-----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, QamsI8ZdJARfPC7RVgzwiQTA1de4HjvplLbf9PeJlPkAsrj+HNdaSKCXCbBlupzs Lt6pz5S77Bx4oQ1WEhQFLg== 0000950152-01-506170.txt : 20020412 0000950152-01-506170.hdr.sgml : 20020412 ACCESSION NUMBER: 0000950152-01-506170 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20011120 ITEM INFORMATION: Other events ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 20011203 FILER: COMPANY DATA: COMPANY CONFORMED NAME: METATEC INTERNATIONAL INC CENTRAL INDEX KEY: 0000203200 STANDARD INDUSTRIAL CLASSIFICATION: PHONOGRAPH RECORDS & PRERECORDED AUDIO TAPES & DISKS [3652] IRS NUMBER: 311647405 STATE OF INCORPORATION: OH FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-09220 FILM NUMBER: 1805383 BUSINESS ADDRESS: STREET 1: 7001 METATEC BLVD CITY: DUBLIN STATE: OH ZIP: 43017 BUSINESS PHONE: 6147612000 MAIL ADDRESS: STREET 1: 7001 METATEC BLVD CITY: DUBLIN STATE: OH ZIP: 43017 FORMER COMPANY: FORMER CONFORMED NAME: METATEC CORP DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: SILCO INVESTORS CORP DATE OF NAME CHANGE: 19900801 8-K 1 l91754ae8-k.txt METATEC INTERNATIONAL FORM 8-K 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 3, 2001 (November 20, 2001) METATEC INTERNATIONAL, INC. - ------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Ohio 0-9220 31-1647405 - --------------------------------- -------------- ------------------------- (State or other jurisdiction of (Commission (IRS Employer incorporation) File Number) Identification No.) 7001 Metatec Boulevard, Dublin, Ohio 43017 - -------------------------------------------- -------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (614) 761-2000 Not Applicable - -------------------------------------------------------------------------------- (Former name or former address, if changed since last report) ITEM 5. OTHER EVENTS AND REGULATION FD DISCLOSURE The Huntington National Bank and Bank One, NA (collectively, the "Banks") have provided a $12,958,000 term loan facility and a $13,000,000 revolving loan facility to the Company (the "Credit Facilities") pursuant to an amended and restated loan agreement dated as of March 31, 2001 (the "Loan Agreement"). On October 25, 2001, the Banks declared the Company in default of the Credit Facilities due to the Company's failure to satisfy a financial covenant contained in the Loan Agreement. As of November 20, 2001, the Banks and the Company entered into a standstill agreement and an amendment to the Loan Agreement (the "Standstill Agreement") pursuant to which, among other things, the Banks agreed to forebear commencing any legal proceedings against the Company or exercising their rights and remedies under the Loan Agreement through the period ending on and including December 14, 2001. In addition, under the Standstill Agreement, the Credit Facilities will bear interest at the default rate under the Loan Agreement, which is 3.5% in excess of the prime interest rate of the Banks. The Credit Facilities are secured by a first lien on all non-real estate business assets of the Company and a pledge of the stock of the Company's subsidiaries. In addition, the Company has an equipment lease agreement with Banc One Leasing Company ("BOLC") relating to certain equipment used in the manufacturing operations of the Company. Under the cross-default provisions contained in the equipment lease agreement, on October 31, 2001, BOLC declared the Company to be in default of the equipment lease agreement due to the Company's default under the Loan Agreement. On November 21, 2001, BOLC and the Company entered into a forebearance agreement (the "Forebearance Agreement") pursuant to which, among other things, BOLC agreed to forebear exercising its rights and remedies under the equipment lease agreement through the period ending on and including December 14, 2001. In a related transaction, on November 28, 2001, the Company terminated certain foreign contracts with a market value of approximately $945,000 and used the proceeds to reduce remaining leasing payments. On December 15, 2001, all principal and accrued interest under the Credit Facilities, or approximately $20,200,000, will be immediately due and payable to the Banks, and the Banks will have the right to commence legal proceedings against the Company and exercise its rights and remedies under the Loan Agreement, unless the forebearance period under the Standstill Agreement is extended by agreement of the Banks. Likewise, on December 15, 2001, BOLC will have the right to exercise its rights and remedies under the equipment lease agreement, unless the forebearance period under the Forebearance Agreement is extended by agreement of BOLC. There can be no assurance that the Company will be able to reach an agreement with the Banks on an extension of the Banks' forebearance period. Likewise, there can be no assurance that the Company will be able to reach an agreement with BOLC on an extension of BOLC's forebearance period. The Company's liquidity and its ability to meet its current financial obligations as they become due will be dependent upon the Company's ability to extend such forebearance periods. The Company's failure to reach agreement with the Banks as to an extension of the Banks' forebearance period will have a material adverse impact on the Company's financial position and continuing operations. Copies of the Standstill Agreement and the Forebearance Agreement have been filed as exhibits to this Form 8-K. ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS (c) Exhibits. EXHIBIT NUMBER DESCRIPTION OF EXHIBIT 10.1 Standstill Agreement and First Amendment to Amended and Restated Loan Agreement dated as of November 20, 2001, among Metatec International, Inc., Bank One, NA, The Huntington National Bank, other financial institutions from time to time party thereto, as banks, and The Huntington National Bank, as administrative agent for the banks. 10.2 Forebearance Agreement dated as of November 21, 2001, among Metatec Worldwide, Inc. and Banc One Leasing Corporation. 10.3 Standard Industrial Lease dated as of October 30, 1998, along with Amendment No. 1 to Standard Industrial Lease dated as of July 15, 1999, and Amendment No. 2 to Standard Industrial Lease dated as of August 30, 1999, between Fleming Business Park LLC, as landlord, and Metatec International, Inc., as tenant. SIGNATURES 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 hereunto duly authorized. METATEC INTERNATIONAL, INC. Date: December 3, 2001 By /S/ Julia A. Pollner --------------------------------------- Julia A. Pollner, Senior Vice President, Finance (authorized signatory) EXHIBIT INDEX EXHIBIT NUMBER DESCRIPTION OF EXHIBIT 10.1 Standstill Agreement and First Amendment to Amended and Restated Loan Agreement dated as of November 20, 2001, among Metatec International, Inc., Bank One, NA, The Huntington National Bank, other financial institutions from time to time party thereto, as banks, and The Huntington National Bank, as administrative agent for the banks. 10.2 Forebearance Agreement dated as of November 21, 2001, among Metatec Worldwide, Inc. and Banc One Leasing Corporation. 10.3 Standard Industrial Lease dated as of October 30, 1998, along with Amendment No. 1 to Standard Industrial Lease dated as of July 15, 1999, and Amendment No. 2 to Standard Industrial Lease dated as of August 30, 1999, between Fleming Business Park LLC, as landlord, and Metatec International, Inc., as tenant. EX-10.1 3 l91754aex10-1.txt EXHIBIT 10.1 EXHIBIT 10.1 STANDSTILL AGREEMENT AND FIRST AMENDMENT TO AMENDED AND RESTATED LOAN AGREEMENT This Standstill Agreement and First Amendment to Amended and Restated Loan Agreement (this "Agreement") is dated as of the 20th day of November, 2001, and is executed by and among (a) Metatec International, Inc., an Ohio corporation (the "Company"), as borrower, (b) The Huntington National Bank ("Huntington"), Bank One, NA ("Bank One") and all other financial institutions from time to time party to a certain Amended and Restated Loan Agreement dated as of March 31, 2001 (as the same may be amended from time to time, the "Loan Agreement"), whether by execution of the Loan Agreement or an assignment and acceptance acceptable to the Administrative Agent (collectively, the "Banks" and individually a "Bank"), as lenders, and (c) Huntington, as Administrative Agent for the Banks (Huntington in such capacity, the "Administrative Agent"). (All capitalized terms not otherwise defined herein shall have the meanings ascribed to such terms in the Loan Agreement.) RECITALS -------- The following recitals constitute mutual statements by the parties of certain factual matters which form the basis of this Agreement. A. HUNTINGTON OBLIGATIONS. Pursuant to the terms of the Loan Agreement, Huntington is the owner and holder of (i) a certain $7,800,000.00 Revolving Note executed by the Company and dated as of March 31, 2001, (the "Huntington Revolving Note"), and (ii) a certain $7,774,800.00 Term Note executed by the Company and dated as of March 31, 2001 (the "Huntington Term Note"). B. BANK ONE OBLIGATIONS. Pursuant to the terms of the Loan Agreement, Bank One is the owner and holder of (i) a certain $5,200,000.00 Revolving Note executed by the Company and dated as of March 31, 2001, (the "Bank One Revolving Note"), and (ii) a certain $5,183,200.00 Term Note executed by the Company and dated as of March 31, 2001, (the "Bank One Term Note"). C. OUTSTANDING BALANCES. On and as of the date hereof, (i) the outstanding principal balance of the Huntington Revolving Note is $4,503,679.09, (ii) the outstanding principal balance of the Bank One Revolving Note is $3,002,452.72, (iii) the outstanding principal balance of the Huntington Term Note is $5,595,750.00, (iv) the outstanding principal balance of the Bank One Term Note is $3,730,500.00, and (v) the aggregate stated value of issued and outstanding Sub-Facility Letters of Credit is $2,050,000.00. In addition to the foregoing principal sums of the Notes, the Company is indebted to the Banks with respect to the Notes and the Loan Agreement for accrued and unpaid interest, accrued and unpaid Commitment Fees, late charges and other fees and assessments. D. MATERIAL DEFAULTS. The Company has failed to fulfill certain material obligations under the provisions of the Loan Agreement. Specifically, the Company has failed to meet the requirements set forth in Section 4.21 of the Loan Agreement with respect to the period ending September 30, 2001, and the requirements set forth in Sections 4.12 and 4.21 of the Loan Agreement with respect to the period ending October 31, 2001 (the "Current Defaults"). The failure by the Company to fulfill such obligations has caused the Company to be in default to the Administrative Agent and the Banks under the terms of the Loan Agreement and the Loan Documents. E. MATURITY; RIGHT TO ACCELERATE. By virtue of the existence of the Current Defaults, notice of which has been received by the Company, the Administrative Agent and the Banks have the right, pursuant to the terms of the Loan Agreement and the other Loan Documents, to declare the Obligations to be immediately due and payable, to collect the Obligations and to exercise any and all legal rights and remedies available to the Administrative Agent and the Banks. The Administrative Agent and the Banks hereby reserve all rights they have at law, in equity, by agreement or otherwise. F. BANKS' AGREEMENT TO FORBEAR. The Company, the Administrative Agent and the Banks have recently had certain discussions regarding the exercise by the Administrative Agent and the Banks of their remedies under the Loan Agreement and the Loan Documents. The Company has requested that the Administrative Agent and the Banks forbear from exercising any such remedies or taking any other legal action against the Company based upon the Current Defaults and the Administrative Agent and the Banks have agreed to do so for a limited period of time, conditioned upon the Company's compliance with the provisions of this Agreement. The forbearance by the Administrative Agent and the Banks from the current exercise of the rights and remedies as provided for in this Agreement shall result in direct and tangible benefit to the Company and the Guarantor. STATEMENT OF AGREEMENT ---------------------- In consideration of the foregoing Recitals and the agreements and undertakings contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company, the Administrative Agent and the Banks hereby agree as follows: Section 1. ACKNOWLEDGMENT OF CURRENT DEFAULTS. On and as of the date hereof: (a) the Current Defaults which have occurred under the Loan Agreement are as set forth in the Recitals; (b) timely, adequate and proper notice of the occurrence of the Current Defaults under the Loan Agreement has been received by the Company from the Administrative Agent and the Banks; (c) all grace periods, if any, applicable to the cure of the Current Defaults after receipt of such notices have expired; (d) each of the Current Defaults is continuing without timely cure by the Company; and (e) the Administrative Agent and the Banks have not waived in any respect any or all of the Current Defaults or the Banks' rights and remedies with respect thereto. Section 2. ACKNOWLEDGMENT OF THE BANKS' RIGHTS TO ACCELERATE. On and as of the date hereof, the Administrative Agent and the Banks have the right to accelerate and to declare the Obligations to be immediately due and payable and the right to make demand upon the Company for the payment in full thereof. Section 3. ACKNOWLEDGMENT OF OBLIGATIONS. On and as of the date hereof: (a)(i) the outstanding principal balance of the Huntington Revolving Note is $4,503,679.09, (ii) the outstanding principal balance of the Bank One Revolving Note is $3,002,452.72, (iii) the outstanding principal balance of the Huntington Term Note is $5,595,750.00, (iv) the outstanding principal balance of the Bank One Term Note is $3,730,500.00, and (v) the aggregate stated value of issued and outstanding Sub-Facility Letters of Credit is $2,050,000.00, (b) in addition to the foregoing principal sums of the Notes, the Company is indebted to the Banks with respect to the Notes and the Loan Agreement for accrued and unpaid interest, accrued and unpaid Commitment Fees, late charges and other fees and assessments, and (c) all such amounts are payable in full as provided in the Loan Agreement and the Loan Documents, without offset, recoupment, deduction or counterclaim of any kind or character whatsoever, but are subject to increase or other adjustment as a result of any and all advances, interest charges, late charges and other assessments, including, without limitation, attorneys' fees and costs of collection, which are payable to the Administrative Agent and the Banks under the Loan Agreement and the Loan Documents. Section 4. ACKNOWLEDGMENT THAT OBLIGATIONS CONTINUE IN FULL FORCE AND EFFECT. Except as otherwise expressly set forth in this Agreement, the Obligations of the Company to the Administrative Agent and the Banks under the Loan Agreement and the other Loan Documents shall remain as currently written and in full force and effect in all respects, and nothing herein shall affect, alter, modify, limit or impair any of the rights and powers which the Administrative Agent and the Banks may have thereunder. Section 5. ACKNOWLEDGMENT OF ENFORCEABLE AND PERFECTED SECURITY INTERESTS. The Obligations are secured by valid, enforceable and perfected security interests in Collateral of the Company and the Guarantor, which security interests are and shall remain valid, enforceable and perfected, and shall not be released, impaired, diminished or in any other way modified or amended as a result of the execution and delivery of this Agreement or by the agreements and undertakings of the parties contained herein or relating hereto. Section 6. FORBEARANCE. So long as the Company fully and timely pays and performs its obligations (including, without limitation, the Obligations) to the Administrative Agent and the Banks under the Loan Agreement and the Loan Documents, the Administrative Agent and the Banks shall forbear during the Standstill Period from exercising their rights and remedies at law, in equity, by agreement or otherwise, and the Administrative Agent and the Banks shall not commence, prior to the occurrence of a Standstill Termination Event, any legal proceeding against the Company or the Guarantor or against any Collateral. Section 7. STANDSTILL PERIOD. For purposes of this Agreement, the "Standstill Period" shall mean the period commencing on the date hereof and continuing through the earlier of (i) 11:59 p.m. Eastern Time on December 14, 2001, or (ii) the termination the obligations of the Banks under Section 6 of this Agreement in connection with the occurrence of a Standstill Termination Event. As used herein, a "Standstill Termination Event" shall exist if any of the following (excluding the Current Defaults) occurs: (a) the Company fails to make any payment with respect to any Obligation by the date such payment is due (other than a $625,000.00 principal payment due November 30, 2001 with respect to the Term Note and certain $75,000.00 fee payments due November 30, 2001 to each of Huntington and Bank One under Section 2.14 of the Loan Agreement, all of which payments are hereby deferred to the end of the Standstill Period); or (b) any other Event of Default occurs (and a breach of any term of this Agreement by the Company shall constitute an additional Event of Default under the Loan Agreement). Upon the occurrence of a Standstill Termination Event, the obligations of the Administrative Agent and the Banks under Section 6 of this Agreement shall terminate automatically, upon such notice to the Company, if any, as may be required under the terms of the Loan Agreement, on the day of the occurrence of such Standstill Termination Event, and all of the Obligations shall be immediately due and payable in full without further demand or notice. Thereafter, the rights and remedies of the Administrative Agent and the Banks may be exercised in accordance with this Agreement, the Loan Agreement and the other Loan Documents. Section 8. AMENDMENT OF LOAN AGREEMENT. To induce the Administrative Agent and the Banks to enter into this Agreement, the Company agrees that the Loan Documents are hereby supplemented and modified as follows, which modifications shall supersede and prevail over any conflicting provisions of the Loan Documents: (a) The first paragraph of Section 1.3(a) of the Loan Agreement is hereby amended and restated in full as follows: 1.3 REVOLVING LOAN. (a) FREQUENCY AND AMOUNT OF ADVANCES. Subject to the terms and conditions hereof, the Company may borrow and repay any outstanding advance under the Revolving Loan on any Business Day (as hereinafter defined), and any amounts so repaid may be re-borrowed. "Business Day" means a day which is not a Saturday or Sunday or a legal holiday and on which Huntington is not required by law or other governmental action to close in Ohio. The principal balance of the Revolving Loan shall not exceed an amount equal to the lesser of (i) $13,000,000.00, or (ii) the sum of (A) 80% of Eligible Domestic Accounts (as hereinafter defined), PLUS (B) 30% of Eligible Domestic Inventory (as hereinafter defined), PLUS (C) 90% of Eligible Domestic Machinery and Equipment (as hereinafter defined) (collectively, the "Borrowing Base"). Notwithstanding any other provision of this Agreement, the maximum amount (subject to the limitation of the Borrowing Base) which may be outstanding at any one time under the Revolving Loan shall be permanently reduced (from $13,000,000.00) by the amount of and upon the receipt by the Banks of the net proceeds of the M&E Liquidation (as hereinafter defined), at which time a new draw loan facility (the "Over-Advance Draw Loan Facility") will be made available to the Company by the Banks in accordance with the terms of Section 1.3(j) of this Agreement. Commencing not later than July 1, 2001, all of the Company's accounts (including accounts that are not Eligible Domestic Accounts) shall be collected through lockbox arrangements (the "Lockbox Collection Account") to be entered into between the Company and the Administrative Agent, and cash collateral and controlled disbursement account arrangements shall also to be entered into between the Company and the Administrative Agent not later than July 1, 2001. The Administrative Agent alone shall have control over and power of withdrawal from the Lockbox Collection Account. (b) Paragraph (3) of Section 1.3(i) of the Loan Agreement is hereby amended and restated in full as follows: 1.3 REVOLVING LOAN. (i) ELIGIBILITY. (3) The term "Eligible Domestic Machinery and Equipment" means that portion of the Company's machinery and equipment that is acceptable to the Banks in their sole discretion and that is at all times located in the United States and that conforms to the warranties regarding the machinery and equipment set forth herein and/or in the governing security agreement(s) in favor of the Administrative Agent and that the Administrative Agent determines from time to time, based on credit policies, market conditions, the Company's business and other matters, is eligible for use in calculating the Borrowing Base. For purposes of determining the Borrowing Base, Eligible Domestic Machinery and Equipment (unless the Administrative Agent agrees otherwise in writing) shall not include items of machinery or equipment that, after March 31, 2001, were or are purchased, leased or otherwise acquired by the Company from or through Banc One Leasing Corporation or that are obsolete, materially damaged or in the possession or control of a third person or in transit. All Eligible Domestic Machinery and Equipment shall be valued at orderly liquidation value based upon an appraisal to be completed by July 2, 2001. To the extent that the Company's machinery and equipment associated with the Company's Silicon Valley operations constitute Eligible Domestic Machinery and Equipment, such machinery and equipment shall immediately cease to be Eligible Domestic Machinery and Equipment as and when the same is liquidated in connection with the M&E Liquidation. (c) A new paragraph (j) is hereby added to Section 1.3 of the Loan Agreement as follows: 1.3 REVOLVING LOAN. (j) OVER-ADVANCE DRAW LOAN FACILITY. (i) ESTABLISHMENT OF AND ADVANCES UNDER OVER-ADVANCE DRAW LOAN FACILITY. Subject to the terms and conditions hereof, as and when the Banks receive the net proceeds of the M&E Liquidation, the Banks, severally, will extend credit to the Company on a draw basis (the "Over-Advance Draw Loan"). With respect to the principal balance of the Over-Advance Draw Loan, each Bank's Loan Commitment shall be equal to the product of (A) such Bank's Commitment Percentage multiplied by (B) the principal balance of the Over-Advance Draw Loan. Except with respect to any "Current Defaults" (as defined in any "standstill" agreement then applicable), the Banks, or any of them, shall have no obligation to advance any sums under the Over-Advance Draw Loan upon the occurrence and continuance of an Event of Default or upon the occurrence of an event which, but for the giving of notice or the lapse of time or both, would constitute an Event of Default. Amounts advanced to and repaid by the Company under the Over-Advance Draw Loan may not be re-borrowed. The Company's right to obtain advances under the Over-Advance Draw Loan shall terminate on December 14, 2001. (ii) MAXIMUM PRINCIPAL AMOUNT OF OVER-ADVANCE DRAW LOAN. The maximum principal amount of the Over-Advance Draw Loan shall not exceed an amount equal to (A) 90% of the Company's Eligible Domestic Machinery and Equipment consisting of machinery and equipment used in the Company's Silicon Valley operations, MINUS (B) the net proceeds of the M&E Liquidation received by the Banks. (iii) USE OF PROCEEDS. The net proceeds of the Over-Advance Draw Loan shall be used for general corporate purposes. (iv) EVIDENCE OF INDEBTEDNESS. The Over-Advance Draw Loan shall be evidenced by a note or by one or more notes (collectively, the "Draw Note") subsequently executed in substitution therefor, each in substantially the form set forth in EXHIBIT B-3 attached hereto. (v) INTEREST. Interest shall accrue and shall be due and payable as provided in the Draw Note. (vi) TERMINATION. The unpaid principal balance of the Draw Loan, together with all accrued and unpaid interest and all fees, charges and other outstanding obligations arising in connection with the Draw Loan, shall be due and payable as provided in the Draw Note. (vii) STATUS OF OVER-ADVANCE DRAW LOAN FACILITY. The Over-Advance Draw Loan Facility shall be (A) a credit facility separate and apart from (and not a sub-facility under) the Revolving Loan (notwithstanding its inclusion in this Section 1.3), and (B) one of the Obligations (as hereinafter defined) secured by the Collateral (as hereinafter defined) and guaranteed by the Guarantors (as hereinafter defined). (d) A new concluding paragraph is hereby added to Section 4.12 of the Loan Agreement as follows: The Company's failure to satisfy the minimum Tangible Net Worth requirement for the period ending November 30, 2001 shall not constitute an Event of Default if such failure occurs solely as a consequence of the M&E Liquidation. Additionally, the Company's failure to satisfy the minimum Tangible Net Worth requirement for the period ending November 30, 2001 shall not constitute a Standstill Termination Event. (e) The second paragraph (and associated table) of Section 4.21 of the Loan Agreement concerning minimum EBITDA requirements for the Company's Silicon Valley operations is hereby deleted and such paragraph is hereby amended and restated in full as follows: The Company's failure to satisfy the minimum EBITDA requirement for the period ending November 30, 2001 shall not constitute an Event of Default if such failure occurs solely as a consequence of the M&E Liquidation. Additionally, the Company's failure to satisfy the minimum EBITDA requirement for the period ending November 30, 2001 shall not constitute a Standstill Termination Event. (f) New Section 4.24 of the Loan Agreement is hereby added to the Loan Agreement as follows: 4.24. SILICON VALLEY OPERATIONS. (a) On or before November 26, 2001, the Company shall deliver or cause to be delivered to the Administrative Agent a detailed plan regarding the closing of the Company's Silicon Valley operations covering, without limitation, employee severance costs, proposals for the liquidation of machinery and equipment associated with the Silicon Valley operations that is no longer necessary for the Company's other operations (the "M&E Liquidation") and such other matters as may be requested by the Administrative Agent. (b) Notwithstanding anything to the contrary set forth in the Loan Agreement or any other Loan Documents, 100% of the net proceeds of the M&E Liquidation shall be remitted to the Administrative Agent, for the ratable benefit of the Banks, immediately upon the receipt of such net proceeds by or on behalf of the Company. All such net proceeds shall be applied by the Banks to the outstanding principal balance under the Revolving Loan, and the maximum amount (subject to the limitation of the Borrowing Base) which may be advanced under the Revolving Loan shall be permanently reduced (from $13,000,000.00) by the amount of such net proceeds. (g) New Section 4.25 of the Loan Agreement is hereby added to the Loan Agreement as follows: 4.25. METATEC INTERNATIONAL B.V. OPERATIONS AND FACILITIES. On or before December 14, 2001, the Company shall present to the Administrative Agent a detailed written plan acceptable to the Administrative Agent and the Banks for resolution or disposition of the Company's operations and facilities in Breda, The Netherlands. (h) New Section 4.26 of the Loan Agreement is hereby added to the Loan Agreement as follows: 4.26. ROYALTY AGREEMENTS. On or before December 14, 2001, the Company shall deliver or cause to be delivered to the Administrative Agent copies of all royalty agreements to which the Company is a party or pursuant to which the Company receives or is entitled to receive royalties. Additionally, the Company shall deliver or cause to be delivered to the Administrative Agent copies of all royalty agreements to which the Company is a party or pursuant to which the Company pays or is required to pay royalties, together with all amendments thereto pursuant to which the Company and the licensors have agreed that the Company shall not be required to pay to the licensors, prior to April 2, 2002, any sums that are delinquent under the royalty agreements as of November 21, 2001. (i) Section 5.1(i) is hereby amended and restated in full as follows: 5.1 FINANCIAL INFORMATION AND REPORTING; REGULATORY REPORTS. (i) [Intentionally deleted.] (j) New Sections 5.1(j), (k), (l), (m) and (n) of the Loan Agreement are hereby added to the Loan Agreement as follows: 5.1 FINANCIAL INFORMATION AND REPORTING; REGULATORY REPORTS. (j) On or before Monday of each week, a rolling thirteen-week cash flow projection for the succeeding thirteen-week period, which projection shall reflect cash receipts by major categories, disbursements in line item detail, and such other information as may be required by the Administrative Agent, such projections to include a comparison of the preceding week's actual cash flow to the most recent projection provided by the Company; (k) On or before November 30, 2001, revised financial projections for the Company through March 31, 2002, for each major business line and location (e.g. Dublin and Breda, The Netherlands), which projections shall detail (including