EX-10.2 2 f10q0920ex10-2_purpleinnov.htm LICENSE TRANSFER AND IP ASSIGNMENT AGREEMENT BETWEEN PURPLEINNOVATION, LLC AND EDIZONE, LLC DATED AUGUST 14, 2020
LICENSE TRANSFER AND IP ASSIGNMENT AGREEMENT
This License Transfer and IP Assignment Agreement (this “Agreement”) is datedand made as of the 14th day of August, 2020 (“Effective Date”), by and between EdiZONE, LLC, a Delaware limited liability company (“EdiZONE”), and Purple Innovation, LLC, a Delaware limited liability company (“Purple”). EdiZONE and Purple are referred to herein collectively as the “Parties” and each individually as a “Party.”
WHEREAS, EdiZONE, as assignee and successor in interest of TNT Holdings, LLC (“TNT”), is a party to that certain Amended and Restated License Agreement with Advanced Comfort Technologies, Inc. (“ACTI”) dated January 28, 2010, as amended by the Settlement Agreement and First Amendment to License Agreement between EdiZONE and ACTI dated May 1, 2017 (collectively, the “License Agreement”), a true and complete copy of which is attached hereto as Exhibit A;
WHEREAS, EdiZONE and Purple are parties to that certain Second Amended and Restated Confidential Assignment and License Back Agreement dated November 9, 2018 (the “Assignment and License Back”); and
WHEREAS, for the consideration set forth below, EdiZONE desires to transfer and assign to Purple, and Purple desires to assume, all of EdiZONE’s rights, interests, and obligations under the License Agreement, and certain intellectual property rights of EdiZONE, and indemnify and hold EdiZONE harmless from liability related to the License Agreement as more specifically set forth herein, and the Parties further desire to document certain effects of such transfer and assignment upon their rights and obligations under the Assignment and License Back, all as set forth below;
NOW THEREFORE, in consideration of the foregoing premises and the mutual covenants set forth below and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, EdiZONE and Purple hereby agree, as of the Effective Date, as follows.
1. Assignment of License Agreement. EdiZONE hereby absolutely, fully, and irrevocably assigns, transfers and conveys to Purple, as of the Effective Date, all of EdiZONE’s rights, obligations, claims, causes of action, title and interest in, to, and under the License Agreement, including but not limited to: (i) all rights of EdiZONE to receive any royalties that are paid or payable thereunder on or after the Effective Date; (ii) all rights to be identified as the licensor of trademarks thereunder; and (iii) any and all claims and causes of action that EdiZONE may have thereunder for previously accrued but unpaid royalties, or for any past, present, or future breach by ACTI of the License Agreement. In the event that ACTI remits any royalty payment under the License Agreement to EdiZONE on or after the Effective Date, EdiZONE will promptly pay such amounts over to Purple in full.
2. Assumption by Purple. Purple hereby accepts such assignment and acknowledges that, as between Purple and EdiZONE, Purple will bear all of the obligations and liabilities of EdiZONE under the License Agreement accruing or arising on or after the Effective Date. In addition, Purple is assuming EdiZONE’s (and certain related persons’) responsibility for any past or present breach of the License Agreement (and for certain other matters) to the extent provided in, and subject to the terms and conditions of, Section 7 below. Purple agrees that the assignment by EdiZONE to Purple of the License Agreement is subject to, and Purple will be bound by, the applicable terms and conditions of the License Agreement.
