Document:

exhibit_10-5.htm

    
      
        

      
Exhibit
      10.5

     

    Form
      of Warrant Agreement to Purchase Shares of Common Stock.

     

     

    THIS
      WARRANT AND THE UNDERLYING SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
      SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”) OR QUALIFIED UNDER ANY
      APPLICABLE SECURITIES LAWS. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED,
      HYPOTHECATED OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
      STATEMENT UNDER THE SECURITIES ACT AND QUALIFICATION UNDER SUCH STATE SECURITIES
      LAWS OR AN OPINION OF COUNSEL OR OTHER EVIDENCE SATISFACTORY TO THE COMPANY
      THAT
      SUCH REGISTRATION AND/OR QUALIFICATION IS NOT REQUIRED.

     

    JAYHAWK
      ENERGY, INC.

     

    WARRANT
      AGREEMENT

     

    January
      16, 2008

    

    THIS
      CERTIFIES THAT, for value received, ____________ (the
“Investor”), or Investor’s assigns (Investor and Investor’s assigns being
      the “Holder”), is entitled to subscribe for and purchase at any time
      during the Exercise Period from Jayhawk Energy, Inc., a Nevada corporation,
      with
      an office located at 370 Interlocken Blvd., Suite 400, Broomfield, CO 80021
      (the
“Company”), a number of shares of Common Stock equal to the Share Number
      at a per share price equal to the Exercise Price in effect at such time. This
      Warrant is issued in conjunction with the shares of the Company’s Common Stock
      issued pursuant to the Subscription Agreement dated as of January 16, 2008,
      by
      and between the Company and the Investor.

     

    1. Definitions.
      As used herein, the following terms shall have the following respective
      meanings:

     

    (a)
       “Aggregate Warrant Price” shall mean the dollar value obtained by
      multiplying $1.60 by ___________.

     

    (b)
       “Common Stock” shall mean the common stock of the Company.

     

    (c)
       “Exercise Period” shall mean the period commencing on January 16, 2008,
      and ending on January 15, 2009.

     

    (d)
       “Exercise Price” shall mean $1.60 per share of Common Stock.

     

    (e)
       “Exercise Shares” shall mean any Common Stock acquired upon exercise of
      this Warrant.

     

    (f)
       “Share Number”, at any time, shall mean (i) the Aggregate Warrant Price
      minus the aggregate exercise price previously paid upon exercise of this
      Warrant, divided by (ii) the Exercise Price then in effect.

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

    2. Exercise
      of Warrant.

     

    2.1
       General; Exercise of Warrant .

     

    (a)
       The rights represented by this Warrant may be exercised as a whole or in
      part at any time during the Exercise Period, by delivery of the following to
      the
      Company at its address set forth above (or at such other address as it may
      designate by notice in writing to the Holder):

     

    (i)           An
      executed Notice of Exercise in the form attached hereto;

     

    (ii)           Payment
      of the Exercise Price either in cash or by check; and

     

    (iii)           This
      Warrant.

     

    (b)
       Upon the exercise of the rights represented by this Warrant, a certificate
      or certificates for the Exercise Shares so purchased, registered in the name
      of
      the Holder or persons affiliated with the Holder, if the Holder so designates
      (and such designation is in compliance with applicable securities laws and
      any
      stockholders, investor rights or similar agreement), shall be issued and
      delivered to the Holder as promptly as practicable after the rights represented
      by this Warrant shall have been so exercised.

     

    (c)
       The person in whose name any certificate or certificates for Exercise
      Shares are to be issued upon exercise of this Warrant shall be deemed to have
      become the holder of record of such shares on the date on which this Warrant
      was
      surrendered and payment of the Exercise Price was made, irrespective of the
      date
      of delivery of such certificate or certificates, except that, if the date of
      such surrender and payment is a date when the stock transfer books of the
      Company are closed, such person shall be deemed to have become the holder of
      such shares at the close of business on the next succeeding date on which the
      stock transfer books are open.

     

    2.2
       Net Issue Exercise .

     

    (a)
       In lieu of paying the Exercise Price in cash or by check as provided in
      Section 2.1, the Holder may elect a “Net Issue Exercise” pursuant to which the
      Holder will receive Exercise Shares equal to the value (as determined below)
      of
      this Warrant (or the portion thereof being exercised) by surrender of this
      Warrant at the principal office of the Company together with an executed Notice
      of Exercise in the form attached hereto in which event the Company shall issue
      to the Holder a number of Exercise Shares computed using the following
      formula:

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    X
      = Y
      (A-B)

    A

    Where:

     

    X
      = the
      number of Exercise Shares to be issued to the Holder;

     

    Y
      = the
      number of Exercise Shares purchasable under the Warrant or, if only a portion
      of
      the Warrant is being exercised, the portion of the Warrant being exercised
      (at
      the date of such exercise);

     

    A
      = the
      Fair Market Value of one share of the Company’s Common Stock (at the date of
      such exercise); and

     

    B
      = the
      Exercise Price (as adjusted to the date of such exercise).

     

    (b)
       For purposes of the above calculation, “Fair Market Value” shall be
      determined as follows:

     

    (i)
       If the Common Stock is listed on any established stock exchange or a
      national market system, including, without limitation, The Nasdaq Stock Market’s
      Global Select or Global Market, the Fair Market Value of a share of Common
      Stock
      will be the average closing sales price for such stock (or the closing bid,
      if
      no sales are reported) as quoted on that system or exchange (or the system
      or
      exchange with the greatest volume of trading in Common Stock), over the five
      (5)
      trading day period ending on the trading day immediately preceding the day
      the
      Warrant is being exercised, as reported in the Wall Street Journal or any other
      source the Company considers reliable.

     

    (ii)
       If the Common Stock is quoted on The Nasdaq Stock Market ( but not on The
      Nasdaq Stock Market’s Global Select or Global Market) or is regularly quoted
      elsewhere by recognized securities dealers but selling prices are not reported,
      the Fair Market Value of a share of Common Stock will be the average mean
      between the high bid and low asked prices for the Common Stock over the five
      (5)
      trading day period ending on the trading day immediately preceding the day
      the
      Warrant is being exercised, as reported in the Wall Street Journal or any other
      source the Company considers reliable.

     

    (iii)
       If the Common Stock is not traded as set forth above, the Fair Market
      Value will be determined in good faith by the Board of Directors of the
      Company.

     

    (c)
       If this Warrant is not exercised in full by a Net Issue Exercise, then,
      the “Share Number” in effect immediately after such partial exercise shall be
      appropriately adjusted to take into account the effect of the Net Issue
      Exercise.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    3. Covenants
      of the Company.

