ITEM 2.01. COMPLETION OF ACQUISITION OR DISPOSITION OF ASSETS.
Effective January 1, 2020, Genesco Brands NY, LLC, a Delaware limited liability company (“Purchaser”) and a wholly-owned subsidiary of Genesco Inc., a Tennessee corporation (the “Company”), completed its acquisition of substantially all of the assets, and assumption of certain liabilities, of Togast LLC, a Delaware limited liability company (“Togast”), Togast Direct, LLC, a New York limited liability company (“Togast Direct”) and TGB Design, LLC, a New Jersey limited liability company (“TGB Design”). Pursuant to the terms of the previously announced Asset Purchase Agreement (the “Purchase Agreement”), dated as of December 18, 2019, among (i) Purchaser, (ii) Togast, (iii) Togast Direct, (iv) TGB Design, (v) Quanzhou TGB Footwear Co. Ltd., an entity organized under the laws of China (“TGB China”), and (vi) Anthony LoConte (the “Unitholder”), the Purchaser acquired substantially all of the assets of, and assumed certain liabilities of, Togast, Togast Direct and TGB Design (the “Transaction”) for an aggregate base purchase price of $33.5 million in cash at closing, which was paid in full in cash at the closing, with an additional two-part earnout provision of up to an additional $17.0 million in cash following the Company’s fiscal 2022 and an additional $17.0 million in cash following the Company’s fiscal 2024, contingent upon the acquired business achieving certain earnings targets over multi-year periods, plus a potential further payment following fiscal 2022 of 10% of earnings in excess of the earnings target. The purchase was funded from cash on hand.
The Purchase Agreement contains customary representations, warranties and covenants by each party. Togast, Togast Direct, TGB Design, the Unitholder and the Purchaser have agreed to indemnify the other party(ies) for losses arising from certain breaches of representations, warranties and covenants of the parties and for certain other matters, subject to applicable limitations set forth in the Purchase Agreement.
The acquisition by Purchaser of the assets of TGB China for a purchase price of $150,000 is anticipated to occur in the first quarter of the Company’s fiscal 2021 following receipt of certain Chinese regulatory approvals and following the satisfaction of certain closing conditions related thereto set forth in the Purchase Agreement. TGB China and the Purchaser have entered into a transition services agreement pending the acquisition of the assets of TGB China.
A copy of the Purchase Agreement was attached as Exhibit 2.1 to the Company’s Current Report on Form 8-K filed on December 18, 2019 and is incorporated herein by reference. The foregoing summary of the Purchase Agreement and the Transaction does not purport to be complete and is subject to, and qualified in its entirety by, the full text of the Purchase Agreement.
The Purchase Agreement is not intended to modify or supplement any factual disclosures about the Company or its subsidiaries in the Company’s public reports filed with the Securities and Exchange Commission and is not intended to be, and should not be relied upon as, disclosures regarding any facts and circumstances relating to the Company or its subsidiaries. In particular, the representations, warranties and covenants set forth in the Purchase Agreement (i) were made solely for purposes of the Transaction and solely for the benefit of the contracting parties (except with respect to the rights of specific third parties enumerated in the Purchase Agreement), (ii) may be subject to limitations agreed upon by the contracting parties, including certain disclosure schedules, (iii) are qualified in certain circumstances by a materiality standard which may differ from what may be viewed as material by investors, (iv) were made only as of the date(s) specified in the Purchase Agreement, and (v) may have been included in the Purchase Agreement for the purpose of allocating risk between the parties rather than establishing matters as facts. 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 conditions of the parties. Moreover, information concerning the subject matter of the representations and warranties may change after the date of the Purchase Agreement.