Exhibit 10.2

 

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.

 

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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. Consideration.

 

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.

 

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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.

 

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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. Indemnification.

 

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.

 

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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.

 

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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]

 

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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

 

 

 

 

 

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