Item 5.02. Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain
Officers.
On May 4, 2021, the Board of Directors (the "Board") of Square, Inc. (the
"Company") increased the size of the Board from eleven to twelve directors and
elected Shawn Carter to the Board as a Class II director, effective May 6, 2021.
Mr. Carter is not expected to serve on any individual Board committees at this
time.
Mr. Carter, age 51, known professionally as JAY-Z, is a musician, songwriter,
record executive, producer, 22-time Grammy award-winner and entrepreneur. He has
served as the co-founder and majority owner of Roc Nation LLC ("Roc Nation") and
founder of Marcy Media LLC, a full-service agency and entertainment company,
since 2008 and co-founder and manager of Marcy Venture Partners, L.P., a venture
capital and private equity firm, since March 2019. Since March 2015, he has been
a founder, shareholder and artist of TIDAL, a global music and entertainment
platform that brings artists and fans closer together through unique original
content and exclusive events, which is currently majority owned by the Company
("TIDAL"). Since 2014, Mr. Carter has served as the co-founder, manager and
board member of Ace of Spades Holdings, LLC, a luxury champagne company, and
serves on the board of directors of a number of privately-held companies.
Mr. Carter has also served as the Chief Visionary Officer of TPCO Holdings Corp.
since November 2020, and previously the Chief Brand Strategist of Caliva, from
July 2019 until its acquisition by TPCO Holdings Corp. in November 2020. Since
2003, Mr. Carter has served as the founder of the Shawn Carter Scholarship
Foundation, a charitable organization focused on education. He also currently
serves on the board of directors of REFORM, a philanthropic organization
advocating for criminal justice reform.
Mr. Carter will receive the Company's standard remuneration for non-employee
directors in accordance with the Company's Outside Director Compensation Policy,
as described in the proxy statement relating to the Company's 2021 annual
meeting of stockholders. Mr. Carter has also executed the Company's standard
form of indemnification agreement.
There is no arrangement or understanding between Mr. Carter and any other
persons pursuant to which Mr. Carter was selected as a director. The following
are transactions required to be disclosed pursuant to Item 404(a) of Regulation
S-K.
TIDAL Transaction Consideration. On April 30, 2021 (the "Closing Date"), the
Company completed its previously announced acquisition of a majority stake in
TIDAL pursuant to the Share Purchase Agreement ("SPA"), dated March 3, 2021, by
and among Vandutch Acquisition Corp., a direct wholly-owned subsidiary of the
Company ("Vandutch"), Project Panther, Ltd. ("Project Panther"), certain holders
of equity interests in Project Panther listed in an exhibit to the SPA (the
"Sellers") and Mr. Carter, as Sellers' Representative. Pursuant to the SPA,
Vandutch purchased a majority interest in Project Panther in exchange for
approximately $302 million, which amount is subject to customary adjustments and
includes certain outstanding indebtedness of Project Panther and its
subsidiaries, certain transaction expenses, and the aggregate amount of certain
indemnification holdbacks established pursuant to the terms of the SPA, paid in
shares of the Company's Class A Common Stock, par value $0.0000001 per share
("Common Stock") and cash (the "Transaction"). As part of the Transaction,
Mr. Carter, directly and indirectly through entities affiliated with him,
received approximately $63.4 million in the aggregate (the "S.C. Payment"), and
a family member received approximately $450,000, in each case, in the form of
cash and Common Stock within five business days of the Closing Date. The cash
portion of the S.C. Payment includes repayment of outstanding indebtedness owed
by Project Panther and its subsidiaries to such affiliated entities. Mr. Carter,
the entities affiliated with him and the family member (collectively, the
"Related Parties") may also be entitled to receive additional amounts from
certain indemnification holdbacks in the future in connection with the
Transaction. Mr. Carter was also reimbursed $4.5 million in connection with
certain insurance expenses related to the Transaction which he previously paid
on behalf of Project Panther. Following the Transaction, the Related Parties
continue to retain a minority interest in Project Rising, LLC, TIDAL's new
parent company and a direct subsidiary of Vandutch. In connection with the
Transaction, the Company retains a call option to acquire this minority interest
in the future.
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Sublease. The Company has entered into a sublease agreement, dated as of
April 30, 2021, with Roc Nation for approximately 15,875 square feet of office
space in New York City at an annual base rate of approximately $1.5 million. The
sublease commenced on the Closing Date and has a term of one year, with the
Company having the option to extend the sublease for two additional six-month
terms and the right to terminate the sublease upon thirty (30) days' prior
notice.
Marketing Agreement. The Company has entered into a marketing agreement,
effective as of December 14, 2020, with an artist represented by Roc Nation
pursuant to which the Company would collaborate with the artist on certain
marketing campaigns. The marketing agreement has a term of one year. Roc Nation
is paid a commission of approximately $200,000 pursuant to the terms of the
marketing agreement.
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