3. Assignment of IP.
3.1. Specified Marks. EdiZONE hereby absolutely, fully, and irrevocably assigns, transfers, and conveys to Purple, as of the Effective Date, the entire right, title, and interest in and to the trademarks GEL MATRIX and INTELLIPILLOW (the “Specified Marks”), all registrations pertaining to the same (including U.S. Reg. Nos. 5,938,419 and 5,441,198), all related common-law rights, and the goodwill pertaining thereto, together with all claims, demands and causes of action for the past infringement of the Specified Marks or for unfair competition in business in connection therewith, and all rights to sue at law or in equity for any infringement, misappropriation, dilution, or other violations of any of the foregoing, including the right to enforce the use of the Specified Marks in accordance with the License Agreement, and also including the right to receive all proceeds and damages therefrom the same, to be held and enjoyed by Purple and its successors, assigns, or other legal representatives as fully and entirely as the same would or could have been held and enjoyed by EdiZONE had this assignment not been made.
3.2. Incremental IP. To the extent, if any, that any other trademarks, service marks, patents, patent applications, copyrights, trade secrets, know-how, or other intellectual property exist that are licensed to ACTI under the License Agreement and are not already owned by Purple (pursuant to the Assignment and License Back or otherwise) (collectively, “Incremental IP”), EdiZONE hereby absolutely, fully, and irrevocably assigns, transfers, and conveys to Purple, as of the Effective Date, the entire right, title, and interest in and to such Incremental IP and, to the extent applicable, all registrations, applications, and filings pertaining thereto, all related common-law rights, and the goodwill pertaining thereto, together with all claims, demands and causes of action for the past infringement of the Incremental IP or for unfair competition in business in connection therewith, and all rights to sue at law or in equity for any infringement, misappropriation, dilution, or other violations of any of the foregoing, including the right to enforce the use of the Incremental IP in accordance with the License Agreement, and also including the right to receive all proceeds and damages therefrom the same, to be held and enjoyed by Purple and its successors, assigns, or other legal representatives as fully and entirely as the same would or could have been held and enjoyed by EdiZONE had this assignment not been made.
3.3. Recordation and Further Assurances. EdiZONE further agrees promptly to confirm the foregoing assignment of the Specified Marks and, if requested by Purple, any other issued, registered, or pending item(s) of Incremental IP in one or more separate assignment documents, in the form set forth in Exhibit B (or another form reasonably acceptable to Purple and suitable for recording in the U.S. Patent and Trademark Office), and will so record such separate assignment document(s), or cooperate with Purple’s recordation thereof, within thirty (30) days after Purple’s request provided that EdiZONE shall not be required to incur any unreimbursed cost or expenses associated with complying with this Section 3.3. At Purple’s direction, and at no cost to Purple other than reimbursement of EdiZONE’s reasonable out-of-pocket costs, EdiZONE will execute such documents (and, as applicable, cause its affiliates and personnel to execute such documents) as Purple may reasonably request in order to permit Purple to perfect, memorialize, record, maintain, defend, and enforce Purple’s rights, title, and interests in and to the Specified Marks and any Incremental IP. To the extent that any of EdiZONE’s officers, managers or employees are required to testify, be deposed or otherwise be a witness in litigation Purple will pay them $2,500 per day. EdiZONE shall not be required to initiate or take any legal action to protect or enforce the Specified Marks and any Incremental IP.
3.4. Technology Transfer. EdiZONE will consult with and train Purple as reasonably necessary within six months following the Effective Date, in order to enable Purple to understand, exercise, practice, and exploit (to the extent not prohibited under the License Agreement and Retained Existing Contracts) the Specified Marks and Incremental IP. EdiZONE will deliver and, where applicable, transfer ownership of any associated files, embodiments, documentation, tooling, materials, and know-how, at no additional cost to Purple other than reimbursement of EdiZONE’s reasonable out-of-pocket costs.
4. Effect on Assignment and License Back.
4.1. Retained Existing Contracts. Purple acknowledges that certain of the Incremental IP may currently be licensed to third parties under one or more agreements that are currently in effect and identified in the Assignment and License Back as “Existing Contracts” (such agreements, excluding the License Agreement, the “Retained Existing Contracts”), and that Purple’s right, title and interest in and to the Incremental IP and Purple’s ownership of any such Incremental IP is subject to the licenses granted in those Retained Existing Contracts.
