Document:

Exhibit 10.1
        
	
          25 December 2009
        	

        
	

        	
           
        
	
          Innovex (Thailand) Limited
        	
          Innovex, Inc.
        
	
          
            79, Moo 4, EPZ Zone 2, NRIE
          

        	
          3033 Campus Drive
        
	
          T. Ban Klang, Amphur Muang
        	
          Suite E180
        
	
          Lamphun 51000
        	
          Plymouth, Minnesota
        
	
          Thailand
        	
          USA
        

    

    
      Attn: Randy Acres, Chief Financial Officer
    

    
      

      

      Dear Sir,  
    

    
      Re: Mandate Letter in relation to the restructuring of
      Innovex, Inc
    

    
      Thank you for discussing with Standard Chartered Bank (Hong Kong)
      Limited (“SCB” or “us”) the opportunity to work with Innovex, Inc.
      (“Innovex” or the “Company”) on a potential restructuring of the Company
      and its subsidiaries.  We are writing to express our interest to work
      with you to support the Company in finalising its turnaround plan, in
      restructuring its capital structure, and in considering to provide an
      appropriate financing package.
    

    
      

      Background
    

    
      We understand from you that the Company is in discussions with its
      lenders but has not come to an agreement on a restructuring or
      settlement package as yet.  The Company expects to negotiate a
      significant discount on the total outstanding debt to a one-time
      settlement or a restructuring at levels around 25 percent of the current
      outstanding debt with a principal balance of about Thb 1.9 Billion. SCB
      would consider to purchase the debt directly from BAY and TMB and
      thereby become a secured financial creditor of Innovex Thailand Limited
      ("InnovexTH") taking the place of BAY and TMB. In addition, equity funds
      and working capital of US$ 10 Million are expected to be injected to
      support a revival of the operations as part of the restructuring.
      Alternatively, the company can obtain priority working capital finance
      (with priority over cash flows and assets over the existing secured
      lenders) without refinancing existing secured lenders. We understand
      from the Company that there is sufficient demand from its customer base
      to support a revival of the business should the requisite working
      capital funds be made available.
    

    
      In order to revive the business, the Company will require refinancing
      existing creditors down to a sustainable level and source appropriate
      working capital finance. We will consider underwriting such financing in
      combination of a debt and equity package.
    

    
      

      Scope of our involvement
    

    
      We will look to engage with management to confirm the viability of the
      turnaround strategy by testing the commercial assumptions through a
      market due diligence, technical assessment and business valuation. We
      will also try and determine the peak cash requirements of the business
      during its turnaround that will need to be factored in any financing
      package.   Concurrently we will engage an internationally recognized
      appraiser to value the Company’s assets and assess its liquidation
      value. We will also engage lawyers to advise us on the appropriateness
      of the proposed legal process through which the Company may be
      restructured and also comment on due diligence of the Company and its
      existing contracts and applicable regulatory approvals/licenses.  We
      will engage accountants to carry out a review of the financial position
      and historical operating performance.
    

    
      
        

        

      

      
        

        

        
          

        

      

      
        

        

      

    

    

    

    
      Based on a plan agreed with the Company, we may advise on an appropriate
      recast of the balance sheet and refinancing plan for the existing
      creditors of the Company.  If considered appropriate we will support the
      Company in holding discussions with the creditors or the appropriate
      steering committee.
    

    
      If the negotiations with the lenders are successful and results of the
      due diligence exercise are satisfactory we may, at our discretion, seek
      final internal approvals to extend a suitable financing package to the
      Company.
    

    
      Our financing package is likely to be contingent on the successful
      acquisition of 100% of all secured debts. Additional working capital is
      likely to be structured as debt, also secured on the Company’s assets.
      We will also look to convert some of the existing outstanding debt in to
      equity of the Company through a restructuring, with the view that we as
      investor hold a significant majority of the equity in the
      Company.  Innovex will need to examine with its lawyers the possible
      approaches to providing SCB with the opportunity to acquire equity in
      the U.S. parent. Our structure may be contingent on management and
      sponsors to inject financial support to align their interests with SCB.
      We may allow an earn-out option to management and sponsor, wherein they
      can gain some of the shares based on achieving pre-set operational
      milestones to be agreed upon between the company and SCB.  Any financing
      package structure will be subject to compliance with any relevant
      applicable laws, rules and regulations.
    

