| Item 1.01 | Entry into a Material Definitive Agreement. |
On December 22, 2021, Kewaunee Scientific Corporation (the “Company”) entered into an Agreement for Purchase and Sale of Real Property with CAI Investments Sub Series 100, LLC, a Nevada limited liability company (the “Buyer”), for the Company’s headquarters and manufacturing facilities located at 2700 West Front Street in Statesville, North Carolina (the “Sale Agreement”). The Sale Agreement is subject to customary due diligence and the Company expects the transaction to close within 60 days of the contract execution date.
Under the terms of the Sale Agreement, the Company will sell the property for $30,275,000 and, at closing, enter into a Lease Agreement with an affiliate of the Buyer (the “Lease Agreement”, and together with the Sale Agreement, the “Sale-Leaseback Agreement”). The Lease Agreement is for an initial term of twenty years, with the Company having a right to renew thereafter for four renewal terms of five years each. Under the terms of the Lease Agreement, the Company’s initial basic rent would be approximately $139,000 per month, which rent will increase by approximately 2% each year of the initial term. The proceeds of this transaction are expected to be used for debt repayment and general corporate purposes.
The Sale Agreement includes customary representations, warranties, covenants and indemnities. The Sale Agreement is subject to a thirty-day examination period, during which the Buyer may terminate for any reason or no reason. Should Buyer terminate the Sale Agreement during the examination period for reasons other than the Company’s default or breach of representations, all but a portion of the earnest money deposit would be refunded to the Buyer.
The foregoing description of the Sale-Leaseback Agreement is qualified in its entirety by reference to the Sale-Leaseback Agreement, a copy of which will be filed as an exhibit to the Company’s Quarterly Report on Form 10-Q for the quarterly period ending January 31, 2022.