4.2. License Back. To the extent necessary to enable EdiZONE to perform its obligations under the Retained Existing Contracts, and subject to all terms and conditions set forth in the Assignment and License Back, the Parties agree that the Incremental IP will be deemed included in the license back to EdiZONE as granted in the Assignment and License Back, but only as to the Retained Existing Contracts.
4.3. Modification. From and after the Effective Date: (i) the License Agreement will not be considered an Existing Contract for purposes of the Assignment and License Back (nor is it a Retained Existing Contract for purposes of this Agreement); and (ii) the Parties agree that Purple will have no restrictions, limitations, conditions, or duties to EdiZONE under the Assignment and License Back in relation to (a) the License Agreement or (b) Purple’s enforcement of any Purple intellectual property rights against any third party, other than the counterparties to the Retained Existing Contracts.
5.1. Transfer Payment. Concurrently with the Parties’ execution of this Agreement, Purple shall remit to EdiZONE, as consideration for the assignments, transfers, and other rights granted to Purple hereunder, a one-time lump-sum payment in the amount of $8,456,191 (the “Transfer Payment”), subject to adjustment as set forth below. Such remittance is to be made by wire transfer, using the bank information provided by EdiZONE to Purple for that purpose, and is made against release of signatures to this Agreement and the recordable assignment for the Specified Marks in the form of Exhibit B.
5.2. Audit and Adjustment. Purple may audit EdiZONE’s books and records within 60 days after the Effective Date to verify the royalty amounts received from ACTI under the License Agreement, and EdiZONE will reasonably cooperate with any such audit at Purple’s request. Purple will bear its costs to perform such audit, and will maintain the results thereof in confidence. If Purple completes such an audit within that time period, the Transfer Payment will be subject to adjustment to the extent set forth below, and such adjustment will be made (via refund by EdiZONE or additional payment by Purple, as the case may be) no later than 60 days after the Effective Date or 15 days after Purple informs EdiZONE of the results of such audit, whichever is later.
(a) If the audit establishes that the Transfer Payment is at least $10,000 greater than three times the amount of ACTI royalties EdiZONE has received under the License Agreement in respect of the royalty periods between June 1, 2019 and May 31, 2020 (“3X LTM Royalties”), then EdiZONE will refund to Purple the difference between the Transfer Payment amount and 3X LTM Royalties.
(b) If the audit establishes that 3X LTM Royalties are at least $10,000 greater than the Transfer Payment, then Purple will additionally pay EdiZONE the difference between 3X LTM Royalties and the Transfer Payment amount.
5.3. Taxes. EdiZONE will be solely responsible for any taxes that may apply to the Transfer Payment (net of any adjustments as set forth above) and any tax liability associated with any amounts received under the License Agreement prior to the Effective Date.
6. Representations and Warranties.
6.1. By EdiZONE. EdiZONE represents and warrants to Purple that:
(a) EdiZONE has all requisite power and authority to enter into and perform this Agreement, and, to the best of EdiZONE’s knowledge, its execution and performance of this Agreement does not and will not conflict with any agreements, obligations, or commitments of EdiZONE with respect to any third parties;
(b) EdiZONE was, immediately prior to the assignment to Purple as set forth above, the Licensor under the License Agreement, with full, valid rights to enforce the same against ACTI, and EdiZONE has not assigned the License Agreement (or any rights thereunder) to any third party or otherwise encumbered its rights under the License Agreement; and
(c) EdiZONE’s disclosures in response to Purple’s due-diligence inquiries in anticipation of this Agreement have been full and accurate, based on the information known to Terry Pearce, Tony Pearce, Carrie Pearce, and/or Gaelyn Pearce and/or in EdiZONE’s and/or TNT’s files (but without requiring them to perform any special investigation or audit, or to breach any duty of confidentiality to ACTI or others if EdiZONE has advised Purple when and how such confidentiality obligations affect EdiZONE’s disclosures). Indeed, Purple acknowledges that EdiZONE is unable to view a large cache of emails between EdiZONE and ACTI.