    
      There are a number of questions on the financials and the turnaround
      strategy that we would seek answers for once we engage fully with the
      Company before we are able to finalise our package. At this stage we
      have financial projections from the Company that we have not been able
      to verify without a due diligence.  As a result we have run our
      preliminary analysis on the basis of the numbers provided by the
      Company.  This implies that for a financing package to work for us as an
      investor we will be seeking to confirm certain key assumptions.  If
      these key assumptions change or are not justifiable, the deal may not be
      possible or alternatively the terms being offered to the creditors may
      have to be significantly reduced.  The key assumptions are :
    

    	
        Value of the Company’s assets, mainly its production facilities, on a
        consolidated forced sale value (as if sold on a block basis) are not
        less than US$ 35 Million, to be appraised by a market expert chosen by
        SCB
      
	
        We have not been disclosed the sale volumes and price data supporting
        the projections and also the data supporting the gross margins yet; we
        will need this data to understand the reasonableness of the
        projections.
      
	
        there are significant tax losses that will provide shelter over the
        life of our investment
      
	
        The Company understands that a condition of going forward will be the
        agreement of the two banks to transfer the loans to SCB for
        consideration of not more than 25% of the outstanding loan balances
        and satisfactory settlement arrangements for the approximately 400
        trade creditors and unsecured debt accounting for approximately USD 20
        million of accounts payable as at 30 September 2009.
      

    
      
        

        

      

      
        

        

        
          

        

      

      
        

        

      

    

    

    

    
      Exclusivity and Fees
    

    
      We will look to work with the Company on an exclusive basis for a period
      of up to 90 days (“Exclusivity Period”) from the date of acceptance of
      this mandate letter, beyond which time any extension must be mutually
      agreed. The Company will ensure that no other debt or securities are
      solicited, mandated, issued, syndicated or privately placed in the
      market, until the validity of this mandate letter expires.
    

    
      The fees payable by the Company and the milestones are as follows:
    

    
    	
          Milestones
        	
          Fees
        
	
          On acceptance of this mandate letter
        	
          The Company will be required to pay US$50,000 fees in advance.
        
	
          On a term sheet being agreed by the Company and / or the sponsor and
          SCB
        	
          The Company will be required to pay SCB a fee of US$25,000 in
          advance.
        
	
          On agreement being reached on a settlement or a restructuring by the
          Company with its lenders, or SCB’s acquisition of secured claims,
          whichever comes first
        	
          The Company will be required to pay SCB a fee of US$25,000
          immediately and not later than three business days after reaching
          the agreement.
        

    

    
      Once the Company has negotiated with the creditors or once it has signed
      a term sheet with SCB, and the Company decides not to proceed with SCB
      for the restructuring finance but instead proceeds with any other source
      of funding within a period of two years from the date of this mandate
      letter, then the Company will pay SCB a Break Fee of US$500,000
      immediately.  The Break Fee will not be applicable if the Company
      proceeds with another investor in the event SCB is not able to follow
      through the financing within the validity period specified in an agreed
      term sheet.  However the Break Fee will be applicable if SCB cannot
      proceed (after agreeing a binding term sheet) for reasons beyond its
      control (e.g. unsatisfactory due diligence results, any material event
      affecting the value of the business, creditors withdrawing on agreed
      terms etc).
    

    
      All out-of-pocket expenses incurred by SCB, which shall include, but not
      be limited to, legal, accounting and tax advisory fees and expenses,
      traveling, printing, telecommunications, signing and publicity, shall be
      reimbursed by the Company on a monthly basis. We will agree a budget for
      the due diligence with the Company in advance. The Company will be
      required to pay the budgeted amount of due diligence fees and costs to
      SCB in advance. Any amounts remaining which have not finally been spent
      by SCB towards due diligence will be returned to the Company.
    

    
      Conclusion
    

    
      As immediate next steps, we will discuss with management the company’s
      turnaround strategy in detail and strategy to deal with the lenders.
      Also once we have concluded a potential structure for the financing
      package, we will agree and enter into a term sheet with you.  Please
      refer to Appendix I for indicative next steps.
    

    
      It should be understood that this letter does not constitute or give
      rise to any obligation on the part of the lender to arrange, underwrite
      or provide or commit to arrange, underwrite or provide any financing;
      any such obligations would arise only upon a satisfactory due diligence
      process, our internal credit approval, completion of legal and
      regulatory requirements and would be documented under separate written
      agreements acceptable to the lender.  In addition, this letter is not
      meant to be, nor shall it be construed as, an attempt to define all of
      the terms and conditions of a financing facility.  Rather, it is
      intended to outline certain basic points of business understanding upon
      which the financing contemplated herein would proceed.   
    

    

    

    
      
        

        

      

      
        

        

        
          

        

      

      
        

        

      

    

    

    

    
      Kindly acknowledge this letter and return to SCB a signed copy.
    

