) as they mature.

                  5.10 Regulatory  Compliance.  Borrower and each Subsidiary has
met the  minimum  funding  requirements  of ERISA with  respect to any  employee
benefit plans subject to ERISA. No event has occurred  resulting from Borrower's
failure to comply with ERISA that is  reasonably  likely to result in Borrower's
incurring any liability that could have a Material  Adverse Effect.  Borrower is
not an "investment company" or a company "controlled" by an "investment company"
within the  meaning  of the  Investment  Company  Act of 1940.  Borrower  is not
engaged principally,  or as one of the important activities,  in the business of
extending  credit for the purpose of purchasing or carrying margin stock (within
the meaning of  Regulations  G, T and U of the Board of Governors of the Federal
Reserve  System).  Borrower has complied with all the  provisions of the Federal
Fair  Labor  Standards  Act.  Borrower  has not  violated  any  statutes,  laws,
ordinances or rules  applicable to it,  violation of which could have a Material
Adverse Effect.

                  5.11  Environmental  Condition.  None  of  Borrower's  or  any
Subsidiary's  properties  or  assets  has  ever  been  used by  Borrower  or any
Subsidiary  or,  to the best of  Borrower's  knowledge,  by  previous  owners or
operators,  in the disposal of, or to produce, store, handle, treat, release, or
transport,  any hazardous waste or hazardous  substance other than in accordance
with  applicable  law; to the best of Borrower's  knowledge,  none of Borrower's
properties  or assets  has ever been  designated  or  identified  in any  manner
pursuant  to any  environmental  protection  statute  as a  hazardous  waste  or
hazardous  substance  disposal site, or a candidate for closure  pursuant to any
environmental  protection  statute;  no lien  arising  under  any  environmental
protection  statute  has  attached  to any  revenues  or to any real or personal
property  owned by Borrower or any  Subsidiary;  and  neither  Borrower  nor any
Subsidiary  has received a summons,  citation,  notice,  or  directive  from the
Environmental   Protection   Agency  or  any  other  federal,   state  or  other
governmental  agency  concerning  any  action or  omission  by  Borrower  or any
Subsidiary resulting in the releasing, or otherwise disposing of hazardous waste
or hazardous substances into the environment.

                  5.12 Taxes.  Borrower and each  Subsidiary has filed or caused
to be filed all tax  returns  required  to be filed,  and has paid,  or has made
adequate provision for the payment of, all taxes reflected therein.

                                       12

<PAGE>

                  5.13   Subsidiaries.   Borrower   does  not  own  any   stock,
partnership  interest  or other  equity  securities  of any  Person,  except for
Permitted Investments.

                  5.14  Government  Consents.  Borrower and each  Subsidiary has
obtained all consents, approvals and authorizations of, made all declarations or
filings with, and given all notices to, all  governmental  authorities  that are
necessary  for the  continued  operation  of  Borrower's  business as  currently
conducted.

                  5.15 Full  Disclosure.  No  representation,  warranty or other
statement made by Borrower in any certificate or written statement  furnished to
Bank  contains  any  untrue  statement  of a  material  fact or omits to state a
material  fact  necessary  in  order to make the  statements  contained  in such
certificates or statements not misleading.

         6.       AFFIRMATIVE COVENANTS

                  Borrower  covenants and agrees that,  until payment in full of
all outstanding Obligations,  and for so long as Bank may have any commitment to
make an Advance hereunder, Borrower shall do all of the following:

                  6.1 Good Standing. Borrower shall maintain its and each of its
Subsidiaries'  corporate  existence  and good  standing in its  jurisdiction  of
incorporation  and  maintain  qualification  in each  jurisdiction  in which the
failure to so  qualify  could have a Material  Adverse  Effect.  Borrower  shall
maintain,  and shall cause each of its  Subsidiaries to maintain,  to the extent
consistent  with  prudent  management  of  Borrower's  business,  in  force  all
licenses,  approvals  and  agreements,  the loss of which  could have a Material
Adverse Effect.

                  6.2  Government  Compliance.  Borrower  shall meet,  and shall
cause each  Subsidiary to meet, the minimum  funding  requirements of ERISA with
respect to any employee  benefit plans subject to ERISA.  Borrower shall comply,
and shall cause each Subsidiary to comply, with all statutes,  laws,  ordinances
and government rules and regulations to which it is subject,  noncompliance with
which could have a Material  Adverse Effect or a material  adverse effect on the
Collateral or the priority of Bank's Lien on the Collateral.

                  6.3  Financial  Statements,  Reports,  Certificates.  Borrower
shall deliver to Bank: (a) as soon as available,  but in any event within thirty
(30) days after the end of each month, a company prepared  consolidated  balance
sheet and income statement covering  Borrower's  consolidated  operations during
such period,  certified by a Responsible Officer; (b) as soon as available,  but
in any event within  ninety (90) days after the end of  Borrower's  fiscal year,
audited  consolidated  financial  statements of Borrower  prepared in accordance
with GAAP,  consistently  applied,  together with an unqualified opinion on such
financial  statements  of  an  independent   certified  public  accounting  firm
reasonably acceptable to Bank; (c) within five (5) days upon becoming available,
copies of all statements,  reports and notices sent or made available  generally
by Borrower to its security  holders or to any holders of Subordinated  Debt and
all  reports  on Form  10-K and 10-Q  filed  with the  Securities  and  Exchange
Commission;  (d) promptly upon receipt of notice thereof,  a report of any legal
actions  pending or threatened  against  Borrower or any  Subsidiary  that could
result in damages or costs to Borrower or any Subsidiary of One Hundred Thousand
Dollars  ($100,000)  or more;  (e) prompt  notice of any material  change in the
composition of the Intellectual Property Collateral,  including, but not limited
to, any  subsequent  ownership  right of the  Borrower  in or to any  Copyright,
Patent  or  Trademark  not  specified  in  any  intellectual  property  security
agreement  between  Borrower and Bank or  knowledge of an event that  materially
adversely  effects the value of the Intellectual  Property  Collateral;  and (f)
such budgets, sales projections,  operating plans or other financial information
as Bank may reasonably request from time to time.

                                       13

<PAGE>

         Borrower shall deliver to Bank with the monthly financial  statements a
Compliance Certificate signed by a Responsible Officer in substantially the form
of Exhibit D hereto.

                  6.4 Inventory;  Returns.  Borrower shall keep all Inventory in
good and  marketable  condition,  free from all  material  defects.  Returns and
allowances,  if any, as between Borrower and its account debtors shall be on the
same basis and in accordance with the usual customary practices of Borrower,  as
they exist at the time of the execution and delivery of this Agreement. Borrower
shall promptly notify Bank of all returns and recoveries and of all disputes and
claims,  where the return,  recovery,  dispute or claim involves more than Fifty
Thousand Dollars ($50,000).

