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Item 1.01
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Entry into a Material Definitive Agreement.
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On October 9, 2020, EVI Industries, Inc.,
a Delaware corporation (the “Company”), entered into an Agreement and Plan of Merger (the “Merger Agreement”)
with Yankee Equipment Systems, LLC, a Delaware limited liability company and a wholly-owned subsidiary of the Company (“Merger
Sub”), on the one hand, and Yankee Equipment Systems, Inc., a New Hampshire corporation (“YES”), Limoncelli Family
2020 Revocable Trust U/I/D June 29, 2020 (the “Seller”), and Peter Limoncelli, an individual residing in the State
of New Hampshire (the “Principal”). Pursuant to the Merger Agreement, among other things, YES will merge with and into
Merger Sub with the result that Merger Sub will continue as the surviving corporation and a wholly-owned subsidiary of the Company
(the “Merger”).
Subject to certain working capital and other
adjustments, the consideration for the Merger will be equal to $13,500,000, consisting of: (a) $6,500,000 in cash, of which $2,025,000
(the “Escrow Amount”) will be deposited in an escrow account for no less than 18 months after the date of the closing
of the Merger (subject to extension in certain circumstances), (b) 278,385 shares (the “Stock Consideration”) of the
Company’s common stock, par value $0.025 per share (the “Common Stock”), and (iii) the Merger Sub will assume
that certain the Note, dated as of April 31, 2020, between YES, as borrower, and TD Bank, NA, as lender, obtained in accordance
with and pursuant to Section 1102 of the Coronavirus Aid, Relief, and Economic Security Act, Pub.L. 116–136 (03/27/2020)
in the principal amount of $916,232.
The Merger Agreement contains representations,
warranties and covenants customary for a transaction of its size and nature. Subject to certain limitations, the Company, on the
one hand, and the Seller and the Principal, on the other hand, have agreed to indemnify each other for breaches of representations,
warranties and covenants and other specified matters.
The Merger Agreement contains certain termination
rights for the Company and the Merger Sub, on the one hand, and YES, the Seller and the Principal, on the other hand, including,
but not limited to, (i) by mutual written agreement; (ii) if the closing has not occurred on or before December 31, 2020; and (iii)
the non-performance of any material covenant or other agreement set forth in the Merger Agreement after an opportunity to cure
in some cases.
Each of the Seller and Principal have agreed
to vote all shares of Common Stock owned by them at any time during the period beginning on the date of the closing of the Merger
and ending on the fifth anniversary of the closing of the Merger in accordance with the recommendations or directions of the Company’s
board of directors and grant to the Company and its designees, an irrevocable proxy and power of attorney in furtherance thereof.
The Merger Agreement contains certain transfer restrictions with respect to the shares of Common Stock held by the Seller and the
Principal for a period beginning on the date of the closing of the Merger and ending on the fifth anniversary of closing of the
Merger. Notwithstanding the foregoing, on the day immediately following the six-month anniversary of the closing of the Merger,
69,596 shares of Common Stock issued to Seller as the Stock Consideration will be released from the voting agreement and transfer
restrictions described above.
The Company is subject to closing conditions,
including, but not limited to, (i) the approval by the NYSE American of the listing of the Stock Consideration to be issued at
the closing of the Merger; (ii) the accuracy of the representations and warranties of the parties; and (iii) the parties’
performance and compliance in all material respects with the agreements and covenants contained in the Merger Agreement
The foregoing description of the Merger
Agreement is a summary and does not purport to be complete, and is subject to, and qualified in its entirety by reference to, the
Merger Agreement, a copy of which will be filed with the Company’s next periodic report.
The Merger Agreement contains representations
and warranties made by the parties as of specific dates and solely for their benefit. The representations and warranties reflect
negotiations between the parties and are not intended as statements of fact to be relied upon by the Company’s stockholders
or any other person or entity other than the parties to the Merger Agreement, and in certain cases, represent allocation decisions
among the parties and are modified or qualified by correspondence or confidential disclosures made between the parties in connection
with the negotiation of the Merger Agreement (which disclosures are not reflected in the Merger Agreement itself, may not be true
as of any date other than the date made, or may apply standards of materiality in a way that is different from what may be viewed
as material by stockholders). Accordingly, the representations and warranties may not describe the actual state of affairs at the
date they were made or at any other time, and stockholders should not rely on them as statements of fact. Moreover, information
concerning the subject matter of the representations and warranties may change after the date of the Merger Agreement.