    
    	
          Yours faithfully,
        	
          Acknowledged and accepted by :
        
	

        	
           
        
	

        	
           
        
	
          
            Sarit Chopra, Director
          

          
            Alternative Investments
          

          
            Standard Chartered Bank
          

        	
          
            /s/ Randy Acres
          

          
            Randy Acres
          

          
            Chief Financial Officer
          

          
            Innovex, Inc.
          

        

    

    
      *On behalf of Sarit Chopra
/s/ Paul Juri
Paul Jurie
Managing
      Director
    

    
      
        

        

      

      
        

        

        
          

        

      

      
        

        

      

    

    
      Appendix I – Indicative key next steps

    

    	
          Agree due diligence scope and budget with the Company
      
	
         Engage the advisors
      
	
          Agree detailed financial projection model (including cash flows and
        balance sheet projections) including monthly forecasts with the
        Company.
      
	
          Critical due diligence to be identified to be carried out upfront in
        the process. Finalise the model on the basis of feedback received from
        this due diligence
      
	
          Propose final structure of proposed funding package subject to
        completion of due diligence and final internal approvals.
      
	
          Agree and sign term sheet
      
	
          Support Company in discussions with lenders or creditors if required
      
	
          Company to agree a restructuring package with its lenders and
        creditors.
      
	
          Complete all due diligence
      
	
          Draft facility documents and related security documentation
      
	
          Company to complete all conditions precedent provided in the term
        sheet.
      
	
          Sign documents
      
	
          CloseExhibit 10.2
    

    

    

    
    	
          
            INNOVEX, INC.
          

        
	
          
            CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
          

        
	
          (In thousands)
        
	

        	
           
        	

        	

        	
           
        	

        	

        
	

        	

        	
          Three Months Ended
        
	

        	

        	
          October 3, 2009
        	

        	
          September 27, 2008
        
	

        	

        	

        	

        	

        	

        	
           
        
	
          Net sales
        	

        	
          $6,352
        	

        	

        	
          $20,796
        	

        
	
          Costs and expenses:
        	

        	

        	

        	

        	

        	

        
	
          Cost of sales
        	

        	
          8,710
        	

        	

        	
          23,537
        	

        
	
          Selling, general and administrative
        	

        	
          1,493
        	

        	

        	
          2,316
        	

        
	
          Engineering
        	

        	
          209
        	

        	

        	
          554
        	

        
	
          Asset impairment and restructuring charges
        	

        	
          -
        	

        	

        	
          388
        	

        
	
          Net interest expense
        	

        	
          2,082
        	

        	

        	
          852
        	

        
	
          Net FX (gain) loss
        	

        	
          1,218
        	

        	

        	
          
            (339
          

        	
          
            )
          

        
	
          Net other (income) expense
        	

        	
          39
        	
           
        	

        	
          
            (64
          

        	
          
            )
          

        
	
          Income (loss) before income taxes
        	

        	
          
            (7,399
          

        	
          
            )
          

        	

        	
          
            (6,448
          

        	
          
            )
          

        
	

        	

        	

        	

        	

        	

        	
           
        
	
          Provision for income taxes
        	

        	
          2
        	
           
        	

        	
          17
        	
           
        
	
          Net income (loss)
        	

        	
          
            ($7,401
          

        	
          
            )
          

        	

        	
          
            ($6,465
          

        	
          
            )
          

        
	

        	

        	

        	

        	

        	

        	
           
        
	
          Net income (loss) per share:
        	

        	

        	

        	

        	

        	

        
	
          Basic
        	

        	
          
            ($0.38
          

        	
          
            )
          

        	

        	
          
            ($0.33
          

        	
          
            )
          

        
	
          Diluted
        	

        	
          
            ($0.38
          

        	
          
            )
          

        	

        	
          
            ($0.33
          

        	
          
            )
          

        
	

        	

        	

        	

        	

        	

        	
           
        
	
          Weighted average shares outstanding:
        	

        	

        	

        	

        	

        	

        
	
          Basic shares
        	

        	
          19,443
        	
           
        	

        	
          19,411
        	
           
        
	
          Diluted shares
        	

        	
          19,443
        	
           
        	

        	
          19,411
        	
           
        

    

    

    

    
    	

        	
           
        	
          Twelve Months Ended
        
	

        	

        	
          October 3, 2009
        	
           
        	
           
        	
          September 27, 2008
        	
           
        
	

        	

        	

        	

        	

        	

        	
           
        
	
          Net sales
        	

        	
          $39,559
        	

        	

        	
          $71,039
        	

        
	
