EXHIBIT 10.2


 


CONFIDENTIAL TREATMENT


Apogee Technology, Inc. has requested that the marked
portions of this document be accorded confidential treatment pursuant to
Rule24b-2 under the Securities Exchange Act of 1934.


 


TRANSFER, EMPLOYMENT AND ROYALTY AGREEMENT


 


This TRANSFER, EMPLOYMENT
AND ROYALTY AGREEMENT (the “Agreement”) is made as of April 30, 2004 (the
“Effective Date”) between Apogee Technology, Inc., a corporation organized and
existing under the laws of the State of Delaware, with its principal office at
129 Morgan Drive Norwood,  MA  02062 (“Apogee”), and Glenn Fricano, an
individual residing at 95 Church Avenue, Islip, NY 11751 (hereafter “Fricano”).


 


Recitals


 


WHEREAS, Fricano is
knowledgeable concerning micro-electro-mechanical (“MEMS”) technology, and
managed the former Hauppauge fabrication facility of Standard Mems, Inc.
bankrupt (“SMI”);


 


WHEREAS, SMI is a bankrupt
under Chapter 7 of the Bankruptcy Act;


 


WHEREAS, Kavlico Corporation
is a senior secured creditor of SMI, holding a security interest in, among
other assets, certain MEMS technology, related documentation, and intellectual
property rights, as further defined below (the “MEMS Technology and
Documentation”);


 


WHEREAS, Fricano and Kavlico
are parties to a Release of Rights Agreement dated March 31, 2004, a copy of
which is annexed hereto as Exhibit A (the “Release of Rights Agreement”);


 


WHEREAS, Fricano is willing,
on the terms and conditions set out below, to assign his rights under the
Release of Rights Agreement to Apogee, and to collect further materials
concerning the MEMS Technology and Documentation, perform due diligence, and
obtain further evidence concerning interests in the MEMS Technology and
Documentation; and


 


WHEREAS, Apogee wishes to
receive such assignment from Fricano, and to have Fricano collect such further
materials and perform such due diligence, and perform services for Apogee, on
the terms set out below;


 


NOW, THEREFORE, in
furtherance of the foregoing Recitals and in consideration of the mutual
covenants and obligations set forth in this Agreement, the Parties agree as
follows:


 


Agreement


 


1.                                       Definitions. 
Capitalized terms shall have the following meanings:


 


“Confidential Information”
shall have the meaning provided in Section 10 (Confidential Information).


 


“Employment Agreement” shall
have the meaning set out in Section Error!
Reference source not found. (Employee Commitment).


 


“Further Deliverables” shall
have the meaning set out in Section Error!
Reference source not found. (Further Deliverables).


 


“Initial Deliverables” shall
have the meaning set out in Section Error!
Reference source not found. (Delivery; Continuing Obligations).


 


“IP Rights” shall mean
patent rights, copyrights, trademarks, rights in mask works, trade secrets
rights, and any other rights to exclude, existing from time to time in a
jurisdiction under patent law, copyright law, trademark


 


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law, unfair competition law,
moral rights law, trade-secret law, semiconductor chip protection law, or other
similar law.


 


“Knowledge” shall mean the
actual knowledge of the indicated Party without any investigation or due
diligence on the part of such person or persons.


 


“License Revenues” shall
mean all of the royalties paid to Apogee for licensing or similar exploitation,
regardless of the form thereof, of the MEMS Technology and Documentation (as
defined below).


 


“MEMS Division” shall mean
the division Apogee is establishing to design, develop, manufacture and sell
MEMS Products.


 


“MEMS Product” shall mean
any (a) device or intellectual property that can be sold or licensed that
relies for its content, design, functionality or manufacturing process in any
material respect on the MEMS Technology and Documentation and (b) any product
derived from the MEMS Technology and Documentation.


 


“MEMS Technology and
Documentation” shall mean (a) the materials, techniques, processes, and
information described in Exhibit A, including all associated IP Rights and (b)
all technology developed by the MEMS Division or otherwise by Apogee using the
services of Fricano and others and based on or originating from the rights
being transferred pursuant to Section 3 hereof (Transfer of Rights).


 


“Party” or “Parties” shall
mean Apogee, Fricano, or both Apogee and Fricano, as the context permits.


 


“Release of Rights
Agreement” shall have the meaning set out in the Preamble.


 


“Royalty Start Date” shall
mean the first date on which Apogee sells a MEMS Product.


 


“Term” shall have the
meaning set forth in Section 13 hereof (Term).


