EXHIBIT 10.2
Engineering and License Agreement
with Precision Tracking FM, Inc.
(`The Engineering Agreement`)
ENGINEERING SERVICES AND LICENSE AGREEMENT
This is an agreement made effective as of January 31 ,1997
(the `Effective Date`) by and among Versus Technology, Inc.,
a Delaware corporation, including its parent or subsidiary
corporations, whose mailing address is 0000 Xxxxxx Xxxxx
Xx., Xxxxxxxx Xxxx, Xxxxxxxx 00000 (hereinafter `Versus`),
Precision Tracking FM, Inc., a Texas corporation, including
its parent or subsidiary corporations, whose mailing address
is 00000 X. Xxxxxxxx Xxxxxxx, Xxxxxx, Xxxxx 00000-0000
(hereinafter `PTFM`), and Xxxx X. Xxxxxx (hereinafter
`Xxxxxx`).
RECITALS:
A. PTFM and Versus are parties to an agreement of even date
herewith (the `Agreement`) pursuant to which Versus has
become the licensee of certain intellectual properties of
PTFM relating to products employing infrared technology,
and pursuant to which Versus will take over management of
existing contracts with PTFM`s existing resellers and the
manufacturing and sales of PTFM`s infrared technology
based products.
B. To help assure continuity in the implementation of the
business and technology transfer contemplated by the
Agreement, and to obtain help in further developing the
market for and products based upon infrared technology,
Versus desires to employ the services of PTFM (with
Xxxxxx as its chief executive officer), as an independent
contractor and consultant for the purpose of coordinating
the infrared sales and service business formerly owned by
PTFM. Versus is also willing to grant back to PTFM a
limited license to make, use, and sell infrared products
to the limited extent necessary for PTFM to complete its
performance under the Existing PTFM Contracts (as
defined in paragraph 4 of the Agreement), but without any
extensions, renewals or modifications being made thereto
by PTFM, pursuant to the terms and conditions of this
Engineering Services and License Agreement.
NOW, THEREFORE, THE PARTIES AGREE AS FOLLOWS
1. Term.
_____
The term of this Engineering Services and License
Agreement shall commence as of the Effective Date and
shall end at such time as PTFM has performed services and
incurred expenses pursuant hereto on Versus` behalf in
the sum of $480,000, or on the first anniversary of the
Effective Date, whichever shall come first; provided,
however, the term of the limited license granted to PTFM
hereunder shall be extended, as necessary to permit PTFM
to remain in compliance with any Existing PTFM Contract
with respect to which PTFM may still have obligation
after termination hereof.
2. Compensation and Reimbursement to PTFM; Accounting.
__________________________________________________
2.1 Versus shall pay to PTFM during the 12 months following
the Effective Date the sum of $480,000 (excluding
payments applicable to Additional Authorized Expenses, as
hereinafter defined in subsection 2.2), in return for
which PTFM shall make its employees and internal
resources available to Versus to perform such support,
training, management and development services as
elsewhere described herein. Versus shall pay such sum to
PTFM based on average anticipated xxxxxxxx of $40,000 per
month (excluding Additional Authorized Expenses). PTFM
will submit to Versus a detailed invoice on or before the
10th day of each month following the month in which the
services billed for were performed (the `Invoice(s)`).
The Invoices shall itemize the time, costs and expenses
paid or incurred by PTFM in its performance of the duties
set forth in paragraphs 3 and 4, below, (except no time,
costs or expenses attributable to subparagraph 3(B) will
be invoiced to or otherwise be the responsibility of
Versus). The Invoices shall itemize, at PTFM`s cost, all
costs and expenses reasonably incurred in the performance
of this Engineering Services and Licensing Agreement for
which PTFM shall be reimbursed, including a separate
allocation of the costs of : PTFM`s (1) office
facilities, equipment, utilities, copying, fax, postage
and similar office overhead expenses allocable to
performance of services for Versus hereunder, which
office overhead expenses are currently estimated to
aggregate, and shall not without Versus` prior approval
exceed, approximately $4,000 per month, plus (2) out of
pocket travel-related expenses for the first 24 trips
from Dallas, Texas to Traverse City, Michigan, and the
first trip to any currently existing distributor,
reseller or customer of PTFM which are made during the
term of this Engineering Services and Licensing Agreement
by Xxxxxx or Xxxxxxx Xxxxxx or other necessary PTFM
personnel at the request of Versus (to be counted as one
trip for each person Versus requests), plus (3) the time
based fees of PTFM applicable to performance of PTFM`s
duties set forth in paragraphs 3 and 4 of this
Engineering Services and Licensing Agreement (other than
subparagraph 3(B)), which time based fees are estimated
to aggregate, and shall not without Versus` prior
approval exceed, approximately $25,200 per month, as
follows: Xxxxxx - $12,960; Xxxxxx - $8,640; Internal
Clerical/Bookkeeping - $3600; plus (4) miscellaneous
incidental travel or other expenses, if any, not to
exceed an average of $10,800 per month (provided,
however, that at such time as Versus has approved the
adding of a technician, the amount budgeted in item (3)
shall be increased to $30,000 and the preceding $10,800
budgeted amount shall be reduced to $4,000. The
immediately preceding items (1) through (4) are herein
referred to as the `Budgeted Items.` The Invoices shall
itemize the nature of, date performed, and time spent
with respect to each service performed hereunder, showing
the name of the person performing the service, and the
hourly rate of such person. The hourly rate for Xxxx X.