                  6.5  Taxes.   Borrower   shall  make,  and  shall  cause  each
Subsidiary to make, due and timely  payment or deposit of all material  federal,
state, and local taxes, assessments, or contributions required of it by law, and
will execute and deliver to Bank, on demand,  appropriate certificates attesting
to the payment or deposit  thereof;  and Borrower will make, and will cause each
Subsidiary to make,  timely  payment or deposit of all material tax payments and
withholding taxes required of it by applicable laws, including,  but not limited
to, those laws  concerning  F.I.C.A.,  F.U.T.A.,  state  disability,  and local,
state, and federal income taxes, and will, upon request, furnish Bank with proof
satisfactory  to Bank  indicating  that  Borrower or a Subsidiary  has made such
payments or deposits;  provided that Borrower or a Subsidiary  need not make any
payment if the amount or validity of such  payment is contested in good faith by
appropriate proceedings and is reserved against (to the extent required by GAAP)
by Borrower.

                  6.6 Insurance.

                           (a)  Borrower,   at  its  expense,   shall  keep  the
Collateral insured against loss or damage by fire, theft, explosion, sprinklers,
and all other  hazards and risks,  and in such amounts,  as  ordinarily  insured
against by other owners in similar  businesses  conducted in the locations where
Borrower's  business  is  conducted  on the date  hereof.  Borrower  shall  also
maintain insurance relating to Borrower's ownership and use of the Collateral in
amounts and of a type that are customary to businesses similar to Borrower's.

                           (b) All such  policies of insurance  shall be in such
form,  with such  companies,  and in such amounts as reasonably  satisfactory to
Bank.  All such  policies of property  insurance  shall  contain a lender's loss
payable  endorsement,  in a  form  satisfactory  to  Bank,  showing  Bank  as an
additional  loss payee thereof and all liability  insurance  policies shall show
the Bank as an additional insured,  and shall specify that the insurer must give
at least  twenty (20) days notice to Bank  before  canceling  its policy for any
reason. Upon Bank's request,  Borrower shall deliver to Bank certified copies of
such  policies  of  insurance  and  evidence  of the  payments  of all  premiums
therefor.  All proceeds  payable under any such policy  shall,  at the option of
Bank, be payable to Bank to be applied on account of the Obligations.

                  6.7  Principal   Depository.   Borrower   shall  maintain  its
principal  depository and operating accounts with Bank.  Borrower shall maintain
average  outstanding  deposit balances held at Bank of no less than Five Million
Dollars ($5,000,000).

                  6.8  Cash  Position/Debt  Service  Coverage.   Borrower  shall
maintain,  as of the last day of each calendar month, cash (or cash equivalents)
of no less than Nine  Million  Dollars  ($9,000,000),  excluding  cash  balances
deposited  pursuant to the set aside  letter  between  Borrower and its landlord
dated __________________. Notwithstanding the foregoing, from and after the time
Borrower  achieves  a minimum  net  profit of at least One  Dollar  ($1.00),  as
determined on a quarterly basis,  for a consecutive  eighteen (18) month period,
the  foregoing  Cash  Position  covenant  shall be  replaced  by a Debt  Service
Coverage  covenant,  and  Borrower  shall  maintain,  as of the last day of each
fiscal quarter, a Debt Service Coverage of at least 1.50 to 1.00.

                                       14

<PAGE>

                  6.9 Ouick Ratio.  Borrower shall maintain,  as of the last day
of  each  calendar  month,  a ratio  of  Quick  Assets  to  Current  Liabilities
(excluding deferred revenue) of at least 2.0 to 1.0.

                  6.10  Tangible  Net  Worth.  Borrower  shall  maintain,  on  a
consolidated  basis,  as of the last day of each calendar  month, a Tangible Net
Worth plus  Subordinated  Debt in the  following  amounts:  (i) at least Sixteen
Million Dollars  ($16,000,000) for the calendar month ending June 30, 1997; (ii)
at least Fourteen Million Five Hundred Thousand  Dollars  ($14,500,000)  for the
calendar  months  ending July 31, 1997,  August 31, 1997 and September 30, 1997;
and (iii) at least Thirteen Million Five Hundred Thousand Dollars  ($13,500,000)
for the calendar month ending October 31, 1997 and for each subsequent  calendar
month thereafter.

                  6.11 Registration of Intellectual Property Rights.

                           (a) Borrower shall register or cause to be registered
(to the  extent  not  already  registered)  with the  United  States  Patent and
Trademark Office or the United States  Copyright  Office,  as applicable,  those
intellectual  property rights listed on Exhibits A, B and C to the  Intellectual
Property  Security  Agreement  delivered to Bank by Borrower in connection  with
this Agreement  within thirty (30) days of the date of this Agreement.  Borrower
shall  register  or cause to be  registered  with the United  States  Patent and
Trademark Office or the United States  Copyright  Office,  as applicable,  those
additional  intellectual  property rights developed or acquired by Borrower from
time to time in  connection  with any product  prior to the sale or licensing of
such  product to any third  party,  including  without  limitation  revisions or
additions to the  intellectual  property rights listed on such Exhibits A, B and
C.

                           (b)   Borrower   shall   execute  and  deliver   such
additional  instruments and documents from time to time as Bank shall reasonably
request  to  perfect  Bank's  security  interest  in the  Intellectual  Property
Collateral.

                           (c) Borrower  shall (i) protect,  defend and maintain
the validity and enforceability of the Trademarks,  Patents and Copyrights, (ii)
use its best  efforts to detect  infringements  of the  Trademarks,  Patents and
Copyrights  and  promptly  advise  Bank in  writing  of  material  infringements
detected,  and (iii)  not allow any  Trademarks,  Patents  or  Copyrights  to be
abandoned,  forfeited or dedicated to the public without the written  consent of
Bank,  which shall not be  unreasonably  withheld,  unless Bank  determines that
reasonable business practices suggest that abandonment is appropriate.

                           (d)  Bank  shall   have  the   right,   but  not  the
obligation,  to take, at Borrower's  sole expense,  any actions that Borrower is
required under this Section 6.11 to take but which Borrower fails to take, after
fifteen (15) days' notice to Borrower.  Borrower  shall  reimburse and indemnify
Bank for all reasonable costs and reasonable expenses incurred in the reasonable
exercise of its rights under this Section 6.11.

                  6.12  Further  Assurances.  At any time and from  time to time
Borrower  shall  execute  and deliver  such  further  instruments  and take such
further  action as may reasonably be requested by Bank to effect the purposes of
this Agreement.

