Item 2.02. Results of Operations and Financial Condition.
On August 9, 2022, ContextLogic Inc. (the "Company") issued a press release
announcing the Company's financial results for the second quarter ended June 30,
2022. A copy of the Company's press release is attached hereto as Exhibit 99.1.
Item 5.01. Changes in Control of Registrant.
Piotr Szulczewski, a member of the board of directors (the "Board") of
ContextLogic Inc. (the "Company") and founder of the Company, submitted a
conversion notice on August 4, 2022 to convert, effective 1:00 PM Pacific Time
on August 9, 2022 (the "Conversion"), 57,128,812 shares of Class B common stock
of the Company ("Class B Common Stock") he holds into 57,128,812 shares of Class
A common stock of the Company ("Class A Common Stock"), which constituted his
entire holdings of Class B Common Stock. The Class B Common Stock was entitled
to twenty votes per share and the Class A Common Stock is entitled to one vote
per share (the Class B Common Stock and the Class A Common Stock, collectively,
the "Common Stock"). Immediately prior to the Conversion, Mr. Szulczewski's
holdings of Class B Common Stock and Class A Common Stock constituted
approximately 62% of the voting power of the outstanding Common Stock.
Immediately following such Conversion, his voting power constituted
approximately 8% of the voting power of the outstanding Common Stock, not
including options for 43,375,000 shares of Class B Common Stock (Class A Common
Stock following the Automatic Conversion discussed below) that are immediately
exercisable. Additionally, following the Conversion the outstanding Class B
Common Stock constituted less than 1% of the Company's outstanding Common Stock.
The balance of the voting power of the Common Stock, approximately 92%, is held
by the Company's other stockholders and no other stockholder of the Company
currently owns a majority of (i) the outstanding voting power of the Company's
outstanding Common Stock or (ii) the outstanding Common Stock.
In accordance with the Company's Amended and Restated Certificate of
Incorporation (the "Certificate of Incorporation"), due to the outstanding
shares of Class B Common Stock representing less than 5% of the aggregate number
of shares of Class A Common Stock and Class B Common Stock outstanding after the
Conversion, all remaining shares of Class B Common Stock have been automatically
converted into Class A Common Stock immediately following the Conversion and no
further Class B Common Stock will be issued (the "Automatic Conversion"). In
connection with the Automatic Conversion, outstanding proxy agreements entered
into among the Company, Mr. Szulczewski and certain stockholders, which granted
Mr. Szulczewski voting power over certain shares of Class B Common Stock held by
such stockholders, terminated by their terms. The Company will file a
certificate with the Secretary of State of the State of Delaware effecting the
retirement and cancellation of the shares of Class B Common Stock ("Certificate
of Retirement"), which shall be effective on or around the date of the Automatic
Conversion.
Pursuant to the Certificate of Incorporation, the Conversion triggered various
corporate governance changes as previously disclosed in the Company's filings,
which include:
•
the Board will be classified into three classes of directors with staggered
three-year terms;
•
directors will be able to be removed only for cause and only by the affirmative
vote of the holders of at least two-thirds of the voting power of the Common
Stock; and
•
stockholders will only be able to take action at a meeting of stockholders and
not by written consent.
These provisions in the Certificate of Incorporation could make it more
difficult for stockholders or potential acquirors to obtain control of the Board
or initiate actions that are opposed by the Company's then-current Board. See
Item 1A - Risk Factors in the Company's Quarterly Report on Form 10-Q for the
quarter ended June 30, 2022, filed on or around the date hereof for further
information.
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The Automatic Conversion had the following effects, among others, on the holders
of shares of Class B Common Stock:
•
Voting Power. Prior to the Automatic Conversion, holders of shares of Class B
Common Stock were entitled to cast twenty votes per share on any matter
submitted to a vote of the Company's stockholders. As a result of the Automatic
Conversion, all former holders of shares of Class B Common Stock are now holders
of shares of Class A Common Stock, which is entitled to only one vote per share
on all matters subject to a stockholder vote with a record date on or after the
date of the conversion. In addition, the provisions of the Certificate of
Incorporation and Delaware law that entitled the holders of shares of Class A
and Class B common stock, in certain circumstances, to separate class voting
rights are no longer applicable as a result of the conversion.
•
Economic Interests. Because holders of shares of Class A Common Stock are
entitled to the same economic interests to which former holders of shares of
Class B Common Stock were entitled before the Automatic Conversion, including
with regard to dividends, liquidation rights and treatment in connection with a
change of control or merger transaction, the Automatic Conversion had no impact
on the economic interests of former holders of shares of Class B Common Stock.
•
Capitalization. The Automatic Conversion had no impact on the total number of
the Company's outstanding shares of capital stock, as the shares of Class B
Common Stock converted into an equivalent number of shares of Class A Common
Stock.
•
Equity Incentive Plans. Upon the Automatic Conversion, outstanding options and
RSUs for shares of Class B Common Stock issued under the Company's 2010 Stock
Plan remain unchanged, except that they now represent the right to receive
shares of Class A Common Stock.
Item 5.02. Departure of Directors or Certain officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
On August 4, 2022, Mr. Szulczewski notified the Board of his intent to resign as
a member of the Board, effective August 9, 2022. The resignation is not a result
of any disagreement with the Company on any matter relating to the Company's
operations, policies or practices.
