Exhibit 10.4

 

SETTLEMENT AND GENERAL RELEASE OF CLAIMS

 

This Settlement and General Release of Claims (hereinafter “Agreement”) is
entered into by and between Mark Watkins (hereinafter “Watkins”) on the one hand
and Purple Innovation, Inc. and its subsidiaries, predecessors, and affiliates
(hereinafter the “Company”) on the other hand. Watkins and the Company may
individually and collectively be referred to as a “Party” and the “Parties.”

 

RECITALS

 

A. Company is a Delaware company doing business in the State of Utah.

 

B. Watkins was employed by the Company as its Chief Financial Officer (“CFO”).

 

C. Watkins’ employment with the Company terminated on March 15, 2019 (the
“Separation Date”) pursuant to Watkins’ resignation.

 

D. During his employment as CFO, Watkins was granted options to purchase Class A
Common Stock of the Company, of which 107,604 had vested and were exercisable
with 90-days of his Separation Date.

 

E. Watkins desires to exercise and sell all his exercisable options within the
90-day time period he can do so under the terms of his equity grant.

 

F. Because of his position as CFO, Watkins was an “affiliate” for purposes of
Rule 144 during the past 90 days and is limited in the number of shares of the
Company’s stock he can sell within 90-days from his Separation Date, and, as a
consequence of this Rule, Watkins is not allowed by law to exercise and sell all
of his vested options during the limited 90-day time period he can exercise his
options under the terms of his equity grant.

 

G. Watkins desires and has asked the Company for an accommodation that would
allow him the ability to exercise and sell all his vested options, or otherwise
fully benefit from the vested equity granted to him.

 

H. The Company desires and has agreed to provide the accommodation set forth
herein to which Watkins would not otherwise be entitled in exchange for Watkins’
settlement and compromise of any and all possible claims and disputes he has
against the Company arising out of their relationship to date, and to provide
for a General Release of any and all such claims.

 

AGREEMENT

 

1. Payment from the Company. If Watkins signs this Agreement within twenty-one
(21) days of receipt and does not revoke it as set forth in Section 5, then in
exchange for the promises contained in this Agreement, the Company agrees to pay
Watkins a settlement amount determined by multiplying (x) the difference between
(i) the closing price of the Company’s Class A Common Stock on the date he signs
and returns this Agreement to the Company minus (ii) the strike price of
$5.9455, by (y) the full 107,604 vested options he now can exercise, less
applicable federal and state payroll tax deductions. The payment will be made in
2 equal monthly installments, with the first payment to be made no later than
seven (7) business days after the Effective Date of this Agreement, as defined
in Section 5, and will be subject to applicable tax withholdings, provided
Watkins does not revoke this Agreement.

 

 

 

 

2. Release of All Claims by Watkins. In consideration of the payment and
promises described in Section 1, which Watkins would otherwise not be entitled
to except for signing this Agreement, Watkins does hereby unconditionally,
irrevocably and absolutely release and discharge the Company and any related
holding, parent, sister or subsidiary corporations or entities and all of their
respective owners, directors, officers, employees, agents, volunteers,
attorneys, insurers, divisions, successors and assigns (“Releasees”) from any
and all loss, liability, claims, demands, causes of action or suits of any type,
whether in law and/or in equity, whether known or unknown, related directly or
indirectly, or in any way connected with any transaction, affairs or occurrences
between them to date, including but not limited to Watkins’ employment at the
Company, the terms of said employment, the termination of said employment, and
any other conduct by the Company concerning Watkins to date. This Agreement
specifically applies, without limitation, to any and all contract or tort
claims, claims for wrongful termination and/or violation of public policy, wage
claims, and claims arising under Title VII of the Civil Rights Act of 1991, the
Americans with Disabilities Act, the Age Discrimination in Employment Act
(“ADEA”), the Equal Pay Act, the Fair Labor Standards Act, the Family and
Medical Leave Act, the Utah Antidiscrimination Act, and any and all federal,
state or local statutes, regulations or ordinances, including without limitation
those governing the employment relationship and/or discrimination in employment.
Without limiting the foregoing, the Option Grant Agreement under which Watkins
was granted his equity in the Company is hereby canceled in accordance with
Section 14(b) of the Company’s 2017 Equity Incentive Plan and no longer conveys
any rights to Watkins, and Watkins expressly agrees not to exercise, or attempt
to exercise, any rights under the grant document.

 

This Agreement does not prohibit Watkins from reporting possible violations of
federal law or regulation to any governmental agency or entity, including but
not limited to the Department of Justice, the Securities and Exchange Commission
(“SEC”), the Congress, and any agency Inspector General, or making other
disclosures that are protected under the whistleblower provisions of federal law
or regulation. Nothing in this Agreement requires Watkins to seek prior
authorization from the Company to make any such reports or disclosures and
Watkins does not need and is not required to notify the Company that he has made
any such reports or disclosures. This Agreement is not intended to and does not
restrict Watkins from seeking or obtaining an SEC whistleblower award.

