Item 1.01 Entry into a Material Definitive Agreement.
On December 10, 2018 (the Closing Date), Lumentum entered into a Credit Agreement (the Credit Agreement), by and
among Lumentum, certain subsidiaries of Lumentum from time to time party thereto, as subsidiary guarantors, the lenders from time to time party thereto, and Deutsche Bank AG New York Branch, as administrative agent and collateral agent.
The Credit Agreement provides for a senior secured term loan facility (the Term Loan Facility) in an aggregate principal amount of
$500.0 million. The term loans available under the Term Loan Facility (the Term Loans) were fully drawn on the Closing Date and the proceeds of the Term Loans were used to finance a portion of the consideration for the transactions
contemplated by the Merger Agreement and pay fees and expenses incurred in connection with such transactions and the Term Loan Facility. The Credit Agreement permits Lumentum to add one or more incremental term loan facilities in an aggregate
principal amount not to exceed (a) the greater of (A) $485.0 million and (B) 100.0% of LTM Consolidated Adjusted EBITDA (as defined in the Credit Agreement), plus (b) an additional amount equal to the amount of certain voluntary
prepayments of indebtedness (including voluntary prepayments of the Term Loans), plus (c) an unlimited amount that is subject to pro forma compliance with (i) in respect of any
pari passu
indebtedness, a first lien net leverage
ratio test or (ii) in respect of any junior or unsecured indebtedness, a total net leverage ratio test. Incremental loans are subject to certain additional conditions, including obtaining additional commitments from the lenders then party to
the Credit Agreement or from new lenders.
The Term Loans bear interest, at Lumentums option, at a rate equal to either (a) a
base rate equal to the highest of (A) the prime rate then in effect, (B) the federal funds rate, plus 0.50% and (C) an adjusted LIBOR rate determined on the basis of a
one-month
interest period,
plus 1.0% or (b) an adjusted LIBOR rate, subject to a floor of 0.0%, in each case, plus an applicable margin of (i) initially, 2.50% in the case of LIBOR rate loans and 1.50% in the case of base rate loans and (ii) following
Lumentums delivery of financial statements for the first full fiscal quarter following the Closing Date, (y) if Lumentums first lien net leverage ratio is greater than 0.50:1.00, an applicable margin of 2.50% in the case of LIBOR
rate loans and 1.50% in the case of base rate loans or (z) if Lumentums first lien net leverage ratio is equal to or less than 0.50:1.00, 2.25% in the case of LIBOR rate loans and 1.25% in the case of base rate loans. Commencing on the
last business day of the first full fiscal quarter after the Closing Date, the Term Loans will amortize in equal quarterly installments equal to 0.25% of the original principal amount of the Term Loans, with the balance payable on the maturity date.
The Term Loans will mature on the seventh anniversary of the Closing Date, at which time all outstanding principal and accrued and unpaid interest on the Term Loans must be repaid.
Lumentum is required to make mandatory prepayments of the outstanding principal amount of Term Loans with the net cash proceeds from the
disposition of certain assets and the receipt of insurance proceeds upon certain casualty and condemnation events, in each case, to the extent in excess of certain threshold amounts and to the extent not reinvested within a specified time period.
Lumentum is also required to make mandatory prepayments of the outstanding principal amount of Term Loans from the incurrence of certain types of indebtedness and from any excess cash flow beyond stated threshold amounts. Lumentum has the right to
prepay the Term Loans, in whole or in part, at any time without premium or penalty, subject to certain limitations and a 1.00% soft call premium applicable during the first six months following the Closing Date. Lumentum is also obligated to pay
customary fees for a credit facility of this size and type.
Lumentums obligations under the Credit Agreement are required to be
guaranteed by certain of its domestic subsidiaries meeting materiality thresholds set forth in the Credit Agreement. Such obligations, including the guaranties, are secured by substantially all of the assets of Lumentum and Lumentums
subsidiary guarantors (other than customarily excluded assets) pursuant to a Pledge and Security Agreement, dated as of December 10, 2018, by and among Lumentum, the subsidiary guarantors from time to time party thereto, and Deutsche Bank AG
New York Branch, as collateral agent.