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): March 28, 2019

 

Blue Apron Holdings, Inc .

(Exact Name of Registrant as Specified in its Charter)

 

Delaware

 

001-38134

 

81-4777373

(State or Other Jurisdiction
of Incorporation)

 

(Commission
File Number)

 

(IRS Employer
Identification No.)

 

40 West 23rd Street
New York, New York

 

10010

(Address of Principal Executive Offices)

 

(Zip Code)

 

(347) 719-4312

(Registrant’s telephone number, including area code)

 

N/A

(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 (see General Instruction A.2. below):

 

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

Emerging growth company  x

 

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.  o

 

 

 


 

Item 2.02     Results of Operations and Financial Condition.

 

On April  2, 2019, Blue Apron Holdings, Inc. (collectively with its subsidiaries and other affiliates, as applicable, the “Company”) issued a press release disclosing material nonpublic information regarding its results of operations for the three months ended March 31, 2019. The full text of the press release issued by the Company in connection with the announcement is furnished as Exhibit 99.1 to this Current Report on Form 8-K.

 

The information contained in this Item 2.02 and in the accompanying exhibit shall not be incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing, unless expressly incorporated by specific reference to such filing. The information in this Current Report on Form 8-K, including the information set forth under this Item 2.02 and the exhibit hereto, shall not be deemed to be “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 or Sections 11 and 12(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”).

 

Item 5.02          Departure of Directors or Principal Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

 

(b)

 

Effective as of the commencement of employment of Linda Findley Kozlowski as described in Item 5.02(c) below, Bradley J. Dickerson will be resigning as President and Chief Executive Officer and as a director of the Company and as an employee of the Company. Mr. Dickerson will serve as an advisor to the Company for a period of time following Ms. Kozlowski’s appointment.

 

Effective as of May 3, 2019, Ilia M. Papas will be resigning as Chief Technology Officer and as an employee of the Company.

 

(c)

 

On April 2, 2019, the Company announced that its board of directors has appointed Linda Findley Kozlowski as the Company’s President and Chief Executive Officer, and as a class I director with her term expiring at the Company’s 2021 annual meeting of stockholders, in each case, effective as of the commencement of Ms. Kozlowski’s employment with the Company, which is contemplated to be April 8, 2019. Ms. Kozlowski will serve as the Company’s principal executive officer. Ms. Kozlowski will not receive separate compensation for services rendered as a director and will not serve on any committees of the Company’s board of directors.

 

Ms. Kozlowski, 45, served as Chief Operating Officer of Etsy, Inc., a global marketplace for unique and creative goods, from May 2016 to December 2018.  From October 2012 to December 2015, Ms. Kozlowski served in multiple positions at Evernote Corporation, a mobile app for productivity, including as Chief Operating Officer from May 2015 to December 2015, during which time she oversaw worldwide operations and led cross-functional teams in offices across seven countries. Ms. Kozlowski served as Vice President of Worldwide Operations at Evernote from May 2014 to May 2015, as Vice President of International Marketing from April 2013 to May 2014, and as Director of Market Development from October 2012 to April 2013. Prior to Evernote, Ms. Kozlowski was Director of Global Marketing and Customer Experience at Alibaba.com from June 2011 to October 2012, and Director of International Corporate Affairs from July 2009 to June 2011. Ms. Kozlowski currently serves as a member of the board of directors of Ralph Lauren Corporation. Ms. Kozlowski holds a B.A. in corporate communications and journalism from Elon University and an M.A. in journalism and public relations from the University of North Carolina at Chapel Hill.

 

Pursuant to the terms of her employment offer letter with the Company (the “Offer Letter”), Ms. Kozlowski will be entitled to the following compensation, subject to the commencement of her employment with the Company and, as applicable, approval by the compensation committee of the Company’s board of directors:

 

Base Salary. Ms. Kozlowski’s annual base salary will be $250,000.

 

Bonus .  Ms. Kozlowski will be eligible to receive a discretionary annual performance-based target cash bonus equal to 75% of her annual base salary, based on achievement of certain Company and individual performance goals.

