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EXHIBIT 10.2    
    

CERTAIN
INFORMATION HAS BEEN DELETED FROM THIS EXHIBIT AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT UNDER RULE 406. 

 
 

FIRST AMENDMENT TO
  LICENSE AND DEVELOPMENT AGREEMENT    
    

        This First Amendment to License and Development Agreement ("Amendment") is entered into as of the first day of July, 2001 by and between Innovex Precision
Components, Inc. ("IPC"), a wholly owned subsidiary of Innovex, Inc. ("Innovex") and Applied Kinetics, Inc. ("AKI"). 

WITNESSETH:  

        WHEREAS, IPC and AKI are parties to a License and Development Agreement dated October 12, 1999 (the "License Agreement"); and 

        WHEREAS,
all capitalized but undefined terms set forth in this Amendment shall have the meaning ascribed to those terms in the License Agreement; and 

        WHEREAS,
the License Agreement currently obligates IPC to pay a royalty to AKI in consideration of the intellectual property rights licensed to IPC by AKI in the License Agreement based
upon FSA production by any party AFAM Technology, AFAM Improvements or FSA Product Improvements; and 

        WHEREAS,
the License Agreement requires IPC, for a period of time specified therein, to make a guaranteed minimum royalty payment to AKI which, to the extent the actual royalty earned by
AKI at the royalty rate provision set forth in the License Agreement is less than the guaranteed minimum
royalty payments made, accumulates and constitutes an obligation of AKI to be repaid to IPC as more fully set forth in the License Agreement; and 

        WHEREAS,
the cumulative difference between royalty earned and royalty paid which has accumulated under the License Agreement is $909,860.21 (the "Shortfall") as of the date of this
Agreement; and 

        WHEREAS,
concurrently with the execution of this Amendment, Innovex is closing on its purchase of thirty-five percent (35%) of the outstanding common stock of AKI and, as
part of that purchase, AKI has agreed that Innovex has the right to pay a portion of the purchase price for such shares by causing IPC to cancel the Shortfall; and 

        WHEREAS,
Innovex has requested that AKI agree to accept a royalty from and after the date of this Amendment based upon sales by Innovex of FSAs, flex circuits and other flex products (as
more fully set forth hereinafter) rather than based upon all sales of FSAs whether by Innovex or any other party; and 

        WHEREAS,
recognizing that the sale by Innovex of FSAs, flex circuits and other flex products will constitute a royalty base less than the base of all FSAs sold by all parties with
utilizing AFAM Technology, AFAM Improvements or FSA Product Improvements, AKI has required that the royalty rate be increased from [* * *] to
[* * *], which IPC is willing to agree to; and 

        WHEREAS,
in consideration of changing the royalty base, AKI has required that IPC agree to pay a guaranteed minimum royalty during the term of this Agreement of $45,000 per month and
that, in the event that actual royalties earned under the new royalty rate provisions are less than such guaranteed amount, no "shortfall" or other obligation shall accrue or accumulate; and 

        WHEREAS,
the License Agreement currently allows IPC to sublicense some of the intellectual property rights licensed to IPC by AKI provided it meets certain terms and conditions set forth
in the License Agreement; and 

 

        WHEREAS,
AKI has required, as a condition to execution of this Amendment, that all future sublicensing by IPC of any intellectual property rights of AKI be subject to a requirement of
prior written AKI approval from AKI, which IPC has agreed to in consideration of the execution of this Amendment; and 

        WHEREAS,
IPC currently uses AFAMs for production of assemblies (non-FSA) for Philips; and 

        WHEREAS,
in consideration of the execution of this Amendment, AKI and IPC have agreed that the royalty rate set forth in this Amendment with respect to sales by Innovex of FSAs, flex
circuits and other flex products shall apply to the circuit portion of products sold to Philips; 

        NOW,
THEREFORE, in consideration of the foregoing premises, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, it is hereby
agreed as follows: 

        1.    Incorporation of Recitals.    The foregoing recitals shall constitute a part of this Agreement. 

        2.    Restriction on Future Sublicensing.    Notwithstanding any provision of the License Agreement to the contrary,
IPC shall not have the right to sublicense any of the intellectual property rights its has licensed from AKI pursuant to the License Agreement, without the express written consent of AKI. This
provision shall amend all provisions of the License Agreement which permit IPC to sublicense any intellectual property rights of AKI including, but not limited to, Sections 3.2, 3.3, 3.4, 4.6
and 5.1. IPC represents and warrants that, as of the date of this Amendment, it has sublicensed intellectual property rights of AKI as set forth on the attachments hereto. 

