Item 1.01 Entry into a Material Definitive Agreement
On May 17, 2021, Aviat Networks, Inc. (the "Company") entered into Amendment No.
4 to Third Amended and Restated Loan and Security Agreement (the "Amendment") by
and among the Company, Aviat U.S., Inc. ("Opco"), Aviat Networks (S) Pte. Ltd.
(the "Singapore Borrower" and collectively with the Company and Opco, the
"Borrowers") and Silicon Valley Bank, as lender (the "Lender"). The Amendment
amends the terms of the Company's Third Amended and Restated Loan and Security
Agreement, dated as of June 29, 2018, as amended, by and among the Borrowers and
the Lender (the "Agreement") by extending the Revolving Line Maturity Date (as
defined in the Amendment) to June 28, 2024.
The foregoing description of the Amendment is not complete and is qualified in
its entirety by reference to the full text of the Amendment, which is attached
as Exhibit 10.2 to this Current Report on Form 8-K and incorporated in this Item
1.01 by reference.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an
Off Balance Sheet Arrangement of the Registrant
The disclosure in Item 1.01 of this Current Report on Form 8-K are incorporated
herein by reference.
Item 2.05. Costs Associated with Exit or Disposal Activities
On May 14, 2021, the Board of Directors (the "Board") of the Company approved a
restructuring plan (the "Restructuring Plan") to initiate discussions with local
employee representatives concerning the possible closure of its Paris, France
office. The precise date of the closure has not yet been fixed and is subject to
consultation with the employee representative and applicable laws.
The Company estimates that Restructuring Plan charges will be approximately $1.2
million and will be recorded as restructuring expenses which consist of one-time
severance charges, facilities charges and legal costs. The foregoing estimated
charges will be cash expenditures. The Company anticipates it will generate
approximately $0.8 million in annual savings, the majority of which will be
allocated to support growth-related initiatives to be in a stronger position to
drive both top- and bottom- line performance.
This Item 2.05 contains "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995, including, but not limited to,
statements related to the expected costs associated with termination benefits
and the financial impact of the Restructuring Plan. These forward-looking
statements are based on the Company's current expectations and inherently
involve significant risks and uncertainties. The Company's actual results and
the timing of events could differ materially from those anticipated in such
forward-looking statements as a result of these risks and uncertainties, which
include, without limitation, risks related to the closure, and other risks. In
addition, the Company's closure costs may be greater than anticipated and the
Restructuring Plan may have an adverse impact on the Company's development
activities. A further description of the risks and uncertainties relating to the
business of the Company is contained in the Company's Annual Report on Form 10-K
for the year ended July 3, 2020, filed with the Securities and Exchange
Commission (the "SEC") on August 27, 2020, and the Company's subsequent current
reports filed with the SEC. The Company undertakes no duty or obligation to
update any forward-looking statements contained in this Item 2.05 as a result of
new information, future events or changes in its expectations.
Item 5.02 Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain Officers
CEO Compensation
As previously disclosed by the Company in its Current Report on Form 8-K filed
with the Securities and Exchange Commission on January 2, 2020 (the "Prior
Report"), the Company is party to an employment agreement with Peter Smith, the
Company's President and Chief Executive Officer, dated January 2, 2020 (the
"Employment Agreement"), The Employment Agreement is described in the Prior
Report. Such description is not complete and is qualified in its entirely by
reference to the full text of the Employment Agreement, which was filed as
Exhibit 10.1 to the Prior Report.
As described in the Prior Report, upon Mr. Smith's termination of employment by
the Company without "Cause" or resignation for "Good Reason" within 12 months
following a "Change in Control" (each such quoted term as defined in the
Employment
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Agreement), the Employment Agreement provided Mr. Smith with the opportunity to
receive cash severance payments equal to the sum of (i) his then-current base
salary, payable in 12 substantially equal monthly installments, and (ii) an
amount equal to his target annual incentive payment for the year in which the
termination of employment occurs, payable in a lump sum (such payments, the "CIC
Cash Severance Payments"). Pursuant to the Employment Agreement, the CIC Cash
Severance Payments payable to Mr. Smith could not exceed $750,000.
On May 13, 2021, the Board approved an amendment to the Employment Agreement
(the "Employment Agreement Amendment") to eliminate the $750,000 limit
applicable to the CIC Cash Severance Payments. The Employment Agreement
Amendment also expands Mr. Smith's relocation allowance to provide for six
months of storage of his household items if needed rather than one month, as
originally provided in the Employment Agreement.
The foregoing description of the Employment Agreement Amendment is not complete
and is qualified in its entirety by reference to the full text of the Employment
Agreement Amendment, which is attached as Exhibit 10.1 to this Current Report on
Form 8-K and incorporated in this Item 5.02 by reference.
Director Compensation
On May 13, 2021 the Board approved an increase in the annual equity compensation
provided to non-employee directors to $100,000, from $75,000 effective at the
beginning of the Company's fiscal year 2022. The Board also approved an increase
in the annual retainer paid to the non-employee Chairman of the Board to $40,000
from $25,000 for that role effective at the beginning of fiscal year 2022. There
were no changes to the other annual retainers paid to non-employee directors,
namely: $60,000 to each non-employee director $20,000 to the Audit Committee
Chairman, $15,000 to the Governance and Nominating Committee Chairman, and
$15,000 to the Compensation Committee Chairman. Aside from such cash
compensation, non-employee directors are also reimbursed for their expenses
incurred in attending Board and committee meetings. There are no fees based upon
number of meetings attended.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
Exhibit No. Description
First Amendment to the Employment Agreement between Aviat Networks,
10.1 Inc. and Peter Smith, dated May 1 7 , 2021
Amendment No. 4 to Third Amended and Restated Loan and Security
10.2 Agreement
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