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Item 1.01 | Entry into a Material Definitive Agreement. |
On May 19, 2023 (the “Closing Date”), a wholly-owned subsidiary (the “Purchaser”) of Global Industrial Company (the “Company”) entered into and completed certain transactions contemplated by a Securities Purchase Agreement (the “Purchase Agreement”) with the holder (the “Seller”) of 100% of the issued and outstanding equity interests (both voting and economic) of Indoff (“Indoff”), and certain direct and indirect owners of the Seller who beneficially own Indoff through the Seller (the “Seller Owners”). Pursuant to the Purchase Agreement, among other things, the Purchaser acquired 100% of the issued and outstanding equity interests (both voting and economic) of Indoff in exchange for a cash purchase price (subject to adjustment for closing expenses and leakage) of approximately $69.2 million. The Company funded the purchase price from the Company’s existing credit facility and cash on hand.
The Purchase Agreement contains customary representations, warranties and covenants for a transaction of this type, size and nature, including customary non-compete, non-solicitation, non-disparagement and non-hire covenants binding on the Seller and the Seller Owners, preventing such persons from participating in certain competitive activities for a period of five years following the Closing Date. Subject to certain limitations in the Purchase Agreement, the Seller and the Seller Owners are required to indemnify and defend the Purchaser and its affiliates (including the Company) for certain losses resulting from breaches or inaccuracies of the Seller’s and the Seller Owners’ representations, warranties and covenants made in the Purchase Agreement and for certain other matters, in each case, as set forth in the Purchase Agreement. A portion of the purchase price in an amount equal to $5,193,750 in cash was deposited into an escrow account for a limited time to satisfy certain claims for indemnification that the Purchaser may have under the Purchase Agreement.
The Purchase Agreement is incorporated by reference herein to provide investors with information regarding its terms. It is not intended to provide any other factual information about the Company, the Purchaser, the Seller, the Seller Owners, Indoff or their respective affiliates (as applicable). The representations, warranties and covenants contained in the Purchase Agreement were made only for purposes of the Purchase Agreement and as of specific dates, were solely for the benefit of the parties to the Purchase Agreement, may be subject to limitations agreed upon by the parties, including being qualified by confidential disclosures made for the purposes of allocating contractual risk between the parties instead of establishing these matters as facts, and may be subject to standards of materiality applicable to the parties that differ from those applicable to investors or from what may be viewed as material by investors. Investors are not third-party beneficiaries under the Purchase Agreement and should not rely on the representations, warranties and covenants or any descriptions thereof as characterizations of the actual state of facts or condition of the parties or any of their respective affiliates (as applicable). Moreover, information concerning the subject matter of the representations and warranties may change after the date hereof, which subsequent information may or may not be fully reflected in the Company’s public disclosures.
The foregoing description of the Purchase Agreement, and the transactions contemplated thereby, is not complete and is subject to, and qualified in its entirety by, the full text of the Purchase Agreement. The Company expects to file the Purchase Agreement as an exhibit to its quarterly report on Form 10-Q for the quarter ended June 30, 2023.