     

    3.1
       Covenants as to Exercise Shares . The Company covenants and agrees
      that all Exercise Shares that may be issued upon the exercise of the rights
      represented by this Warrant will, upon issuance, be validly issued and
      outstanding, fully paid and nonassessable, and free from all taxes, liens and
      charges with respect to the issuance thereof. The Company further covenants
      and
      agrees that the Company will at all times during the Exercise Period have
      authorized and reserved, free from preemptive rights, a sufficient number of
      shares of its Common Stock to provide for the exercise of the rights represented
      by this Warrant. If at any time during the Exercise Period the number of
      authorized but unissued shares of Common Stock shall not be sufficient to permit
      exercise of this Warrant, the Company will take such corporate action as may,
      in
      the opinion of its counsel, be necessary to increase its authorized but unissued
      shares of Common Stock to such number of shares as shall be sufficient for
      such
      purposes.

     

    3.2
       No Impairment . Except and to the extent as waived or consented to
      by the Holder, the Company will not, by amendment of its Articles of
      Incorporation or through any reorganization, transfer of assets, consolidation,
      merger, dissolution, issue or sale of securities, or any other voluntary action,
      avoid or seek to avoid the observance or performance of any of the terms to
      be
      observed or performed hereunder by the Company, but will at all times in good
      faith assist in the carrying out of all the provisions of this Warrant and
      in
      the taking of all such action as may be necessary or appropriate in order to
      protect the exercise rights of the Holder against impairment.

     

    3.3
       Notices of Record Date . In the event of any taking by the Company
      of a record of the holders of any class of securities for the purpose of
      determining the holders thereof who are entitled to receive any dividend (other
      than a cash dividend which is the same as cash dividends paid in previous
      quarters) or other distribution, the Company shall mail to the Holder, at least
      ten (10) days prior to the date specified herein, a notice specifying the date
      on which any such record is to be taken for the purpose of such dividend or
      distribution.

     

    4. Representations
      of Holder.

     

    4.1
       Acquisition of Warrant for Personal Account . The Holder represents
      and warrants that it is acquiring the Warrant and any shares of capital stock
      issued or issuable upon exercise or conversion of the Warrant for investment
      purposes only and not with a view to or for resale in connection with any
      distribution or public offering thereof within the meaning of the Act (as
      defined below). The Holder also represents that the entire legal and beneficial
      interests of the Warrant and Exercise Shares the Holder is acquiring is being
      acquired for, and will be held for, the account of the Holder only.

     

    4.2
       Accredited Investor; Off-Shore Transaction; Not a U.S. Person . The
      Holder represents and warrants that, unless not a “U.S. Person” as defined
      below, the Holder it is an “accredited investor” as such term is defined in Rule
      501 under the Securities Act of 1933, as amended (the “ Act ”). The
      Holder shall provide the Company with such additional information as the Company
      may reasonably request with respect to the Holder’s status as an “accredited
      investor.” The exercise of this Warrant and the transactions contemplated herein
      may constitute an “off-shore transaction,” as that term is defined in Rule
      902(h) of Regulations S promulgated under the Securities Act. If the Holder
      is
      not an accredited investor, then the Holder is not a “U.S. Person,” as that term
      is defined in Rule 902(k) of Regulation S promulgated under the Securities
      Act.

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

    4.3
       Securities Are Not Registered .

     

    (a)
       The Holder understands that the Warrant and the Exercise Shares have not
      been registered under the Act, on the basis that no distribution or public
      offering of the stock of the Company is to be effected, or registered or
      qualified under any applicable state securities laws. The Holder realizes that
      the basis for the exemption may not be present if, notwithstanding its
      representations, the Holder has a present intention of acquiring the securities
      for a fixed or determinable period and, in the future, selling (in connection
      with a distribution or otherwise), granting any participation in, or otherwise
      distributing the securities. The Holder has no such present
      intention.

     

    (b)
       The Holder recognizes that the Warrant and the Exercise Shares must be
      held indefinitely unless they are subsequently registered under the Act or
      an
      exemption from such registration is available. The Company has no obligation
      to
      register the Warrant or the Exercise Shares of the Company, or to comply with
      any exemption from such registration.

     

    (c)
       The Holder is aware that neither the Warrant nor the Exercise Shares may
      be sold pursuant to Rule 144 adopted under the Act unless certain conditions
      are
      met, including, among other things, the existence of a public market for the
      shares, the availability of certain current public information about the
      Company, the resale following the required holding period under Rule 144 and
      the
      number of shares being sold during any three (3) month period not exceeding
      specified limitations. For so long as the Warrants are outstanding and for
      the
      two-year period thereafter, the Company will use its best efforts to satisfy
      these conditions.

     

    (d)
       The Holder is aware of the Company’s business affairs and financial
      condition and has acquired sufficient information about the Company to reach
      an
      informed and knowledgeable decision regarding its investment in the Company.
      The
      Holder is experienced in making investments of this type and has such knowledge
      and background in financial and business matters that the Holder is capable
      of
      evaluating the merits and risks of this investment and protecting its own
      interests. The Holder has had an opportunity to ask questions of, and receive
      answers from, the Company and its officers and employees regarding the business,
      financial affairs and other aspects of the Company, and has further had the
      opportunity to obtain information (to the extent the Company possesses or can
      acquire such information without unreasonable effort or expense) which the
      Holder deems necessary to evaluate an investment in the Company and to verify
      the accuracy of information otherwise provided to the Holder.

     

    4.4
       Disposition of Warrant and Exercise Shares .

     

    (a)
       Except for transfers by the Holder to its affiliates in compliance with
      all applicable securities laws, the Holder further agrees not to make any
      disposition of all or any part of the Warrant or Exercise Shares in any event
      unless and until:

     

    (i)
       The Company shall have received a letter secured by the Holder from the
      Securities and Exchange Commission stating that no action will be recommended
      to
      the Commission with respect to the proposed disposition; or

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

    (ii)
       There is then in effect a registration statement under the Act covering
      such proposed disposition and such disposition is made in accordance with said
      registration statement; or

     

    (iii)
       The Holder shall have shall have furnished the Company with an opinion of
      counsel, reasonably satisfactory to the Company, for the Holder to the effect
      that such disposition will not require registration of such Warrant or Exercise
      Shares under the Act or any applicable state securities laws.

     

    (b)
       The Holder understands and agrees that all certificates evidencing the
      Exercise Shares to be issued to the Holder may bear the following legend (in
      addition to any legend required under applicable state securities laws, the
      Company’s Bylaws, or as provided elsewhere in this Warrant):

     

    THESE
      SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
      (THE “SECURITIES ACT”) OR QUALIFIED UNDER ANY APPLICABLE SECURITIES LAWS. THEY
      MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED, HYPOTHECATED OR TRANSFERRED IN
      THE
      ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND
      QUALIFICATION UNDER SUCH STATE SECURITIES LAWS OR AN OPINION OF COUNSEL OR
      OTHER
      EVIDENCE SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION AND/OR QUALIFICATION
      IS NOT REQUIRED.

     

    5. Adjustments
      and Notices. The Exercise Price and the number of
      Exercise Shares issuable upon exercise of this Warrant shall be subject to
      adjustment from time to time in accordance with this Section 5.

