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Item 1.01.
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Entry into a Material Definitive Agreement.
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On March 30, 2017, Cisco Systems, Inc.
(“Cisco”) entered into a
364-Day
Credit Agreement (the “Credit Agreement”) by and among Cisco, certain lenders party thereto (the “Lenders”) including Bank of America, N.A.
(“Bank of America”), which will serve as administration agent and a Lender.
The Credit Agreement provides for a $2,000,000,000
unsecured revolving credit facility (the “Facility”) that is scheduled to expire on March 29, 2018 (the “Termination Date”), provided that Cisco will have the option, on the Termination Date, with notice to the Lenders and
upon payment of an upfront fee equal to 0.50% of the amount of any such loan outstanding on the Termination Date, to convert such loan into a term loan maturing no later than the first anniversary of the Termination
Date.
The Credit Agreement will be used for working capital and general corporate purposes. At this time, Cisco has not borrowed any funds under the
Credit Agreement.
The interest rate applicable to outstanding balances under the Credit Agreement will be based on either (i) the
higher of (a) the rates on overnight Federal Funds transactions with members of the Federal Reserve System (i.e., Federal Funds rate) plus 0.50%, (b) Bank of America’s “prime rate” as announced from time to time or (c) the
London Interbank Offered Rate (“LIBOR”) for an interest period of one month plus 1.00%, or (ii) LIBOR plus a margin that is based on Cisco’s senior debt credit ratings as published by S&P Global Rating, a business unit of
Standard & Poor’s Financial Services LLC, and Moody’s Investors Service, Inc. Cisco will pay an annual commitment fee during the term of the Credit Agreement which may vary depending on Cisco’s credit ratings.
The Credit Agreement contains customary representations and warranties as well as customary affirmative and negative covenants. Negative
covenants include, among others, limitations on incurrence of liens and secured indebtedness, and limitations on incurrence of any indebtedness by Cisco’s subsidiaries. In addition, the Credit Agreement requires that Cisco maintain a ratio
of consolidated EBITDA to consolidated interest expense of not less than 3.00 to 1.00.
The Credit Agreement also contains customary
events of default. Upon the occurrence and during the continuance of an event of default, the Lenders may declare the outstanding loans and all other obligations under the Credit Agreement immediately due and payable.
Merrill Lynch, Pierce, Fenner & Smith Incorporated, Deutsche Bank Securities Inc., Citigroup Global Markets, Inc., JPMorgan Chase
Bank, N.A., and Wells Fargo Securities, LLC are acting as joint lead arrangers and joint bookrunners for the Facility.
Cisco and its
affiliates maintain various commercial and service relationships with certain of the Lenders and their affiliates in the ordinary course of business. In the ordinary course of their respective businesses, certain of the Lenders and the other parties
to the Facility and their respective affiliates have engaged, and may in the future engage, in commercial banking, investment banking, financial advisory or other services with Cisco and its affiliates for which they have in the past received,
and/or may in the future receive, customary compensation and expense reimbursement.
The description of the Credit Agreement contained herein is qualified in its entirety by
reference to the Credit Agreement, a copy of which is filed herewith as Exhibit 10.1 and is incorporated herein by reference.