**Exhibit 10.2**

 

**TERMINATIONAGREEMENT**

 

ThisTermination Agreement (the “Termination Agreement”) is executed as of August 8,2005, by and among SILICON VALLEY BANK, a California-chartered bank, with itsprincipal place of business at 3003 Tasman Drive, Santa Clara, California 95054and with a loan production office located at One Newton Executive Park, Suite 200,2221 Washington Street, Newton, Massachusetts 02462 (“Bank”), and PHASEFORWARD SECURITIES CORPORATION, a Massachusetts corporation with its principalplace of business at 880 Winter Street, Waltham, Massachusetts 02451 (“Guarantor”).

 

WHEREAS,Guarantor and Bank are parties to a certain Security Agreement dated as of May 3,1999 (as amended, the “Security Agreement”);

 

WHEREAS,Guarantor and Bank wish to terminate the Security Agreement as set forthherein;

 

NOW,THEREFORE, for good and valuable consideration, the receipt and adequacy ofwhich are hereby acknowledged, Guarantor and Bank hereto agree as follows:

 

1.             Terminationof Security Agreement.  Guarantor andBank hereby agree that the Security Agreement is terminated in all respects andshall no longer be of any legal force or effect, and each of the partiesthereto have no rights or obligations thereunder.

 

2.             BindingEffect.  This Termination Agreementshall be binding on Borrower and Bank upon their execution hereof. ThisTermination Agreement shall inure to the benefit of, and be binding upon theparties and each of their respective assigns, heirs or other successors ininterest.

 

3.             GoverningLaw.  This Termination Agreementshall be construed and enforced in accordance with the substantive laws of theCommonwealth of Massachusetts, without reference to its principles of conflictsof law.

 

4.             Counterparts.  This Termination Agreement may be executed incounterparts, each of which shall be deemed an original, but all of whichtogether shall constitute one and the same instrument.

 

***

 

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IN WITNESSWHEREOF, each of the parties has executed this Termination Agreement as aninstrument under seal as of the date first written above.

 

 
| SILICON VALLEY BANK                  |
|--------------------------------------|
|                                 |
| By:                                  |   |   |
| Its:                                 |   |   |
|                                 |
|                                 |
| PHASE FORWARD SECURITIES CORPORATION |
|                                 |
| By:                                  | /s/ William  G. Porter |   |
| Its:                                 | Assistant  Treasurer |   |

 

2

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**SIXTH LOAN MODIFICATION AGREEMENT**

 

This Sixth Loan ModificationAgreement (this “Loan Modification Agreement”) is entered into as of August 8,2005, by and between **SILICON VALLEY BANK**,a California-chartered bank, with its principal place of business at3003 Tasman Drive, Santa Clara, California 95054 and with a loanproduction office located at One Newton Executive Park, Suite 200, 2221Washington Street, Newton, Massachusetts 02462 (“Bank”) and **PHASE FORWARD INCORPORATED**, a Delawarecorporation (“Borrower”).

 

# **1.**             DESCRIPTION OF EXISTING INDEBTEDNESSAND OBLIGATIONS. Among other indebtedness and obligations which may beowing by Borrower to Bank, Borrower is indebted to Bank pursuant to a loanarrangement dated as of April 17, 2002, evidenced by, among otherdocuments, a certain Second Amended and Restated Loan and Security Agreementdated as of April 17, 2002 between Borrower and Bank, as amended by acertain 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 datedas of March 31, 2003, as further amended by a certain Fourth LoanModification Agreement dated as of February 27, 2004, and as furtheramended by a certain Fifth Loan Modification Agreement dated as of April 27,2004 (as amended, the “Loan Agreement”). Capitalized terms used but nototherwise defined herein shall have the same meaning as in the Loan Agreement.

# ** **

Hereinafter, the LoanAgreement, together with all other documents evidencing or securing theObligations 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 followingtext appearing in Section 2.1.1 thereof, entitled “Revolving Advances”:

### ** **

“(a)         Bank shall make Advances not exceeding (i) thelesser of (A) the Committed Revolving Line or (B) the Borrowing Baseminus (ii) the amount of all outstanding Letters of Credit (includingdrawn but unreimbursed Letters of Credit), minus (iii) the FX Reserve, andminus (iv) the aggregate outstanding Advances hereunder (including anyCash Management Services).”