customer names and amounts, and presented by lines of business [e.g. vertical business units for Dublin only]) revenues anticipated from the Company's customers which comprise either the greater of (a) the 10 customers from which the Company earns the greatest amount of revenue, or (b) the customers from which the Company derives 70% of its total revenues, such projections to be in such form and of such content as may be satisfactory to the Administrative Agent and the Banks; (l) On or before the 20th day of each month, preliminary internally prepared financial statements of the Company for the preceding month, on a consolidated and consolidating basis and prepared in accordance with GAAP, including a balance sheet and statements of income and surplus and cash flows, with comparisons to the projections most recently provided to the Administrative Agent, such financial statements to be certified by a Financial Officer as of the end of such period; (m) On or before the 15th day of each month, reports for the preceding month concerning accounts receivable and payable agings, accounts receivable reconciliations and inventory listings, such reports to be (i) segregated by U.S. and foreign operations (with a list of the Company's Silicon Valley customers to be provided), (ii) certified by a Financial Officer, and (iii) in such form and of such content as may be satisfactory to the Administrative Agent and the Banks; and (n) At the request of the Administrative Agent, such other information as the Administrative Agent may from time to time require, in form and substance satisfactory to the Administrative Agent. (k) All references in the Loan Agreement to "Banc One Leasing Company" are hereby changed to "Banc One Leasing Corporation". Section 9. DEFAULT RATE OF INTEREST. The Company agrees that commencing October 25, 2001, the Revolving Note and the Term Note shall bear interest at the default rate as set forth in the second paragraph of Section 2.1 of the Loan Agreement. Section 10. COMPLIANCE WITH LOAN DOCUMENTS. As a continuing condition to the agreements of the Administrative Agent and the Banks contained herein, the Company shall not allow any Event of Default (other than the Current Defaults) to exist under the Loan Agreement and the Loan Documents (and the execution of this Agreement by the Administrative Agent and the Banks shall not constitute a waiver of the Current Defaults), and the Company shall comply with all the terms and provisions of all such documents during the term of this Agreement, except to the extent that the timing of certain payments has been temporarily restated by the terms hereof. Section 11. NO WAIVER OF RIGHTS. Nothing contained herein shall be deemed a waiver of any of the rights and remedies of the Administrative Agent or the Banks, at law or in equity, or under the Loan Agreement or the Loan Documents, or under any other agreement evidencing, securing, governing or pertaining to the Obligations. The Administrative Agent and the Banks are under no duty or obligation of any kind to grant to the Company any additional period of forbearance beyond the Standstill Period. The actions of the Administrative Agent and the Banks in entering into this Agreement are without prejudice to their rights to pursue any and all remedies available to them on or after the termination of the Standstill Period. Section 12. TERM OF AGREEMENT. At the end of the Standstill Period, the Administrative Agent and the Banks shall have no obligation to extend, reconsider, restructure or otherwise continue this Agreement or the Standstill Period or to consent to any other forbearance or standstill agreement. The Company specifically and expressly agrees that it is not relying on any commitment of the Administrative Agent or the Banks to further forbear with respect to the Obligations beyond the specific terms of this Agreement. Section 13. NO ACCORD OR COMPROMISE. This Agreement shall not be construed as a compromise or accord and satisfaction as to the Obligations or to any other obligations of the Company arising under or in connection with the Loan Agreement or the Loan Documents. Section 14. AUTHORITY; BINDING EFFECT. The Company represents and warrants to the Administrative Agent and the Banks that (i) the Company has the corporate power and authority to execute and deliver this Amendment; (ii) the officer executing this Amendment on behalf of the Company has been duly authorized to execute and deliver the same and to bind the Company with respect to the provisions hereof; (iii) the execution by the Company of this Agreement and the performance and observance by the Company of the provisions hereof do not violate or conflict with the articles of incorporation or code of regulations of the Company or any law applicable to the Company and will not result in the breach of any provision of or constitute a default under any agreement, instrument or document binding upon or enforceable against the Company; and (iv) this Agreement and other the Loan Documents constitute valid and legally binding obligations of the Company in every respect, subject to applicable bankruptcy, insolvency, reorganization and other similar laws affecting creditors' rights generally, to general equitable principles and to applicable doctrines of commercial reasonableness. Section 15. NOTICES. Section 8.1 of the Loan Agreement is hereby incorporated by reference. Section 16. SUCCESSORS AND ASSIGNS. Whenever in this Agreement any of the parties hereto is referred to, such reference shall be deemed to include the successors and assigns of such parties, and all terms and provisions of this Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and assigns, whether so expressed or not; provided, however, that the Company shall not assign or transfer, or purport or attempt to assign or transfer to any person or entity or permit any person or entity to assume or undertake any of the Company's rights, duties or obligations under this Agreement without the prior written consent of the Administrative Agent and the Banks, which consent may be granted or waived in the sole discretion of the Administrative Agent and the Banks. Section 17. APPLICABLE LAW. This Agreement has been made by the Company, the Administrative Agent and the Banks at Columbus, Ohio. This Amendment shall be interpreted, and the rights and liabilities of the parties hereto determined, in accordance with the laws of the State of Ohio. Section 18. MODIFICATIONS, AMENDMENTS OR WAIVERS; NO IMPLIED WAIVERS. All references to this Agreement shall also include all amendments, extensions, renewals, modifications and substitutions thereto and thereof. This Agreement may be amended, and the observance of any term of this Agreement may be waived, with (and only with) the written consent of the Company, the Administrative Agent and the Banks. No notice to or demand on the Company in any case shall entitle the Company to any other or further notice or demand in the same, similar and other circumstances. Neither any failure nor any delay on the part of the Administrative Agent or the Banks in exercising any right, power or privilege hereunder or under Agreement or the other Loan Documents shall operate as a waiver thereof, nor shall a single or partial exercise thereof preclude any other or further exercise of the same or the exercise of any other right, power or privilege. Section 19. COUNTERPARTS. This Agreement may be signed in any number of counterparts with the same effect as if the signatures thereto were upon the same instrument. Section 20. HEADINGS. The headings of the sections of this Agreement are inserted for convenience only and shall not be deemed to constitute a part hereof. Section 21. SEVERABILITY. Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof or effecting the validity or enforceability of such provisions in any other jurisdiction. Section 22 ENTIRE AGREEMENT. This Agreement reflects the entire understanding of the parties with respect to the subject matter hereof and supersede all prior agreements or understandings with respect hereto in their entirety. Section 23. CONSENT TO JURISDICTION AND VENUE. Section 8.8 of the Loan Agreement is hereby incorporated by reference. Section 24. WAIVER OF RIGHT TO TRIAL BY JURY. EACH PARTY TO THIS AGREEMENT HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (1) ARISING UNDER THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR (2) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT TO THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR THE TRANSACTIONS RELATED HERETO OR THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE; AND EACH PARTY HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY. Section 25. RELEASE OF ADMINISTRATIVE AGENT AND BANKS. The Company hereby releases, acquits and forever discharges the Administrative Agent and the Banks, and each and every past and present stockholder, affiliate, director, officer, employee, agent, representative and attorney of the Administrative Agent and the Banks, from any and all claims, causes of action, suits, debts, liens, obligations, liabilities, demands, losses, costs and expenses (including attorneys' fees) of any kind, character, or nature whatsoever, known or unknown, fixed or contingent, which the Company may have or claim to have now or which may hereafter arise out of or connected with any act or omission of the Administrative Agent or the Banks existing or occurring prior to the date of this Agreement or any instrument executed prior to the date of this Agreement. IN WITNESS WHEREOF, the parties hereto, by their officers thereunto duly authorized, have executed and delivered this Agreement as of the day and year first above written. COMPANY: METATEC INTERNATIONAL, INC. an Ohio corporation By: /s/ Jeffrey M. Wilkins --------------------------------------- Its: Chairman and Ceo -------------------------------------- AGENT: THE HUNTINGTON NATIONAL