| Item 1.01 | Entry into a Material Definitive Agreement. |
On April 4, 2022, Benefitfocus, Inc. (the “Company”) entered into a cooperation agreement (the “Cooperation Agreement”) with Indaba Capital Management, L.P. ( “Indaba”).
Pursuant to the Cooperation Agreement, the Company appointed Alexander Lerner, an Investment Partner at Indaba, as a Class II member of the Board of Directors of the Company (the “Board”), with a term expiring at the Company’s 2022 annual meeting of stockholders (the “2022 Annual Meeting”), anticipated to be held in June 2022. The Board also will nominate Mr. Lerner (or his replacement appointed in accordance with the terms of the Cooperation Agreement) for election as a director at the 2022 Annual Meeting. Mr. Lerner has been appointed Co-Chair of each of the Board’s Nominating and Governance and Strategy and Finance Committees. The Strategy and Finance Committee is tasked with assessing strategic and value creation opportunities.
As a part of the Cooperation Agreement, Indaba has agreed to customary standstill provisions during the Term (as defined below) of the Cooperation Agreement, which provide that, subject to certain exceptions, Indaba will not, among other things: (i) seek, alone or in concert with others, the election, nomination, or removal of a director of the Company; (ii) solicit proxies of stockholders or encourage or assist other stockholders to withhold their vote or proxy or similar campaign; (iii) indicate interest in or make any offer or proposal with respect to certain extraordinary transactions involving the Company; (iv) make any proposal for consideration at any meeting of stockholders of the Company; or (v) acquire beneficial ownership of more than 14.99% of the Company’s outstanding common stock; in each case as further described in the Cooperation Agreement.
The term of the Cooperation Agreement (the “Term”) begins on the date of the Cooperation Agreement and ends thirty days before the nomination window closes under the Company’s Bylaws for the Company’s 2023 annual meeting of stockholders.
Indaba also has agreed that, during the Term of the Cooperation Agreement, it will vote its shares of the Company’s common stock at any meeting of the Company’s shareholders in favor of each director nominated and recommended by the Board for election at any such meeting and, subject to certain exceptions, in support of other proposals as recommended by the Board.
Pursuant to the Cooperation Agreement, Mr. Lerner will receive the same benefits and the same compensation as other non-management directors on the Board and the Company will bear no responsibility for how Indaba or its affiliates classify or disclose beneficial ownership and pecuniary interest in any equity compensation paid to Mr. Lerner.
A copy of the Cooperation Agreement is filed with this Current Report on Form 8-K as Exhibit 10.1 and is incorporated by reference herein. The foregoing description of the Cooperation Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Cooperation Agreement.
| Item 5.02 | Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers. |
(b), (d) Departure and Election of Directors
Pursuant to the Cooperation Agreement, on April 4, 2022, the Board appointed Mr. Lerner as a Class II director to hold office until the 2022 Annual Meeting or until his successor is duly elected and qualified. The Board has determined that Mr. Lerner is an independent director under the relevant Nasdaq rules. Accordingly, following Mr. Lerner’s appointment, the Board remains majority independent.
