FormFactor(US:FORM)2025-07-30 20:04Credit Agreement Overview This section introduces the parties, facility amount, and effective date of the credit agreement Parties and Facility This Credit Agreement, dated July 29, 2025, is established for FORMFACTOR, INC. as the Borrower, with Wells Fargo Bank, National Association serving as the Administrative Agent, Swingline Lender, and an Issuing Lender. The agreement provides for a credit facility of $150,000,000 Credit Agreement Details | Role | Entity | Amount | Date | | :--- | :--- | :--- | :--- | | Borrower | FORMFACTOR, INC. | $150,000,000 | July 29, 2025 | | Administrative Agent | WELLS FARGO BANK, NATIONAL ASSOCIATION | | | | Sole Lead Arranger | WELLS FARGO SECURITIES, LLC | | | Article I: Definitions This article provides comprehensive definitions for key terms, financial metrics, and accounting principles governing the credit agreement Section 1.1: Definitions This section provides comprehensive definitions for the key terms used throughout the credit agreement. It establishes the meanings of financial metrics, legal terms, and operational concepts that govern the facility. Key definitions include the calculation of the Applicable Margin based on the Consolidated Total Net Leverage Ratio, the total Revolving Credit Commitment, and the facility's maturity date Applicable Margin Pricing Grid | Pricing Level | Consolidated Total Net Leverage Ratio | Term SOFR + | Base Rate + | Commitment Fee | | :--- | :--- | :--- | :--- | :--- | | I | Less than 1.00 to 1.00 | 1.125% | 0.125% | 0.150% | | II | ≥ 1.00 to 1.00, but < 2.00 to 1.00 | 1.250% | 0.250% | 0.175% | | III | ≥ 2.00 to 1.00, but < 3.00 to 1.00 | 1.500% | 0.500% | 0.200% | | IV | ≥ 3.00 to 1.00 | 1.750% | 0.750% | 0.250% | - The aggregate Revolving Credit Commitment on the Closing Date is $150,000,000230 - The Revolving Credit Maturity Date is July 29, 2030, unless terminated earlier under the agreement's terms234 - The Threshold Amount for various covenants and default triggers is set at $20,000,000267 Section 1.3: Accounting Terms This section stipulates that all accounting terms will be construed in accordance with U.S. GAAP, applied consistently. It specifies that for covenant compliance, Indebtedness will be carried at 100% of its principal amount, disregarding certain accounting standards like FASB ASC 825 and 470-20. It also clarifies that obligations treated as operating leases prior to FASB ASC 842 will continue to be treated as such for financial calculations under this agreement - All financial data and calculations must conform to GAAP, applied on a consistent basis282 - For covenant purposes, Indebtedness is calculated at 100% of its outstanding principal amount, ignoring the effects of FASB ASC 825 and FASB ASC 470-20282 - Leases that were classified as operating leases before the adoption of FASB ASC 842 will continue to be treated as operating leases for all financial definitions and calculations in this agreement284 Section 1.10: Limited Condition Acquisitions This section outlines specific provisions for Limited Condition Acquisitions (LCAs), which are acquisitions not conditioned on obtaining third-party financing. For LCAs, compliance with certain conditions, such as the absence of defaults and the accuracy of representations, is tested at the time the definitive acquisition agreement is signed (the "LCA Test Date") rather than at the closing of the acquisition. This provides greater certainty of financing for such transactions - For a Limited Condition Acquisition, the absence of a Default or Event of Default is tested at the time the definitive acquisition agreement is executed (LCA Test Date), not at closing292 - Financial ratio tests and other conditions related to the incurrence of debt for an LCA are also tested as of the LCA Test Date on a Pro Forma Basis292 Article II: Revolving Credit Facility This article details the terms for revolving credit loans, including borrowing, repayment, and the Swingline Loan sub-facility Section 2.1: Revolving Credit Loans This section establishes the revolving credit facility, allowing the Borrower to borrow, repay, and reborrow Revolving Credit Loans in Dollars up to the Revolving Credit Commitment of $150,000,000. The facility is available from the Closing Date until the Revolving Credit Maturity Date, subject to the terms and conditions of the agreement - Each Revolving Credit Lender agrees to make loans to the Borrower up to its pro-rata share of the total Revolving Credit Commitment297 - Total outstanding Revolving Credit Outstandings cannot exceed the Revolving Credit Commitment ($150,000,000)297230 Section 2.2: Swingline Loans This section details the Swingline Loan facility, a sub-facility of the revolving credit line provided by the Swingline Lender for short-term borrowing needs. The aggregate principal amount of outstanding Swingline Loans cannot exceed the Swingline Commitment of $10,000,000. These loans can be refunded by Revolving Credit Loans made by all Revolving Credit Lenders on a pro-rata basis - The Swingline Lender agrees to make Swingline Loans up to an aggregate principal amount not to exceed the Swingline Commitment299 - The Swingline Commitment is the lesser of $10,000,000 and the aggregate Revolving Credit Commitments255 - The Swingline Lender can, at its discretion, request that