     

    5.1
       Subdivision, Stock Dividends or Combinations . In case the Company
      shall at any time after the commencement of the Exercise Period subdivide the
      outstanding Common Stock or shall issue a stock dividend with respect to the
      Common Stock, the Exercise Price in effect immediately prior to such subdivision
      or the issuance of such dividend shall be proportionately decreased, and in
      case
      the Company shall at any time after the commencement of the Exercise Period
      combine the outstanding shares of Common Stock, the Exercise Price in effect
      immediately prior to such combination shall be proportionately increased, in
      each case effective at the close of business on the date of such subdivision,
      dividend, or combination, as the case may be.

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

    5.2
       Reclassification, Exchange, Substitution, In-Kind Distribution .
      Upon any reclassification, exchange, substitution or other event after the
      commencement of the Exercise Period that results in a change of the number
      and/or class of the securities issuable upon exercise or conversion of this
      Warrant or upon the payment after the commencement of the Exercise Period of
      a
      dividend in securities or property other than shares of Common Stock, the Holder
      shall be entitled to receive, upon exercise or conversion of this Warrant,
      the
      number and kind of securities and property that Holder would have received
      if
      this Warrant had been exercised or converted immediately before the record
      date
      for such reclassification, exchange, substitution, or other event or immediately
      prior to the record date for such dividend. The Company or its successor shall
      promptly issue to Holder a new warrant for such new securities or other
      property. The new warrant shall provide for adjustments, which shall be as
      nearly equivalent as may be practicable to the adjustments provided for in
      this
      Section 5, including, without limitation, adjustments to the Warrant Price
      and
      to the number of securities or property issuable upon exercise or conversion
      of
      the new warrant. The provisions of this Section 5.2 shall similarly apply to
      successive reclassifications, exchanges, substitutions, or other events and
      successive dividends.

     

    5.3
       Consolidation, Merger, Sale and the Like . In case of any (i)
      merger or consolidation of the Company into or with another corporation where
      the Company is not the surviving corporation (but including a merger for the
      purpose of reincorporating in a new domicile) (ii) sale, transfer or lease
      (but
      not including a transfer or lease by pledge or mortgage to a bona fide lender)
      of all or substantially all of the assets of the Company or (iii) sale by
      the Company’s stockholders of 50% or more of the Company’s outstanding
      securities in one or more related transactions, the Company, or such successor
      or purchasing corporation, as the case may be, shall duly execute and deliver
      to
      the Holder hereof a new warrant so that the Holder shall have the right to
      receive upon exercise or conversion of the unexercised or unconverted portion
      of
      this Warrant, at a total purchase price not to exceed that payable upon the
      exercise or conversion of the unexercised or unconverted portion of this
      Warrant, and in lieu of shares of Common Stock theretofore issuable upon
      exercise or conversion of this Warrant, the kind and amount of shares of stock,
      or other securities, money and other property in lieu of such shares of stock,
      receivable upon or as a result of such reorganization, merger, or sale by a
      holder of the number of shares of Common Stock for which this Warrant is
      exercisable or convertible immediately prior to such event. Such new warrant
      shall provide for adjustments that shall be as nearly equivalent as may be
      practicable to the adjustments provided for in this Section 5. The provisions
      of
      this Section 5.3 shall similarly apply to successive reorganizations,
      mergers, and sales.

     

    5.4
       In each case of an adjustment or readjustment of the Exercise Price
      pursuant to this Section 5, the Company, at its expense, shall compute such
      adjustment or readjustment in accordance with the provisions hereof and prepare
      a certificate showing such adjustment or readjustment, and shall mail such
      certificate, by first class mail, postage prepaid, to the Holder at the Holder’s
      address as shown in the Company’s books. The certificate shall set forth such
      adjustment or readjustment, showing in reasonable detail the facts upon which
      such adjustment or readjustment is based, including a statement of, if
      applicable, the type and amount, if any, of other property which at the time
      would be received upon exercise of this Warrant.

     

    6. Fractional
      Shares. No fractional shares shall be issued upon
      the exercise of this Warrant as a consequence of any adjustment pursuant hereto.
      All Exercise Shares (including fractions) issuable upon exercise of this Warrant
      may be aggregated for purposes of determining whether the exercise would result
      in the issuance of any fractional share. No payments shall be made by the
      Company in respect of any fractional shares otherwise issuable pursuant to
      this
      Warrant.

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

    7. No
      Stockholder Rights. This Warrant in and of itself
      shall not entitle the Holder to any voting rights or other rights as a
      stockholder of the Company.

     

    8. Transfer
      of Warrant. Subject to applicable laws, the restriction on transfer
      set forth on the first page of this Warrant and in Section 4.4 and the terms
      of
      any applicable stockholders, investor rights, or similar agreements, this
      Warrant and all rights hereunder are transferable, by the Holder in person
      or by
      duly authorized attorney, upon delivery of this Warrant and the form of
      assignment attached hereto to any transferee designated by Holder, provided
      that
      the transferee shall have signed an investment letter in form and substance
      satisfactory to the Company and agreed to be bound by the provisions of this
      Warrant. Notwithstanding anything to the contrary, no partial transfer of this
      Warrant shall be permitted.

     

    9. Lost,
      Stolen, Mutilated or Destroyed Warrant. If this
      Warrant is lost, stolen, mutilated, or destroyed, the Company may, on such
      terms
      as to indemnity or otherwise as it may reasonably impose (which shall, in the
      case of a mutilated Warrant, include the surrender thereof), issue a new Warrant
      of like denomination and tenor as the Warrant so lost, stolen, mutilated, or
      destroyed. Any such new Warrant shall constitute an original contractual
      obligation of the Company, whether or not the allegedly lost, stolen, mutilated,
      or destroyed Warrant shall be at any time enforceable by anyone.

    

    10.
       Notices, Etc.
All notices and
      other communications required or permitted hereunder
      shall be in writing and shall be sent by express mail or other form of rapid
      communications, if possible, and if not then such notice or communication shall
      be mailed by first-class mail, postage prepaid, addressed in each case to the
      party entitled thereto at the following addresses: (a) if to the Company, to
      Jayhawk Energy, Attention: President, 370 Interlocken Blvd., Suite 400,
      Broomfield, CO 80021 , and (b) if to the Holder, to such address as originally
      furnished to the Company by the Holder, or at such other address as one party
      may furnish to the other in writing. Notice shall be deemed effective on the
      date dispatched if by personal delivery, two days after mailing if by express
      mail, or three days after mailing if by first-class mail.

     

    11.
       Amendment. This
      Warrant may be amended or otherwise modified only by a writing signed by the
      Company and the Holder.

     

    12. Acceptance.
      Receipt of this Warrant by the Holder shall constitute acceptance of and
      agreement to all of the terms and conditions contained herein.