BANK, a national banking association, as Administrative Agent By: /s/ David F. Isler --------------------------------------- Its : Senior Vice President -------------------------------------- BANK: THE HUNTINGTON NATIONAL BANK, a national banking association By: /s/ David F. Isler --------------------------------------- Its: Senior Vice President -------------------------------------- BANK: BANK ONE, NA, a national banking association By: /s/ Michael A. Reeves --------------------------------------- Its: Vice President -------------------------------------- EX-10.2 4 l91754aex10-2.txt EXHIBIT 10.2 EXHIBIT 10.2 FORBEARANCE AGREEMENT This agreement ("Agreement") is entered into as of this 21st day of November, 2001, by and between Banc One Leasing Corporation ("Banc One"), Metatec International, Inc., an Ohio company ("International"), and Metatec Worldwide, Inc., an Ohio company ("Worldwide"). BACKGROUND INFORMATION WHEREAS, on or around July 27, 1998, Metatec Corporation executed and delivered to Banc One a Master Lease Agreement (together with all related addenda, certificates, riders, evidence of perfection, the Schedules and Assumption, as defined below, all as may have been or may be amended, the "Lease"); and WHEREAS, pursuant to the Lease, on or around July 30, 1998, Metatec Corporation executed and delivered to Banc One Lease Schedule No. 1000063754 (together with related addenda, certificates, riders and other related documents, as amended, "Schedule 1") pursuant to which Banc One leased to Metatec Corporation certain personal property described therein ("Equipment 1"); and WHEREAS, pursuant to the Lease, on or around August 20, 1998, Metatec Corporation executed and delivered to Banc One Lease Schedule No. 1000063755 (together with related addenda, certificates, riders and other related documents, as amended, "Schedule 2"; Schedules 1 and 2 are herein collectively referred to as the "Schedules") pursuant to which Banc One leased to Metatec Corporation certain personal property described therein ("Equipment 2"; Equipment 1 and 2 is herein collectively referred to as the "Equipment"); and WHEREAS, on or around November 24, 1999, Metatec Corporation, International and Banc One entered into an Assumption Agreement wherein International assumed all of Metatec Corporation's obligations, agreements, tax indemnities and other indemnities under the Lease (the "Assumption"); and WHEREAS, as of March 31, 2001, International and Worldwide executed and delivered to Banc One Security Agreements (together with all related evidence of perfection, each, a "Security Agreement"; collectively, the "Security Agreements") pursuant to which International and Worldwide granted to Banc One, as collateral security for International's obligations under the Lease, a security interest in their Equipment, Inventory, Accounts, chattel paper, general intangibles, instruments, investment property, documents, deposit accounts, letter of credit rights and foreign currency, exchange or options contracts between International and any affiliate of Bank One Corporation (all as more particularly described therein, the "Collateral"), which security interests were perfected by the filing of UCC financing statements with various governmental offices and/or other acts of perfection; and WHEREAS, included in the Collateral is a Foreign Exchange & Options Agreement & Schedule between International and Bank One, NA (Illinois) dated as of April __, 2001 (together with all rights and agreements thereunder, including all FX Transactions [as defined therein], the "FEOMA"); and WHEREAS, pursuant to Section 14(d) of the Lease, International is or will be, as of November 30, 2001, in default on its obligations under the Lease (as described in a Standstill Agreement and First Amendment to Amended and Restated Loan Agreement dated as of November 21, 2001, the "Existing Default") due to a default by International under its Amended and Restated Loan Agreement dated as of March 31, 2001 (the "Loan Agreement") between International and Huntington National Bank (the "Agent") as agent for Huntington National Bank and Bank One, NA (Ohio), which Existing Default, along with receipt of Banc One's prior notice thereof, is hereby acknowledged by International and Worldwide; and WHEREAS, as a consequence of the Existing Default, Banc One may exercise any or all of its remedies as enumerated in Section 15 of the Lease and Section 12 of the Security Agreements (collectively, the "Remedies"); and WHEREAS, International and Worldwide have requested Banc One to forbear from exercising its Remedies as result of the Existing Default and to otherwise modify its rights and remedies; and WHEREAS, Banc One is willing to modify its rights and to forbear from exercising its Remedies, except as provided herein, during the term of this Agreement. NOW, THEREFORE, in consideration of the mutual covenants and promises contained herein, Banc One, International and Worldwide do voluntarily and without coercion of any kind hereby agree as follows: I. Acknowledgment. A. Banc One, International and Worldwide hereby acknowledge the accuracy of the Background Information contained in this Agreement. B. Banc One, International and Worldwide hereby acknowledge and stipulate that (a) Banc One's interest in the Equipment is an ownership interest, and its security interest in the Collateral is properly perfected; (b) Metatec Corporation or International, as applicable, (i) executed and delivered the Lease to Banc One on the dates reflected above, (ii) is properly obligated under the Lease by the terms thereof, (iii) is in possession of a copy of the Lease, and (iv) remains bound, in all respects, under the terms of the Lease, as specifically modified herein; and (c) International and Worldwide (i) executed and delivered the Security Agreements to Banc One on the dates reflected above, (ii) are properly obligated under their respective Security Agreement by the terms thereof, (iii) are in possession of copies of their respective Security Agreement, and (iv) remain bound, in all respects, under the terms of their respective Security Agreement. C. International hereby ratifies its obligations under the Lease as specifically modified herein. Any rights to or interests in property, including ownership and/or collateral interests in the Equipment or Collateral, granted to Banc One pursuant to the Lease or otherwise shall be continued and are hereby ratified and acknowledged without further action by Banc One, International or Worldwide. D. International and Worldwide hereby ratify their respective obligations under the Security Agreements. E. International and Worldwide acknowledge that (i) prior to giving effect to this Agreement, the obligations under the Lease and Security Agreements were in default and were subject to all Remedies available to Banc One thereunder, and (ii) the Existing Default will continue to exist as a default under the Lease notwithstanding any forbearance or waiver by the Agent or any partial or complete cure by International of its prior, current or subsequent defaults under the Loan Agreement. II. Agreement. 1. FORBEARANCE. 1.01. Except as provided in this Agreement, Banc One shall not, prior to the Termination Date (as defined herein), exercise its Remedies against International, Worldwide, the Equipment or the Collateral based upon the Existing Default. 1.02. "Termination Date" shall mean the earlier to occur of any of the following: (a) A default of any term of this Agreement, without notice or cure period. (b) Any event, non-event or occurrence described as a default or event of default in the Lease or either Security Agreement, or any document executed in connection therewith (but not the Existing Default), or a material adverse change to International, Worldwide, the Equipment or the Collateral. (c) December 14, 2001. 1.03. No delay or failure of Banc One to exercise any of its Remedies, or any rights or remedies under this Agreement or any document executed in connection with the Lease, the Security Agreements or herewith shall operate as a waiver thereof. 1.04. Prior to the Termination Date, except with respect to the Existing Default, International will continue to comply with all of its obligations under the Lease. 1.05. In consideration of the forbearance provided herein, International agrees to take such actions as are requested by Banc One or Bank One, NA (Illinois), including, but not limited to executing and delivering to Bank One, NA (Illinois), on even date herewith, the letter attached hereto as Exhibit 1.05 (the "Instruction"), and causing the Agent to execute the Instruction on even date herewith, for the purpose of immediately (a) settling and netting all FX Transactions and (b) causing the delivery by Bank One, NA (Illinois) of all amounts otherwise to be paid to International under the FEOMA upon such settlement or netting to be delivered to Banc One for application to International's payment obligations under the Lease, in allocations as Banc One, in its sole discretion, determines to be appropriate. 2. REPRESENTATIONS AND WARRANTIES. 2.01. International and Worldwide represent and warrant to Banc One that: (a) No default or event of default under the Lease or Security Agreements, nor any event that, with the giving of notice or the passage of time or both, would be a default or an event of default under such documents has occurred and is continuing, except the Existing Default. (b) International and Worldwide have no claims, counterclaims, defenses, or set-offs with respect to their respective obligations under the Lease or the Security Agreements. (c) The Lease and the Security Agreements are the legal, valid and binding obligations of International and Worldwide, respectively, enforceable against International and Worldwide, respectively, in accordance with their terms. 3. REAFFIRMATION AND WAIVERS. 