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.
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On April 4, 2022, Mr. Lerner entered into an Independent Director Compensation
Agreement in substantially the form filed by the Company with the SEC as Exhibit
10.26 to its Form 10-K on March 4, 2022. Mr. Lerner will be compensated in
accordance with that agreement, including the initial equity grant and committee
fees as set forth therein.
Mr. Lerner, age 38, is currently an Investment Partner at Indaba. Mr. Lerner
joined Indaba in 2010, and following his graduation from business school in
2014, rejoined Indaba and was elected Partner in 2016. Prior to joining Indaba,
Mr. Lerner was an analyst in the Mergers & Acquisitions Group at Lazard Ltd.
Mr. Lerner currently serves on the board of directors of 826 Valencia.
Mr. Lerner earned an M.B.A. from the Graduate School of Business at Stanford
University and graduated from Stanford University with a B.A. in English.
Other than as described in Item 1.01 of this Current Report on Form 8-K and the
Cooperation Agreement, there are no arrangements or understandings between
Mr. Lerner or any other persons pursuant to which he was named a director of the
Company. Mr. Lerner and his immediate family members do not have any direct or
indirect material interest in any transaction or proposed transaction required
to be reported under Item 404(a) of Regulation S-K.
As previously disclosed, on October 29, 2021, Francis J. Pelzer V notified the
Board of his intent to step down from the Board after more than eight years of
service. On April 4, 2022, Mr. Pelzer notified the Board of his retirement,
effective immediately. Mr. Pelzer's decision to retire from the Board was not
related to any disagreement with the Company on any matter relating to the
Company's operations, policies or practices. Following the addition of
Mr. Lerner and the departure of Mr. Pelzer, the size of the Board will remain at
nine directors.
Item 1.01 of this Form 8-K is incorporated by reference herein. A copy of the
press release regarding the appointment of Mr. Lerner to the Board is attached
hereto as Exhibit 99.1 and is incorporated by reference herein.
9.01 Financial Statements and Exhibits.
(d) Exhibits
Exhibit
No. Description
10.1 Cooperation Agreement, dated April 4, 2022, by and between
Benefitfocus, Inc. and Indaba Capital Management, L.P.
99.1 Press Release dated April 4, 2022.
104 Cover Page Interactive Data File (embedded within the Inline XBRL
document).
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