| Item1.01 | ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT |
On March 18, 2019, 1G Acquisitions, LLC (the “Purchaser”), an indirect wholly owned subsidiary of Blucora, Inc. (the “Company”), entered into a Stock Purchase Agreement (the “Purchase Agreement”) with 1st Global, Inc. and 1st Global Insurance Services, Inc. (together, “1st Global”), certain selling stockholders named therein and joinder sellers (the “Sellers”) and SAB Representative, LLC, as the Sellers’ representative.
Pursuant to the terms and conditions of the Purchase Agreement, at the closing, Purchasers will acquire (the “Acquisition”) all of the issued and outstanding common stock of 1st Global for a cash purchase price of $180 million, which is subject to customary purchase price adjustments and certain indemnity escrows as described more fully in the Purchase Agreement. The Purchaser’spre-closing obligations under the Purchase Agreement, including its obligation to pay the purchase price, are guaranteed by the Company. The consummation of the Acquisition is subject to certain conditions, but Purchaser’s obligation is not subject to any condition related to the availability of financing. The purchase price is expected to be paid with a combination of cash on hand and a new term loan under the Company’s credit facility.Any financing arrangement used to pay a portion of the purchase price is expected to be entered into on or about the time of the closing of the Acquisition.
The Purchase Agreement contains customary representations, warranties and covenants of the Sellers and 1st Global relating to 1st Global and the Acquisition. From the date of the Purchase Agreement until the closing, 1st Global and the Sellers are required to operate 1st Global’s business in the ordinary course and to comply with certain covenants regarding the operation of such business. In addition, the Sellers and 1st Global agreed to a “no shop” provision that limits the ability of 1st Global and the Sellers to discuss or engage in certain alternative transactions to the Acquisition prior to the closing, subject to certain exceptions. The Purchase Agreement also includes customarynon-competition andnon-solicitation provisions applicable to certain Sellers.
The closing of the Acquisition is subject to the satisfaction or waiver of customary closing conditions, including, among others, (i) the accuracy of representations and warranties set forth in the Purchase Agreement and compliance with covenants set forth in the Purchase Agreement (in each case, subject to certain materiality or material adverse effect qualifications), (ii) the absence of a material adverse effect with respect to 1st Global, (iii) the expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”), (iv) the failure to receive any material objection by the Financial Industry Regulatory Authority (“FINRA”) to the Acquisition within 45 days of the date of the application for FINRA approval; (v) at least 45 days having elapsed following 1st Global providing a notice to its clients concerning the Acquisition and the proposed assignment of their existing advisory contracts to the Company; and (vi) 1st Global’s assets under administration (as defined in the Purchase Agreement) as of the closing being no less than 95% of 1st Global’s assets under administration as of the date of the Purchase Agreement. The Acquisition is expected to close prior to May 31, 2019.
The Purchase Agreement contains certain termination rights for the parties, including if the Acquisition does not close before June 3, 2019 and the waiting period under the HSR Act with respect to the Acquisition has not expired or been terminated at such time; provided that the terminating party is not in material default of its obligations under the Purchase Agreement and has not materially defaulted in any of its obligations under the Purchase Agreement in a way that was reasonably likely to delay the attainment of any of the conditions to closing. No termination fee is payable by the Company, the Purchaser, 1st Global, the Sellers or the Sellers’ representative in the event of a termination of the Purchase Agreement.
Subject to certain limitations and conditions set forth in the Purchase Agreement, the parties have agreed to indemnify each other for, among other things, breaches of representations, warranties and covenants contained in the Purchase Agreement, and, in the case of Sellers, to indemnify the Purchaser, the Company and 1st Global for certain tax and otherpre- and post-closing liabilities. To supplement the indemnification provided by the Sellers, various escrows have been established and the Purchaser has obtained representation and warranty insurance from a third party.
The foregoing description of the Purchase Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Purchase Agreement, a copy of which is filed as Exhibit 2.1 hereto and is incorporated by reference herein.
The Purchase Agreement is being filed in accordance with the requirements of federal securities laws in order to provide investors and security holders with information regarding its terms. It is not intended to provide any other factual information about the parties to the Purchase Agreement. The representations, warranties and covenants of each party set forth in the Purchase Agreement were made only for purposes of the Purchase Agreement as of the specific dates set forth therein, were solely for the benefit of the parties to the Purchase Agreement, may be subject to limitations agreed upon by the contracting parties, including being qualified by confidential disclosures made for the purposes of allocating contractual risk between the parties to the Purchase
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