          Costs and expenses:
        	

        	

        	

        	

        	

        	

        
	
          Cost of sales
        	

        	
          50,615
        	

        	

        	
          80,113
        	

        
	
          Selling, general and administrative
        	

        	
          6,779
        	

        	

        	
          9,136
        	

        
	
          Royalty expense to equity investee
        	

        	
          -
        	

        	

        	
          128
        	

        
	
          Engineering
        	

        	
          1,462
        	

        	

        	
          2,472
        	

        
	
          Asset impairment and restructuring charges
        	

        	
          1,312
        	

        	

        	
          3,827
        	

        
	
          Net (gain) loss on sale of assets
        	

        	
          -
        	

        	

        	
          
            (125
          

        	
          
            )
          

        
	
          Net interest expense
        	

        	
          4,979
        	

        	

        	
          3,054
        	

        
	
          Net FX (gain) loss
        	

        	
          1,540
        	

        	

        	
          556
        	

        
	
          Net other (income) expense
        	

        	
          116
        	
           
        	

        	
          
            (138
          

        	
          
            )
          

        
	
          Income (loss) before income taxes
        	

        	
          
            (27,244
          

        	
          
            )
          

        	

        	
          
            (27,984
          

        	
          
            )
          

        
	

        	

        	

        	

        	

        	

        	
           
        
	
          Provision for income taxes
        	

        	
          2
        	
           
        	

        	
          17
        	
           
        
	
          Net income (loss)
        	

        	
          
            ($27,246
          

        	
          
            )
          

        	

        	
          
            ($28,001
          

        	
          
            )
          

        
	

        	

        	

        	

        	

        	

        	
           
        
	
          Net income (loss) per share:
        	

        	

        	

        	

        	

        	

        
	
          Basic
        	

        	
          
            ($1.40
          

        	
          
            )
          

        	

        	
          
            ($1.44
          

        	
          
            )
          

        
	
          Diluted
        	

        	
          
            ($1.40
          

        	
          
            )
          

        	

        	
          
            ($1.44
          

        	
          
            )
          

        
	

        	

        	

        	

        	

        	

        	
           
        
	
          Weighted average shares outstanding:
        	

        	

        	

        	

        	

        	

        
	
          Basic shares
        	

        	
          19,440
        	
           
        	

        	
          19,409
        	
           
        
	
          Diluted shares
        	

        	
          19,440
        	
           
        	

        	
          19,409
        	
           
        

    

    

    

    
      
        

        

      

      
        

        

        
          

        

      

      
        

        

      

    

    

    

    
    	
          
            INNOVEX, INC.
          

        
	
          
            CONSOLIDATED BALANCE SHEETS (UNAUDITED)
          

        
	
          
            (In thousands)
          

        
	

        	
           
        	
          October 3,
        	

        	
           
        	
          September 27,
        	

        
	
          Assets
        	

        	
          2009
        	
           
        	

        	
          2008
        	
           
        
	
          Cash and short-term investments
        	

        	
          $918
        	

        	

        	
          $6,532
        	

        
	
          Accounts receivable, net
        	

        	
          767
        	

        	

        	
          14,345
        	

        
	
          Inventory
        	

        	
          2,286
        	

        	

        	
          9,999
        	

        
	
          Other current assets
        	
           
        	
          1,465
        	
           
        	
           
        	
          1,876
        	
           
        
	
          Total current assets
        	

        	
          5,436
        	

        	

        	
          32,752
        	

        
	
          Property, plant and equipment, net
        	

        	
          29,246
        	

        	

        	
          34,438
        	

        
	
          Assets held for sale
        	

        	
          0
        	

        	

        	
          1,927
        	

        
	
          Intangible & other assets, net
        	
           
        	
          30
        	
           
        	
           
        	
          40
        	
           
        
	
          Total assets
        	

        	
          $34,712
        	
           
        	

        	
          $69,157
        	
           
        
	

        	

        	

        	

        	

        	

        	
           
        
	

        	

        	

        	

        	

        	

        	
           
        
	
          Liabilities and Stockholders' Equity (Deficit)
        	

        	

        	

        	

        	

        	

        
	
          Current maturities of long-term debt
        	

        	
          $7,143
        	

        	

        	
          $3,538
        	

        
	
          Line of credit
        	

        	
          34,942
        	

        	

        	
          32,665
        	

        
	
          Accounts payable
        	

        	
          13,064
        	

        	

        	
          23,306
        	

        
	
          Other current liabilities
        	
           
        	
          6,019
        	
           
        	
           
        	
          4,479
        	
           
        
	
          Total current liabilities
        	

        	
          61,168
        	

        	

        	
          63,988
        	

        
	
          Long-term debt
        	

        	
          14,459
        	

        	

        	
          18,970
        	

        
	
          Stockholders' equity (deficit)
        	
           
        	
          
            (40,915
          

        	
          
            )
          

        	
           
        	
          
            (13,801
          

        	
          
            )
          

        
	
          Total liabilities and stockholders' equity (deficit)
        	

        	
          $34,712
        	
           
        	

        	
          $69,157
        	
           
        

    

    

    

    
      
        

        

      

      
        

        

        
          

        

      

      
        

        

      

    

    

    

    
    	
          INNOVEX, INC.
        
