Restructuring Support Agreement, dated March 27, 2020 by and between the Company, the Plan Sponsor, and other major shareholders of the Company, including Dr. Pehong Chen and Honu Holdings, LLC
RESTRUCTURING SUPPORT AGREEMENT
This Restructuring Support Agreement, dated as of March 27, 2020 (as the same may be amended, modified or extended, and including the exhibits hereto, the “Agreement”) is entered into by and among BroadVision, Inc. (the “Company”), Dr. Pehong Chen and Honu Holdings, LLC, solely in their respective capacities as a shareholder of the Company (collectively, “Honu”), and ESW Capital, LLC, the proposed plan sponsor of the Plan (as defined below) and a shareholder of the Company (“ESW”). The Company, Honu, and ESW are referred to collectively as the “Parties”. Capitalized terms used herein and not otherwise defined shall have the meanings ascribed to such terms in the Plan.
WHEREAS, in light of the Company’s deteriorating liquidity position due to its inability to generate positive net income coupled with uncertainty regarding its ability to generate profits or positive cash flows in future periods, the Company has determined to commence a voluntary reorganization case (the “Chapter 11 Case”) under chapter 11 of title 11 of the United States Code, 11 U.S.C. §§ 101 et seq. (as amended, the “Bankruptcy Code”), in the United States Bankruptcy Court for District of Delaware (the “Bankruptcy Court”) to effectuate a chapter 11 restructuring (the “Restructuring Transaction”), which shall be implemented pursuant to the Plan that shall be consistent in all material respects with the terms and conditions of this Agreement and otherwise in form and substance acceptable to the Parties in order to maximize the value of the Company for the benefit of all of its stakeholders;
WHEREAS, as of the date hereof, Honu and ESW each hold certain equity interests in the Company, including certain shares of the Company’s common stock and the right to acquire certain shares of the Company’s common stock (the “Subject Interests”);
WHEREAS, the Parties have agreed to implement the Restructuring Transaction in accordance with, and subject to the terms and conditions set forth in, this Agreement, pursuant to the Prepackaged Plan of Reorganization Under Chapter 11 of the Bankruptcy Code for BroadVision, Inc., a copy of which is attached hereto as Exhibit A (such plan, together with all exhibits, schedules and attachments thereto, as amended, supplemented or otherwise modified from time to time in accordance with the terms of this Agreement, the “Plan”), which generally provides for (1) the reorganization of the Debtor by retiring, cancelling, extinguishing and/or discharging all Interests; (2) the funding of the Cash Consideration by the Plan Sponsor, (3) the distribution of Available Cash to holders of Allowed Claims and Interests in accordance with the priority scheme established by the Bankruptcy Code or as otherwise agreed; and (4) the issuance of 100% of the New Equity in the Reorganized Debtor to ESW;
WHEREAS, this Agreement, including the Plan, (a) is the product of arms’-length, good faith negotiations among the Parties, and (b) sets forth the material terms and conditions of the Restructuring Transaction; and
WHEREAS, the Parties desire to express to each other their mutual support and commitment in respect of the matters discussed herein;
NOW, THEREFORE, in consideration of the promises, mutual covenants and agreements set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, each of the Parties, intending to be legally bound, agrees as follows:
The Plan sets forth the material terms and conditions of the Restructuring Transaction. In the event of any inconsistency between the Plan and this Agreement, the Plan shall govern.
In addition to the terms defined elsewhere herein, for purposes of this Agreement, the following terms shall have the meanings specified in this Section 2 when used herein:
“Agreement” shall have the meaning ascribed to it in the preamble.
“Alternative Transaction” shall mean any reorganization, merger, consolidation, tender offer, exchange offer, business combination, joint venture, partnership, sale of a material portion of assets, financing (whether debt, including any debtor-in-possession financing, or equity), recapitalization, workout or restructuring of the Company (including, for the avoidance of doubt, a transaction premised on a chapter 11 plan or a sale of a material portion of assets under section 363 of the Bankruptcy Code), other than the Restructuring Transaction.
“Bankruptcy Code” shall have the meaning ascribed to it in the Recitals.
“Bankruptcy Court” shall have the meaning ascribed to it in the Recitals.
