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Item 1.01
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Entry into a Material Definitive Agreement
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On April 19, 2018, Super Micro Computer, Inc., a Delaware corporation (the “
Company
” or “
U.S. Borrower
”), entered into a Loan and Security Agreement by and among the Company (and together with any other party joined thereto after the U.S. Closing Date referred to therein, a “
U.S. Borrower
”, individually, each a “
U.S. Borrower
” and collectively, the “
U.S. Borrowers
”), Super Micro Computer B.V., a private limited liability company formed under the laws of the Netherlands and registered with the Trade Register of the Dutch Chamber of Commerce under number 17102792 (“
SMCI BV
”, together with any other party joined hereto after the Dutch Closing Date, as defined therein, as a “
Dutch Borrower
”, individually, each a “
Dutch Borrower
” and collectively, the “
Dutch Borrowers
”, and together with U.S. Borrowers, individually, a “
Borrower
” and, collectively, the “
Borrowers
”), the financial institutions party thereto from time to time (the “
Lenders
”), and Bank of America, N.A., a national banking association, as administrative agent for the Lenders (in such capacity, “
Agen
t”) (the “
Loan and Security Agreement
”). The Loan and Security Agreement replaced the Company’s existing Credit Agreement with Bank of America, N.A. dated as of June 30, 2016, as amended.
The Loan and Security Agreement provides for revolving loans and other financial accommodations in an aggregate principal amount not to exceed Two Hundred Fifty Million Dollars ($250,000,000) extended by the U.S. Lenders (as defined in the Loan and Security Agreement) to the U.S. Borrowers on the U.S. Closing Date of April 19, 2018 (the “
U.S. Revolving Credit Facility
”). The term of the U.S. Revolving Credit Facility expires after 364 days or, if certain conditions are satisfied under the Loan and Security Agreement, the U.S. Revolving Credit Facility will convert to a 5-year revolving credit facility (the “
5-year Revolving Credit Facility
”). Upon converting to the 5-year Revolving Credit Facility, the Lenders shall extend U.S. Revolver Loans and Dutch Revolver Loans (both as defined in the Loan and Security Agreement) and other financial accommodations in an aggregate principal amount not to exceed $400,000,000 to the Borrowers.
Prior to the conversion to the 5-year Revolving Credit Facility, interest on the U.S. Revolver Loans shall be LIBOR plus 2.75% per annum. Upon converting to the 5-year Revolving Credit Facility, interest shall be equal to LIBOR plus: (a) 2.00% on the U.S. Revolver Loans and 2.00% on the Dutch Revolver Loans if Global Availability (as defined in the Loan and Security Agreement) is less than or equal to 25%; (b) 1.75% on the U.S. Revolver Loans and 1.75% on the Dutch Revolver Loans if Global Availability is greater than 25% and less than or equal to 50%; and (c) 1.50% on the U.S. Revolver Loans and 1.50% on the Dutch Revolver Loans if Global Availability is greater than 50%. If LIBOR is unavailable, the U.S. Revolver Loans shall bear interest at the U.S. Base Rate (as defined in the Loan and Security Agreement) plus 0.50%, and the Dutch Revolver Loans shall bear interest at the Foreign Base Rate (as defined in the Loan and Security Agreement) plus 1.50%.
Interest accrued on the Revolver Loans (as defined in the Loan and Security Agreement) shall be due and payable in arrears on the first day of each month. Revolver Loans are due and payable in full on the Revolver Termination Date (as defined in the Loan and Security Agreement), unless payment is required earlier under the Loan and Security Agreement. Voluntary prepayments are permitted without early repayment fees or penalties.
Subject to customary exceptions, the U.S. Revolving Credit Facility is secured by substantially all of the assets of the U.S. Borrowers, and the Dutch Revolving Credit Facility is secured by substantially all of the assets of the Dutch Borrowers. Additionally, the Revolver Loans are guaranteed by Super Micro Computer, LLC, a Delaware limited liability company (the “
Guarantor
”). The Guarantor has secured its guaranty pursuant to a security agreement pledging substantially all of its assets, subject to customary exceptions.
The Loan Documents (as defined in the Loan and Security Agreement) contain customary covenants that require the Borrowers to maintain a specified fixed charge coverage ratio and restrict the ability of the Borrowers and certain of their subsidiaries to make certain distributions with respect to their capital stock, prepay other debt, encumber their assets, incur additional indebtedness, make investments above specified levels, engage in certain business combinations and engage in other specified corporate activities.
On April 19, 2018, the Company issued a press release announcing the Company has entered into the Loan and Security Agreement. A copy of the press release is attached as Exhibit 99.1 and incorporated herein by reference.