 

Equity Compensation.   In connection with her appointment, the Company will grant Ms. Kozlowski (i) a restricted stock unit award (the “New Hire Award”) under the Company’s 2017 Equity Incentive Plan (the “Plan”) for such number of shares of the Company’s Class A Common Stock, par value $0.0001 per share (“Class A Common Stock”), having a target value of $1,000,000, and (ii) a one-time restricted stock unit award under the Plan for such number of shares of Class A Common Stock having a target value of $2,500,000 (the “One-Time RSU” and together with the “New Hire Award,” the “RSU Awards”). The RSU Awards will be scheduled to vest quarterly over four years. In addition, in connection with her appointment, the Company will grant Ms. Kozlowski a one-time, performance-based restricted stock unit award for a number of shares of Class A Common Stock having a target value of $250,000, with vesting conditions tied to the Company’s achievement of specified performance goals (the

 

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“PSU Award”).  Ms. Kozlowski will also be eligible to receive an annual equity award having a target value equal to the value of the New Hire Award, which award is expected to vest over four years (the “Annual Grant”); provided, that 25% of the Annual Grant awards in each of grant years 2020, 2021 and 2022 will be calculated based on the unweighted average closing price of the Class A Common Stock on the New York Stock Exchange over the 90 consecutive calendar days immediately preceding the date of the announcement of Ms. Kozlowski’s appointment as President and Chief Executive Officer of the Company. All equity grants to be made to Ms. Kozlowski will be subject to the terms set forth in the Offer Letter, the Plan and the applicable award agreement.

 

Termination of Employment and Payments .  In connection with her appointment, Ms. Kozlowski will be a “Covered Employee” under the Company’s Executive Severance Benefits Plan (the “Severance Plan”), which was filed as Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q on May 3, 2018 and is described under “Executive Compensation—Potential Payments Upon Termination or Change in Control” in the Company’s definitive proxy statement for the 2018 annual meeting of stockholders filed with the U.S. Securities and Exchange Commission on April 26, 2018.

 

In addition to the benefits provided under the Severance Plan, if, prior to the first anniversary of her commencement date, the Company terminates Ms. Kozlowski’s employment without Cause or she resigns for Good Reason (each as defined in the Severance Plan), she will be eligible to receive an additional cash severance amount equal to 12 months of her base salary (the “Additional Severance”).  In addition, and notwithstanding the Severance Plan, in the event of Ms. Kozlowski’s termination without Cause or resignation for Good Reason, the portion of any time-based equity awards held by her as of the date of termination that are scheduled to vest over the six-month period immediately following such termination date will accelerate and vest as of the date of such termination (the “Additional Equity Severance”).  In the event of Ms. Kozlowski’s death or disability, she will be entitled to the same benefits under the Severance Plan as if she experienced a termination without Cause or resigned for Good Reason under the Severance Plan.  In the event that Ms. Kozlowski is terminated without Cause or resigns for Good Reason within the 24-month period following a Change in Control (as defined in the Severance Plan), she will be entitled to the post-change in control severance benefits under the Severance Plan.

 

The foregoing descriptions are qualified in their entirety by the full text of the Offer Letter, which is filed herewith as Exhibit 99.2, and is incorporated herein by reference.

 

(e)

 

Arrangements with Linda Findley Kozlowski

 

Reference is made to the disclosure in Item 5.02(c) above regarding the Offer Letter with Ms. Kozlowski.

 

Arrangements with Bradley J. Dickerson

 

In connection with Mr. Dickerson’s resignation as President and Chief Executive Officer and as a director and employee of the Company, the Company and Mr. Dickerson will enter into an advisory agreement (the “Advisory Agreement”), pursuant to which Mr. Dickerson will provide certain advisory services to the Company through December 31, 2019 (the “Term”), unless the arrangement is earlier terminated.

 

Under the Advisory Agreement, in addition to his agreement to provide advisory services, Mr. Dickerson will provide a customary general release of claims against the Company arising out of or related to his employment with or separation from the Company, and agree to certain restrictive and other covenant obligations. In consideration for the foregoing, Mr. Dickerson will be entitled to the following compensation, subject to his execution and nonrevocation of the general release: (i) 12 equal monthly installments of $41,666 (the “Advisory Fees”), which will survive expiration or termination of the Advisory Agreement; (ii) continued vesting of Mr. Dickerson’s outstanding unvested restricted stock unit awards through the earlier to occur of the expiration or termination of the Advisory Agreement (the “Continued Vesting RSUs”), provided that upon any termination of the Advisory Agreement such RSUs that would have vested through December 31, 2019 but for such termination will accelerate and be settled in accordance with their terms unless such termination was by Mr. Dickerson for convenience or by the Company due to Mr. Dickerson’s material breach of the Advisory Agreement; and (iii) extension of the exercise period applicable to certain of Mr. Dickerson’s outstanding stock option awards that are vested as of his date of resignation through

