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): December 31, 2004

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):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Items under Sections 2 though 8 are not applicable and therefore omitted.

ITEM 1.01          Entry into a Material Definitive Agreement

          On December 31, 2004, Innovex, Inc. (the “Company”) entered into agreements with Nikko Materials USA, Inc. (d/b/a Gould Electronics) (“Gould”) described below.

          Pursuant to an Amended and Restated License Agreement dated December 31, 2004 between the Company and Gould, attached hereto as Exhibit 10.1 (the “License Agreement”), Gould granted to the Company a perpetual, worldwide, royalty-bearing, irrevocable, non-exclusive license under Gould’s patents and know-how relating to adhesiveless flexible laminates.  The license was granted to the Company to (a) make any adhesiveless flexible laminate film material that is covered by any claim under the patents described in the License Agreement or that, prior to the License Agreement, was manufactured by Gould for the Company or its affiliates (the “Covered Products”) and use the Covered Products so made solely for the Company’s own internal purposes in the fabrication of circuits and (b) sell, market and distribute by any means whatsoever circuitry products that include the Covered Products as component parts thereof.  Royalty payments are due within 45 days following the end of each quarter through December 31, 2009.  Additionally, under the License Agreement, Gould will provide for the next six months reasonable access to its technical personnel and, to the extent not already provided, will furnish the Company with drawings, specifications, layouts and such other written, oral and machine-readable information as Gould has available relating to the formulation, raw material specifications and process specifications for the Covered Products.  The License Agreement will terminate upon the expiration or invalidity of the licensed patents, breach by either party or the failure of a closing to occur under the related real estate purchase agreement described below by reason of the Company’s breach of that agreement.

          The Company and Gould entered into a real estate purchase agreement pursuant to which the Company will purchase from Gould the real property located at 34929 Curtis Boulevard, Eastlake, Ohio.  The purchase price is $3,500,000, of which $1,500,000 will be paid in cash and the remainder will be paid to Gould by the issuance of two promissory notes.  Each promissory note will be in the amount of $1,000,000, with the first maturing on June 30, 2006 and the second maturing on June 30, 2007.  Neither note will bear interest.  The notes will be secured by two $1,000,000 letters of credit issued to Gould.  Gould will be permitted to draw under the letters of credit upon ten days’ written notice in the event that the Company fails to perform any of its obligations under the notes.  The closing of the real estate purchase will occur on July 1, 2005 or at such earlier time as agreed to by the parties.  Pending the closing, Gould will lease the Eastlake, Ohio property to the Company for total rent of $1.00 pursuant to a lease agreement.  If the real estate purchase agreement is terminated, the lease agreement will automatically terminate thirty days thereafter.

          On December 31, 2004, the Company also purchased certain equipment and inventory from Gould used in connection with Gould’s business of manufacturing and selling adhesiveless flexible laminate materials.  The Company paid $3,681,324.37 for the equipment and inventory.  The Company intends to operate the equipment at Gould’s Eastlake, Ohio manufacturing facility under the lease agreement described above pending the closing of the real estate purchase. 

          On January 6, 2005, the Company issued a press release regarding the transactions with Gould, attached hereto as Exhibit 99.1.

ITEM 9.01          Financial Statements And Exhibits.

Exhibit No.	Description
10.1	License Agreement dated December 31, 2004 between Innovex, Inc. and Nikko Materials USA, Inc. **
10.2	Lease Agreement dated as of December 31, 2004 between Nikko Materials USA, Inc. and Innovex, Inc.
99.1	Press Release issued on January 6, 2005.

**  Certain portions of this Exhibit have been deleted and filed separately with the Commission pursuant to a request for confidential treatment under Rule 24b-2. Spaces corresponding to the deleted portions are represented by brackets with asterisks.

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
		Senior Vice President and Chief Financial Officer
Date:  January 6, 2005

EX-10.1

CERTAIN INFORMATION INDICATED BY [* * *] HAS BEEN DELETED FROM THIS EXHIBIT AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT UNDER RULE 24b-2.

