-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, PDeW19EOH8xRx2nJlQdOEba62IR59ye40ihMlKn0qLGQUPpl1mduK2z+GAXow+SW 9P0LW1b6GRADrxGdqLMtjw== 0001157523-05-003438.txt : 20050419 0001157523-05-003438.hdr.sgml : 20050419 20050419094454 ACCESSION NUMBER: 0001157523-05-003438 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20050418 ITEM INFORMATION: Entry into a Material Definitive Agreement ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20050419 DATE AS OF CHANGE: 20050419 FILER: COMPANY DATA: COMPANY CONFORMED NAME: INNOVEX INC CENTRAL INDEX KEY: 0000050601 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRONIC COMPONENTS, NEC [3679] IRS NUMBER: 411223933 STATE OF INCORPORATION: MN FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-13143 FILM NUMBER: 05758208 BUSINESS ADDRESS: STREET 1: 5540 PIONEER CREEK DRIVE CITY: MAPLE PLAIN STATE: MN ZIP: 55359-9003 BUSINESS PHONE: 7634795300 8-K 1 a4866804.txt INNOVEX, INC. 8-K UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (date of earliest event reported): April 18, 2005 Innovex, Inc. --------------------------- (Exact name of Registrant as Specified in its Charter) Minnesota --------------------------- (State Or Other Jurisdiction Of Incorporation) 000-13143 41-1223933 -------------------------- --------------------------------------- (Commission File Number) (I.R.S. Employer Identification No.) 5540 Pioneer Creek Drive Maple Plain, MN 55359 ---------------------------------------- ------------ (Address Of Principal Executive Offices) (Zip Code) (763) 479-5300 ---------------- Registrant's Telephone Number, Including Area Code Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below): |_| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |_| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |_| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) Items under Sections 3 though 8 are not applicable and therefore omitted. ITEM 1.01 Entry into a Material Definitive Agreement. ITEM 2.02 Results of Operations and Financial Condition. Innovex, Inc. hereby furnishes a press release, issued on April 18, 2005, disclosing material non-public information regarding its results of operations for the quarter ended March 31, 2005. ITEM 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant. On April 13, 2005, Innovex, Inc. (the "Company") entered into a new financing arrangement with US Federal Credit Union ("US Federal") pursuant to which the Company borrowed $3,104,000 in addition to the $4,000,000 the Company had previously borrowed from US Federal on January 12, 2005. The total borrowing of $7,104,000 is represented by the Business Note attached hereto at Exhibit 10.1 (the "Note") which replaces the original $4,000,000 note entered into on January 12, 2005. The Note is due February 1, 2010, but may be prepaid at any time without penalty. Principal amounts under the Note bear interest at a rate of 7% per annum, but in the event of default of the Note, the interest rate will increase to the highest amount allowed under Minnesota law. The Company is required to make monthly principal and interest payments under the Note. Under a security agreement, the Company has granted US Federal a security interest of up to $7,104,000 in the Company's Maple Plain and Litchfield facilities pursuant to a Combination Mortgage, Assignment of Rents and Security Agreement previously attached as Exhibit 10.2 to Form 8-K filed January 12, 2005 and amended by the Modification Agreement for Mortgage, Assignment of Rents, Security Agreement and Fixture Financing Statement attached hereto as Exhibit 10.2. ITEM 9.01 Financial Statements And Exhibits. Exhibit No. Description - ----------- ----------------------------------------------------------------- 10.1 Business Note in the principal amount of $7,104,000 due February 1, 2010 with Innovex, Inc. as maker and US Federal Credit Union as lender. 10.2 Modification Agreement for Mortgage, assignment of Rents, Security Agreement and Fixture Financing Statement dated as of April 13, 2005 made by Innovex, Inc. for the benefit of US Federal Credit Union. 99.1 Press Release issued on April 18, 2005 SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. INNOVEX, INC. By: /s/ Thomas Paulson ----------------------- Thomas Paulson Chief Financial Officer Date: April 18, 2005 EX-10.1 2 a4866804ex101.txt INNOVEX, INC. EXHIBIT 10.1 Exhibit 10.1 BUSINESS NOTE - -------------------------------------------------------------------------------- THIS LOAN IS PAYABLE IN FULL AT MATURITY. YOU MUST REPAY THE ENTIRE PRINCIPAL BALANCE OF THE LOAN AND UNPAID INTEREST THEN DUE. THE LENDER IS UNDER NO OBLIGATION TO REFINANCE THE LOAN AT THAT TIME. YOU WILL, THEREFORE, BE REQUIRED TO MAKE PAYMENT OUT OF OTHER ASSETS THAT YOU MAY OWN, OR YOU WILL HAVE TO FIND A LENDER, WHICH MAY BE THE LENDER YOU HAVE THIS LOAN WITH, WILLING TO LEND YOU THE MONEY. IF YOU REFINANCE THIS LOAN AT MATURITY, YOU MAY HAVE TO PAY SOME OR ALL OF THE CLOSING COSTS NORMALLY ASSOCIATED WITH A NEW LOAN EVEN IF YOU OBTAIN REFINANCING FROM THE SAME LENDER. Loan Number: ______________________ Dated: April 13, 2005 Maturity Date: February 1, 2010 Maker: Innovex, Inc., a Minnesota corporation 5540 Pioneer Creek Drive Maple Plain, Minnesota 55359-9003 Lender: US Federal Credit Union 1400 Riverwood Drive Burnsville, MN 55337 Purpose: Commercial Loan Amount: $7,104,000.00 Initial Interest Rate: 7.00% - -------------------------------------------------------------------------------- Agreement to Pay. FOR VALUE RECEIVED, the undersigned, Innovex, Inc., a Minnesota corporation (hereinafter referred to as the "Borrower"), whose mailing address is 5540 Pioneer Creek Drive, Maple Plain, Minnesota 55359-9003, hereby agrees and promises to pay to the order of US Federal Credit Union, a federal credit union, its endorsees, successors and assigns (hereinafter sometimes referred to as the "Lender"), at its office and mailing address at 1400 Riverwood Drive, MN 55337, or such other place as the Lender may from time to time designate in writing, the principal sum of Seven Million One Hundred Four Thousand and no/100 Dollars ($7,104,000.00), together with interest on the unpaid principal balance at the rates provided for herein, payable in lawful money of the United States of America, which shall be legal tender for public and private debts at the time of payment. Interest Rate. The outstanding principal balance hereof shall bear interest at the rate of SEVEN percent (7%) per annum (hereinafter referred to as the "Regular Rate"). Interest shall be calculated on the basis of a 360-day year, but shall be charged on the actual number of days principal remains unpaid. Late Charge. Any payment of principal, or interest not made by the Borrower within ten (10) days of the due date thereof shall be subject to a late payment charge equal to FIVE percent (5%) of the monthly payment. The late charge shall apply individually to all payments past due with no daily adjustment and shall be used to defray the costs of the Lender incident to collecting such late payment. This provision shall not be deemed to excuse a late payment or be deemed a waiver of any other rights the Lender may have including the right to declare the entire unpaid principal and interest immediately due and payable. Default Rate. Upon the occurrence of an Event of Default (as hereinafter defined) the interest rate shall thereafter increase and shall be payable on the whole of the unpaid principal balance at a rate equal to at a rate up the maximum allowable rate by Minnesota law (hereinafter referred to as the "Default Rate"), which Default Rate shall be effective as of the date of the occurrence of such Event of Default. The increase in the interest rate upon the occurrence of an Event of Default shall be applicable whether or not the Lender has exercised its option to accelerate the maturity of this Note and declared the entire unpaid principal indebtedness to be due and payable. The Default Rate shall continue until such Event of Default is cured, payment in full of all indebtedness evidenced by this Note, or completion of all foreclosure proceedings and redemption periods, whichever shall occur first. Monthly Payments. Principal and interest owing under this Note shall be payable as follows: Interest only on the unpaid principal balance shall be due and payable on the date funds are disbursed hereunder in an amount equal to interest accrued from date of last payment through date of disbursement on the new note. On the first day of May, 2005, and on the first day of each month thereafter, principal and interest shall be due and payable in equal monthly installments of FIFTY THOUSAND TWO HUNDRED NINE THOUSAND and 59/100 Dollars ($50,209.59) until February 1, 2010 (hereinafter referred to as the "Maturity Date"), on which date the entire unpaid principal balance together with all accrued interest shall become due and payable. This is a balloon note and on the Maturity Date a substantial portion of the principal amount of this Note will remain unpaid by the monthly payments above required. All payments shall be applied first to late, second to interest at the rate then in effect under the terms hereof and third to principal, provided however, that if any advance made by the Lender as the result of a default on the part of the Borrower under the terms of this Note or any instrument securing this Note is not repaid on demand, any monies received, at the option of the Lender, may first be applied to repay such advances, plus interest thereon at the Default Rate, and the balance, if any, shall be applied in accordance with the provisions hereof. Loan Documents; Security. This Note is given to evidence the loan described herein (the "Loan") and is the Note referred to in and/or secured by the following (hereinafter referred to as the "Loan Documents"): A Combination Mortgage, Assignment of Rents, and Security Agreement together with any amendment thereto, the "Mortgage") given by the Borrower, as mortgagor, to the Lender, as mortgagee, dated of even date herewith, encumbering the Borrower's interest in certain real property and the improvements, fixtures, equipment and personal property located thereon in Hennepin County and Meeker County, Minnesota as more particularly described in the Mortgage (hereinafter referred to as the "Mortgaged Property"); and An Assignment of Rents and Leases (together with any amendment thereto, the "Assignment of Rents") given by the Borrower, as assignor, to the Lender, as assignee, dated of even date herewith, assigning to the Lender all of the rents, issues, profits and leases of the Mortgaged Property; A Modification Agreement changing the terms and