 

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July 31, 2020 (the “Extended Exercise Options”). In connection with the consummation of a Reorganization Event (as defined in the Plan) occurring at any time (x) during the Term, the Continued Vesting RSUs will accelerate and be settled in accordance with their terms; (y) prior to July 31, 2020, the Extended Exercise Options will either be assumed, replaced or, to the extent “in-the-money,” paid therefor; and (z) prior to the final payment of the Advisory Fees, the Advisory Fees will remain an obligation of the Company (or the successor thereto) until so paid.

 

Arrangements with Ilia M. Papas

 

In connection with Mr. Papas’ resignation as Chief Technology Officer and an employee of the Company, the Company will enter into a separation agreement with Mr. Papas (the “Separation Agreement”), pursuant to which Mr. Papas will provide a customary general release of claims against the Company arising out of or related to his employment with or separation from the Company, and agree to certain restrictive and other covenant obligations. In consideration for the foregoing, Mr. Papas will be entitled to the following compensation, subject to his execution of the Separation Agreement and nonrevocation of the release contained therein: (i) $157,500, in the form of the continued payment of Mr. Papas’s base salary amount for a period of six months; and (ii) in the event Mr. Papas elects to receive COBRA continuation health coverage, payment of the Company portion of the premiums associated with Mr. Papas’s and his dependents’ COBRA continuation health coverage for a period of 12 months, or, if earlier, through the date Mr. Papas becomes eligible for benefits coverage under a new employer’s benefits plan.

 

Item 7.01          Regulation FD Disclosure.

 

On April 2, 2019, the Company announced Ms. Kozlowski’s appointment as President and Chief Executive Officer and a member of the board of directors of the Company by a press release, which is attached hereto as Exhibit 99.1 and is incorporated by reference into this Item 7.01.

 

In accordance with General Instruction B-2 of Form 8-K, the information set forth in or incorporated by reference into this Item 7.01 shall not be deemed to be “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

 

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Item 9.01                    Financial Statements and Exhibits.

 

(d) Exhibits

 

Exhibit

 

Description

 

 

 

99.1

 

Press Release dated April 2, 2019.

 

 

 

99.2

 

Offer Letter, dated April 1, 2019, by and between Linda Findley Kozlowski and Blue Apron, LLC.

 

 

 

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SIGNATURES

 

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.

 

 

 

 

BLUE APRON HOLDINGS, INC.

 

 

Date: April 2, 2019

By:

/s/ Benjamin C. Singer

 

 

Benjamin C. Singer

 

 

General Counsel and Secretary

 

6


Exhibit 99.1

 

Blue Apron Appoints Linda Findley Kozlowski as President and Chief Executive Officer

 

Brad Dickerson to Resign as President and CEO, Leaving Company Well-Positioned Strategically

Company Reaffirms Guidance of Significant Improvement in Net Loss and Achieving Profitability on an Adjusted EBITDA Basis for First Quarter and Full Year 2019

Company to Host Conference Call to Discuss First Quarter 2019 Earnings on April 30, 2019

 

NEW YORK, NY—April 2, 2019—Blue Apron Holdings, Inc. (NYSE: APRN) today announced that its Board of Directors has appointed Linda Findley Kozlowski as President, Chief Executive Officer, and a member of the Board of Directors, effective as of April 8, 2019. Kozlowski brings a proven record of success at innovative, consumer-focused companies, having most recently served as Chief Operating Officer of Etsy, Inc. and prior to that as COO of Evernote Corporation. Brad Dickerson, who joined Blue Apron as Chief Financial Officer in February 2016 and was appointed as President, CEO and a member of the Board of Directors in November 2017, has decided to resign in order to pursue new opportunities. Following Kozlowski’s appointment, he will serve as an advisor to the company for a period of time to assist with the transition.

 

“This is an exciting time to join Blue Apron,” said Kozlowski. “Over the past year, the company has made significant product, platform and operational advancements, and now has the right foundation for growth. I look forward to working closely with the team to focus on the best opportunities to attract and engage consumers and drive the business to new levels of performance.”

