Super Micro Computer, Inc. entered into a Credit Agreement by and among the Company, as the lead borrower, the additional borrowers from time to time party thereto, the various financial institutions from time to time party thereto, as lenders, and JPMorgan Chase Bank, N.A., as administrative agent and collateral agent. The Credit Agreement provides for a revolving credit facility in an initial aggregate principal amount of up to $2,000,000,000. The Revolving Credit Facility includes a $200,000,000 letter-of-credit sub-limit and a $150,000,000 same-day borrowing sub-limit.
The Credit Agreement also provides an option to increase the aggregate principal amount of the revolving commitments by up to $1,000,000,000, subject to the satisfaction of certain conditions. The proceeds of the Revolving Credit Facility may be used for working capital and other general corporate purposes of the Company and its subsidiaries. During any Non-IG Period, the Revolving Credit Facility will be guaranteed by the Company (with respect to the borrowing liabilities of other borrowers, if any), its qualifying domestic subsidiaries (subject to customary exclusions set forth in the Credit Agreement) and any subsidiary of the Company which guarantees indebtedness of the Company in excess of $350 million.
Each such guarantor will also grant a first priority security interest in substantially all of its assets (subject to customary exclusions, including any real property owned in fee simple or leasehold) for the same period. The guaranties and liens granted by the Loan Parties will cease to apply the earlier of any Business Day on or after September 30, 2026 on which the Company achieves a corporate family rating equal to or higher than the following from at least two of the following three ratings agencies: (i) at least Baa3 from Moody?s, (ii) at least BBB- from S&P and (iii) at least BBB- from Fitch, in each case, with a stable or better outlook, and will be reinstated within 30 days of the corporate family rating maintained by any two of the aforementioned agencies falling below those levels. Borrowings made available under the Credit Agreement will accrue interest at a per annum rate on the basis of (x) (i) an alternate base rate or (ii) a term rate (in each case, at the Company?s option) plus (y) an applicable margin.
The margin applicable to borrowings will be adjusted by reference to a pricing grid based on (i) (during a Non-IG Period) the Company?s then applicable leverage ratio, with a range between 1.25% per annum and 2.00% per annum (or 0.25% per annum and 1.00% per annum for alternate base rate loans) or (ii) (during an IG Period) the Company?s then applicable corporate family rating, with a range between 1.125% per annum and 1.375% per annum (or 0.125% per annum and 0.375% per annum for alternate base rate loans). The Company will pay a commitment fee for any unused and available commitments under the Revolving Credit Facility. The commitment fee will accrue in arrears at a rate of (during a Non-IG Period) 0.15% to 0.30% per annum determined by reference to the Company?s then applicable leverage ratio and (during an IG Period) 0.12% to 0.15% per annum determined by reference to the Company?s then applicable corporate family rating.
The commitment fee will be payable on a quarterly basis. The Credit Agreement contains customary restrictive covenants, certain of which will cease to apply during an IG Period. These covenants include, among others, limitations on the incurrence of indebtedness, the making of certain investments and the making of certain restricted payments, and a requirement for the Company?s leverage ratio to not exceed the leverage ratios specified below on the following quarter end dates: Commencing with the first full fiscal quarter after December 29, 2025 until the end of the fourth full fiscal quarter after December 29, 2025, 4.00 to 1.00; Commencing with the fifth full fiscal quarter after December 29, 2025 until the end of the eighth full fiscal quarter after December 29, 2025, 3.50 to 1.00; Each fiscal quarter thereafter, 3.00 to 1.00.
The Credit Agreement includes customary events of default. Upon the occurrence of certain events of default, including any change of control, the lenders may terminate their commitments and declare all outstanding amounts under the Revolving Credit Facility immediately due and payable. At any time that (x) an event of default relating to (i) the late payment of any principal amount, interest, fees or reimbursement obligations arising under the Credit Agreement or (ii) an insolvency related event of default with respect to any borrower under the Credit Agreement is continuing or (y) the lenders have accelerated, each borrower under the Credit Agreement will pay interest on overdue amounts of all loans, reimbursement obligations, interest or fees owing under the Credit Agreement at a rate of 2.00% per annum, plus, in the case of loans, the interest rate that would otherwise be applicable to such loans.
The Revolving Credit Facility matures on December 29, 2030, unless extended pursuant to the terms of the Credit Agreement.
