Exhibit 10.2


 


TERMINATION
AGREEMENT


 


This
Termination Agreement (the “Termination Agreement”) is executed as of August 8,
2005, by and among SILICON VALLEY BANK, a California-chartered bank, 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 SECURITIES CORPORATION, a Massachusetts corporation with its principal
place 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 forth
herein;


 


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


 


1.             Termination
of Security Agreement.  Guarantor and
Bank hereby agree that the Security Agreement is terminated in all respects and
shall no longer be of any legal force or effect, and each of the parties
thereto have no rights or obligations thereunder.


 


2.             Binding
Effect.  This Termination Agreement
shall be binding on Borrower and Bank upon their execution hereof. This
Termination Agreement shall inure to the benefit of, and be binding upon the
parties and each of their respective assigns, heirs or other successors in
interest.


 


3.             Governing
Law.  This Termination Agreement
shall be construed and enforced in accordance with the substantive laws of the
Commonwealth of Massachusetts, without reference to its principles of conflicts
of law.


 


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


 


***


 





















 


IN WITNESS
WHEREOF, each of the parties has executed this Termination Agreement as an
instrument 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





















 


SIXTH LOAN MODIFICATION AGREEMENT


 


This Sixth Loan Modification
Agreement (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 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, and as further
amended by a certain Fifth Loan Modification Agreement dated as of April 27,
2004 (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 2.1.1 thereof, entitled “Revolving Advances”:


 


“(a)         Bank shall make Advances not exceeding (i) the
lesser of (A) the Committed Revolving Line or (B) the Borrowing Base
minus (ii) the amount of all outstanding Letters of Credit (including
drawn but unreimbursed Letters of Credit), minus (iii) the FX Reserve, and
minus (iv) the aggregate outstanding Advances hereunder (including any
Cash Management Services).”


 


and inserting in lieu thereof the following:


 


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


 


2.             The Loan Agreement shall be amended by deleting the
following text appearing in Section 2.1.11 thereof, entitled “Letters of
Credit Sublimit”:


 


“(a)         Bank shall issue or have issued Letters of
Credit for Borrower’s account not exceeding (i) the lesser of the
Committed Revolving Line or the Borrowing Base minus (ii) the outstanding
principal balance of any Advances (including any Cash Management Services),
minus (iii) the amount of all Letters of Credit (including drawn but
unreimbursed Letters of Credit), plus an amount equal to any Letter of Credit
Reserves. 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. Each Letter of Credit shall have an expiry date no later than
180 days after the Revolving Maturity Date provided Borrower’s Letter of Credit
reimbursement obligation shall be secured by cash on terms acceptable to Bank
on and after (i) the Revolving Maturity Date if the Revolving Maturity
Date is not extended by Bank, or (ii) the occurrence of an Event of
Default hereunder.”


 


and
inserting in lieu thereof the following:


 


“(a)         Bank shall issue or have issued Letters of
Credit for Borrower’s account not exceeding (i) the Committed Revolving
Line, minus (ii) the outstanding principal balance of any Advances
(including any Cash Management Services), minus (iii) the amount of all
Letters of Credit (including drawn but unreimbursed Letters of Credit), plus an
amount equal to any Letter of Credit Reserves. 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. Borrower’s Letter of
Credit reimbursement obligation shall be secured by cash on terms acceptable to
Bank on and after (i) the Revolving Line Maturity Date, or (ii) the
termination of the Committed Revolving Line by Borrower, or (iii) the
occurrence of an Event of Default hereunder.”


 


3.             The Loan Agreement shall be amended by deleting the
following text appearing in Section 2.1.12 thereof, entitled “Foreign
Exchange Sublimit”:


 


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


 


and
inserting in lieu thereof the following:


 


“If there is availability
under the Committed Revolving Line, then Borrower may enter in foreign exchange
forward contracts with the Bank under which Borrower commits to purchase from
or sell to Bank a set amount of foreign currency more than one business day
after the contract date (the “FX Forward Contract”). Borrower’s existing and
contingent obligations with respect any such FX Forward Contracts shall be
secured by cash on terms acceptable to Bank on and after (i) the Revolving
Line Maturity Date, or (ii) the termination of the Committed Revolving
Line by Borrower, or (iii) the occurrence of an Event of Default
hereunder.”


 


4.             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 $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”). Borrower’s existing and contingent
obligations with respect any such Cash Management Services shall be secured by
cash on terms acceptable to Bank on and after (i) the Revolving Line
Maturity Date, or (ii) the termination of the Committed Revolving Line by
Borrower, or (iii) the occurrence of an Event of Default hereunder.”


 


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


 


“2.2        INTENTIONALLY DELETED”


 


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


 


“4.1        INTENTIONALLY DELETED”


 


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


 


“5.2        INTENTIONALLY DELETED”


 


8.             The Loan Agreement shall be amended by deleting Section 6.2
thereof, 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 later
than forty-five (45) days after the last day of each quarter, a company
prepared consolidated and consolidating balance sheet and income statement
covering Borrower’s consolidated operations during the period certified by a
Responsible Officer and in a form reasonably acceptable to Bank.
Notwithstanding the foregoing, such balance sheet and income statement for January 2004
and 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 consolidated
financial statements prepared under GAAP, consistently applied, together with
an unqualified opinion on the financial statements from an independent
certified public accounting firm reasonably acceptable to Bank; (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; (iv) within five (5) days
of filing, copies of or electronic notice of links to, all statements, reports
and notices made available to Borrower’s security holders or to any holders of
Subordinated Debt and all reports on Form 10-K, 10-Q and 8 K
filed with the Securities and Exchange Commission; (v) a prompt 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 Five Hundred Thousand
Dollars ($500,000.00) or more in the aggregate; and (vi) budgets, sales
projections, operating plans or other financial information reasonably
requested by Bank.


 


(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.”


 


9.             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. Borrower shall not maintain more than fifteen
percent (15%) of the aggregate dollar value of Borrower’s and Borrower’s
Subsidiaries’ cash and securities maintained at financial institutions,
domestic or otherwise, in the name of Borrower’s foreign Subsidiaries. Borrower
shall identify to Bank, in writing, of any bank or securities account opened by
Borrower with any institution other than 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.”


 


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


 


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


 


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


 


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


 





















 


“9.5        INTENTIONALLY DELETED”


 


13.           The Loan Agreement shall be amended by deleting the
definitions 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 C to the Loan Agreement is
hereby deleted in its entirety.


 


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


 


17.           The Loan Agreement shall be amended by deleting all
references to the defined terms “Collateral” and “Code.”


 


3.             FEES. The Borrower shall also 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 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.


 


[The
remainder of this page is intentionally left blank]


 





















 


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/ William G. Porter

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Name:

  	
   William G. Porter

  	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
   Vice President, Finance

  	
   

  	
  Title:

  	
   

  	
   

  
												



 


 


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

  



 





















 


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

  	
   

  	
  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

  	
   

  



 










*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

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  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