 

3. No Claims Filed/Waiver of Right to Sue. Watkins represents that Watkins has
not filed any claim, complaint, charge or lawsuit against Company or any other
Releasee with any governmental agency or any state or federal court. Watkins
agrees that neither he nor any person, organization or any other entity acting
on his behalf will file, charge, claim, sue, participate in, join or cause or
permit to be filed, charged or claimed, any action, claim, charge, grievance, or
demand for damages or other relief (including injunctive, declaratory, monetary
or other) against the Releasees with respect to the claims which are the subject
of this Agreement. Notwithstanding the foregoing, nothing in this Agreement
prohibits Watkins from filing a charge with the Equal Opportunity Employment
Commission (“EEOC”) or participating in any investigation or proceeding
conducted by the EEOC. Nothing in this Agreement shall be deemed to preclude
Watkins from challenging the knowing and voluntary nature of his waiver of ADEA
claims, or from challenging any breach of this Agreement.

 

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4. Waiver of Damages. Watkins hereby waives any right to recover damages, costs,
attorneys’ fees, and any other relief in any charge, proceeding or action
brought against the Releasees by him or by any other party on his behalf,
including without limitation the Equal Employment Opportunity Commission, or
other administrative agency, asserting any claims released by Watkins herein.
Notwithstanding the foregoing, Watkins does not waive rights, if any, he may
have to unemployment insurance benefits or workers’ compensation benefits.

 

5. Older Workers’ Benefit Protection Act/ADEA Claims.

 

a. This section of the Agreement addresses Watkins’ release of claims arising
under the ADEA, the federal law involving discrimination on the basis of age in
employment (age 40 and above). This section is provided, in compliance with
federal law, including but not limited to the ADEA and the Older Workers’
Benefit Protection Act of 1990, to ensure that Watkins clearly understands his
rights so that any release of age discrimination claims under federal law (the
ADEA) is knowing and voluntary on the part of Watkins.

 

b. Watkins represents, acknowledges and agrees that the Company has advised him,
in writing through this subparagraph, to discuss this Agreement with an
attorney, and to the extent, if any, that Watkins has desired, Watkins has done
so; that the Company has given Watkins twenty-one (21) days from receipt of this
Agreement to review and consider this Agreement before signing it, and Watkins
understands that he may use as much of this twenty-one (21) day period as he
wishes prior to signing; that no promise, representation, warranty or agreements
not contained herein have been made by or with anyone to cause him to sign this
Agreement; that he has read this Agreement in its entirety, and fully
understands and is aware of its meaning, intent, content and legal effect; and
that he is executing this release voluntarily and free of any duress or
coercion.

 

c. The Parties acknowledge that for a period of seven (7) days following the
execution of this Agreement, Watkins may revoke the ADEA release portion of the
Agreement. If revocation occurs, the Agreement shall not become effective or
enforceable. If revocation does not occur, the Agreement shall become effective
and enforceable upon the eighth (8th) day after it has been signed by Watkins
(the “Effective Date”).

 

d. This Agreement and its release of ADEA claims do not waive rights or claims
under ADEA that may arise after the date the Agreement is executed.

 

e. If Watkins exercises his right to revoke the ADEA release portion of the
Agreement, the Company may, at its option, either nullify this Agreement in its
entirety, or keep it in effect in all respects other than as to that portion of
his release of claims that Watkins has revoked. Watkins agrees and understands
that if the Company chooses to nullify this Agreement in its entirety, the
Company will have no further obligations under this Agreement.

 

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6. Confidentiality of Agreement. Watkins agrees that all matters relative to
this Agreement shall remain confidential. Watkins agrees that Watkins shall not
disclose any information concerning this Agreement to any person who is not a
party hereto, other than Watkins’ attorneys, tax advisors, or spouse. The
Parties acknowledge that Watkins may disclose this Agreement and its terms
pursuant to court order, agency directive, or in accordance with law. Watkins
also agrees to immediately notify the Company of any requests or demands to
disclose any information concerning this Agreement before any such disclosure is
made pursuant to court order, agency directive, or in accordance with law.
Watkins agrees to advise all persons to whom he discloses this Agreement or its
terms, of his obligation of confidentiality, and, with respect to Watkins’
attorneys, tax advisors, and spouse, to extract from them a promise to be bound
by this section.

 

7. Non-Disparagement. As a material condition of this Agreement, Watkins agrees
not to disparage in any way, orally or in writing, any of the Releasees to any
person or entity.

 

8. Cooperation. Upon reasonable request, Watkins agrees to give reasonable
assistance and cooperation willingly in any matter relating to his expertise or
experience as an employee or officer of the Company, as the Company may
reasonably request, including but not limited to one or both of (1) providing
information concerning, or assistance with, investigations, claims, litigations,
matters or projects in which Watkins was involved or as to which Watkins
potentially has knowledge by virtue of his employment with the Company or
otherwise related to the Company’s business prior to the Separation Date and (2)
Watkins’ attendance and truthful testimony where deemed appropriate by the
Company, with respect to any investigation or the Company’s defense or
prosecution of any existing or future claims or litigations relating to matters
in which Watkins was involved or as to which Watkins potentially has knowledge
by virtue of his employment with the Company or otherwise related to the
Company’s business prior to the Separation Date. Watkins agrees to comply with
any and all litigation holds provided to him by the Company and to produce all
documents related to such litigation holds as requested by the Company. To the
extent permitted by law, the Company will reimburse Watkins’ reasonable expenses
incurred in connection with any travel that may be required to fulfill his
obligation under this paragraph.

