Item 1.01 Entry into a Material Definitive Agreement
On December 22, 2008, McAfee, Inc. (the "Company") entered into a Credit
Agreement among the Company, McAfee Ireland Holdings Limited ("McAfee Ireland"),
the subsidiaries of the Company party thereto as guarantors, the lenders from
time to time party thereto and Bank of America, N.A., as Administrative Agent
and L/C Issuer (the "Credit Agreement"). The Credit Agreement provides for a
$100.0 million unsecured term loan to the Company, and a $100.0 million
unsecured revolving credit facility, with a $25.0 million letter of credit
sublimit, under which either the Company or McAfee Ireland may borrow. The term
loan is available for draw from January 5, 2009 through January 9, 2009. The
Credit Agreement also contains an expansion option permitting the Company to
arrange with existing lenders and/or new lenders for them to provide up to an
aggregate of $200.0 million in additional commitments. The facility was undrawn
at closing. The Company intends to draw the full amount of the term loan during
the availability period. Initial borrowing under the Credit Agreement by McAfee
Ireland is subject to satisfaction of certain conditions precedent.
The principal of, together with accrued interest on, the term loan is due on
December 22, 2009. The revolving credit facility terminates on December 22,
2011, on which date all outstanding principal of, together with accrued interest
on, any revolving loans will be due. The Company may prepay the loans and
terminate the commitments at any time, without premium or penalty, subject to
reimbursement of certain costs in the case of eurocurrency loans.
Loans may be made in U.S. dollars, euros or other currencies agreed to by the
lenders. Loans will bear interest at the election of the Company at the prime
rate or at an adjusted LIBOR rate plus a margin (ranging from 2.00% to 2.50%)
that varies with the Company's consolidated leverage ratio (a "eurocurrency
loan"). Interest on the loans is payable quarterly in arrears with respect to
prime rate loans and at the end of an interest period (or at each three month
interval in the case of loans with interest periods greater than three months)
in the case of eurocurrency loans.
The credit facility contains financial covenants, measured at the end of each
of the Company's fiscal quarters, providing that the Company's consolidated
leverage ratio (as defined in the Credit Agreement) cannot exceed 2.0 to 1.0 and
its consolidated interest coverage ratio (as defined in the Credit Agreement)
cannot be less than 3.0 to 1.0.
Additionally, the credit facility contains affirmative covenants, including
covenants regarding the payment of taxes, maintenance of insurance, reporting
requirements and compliance with applicable laws. The credit facility contains
negative covenants, among other things, limiting the ability of the Company and
its subsidiaries to incur debt, liens, make acquisitions, make certain
restricted payments and sell assets. The events of default under the credit
facility include payment defaults, cross defaults with certain other
indebtedness, breaches of covenants, judgment defaults, bankruptcy events and
the occurrence of a change in control (as defined in the Credit Agreement).
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Arrangement of a Registrant
The information set forth under Item 1.01 above is incorporated herein by
reference.
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