Document:

Exhibit 10.1

 

 

BOARD
OF DIRECTORS COMPENSATION SUMMARY

 

	
  Annual Retainers

  	
   

  	
  •      $100,000
  for all non-employee directors of the Board (1⁄2 paid in cash; 1⁄2 paid in stock)

  
	
   

  	
   

  	
   

  
	
  Restricted Stock Units (RSUs)

  	
   

  	
  •      1,000
  RSUs

  •      Granted
  on same day as annual meeting 

  •      Deferred
  to retirement 

  •      Paid
  out over same period as elective deferred compensation

  •      Pro
  rata RSUs for directors appointed during the year (based on quarter after
  joining the Board)

  
	
   

  	
   

  	
   

  
	
  Committee Retainers

  	
   

  	
  •      $20,000
  for Presiding Director (which includes all other Committee fees to which he
  or she might otherwise be entitled) and Audit Committee Chair 

  •      $10,000
  for Compensation Committee Chair and Audit Committee members 

  •      $7,500
  for Chairman: Finance and Corporate Governance / Qualified Legal Compliance 

  •      $7,500
  for Board members serving on more than one committee. Except, fee shall not
  be paid to those receiving fees for both committees on which they serve,
  e.g., member of Audit and Chairman of Governance. (Corporate
  Governance & Qualified Legal Compliance considered one committee)

  
	
   

  	
   

  	
   

  
	
  Retainer Payment Timing

  	
   

  	
  •      The
  quarterly retainer is paid on an arrears basis. For example the retainer
  earned for November, December and January is paid in January.

  
	
   

  	
   

  	
   

  
	
  Form of Retainer Payment

  	
   

  	
  •      One-half
  of retainers paid in Brunswick Stock. Stock can either be: 

  •      Distributed
  on a current basis, or 

  •      Deferred
  and distributed in stock after retirement from the Board 

   

  •      One-half
  of retainer to be paid in cash. Cash can either be: 

  •      Paid
  on a current basis 

  •      Converted
  to common stock and distributed on a current basis (number of shares
  determined by dividing cash to be converted by closing Brunswick stock price
  on day cash would have been paid) 

  •      Converted
  to deferred stock with a 20% premium (number of shares determined by dividing
  120% of cash to be converted by closing Brunswick stock price on day cash
  would have been paid). Common stock will be distributed after retirement from
  the Board 

   

  •      Deferred
  stock is credited to a Rabbi Trust at Bank One. 

   

  •      Pre
  2005 retainer deferrals will continue to be managed per the terms and
  conditions of the 1997 Stock Plan for Non-Employee Directors. 

   

  •      2005
  and later retainer deferrals will be managed per the terms and conditions of
  the 2005 Brunswick Corporation Deferred Compensation Plan for Non-Employee
  Directors.

  
	
   

  	
   

  	
   

  
	
  Product

  	
   

  	
  •      $15,000
  of product annually.Exhibit
10.1

 

SEVENTH LOAN MODIFICATION
AGREEMENT

 

This Seventh Loan
Modification Agreement (this “Agreement”) is entered into as of March 10, 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 as follows:

 

2.1           Advances.    The Loan Agreement is hereby amended by
deleting Section 2.1.1(a) thereof in its entirety and by substituting therefor
a new Section 2.1.1(a) to read as follows:

 

(a)           Bank
will 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 Cash
Management Sublimit and minus (iv) the FX Reserve; provided, however,
that on any day on which Borrower meets the Unrestricted Cash Threshold, the
restriction in clause (i)(B) above shall not apply. Amounts borrowed under this
Section may be repaid and reborrowed during the term of this Agreement. All
advances shall be evidenced by the Revolving Promissory Note to be executed and
delivered by Borrower to Bank and shall be repaid in accordance with the terms
of the Revolving Promissory Note.

 

2.2           The
Loan Agreement is hereby further amended by deleting Section 2.2 in its
entirety and by substituting therefor a new Section 2.2 to read as follows:

 

2.2          Overadvances.

 

If
Borrower’s Obligations under Sections 2.1.1, 2.1.2, 2.1.3 and 2.1.4 exceed the
Committed Revolving Line or, on any day that Borrower does not meet the

 

39

 

Unrestricted Cash
Threshold, the Borrowing Base, Borrower shall upon notice from Bank,
immediately pay such excess or secure such excess with a pledge of cash
maintained at Bank.

 

2.3           Quick
Ratio Covenant.  The Loan Agreement
is hereby further amended by deleting Section 6.7(i) in its entirety and by
substituting therefor a new Section 6.7(i) to read as follows:

 

(i)            Quick Ratio.  A Quick
Ratio of at least 1.50 to 1.0; provided, however, at any time that the Quick
Ratio is less than 2.0 to 1.0 than this covenant will be tested on a monthly
basis.

 

2.4           Revolving
Maturity Date Definition.  The Loan
Agreement is hereby further amended by deleting the definitions of “EBITDA” and “Revolving Maturity Date”
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 interest, taxes, depreciation, amortization expense and non-cash
compensation expense, all as determined on a consolidated basis in accordance
with GAAP.