                                       15

<PAGE>

         7.       NEGATIVE COVENANTS

                  Borrower  covenants  and  agrees  that,  so long as any credit
hereunder  shall be  available  and  until  payment  in full of the  outstanding
Obligations or for so long as Bank may have any commitment to make any Advances,
Borrower will not do any of the following:

                  7.1 Dispositions.  Convey, sell, lease,  transfer or otherwise
dispose of  (collectively,  a "Transfer"),  or permit any of its Subsidiaries to
Transfer, all or any part of its business or property, other than: (i) Transfers
of Inventory in the ordinary course of business; (ii) Transfers of non-exclusive
licenses and similar arrangements for the use of the property of Borrower or its
Subsidiaries;  or (iii) Transfers of worn-out or obsolete Equipment or Equipment
financed by other vendors.

                  7.2 Change in Business.  Engage in any business, or permit any
of its  Subsidiaries  to  engage  in any  business,  other  than the  businesses
currently  engaged in by  Borrower  and any  business  substantially  similar or
related  thereto  (or  incidental  thereto),  or  suffer a  material  change  in
Borrower's ownership.  Borrower will not, without thirty (30) days prior written
notification to Bank, relocate its chief executive office.

                  7.3 Mergers or Acquisitions.  Merge or consolidate,  or permit
any of its Subsidiaries to merge or consolidate, with or into any other business
organization,  or acquire, or permit any of its Subsidiaries to acquire,  all or
substantially all of the capital stock or property of another Person.

                  7.4 Indebtedness. Create, incur, assume or be or remain liable
with respect to any Indebtedness,  or permit any Subsidiary so to do, other than
Permitted Indebtedness.

                  7.5 Encumbrances. Create, incur, assume or suffer to exist any
Lien with  respect to any of its  property,  or assign or  otherwise  convey any
right to receive  income,  including the sale of any Accounts,  or permit any of
its Subsidiaries so to do, except for Permitted Liens.

                  7.6  Distributions.  Pay  any  dividends  or  make  any  other
distribution  or payment on account of or in redemption,  retirement or purchase
of any capital stock.

                  7.7  Investments.  Directly or  indirectly  acquire or own, or
make any Investment in or to any Person, or permit any of its Subsidiaries so to
do, other than Permitted Investments.

                  7.8 Transactions with Affiliates. Directly or indirectly enter
into or permit to exist any material  transaction with any Affiliate of Borrower
except for transactions that are in the ordinary course of Borrower's  business,
upon fair and reasonable terms that are no less favorable to Borrower than would
be obtained in an arm's length transaction with a nonaffiliated Person.

                  7.9  Intellectual  Property  Agreements.  Borrower  shall  not
permit the inclusion in any material contract to which it becomes a party of any
provisions  that could or might in any way  prevent  the  creation of a security
interest in Borrower's  rights and interests in any property included within the
definition  of  the  Intellectual   Property   Collateral  acquired  under  such
contracts,  [except  to  the  extent  that  such  provisions  are  necessary  in
Borrower's exercise of its reasonable business judgement.

                  7.10  Subordinated  Debt.  Make any  payment in respect of any
Subordinated  Debt, or permit any of its  Subsidiaries to make any such payment,
except in  compliance  with the terms of such  Subordinated  Debt,  or amend any
provision  contained  in any  documentation  relating to the  Subordinated  Debt
without Bank's prior written consent.

                                       16

<PAGE>

                  7.11   Inventory.   Store   the   Inventory   with  a  bailee,
warehouseman,  or  similar  party  unless  Bank has  received  a  pledge  of the
warehouse  receipt  covering such  Inventory.  Except for Inventory  sold in the
ordinary  course of  business  and except for such other  locations  as Bank may
approve in writing,  Borrower  shall keep the Inventory only at the location set
forth in Section 10 hereof and such other locations of which Borrower gives Bank
prior  written  notice  and as to which  Borrower  signs and  files a  financing
statement where needed to perfect Bank's security interest.

                  7.12 Compliance.  Become an "investment company" controlled by
an "investment  company,"  within the meaning of the  Investment  Company Act of
1940,  or become  principally  engaged in, or undertake as one of its  important
activities,  the business of extending  credit for the purpose of  purchasing or
carrying margin stock, or use the proceeds of any Advance for such purpose. Fail
to meet the minimum funding  requirements of ERISA, permit a Reportable Event or
Prohibited  Transaction,  as defined in ERISA, to occur, fail to comply with the
Federal  Fair  Labor  Standards  Act or  violate  any law or  regulation,  which
violation could have a Material  Adverse Effect or a material  adverse effect on
the Collateral or the priority of Bank's Lien on the  Collateral,  or permit any
of its Subsidiaries to do any of the foregoing.

         8.       EVENTS OF DEFAULT

                  Any one or more of the  following  events shall  constitute an
Event of Default by Borrower under this Agreement:

                  8.1 Payment  Default.  If Borrower  fails to pay the principal
of, or any interest on, any Advances  when due and payable;  or fails to pay any
portion of any other  Obligations not  constituting  such principal or interest,
including without  limitation Bank Expenses,  within thirty (30) days of receipt
by Borrower of an invoice for such other Obligations;

                  8.2  Covenant  Default.  If  Borrower  fails  to  perform  any
obligation  under  Sections  6.7,  6.8, 6.9, 6.10 or 6.11 or violates any of the
covenants  contained  in Article 7 of this  Agreement,  or fails or  neglects to
perform,  keep,  or  observe  any other  material  term,  provision,  condition,
covenant,  or  agreement  contained  in  this  Agreement,  in any  of  the  Loan
Documents, or in any other present or future agreement between Borrower and Bank
and as to any default under such other term, provision,  condition,  covenant or
agreement  that can be cured,  has failed to cure such  default  within ten (10)
days after Borrower  receives notice thereof or any officer of Borrower  becomes
aware thereof;  provided,  however,  that if the default cannot by its nature be
cured  within  the ten (10) day  period or cannot  after  diligent  attempts  by
Borrower be cured within such ten (10) day period, and such default is likely to
be cured  within a  reasonable  time,  then  Borrower  shall have an  additional
reasonable  period  (which  shall not in any case  exceed  thirty  (30) days) to
attempt to cure such default, and within such reasonable time period the failure
to have cured  such  default  shall not be deemed an Event of Default  (provided
that no Advances will be required to be made during such cure period);

                  8.3  Material  Adverse  Change.  If there  occurs  a  material
adverse change in Borrower's business or financial  condition,  or if there is a
material  impairment  of  the  prospect  of  repayment  of  any  portion  of the
Obligations or a material impairment of the value or priority of Bank's security
interests in the Collateral;

                  8.4 Attachment.  If any material portion of Borrower's  assets
is attached, seized, subjected to a writ or distress warrant, or is levied upon,
or comes into the  possession  of any  trustee,  receiver or person  acting in a
similar capacity and such attachment,  seizure, writ or distress warrant or levy
has not been  removed,  discharged  or  rescinded  within ten (10)  days,  or if
Borrower is enjoined,  restrained,  or in any way  prevented by court order from
continuing to conduct all or any material part of its business affairs,  or if a
judgment or other claim becomes a lien or encumbrance  upon any material portion
of Borrower's  assets,  or if a notice of lien,  levy, or assessment is filed of
record with respect to any of Borrower's  assets by the United States Govemment,
or any department, agency, or