conditions of the Combination Mortgage, Assignment of Rents, and Security Agreement referenced herein, to reflect the principal sum of indebtedness of this Note, of Seven Million One Hundred Four Thousand and no/100 Dollars ($7,104,000.00). Any other documents evidencing or securing the Loan, together with any amendment thereto. Reference is hereby made to the Loan Documents (which are incorporated herein by reference as fully and with the same effect as if set forth herein at length) for a more complete description of the Mortgaged Property, a statement of the covenants and agreements made with respect thereto, a statement of the rights and remedies afforded thereby and all other matters contained therein. Default and Acceleration; Waivers. The failure to pay when due any installment under this Note, or the occurrence of an Event of Default), shall constitute an Event of Default hereunder, and the entire unpaid principal balance together with accrued interest at the Default Rate shall become, without notice, immediately due and payable at the option of the Lender. No delay or omission on the part of the Lender in exercising any right hereunder shall operate as a waiver of such right or of any other remedy under this Note. A waiver on any one occasion shall not be construed as a bar to or waiver of any such right or remedy on a future occasion. Prepayment Privilege. The indebtedness evidenced hereby may be prepaid in whole or in part at any time without premium or penalty. The Borrower shall provide the Lender with not less than fifteen (15) nor more than one hundred twenty (120) days prior written notice of any prepayment of the Loan. Costs of Collection. The Borrower agrees that if, and as often as, this Note is placed in the hands of an attorney for collection or to defend or enforce any of the Lender's rights hereunder or under the Mortgage[, the Assignment of Rents] or any other Loan Document securing payment of this Note, the Borrower will pay to the Lender its attorneys' fees and all court costs (including attorneys' fees and court costs prior to trial, at trial and on appeal, or in any bankruptcy proceeding) and other expenses incurred in connection therewith. Time. Time is of the essence of this Note and each of the provisions hereof. Governing Law. This Note shall be governed by the laws of the State of Minnesota. Interest Limitation. All agreements between the Borrower and the Lender are hereby expressly limited so that in no contingency or event whatsoever, whether by reason of acceleration of maturity of the indebtedness evidenced hereby or otherwise, shall the amount paid or agreed to be paid to the Lender for the use, forbearance, loaning or detention of the indebtedness evidenced hereby exceed the maximum permissible under applicable law. If from any circumstances whatsoever, fulfillment of any provisions hereof or of the Mortgage, the Assignment of Rents, or any other Loan Document at any time given shall exceed the maximum permissible under applicable law, then the obligation to be fulfilled shall automatically be reduced to an amount which complies with applicable law, and if from any circumstances the Lender should ever receive as interest an amount which would exceed the highest lawful rate of interest, such amount which would be in excess of such lawful rate of interest shall be applied to the reduction of the principal balance evidenced hereby and not to the payment of interest. This provision shall control every other provision of all agreements between the Borrower and Lender and shall also be binding upon and available to any subsequent holder of this Note. Waivers. This Note shall be the joint and several obligation of all makers, sureties, guarantors and endorsers, and shall be binding upon them and their successors and assigns. The Borrower, all sureties, guarantors and endorsers and all other persons liable for all or any part of the principal balance evidenced by this Note severally waive presentment for payment, protest, notice of nonpayment and notice of dishonor. Such parties hereby consent, without affecting their liability, to any extension or alteration of the time or terms of payment hereof, any renewal, any release of any or all of the security given for the payment hereof, any acceptance of additional security of any kind, and any release of, or resort to any party liable for payment hereof. Disbursement. Funds representing the proceeds of the indebtedness evidenced hereby which are disbursed by Lender by mail, wire transfer or other delivery to the Borrower, to escrows or otherwise for the benefit of the Borrower shall, for all purposes, be deemed outstanding hereunder and to have been received by Borrower as of the date of such mailing, wire transfer or delivery and until repaid, notwithstanding the fact that such funds may not at any time have been remitted by such escrows to the Borrower or for its benefit. Captions. The captions to the Sections of this Note are for convenience only and shall not be deemed part of the text of the respective Sections and shall not vary, by implication or otherwise, any of the provisions of this Note. Notices. All notices required or permitted to be given hereunder to Borrower or the Lender shall be given in the manner and to the place as provided in the Mortgage. Due-on-Sale-and-Encumbrance Call Provisions. The