“Bankruptcy Rules” means (i) the Federal Rules of Bankruptcy Procedure and the Official Bankruptcy Forms, as amended and promulgated under section 2075 of title 28 of the United States Code, (ii) the Local Rules of Bankruptcy Practice and Procedure of the United States Bankruptcy Court for the District of Delaware, and (iii) any general or chamber rules, or standing orders governing practice and procedure issued by the Bankruptcy Court, each as in effect on the Petition Date, and each of the foregoing together with all amendments and modifications thereto that are subsequently made and as applicable to the Chapter 11 Case or proceedings therein, as the case may be.
“Break Up Fee” shall mean an amount equal to $100,000.00.
“Chapter 11 Case” shall have the meaning ascribed to it in the Recitals.
“Company” shall have the meaning ascribed to it in the preamble.
“Company Termination Events” shall have the meaning ascribed to it in Section 7(a) hereof.
“Definitive Documents” means the (a) Plan, (b) Confirmation Order, (c) this Agreement (d) the RSA Order and (e) any other documents or exhibits related to or contemplated
in the foregoing clauses (a) through (d), in each case in form and substance acceptable to the Company and ESW.
“Deposit” shall have the meaning ascribed to it in Section 6 hereof.
“Escrow Account” shall have the meaning ascribed to it in Section 6 hereof.
“ESW” shall have the meaning ascribed to it in the preamble.
“ESW Termination Events” shall have the meaning ascribed to it in Section 7(c) hereof.
“Honu” shall have the meaning ascribed to it in the preamble.
“Milestones” shall have the meaning ascribed to it in Section 7(c)(ii) hereof.
“Outside Date” shall mean May 29, 2020.
“Parties” shall have the meaning ascribed to it in the preamble.
“Petition Date” shall mean March 30, 2020.
“Plan” shall have the meaning ascribed to it in the Recitals.
“Restructuring Support Period” means the period commencing on the date of execution of this Agreement and ending on the earlier of (i) the Effective Date of the Plan and (ii) the date on which the Agreement is terminated according to its terms.
“Restructuring Transaction” shall have the meaning ascribed to it in the Recitals.
“RSA Motion” shall have the meaning ascribed to it in Section 7(c)(ii)(2) hereof.
“RSA Order” means a Final Order of the Bankruptcy Court authorizing the Company to assume this Agreement.
“Solicitation” means any solicitation of votes for the Plan pursuant to sections 1125 and 1126 of the Bankruptcy Code.
“Subject Interest” shall have the meaning ascribed to such term in the Recitals.
“support” or “support, and not object” shall mean to affirmatively support and to use commercially reasonable efforts and take all reasonable, necessary and appropriate actions or commercially reasonable actions requested by the Company or ESW, as applicable, in furtherance of, and to not take any action to hinder, delay or impede, the action to be taken, or the relief sought; provided, however, there shall be no obligation to incur (or suffer) any costs or expenses with respect to the same unless specifically agreed to in writing by the party that would incur such costs and expenses.
3.Agreements of the Company.
a)Support of the Restructuring Transaction. Upon the terms and subject to the conditions hereof, the Company agrees that, for the duration of the Restructuring Support Period it shall at its sole cost and expense (other than as set forth below):
b)Upon the terms and subject to the conditions hereof, the Company agrees that, for the duration of the Restructuring Support Period, it shall not, directly or indirectly, do or permit to occur any of the following:
4.Agreement of Honu.
a)Support of Restructuring Transaction. Upon the terms and subject to the conditions hereof, Honu agrees to comply with the following covenants and that, for the duration of the Restructuring Support Period, it shall:
b)Upon the terms and subject to the conditions hereof, Honu agrees to comply with the following covenants and that, for the duration of the Restructuring Support Period, they shall not, directly or indirectly:
c)Certain Conditions. The obligations of Honu set forth in Sections 4(a) and 4(b) above are subject to the following conditions:
5.Agreement of ESW.
