Related Party Transactions with Officers and Directors |
9 Months Ended |
|---|---|
Sep. 30, 2021 | |
| Related Party Transactions with Officers and Directors | |
| Related Party Transactions with Officers and Directors |
(8) Related Party Transactions with Officers and Directors
Malone Stock Exchange and Maffei Arrangements
On May18, 2021,Gregory B. Maffei, the Chairman of the Boardand a director of the Company,delivered a written offer (the “Offer”) to John C. Malone, a director of߲ݴý, to acquire all ofthe outstanding shares of QRTEB beneficially owned by Mr.Malone, his wife Leslie Malone and certain trusts for the benefit of Mr. Malone, Mrs. Malone and/or their children (the “Malone Group,” and such shares, the “Subject Shares”) at a per share price of $14.00 payable in cash, securities or such other form of consideration as to which Mr.Maffei and Mr.Malone might mutually agree. The transfer by the Malone Group of the Subject Shares was subject to the terms ofthat certain call agreement, dated February9, 1998 (the “Call Agreement”), among ߲ݴý, as successor-in-interest to the assignee of Tele-Communications,Inc., a Delaware corporation, Mr.Malone and Mrs.Malone, which provided߲ݴýwith the right to acquire all, but not less than all, of the Subject Sharesat a per share price equal to the lower of (x)the Offer price or (y)110% of the average closing prices of a share of QRTEA for the consecutive trading days ending on May17, 2021 (with the price calculated pursuant to clause (y)equal to $13.62 per share (the“Call Price”))(the “Call Right”). As previously disclosed, on May18, 2021, Mr.Malone provided written notice to ߲ݴý of his desire to accept the Offer, subject tothe approval by the Board of Directors of the Company of the transactions contemplated thereby for purposes of Section203 of the General Corporation Law of the State of Delaware, pursuant to the terms of the Call Agreement. However, in the event the Company determined to exercise the Call Right, Mr.Malone indicated a preference for the payment of the per share price in the form of shares of QRTEA such that he would continue to hold a substantial investment in the Company.
On June2, 2021,߲ݴýdelivered written notice to Mr.Malone to exercise the Call Right and to pay the per share Call Price required by the Call Agreement in shares of QRTEA. On June3, 2021, the Company and the Malone Group entered into a Stock Exchange Agreement (the “Malone Stock Exchange Agreement”) to effect the closing of the Call Right exercise, pursuant to whichthe Malone Group transferred tothe Companyan aggregate of 27,655,931 shares of QRTEB, and in exchange (the “Malone Exchange”),߲ݴýissued to the Malone Group an aggregate of 30,421,522 shares of QRTEA. Under the terms of the Call Agreement, the aggregate Call Price converts into an equivalent ratio of 1.1 shares of QRTEA for each share of QRTEB with the aggregate number of shares of QRTEA issued to each member of the Malone Group rounded down to the nearest whole share.
On June3, 2021,the Company, LMC and Mr.Maffei entered into a Waiver Letter and Amendment of Employment Agreement (the “Letter Agreement”), pursuant to which, among other things, Mr.Maffei (x)waived his rights to assert that ߲ݴý’s exercise of the Call Right, the transactions to be consummated pursuant to the Malone Stock Exchange Agreement or the resulting reduction in the Malone Group’s voting power with respect to߲ݴý(collectively, the “Specified Events”) would constitute a “Change in Control” or “Good Reason,” in each case, as defined in the Executive Employment Agreement, dated as of December 13, 2019, by and between LMC and Mr. Maffei (the “Employment Agreement”), with respect to߲ݴý, and agreed not to terminate his employment with߲ݴýfor “Good Reason” in connection with or arising out of the Option Cancellation (as defined below) or any of the Specified Events, and (y)consented to the cancellation (the “Option Cancellation”) of stock option awards to purchase shares of QRTEB that had been granted to Mr.Maffei on each of December24, 2014, and March31, 2015 for 1,137,228 shares at an exercise price of $16.97 per share, and 197,783 shares at an exercise price of $16.71 per share, respectively. In consideration for the foregoing, pursuant to the Letter Agreement, (i)Mr.Maffei received a grant of 1,101,321 restricted shares of QRTEB that are scheduled to vest, subject to Mr.Maffei’s continued employment withthe Company, in two equal tranches on December10, 2024 and the fifth anniversary of the grant date, subject to earlier vesting under certain circumstances, and (ii)߲ݴýagreed that the portion of the Annual Equity Awards (as defined in the Employment Agreement) to be granted by߲ݴýto Mr.Maffei pursuant to Section4.11 of the Employment Agreement for calendar years 2022, 2023 and 2024 shall be granted with respect to the QRTEB.