Mortgage provides for certain rights on the part of the Lender to call all outstanding principal and accrued interest on this Note due and payable in full in the event that (a) Borrower should sell, transfer, lease, sublease or convey any interest of Borrower, legal or equitable, in the Mortgaged Property; (b) Borrower should sell, transfer or encumber any of the equity interests in Borrower; or (c) Borrower should mortgage, pledge, encumber or permit a lien to be outstanding against the Mortgaged Property or any portion thereof, or any security interest to exist therein, without, in each instance, the prior written consent of Lender. Reference to the Mortgage must be made for the terms of these provisions. Such provisions are incorporated herein by this reference. Partial Nonrecourse to Borrower. Subject to the provisions of this Section 17, Borrower shall have no personal liability to pay the outstanding principal balance of this Note or any interest that may accrue thereon, all such liability being expressly waived by the Lender, and Lender's monetary remedies under this Note, the Mortgage and the Assignment of Rents shall be limited to Borrower's interest in the Mortgaged Property and the improvements, furnishings, equipment, leases and rents on which the Mortgage and the Assignment of Rents constitute a lien. Notwithstanding the foregoing, it is expressly understood and agreed that if Borrower breaches Section 16 of this Note and any such event shall continue for 30 days following written notice to Borrower from Lender of such default, such event shall constitute an "Event of Default" and the first paragraph of this Section 17 shall thereafter not apply and the Borrower and any general partner of Borrower (if Borrower is a partnership) (each individually and on a joint and several basis if more than one) shall be personally liable on a joint and several basis for full recourse liability under this Note and the other Loan Documents. Notwithstanding the foregoing, it is expressly understood and agreed that the limitation on liability set forth in the first paragraph of this Section 17 shall in no way affect or apply to the Borrower's continued liability for the payment to Lender of: (i) any rents, issues, profits and/or income collected by the Borrower in excess of normal and verifiable operating expenses from the Mortgaged Property after the occurrence of an Event of Default hereunder or under the Mortgage[, the Assignment of Rents] or any other Loan Document; (ii) unrefunded security deposits made by tenants of the Mortgaged Property; (iii) any rent, issues, profits and/or income from the Mortgaged Property which have been prepaid more than thirty (30) days in advance; (iv) payments of taxes, special assessments, insurance premiums, or utility charges, the payment of which is required to be made by the Borrower under the terms of the Mortgage; (v) reasonable attorney's fees and expenses incurred by the Lender in connection with enforcement by Lender of its rights under this Section 17; (vi) insurance proceeds and condemnation awards, payments and consideration which the Borrower receives and to which the Lender is entitled pursuant to the terms hereof, of the Mortgage, the Assignment of Rents or of any other Loan Document; (vii) damage to the Mortgaged Property from waste committed or permitted by the Borrower or from a failure by the Borrower to maintain or repair the Mortgaged Property in the manner required by the Mortgage; (viii) losses, liabilities, costs, expenses or damage occurring by reason of the failure of the Borrower to observe and perform its covenants and indemnities respecting the existence, release or discharge of Hazardous Materials, as defined in Section 14 of the Mortgage; and (ix) any loss or claim incurred by or asserted against Lender as a result of fraud or misrepresentation in connection with the loan evidenced by this Note. Nothing contained herein shall be deemed to release the Borrower from its obligations under the terms of the separate Environmental Indemnity dated of even date herewith executed by Borrower in connection with the loan evidenced by this Note. WAIVER OF JURY TRIAL. THE LENDER BY ITS ACCEPTANCE HEREOF AND THE BORROWER HEREBY VOLUNTARILY, KNOWINGLY AND INTENTIONALLY WAIVE ANY AND ALL RIGHTS TO TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING ARISING UNDER THIS NOTE OR CONCERNING THE INDEBTEDNESS EVIDENCED HEREBY AND/OR ANY COLLATERAL SECURING SUCH INDEBTEDNESS, REGARDLESS OF WHETHER SUCH ACTION OR PROCEEDING CONCERNS ANY CONTRACTUAL OR TORTIOUS OR OTHER CLAIM. THE BORROWER ACKNOWLEDGES THAT THIS WAIVER OF JURY TRIAL IS A MATERIAL INDUCEMENT TO THE LENDER IN EXTENDING CREDIT TO THE BORROWER, THAT THE LENDER WOULD NOT HAVE EXTENDED SUCH CREDIT WITHOUT THIS JURY TRIAL WAIVER, AND THAT THE BORROWER HAS BEEN REPRESENTED BY AN ATTORNEY OR HAS HAD AN OPPORTUNITY TO CONSULT WITH AN ATTORNEY IN CONNECTION WITH THIS JURY TRIAL WAIVER AND UNDERSTANDS THE LEGAL EFFECT OF THIS WAIVER. Jurisdiction and Venue. The Borrower hereby irrevocably agrees that any legal action or proceedings against it with respect to this Note may be brought in the courts of the State of Minnesota, or in any United States District Court in the State of Minnesota, and by the execution and delivery of this Agreement, the Borrower hereby irrevocably submits