Varex Imaging Corp 10-Q

Item 5. Other Information Insider Trading Arrangements 55 Table of Contents During the fiscal quarter ended March 29, 2024, none of our directors or officers informed us of the adoption or termination of a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as those terms are defined in Regulation S-K, Item 408, except as follows: On February 9, 2024 , Andrew Hartmann , our Senior Vice President and General Manager - Detectors, adopted a Rule 10b5-1 trading arrangement providing for the exercise, subject to pricing triggers, of up to 87,271 stock options, some of which expire in August 2025, that have vested or may vest to Mr. Hartmann pursuant to previous awards and the related sale of the net shares acquired upon exercise, after withholding by the Company of shares in payment of the exercise price and applicable taxes. The arrangement is intended to satisfy the affirmative defense of Rule 10b5-1(c). The first date that shares are permitted to be sold under the trading arrangement is May 10, 2024, and subsequent sales may occur until the arrangement’s expiration date, which is February 4, 2025, or earlier if all transactions under the trading arrangement are completed or the trading arrangement is otherwise earlier terminated. On February 23, 2024 , Mark Jonaitis , our Senior Vice President and General Manager – X-ray Sources, adopted a Rule 10b5-1 trading arrangement providing for the exercise, subject to pricing triggers, of up to 14,409 vested stock options, that expire in February 2025, pursuant to previous awards and the related sale of the net shares acquired upon exercise, after withholding by the Company of shares in payment of the exercise price and applicable taxes. The arrangement is intended to satisfy the affirmative defense of Rule 10b5-1(c). The first date that shares are permitted to be sold under the trading arrangement is May 24, 2024, and subsequent sales may occur until the arrangement’s expiration date, which is February 14, 2025, or earlier if all transactions under the trading arrangement are completed or the trading arrangement is otherwise earlier terminated. On March 5, 2024 , Sunny Sanyal , our CEO, President, and a member of the Board of Directors , adopted a Rule 10b5-1 trading arrangement (“10b5-1 Plan”) providing for: (i) the sale of shares of Company common stock currently owned by Mr. Sanyal once per quarter in an amount not to exceed $100,000 in any single quarter, and not to exceed $300,000 in the aggregate during the term of the 10b5-1 Plan, with the aggregate number of shares to be sold during the term of the 10b5-1 Plan not to exceed 23,009 shares; and (ii) the exercise, subject to pricing triggers, of up to 720,585 stock options (which includes shares to be withheld by the Company in payment of the exercise price and applicable taxes), some of which expire in February 2025, that have vested or may vest to Mr. Sanyal pursuant to previous awards. Mr. Sanyal presently does not intend to sell the net shares he acquires pursuant to exercise of these options. The arrangement is intended to satisfy the affirmative defense of Rule 10b5-1(c). Mr. Sanyal will continue to be subject to the Company’s stock ownership guidelines. Sales contemplated by the 10b5-1 Plan will not reduce his ownership of Company common stock below the level required by the guidelines. The first date that shares are permitted to be sold under the trading arrangement is June 10, 2024, and subsequent sales may occur until the arrangement’s expiration date, which is March 7, 2025, or earlier if all transactions under the trading arrangement are completed or the trading arrangement is otherwise earlier terminated. Equipment Credit Agreement On April 26, 2024, the Company and Varex Imaging West, LLC (together with the Company, the “Equipment Borrowers”) and certain guarantors party thereto (the “Equipment Guarantors”) entered into a secured delayed draw term loan credit agreement, dated as of April 26, 2024 (the “Equipment Credit Agreement”) with Zions Bancorporation, N.A. DBA Zions Credit Corporation, as the lender (the “Equipment Lender”), providing for a secured equipment credit facility of up to $ 20.0 million (the “Equipment Credit Facility”). The Equipment Credit Facility is in addition to the Revolving Credit Facility. As of May 2, 2024, there was no principal balance outstanding on the Equipment Credit Facility. Availability, interest, and maturity . The maximum availability under the Equipment Credit Facility is $ 20.0 million, available to Equipment Borrowers for delayed draw term loans drawn on or before June 30, 2025, in U.S. dollars. Equipment Borrowers may make and repay borrowings from time to time until the maturity of the Equipment Credit Facility, but once repaid, loans may not be reborrowed. Equipment Borrowers may make voluntary prepayments of borrowings at any time. Borrowings under the Equipment Credit Facility will mature on September 26, 2027. The interest rate for borrowings by Equipment Borrowers under the Equipment Credit Facility is the Secured Overnight Financing Rate (“SOFR”) (subject to a floor of 0.0 %) plus a margin of 2.00 % to 2.75 %, depending on the consolidated total net leverage ratio of the