On August 9, 2022, the Board appointed Lawrence M. Kutscher to the Board,
effective immediately. Mr. Kutscher will serve as a director of the Company
until his successor is duly elected and qualified. Further, the Board appointed
Mr. Kutscher to serve on the Audit Committee of the Board (the "Audit
Committee"). Upon the effective date of Mr. Kutscher's appointment to the Audit
Committee, Hans Tung resigned from the Audit Committee. The Board determined
that Mr. Kutscher is independent under the listing standards of the Nasdaq Stock
Market.
Mr. Kutscher is currently the Chief Executive Officer of A Place for Mom, Inc.,
a technology-driven senior living referral company, leading the company since
April 2019 on its mission to enable caregivers to make the best senior living
decisions. He has over 20 years of executive leadership and experience driving
transformation and growth within data and technology companies. Prior to joining
A Place for Mom, Larry served as CEO of TravelClick, a cloud-based software
solution for hotels, from October 2010 to December 2018, where he more than
doubled the company's revenue and earnings during his tenure. Mr. Kutscher has
also served as Chief Executive Officer of Register.com, General Manager of the
Small Business Group at Dun & Bradstreet, Managing Director with Goldman Sachs
Wealth Management, and held various leadership roles at American Express, where
he started his career. Mr. Kutscher currently serves on the board of A Place for
Mom and previously served on the boards of Thayer Ventures Acquisition
Corporation (now Inspirato Incorporated) as a member of the audit committee from
December 2020 to February 2022 and ReachLocal as a member of the compensation
committee from December 2014 to June 2016. Mr. Kutscher received a bachelor's
degree in political science from Brown University and his M.B.A. from Columbia
University.
As a non-employee director, Mr. Kutscher will receive cash and equity
compensation paid by the Company pursuant to its non-employee director
compensation program. He will receive an initial grant of restricted stock units
("RSUs") pursuant to the Company's 2020 Equity Incentive Plan having an
aggregate value of $440,000 based on the closing price of the Class A Common
Stock on the date of grant, which vests with respect to 1/3rd of the total
number of RSUs on each annual anniversary of the date of grant, as long as Mr.
Kutscher continues to serve on the Board through such date. Additionally, in
connection with Mr. Kutscher's appointment to the Audit Committee, Mr. Kutscher
will receive a grant of RSUs pursuant to the Company's 2020 Equity Incentive
Plan having an aggregate value of $8,333 based on the closing price of the Class
A Common Stock on the date of grant, which will vest in full on the earlier of
the one-year anniversary of the date of grant or the date of the next regular
annual meeting of stockholders, as long as Mr. Kutscher continues to serve on
the Board through such date . There are no arrangements or understandings
between Mr. Kutscher and any other person pursuant to which Mr. Kutscher was
selected as a director, and there are no transactions between Mr. Kutscher and
the Company that would require disclosure under Item 404(a) of Regulation S-K.
In addition, the Company has entered into an indemnification agreement with Mr.
Kutscher in connection with his appointment to the Board in substantially the
form entered into with other directors of the Company.
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Additionally, effective on the Conversion Date, the Board became classified into
three classes of directors with staggered three-year terms and the Board
appointed the existing members of the Board to the following classes:
Class Director
I Stephanie Tilenius
I Lawrence M. Kutscher
II Tanzeen Syed
II Julie Bradley
III Vijay Talwar
III Hans Tung
The Class I directors will serve until the 2023 annual meeting of stockholders.
The Class II directors will serve until the 2024 annual meeting of stockholders.
The Class III directors will serve until the 2025 annual meeting of
stockholders. Upon expiration of the term of a class of directors, directors in
that class will be eligible to be elected for a new three-year term at the
annual meeting of stockholders in the year in which their term expires.
Item 5.03. Amendments to Articles of Incorporation or Bylaws; Change in Fiscal
Year.
The description regarding the Certificate of Retirement under Item 5.01 is
incorporated by reference.
Item 7.01. Regulation FD Disclosure.
On August 9, 2022, the Company posted supplemental investor materials on its
ir.wish.com website. The Company announces material information to the public
about the Company, its products and services and other matters through a variety
of means, including filings with the Securities and Exchange Commission, press
releases, public conference calls, and the investor relations section of its
website (ir.wish.com) in order to achieve broad, non-exclusionary distribution
of information to the public and for complying with its disclosure obligations
under Regulation FD.
The information in this current report on Form 8-K (including Exhibit 99.1)
shall not be deemed "filed" for purposes of Section 18 of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") or otherwise subject to
the liabilities of that section, nor shall it be deemed incorporated by
reference in any filing under the Securities Act of 1933, as amended (the
"Securities Act"), or the Exchange Act, regardless of any general incorporation
language in such filing.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
Exhibit Description
Number
10.1 Form of Indemnification Agreement (incorporated by reference to
Exhibit 10.1 to the Company's Registration Statement on Form S-1 filed
with the Securities and Exchange Commission on November 20, 2020)
99.1 Press release issued by ContextLogic Inc. on August 9, 2022
104 Cover Page Interactive Data File (embedded within the Inline XBRL
document)
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