to the jurisdiction of each such court and hereby irrevocably waives any and all objections that the Borrower may have as to jurisdiction or venue in any of such courts. The Borrower acknowledges that it has received sufficient consideration for any inconvenience which may be caused by any legal action brought in the State of Minnesota, and agrees that the enforcement of the provisions of this Section against the Borrower would not be unreasonable or unfair under all the circumstances of the loan evidenced by this Note. Entire Agreement. This Note and the Loan Documents contain the entire agreement of the parties regarding the Loan. Without limiting the generality of the foregoing, this Note and the Loan Documents supersede any term sheet, loan application or commitment letter issued by the Lender or submitted by the Borrower in connection with the Loan. Business Purpose. The Borrower represents and warrants to the Lender that the Borrower will use the proceeds of the Loan solely for business purposes. Miscellaneous. From time to time, without affecting the obligation of the undersigned or the successors or assigns of the undersigned to pay the outstanding principal balance of this Note and observe the covenants of the undersigned contained herein, without affecting the guaranty of any person, corporation, partnership or other entity for payment of the outstanding principal balance of this Note, without giving notice to or obtaining the consent of the undersigned, the successors or assigns of the undersigned or guarantors, and without liability on the part of the holder hereof, the holder hereof may, at the option of the holder hereof, extend the time for payment of said outstanding principal balance or any part thereof, reduce the payments thereon, release anyone liable on any of said outstanding principal balance, accept a renewal of this Note, agree with the undersigned to modify the terms and time of payment of said outstanding principal balance, join in any extension or subordination agreement, release any security given heretofore, take or release other or additional security, and agree in writing with the undersigned to modify the rate of interest or period of amortization of this Note or change the amount of the monthly installments payable hereunder. IN WITNESS WHEREOF, the Borrower has executed this Promissory Note as of the date and year first above written. Innovex, Inc., a Minnesota corporation By:___________________________________ Name:_________________________________ Its:__________________________________ EX-10.2 3 a4866804ex102.txt INNOVEX, INC. EXHIBIT 10.2 Exhibit 10.2 MODIFICATION AGREEMENT FOR MORTGAGE, ASSIGNMENT OF RENTS, SECURITY AGREEMENT, AND FIXTURE FINANCING STATEMENT THIS MODIFICATION AGREEMENT (this "Agreement") is made and entered into as of the 13th day of April, 2005, by and between Innovex, Inc., a Minnesota corporation and Innovex Precision Components, Inc., a Minnesota corporation, ("Borrower"), and US Federal Credit Union , a federal credit union having an office and place of business at 1400 Riverwood Drive, Burnsville, Minnesota, 55337 ("Lender"). WITNESSETH: WHEREAS, in accordance with the terms of that certain business note for the sum of FOUR MILLION and 00/100 Dollar ($4,000,000.00), dated as of January 12, 2005 ("Note"), by and between the Borrower and the Lender, Borrower agreed to make certain payments described in the Note, in favor of the lender, and which Note provides for payments in the amount of payments required to be made to the holder of the Note; WHEREAS, the Note is secured, inter alia, by that certain Combination Mortgage, Assignment of Rents, Security Agreement and Fixture Financing Statement, for the maximum indebtedness of SEVEN MILLION ONE HUNDRED FOUR THOUSAND and 00/100 Dollars ($7,104,000.00), dated January 10, 2005, granted by the Borrower, as grantor, to Lender, as grantee, and recorded in the land records of Hennepin County, Minnesota, as document number 8529892, on February 18, 2005, and also recorded in the land records of Meeker County, Minnesota (the "Land Records"), as document number 330566, on February 16, 2005, which Combination Mortgage, Assignment of Rents, Security Agreement and Fixture Financing Statement encumber certain parcels of real property, located in the County of Hennepin and the County of Meeker, respectively in the State of Minnesota, as more particularly described on Exhibit "A" hereto (the "Land"), and the improvements thereon (the "Improvements," the Land and the Improvements being herein referred to as the "Mortgaged Property", the Note, and Combination Mortgage, Assignment of Rents, Security Agreement and Fixture Financing Statement and all documents executed and delivered to evidence or secure the obligations evidenced by Note being herein referred to collectively as the "Loan Documents"); WHEREAS, Borrower has requested that Lender consent to a modification to the terms of the Loan Documents as more particularly set forth herein; WHEREAS, Lender has consented to the requested modification on the terms and conditions herein set forth. NOW, THEREFORE, in consideration of the foregoing recitals (which are hereby incorporated fully into the terms of this Agreement), the mutual covenants of the parties hereto, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Borrower covenants and