Exhibit 10.1

AMENDED AND RESTATED LICENSE AGREEMENT

          THIS AMENDED AND RESTATED LICENSE AGREEMENT (this “Agreement”) is dated as of this 31^st day of December, 2004 by and between Innovex, Inc., having a place of business at 5540 Pioneer Creek Drive, Maple Plain, MN 55359 (hereinafter called “Innovex”) and Nikko Materials USA, Inc. (d/b/a Gould Electronics), having a place of business at 34929 Curtis Blvd., Eastlake, OH 44095-4001 (hereinafter called “Gould”). 

          WHEREAS, Innovex and Gould have entered into an Equipment and Inventory Purchase Agreement (the “Equipment and Inventory Purchase Agreement”), dated September 7, 2004, as amended on December 22, 2004, pursuant to which, as of the date hereof, Innovex purchased from Gould certain equipment specifically described in the Equipment and Inventory Purchase Agreement (the “Equipment”). 

          WHEREAS, on January 1, 2000, Innovex and Gould entered into a License Agreement (the “Original Agreement”).  This Agreement amends and restates the Original Agreement in its entirety.

          WHEREAS, Gould has Patents and certain know-how relating to adhesiveless flexible laminates. 

          WHEREAS, Gould has represented to Innovex that it has the right to grant a license under the Patents to make, use and sell any product described and claimed therein. 

          WHEREAS, Gould has represented to Innovex that the Patents were duly granted by the United States Patent and Trademark Office and are valid and enforceable. 

          WHEREAS, Gould desires to license to Innovex the Patents and all related know-how required to allow Innovex to produce the Covered Products (defined below) for Innovex’s own internal purposes and Innovex desires to obtain such license. 

          NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein, the parties hereto agree as follows:

1.       DEFINITIONS

Where used in this Agreement, the following terms will have the meaning attributed to them:

          1.1          Affiliates means any wholly-owned subsidiary of Innovex. 

          1.2          Effective Date means January 1, 2005. 

CERTAIN INFORMATION INDICATED BY [* * *] HAS BEEN DELETED FROM THIS EXHIBIT AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT UNDER RULE 24b-2.

          1.3          Covered Products means any adhesiveless flexible laminate film material that is covered by any claim under the Patents or that, prior to the Effective Date, was manufactured by Gould for Innovex or its Affiliates. 

          1.4          Know-How means all areas of technology existing as of the Effective Date related to the Covered Products, whether patentable or not, and relating to the manufacture of the Covered Products, including, without limitation, manufacturing processes, equipment specifications, design standards, controls, processes, systems, equipment and related technology. 

          1.5          Patents means:  (a) United States Patent No. 4,863,808 for COPPER-CHROMIUM-POLYMIDE COMPOSITE granted to Jerome S. Sallo and assigned to Gould on September 5, 1989; (b) United States Patent No. 5,685,970 for METHOD AND APPARATUS FOR SEQUENTIALLY METALIZED POLYMERIC FILMS AND PRODUCTS MADE THEREBY granted to Thomas J. Ameen, Robert D. DeWitt, Peter Peckham, Ronald K. Haines and Adam G. Bay (“Ameen, et al.”) and assigned to Gould on November 11, 1997; (c) United States Patent No. 6,224,722 for METHOD AND APPARATUS FOR SEQUENTIALLY METALIZING POLYMERIC FILMS AND PRODUCTS MADE THEREBY granted to Ameen, et al. and assigned to Gould on May 1, 2001; (d) United States Patent No. 5,716,502 for METHOD AND APPARATUS FOR SEQUENTIALLY METALIZING POLYMERIC FILMS AND PRODUCT MADE THEREBY granted to Ameen, et al. and assigned to Gould on February 10, 1998; (e) United States Patent No. 5,681,443 for METHOD FOR FORMING PRINTED CIRCUITS granted to Ameen, et al. and assigned to Gould on October 28, 1997; and (f) United States Patent No. 5,944,965 for METHOD AND APPARATUS FOR SEQUENTIALLY METALIZING POLYMERIC FILMS AND PRODUCTS MADE THEREBY granted to Ameen, et al. and assigned to Gould on August 31, 1999.  The Patents include all continuations and divisional patent applications related to the foregoing and all patents issued thereon, including corresponding foreign patents and patent applications, existing as of the Effective Date. 

