Exhibit 10.6

 

SEVENTH LOAN MODIFICATION AGREEMENT

This Seventh Loan Modification Agreement (this “Loan Modification Agreement”) is
entered into as of April 11, 2006, and effective as of March 31, 2006, by and
between SILICON VALLEY BANK, a California corporation, with its principal place
of business at 3003 Tasman Drive, Santa Clara, California 95054 and with a loan
production office located at One Newton Executive Park, Suite 200, 2221
Washington Street, Newton, Massachusetts 02462 (“Bank”) and PHASE FORWARD
INCORPORATED, a Delaware corporation (“Borrower”).

1.             DESCRIPTION OF EXISTING INDEBTEDNESS AND OBLIGATIONS. AMONG OTHER
INDEBTEDNESS AND OBLIGATIONS WHICH MAY BE OWING BY BORROWER TO BANK, BORROWER IS
INDEBTED TO BANK PURSUANT TO A LOAN ARRANGEMENT DATED AS OF APRIL 17, 2002,
EVIDENCED BY, AMONG OTHER DOCUMENTS, A CERTAIN SECOND AMENDED AND RESTATED LOAN
AND SECURITY AGREEMENT DATED AS OF APRIL 17, 2002 BETWEEN BORROWER AND BANK, AS
AMENDED BY A CERTAIN FIRST LOAN MODIFICATION AGREEMENT DATED AS OF DECEMBER 24,
2002, AS FURTHER AMENDED BY A CERTAIN SECOND LOAN MODIFICATION AGREEMENT DATED
AS OF FEBRUARY 28, 2003, AS FURTHER AMENDED BY A CERTAIN THIRD LOAN MODIFICATION
AGREEMENT DATED AS OF MARCH 31, 2003, AS FURTHER AMENDED BY A CERTAIN FOURTH
LOAN MODIFICATION AGREEMENT DATED AS OF FEBRUARY 27, 2004, AS FURTHER AMENDED BY
A CERTAIN FIFTH LOAN MODIFICATION AGREEMENT DATED AS OF APRIL 27, 2004, AND AS
FURTHER AMENDED BY A CERTAIN SIXTH LOAN MODIFICATION AGREEMENT DATED AS OF
AUGUST 8, 2005 (AS AMENDED, THE “LOAN AGREEMENT”). CAPITALIZED TERMS USED BUT
NOT OTHERWISE DEFINED HEREIN SHALL HAVE THE SAME MEANING AS IN THE LOAN
AGREEMENT.

Hereinafter, the Loan Agreement, together with all other documents evidencing or
securing the Obligations shall be referred to as the “Existing Loan Documents”.

2.             DESCRIPTION OF CHANGE IN TERMS.

A.                                   MODIFICATIONS TO LOAN AGREEMENT.

1.                                       THE LOAN AGREEMENT SHALL BE AMENDED BY
DELETING THE FOLLOWING TEXT APPEARING IN SECTION 2.1.11 THEREOF, ENTITLED
“LETTERS OF CREDIT SUBLIMIT”:

“The face amount of outstanding Letters of Credit (including drawn but
unreimbursed Letters of Credit and any Letter of Credit Reserve) may not exceed
$5,000,000.00.”

                              and inserting in lieu thereof the following:

“The face amount of outstanding Letters of Credit (including drawn but
unreimbursed Letters of Credit and any Letter of Credit Reserve) may not exceed
$2,000,000.00.”

2.                                       THE LOAN AGREEMENT SHALL BE AMENDED BY
DELETING THE FOLLOWING TEXT APPEARING IN SECTION 2.1.12 THEREOF, ENTITLED
“FOREIGN EXCHANGE SUBLIMIT”:

“Bank shall subtract 10% of each outstanding FX Forward Contract from the
foreign exchange sublimit, which sublimit is a maximum of $5,000,000.00 (the “FX
Reserve”).”

                              and inserting in lieu thereof the following:

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“Bank shall subtract 10% of each outstanding FX Forward Contract from the
foreign exchange sublimit, which sublimit is a maximum of $2,000,000.00 (the “FX
Reserve”).”

3.                                       THE LOAN AGREEMENT SHALL BE AMENDED BY
DELETING THE FOLLOWING TEXT APPEARING IN SECTION 2.1.13 THEREOF, ENTITLED “CASH
MANAGEMENT SERVICES SUBLIMIT”:

“Borrower may use up to $5,000,000.00 for the Bank’s Cash Management Services,
which may include merchant services, direct deposit of payroll, business credit
card, and check cashing services identified in the various cash management
services agreements related to such Cash Management Services (the “Cash
Management Services”).”

                              and inserting in lieu thereof the following:

“Borrower may use up to $2,000,000.00 for the Bank’s Cash Management Services,
which may include merchant services, direct deposit of payroll, business credit
card, and check cashing services identified in the various cash management
services agreements related to such Cash Management Services (the “Cash
Management Services”).”