agree with Lender as follows: 1. Amendments to the Combination Mortgage, Assignment of Rents, and Security Agreement and Fixture Financing Statement. Effective on April 8, 2005, the second full paragraph on page one of the Combination Mortgage, Assignment of Rents, and Security Agreement and Fixture Financing Statement shall be deleted and replaced as follows: Borrower has executed a Promissory Note, dated January 12, 2005, payable to Lender to evidence Borrower's obligation to repay a loan (the "Loan") from Lender in the principal amount of FOUR MILLION and 00/100 Dollar ($4,000,000.00). It is the intent of Borrower and Lender that a new Promissory Note for the principal amount of SEVEN MILLION ONE HUNDRED FOUR THOUSAND and 00/100 Dollars ($7,104,000.00) shall replace that certain Promissory Note dated January 12, 2005. Borrower agrees to execute a new Promissory Note, dated April 8, 2005, payable to Lender to evidence Borrower's obligation to repay a loan from Lender in the new principal amount of SEVEN MILLION ONE HUNDRED FOUR THOUSAND and 00/100 Dollars ($7,104,000.00). 2. Representations and Warranties. For valuable consideration, Borrower represents and warrants to Lender that Borrower is a Minnesota Corporation, duly organized and in good standing, that Borrower is the current fee owner of the Land, subject only to the Combination Mortgage, Assignment of Rents, Security Agreement and Fixture Financing Statement as herein described and such other non-financial encumbrances disclosed to Lender, and that the party executing this Modification on behalf of Borrower has all requisite corporate authority to execute this Modification. 3. References in Loan Documents. Each reference to the Note, the Loan Agreement, the Combination Mortgage, Assignment of Rents, Security Agreement and Fixture Financing Statement or any or all of the Loan Documents in this Agreement and in each and all of the Loan Documents shall be deemed and construed to refer to the Note, the Loan Agreement, the Combination Mortgage, Assignment of Rents, Security Agreement and Fixture Financing Statement and any or all of the Loan Documents, as previously modified and as modified by this Agreement, and the Loan Documents are hereby modified accordingly. The Note and this Agreement shall be construed together as a single instrument; the Combination Mortgage, Assignment of Rents, and Security Agreement and Fixture Financing Statement and this Agreement shall be construed together as a single instrument. 4. Continued Force and Effect. All of the terms and conditions of the Note, the Loan Agreement, the Combination Mortgage, Assignment of Rents, and Security Agreement and Fixture Financing Statement and the other Loan Documents and the Mortgaged Property security provided thereby, including those terms and conditions modified by this Agreement, are hereby ratified and confirmed in all respects and shall remain and in full force and effect. This Agreement is not intended to, and shall not be construed to, effect a novation, and, except as expressly provided herein, none of the Loan Documents has been modified, amended, canceled, terminated, released, satisfied, superseded or otherwise invalidated. In the event of any conflict between the terms of this Agreement and the terms of any of the Loan Documents, the terms of this Agreement shall control. 5. Miscellaneous. (a) This Agreement may be executed in any number of identical counterparts, each of which shall be deemed to be an original, and all of which shall collectively constitute a single agreement, fully binding upon and enforceable against the parties hereto. (b) This Agreement shall be binding upon all parties hereto and their respective heirs, executors, administrators, legal representatives, successors and assigns, including a subsequent holder of the Loan Documents. IN WITNESS WHEREOF, the undersigned have caused this Agreement to be executed and delivered as of the date and year first above written. US Federal Credit Union, Innovex, Inc., a Minnesota a federal credit union corporation and Innovex Precision Components, Inc., a Minnesota corporation By:___________________________ By: _________________________ Name:_________________________ Name:________________________ Its:__________________________ Its:_________________________ EX-99.1 4 a4866804ex991.txt INNOVEX, INC. EXHIBIT 99.1 Exhibit 99.1 Innovex Announces Fiscal 2005 Second Quarter Results MAPLE PLAIN, Minn.--(BUSINESS WIRE)--April 18, 2005--Innovex (Nasdaq:INVX) today reported revenue of $52.7 million for the fiscal 2005 second quarter ending March 31, 2005, an increase of 34% from $39.3 million for the prior year period. The Company's net loss in the second quarter of fiscal 2005 of $14.0 million or $0.73 per share includes a restructuring charge of $466,000 and a $9 million, non-cash deferred income tax asset write-down. Excluding the restructuring charge and the deferred income tax asset write-down, the net loss was $0.24 per share. The restructuring charge is related to the Company's previously announced plan to close its Maple Plain facility, transfer operations to the Company's Lamphun, Thailand and Litchfield, Minnesota facilities and phase out the Flex Suspension Assembly (FSA) attachment operation. The Company had net income of $137,000 or $0.01 per share in its fiscal 2004 second quarter. At