Xxxxxx shall be $90. The hourly rate for Xxxxxxx X.
Xxxxxx shall be $60. The hourly rate for internal
clerical and bookkeeping services performed by personnel
other than Xxxxxx and Xxxxxx shall be $25.00. The hourly
rate for internal technicians other than Xxxxxx and
Xxxxxx shall be $40.
2.2 From time to time PTFM may, with Versus` prior
authorization, make use of outside contractors in order
to perform services pursuant to this Engineering Services
and Licensing Agreement. In the event outside
contractors are so utilized, PTFM will document and
Versus shall pay the total reasonable amount billed by
said contractors. In addition, Versus will reimburse
PTFM for any direct out of pocket costs of goods sold
which are paid or incurred by PTFM in connection with
goods sold or supplied by PTFM in fulfillment of the
Existing PTFM Contracts during the term of this
Engineering Services and License Agreement prior to the
assignment of the applicable Existing PTFM Contract to
Versus or such contract`s termination, whichever first
occurs. In addition, Versus will reimburse PTFM for any
direct out of pocket travel expenses of PTFM`s personnel
which may be incurred by PTFM at Versus` request, to the
extent such travel expenses exceed the core estimated
travel expenses contemplated by the Budgeted Items. The
amounts to be paid by Versus pursuant to this paragraph
2.2 are herein referred to as `Additional Authorized
Expenses.` Each monthly Invoice shall separately state
what amounts, if any, are applicable to Additional
Authorized Expenses and which amounts are applicable to
the Budgeted Items.
2.3 At the end of the term of this Engineering Services and
License Agreement the parties shall render to each other
an accounting of the Invoices, the Additional Authorized
Expenses, and the sums paid to PTFM by Versus under or in
connection herewith. To the extent that the amounts paid
by Versus pursuant to the Invoices for Budgeted Items
shall have exceeded the actual amounts earned by PTFM
from time based fees and cost pass through of authorized
expenses, such amount shall be promptly repaid to Versus
by PTFM, or shall be credited against any sums Versus may
owe for the Additional Authorized Expenses. In the event
the accounting shall disclose that Versus has failed to
pay any sums due under this Engineering Services and
License Agreement, Versus shall promptly pay the same.
3. Services.
________
During the term of this Engineering Services and License
Agreement, PTFM will maintain offices and make
arrangements for manufacturing facilities, supplies,
equipment and staffing necessary to:
(A) perform and complete all services requested by Versus
which may be necessary to correct errors which may
exist in any engineering or end user documentation
applicable to the installation, use, maintenance,
modification or performance of the hardware, software
or firmware associated with the infrared technology
based products sold by PTFM. PTFM shall also use its
best efforts to assist Versus in correcting or
completing any of Versus` own documentation related to
infrared products or services sold or supplied by
Versus; and
(B) with respect to only those infrared based products
shipped by PTFM prior to the Effective Date, perform
limited warranty services in accordance with the terms
of any written, limited warranty extended by PTFM to
its customers at the time the product was sold.