Exchange and Cap.Also, on June3, 2021,the Companyand Mr.Maffei also entered into a Stock Exchange Agreement (the “Maffei Stock Exchange Agreement”) pursuant to which, among other things: (i)on June3, 2021, Mr.Maffei transferred to߲ݴýan aggregate of 5,378,308 shares of QRTEA, and in exchange߲ݴýissued to Mr.Maffei an equivalent number of shares of QRTEB; (ii)߲ݴýagreed that on the terms and subject to the conditions of the Maffei Stock Exchange Agreement, Mr.Maffei, at his option (during the six-month period following the vesting of the performance-based restricted stock unit award granted to Mr.Maffei on March10, 2021), may transfer tothe Companythe number of shares of QRTEA actually received by Mr.Maffei upon vesting of such performance-based restricted stock unit award in exchange for an equivalent number of newly-issued shares of QRTEB (the “Subsequent Exchange”); (iii)Mr.Maffei agreed that until December31, 2024 (the “Cap Period”), which is also the end of the current term of his employment as set forth in the Employment Agreement, he will not, and will not authorize or permit any of his affiliates that he controls (“Controlled Affiliates”) to, acquire or agree to acquire (or announce publicly an intent to acquire) by purchase or otherwise, beneficial ownership of voting securities ofthe Company(or direct or indirect rights or options to acquire any such voting securities) if, after giving effect to any such acquisition of securities, the aggregate voting power ofthe Company’s voting securities beneficially owned by Mr.Maffei and his Controlled Affiliates would exceed 20.0% of the voting power of all of the outstanding voting securities (assuming, for purposes of this calculation that all voting securities beneficially owned by Mr.Maffei which are not outstanding are included in the calculation) (the “Cap”); and (iv)the foregoing transactions by which Mr.Maffei and certain of his related persons became an “interested stockholder” were approved for purposes of Section203 of the General Corporation Law of the State of Delaware. The Cap is subject to certain terms and exceptions, as described in the Maffei Stock Exchange Agreement. In addition, Mr.Maffei and his Controlled Affiliates may not transfer voting securities of ߲ݴý to any other Controlled Affiliate of Mr.Maffei unless such transferee has agreed to be bound by the terms of the Maffei Stock Exchange Agreement.
CEO Employment Agreement
On July12, 2021, the compensation committee of the board of directors of ߲ݴý approved the Company’s entry into an employment agreement withDavid Rawlinson II, effective July12, 2021. Effective August1, 2021, Mr.Rawlinson began to serve as President and Chief Executive Officer-Elect of ߲ݴý, with MikeGeorge continuing as Chief Executive Officer, and effective October1, Mr.Rawlinson began to serve as President and Chief Executive Officer of ߲ݴý, with Mr.George assuming the role of Senior Advisor. Mr. Rawlinson concurrently assumed the same positions with QVC. Mr.George will resign from the board of directors effective January1, 2022, at which time Mr.Rawlinson is expected to join the Board. With respect to his roles at ߲ݴý and QVC, Mr.George stepped down as President effective August1, 2021 and as Chief Executive Officer effective October1, 2021. |