Item 1.01 Entry into a Material Definitive Agreement.
Underwriting Agreement
On June 17, 2020, Fox Factory Holding Corp. ("Fox" or the "Company") entered into an underwriting agreement (the "Underwriting Agreement") with BofA Securities, Inc. as representative of the Underwriters listed on Schedule A attached thereto (the "Underwriters"). Pursuant to the Underwriting Agreement, the Company issued and sold 2,760,000 shares of the Company's common stock $0.001 par value per share (the "Common Stock") to the Underwriters at a price to the public of $76.00 per share (the "Offering Shares"), which included the full exercise of the underwriters' option to purchase up to 360,000 additional shares. The sale of the Offering Shares pursuant to the Underwriting Agreement closed on June 22, 2020.
The Underwriting Agreement contains customary representations, warranties, and covenants by the Company, customary indemnification rights and obligations of the parties and termination provisions.
The offering and sale of the Common Stock was made pursuant to the Company's Registration Statement on Form S-3 (Registration No. 333-239231) (the "Registration Statement"), including a prospectus supplement dated June 17, 2020, to the base prospectus contained in the Registration Statement, filed by the Company with the Securities and Exchange Commission under the Securities Act of 1933, as amended.
The foregoing summary of the material terms of the Underwriting Agreement does not purport to be complete and is subject to, and qualified in its entirety by, reference to the complete text of the Underwriting Agreement, a copy of which is filed with this Current Report on Form 8-K as Exhibit 1.1 and is incorporated by reference herein and into the Registration Statement.
First Amendment to the Amended and Restated Credit Agreement
On June 19, 2020, the Company entered into the First Amendment (the "First Amendment") to the Amended and Restated Credit Agreement, dated March 11, 2020 (as amended and restated, the "Amended and Restated Credit Agreement"), among the Company, Bank of America, N.A., as Administrative Agent, Swingline Lender and L/C Issuer (the "Agent"), and a group of lenders (collectively, the "Lenders"). Capitalized terms used but not defined herein shall have the meanings ascribed to them in the First Amendment.
The First Amendment, among other things, amends the Amended and Restated Credit Agreement to require the Company to maintain, as of the end of each fiscal quarter (commencing with the fiscal quarter ending July 3, 2020), a Consolidated Net Leverage Ratio not to exceed 4.25 to 1.00, decreasing to 4.00 to 1.00 for the second fiscal quarter of 2021 and quarterly thereafter. This Consolidated Net Leverage Ratio covenant replaced the financial covenant in the Amended and Restated Credit Agreement that required the Company to maintain, as of the end of each fiscal quarter, a Leverage Ratio (which did not exclude unrestricted cash and cash equivalents from the numerator) not to exceed 3.75 to 1.00. Additionally, the First Amendment permits the Company to enter into certain Permitted Hedge Transactions and allows the Company to add back up to $10 million in non-recurring relocation expenses to its Consolidated EBITDA through June 4, 2021. In addition, the First Amendment adds a new tier of pricing when the Consolidated Net Leverage Ratio exceeds 3.50 to 1.00 and increases the minimum Eurodollar Rate from 0% to 0.50%. The First Amendment does not change the aggregate amount or the final maturity date of the Amended and Restated Credit Agreement.
The First Amendment also amends the Amended and Restated Credit Agreement to permit the Company to obtain vendor financing with respect to chassis held for upfit, which vendor financing will not be included as indebtedness for purposes of calculating the Consolidated Net Leverage Ratio so long as certain criteria are met.
The foregoing summary of the material terms and conditions of the First Amendment does not purport to be complete and is subject to, and qualified in its entirety by, reference to the complete text of the First Amendment which is filed with this Current Report on Form 8-K as Exhibit 10.1 and is incorporated herein by reference.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
The information with respect to the First Amendment included or incorporated by reference in Item 1.01 of this Current Report on Form 8-K is incorporated by reference into this Item 2.03 of this Current Report on Form 8-K.