 

and inserting in lieu thereof the following:

 

“(a)         Bank shall make Advances not exceeding (i) theCommitted Revolving Line, minus (ii) the amount of all outstanding Lettersof Credit (including drawn but unreimbursed Letters of Credit), minus (iii) theFX Reserve, and minus (iv) the aggregate outstanding Advances hereunder (includingany Cash Management Services).”

 

### **2.**             The Loan Agreement shall be amended by deleting thefollowing text appearing in Section 2.1.11 thereof, entitled “Letters ofCredit Sublimit”:

### ** **

“(a)         Bank shall issue or have issued Letters ofCredit for Borrower’s account not exceeding (i) the lesser of theCommitted Revolving Line or the Borrowing Base minus (ii) the outstandingprincipal balance of any Advances (including any Cash Management Services),minus (iii) the amount of all Letters of Credit (including drawn butunreimbursed Letters of Credit), plus an amount equal to any Letter of CreditReserves. The face amount of

 

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outstanding Letters of Credit (including drawn butunreimbursed Letters of Credit and any Letter of Credit Reserve) may not exceed$5,000,000.00. Each Letter of Credit shall have an expiry date no later than180 days after the Revolving Maturity Date provided Borrower’s Letter of Creditreimbursement obligation shall be secured by cash on terms acceptable to Bankon and after (i) the Revolving Maturity Date if the Revolving MaturityDate is not extended by Bank, or (ii) the occurrence of an Event ofDefault hereunder.”

 

andinserting in lieu thereof the following:

 

“(a)         Bank shall issue or have issued Letters ofCredit for Borrower’s account not exceeding (i) the Committed RevolvingLine, minus (ii) the outstanding principal balance of any Advances(including any Cash Management Services), minus (iii) the amount of allLetters of Credit (including drawn but unreimbursed Letters of Credit), plus anamount equal to any Letter of Credit Reserves. The face amount of outstandingLetters of Credit (including drawn but unreimbursed Letters of Credit and anyLetter of Credit Reserve) may not exceed $5,000,000.00. Borrower’s Letter ofCredit reimbursement obligation shall be secured by cash on terms acceptable toBank on and after (i) the Revolving Line Maturity Date, or (ii) thetermination of the Committed Revolving Line by Borrower, or (iii) theoccurrence of an Event of Default hereunder.”

 

### **3.**             The Loan Agreement shall be amended by deleting thefollowing text appearing in Section 2.1.12 thereof, entitled “ForeignExchange Sublimit”:

### ** **

“If there is availabilityunder the Committed Revolving Line and the Borrowing Base, then Borrower mayenter in foreign exchange forward contracts with the Bank under which Borrowercommits to purchase from or sell to Bank a set amount of foreign currency morethan one business day after the contract date (the “FX Forward Contract”).”

 

andinserting in lieu thereof the following:

 

“If there is availabilityunder the Committed Revolving Line, then Borrower may enter in foreign exchangeforward contracts with the Bank under which Borrower commits to purchase fromor sell to Bank a set amount of foreign currency more than one business dayafter the contract date (the “FX Forward Contract”). Borrower’s existing andcontingent obligations with respect any such FX Forward Contracts shall besecured by cash on terms acceptable to Bank on and after (i) the RevolvingLine Maturity Date, or (ii) the termination of the Committed RevolvingLine by Borrower, or (iii) the occurrence of an Event of Defaulthereunder.”

 

### **4.**             The Loan Agreement shall be amended by deleting thefollowing text appearing in Section 2.1.13 thereof, entitled “CashManagement Services Sublimit”:

### ** **

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

 

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and inserting in lieu thereof the following:

 

“Borrower may use up to $5,000,000.00 for the Bank’sCash Management Services, which may include merchant services, direct depositof payroll, business credit card, and check cashing services identified in thevarious cash management services agreements related to such Cash ManagementServices (the “Cash Management Services”). Borrower’s existing and contingentobligations with respect any such Cash Management Services shall be secured bycash on terms acceptable to Bank on and after (i) the Revolving LineMaturity Date, or (ii) the termination of the Committed Revolving Line byBorrower, or (iii) the occurrence of an Event of Default hereunder.”

