Exhibit 10.1


 


EIGHTH LOAN MODIFICATION AGREEMENT


 


This
Eighth Loan Modification Agreement (this “Agreement”) is entered into as of March 31,
2005 by and between WITNESS SYSTEMS, INC.,
a Delaware corporation (“Borrower”), whose address is 300 Colonial Center
Parkway, Roswell, Georgia 30076, and SILICON VALLEY BANK
(“Lender”), a California-chartered bank with a principal place of business at
3003 Tasman Drive, Santa Clara, CA 95054 and with a loan production office
located at 3353 Peachtree Road, Suite M-10, Atlanta, GA 30326.


 


WHEREAS,
among other indebtedness which may be owing by Borrower to Lender, Borrower is
indebted to Lender pursuant to, among other documents, a Loan and Security
Agreement, dated April 3, 2002, as may be amended from time to time, in the
original principal amount of Fifteen Million Dollars ($15,000,000) (the “Loan
Agreement”; the Loan Agreement together with all other documents evidencing or
securing the indebtedness shall be referred to as the “Existing Loan Documents”);


 


WHEREAS,
the Loan Agreement provides for, among other things, a Committed Revolving Line
in the original principal amount of Fifteen Million Dollars ($15,000,000)
(hereinafter, all indebtedness owing by Borrower to Lender shall be referred to
as the “Indebtedness”); and


 


WHEREAS,
Borrower has requested that Lender amend the Loan Agreement, and Lender is
willing to do so, subject to the terms and conditions set forth herein.


 


NOW,
THEREFORE, in consideration of the foregoing premises, and other good and
valuable consideration, the receipt and legal sufficiency of which is hereby
acknowledged, the parties hereto hereby agree as follows:


 


1.             DEFINITIONS.  All capitalized terms used herein and not
otherwise defined shall have the meanings given to such terms in the Loan Agreement.


 


2.             MODIFICATIONS
TO LOAN AGREEMENT.  The Loan
Agreement is hereby amended by deleting the definition of “EBITDA”
in Section 13.1 thereof in their entirety, and by substituting therefor
the following new definitions:


 


“EBITDA” is, for
any period of determination thereof, net income before (a) interest,
taxes, depreciation and amortization expense; (b) merger-related and
restructuring costs during Borrower 2005 fiscal year in an amount not to exceed
$2,000,000); (c) in-process research and development expense associated
with the acquisition of Blue Pumpkin Software, Inc.; and (d) other
non-cash expenses of Borrower, all as determined on a consolidated basis in
accordance with GAAP.


 


3.             LOAN
FEE.  To induce Bank to execute and
deliver this Agreement, Borrower shall pay to Lender a loan fee in the amount
of up to Two Thousand Dollars ($2,000) (the “Loan Fee”) which shall be payable
upon the execution and delivery of this Agreement by Borrower.  The Loan Fee, once and to the extent accrued,
shall be fully earned and shall not be subject to rebate or reduction for any
reason.


 


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 it has no defenses against the obligations to pay any amounts under
the Indebtedness.


 


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6.             CONTINUING
VALIDITY.  Borrower understands and
agrees that in modifying the existing Indebtedness, Lender is relying upon
Borrower’s representations, warranties, and agreements, as set forth in the
Existing Loan Documents.  Except as
expressly modified pursuant to this Agreement, the terms of the Existing Loan
Documents remain unchanged and in full force and effect.  Lender’s agreement to modifications to the
existing Indebtedness pursuant to this Agreement in no way shall obligate
Lender to make any future modifications to the Indebtedness.  Nothing in this Agreement shall constitute a
satisfaction of the Indebtedness.  It is
the intention of Lender and Borrower to retain as liable parties all makers and
endorsers of Existing Loan Documents, unless the party is expressly released by
Lender in writing.  No maker, endorser,
or guarantor will be released by virtue of this Agreement.  The terms of this paragraph apply not only to
this Agreement, but also to all subsequent loan modification agreements.


 


7.             EXPENSES.  Borrower shall reimburse Lender for all
out-of-pocket expenses, including, but not limited to, reasonable attorneys’
fees and expenses, incurred by Lender in connection with this Agreement.


 


8.             NEGATIVE
PLEDGE.  Borrower and Lender are
parties to that certain Negative Pledge Agreement, dated as of April 3,
2002 (the “Negative Pledge Agreement”). 
Borrower hereby acknowledges and agrees that the Negative Pledge Agreement, and Borrower’s obligations thereunder, remain in
full force and effect, without release, diminution or impairment,
notwithstanding the execution and delivery of this Agreement.


 


9.             LIMITATION.  This Agreement is limited to the matters
expressly set forth above and shall not be deemed to waive or modify any other
term of the Loan Agreement or Loan Documents, each of which is hereby ratified
and reaffirmed, or to consent to any subsequent failure of Borrower to comply
with any term or provision of the Loan Agreement or the Loan Documents, each of
which shall remain in full force and effect.


 


10.           CONDITIONS.  The effectiveness of this Agreement is
conditioned upon:  (a) Borrower’s
execution and delivery of this Agreement, (b) Borrower’s payment of the
Loan Fee payable on the date hereof pursuant to Section Error! Reference source not found.  hereof and all outstanding legal fees and expenses and (c) such
other instruments, documents and agreements as Lender or its counsel shall
request.


 


 


[signatures appear on following page]


 


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


 


 


	
   

  	
   

  	
   

  	
   

  	
  LENDER:

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  SILICON
  VALLEY BANK

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  BORROWER:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  WITNESS
  SYSTEMS, INC.

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Title: