NEW YORK (Dow Jones) - A former Tyco International Ltd. (TYC) director testified Thursday that the company's compensation committee asked to be notified of all loans over $50,000 after learning of millions of dollars of outstanding company loans to ex-top executives L. Dennis Kozlowski, Mark H. Swartz and others.

However, Stephen Foss, a former director at the Bermuda conglomerate and an ex-member of its compensation committee, conceded under questioning by defense attorneys that the committee took no other action regarding Tyco's internal loan programs to employees, such as changing the procedures for how loans were issued.

The committee received information at a January 2002 meeting that Kozlowski had outstanding loans of more than $18 million and Swartz had $7 million in outstanding loans under the company's so-called Key Employee Loan Program.

"Did you say you wanted all of the loans repaid right now?," asked Charles A. Stillman, one of Swartz's lawyers.

"No, sir," Foss said.

Prosecutors have alleged that Kozlowski, Tyco's former chief executive, and Swartz, its ex-chief financial officer, improperly used KELP to buy artwork, jewelry and make personal investments, rather than for its original purpose of loaning money for the payment of taxes on the vesting of restricted shares. The government claims the two executives later forgave millions of dollars of those loans as bonuses without proper authorization by Tyco's compensation committee.

Kozlowski, 58 years old, and Swartz, 44, are on trial in New York State Supreme Court, facing charges of grand larceny, securities fraud and other crimes in connection with giant bonuses and other compensation they received while working as Tyco's top executives. They each face up to 25 years in prison on the most serious charge of grand larceny. They have denied wrongdoing.

Their first trial ended in a mistrial in April after a juror reported receiving a phone call and letter about the case during deliberations. The juror's name had been disclosed by several news organizations after she appeared to give an "OK" signal to the defense.

In his third day of testimony, Foss, a prosecution witness, later said under additional questioning by prosecutors that he believed at the time that Kozlowski's and Swartz's loans were being used to pay taxes.

"That was the purpose of the Key Employee Loan Program," Foss said.

Barbara Miller, Tyco's former treasurer, is expected to take the stand beginning Monday.

Tyco has its headquarters in Bermuda, but now operates out of West Windsor, N.J.

-By Chad Bray, Dow Jones Newswires; 212-227-2017; chad.bray@dowjones.com Dow Jones Newswires 03-03-05 1724ET Copyright (C) 2005 Dow Jones & Company, Inc. All Rights Reserved.