CREDIT AGREEMENT AND RELATED INSTRUMENTS

Credit Agreement

We are a party to a senior secured credit facility with Morgan Stanley Senior Funding, Inc. ("MSSF") pursuant to a Credit Agreement, dated as of November 2, 2010, with MSSF and the lenders therein (as amended, the “Credit Agreement”), consisting of a term loan facility and a $50.0 million revolving credit facility. We can also request the establishment of one or more incremental loans with commitments in an aggregate amount not to exceed $50.0 million.

During the quarter ended December 29, 2013, we entered into a commitment letter with MSSF pursuant to which MSSF committed to provide a $150.0 million incremental term loan under our term loan facility, which MSSF subsequently syndicated during the quarter. The incremental term loan was made available to (i) finance the acquisition of Symmetricom, (ii) repay any existing indebtedness of Symmetricom following the consummation of the merger, and (iii) pay fees and expenses related to the merger. The covenants under the incremental term loan are consistent with those in our existing Credit Agreement.

Under our Credit Agreement, we may borrow under a "Base Rate" which approximates the prime rate or "Eurodollar Rate" which approximates LIBOR. The principal amount outstanding and interest rate per annum for each type of loan at December 29, 2013 are as follows (amounts in thousands):



	Principal Outstanding		Base Rate		Eurodollar Rate		Eurodollar Floor		Current Rate
Revolving and swingline loans	$	—	3.50	%	4.50	%	—	%	—	%
Term loan	$	676,000	1.75	%	2.75	%	1.00	%	3.75	%
Incremental term loan	$	150,000	1.50	%	2.75	%	0.75	%	3.50	%

Our term loan facility matures in February 2020 and principal amortizes at $7.3 million per year on our term loan and at $1.5 million per year on our incremental term loan. Due to prepayments of principal, there are currently no scheduled principal repayments until the maturity date though the Credit Agreement stipulates an annual payment of a percentage of Excess Cash Flow ("ECF"). The ECF percentage is between 0% and 50% depending on our consolidated leverage ratio as of the end of a fiscal year. The fair value of our term loans were $828.1 million at December 29, 2013 and $674.3 million at September 29, 2013, and we classify this valuation as a Level 2 fair value measurement.

We currently pay an undrawn commitment fee of 0.375% on the unused portion of the revolving facility. If any letters of credit are issued, then we expect to pay a fronting fee equal to 0.25% per annum of the aggregate face amount of each letter of credit and a participation fee on all outstanding letters of credit at a per annum rate equal to the margin then in effect with respect to Eurodollar Rate-based loans on the face amount of such letter of credit.

Our Credit Agreement includes financial covenants requiring a maximum leverage ratio and minimum fixed charge coverage ratio that are applicable only when revolving loans or swingline loans are outstanding at the end of a fiscal quarter and also contains other customary affirmative and negative covenants and events of default. We were in compliance with our covenants as of December 29, 2013.

Interest Rate Swap Agreements

In connection with our Credit Agreement, in 2011, we entered into interest rate swap agreements for the purpose of minimizing the variability of cash flows in the interest rate payments of our variable rate borrowings. The cash flows received under the interest rate swap agreements are expected to offset the change in cash flows associated with LIBOR rate borrowings between the effective and maturity dates of the swaps. Our two outstanding swap agreements have notional amounts, fixed rates and expiration dates are as follows: $121.0 million at 1.83% expiring January 2014 and $24.0 million at 2.21% expiring January 2015. We classify our interest rate swap balances as Level 2 fair value measurements. We determined the fair value of our interest rate swap agreements based on mid-market valuations reported to us by the counterparty to the swap agreements. Related to these interest rate swap agreements, we recorded a long-term liability of $0.3 million as of December 29, 2013. As of September 29, 2013, we had recorded a current liability of $0.3 million and a long-term liability of $0.4 million. We reflect the change in fair value of the swaps through other income (expense), net and recorded income of $0.3 million in both the first quarter of 2014 and 2013.