PRPL Purple Innovation Inc

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported): January 26, 2024

 

Purple Innovation, Inc.

(Exact Name of Registrant as Specified in its Charter)

 

Delaware		001-37523		47-4078206
(State or other jurisdiction of incorporation)		(Commission File Number)		(IRS Employer Identification No.)

 

4100 North Chapel Ridge Road, Suite 200
Lehi, Utah		84043
(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))

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Class A Common Stock, par value $0.0001 per share		PRPL		The NASDAQ Stock Market LLC

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§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.

 

Amendment to Chief Executive Officer’s Employment Agreement

 

On January 26, 2024, the Board of Directors (the “Board”) of Purple Innovation, Inc. (the “Company”) unanimously approved an amendment to the amended and restated employment agreement of Robert T. DeMartini, the Company’s Chief Executive Officer (the “Amendment”). Under the Amendment, the Company agreed that, among other things: (1) Mr. DeMartini’s base salary will be increased, effective March 19, 2024, to $725,000; (2) Mr. DeMartini will be eligible to earn an incremental aggregate cash bonus equal to $850,000 that will vest 10% on August 1, 2024, 20% on February 1, 2025, and 70% on August 1, 2025, provided he continues to be employed by the Company and subject to Mr. DeMartini’s obligation to repay any such bonus actually received in the event his employment is terminated other than by the Company without cause prior to June 30, 2026, subject to certain conditions; and (3) Mr. DeMartini will be eligible to earn a cash payment of up to $5,000,000, less tax and other required withholdings, based on the Volume Weighted Average Price per share of the Company’s common stock on NASDAQ during the period from March 16, 2026 through June 30, 2026 subject to his continued employment with the Company, with the amount earned payable in quarterly installments commencing with the first payroll period following June 30, 2026.

 

In addition, under the Amendment, in the event of Mr. DeMartini’s retirement, subject to certain conditions, all of Mr. DeMartini’s time-based vesting restricted stock units (“RSUs”) then outstanding and unvested will vest in accordance with the remaining schedule as if Mr. DeMartini remained employed for an additional twelve (12) months and all of Mr. DeMartini’s outstanding performance-based vesting RSUs (“PSUs”) then outstanding will be eligible to vest on a pro-rata basis, subject to the performance achieved at the same time as active Company employees with the same type of PSUs. Accordingly, the revised vesting terms in the Amendment amend the terms in Mr. DeMartini’s RSU and PSU grant agreements dated June 20, 2023.

 

The foregoing summary of the Amendment does not purport to be complete and are subject to, and qualified in their entirety by, the full text of the Amendment, a copy of which is attached as Exhibit 10.1 to this report and are incorporated by reference herein.

 

Senior Leadership Team Special Recognition Bonus

 

On January 26, 2024, the Board unanimously approved a special recognition bonus payment to certain members of the Company’s senior leadership team, including, among others, Todd Vogensen, Chief Financial Officer, John J. Roddy, Chief People Officer, and Eric S. Haynor, Chief Operating Officer. Each participant is eligible to earn a special recognition bonus payment equal to 15 months of their regular salary. The special recognition bonus payment is payable, subject to the employee’s continued employment with the Company, 10% on August 1, 2024, 20% on February 1, 2025, and 70% on August 1, 2025.

 

  

ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS

 

Exhibit Number		Description of Exhibit
10.1		Amendment to the Amended and Restated Employment Agreement dated January 26, 2024, between the Company and Robert T. DeMartini.
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 hereunto duly authorized.

 

Dated: January 26, 2024	PURPLE INNOVATION, INC.
	By:	/s/ Tricia McDermott
		Tricia McDermott Chief Legal Officer

 

 

Exhibit 10.1

 

Amendment to
Amended and Restated Employment Agreement

 

This Amendment to Amended and Restated Employment Agreement (this “Amendment”) is hereby entered into as of January 26, 2024 by and between Purple Innovation, Inc. (the “Company”) and Robert T. DeMartini (“you”), and constitutes an amendment to your Amended and Restated Employment Agreement with the Company dated March 19, 2022 (as amended, your “Employment Agreement”). Other than expressly herein set forth, your Employment Agreement remains in full force and effect without change.

