Grid Dynamics Holdings, Inc DEFA14A, filed Jan 27, 2020
Grid Dynamics Holdings, Inc. (GDYN)
UNITED
STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): January 26, 2020
ChaSerg Technology Acquisition Corp.
(Exact name of registrant as specified in its charter)
| Delaware | 001-38685 | 83-0632724 | ||
| (State or other jurisdiction of incorporation) |
(Commission File Number) | (IRS Employer Identification No.) |
7660 Fay Avenue, Suite H, Unit 339
La Jolla, CA 92037
(Address of principal executive offices, including zip code)
Registrant’s telephone number, including area code: (619) 736-6855
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ☑ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
| Class A Common Stock, par value $0.0001 per share | CTAC | The NASDAQ Stock Market LLC | ||
| Warrants to purchase one share of Class A Common Stock | CTACW | The NASDAQ Stock Market LLC | ||
| Units, each consisting of each consisting of one share of Class A Common Stock and one-half of one Warrant | CTACU | The NASDAQ Stock Market LLC |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 or Rule 12b-2 of the Securities Exchange Act of 1934.
Emerging growth company ☑
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 1.01 Entry into a Material Definitive Agreement.
On January 26, 2020, ChaSerg Technology Acquisition Corp. (“ChaSerg”) entered into an amended and restated side letter (“A&R Side Letter”) with each of ChaSerg Technology Sponsor LLC (the “Sponsor”) and Cantor Fitzgerald & Co. (“Cantor”) which amended and restated in its entirety the side letter (the “Original Letter”), dated November 13, 2019, between ChaSerg and Sponsor. The Original Letter was previously disclosed in and filed as an exhibit to ChaSerg’s Current Report on Form 8-K filed on November 13, 2019 with the U.S. Securities and Exchange Commission. Pursuant to the A&R Side Letter and effective upon the closing (the “Closing”) of the proposed the business combination (the “Business Combination”) between ChaSerg and Grid Dynamics, Inc. (“Grid Dynamics”), the Sponsor agreed to refrain from selling, transferring or otherwise disposing of 1,090,000 shares of its common stock in ChaSerg (such portion, the “Sponsor Earnout Shares”), rather than 1,200,000 pursuant to the Original Letter, until certain release events have been realized. Also pursuant to the A&R Side Letter and effective upon the Closing, Cantor agreed to refrain from selling, transferring or otherwise disposing of up to 110,000 shares of its common stock in ChaSerg (such portion, the “Cantor Earnout Shares” and together with the Sponsor Earnout Shares, the “Earnout Shares”) until certain release events have been realized. Under the terms of the A&R Side Letter, each of the Sponsor and Cantor will be able to sell or transfer one-third of its respective Earnout Shares upon ChaSerg’s common stock reaching a price of $12.00 per share, an additional one-third of its respective Earnout Shares upon the stock price reaching a price of $13.50 per share and the final one-third of its respective Earnout Shares upon the stock price reaching a price of $15.00 per share, in each case where such price targets were achieved for a minimum of 20 days out of a 30-day trading period during the applicable earn out period.
The foregoing description of the A&R Side Letter does not purport to be complete and is qualified in its entirety by reference to the complete text of the A&R Side Letter, a copy of which is filed hereto as Exhibit 10.1.
Important Information About the Business Combination and Where to Find It
In connection with the Business Combination, ChaSerg has filed a preliminary proxy statement with the SEC. ChaSerg will mail a definitive proxy statement and other relevant documents to its stockholders. ChaSerg’s stockholders and other interested persons are advised to read the preliminary proxy statement and any amendments thereto and, when available, the definitive proxy statement and documents incorporated by reference therein filed in connection with the Business Combination, as these materials will contain important information about Grid Dynamics, ChaSerg and the Business Combination. When available, the definitive proxy statement and other relevant materials for the Business Combination will be mailed to stockholders of ChaSerg as of a record date to be established for voting on the Business Combination. INVESTORS ARE URGED TO READ THE DEFINITIVE PROXY STATEMENT AND OTHER RELEVANT MATERIALS CAREFULLY AND IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE COMPANY AND THE TRANSACTION. Stockholders will also be able to obtain copies of the preliminary proxy statement, the definitive proxy statement and other documents filed with the SEC that will be incorporated by reference therein, without charge, once available, at the SEC’s website at www.sec.gov, or by directing a request to: ChaSerg Technology Acquisition Corp., 7660 Fay Avenue, Suite H, Unit 339, La Jolla, CA 92037, Attention: Secretary, (619) 736-6855.
Participants in the Solicitation
ChaSerg and its directors and executive officers may be deemed participants in the solicitation of proxies from ChaSerg’s stockholders with respect to the Business Combination. A list of the names of those directors and executive officers and a description of their interests in ChaSerg is contained in ChaSerg’s annual report on Form 10-K for the fiscal year ended December 31, 2018, which was filed with the SEC on March 20, 2019 and is available free of charge at the SEC’s website at www.sec.gov, or by directing a request to ChaSerg Technology Acquisition Corp., 7660 Fay Avenue, Suite H, Unit 339, La Jolla, CA 92037, Attention: Secretary, (619) 736-6855. Additional information regarding the interests of such participants will be contained in the proxy statement for the Business Combination when available.
Grid Dynamics International, Inc. and its directors and executive officers may also be deemed to be participants in the solicitation of proxies from the stockholders of ChaSerg in connection with the Business Combination. A list of the names of such directors and executive officers and information regarding their interests in the Business Combination will be included in the proxy statement for the Business Combination when available.
1
Forward-Looking Statements
This Current Report on Form 8-K “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 that are not historical facts, and involve risks and uncertainties that could cause actual results of ChaSerg and Grid Dynamics to differ materially from those expected and projected. These forward-looking statements can be identified by the use of forward-looking terminology, including the words “believes,” “estimates,” “anticipates,” “expects,” “intends,” “plans,” “may,” “will,” “potential,” “projects,” “predicts,” “continue,” or “should,” or, in each case, their negative or other variations or comparable terminology. These forward-looking statements include, without limitation, statements concerning: ChaSerg’s and Grid Dynamics’s expectations with respect to future performance, market size and anticipated financial impacts of the Business Combination; the satisfaction of the closing conditions to the Business Combination; and the timing of the completion of the Business Combination.
These forward-looking statements involve significant risks and uncertainties that could cause the actual results to differ materially from the expected results. Most of these factors are outside ChaSerg’s and Grid Dynamics’s control and are difficult to predict. Factors that may cause such differences include, but are not limited to: (i) the occurrence of any event, change or other circumstances that could give rise to the termination of the Merger Agreement or could otherwise cause the Business Combination to fail to close; (ii) the outcome of any legal proceedings that may be instituted against ChaSerg and Grid Dynamics following the execution of the Merger Agreement and the Business Combination; (iii) any inability to complete the Business Combination, including due to failure to obtain approval of the stockholders of ChaSerg or other conditions to closing in the Merger Agreement; (iv) the receipt of an unsolicited offer from another party for an alternative business transaction that could interfere with the Business Combination; (v) the inability to maintain the listing of the shares of common stock of the post-acquisition company on The Nasdaq Stock Market following the Business Combination; (vi) the risk that the Business Combination disrupts current plans and operations as a result of the announcement and consummation of the Business Combination; (vii) the ability to recognize the anticipated benefits of the Business Combination, which may be affected by, among other things, competition, the ability of the combined company to grow and manage growth profitably and retain its key employees; (viii) costs related to the Business Combination; (ix) changes in applicable laws or regulations; (x) the possibility that Grid Dynamics or the combined company may be adversely affected by other economic, business, and/or competitive factors; and (xi) other risks and uncertainties indicated in the proxy statement, including those under the section entitled “Risk Factors”, and in ChaSerg’s other filings with the SEC.
ChaSerg cautions that the foregoing list of factors is not exclusive. ChaSerg cautions readers not to place undue reliance upon any forward-looking statements, which speak only as of the date made. ChaSerg does not undertake or accept any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements to reflect any change in its expectations or any change in events, conditions or circumstances on which any such statement is based. Further information about factors that could materially affect ChaSerg, including its results of operations and financial condition, is set forth under “Risk Factors” in Part I, Item 1A of ChaSerg’s Annual Report on Form 10-K for the fiscal year ended December 31, 2018 and in Part II, Item 1A of ChaSerg’s Quarterly Reports on Form 10-Q for the fiscal quarters ended March 31, 2019, June 30, 2019 and September 30, 2019.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
| Exhibit No. | Description | |
| 10.1 | Amended and Restated Side Letter dated January 26, 2020 between Chaserg Technology Acquisition Corp., ChaSerg Technology Sponsor LLC and Cantor Fitzgerald & Co. | |
| 104.1 | Cover page interactive data file (embedded within the Inline XBRL document). |
2
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Dated: January 27, 2020 | CHASERG TECHNOLOGY ACQUISITION CORP. | |
| By: | /s/ Lloyd Carney | |
| Name: Lloyd Carney | ||
| Title: Chief Executive Officer | ||
3
Exhibit 10.1
ChaSerg Technology Sponsor LLC
533 Airport Blvd, Suite 400
Burlingame, CA 94010
January 26, 2020
ChaSerg Technology Acquisition Corp.
