ITEM 1.01
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Entry into a Material Definitive Agreement.
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Agreement with Starboard Value LP
On March 22, 2020, Box, Inc., a Delaware corporation (the “Company”) entered into an agreement (the “Agreement”) with Starboard Value LP and certain of its affiliates (collectively, “Starboard”), regarding, among other things, the membership and composition of the Company’s Board of Directors (the “Board”) and committees thereof. Starboard beneficially owns approximately 7.7% of the Company’s outstanding common stock.
Pursuant to the Agreement, the Company agreed (i) to increase the size of the Board from nine directors to 12 directors and appoint Jack Lazar as a Class III director and one additional Class II director, who will be selected from a list of candidates mutually agreed to by the Company and Starboard pursuant to the procedures described in the Agreement (collectively, the “Independent Designees”), to the Board; (ii) to identify and appoint one additional independent Class III director prior to the Company’s 2020 annual meeting of stockholders (the “2020 Annual Meeting”); (iii) that Rory O’Driscoll and Dylan Smith will not stand for reelection as directors at the 2020 Annual Meeting; (iv) that Josh Stein would resign from the Board effective as of the conclusion of the 2020 Annual Meeting; (v) to form an operating committee of the Board (the “Operating Committee”) to work with the Company’s Chief Executive Officer and management to identify and recommend opportunities for further improvement in growth and margin performance; (vi) to appoint the members of the Operating Committee as described in Item 5.02 of this Current Report on Form 8-K; and (vii) to provide at least one Independent Designee the opportunity to serve on each standing committee of the Board and provide each Independent Designee the opportunity to serve on at least one standing committee of the Board. Following the conclusion of the 2020 Annual Meeting, the Company agreed to reduce the size of the Board to nine directors.
With respect to the 2020 Annual Meeting, Starboard has agreed to, among other things, vote, subject to certain conditions, all shares of the Company’s Class A common stock beneficially owned by Starboard in favor of the Company’s director nominees and in accordance with the Board’s recommendations on all other proposals.
Starboard also agreed to certain customary standstill provisions, effective as of the date of the Agreement through the earlier of (x) 15 business days prior to the deadline for the submission of stockholder nominations for the Company’s 2021 annual meeting of stockholders and (y) 100 days prior to the first anniversary of the 2020 Annual Meeting (the “Standstill Period”), prohibiting it from, among other things: (i) soliciting proxies or consents with respect to securities of the Company; (ii) entering into a voting agreement or forming, joining or participating in a “group” with other stockholders of the Company, other than certain affiliates of Starboard; (iii) seeking or submitting or encouraging any person to submit nominees in furtherance of a contested solicitation for the appointment, election or removal of directors; (iv) submitting any proposal for consideration by stockholders of the Company at any annual or special meeting of stockholders or through any written consent, soliciting a third party to make an acquisition proposal, commenting on any third-party acquisition proposal or calling or seeking a special meeting of stockholders or act by written consent; (v) seeking, alone or in concert with others, representation on the Board other than as described above; or (vi) advising, encouraging, supporting, or influencing any person with respect to the voting or disposition of the Company’s Class A common stock.
During the Standstill Period, and for so long as Starboard beneficially owns at least 3.0% of the Company’s then-outstanding Class A common stock or 4,560,420 shares of Class A common stock, whichever is lesser (the “Minimum Ownership Threshold”), if any Independent Designee ceases to be a director for any reason, Starboard may recommend a replacement independent director who is not an affiliate or employee or director of Starboard and meets other criteria specified in the Agreement.
The Company and Starboard also made certain customary representations, agreed to mutual non-disparagement provisions and agreed to jointly issue a press release announcing certain terms of the Agreement. The Company also agreed to reimburse Starboard for its reasonable, documented out-of-pocket fees and expenses (including legal fees) incurred in connection with Starboard’s involvement with the Company though the date of the Agreement.
The foregoing summary of the Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Agreement, a copy of which is filed with this Current Report on Form 8-K as Exhibit 10.01 and is incorporated herein by reference.