 


2.                                       Fricano Acquisition of Rights.  Fricano acquired his right, title, and
interest in and to the MEMS Technology and Documentation and all associated IP
Rights solely through the Release of Rights Agreement.


 


3.                                       Transfer of Rights.  In consideration of Apogee’s obligations under this Agreement,
Fricano hereby assigns to Apogee all of his interest in the Release of Rights
Agreement, and represents that he has made no other assignment of such rights
nor encumbered the same.


 


4.                                       Employment Commitment.  Apogee agrees to employ Fricano, and Fricano
agrees to accept and carry out such employment on a full-time basis for a
period of no less than one year, commencing on the Effective Date, in
accordance with the Confidentiality, Non-Disclosure and Non-Solicitation Agreements,
a copy of which is annexed hereto as Exhibit B, and incorporated herein by such
reference as if fully set forth herein, and the provisions of Section 6 hereof.
Fricano’s compensation shall be as separately agreed to by Fricano and Apogee.


 


5.                                       Delivery; Continuing Obligations.  Within two (2) business days of the
Effective Date, Fricano shall deliver to Apogee all media in his possession as
of the Effective Date embodying the MEMS Technology and Documentation (the
“Initial Deliverables”).


 


5.1                                 Further Deliverables.  After delivery of the Initial Deliverables
and in consideration of Apogee’s obligations under Section Error! Reference source not found.
(Compensation), Fricano shall during the Term of this Agreement, shall use
reasonable business efforts, at the expense of Apogee, to collect and compile
media embodying the MEMS Technology and Documentation, it being understood that
such media, due to SMI’s bankruptcy, may be stored in diverse locations.  Upon obtaining possession of any media
embodying the MEMS Technology and Documentation, Fricano shall promptly deliver
such media to Apogee (“Further Deliverables”) and such Further Deliverables
shall be deemed transferred in accordance with Section Error! Reference source not found.
(Transfer of Rights).  .


 


5.2                                 Costs. 
Actual out-of-pocket costs associated with the collection of media and
delivery of Further Deliverables under Section Error! Reference source not found. (Further Deliverables)
shall be handled in accordance with the Employment Agreement.  After expiration or termination of the
Employment


 


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Agreement (if applicable),
Apogee will reimburse Fricano for his actual out-of-pocket costs, upon
submission of supporting invoices and provided Fricano obtains written
pre-approval for costs in excess of $500.00. .


 


5.3                                 Technical Assistance.  Fricano shall provide Apogee with such
services and consultation as is reasonably necessary to allow Apogee to test
and evaluate the MEMS Technology and Documentation.  If Fricano is not employed at Apogee, such consulting services
shall be at such rates and for such periods as may be agreed to by Fricano and
Apogee.


 


6.                                       Compensation.  In consideration of (i) the assignment by Fricano to Apogee under
Section Error! Reference source not found.
(Transfer of Rights), and (ii) Fricano’s obligations under Section Error! Reference source not found.
(Employee Commitment), Apogee agrees as follows:


 


6.1                                 Transfer Compensation.  Apogee shall pay to Fricano the sum of One
Hundred Thousand Dollars ($100,000.00) in the following installments:  (i) within five (5) business days of
Apogee’s receipt of the Initial Deliverables, Apogee shall pay Fricano the sum
of Seventy Five Thousand Dollars ($75,000.00); (ii) within ninety (90) days of
the receipt of the Initial Deliverables, shall pay Fricano the sum of Twenty
Five Thousand Dollars ($25,0000), provided Fricano is complying with his
obligations under Section Error! Reference
source not found. (Further Deliverables).


 


6.2                                 MEMS Product Royalties.  Within forty-five (45) days of the end of
each calendar quarter, Apogee shall make a payment (the “Royalty Payment”) of
Royalties (as defined below) on MEMS Products calculated as set forth below:


 


6.2.1.                     Definition of Net Sales Revenue.  The term “Net Sales Revenue” shall mean
[***************************************************************].


 


6.2.2.                     Royalties. 
(a) For MEMS Products sold during the [**************] after the Royalty
Start Date, the Royalty shall be [******(****)] of the Net Sales Revenues;
during the period from the [*******] anniversary of the Royalty Start Date
through the [*******] anniversary of the Royalty Start Date, the Royalty shall
be [******(****)] of the Net Sales Revenues; and after the [*******]
anniversary of the Royalty Start Date, there shall be no Royalty due or
owing.  If a MEMS Product is bundled
with other previously existing Apogee products without a separate price, then
the amount for Net Sales Revenues will be calculated based on the ratio of (i)
Apogee’s then-current list price for the Product as compared to (ii) Apogee’s
then-current list price for all of the other products included in the bundle.


