Overstock.com, Inc. (NASDAQ:OSTK) Files An 8-K Entry into a Material Definitive AgreementItem 1.01Entry into a Material Definitive Agreement
On December 27, 2017 Overstock.com, Inc. (“Overstock”), its wholly owned subsidiary Medici Ventures, Inc. (“Medici”), Patrick Byrne and Hernando de Soto entered into a Memorandum of Understanding dated December 27, 2017 (the “MOU”). The MOU provides that the parties will form a company (“DeSoto”) that will be owned 50% by Medici, 33% by Hernando de Soto and 17% by Patrick Byrne, who is the Chief Executive Officer and a member of the Board of Directors of Overstock, and also serves on the board of directors of Medici. The goal of the new company is to develop a blockchain-based system to develop a global property registry system focused on the property rights of people in the developing world. Overstock and/or Medici will pay or contribute $14 million to help launch the project, $8 million of which will be used to fund DeSoto, and Medici will receive a 50% ownership interest in DeSoto. Patrick Byrne personally will contribute $14 million to help launch the project, and will receive a 17% ownership interest in DeSoto.
Hernando de Soto will serve as Chairman of DeSoto and as a director of Medici. Patrick Byrne will serve as Co-Chairman and Chief Executive Officer of DeSoto, in addition to his positions with Overstock and Medici.
The MOU contemplates a more detailed future agreement, and provides that the parties will cooperate in good faith to reach more detailed agreements in the future.
Item 5.02Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
(e)On December 27, 2017 the board of directors of Medici authorized the grant of compensatory options to purchase shares of Medici’s common stock to certain persons, including Patrick Byrne, who is the Chief Executive Officer and a member of the Board of Directors of Overstock, and also serves on the board of directors of Medici, to the Medici Ventures, Inc. Stock Option Plan. The option grants to Dr. Byrne cover a total of 2,500 shares of common stock of Medici, representing 0.25% of Medici’s fully diluted shares, at an exercise price of $3.33 per share of common stock, and expire ten years after the date of grant. The options vest over a three-year period, with one-third vesting at the end of year one, one-third vesting at the end of year two, and one-third vesting at the end of year three, with vesting commencing on the date of grant, subject to the power of the Medici board of directors to accelerate the vesting schedule. The options cannot be exercised for any security issued by Overstock, and the Medici common stock, if issued, will not be convertible into or exchangeable for any security issued by Overstock.
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