UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): March 24, 2022
(Exact name of registrant as specified in its charter)
| Delaware | 0-5286 | 38-0715562 | ||
| (State or other jurisdiction of incorporation) |
(Commission File Number) |
(I.R.S. Employer Identification No.) | ||
| 2700 West Front Street Statesville, North Carolina |
28677 | |||
| (Address of principal executive offices) | (Zip Code) | |||
Registrant’s telephone number, including area code: 704-873-7202
N/A
(Former name or former address, if changed since last report.)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class |
Trading |
Name of each exchange | ||
| Common Stock, $2.50 par value | KEQU | NASDAQ Global Market |
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
| Item 1.01 | Entry into a Material Definitive Agreement. |
On March 11, 2022, Kewaunee Scientific Corporation (the “Company”) entered into a Thirteenth Amendment to Credit and Security Agreement (the “Amendment”) with Wells Fargo Bank, National Association (the “Bank”), the effectiveness of which was conditioned upon the consummation of the Sale-Leaseback Arrangement (as defined and further described below in Item 2.01), which occurred on March 24, 2022. The Amendment made certain changes to the Credit and Security Agreement, dated as of May 6, 2013, as amended (the “Credit Agreement”), between the Company and the Bank, and to the Revolving Line of Credit Note, dated May 6, 2013, made by the Company and payable to the order of the Bank, as amended (the “Revolving Note”). The changes included (i) amending and replacing the $15,000,000 line of credit with a $7,500,000 line of credit; (ii) providing for the removal of liens on property of the Company previously existing pursuant to the terms of the Credit Agreement; (iii) changing the interest rate under the Credit Agreement such that interest shall accrue at a rate equal to the greater of (a) the Prime Rate (as defined in the Revolving Note) plus 1.1% and (b) 4.75%, in each case plus any default interest which may become applicable pursuant to the terms of clause (d) of the “Interest” section of the Revolving Note; (iv) consenting to the consummation of the Sale-Leaseback Arrangement; and (v) restating the amended Credit Agreement to reflect all amendments to date.
On March 24, 2022, under the terms of the previously announced Sale-Leaseback Arrangement (as defined and further described below in Item 2.01), the Company entered into a 20-year lease with CAI Investments Medical Products I Master Lessee, LLC, a Delaware limited liability company and affiliate of the buyer under the Sale-Leaseback Arrangement, CAI Investments Sub Series 100, LLC, a Nevada limited liability company (the “Lease Agreement”). In addition to the initial term of 20 years, the Company has a right to renew the Lease Agreement thereafter for four renewal terms of five years each. The Company’s initial basic rent under the Lease Agreement is approximately $158,000 per month, which rent will increase by approximately 2% each year of the initial term.
The foregoing descriptions are not intended to be complete descriptions of the Amendment and the Lease Agreement and are qualified in their entirety by reference to the full texts of the Amendment and the Lease Agreement, as applicable, copies of which will be filed as exhibits to the Company’s Annual Report on Form 10-K for the year ending April 30, 2022.
| Item 2.01 | Completion of Acquisition or Disposition of Assets. |
On March 24, 2022, the Company completed the transactions contemplated by its previously announced sale-leaseback arrangement for the Company’s headquarters and manufacturing facilities located at 2700 West Front Street in Statesville, North Carolina (the “Sale-Leaseback Arrangement”).
The Company sold the property for $30,275,000 and simultaneously entered into the Lease Agreement (as defined and further described above in Item 1.01).
After payment of fees and withholding of a repair fund of $161,012.50 and a capital expenditure account of $1,000,000, the Company’s net cash proceeds received upon closing equaled $13,643,472.80 (the “Net Cash Proceeds”). Additionally, the Company acquired $14,864,377.20 of preferred equity in CAI Investments Medical Products I Parent, LLC, a Delaware limited liability company (the “Preferred Equity”). The Preferred Equity will be purchased from the Company over a 30-day period, subject to a cure period of equal duration and backed by a guaranty from certain affiliates of the buyer (the “Preferred Equity Proceeds” and, together with the Net Cash Proceeds, the “Proceeds”). A portion of the Net Cash Proceeds was used to repay amounts outstanding under the Credit Agreement, and the remainder of the Proceeds is expected to be used for general corporate purposes.
In connection with the consummation of the Sale-Leaseback Arrangement, the Company also entered into a fourth amendment to the Agreement for Purchase and Sale of Real Property with the buyer, CAI Investments Sub Series 100, LLC, a Nevada limited liability company (the “Fourth Amendment”). The Fourth Amendment made certain changes to the terms and structure of the Sale-Leaseback Arrangement, resulting in the principal final terms described above.
The foregoing description of the Sale-Leaseback Arrangement is not intended to be a complete description of the Sale-Leaseback Arrangement or the documents governing the Sale-Leaseback Arrangement and is qualified in its entirety by reference to the full text of the Agreement for Purchase and Sale of Real Property, including all amendments to date, copies of which are incorporated by reference as Exhibits 10.1, 10.2, 10.3 and 10.4, and included as Exhibit 10.5, to this Current Report on Form 8-K.
| Item 9.01 | Financial Statements and Exhibits. |
(d) Exhibits
Signature
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 hereunto duly authorized.
| (Registrant) | ||||||
| Kewaunee Scientific Corporation | ||||||
| Date: March 30, 2022 | /s/ Donald T. Gardner III |
|||||
| Donald T. Gardner III Vice President, Finance |
||||||
| Chief Financial Officer | ||||||
Exhibit 10.5
FOURTH AMENDMENT TO PURCHASE AGREEMENT
This Fourth Amendment to Purchase Agreement (this “Amendment”) is dated March 23, 2022 (the “Effective Date”), by and between KEWAUNEE SCIENTIFIC CORPORATION, a Delaware corporation (“Seller”) and CAI INVESTMENTS SUB SERIES 100, LLC, a Nevada limited liability company, and/or its permitted assignee (“Buyer”).