 


(b) For MEMS Technology and
Documentation licensed during the [*****(***)] years after the Royalty Start
Date, the Royalty shall be [******(***)] of the License Revenues; during the
period from the [*******] anniversary of the Royalty Start Date through the
[*******] anniversary of the Royalty Start Date, the Royalty shall be
[******(***)] of the License Revenues; and after the [*******] anniversary of
the Royalty Start Date, there shall be no Royalty due or owing.


 


6.3.                              Division of Royalty Payments.  Royalty Payments shall be allocated as
follows:


 


6.3.1.[***************************************************************************************
*****************************************]


 


6.3.2.[***************************************************************************************
*****************************************]


 


6.4.                              Royalty Report.  Simultaneous with the payment of the Royalty, Apogee shall submit
to Fricano a royalty report setting forth (i) an itemized summary of the
quantity, Net Sales Revenues and identity of Products subject to royalty, and
(ii) the payments due under the terms of this Agreement, showing the manner of
calculating these payments.


 


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6.5.                              Method of Payment; Overdue Payments.  Royalty Payments shall be made in U.S.
dollars by wire transfer or by other reasonable payment means.  [**********************************************************************].  Overdue payments shall bear interest at the
rate of one percent (1%) per month, beginning on the date such payment was due.


 


6.6.                              Apogee Commercialization Obligations.  Fricano is entering into this Agreement with
the understanding of both Fricano and Apogee that a typical cycle time to bring
a MEMS Product to market is not more than two (2) years.  This means development needs to begin as
soon as possible after the Effective Date and should be reasonably close to
commercialization by end of year two. 
In any event, Apogee intends to take commercially reasonable steps to
design, develop, manufacture and sell MEMS Products, and Apogee commits to do
so, provided however, that its failure to do so shall not render it liable to
Fricano if it then grants the License to Fricano described in Section 8 hereof
and releases him from any obligations to Apogee which would interfere with the
exercise by him or others of such license.


 


7.                                       Fricano Representations and Warranties.  Fricano represents and warrants that:


 


7.1.                              Right to Assign.  As of the Effective Date, Fricano, to his knowledge, has the
right to take the action described in Section 3 hereof (Transfer of Rights).


 


7.2.                              Non-Infringement.  As of the Effective Date, Fricano, to his Knowledge, knows of no
infringement or threatened infringement of third party IP Rights by the MEMS
Technology and Documentation, other than the matters set out on Exhibit C,
based solely on writings received by Fricano or statements made to Fricano
which he actually believes to be authoritative.


 


7.3.                              No Claims. 
As of the Effective Date, to Fricano’s Knowledge, no claim has been made
and is continuing or threatened that the use of any IP Right concerning the
MEMS Technology and Documentation is invalid or unenforceable or that the use
of any such IP Right does or may violate the rights of any third party, other
than the claims set out on Exhibit C, based solely on writings received by
Fricano or statements made to Fricano which he actually believes to be
authoritative.


 


7.4.                              Disclaimer of Other
Warranties.  EXCEPT AS EXPRESSLY
PROVIDED IN THIS SECTION Error! Reference
source not found. (Fricano Representations and Warranties), FRICANO
MAKES NO OTHER WARRANTIES (AND EXPRESSLY DISCLAIMS ANY AND ALL SUCH
WARRANTIES), WHETHER EXPRESS, IMPLIED, STATUTORY, OR OTHERWISE, INCLUDING,
WITHOUT LIMITATION, WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE.  APART FROM THE WARRANTIES SET
FORTH IN THIS SECTION Error! Reference source
not found., THE MEMS TECHNOLOGY AND DOCUMENTATION IS PROVIDED “AS
IS.”


 


7.5.                              Remedy for Material
Breach of Warranty.  In the event of a
material breach of the representations and warranties set out in this Section,
Apogee’s sole remedy shall be recovery of not more than [*********(***)] of the
Transfer Compensation paid to Fricano under Section Error! Reference source not found. (Transfer Compensation).


 


8.                                       Conditional License to Fricano.  In the event that Apogee fails to perform
the Apogee Commercialization Obligations, Apogee shall, upon notice of such
failure which is not remedied within sixty (60) days thereafter, grant to
Fricano a non-exclusive license (with the right to grant sublicenses) to copy,
modify, and exploit the MEMS Technology and Documentation.  Such license shall bear a royalty to Apogee
on the same terms and conditions as set out in this Agreement, and shall
contain such other provisions as are customary in such a license. In connection
therewith, Apogee shall make disclosure to Fricano of any part of the then MEMS
Technology and Documentation.


