**EXHIBIT 10.2**

 

**CONFIDENTIAL TREATMENT**

**Apogee Technology, Inc. has requested that the markedportions of this document be accorded confidential treatment pursuant toRule24b-2 under the Securities Exchange Act of 1934.**

 

TRANSFER, EMPLOYMENT AND ROYALTY AGREEMENT

 

This TRANSFER, EMPLOYMENTAND ROYALTY AGREEMENT (the “Agreement”) is made as of April 30, 2004 (the“Effective Date”) between Apogee Technology, Inc., a corporation organized andexisting under the laws of the State of Delaware, with its principal office at129 Morgan Drive Norwood,  MA  02062 (“Apogee”), and Glenn Fricano, anindividual residing at 95 Church Avenue, Islip, NY 11751 (hereafter “Fricano”).

 

Recitals

 

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

 

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

 

WHEREAS, Kavlico Corporationis a senior secured creditor of SMI, holding a security interest in, amongother assets, certain MEMS technology, related documentation, and intellectualproperty rights, as further defined below (the “MEMS Technology andDocumentation”);

 

WHEREAS, Fricano and Kavlicoare parties to a Release of Rights Agreement dated March 31, 2004, a copy ofwhich 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 theRelease of Rights Agreement to Apogee, and to collect further materialsconcerning the MEMS Technology and Documentation, perform due diligence, andobtain further evidence concerning interests in the MEMS Technology andDocumentation; and

 

WHEREAS, Apogee wishes toreceive such assignment from Fricano, and to have Fricano collect such furthermaterials and perform such due diligence, and perform services for Apogee, onthe terms set out below;

 

NOW, THEREFORE, infurtherance of the foregoing Recitals and in consideration of the mutualcovenants and obligations set forth in this Agreement, the Parties agree asfollows:

 

Agreement

 

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

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

 

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

 

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

 

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

 

“IP Rights” shall meanpatent rights, copyrights, trademarks, rights in mask works, trade secretsrights, and any other rights to exclude, existing from time to time in ajurisdiction 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 othersimilar law.

 

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

 

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

 

“MEMS Division” shall meanthe division Apogee is establishing to design, develop, manufacture and sellMEMS Products.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

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# 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 RightsAgreement, and represents that he has made no other assignment of such rightsnor encumbered the same.

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# 4.                                       Employment Commitment.  Apogee agrees to employ Fricano, and Fricanoagrees to accept and carry out such employment on a full-time basis for aperiod of no less than one year, commencing on the Effective Date, inaccordance with the Confidentiality, Non-Disclosure and Non-Solicitation Agreements,a copy of which is annexed hereto as Exhibit B, and incorporated herein by suchreference 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.

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

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

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## 5.2                                 Costs. Actual out-of-pocket costs associated with the collection of media anddelivery 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 theEmployment

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

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

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# 6.                                       Compensation.  In consideration of (i) the assignment by Fricano to Apogee underSection **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:

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## 6.1                                 Transfer Compensation.  Apogee shall pay to Fricano the sum of OneHundred Thousand Dollars ($100,000.00) in the following installments:  (i) within five (5) business days ofApogee’s receipt of the Initial Deliverables, Apogee shall pay Fricano the sumof Seventy Five Thousand Dollars ($75,000.00); (ii) within ninety (90) days ofthe receipt of the Initial Deliverables, shall pay Fricano the sum of TwentyFive Thousand Dollars ($25,0000), provided Fricano is complying with hisobligations under Section **Error! Referencesource not found.** (Further Deliverables).

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

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

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### 6.2.2.                     Royalties. (a) For MEMS Products sold during the [**************] after the RoyaltyStart Date, the Royalty shall be [******(****)] of the Net Sales Revenues;during the period from the [*******] anniversary of the Royalty Start Datethrough the [*******] anniversary of the Royalty Start Date, the Royalty shallbe [******(****)] of the Net Sales Revenues; and after the [*******]anniversary of the Royalty Start Date, there shall be no Royalty due orowing.  If a MEMS Product is bundledwith other previously existing Apogee products without a separate price, thenthe 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’sthen-current list price for all of the other products included in the bundle.

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### (b) For MEMS Technology andDocumentation licensed during the [*****(***)] years after the Royalty StartDate, the Royalty shall be [******(***)] of the License Revenues; during theperiod 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 ofthe Royalty Start Date, there shall be no Royalty due or owing.

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## 6.3.                              Division of Royalty Payments.  Royalty Payments shall be allocated asfollows:

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

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

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## 6.4.                              Royalty Report.  Simultaneous with the payment of the Royalty, Apogee shall submitto Fricano a royalty report setting forth (i) an itemized summary of thequantity, Net Sales Revenues and identity of Products subject to royalty, and(ii) the payments due under the terms of this Agreement, showing the manner ofcalculating 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 therate of one percent (1%) per month, beginning on the date such payment was due.

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

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

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

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## 7.2.                              Non-Infringement.  As of the Effective Date, Fricano, to his Knowledge, knows of noinfringement or threatened infringement of third party IP Rights by the MEMSTechnology and Documentation, other than the matters set out on Exhibit C,based solely on writings received by Fricano or statements made to Fricanowhich he actually believes to be authoritative.

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

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## 7.4.                              Disclaimer of OtherWarranties.  EXCEPT AS EXPRESSLYPROVIDED IN THIS SECTION **Error! Referencesource not found.** (Fricano Representations and Warranties), FRICANOMAKES NO OTHER WARRANTIES (AND EXPRESSLY DISCLAIMS ANY AND ALL SUCHWARRANTIES), WHETHER EXPRESS, IMPLIED, STATUTORY, OR OTHERWISE, INCLUDING,WITHOUT LIMITATION, WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULARPURPOSE.  APART FROM THE WARRANTIES SETFORTH IN THIS SECTION **Error! Reference sourcenot found.**, THE MEMS TECHNOLOGY AND DOCUMENTATION IS PROVIDED “ASIS.”