533 Airport Blvd, Suite 400
Burlingame, CA 94010
Attn: Lloyd Carney, Chief Executive Officer
| Re: | Amended and Restated Sponsor Share Letter |
Dear Lloyd:
Reference is hereby made to that certain Sponsor Share Letter, dated as of November 13, 2019, by and between the Sponsor (as defined below) and Pubco (as defined below) (the “Original Letter”) and to that certain Agreement and Plan of Merger, dated as of November 13, 2019 (as it may be amended, the “Business Combination Agreement”), by and among (i) ChaSerg Technology Acquisition Corp. (the “Purchaser” or “Pubco”), (ii) CS Merger Sub 1, Inc., a California corporation and a wholly-owned subsidiary of the Company, (iii) CS Merger Sub 2, LLC, a Delaware limited liability company and a wholly-owned subsidiary of the Company, (iv) Grid Dynamics International, Inc., a California corporation, and (v) Automated Systems Holdings Limited, a company incorporated in Bermuda with limited liability, solely in its capacity as representative of the Securityholders (as defined in the Business Combination Agreement). Any capitalized term used but not defined herein will have the meanings ascribed thereto in the Business Combination Agreement.
ChaSerg Technology Sponsor LLC, a Delaware limited liability company (“Sponsor”), has agreed to amend and restate the Original Letter by entering into this amended and restated letter agreement (this “Agreement”) with Cantor Fitzgerald & Co (“Cantor” or “Underwriter”) relating to (i) 1,090,000 shares of Class B common stock, par value $0.0001 per share (including shares of common stock of the Purchaser into which such shares shall convert immediately prior to the Closing, the “Common Stock”), of Purchaser in accordance with the Business Combination Agreement, (“Founder Shares”) initially purchased by Sponsor in a private placement prior to Purchaser’s initial public offering, which shares are currently held by Sponsor and (ii) 110,000 shares of Class A common stock, par value $0.001 per share (including shares of common stock of the Purchaser into which such shares shall convert immediately prior to the Closing, the “Common Stock”), of Purchaser in accordance with the Business Combination Agreement, (“Underwriter Shares”) initially comprising the units that were purchased by Underwriter in a private placement concurrent with Purchaser’s initial public offering, which shares are currently held by the Underwriter.
For good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, each of the undersigned parties hereby agrees as follows:
| 1. | Sponsor hereby agrees that, upon and subject to the Closing, it will not sell, transfer or otherwise dispose of, or hypothecate or otherwise grant any interest in or to, a total of 1,090,000 Founder Shares held by Sponsor (the “Sponsor Earnout Shares”), unless, until and to the extent that a Release Event (as defined in Section 4 of this Agreement) has occurred with respect to such Sponsor Earnout Shares. The share certificates representing the Sponsor Earnout Shares shall contain a legend relating to transfer restrictions imposed by this Agreement. Such legend shall be removed upon the request of Sponsor following a Release Event with respect to the applicable Sponsor Earnout Shares. |
| 2. | Underwriter hereby agrees that, upon and subject to the Closing, it will not sell, transfer or otherwise dispose of, or hypothecate or otherwise grant any interest in or to, a total of 110,000 Underwriter Shares held by Underwriter (the “Underwriter Earnout Shares” and, together with the Sponsor Earnout Shares, the “Earnout Shares”), unless, until and to the extent that a Release Event (as defined in Section 4 of this Agreement) has occurred with respect to such Underwriter Earnout Shares. The share certificates representing the Underwriter Earnout Shares shall contain a legend relating to transfer restrictions imposed by this Agreement. Such legend shall be removed upon the request of Underwriter following a Release Event with respect to the applicable Underwriter Earnout Shares. |
| 3. | Notwithstanding any other provisions of this Agreement, Sponsor and Underwriter shall have full ownership rights to its respective Earnout Shares, including the right to vote such shares and to receive dividends and distributions thereon. |
| 4. | The Earnout Shares shall vest and no longer be subject to transfer restrictions as follows (each, as applicable to the relevant Earnout Shares, a “Release Event”): |
| (a) | 363,333 Sponsor Earnout Shares and 36,666 Underwriter Earnout Shares shall vest and no longer be subject to transfer restrictions in this Agreement if the closing price of the Common Stock on the principal exchange on which such securities are then listed or quoted shall have been at or above $12.00 (the “First Price Threshold”) for twenty (20) trading days (which need not be consecutive) over a thirty (30) trading day period at any time; |
