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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): August 18, 2021
Purple
Innovation, Inc.
(Exact
Name of Registrant as Specified in its Charter)
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Delaware
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001-37523
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47-4078206
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(State
or other jurisdiction
of incorporation)
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(Commission
File Number)
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(IRS
Employer
Identification No.)
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4100
North Chapel Ridge Road, Suite 200
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Lehi,
Utah
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84043
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(Address
of Principal Executive Offices)
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(Zip
Code)
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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:
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☐
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Written
communication pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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☐
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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☐
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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☐
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Pre-commencements
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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Securities
registered pursuant to Section 12(b) of the Act:
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Title
of each class
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Trading Symbol(s)
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Name
of each exchange on which registered
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Class
A Common Stock, par value $0.0001 per share
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PRPL
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The
NASDAQ Stock Market LLC
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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.
Departure
of Chief Financial Officer
On August 18, 2021, Craig L. Phillips, Chief Financial
Officer of Purple Innovation, Inc. (the “Company”), and the Company determined that Mr. Phillips’ last day of employment
as the Chief Financial Officer of the Company will be August 31, 2021. Mr. Phillips is not leaving the Company as a result of any disagreement
regarding the Company's financial reporting or accounting policies, procedures, estimates, or judgments. The Company will commence a formal
search process for the position of Chief Financial Officer for the Company.
Appoint
of Interim Chief Financial Officer
On August 19, 2021, in connection with the departure
of Craig L. Phillips as the Company’s Chief Financial Officer, the Board of Directors (the “Board”) of the Company appointed
Bennett Nussbaum to serve as the Interim Chief Financial Officer and Principal Financial Officer of the Company.
Prior to joining Purple, Mr. Nussbaum, age 74, served
as the Interim Chief Financial Officer of American Megatrends, Inc. from about April 2019 to September 2020. During that period he also
served as Operating Partner of HGGC, LLC from about December 2017 to September 2020. He also served as Interim CFO at 4over, Inc. from
about December 2017 to September 2018. From April 2016 to March 2017 he was the Chief Financial Officer of American Apparel, LLC. He currently
serves on the advisory board for the W. Edwards Deming Center for Quality, Productivity, and Competitiveness at the Columbia University
Graduate School of Business, a position he has held since 2011. Mr. Nussbaum previously served on the boards of directors of The Collected
Group, LLC from about October 2018 to November 2019, Charlotte Russe, Inc. from about February 2018 to January 2019, and BCBGMAXAZRIA,
LLC from about January 2017 to September 2017.
In connection with his appointment as Interim Chief
Financial Officer, the Company and Mr. Nussbaum entered into a consultancy agreement (the “Consultancy Agreement”) effective
August 19, 2021. The Consultancy Agreement provides that Mr. Nussbaum will serve as Interim Chief Financial Officer for an initial term
of six months from August 19, 2021. The Company may renew the Consultancy Agreement for additional one-month terms upon sixty days’
notice prior to the end of the initial term, or ten days’ notice prior to the end any renewal term. Either party may terminate the
engagement at any time. Under the terms of the Consultancy Agreement, Mr. Nussbaum will receive compensation comprised of (1) $300,000
for the initial six-month term and $50,000 for each additional one-month term, which amount shall be paid in full unless Mr. Nussbaum’s
engagement is terminated for cause, and (2) an additional payment of $100,000 at the end of the initial six-month term and $16,666.67
at the end of each additional one-month term, as well as a discretionary payment of up to $75,000 payable in the Company’s discretion.
In addition, if the price of the Company’s Class A Common Stock increases above $26.00 per share prior to the termination of Mr.
Nussbaum’s engagement with the Company (other than for cause), the Company will pay additional compensation in an amount equal to
the product of (a) the increase from $26.00 per share up to a maximum of $36.00 per share multiplied by (b) 20,000. The Company has also
agreed to reimburse Mr. Nussbaum for transportation and lodging expenses relating to his travel to the Company’s headquarters. The
foregoing summary of the Consultancy Agreement does not purport to be complete and is subject to, and qualified in its entirety by, the
full text of the Consultancy Agreement, a copy of which is attached as Exhibit 10.1 to this report and is incorporated by reference herein.
