Item 1.01 Entry into a Material Definitive Agreement.
Amendment to Third Amended and Restated Cooperation Agreement
On August 12, 2020, Avis Budget Group, Inc. (the "Company") entered into an
Amendment (the "Amendment") to the Third Amended and Restated Cooperation
Agreement (the "Third A&R Cooperation Agreement"), dated as of February 23,
2020, among the Company, SRS Investment Management, LLC and certain of its
affiliates (collectively, "SRS").
The Amendment, which becomes effective on August 21, 2020, provides that during
the Standstill Period (as defined in the Third A&R Cooperation Agreement), the
number of persons that SRS will be entitled to designate to serve as members of
the Board of Directors of the Company (the "Board") will be reduced from three
to two. The Amendment also removes the provisions requiring the Board to appoint
additional directors to the Board. Under the terms of the Amendment, the size of
each of the Corporate Governance Committee and the Compensation Committee will
be set at no fewer than two and no more than three members, rather than three
members.
The foregoing summary of the Amendment does not purport to be complete and is
qualified in its entirety by reference to the full text of the Amendment, a copy
of which is attached as Exhibit 10.1 hereto and is incorporated herein by
reference.
Item 5.02 Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain
Officers.
Mr. ChoiOn August 13, 2020, the Company announced that Brian J. Choi will resign from
the Board, which will become effective August 21, 2020, and he will become Chief
Financial Officer of the Company, effective August 24, 2020. John F. North, III
will continue to serve as Chief Financial Officer until August 24, 2020.
Mr. Choi, 37, has been a member of the Board since January 2016, and a partner
at SRS, serving in various roles, from October 2008. Mr. Choi will resign from
SRS, effective August 21, 2020, and will no longer have any affiliation with
SRS. Prior to joining SRS, Mr. Choi worked at Metalmark Capital from 2007 to
2008 and also served as an analyst in the Leveraged Finance Group at Lehman
Brothers from 2005 to 2007.
Pursuant to Mr. Choi's offer letter, dated August 12, 2020 (the "Offer Letter"),
Mr. Choi will receive an annual base salary of $500,000, will be eligible to
earn an annual incentive award at a target rate of 100% of base salary, subject
to attainment of applicable performance goals, and starting in 2021 will be
eligible to participate in the Company's long-term incentive program. In
connection with his appointment, Mr. Choi is expected to receive a time-based
restricted stock unit award with a grant date value of $3,000,000 at the end of
August 2020, which is expected to vest ratably over the three years from the
date of grant, subject to continued service.
Mr. North
Mr. North will transition from Chief Financial Officer of the Company, effective
August 24, 2020, and will remain employed with the Company as an advisor through
the end of 2020. In connection with Mr. North's transition, the Company entered
into a Separation Agreement with Mr. North, dated August 12, 2020 (the
"Separation Agreement"), on terms consistent with Mr. North's Severance
Agreement with the Company. Accordingly, the Separation Agreement provides for
cash severance of $2.5 million and the acceleration of 99,678 outstanding
time-based restricted stock units, and the cancelation of 12,645 time-based
restricted stock units and 37,933 performance-based stock units. The Company is
not expected to be obligated to make any severance payments until 2021, and the
Company's obligation to provide severance payments or benefits is contingent on
Mr. North's execution and non-revocation of a release of claims pursuant to the
terms of the Separation Agreement. The Separation Agreement also provides that
Mr. North will remain subject to non-competition and non-solicitation covenants
for two years following his separation from the Company.
The Offer Letter and the Separation Agreement are attached hereto as Exhibit
10.2 and 10.3, respectively, and incorporated herein by reference. The foregoing
description of the Offer Letter and the Separation Agreement does not purport to
be complete and is qualified in its entirety by reference to the full text of
the Offer Letter and Separation Agreement, respectively.
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Item 5.03 Amendments to Articles of Incorporation or Bylaws; Change in Fiscal
Year.
On August 10, 2020, the Board approved an amendment to the Company's Amended and
Restated By-Laws. The amendment reduced the required number of members on the
Compensation Committee from three to two members.
The foregoing summary is qualified in its entirety by reference to the text of
the Company's Amended and Restated By-Laws, as of August 10, 2020, a copy of
which is attached as Exhibit 3.2 and is incorporated herein by reference.
Item 7.01 Regulation FD Disclosure.
On August 13, 2020, the Company issued a press release regarding certain of the
foregoing items. A copy of the press release is furnished herewith as Exhibit
99.1 and is incorporated herein by reference.
Item 8.01 Other Items.
In connection with the resignation of Mr. Choi from the Board, the Board has
approved the composition of the Board Committees as follows:
• Audit: Carl Sparks (Chair), Lynn Krominga and Glenn Lurie
• Compensation: Karthik Sarma (Chair), Lynn Krominga and Glenn Lurie
• Corporate Governance: Lynn Krominga (Chair), Karthik Sarma and Carl Sparks
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
Exhibit
No. Description
3.2 Amended and Restated Bylaws of Avis Budget Group, Inc., dated as of
August 10, 2020
10.1 Amendment, dated August 12, 2020, to Third Amended and Restated
Cooperation Agreement, dated as of February 23, 2020, by and among
Avis Budget Group, Inc., SRS Investment Management, LLC and certain of
its affiliates.
10.2 Offer Letter, dated August 12, 2020, between Brian Choi and Avis
Budget Group, Inc.
10.3 Separation Agreement, dated August 12, 2020, between John North and
Avis Budget Group, Inc.
99.1 Press Release dated August 13, 2020.
104 The cover page from this Current Report on Form 8-K formatted in
Inline XBRL (included as Exhibit 101).
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