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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
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CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): June 26, 2023
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1STDIBS.COM, INC.
(Exact name of registrant as specified in its charter)
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| (State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) | ||||||
51 Astor Place, 3rd Floor New York, New York 10003 | ||
| (Address of principal executive offices, including zip code) | ||
| (Registrant's telephone number, including area code) | ||
| N/A | ||
| (Former name or former address, if changed since last report) | ||
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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligations of the registrant under any of the following provisions (see General Instruction A.2. below):
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading symbol(s) | Name of each exchange on which registered | ||||||||||||
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Item 2.05 Costs Associated with Exit or Disposal Activities.
On June 28, 2023, 1stdibs.com, Inc. (the “Company”) announced a workforce reduction designed to reduce operating costs and realign investment priorities. This reduction is expected to represent approximately 20% of the Company’s current global workforce.
As a result of the reduction, the Company estimates that it will incur approximately $1.9 million - $2.2 million in non-recurring restructuring charges, consisting primarily of employee severance and benefits costs. The Company expects that substantially all of the restructuring charges will be incurred in the second quarter of 2023.
Potential position eliminations in each country are subject to local law and consultation requirements. The charges that the Company expects to incur are subject to a number of assumptions, including local law requirements in various jurisdictions, and actual expenses may differ materially from the estimates disclosed above.
Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
On June 26, 2023, the Company determined that the employment of Ross Paul, the Company’s Chief Technology Officer and a named executive officer, would be terminated as part of the above-referenced workforce reduction, with such termination effective June 30, 2023. In connection with his termination of employment, Mr. Paul is eligible to receive the severance payments and benefits under Section 4(a) of the Company’s Executive Severance Plan (the “Severance Plan”) in accordance with the terms and conditions of the Severance Plan, including that Mr. Paul execute and not revoke a release of claims in favor of the Company which Mr. Paul executed on June 28, 2023.
On June 28, 2023, to facilitate his transition, the Company entered into an advisory agreement with Mr. Paul pursuant to which he will advise the Company on various matters until December 31, 2023 (unless terminated earlier by the Company at any time, with or without cause). All of Mr. Paul’s previously issued equity incentive awards will continue to vest during the term of the advisory agreement. Further, in consideration of such services, the Company and Mr. Paul agreed that, in the event that his service is terminated by the Company without Cause, as defined in the Severance Plan, during the term of the advisory agreement, all of Mr. Paul’s previously issued equity incentive awards that are unvested as of the effective date of such termination that would have vested on or prior to December 31, 2023 had Mr. Paul remained in service on the applicable vesting dates will immediately vest upon the effective date of such termination and the remaining unvested equity awards will be subject to the treatment described below. Additionally, in consideration of Mr. Paul’s advisory services, the Company and Mr. Paul agreed that, in the event that a Change in Control, as defined in the Severance Plan, is consummated on or prior to December 31, 2023 and Mr. Paul is providing services to the Company on such date or his service has been terminated by the Company without Cause prior to the date on which the Change in Control is consummated, Mr. Paul will be entitled to receive the “change in control benefits” set forth in Section 4(c) of the Severance Plan as if his employment was terminated within 12 months after a Change in Control (the “Change in Control Benefits”) subject to, and in accordance with, the terms and conditions of the Severance Plan; provided, however, that (a) any payments and/or benefits payable or to be provided to Mr. Paul under Section 4(c) of the Severance Plan will be offset by any payments and/or benefits previously paid or provided to him under Section 4(a) of the Severance Plan such that there will be no duplication of payments or benefits; (b) to give effect to the foregoing, if Mr. Paul’s service is terminated for any reason other than for Cause on or prior to December 31, 2023, the remaining unvested equity awards shall remain outstanding (but unvested) until the earliest to occur of (i) the original expiration date of the equity award, (ii) December 31, 2023 and (iii) the date on which the Change in Control is consummated and (c) if the Company subsequently determines that it had grounds to terminate Mr. Paul’s employment for Cause (as defined in the Severance Plan) had it known of all of the relevant facts as of the date of his termination of employment, Mr. Paul will not be eligible to receive the Change in Control Benefits.