2.       LICENSE

          2.1          Gould hereby grants to Innovex and its Affiliates a perpetual, worldwide, royalty-bearing (subject to Section 3.1), irrevocable, non-exclusive license under the Patents and Know-How to make the Covered Products and use the Covered Products so made solely for its own internal purposes in the fabrication of circuits and to sell, market and distribute by any means whatsoever circuitry products that include the Covered Products as component parts thereof. 

3.       COMPENSATION - ROYALTIES

          3.1          Subject to the terms of Section 5.1, Innovex shall pay Gould a royalty of  [*  *  *] per square foot of all finished Covered Products, excluding scrap, manufactured by Innovex or its Affiliates from the Effective Date until December 31, 2009 (the “Royalty Period”). 

2

CERTAIN INFORMATION INDICATED BY [* * *] HAS BEEN DELETED FROM THIS EXHIBIT AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT UNDER RULE 24b-2.

          3.2          Within 45 days following the end of each quarter during the Royalty Period, Innovex shall submit to Gould royalty payments and a report that specifies the square feet area of finished Covered Products manufactured during the previous quarter by Innovex. 

          3.3          At reasonable times, to occur no more frequently than semi-annually, with due notice and at its own expense, Gould or its designee is entitled to access the records maintained by Innovex for inspection, audit and review.  Innovex shall permit such examination and make appropriate adjustments as may be required to reflect the results of any and all audits.  In the event that a discrepancy is discovered between the audit results and the information reported by Innovex, the parties agree to the following terms: 

               3.3.1      Innovex shall reimburse Gould for any royalty payments related to any agreed upon deviation of reported production.

               3.3.2      Moreover, if such deviation is greater than five percent (5%), Innovex shall pay Gould interest on the delinquent royalty payments due from the due date to the date of payment in the amount of prime plus two percent (2%) per annum.

               3.3.3      In the event the parties do not reach mutual agreement as to the royalty due, the parties shall engage an independent third-party accounting firm whose findings will be binding upon the parties with respect to all matters relating to royalties due.

4.       INFORMATION

          4.1          For a period of six months from and after the Effective Date, Gould will provide reasonable access to its technical personnel and, to the extent not provided on or before the Effective Date, will furnish Innovex with drawings, specifications, layouts and such other written, oral and machine-readable information as Gould has available relating to the formulation, raw material specifications and process specifications for the Covered Products as of the Effective Date. 

5.       TERMINATION

          5.1          If any of the Patents expire or are challenged and declared invalid by a court of competent jurisdiction, the license hereunder with respect to such Patent(s) will terminate and the royalty with respect to Covered Products covered by a claim under such Patent(s) shall terminate, provided such Covered Products are not covered by an unexpired valid claim under a different Patent. 

          5.2          If either party defaults on or breaches a material provision of this Agreement, the party not in default or breach will have the right to cancel this Agreement upon ninety (90) days’ written notice; provided, however, that if the defaulting party corrects the default or breach within the ninety (90)-day period, this Agreement will continue in full force and effect; provided, further, that for purposes of this Section 5.2, Sections 6.1, 6.2, 7.1, 7.2 and, to the extent a breach thereunder results in the inability of Innovex to produce the Covered Products, 4.1, are the “material provisions.” 

3

CERTAIN INFORMATION INDICATED BY [* * *] HAS BEEN DELETED FROM THIS EXHIBIT AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT UNDER RULE 24b-2.

          5.3          Gould may terminate this Agreement in the event that proceedings for reorganization, liquidation, bankruptcy or receivership are filed or instituted against Innovex. 

          5.4          Gould may terminate this Agreement in the event the closing contemplated by that certain Real Property Purchase Agreement dated September 7, 2004 between Innovex and Gould (the “Real Property Agreement”) does not occur by reason of Innovex’s failure to satisfy its obligations thereunder, except to the extent such obligations need not be satisfied by reason of the failure of the Contingencies (as defined in the Real Property Agreement) to be met. 

          5.5          In the event this Agreement is terminated under Section 5.2 by Innovex, Innovex shall have a worldwide, perpetual, non-exclusive, royalty-free right and license under the Patents and Know-How to make the Covered Products for its own internal purposes in the fabrication of circuits and to sell, market and distribute by any means whatsoever circuitry products which include the Covered Products as component parts thereof. 