 


9.                                       Audit Right. 
Apogee shall keep separate, auditable, 
books and records pertaining to the sale, distribution, and pricing of
MEMS Products. 
[***********************************************************************************************
********************************************************].


 


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10.                               Confidential Information.   The following terms and conditions govern
use and protection of confidential information that one Party (the “Disclosing
Party”) provides or discloses to the other Party (the “Receiving Party”)
pursuant to this Agreement:


 


10.1.                        Definition of Confidential Information.  The term “Confidential Information” shall
mean (a) the MEMS Technology and Documentation; (b) non-public information and
materials (in any medium), including but not limited to any software,
semiconductor chip design, design documentation, business, financial or
strategic plans or information of the Disclosing Party; (c) information subject
to an obligation of confidence to a third party; and (d) any information marked
confidential, restricted or proprietary by a Party or by any other person to
whom such party has an obligation of confidence; provided, however, that the
failure of either Party to so mark any material shall not relieve the Receiving
Party of the obligation to maintain the confidentiality of any unlegended
material which the Receiving Party knows or should know contains Confidential
Information.  The financial terms of
this Agreement shall be Confidential Information of both Parties.


 


10.2.                        Limitations on Use and Disclosure.  The Receiving Party shall not use
Confidential Information of the Disclosing Party except for purposes of this
Agreement. The Receiving Party shall not disclose Confidential Information
received from the Disclosing Party; provided that the Receiving Party may
disclose such information to its employees if such personnel have a legitimate
need to know such information and are bound in writing by confidentiality
obligations not materially less restrictive than those set forth in this
Agreement.


 


10.3.                        Standard of Care.  The Receiving Party will use the same degree of care and
discretion (but in any event no less than a reasonable degree of care and
discretion) to avoid unauthorized disclosure or use of Confidential Information
received from the Disclosing Party as the Receiving Party uses to protect its
own information of a similar nature from unauthorized disclosure or use.


 


10.4.                        Exclusions. 
Without granting any right or license, the Parties agree that no
obligation of nondisclosure or nonuse under this Agreement will apply to any
information (with the burden of proof upon the Receiving Party) (i) that the
Receiving Party already rightfully possesses at the time of the disclosure by
the Disclosing Party or rightfully receives from a third party, (ii) that the
Receiving Party develops independently and without reference to any
Confidential Information of the Disclosing Party, or (iii) that is or becomes
available to the public other than by breach of this Agreement.  The Receiving Party may disclose
Confidential Information received from the Disclosing Party to the extent that
the Receiving Party is required by any judicial or government authority to
disclose such information, provided the Receiving Party gives the Disclosing
Party prompt notice of such requirement and reasonably cooperates with the
Disclosing Party in attempting to limit such required disclosure.


 


10.5.                        Return of Confidential Information.  Upon termination or expiration of this
Agreement, the Receiving Party will promptly return all documents and materials
containing Confidential Information that were provided to it by Disclosing
Party or will certify to the destruction of such materials.


 


11.                                 Limitation of Liability.  IN NO EVENT SHALL EITHER PARTY BE LIABLE TO
THE OTHER PARTY FOR ANY INDIRECT, SPECIAL, OR CONSEQUENTIAL DAMAGES OF ANY KIND
OR NATURE WHATSOEVER, INCLUDING WITHOUT LIMITATION, LOSS OF PROFITS OR OTHER
ECONOMIC LOSS, EVEN IF SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH
DAMAGES, EXCEPT FOR A BREACH OF SECTION 10 (Confidential Information).


 


12.                                 No Implied Licenses. Any license concerning
the MEMS Technology and Documentation to Fricano under this Agreement must be
expressly provided herein, and there shall be no licenses implied pursuant to
this Agreement, based on any course of conduct or other construction or
interpretation thereof.


 


13.                                 Term. 
The term (“Term”) of this Agreement shall commence on the Effective Date
and shall continue in force until all of the provisions hereof have been
performed as set forth herein, unless sooner terminated in accordance with
Section 14 (Termination).


 


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14.                                 Termination. 
Without prejudice to other remedies, a Party may terminate this
Agreement on the occurrence of one or more of the following:


 


14.1.                        Material Breach.  In the event that either of the Parties is in material breach of
any obligation under this Agreement, the non-breaching Party may terminate this
Agreement upon (i) providing the other Party with written notice of the breach
(a “Notice of Breach”) and (ii) providing thereafter a ninety (90) day
opportunity to cure beginning on the date of receipt by the alleged breaching
Party of the Notice of Breach.