	
          CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
        
	
          (In thousands)
        
	

        	
           
        	
          Twelve months ended
        
	

        	

        	
          October 3, 2009
        	
           
        	
           
        	
          September 27, 2008
        	
           
        
	
          Cash Flows From Operating Activities:
        	

        	

        	

        	

        	

        	

        
	
          Net income (loss)
        	

        	
          
            ($27,246
          

        	
          
            )
          

        	

        	
          
            ($28,001
          

        	
          
            )
          

        
	
          Adjustments to reconcile net income (loss) to net
        	

        	

        	

        	

        	

        	

        
	
          cash provided by operating activities:
        	

        	

        	

        	

        	

        	

        
	
          Depreciation and amortization
        	

        	
          7,559
        	

        	

        	
          7,729
        	

        
	
          Asset impairment charge
        	

        	
          700
        	

        	

        	
          -
        	

        
	
          Stock option expense
        	

        	
          133
        	

        	

        	
          269
        	

        
	
          Other non-cash items
        	

        	
          2
        	

        	

        	
          
            (71
          

        	
          
            )
          

        
	
          Changes in operating assets and liabilities:
        	

        	

        	

        	

        	

        	

        
	
          Accounts receivable
        	

        	
          13,578
        	

        	

        	
          
            (603
          

        	
          
            )
          

        
	
          Inventories
        	

        	
          7,713
        	

        	

        	
          1,056
        	

        
	
          Other current assets
        	

        	
          411
        	

        	

        	
          584
        	

        
	
          Other long term assets
        	

        	
          10
        	

        	

        	
          727
        	

        
	
          Accounts payable
        	

        	
          
            (10,243
          

        	
          
            )
          

        	

        	
          8,441
        	

        
	
          Other current liabilities
        	

        	
          1,541
        	
           
        	

        	
          944
        	
           
        
	
          Net cash used in operating activities
        	

        	
          
            (5,842
          

        	
          
            )
          

        	

        	
          
            (8,925
          

        	
          
            )
          

        
	

        	

        	

        	

        	

        	

        	
           
        
	
          Cash Flows From Investing Activities:
        	

        	

        	

        	

        	

        	

        
	
          Capital expenditures
        	

        	
          
            (1,143
          

        	
          
            )
          

        	

        	
          
            (3,267
          

        	
          
            )
          

        
	
          Proceeds from sale of assets
        	

        	
          -
        	
           
        	

        	
          126
        	
           
        
	
          Net cash used in investing activities
        	

        	
          
            (1,143
          

        	
          
            )
          

        	

        	
          
            (3,141
          

        	
          
            )
          

        
	

        	

        	

        	

        	

        	

        	
           
        
	
          Cash Flows From Financing Activities:
        	

        	

        	

        	

        	

        	

        
	
          Payments on long-term debt
        	

        	
          
            (1,168
          

        	
          
            )
          

        	

        	
          
            (6,035
          

        	
          
            )
          

        
	
          Issuance of long-term debt
        	

        	
          -
        	

        	

        	
          1,508
        	

        
	
          Effect of currency translation on long-term debt
        	

        	
          262
        	

        	

        	
          437
        	

        
	
          Net line of credit activity
        	

        	
          2,277
        	

        	

        	
          12,231
        	

        
	
          Proceeds from exercise of stock options
        	

        	
          -
        	
           
        	

        	
          3
        	
           
        
	
          Net cash provided by (used in) financing activities
        	

        	
          1,371
        	
           
        	

        	
          8,144
        	
           
        
	
          Increase (decrease) in cash and equivalents
        	

        	
          
            (5,614
          

        	
          
            )
          

        	

        	
          
            (3,922
          

        	
          
            )
          

        
	
          Cash and equivalents at beginning of period
        	

        	
          6,532
        	
           
        	

        	
          10,454
        	
           
        
	
          Cash and equivalents at end of period
        	

        	
          $918
        	
           
        	

        	
          $6,532

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