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 Annual Report on Form 10-K filed with the Securities and Exchange
Commission on March 11, 2021 and amended on May 10, 2021, as well as in our Quarterly Reports on Form 10-Q and Current Reports on Form
8-K filed with the Securities and Exchange Commission, 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
7.01 REGULATION FD DISCLOSURE.
On August 24, 2021, the Company issued a press release
announcing Mr. Phillips’ departure and the appointment of Bennett Nussbaum as the Company’s Interim Chief Financial Officer.
A copy of the press release is attached hereto as Exhibit 99.1.
The
information in Item 7.01 of this Current Report on Form 8-K, including Exhibit 99.1, is being furnished and shall not be deemed “filed”
for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) or otherwise subject to
the liabilities of that section, nor shall it be deemed to be incorporated by reference in any registration statement or other document
filed under the Securities Act of 1933, as amended, or the Exchange Act, except as otherwise stated in such filing.
ITEM
9.01 FINANCIAL STATEMENTS AND EXHIBITS
(d)
Exhibits
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.
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Dated:
August 24, 2021
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PURPLE
INNOVATION, INC.
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By:
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/s/ Joseph Megibow
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Joseph
Megibow
Chief Executive Officer
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3
Exhibit 10.1
Consultancy Agreement
This Consultancy Agreement dated effective August 19, 2021, sets forth
the terms of engagement of Bennett Nussbaum as Interim Chief Financial Officer (“Interim CFO”) with Purple Innovation, Inc.
(the “Company”).
Title. Interim Chief Financial Officer
Term. Engagement shall commence August 19, 2021 and go through
February 19, 2022 (the “Term”). Notwithstanding the Term period, the engagement may be terminated at any time, and both parties
to this agreement shall be free to terminate this engagement at any time, for any reason; provided, however, the engagement shall end
on the last day of the Term unless renewed by the Company. In the event the engagement is terminated prior to the end of the Term, the
effective date of the termination shall be two (2) weeks from the notice of early termination.
Renewal. The Company may renew this agreement for additional
one (1) month terms (each being a “Renewal Term”) replacing the beginning and ending dates as appropriate. The Company may
renew by giving sixty (60) days written notice of renewal prior to the end of the Term or ten (10) calendar days written notice of renewal
prior to the end of the Renewal Term.
Interim Chief Financial Officer Responsibilities. Interim CFO
shall report directly to the Chief Executive Officer (“CEO”). Interim CFO shall be responsible for the ordinary and customary
duties of a Chief Financial Officer of a public company. Interim CFO shall not be precluded from serving on the board of directors of
other corporations and/or non-profit organizations, subject to (i) the Company’s prior written consent, said consent shall not
be unreasonably withheld, and (ii) the approval of the Company’s board of directors. The Interim CFO’s engagement shall be
full-time and performed by Interim CFO at the Company’s headquarters or remotely at the discretion of the CEO.
Compensation. Interim CFO shall receive compensation in the
amount of $300,000 for the Term, and $50,000 for any Renewal Term, payable over that period every two (2) weeks on the dates in accordance
with usual payroll practices of the Company. The Interim CFO will be responsible for payment of all taxes and obligations arising from
these payments. These payments will be reported by the Company on an IRS Form 1099-MISC. Unless Interim CFO’s engagement is terminated
by the Company for cause, payment of this compensation shall be guaranteed through the end of the Term and any subsequent Renewal Term.
In the event Interim CFO’s engagement is terminated without cause before the end of the Term or any Renewal Term, payment of any
unpaid compensation for the Term or Renewal Term in which such notice of early termination is given shall be paid to Interim CFO no later
than two (2) weeks from the notice of termination or last day of service whichever is later. A change in title/position as the Company’s
Interim CFO shall be deemed a termination unless otherwise agreed in writing by the parties.