a)Support of Restructuring Transaction. Upon the terms and subject to the conditions hereof, ESW agrees to comply with the following covenants and that, for the duration of the Restructuring Support Period, it shall:
b)Upon the terms and subject to the conditions hereof, ESW agrees to comply with the following covenants and that, for the duration of the Restructuring Support Period, it shall not, directly or indirectly:
c)Certain Conditions. The obligations of ESW set forth in Section 6(c) above are subject to the following conditions:
6.Payment of Deposit and Cash Consideration
In connection with the Restructuring Transaction, (a) as a condition to the effectiveness of this Agreement pursuant to Section 12 hereof, ESW shall make a non-refundable deposit to the Company pursuant to wire instructions to be provided to ESW in the amount of $1.5 million (the “Deposit”), which Deposit shall be held by the Company in an escrow account established with Morgan Stanley Smith Barney, LLC (the “Escrow Account”); and (b) as a condition to the Effective Date of the Plan, ESW shall deliver the Cash Consideration (net of the Deposit) to the Company; provided that (x) if the Company exercises its fiduciary out (as contemplated in Section 10 hereof), or the Company or Honu breaches this Agreement, then the Company shall immediately return the Deposit to ESW, and pay ESW the additional amounts contemplated in Section 10 hereof; and (y) if ESW breaches this Agreement, then in addition to forfeiting the Deposit, ESW shall also immediately reimburse the Company for all of its reasonable out-of-pocket legal, accounting, and professional fees and expenses related to the Restructuring Transaction (including the Chapter 11 Case) (collectively, the “Company Expenses”). The Company hereby agrees that, in the event the Plan is not confirmed or does not become effective and ESW has not breached this Agreement, the Company’s retention of the Deposit and ESW’s
payment of the Company Expenses shall be ESW’s sole liability and entire obligation. Further, the Company and ESW agree that the Deposit shall only be transferred from the Escrow Account pursuant to joint written instructions signed by the Company and ESW or, in the absence thereof, an order from the Bankruptcy Court.
7.Termination of Agreement.
a)Company Termination Events. The Company may terminate this Agreement only upon the occurrence, and during the continuation of, any of the following events (the “Company Termination Events”):
8.Good Faith Cooperation; Further Assurances; Acknowledgment; No Solicitation.
During the Restructuring Support Period, the Parties shall cooperate with each other in good faith and shall coordinate their activities (to the extent practicable and subject to the terms hereof) in respect of (a) all matters relating to their rights hereunder in respect of the Company or otherwise in connection with their relationship with the Company, (b) all matters concerning the implementation of this Agreement, and (c) the pursuit and support of the Restructuring Transaction (including confirmation of the Plan). Furthermore, subject to the terms hereof, each of the Parties shall take such action as may be reasonably necessary to carry out the purposes and intent of this Agreement, including making and filing any required governmental, regulatory, or licensing filings, and shall refrain from taking any action that would frustrate the purposes and intent of this Agreement. This Agreement is not, and shall not be deemed, a Solicitation for consents to the Plan. Except as otherwise permitted in accordance with sections 1125 and 1126 of the Bankruptcy Code, acceptances of the Plan, if any, will not be solicited until the Disclosure Statement and related ballot(s), if any, have been approved by the Bankruptcy Court.
During the Restructuring Support Period, the Parties hereby covenant and agree (i) to negotiate in good faith the Definitive Documents and (ii) to execute (to the extent such Party is a party thereto) and otherwise support the Definitive Documents. For the avoidance of doubt, during the Restructuring Support Period, each Party agrees to (a) act in good faith and use commercially reasonable efforts to support and complete successfully the implementation of the Definitive Documents and the Restructuring Transaction in accordance with the terms of this Agreement, and (b) do all things reasonably necessary and appropriate in furtherance of consummating the Restructuring Transaction in accordance with, and within the time frames contemplated by, this Agreement.