6.2. By Purple. Purple represents and warrants to EdiZONE that Purple has all requisite power and authority to enter into and perform this Agreement, and, to the best of Purple’s knowledge, its execution and performance of this Agreement do not and will not conflict with any agreements, obligations, or commitments of Purple with respect to any third parties.
6.3. Independent Knowledge. Purple acknowledges that it has certain knowledge regarding ACTI’s activities as a result of, among other things, Purple’s communications with personnel of ACTI and/or third parties and other due diligence and that EdiZONE will have no liability to Purple for any representation or warranty that Purple knows to be untrue as a result of any such knowledge in Purple’s possession as of the Effective Date.
7.1. Obligation. Subject to the representations and warranties by EdiZONE set forth above, Purple agrees to indemnify and hold harmless the EdiZONE Group (as defined below) from and against any claims by ACTI or its affiliates, successors, or assigns: (i) for EdiZONE’s breach of the ACTI License on or before the Effective Date; or (ii) arising out of or caused by the Parties’ execution and/or performance of this Agreement (whether such claim is based on a violation of the 2010 Amended Permanent Injunction in Case No. 060910483 or otherwise) or (iii) Purple’s ownership, enforcement or breach of the ACTI License on or after the Effective Date.
7.2. Definition. As used herein, the “EdiZONE Group” means and includes: (i) EdiZONE and TNT; (ii) any business entity that controls, is controlled by, or is under common control with EdiZONE and/or TNT; (iii) Terry Pearce, Tony Pearce, Carrie Pearce, and Gaelyn Pearce, each in his or her capacity as an owner, officer, member, agent, or other representative of any of the entities described in clause (i) or (ii); and (iv) any successor of any of the entities or persons described in clauses (i)-(iii), each in its, his, or her capacity as such, but in each case excluding any purported successor to EdiZONE’s rights in the License Agreement.
7.3. Notice. EdiZONE Group will promptly notify Purple of any applicable claims, tender to Purple sole control and authority over the defense and settlement of such claims, and provide Purple (at Purple’s cost) with reasonable cooperation and information as Purple may reasonably request in connection with the defense and/or settlement of any such claim, subject to compensation to such EdiZONE Group member with compensation for the time incurred. Such cooperation will include, without limitation, prompt approval by the relevant member(s) of the EdiZONE Group of any Purple-requested settlement that fully releases the relevant member(s) of the EdiZONE Group from liability. EdiZONE (on behalf of itself and the other members of the EdiZONE Group) agrees that Purple may conduct the defense and settlement of any such claims through (and will be responsible for the fees and expenses only of) counsel chosen and retained by Purple.
8. Confidentiality. EdiZONE shall, from and after the Effective Date, take all commercially reasonable measures to preserve the confidentiality of any trade secrets and proprietary information included in the Incremental IP, and will treat the same as Confidential Information of Purple for purposes of Section 11 (Confidentiality) of the Assignment and License Back. In addition, each Party agrees to keep the terms of this Agreement, including but not limited to the amount of the Transfer Payment, confidential, and neither will disclose the same to any third party without the other Party’s consent; provided, however, that either Party may disclose the terms of this Agreement: (i) as reasonably necessary to comply with applicable laws, regulations, or securities exchange rules or to enforce its rights hereunder; (ii) in confidence to its business or legal advisors; and/or (iii) in confidence to its actual or prospective investors, acquirers, providers of capital, licensees, and/or assignees in order to advise them of the nature and extent of the Parties’ rights and obligations hereunder.
9. Successors and Assigns. This Agreement shall be binding upon and shall inure to the benefit of the Parties hereto and their respective successors and permitted assigns; provided, however, that EdiZONE may not assign this Agreement, or any of its rights or obligations hereunder, to any third party without Purple’s prior written consent, and any attempt to do so will be void. Purple may assign this Agreement without EdiZONE’s consent.