     

    13.
       Governing Law;
      Forum. This Warrant and all rights, obligations,
      and liabilities hereunder shall be governed by the internal laws of the State
      of
      Colorado and any actions related hereto shall be brought in a court of competent
      jurisdiction located in the County of Broomfield, State of
      Colorado.

     

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    IN
      WITNESS WHEREOF, the Company has caused this Warrant to be executed by its
      duly
      authorized officer as of the date first written above.

     

     

    
      	
               

            	
              JAYHAWK
                ENERGY, INC.

            
	
               

            	
              a
                Colorado corporation

            
	
               

            	
               

            
	
               

            	
               

            
	
               

            	
              By:_________________________________________

            
	
               

            	
              Name:
                Lindsay Gorrill

            
	
               

            	
              Title:
                President

            

    

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

    

    NOTICE
      OF EXERCISE

     

    To:           Jayhawk
      Energy, Inc.

     

    1.
       The undersigned hereby elects to purchase ________ shares of the Common
      Stock of Jayhawk Energy, Inc. (the “Company”) pursuant to the terms of
      the attached Warrant, and tenders herewith payment of the exercise price in
      full
      pursuant to the terms of Section 2.1 of the attached Warrant, or by net issue
      exercise pursuant to the terms of Section 2.2 of the attached Warrant, together
      with all applicable transfer taxes, if any.

     

    2.
       Please issue a certificate or certificates representing said shares of
      Common Stock in the name of the undersigned or in such other name as is
      specified below:

     

    
      	
               

            	
              ________________________

            
	
               

            	
              (Name)

            
	
               

            	
              ________________________

            
	
               

            	
              (Address)

            

    

     

    3.
       The undersigned represents that (i) the aforesaid shares of Common Stock
      are being acquired for the account of the undersigned for investment purposes
      only and not with a view to, or for resale in connection with, the distribution
      thereof and that the undersigned has no present intention of distributing or
      reselling such shares; (ii) the undersigned is aware of the Company’s
      business affairs and financial condition and has acquired sufficient information
      about the Company to reach an informed and knowledgeable decision regarding
      its
      investment in the Company; (iii) the undersigned is experienced in making
      investments of this type and has such knowledge and background in financial
      and
      business matters that the undersigned is capable of evaluating the merits and
      risks of this investment and protecting the undersigned’s own interests; (iv)
      the undersigned is an “accredited investor” as defined in Rule 501 under the
      Securities Act of 1933, as amended (the “ Securities Act ”); (v) the
      undersigned understands that the shares of Common Stock issuable upon exercise
      of this Warrant have not been registered under the Securities Act by reason
      of a
      specific exemption from the registration provisions of the Securities Act,
      which
      exemption depends upon, among other things, the bona fide nature of the
      investment intent as expressed herein, and, because such securities have not
      been registered under the Securities Act, they must be held indefinitely unless
      subsequently registered under the Securities Act or an exemption from such
      registration is available; (vi) the undersigned is aware that the aforesaid
      shares of Common Stock may not be sold pursuant to Rule 144 adopted under the
      Securities Act unless certain conditions are met and until the undersigned
      has
      held the shares for the number of years prescribed by Rule 144; and (vii) the
      undersigned agrees not to make any disposition of all or any part of the
      aforesaid shares of Common Stock unless and until there is then in effect a
      registration statement under the Securities Act covering such proposed
      disposition and such disposition is made in accordance with said registration
      statement, or the undersigned has provided the Company with an opinion of
      counsel satisfactory to the Company, stating that such registration is not
      required.

    

    
      	
              ________________________

            	
              ________________________

            
	
              (Date)

            	
              (Signature)

            
	
               

            	
               

            
	
               

            	
              ________________________

            
	
               

            	
              (Print
                name)Exhibit 10.1

                              AMENDED AND RESTATED
                              EMPLOYMENT AGREEMENT

This Amended and Restated Employment Agreement (the "Agreement") is entered into
between Innovex, Inc., a Minnesota corporation (collectively, with its
subsidiaries, affiliates and parent companies, "Innovex" or the "Company"), and
Terry Dauenhauer ("Employee") as of January 16, 2008.

WHEREAS, the Employee and the Company entered into an Employment Agreement dated
as of October 19, 2005 (the "Existing Agreement"); and

WHEREAS, the Employee has been employed as Innovex's Senior Vice-President since
January 12, 2004, Innovex desires to continue to employ the Employee in the
capacity of Chief Executive Officer and the Employee agrees to continue his
employment under the terms and conditions of this Agreement, which amends and
replaces the Existing Agreement; and

WHEREAS, Innovex is providing consideration to the Employee consisting of
increased protection in the event of a Change in Control, enhanced severance
benefits, its willingness to retain him as its employee, its payment of
compensation and provision of benefits to him, his exposure and access to its
valuable Customers and other business contacts and trade secrets, his
specialized training in connection with his employment, and all other benefits
associated with this Agreement and his employment with Innovex.

NOW THEREFORE, in consideration of the mutual covenants, terms and conditions
herein contained, it is hereby agreed by and between the parties hereto as
follows:

                                   DEFINITIONS

Change in Control. A Change in Control shall be deemed to have occurred if any
of the following occur:

(1)    Any "Person" (as defined in Section 13(d) of the Securities Exchange Act
       of 1934, as amended, or any successor statute thereto (the Exchange Act))
       acquires or becomes a beneficial owner (as defined in Rule 13d-3 or any
       successor rule), directly or indirectly, of securities of the Company
       representing 20% or more of the combined voting power of the Company's
       then outstanding securities entitled to vote generally in the election of
       directors (Voting Securities) or 20% or more of the outstanding shares of
       common stock of the Company (Common Stock), provided, however, that the
       following shall not constitute a Change in Control:

       (a) any acquisition or beneficial ownership by the Company or a
       subsidiary of the Company;

       (b) any acquisition or beneficial ownership by any employee benefit plan
       (or related trust) sponsored or maintained by the Company or one or more
       of its subsidiaries;

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(2)    Continuing Directors shall not constitute a majority of the members of
       the Board of Directors of the Company. Continuing Directors shall mean:
       (a) individuals who, on the date hereof, are directors of the Company,
       (b) individuals elected as directors of the Company subsequent to the
       date hereof for whose election proxies shall have been solicited by the
       Board of Directors of the Company, or (c) any individual elected or
       appointed by the Board of Directors of the Company to fill vacancies on
       the Board of Directors of the Company caused by death or resignation (but
       not by removal) or to fill newly-created directorships, provided that a
       Continuing Director shall not include an individual whose initial
       assumption of office occurs as a result of an actual or threatened
       election contest with respect to the threatened election or removal of
       directors (or other actual or threatened solicitation of proxies or
       consents) by or on behalf of any person other than the Board of Directors
       of the Company;

(3)    Consummation of a reorganization, merger or consolidation of the Company
       (other than a merger or consolidation with a subsidiary of the Company),
       unless immediately following such reorganization, merger or
       consolidation, all or substantially all of the persons who were the
       beneficial owners, respectively, of Voting Securities and Common Stock
       immediately prior to such reorganization, merger or consolidation
       beneficially own, directly or indirectly, 51% or more respectively of (a)
       the combined voting power of the then outstanding Voting Securities
       entitled to vote generally in the election of directors, and (b) the then
       outstanding shares of Common Stock of the corporation resulting from such
       reorganization, merger or consolidation in substantially the same
       proportions as their ownership of the Voting Securities and Common Stock,
       as the case may be, immediately prior to such reorganization, merger or
       consolidation; or

(4)    Consummation of a liquidation or dissolution of the Company or the sale
       or other disposition of all or substantially all of the assets of the
       Company (in one or a series of transactions), other than to a
       wholly-owned subsidiary of the Company.

