ITEM 1.01. ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT.
On May 2, 2019, Navient Corporation, a Delaware corporation (the “Company”), entered into a cooperation agreement (the “Agreement”) with Canyon Capital Advisors LLC and certain of its affiliates (collectively, “Canyon”). Canyon beneficially owns approximately 10.7% of the Company’s outstanding common stock. Pursuant to the Agreement, the Board of Directors of the Company (the “Board”) agreed, among other things, to appoint Marjorie Bowen and Larry Klane as directors of the Company, subject to satisfaction of customary conditions, and to nominate and recommend Ms. Bowen and Mr. Klane for election to the Board at the Company’s 2019 Annual Meeting of Shareholders (the “2019 Annual Meeting”). The Agreement also provides for customary director replacement rights. In connection with the Agreement, Canyon will withdraw its nomination notice and vote in favor of the slate of directors nominated by the Board for election at the 2019 Annual Meeting.
Under the terms of the Agreement, Canyon has agreed to abide by customary standstill restrictions until the earlier of (i) ten business days prior to the deadline for submission of a notice of shareholder nomination of individuals for election as directors of the Company at the Company’s 2020 annual meeting of shareholders and (ii) December 31, 2019 (the “Standstill Period”). Pursuant to the Agreement, Ms. Bowen, Mr. Klane and Frederick Arnold, a director of the Company, have each delivered to the Company an irrevocable advance resignation letter, tendering their respective resignations from the Board upon the occurrence of certain events specified in such resignation letters, which resignations may be accepted by the Board in its sole discretion.
In connection with the approval of the Company’s slate of nominees for the 2019 Annual Meeting, William M. Diefenderfer, III notified the Board that he has chosen not to stand forre-election at the 2019 Annual Meeting. Pursuant to the Agreement, Barry L. Williams has agreed to retire from the Board prior to August 31, 2019. After Mr. Diefenderfer and Mr. Williams are no longer directors and during the Standstill Period, the Board has agreed that its size will be no more than ten.
Pursuant to the Agreement, the Board appointed Mr. Arnold as a member of the Finance and Operations Committee of the Board, and the Board agreed that such committee will retain, in its discretion, one or more financial advisors and/or consultants to assist with its oversight and review of the Company’s policies and practices. The Company also agreed that the Board will appoint at least one of Ms. Bowen and Mr. Klane to each of the Nominations and Governance Committee of the Board and the Compensation and Personnel Committee of the Board, respectively. The specific committee appointments of each of Ms. Bowen and Mr. Klane will be determined by the Board.
The parties also agreed to customary mutualnon-disparagement obligations, and the Company agreed to reimburse Canyon for its reasonable and documentedout-of-pocket expenses related to preparing for, engaging in and settling the proxy contest up to a cap of $2,750,000.
On May 2, 2019, the Company and Canyon issued a press release announcing the signing of the Agreement. A copy of the press release is attached hereto as Exhibit 99.1. As a result of the Agreement, the Company no longer intends to mail the letter to shareholders regarding the 2019 Annual Meeting filed with the U.S. Securities and Exchange Commission (the “SEC”) on April 30, 2019.
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