10. Controlling Law and Jurisdiction. This Agreement shall be construed in accordance with the law of the State of Utah applicable to agreements that are executed and fully performed therein. The Parties agree that the courts of the State of Utah and the United States District Courts therein shall have exclusive jurisdiction of any action or proceeding arising out of or related to this Agreement, without consideration of the applicable laws pertaining to conflict of laws.
11. Injunctive Relief. Given the unique and proprietary nature of the rights granted to Purple under this Agreement and Purple’s dependence upon EdiZONE to fulfill its obligations hereunder, the Parties acknowledge and agree that any breach by EdiZONE of its obligations or covenants under this Agreement would cause Purple irreparable harm for which monetary damages would not be an adequate remedy, and Purple will be entitled to equitable relief, including injunctive relief and specific performance, for any threatened or actual breach of this Agreement in addition to all available legal remedies. Given the indemnification and hold harmless granted to EdiZONE and the other members of the EdiZONE Group under this Agreement and their dependence upon Purple to fulfill its obligations hereunder, the Parties acknowledge and agree that any breach by Purple of its obligations or covenants under this Agreement would cause one or more of them irreparable harm for which monetary damages would not be an adequate remedy, and they will be entitled to equitable relief, including injunctive relief and specific performance, for any threatened or actual breach of this Agreement in addition to all available legal remedies.
12. Entire Agreement. This Agreement is the Parties’ entire agreement and understanding regarding the subject matter hereof, and supersedes all prior and contemporaneous agreements and understandings among the Parties with respect to such subject matter; provided, however, that for the avoidance of doubt, the Parties acknowledge that the Assignment and License Back continues to be in full force and effect except to the extent expressly set forth in this Agreement.
13. Severability. The Parties will cooperate with one another in good faith to give effect to and accomplish the purposes of this Agreement and its provisions to the fullest extent permitted under applicable laws. If any term or provision of this Agreement is determined to be invalid or unenforceable in any situation or in any jurisdiction, it shall be deemed amended consistent with the intent of this Agreement to the narrowest extent possible to render that provision valid and enforceable or, if necessary, removed from this Agreement, and shall not diminish the validity or enforceability of the remaining terms and provisions hereof or the validity or enforceability of the offending term or provision in any other situation or in any other jurisdiction.
14. Headings. The section headings contained in this Agreement are inserted for convenience only and shall not affect in any way the meaning or interpretation of this Agreement.
15. Amendments and Waivers. No amendment of any provisions of this Agreement shall be valid unless the same shall be in writing and signed by the Parties. No waiver by any Party of any provision of this Agreement or any default, misrepresentation, or breach of warranty or covenant hereunder, whether intentional or not, shall be valid unless the same shall be in writing and signed by the Party, as applicable, making such waiver nor shall such waiver be deemed to extend to any prior or subsequent default, misrepresentation, or breach of warranty or covenant hereunder or affect in any way any rights arising by virtue of any prior or subsequent such occurrence.
16. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original but all of which together will constitute one and the same instrument. Such counterparts may be executed and/or delivered by electronic means by either of the Parties, and any signature page so executed and/or delivered shall be treated as an original signature page of this Agreement.
[Signature page follows]
IN WITNESS WHEREOF, each of Parties has caused its authorized representative to execute and deliver this License Transfer and IP Assignment Agreement as of the Effective Date written above.
|EdiZONE, LLC|| ||Purple Innovation, LLC|
| || || || || |
|By: ||/s/ Tony M. Pearce|| ||By: ||/s/ Joseph B. Megibow|
| || || || || |
|Name: ||Tony M. Pearce|| ||Name: ||Joseph B. Megibow|
|Title: ||Manager|| ||Title: ||CEO|
|Date: ||August 13, 2020|| ||Date: ||August 14, 2020|