        3.    Deletion of Certain Contract Requirements.    Acknowledging that Section 3.5 of the License Agreement is
no longer necessary because of the consent requirement set forth in Section 2 of this Amendment, Section 3.5 of the License Agreement is hereby deleted in its entirety. 

        4.    Amendment and Restatement of Article VI.    Article VI of the License Agreement is hereby amended
and restated in its entirety to provide as follows: 

 
 

ARTICLE VI
  ROYALTY PAYMENTS    
    

        6.1    General Payment Obligation.    In consideration of: the licenses granted to IPC under this Agreement to AFAM
Technology, AFAM Improvements, FSA Product Improvements and Microactuation Technology, the obligation to sell AFAMs to IPC at AKI's cost, and the above-described commitment to provide services,
and in addition to the payment obligations of IPC set forth in Section 5.2 hereof, IPC agrees to pay AKI, on a monthly basis as set forth in Section 6.3 hereof, from July 1, 2001
until January 17, 2012, [* * *] of all FSA and Circuit Revenue (as hereinafter defined). For purposes of this Agreement, "FSA and Circuit Revenue" shall
mean the gross revenue received by IPC, and any entities affiliated with IPC (whether such entities now exist or are created or acquired subsequently), appropriately adjusted for rejections and
returns of defective product, from the sale, lease, licensing or other disposition of FSAs, flex on suspension circuits ("FOSs"), bridge flex circuits ("BFCs") or any other flex based product that
comes in contact with a suspension or the flexure, load beam or baseplate portions of a head gimbal assembly, regardless of whether revenue is received on a per piece basis, as a general payment or
prepayment for products in bulk, as a payment for services or intellectual property rights, is incorporated into the price of other products, as a return on investment, or otherwise. The parties
acknowledge that the definition of FSA and Circuit Revenue does not include actuator flex circuits which only connect to the termination portion of the circuit component of the suspension or head
gimbal assembly and which do not cross over part of the baseplate or spring region. Notwithstanding the preceding sentence, FSA and Circuit Revenue shall not include, from July 1, 2001 until
December 31, 2002, FOSs manually assembled by Seagate Technology. 

2

 

        6.2    Additional Payment Obligation.    In consideration of: the licenses granted to IPC under this Agreement
to AFAM Technology, AFAM Improvements, FSA Product Improvements and Microactuation Technology, the obligation to sell AFAMs to IPC at AKI's cost, and the above-described commitment to provide
services, and in addition to the payment obligations of IPC set forth in Sections 5.2 and 6.1 hereof, IPC agrees to pay AKI, on a monthly basis as set forth in Section 6.3 hereof, from
July 1, 2001 until January 17, 2012, [* * *] of all Other Product Revenue (as hereafter defined) produced from the operation of each and every AFAM
(regardless of whether an AFAM was purchased from AKI or was manufactured by IPC or any third party). For purposes of this Agreement, "Other Product Revenue" shall mean all revenue received by IPC
from sales or other dispositions of the circuit portion of other products produced on AFAMs (other than products covered by Section 6.1 hereof) pursuant to the license granted in
Section 3.3 hereof, without any deductions or offsets, regardless of whether revenue is received on a per piece basis, as a general payment or prepayment for products in bulk, as a payment for
services or intellectual property rights, is incorporated into the price of other products, as a return on investment, or otherwise. In the event that IPC receives revenue from any third party
resulting from the sale or other disposition of goods or the provision of services, an equitable allocation of revenue shall be made between the products giving rise to a royalty under this
Section 6.2 and such other goods or services. The parties acknowledge that sales by IPC to Philips constitute Other Product Revenue. 