Notwithstanding anything stated above, a Change of Control event shall not be
deemed to occur with respect to the Employee if the acquisition or beneficial
ownership of the 20% or greater interest referred to in (1) is by the Employee
or a group, acting in concert, that includes the Employee or a majority of the
then combined voting power of the then outstanding Voting Securities (or voting
equity interests) of the surviving corporation or of any corporation (or other
entity) acquiring all or substantially all of the assets of the Company shall,
immediately after a reorganization, merger, consolidation or disposition of
assets referred to in (3) or (4) of this definition, be beneficially owned,
directly or indirectly, by the Employee or by a group, acting in concert, that
includes the Employee.

Conflicting Organization. A Conflicting Organization is any person or
organization (including Innovex Customers and Vendors) engaged in or about to
become engaged in, research, development, production, marketing, leasing,
selling or servicing of a Conflicting Product in any market in which Innovex is
doing or about to be doing business as of the Employee's termination date.

Conflicting Product. A Conflicting Product is any product, product line,
process, system or service (including any component thereof or research to
develop information useful in connection with a product or service) which is the
same, similar to or competitive with (whether based on similar or alternative
technologies) any product, product line, process, system or service which the
Employee or any person under the Employee's direct or indirect supervision
designed, developed, marketed, promoted, sold, serviced, provided or worked on
in any other capacity on behalf of Innovex during the two years preceding the
Employee's termination date, including any product, product line, process,
system or service in existence or under development or about which the Employee
possesses Confidential Information.

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Customer or Vendor. A Customer or Vendor is any person or entity with whom the
Employee or anyone under his direct or indirect supervision had any direct or
indirect contact on behalf of Innovex in connection with Innovex's products or
services.

Disability. The Employee's Disability shall occur if he becomes unable to
substantially, with or without reasonable accommodation, perform his duties
under this Agreement, by reason of any medically determinable physical or mental
impairment, for at least 180 consecutive days. The existence of a Disability
will be determined pursuant to the standards for entitlement for long-term
disability benefits set forth in Innovex's Long-Term Disability Plan.

Good Cause. Good Cause shall exist if the Employee has (a) engaged in theft,
embezzlement, other act of dishonesty, moral turpitude, or any willful violation
of the Securities Exchange Act of 1934, as amended; (b) materially breached any
of his obligations under this Agreement; or (c) engaged in gross mismanagement
or gross negligence in the performance of his duties hereunder. With respect to
(b) and (c), Employee shall be given written notice of the facts believed to
constitute grounds for termination and a 30-day period in which to cure those
grounds to the satisfaction of the Board.

Good Reason. Good Reason shall exist if the Employee experiences (a) a material
reduction in his compensation or responsibilities (except if such change is made
available as reasonable accommodation in the event of Employee's Disability or
other inability to perform his duties due to a physical or mental condition) or
(b) a requirement that he relocate to a workplace more than 50 commuting miles
from his principal residence, provided however that Good Reason shall not exist
following a Change in Control if the Employee retains responsibility for a
division, subsidiary or other operational unit or entity that is substantially
similar to or larger than Innovex as it existed prior to the Change in Control.

Good Will. Good Will is Innovex's valuable Customer, Vendor and other industry
relationships which it is the responsibility of the Employee and other Innovex
employees to maintain, develop, nurture, improve and expand in connection with
the products and services provided to said Customers by Innovex or purchased
from said Vendors.

1.     Employment and Term. Innovex agrees to employ the Employee as its Chief
       Executive Officer, reporting to the Board of Directors (the "Board"), and
       the Employee agrees to serve Innovex in such capacities on the terms and
       conditions set forth herein for the period commencing on the date of this
       Agreement and continuing until terminated by the Employee or Innovex in
       accordance with paragraph 5.

2.     Duties. The Employee shall be responsible for the management of
       manufacturing operations, process engineering, supply chain management,
       human resources management and such other duties and responsibilities as
       may be assigned to him by the Board. Employee shall faithfully and
       diligently do and perform all such acts and duties and furnish such
       services for Innovex as the Board shall direct, promote the interest and
       welfare of Innovex and its business, be familiar with Innovex's policies
       that relate to his duties and abide by these policies, and not
       intentionally do anything which may cause loss or damage to Innovex, its
       business, business reputation or Good Will. He shall devote his full
       time, energy and skill to the business of Innovex, except for vacations,
       absences made necessary because of illness, and service on other
       corporate, civic, or charitable boards or committees not significantly
       interfering with his duties hereunder. Employee shall not engage in any
       other business or nonprofit activity during his employment with Innovex
       except as may be approved in advance by the Board; provided, however,
       that Employee shall not be precluded from owning up to 5% of the issued
       and outstanding capital stock or other interest of an entity which is not
       a Customer, Vendor or Conflicting Organization.

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3.     Compensation. In return for his services to Innovex, Employee shall
       receive compensation and benefits which shall include the following:

3.1    Salary. The Employee shall receive a semi-monthly base salary of $11,875
       ($285,000 annualized). Salary reviews shall occur at least once per year,
       and the Board shall grant Employee such salary increases based upon the
       Employee's performance as the Board, in its sole discretion, deems
       appropriate.

3.2    Bonus. For each fiscal year during Employee's employment, Employee will
       be eligible for a bonus award pursuant to a bonus plan determined by the
       Board. Bonus awards will be subject to the terms of the applicable bonus
       plan and are conditioned upon Employee's continued employment with
       Innovex through the last day of the fiscal year on which the bonus is
       based except as otherwise permitted under 5.2. A determination as to
       whether the bonus objectives have been met will be made, in the sole
       discretion of the Board, by comparing Employee's and Innovex's actual
       performance for the fiscal year to the performance measures defined in
       the bonus plan at the beginning of the fiscal year. A bonus awarded
       pursuant to this 3.2 may take the form of cash or stock options, subject
       to the applicable stock option plans, or a combination of the two. A
       bonus awarded to the Employee for any fiscal year will be paid within two
       and a half months following the end of said year.

