Item 1.01 Entry Into a Material Definitive Agreement.
On November 21, 2022, Optex Systems Holdings, Inc., a Delaware corporation (the
"Company") and its subsidiary Optex Systems, Inc. ("Optex", and with the
Company, the "Borrowers") issued an Amended and Restated Revolving Line of
Credit Note (the "Line of Credit Note") to PNC Bank, National Association,
successor to BBVA USA (the "Lender"), in connection with an increase of the
Borrowers' revolving line of credit facility from $1.125 million to $2.0 million
under the Borrowers' existing Amended and Restated Loan Agreement with the
Lender (the "Loan Agreement"). The maturity date remains April 15, 2023.
Obligations outstanding under the credit facility will accrue interest at a rate
equal to the Lender's prime rate minus 0.25%.
The Line of Credit Note and Loan Agreement contain customary events of default
and negative covenants, including but not limited to those governing
indebtedness, liens, fundamental changes, investments, and restricted payments.
The credit facility is secured by substantially all of the operating assets of
the Borrowers as collateral. The Borrowers' obligations under the credit
facility are subject to acceleration upon the occurrence of an event of default
as defined in the Line of Credit Note.
The foregoing summary of the Line of Credit Note and the transactions
contemplated thereby is qualified in its entirety by reference to the text of
such note, a copy of which is attached hereto as Exhibit 10.1 and is
incorporated by reference herein. The foregoing summary of the Loan Agreement
and the transactions contemplated thereby is qualified in its entirety by
reference to the text of such agreement, a copy of which is attached hereto as
Exhibit 10.2 and is incorporated by reference herein.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Arrangement of a Registrant.
As described in Item 1.01 above, on November 21, 2022, the Company's existing
revolving credit facility was amended and restated. The terms of the credit
facility disclosed in Item 1.01 are incorporated herein by reference.
Item 5.02 Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
On November 28, 2022, the Company entered into a new employment agreement with
Danny Schoening. Pursuant to the agreement, which is dated as of December 1,
2022, Mr. Schoening will continue to serve as the Company's President and Chief
Executive Officer through November 30, 2025. Mr. Schoening's base salary
initially is $304,912 per annum, and will be increased to $314,060 on December
1, 2023 and $323,481 on December 1, 2024. Mr. Schoening will be eligible for a
performance bonus based on a one-year operating plan adopted by the Company's
Board of Directors (the "Board"). The bonus will be based on financial and/or
operating metrics decided annually by the Board or the Compensation Committee
and tied to such one-year plan. The target bonus will equate to 30% of Mr.
Schoening's base salary. The Board will have discretion in good faith to alter
the performance bonus upward or downward by 20%.
The updated employment agreement also served to amend Mr. Schoening's RSU
Agreement, dated January 2, 2019, which had been previously amended as of
December 1, 2021, by changing the third and final vesting date for the
restricted stock units granted under such agreement from the "change of control
date" to January 1, 2023.
The employment agreement events of termination consist of: (i) death or
permanent disability of Mr. Schoening; (ii) termination by the Company for cause
(including conviction of a felony, commission of fraudulent, illegal or
dishonest acts, certain willful misconduct or gross negligence by Mr. Schoening,
continued failure to perform material duties or cure material breach after
written notice, violation of securities laws and material breach of the
employment agreement), (iii) termination by the Company without cause and (iv)
termination by Mr. Schoening for good reason (including continued breach by the
Company of its material obligations under the agreement after written notice,
the requirement for Mr. Schoening to move more than 100 miles away for his
employment without consent, and merger or consolidation that results in more
than 66% of the combined voting power of the Company's then outstanding
securities or those of its successor changing ownership or a sale of all or
substantially all of its assets, without the surviving entity assuming the
obligations under the agreement). For a termination by the Company for cause or
upon death or permanent disability of Mr. Schoening, Mr. Schoening will be paid
accrued and unpaid salary and any bonus earned through the date of termination.
For a termination by the Company without cause or by Mr. Schoening with good
reason, Mr. Schoening will also be paid six months' base salary in effect.
The foregoing description of the employment agreement is only a summary, does
not purport to be complete, and is qualified in its entirety by the terms of the
agreement, which is filed as Exhibit 10.3 hereto and incorporated by reference
herein.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits:
10.1 Amended and Restated Line of Credit Note dated as of November 21, 2022 by
and among Optex Systems Holdings, Inc., Optex Systems, Inc. and PNC Bank,
National Association
10.2 Amended and Restated Loan Agreement dated as of April 12, 2022 by and
among Optex Systems Holdings, Inc., Optex Systems, Inc., and PNC Bank,
National Association*
10.3 Employment Agreement of Danny Schoening, dated December 1, 2022
104 Cover Page Interactive Data File (embedded within the Inline XBRL document)
* Previously filed
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