SMIT Schmitt Industries Inc

Item 1.01 Entry into a Material Definitive Agreement.

(a) On October 9, 2019, Schmitt Industries, Inc. (“Registrant” or “Schmitt”) entered into a definitive agreement to sell its SBS business line to Tosei Engineering Corp. and Tosei America, Inc., for a purchase price of $10.5 million in cash, subject to customary closing adjustments (the “Purchase Agreement”). The transaction, which was approved by Schmitt’s Board of Directors, is expected to close in the fourth quarter of calendar year 2019 following a 30-day go shop period.

The foregoing description of the Purchase Agreement does not purport to be complete and is qualified in its entirety by reference to the Purchase Agreement attached hereto as Exhibit 1.01(a) and incorporated herein by reference.

The Registrant has made customary representations, warranties and covenants in the Purchase Agreement. The closing of the acquisition is subject to customary closing conditions, including the absence of any legal proceeding, law or governmental order that prevents the completion of the transactions contemplated by the Purchase Agreement and the accuracy of the representations and warranties of, and compliance with covenants by, each of the parties to the Purchase Agreement. The closing is not subject to a financing condition.

The Purchase Agreement has been filed with this Current Report on Form 8-K to provide investors with information regarding its terms. It is not intended to provide any other factual information about the Registrant. The representations, warranties and covenants contained in the Purchase Agreement were made only for purposes of such agreement and as of specific dates, were solely for the benefit of the parties to such Purchase Agreement, and may be subject to important limitations agreed upon by the contracting parties, including being qualified by confidential disclosures exchanged between the parties in connection with the execution of the Purchase Agreement. The representations and warranties may have been made for the purposes of allocating contractual risk between the parties to the agreement instead of establishing these matters as facts and may be subject to standards of materiality applicable to the contracting parties that differ from those applicable to 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 thereto or any of their respective subsidiaries or affiliates. Moreover, information concerning the subject matter of representations and warranties may change after the date of the Purchase Agreement, which subsequent information may or may not be fully reflected in the Registrant’s public disclosures.