RECITALS
WHEREAS, Buyer and Seller entered into that certain Agreement for Purchase and Sale of Real Property dated as of December 22, 2022 (as amended by that First Amendment to Purchase Agreement dated January 21, 2021, that Second Amendment to Purchase Agreement dated January 24, 2022, and that Third Amendment to Purchase Agreement dated January 26, 2022 (the “Third Amendment”; collectively, the “Agreement”), for that certain property located at 2700 West Front Street, Statesville, North Carolina as further described in the Agreement; and
WHEREAS, Buyer and Seller desire to amend the Agreement as set forth below.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants contained herein, Buyer and Seller hereby agree to amend the Agreement as follows:
1. Recitals. The recitals set forth above are true and correct and are hereby incorporated in their entirety. Capitalized terms not otherwise defined herein shall have the meaning ascribed to them in the Agreement.
2. Lease.
(a) Exhibit C to the Agreement (i.e., the form of Lease) is hereby deleted and replaced with Exhibit C attached hereto.
(b) At Closing, Seller and Buyer agree to cause the execution of (i) that Memorandum of Lease in the form of Exhibit C-1 attached hereto and (ii) Subordination, Non-Disturbance and Attornment Agreement in the form of Exhibit C-2 attached hereto.
3. Letter Agreement. At Closing, Seller and Buyer agree to execute that Letter Agreement in the form of Exhibit D attached hereto.
4. Preferred Equity Documents.
(a) At Closing, Seller and Buyer (or its assign) agree to execute and deliver the Limited Liability Company Agreement of CAI Investments Medical Products I Parent, LLC in the form of Exhibit E attached hereto.
(b) At Closing, Buyer shall cause the Guaranty to be executed and delivered in the form of Exhibit F attached hereto.
(c) At Closing, Buyer shall cause the Trust Agreement of CAI Investments Medical Products I, DST to be executed and delivered in the form of Exhibit G attached hereto.
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(d) At Closing, Buyer shall cause the Loan Agreement with Bank of Montreal as “Lender” to be executed and delivered in the form of Exhibit H attached hereto.
5. Property.
(a) Section 1(e) of the Agreement is hereby deleted and replaced with the following: “Property” shall mean: (a) that certain property located at 2700 West Front Street in Statesville, North Carolina, being also known as Iredell County Tax Parcel 4724791244.000, together with all improvements therein (including, without limitation, that +/- 416,299 square foot building thereon); and (b) all right, title and interest of Seller in and to all easements, licenses, rights and appurtenances relating to any of the foregoing.”
(b) Exhibit A to the Agreement and Exhibit A to the Lease attached as Exhibit C of the Agreement are hereby deleted and shall be replaced with the legal description of the Property as described in the Deed being simultaneously delivered from Seller to Buyer in connection with Closing and included in Buyer’s approved title proforma.
(c) The second and third sentences of Section 10(a) of the Agreement are hereby deleted and replaced with the following: “The legal description to be used in the Deed shall be derived from the Survey. Buyer shall cause the Survey to be certified to Buyer, Seller and such other parties as Buyer may request.”
6. Ratifications. Except as specifically modified and amended herein, all terms, provisions, conditions, and exhibits contained in the Agreement are hereby reinstated, confirmed, ratified, and shall remain unmodified and in full force and effect. In the event that any provision of this Amendment shall conflict with the terms of the Agreement, the terms of this Amendment shall govern and control. Seller hereby certifies to Buyer that Buyer is not in default of the Agreement as of the Effective Date, and Seller hereby agrees that Seller is estopped from claiming any breach of the Agreement due to circumstances that occurred prior to the Effective Date or facts that were known to Seller prior to the Effective Date. Buyer hereby certifies to Seller that Seller is not in default of the Agreement as of the Effective Date, and Buyer hereby agrees that Buyer is estopped from claiming any breach of the Agreement due to circumstances that occurred prior to the Effective Date or facts that were known to Buyer prior to the Effective Date.
7. Counterparts; Signatures. This Amendment may be executed in any number of counterparts. Signatures to this Amendment transmitted by email or other electronic means shall be treated as originals in all respects for purposes of this Amendment.
8. Successors and Assigns. This Amendment shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and assigns.
9. Time of the Essence. Time is of the essence with respect to this Amendment and the Agreement.
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IN WITNESS WHEREOF, this Amendment is executed as of the Effective Date.
SELLER:
KEWAUNEE SCIENTIFIC CORPORATION, a Delaware corporation
| By: |
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| Name: |
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| Title: |
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BUYER:
CAI INVESTMENTS SUB SERIES 100, LLC, a Nevada limited liability company
| By: | /s/ Christopher Beavor | |
| Name: | Christopher Beavor | |
| Title: | Manager |
IN WITNESS WHEREOF, this Amendment is executed as of the Effective Date.
SELLER:
KEWAUNEE SCIENTIFIC CORPORATION, a Delaware corporation
| By: | /s/ Donald T Gardner III | |
| Name: | Donald T Gardner III | |
| Title: | CFO |
BUYER:
CAI INVESTMENTS SUB SERIES 100, LLC, a Nevada limited liability company
| By: |
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| Name: |
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| Title: |
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