Item 1.01 Entry into a Material Definitive Agreement.
On April 24, 2018, Genesco Inc., a Tennessee corporation (the “
Company
”), entered into an agreement (the “
Cooperation Agreement
”) with Legion Partners Asset Management, LLC (“
Legion Partners
”), 4010 Capital, LLC (“
4010 Capital
”) and each of the persons listed on the signature page thereto, together with Legion Partners and 4010 Capital, the “
Investor Group
.” As of the date of the Cooperation Agreement, the Investor Group has represented to the Company that it is deemed to beneficially own shares common stock of the Company, par value $1.00 per share (the “
Common Stock
”), totaling, in the aggregate, 1,065,234 shares or approximately 5.3% of the Common Stock outstanding as of April 24, 2018.
The Cooperation Agreement provides, among other things, that the size of the Board of Directors of the Company (the “
Board
”) will be increased from ten to twelve and that Ms. Marjorie L. Bowen and Mr. Joshua E. Schechter (or their replacements, collectively, the “
New Directors
”) will be appointed to the Board on April 24, 2018 and will be nominated as a candidates for re-election to the Board at the Company’s 2018 annual meeting of shareholders. The Cooperation Agreement also provides that the New Directors or their replacements will be appointed to the Strategic Alternatives Committee of the Board (the “
Committee
”). Pursuant to the Cooperation Agreement, the Company also agreed that the Committee will undertake an updated review of strategic alternatives and that the Board will consider in good faith, with the advice of its financial advisors, returning all or a substantial portion of the net proceeds from any sale of the Lids Sports Group to shareholders, including through share repurchases and/or a special dividend. In addition, pursuant to the Cooperation Agreement, the size of the Board will be reduced from twelve to eleven members immediately following the Company’s 2018 annual meeting of shareholders (and the size of the Board will not increase to more than eleven through the expiration of the Standstill Period (as defined below)).
Under the terms of the Cooperation Agreement, the Investor Group agreed not to nominate any director candidates to stand for election at the Company’s 2018 Annual Meeting. In addition, the Cooperation Agreement provides that, at the 2018 Annual Meeting and at any meeting of the Company’s shareholders held prior to the expiration of the Standstill Period, the Investor Group will vote all of their shares of Common Stock in favor of the election of directors nominated by the Board and otherwise in accordance with the Board’s recommendation, subject to certain exceptions for extraordinary transactions and certain matters with a contrary recommendation from Institutional Shareholder Services Inc. and Glass Lewis & Co., LLC.
The Cooperation Agreement includes certain restrictions applicable from April 24, 2018 until the date that is ten business days prior to the expiration of the advance notice period for the submission of shareholder nominations of directors for the 2019 annual meeting of shareholders pursuant to the Company’s Amended and Restated Bylaws (the “
Standstill Period
”).
During the Standstill Period, the Investor Group is restricted from, among other things, engaging in any solicitation of proxies or written consents to vote any voting securities of the Company, and from acquiring any securities of the Company that would result in the Investor Group, in the aggregate, having beneficial ownership of more than 10% of the Company’s outstanding Common Stock. The Investor Group has also agreed to certain non-disparagement provisions.
Under the terms of the Cooperation Agreement, the Company has also agreed to reimburse the Investor Group for its reasonable documented out-of-pocket third party expenses, including legal fees and expenses, as actually incurred in connection with the Investor Group’s involvement with the Company prior to April 24, 2018 and the negotiation and execution of the Cooperation Agreement in an amount not to exceed $60,000.00.
The foregoing description of the Cooperation Agreement is qualified in its entirely by reference to the full text of the Cooperation Agreement, which is filed herewith as Exhibit 10.1 and incorporated herein by reference.