SLAB Silicon Labs

Item 1.01. Entry into a Material Definitive Agreement

On August 7, 2019, Silicon Laboratories Inc. (the “Company”) and certain of its domestic subsidiaries (the “Guarantors”) entered into the Third Amendment to Credit Agreement (the “Third Credit Agreement Amendment”) with Wells Fargo Bank, National Association (“Wells Fargo”), as administrative agent, and a syndicate of lenders. The Third Credit Agreement Amendment amends the Company’s original credit agreement (as amended prior to the Third Amendment, the “Original Credit Agreement” and, as amended by the Third Credit Agreement Amendment, the “Amended Credit Agreement”) with Wells Fargo (as successor to Bank of America, N.A.), as administrative agent, the Guarantors party thereto and syndicate of lenders party thereto, in order to, among other things, increase the revolving credit facility (the “Revolving Credit Facility”) provided for therein to $400 million and extend the maturity date of such facility to five years from the closing date.

Pursuant to the Amended Credit Agreement, the Company has an option to incur term loans under one or more new term loan facilities (each, an “Incremental Term Loan”) and/or to increase the Revolving Credit Facility (each increase, a “Revolving Facility Increase”), subject to certain conditions and provided that the aggregate principal amount of Incremental Term Loans and Revolving Facility Increases available to be incurred shall be limited to (i) the greater of $250 million and 100% of Consolidated EBITDA (as defined in the Amended Credit Agreement) for the most recently completed four fiscal quarters for which financial statements have been delivered under the Amended Credit Agreement plus (ii) the maximum amount of Incremental Term Loans/Revolving Facility Increases that could be incurred without causing the Secured Leverage Ratio (as defined in the Amended Credit Agreement) to exceed 3.25 to 1.00 at the time of and after giving effect to the incurrence thereof (assuming any Revolving Facility Increase is fully funded). The calculation of such cap with respect to any Incremental Term Loan incurred in connection with a Limited Condition Acquisition (as defined in the Amended Credit Agreement) shall be determined, at the option of the Company, on the date the definitive agreements for such Limited Condition Acquisition are entered into.

The Revolving Credit Facility, other than swingline loans, will bear interest at the Eurodollar rate plus an applicable margin or, at the option of the Company, the base rate (defined as the highest of the Wells Fargo prime rate, the Federal Funds rate plus 0.50% and the Eurodollar Base Rate plus 1.00%) plus an applicable margin. Swingline loans accrue interest at a per annum rate based on the base rate plus the applicable margin for base rate loans. The applicable margins for the Eurodollar rate loans range from 1.00% to 1.75% and for base rate loans range from 0.00% to 0.75%, depending in each case, on the consolidated leverage ratio as defined in the Amended Credit Agreement.

The Amended Credit Agreement contains various conditions, covenants and representations with which the Company must be in compliance in order to borrow funds and to avoid an event of default, including financial covenants that the Company must maintain a consolidated leverage ratio (defined as a ratio of Consolidated Funded Indebtedness (as defined in the Amended Credit Agreement) to Consolidated EBITDA) of no more than 4.25 to 1.00 (which, at the election of the Borrower following the consummation of a permitted acquisition with total consideration in an aggregate amount greater than or equal to $100,000,000, shall be increased to 4.75 to 1.00 for the next four quarterly test dates); a Secured Leverage Ratio (as defined in the Amended Credit Agreement) of no more than 3.50 to 1.00; and a minimum Consolidated Interest Coverage Ratio (as defined in the Amended Credit Agreement) of no less than 2.5 to 1.00. The occurrence of an event of default could result in the acceleration of all outstanding obligations under the Amended Credit Agreement as well as other remedies as defined therein. The Company’s obligations under the Amended Credit Agreement are guaranteed by the Guarantors and are secured by a security interest in substantially all assets of the Company and the Guarantors.

The foregoing descriptions are subject to, and qualified in their entirety by, the Amended Credit Agreement. The Amended Credit Agreement is attached hereto as Exhibit 10.1 and the terms thereof are incorporated herein by reference.