        6.3    Monthly Payments.    IPC shall make royalty payments no later than the 20th day of each month during the term
of this Agreement, with the first payment based upon FSA and Circuit Revenue being made on or before July 20, 2001, and on the same day of each and every month thereafter up to and including
December 20, 2012. IPC agrees that it will make a guaranteed minimum royalty payment of $45,000 per month (the "Guaranteed Monthly Minimum Payment") unless the actual royalty payment obligation
would be greater (in which case it will pay the greater amount), regardless of the actual amount of FSA and Circuit Revenue. In the event that the Guaranteed Monthly Minimum Payment made by IPC in any
month exceeds the amount IPC would have paid under Section 6.1 above but for the Guaranteed Monthly Minimum Payment requirement, no "shortfall" or other obligation of any type or kind shall
accrue or accumulate and IPC shall not have the right to offset against any future monthly royalty payments, it being understood that AKI has fully earned the Guaranteed Monthly Minimum Payment in
exchange for its agreement to reduce the royalty base on which its royalty is calculated. 

        6.4    Certain Payment Provisions.    Within twenty (20) days after the end of each calendar month during the
term of this Agreement, IPC shall send AKI a written report, itemizing the volume of FSAs, FOSs, BFCs and all other flex related products giving rise to a royalty obligation which report shall
identify the applicable price of all such products, calculate the amount of royalty due under Section 6.1 and/or Section 6.2, identify the amount of revenue sharing required under
Section 5.2 hereof, and provide such further itemization as AKI may reasonably request. Payment of the amount due shall accompany each such report. AKI shall have the right, at reasonable times
not more often than twice per calendar year, and upon not less than 72 hours' prior notice, to examine and/or audit (directly or with others' help) all of IPC's books, records, and accounts
relating to the subject matter of this Agreement, for the sole purpose of verifying IPC's reports and payments under this Agreement. Except as necessary to enforce the terms of this Agreement, AKI
agrees to hold any information received in such examination or audit in confidence and to instruct any third party retained by AKI in connection with such examination or audit to do the same. If any
examination or audit by or for AKI reveals a shortfall in payment to AKI for any thirty (30) day period in excess of the greater of $5,000 or 10% of the amount due, IPC shall pay the reasonable
costs and expenses of the examination or audit. In addition, IPC shall promptly remit the amount of any shortfall, whether or not in excess of such amount. All royalty payments shall be made in United
States dollars and in immediately or next day available funds. 

3

 

        6.5    Effect of Failure to Make Guaranteed Monthly Minimum Payment.    Notwithstanding the provisions of
Section 10.1 of this Agreement, in the event that IPC does not make any required Guaranteed Monthly Minimum Payment, such failure shall not be a material breach of this Agreement (provided that
IPC pays the actual royalty payments required by this Agreement without giving effect to the Guaranteed Monthly Minimum Payment requirement); however, upon ten (10) days written notice to IPC
of intent to convert license rights to non-exclusive, and the failure of IPC to pay to AKI the difference between the Guaranteed Monthly Minimum Payment and the amount of royalties
actually paid for the preceding month within such ten day notice period, all license rights granted to IPC in this
Agreement shall automatically convert into non-exclusive rights, and all restrictions in this Agreement on AKI selling AFAMs and licensing AFAM Technology, AFAM Improvements, FSA
Product Improvements and Microactuation Technology shall automatically be null and void. The preceding provisions shall in no way relieve IPC of its obligation to make the actual royalty payments
required by Article VI hereof. 

        5.    Representations and Warranties.    Each of the parties hereto represents and warrants to the other that it has
all necessary corporate power and authority to enter into this Amendment; that it has taken all corporate actions necessary to authorize the execution, delivery and performance of this Amendment; and
that this Amendment is a valid and legally binding obligation of each of the respective parties fully enforceable in accordance with its terms. 

        6.    Acknowledgement Regarding Satisfaction of Shortfall.    IPC hereby acknowledges that the Shortfall has been
completely satisfied by issuance of AKI shares of common stock to Innovex; and that AKI has no further obligation with respect to the Shortfall. 