                                       17
<PAGE>

instrumentality  thereof, or by any state,  county,  municipal,  or governmental
agency,  and the same is not paid within ten (10) days after  Borrower  receives
notice thereof, provided that none of the foregoing shall constitute an Event of
Default where such action or event is stayed or an adequate bond has been posted
pending a good faith  contest by Borrower  (provided  that no  Advances  will be
required to be made during such cure period);

                  8.5  Insolvency.  If  Borrower  becomes  insolvent,  or  if an
Insolvency  Proceeding is commenced by Borrower,  or if an Insolvency Proceeding
is commenced  against  Borrower and is not  dismissed or stayed  within ten (10)
days  (provided  that no Advances  will be made prior to the  dismissal  of such
Insolvency Proceeding);

                  8.6 Other  Agreements.  If there is a default in any agreement
to which Borrower is a party with a third party or parties  resulting in a right
by such third party or parties,  whether or not  exercised,  to  accelerate  the
maturity  of any  Indebtedness  in an amount in excess of One  Hundred  Thousand
Dollars ($100,000) or that could have a Material Adverse Effect;

                  8.7  Subordinated  Debt.  If  Borrower  makes any  payment  on
account of Subordinated Debt, except to the extent such payment is allowed under
any subordination agreement entered into with Bank;

                  8.8  Judgments.  If a judgment or judgments for the payment of
money in an amount, individually or in the aggregate, of at least Fifty Thousand
Dollars   ($50,000)  shall  be  rendered   against  Borrower  and  shall  remain
unsatisfied  and  unstayed  for a period  of ten  (10)  days  (provided  that no
Advances will be made prior to the satisfaction or stay of such judgment); or

                  8.9 Misrepresentations.  If any material  misrepresentation or
material  misstatement exists now or hereafter in any warranty or representation
set forth  herein or in any  certificate  delivered  to Bank by any  Responsible
Officer  pursuant  to this  Agreement  or to  induce  Bank to  enter  into  this
Agreement or any other Loan Document.

         9.       BANK'S RIGHTS AND REMEDIES

                  9.1 Rights and Remedies.  Upon the  occurrence  and during the
continuance of an Event of Default, Bank may, at its election, without notice of
its election and without  demand,  do any one or more of the  following,  all of
which are authorized by Borrower:

                           (a) Declare all  Obligations,  whether  evidenced  by
this Agreement,  by any of the other Loan Documents,  or otherwise,  immediately
due and  payable  (provided  that  upon the  occurrence  of an Event of  Default
described  in Section  8.5 all  Obligations  shall  become  immediately  due and
payable without any action by Bank);

                           (b) Cease advancing  money or extending  credit to or
for the benefit of Borrower  under this  Agreement or under any other  agreement
between Borrower and Bank;

                           (c) Settle or adjust  disputes  and  claims  directly
with  account  debtors for amounts,  upon terms and in whatever  order that Bank
reasonably considers advisable;

                           (d) Without notice to or demand upon  Borrower,  make
such  payments and do such acts as Bank  considers  necessary or  reasonable  to
protect its security interest in the Collateral. Borrower agrees to assemble the
Collateral if Bank so requires,  and to make the Collateral available to Bank as
Bank may  designate.  Borrower  authorizes  Bank to enter the premises where the
Collateral is located, to take and maintain possession of the Collateral, or any
part of it,  and to pay,  purchase,  contest,  or  compromise  any  encumbrance,
charge, or lien which in Bank's determination appears to be prior or superior to
its security interest and to pay all expenses incurred in connection

                                       18

<PAGE>

therewith.  With respect to any of Borrower's  owned  premises,  Borrower hereby
grants Bank a license to enter into  possession  of such  premises and to occupy
the same,  without charge, in order to exercise any of Bank's rights or remedies
provided herein, at law, in equity, or otherwise;

                           (e) Without  notice to Borrower  set off and apply to
the  Obligations any and all (i) balances and deposits of Borrower held by Bank,
or (ii)  indebtedness  at any time owing to or for the credit or the  account of
Borrower held by Bank;

                           (f) Ship, reclaim,  recover, store, finish, maintain,
repair,  prepare for sale,  advertise for sale, and sell (in the manner provided
for herein) the  Collateral.  Bank is hereby  granted a license or other  right,
solely  pursuant to the provisions of this Section 9.1, to use,  without charge,
Borrower's  labels,  patents,  copyrights,  rights  of use of  any  name,  trade
secrets, trade names, trademarks,  service marks, and advertising matter, or any
property of a similar nature,  as it pertains to the  Collateral,  in completing
production  of,  advertising  for sale,  and  selling  any  Collateral  and,  in
connection with Bank's exercise of its rights under this Section 9.1, Borrower's
rights  under all licenses and all  franchise  agreements  shall inure to Bank's
benefit;

                           (g) Sell the Collateral at either a public or private
sale, or both, by way of one or more contracts or  transactions,  for cash or on
terms, in such manner and at such places (including Borrower's premises) as Bank
determines is commercially reasonable, and apply any proceeds to the Obligations
in whatever manner or order Bank deems appropriate;

                           (h) Bank may  credit bid and  purchase  at any public
sale; and

                           (i) Any deficiency  that exists after  disposition of
the Collateral as provided above will be paid immediately by Borrower.

                  9.2 Power of Attorney.  Effective only upon the occurrence and
during the  continuance  of an Event of  Default,  Borrower  hereby  irrevocably
appoints  Bank  (and  any  of  Bank's  designated  officers,  or  employees)  as
Borrower's  true and lawful  attorney to: (a) send requests for  verification of
Accounts or notify account debtors of Bank's security  interest in the Accounts;
(b) endorse  Borrower's name on any checks or other forms of payment or security
that may come into Bank's possession; (c) sign Borrower's name on any invoice or
bill  of  lading  relating  to any  Account,  drafts  against  account  debtors,
schedules and assignments of Accounts, verifications of Accounts, and notices to
account  debtors;  (d) make,  settle,  and adjust all claims under and decisions
with respect to Borrower's policies of insurance; (e) settle and adjust disputes
and claims  respecting the accounts  directly with account debtors,  for amounts
and upon terms which Bank  determines to be  reasonable;  (f) to modify,  in its
sole  discretion,  any intellectual  property  security  agreement  entered into
between  Borrower and Bank without  first  obtaining  Borrower's  approval of or
signature to such  modification by amending  Exhibit A, Exhibit B and Exhibit C,
thereof, as appropriate, to include reference to any right, title or interest in
any Copyrights,  Patents or Trademarks  acquired by Borrower after the execution
hereof or to  delete  any  reference  to any  right,  title or  interest  in any
Copyrights,  Patents or Trademarks in which Borrower no longer has or claims any
right,  title or  interest;  (g) to file,  in its sole  discretion,  one or more
financing or continuation statements and amendments thereto,  relative to any of
the Collateral without the signature of Borrower where permitted by law; and (h)
to transfer  the  Intellectual  Property  Collateral  into the name of Bank or a
third party to the extent  permitted  under the  California  Uniform  Commercial
Code;  provided  Bank may  exercise  such power of  attorney to sign the name of
Borrower on any of the documents  described in Section 4.2 regardless of whether
an Event of Default has occurred. The appointment of Bank as Borrower's attorney
in fact, and each and every one of Bank's rights and powers,  being coupled with
an interest,  is irrevocable until all of the Obligations have been fully repaid
and performed and Bank's obligation to provide advances hereunder is terminated.