Additional Compensation. Additional compensation in the amount
of $100,000 shall be paid to Interim CFO at the end of the Term, and $16,666.67 at the end of each Renewal Term, unless engagement under
this agreement is terminated earlier by the Company for cause or by Interim CFO for any reason. The Company may give a discretionary payment
of up to an additional $75,000 at the discretion of the CEO. The additional compensation and any payment amount will be paid to Interim
CFO at the earlier of the next regularly scheduled payroll date after the Term, and any Renewal Term, or the earlier departure of the
Interim CFO following a termination by the Company without cause. For the avoidance of doubt, no additional compensation under this section
shall be paid to Interim CFO in the event of an earlier departure following a voluntary termination by Interim CFO for any reason or a
termination by the Company for cause.
Incentive Compensation. In the event the Company stock price
increases prior to the end of the initial Term, or any earlier termination by the Company other than for cause, Interim CFO will be paid
one-time additional compensation which shall be calculated as the increase from a base of $26.00 per share to the NASDAQ price per share
at the time of the Interim CFO’s departure from the Company, but in no event greater than $36.00 per share, multiplied by a factor
of 20,000. This additional compensation shall be paid to Interim CFO within two (2) weeks from the last date of his services.
Business Expense Reimbursement. Interim CFO shall be reimbursed
all reasonable and documented business-related expenses incurred in connection with Interim CFO’s services including but not limited
to air, auto, and/or other transportation expenses for travel to and from the Company’s headquarters and nearby lodging. International
travel shall be no less than business class. Expenses shall be reimbursed per the Company’s policies related to business expenses.
If there is a conflict in such policies and this provision, this provision shall apply.
Insurance Coverage. The Interim CFO shall be covered by all
insurance policies (including D & O Liability insurance) available to other senior management of the Company. The Company represents
it carries, will continue to carry, and keep in full force and effect, proper insurance coverage in scope, terms, and size appropriate
for a company of the size and nature of the Company. In the event the Company does not have proper coverage at any time, the Company agrees
to indemnify and hold harmless the Interim CFO for all costs, expense, liabilities, losses, judgments, fines, legal, and accounting fees,
or other to be paid in settlement, in defense, or otherwise suffered by the Interim CFO by virtue of this consulting agreement with the
Company or its agents, in the form of the Company’s indemnification agreements entered into with other senior management.
No Other Benefits. Interim CFO is not an employee of the Company
and shall not be eligible to participate in the Company’s benefits programs, such as health, dental, and vision insurance plans,
as well as life insurance and the Company’s 401(k) plan. Interim CFO shall not be required to work during acknowledged days off
during sick leave, holidays and other excused absences as recognized by the Company in accordance with its policies for its employees.
Drug/Alcohol Testing. By accepting this engagement, Interim
CFO represents that he is free of inappropriate drug or alcohol use, and further agrees to submit to a drug/alcohol screening test as
reasonably requested by the Company. Interim CFO accepts that the Company has a smoke-free workplace policy and a drug/alcohol-free workplace
program which could include ongoing random or comprehensive testing of all employees, including consultants.
Company Policies. Interim CFO shall comply with all Company
policies and procedures and acknowledges that as a condition of this engagement Interim CFO shall sign additional agreements preserving
Company’s rights in its intellectual property and other assets, including confidentiality, non-compete, and non-solicitation agreements,
in the Company’s usual forms.
Corporate Opportunity. During this engagement, Interim CFO shall
submit to the Company all business, commercial and investment opportunities or offers presented to him or of which he is aware related
to the business of the Company. Unless approved by the board of directors, Interim CFO shall not accept or pursue, directly or indirectly,
any such corporate opportunities on his own behalf.
Cooperation. Interim CFO shall during and after the Term, subject
to the Company providing reimbursement for out-of-pocket expenses, including but not limited to accounting fees and legal fees, cooperate
with the Company in any internal investigations or administrative, regulatory, or judicial proceedings or matters as reasonably requested
by the Company, including without limitation 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 his possession,
all at times and on schedules that are reasonably consistent with his other permitted activities and commitments. The Company represents
that no such matters that would take Interim CFO away from the usual duties of a CFO are pending or ongoing at this time. For the avoidance
of doubt, in the event Interim CFO no longer is engaged by the Company as Interim CFO, he shall be given a reasonable per diem to compensate
him for his time incurred in complying with his obligations under this provision.