 

9. Entire Agreement. The Parties further declare and represent that no promise,
inducement or agreement not herein expressed has been made to them, and that
this Agreement contains the full and entire agreement between and among the
Parties concerning the subject matter herein, and that the terms of this
Agreement are contractual and not a mere recital. Notwithstanding the foregoing,
the Parties acknowledge and agree that the Proprietary Information, Invention
Assignment, and Non-Competition Agreement signed by Watkins on [*], will remain
in full force and effect, to the fullest extent allowed by law, following the
execution of this Agreement. Without limiting the nature of those agreements,
Watkins acknowledges that the Company owns all of Watkins’s ideas, inventions
and other intangible property, including but not limited to photographs and
writings of Watkins, in the Company’s possession or control or created by
Watkins for the Company or while employed by the Company, and the Company may
fully use the same without any limitation or obligation to Watkins.

 

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10. Knowing Agreement. Watkins has read the foregoing Agreement, knows its
contents and fully understands it. Watkins further acknowledges that he has been
given the opportunity to consult with his own independent legal counsel with
respect to the matters referenced in this Agreement. Watkins acknowledges that
he has fully discussed this Agreement with his attorney or has voluntarily
chosen to sign this Agreement without consulting an attorney, fully
understanding the consequences of this Agreement.

 

11. Applicable Law and Venue. The validity, interpretation and performance of
this Agreement shall be construed and interpreted according to the substantive
laws of the State of Utah. Any cause of action arising under this Agreement
shall be brought in the courts located in Salt Lake County, Utah and both
Parties agree to submit to the jurisdiction of those courts.

 

12. Attorneys’ Fees. The Parties also expressly agree that, should any action or
proceeding be commenced for breach of this Agreement, the prevailing Party shall
be awarded reasonable attorneys’ fees on such proceedings. The Parties further
agree that, in the event Watkins commences any sort of legal proceeding or
action in any court or before any tribunal alleging a claim or cause of action
that is released, waived, or barred under the provisions of this Agreement, the
Company shall be awarded its attorneys’ fees and costs in defending against such
action or proceeding upon dismissal or judgment of the barred claim or cause of
action. The Parties further agree that, in the event Watkins attempts to
exercise any rights under the Options Grant Agreement that is voided by this
Agreement, the Company shall be awarded its attorneys’ fees and costs in
enforcing this Agreement.

 

13. Complete Defense. This Agreement may be pleaded as a full and complete
defense against any action, suit or proceeding which may be prosecuted,
instituted or attempted by either Party in breach thereof.

 

14. Severability. If any provision of this Agreement, or part thereof, is held
invalid, void or voidable as against public policy or otherwise, the invalidity
shall not affect other provisions, or parts thereof, which may be given effect
without the invalid provision or part. To this extent, the provisions, and parts
thereof, of this Agreement are declared to be severable.

 

15. No Admission of Liability. It is understood that this Agreement is not an
admission of any liability by any person, firm, association or corporation, or
of any rights under any agreement, but is in compromise and settlement of
disputed claims and rights.

 

16. Authority to Sign. Each individual signing this Agreement directly and
expressly warrants that she or he has been given and has received and accepted
authority to sign and execute the documents on behalf of the Party for whom it
is indicated she or he has signed, and further has been expressly given and
received and accepted authority to enter into a binding agreement or enter into
a binding agreement on behalf of such Party with respect to the matters
contained herein and as stated herein.

 

17. No Assignment of Claims. Watkins represents and warrants that he has not
previously assigned or transferred, or attempted to assign or transfer, to any
third party, any of the claims waived and released herein

 

18. Successors and Assigns. This Agreement shall be binding upon and inure to
the benefit of the Parties hereto and their respective heirs, legal
representatives, successors and assigns.

 

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19. Counterparts. This Agreement may be signed in counterparts. A facsimile
signature shall have the same force and effect as an original signature.

 

20. Notices. Watkins should provide the required notices and shall return the
executed Agreement, and if applicable his revocation of the Agreement, to the
following representative of Purple:

 

Casey McGarvey

Purple Innovation, Inc.

123 E 200 N

Alpine, UT 84004

801-756-2600 x211 (office)

casey@purple.com

 

IN WITNESS WHEREOF, the undersigned have executed this Agreement on the dates
shown below.

 

Dated:  May 22, 2019 /s/ Mark Watkins   Mark Watkins     Dated:  May 28, 2019
/s/ Joseph B. Megibow   Joseph B. Megibow, CEO

 

 

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