        7.    Effect of Amendment.    Except as amended hereby, all terms and conditions of the License Agreement shall remain
in full force and effect. 

        IN
WITNESS WHEREOF, the parties hereto have entered into this Amendment as of the date first above written. 

	 	 	INNOVEX PRECISION COMPONENTS, INC.
	

 	
 	

 	

 	

 
	 	 	By:	/s/  TOM PAULSON      

	 	 	 	Its:	Senior Vice President

	

 	
 	

 	

 	

 
	 	 	APPLIED KINETICS, INC.
	

 	
 	

 	

 	

 
	 	 	By:	/s/  RYAN A. JURGENSON      

	 	 	 	Its:	President

4

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EXHIBIT 10.2

FIRST AMENDMENT TO LICENSE AND DEVELOPMENT AGREEMENT

ARTICLE VI ROYALTY PAYMENTSQuickLinks
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EXHIBIT 10.3    
    

CERTAIN
INFORMATION HAS BEEN DELETED FROM THIS EXHIBIT AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT UNDER RULE 406. 

 
 

SECOND AMENDMENT TO
  LICENSE AND DEVELOPMENT AGREEMENT    
    

        This Second Amendment to License and Development Agreement ("Second Amendment") is entered into as of the 4th day of October, 2002 by and between
Innovex Precision Components, Inc. ("IPC") and Applied Kinetics, Inc. ("AKI"). 

WITNESSETH:  

        WHEREAS, IPC and AKI are parties to a License and Development Agreement dated October 12, 1999 (the "Original License Agreement"), as amended by the First
Amendment to License and Development Agreement dated as of July 1, 2001 (the "First Amendment") (the Original License Agreement as amended by the First Amendment is sometimes hereinafter
referred to as the "License Agreement"); and 

        WHEREAS,
IPC is currently negotiating an Agreement Relating to the Manufacture and Sale of FSA Products (the "Supply Agreement") with KR Precision Public Company, Limited ("KRP"); and 

        WHEREAS,
as a part of the Supply Agreement, IPC desires to enter into a License Agreement with KRP (the "Sublicense") pursuant to which IPC will sublicense to KRP certain technology
which IPC currently licenses from AKI; and 

        WHEREAS,
the First Amendment requires IPC to obtain the consent of AKI to any sublicense of technology owned by AKI and, accordingly, IPC has requested that AKI consent to the proposed
Sublicense in the form attached hereto; and 

        WHEREAS,
IPC and/or its parent Innovex, Inc. ("Innovex") is obtaining or is being granted an option to obtain, as part of the transaction resulting in the execution of the Supply
Agreement and the Sublicense, 24.9 percent of the issued and outstanding stock of KRP; and 

        WHEREAS,
Section 6.1 of the First Amendment requires IPC to pay to AKI [* * *] of all "FSA and Circuit Revenue", which term includes revenue
received by affiliates of IPC; and 

        WHEREAS,
AKI and IPC have disagreed as to whether or not KRP is an "affiliate" of IPC as a result of the execution by IPC and KRP of the Supply Agreement and the Sublicense, and the
acquisition of stock in KRP by IPC and/or Innovex; and 

        WHEREAS,
AKI and IPC have resolved their disagreement over this issue and desire to memorialize such resolution in this Second Amendment; and 

        WHEREAS,
AKI is willing to consent to the Sublicense in consideration of the execution by IPC of this Second Amendment; 

        NOW,
THEREFORE, in consideration of the foregoing premises, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, it is hereby
agreed as follows: 

        1.    Approval of Sublicense.    AKI hereby consents to IPC's execution of the Sublicense in the form attached to this
Second Amendment. Such approval by AKI shall not be deemed to be an approval of any other or further license or sublicense of technology owned by AKI, nor shall it be deemed to be an approval of any
modification, amendment or waiver of any term of the Sublicense from the form attached hereto. 

        2.    Seagate-Based Revenue.    IPC acknowledges and agrees that it will continue to make the
[* * *] payment required by Section 6.1 of the First Amendment on all FSA and Circuit Revenue (as defined 

 

in
the First Amendment) from all applicable sales to Seagate Technology and its affiliates (collectively, "Seagate") regardless of whether IPC, Innovex or KRP or the affiliates of each is the point of
sale to Seagate. 