Notwithstanding anything to the contrary herein, nothing in this Agreement shall require the Company or any directors or officers of the Company (in such person’s capacity as a director or officer of the Company) to take any action, or to refrain from taking any action, to the extent required, in the opinion of counsel in writing, to comply with its or their fiduciary obligations under applicable law; provided that (i) the Company and its advisors may not, directly or indirectly, solicit, initiate or knowingly encourage, or take any other action designed to facilitate, any inquiries or the making of any proposal that constitutes, or may reasonably be expected to lead to, any proposal for an Alternative Transaction; (ii) the Company must provide notice to ESW of the Company’s material communications, no later than forty-eight (48) hours of the Company’s first such communication (or continuation of such communication), with any other party which expresses interest in an Alternative Transaction; and (iii) prior to the Company terminating this Agreement to move forward with an Alternative Transaction, the Company shall provide ESW with at least seventy-two (72) hours’ notice of the material terms and conditions of the proposed Alternative Transaction and its intent to terminate this Agreement, during which time ESW shall have a right of first refusal to match such proposal; and (iv) in the event ESW does not exercise its right of first refusal, the Company otherwise seeks to invoke its fiduciary out or the Bankruptcy Court approves an Alternative Transaction, then the Company shall immediately refund the Deposit to ESW and ESW shall be entitled to the immediate payment and/or repayment from the proceeds of the closing of the Alternative Transaction of (x) all of its reasonable out-of-pocket legal, accounting, and professional fees and expenses related to the Restructuring Transaction (including the Chapter 11 Case); and (y) a break-up fee in the amount of $100,000, and pending receipt of such payments, ESW shall have an Allowed Claim pursuant to sections 503(b) and 507(a)(2), (b) of the Bankruptcy Code.
11.Representations and Warranties.
a)As applicable, each Party, severally (and not jointly), represents and warrants to the other Parties that the following statements are true, correct and complete as of the date hereof:
This Agreement shall become effective upon the (a) receipt by the Company of the Deposit; and (b) release and delivery of signature pages to counsel to the Parties hereto, duly executed by each of the Parties. Delivery by telecopier or electronic mail of an executed counterpart of a signature page to this Agreement shall be effective as delivery of an original executed counterpart hereof.
13.Independent Due Diligence and Decision Making.
Each Party confirms that its decision to execute this Agreement has been based upon its independent investigation of the operations, businesses, financial and other conditions and prospects of the Company. To the extent any materials or information have been furnished to it by another Party, each Party acknowledges that it has been provided for informational purposes only, without any representation or warranty.
All notices hereunder shall be deemed given if in writing and delivered, if sent by facsimile, courier or by registered or certified mail (return receipt requested) to the following addresses and facsimile numbers (or at such other addresses or facsimile numbers as shall be specified by like notice):
(a)If to the Company, at:
460 Seaport Court, Suite 210
Redwood City, CA 94063
Attention: Dr. Pehong Chen
DLA Piper LLP
555 Mission Street, Suite 2400
San Francisco, California
Attention: Joshua D. Morse, Esq.
DLA Piper LLP
1201 North Market Street, Suite 2100
Wilmington, Delaware 19801
Attention: R. Craig Martin, Esq.
(b)If to ESW, at:
ESW Capital, LLC
401 Congress Ave. Suite 2650
Austin, TX 78701
Attn: Neeraj Gupta, Corporate Development
Goulston & Storrs PC
885 Third Avenue, 18th Floor
New York, New York 10022
Attention: Trevor R. Hoffmann, Esq.
Facsimile: (212) 878-6911
(c)If to Dr. Pehong Chen or Honu Holdings, LLC at:
Honu Holdings, LLC
93 Ridgeview Dr.
Atherton, CA 94027
Attn: Dr. Pehong Chen
15.GOVERNING LAW; JURISDICTION; WAIVER OF JURY TRIAL.
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF DELAWARE, WITHOUT REGARD TO ANY CONFLICTS OF LAW PROVISIONS WHICH WOULD REQUIRE THE APPLICATION OF THE LAW OF ANY OTHER JURISDICTION. BY ITS EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH OF THE PARTIES HEREBY IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ANY LEGAL ACTION, SUIT, DISPUTE OR PROCEEDING ARISING UNDER, OUT OF OR IN CONNECTION WITH THIS AGREEMENT SHALL BE BROUGHT IN THE FEDERAL OR STATE COURTS LOCATED IN THE STATE OF DELAWARE OR IN THE BANKRUPTCY COURT (FOR SO LONG AS THE COMPANY IS SUBJECT TO THE JURISDICTION OF THE BANKRUPTCY COURT) AND THE PARTIES HERETO IRREVOCABLY CONSENT TO THE JURISDICTION OF SUCH COURTS AND WAIVE ANY OBJECTIONS AS TO VENUE OR INCONVENIENT FORUM. EACH PARTY HERETO IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
It is understood and agreed by the Parties that money damages would not be a sufficient remedy for any breach of this Agreement by any Party and each non-breaching Party shall be entitled to specific performance and injunctive or other equitable relief (including attorneys’ fees and costs) as a remedy for any such breach, without the necessity of proving the inadequacy of money damages as a remedy, including an order of the Bankruptcy Court requiring any Party to comply promptly with any of its obligations hereunder.