 

### **5.**             The Loan Agreement shall be amended by deleting Section 2.2thereof, entitled “Overadvances”, in its entirety, and inserting in lieuthereof the following:

### ** **

“**2.2**        INTENTIONALLY DELETED”

 

### **6.**             The Loan Agreement shall be amended by deleting Section 4.1thereof, entitled “Grant of Security Interest”, in its entirety, and insertingin lieu thereof the following:

### ** **

“**4.1**        INTENTIONALLY DELETED”

 

### **7.**             The Loan Agreement shall be amended by deleting Section 5.2thereof, entitled “Collateral”, in its entirety, and inserting in lieu thereofthe following:

### ** **

“**5.2**        INTENTIONALLY DELETED”

 

### **8.**             The Loan Agreement shall be amended by deleting Section 6.2thereof, entitled “Financial Statements, Reports, Certificates” in its entirety,and inserting in lieu thereof the following:

### ** **

“**6.2****       ****Financial Statements,Reports, Certificates**.

 

(a)           Borrower shall deliver to Bank:  (i) as soon as available, but no laterthan forty-five (45) days after the last day of each quarter, a companyprepared consolidated and consolidating balance sheet and income statementcovering Borrower’s consolidated operations during the period certified by aResponsible Officer and in a form reasonably acceptable to Bank.Notwithstanding the foregoing, such balance sheet and income statement for January 2004and February 2004, shall be delivered to Bank no later than April 15,2004; (ii) as soon as available, but no later than one hundred twenty(120) days after the last day of Borrower’s fiscal year, audited consolidatedfinancial statements prepared under GAAP, consistently applied, together withan unqualified opinion on the financial statements from an independentcertified public accounting firm reasonably acceptable to Bank; (iii) assoon as available, but no later than forty-five (45) days after the last day ofBorrower’s fiscal year, financial projections, approved by the Borrower’s Boardof Directors, for the then current fiscal year; (iv) within five (5) daysof filing, copies of or electronic notice of links to, all statements, reportsand notices made available to Borrower’s security holders or to any holders ofSubordinated Debt and all reports on Form 10-K, 10-Q and 8 Kfiled with the Securities and Exchange Commission; (v) a prompt report ofany legal actions pending or threatened against Borrower or any Subsidiary thatcould result in damages or costs to

 

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Borrower or any Subsidiary of Five Hundred ThousandDollars ($500,000.00) or more in the aggregate; and (vi) budgets, salesprojections, operating plans or other financial information reasonablyrequested by Bank.

 

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

 

### **9.**             The Loan Agreement shall be amended by deleting Section 6.5thereof, entitled “Primary Accounts”, in its entirety, and inserting in lieuthereof the following:

### ** **

“**6.5**        **Primary Accounts**.  Inorder to permit the Bank to monitor the Borrower’s financial performance andcondition, Borrower shall maintain its primary depository and operatingaccounts with Bank. Additionally, at least one-third (33.33%) of the aggregatedollar value of Borrower’s and Borrower’s Subsidiaries’ cash and securitiesmaintained at domestic financial institutions, shall be maintained andadministered through the Bank. Borrower shall not maintain more than fifteenpercent (15%) of the aggregate dollar value of Borrower’s and Borrower’sSubsidiaries’ cash and securities maintained at financial institutions,domestic or otherwise, in the name of Borrower’s foreign Subsidiaries. Borrowershall identify to Bank, in writing, of any bank or securities account opened byBorrower with any institution other than Bank. The provisions of this paragraphshall not apply to deposit accounts exclusively used for payroll, payroll taxesand other employee wage and benefit payments to or for the benefit of theBorrower’s employees.”

 

### **10.**           The Loan Agreement shall be amended by deleting Section 6.6thereof, entitled “Adjusted Quick Ratio”, in its entirety, and inserting inlieu thereof the following:

### ** **

“**6.6****       ****Adjusted Quick Ratio****.** Borrower shall maintain at all times, to be tested as of the last day ofeach quarter, a ratio of Quick Assets to Current Liabilities minus DeferredRevenue of not less than 3.0 to 1.0.”