| (b) | 363,333 Sponsor Earnout Shares and 36,667 Underwriter Earnout Shares shall vest and no longer be subject to transfer restrictions in this Agreement if the closing price of the Common Stock on the principal exchange on which such securities are then listed or quoted shall have been at or above $13.50 (the “Second Price Threshold”) for twenty (20) trading days (which need not be consecutive) over a thirty (30) trading day period at any time; |
| (c) | 363,334 Sponsor Earnout Shares and 36,667 Underwriter Earnout Shares shall vest and no longer be subject to transfer restrictions in this Agreement if the closing price of the Common Stock on the principal exchange on which such securities are then listed or quoted shall have been at or above $15.00 (the “Third Price Threshold”) for twenty (20) trading days (which need not be consecutive) over a thirty (30) trading day period at any time; and |
| (d) | all of the Earnout Shares shall vest and no longer be subject to transfer restrictions in this Agreement upon, and effective immediately prior to, the first of any of the following to occur: |
| (i) | if Pubco shall engage in a “going private” transaction pursuant to Rule 13e-3 under the Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise cease to be subject to reporting obligations under Sections 13 or 15(d) of the Exchange Act; |
| (ii) | If the Common Stock shall cease to be listed on a national securities exchange; |
| (iii) | if Pubco is amalgamated, merged, consolidated or reorganized with or into another Person (an “Acquiror”) and as a result of such amalgamation, merger, consolidation or reorganization, fewer than 50.1% (whether by voting or economic rights) of the outstanding equity securities or other capital interests of the Acquiror or surviving or resulting entity is owned in the aggregate by the shareholders of Pubco, directly or indirectly, immediately prior to such amalgamation, merger, consolidation or reorganization, excluding from such computation the interests of the Acquiror or any Affiliate of the Acquiror (the “Pre-Transaction Pubco Equityholders”); |
2
| (iv) | If Pubco and/or its subsidiaries sell, assign, transfer or otherwise dispose of (including by bulk reinsurance outside of the ordinary course of business consistent with past practice), in one or a series of related transactions, all or substantially all of the assets of Pubco and its subsidiaries, taken as a whole, to an Acquiror, fewer than 50.1% (whether by voting or economic rights) of the outstanding equity securities or other capital interests of which, immediately following such sale, assignment or transfer, are owned in the aggregate by the Pre-Transaction Pubco Equityholders; or |
| (v) | If a Schedule 13D or Schedule 13G report (or any successor schedules, form or report), each as promulgated pursuant to the Exchange Act, is filed with the SEC disclosing that any person or group (as the terms “person” and “group” are used in Section 13(d) or Section 14(d) of the Exchange Act and the rules and regulations promulgated thereunder) has become the beneficial owner (as the term “beneficial owner” is defined in Rule 13d-3 or any successor rule or regulation promulgated under the Exchange Act) of a percentage of shares of the outstanding Pubco Common Shares as shall be greater than the percentage of such shares that, at the date of such filing, is held by any other person or group that held more than 50% of the voting or economic power of Pubco immediately after the Closing. |
| Each Price Threshold set forth in clauses (a) through (c) of Section 4 above and the applicable number of Earnout Shares released for any Release Event shall be subject to equitable adjustment for share splits, share dividends, reorganizations, combinations, recapitalizations and similar transactions affecting the Common Stock after the Closing. Additionally, each such Price Threshold shall be reduced by the amount of the aggregate cash or the fair market value of any securities or other assets paid or payable by Pubco to the holders of Common Stock, on a per share basis, as an extraordinary dividend or distribution following the Closing; provided that the declaration and payment of any such extraordinary dividend or distribution shall be subject to all applicable Laws. An “extraordinary dividend or distribution” means any dividend or distribution other than a regularly-scheduled dividend or distribution. |