                                       19
<PAGE>

                  9.3  Accounts  Collection.  At any time  from the date of this
Agreement, Bank may notify any Person owing funds to Borrower of Bank's security
interest  in such funds and verify the amount of such  Account.  Borrower  shall
collect all amounts owing to Borrower for Bank, receive in trust all payments as
Bank's trustee,  and immediately deliver such payments to Bank in their original
form as received from the account debtor, with proper endorsements for deposit.

                  9.4 Bank  Expenses.  If  Borrower  fails to pay any amounts or
furnish any  required  proof of payment  due to third  persons or  entities,  as
required under the terms of this  Agreement,  then Bank may do any or all of the
following:  (a) make  payment of the same or any part  thereof;  (b) set up such
reserves  under the Revolving  Facility as Bank deems  necessary to protect Bank
from the exposure created by such failure;  or (c) obtain and maintain insurance
policies of the type  discussed in Section 6.6 of this  Agreement,  and take any
action with respect to such policies as Bank deems prudent.  Any amounts so paid
or deposited by Bank shall  constitute  Bank Expenses,  shall be immediately due
and payable,  and shall bear interest at the then  applicable  rate  hereinabove
provided,  and shall be secured by the  Collateral.  Any  payments  made by Bank
shall not constitute an agreement by Bank to make similar payments in the future
or a waiver by Bank of any Event of  Default  under this  Agreement.  Bank shall
have a  non-exclusive,  royalty-free  license to use the  Intellectual  Property
Collateral  to the extent  reasonably  necessary  to permit Bank to exercise its
rights and remedies upon the occurrence of an Event of Default.

                  9.5 Bank's Liability for Collateral.  So long as Bank complies
with reasonable banking practices, Bank shall not in any way or manner be liable
or  responsible  for: (a) the  safekeeping  of the  Collateral;  (b) any loss or
damage thereto occurring or arising in any manner or fashion from any cause; (c)
any diminution in the value  thereof;  or (d) any act or default of any carrier,
warehouseman, bailee, forwarding agency, or other person whomsoever. All risk of
loss, damage or destruction of the Collateral shall be borne by Borrower.

                  9.6 Remedies Cumulative. Bank's rights and remedies under this
Agreement,  the Loan Documents,  and all other  agreements  shall be cumulative.
Bank shall have all other  rights and  remedies  not  inconsistent  herewith  as
provided under the Code, by law, or in equity.  No exercise by Bank of one right
or remedy  shall be deemed  an  election,  and no waiver by Bank of any Event of
Default on Borrower's part shall be deemed a continuing waiver. No delay by Bank
shall  constitute a waiver,  election,  or acquiescence by it. No waiver by Bank
shall be effective  unless made in a written  document  signed on behalf of Bank
and then shall be effective  only in the specific  instance and for the specific
purpose for which it was given.

                  9.7 Demand;  Protest.  Borrower waives demand, protest, notice
of protest,  notice of default or  dishonor,  notice of payment and  nonpayment,
notice of any default, nonpayment at maturity, release, compromise,  settlement,
extension, or renewal of accounts,  documents,  instruments,  chattel paper, and
guarantees at any time held by Bank on which Borrower may in any way be liable.

         10.      NOTICES

                  Unless  otherwise  provided in this Agreement,  all notices or
demands by any party relating to this Agreement or any other  agreement  entered
into in  connection  herewith  shall be in writing  and  (except  for  financial
statements and other  informational  documents  which may be sent by first-class
mail,  postage  prepaid)  shall be personally  delivered or sent by a recognized
overnight  delivery  service,  certified mail,  postage prepaid,  return receipt
requested,  or by  telefacsimile  to Borrower or to Bank, as the case may be, at
its addresses set forth below:

                                       20

<PAGE>


          If to Borrower:      BroadVision, Inc.                        
                               1975 El Camino Real West, Suite 303      
                               Mountain View, CA 94040                  
                               Attn: Mr. Peter Downs                    
                               FAX: (415) 967-2100                      
          
          If to Bank:          Silicon Valley Bank                 
                               1731 Embarcadero Road, Suite 220    
                               Palo Alto, CA 94303                 
                               Attn: Ms. Colleen Atkinson          
                               FAX: (415) 812-0640                 
          
         The parties  hereto may change the address at which they are to receive
notices  hereunder,  by notice in writing in the  foregoing  manner given to the
other.

         11.      CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER

                  The Loan  Documents  shall be governed  by, and  construed  in
accordance with, the internal laws of the State of California, without regard to
principles of conflicts of law. Each of Borrower and Bank hereby  submits to the
exclusive  jurisdiction of the state and Federal courts located in the County of
Santa  Clara,  State of  California.  BORROWER  AND BANK EACH HEREBY WAIVE THEIR
RESPECTIVE  RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF ANY OF THE LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED
THEREIN,  INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL
OTHER COMMON LAW OR STATUTORY CLAIMS.  EACH PARTY RECOGNIZES AND AGREES THAT THE
FOREGOING  WAIVER  CONSTITUTES A MATERIAL  INDUCEMENT  FOR IT TO ENTER INTO THIS
AGREEMENT.  EACH PARTY  REPRESENTS AND WARRANTS THAT IT HAS REVIEWED THIS WAIVER
WITH ITS LEGAL  COUNSEL AND THAT IT KNOWINGLY  AND  VOLUNTARILY  WAIVES ITS JURY
TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL.

         12.      GENERAL PROVISIONS

                  12.1  Successors and Assigns.  This  Agreement  shall bind and
inure to the benefit of the respective  successors and permitted assigns of each
of the parties;  provided,  however,  that neither this Agreement nor any rights
hereunder  may be assigned by Borrower  without  Bank's prior  written  consent,
which consent may be granted or withheld in Bank's sole  discretion.  Bank shall
have the right  without the consent of or notice to Borrower to sell,  transfer,
negotiate,  or grant  participation  in all or any part of, or any  interest in,
Bank's obligations, rights and benefits hereunder.

