**Exhibit 10.1**

 

**EIGHTH LOAN MODIFICATION AGREEMENT**

 

ThisEighth 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 CenterParkway, Roswell, Georgia 30076, and **SILICON VALLEY BANK**(“Lender”), a California-chartered bank with a principal place of business at3003 Tasman Drive, Santa Clara, CA 95054 and with a loan production officelocated at 3353 Peachtree Road, Suite M-10, Atlanta, GA 30326.

 

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

 

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

 

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

 

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

 

1.             DEFINITIONS.  All capitalized terms used herein and nototherwise defined shall have the meanings given to such terms in the Loan Agreement.

 

2.             MODIFICATIONSTO LOAN AGREEMENT.  The LoanAgreement is hereby amended by deleting the definition of “**EBITDA**”in Section 13.1 thereof in their entirety, and by substituting thereforthe following new definitions:

 

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

 

3.             LOANFEE.  To induce Bank to execute anddeliver this Agreement, Borrower shall pay to Lender a loan fee in the amountof up to Two Thousand Dollars ($2,000) (the “Loan Fee”) which shall be payableupon 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 anyreason.

 

4.             CONSISTENTCHANGES.  The Existing Loan Documentsare hereby amended wherever necessary to reflect the changes described above.

 

5.             NODEFENSES OF BORROWER.  Borroweragrees that it has no defenses against the obligations to pay any amounts underthe Indebtedness.

 

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6.             CONTINUINGVALIDITY.  Borrower understands andagrees that in modifying the existing Indebtedness, Lender is relying uponBorrower’s representations, warranties, and agreements, as set forth in theExisting Loan Documents.  Except asexpressly modified pursuant to this Agreement, the terms of the Existing LoanDocuments remain unchanged and in full force and effect.  Lender’s agreement to modifications to theexisting Indebtedness pursuant to this Agreement in no way shall obligateLender to make any future modifications to the Indebtedness.  Nothing in this Agreement shall constitute asatisfaction of the Indebtedness.  It isthe intention of Lender and Borrower to retain as liable parties all makers andendorsers of Existing Loan Documents, unless the party is expressly released byLender in writing.  No maker, endorser,or guarantor will be released by virtue of this Agreement.  The terms of this paragraph apply not only tothis Agreement, but also to all subsequent loan modification agreements.

 

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

 

8.             NEGATIVEPLEDGE.  Borrower and Lender areparties 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 infull force and effect, without release, diminution or impairment,notwithstanding the execution and delivery of this Agreement.

 

9.             LIMITATION.  This Agreement is limited to the mattersexpressly set forth above and shall not be deemed to waive or modify any otherterm of the Loan Agreement or Loan Documents, each of which is hereby ratifiedand reaffirmed, or to consent to any subsequent failure of Borrower to complywith any term or provision of the Loan Agreement or the Loan Documents, each ofwhich shall remain in full force and effect.

 

10.           CONDITIONS.  The effectiveness of this Agreement isconditioned upon:  (a) Borrower’sexecution and delivery of this Agreement, (b) Borrower’s payment of theLoan Fee payable on the date hereof pursuant to Section **Error! Reference source not found.**  hereof and all outstanding legal fees and expenses and (c) suchother instruments, documents and agreements as Lender or its counsel shallrequest.

 

 

[signatures appear on following page]

 

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ThisLoan 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:                     |   |   |
|            |            |            |            |                            |  |  |  |  |

 

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