 

Kozlowski is a highly accomplished e-commerce and consumer-focused executive with 25 years of experience across product, sales, marketing, business development and operations. Most recently, she served as COO of Etsy, with responsibility for product, marketing and customer engagement and acquisition. In this position, Kozlowski helped realize a transformation that grew annual marketplace sales to more than $3.9 billion and revenue to over $600 million in fiscal year 2018. Prior to Etsy, Kozlowski served as COO of Evernote, where she oversaw worldwide operations, managed cross-functional teams across seven countries and led the successful launch of the company’s multi-tier pricing strategy to drive accelerated revenue. Before Evernote, she worked for Alibaba.com based out of Hong Kong, most recently as Director of Global Marketing and Customer Experience with responsibilities spanning multiple revenue-generating and customer-facing functions.

 

“We are incredibly excited to have an executive of Linda’s caliber as Blue Apron’s next CEO,” said Matt Salzberg, Chairman of Blue Apron’s Board of Directors. “Linda’s exceptional leadership and marketing expertise, as well as her understanding of Blue Apron customers as a long-time customer herself, will help her advance the company towards sustainable, profitable growth.”

 

Robert Goodman, Blue Apron’s lead independent director, added: “We congratulate Linda on her appointment and look forward to working with her to build upon the strong foundation for future growth that is now in place.”

 

In addition, Ilia Papas, Blue Apron’s co-founder and Chief Technology Officer, will be departing the company to pursue new opportunities. His last day with Blue Apron will be May 3, 2019. The company has a transition plan in place.

 


 

“On behalf of the Board, I would like to thank Brad for his leadership, and for the progress the team has achieved in the past year, including in driving operational optimization, realizing meaningful margin expansion, and evolving the company’s product portfolio and channel strategy,” said Salzberg. “I’d also like to thank my co-founder Ilia for all of his contributions over the past 7 years, particularly in developing Blue Apron’s technology infrastructure and capabilities as our Chief Technology Officer. We wish both Brad and Ilia the best with their future pursuits.”

 

“Blue Apron has reached an important point in the company’s history, highlighted by a clear path towards adjusted EBITDA profitability and a sharpened focus on the strongest opportunities for the business, and the Board and I believe this is an appropriate time to transition to a new leader who can optimize for growth,” said Dickerson. “I am proud of the great things our team has accomplished and am confident that with Linda as CEO, Blue Apron will implement the appropriate strategies to create value for all of its stakeholders.”

 

Kozlowski serves on the Board of Directors and as a member of the Finance and Audit Committee of the Ralph Lauren Corporation, in addition to serving on the Board of Directors of Styleseat, Inc., an online platform for beauty and wellness professionals, and Dress for Success, a not-for-profit organization focused on empowering women. She received a Bachelor’s degree in Corporate Communications and Journalism from Elon College and a Master of Arts in Journalism and Public Relations from UNC-Chapel Hill.

 

Based on its current view of the business, Blue Apron also reaffirms its prior guidance of a significant improvement in net loss and achieving profitability on an adjusted EBITDA basis for the first quarter of 2019 and for full year 2019. Please refer to “Use of Non-GAAP Financial Information” below for further discussion of the Company’s use of non-GAAP measures.

 

First Quarter 2019 Earnings Call Details

 

Blue Apron plans to release its first quarter 2019 financial results prior to the opening of the U.S. financial markets on Tuesday, April 30, 2019. The release will be followed by a conference call and live webcast at 8:30 a.m., Eastern Time, during which the company will discuss its first quarter 2019 financial results, strategic initiatives and business outlook. The earnings conference call can be accessed by dialing 1-877-883-0383 or 1-412-902-6506, utilizing the conference ID 6871758. Alternatively, participants may access the live webcast on Blue Apron’s Investor Relations website at investors.blueapron.com.

 

A recording of the webcast will also be available on Blue Apron’s Investor Relations website at investors.blueapron.com following the conference call. Additionally, a replay of the conference call can be accessed until May 7, 2019 by dialing 1-877-344-7529 or 1-412-317-0088, utilizing the conference ID 10129338.