                  12.2  Indemnification.  Borrower  shall defend,  indemnify and
hold harmless  Bank and its officers,  employees,  and agents  against:  (a) all
obligations,  demands,  claims, and liabilities claimed or asserted by any other
party in connection  with the  transactions  contemplated by the Loan Documents;
and (b) all losses or Bank  Expenses in any way suffered,  incurred,  or paid by
Bank as a result of or in any way arising out of, following, or consequential to
transactions  between Bank and Borrower  whether  under the Loan  Documents,  or
otherwise (including without limitation reasonable attorneys fees and expenses),
except for losses caused by Bank's gross negligence or willful misconduct.

                  12.3  Time  of  Essence.  Time  is  of  the  essence  for  the
performance of all obligations set forth in this Agreement.

                                       21
<PAGE>

                  12.4  Severability  of  Provisions.  Each  provision  of  this
Agreement  shall be severable  from every other  provision of this Agreement for
the purpose of determining the legal enforceability of any specific provision.

                  12.5 Amendments in Writing, Integration. This Agreement cannot
be  amended  or  terminated  orally.   All  prior  agreements,   understandings,
representations,  warranties,  and negotiations  between the parties hereto with
respect to the subject  matter of this  Agreement,  if any, are merged into this
Agreement and the Loan Documents.

                  12.6  Counterparts.  This  Agreement  may be  executed  in any
number of counterparts and by different parties on separate  counterparts,  each
of which,  when executed and delivered,  shall be deemed to be an original,  and
all of  which,  when  taken  together,  shall  constitute  but one and the  same
Agreement.

                  12.7 Survival.  All covenants,  representations and warranties
made in this  Agreement  shall  continue in full force and effect so long as any
Obligations  remain  outstanding.  The obligations of Borrower to indemnify Bank
with respect to the expenses,  damages,  losses, costs and liabilities described
in Section  12.2  shall  survive  until all  applicable  statute of  limitations
periods with respect to actions that may be brought against Bank have run.

         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first above written.

                                     BROADVISION, INC.                       
                                     
                                     By: _________________________________
                                     
                                     Title: ______________________________
                                     
                                     By: _________________________________
                                     
                                     Title:  _____________________________
                                     
                                     SILICON VALLEY BANK
                                     
                                     By: _________________________________
                                     
                                     Title:  _____________________________
                                     


                                       22
                                     
<PAGE>    

                                   EXHIBIT A

         The  Collateral  shall  consist of all  right,  title and  interest  of
Borrower in and to the following:

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

         (b) All inventory, now owned or hereafter acquired,  including, without
limitation,  all  merchandise,  raw  materials,  parts,  supplies,  packing  and
shipping  materials,  work in  process  and  finished  products  including  such
inventory  as is  temporarily  out of  Borrower's  custody or  possession  or in
transit and including any returns upon any accounts or other proceeds, including
insurance  proceeds,  resulting  from  the  sale  or  disposition  of any of the
foregoing  and  any  documents  of  title  representing  any of the  above,  and
Borrower's Books relating to any of the foregoing;

         (c) All contract rights and general  intangibles now owned or hereafter
acquired,  including, without limitation,  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 of insurance and rights to payment of any kind;

         (d) All now existing and hereafter arising  accounts,  contract rights,
royalties,  license rights and all other forms of obligations  owing to Borrower
arising out of the sale or lease of goods,  the  licensing of  technology or the
rendering of services by Borrower, whether or not earned by performance, and any
and all credit insurance,  guaranties,  and other security therefor,  as well as
all  merchandise  returned to or  reclaimed  by Borrower  and  Borrower's  Books
relating to any of the foregoing;

         (e)  All  documents,  cash,  deposit  accounts,  securities,  financial
assets,  investment properties,  securities accounts,  securities  entitlements,
letters of credit,  certificates  of deposit,  instruments and chattel paper now
owned or hereafter acquired and Borrower's Books relating to the foregoing;

         (f)   All   copyright   rights,   copyright   applications,   copyright
registrations  and like  protections  in each work of authorship  and derivative
work thereof, whether published or unpublished, now owned or hereafter acquired;
all  trade  secret  rights,  including  all  rights  to  unpatented  inventions,
know-how,  operating  manuals,  license rights and  agreements and  confidential
information,  now owned or hereafter  acquired;  all mask work or similar rights
available for the  protection  of  semiconductor  chips,  now owned or hereafter
acquired;  all  claims  for  damages  by way of any  past,  present  and  future
infringement of any of the foregoing; and

         (g) Any and all claims,  rights and  interests  in any of the above and
all substitutions for, additions and accessions to and proceeds thereof.

                                      A-1
<PAGE>

                                   EXHIBIT B

                  LOAN PAYMENT/ADVANCE TELEPHONE REQUEST FORM

             DEADLINE FOR SAME DAY PROCESSING IS 3:00 P.M., P.S.T.

TO: CENTRAL CLIENT SERVICE DIVISION               DATE:_______________________

FAX#: (408) 496-2426                              TIME:_______________________

--------------------------------------------------------------------------------

FROM: BROADVISION, INC.
      --------------------------------------------------------------------------
                             CLIENT NAME (BORROWER)

REQUESTED BY:
             -------------------------------------------------------------------
                            AUTHORIZED SIGNER'S NAME

AUTHORIZED SIGNATURE: __________________________________________________________

PHONE NUMBER: __________________________________________________________________

FROM ACCOUNT # _______________________       TO ACCOUNT # _____________________

REQUESTED TRANSACTION TYPE                   REQUEST DOLLAR AMOUNT

PRINCIPAL INCREASE (EQUIPMENT ADVANCE)        $_______________________
PRINCIPAL INCREASE (LEASEHOLD ADVANCE)        $_______________________
PRINCIPAL PAYMENT (ONLY)                      $_______________________
INTEREST PAYMENT (ONLY)                       $_______________________
PRINCIPAL AND INTEREST (PAYMENT)              $_______________________

OTHER INSTRUCTIONS: ____________________________________________________________
________________________________________________________________________________

    All  representations  and  warranties  of  Borrower  stated  in the Loan and
Security Agreement are true, correct and complete in all material respects as of
the date of the telephone  request for and Advance  confirmed by this  Borrowing
Certificate;  provided,  however,  that  those  representations  and  warranties
expressly  referring to another date shall be true,  correct and complete in all
material respects as of such date.

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

                                 BANK USE ONLY

TELEPHONE REOUEST:

The following  person is  authorized  to request the loan payment  transfer/loan
advance on the advance designated account and is known to me.
____________________________________        ____________________________________
     Authorized Requester                                   Phone #

____________________________________        ____________________________________
     Received By (Bank)                                     Phone #

                    _________________________________________    
                          Authorized Signature (Bank)

--------------------------------------------------------------------------------

<PAGE>


                                   EXHIBIT C
                             COMPLIANCE CERTIFICATE

TO:     SILICON VALLEY BANK

FROM:   BROADVISION, INC.

