Exhibit
10.40


 


LOAN MODIFICATION
AGREEMENT


 


This Loan Modification Agreement is entered into as of October 23, 2002
by and between PHARSIGHT, INC. (the “Borrower”) and Silicon Valley Bank
(“Bank”).  This loan modification
agreement is hereby amended to reflect “PHARSIGHT CORPORATION” as the name of
the Borrower.


 


1.             DESCRIPTION OF
EXISTING OBLIGATIONS: Among other Obligations which may be owing by
Borrower to Bank, Borrower is indebted to Bank pursuant to, among other
documents, a Loan and Security Agreement, dated June 13, 2001, as modified and
amended from time to time, (the “Domestic Loan Agreement”).  The Domestic Loan Agreement provides for,
among other things, a Committed Revolving Line in the original principal amount
of Two Million Five Hundred Thousand Dollars ($2,500,000) and a Committed Term
Loan in the original principal amount of Three Million Five Hundred Thousand
Dollars ($3,500,000). Furthermore, Borrower is indebted to Bank pursuant to,
among other documents, an Export-Import Bank Loan and Security Agreement, dated
June 13, 2001, as modified and amended from time to time (the “EXIM Loan
Agreement”).  The EXIM Loan Agreement
provided for, among other things, an EXIM Committed Line in the original
principal amount of One Million Five Hundred Thousand Dollars
($1,500,000).  The Domestic Loan
Agreement and the EXIM Loan Agreement are collectively defined as the Loan
Agreements. Defined terms used but not otherwise defined herein shall have the
same meanings as set forth in the Loan Agreements.


 


Hereinafter, all indebtedness owing by Borrower to Bank shall be
referred to as the “Obligations.”


 


2.             DESCRIPTION OF
COLLATERAL. Repayment of the Obligations is secured by the Collateral as
described in the Loan Agreements.  
Additionally, repayment of the EXIM Committed Line is guaranteed by the
Export-Import Bank of the United States, “EXIM Bank” pursuant to a Master
Guarantee Agreement between EXIM Bank and Bank.


 


Hereinafter, the above-described security documents and guaranties,
together with all other documents securing repayment of the Obligations shall
be referred to as the “Security Documents”. 
Hereinafter, the Security Documents, together with all other documents
evidencing or securing the Obligations shall be referred to as the “Existing
Loan Documents”.


 


3.             DESCRIPTION OF CHANGE IN TERMS.


 


A.                                Modification(s) to Domestic Loan
Agreement.


 


Sub-letter (e) under Section 6.7
entitled “Maximum Losses” is hereby amended to read as follows:


 


(e)       Maximum Losses.  Borrower may suffer losses not to exceed the
following: $3,500,000 for quarter ending December 31, 2002, and $3,700,000 for
quarter ending March 31, 2003. 
Commencing June 30, 2003, Borrower will have net losses no more than 20%
greater than the projected amount in the “street” projections approved by
Borrower’s board of directors.  If
Borrower projects profitability for any given quarter ended June 30, 2003 or
beyond, net income will be at least 80% of the projected amount in the “street”
projections approved by Borrower’s board of directors.


 


4.             CONSISTENT
CHANGES.  The Existing Loan
Documents are hereby amended wherever necessary to reflect the changes
described above.


 


5.             NO DEFENSES OF BORROWER. 
Borrower agrees that, as of the date hereof, it has no defenses against
paying any of the Obligations.


 


6.             PAYMENT OF LOAN FEE. 
Borrower shall pay Bank a fee in the amount of Five Hundred and 00/100
Dollars ($500.00) (“Loan Fee”) plus all out-of-pocket expenses.


 

















 


 


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 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 and endorsers of Existing Loan Documents, unless the party is
expressly released by Bank in writing. 
Unless expressly released herein, no maker, endorser, or guarantor will
be released by virtue of this Loan Modification Agreement.  The terms of this paragraph apply not only
to this Loan Modification Agreement, but also to all subsequent loan modification
agreements.


 


8.             CONDITIONS.  The effectiveness of this Loan Modification
Agreement is conditioned upon payment of the Loan Fee.


 


                This Loan
Modification Agreement is executed as of the date first written above.


 


	
  BORROWER:

  	
   

  	
  BANK:

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  PHARSIGHT CORPORATION

  	
   

  	
  SILICON VALLEY BANK

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/  Charles Faas

  	
   

  	
  By:

  	
  /s/
  Ron Kundich

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Name:

  	
  Charles
  Faas

  	
   

  	
  Name:

  	
  Ron
  Kundich

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
  Vice
  President, Finance

  	
   

  	
  Title:

  	
  Vice
  President