Forward-Looking Statements
This Current Report on Form 8-K contains forward-looking statements within the meaning of the “safe harbor” provisions of the United States Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical fact, included or incorporated by reference in this Current Report on Form 8-K are forward-looking statements. These forward-looking statements may be identified by terms such as “continue,” “could,” “designed to,” “estimates,” “expects,” “intends,” “may,” “potential,” “will,” and “would,” or the negative of such terms or other variations or comparable terminology, although not all forward-looking statements may contain such terms. These forward-looking statements include, without limitation, statements regarding the estimated size, parameters, timing, implementation, and impact of the workforce reduction plan, and the estimated charges and expenses expected to be recognized and incurred in connection therewith and the timing thereof. These forward-looking statements are based on the Company’s current expectations and projections about future events and various assumptions, and are not a guarantee that the Company will actually achieve the results, objectives, intentions, or expectations disclosed in the forward-looking statements. These forward-looking statements involve a number of risks and uncertainties or other assumptions, many of which are beyond the Company’s control, that may cause actual results to differ materially from those expressed or implied by these forward-looking statements. These forward-looking statements are also subject generally to other risks and uncertainties that are described from time to time in the Company’s filings with the Securities and Exchange Commission, including under Item 1A, “Risk Factors” in the Company’s most recent Annual Report on Form 10-K, and as revised and updated by the Company’s Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. Accordingly, you should not place undue reliance on such forward-looking statements. These forward-looking statements are made as of the date of this Current Report on Form 8-K and, except as may be required by law, the Company undertakes no obligation to update them, whether as a result of new information, developments, or otherwise.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
| Exhibit Number | Description | |||||||||||||
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document). | |||||||||||||
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 thereunto duly authorized.
| 1STDIBS.COM, INC. | ||||||||
| Dated: | June 28, 2023 | /s/ David S. Rosenblatt | ||||||
David S. Rosenblatt Chief Executive Officer | ||||||||
EXHIBIT 10.1
Dated as of June 28, 2023
BY EMAIL
Ross Paul
ross.paul@1stdibs.com
Dear Ross:
I appreciate your agreeing to serve as an advisor to 1stdibs.com, Inc. (the “Company”). Below are details of our arrangement:
Purpose: Support the strategic growth of the Company by sharing experience, providing advice and assisting with leadership transition.
Obligations: We expect that you will be available to assist with the transition of your employment duties and periodically answer questions in your area of expertise via Zoom, phone, email or meetings. We expect no more than ten (10) hours per week of availability on an as-needed and reasonable basis, to be scheduled at your and the Company’s mutual convenience.
Term: The term of this agreement will commence as of the date your employment with the Company terminates (the “Termination Date”) and will continue until December 31, 2023, subject to the earlier termination of the appointment by the Company in its sole discretion at any time, with or without cause (the “Term”).
Compensation: During the Term, you will continue to vest in your restricted stock unit and stock option awards under the Company’s 2011 Stock Option and Grant Plan and the Company’s 2021 Stock Incentive Plan that are outstanding as of the Termination Date (collectively, the “Equity Awards”), subject to the terms and conditions governing the Equity Awards.
As compensation for your service as an advisor, if your service is terminated by the Company for any reason other than for Cause during the Term, the unvested Equity Awards held by you as of the effective date of such termination that would have vested according to their terms on or prior to December 31, 2023 had you remained in service on the applicable vesting dates shall immediately vest upon the effective date of such termination, and the remaining unvested Equity Awards (the “Unvested Equity Awards”) shall be subject to the paragraph below.
Additionally, as compensation for your service as an advisor, in the event that a Change in Control is consummated during the Term and you are providing services to the Company on the date on which the Change in Control is consummated or your service with the Company has been terminated by the Company without Cause prior to the date on which the Change in Control has been consummated, you shall be entitled to receive the “change in control benefits” set forth in Section 4(c) of the Company’s
Executive Severance Plan (the “Severance Plan”) as if your employment was terminated within 12 months after a Change in Control (the “Change in Control Benefits”) subject to, and in accordance with, the terms and conditions of the Severance Plan; provided, however, that (a) any payments and/or benefits payable or to be provided to you under Section 4(c) of the Severance Plan shall be offset by any payments and/or benefits previously paid or provided to you under Section 4(a) of the Severance Plan such that there will be no duplication of payments or benefits; (b) to give effect to the foregoing, if your service is terminated for any reason other than for Cause during the Term, the Unvested Equity Awards shall remain outstanding (but unvested) until the earliest to occur of (i) the original expiration date of the equity award, (ii) the last day of the Term and (iii) the date on which the Change in Control is consummated; and (c) if the Company subsequently determines that it had grounds to terminate your employment for Cause had it known of all of the relevant facts as of the Termination Date, you shall not be eligible to receive the Change in Control Benefits. Capitalized terms used in this provision but not defined shall have the meanings assigned to such terms in the Severance Plan.