Without any indemnity by Versus being made or implied,
the parties agree that PTFM`s maximum liability under
its warranties, if any, shall be limited to the repair
or replacement of product, at PTFM`s sole discretion,
at such facility as PTFM may designate; and
(C) perform all PTFM obligations under the Existing PTFM
Contracts, pending their assignment to Versus or
expiration of the terms thereof, and perform support
services to existing customers of infrared products
sold by or through PTFM prior to the Effective Date, or
pursuant to the license granted under this Engineering
Services and License Agreement; and
(D) Make available to Versus all deliverables,
information, copies of documents, consultation and
instruction as may be reasonably requested by Versus in
order to fully implement and carry out the intent of
the Agreement; and
(E) provide to Versus such communication and information
as may be reasonably requested by Versus from time to
time concerning PTFM`s manufacture, marketing and sale
of infrared based products, including, without implied
limitation, any details or information concerning
PTFM`s infrared based business with its existing
customers, dealers, distributors, resellers,
manufacturers, suppliers, licensees, or their
affiliates; and
(F) provide such product development information, designs
and services regarding new infrared technology products
as may be reasonably requested by Versus; and
(G) take all such reasonable action that Versus may deem
necessary or desirable to preserve and protect the
existing good will and customer and distribution
network of PTFM for its infrared products, and
cooperate with the transfer of all Existing PTFM
Contracts as and when requested by Versus.
4. Developments and Confidential Information.
_________________________________________
During the term of this Engineering Service and
Licensing Agreement, PTFM and Xxxxxx
(A) agree to promptly inform Versus of the full details of
all inventions, discoveries, concepts, and ideas,
whether patentable or not including, but not limited to
hardware and apparatus, processes and methods,
formulae, computer programs and techniques, as well as
any improvements and related knowledge of which they
may conceive, complete or reduce to practice (whether
alone or jointly with others) during the term of this
Engineering Services and Licensing Agreement which
employ or may reasonably be calculated to employ
infrared based technology (the `Developments`); and
(B) agree to assign, and hereby do assign, to Versus or
Versus` designee, their entire right, title and
interest in: (1) the Developments; (2) all trademarks,
copyrights and mask work rights in the Developments;
and (3) all patent applications filed and patents
granted on the Developments, including those in foreign
countries, which they conceive of or make (whether
alone or with others) during the term hereof or within
one year thereafter; and
(C) during the term of this Engineering Services and
License Agreement and for one year thereafter, they
agree to execute such documents as may be reasonable
and necessary for Versus to obtain or maintain infrared
technology related patents in and to the Developments,
whether during the prosecution of patent applications
or in connection with infringement litigation (all of
their expenses to be borne by Versus); and
(D) agree not to use or disclose (except as their duties
for Versus may require) any of Versus` Confidential
Information, including confidential information
concerning the Developments, without Versus` written
consent. They understand that this obligation remains
with them for a reasonable period (not to exceed 5
years) from the termination of this Engineering
Services and License Agreement.
`Confidential Information` means information or
material, clearly marked `confidential Information
of Versus` (or other similar words which clearly
give substantially the same message) , which is not
generally available to or used by PTFM or Xxxxxx
except by virtue of this Engineering Services and
License Agreement, or of which the utility or value
is not generally known or recognized by PTFM, Xxxxxx
or similar companies as standard practice, whether
or not the underlying details are in the public
domain. Confidential Information includes:
information or materials which relate to Versus`
presently existing inventions, the Developments,
`know-how,` purchasing, accounting, merchandising,
or licensing; trade secrets, as defined in the
Restatement of Torts; software in various stages of
development (source code, object code,
documentation, diagrams, flow charts), designs,
drawings, specifications, models, data and customer
information; and any information of the type
described above which Versus obtained from another
party and which Versus treats as proprietary or
designates as confidential, whether or not owned or
developed by Versus and not otherwise known to PTFM
or Xxxxxx.
(E) agree to make available to Versus, on or before the
date this Engineering Services and Licensing Agreement
terminates, and in any event, promptly upon request,
all documents and things in their possession pertaining
to PTFM`s infrared technology products or services, or
the business of Versus, including, but not limited to
Versus` Confidential Information. If documents and
things pertaining to the business of Versus or
originating with Versus come into their possession or
are discovered after the term hereof, they will
promptly notify Versus and make same available to
Versus; and
(F) agree that all Developments (whether created alone or
jointly with others) pursuant to this Engineering
Services and Licensing Agreement (including, but not
limited to, computer programs, listings, design
specifications, flow charts and documentation) are
works made for hire under the United States Copyright
Laws and are the sole and exclusive property of Versus.
In the event a court of competent jurisdiction
determines that any of the Developments are not `works
made for hire` under the United States Copyright Laws,
this document shall operate as an irrevocable
assignment to Versus of all rights related to the
copyrights in the Developments.
(G) agree to assign, and do assign, to Versus or Versus`
designee their entire right, title and interest in all
mask works (as the Semiconductor Chip Protection Act,
17 U.S.C. Section 901, defines the term) related to the
Developments which they create (whether alone or
jointly with others) for Versus hereunder.