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

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# 8.                                       Conditional License to Fricano.  In the event that Apogee fails to performthe Apogee Commercialization Obligations, Apogee shall, upon notice of suchfailure which is not remedied within sixty (60) days thereafter, grant toFricano 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 Apogeeon the same terms and conditions as set out in this Agreement, and shallcontain such other provisions as are customary in such a license. In connectiontherewith, Apogee shall make disclosure to Fricano of any part of the then MEMSTechnology and Documentation.

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

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

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## 10.1.                        Definition of Confidential Information.  The term “Confidential Information” shallmean (a) the MEMS Technology and Documentation; (b) non-public information andmaterials (in any medium), including but not limited to any software,semiconductor chip design, design documentation, business, financial orstrategic plans or information of the Disclosing Party; (c) information subjectto an obligation of confidence to a third party; and (d) any information markedconfidential, restricted or proprietary by a Party or by any other person towhom such party has an obligation of confidence; provided, however, that thefailure of either Party to so mark any material shall not relieve the ReceivingParty of the obligation to maintain the confidentiality of any unlegendedmaterial which the Receiving Party knows or should know contains ConfidentialInformation.  The financial terms ofthis Agreement shall be Confidential Information of both Parties.

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## 10.2.                        Limitations on Use and Disclosure.  The Receiving Party shall not useConfidential Information of the Disclosing Party except for purposes of thisAgreement. The Receiving Party shall not disclose Confidential Informationreceived from the Disclosing Party; provided that the Receiving Party maydisclose such information to its employees if such personnel have a legitimateneed to know such information and are bound in writing by confidentialityobligations not materially less restrictive than those set forth in thisAgreement.

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## 10.3.                        Standard of Care.  The Receiving Party will use the same degree of care anddiscretion (but in any event no less than a reasonable degree of care anddiscretion) to avoid unauthorized disclosure or use of Confidential Informationreceived from the Disclosing Party as the Receiving Party uses to protect itsown information of a similar nature from unauthorized disclosure or use.

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## 10.4.                        Exclusions. Without granting any right or license, the Parties agree that noobligation of nondisclosure or nonuse under this Agreement will apply to anyinformation (with the burden of proof upon the Receiving Party) (i) that theReceiving Party already rightfully possesses at the time of the disclosure bythe Disclosing Party or rightfully receives from a third party, (ii) that theReceiving Party develops independently and without reference to anyConfidential Information of the Disclosing Party, or (iii) that is or becomesavailable to the public other than by breach of this Agreement.  The Receiving Party may discloseConfidential Information received from the Disclosing Party to the extent thatthe Receiving Party is required by any judicial or government authority todisclose such information, provided the Receiving Party gives the DisclosingParty prompt notice of such requirement and reasonably cooperates with theDisclosing Party in attempting to limit such required disclosure.

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## 10.5.                        Return of Confidential Information.  Upon termination or expiration of thisAgreement, the Receiving Party will promptly return all documents and materialscontaining Confidential Information that were provided to it by DisclosingParty or will certify to the destruction of such materials.

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

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

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# 13.                                 Term. The term (“Term”) of this Agreement shall commence on the Effective Dateand shall continue in force until all of the provisions hereof have beenperformed as set forth herein, unless sooner terminated in accordance withSection 14 (Termination).

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

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

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

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## 14.3.                        Survival.  The rights and obligations of the Partiesunder the following Sections shall survive the termination or expiration ofthis Agreement:  Section **Error! Reference source not found.**(Transfer of Rights); Section **Error!Reference source not found.** (Fricano Representations andWarranties); Section 9 (Audit Right) (for the period specified in suchsection); Section 10 (Confidential Information);; Section 11 (Limitation ofLiability); and Section 15 (General).

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# 15.                                 General

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

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

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## 15.3.                        Governing Law.  This Agreement shall be governed in all respects by the laws ofCommonwealth of Massachusetts without regard to its conflicts of lawprinciples.

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## 15.4.                        Forum. In the event of a dispute hereunder, the same shall be submitted tobinding arbitration under the rules of the American Arbitration Association inthe city of Boston, State of Massachusetts or the City of New York, State ofNew York.  The Party prevailing shall beentitled to recover reasonable legal fees and expenses from the Party notprevailing.

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## 15.5.                        Notices. In any case where any notice or other communication is required orpermitted to be given hereunder, such notice or communication will be given inwriting by personal delivery or national overnight delivery service, addressedto the respective Party at the addresses indicated above.  All such notices or other communicationswill be deemed to have been given and received (i) upon receipt if personallydelivered or sent by registered mail; or (ii) when delivery is confirmed ifsent by overnight delivery service

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## 15.6.                        Force Majeure.  Neither Party shall be liable hereunder by reason of any failureor 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 ofsuch Party.

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

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

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

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

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## 15.11.                  Entire Agreement.  This Agreement together with the exhibits hereto completely andexclusively states the agreement of the Parties regarding its subject matter,and supersedes, and its terms govern, all prior proposals, agreements, or othercommunications between the parties, oral or written, regarding such subjectmatter.  This Agreement shall not bemodified except by a subsequently dated written amendment signed on behalf ofeach of the parties.

 

IN WITNESS WHEREOF, theparties hereto have caused this Transfer and Royalty Agreement to be executedby 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”

ConfidentialityAgreement

 

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EXHIBIT“C”

Infringement and Adverse Claims

 

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