3.01. The Lease. International hereby reaffirms, acknowledges and agrees that it is fully liable for the all obligations under the Lease. 3.02. Security Agreements. International and Worldwide hereby reaffirm, acknowledge and agree that they are fully obligated under the Security Agreements pursuant to their terms. 4. RELEASE. 4.01. As a material inducement to Banc One to enter into this Agreement, which the parties have determined to be to their direct advantage and benefit, International and Worldwide do hereby release and forever discharge Banc One, Bank One Corporation, and all of their past and present employees, agents, attorneys, officers, directors, subsidiaries and affiliates, and each of their predecessors, successors and assigns (hereinafter collectively referred to as "Banc One Releasees"), from any and all claims, losses, liabilities, demands, defenses, setoffs, counterclaims and causes of action of any kind, if any, whether absolute or contingent, known or unknown, matured or unmatured, that International or Worldwide have or hereinafter can have, or have ever had, in whatever capacity against any of the Banc One Releasees, arising out of or relating to the Lease, the Equipment, either Security Agreement, the Collateral, the FEOMA or any other event, agreement, letter or transaction, oral or written, between either of International or Worldwide and any of the Banc One Releasees by reason of any matter from the beginning of time, to and including the date of this Agreement. 4.02. This Release is non-contingent and absolute. 4.03 This Release shall survive and shall remain in full force and effect after all of the obligations under the Lease have been satisfied in full. 5. GENERAL PROVISIONS. 5.01. NO MODIFICATIONS. Except as otherwise provided herein, this Agreement does not either implicitly or explicitly, modify any provision of any documents, including the Lease or the Security Agreements, and shall not constitute a waiver of any rights or remedies thereunder. 5.02. GOVERNING LAW. This Agreement shall be governed by the laws of Ohio without reference to any conflicts of law. 5.03. TIME IS OF THE ESSENCE. Time is of the essence under this Agreement. 5.04. COUNTERPARTS. This Agreement may be executed in multiple counterparts, each of which shall be deemed an original, and all such counterparts together shall constitute one and the same instrument. 5.05. SEVERABILITY. If any portion of this Agreement is found by a court to be unenforceable, the entire remainder of the Agreement shall remain in full force and effect. 5.06. VENUE. Exclusive venue for any actions involving this Agreement shall be in Franklin County, Ohio. 5.07. COUNSEL. In the negotiations leading up to this Agreement, International and Worldwide have had sufficient time to consider all terms of this Agreement and the alternatives to this Agreement, during which time they have retained counsel and are fully prepared and willing to sign this Agreement and be legally bound hereby. International and Worldwide have freely and thoroughly considered all their options and enter into this Agreement knowingly and voluntarily. Each party has had equal opportunity to negotiate the terms of this Agreement, and Banc One's counsel is preparing the draft merely for the convenience of the parties. The identity of the party preparing this Agreement shall have no effect on the interpretation hereof. 5.08. DEFINITIONS AND CAPTIONS. All capitalized terms used in this Agreement that are not otherwise defined herein but are defined in the Lease, Security Agreement or FEOMA shall have the same meanings ascribed to them in the respective instrument or document. Section captions used in this Agreement are for convenience only and shall not affect the construction of this Agreement. 5.09. INTEGRATION. This Agreement and the documents and instruments executed contemporaneously herewith, and to which Banc One is a party, contain the entire Agreement among the parties and supersede any prior discussions, negotiations, representations or agreements among them respecting the subject matter; provided, however, that except as specifically provided herein, this Agreement does not alter or amend any document or instruments previously executed and delivered by either International or Worldwide to Banc One. 5.10. NOT A NOVATION. This Agreement is a modification only and not a novation. Except for the forbearance provided for herein, the Lease and the Security Agreement, and all the terms and conditions thereof, shall be and remain in full force and effect with any changes herein deemed to be incorporated therein. This Agreement is to be considered attached to the Lease and made a part thereof. This Agreement shall not release or affect the liability of any guarantor, surety or endorser of the Lease or release any owner of Equipment or Collateral securing the Lease. The validity, priority and enforceability of the Lease shall not be impaired hereby. 5.11. REINSTATEMENT. International and Worldwide agree that to the extent that all or any part of the payments contemplated herein is subsequently invalidated, declared to be fraudulent or preferential, set aside and required to be paid or repaid over to the trustee, receiver or other entity, including International or Worldwide acting as debtor-in-possession, whether under any bankruptcy law or otherwise (any such payment is hereinafter referred to as a "Preferential Payment"), then the Lease and Security Agreements shall be reinstated in an amount equal to the amount of such Preferential Payment with all liabilities intended to be satisfied by the payments to be made hereunder being revived and continued in full force and effect as if such Preferential Payment had not been made. 5.12. JURY WAIVER. International and Worldwide and Banc One (by its acceptance hereof) hereby voluntarily, knowingly, irrevocably and unconditionally waive any right to have a jury participate in resolving any dispute (whether based upon contract, tort or otherwise) between or among either or both of International or Worldwide and Banc One arising out of or in any way related to this Agreement, any other related document, or any relationship between Banc One and International or Worldwide. This provision is a material inducement to Banc One to provide the forbearance described herein. THE UNDERSIGNED HAVE HEREUNTO SET THEIR HAND IN COLUMBUS, OHIO ON THE 21st DAY OF NOVEMBER, 2001. Banc One Leasing Corporation By: /s/ Michael A. Reeves --------------------------------------- Its: Vice President --------------------------------------- Metatec International, Inc. By: /s/ Jeffrey M. Wilkins ---------------------------------------- Its: Chairman and CEO --------------------------------------- Metatec Worldwide, Inc. By: /s/ Jeffrey M. Wilkins ---------------------------------------- Its: Chairman and CEO --------------------------------------- EX-10.3 5 l91754aex10-3.txt EXHIBIT 10.3 EXHIBIT 10.3 STANDARD INDUSTRIAL LEASE Dated (for reference) as of: October 30, 1998 1. DEFINED TERMS. Each reference in this Lease to any of the following terms shall include the data for such term as stated below with any additional terms used in this Lease to have the meaning and definition given hereafter: Tenant: Metatec Acquisition Corporation, Landlord: Fleming Business Park LLC, an Ohio corporation a Delaware limited liability corporation Tenant's Address: 1103 Montague Expressway Landlord's Address: c/o Warehouse Properties, Inc. Milpitas, CA 95035 2101 Woodside Road Woodside, Ca 94062 Description of the Premises: Street Address: 1103 Montague Expressway, Milpitas, CA Floor Area of Improvements: 104,400 s.f. including 10,000 sq. ft. of second floor office/mezzanine (see attached Exhibit "A")
Term: 121 months - See Paragraph 54 thereafter. Scheduled Term Commencement Date: March 1, 1999 Rent: $55,700/month for months 1-12; See Paragraph 53. Taxes, Insurance, and Maintenance Reserve Deposit: $10,500/month Security Deposit: $50,000.00 in cash and an Irrevocable Letter of Credit for $400,000. See Paragraph 5.2. Guarantor: Metatec Corporation, a Florida corporation Insurance Amounts: Bodily Injury per Person: $3,000,000.00 Bodily Injury per Occurrence: $3,000,000.00 Property Damage: $3,000,000.00 Landlord's Construction Representative: David R. Denton Tenant's Construction Representative: Henry Patterson Uses: General office and administration, light assembly, manufacturing and distribution. See Paragraph 6. Tenant's Share of: Real Property Taxes 68.41%, Insurance Expenses 68.41%, Maintenance Expenses 68.41% Tenant's Share is Tenant's percentage of Building #1's expenses which will be calculated as a portion of the greater Fleming Business Park Industrial Center. 2. PREAMBLE. Landlord hereby leases to Tenant, and Tenant hereby leases and accepts from Landlord, that certain real property described in Paragraph 1 (the "Premises") for the Term and upon the covenants and conditions hereinafter specified. Any statement of square footage set forth in this Lease is an approximation which Landlord and Tenant agree is reasonable and the rental is not subject to revision whether or not the actual square footage is more or less. The Security Deposit and first month's Rent are due at execution of the Lease by Tenant. 3. CONSTRUCTION AND COMMENCEMENT. 