Revolving Credit Lenders fund their pro-rata share of outstanding Swingline Loans by making a Revolving Credit Loan300 Section 2.4: Repayment and Prepayment of Revolving Credit and Swingline Loans This section outlines the repayment and prepayment terms for loans under the revolving credit facility. All outstanding principal and accrued interest on Revolving Credit Loans are due on the Revolving Credit Maturity Date. Mandatory prepayments are required if total outstandings exceed the commitment. The Borrower also has the option to prepay loans in whole or in part at any time without penalty, subject to notice requirements and potential break-funding costs for SOFR Loans - The Borrower must repay all outstanding Revolving Credit Loans in full on the Revolving Credit Maturity Date310 - A mandatory prepayment is triggered if the total Revolving Credit Outstandings exceed the Revolving Credit Commitment311 - Optional prepayments are permitted at any time without premium or penalty, but prepaying a SOFR Loan before the end of its Interest Period may incur costs as per Section 4.9312314 Article III: Letter of Credit Facility This article outlines the terms for the Letter of Credit facility, including issuance, commissions, and reimbursement obligations Section 3.1: L/C Facility This section establishes a Letter of Credit (L/C) facility as a sub-facility of the Revolving Credit Commitments. Issuing Lenders agree to issue standby Letters of Credit for the account of the Borrower or its subsidiaries. The total outstanding L/C Obligations are capped by the L/C Sublimit, and each L/C must expire no later than five business days before the Revolving Credit Maturity Date - The L/C Sublimit is the lesser of $10,000,000 and the aggregate Revolving Credit Commitments167319 - Letters of Credit cannot be issued if the total L/C Obligations would exceed the L/C Sublimit or if the total Revolving Credit Outstandings would exceed the Revolving Credit Commitment319 - Each Letter of Credit must expire no later than the fifth business day prior to the Revolving Credit Maturity Date319 Section 3.3: Commissions and Other Charges This section specifies the fees associated with the Letter of Credit facility. The Borrower is required to pay a letter of credit commission to the Administrative Agent for the benefit of the L/C Participants, calculated based on the Applicable Margin for SOFR Loans. Additionally, the Borrower must pay a separate issuance fee directly to the issuing bank and reimburse any other customary administrative charges - A letter of credit commission is payable quarterly, calculated as the daily available amount under each L/C multiplied by the Applicable Margin for SOFR Loans323 - In addition to the commission, the Borrower must pay a separate issuance fee directly to the applicable Issuing Lender325 Section 3.5: Reimbursement This section outlines the Borrower's absolute obligation to reimburse the Issuing Lender for any drawings made under a Letter of Credit. Reimbursement is due on the same or next business day after notice of a drawing. The Borrower can use its own funds or, by default, is deemed to have requested a Revolving Credit Loan (as a Base Rate Loan) to cover the reimbursement amount - The Borrower must reimburse the Issuing Lender for any L/C drawing by 11:00 a.m. on the same or next business day after receiving notice335 - Unless the Borrower specifies using other funds, a reimbursement obligation is automatically converted into a request for a Base Rate Revolving Credit Loan to cover the drawn amount335 Article IV: General Loan Provisions This article covers general loan terms such as interest rates, fees, incremental facility increases, and provisions for defaulting lenders Section 4.1: Interest This section details the interest rate options and payment terms for loans under the facility. The Borrower can elect for Revolving Credit Loans to bear interest at either the Base Rate or Term SOFR, plus the Applicable Margin. Swingline Loans bear interest at the Base Rate plus the Applicable Margin. In the event of a default, a higher default interest rate of an additional 2% per annum will apply - Revolving Credit Loans can be designated as either Base Rate Loans or SOFR Loans, each with the corresponding Applicable Margin352 - Upon an Event of Default, a default interest rate of 2% above the otherwise applicable rate will be charged on all outstanding obligations353 Section 4.3: Fees This section outlines the various fees payable by the Borrower. A non-refundable commitment fee is payable quarterly on the average daily unused portion of the Revolving Credit Commitment, at a rate determined by the Applicable Margin grid. Other fees, as specified in the separate Fee Letter with the Arranger and Administrative Agent, are also required - A quarterly Commitment Fee is charged on the unused portion of the Revolving Credit Commitment. The rate is determined by the Consolidated Total Net Leverage Ratio, as per the 'Applicable Margin' definition359 - The Borrower must also pay other fees to the Arranger and Administrative Agent as specified in the Fee Letter361 Section 4.13: Incremental Increases This section provides the Borrower with the option to request increases to the credit facility, either as new Incremental Term Loans or as an increase to the existing Revolving