Company. Alternatively, Equipment Borrowers have the option of selecting a base rate equal to the highest of (a) the prime rate, (b) the Federal Funds Rate plus 0.50 % and (c) SOFR (subject to a floor of 0.0 %) plus a margin of 1.00 %, in each case plus a margin of 1.00 % to 1.75 %, depending on the consolidated total net leverage ratio of the Company. A commitment fee of 0.375 % per annum is payable from April 26, 2024 until June 28, 2024, and thereafter a commitment fee of between 0.30 % to 0.40 % per annum is payable quarterly on the actual daily unused portion of the Equipment Credit Facility, depending on the consolidated total net leverage ratio of the Company. The proceeds of the Equipment Credit Facility will be used for purchases of eligible equipment and associated software costs for the Company and its subsidiaries. 56 Table of Contents Security and Unsecured Guarantees . Equipment Borrowers’ obligations under the Equipment Credit Agreement are secured by the equipment and associated software financed by the Equipment Credit Facility. Equipment Borrower’s obligations are guaranteed by the Equipment Guarantors on an unsecured basis. Covenants . The Equipment Credit Agreement contains customary covenants restricting the Company’s activities, as well as those of its subsidiaries, including limitations on the ability to sell financed equipment or all or substantially all assets, engage in mergers or other fundamental changes, grant liens or negative pledges on financed equipment, make changes in its corporate structure, though there are certain exceptions and carveouts related to these restrictions. In addition, the Equipment Credit Agreement includes financial covenants related to the Company’s consolidated total net leverage ratio and its consolidated fixed charge coverage ratio. Events of default . The Equipment Credit Agreement contains customary events of default, including payment failures, breaches of representations and warranties, failure to comply with covenants, failure to satisfy other obligations under the Equipment Credit Agreement or related documents, defaults in respect of the Revolving Credit Facility, bankruptcy, insolvency and inability to pay debts when due, material judgments, pension plan terminations or specified underfunding, change of control and failure of certain provisions of any guarantee or security document supporting the Company’s Equipment Credit Facility to be in full force and effect. If an event of default occurs under the Equipment Credit Agreement, subject to any applicable grace period, the Equipment Lender may terminate its commitments, declare immediately payable all borrowings under the Equipment Credit Facility and foreclose on the collateral. The above summary of the material terms of the Equipment Credit Agreement does not purport to be complete and is qualified in its entirety by reference to the Equipment Credit Agreement, a copy of which is filed as Exhibit 10.2 hereto and incorporated by reference herein. 57 Table of Contents Item 6. Exhibits (a) Exhibits required to be filed by Item 601 of Regulation S-K: Exhibit No. Description 3.1 Amended and Restated Certificate of Incorporation, dated January 27, 2017 (as corrected December 11, 2017) (incorporated by reference to Exhibit 3.1 to the Company’s Annual Report on Form 10-K filed November 27, 2018). 3.2 Amended and Restated Bylaws of the Company, as amended February 11, 2021 (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed February 16, 2021). 10.1 Credit Agreement dated as of March 26, 2024, by and among Varex Imaging Corporation, Varex Imaging West, LLC, Varex Imaging Deutschland AG, the Guarantors party thereto and Zions Bancorporation, N.A. DBA Zions First National Bank, as administrative and collateral agent, and the lenders party thereto (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed March 27, 2024). 10.2* Equipment Credit Agreement, dated as of April 26, 2024 , by and among the Company, Varex Imaging West, LLC, certain guarantors party thereto and Zions Bancorporation, N.A. DBA Zions Credit Corporation. 31.1* Chief Executive Officer Certification Pursuant to Rule 13a-14(a) of the Securities Exchange Act 31.2* Chief Financial Officer Certification Pursuant to Rule 13a-14(a) of the Securities Exchange Act 32.1** Certification pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 32.2** Certification pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 101.INS* Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document 101.SCH* Inline XBRL Taxonomy Extension Schema Document 101.CAL* Inline XBRL Taxonomy Extension Calculation Linkbase Document 101.DEF* Inline XBRL Taxonomy Extension Definition Linkbase Document 101.LAB* Inline XBRL Taxonomy Extension Label Linkbase Document 101.PRE* Inline XBRL Taxonomy Extension Presentation Linkbase Document 104* Cover Page Interactive Data File - (formatted as Inline XBRL and contained in Exhibit 101) * Filed herewith. ** Furnished herewith. 58 Table of Contents SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. VAREX IMAGING CORPORATION Date: May 2, 2024 By: /s/ SHUBHAM MAHESHWARI Shubham Maheshwari Chief Financial Officer (Duly Authorized Officer and Principal Financial Officer) 59