 

Forward-Looking Statements

 

This press release includes statements concerning Blue Apron Holdings, Inc. and its future expectations, plans and prospects that constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, including guidance for first quarter 2019 and full year 2019. For this purpose, any statements contained herein that are not statements of historical fact may be deemed to be forward-looking statements. In some cases, you can identify forward-looking statements by terms such as “may,” “should,” “expects,” “plans,” “anticipates,” “could,” “intends,” “target,” “projects,” “contemplates,” “believes,” “estimates,” “predicts,” “potential,” or “continue,” or the negative of these terms or other similar

 


 

expressions. Blue Apron has based these forward-looking statements largely on its current expectations and projections about future events and financial trends that it believes may affect its business, financial condition and results of operations. These forward-looking statements speak only as of the date of this press release and are subject to a number of risks, uncertainties and assumptions including, without limitation, revenue and/or expense adjustments identified in the course of the review of the company’s results for the quarter ended March 31, 2019; assumptions based on information available to management as of the date of this release which remains subject to the completion of normal quarter-end accounting procedures and adjustments, and which assumptions are subject to change; the company’s anticipated growth strategies, including its decision to prioritize customer segments within the direct-to-consumer business; risks resulting from the management transition, including, but not limited to, loss of institutional knowledge and expertise; the company’s ability to execute on its multi-product, multi-channel growth strategy; the company’s ability to achieve the benefits associated with, and mitigate the risks resulting from, the workforce reduction announced in November 2018 and transfer of production volume from its Arlington, Texas fulfillment center announced in January 2019; its ability to expand its product offerings, strategic partnerships and distribution channels; its ability to cost-effectively attract new customers, retain existing customers and increase the number of customers it serves; its amount of indebtedness and ability to fulfill its debt-related obligations; its ability to comply with the covenants in its revolving credit facility; seasonal trends in customer behavior; its expectations regarding, and the stability of, its supply chain; the size and growth of the markets for its product offerings and its ability to serve those markets; federal and state legal and regulatory developments; other anticipated trends and challenges in its business; and other risks more fully described in the company’s Annual Report on Form 10-K for the year ended December 31, 2018, and in other filings that the company may make with the SEC in the future. The company assumes no obligation to update any forward-looking statements contained in this press release as a result of new information, future events or otherwise.

 

Use of Non-GAAP Financial Information

 

This press release includes adjusted EBITDA, a non-GAAP financial measure, that is not prepared in accordance with, nor an alternative to, financial measures prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). In addition, adjusted EBITDA is not based on any standardized methodology prescribed by GAAP and is not necessarily comparable to similarly-titled measures presented by other companies.

 

The company defines adjusted EBITDA as net earnings (loss) before interest income (expense), net, other operating expense, other income (expense), net, benefit (provision) for income taxes and depreciation and amortization, adjusted to eliminate share-based compensation expense. The company presents adjusted EBITDA because it is a key measure used by the company’s management and board of directors to understand and evaluate the company’s operating performance, generate future operating plans and make strategic decisions regarding the allocation of capital. In particular, the company believes that the exclusion of certain items in calculating adjusted EBITDA can produce a useful measure for period-to-period comparisons of the company’s business. Further, Blue Apron uses adjusted EBITDA to evaluate its operating performance and trends and make planning decisions, and it believes that adjusted EBITDA helps identify underlying trends in its business that could otherwise be masked by the effect of the items that company excludes. Accordingly, Blue Apron believes that adjusted EBITDA provides useful information to investors and others in understanding and evaluating its operating results, enhancing the overall understanding of the company’s past performance and future prospects, and allowing for greater transparency with respect to key financial metrics used by its management in its financial and operational decision-making.

 


 

There are a number of limitations related to the use of adjusted EBITDA rather than net income (loss), which is the most directly comparable GAAP equivalent. Some of these limitations are:

 

·      adjusted EBITDA excludes share-based compensation expense, as share-based compensation expense has recently been, and will continue to be for the foreseeable future, a significant recurring expense for the company’s business and an important part of its compensation strategy;

·      adjusted EBITDA excludes depreciation and amortization expense and, although these are non-cash expenses, the assets being depreciated may have to be replaced in the future;

·      adjusted EBITDA excludes other operating expense, as other operating expense represents restructuring costs, primarily including severance and other costs;

·      adjusted EBITDA excludes other expense, as other expense represents a one-time loss on the extinguishment of convertible notes;

·      adjusted EBITDA does not reflect interest expense, or the cash requirements necessary to service interest, which reduces cash available to us;

·      adjusted EBITDA does not reflect income tax payments that reduce cash available to us; and

·      other companies, including companies in the company’s industry, may calculate adjusted EBITDA differently, which reduces its usefulness as a comparative measure.