Credit Commitments. The total amount of such increases is limited by the Incremental Facilities Limit, which is a formula based on a leverage ratio test plus a fixed basket of $100,000,000. Any such increase requires the consent of the participating lenders but not existing lenders who choose not to participate - The Borrower may request Incremental Increases (new term loans or increased revolving commitments) up to the Incremental Facilities Limit409 - The Incremental Facilities Limit is the sum of a fixed basket and a leverage-based amount. The fixed basket is $100,000,000, less any prior increases taken under this basket143 - Effectiveness of any incremental facility is subject to conditions, including no Default or Event of Default and compliance with financial covenants on a pro forma basis414 Section 4.15: Defaulting Lenders This section defines a "Defaulting Lender" (a lender who fails to fund its obligations) and outlines the consequences. A Defaulting Lender's voting rights are restricted, and they are not entitled to receive commitment fees. Their participation in L/C and Swingline obligations is reallocated to non-defaulting lenders to the extent possible, and the Borrower may be required to provide cash collateral to cover any remaining exposure - A Defaulting Lender's right to approve amendments and waivers is restricted as set forth in the definition of 'Required Lenders'421 - Payments intended for a Defaulting Lender are redirected to cover its obligations to the Administrative Agent, Issuing Lenders, and Swingline Lender, and to cash collateralize its exposure422 - A Defaulting Lender is not entitled to receive commitment fees while in default status424 Article V: Conditions of Closing and Borrowing This article specifies the conditions precedent for the agreement's effectiveness and for all subsequent extensions of credit Section 5.1: Conditions to Closing and Initial Extensions of Credit This section lists the conditions precedent that must be satisfied before the credit agreement becomes effective and the initial loans can be made. These conditions include the execution of all loan documents, delivery of legal opinions, officer's certificates, financial statements, and collateral perfection documents, and payment of all upfront fees - Key closing deliverables include executed Loan Documents, officer's certificates confirming no Material Adverse Effect and no defaults, legal opinions, and certificates of good standing432433436 - Collateral requirements include perfecting security interests through necessary filings, delivering pledged stock certificates, and providing evidence of insurance437438441 - The Borrower must provide a Solvency Certificate and satisfy all 'know your customer' and anti-money laundering documentation requirements447450 Section 5.2: Conditions to All Extensions of Credit This section specifies the ongoing conditions that must be met for any borrowing, issuance, or extension of credit after the initial closing date. The two primary conditions are that all representations and warranties must be true and correct at the time of the credit extension, and no Default or Event of Default must have occurred and be continuing - For any new loan or letter of credit, the representations and warranties in the Loan Documents must be true and correct in all material respects454 - No Default or Event of Default can exist at the time of, or after giving effect to, any new extension of credit455 Article VI: Representations and Warranties of the Credit Parties This article contains the factual statements made by the Credit Parties regarding their legal, financial, and operational status Summary of Representations and Warranties This article contains the representations and warranties made by the Credit Parties to the Lenders. These are statements of fact concerning the company's legal, financial, and operational status as of the Closing Date and, for certain representations, on an ongoing basis. Key areas covered include due organization, enforceability of the agreement, compliance with laws (including environmental and anti-corruption laws), accuracy of financial statements, solvency, and the absence of material adverse changes or defaults - Corporate Status: Each Credit Party is duly organized, validly existing, and has the power to conduct its business (Section 6.1)461 - Financial Condition: Financial statements provided are accurate, there has been no Material Adverse Change since December 28, 2024, and the Credit Parties are Solvent (Sections 6.14, 6.15, 6.16)477478479 - Compliance: The Credit Parties are in compliance with all applicable laws, including anti-corruption laws, sanctions, and environmental regulations, and the execution of the loan documents does not violate any laws or other agreements (Sections 6.4, 6.5, 6.8, 6.19)465466470483 - No Defaults: No Default or Event of Default exists, and no default exists under any other material agreement (Section 6.20)488 Article VII: Affirmative Covenants This article outlines the ongoing actions and obligations the Credit Parties must undertake to maintain compliance with the agreement Summary of Affirmative Covenants This article sets forth the affirmative covenants, which are actions the Credit Parties are required to take and maintain throughout the term of the loan. These obligations are