Exhibit 10.1
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 8, 2019
Purple Innovation, Inc.
(Exact Name of Registrant as Specified in its Charter)
| Delaware | 001-37523 | 47-4078206 | ||
| (State of Incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) |
| 123 East 200 North | ||
| Alpine, Utah | 84004 | |
| (Address of Principal Executive Offices) | (Zip Code) |
Registrant’s telephone number, including area code: (801) 756-2600
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ☐ | Written communication 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-commencements 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 ☒
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 5.02 DEPARTURE OF DIRECTORS OR CERTAIN OFFICERS; ELECTION OF DIRECTORS; APPOINTMENT OF CERTAIN OFFICERS; COMPENSATORY ARRANGEMENTS OF CERTAIN OFFICERS.
Appointment of Chief Operating Officer
On January 14, 2019, Purple Innovation, Inc. (the “Company”) announced that on January 12, 2019 John Legg accepted a position to serve as the Company’s Chief Operating Officer, effective January 21, 2019.
Mr. Legg, age 57, brings to the Company 20 years of experience in supply chain management in the wholesale, retail and e-commerce/direct-to-consumer sectors. Prior to joining the Company, Mr. Legg served as a partner in the consulting firm Claris Solutions Group (“Claris”) since September 2017. From 2015 to 2017, he served as Senior Vice President Global Operations for Global Brands Group, providing strategic direction across a number of operational areas. Prior to joining Global Brands Group, Mr. Legg was the Senior Vice President Logistics and Supply Chain for the Zale Corporation from 2010 to 2015. From 2009 to 2010, he worked in supply chain management for Tory Burch. From 2007 to 2008, Mr. Legg worked for Warnaco, serving as Senior Vice President Global Distribution and Logistics. From 1999 to 2007, he worked for Liz Claiborne, serving as Vice President International Distribution. Mr. Legg is a graduate of Northeastern University, in Boston, MA, and holds a BS in Business Administration, Transportation and Distribution Management.
Mr. Legg, pursuant to a Statement of Work dated July 17, 2018 between Claris and the Company (the “Statement of Work”), is providing consulting services to the Company regarding statistical quality control, forecasting and inventory management, production planning and control, and simulation modeling. The foregoing summary of the Statement of Work does not purport to be complete and is subject to, and qualified in its entirety by, the full text of the Statement of Work, a copy of which is attached as Exhibit 10.1 to this report and is incorporated by reference herein. Since the beginning of the Company’s last fiscal year, the Company has paid to Claris fees totaling $488,315.28 under the Statement of Work. Mr. Legg is a partner at Claris but will be resigning from that position due to his acceptance of his position with the Company.
In connection with his appointment, Mr. Legg entered into an offer letter (the “Offer Letter”) that includes the following terms: (1) an annual base salary of $350,000; (2) an annual bonus up to 50% of annual base salary based on the Company’s and Mr. Legg’s performance; (3) a grant of up to 250,000 options to purchase Class A Common Stock, subject to Board approval; (4) participation in the Company’s long-term incentive program; (5) participation in the Company’s severance program; (6) a living expense stipend of $4,500 per month through June 2020 to cover local living and transportation expenses while commuting; and (7) payment of relocation expenses no later than June 2020 to move to Utah. The foregoing summary of the Offer Letter does not purport to be complete and is subject to, and qualified in its entirety by, the full text of the Offer Letter, a copy of which is attached as Exhibit 10.2 to this report and is incorporated by reference herein.
Departure of Principal Financial Officer
On January 8, 2019, Mark A. Watkins gave notice to the Company of his resignation as the Company’s Chief Financial Officer, effective end-of-day March 15, 2019. In this role, he has functioned as the Company’s Principal Financial Officer and Principal Accounting Officer for SEC reporting purposes. Mr. Watkins will continue to actively pursue his duties and assist in the transition of those duties, as may be requested by the Company, up through March 15, 2019.
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Forward-Looking Statements
Certain statements made herein that are not historical facts are “forward looking statements” within the meaning of the “safe harbor” provisions of the United States Private Securities Litigation Reform Act of 1995. Statements based on historical data are not intended and should not be understood to indicate the Company’s expectations regarding future events. Forward-looking statements provide current expectations or forecasts of future events or determinations. These forward-looking statements are not guarantees of future performance, conditions or results, and involve a number of known and unknown risks, uncertainties, assumptions and other important factors, many of which are outside the Company’s control, that could cause actual results or outcomes to differ materially from those discussed in the forward-looking statements. Factors that could influence the realization of forward-looking statements include the risk factors outlined in the “Risk Factors” section of our Quarterly Reports on Form 10-Q filed with the Securities and Exchange Commission on May 15, 2018, August 9, 2018 and November 14, 2018 and in our Current Report on Form 8-K filed with the Securities and Exchange Commission on February 8, 2018, as amended February 14, 2018, March 15, 2018 and April 17, 2018. The Company does not undertake any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS
(d) Exhibits
| 10.1 | Statement of Work, dated as of July 17, 2018, between Purple Innovation, LLC. and Claris Systems, LLC. |
| 10.2 | Offer Letter between Purple Innovation, LLC and John Legg dated January 12, 2019. |
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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 14, 2019 | PURPLE INNOVATION, INC. | |
| By: |
/s/ Mark A. Watkins |
|
| Mark A. Watkins | ||
| Chief Financial Officer | ||
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Exhibit 10.1
Exhibit 10.2
January 12, 2019
John Legg
Westport, CT
Dear John,
On behalf of Purple, it is my pleasure to extend to you this written offer to serve as an officer of Purple Innovation, Inc. This offer is contingent upon successful results of a background check and drug screen, and your execution of an agreement to protect the intellectual property and other rights of Purple and its affiliated companies.