          5.6           In the event this Agreement is terminated, this Agreement will become void and cease to have any further force or effect and no party will have any liability or any further obligation to any other party, provided, however, that the obligations of the parties under Sections 5, 6, 8, 9 and 12-17 will survive any termination of this Agreement. 

6.       CONFIDENTIALITY

          6.1          Neither party shall disclose to the other party any Confidential Information of any third person or organization. 

          6.2          Neither party shall at any time or in any manner, either directly or indirectly, divulge, disclose or communicate in any manner any Confidential Information to any third person or organization without the prior written consent of said other party.  “Confidential Information” means all information or knowledge disclosed in connection with this Agreement that is not known to the general public, including, without limitation, all know-how, research, technical information, ideas, inventions, improvements, data and files.  Confidential Information does not include any information that (a) has entered the public domain through no wrongful act or breach of any obligation of confidentiality on the disclosing party’s part or (b) is rightfully received from a third party who provides such information without a confidentiality obligation. 

          6.3          Neither party shall disclose the details of the terms and conditions of this Agreement without the prior written consent of the other party unless required to do so in connection with a legal proceeding by order of a competent court of law or otherwise required by law, including U.S. securities laws.  If such an order occurs, written notice will be provided to the party to this Agreement that is not a participant in the legal proceeding so that such party may contest disclosure of the terms and conditions of this Agreement if that party so chooses. 

4

CERTAIN INFORMATION INDICATED BY [* * *] HAS BEEN DELETED FROM THIS EXHIBIT AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT UNDER RULE 24b-2.

          6.4          Notwithstanding the foregoing, Gould has the right to issue communications or press releases from time to time that state that Gould has entered into a license agreement with a third party with respect to the Patents.  In no circumstances will Gould identify Innovex in such press releases without the prior written consent of Innovex. 

7.       WARRANTY

Each of Innovex and Gould represents and warrants that:

          7.1          It has full right and title to all of the information, materials, apparatus and other items to be delivered under this Agreement. 

          7.2          It has the right and power to grant the rights granted in this Agreement. 

          7.3          There are no liens or encumbrances of any kind whatsoever against such information, materials, apparatus and other items to be delivered, or any outstanding agreements, assignments or encumbrances inconsistent with the provisions of this Agreement. 

8.       OWNERSHIP

          8.1          Innovex and Gould acknowledge and agree that nothing contained in this Agreement will be deemed to grant either party directly or by implication, estoppel or otherwise, any license under any trademarks, service marks, patents or patent applications arising out of any other intellectual property of any party that is not otherwise specified in this Agreement.  Ownership of any work protectable by patent, trademark or copyright that is not associated with the subject matter of this Agreement is expressly reserved for and owned by the originating party. 

9.       ENFORCING PATENT RIGHTS

          9.1          Gould has the right to enforce any and all rights relating to the Patents against any infringer at its own and sole expense. 

10.     INDEMNIFICATION

          10.1        Except to the extent indemnifiable by Gould under Section 10.2, Innovex shall indemnify, defend and hold harmless Gould, its affiliates and its officers, directors, agents, employees, successors and assigns from and against any and all claims, losses, damages, expenses, obligations, penalties, demands, suits, procedures, assessments, judgments, costs and liabilities (including costs of collection, investigation, reasonable attorneys’ fees and other costs of defenses) (collectively, the “Losses”) incurred by Gould, arising out of or relating to (a) any unauthorized use by Innovex of the Patents and Know-How, (b) any liability to any third party from loss, damage or injury to persons or property in any manner arising from Innovex’s use of or sale of goods relating to the Patents and (c) any breach by Innovex of any term or condition contained in this Agreement. 

5

CERTAIN INFORMATION INDICATED BY [* * *] HAS BEEN DELETED FROM THIS EXHIBIT AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT UNDER RULE 24b-2.

          10.2        Gould shall indemnify, defend and hold harmless Innovex, its affiliates and its officers, directors, agents, employees, successors and assigns from and against any and all Losses incurred by Innovex arising out of or relating to (a) any claim by any third party that the Patents or Know-How infringe the rights of such third party; and (b) any breach by Gould of any term or condition contained in this Agreement. 

11.     AMENDMENTS

          11.1        No provisions to this Agreement will be deemed waived, amended, modified or in any way altered by either party unless such waiver, amendment or modification is an instrument in writing and signed by a duly authorized officer of the party against whom the waiver or modification is sought to be enforced. 