3.1 Plans. Landlord and Tenant have approved the Preliminary Plans (see attached Exhibit "B") for the construction of Tenant's necessary improvements (the "Tenant Improvements") on the Premises. Landlord shall have prepared final plans and specifications ("Final Plans") substantially in conformity with the Preliminary Plans. Final Plans shall be delivered to Tenant as soon as reasonably possible. Within ten (10) days after delivery of the Final Plans, Tenant shall set forth in writing with particularity and precision, any corrections or changes necessary to bring the Final Plans into substantial conformity with the Preliminary Plans, except that Tenant may not object to any part of the Final Plans which Landlord deems to be in Landlord's sole good faith discretion a logical development or refinement of the Preliminary Plans. Failure to deliver to Landlord written notice of such corrections or changes within said ten (10) day period shall constitute approval of the Final Plans by Tenant. Following approval of the Final Plans, changes may be made only in accordance with Paragraph 3.3. In the event that this Lease provides for a Tenant Improvement Allowance, and Tenant chooses to use Warehouse Properties, Inc. to manage the design, processing and construction of the Tenant Improvements, Tenant shall pay Warehouse Properties, Inc. a fee of 5% of all costs (design, permitting, construction, etc.) expended for Tenant Improvements. 3.2 Construction. Landlord shall construct or cause to be constructed the Tenant Improvements substantially in accordance with the Final Plans and the Work Letter (see attached Exhibit "E"). The Premises shall be ready for occupancy on the date upon which the work of construction to be undertaken by Landlord has been substantially completed ("Ready for Occupancy") as determined by the issuance of a written certificate from Landlord to Tenant certifying (a) that the Tenant Improvements have been substantially completed in accordance with the Final Plans, (b) the date of such completion, and the earlier of the issuance of a temporary Certificate of Occupancy for the Premises by the City of Milpitas, or the occupancy of the Premises by Tenant with Tenant allowed to perform substantially all of their required business functions. Landlord shall complete, as soon as reasonably possible, any items of work or adjustment not completed when the Premises are Ready for Occupancy and such defective or omitted work undertaken by Landlord of which Tenant has given Landlord written notice within thirty (30) days after the date the Premises are Ready for Occupancy. The Premises shall be Ready for Occupancy not later than the Scheduled Term Commencement Date; provided, however, that the Scheduled Term Commencement Date may be extended for a period of time equal to the period of any delay encountered by Landlord affecting said work of construction because of fire, inclement weather, acts of God, riot, governmental regulations, strikes, shortages of material or labor, changes in the Final Plans pursuant to Paragraph 3.3, or any other cause beyond the reasonable control of Landlord. In the event construction is not complete by July 1, 1999, subject to Tenant Delays defined in the Work Letter, Tenant shall have the option to terminate the Lease. 3.3. Changes in Plans. Tenant shall have the right to request changes in the Preliminary or Final Plans provided, however, that: (a) no such request shall affect any structural change in the Premises, (b) Tenant shall pay upon demand, any additional costs incurred by Landlord required to implement such change, (c) such requests shall constitute an agreement on the part of Tenant to any delay in completion caused by reviewing, processing, permitting and implementing the change, and (d) Tenant's obligation to pay Rent hereunder shall commence to accrue on the date when the same would have otherwise commenced to be payable hereunder had such changes not been requested by Tenant. In connection with the original construction of the Tenant Improvements, each party shall be bound by each approval or lack thereof given by its respective Construction Representative. A party may designate a substitute Construction Representative by giving written notice to the other party. 3.4 Commencement. The Term of this Lease shall commence upon the earlier of: (a) the Scheduled Term Commencement Date, or if the Premises are not Ready for Occupancy by the Scheduled Term Commencement Date, the date upon which the Premises are Ready for Occupancy, (b) the date upon which Tenant first occupies any portion of the Premises (Tenant's entry upon the Premises as provided for in Paragraph 51 shall not cause the Term to commence), or (c) the date upon which Rent would have otherwise commenced to accrue under this Lease had Tenant not delayed in the performance of any of its duties or obligations hereunder or had not otherwise interfered with or caused a delay in the performance of Landlord's obligations hereunder. If the work of construction is not completed within one hundred twenty (120) days after the Scheduled Term Commencement Date as extended pursuant to Paragraph 3.2, the sole remedy of either party shall be to terminate this Lease by the delivery to the other party of written notice of such termination within ten (10) days thereafter. 4. RENT; NET LEASE. Tenant agrees to pay Landlord at Landlord's Address, or at such other place designated by Landlord by written notice to Tenant, the Rent, in lawful money of the United States, in advance, without demand, off-set or deduction, on the first day of each calendar month of the Term hereof. In the event the Term commences or the date of expiration of this Lease occurs other than on the first day or the last day of a calendar month, the Rent for such month shall be prorated. This Lease is what is commonly called a "triple net lease"; it being understood that Landlord shall receive the Rent free and clear of any and all impositions, taxes, liens, charges or expenses of any nature or kind whatsoever in connection with the ownership and operation of the Premises. In addition to the Rent, Tenant shall pay a fee in the amount of 3% of the Rent to compensate Landlord for property management services relating to the Premises. If Rent is not received as provided above and on or before the first day of each calendar month, a 6% late charge shall be payable by Tenant as provided in Paragraph 13.4 to compensate Landlord for expense incurred by Landlord for recordkeeping and collection. In the event that a late charge is payable, whether or not collected, three times in any twelve month period, then Rent shall automatically become due and payable quarterly in advance for the next twelve month period. 5. DEPOSITS. 5.1 Taxes, Insurance and Maintenance Reserve. Tenant shall deposit with Landlord each month the amount set forth in Paragraph 1 as a Taxes, Insurance and Maintenance Reserve to be used to pay real property taxes, maintenance expenses, management expenses, and insurance expenses on the Premises which are payable by Tenant under the terms of this Lease. Tenant's expense obligations shall include a 3% management fee on Tenant expenses collected by Landlord. At least once annually Landlord shall provide Tenant with a written reconciliation of expenses, together with backup reasonably acceptable to Tenant. Tenant shall have the right: i) at Tenant's expense, to audit Landlord's reconciliation of expenses; and ii) to the extent of any discrepancy, receive a reimbursement for any overcharges. If the amounts deposited with Landlord by Tenant under the provisions of this Paragraph are insufficient to discharge the obligations of Tenant, Tenant shall deposit with Landlord, upon Landlord's demand, the additional sums necessary to fully satisfy such obligations. If Tenant's deposits are in excess of the expenses, the excess shall be credited to the next month's rent. All monies deposited with Landlord under this Paragraph may be intermingled with other monies of Landlord and shall not bear interest. 5.2 Security Deposit. Tenant has deposited with Landlord the Security Deposit set forth in Paragraph 1 above as security for Tenant's faithful performance of Tenant's obligations hereunder. The form of Letter of Credit shall be as shown on the attached Exhibit "F". If Tenant is not in default as of the end of the third year of the Term, and so long as Tenant's "net worth" is in excess of $30,000,000 as of the end of the third year of the Term, the amount of the Letter of Credit shall be reduced to $200,000. If Tenant is not in default, and Tenant's "net worth" is in excess of $30,000,000, as of the end of the fourth year of the Term, then the requirement for a Letter of Credit as an additional Security Deposit shall terminate. If Tenant fails to pay Rent or other charges due hereunder, or otherwise defaults with respect to any provision of this Lease, Landlord may use, apply or retain all or any portion of said deposit for the payment of any Rent or other charge in default, or for the payment of any other sum to which Landlord may become obligated by reason of Tenant's default, or to compensate Landlord for any loss or damage which Landlord may suffer thereby. If Landlord so uses or applies all or any portion of said deposit, Tenant shall, within ten (10) days after written demand therefor, deposit cash with Landlord in an amount sufficient to restore said deposit to the full amount stated in Paragraph 1, and Tenant's failure to do so shall be a material breach of this Lease. Tenant shall have the right: i) at Tenant's expense, to audit Landlord's reconciliation of expenses deducted from the Security Deposit; and ii) to the extent of any discrepancy, receive a reimbursement for any overcharges. Landlord shall not be required to keep said deposit separate from its general accounts. If Tenant performs all of Tenant's obligations hereunder, said deposit, or so much thereof as has not theretofore been applied by Landlord, shall be returned, to Tenant (or, at Landlord's option, to the last assignee, if any, of Tenant's interest hereunder) at the expiration of the Term hereof, and after Tenant has vacated the Premises. No trust relationship is created herein between Landlord and Tenant with respect to said Security Deposit. No part of the Security Deposit shall be considered to be a prepayment for any monies to be paid by Tenant under this Lease. 6. USE, ACCESS AND PARKING. 6.1 Use. The Premises shall be used and occupied only for the uses stated in Paragraph 1. 