Notwithstanding the termination of this Agreement pursuant to Section 7 hereof, the agreements and obligations of the Parties in this Section 17 and in Sections 6, 10, 14, 15 and 19-27 hereof shall survive such termination and shall continue in full force and effect for the benefit of the Parties in accordance with the terms hereof.
The headings of the paragraphs of this Agreement are inserted for convenience only and shall not affect the interpretation hereof.
19.Successors and Assigns; Severability; Several Obligations.
This Agreement is intended to bind and inure to the benefit of the Parties and their respective successors, assigns, heirs, executors, administrators and representatives; provided, however, that nothing contained in this Section 19 shall be deemed to permit sales, assignments or transfers of Honu’s claims against or interests in the Company. If any provision of this Agreement, or the application of any such provision to any person or circumstance, shall be held invalid or unenforceable in whole or in part, such invalidity or unenforceability shall attach only to such provision or part thereof and the remaining part of such provision shall continue in full force and effect so long as the economic or legal substance of the Restructuring Transaction contemplated hereby are not affected in any manner materially adverse to any Party. Upon any such determination of invalidity, the Parties shall negotiate in good faith to modify this Agreement so as to effect the original intent of the Parties as closely as possible in an acceptable manner in order that the Restructuring Transaction contemplated hereby are consummated as originally contemplated to the greatest extent possible.
20.No Third-Party Beneficiaries.
Unless expressly stated herein, this Agreement shall be solely for the benefit of the Parties and their respective successors, assigns, heirs, executors, administrators and representatives, and no other Person shall be a third-party beneficiary hereof.
21.Prior Negotiations; Entire Agreement.
This Agreement (including the exhibits hereto and made a part hereof) constitutes the entire agreement between the Parties with respect to the subject matter hereof and supersedes all prior agreements and understandings, written and oral, between the Parties with respect to the transactions contemplated hereby.
23.Reservation of Rights; No Admission.
Nothing herein shall be deemed an admission of any kind with respect to any other proceeding. If the transactions contemplated herein are not consummated, or this Agreement is terminated for any reason, the Parties fully reserve any and all of their rights. Pursuant to Rule 408 of the Federal Rules of Evidence, any applicable state rules of evidence and any other applicable law, foreign or domestic, this Agreement and all negotiations relating thereto shall not be admissible into evidence in any proceeding other than a proceeding to enforce its terms or in the Chapter 11 Case.
24.Relationship Among Parties.
It is understood and agreed that, except as expressly provided in this Agreement, none of the Parties: (a) have any duty of trust or confidence of any kind or form with each other; (b) have or owe any other duties (fiduciary or otherwise (except for the Company’s fiduciary duties under applicable law)) whatsoever to each other; and (c) have commitments among or between them. No prior history, pattern or practice of sharing confidences among or between the Parties shall in any way affect or negate this understanding and agreement.
25.Representation by Counsel.
Each Party acknowledges that it has been represented by, or provided a reasonable period of time to obtain access to and advice by, counsel with this Agreement and the Restructuring Transaction contemplated herein. Accordingly, any rule of law or any legal decision that would provide any Party with a defense to the enforcement of the terms of this Agreement against such Party based upon lack of legal counsel shall have no application and is expressly waived.
26.Costs and Expenses.
Except as otherwise set forth herein, each Party shall bear its own costs and expenses of negotiating and preparing this Agreement and the Definitive Documents.
This Agreement may be executed in any number of counterparts and by different Parties hereto in separate counterparts and by facsimile or other electronic transmission, with the same effect as if all Parties had signed the same document. All such counterparts shall be deemed an original, shall be construed together and shall constitute one and the same instrument.
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the day and year first above written.
ESW Capital, LLC
Honu Holdings, LLC
Dr. Pehong Chen