Safeguard Scientifics, Inc. (NYSE:SFE) Files An 8-K Entry into a Material Definitive Agreement
ITEM 1.01. Entry into a Material Definitive Agreement.
On March 15, 2019, Safeguard Scientifics, Inc. (the “Company”) and a subtenant (the “Subtenant”) entered into a Sublease Agreement (the “Sublease”) to which the Subtenant will sublease all of the Company’s principal executive offices located at 170 North Radnor Chester Road, Radnor, PA, which the Company leased under that certain Lease Agreement entered into on February 11, 2015 (the “Lease”) between the Company and Radnor Properties-SDC, L.P. (the “Landlord”). The Lease was previously disclosed by the Company in its Current Report on Form 8-K filed with the Securities and Exchange Commission on February 17, 2015.
The term of the Sublease will commence on the earlier of August 31, 2019 or the date on which the Subtenant takes possession of the subleased property, and will extend through April 29, 2026, unless sooner terminated in accordance with the terms of the Sublease. The Subtenant will also have the right to access the subleased property solely for purposes of installing furniture, fixtures and other improvements beginning on June 1, 2019. The Company is actively seeking appropriate office accommodations that will be available for the Company’s occupancy prior to June 1, 2019.
The Subtenant will pay annual fixed rent of $499,264 in the first year of the Sublease term, increasing incrementally annually during the Sublease term, resulting in a total amount of fixed rent during the full Sublease term of approximately $3.8 million. In addition to fixed rent and the Subtenant’s utility costs, the Subtenant will also pay its proportionate share of operating costs associated with the subleased property and its proportionate share of operating costs associated with the complex in which the subleased property sits.
Notwithstanding the Company’s entry into the Sublease, all of the terms of the Lease, including the Company’s obligations under the Lease, will remain in full force and effect until the Lease is terminated in accordance with its terms. Specifically, in the event of a default by the Company under the Lease, the Landlord has the right to terminate the Lease and take possession of the leased property. Any such action would cause the Company’s rent payment obligations under the Lease to accelerate, subject to limitations set forth in the Lease.
The summary of the Sublease contained in this Item 1.01 does not purport to be complete and is subject to, and qualified in its entirety by, the full text of the Sublease, a copy of which is filed as Exhibit 10.1 to this Current Report on Form 8-K.
ITEM 8.01. Other Events.
As previously disclosed in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2018, the Company adopted ASU 2016-02, Leases, effective January 1, 2019. The Company evaluated the impact of the adoption of ASU 2016-02 and, effective January 1, 2019, recorded a lease liability of $2.9 million, recorded a right-to-use asset of $2.2 million and eliminated the deferred rent liability of $0.7 million included in Other long-term liabilities. The Company does not expect to record an impairment of such right-to-use asset due to the Sublease. Further, the Sublease will result in Other income over the term of the Sublease that will substantially offset the Company’s existing lease expense that will continue to be recorded in General and administrative expense.
ITEM 9.01. Financial Statements and Exhibits.
(d) Exhibits
SAFEGUARD SCIENTIFICS INC Exhibit
EX-10.1 2 tv516591_ex10-1.htm EXHIBIT 10.1 Exhibit 10.1 SUBLEASE AGREEMENT THIS SUBLEASE AGREEMENT (this “Sublease”) is made and entered into as of the 15th day of March,…
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About Safeguard Scientifics, Inc. (NYSE:SFE)
Safeguard Scientifics, Inc. provides capital, as well as strategic, operational and management resources to growth-stage businesses. The Company participates in early- and growth-stage financings. The Company operates through two segments: Healthcare and Technology. The Healthcare segment’s companies focuses principally on medical technology (MedTech), including diagnostics and devices, and healthcare technology (HealthTech). The Technology segment’s companies focuses principally on digital media, financial technology (FinTech), and enterprise software, including mobile technology, cloud, Internet of Things (IoT) and big data. It holds interests in approximately 30 non-consolidated partner companies, which are included in the Healthcare and Technology segments. The Company provides management and operational support, as well as ongoing planning and development assessment. It provides mentoring, advice and guidance to develop partner company management.