4.     Benefits and Expenses.

4.1    Employee Benefits. The Employee shall be eligible for such employee
       benefits as are offered by Innovex to other employees. Innovex may
       terminate any or all such plans at any time and may choose not to adopt
       any additional plans. Employee's rights under any Innovex plans and
       policies shall be governed solely by their terms. Employee shall be
       eligible for four weeks of vacation annually, subject to the parameters
       set forth in Innovex's vacation policy.

4.2    Reimbursable Business Expenses. In addition to salary and other benefits,
       Innovex will advance or reimburse Employee for any ordinary, necessary
       and reasonable expenses incurred by him in the course of his employment.
       Innovex shall reimburse the Employee upon his submission of any records
       and documentation required to substantiate said expenses.

4.3    Company Vehicle. Innovex will provide Employee with an annual vehicle
       allowance to be prorated over the Company's regular pay periods
       throughout the year. Employee's vehicle allowance will be in accordance
       with and subject to the Company Vehicle Policy (Exhibit 2).

4.4    Indemnification. Innovex will indemnify the Employee from loss and
       expenses arising out of his conduct as an officer of Innovex to the
       fullest extent permitted by the Company's corporate articles, by-laws,
       Board resolutions, applicable insurance policy and Minnesota law.

4.5    Relocation Expenses. In the event the Employee's employment is terminated
       by Innovex without Good Cause or by Employee for Good Reason, Innovex
       will provide Employee relocation expenses, back to the United States
       location of Employee's choice, consisting solely of (i) business class
       airfare for Employee and his spouse; (ii) en route normal travel
       expenses; (iii) sea transportation of personal belongings (including
       packing and unpacking); and (iv) up to two (2) weeks' temporary lodging
       costs. In no event shall such costs exceed $50,000.

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5.     Termination of Employment.

5.1    Voluntary Resignation. The Employee may resign his employment with
       Innovex for any reason effective upon 120 days' advance written notice to
       the Board. During the notice period he will provide all reasonable aid
       and assistance in hiring, training, and introducing his replacement as
       may be requested by Innovex and will undertake such other
       responsibilities as Innovex may direct. Alternatively, Innovex reserves
       the right to terminate Employee's employment, effective upon written
       notice to Employee, at any time during the notice period provided,
       however, that base salary and Innovex's share of his group health, dental
       and life premiums as may be in effect, subject to the terms of the plans,
       applicable law and 5.6 and 5.7 hereof, will continue for the duration of
       the notice period. No other benefits will be payable to Employee during
       the notice period.

5.2    Involuntary Termination and Resignation for Good Reason. Employee's
       employment may be terminated (a) by Innovex for other than Good Cause,
       effective upon the date specified in Innovex's written notice of
       termination to Employee, (b) by Innovex for Good Cause, effective upon
       Employee's receipt of Innovex's written notice of termination, or (c) by
       the Employee for Good Reason, effective upon the Board's receipt of
       Employee's written notice of termination, which shall include a detailed
       explanation as to why he believes Good Reason exists. If Employee's
       employment is terminated for other than Good Cause or for Good Reason
       under this 5.2 and the termination is not related to a Change in Control,
       base salary and the employer share of Employee's Innovex group health and
       dental premiums will continue to be paid for 12 months from Employee's
       termination date, subject to 5.6, 5.7 and Employee's other obligations
       hereunder. In addition, if the Employee's termination occurs partway
       through a fiscal year, the Board may award a prorated bonus to Employee
       if (i) Employee would have received a bonus if he had remained in
       Innovex's employ for the full fiscal year and (ii) the Board determines
       that Employee's contribution to Innovex prior to his termination date
       warrants a prorated bonus award. Only the benefits described in this 5.2
       will be payable to Employee during the severance period. Termination for
       other than Good Cause shall include non-Good Cause termination due to
       performance issues and any other non-Good Cause termination not described
       in 5.3, 5.4 or 5.5. If the Employee's termination is for Good Cause, his
       base salary and benefits will be paid only through his termination date.

5.3    Change in Control.

5.3.1. If Employee's employment is terminated without Good Cause or Employee
       resigns for Good Reason within 18 months following a Change in Control,
       he will receive (a) continuation of his base salary for 18 months, (b)
       payment of the employer share of his group health and dental premiums for
       up to 12 months, and (c) immediate 100% vesting of any unvested stock
       options (the "Parachute Payments"). Approval of this Agreement by the
       Compensation Committee of the Board shall be deemed approval of the
       vesting of options as provided in the immediately preceding sentence for
       all purposes under Innovex stock purchase and stock option plans and
       programs. Notice of termination or resignation shall be in writing to the
       applicable party. Employee's right to the benefits provided in this 5.3.1
       is contingent upon him not resigning his employment from Innovex within
       90 days following a Change in Control, the requirements of 5.6 and 5.7,
       and his compliance with his other obligations hereunder.

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5.3.2. If the Employee or Innovex would be subject to excise tax or denial of
       deduction under Sections 280G and 4999 of the Internal Revenue Code as a
       result of the Parachute Payments described in 5.3.1, Innovex shall reduce
       or eliminate such payments to the extent necessary to reduce the
       aggregate "present value" (as defined in Section 280G(d)(4) of the Code)
       of such payments to $100 less than an amount equal to three times
       Employee's "base amount" (as defined in 280G(b)(3)(a) and (d)(1) and (2)
       of the Code) so that Employee is not subject to tax under Section 4999
       and no Innovex deduction is disallowed pursuant to Section 280G(a).

5.4    Disability. The Employee's employment will terminate if he comes under a
       Disability, is unable to perform his duties hereunder and Innovex is
       unable, because of undue hardship, to provide reasonable accommodations
       to enable him to continue his employment. Accommodations offered by
       Innovex could include change of responsibilities or title. In the event
       of Employee's Disability, his benefits will be those available under
       group short-term and long-term disability plans sponsored by Innovex,
       except as provided in the following sentence. If Employee is covered
       under a group short-term disability plan, Innovex will continue to pay
       40% of his base salary for the duration of his short-term disability
       period unless the plan would cause this amount to reduce his short-term
       disability benefits. If he is covered by a long-term disability plan, he
       will not be eligible for any additional payments from Innovex during the
       period of such coverage. Innovex will pay Employee's group health and
       dental premiums during any period of group short or long term disability
       coverage for up to 18 months, to the extent such premiums are not paid
       under any group health, disability or other policy maintained by Innovex
       under which the Employee is a Participant, Employee is not eligible to
       participate in any other group plans, and Employee continues to be
       eligible to participate in said Innovex plans.

5.5    Death. If Employee dies during his employment, Innovex will pay his
       estate the biweekly installment otherwise due and payable at the end of
       that biweekly period in which the Employee shall have died, and
       thereafter no further compensation shall be payable by Innovex to
       Employee hereunder, except for normal and customary life insurance
       benefits and vested pension benefits, if any.

