Item 1.01. Entry into a Material Definitive Agreement.
On September 11, 2020, Party City Holdco Inc. (the “Company”) entered into a board nomination agreement (the “Board Nomination Agreement”) with certain nominating parties (the “Nominating Parties”) in connection with a transaction support agreement (the “Transaction Support Agreement”) and backstop and private placement agreement (the “Backstop and Private Placement Agreement”) previously disclosed on Current Report on Form 8-K on May 29, 2020 and June 29, 2020, respectively. Pursuant to the terms of the Board Nomination Agreement, the Nominating Parties have the right to jointly designate one individual to serve on the Board of Directors of the Company (the “Board”). The Company has an ongoing obligation to appoint the Nominating Parties’ nominee, subject to the nominee meeting the requirements specified in Section 1(f) of the Board Nomination Agreement and being reasonably acceptable to the Nominating and Governance Committee of the Company, until the earlier of (i) August 15, 2025, (ii) the 15.00% senior secured notes due 2025 (the “Notes”) are accelerated or otherwise become due prior to August 15, 2025, or (iii) the Board Nomination Agreement terminates because (x) the Nominating Parties in aggregate hold less than $40 million in Notes or (y) all Nominating Parties cease to be a Nominating Party by virtue of each Nominating Party no longer holding at least 50% of the Notes as of the date of the Board Nomination Agreement.
The foregoing is a summary of the material terms of, and is qualified by, the Board Nomination Agreement, a copy of which is attached hereto as Exhibit 10.1 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.
Departure of Directors
On September 11, 2020, Mr. Morry J. Weiss notified the Company of his desire to resign from the Board, effective September 13, 2020. Mr. Weiss has served on the Board since 2015. Mr. Weiss’s resignation was not the result of or caused by any disagreement with the Company or the Board.
Election of Directors
On September 13, 2020, the Board, acting upon the recommendation of its Nominating and Corporate Governance Committee, increased the size of the Board from ten to eleven and appointed Jennifer Fleiss and Joel Alsfine as independent directors of the Company, effective as of September 13, 2020, to fill the newly created vacancies resulting from Mr. Weiss’ resignation and the newly created seat. Ms. Fleiss and Mr. Alsfine will hold office until the 2021 annual meeting of shareholders and until his or her successor is elected and qualified. The Board does not expect to appoint Ms. Fleiss or Mr. Alsfine to any Board committee at this time.
Ms. Fleiss and Mr. Alsfine will receive compensation for their service as members of the Board in accordance with the Company’s non-employee director compensation policy. Pursuant to this policy Ms. Fleiss and Mr. Alsfine will each receive (i) an annual cash retainer of $75,000 for service as a Board member and (ii) an annual grant of restricted stock units (“RSUs”) equal to $125,000 (based on the aggregate value of the underlying shares on the date of grant), which will fully vest on the date of the annual meeting of stockholders following the date of grant. In connection with their appointment to the Board, Ms. Fleiss and Mr. Alsfine each received a grant of 30,000 RSUs.
Ms. Fleiss most recently served as the Chief Executive Officer of Jetblack, a subdivision of Walmart, and prior as Co-Founder, President and Director of Rent the Runway. During her nine years at Rent the Runway, Ms. Fleiss served in a variety of leadership roles in operations, strategy and business development. Ms. Fleiss currently serves on the Board of Directors of Rent the Runway and Shutterfly, Inc. Previously, Ms. Fleiss worked at Lehman Brothers and Morgan Stanley Dean Witter & Co. Ms. Fleiss received her M.B.A. from Harvard Business School in 2009 and her Bachelor of Arts in Political Science from Yale University in 2005.
Ms. Fleiss was not selected as a director pursuant to any arrangement or understanding with the Company or any other person. Since the beginning of the Company’s last fiscal year through the present, there have been no transactions with the Company, and there are currently no proposed transactions with the Company, in which the amount involved exceeds $120,000 and in which Ms. Fleiss had or will have a direct or indirect material interest within the meaning of Item 404(a) of Regulation S-K.