 

### **11.**           The Loan Agreement shall be amended by deleting Section 6.7thereof, entitled “Revenue”, in its entirety, and inserting in lieu thereof thefollowing:

### ** **

“**6.7****       ****Revenue****.** Borrower shall maintain, as of the last day ofeach quarter, net revenues of not less than: (i) Eighteen Million TwoHundred Fifty Thousand Dollars ($18,250,000.00) for the quarter ending June 30,2005, (ii) Nineteen Million Dollars ($19,000,000.00) for the quarterending September 30, 2005, and (iii) Nineteen Million Five HundredThousand Dollars ($19,500,000.00) for the quarter ending December 31,2005. Commencing with the quarter ending March 31, 2006, and for eachquarter thereafter, the Borrower shall maintain net revenues at an amount notless than the greater of: (a) Twenty Million Dollars ($20,000,000.00), or (b) eighty-fivepercent (85%) of the plan for minimum quarterly net revenues approved by theBorrower’s Board of Directors.”

 

### **12.**           The Loan Agreement shall be amended by deleting Section 9.5thereof, entitled “Bank’s Liability for Collateral”, in its entirety, andinserting in lieu thereof the following:

 

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### **“**9.5        INTENTIONALLY DELETED”

### ** **

### **13.**           The Loan Agreement shall be amended by deleting thedefinitions of “Borrowing Base,” “Collateral,” and “Eligible Accounts,”appearing in Section 13.1 thereof.

### ** **

### **14.**           Exhibit A to the Loan Agreement is hereby deleted in its entirety.

### ** **

### **15.**           Exhibit Cto the Loan Agreement ishereby deleted in its entirety.

### ** **

### **16.**           The Compliance Certificate appearing as Exhibit D to the Loan Agreement is hereby replaced with theCompliance Certificate attached as Exhibit A hereto.

### ** **

### **17.**           The Loan Agreement shall be amended by deleting allreferences to the defined terms “Collateral” and “Code.”

### ** **

# **3.**             FEES. The Borrower shall also reimburseBank for all legal fees and expenses incurred in connection with this amendmentto the Existing Loan Documents.

# ** **

# **4.**             CONSISTENT CHANGES. The Existing Loan Documents are hereby amended wherever necessary toreflect the changes described above.

# ** **

# **5.**             RATIFICATION OF LOAN DOCUMENTS. Borrower hereby ratifies, confirms, and reaffirms all terms andconditions 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 theObligations, or otherwise, and that if Borrower now has, or ever did have, anyoffsets, defenses, claims, or counterclaims against Bank, whether known orunknown, at law or in equity, all of them are hereby expressly WAIVED andBorrower hereby RELEASES Bank from any liability thereunder.

# ** **

# **7.**             CONTINUING VALIDITY. Borrower understands and agrees that in modifying the existingObligations, Bank is relying upon Borrower’s representations, warranties, andagreements, as set forth in the Existing Loan Documents.  Except as expressly modified pursuant to thisLoan Modification Agreement, the terms of the Existing Loan Documents remainunchanged and in full force and effect. Bank’s agreement to modifications to the existing Obligations pursuantto this Loan Modification Agreement in no way shall obligate Bank to make anyfuture modifications to the Obligations. Nothing in this Loan Modification Agreement shall constitute asatisfaction of the Obligations.  It isthe intention of Bank and Borrower to retain as liable parties all makers ofExisting Loan Documents, unless the party is expressly released by Bank inwriting.  No maker will be released byvirtue of this Loan Modification Agreement.

# ** **

# **8.**             COUNTERSIGNATURE. This Loan Modification Agreement shall become effective only when it shallhave been executed by Borrower and Bank.

# ** **

[Theremainder of this page is intentionally left blank]

 

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This Loan ModificationAgreement is executed as a sealed instrument under the laws of the Commonwealthof Massachusetts as of the date first written above.