5.6    Payment Conditions. Any payments made to Employee pursuant to 5.1, 5.2,
       5.3 or 5.4 will be reduced by (a) any other benefits payable to Employee
       directly or indirectly from Innovex (not including Social Security
       benefits), such as payments under any disability plan or policy the
       premiums of which have been paid by Innovex or any severance or other
       payments to Employee under any company plan or policy and (b)
       unemployment benefits received by the Employee. In addition, as a
       condition of receiving any such payments, or any payments under Section
       4.5, Employee will be required to sign a standard release agreement in
       which he releases all claims which he might have against Innovex or any
       affiliate, employee, shareholder, director, officer or agent of Innovex
       (along with other standard releasees affiliated with Innovex). Innovex
       will provide said release agreement to the Employee at the time he is
       notified of his termination without Good Cause, following his notice of
       resignation for Good Reason or during the notice period following his
       voluntary resignation. As part of the release agreement, Employee will be
       required to (i) cooperate with Innovex with respect to any business
       matters about which he has knowledge, including any litigation or
       threatened litigation, (ii) not cooperate with any plaintiffs or
       claimants against Innovex unless required by law to do so, (iii) not make
       negative or derogatory comments about Innovex or any other releasee and
       (iv) affirm his post-termination obligations under this Agreement. The
       release agreement will also provide that if the Employee violates any
       obligation of his under paragraphs 6, 7 or 8 of this Agreement, all
       payments and benefits to him will immediately cease. The release
       agreement is attached as Exhibit 3, provided however that Exhibit 3 may
       be revised to comply with current law or to provide for unforeseen
       circumstances.

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5.7    Group Health and Dental Coverage. The Employee's right to Innovex's
       payment of the employer share of his group health and dental premiums is
       subject to his timely election to continue his coverage under COBRA and
       applicable state law, his continued eligibility under the plans, his lack
       of eligibility to participate in any other group plans, and deduction of
       his share of the premiums from his severance payments.

6.     Confidentiality. During his employment with Innovex, the Employee has had
       and will continue to have access to and become acquainted with trade
       secrets and other proprietary and confidential information owned by
       Innovex and used in the operation of Innovex's business. "Trade secrets
       and other proprietary and confidential information" shall mean any
       information or knowledge possessed by Innovex which is not generally
       known to or readily ascertainable by outside parties who can obtain
       economic value from its use or disclosure. This shall include, without
       limitation, inventions, discoveries, ideas, know-how, research and
       development information, designs, specifications, formulas, patterns,
       compilations, computer programs, devices, methods, techniques, processes,
       data, improvements, ideas, algorithms, computer processing systems,
       drawings, proposals, job notes, reports, records, specifications,
       information concerning any matters relating to the business of Innovex
       and any of its customers, vendors, customer and vendor contacts,
       licenses, the prices it obtains or has obtained for the licensing of its
       software products and services, or any other non-public information
       concerning the business of Innovex and its good will. Confidential
       information also includes the terms of this Agreement and any release
       agreement provided to Employee by Innovex or entered into between the
       Employee and Innovex, except as otherwise provided in 6.1 or 8.2.

6.1    Nondisclosure. Employee shall not disclose or use in any manner, directly
       or indirectly, any such trade secrets or other proprietary and
       confidential information either during the term of his employment or at
       any time thereafter, except as required (a) in the course of his
       employment with Innovex or (b) by applicable law, including the Exchange
       Act, contingent upon establishment of confidentiality protections
       satisfactory to Innovex.

6.2    Information Disclosed Remains Company Property. All ideas, concepts,
       information, and written material disclosed to Employee by Innovex or
       acquired from a Customer or prospective Customer of Innovex, are and
       shall remain the sole and exclusive property and proprietary information
       of Innovex or such Customers, and are disclosed in confidence by Innovex
       or permitted to be acquired from such Customers in reliance on Employee's
       agreement to maintain them in confidence and not to use or disclose them
       to any other person except in furtherance of Innovex's business.

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6.3    Return of Materials. Employee agrees that, upon request of Innovex or
       upon termination of employment, Employee shall turn over to Innovex
       originals and any copies of all documents, files, disks or other computer
       media, or other property or material in his possession or under his
       control that (a) may contain or be derived from ideas, concepts,
       creations, or trade secrets and other proprietary and confidential
       information as described in this section or (b) are connected with or
       derived from Employee's services to Innovex. Employee agrees to certify
       in writing that he has complied with this 6.3 at the time of his
       termination of employment.

6.4    Prohibition. Employee certifies and agrees that to the best of his
       knowledge he (a) does not possess confidential or proprietary documents
       or property of any prior employer and (b) while in Innovex's employ, he
       has not and will not use or disclose the protected trade secrets of any
       prior employer or other entity. Trade secrets for purposes of this
       prohibition are defined in (i) Minnesota Statutes Section 325C.01, Subd.
       5 and (ii) any agreement with a prior employer or any other person or
       entity in which the Employee is obligated not to use or disclose that
       person or entity's trade secrets. The Employee certifies that he has
       provided a copy of any such contractual obligation to Innovex.

7.     Inventions and Creations. Any and all inventions, discoveries,
       improvements, or creations (collectively, "Inventions") made or conceived
       by Employee during the period of his employment by Innovex shall be the
       property of Innovex. Employee hereby assigns to Innovex all of his rights
       to any such Inventions and agrees to promptly disclose any such
       Inventions in writing to Innovex. Employee further agrees to execute and
       assign any and all proper applications, assignments and other documents
       and to render all assistance reasonably necessary to apply for patent,
       copyright or trademark protection in all countries.

7.1    Exceptions. Paragraph 7 does not apply to an Invention for which no
       equipment, supplies, facility or trade secret information of Innovex was
       used and which was developed entirely on Employee's own time and (a)
       which does not relate (i) directly to the business of Innovex or (ii) to
       Innovex's actual or demonstrably anticipated research or development; or
       (b) which does not result from any work performed by Employee for
       Innovex. Exhibit 3 hereto constitutes a complete list of the inventions
       made by Employee prior to employment by Innovex as to which he has at
       least partial ownership. Innovex shall have no claim of right or title to
       the inventions listed on Exhibit 3.

7.2    Definition of Inventions. For purposes of this Agreement, the term
       "Inventions" shall mean discoveries, improvements, and ideas (whether or
       not shown or described in writing or reduced to practice) and works of
       authorship, whether or not patentable or copyrightable, which (a) relate
       directly to the business of Innovex; (b) relate to Innovex's actual or
       demonstrably anticipated research or development; or (c) result from any
       work performed by Employee for Innovex, or for which equipment, supplies,
       facilities or trade secret information of Innovex is used, or which is
       developed on Innovex time.

7.3    Non-Covered Inventions. Should the Employee make a discovery, improvement
       or Invention that is not covered by the provisions of this Agreement (a
       "Non-Covered Invention"), the Employee may, at his sole option, disclose
       the Non-Covered Invention to Innovex and Innovex shall then have a right
       of first refusal to enter into a license agreement with Employee to
       acquire rights thereunder. If negotiations extend for more than six
       months from the date of disclosure to Innovex, Employee shall be free to
       submit the Non-Covered Invention to others without obligation to Innovex
       and with respect to such Non-Covered Invention.