        3.    Non-Seagate Sales—IPC Circuit.    IPC acknowledges and agrees that in the event that KRP
or its affiliates is the point of sale to any customer other than Seagate with respect to an FSA (as defined in the Original License Agreement) or other products included within the definition of "FSA
and Circuit Revenue," and uses an IPC flex on suspension circuit (an "FOS") purchased from IPC, IPC will pay AKI [* * *] of the gross revenue received from such
customers on the FOS component and will also pay, monthly, [* * *] for each FSA sold by KRP or its affiliates to such customers multiplied by the percentage
ownership of IPC/Innovex in KRP provided, however, that in the event that IPC and/or Innovex own 51 percent or more of the voting stock of KRP, have a majority of the seats on the Board of
Directors or other governing body of KRP, or are otherwise in control of KRP, then the percentage ownership of IPC/Innovex in KRP will be deemed to be 100 percent. 

        4.    Non-Seagate Sales—Non-IPC Circuit.    IPC acknowledges and agrees that in
the event that KRP or its affiliates is the point of sale to any customer other than Seagate with respect to an FSA or other products included within the definition of "FSA and Circuit Revenue," and
is not using an IPC FOS in such FSA or other product, IPC will pay AKI [* * *] of "KRP FSA and Circuit Revenue" multiplied by the percentage ownership of
IPC/Innovex in KRP provided, however, that in the event that IPC and/or Innovex owns 51 percent of the voting stock of KRP, has a majority of the seats on the Board of Directors or other
governing body of KRP, or is otherwise in control of KRP, then the percentage ownership of IPC/Innovex in KRP will be deemed to be 100 percent. For purposes of this Second Amendment, the term
"KRP FSA and Circuit Revenue" shall have the same meaning as the term "FSA and Circuit Revenue" in the First Amendment except that the phrase "KRP and any entities affiliated with KRP" shall be
substituted for the phrase "IPC and any entities affiliated with IPC." In addition to the foregoing payment, IPC will pay AKI [* * *] of the Machinery Rental Fee
(or any comparable or successor fee) paid by KRP under the Supply Agreement (which is currently set at [* * *] under Section 3.3 of the Supply Agreement). 

        5.    Intent of Amendment.    The parties acknowledge and agree that Sections 2, 3 and 4 of this Second Amendment are
intended to supplement and clarify Section 6.1 of the First Amendment and should be interpreted in that manner. 

        6.    Certain Monitoring Provisions.    IPC agrees to include in the Sublicense, or to enter into a separate agreement
with KRP containing, provisions allowing it to examine and audit the books and records of KRP related to operation of and production from AFAMs (as defined in the Original License
Agreement). In the event that AKI reasonably believes that KRP is underreporting its production of FSAs or its KRP FSA and Circuit Revenue, then AKI shall have the right to require IPC, no more often
than twice annually, to conduct such examination and audit, and to make the results thereof available to AKI. 

        7.    Steering Committee.    AKI agrees to participate on a technology steering committee with KRP and Innovex to help
develop the process and equipment technology roadmap. 

        8.    Effect of Second Amendment.    Except as amended or supplemented by this Second Amendment, all terms and
conditions of the License Agreement shall remain in full force and effect. 

2

 

        IN
WITNESS WHEREOF, the parties hereto have entered into this Second Amendment as of the date first above written. 

	 	 	INNOVEX PRECISION COMPONENTS, INC.
	

 	
 	

 	

 	

 
	 	 	By:	/s/  THOMAS PAULSON      

	 	 	 	Its:	Senior Vice President—CFO

	

 	
 	

 	

 	

 
	 	 	APPLIED KINETICS, INC.
	

 	
 	

 	

 	

 
	 	 	By:	/s/  RYAN JURGENSON      

	 	 	 	Its:	President

3

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EXHIBIT 10.3

SECOND AMENDMENT TO LICENSE AND DEVELOPMENT AGREEMENT

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