(H) agree to include the appropriate proprietary rights
notice on all materials, mask works, masks, and
semiconductor chip products embodying mask or copyright
works related to the Developments which they create
(whether alone or jointly with others) for Versus
hereunder.
(I) represent that, except as set forth in the Existing
PTFM Contracts (Exhibit A to the Agreement) they have
no agreements with or obligations to others concerning
any Developments or Confidential Information, nor,
except as indicated in said Exhibit A, do they have any
agreements or obligations that might conflict with this
Engineering Services and License Agreement.
PTFM shall take all reasonable and necessary steps with
respect to each of its employees or consultants who
shall remain with PTFM during the term of this
Engineering Services and License Agreement to insure
that they are obligated in writing to PTFM in such
manner as is consistent with PTFM`s obligations to
Versus under paragraph 4 hereof.
5. License to PTFM.
_______________
Upon request by Versus, PTFM shall make assignment to
Versus of Existing PTFM Contracts. Pending such
request, PTFM shall retain a license from Versus to the
extent necessary to comply with PTFM`s obligations under
the Existing PTFM Contracts. During the term of this
Engineering Services and License Agreement, and pending
the assignment to and assumption by Versus of such
Existing PTFM Contracts, PTFM shall continue to perform
under its contracts and pass through to Versus all
Additional Authorized Expenses and all gross receipts or
accounts receivable first attributable to such Existing
PTFM Contracts after the Effective Date. Versus shall
compensate PTFM for PTFM`s billable time and expenses
incurred in fulfilling said Existing PTFM Contracts in
accordance with paragraph 2, above. If PTFM shall remain
obligated under any Existing PTFM Contracts at the
termination of this Engineering Services and License
Agreement, then in that event Versus shall enter into an
OEM Agreement with PTFM, making Versus` infrared based
products available to PTFM upon the identical terms and
conditions as Versus` June 30, 1995 OEM Agreement with
PTFM, to the limited extent necessary for PTFM to
continue its performance under any remaining Existing
PTFM Contracts until they expire by their terms.
6. Force Majeure.
______________
`Force Majeure` shall mean war, fire, flood, strike,
labor trouble, breakage of equipment, accident, riot,
action of governmental authority, or contingencies beyond
the reasonable control of the parties which prevent
performance of obligations under this Engineering
Services and License Agreement. If a Force Majeure
circumstance occurs, the party so affected shall be
excused from the performance of the particular obligation
affected during the period of the Force Majeure
circumstance.
7. No Personal Liability.
______________________
Notwithstanding any provision herein to the contrary,
Xxxxxx shall not be personally liable for monetary
damages for any breach of contract or duty relating to
this Engineering Services and License Agreement and
Versus` sole remedy for monetary damages shall be limited
to PTFM.
8. Covenants Not to Compete.
___________________________
For the period beginning on the Effective Date of this
Engineering Services and License Agreement and ending ten
years following same, neither PTFM nor Xxxxxx will aid
or assist any competitor of, or compete with, Versus in
the infrared based technology market, nor will they make,
sell, service, or consult with respect to any products
which make use of infrared technology (except for Versus`
sole benefit). PTFM and Xxxxxx further agree, for a
period beginning on the Effective Date and ending three
years after the Completed Transfer Date (as defined in
the Agreement) that they shall not themselves make or
sell, nor shall they knowingly and intentionally aid or
assist any person or entity to make or sell any product
or service which competes with Versus in any North
American market in which Versus markets and sells, or is
attempting to market and sell, the following existing
products of Versus:
1. Mobil Alarm Product Security;
2. Trigger alarm home security system with cellular
telephone back-up (an example of which is used by
Brinks Security);
3. Machining software for use in mold making;
4. Data-base software products for use in machining;
5. Video compression software (an example of which is
used by TVX);
6. Infrared to Radio frequency data transmission;
7. Products designed and manufactured by or for Versus
for in-door tracking of personnel or equipment.
9. Xxxxxx`s Personal Services.
___________________________
Xxxxxx agrees to devote an average of not less than 36
hours per week (with not more than 8 billable hours in
any one day) of his business time and attention to Versus
through the Completed Transfer Date or 120 days from the
Effective Date, whichever is later.
