Item 1.01 Entry into a Material Definitive Agreement.
As previously disclosed, on October 1, 2019, Cantel Medical Corp. (the
"Company") issued an aggregate of 438,359 shares of common stock (the "Shares")
of the Company to Dental Holding, LLC ("Dental Holding") in connection with the
Company's acquisition of Hu-Friedy Mfg. Co., LLC, a Delaware limited liability
company and, at the time, a direct wholly owned subsidiary of Dental Holding
("Hu-Friedy"), pursuant to the Purchase and Sale Agreement by and among the
Company, Dental Holding, Hu-Friedy and, for limited purposes set forth therein,
Ken Serota and Ron Saslow (the "Purchase and Sale Agreement"). In addition, as
previously disclosed, on October 1, 2019, the Company and Dental Holding entered
into a Registration Rights Agreement (the "Registration Rights Agreement")
relating to the Shares. Pursuant to the Purchase and Sale Agreement and the
Registration Rights Agreement, each as amended on December 12, 2019, the Company
was required to use reasonable efforts to file a registration statement on Form
S-3 with the U.S. Securities and Exchange Commission covering the resale of all
of the Shares in an offering to be made on a continuous or delayed basis
pursuant to Rule 415 under the Securities Act of 1933, as amended (an
"Offering") on or prior to February 15, 2020 (such requirements, the "Resale
Obligation").
On February 13, 2020, the Company entered into a Stock Repurchase Agreement with
Dental Holding (the "Repurchase Agreement"). The Repurchase Agreement amends the
Purchase and Sale Agreement and the Registration Rights Agreement to provide
that in lieu of completing an Offering to satisfy the Resale Obligation, the
Company will repurchase the Shares from Dental Holding at a price per share of
$64.51 (the "Repurchase"), which equals the closing price of shares of the
Company's common stock traded on the New York Stock Exchange on February 12,
2020, the last day before entry into the Purchase and Sale Agreement. The
Repurchase was completed on February 13, 2020, and the Shares were thereafter
canceled and retired by the Company.
As previously disclosed, the Purchase and Sale Agreement (as amended on December
12, 2019) further required the Company to pay to Dental Holding an amount in
cash equal to $35,000,117 minus the aggregate net proceeds received by Dental
Holding from an Offering if the amount of such aggregate net proceeds was less
than $35,000,117 (such requirement, the "True-Up Obligation"). The Repurchase
Agreement further amends the Purchase and Sale Agreement to provide that in
satisfaction of the True-Up Obligation, the Company will make a payment to
Dental Holding in an amount equal to $6,721,577.91, which amount equals
$35,000,117 minus the aggregate amount of $28,278,539.09 paid to Dental Holding
as consideration for the Repurchase. This payment was made to Dental Holding on
February 13, 2020.
In connection with the Repurchase, Dental Holding waived all of its rights with
respect to the Resale Obligation and the True-Up Obligation, each of which were
deemed satisfied in full. The Repurchase Agreement further provided that Dental
Holding waived all of its rights to receive certain payments from the Company in
respect of certain tax matters pursuant to Section 2.11(b) of the Purchase
Agreement and that the Registration Rights Agreement was terminated without any
continuing liability or obligation of the Company or Dental Holding.
The foregoing description of the Repurchase Agreement does not purport to be
complete and is subject to, and qualified in its entirety by reference to, the
full text of the Repurchase Agreement, which is filed as Exhibit 10.1 to this
Current Report on Form 8-K and incorporate herein by reference.
Item 1.02 Termination of a Material Definitive Agreement.
The information set forth in Item 1.01 of this Current Report on Form 8-K is
incorporated by reference into this Item 1.02.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Arrangement of a Registrant.
The Company funded the payment made in respect of the Repurchase and the True-Up
Payment described in Item 1.01 of this Current Report on Form 8-K through a
borrowing of its existing revolving credit facility in the amount of $35,000,000
under that certain Fourth Amended and Restated Credit Agreement dated as of June
28, 2018, among the Company, the subsidiary obligors party thereto, the lenders
party thereto and Bank of America, N.A., as administrative agent (as amended,
supplemented or modified prior to the date hereof, the "Credit Agreement"). The
borrowing was made on February 12, 2020. The terms and conditions of the
revolving credit facility are incorporated herein by reference to the
description of the Credit Agreement contained in the Company's Current Report on
Form 8-K filed on September 9, 2019.
Item 9.01 Financial Statements, Pro Forma Financial Information and Exhibits.
(d) The following exhibits are filed as part of this report:
Exhibit No. Description of Exhibit
10.1 Stock Repurchase Agreement, dated as of February 13, 2020, by and
between Cantel Medical Corp. and Dental Holding, LLC.
104.1 Cover Page Interactive Data File (embedded within the Inline XBRL
document)
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