 


14.2.                        Insolvency. 
In the event a Party shall become insolvent, shall make an assignment
for the benefit of creditors, or shall have a petition in bankruptcy filed for
or against it, the other Party shall have the right to terminate this entire
Agreement immediately upon providing written notice of such termination.


 


14.3.                        Survival.  The rights and obligations of the Parties
under the following Sections shall survive the termination or expiration of
this Agreement:  Section Error! Reference source not found.
(Transfer of Rights); Section Error!
Reference source not found. (Fricano Representations and
Warranties); Section 9 (Audit Right) (for the period specified in such
section); Section 10 (Confidential Information);; Section 11 (Limitation of
Liability); and Section 15 (General).


 


15.                                 General


 


15.1.                        No Agency. 
Nothing contained herein shall be construed as creating any agency,
partnership, or other form of joint enterprise between the Parties.


 


15.2.                        Press Releases.  Upon obtaining the consent of the other Party (which consent
shall not be unreasonably withheld or delayed), either Party shall be entitled
to issue press releases concerning this Agreement.


 


15.3.                        Governing Law.  This Agreement shall be governed in all respects by the laws of
Commonwealth of Massachusetts without regard to its conflicts of law
principles.


 


15.4.                        Forum. 
In the event of a dispute hereunder, the same shall be submitted to
binding arbitration under the rules of the American Arbitration Association in
the city of Boston, State of Massachusetts or the City of New York, State of
New York.  The Party prevailing shall be
entitled to recover reasonable legal fees and expenses from the Party not
prevailing.


 


15.5.                        Notices. 
In any case where any notice or other communication is required or
permitted to be given hereunder, such notice or communication will be given in
writing by personal delivery or national overnight delivery service, addressed
to the respective Party at the addresses indicated above.  All such notices or other communications
will be deemed to have been given and received (i) upon receipt if personally
delivered or sent by registered mail; or (ii) when delivery is confirmed if
sent by overnight delivery service


 


15.6.                        Force Majeure.  Neither Party shall be liable hereunder by reason of any failure
or delay in the performance of its obligations hereunder on account of strikes,
shortages, riots, insurrection, fires, flood, storm, explosions, acts of God,
acts of terrorism, war, governmental action, labor conditions, earthquakes,
material shortages or any other cause which is beyond the reasonable control of
such Party.


 


15.7.                        Waiver. 
The failure of either Party to require performance by the other party of
any provision hereof shall not affect the full right to require such
performance at any time thereafter; nor shall the waiver by either party of a
breach of any provision hereof be taken or held to be a waiver of the provision
itself.


 


15.8.                        Severability.  In the event that any provision of this Agreement shall be
unenforceable or invalid under any applicable law or be so held by applicable
court decision, such unenforceability or invalidity shall not render this
Agreement unenforceable or invalid as a whole, and, in such event, such
provision shall be changed and interpreted so as to best accomplish the
objectives of such unenforceable or invalid provision within the limits of
applicable law or applicable court decisions.


 


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15.9.                        Assignment. 
Neither this Agreement nor any rights or obligations of either Party
shall be assigned without the prior written approval of the other Party except
as follows: (a) Apogee shall assign its rights and obligations hereunder to any
entity that acquires its business and assets, or such portion thereof as is
relevant to the subject matter of this Agreement; and (b) Fricano may assign
any right to any payment to him hereunder.


 


15.10.                  Counterparts.  This Agreement may be executed simultaneously in two or more
counterparts, each of which will be considered an original, but all of which
together will constitute one and the same instrument.


 


15.11.                  Entire Agreement.  This Agreement together with the exhibits hereto completely and
exclusively states the agreement of the Parties regarding its subject matter,
and supersedes, and its terms govern, all prior proposals, agreements, or other
communications between the parties, oral or written, regarding such subject
matter.  This Agreement shall not be
modified except by a subsequently dated written amendment signed on behalf of
each of the parties.


 


IN WITNESS WHEREOF, the
parties hereto have caused this Transfer and Royalty Agreement to be executed
by their duly authorized representatives.


 


	
   

  	
  Fricano:

  
	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Date:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Apogee Technology,

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
  Date:

  	
   

  	
   

  
					



 


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EXHIBIT “A”


Release of Rights Agreement


 


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EXHIBIT “B”


Confidentiality
Agreement


 


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EXHIBIT
“C”


Infringement and Adverse Claims


 


10