Counterparts. This agreement may be executed in multiple counterparts,
each of which shall be deemed an original, and all of which shall constitute an agreement between each of the parties, hereto, notwithstanding
that all of the parties are not signatories to the original or same counterpart.
Severability. Should any part, term, or provision of this agreement
be declared or determined by a court to be illegal or invalid, the validity of the remaining parts, terms, or provisions shall not be
affected thereby and shall remain in effect.
Miscellaneous. This agreement between the parties shall be construed
in accordance with the laws of the State of Utah and, together with other reasonable customary agreements, including those referenced
herein, that Interim CFO is requested to sign as a condition of his engagement, constitutes the entire agreement and understanding of
the undersigned. It shall be binding upon, and inure to, the benefit of the undersigned parties hereto, any successors to or assigns of
the Company, Interim CFO’s heirs, beneficiaries, executors, estates, and/or personal representatives. The undersigned Company representative
acknowledges that he has been properly authorized to enter into this agreement and with the approval of the board of directors of the
Company.
IN WITNESS WHEREOF, the parties hereto, being fully authorized, have
caused this Consultancy Agreement to be duly executed effective as of the date first above written.
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Purple Innovation, Inc.
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/s/ Joseph Megibow
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By:
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Joseph
Megibow
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Date: 08/23/2021
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Title:
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Chief Executive
Officer
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/s/
Bennett L. Nussbaum
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Date: 08/23/2021
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Bennett L. Nussbaum
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Page
4 of 4
Exhibit 99.1
Purple
Innovation, Inc. Announces Chief Financial Officer Transition
Lehi, Utah, August 24, 2021 – Purple Innovation,
Inc. (NASDAQ: PRPL) (“Purple” or the “Company”), a leader in comfort innovation and the creator of the renowned
Purple® Mattress, today announced that Chief Financial Officer Craig Phillips and the Company have determined to separate, effective
August 31, 2021. Purple has engaged an executive search firm to identify Phillips’ successor.
The Company has appointed Bennett Nussbaum to
serve as interim Chief Financial Officer. Nussbaum is a global financial executive and senior adviser with over 45 years of experience
including roles as Chief Financial Officer at Pepsi-Cola International, Burger King and FedEx Office.
Joe Megibow, Chief Executive Officer said, “On
behalf of the board and entire Company, we wish Craig all the best in his future endeavors. With an experienced finance team in place,
combined with the addition of a seasoned financial executive in Bennett, we are confident in our finance team’s ability to support
Purple while we identify and appoint a permanent CFO.”
Phillips’ departure is not related to
the Company’s operations, financial reporting or controls.
About Purple
Purple is a digitally-native vertical brand with a mission to help
people feel and live better through innovative comfort solutions. We design and manufacture a variety of innovative, premium, branded
comfort products, including mattresses, pillows, seat and back cushions, frames, sheets and more. Our products are the result of over
25 years of innovation and investment in proprietary and patented comfort technologies and the development of our own manufacturing processes.
Our proprietary gel technology, Hyper-Elastic Polymer®, underpins many of our comfort products and provides a range of benefits that
differentiate our offerings from other competitors’ products. We market and sell our products through our direct-to-consumer online
channels, traditional retail partners, third-party online retailers and our owned retail showrooms.
Forward Looking Statements
Certain statements made in this release 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. Such forward-looking statements include but are not limited to statements
relating to the timing and ability of the Company to identify and appoint a permanent Chief Financial Officer and the performance of the
Company’s business. 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, among others, the risk factors outlined in the “Risk Factors” section of
our Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on March 11, 2021,
as amended by our Annual Report on Form 10-K/A filed with the SEC on May 10, 2021 and in our Quarterly Reports on
Form 10-Q filed with the SEC on May 17, 2021 and August 9, 2021. 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.
Investor Contact:
Brendon Frey, ICR
brendon.frey@icrinc.com
203-682-8200
Purple Innovation, Inc.
Misty Bond
Director of Purple Communications
misty.b@purple.com
385-498-1851