         The  undersigned   authorized  officer  of  BroadVision,   Inc.  hereby
certifies  that in  accordance  with the  terms and  conditions  of the Loan and
Security Agreement between Borrower and Bank (the "Agreement"),  (i) Borrower is
in complete  compliance  for the period  ending  _____________ with all required
covenants except as noted below and (ii) all  representations  and warranties of
Borrower  stated in the Agreement are true and correct in all material  respects
as of the date hereof.  Attached herewith are the required documents  supporting
the above  certification.  The Officer further certifies that these are prepared
in accordance  with  Generally  Accepted  Accounting  Principles  (GAAP) and are
consistently  applied  from one  period to the next  except as  explained  in an
accompanying letter or footnotes.

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

Reporting Covenant            Required                      Complies
------------------            --------                      --------

Monthly financial statements  Monthly within 30 days        Yes    No
Annual (CPA Audited)          FYE within 90 days            Yes    No
Quarterly 10-Q                Within 5 days                 Yes    No
=====================================================================

Financial Covenant                 Required         Actual       Complies
------------------                 --------         ------       --------

Maintain on a Monthly Basis:
  Minimum Cash Position(1)         $9,000,000(2)    $_______     Yes       No 
  Minimum Quick  Ratio(3)          2.0:1.0          ____:1.0     Yes       No 
  Minimum Tangible Net Worth(4)    (5)              $_______     Yes       No 
  Debt Service Coverage            2.0:1.0          ____:1.0     Yes       No 
                                                    


(1)  Converts to Debt Service Coverage on profitability for 18 months

(2)  excluding cash balances  deposited pursunat to the set aside letter between
     Borrower and its Landlord

(3)  Current Liabilities to exclude deferred revenue

(4)  the  consolidated  total  assets of Borrower  and its  Subsidiaries  minus,
     without  duplication,  (i)  the  sum of  any  amounts  attributable  to (a)
     goodwill,  (b)  intangible  items such as  unamortized  debt  discount  and
     expense,  patents,  trade and  service  marks  and  names,  copyrights  and
     research  and  development  expenses  except  prepaid  expenses,  Leasehold
     Improvements,  and (c) all reserves not already  deducted from assets,  and
     (ii) cost  overruns in excess of One Hundred  Thousand  Dollars  ($100,000)
     over  Borrower's  budget  for  Leasehold   Improvements,   and  (ii)  Total
     Liabilities

(5)  (i)  $16,000,000  for month ending  6/30/97;  (ii)  $14,500,000  for months
     ending 7/31/97, 8/31/97 and 9/30/97; and (ill) $13,500,000 for month ending
     10/31/97 and subsequent months

Comments Regarding Exceptions: See Attached.

                                                  BANK USE ONLY              
Sincerely,                                                                   
_____________________________          Received by: _________________________
SIGNATURE                                             AUTHORIZED             
_____________________________          SIGNER                                
TITLE                                                                        
_____________________________          Date: ________________________________
DATE                                                                         
                                       Verified:_____________________________
                                                      AUTHORIZED             
                                       SIGNER                                
                                                                             
                                       Date: ________________________________
                                                                             
                                       Compliance Status:         Yes     No 
                                                                             

                                       C-1

<PAGE>

                     DISBURSEMENT REQUEST AND AUTHORIZATION

Borrower: BroadVision, Inc.                           Bank: Silicon Valley Bank
================================================================================

LOAN TYPE. This is a variable rate,  convertible to a fixed rate,  equipment and
leasehold line of credit of an aggregate principal amount up to $3,000,000.

PRIMARY PURPOSE OF LOAN. The primary purpose of this loan is for business.

SPECIFIC PURPOSE.  The specific purpose of this loan is: equipment and leasehold
improvements financing.

DISBURSEMENT  INSTRUCTIONS.  Borrower  understands that no loan proceeds will be
disbursed  until  all of  Bank's  conditions  for  making  the  loan  have  been
satisfied. Please disburse the loan proceeds as follows:

                                                             Equipment/Leasehold
                                                             -------------------
Amount paid to Borrower directly:                                $______
Undisbursed Funds                                                $______

Principal                                                        $______

CHARGES  PAID IN  CASH.  Borrower  has paid or will  pay in cash as  agreed  the
following charges:

Charges Paid in Cash:                                            $______
        $TBD  UCC Search Fees                                
        $TBD  UCC Filing Fees                                
        $TBD  Patent Filing Fees                             
        $TBD  Trademark Filing Fees                          
        $TBD  Copyright Filing Fees                          
        $TBD  Outside Counsel Fees and Expenses (Estimate)   
                                                             
Total Charges Paid in Cash                                       $______

AUTOMATIC PAYMENTS. Borrower hereby authorizes Bank automatically to deduct from
Borrower's account numbered  ______________  the amount of any loan payment.  If
the funds in the account are  insufficient to cover any payment,  Bank shall not
be obligated to advance funds to cover the payment.

FINANCIAL  CONDITION.  BY SIGNING THIS  AUTHORIZATION,  BORROWER  REPRESENTS AND
WARRANTS  TO BANK THAT THE  INFORMATION  PROVIDED  ABOVE IS TRUE AND CORRECT AND
THAT THERE HAS BEEN NO  ADVERSE  CHANGE IN  BORROWER'S  FINANCIAL  CONDITION  AS
DISCLOSED  IN  BORROWER'S  MOST  RECENT   FINANCIAL   STATEMENT  TO  BANK.  THIS
AUTHORIZATION IS DATED AS OF JULY 2, 1997.

BORROWER:

_______________________________________

_______________________________________
Authorized Officer




<PAGE>


                         AGREEMENT TO PROVIDE INSURANCE
================================================================================

Grantor:            BroadVision, Inc.       Bank:      Silicon Valley Bank

================================================================================

         INSURANCE REQUIREMENTS.  BroadVision, Inc. ("Grantor") understands that
insurance coverage is required in connection with the extending of a loan or the
providing  of  other  financial   accommodations   to  Grantor  by  Bank.  These
requirements  are  set  forth  in the  Loan  Documents.  The  following  minimum
insurance coverages must be provided on the following described  collateral (the
"Collateral"):

Collateral:         All Inventory, Equipment and Fixtures.
Type:               All risks, including fire, theft and liability.
Amount:             Full insurable value.
Basis:              Replacement value.
Endorsements:       Loss payable clause to Bank with  stipulation  that coverage
                    will not be  canceled  or  diminished  without a minimum  of
                    twenty (20) days' prior written notice to Bank.

         INSURANCE  COMPANY.  Grantor may obtain  insurance  from any  insurance
company  Grantor  may choose  that is  reasonably  acceptable  to Bank.  Grantor
understands  that  credit may not be denied  solely  because  insurance  was not
purchased through Bank.