the high end of the Company's preliminary guidance issued on March 22, 2005, revenue for the second quarter was $52.7 million, representing sequential growth of 32% from $40 million for the fiscal 2005 first quarter. The growth in revenue reflects strong Flat Panel Display (FPD) and FSA demand. The Company began ramping several new FPD programs during the quarter, helping drive FPD revenue to $8.7 million for the quarter. FSA revenue was $35 million reflecting continued strong demand for current generation disk drives coupled with the ramp-up of new applications. Revenue growth was also accelerated by high pass-through material content associated with the assembly of components required for many of the new FPD and FSA products. Fiscal 2005 second quarter gross margins were 2.9% as compared to 14.2% for the fiscal 2004 second quarter. The lower than expected gross margin reflects numerous start-up issues and inefficiencies caused by the sharp increase in new products entering production during the quarter and higher than expected pass-through material content. In light of the lower than expected operating results for its second quarter, the Company re-evaluated the carrying value of its deferred tax asset and determined that a non-cash write-down of the asset was appropriate. As a result, an additional tax expense of approximately $9 million was recorded during the fiscal 2005 second quarter instead of the previously expected tax benefit. FSA products constituted 67% of the Company's net sales for the quarter, Actuator Flex circuit (AFC) revenue was 10%, FPD product revenue was 17%, integrated circuit packaging application revenue was 3% and network system application revenue was 3%. In its fiscal 2005 third quarter, the Company expects revenue between $53 and $57 million and gross and operating margins are expected to improve over the fiscal 2005 second quarter. "We are encouraged by the strong new business growth experienced during the quarter, especially the growth in our FPD business," commented William P. Murnane, Innovex's President and Chief Executive Officer. "Our inability to ramp efficiently was disappointing, but we are confident we will experience continued business growth and margin improvement in the June quarter as we continue to focus on aggressively improving operating efficiencies and cost." Accounts receivable increased by $9 million, inventories increased by $3 million and accounts payable increased by $7 million during the quarter, primarily as a result of the dramatic increase in FPD and FSA revenue during the quarter. Capital expenditures of $8.5 million for the fiscal 2005 second quarter principally reflect expenditures related to the expansion of the Company's Thailand operations. "We expect to begin utilizing our expanded Thailand facilities late in our fiscal 2005 third quarter and begin seeing cost savings related to the expansion and the closure of our Maple Plain operation in late 2005 after the Maple Plain operations have been transferred to Thailand and Litchfield," stated Tom Paulson, Innovex's Chief Financial Officer. "Including the April 15, 2005 $3 million expansion of our U.S. based credit facilities and the remaining $33 million capacity on our Thailand credit facilities, we have the capital resources needed to complete our Thailand expansion and to adequately fund the working capital needs related to our significant revenue increase." Restructuring An additional $466,000 restructuring charge was recorded in the fiscal 2005 second quarter as part of the Company's previously announced restructuring plan to close its Maple Plain facility and transfer operations to its Lamphun, Thailand and Litchfield, Minnesota facilities. Additional charges of up to $4.4 million are expected to complete this planned restructuring. $15.6 million of the expected $20 million total charges related to this restructuring have been recorded through March 31, 2005. The remaining expected restructuring charges will be recorded as the liabilities are incurred over the next 6 months. The Company's restructuring plan is progressing on schedule with the Maple Plain facility expected to remain in operation into the fiscal 2005 fourth quarter, as operations will begin to be transferred late in the fiscal 2005 third quarter. The Company continues to expect annual operating cost savings of $8 to $9 million related to the restructuring. Live Webcast Innovex will conduct a conference call and web cast for investors beginning at 10:00 a.m. Central Daylight Time (CDT) on Tuesday, April 19, 2005. During the conference call, Mr. Murnane and senior managers will discuss the Company's future product, revenue, mix and margin expectations along with historical results. To listen to the live conference call, dial (785) 832-2422 and ask for conference ID "Innovex." The live web cast will be available at www.innovexinc.com/investor.shtml. A replay of the call will be available on Tuesday, April 19 beginning at 12:00 p.m. through 11:59 p.m. EDT on Thursday, April 21. To access the replay, dial (402) 220-2555 and ask for conference ID "Innovex." The web cast version of the conference call will be archived at www.innovexinc.com/investor.shtml. About Innovex, Inc. Innovex, Inc. is a leading manufacturer of high-density flexible circuit-based electronic interconnect solutions. Innovex's