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):
October 24, 2006
GALES INDUSTRIES INCORPORATED
------------------------------------------------------
(Exact Name of Registrant as Specified in its Charter)
Delaware 000-29245 20-4458244
-------- --------- ----------
State of Commission IRS Employer
Incorporation File Number I.D. Number
1479 North Clinton Avenue, Bay Shore, NY 11706
----------------------------------------------
Address of principal executive offices
Registrant's telephone number: (631) 968-5000
-------------------------------------------------------------
(Former Name or Former Address, if Changed Since Last Report)
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 (see General Instruction A.2. below):
|_| 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))
Item 1.01. Entry into a Material Definitive Agreement.
On October 24, 2006, Air Industries Machining, Corp. ("Air Industries"), a
wholly-owned subsidiary of Gales Industries Incorporated ("Gales"), consummated
its agreement with STNLA-SPVEF Bay Shore, LLC, successor in interest to Net
Lease Advisors LLC ("Purchaser"), whereby Air Industries sold to the Purchaser
the buildings and related real property at its corporate headquarters in Bay
Shore, New York (the "Property"), for $6,200,000. Air Industries' net proceeds
from the sale, after transaction and other related costs, were approximately
$4,850,000, which Air Industries used to repay debt obligations.
Simultaneously with the closing of the purchase agreement Air Industries entered
into a 20-year triple-net lease with the Purchaser for the Property. The lease
grants Air Industries an option to renew the lease for an additional period of
five years. Base annual rent is approximately $540,000 for the first five years
of the lease, increases to $621,000 for the sixth year of the term, and
thereafter increases 3% per year. Air Industries deposited with Purchaser
$127,500 as security for performance of its obligations under the lease which it
intends to replace with a $127,500 letter of credit. Pursuant to the terms of
the lease, Air Industries is required pay all of the costs associated with the
operation of the facilities, including, without limitation, insurance, taxes and
maintenance.
The lease contains customary representations, warranties, obligations,
conditions and indemnification provisions and grants the landlord customary
remedies upon a breach of the lease by Air Industries, including the right to
terminate the lease and hold Air Industries liable for any deficiency in future
rent.
The foregoing summary is subject to, and qualified in its entirety by, the terms
of the agreement of sale, attached hereto as Exhibit 10.1, and the lease,
attached hereto as Exhibit 10.2. The terms of the agreement of sale, the lease
and all other documents attached thereto are incorporated herein by reference. A
copy of the press release announcing the closing of the transaction is attached
as Exhibit 99.1.
The representations, warranties and obligations contained in the purchase and
sale agreement and the lease are intended for the benefit of the parties as of
the date thereof, and are not to be considered factual representations to
shareholders of or prospective purchasers of the shares of Gales. Investors are
advised to review Gales' periodic filings with the SEC.
Item 2.01. Completion of Acquisition or Disposition of Assets
The information set forth under Item 1.01 is incorporated herein by reference.
Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Arrangement of a Registrant
The information set forth under Item 1.01 is incorporated herein by reference.
2
EXHIBIT
--------------------------------------------------------------------------------
10.1 Agreement of Sale, dated June 5, 2006, between Air Industries Machining,
Corp. and Net Lease Advisors LLC (predecessor-in-interest to STNLA-SPVEF
Bay Shore, LLC).
--------------------------------------------------------------------------------
10.2 Lease, dated October 24, 2006, between Air Industries Machining, Corp, as
tenant, and STNLA-SPVEF Bay Shore, LLC, as Landlord.
--------------------------------------------------------------------------------
99.1 Press Release, dated October 24, 2006, of Gales Industries Incorporated
announcing consummation of sale-and-leaseback transaction.
--------------------------------------------------------------------------------
3
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Current Report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: October 25, 2006
GALES INDUSTRIES INCORPORATED
By: /s/ Michael A. Gales
------------------------------------
Michael A. Gales, Executive Chairman
4
EXHIBIT INDEX
--------------------------------------------------------------------------------
10.1 Agreement of Sale, dated June 5, 2006,between Air Industries Machining,
Corp. and Net Lease Advisors LLC (predecessor-in-interest to STNLA-SPVEF
Bay Shore, LLC).
--------------------------------------------------------------------------------
10.2 Lease, dated October 24, 2006, between Air Industries Machining, Corp, as
tenant, and STNLA-SPVEF Bay Shore, LLC, as Landlord.
--------------------------------------------------------------------------------
99.1 Press Release, dated June 29, 2006, of Gales Industries Incorporated
announcing a up to five-year government contract.
--------------------------------------------------------------------------------
5