         FAILURE TO PROVIDE INSURANCE.  Grantor agrees to deliver to Bank, on or
before closing,  evidence of the required  insurance as provided above,  with an
effective date of July 2, 1997, or earlier. Grantor acknowledges and agrees that
if Grantor  fails to provide any required  insurance  or fails to continue  such
insurance in force,  Bank may do so at Grantor's expense as provided in the Loan
and Security Agreement. The cost of such insurance, at the option of Bank, shall
be payable on demand or shall be added to the  indebtedness  as  provided in the
security  document.  GRANTOR  ACKNOWLEDGES  THAT IF BANK SO  PURCHASES  ANY SUCH
INSURANCE, THE INSURANCE WILL PROVIDE LIMITED PROTECTION AGAINST PHYSICAL DAMAGE
TO THE COLLATERAL,  UP TO THE BALANCE OF THE LOAN; HOWEVER,  GRANTOR'S EQUITY IN
THE  COLLATERAL MAY NOT BE INSURED.  IN ADDITION,  THE INSURANCE MAY NOT PROVIDE
ANY PUBLIC  LIABILITY OR PROPERTY  DAMAGE  INDEMNIFICATION  AND MAY NOT MEET THE
REQUIREMENTS OF ANY FINANCIAL RESPONSIBILITY LAWS.

         AUTHORIZATION.  For purposes of insurance  coverage on the  Collateral,
Grantor  authorizes Bank to provide to any person (including any insurance agent
or company)  all  information  Bank deems  appropriate,  whether  regarding  the
Collateral, the loan or other financial accommodations, or both.

         GRANTOR  ACKNOWLEDGES  HAVING READ ALL THE PROVISIONS OF THIS AGREEMENT
TO PROVIDE  INSURANCE AND AGREES TO ITS TERMS.  THIS  AGREEMENT IS DATED JULY 2,
1997.

GRANTOR:

____________________________________


X___________________________________
Authorized Officer

================================================================================

                                FOR BANK USE ONLY
                             INSURANCE VERIFICATION

DATE:__________________                                   PHONE:________________
AGENT'S NAME:___________________________________________________________________
INSURANCE COMPANY:______________________________________________________________
POLICY NUMBER:__________________________________________________________________
EFFECTIVE DATES:________________________________________________________________
COMMENTS:_______________________________________________________________________

================================================================================

<PAGE>

                        CORPORATE RESOLUTIONS TO BORROW

--------------------------------------------------------------------------------

Borrower:      BroadVision, Inc.

--------------------------------------------------------------------------------

         I, the  undersigned  Secretary or Assistant  Secretary of  BroadVision,
Inc. (the  "Corporation"),  HEREBY CERTIFY that the Corporation is organized and
existing under and by virtue of the laws of the State of Delaware.

         I FURTHER  CERTIFY that attached hereto as Attachments 1 and 2 are true
and  complete  copies of the  Certificate  of  Incorporation  and  Bylaws of the
Corporation, each of which is in full force and effect on the date hereof.

         I  FURTHER   CERTIFY  that  at  a  meeting  of  the  Directors  of  the
Corporation,  duly called and held, at which a quorum was present and voting (or
by other duly authorized  corporate action in lieu of a meeting),  the following
resolutions were adopted.

         BE IT  RESOLVED,  that  any one (1) of the  following  named  officers,
employees,  or agents of this  Corporation,  whose actual  signatures  are shown
below:

            NAMES                   POSITIONS             ACTUAL SIGNATURES
            -----                   ---------             -----------------

__________________________   _______________________  __________________________

__________________________   _______________________  __________________________

__________________________   _______________________  __________________________

__________________________   _______________________  __________________________

__________________________   _______________________  __________________________


acting  for and on behalf of this  Corporation  and as its act and deed be,  and
they hereby are, authorized and empowered:

         Borrow  Money.  To borrow  from time to time from  Silicon  Valley Bank
("Bank"),  on such terms as may be agreed upon between the officers,  employees,
or agents  and Bank,  such sum or sums of money as in their  judgment  should be
borrowed,  without  limitation,  including  such sums as are  specified  in that
certain  Loan  and  Security  Agreement  dated  as of July 2,  1997  (the  "Loan
Agreement").

         Execute Notes.  To execute and deliver to Bank the  promissory  note or
notes of the  Corporation,  on Lender's  forms, at such rates of interest and on
such terms as may be agreed  upon,  evidencing  the sums of money so borrowed or
any  indebtedness of the Corporation to Bank, and also to execute and deliver to
Lender  one  or  more   renewals,   extensions,   modifications,   refinancings,
consolidations, or substitutions for one or more of the notes, or any portion of
the notes.

         Grant Security.  To grant a security interest to Bank in the Collateral
described in the Loan Agreement, which security interest shall secure all of the
Corporation's Obligations, as described in the Loan Agreement.

         Negotiate Items. To draw,  endorse,  and discount with Bank all drafts,
trade acceptances,  promissory notes, or other evidences of indebtedness payable
to or belonging to the Corporation or in which the Corporation may have an

<PAGE>

interest,  and either to receive cash for the same or to cause such  proceeds to
be credited to the account of the Corporation  with Bank, or to cause such other
disposition of the proceeds derived therefrom as they may deem advisable.

         Further Acts. In the case of lines of credit,  to designate  additional
or alternate individuals as being authorized to request advances thereunder, and
in all cases,  to do and perform such other acts and things,  to pay any and all
fees and costs,  and to execute and deliver such other  documents and agreements
as they may in their discretion deem reasonably  necessary or proper in order to
carry into effect the provisions of these Resolutions.

         BE IT FURTHER  RESOLVED,  that any and all acts authorized  pursuant to
these  resolutions and performed  prior to the passage of these  resolutions are
hereby ratified and approved,  that these Resolutions shall remain in full force
and effect and Bank may rely on these  Resolutions until written notice of their
revocation  shall have been  delivered to and received by Bank.  Any such notice
shall not affect any of the Corporation's agreements or commitments in effect at
the time notice is given.

         I FURTHER CERTIFY that the officers,  employees, and agents named above
are duly elected,  appointed, or employed by or for the Corporation, as the case
may be, and occupy the positions set forth opposite their respective names; that
the foregoing  Resolutions now stand of record on the books of the  Corporation;
and that the Resolutions are in full force and effect and have not been modified
or revoked in any manner whatsoever.

         IN WITNESS  WHEREOF,  I have hereunto set my hand on July 2, 1997,  and
attest that the signatures set opposite the names listed above are their genuine
signatures.

                                 CERTIFIED TO AND ATTESTED BY:

                                 X________________________________________

--------------------------------------------------------------------------------

Attachment 1 - Certificate of Incorporation 
Attachment 2 - Bylaws