 

 
| BORROWER:                      | BANK:                         |
|--------------------------------|-------------------------------|
| **PHASE FORWARD INCORPORATED** | **SILICON VALLEY BANK**       |
|                           |                          |
| By:                            | /s/ William G. Porter         |   | By: |   |   |
|                           |                          |   |   |   |   |
| Name:                          |  William G. Porter       |   | Name: |   |   |
|                           |                          |   |   |   |   |
| Title:                         |  Vice President, Finance |   | Title: |   |   |
|                                |                               |  |  |  |  |  |  |  |  |  |  |

 

 

The undersigned, **PHASEFORWARD SECURITIES CORPORATION**, ratifies, confirms and reaffirms,all and singular, the terms and conditions of a certain Unlimited Guarantydated May 3, 1999 (the “Guaranty”) and acknowledges, confirms and agreesthat the Guaranty shall remain in full force and effect and shall in no way belimited by the execution of this Loan Modification Agreement, or any otherdocuments, instruments and/or agreements executed and/or delivered inconnection herewith.

 

 
| ** ** | **PHASE FORWARD SECURITIES CORPORATION** |
|------------|------------------------------------------|
|       |                                     |
|       | By:                                      |       /s/  Rodger Weismann |   |
|       | Name: Rodger Weismann                    |
|       | Title: Treasurer                         |

 

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#### **EXHIBIT A**

 

**COMPLIANCECERTIFICATE**

 

TO:         SILICON VALLEY BANK

FROM:   PHASE FORWARD INCORPORATED

 

The undersigned authorizedofficer of PHASE FORWARD INCORPORATED certifies that under the terms andconditions 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) allrepresentations and warranties in the Agreement are true and correct in allmaterial respects on this date.  Attachedare the required documents supporting the certification.  The Officer certifies that these are preparedin accordance with Generally Accepted Accounting Principles (GAAP) consistentlyapplied from one period to the next except as explained in an accompanyingletter or footnotes.  The Officeracknowledges that no borrowings may be requested at any time or date ofdetermination that Borrower is not in compliance with any of the terms of theAgreement, and that compliance is determined not just at the date thiscertificate is delivered.

 

**.Please indicate compliance status by circling Yes/Nounder “Complies” column.**

 
| **Reporting Covenant**                   | ** ** | **Required**                        | ** ** | **Complies**      | ** ** |
|------------------------------------------|------------|-------------------------------------|------------|-------------------|------------|
| ** **                               | ** ** | ** **                          | ** ** | ** **        | ** ** |
| Financial statements with CC             |       | Monthly within 45 days*             |       | Yes  No |       |
| Annual financial statement (CPA Audited) |       | FYE within 120 days                 |       | Yes  No |       |
| 10-Q, 10-K and 8-K                       |       | Within 5 days after filing with SEC |       | Yes  No |       |
| Annual Projections                       |       | Within 45 days of prior FYE         |       | Yes  No |       |

 

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*January 2004and 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 |              |
|                                            |       |                                                 |       |       |       |              |              |
| Minimum Net Revenue (tested quarterly)          |       | $18,500,000 for Q-end 6/30/05                        |       | $          |       |              | Yes  No |   |
|                                            |       | $19,000,000 for Q-end 9/30/05                        |       | $          |       |              | Yes  No |   |
|                                            |       | $19,500,000 for Q-end 12/31/05                       |       | $          |       |              | Yes  No |   |
| The greater of:                                 |       | $20,000,000 or 85% of Board approved plan thereafter |       | $          |       |              | Yes  No |   |

 

 
| ** **                                       | **BANK USE ONLY**                                                                                                                                            |
|--------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **Comments Regarding Exceptions:** See Attached. | Received by:                                                                                                                                                 |   |   |
| Sincerely,                                       |                                                                                                                                                         | AUTHORIZED SIGNER  |   |
| ** **                                       | ** **                                                                                                                                                   | Date: | ** ** | ** ** |
| SIGNATURE                                        | ** **                                                                                                                                                   |
| ** **                                       | ** **                                                                                                                                                   | Verified: | ** ** | ** ** |
| TITLE                                            | ** **                                                                                                                                                   | AUTHORIZED SIGNER  | ** ** |
|                                             |                                                                                                                                                         | Date: | ** ** | ** ** |
| DATE                                             | ** **                                                                                                                                                   |
|                                             | Compliance  Status:              Yes        No |
|                                                  |                                                                                                                                                              |  |  |  |  |

 

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