 

“Revolving
Maturity Date” is March 9, 2006.

 

2.5           Definitions.  The Loan Agreement is hereby further amended
by adding the following definitions of “Quick Ratio”
and “Unrestricted Cash Threshold” to Section
13.1 thereof in appropriate alphabetical order:

 

“Quick Ratio” means the ratio of Borrower’s Quick Assets to
Current Liabilities, less Deferred Maintenance Revenue, calculated on a
consolidated basis in accordance with GAAP.

 

“Unrestricted Cash Threshold” means, on any day, that
Borrower has unrestricted cash and cash equivalents in an amount of not less
than $20,000,000 on deposit with Bank or its Affiliates and in which Bank has a
first priority perfected security interest.

 

2.6           Compliance
Certificate. The Loan Agreement is hereby further amended by deleting
Exhibit D thereto in its entirety, and by substituting therefor a new Exhibit D
in the form of Exhibit D to this Agreement.

 

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 Thirty Thousand Dollars ($30,000) (the “Loan Fee”) which shall be
payable as follows: Ten Thousand Dollars ($10,000) of the Loan Fee shall accrue
and be payable upon the execution and delivery of this Agreement by Borrower
and Twenty Thousand Dollars ($20,000) of the Loan Fee shall accrue and be
payable on the date of the first Advance made after the date hereof under
Section 2.1.1(a) of the Loan Agreement. 
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.

 

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

 

40

 

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 2.6 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]

 

41

 

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:

  	
   

  
							

 

 

EXHIBIT D

COMPLIANCE CERTIFICATE

 

	
  TO:

  	
   

  	
  SILICON VALLEY BANK

  
	
   

  	
   

  	
  3003 Tasman Drive

  
	
   

  	
   

  	
  Santa Clara, CA 95054

  
	
   

  	
   

  	
   

  
	
  FROM:

  	
   

  	
  Witness Systems, Inc.

  

 

 

The undersigned
authorized officer of Witness Systems, Inc. (“Borrower”) 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

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Quarterly
  financial statements + CC

  	
   

  	
   

  	
   

  	
  Quarterly within 45 days

  (if QR below 2 to 1)

  	
   

  	
  Yes  No

  	
   

  
	
  Annual
  (Audited)

  	
   

  	
   

  	
   

  	
  FYE within 90 days

  	
   

  	
  Yes  No

  	
   

  
	
  10-K
  & 10Q

  	
   

  	
   

  	
   

  	
  Within 5 days of filing

  	
   

  	
  Yes  No

  	
   

  
	
  A/R
  Agings

  	
   

  	
   

  	
   

  	
  Monthly within 30 days

  (if Advances outstanding)

  	
   

  	
  Yes  No

  	
   

  
	
  A/R
  Audit

  	
   

  	
   

  	
   

  	
  Annual

  	
   

  	
  Yes  No

  	
   

  
	
  Borrowing
  Base Certificate

  	
   

  	
   

  	
   

  	
  Monthly within 30 days

  (if Advances outstanding)

  	
   

  	
  Yes  No

  	
   

  

 

	
  Financial
  Covenant

  	
   

  	
   

  	
   

  	
  Required

  	
   

  	
  Actual

  	
   

  	
  Complies

  	
   

  
	
  Maintain
  on a quarterly Basis:

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Minimum
  Quick Ratio

  	
   

  	
   

  	
   

  	
  1.5:1.00

  	
   

  	
          :1.00

  	
   

  	
  Yes  No

  	
   

  
	
  Average
  QuarterlyEBITDA:

  	
   

  	
  as of 3/31/05

  	
   

  	
  $

  	
  (500,000

  	
  )

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  as of 6/30/05

  	
   

  	
  $

  	
  1,500,000

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  as of 9/30/05

  	
   

  	
  $

  	
  3,000,000

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  as of 12/31/05

  	
   

  	
  $

  	
  4,000,000

  	
   

  	
  $

  	
   

  	
   

  	
  Yes  No

  	
   

  
	
  Maintain
  on a monthly basis when QR is less than 2.0:1.00

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Minimum
  Quick Ratio

  	
   

  	
   

  	
   

  	
  1.5:1.00

  	
   

  	
          :1.00

  	
   

  	
  Yes  No

  	
   

  
												

 

Have there been updates
to Borrower’s intellectual property, if appropriate?                        Yes / No

 

43

 

	
  Comments Regarding Exceptions:
  See Attached.

  	
   

  	
  BANK
  USE ONLY

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Received by:

  	
   

  	
   

  
	
  Sincerely,

  	
   

  	
  authorized signer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Date:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Verified:

  	
   

  	
   

  
	
  Signature

  	
   

  	
  authorized signer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Date:

  	
   

  	
   

  
	
  Title

  	
   

  	
   

  
	
   

  	
   

  	
  Compliance Status:

  	
  Yes   No

  
	
   

  	
   

  	
   

  
	
  Date

  	
   

  	
   

  
												

 

44

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