 

1.

Your annual base salary will be increased, effective March 19, 2024, to $725,000.

 

2.

You are eligible to earn an incremental aggregate cash bonus equal to $850,000 (“Special Recognition Bonus”). You will vest in the Special Recognition Bonus in the percentages set forth in the chart below, provided you remain continuously employed by the Company through the vesting date set forth below corresponding to each such percentage (each such date, a “Special Recognition Bonus Vesting Date”), and neither you nor the Company have given notice of termination of your employment at any time before such Special Recognition Bonus Vesting Date:

 

Percentage		Special Recognition Bonus Vesting Date
10%		August 1, 2024
20%		February 1, 2025
70%		August 1, 2025

 

Each vested portion of the Special Recognition Bonus will be paid in the Company’s normal payroll run following the corresponding Special Recognition Bonus Vesting Date subject to deduction for tax and other required withholdings. If your employment with the Company ends for any reason prior to a Special Recognition Bonus Vesting Date or you or the Company have given notice of your termination before then, you will not be eligible for the portion(s) of the Special Recognition Bonus payable in respect of such or any future Special Recognition Bonus Vesting Date.

 

 

In addition, if your employment with the Company ends for any reason prior to June 30, 2026 (other than as a result of the Company’s termination of your employment without Cause (as defined in your Amended and Restated Employment Agreement with the Company dated March 19, 2022 (as amended, your “Employment Agreement”))) or you or the Company have given notice of your termination of employment before then (but excluding a notice by the Company of termination without Cause or your provision of a Good Leaver Retirement Notice in accordance with Section 4 below), then you are required to immediately repay to the Company in full the entire amount of the Special Recognition Bonus payments received.

 

3.

You are eligible to earn a cash payment of up to $5,000,000, less tax and other required withholdings (“Equity Value Increase Bonus”). Subject to the remaining provisions of this Paragraph 3, you will vest in the percentage of the Equity Value Increase Bonus set forth in the chart below* based on the Volume Weighted Average Price (“VWAP”) per share of trades in the Company’s common stock on NASDAQ during the period from March 16, 2026 through June 30, 2026 (as adjusted for stock splits, stock dividends and the like).

 

Applicable VWAP		Vesting Percentage
$1.50		0%
$2.50		10%
$3.50		20%
$4.50		40%
$5.50		60%
$6.50		80%
≥ $7.50		100%

 

*	Applicable VWAP that is between two of the above thresholds will vest on a pro-rata basis through linear interpolation.

 

Such amount, but not in excess of $5,000,000 in total, shall be paid to you, without interest, in quarterly calendar year installments commencing on the first payroll period following June 30, 2026 and extending for up to an additional eight calendar quarters (for the avoidance of doubt, up to nine payments in total, where the ninth and final payment would be made during the first payroll period following June 30, 2028). 

 

If the aggregate amount of the Equity Value Increase Bonus is:

 

a)

Less than or equal to $4,500,000, then the amount of the quarterly installments shall be $500,000 (or lesser amount for the final installment) until the entire amount of the Equity Value Increase Bonus is completely paid; or

 

b)

More than $4,500,000, then the amount of the quarterly installments shall be $500,000 (or greater amount for the final installment) until the entire amount of the Equity Value Increase Bonus is completely paid.

 

 

Notwithstanding the foregoing, any unpaid amount of the Equity Value Increase Bonus will be due and payable upon the consummation of a Change in Control (as such term is defined in your Employment Agreement) that qualifies as “change in control event” under Treasury Regulation Section 1.409A-3(i)(5)(i). 