designed to ensure the company remains financially healthy and transparent. Key requirements include timely delivery of financial statements, maintaining corporate existence and properties, paying taxes, complying with laws, and providing notice of material events like litigation or defaults - Financial Reporting: Deliver audited annual financial statements within 90 days of fiscal year-end and unaudited quarterly statements within 45 days of quarter-end, accompanied by a Compliance Certificate (Section 7.1, 7.2)493494497 - Notice of Material Events: Promptly notify the Administrative Agent of any Default or Event of Default, material litigation, or other significant adverse events (Section 7.3)501 - Maintenance and Compliance: Maintain corporate existence, properties, insurance, and comply with all applicable laws, including ERISA and environmental laws (Sections 7.4, 7.5, 7.6, 7.9)503504506510 - Use of Proceeds: Use loan proceeds for working capital and general corporate purposes, and not for purposes that violate margin regulations or sanctions (Section 7.15)522524 - Additional Guarantors: Cause new or acquired Wholly-Owned Subsidiaries (that are not Excluded Subsidiaries) to become Subsidiary Guarantors and provide collateral within 45 days516 Article VIII: Negative Covenants This article imposes restrictions on the Credit Parties regarding indebtedness, liens, investments, and other significant corporate actions Sections 8.1, 8.2, 8.3: Covenants on Indebtedness, Liens, and Investments These sections restrict the ability of the Credit Parties to incur additional debt, grant liens on their assets, and make investments. While generally prohibited, the covenants provide specific exceptions or "baskets." These include exceptions for the Obligations under this agreement, existing debt, limited purchase money debt, intercompany debt, and other general-purpose baskets up to specified amounts, often tied to a percentage of Consolidated TTM EBITDA - Indebtedness: Generally restricted, with key exceptions for the Obligations, existing debt, unsecured debt subject to a leverage test (3.50x), and a general basket of the greater of $25M or 20% of Consolidated TTM EBITDA (Section 8.1)529530531 - Liens: Generally restricted, with exceptions for liens securing the Obligations, existing liens, tax liens, and a general basket for liens on non-Collateral assets up to the greater of $15M or 10% of Consolidated TTM EBITDA (Section 8.2)532534 - Investments: Generally restricted, with exceptions for Permitted Acquisitions, investments in other Credit Parties, and baskets for investments in non-guarantor subsidiaries and other general investments, subject to caps and leverage tests (Section 8.3)536538 Sections 8.4, 8.5, 8.6: Covenants on Fundamental Changes, Asset Dispositions, and Restricted Payments These sections limit major corporate actions. Mergers and consolidations are generally prohibited unless the surviving entity is a Credit Party. Asset dispositions are restricted but permitted for inventory in the ordinary course of business, obsolete assets, and up to a general basket amount. Restricted Payments (like dividends and share buybacks) are also limited, with exceptions for payments to the Borrower or other guarantors and a general basket tied to a leverage test (3.00x) or a fixed annual amount - Fundamental Changes: Mergers and liquidations are restricted, except for mergers between Credit Parties where a Credit Party is the survivor (Section 8.4)540 - Asset Dispositions: Asset sales are limited, with a general basket allowing for dispositions up to the greater of $25M or 20% of Consolidated TTM EBITDA per fiscal year, provided no default exists and fair market value is received (Section 8.5)545 - Restricted Payments: Dividends and share repurchases are restricted but permitted if the pro forma Consolidated Total Net Leverage Ratio is below 3.00 to 1.00 and no default exists. An additional basket allows for payments up to the greater of $30M or 25% of Consolidated TTM EBITDA per fiscal year (Section 8.6)546547 Section 8.13: Financial Covenants This section establishes the key financial maintenance covenants that the Borrower must comply with, tested at the end of each fiscal quarter. The two primary covenants are a maximum Consolidated Total Net Leverage Ratio and a minimum Consolidated Interest Coverage Ratio. The leverage ratio covenant includes a temporary step-up provision following a Material Acquisition Financial Covenant Requirements | Covenant | Requirement | Notes | | :--- | :--- | :--- | | Consolidated Total Net Leverage Ratio | ≤ 3.50 to 1.00 | Can be increased to 4.00 to 1.00 for four quarters following a Material Acquisition (a "Leverage Ratio Increase"), usable up to two times | | Consolidated Interest Coverage Ratio | ≥ 3.25 to 1.00 | | Article IX: Default and Remedies This article defines events of default and the remedies available to the Administrative Agent and Lenders upon their occurrence Section 9.1: Events of Default This section defines the specific events that constitute a default under the credit agreement. These triggers include failure to make payments, breach of covenants, misrepresentation, cross-defaults on other indebtedness exceeding the Threshold Amount ($20,000,000), bankruptcy or insolvency proceedings, and the occurrence of a Change in Control - Payment defaults on principal are immediate Events of Default; defaults on interest or fees have a 3-business day grace period565566 - A cross-default is triggered if the Borrower defaults on other Indebtedness exceeding the Threshold Amount ($20,000,000)570267 - Bankruptcy or insolvency proceedings are immediate Events of Default572573 - A Change in Control, as defined in the agreement, constitutes an Event of Default57565 Section 9.2: Remedies This section outlines the actions the Administrative Agent and Lenders can take upon the occurrence of an Event of Default. With the consent of the Required Lenders, the Agent may terminate the commitments and accelerate the full repayment of all outstanding Obligations. In the case of bankruptcy, this acceleration is automatic. The Agent may also demand cash collateral for outstanding Letters of Credit - Upon an Event of Default, the Required Lenders can direct the Administrative Agent to terminate commitments and declare all Obligations immediately due and payable578 - In the event of bankruptcy (Sections 9.1(i) or (j)), the termination of commitments and acceleration of Obligations are automatic578 - The Borrower may be required to deposit cash collateral equal to the Minimum Collateral Amount (103%) for all outstanding Letters of Credit579181 Article X: The Administrative Agent This article defines the role, responsibilities, and protections of the Administrative Agent acting on behalf of the Lenders Summary of Administrative Agent Provisions This article defines the role, rights, powers, and responsibilities of the Administrative Agent (Wells Fargo). It establishes that the Agent acts on behalf of the Lenders but is not a fiduciary. The article includes exculpatory provisions, protecting the Agent from liability except in cases of its own gross negligence or willful misconduct. It also outlines the procedures for the Agent's resignation or removal and its authority regarding collateral and guaranty matters - Each Lender irrevocably appoints Wells Fargo as the Administrative Agent to act on its behalf592 - The Agent is protected from liability for actions taken or not taken, except in cases of its own gross negligence or willful misconduct. It is entitled to rely on notices and communications believed to be genuine598602 - The Agent may resign with 30 days' notice, and a successor can be appointed by the Required Lenders in consultation with the Borrower605 - The Agent is authorized to release liens on collateral or release guarantors in connection with asset sales or other transactions permitted by the Loan Documents613 Article XI: Miscellaneous This article contains standard legal and administrative clauses governing the agreement, including amendments, governing law, and assignments Summary of Miscellaneous Provisions This article contains standard legal and administrative clauses that govern the agreement. Key provisions include procedures for notices, rules for amendments and waivers (which generally require the consent of Required Lenders), expense reimbursement and indemnification obligations of the Borrower, governing law (New York), submission to jurisdiction, and a waiver of jury trial. It also details the rules for assignments and participations of the loans by Lenders - Amendments and Waivers: Generally require the written consent of the Required Lenders and the Borrower, with certain critical changes (e.g., extending maturity, reducing principal) requiring the consent of all affected Lenders (Section 11.2)641 - Expenses and Indemnity: The Borrower agrees to pay all reasonable out-of-pocket costs of the Administrative Agent and Lenders and to indemnify them against losses and claims arising from the credit facility (Section 11.3)645647 - Governing Law and Jurisdiction: The agreement is governed by the law of the State of New York, and parties submit to the exclusive jurisdiction of New York courts (Section 11.5)652654 - Waiver of Jury Trial: All parties irrevocably waive their right to a trial by jury in any legal proceeding related to the Loan Documents (Section 11.6)659 - Assignments and Participations: Lenders may assign their loans and commitments to other Eligible Assignees with required consents (including the Borrower's consent, unless an Event of Default exists) (Section 11.9)664 Schedules and Exhibits This section lists and describes the supplementary schedules and exhibits that provide specific details and forms for the agreement List of Schedules and Exhibits The agreement includes various schedules and exhibits that provide specific details and standardized forms. Schedules contain factual information as of the Closing Date, such as lender commitments, existing indebtedness, and material contracts. Exhibits provide the forms for legal documents to be used under the agreement, such as the form of notes, notices of borrowing, and compliance certificates - Schedules: Detail specific information including Commitments (1.1(a)), Disqualified Competitors (1.1(b)), Jurisdictions of Organization (6.1), Existing Indebtedness (8.1), Existing Liens (8.2), and Post-Closing Matters (7.18)16 - Exhibits: Provide templates for key operational and legal documents, including forms for Revolving Credit Notes (A-1), Notices of Borrowing (B), Compliance Certificates (F), and Assignment and Assumption agreements (G)17