12.     ASSIGNMENTS

          12.1        The rights and obligations of Innovex under this Agreement may not be assigned by Innovex to any successor or assign (whether by stock, asset transfer, merger or otherwise) without the prior written consent of Gould, which consent shall not be unreasonably withheld.  In the event Gould withholds its consent in accordance with the preceding sentence, this Agreement will continue in full force and effect for a period of one year from the date of the assignment, or such earlier date as Innovex has transitioned to an alternative material for use in its manufacturing process as long as the parties hereto (including any proposed successor or assignee) first negotiate in good faith to attempt to enter into an amended and restated license agreement or other mutually agreeable agreement between Gould and such successor or assign. 

13.     SEVERABILITY

          13.1        If any provision of this Agreement is held to be invalid, illegal or unenforceable, the validity, legality and the ability to enforce the remaining provisions will in no way be affected or impaired thereby. 

          13.2        The failure of either party in any instance to insist on strict performance of a covenant or condition of this Agreement or to exercise any option contained in this Agreement will not be construed as a waiver of its own right to enforce all the terms and conditions in any other instance. 

14.     FORCE MAJEURE

          14.1        In the event that further lawful performance of this Agreement or any part thereof by either party is rendered impossible by or as a consequence of any law, order, regulation or act of any government or political subdivisions or agency thereof having jurisdiction over such party or its affiliates or acts of public enemies, war, strikes or other labor disturbances, fires, floods, acts of God or any causes of like or different kind beyond the control of the parties, the parties will be excused from any failure to perform any obligation under this Agreement to the extent such failure is attributable to such causes. 

6

CERTAIN INFORMATION INDICATED BY [* * *] HAS BEEN DELETED FROM THIS EXHIBIT AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT UNDER RULE 24b-2.

15.     THIRD PARTY BENEFICIARIES

          15.1        Nothing in this Agreement is intended or will be construed to confer on any person other than the parties or their successors and assigns any rights or benefits under this Agreement.

16.     ENTIRE UNDERSTANDING OF THE PARTIES

          16.1        This Agreement is intended to be the sole and complete statement of the obligations of the parties relating to the subject matter of this Agreement and supersedes any and all prior or contemporaneous oral or written representations or communications, understandings, agreements, negotiations and proposals relating to this Agreement. 

17.     OHIO LAW

          17.1        This Agreement will be construed and the legal relations created in this Agreement between the parties will be determined in accordance with the laws of the State of Ohio and any dispute related thereto will be venued in the courts of the State of Ohio. 

          17.2        In the event any litigation between the parties hereto to enforce any provision in this Agreement arises, the party found liable in such litigation shall pay to the prevailing party the reasonable attorneys’ fees incurred by the prevailing party. 

IN WITNESS WHEREOF, the parties have executed this Agreement on the date specified below. 

NIKKO MATERIALS USA, INC.		INNOVEX, INC.
(d/b/a Gould Electronics)
	/s/  L. JOSEPH HUSS		/s/  THOMAS PAULSON
By:	L. Joseph Huss	By:	Thomas Paulson
Title:	President and CEO	Title:	Senior Vice President and CFO
Date:	December 31, 2004	Date:	December 31, 2004

7

EX-10.2

Exhibit 10.2

LEASE AGREEMENT

          THIS LEASE (this “Lease”) is entered into as of December 31, 2004, between NIKKO MATERIALS USA, INC., an Arizona corporation (“Landlord”) and INNOVEX, INC., a Minnesota corporation (“Tenant”).

RECITALS:

          A.          Landlord, as seller, and Tenant, as purchaser, have entered into (a) that certain Real Property Purchase Agreement dated September 7, 2004 (the “Property Purchase Agreement”), whereby Tenant agreed to purchase from Landlord the real property located at 34929 Curtis Boulevard, Eastlake, Ohio more particularly described on Exhibit A attached hereto (the “Land”) and (b) that certain Equipment and Inventory Purchase Agreement dated as of September 7, 2004, as amended on December 22, 2004 (the “Equipment and Inventory Purchase Agreement”), whereby Tenant agreed to purchase from Landlord certain personal property more particularly described in the Equipment and Inventory Purchase Agreement (the “Equipment”).