 

Because of these limitations, adjusted EBITDA should be considered together with other operating and financial performance measures presented in accordance with GAAP. A reconciliation of certain forward-looking, non-GAAP measures referenced in this release are included on the company’s Investor Relations section of its website, located at investors.blueapron.com under “Events & Presentations.” A reconciliation of the company’s guidance of profitability on an adjusted EBITDA basis to net income (loss) for full year 2019 is not included because the information necessary to reconcile such guidance to GAAP for full year 2019 cannot be reasonably calculated at this time.

 

In addition, the company will be presenting certain guidance regarding future operating results, including forward-looking non-GAAP measures, on the company’s call and webcast on April 30, 2019. Reconciliations of these forward-looking non-GAAP measures to the most directly comparable measures calculated in accordance with GAAP, to the extent available without unreasonable efforts, will be posted on the company’s Investor Relations section of its website, located at investors.blueapron.com under “Events and Presentations.”

 

About Blue Apron

 

Blue Apron’s mission is to make incredible home cooking accessible to everyone. Launched in 2012, Blue Apron is reimagining the way that food is produced, distributed, and consumed, and as a result, building a better food system that benefits consumers, food producers, and the planet. The company has developed an integrated ecosystem that enables the company to work in a direct, coordinated manner with farmers and artisans to deliver high-quality products to customers nationwide at compelling values.

 

Contact
Louise Ward
louise.ward@blueapron.com

 


Exhibit 99.2

 

 

April 1, 2019

 

Linda Kozlowski

 

Dear Linda,

 

Congratulations! We are delighted to offer you the opportunity to share in our mission of making incredible home cooking accessible to everyone. We are confident that your skills and experience will be an asset to our company, and are excited for you to become a part of our team.

 

This letter confirms our previous conversations regarding the employment opportunity available to you with Blue Apron, LLC (the “Company”), an affiliate of Blue Apron Holdings, Inc. (“Blue Apron” and, collectively with its affiliates, including the Company, the “Company Group”), and sets forth the terms and conditions of that employment.

 

The Company hereby offers you full-time employment as Chief Executive Officer of Blue Apron beginning on or about April 8, 2019 (the “Commencement Date”) with an annual base salary of $250,000.00 at the Company’s offices located in New York, New York (Flatiron).

 

The Board of Directors of Blue Apron (the “Board” or the “Board of Directors”) will, effective as of the Commencement Date, elect you to serve as a member of the Board, on which you will serve for no additional compensation during your employment. On or around the two-year anniversary of the Commencement Date, the Company shall review and consider an increase, if any, to your annual base salary based on your and the company’s performance. Any determinations with respect to such review will be made in the Company’s reasonable discretion with due regard to your and the Company’s performance. Your position is classified as exempt from the state and federal wage and hour laws, so you will not receive any overtime pay.

 

Equity

 

If you decide to join the Company, Blue Apron will grant you (i) a new hire equity award having a target value of $1,000,000 (the “New Hire Grant”) and (ii) a one-time equity award having a target value of $2,500,000 (the “One-Time Grant”). Your New Hire Grant and your One-Time Grant will each (i) be granted effective as of the date of the next regularly scheduled equity grants under Blue Apron’s equity grant program (on or around May 25, 2019); provided that the vesting of each such grant will commence as of the Commencement Date, (ii) be in the form of restricted stock unit awards and (iii) vest quarterly over four years in equal installments (on the applicable quarterly vesting date) over the four-year period following the Commencement Date. The New Hire Grant and the One-Time Grant will be subject to the

 


 

other terms and conditions of Blue Apron’s equity incentive plan, equity compensation program and applicable award agreement, including the right to execute an automatic sale of shares to cover any applicable tax obligations you may incur in connection with the vesting of the applicable equity award (“Automatic Sale Rights”).  The number of shares subject to the New Hire Grant and the One-Time Grant shall be calculated based on the unweighted average closing price of Blue Apron’s Class A Common Stock on the New York Stock Exchange over the 90 consecutive calendar days (the “Average Closing Price”) immediately preceding the date that your employment as the Chief Executive Officer of Blue Apron is publicly announced by the Company (the “Announcement Date”).

