Item 1.01 Entry into a Material Definitive Agreement.
As previously disclosed, on May 18, 2021, Gregory B. Maffei, the Chairman of the
Board and a director of Qurate Retail, Inc. ("Qurate Retail"), delivered a
written offer (the "Offer") to John C. Malone, a director of Qurate Retail, to
acquire all of the outstanding shares of Series B common stock of Qurate Retail
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 of that certain call agreement,
dated February 9, 1998 (the "Call Agreement"), among Qurate Retail, as
successor-in-interest to the assignee of Tele-Communications, Inc., a Delaware
corporation, Mr. Malone and Mrs. Malone, which provided Qurate Retail with the
right to acquire all, but not less than all, of the Subject Shares at 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 Series A common stock for the 30 consecutive
trading days ending on May 17, 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 May 18, 2021, Mr. Malone provided written notice to
Qurate Retail of his desire to accept the Offer, subject to the approval by the
Board of Directors of Qurate Retail of the transactions contemplated thereby for
purposes of Section 203 of the General Corporation Law of the State of Delaware,
pursuant to the terms of the Call Agreement. Mr. Malone supports the long-term
business strategy of Qurate Retail but desired to accept the Offer because it
would provide flexibility for certain long-term estate and tax planning goals in
light of potential changes in federal tax laws. However, in the event Qurate
Retail 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 Series A common
stock of Qurate Retail such that he would continue to hold a substantial
investment in Qurate Retail.
Stock Exchange Agreement with John C. Malone
On June 2, 2021, Qurate Retail delivered 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 Series A common stock of Qurate Retail. On June 3, 2021,
Qurate Retail 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 which the Malone Group transferred to Qurate Retail an
aggregate of 27,655,931 shares of Series B common stock, and in exchange (the
"Malone Exchange"), Qurate Retail issued to the Malone Group an aggregate of
30,421,522 shares of Series A common stock. Under the terms of the Call
Agreement, the aggregate Call Price converts into an equivalent ratio of 1.1
shares of Series A common stock for each share of Series B common stock with the
aggregate number of shares of Series A common stock issued to each member of the
Malone Group rounded down to the nearest whole share.
Arrangements with Gregory B. Maffei
As a result of the Malone Exchange and in the absence of the negotiated Letter
Agreement (defined below) Mr. Maffei would have had the right to assert that a
"Change of Control" (as defined in that certain Executive Employment Agreement,
dated as of December 13, 2019 (the "Employment Agreement"), by and between
Liberty Media Corporation, a Delaware corporation ("Liberty Media"), and
Mr. Maffei) with respect to Qurate Retail had occurred and that Mr. Maffei had
"Good Reason" (as defined in the Employment Agreement) to resign from and
terminate his employment with Qurate Retail. This would have resulted in the
acceleration of the vesting of Mr. Maffei's outstanding and unvested Qurate
Retail equity-based awards, the obligation of Qurate Retail to pay Mr. Maffei
certain severance related benefits and the obligation of Qurate Retail to make a
termination payment to Liberty Media pursuant to that certain Services
Agreement, dated as of September 23, 2011, between Qurate Retail and Liberty
Media, as clarified by that certain Letter Agreement, dated as of September 23,
2011, by and between Qurate Retailand Liberty Media, and as amended by that
certain First Amendment to Services Agreement, effective as of December 13,
2019, by and between Qurate Retail and Liberty Media (the "Services Agreement").
Waiver Letter and Amendment of Employment Agreement
On June 3, 2021, Qurate Retail, Liberty Media 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 Qurate Retail'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 to Qurate Retail
(collectively, the "Specified Events") would constitute a "Change in Control" or
"Good Reason," in each case, as defined in the Employment Agreement, with
respect to Qurate Retail, and agreed not to terminate his employment with Qurate
Retail for "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 Series B common stock that had been granted to
Mr. Maffei on each of December 24, 2014, and March 31, 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 Series B common stock that are scheduled to vest, subject
to Mr. Maffei's continued employment with Qurate Retail, in two equal tranches
on December 10, 2024 and the fifth anniversary of the grant date, subject to
earlier vesting under certain circumstances, and (ii) Qurate Retail agreed that
the portion of the Annual Equity Awards (as defined in the Employment Agreement)
to be granted by Qurate Retail to Mr. Maffei pursuant to Section 4.11 of the
Employment Agreement for calendar years 2022, 2023 and 2024 shall be granted
with respect to the Series B common stock.
Maffei Stock Exchange Agreement
Exchange and Cap. Also, on June 3, 2021, Qurate Retail and Mr. Maffei also
entered into a Stock Exchange Agreement (the "Maffei Stock Exchange Agreement")
pursuant to which, among other things: (i) on June 3, 2021, Mr. Maffei
transferred to Qurate Retail an aggregate of 5,378,308 shares of Series A common
stock, and in exchange Qurate Retail issued to Mr. Maffei an equivalent number
of shares of Series B common stock; (ii) Qurate Retail agreed 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
. . .
Item 3.02 Unregistered Sales of Equity Securities.
The information provided in Item 1.01 of this Current Report on Form 8-K is
incorporated herein by reference. The shares of Series A common stock and
Series B common stock issued by Qurate Retail to Mr. Malone pursuant to the
Malone Stock Exchange Agreement and to Mr. Maffei pursuant to the Maffei Stock
Exchange Agreement, respectively, were not registered under the Securities Act
of 1933, as amended, in reliance on the exemption from registration under
Section 4(a)(2) of the Securities Act of 1933, as amended. Each share of Qurate
Retail's Series B common stock is convertible, at the option of the holder, into
one share of Qurate Retail's Series A common stock.
Item 5.02. Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
The information provided in Item 1.01 of this Current Report on Form 8-K
regarding the Letter Agreement, the Option Cancellation and Mr. Maffei's
restricted stock award is incorporated herein by reference.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
Exhibit No. Description
10.1 Stock Exchange Agreement, dated June 3, 2021, among John C.
Malone, Leslie A. Malone, The John C. Malone 1995 Revocable Trust,
The Leslie A. Malone 1995 Revocable Trust, The Tracy M. Neal Trust
A, The Evan D. Malone Trust A and Qurate Retail, Inc.
10.2 Stock Exchange Agreement, dated June 3, 2021, between Gregory B.
Maffei and Qurate Retail, Inc.
10.3 Waiver Letter and Amendment of Employment Agreement, dated
June 3, 2021, among Gregory B. Maffei, Liberty Media Corporation
and Qurate Retail, Inc.
10.4 Restricted Share Award Agreement under the Qurate Retail, Inc.
2020 Omnibus Incentive Plan, as amended, dated as of June 3, 2021,
by and between Qurate Retail, Inc. and Gregory B. Maffei.
104 Cover Page Interactive Data File (formatted as Inline XBRL and
contained in Exhibit 101)
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