          B.          The Land includes, among other things, a building consisting of approximately 110,000 square feet (the “Building”). 

          C.          Pursuant to the terms and conditions of the Equipment and Inventory Purchase Agreement, Landlord desires to lease to Tenant and Tenant desires to lease from Landlord certain space in the Building where the Equipment is located. 

          NOW, THEREFORE, in consideration of the mutual premises, covenants, terms and conditions herein contained and intending to be legally bound, Landlord and Tenant hereby agree as follows:

1.

Leased Space.  Landlord leases to Tenant, and Tenant accepts and leases from Landlord, under the terms and conditions of this Lease, that certain space in the Building where the Equipment is currently located, and the right to operate such Equipment, together with all necessary means of ingress and egress thereto (the “Premises”).  The use and occupancy by Tenant of the Premises is subject at all times to the use of the Building in common with Landlord without in any way unreasonably interfering with Landlord’s use and operation of the Building and to reasonable rules and regulations for the use thereof as prescribed from time to time by Landlord.  In addition, Tenant and Tenant’s customers, employees, licensees, agents and invitees will have the right to use on a non-exclusive basis the parking lot serving the Building.

2.

Term.  This Lease will commence on the date hereof and will terminate on the date of the transfer of title to the Premises from Landlord to Tenant, in accordance with the terms and provisions of the Property Purchase Agreement (the “Expiration Date”), unless the term is earlier terminated by written notice of Tenant to Landlord at any time or upon the termination of the Purchase Agreement (the “Term”).

3.	Rent.  Tenant shall pay Landlord as rent the gross sum of One Dollar ($1.00) (the “Rent”) for the Term of this Lease. Landlord acknowledges receipt of the Rent.
4.	Use.  The Tenant may use the Premises for operating the Equipment in connection with manufacturing, storing and distributing flex materials.  Tenant shall comply with all laws, rules and ordinances applicable to the Premises.  The Landlord acknowledges that Tenant will list the Premises for sale immediately after the commencement of the Term of this Lease.  In connection with such efforts, Tenant may not place any sale signs on or outside the Premises and Landlord agrees to cooperate with any reasonable action to facilitate the selling of the Premises.  Landlord may access the Premises during the Term to remove any equipment owned by Landlord; provided, however, Landlord shall not remove such equipment that may be necessary for Tenant’s use and enjoyment of the Premises and Landlord shall remove such equipment in a manner to avoid any unreasonable disturbance to Tenant’s operations in the Premises.
5.	Utilities.  Landlord, at its sole cost and expense, shall supply the Premises with any and all utilities necessary for Tenant’s use and enjoyment of the Premises. If the Tenant pays for any utilities, the Landlord shall reimburse the Tenant for all such payments made on the Landlord’s behalf promptly upon presentment of the applicable utility bill.
6.	Maintenance.  Landlord shall perform, at its sole cost and expense, any and all actions necessary to keep the Premises in a neat, clean, orderly and safe condition, including normal and regular maintenance, and all necessary repairs and replacements of the Premises, and its improvements and fixtures.  Tenant will be responsible only to maintain, repair and replace its own equipment located on the Premises.

7.	Insurance.
	a.	Casualty Insurance.  Landlord shall obtain, at is own expense, casualty insurance for the Premises and all improvements for the full replacement value.  Tenant may obtain, at its option, casualty insurance for its equipment located on the Premises.
	b.	Landlord’s Liability Insurance.  Landlord shall procure and maintain a Commercial General Liability Insurance policy, which policy will include without limitation, coverage for bodily injury, personal injury and property damage.  The policy will have a total combined liability policy limit of at least $1,000,000.00 applying to liabilities for bodily injury, personal injury and property damage.  The policy must name Tenant as an additional insured, and will provide that the insurer will not cancel the policy except upon thirty (30) days’ prior written notice.  Landlord shall have provided Tenant with evidence of such insurance prior to the date hereof.
	c.	Tenant’s Liability Insurance.  Tenant shall procure and maintain a Commercial General Liability Insurance policy, which policy will include without limitation, coverage for bodily injury, personal injury, and property damage.  The policy must have a total combined liability policy limit of at least $1,000,000.00 applying to liabilities for bodily injury, personal injury and property damage.