4.                                       THE LOAN AGREEMENT SHALL BE AMENDED BY
DELETING THE FOLLOWING TEXT APPEARING IN SUBSECTION (A) OF SECTION 6.2 THEREOF,
ENTITLED “FINANCIAL STATEMENTS, REPORTS, CERTIFICATES”:

“(iii) as soon as available, but no later than forty-five (45) days after the
last day of Borrower’s fiscal year, financial projections, approved by the
Borrower’s Board of Directors, for the then current fiscal year;”

                              and inserting in lieu thereof the following:

“(iii) as soon as available, but no later than the later of: (A) forty-five (45)
days after the last day of Borrower’s fiscal year, and (B) five (5) days after
approval of same by Borrower’s Board of Directors, financial projections,
approved by the Borrower’s Board of Directors, for the then current fiscal
year.”

5.                                       THE LOAN AGREEMENT SHALL BE AMENDED BY
DELETING THE FOLLOWING TEXT APPEARING IN SECTION 6.2 THEREOF, ENTITLED
“FINANCIAL STATEMENTS, REPORTS, CERTIFICATES”:

“(b)         Within forty-five (45) days after the last day of each quarter,
Borrower shall deliver to Bank with the monthly financial statements a
Compliance Certificate signed by a Responsible Officer in the form of Exhibit D.
Notwithstanding the foregoing, such Compliance Certificate for January 2004 and
February 2004, shall be delivered to Bank no later than April 15, 2004.”

       IN ITS ENTIRETY, AND INSERTING IN LIEU THEREOF THE FOLLOWING:

“(b)         Within forty-five (45) days after the last day of each quarter,
Borrower shall deliver to Bank with the quarterly financial statements a
Compliance Certificate signed by a Responsible Officer in the form of Exhibit D.
Notwithstanding the foregoing, such Compliance Certificate for January 2004 and
February 2004, shall be delivered to Bank no later than April 15, 2004.”

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6.                                       THE LOAN AGREEMENT SHALL BE AMENDED BY
DELETING SECTION 6.5 THEREOF, ENTITLED “PRIMARY ACCOUNTS”, IN ITS ENTIRETY, AND
INSERTING IN LIEU THEREOF THE FOLLOWING:

“6.5               Primary Accounts. In order to permit the Bank to monitor the
Borrower’s financial performance and condition, Borrower shall maintain its
primary depository and operating accounts with Bank. Additionally, at least
one-third (33.33%) of the aggregate dollar value of Borrower’s and Borrower’s
Subsidiaries’ cash and securities maintained at domestic financial institutions,
shall be maintained and administered through the Bank. The provisions of this
paragraph shall not apply to deposit accounts exclusively used for payroll,
payroll taxes and other employee wage and benefit payments to or for the benefit
of the Borrower’s employees.”

7.                                       THE LOAN AGREEMENT SHALL BE AMENDED BY
DELETING SECTION 6.7 THEREOF, ENTITLED “REVENUE”, IN ITS ENTIRETY, AND INSERTING
IN LIEU THEREOF THE FOLLOWING:

“6.7               INTENTIONALLY DELETED”

8.                                       THE LOAN AGREEMENT SHALL BE AMENDED BY
DELETING THE FOLLOWING DEFINITIONS APPEARING IN SECTION 13.1 THEREOF:

“““Committed Revolving Line” is an Advance or Advances of up to $5,000,000.00.

“Revolving Maturity Date” is March 31, 2006.”

       AND INSERTING IN LIEU THEREOF THE FOLLOWING:

“““Committed Revolving Line” is an Advance or Advances of up to $2,000,000.00.

“Revolving Maturity Date” is March 29, 2008.”

9.                                       THE COMPLIANCE CERTIFICATE APPEARING AS
EXHIBIT D TO THE LOAN AGREEMENT IS HEREBY REPLACED WITH THE COMPLIANCE
CERTIFICATE ATTACHED AS EXHIBIT A HERETO.

3.             FEES. THE BORROWER SHALL REIMBURSE BANK FOR ALL LEGAL FEES AND
EXPENSES INCURRED IN CONNECTION WITH THIS AMENDMENT TO THE EXISTING LOAN
DOCUMENTS.

4.             CONSISTENT CHANGES. THE EXISTING LOAN DOCUMENTS ARE HEREBY
AMENDED WHEREVER NECESSARY TO REFLECT THE CHANGES DESCRIBED ABOVE.

5.             RATIFICATION OF LOAN DOCUMENTS. BORROWER HEREBY RATIFIES,
CONFIRMS, AND REAFFIRMS ALL TERMS AND CONDITIONS OF THE LOAN DOCUMENTS.

6.             NO DEFENSES OF BORROWER. BORROWER HEREBY ACKNOWLEDGES AND AGREES
THAT BORROWER HAS NO OFFSETS, DEFENSES, CLAIMS, OR COUNTERCLAIMS AGAINST BANK
WITH RESPECT TO THE OBLIGATIONS, OR OTHERWISE, AND THAT IF BORROWER NOW HAS, OR
EVER DID HAVE, ANY OFFSETS, DEFENSES, CLAIMS, OR COUNTERCLAIMS AGAINST BANK,
WHETHER KNOWN OR UNKNOWN, AT LAW OR IN EQUITY, ALL OF THEM ARE HEREBY EXPRESSLY
WAIVED AND BORROWER HEREBY RELEASES BANK FROM ANY LIABILITY THEREUNDER.