products enable the miniaturization and increasing functionality of high technology electronic devices. Applications for Innovex's products include data storage devices such as hard disk drives and tape drives, liquid crystal displays for mobile telecommunication devices, flat panel displays and printers. Innovex is known worldwide for its advanced technology and world class manufacturing. Safe Harbor for Forward Looking Statements Except for historical information contained herein, the matters discussed in this release are forward looking statements that involve risks and uncertainties, including the timely availability and acceptance of new products, impact of restructuring charges, changes in product mix, the impact of competitive products and pricing, effect of world-wide economic conditions on flexible circuit demand, changes in manufacturing efficiencies, fluctuations in financial results and other risks detailed from time to time in the Company's reports filed with the Securities and Exchange Commission. INNOVEX, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands) Three Months Ended March 31, ----------------------------- 2005 2004 -------------- -------------- Net sales $52,725 $39,265 Costs and expenses: Cost of sales 51,217 33,708 Selling, general and administrative 4,172 4,289 Engineering 1,875 1,681 Restructuring charges 466 - Net interest expense 347 176 Net other (income) expense (302) (204) -------------- -------------- Income (loss) before income taxes (5,050) (385) Provision for income taxes 9,000 (522) -------------- -------------- Net income (loss) ($14,050) $137 ============== ============== Net income (loss) per share: Basic ($0.73) $0.01 ============== ============== Diluted ($0.73) $0.01 ============== ============== Weighted average shares outstanding: Basic shares 19,150 19,020 ============== ============== Diluted shares 19,150 19,678 ============== ============== Six Months Ended March 31, ----------------------------- 2005 2004 -------------- -------------- Net sales $92,766 $83,608 Costs and expenses: Cost of sales 87,359 69,327 Selling, general and administrative 8,043 9,246 Engineering 3,584 3,432 Restructuring charges 809 - Net interest expense 557 335 Net other (income) expense (885) (251) -------------- -------------- Income (loss) before income taxes (6,701) 1,519 Provision for income taxes 8,357 (212) -------------- -------------- Net income (loss) ($15,058) $1,731 ============== ============== Net income (loss) per share: Basic ($0.79) $0.09 ============== ============== Diluted ($0.79) $0.09 ============== ============== Weighted average shares outstanding: Basic shares 19,139 18,979 ============== ============== Diluted shares 19,139 19,720 ============== ============== INNOVEX, INC. CONSOLIDATED BALANCE SHEETS (In thousands) March 31, September 30, Assets 2005 2004 -------------- -------------- Cash and short-term investments $7,964 $14,422 Accounts receivable, net 34,495 27,248 Inventory 20,394 12,223 Other current assets 2,736 3,612 - ---------------------------------------------------------------------- Total current assets 65,589 57,505 Property, plant and equipment, net 65,231 53,538 Intangible & other assets, net 6,261 5,729 Deferred income taxes long term 5,476 12,975 - ---------------------------------------------------------------------- Total assets $142,557 $129,747 ============== ============== Liabilities and Stockholders' Equity Current liabilities $51,393 $31,643 Long-term debt 18,970 11,022 Stockholders' equity 72,194 87,082 - ---------------------------------------------------------------------- Total liabilities and stockholders' equity $142,557 $129,747 ============== ============== INNOVEX, INC. CONSOLIDATED STATEMENT OF CASH FLOWS (In thousands) Six months ended March 31, ----------------------------- 2005 2004 -------------- -------------- Cash Flows From Operating Activities: Net income (loss) ($15,058) $1,731 Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization 5,853 5,779 Restructuring charges 809 - Other non-cash items 8,710 (64) Changes in operating assets and liabilities: Accounts receivable (7,248) (2,385) Inventories (8,172) (5,135) Deferred income taxes - (412) Other current assets (909) (740) Accounts payable 10,782 2,300 Other current liabilities 326 172 -------------- -------------- Net cash provided by (used in) operating activities (4,907) 1,246 Cash Flows From Investing Activities: Capital expenditures (17,544) (4,597) Proceeds from sale of assets 4 60 -------------- -------------- Net cash used in investing activities (17,540) (4,537) Cash Flows From Financing Activities: Net long-term debt activity 8,074 (3,438) Net line of credit activity 7,745 - Proceeds from exercise of stock options 101 700 Proceeds from employee stock purchase plans 69 204 -------------- -------------- Net cash provided by (used in) financing activities 15,989 (2,534) -------------- -------------- Increase (decrease) in cash and equivalents (6,458) (5,825) Cash and equivalents at beginning of period 14,422 21,607 -------------- -------------- Cash and equivalents at end of period $7,964 $15,782 ============== ============== CONTACT: Innovex, Inc., Maple Plain Tom Paulson, 763-479-5300 or Douglas W. Keller, 763-479-5300 Facsimile: 763-479-5395 Internet: http://www.innovexinc.com -----END PRIVACY-ENHANCED MESSAGE-----