The policy must name Landlord as an additional insured, and will provide that the insurer will not cancel the policy except upon thirty (30) days’ prior written notice.  Tenant shall have provided Landlord with evidence of such insurance prior to the date hereof.

8.	Real Estate Taxes.  Landlord shall pay all real estate taxes and installments of special assessments (the “Taxes”) due with respect to the Premises for the Term of this Lease.
9.	Assignment and Subletting.  Tenant shall not assign or in any manner encumber this Lease or its interest in or under this Lease, nor sublet the whole or any part of the Premises, nor permit any other person, either jointly with Tenant or otherwise, to use the Premises or any part thereof, without first obtaining, on each occasion, the written consent of Landlord, which consent shall not be unreasonably withheld.
10.	Alterations.  Tenant shall make no alteration, addition or change in the Premises without the prior written consent of Landlord, which may not be unreasonably withheld, conditioned or delayed.
11.	Casualty and Condemnation.  If (a) the Premises are damaged by any casualty or (b) less than the entire Premises are taken under the exercise of the power of eminent domain by any competent governmental authority, and such casualty or condemnation may reasonably be repaired within ninety (90) days from the date of such casualty or condemnation (as reasonably determined by Landlord), Landlord shall, at Landlord’s expense, repair the same with all reasonable speed and will complete such repairs within ninety (90) days from the happening of such casualty or condemnation. In the event that any casualty or condemnation cannot reasonably be repaired within ninety (90) days from the happening of such destruction or damage, either Landlord or Tenant will have the right to terminate this Lease by giving written notice to the other within thirty (30) days from Landlord’s notice of Tenant of the repair estimate.  If neither party elects to terminate this Lease as provided herein, Landlord shall, at Landlord’s expense, repair the same with all reasonable speed as described herein and, if Landlord fails to repair such damage or destruction within ninety (90) days after such damage or destruction, Tenant will have the right to terminate this Lease.  In the event the entire Premises have been taken under the exercise of the power of eminent domain, this Lease will terminate as of the date of such taking.  If either the entire Premises or only a part thereof are so taken by eminent domain, any damages awarded will belong to and be the property of Landlord, except that the parties specifically agree that Tenant will be entitled to any award made for relocation of Tenant’s business, depreciation or damage to and cost of removal of Tenant’s personal property and trade fixtures, and damage to Tenant’s business due to the taking.

12.	Environmental Agreements.
	a.	Landlord Obligations.  Landlord hereby agrees to pay and protect, indemnify and hold Tenant harmless from and against any and all liabilities, damages, costs, expenses (including reasonable attorneys’ fees and expenses), causes of action, suits, claims, demands or judgment, to the extent arising from a release or

	threatened release of toxic or hazardous wastes or substances, pollutants or contaminants (“Hazardous Materials”) on, in or under the Premises, to the extent such condition was identified as an environmental condition in the environmental assessments conducted pursuant to the Real Property Purchase Agreement (a “Baseline Environmental Condition”) or was caused by Landlord’s acts or omissions on the Premises or other portions of the building during the term hereof.  Landlord represents to Tenant that, to the best of its knowledge, there are no Hazardous Materials on, in or under the Premises as of the date hereof that are not used and stored in compliance with all applicable laws.
b.	Tenant Obligations.  Tenant hereby agrees to pay and protect, indemnify and hold Landlord harmless from and against any and all liabilities, damages, costs, expenses (including reasonable attorneys’ fees and expenses), causes of action, suits, claims, demands or judgment, to the extent arising from a release or threatened release of Hazardous Materials on, in or under the Premises or any other portion of the Building during the Term, except to the extent that such condition was identified as a Baseline Environmental Condition or was caused by Landlord’s acts or omissions during the term hereof.  Tenant hereby warrants and covenants with Landlord that Tenant’s use and occupancy of the Premises will comply with any and all local, state and federal laws, ordinances, rules, regulations and requirements regarding Tenant’s operations and the environmental condition of the Premises.  Tenant further warrants and covenants to Landlord that it will not create or permit the introduction, release or discharge from or onto the Land of any Hazardous Materials during the Term of this Lease.
c.	Survival.  The covenants contained in this paragraph will survive the expiration or earlier termination of the Term of this Lease.

13.