| 5. | Notwithstanding anything to the contrary herein, at or prior to the Closing, each of Sponsor and Underwriter may transfer any Earnout Shares to any third-party investor who provides equity or debt financing for the transactions contemplated by the Business Combination Agreement without the consent of any party hereto, and any Earnout Shares so transferred shall reduce the number of Earnout Shares hereunder (with such reduction in Earnout Shares allocated pro rata among each Release Event in clauses (a) through (c) of Section 4). Unless otherwise agreed in writing by Sponsor, Underwriter and the investor receiving such shares, any such transferred Earnout Shares shall not be subject to the terms and conditions of this Agreement (but shall continue to be subject to the provisions of that certain Letter Agreement, dated as of October 4, 2018 by and between the Sponsor, the Purchaser and its officers and directors (the “Insider Letter”)). |
| 6. | Subject to Section 5 above, no party hereto may assign either this Agreement or any of its rights, interests or obligations hereunder without the prior written consent of the other parties; provided, that in the event that Sponsor or Underwriter liquidates and distributes to its members or partners all securities of Pubco that it owns in accordance with its organizational documents, each of Sponsor or Underwriter may, without obtaining the consent of any other party hereto, transfer its respective Earnout Shares and its rights and obligations under this Agreement to its members or partners so long as such members or partners agree in writing to be bound by the terms of this Agreement that apply to Sponsor or the Underwriter, as applicable, hereunder. Any purported assignment in violation of this Section 6 shall be void and ineffectual and shall not operate to transfer or assign any interest or title to the purported assignee. This Agreement shall be binding on the undersigned and their respective successors and permitted assigns. |
3
| 7. | This Agreement (including the Business Combination Agreement to the extent incorporated herein) constitutes the entire agreement and understanding of the parties hereto in respect of the subject matter hereof and supersedes all prior understandings, agreements or representations by or among the parties hereto, written or oral, to the extent they relate in any way to the subject matter hereof (including, for the avoidance of doubt, the Original Letter, which is deemed superseded, amended and restated); provided, that for the avoidance of doubt, nothing herein shall affect the terms and conditions of the Insider Letter. |
| 8. | This Agreement may not be changed, amended or modified as to any particular provision, except by a written instrument executed by all parties hereto. No provision of this Agreement may be waived except in a writing signed by the party against whom enforcement of such waiver is sought. No failure or delay by a party in exercising any right hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise of any other right hereunder. |
| 9. | Any notice, consent or request to be given in connection with any of the terms or provisions of this Agreement shall be in writing and shall be sent in the same manner as provided in Section 10.05 of the Business Combination Agreement. Unless otherwise specified in writing by such party, notices to the Sponsor shall be sent to the address of the Purchaser set forth in the Business Combination Agreement (or such other address as shall be specified in a notice given in accordance with this Section 9 and Section 10.05 of the Business Combination Agreement). |
| 10. | This Agreement shall be construed, interpreted and enforced in a manner consistent with the provisions of the Business Combination Agreement. The provisions set forth in Section 10.13 of the Business Combination Agreement, as in effect as of the date hereof, are hereby incorporated by reference into, and shall be deemed to apply to, this Agreement as if all references to the “Agreement” in such sections were instead references to this Agreement, and the references therein to the “Parties” were instead to the parties to this Agreement. |
| 11. | This Agreement shall terminate at such time, if any, as the Business Combination Agreement is terminated in accordance with its terms prior to the Closing, and upon such termination this Agreement shall be null and void and of no effect whatsoever, and the parties hereto shall have no obligations under this Agreement. |
{Remainder of Page Left Blank; Signature Page Follows}
4
Please indicate your agreement to the foregoing by signing in the space provided below.
| CHASERG TECHNOLOGY SPONSOR LLC | ||
| By: | /s/ Steve Fletcher | |
| Name: | Steve Fletcher | |
| Title: | Managing Member | |
| By: | /s/ Alex Vieux | |
| Name: | Alex Vieux | |
| Title: | Managing Member |
| By: | /s/ Lloyd Carney | |
| Name: | Lloyd Carney | |
| Title: | Managing Member |
| Cantor Fitzgerald & Co | ||
| By: | /s/ Mark Kaplan | |
| Name: | Mark Kaplan | |
| Title: | Global COO | |
Accepted and agreed, effective as of the date first set forth above:
CHASERG TECHNOLOGY ACQUISITION CORP.
| By: | /s/ Lloyd Carney | |
| Name: | Lloyd Carney | |
| Title: | Chief Executive Officer |
(Signature Page to Amended and Restated Sponsor Share Letter)
5