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| Item 1.01 | Entry into a Material Definitive Agreement
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E.SUN Bank Credit Facility
Super Micro Computer Inc., Taiwan (the “Subsidiary”), a Taiwan corporation and wholly-owned subsidiary of Super Micro Computer, Inc. (the “Company”) was party to that certain General Credit Agreement, dated September 13, 2021, with E.SUN Bank (“E.SUN Bank”), which provided for borrowings of up to (i) NTD1.6 billion ($57 million U.S. dollar equivalent) and (ii) US$30 million as loans, advances, acceptances, bills, bank guarantees, overdrafts, letters of credit, and other types of drawdown instruments (the “Prior E.SUN Bank Credit Facility”).
On August 9, 2022 (the “E.SUN Bank Effective Date”), the Subsidiary entered into a new General Credit Agreement with E.SUN Bank, which replaced the Prior E.SUN Bank Credit Facility (the “New E.SUN Bank Credit Facility”). The New E.SUN Bank Credit Facility permits borrowings of up to (i) NTD1.8 billion ($61 million U.S. dollar equivalent) and (ii) US$30 million as loans. Other terms of the New E.SUN Bank Credit Facility are substantially identical to the Prior E.SUN Bank Credit Facility. Generally, interest for base rate loans made under the New E.SUN Bank Credit Facility are based upon an average interbank overnight call loan rate in the finance industry (such as TAIFX) plus a fixed margin, and is subject to occasional adjustment. The New E.SUN Bank Credit Facility has customary default provisions permitting E.SUN Bank to terminate or reduce the credit limit, shorten the credit period, or deem all liabilities due and payable, including in the event the Subsidiary has an overdue liability at another financial organization. The Company is not a guarantor of the New E.SUN Bank Credit Facility.
Terms for specific drawdown instruments issued under the New E.SUN Bank Credit Facility, such as credit amount, term of use, mode of drawdown, specific lending rate, and other relevant terms, are to be set forth in Notifications and Confirmation of Credit Conditions (a “Notification and Confirmation”) negotiated with E.SUN Bank. Under a Notification and Confirmation entered into on the E.SUN Bank Effective Date, the Subsidiary and E.SUN Bank have agreed to each of the following:
–A medium term credit loan of NTD680 million ($23 million U.S. dollar equivalent) with a tenor of 5 years (the “Medium Term Loan”). The period of use is between April 28, 2022 and April 28, 2023. The interest rate thereunder is based upon a floating annual rate plus a fixed margin, subject to adjustment under certain circumstances. Interest payments are due on a monthly basis. Principal is amortized evenly on a monthly basis, with principal payments subject to a one year grace period prior to the commencement of repayment.
The Medium Term Loan will be used by the Subsidiary to support its manufacturing activities (such as purchase of materials and components) (“Use of Proceeds”). Drawdowns may be in amounts of up to 80% of permitted Use of Proceeds expenses. The Subsidiary is subject to various financial covenants in connection with the Medium Term Loan, including a current ratio, net debt to equity ratio, and interest coverage ratio.
The current Medium Term Loan and the prior medium term loan under the Prior E.SUN Bank Credit Facility shall not exceed in aggregate NTD1.8 billion.
–A drawdown of US$30 million under the E.SUN Bank Credit Facility for an import loan with a tenor of 120 days (the “Import O/A Loan”). The period of use is between April 28, 2022 and April 28, 2023. The interest rate thereunder is based on TAIFX3 plus a fixed margin, subject to negotiation on a monthly basis and adjustment under certain circumstances. Interest payments are due on a monthly basis, and principal is repayable on the due date.
Neither the Medium Term Loan nor Import O/A loan are secured.
The foregoing descriptions of the New E.SUN Bank Credit Facility and Notification and Confirmation do not purport to be complete and are qualified in their entirety by reference to the full and complete terms of such documents, copies of which are filed hereby as Exhibit 10.1 and Exhibit 10.2, respectively, and are incorporated herein by reference.