 

In addition, in connection with the Company’s annual employee review process, you will also be eligible to receive an annual equity award having a target value equal to the target value of your New Hire Grant (the “Annual Grant”), subject to the approval of the Board of Directors at such time. Your Annual Grant will vest quarterly over four years in equal installments (on the applicable quarterly vesting date) over the four-year period following the applicable vesting commencement date and shall be subject to the other terms and conditions of Blue Apron’s equity incentive plan, equity compensation program and the award agreement applicable to the Annual Grant, including any Automatic Sale Rights thereunder; provided, however, that 25% of the Annual Grant for each of 2020, 2021 and 2022 will be calculated based on the Average Closing Price immediately preceding the Announcement Date. In the event the Board of Director fails to approve, and you do not otherwise receive, your 2020, 2021 or 2022 Annual Grant, such event shall constitute “Good Reason” pursuant to Section 3(t)(v) of the Severance Plan (as defined below).  In addition, with respect to years 2023 and beyond, the Company shall evaluate your total compensation package annually and ensure that it is aligned with the general compensation philosophy for other chief-level executives of the Company, with input from an independent compensation consultant and/or the Compensation Committee of the Board of Directors, as applicable.

 

In addition, if you decide to join the Company, Blue Apron will, effective as of the Commencement Date, grant you a one-time, performance-based restricted stock unit award having a target value of $250,000 (the “PSU Grant”), with the number of shares subject to the PSU Grant being calculated based on the Average Closing Price immediately preceding the Announcement Date. Vesting of your PSU Grant is subject to Blue Apron achieving certain stated performance goals during the measurement period and the vesting schedule applicable to such equity award, as described to you by the Company. The PSU Grant will be subject to the terms and conditions of Blue Apron’s equity incentive plan, equity compensation program and the award agreement applicable to the PSU Grant, including vesting requirements and any Automatic Sale Rights thereunder.

 

Bonus

 

You will be eligible to receive a discretionary bonus on an annual basis with a target of 75% of your annual base salary, subject to both your and the Company’s performance. Your bonus payment will be prorated based on your start date with the Company if you start after the 1st of the year of the current measurement period (January 1 through December 31 of such year). Your payment amount will be based on your performance against the goals you and the Board of Directors align on and based on overall Company performance. You must be employed by the Company on the date bonus payments are made to receive such bonus award except as otherwise set forth herein or under the Severance Plan.

 

Executive Severance Benefits Plan

 

If you decide to join the Company, you will be designated a “Covered Employee” under Blue Apron’s Executive Severance Benefits Plan (the “Severance Plan”) and thus be eligible to receive no less than the associated benefits thereunder applicable to the Chief Executive Officer of the Company in accordance with and subject to the terms and conditions of the Severance Plan.  In addition to the foregoing, in the

 


 

event that, prior to a Change in Control, the Company terminates your employment without Cause or you resign for Good Reason (each such term as defined in the Severance Plan), in each case prior to the one-year anniversary of the Commencement Date, you will be eligible to receive an additional cash severance amount equal to twelve months of your base salary (“Additional Severance”).  The Additional Severance will be paid in accordance with and subject to the terms and conditions of the Severance Plan.  In addition, notwithstanding anything provided to the contrary in the Severance Plan or an applicable equity award agreement, in the event of a termination without Cause or a resignation by you for Good Reason, the portion of any time-based equity awards held by you as of the date of such termination or resignation, as applicable, that is scheduled to vest over the 6-month period immediately following such termination or resignation date, as applicable, shall, subject to your execution of a Release (as defined in the Severance Plan), accelerate and be deemed vested as of the date of such termination or resignation, as applicable. In the event of the termination of your employment on account of your death or disability (as defined in Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”)), you shall be eligible to receive the same severance payments and benefits under the Severance Plan you would have otherwise received if the Company terminated your employment without Cause or if you had resigned for Good Reason, with such payments and benefits payable on the same schedule and subject to the same terms set forth in the Severance Plan.

 

Notwithstanding anything provided to the contrary in the Severance Plan, for the purposes of the “Covered Termination” definition under the Severance Plan, the 12-month period following a Change in Control as set forth in Section 3(n)(iii) of the Severance Plan shall be extended to 24-months.