Event of Default.  If Tenant is in default in performing any of the terms and provisions of this Lease, Landlord shall give Tenant written notice of such default, and if Tenant fails to cure such default within thirty (30) days after the date of receipt of such notice (unless such failure cannot reasonably be corrected within such 30-day period, then if Tenant has not within such period commenced in good faith to correct such failure), then and in such event Landlord will have the option of (a) curing such default on behalf of and for the account of Tenant, in which case the sum so expended by Landlord, together with interest at the maximum legal rate per annum will be deemed to be additional rent due and owing on demand, or (b) terminating this Lease by serving written notice thereof on Tenant, as well as such other rights and remedies as this Lease and the law permits.

14.

Termination of the Property Purchase Agreement.  In the event of a termination of the Property Purchase Agreement, this Lease will automatically terminate thirty (30) days after such termination, during which time, Tenant will have the right to remove the Equipment.

15.	Indemnification.
	a.	Tenant hereby agrees to indemnify and hold Landlord, its contractors, employees, officers, partners and shareholders harmless from and against any and all costs, damages, claims, liabilities and expenses (including reasonable attorneys’ fees) suffered by or claimed against Landlord, resulting from Tenant’s use and occupancy of the Premises, any negligence of Tenant or its employees or contractors, or any failure of Tenant to comply with the terms of this Lease.
	b.	Landlord hereby agrees to indemnify and hold Tenant, its contractors, employees, officers, partners and shareholders harmless from and against any and all costs, damages, claims, liabilities and expenses (including reasonable attorney fees) suffered by or claimed against Tenant, resulting from any negligence of Landlord or its employees or contractors, or any failure of Landlord to comply with the terms of this Lease.
16.	Miscellaneous.  There are no understandings or agreements not incorporated in this Lease, the Equipment and Inventory Purchase Agreement or the Property Purchase Agreement.  This Lease will be construed according to the laws of Ohio.  The captions in this Lease are for convenience and are not a part of this Lease.  The covenants and agreements hereof will as fully and completely bind the successors and assigns of the parties hereto as if they had been specifically mentioned in each of said covenants and agreements.  This Lease may be executed in counterparts, each of which will be deemed an original, and all of which together will constitute one and the same instrument.
IN WITNESS WHEREOF, Landlord and Tenant have duly executed this Lease as of the day and year first above written.

Landlord:
NIKKO MATERIALS USA, INC.
	/s/  L. JOSEPH HUSS
By:	L. Joseph Huss
Its:	President and CEO
Tenant:
INNOVEX, INC.
	/s/  THOMAS PAULSON
By:	Thomas Paulson
Its:	Senior Vice President and CF

EX-99.1

Exhibit 99.1

NEWS RELEASE

INNOVEX, INC.	CONTACT:
5540 Pioneer Creek Drive	Tom Paulson, CFO
Maple Plain, MN  55359-9003	Doug Keller, VP - Finance
Phone: 763-479-5300
Facsimile: 763-479-5395
Internet: http://www.innovexinc.com

Innovex Purchases Base Material Manufacturing Capability

          January 6, 2005—Maple Plain, MN—Innovex, Inc. (Nasdaq: INVX) today announced that effective December 31, 2004, 11:59 PM, Innovex purchased the assets used to manufacture adhesiveless, copper clad polyimide from Gould Electronics Inc.  Copper clad polyimide is the base material utilized by Innovex to manufacture flexible circuits.  Concurrent with the purchase, Innovex also obtained a license to manufacture the copper clad polyimide and on July 1, 2005, Innovex will purchase Gould’s Eastlake, Ohio facility where the equipment is currently being used to manufacture copper clad polyimide.  The combined purchase price will be approximately $7 million. 

          “This acquisition represents the achievement of a long-term strategic objective to integrate up-stream and manufacture a significant portion of our copper clad polyimide requirements,” stated William P. Murnane, Innovex’s President and Chief Executive Officer.  “We will now be better able to fine tune the performance of our raw material, which will improve process capability and end product performance.  In addition, controlling our raw material supply will reduce lead times and inventory by shortening our supply chain and will lower overall product costs.”

          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.

          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, the impact of competitive products and pricing, effect of world-wide economic conditions on flexible circuit demand, changes in manufacturing efficiencies and other risks detailed from time to time in the company’s reports filed with the Securities and Exchange Commission.