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8.     Non-Competition, Non-Solicitation and Non-Interference.

8.1    Duty of Loyalty. The Employee acknowledges that he has a duty of loyalty
       to Innovex during his employment. Therefore, during his employment, he
       will not directly or indirectly plan, organize, own, perform services for
       or in any way associate with any Conflicting Organization or conspire
       with others to do so.

8.2    Non-Competition. For one year following the termination of his employment
       with Innovex for any reason, the Employee will not directly or
       indirectly, as a shareholder, director, officer, employee, owner, agent,
       associate, consultant or in any other capacity, plan, organize, own,
       perform services for or in any other way associate with any Conflicting
       Organization. During this one-year period, the Employee also agrees to
       provide (a) a copy of this agreement to any prospective employer or other
       person or entity for which he intend to perform services and (b) written
       notification to the CEO of Innovex of any new employment or other
       business engagement of his. Because Innovex has no interest in the
       Employee's post-Innovex activities if those activities do not involve
       Innovex's Confidential Information or Good Will and are not otherwise
       harmful to Innovex, Innovex's CEO, in his sole discretion, will consider
       modification of the obligation in this 8.2 with respect to a specific
       position with a specific employer, entity or person following Employee's
       written request for same and his cooperation in providing any requested
       information in connection with such request. The CEO will agree to the
       requested modification or a variation thereof only if he determines that
       the modification will not be harmful to Innovex's business interests and
       will not violate its protectable interests in its Confidential
       Information and Good Will. The CEO will notify the Employee in writing of
       his decision, which will be final.

8.3    Non-Solicitation. For one year following the termination of Employee's
       employment with Innovex for any reason, he agrees that he will not,
       directly or indirectly, on his own behalf or on behalf of any Conflicting
       Organization, solicit:

8.3.1  any Customer with whom he had contact during the two-year period prior to
       his termination date or about which he possesses Confidential
       Information, for the purpose of directly or indirectly (a) marketing,
       promoting or encouraging the use of a Conflicting Product, (b) providing
       advice or assistance in connection with the marketing, promotion or use
       of a Conflicting Product, or (c) attempting to interfere with, or
       preventing or diverting the sale or purchase of, any product being
       designed, developed, sold or marketed by Innovex;

8.3.2  any Innovex employee or agent to terminate his or her employment or
       agency with Innovex; or

8.3.3  any Vendor that provides an exclusive or unique service or product to
       Innovex for the purpose of obtaining similar products or services for a
       Conflicting Organization.

8.4    Employee's Acknowledgments and Agreements. Employee acknowledges and
       agrees that the products developed by Innovex are or are intended to be
       marketed and licensed to Customers in various markets throughout the
       world. Employee further acknowledges and agrees to the reasonableness of
       the covenants contained in this Section 8, including the reasonableness
       of the geographic area and duration of time which are part of said
       covenant. Employee also acknowledges and agrees that this covenant will
       not preclude Employee from becoming gainfully employed following
       termination of employment with Innovex. Employee certifies that he is not
       currently subject to a noncompetition agreement with a former employer
       which prohibits him from working for Innovex.

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8.5    Time Periods After a Change in Control. If Employee's employment
       terminates pursuant to 5.3.1, the time periods in 8.2 and 8.3 shall be
       extended from one year to 18 months.

9.     Miscellaneous Provisions.

9.1    Remedies, Injunction. In the event of a breach or threatened breach by
       Employee of any provision of this Agreement which could cause irreparable
       injury and damage to Innovex not compensable by money damages, Employee
       agrees that Innovex, in addition to and not in limitation of any other
       rights, remedies or damages available to Innovex at law or in equity,
       shall be entitled to injunctive and other equitable relief to prevent or
       restrain any such breach by Employee or by Employee's partners, agents,
       representatives, servants, employees, and/or any and all persons directly
       or indirectly acting for or with Employee.

9.2    Severability. If any provisions of this Agreement are held to be invalid
       or unenforceable in whole or in part, those provisions to the extent
       enforceable and all other provisions shall nevertheless continue to be
       valid and enforceable as though the invalid or unenforceable parts had
       not been included in this Agreement. If any provision relating to the
       time period or scope of a restriction shall be declared by a court of
       competent jurisdiction to exceed the maximum time period or scope such
       court deems reasonable and enforceable, then the time period or scope of
       the restriction deemed reasonable and enforceable by the court shall
       become and shall thereafter be the maximum time period or the applicable
       scope of the restriction.

9.3    Governing Law. This Agreement shall be construed and enforced according
       to Minnesota law, except where federal law applies. All legal actions
       arising under this Agreement shall be instituted in, and both Innovex and
       Employee consent to, the jurisdiction of the courts of Hennepin County,
       Minnesota or the U.S. District Court for the District of Minnesota.

9.4    Survivability. The covenants and agreements of paragraphs 5 and 9, where
       applicable, and paragraphs 6, 7 and 8 of this Agreement shall survive the
       termination of the Employee's employment for any reason and shall not be
       terminated by a Change in Control, including but not limited to any
       merger or consolidation whereby Innovex is not the surviving corporation
       or any transfer of substantially all the assets of Innovex, unless no
       transferee or successor continues to carry on the business activities of
       Innovex. In the event of any such event , the provisions of this
       Agreement shall inure to the benefit of and be binding upon the
       surviving, resulting or transferee entity .

9.5    Integration. The terms of this Agreement constitute the entire agreement
       between Innovex and the Employee on the subjects addressed herein and
       supersede any previous conflicting oral or written communications,
       representations, policies or agreements. This Agreement amends and
       replaces the Existing Agreement in its entirety.

9.6    Amendment or Termination. This Agreement may not be terminated, amended,
       or modified in any way, except in writing signed by both Innovex and
       Employee.

<PAGE>

9.7    Waiver. Innovex's waiver or failure to enforce the terms of this
       Agreement or any similar agreement in one instance shall not constitute a
       waiver of its rights hereunder with respect to other violations of this
       or any other agreement.

9.8    Tax Withholding. Innovex will withhold from any payment of benefits under
       this Agreement (and forward to the appropriate taxing authority) any
       taxes required to be withheld under applicable law.

9.9    Agreement Read, Understood and Deemed Reasonable. Employee has carefully
       read and considered all provisions of this Agreement and agrees that all
       of the restrictions set forth are reasonable and reasonably required for
       the protection of Innovex's interests.

AGREED:

Dated:1/16/08                          /s/ Terry Dauenhauer
                                       ------------------------------
                                       Terry Dauenhauer

                                       INNOVEX, INC.

Dated:1/16/08                          /s/ William Murnane
                                       ------------------------------
                                       William Murnane
                                       Chairman of the Board

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