Key points to your employment and compensation include:
| Position: | Chief Operating Officer reporting to Joe Megibow, Chief Executive Officer. |
| Base wage: | $350,000 yearly paid on a bi-weekly basis less deductions required by law. Payable in accordance with normal payroll practices of the company. This is an exempt position. |
| Bonus: | Up to 50% annual bonus at target performance based on both the company and your performance. |
| Equity: | 250,000 options, subject to board approval. It is also expected that you will participate in a long-term incentive plan that is still being finalized. Your level of participation will be commensurate with other C-level positions in the organization. |
| Responsibilities & Duties: | As an officer of the Company you, together with the executive management team, will act on behalf of the Company in managing Purple LLC’s business and otherwise operating the Company. You will be paid by Purple LLC and subject to the policies of Purple LLC. During your employment with Purple LLC, you will devote your full business time, skill, attention, and best efforts to the performance of your duties, subject to customary carve-outs for charitable or religious activities and management of personal affairs that do not materially interfere with the performance of your duties to the Company. You will have such duties and authority as is customary for a COO of a publicly traded company with subsidiaries and as determined from time to time by the CEO. You will comply with all lawful rules, policies, procedures, regulations and administrative directions now or hereafter reasonably established by the Company and Purple LLC. |
| Corporate Opportunity: | You are required to submit to the Company all business, commercial and investment opportunities or offers presented to you or of which you become aware which relate to the business of the Company at any time during your employment. Unless approved by the Board, you shall not accept or pursue, directly or indirectly, any Corporate Opportunities on your own behalf. |
| Cooperation: | You shall both during and after your employment for the Company, subject to the Company reimbursing you for out-of-pocket expenses, cooperate with the Company in any internal investigation or administrative, regulatory or judicial proceeding as reasonably requested by the Company (including, without limitation, your being available to the Company upon reasonable notice for interviews and factual investigations, appearing at the Company’s request to give testimony without requiring service of a subpoena or other legal process, volunteering to the Company all pertinent information and turning over to the Company all relevant documents which are or may come into your possession, all at times and on schedules that are reasonably consistent with your other permitted activities and commitments). |
| Living Expense Stipend: | We jointly agree that you will commute from your home to Purple through June of 2020. You will receive a monthly living expense stipend of $4,500 per month to cover living and local transportation expenses while commuting. |
| Travel Expenses: | Purple will reimburse all airfare travel costs necessary for your commuting to Purple. Flights should be booked at least two (2) weeks in advance and travel should be coach unless you have personal miles to cover any seating upgrades. |
| Relocation Costs: | It is expected that you will relocate to Utah no later than June of 2020. The company will pay for your relocation. You will need to provide three (3) bids from nationally reputable movers and the Company and you will jointly agree upon which service to use. As part of the relocation benefit, Purple will reimburse two (2) round-trip coach flights for your wife and daughter, booked at least two (2) weeks in advance, between now and June, 2020. |
| If you leave Purple by your own choice or are separated from Purple for cause within 12 months of the date of your relocation, you will be responsible for reimbursing the company a pro-rated portion (each month represents 8.33%) of the total relocation costs. |
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| Work Schedule: | This is a full-time position based out of Grantsville, UT (travel between Grantsville and the corporate office will be reimbursed per our mileage reimbursement policy) |
| Benefits: | You will be eligible to participate in the Purple benefits programs on the same basis as other personnel such as health, dental, and vision insurance plans, as well as Life Insurance. You are eligible for the medical, dental, and vision plan on the first day of the month following your date of hire. You are also eligible to participate in our 401(k) plan at a 5% company match on the first of the month following a four-month qualification period. You are also eligible to receive a severance in the event of termination without cause, in accordance with our severance plan applicable to C-level employees. |
| Paid Time Off: | You will receive 120 hours of paid time off (PTO) per annum accrued in accordance with the company’s vacation policy. The company also provides the employee with 10 paid holidays per year. |
| At Will Employment: | In accepting our offer of employment, you certify your understanding that your employment will be on an at-will basis, and that neither you nor any company representative has entered into a contract regarding the terms or the duration of your employment. As an At-Will employee, you will be free to terminate your employment with the company at any time, with or without cause or advance notice. Similarly, the company is free to conclude its employment relationship with you at any time, with or without cause, or advance notice. |
| Drug/alcohol testing: | By accepting this offer: You acknowledge yourself as being free of inappropriate drug or alcohol use; you agree to submit to a drug/alcohol screening test as a condition of employment; and you accept that Purple has a smoke-free workplace policy and a drug/alcohol-free workplace program which could include ongoing random or comprehensive testing of all employees or individual employees. |
In addition, Purple will provide you with the necessary materials and equipment to effectively perform the responsibilities of your position. Any equipment, proprietary information, or other materials must be returned to the company upon termination for any reason.
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As with any employment at will, all compensations, benefits, work assignments, etc. are subject to change in accordance with the needs of the company, with the exception of any vested rights.
John, I am confident that you will find this position both challenging and rewarding. We look forward to your contributions and success with Purple. Upon acceptance of this offer, please sign and date the letter to indicate your acceptance of the position as well as the attached Proprietary Information & Invention Assignment and return it to HR at careers@purple.com .
Sincerely,
| /s/ Joseph B. Megibow | |
| Joseph B. Megibow | |
| Purple, CEO |
I accept this employment offer:
| /s/ John Legg | |
| John Legg | |
| 01/12/2019 | |
| Date |
Employment Start Date: January 21, 2019
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