Status: You shall retain use of your Company email address and Company-issued computer during the term of this agreement. Notwithstanding the foregoing, the parties hereto recognize that the status of advisor is that of an independent contractor engaged solely to consult with senior management of the Company, without duties with respect to the management of its business or authority to bind the Company or act on its behalf. An advisor is not a director, officer, employee or agent of the Company and shall have no liability as such and shall have no right to participate in any of the employee benefit plans, programs or arrangement of the Company in his or her capacity as an advisor.
Confidential
Information:
You agree to treat all confidential or proprietary information related to the Company’s business that is furnished to you by the Company or its representatives as confidential information entrusted to you for use solely in connection with your performance as an advisor, and not to use such information or divulge, disclose or communicate such information in any way to any person or entity (other than an authorized agent of the Company) during or after the term of your service as an advisor; provided, that the foregoing will not apply to (x) publicly available information, (y) information that was known to you on non confidential basis prior to disclosure to you by the Company or its representatives or (z) information that you independently develop; and provided further that you may furnish materials or information as requested in conjunction with a subpoena, deposition, request for documents, civil investigations, demand or similar process upon written notification to the Company of such request and appropriate opportunity for the Company to obtain a protective order or the like. You acknowledge that this agreement is in addition to, and does not supersede or invalidate, your Employee Assignment of Intellectual Property,
Confidentiality and Non-Competition Agreement dated as of January 16, 2012 (the “Restrictive Covenants Agreement”). You will continue to be bound by the terms contained in the Restrictive Covenants Agreement in accordance with its terms.
Intellectual
Property: You agree that the Company shall own all right, title and interest relating to all inventions, improvements, discoveries, methods, developments, software, and works of authorship, whether patentable or not, which are created, made, conceived or reduced to practice by you or jointly with others in the course of your performance of services under this agreement or using the Company’s confidential information (collectively, “Developments”). You hereby assign to the Company or its designee all of your right, title and interest in and to any and all Developments. You agree to cooperate fully with the Company, both during and after the term of this agreement, with respect to the procurement, maintenance, and enforcement of intellectual property rights (both in the United States and foreign countries) relating to any Developments. Notwithstanding anything to the contrary above, this section does not apply to an invention for which no equipment, supplies, facility or trade secret information of the Company was used and which was developed entirely on your own time, unless the invention relates to the business of the Company or to the Company’s actual or demonstrably anticipated research or development, or the invention results from any work performed by you for the Company.
Governing Law: This agreement shall be construed according to the laws of the State of New York without regard to any state’s conflict of laws provisions. Any claims arising hereunder shall exclusively be resolved by submission to final and binding arbitration before the American Arbitration Association (“AAA”) in New York City, New York. Notwithstanding the foregoing agreement to arbitrate, neither party waives the right (a) to seek through judicial process preliminary injunctive relief to preserve the status quo and (b) to enforce this paragraph should one side or the other not participate in the arbitration or take steps to interfere with or make unworkable in whole or in part the arbitration process. In such cases, the parties hereto each hereby irrevocably consent to the exclusive jurisdiction of the federal and state courts located in the County of New York, State of New York; and each agrees that service of process in any such proceeding will be sufficient if delivered by hand with a copy receipted, or by certified mail, return receipt requested, and that such service shall be deemed “personal service.”
Miscellaneous: This agreement (together with the Severance Plan) contains the entire agreement between you and the Company and supersedes all other agreements between you and the Company regarding the subject matter hereof (whether or not in writing). If one or more provisions of this agreement are held by a proper court to be unenforceable under applicable law, the applicable portions of such provisions, or such provisions in their entirety, to the extent necessary and permitted by law, shall be severed from this agreement, and the balance of the Agreement shall be enforceable in
accordance with its terms. The provisions under the headings “Confidential Information,” “Intellectual Property,” “Governing Law,” and “Miscellaneous” shall survive termination of this agreement. This agreement may be executed in separate counterparts, each of which is deemed to be an original and all of which together constitute one and the same agreement. Signed signature pages may be transmitted electronically in pdf format or by facsimile, and any such signature shall have the same legal effect as an original.
To indicate your acceptance of the Company’s offer, please sign and date this letter in the space provided below.
We are grateful for your support and look forward to our continued work together.
Best Regards,
_/s/ David Rosenblatt____________________________________
David Rosenblatt
Chief Executive Officer
ACCEPTED AND AGREED TO THIS 28th day of June, 2023
__/s/ Ross Paul___________________________________
Ross Paul