7.             CONTINUING VALIDITY. BORROWER UNDERSTANDS AND AGREES THAT IN
MODIFYING THE EXISTING OBLIGATIONS, BANK IS RELYING UPON BORROWER’S
REPRESENTATIONS, WARRANTIES, AND AGREEMENTS, AS SET FORTH IN THE EXISTING LOAN

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DOCUMENTS. EXCEPT AS EXPRESSLY MODIFIED PURSUANT TO THIS LOAN MODIFICATION
AGREEMENT, THE TERMS OF THE EXISTING LOAN DOCUMENTS REMAIN UNCHANGED AND IN FULL
FORCE AND EFFECT. BANK’S AGREEMENT TO MODIFICATIONS TO THE EXISTING OBLIGATIONS
PURSUANT TO THIS LOAN MODIFICATION AGREEMENT IN NO WAY SHALL OBLIGATE BANK TO
MAKE ANY FUTURE MODIFICATIONS TO THE OBLIGATIONS. NOTHING IN THIS LOAN
MODIFICATION AGREEMENT SHALL CONSTITUTE A SATISFACTION OF THE OBLIGATIONS. IT IS
THE INTENTION OF BANK AND BORROWER TO RETAIN AS LIABLE PARTIES ALL MAKERS OF
EXISTING LOAN DOCUMENTS, UNLESS THE PARTY IS EXPRESSLY RELEASED BY BANK IN
WRITING. NO MAKER WILL BE RELEASED BY VIRTUE OF THIS LOAN MODIFICATION
AGREEMENT.

8.             COUNTERSIGNATURE. THIS LOAN MODIFICATION AGREEMENT SHALL BECOME
EFFECTIVE ONLY WHEN IT SHALL HAVE BEEN EXECUTED BY BORROWER AND BANK.

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This Loan Modification Agreement is executed as a sealed instrument under the
laws of the Commonwealth of Massachusetts as of the date first written above.

BORROWER:

BANK:

PHASE FORWARD INCORPORATED

SILICON VALLEY BANK

 

 

 

 

 

 

 

By:

 

/s/ ROBERT K. WEILER

By:

/s/ MICHAEL FELL

 

 

Name: Robert Weiler

 

Name: Michael Fell

 

 

Title: President

 

Title: Relationship Manager

 

The undersigned, PHASE FORWARD SECURITIES CORPORATION,  ratifies, confirms and
reaffirms, all and singular, the terms and conditions of a certain Unlimited
Guaranty dated May 3, 1999 (the “Guaranty”) and acknowledges, confirms and
agrees that the Guaranty shall remain in full force and effect and shall in no
way be limited by the execution of this Loan Modification Agreement, or any
other documents, instruments and/or agreements executed and/or delivered in
connection herewith.

PHASE FORWARD SECURITIES CORPORATION

 

 

 

 

 

By:

/s/ RODGER WEISMANN

 

 

 

 

Name: Rodger Weismann

 

 

 

 

Title: Treasurer

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EXHIBIT A
COMPLIANCE CERTIFICATE

TO:         SILICON VALLEY BANK

FROM:   PHASE FORWARD INCORPORATED

The undersigned authorized officer of PHASE FORWARD INCORPORATED certifies that
under 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 in the Agreement are true and
correct in all material respects on this date. Attached are the required
documents supporting the certification. The Officer certifies that these are
prepared in accordance with Generally Accepted Accounting Principles (GAAP)
consistently applied from one period to the next except as explained in an
accompanying letter or footnotes. The Officer acknowledges that no borrowings
may be requested at any time or date of determination that Borrower is not in
compliance with any of the terms of the Agreement, and that compliance is
determined not just at the date this certificate is delivered.

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

Reporting Covenant

 

Required

 

Complies

 

 

 

 

 

Financial statements with CC

 

Quarterly within 45 days*

 

Yes   No

Annual financial statement (CPA Audited)

 

FYE within 120 days

 

Yes   No

10-Q, 10-K and 8-K (or electronic notice to links thereto)

 

Within 5 days after filing with SEC

 

Yes   No

Annual Projections

 

Later of: 45 days of prior FYE and 5 days after Board of Director approval

 

Yes   No

*January 2004 and February 2004 financial statements and compliance certificate
due April 15, 2004.

 

 

 

 

 

Financial Covenant

 

Required

 

Actual

 

Complies

 

 

 

 

 

 

 

Minimum Adjusted Quick Ratio (tested quarterly)

 

3.0:1.0

 

_      :1.0

 

Yes   No

 

Comments Regarding Exceptions: See Attached.

Sincerely,

_____________________________

SIGNATURE 

_____________________________

TITLE 

_____________________________

DATE

 

 

   BANK USE ONLY 

   Received by: _____________________

                             AUTHORIZED SIGNER

   Date:____________________________

 

   Verified: _________________________

                         AUTHORIZED SIGNER

   Date:_____________________________

 

   Compliance Status:  Yes   No

 

 

 

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