10. Miscellaneous.
______________
This Engineering Services and License Agreement shall inure
to the benefit of and be binding upon the heirs, personal
representatives, successors and assigns of the respective
parties hereto. This Engineering Services and License
Agreement, and the Agreement, constitute and fully integrate
the entire understanding between the parties hereto, and are
intended to supersede and cancel all prior written or oral
understandings between them dealing with the subject matter
hereof which have accrued prior to the date hereof. This
Engineering Services and License Agreement may not be
changed orally, but only in writing, signed by the party
against whom enforcement of any waiver, change, amendment,
modification, extension or discharge is sought. No other
warranties, representations or covenants exist that are not
herein contained. All notices required or authorized under
this Engineering Services and License Agreement shall be in
writing and shall be deemed to have been duly given on the
date of service if served personally on the party to whom
notice is to be given, or the second day after mailing, if
mailed to the party to whom notice is to be given by first
class mail, registered or certified, postage prepaid and
addressed to the respective parties at the addresses set
forth above, unless and until a different address shall be
furnished in writing by any party desiring to change such
address to the other party, or if no such address is set
forth with respect to any such party, then by personal
delivery or registered or certified mail, postage prepaid,
to the principal office of such party, or alternatively, the
personal residence of such party, all as last known to the
party giving such notice. For each term and pronoun used
herein, the singular number includes the plural number, and
vice versa, and any gender, whether masculine, feminine, or
neuter, includes the other genders, as appropriate and as
the context may reasonably require. The invalidity of any
paragraph, provision or part hereof shall not affect the
validity of any other paragraph, provision or part hereof.
This Engineering Services and License Agreement shall be
construed as a whole and in accordance with its fair
meaning. Captions, if any, and organization are for
convenience and shall not be used in construing its meaning.
This Engineering Services and License Agreement may be
executed in one or more counterparts, all of which shall
constitute one and the same instrument and each one of which
shall be deemed an original. Each party shall, upon
reasonable request, execute and deliver such other and
further documents as may be necessary and proper to
effectuate this Engineering Services and License Agreement.
This Engineering Services and License Agreement shall be
interpreted and enforced in accordance with the laws of the
State of Michigan, excluding any conflicts-of-law rule or
law which refers to the laws of another jurisdiction. No
party hereunder shall be entitled to exercise a right of off
set with respect to compensation and/or goods in its hands
held for the benefit of the other pursuant to this
Engineering Services and License Agreement. Any dispute or
controversy arising under, out of or in connection with, or
in relation to any promises by Versus hereunder (or any
amendments hereto)to pay to PTFM money, shares or
compensation shall be determined and settled by arbitration
in Dallas County, Texas, in accordance with the rules of the
American Arbitration Association and Texas law. Any award
rendered by the arbitrator shall be final and binding upon
each of the parties, and judgment thereof may be entered in
any court having jurisdiction thereof. During the pendency
if any such arbitration and until final judgment hereon has
been entered, this Agreement shall remain in full force and
effect. The party in whose favor a money judgment may be
entered shall be entitled to recover its reasonable
expenses, attorneys fees and costs of arbitration. With
regard to all other disputes in connection herewith, each
party consents to the exclusive in personam jurisdiction of
the state courts of the State of Michigan, with venue in
Traverse City, Michigan, and the nonprevailing party agrees
to pay the prevailing party`s actual attorney`s fees and
expenses in connection with any such litigation, in addition
to any costs, remedies or damages the court may award. This
Engineering Services and License Agreement constitutes the
jointly bargained agreement of the parties, and the
construction of this Agreement shall not be altered or
influenced by the fact or presumption that one party had a
greater or lesser hand in the drafting hereof. Any Recitals
are hereby made a part of this Engineering Services and
License Agreement and all exhibits, attachments, and
schedules, if any, attached hereto are incorporated herein
by reference for all applicable purposes. If the date for
performance of any act hereunder falls on a Saturday,
Sunday, or legal holiday, then the time for performance
thereof shall be deemed extended to the next successive
business day. Whenever it is provided that days be counted,
the first day to be counted shall be the day following the
date on which the event causing the period to commence
occurs. This Engineering Services and License Agreement is
intended solely for the benefit of the parties hereto and
their successors, heirs and assigns, and may not be relied
upon or enforced by any third party beneficiary.
IN WITNESS WHEREOF, THE PARTIES HAVE MUTUALLY EXECUTED
AND DELIVERED THIS ENGINEERING SERVICES AND LICENSE
AGREEMENT, EFFECTIVE AS OF THE DATE FIRST ABOVE STATED.
Versus Technology, Inc. Precision Tracking FM, Inc.
By: Xxxx X. Xxxxxxx By: Xxxx X. Xxxxxx
_______________________ _ _ _________________________
Xxxx X. Xxxxxxx, President Xxxx X. Xxxxxx, President
Xxxx X. Xxxxxx
_____________________________
Xxxx X. Xxxxxx,individually