 

Terms and Conditions

 

During the period of your employment, you shall (a) devote your entire working time for or at the direction of the Company Group, (b) use your best efforts to complete all assignments, and (c) adhere to the Company Group’s procedures and policies in place from time-to-time. During your employment with the Company, you may not engage in any other paid activities without the prior written consent of the Board of Directors or any other unpaid activities that inhibit or prohibit the performance of your duties to the Company or inhibit or conflict in any way with the business of the Company Group. Notwithstanding the foregoing, you will be permitted to serve as a member of the board of directors of (x) the entities set forth on Exhibit A attached hereto and (y) certain other businesses, civic or charitable organizations with the prior written consent of the Board of Directors in each instance (such consent not to be unreasonably withheld); provided, in each case, that such activities are not inconsistent with any agreement between you and the Company Group, including without limitation, this agreement and the Covenants Agreement (as defined below) or the business practices and policies of the Company Group and do not otherwise materially interfere with the performance of your duties and responsibilities hereunder.

 

During your employment with the Company you will be entitled to participate in all of our then-current customary employee benefit plans and programs, subject to eligibility requirements, enrollment criteria, and the other terms and conditions of such plans and programs, when the Company establishes such plans. The Company reserves the right to change or rescind its benefit plans and programs and alter employee contribution levels in its discretion. The Company will reimburse you for reasonable and documented legal fees incurred by you in connection with the negotiation of this Agreement up to a maximum of $10,000.  Such documentation shall be promptly submitted to the Company following full execution of this Agreement.  In the event of a Change in Control (as defined in the Severance Plan), the Company agrees to engage, at its expense, a nationally recognized accounting firm or law firm, selected in the Company’s sole reasonable discretion, to evaluate and determine the calculations and determinations with respect to Section 280G and Section 4999 of the Code, including without limitation the valuation of the non-competition covenant as set forth herein. The Company and you shall each

 


 

furnish such firm with such information and documents as the firm may reasonably request in order to make such determinations.

 

By executing this letter below, you agree that during the course of your employment and thereafter that you shall not use or disclose, in whole or in part, any of the Company Group’s, or any of its users’, vendors’, or affiliates’, trade secrets, confidential and proprietary information, customer lists and information, to any person, firm, corporation, or other entity for any reason or purpose whatsoever other than in the course of your employment with the Company or with the prior written permission of the Board of Directors or General Counsel of Blue Apron. You also will be required to execute an employee non-disclosure and invention assignment agreement (the “Covenants Agreement”), the terms of which are in addition to the terms of this offer letter.  Notwithstanding anything set forth in the Covenants Agreement, the one-year period set forth under Section 4 of the Covenants Agreement shall be extended to two years in the event you are terminated without Cause or you resign for Good Reason and you receive any payments or benefits pursuant to the Severance Plan or this Agreement as a result thereof.

 

This offer of employment with the Company is contingent upon our satisfactory completion of reference checks, drug testing and proof of your authorization to work in the United States. If, based upon a unique circumstance, you commence work before the Company has completed its inquiry, you will be deemed a conditional employee. Although we hope that your employment with us is mutually satisfactory, employment at the Company is “at will.” This means that, just as you may resign from the Company at any time for any reason or no reason, the Company has the right to terminate this employment relationship at any time with or without cause or notice. Neither this letter nor any other communication, either written or oral, should be construed as a contract of employment, unless it is signed by both you and an authorized member of the Board of Directors, and such agreement is expressly acknowledged as an employment contract.

 

I hope that you elect to accept this offer of employment. Kindly sign your name at the end of this letter to signify your understanding and acceptance of these terms and that no one at the Company has made any other representation to you. The Company welcomes you as an employee and looks forward to a successful relationship in which you will find your work both challenging and rewarding. This offer must be accepted on or before April 1, 2019 provided that you will be available to commence employment immediately following such date of acceptance.  The offer will be deemed to have been withdrawn if your executed acceptance of this offer, together with the signed Covenants Agreement, is not received by the undersigned on or before the above referenced date.

 

Sincerely,

 

/s/ Matt Salzberg

 

 

Matt Salzberg

 

 

Chairman of the Board of Directors

 

 

 

 

 

Agreed and accepted as of the date set forth below:

 

 

 

 

 

/s/ Linda Kozlowski

 

 

Linda Kozlowski

 

 

 

 

 

Date: April 1, 2019

 

 

 


 

EXHIBIT A

 

Ralph Lauren Corporation

Styleseat, Inc.

Dress for Success Worldwide