 

If (i) your employment with the Company ends for any reason prior to June 30, 2026 (other than the Company’s termination of your employment without Cause on or after June 30, 2025 (subject to your satisfaction of the conditions to receive severance payments as provided in your Employment Agreement including, without limitation, executing and not revoking the general release of claims and subject to the pro ration factor described below)), or (ii) you or the Company have given notice of your termination before then (excluding your provision of a Good Leaver Retirement Notice as provided in Section 4 below, you will not be eligible to receive the Equity Value Increase Bonus. In the event that your employment ends on or after June 30, 2025, but prior to June 30, 2026 as a result of the Company’s termination of your employment without Cause, then you will be entitled to a pro-rated amount of the Equity Value Increase Bonus measured by the number of full months following June 30, 2025 you remained employed divided by 12. Notwithstanding any provision herein to the contrary, if you are terminated by the Company without Cause but fail to timely sign the general release of claims, and/or fail to meet the non-revocation requirement set out in Section 4(b) of your Employment Agreement, then you will be required to promptly repay to the Company all amounts you have received of the Equity Value Increase Bonus.

 

4.

If you remain continuously employed by the Company until June 30, 2026, neither you nor the Company have given notice of termination your employment before then, and you give the Company advisory1 notice of your intention to retire (“Good Leaver Retirement Notice”) on or before January 1, 2026 (or such other date agreed to by you and the Company (by action of the Board of Directors)) and you subsequently retire on your retirement date agreed to by you and the Company’s Board of Directors, then

 

·

You will be entitled to full consideration for grants by the Company’s Board of Directors or its Compensation Committee (or other appropriate committee) of incentives under the Company’s long term incentive plan then in effect in your role as Chief Executive Officer, and all of your time-based vesting restricted stock units (“RSUs”) then outstanding and unvested would vest in accordance with the remaining schedule as if you remain employed for an additional twelve (12) months, and

 

·

all of your outstanding performance-based vesting RSUs then outstanding would be eligible to vest on a pro-rata basis, subject to the performance achieved at the same time as active Company employees with the same type of RSUs.

 

In addition to the terms and conditions set forth above, each and every one of the compensation and benefits described in Sections 1 through 4 above are subject to your continued compliance, during and following your employment, with Sections 5, 6, 7, 8, 24 and 25 of your Employment Agreement, and subject to forfeiture in the event of your breach. In addition, all compensation and benefits provided in this letter are subject to forfeiture or other penalties pursuant to applicable law or any Company clawback policy.

 

The Supplemental Compensation and Benefit Arrangements described herein constitute revisions to your Employment Agreement or other terms of your employment with the Company except as expressly herein set forth.

 

¹ This “Good Leaver Retirement Notice” would be tentative and not binding until you and the Company’s Board of Directors agree on a retirement date.

 

 

IN WITNESS WHEREOF, the parties hereto hereby agree to and adopt this Amendment which shall be and become effective as of the date hereinabove set forth.

 

	PURPLE INNOVATION, INC.
	By:	/s/ Adam Gray	1/26/24
		Adam Gray
		Chairman of its Board of Directors
		ROBERT T. DEMARTINI
		/s/ Robert T. DeMartini	1/26/24

 

 

4

v3.23.4

Cover	Jan. 26, 2024
Cover [Abstract]
Document Type	8-K
Amendment Flag	false
Document Period End Date	Jan. 26, 2024
Entity File Number	001-37523
Entity Registrant Name	Purple Innovation, Inc.
Entity Central Index Key	0001643953
Entity Tax Identification Number	47-4078206
Entity Incorporation, State or Country Code	DE
Entity Address, Address Line One	4100 North Chapel Ridge Road
Entity Address, Address Line Two	Suite 200
Entity Address, City or Town	Lehi
Entity Address, State or Province	UT
Entity Address, Postal Zip Code	84043
City Area Code	801
Local Phone Number	756-2600
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Title of 12(b) Security	Class A Common Stock, par value $0.0001 per share
Trading Symbol	PRPL
Security Exchange Name	NASDAQ
Entity Emerging Growth Company	false

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