6.2 Compliance with Law: Prior Restriction. Tenant shall, at Tenant's sole expense, comply promptly and continuously with all applicable statutes, ordinances, rules, regulations, orders, restrictions of record, and requirements in effect during the Term, or any part of the Term hereof, regulating the Use of the Premises. Tenant shall not use or permit the use of the Premises in any manner that will tend to create waste or a nuisance. Outside storage shall not be allowed under any circumstances without Landlord's written consent, which consent may be withheld at Landlord's sole discretion. Any such approved outside storage shall be in full compliance with all City regulations. 6.3 Condition of Premises. Landlord hereby represents that the Premises, as of the date of execution of the Lease, are in full compliance with all state, local and federal laws, codes and government regulations for a "shell" industrial/distribution building in the City of Milpitas and is constructed pursuant to the base building plans for the Building permitted on August 1, 1997. Further, Landlord hereby represents that the Premises, as of the Commencement Date of the Lease, except to the extent of the work performed by Tenant, are in full compliance with all state, local and federal laws, codes and government regulations for an industrial/distribution building in the City of Milpitas. Tenant does hereby acknowledge that the Premises may require additional improvements by Tenant after the Commencement Date, and that installation of these additional improvements after the Commencement Date, along with any required modifications to the Premises to accommodate the Tenant Improvements prior to the Commencement Date, is not a Landlord obligation. Should Landlord's representation in the first sentence of this Paragraph 6.3 prove to be incorrect, then Landlord shall be responsible for any modifications and costs required to bring the "shell" Premises into compliance with those laws, codes and governmental regulations in effect as of the date of Lease execution. Except as otherwise provided in this Paragraph 6.3, Tenant hereby accepts the Premises in their condition existing as of Commencement Date, and subject to all applicable zoning, municipal, county and state laws, ordinances and regulations and any covenants or restrictions of record governing and regulating the use of the Premises, and accepts this Lease subject thereto and to all matters disclosed thereby and by any exhibits attached hereto. Subject to the first three (3) sentences of this Paragraph 6.3, Tenant shall be solely responsible for any costs of, or liabilities resulting from failure to comply with, ADA or related requirements or regulations pertaining to the Premises, and Landlord shall be responsible for the same ADA issues as they pertain to the Common Areas. Tenant acknowledges that, other than as provided in the first sentence of this Paragraph 6.3, neither Landlord nor Landlord's agents has made any representation or warranty as to the suitability of the Premises for the conduct of Tenant's business, or the permissibility of such business at such Premises under applicable federal, state and local laws, ordinances, rules and regulations, and the Tenant has made such legal and factual inquiries with respect thereto as it deems appropriate and has relied solely thereon. 6.4 Hazardous Materials. Tenant shall not cause any substance, material or waste which is or becomes designated, classified or regulated as being "toxic" or "hazardous" or a "pollutant" or which is or becomes similarly designated, classified or regulated, under any Hazardous Materials Law, including asbestos, petroleum and petroleum products (collectively "Hazardous Materials") to be used, generated, stored or disposed of on or about the Premises except in the ordinary course of Tenant's business, and then only in compliance with all Hazardous Materials Laws. "Hazardous Materials Laws" mean any law, statute, ordinance or regulation pertaining to health, industrial hygiene or the environment including, without limitation, CERCLA (Comprehensive Environmental Response, Compensation and Liability Act of 1980) and RCRA (Resources Conservation and Recovery Act of 1976). Tenant shall be liable to Landlord for any and all damages caused by Tenant's breach of the foregoing covenants. Landlord shall not be liable for any claims, damages or losses due to the effects of Hazardous Materials on the Premises that is caused by owners, tenants, licensees, and invitees of other properties or is not directly caused by Landlord. Tenant shall indemnify, defend by counsel acceptable to Landlord and hold Landlord harmless from and against any claims, damages or liabilities arising out of a breach of any provision of this Paragraph 6.4. Landlord and Tenant each agree to promptly notify the other party of, and provide copies of, any communication received from any governmental entity concerning Hazardous Materials or the violation of Hazardous Materials Laws that relate to the Premises. If Landlord requires testing to ascertain whether there has been any violation of Hazardous Materials Laws on the Premises, then upon prior written notice to Tenant, Landlord, may require any such testing that is then customarily used for that purpose. The cost of such testing shall be an expense of Landlord if Tenant has not violated any Hazardous Material Laws. In the event that Tenant has violated any Hazardous Material Laws, then the cost of testing, together with all other costs for remediation or any other related liability, shall be borne by Tenant. Tenant acknowledges that, due to the nature of many industrial uses, exposure to hazardous materials (including noxious gases and liquids) from surrounding neighbors and properties may occur. Tenant agrees that Landlord shall not be held liable in any way for any such exposure. Further, to the extent that Landlord is required by the City, or any other entity with jurisdiction, to implement actions to protect the Premises from the aforementioned exposure(s), then Tenant shall participate to the fullest extent reasonably possible in implementing the protective actions required by the City, or other authority. The cost of installation and maintenance of any protective actions or systems shall be a maintenance expense and shall be reimbursable by Tenant to Landlord as provided in Paragraph 5.1 hereof. The covenants contained herein shall survive the expiration or earlier termination of the Lease. 6.5 Access and Parking. (a) Access. Tenant and its employees, invitees, visitors and guests, Tenant's permitted successors and assigns, if any (collectively, "Tenant's Invitees"), shall be entitled to the non-exclusive use of the primary access road or roads from public rights of way now or hereafter existing across the business park, on which the Premises are located (the "Facility"), to the Premises. The parties understand that Landlord shall have the right to change the exact configuration and/or location of ingress and egress during the term so long as Tenant's operations are not materially adversely affected by such change. (b) Exclusive Parking. Subject to the provisions of this Paragraph 6.5.b, (i) Landlord further agrees to provide to Tenant only the exclusive use of 230 parking spaces in the parking areas on the Facility shown on Exhibit "C" attached hereto ("Tenant's Exclusive Parking") for parking of Tenant and Tenant's Invitees, including, without limitation, for any vehicles with more than two (2) axles (commonly referred to as "trucks"), trailers and containers (trucks, trailers and containers which are in any way affiliated with Tenant are referred to herein collectively as "Truck") parking; (ii) Tenant shall be allowed, at Tenant's expense, to designate these areas for Tenant and Tenant's Invitees exclusive use by painting or other means reasonably acceptable to Landlord; and (iii) Tenant may allocate Tenant's Exclusive Parking among itself and Tenant's permitted successors and assigns, if any, as Tenant shall deem appropriate in Tenant's sole discretion; provided, however, that Landlord shall have no obligation whatsoever for, and shall have no liability whatsoever to Tenant and/or Tenant's permitted successors and/or assigns, if any, for Landlord's failure to monitor or enforce any such allocation by Tenant. (c) No Obstruction. Except as provided in Paragraphs 6.5.a and 6.5.b, above, in its use of parking areas and ingress and egress areas on the Facility, Tenant and Tenant's Invitees shall not in any way interfere with the free flow of traffic on ingress, egress and parking areas on the Facility, or the ability of Landlord and other tenants and their employees, invitees, visitors and guests and their respective permitted successors and assigns, if any, to use the same for their intended use. (d) Violation by Tenant. Should Tenant, any of Tenant's Invitees, or any of Tenant's permitted successors or assigns, if any, park in or use any parking space or parking area other than Tenant's Exclusive Parking (a "Parking Violation") (i) Landlord shall give Tenant written notice (each, a "Noticed Parking Violation") of each Parking Violation and (ii) Tenant shall be fined and shall pay forthwith to Landlord the amount of Five Hundred Dollars ($500) per day (each, a "Parking Violation Fine") for each Noticed Parking Violation. The Parking Violation Fine shall be deemed Rent. Tenant shall be in default hereunder upon the occurrence of six (6) Noticed Parking Violations in any ninety (90) day period; provided, however, if there are more that one (1) Noticed Parking Violations on any given day, all such Noticed Parking Violations given on any given day shall count as one (1) Noticed Parking Violation only for the purposes of determining a default pursuant to this Paragraph 6.5.d, and provided, further, that notwithstanding anything contained herein to the contrary, Tenant shall be and remain obligated to pay all Parking Violation Fines for all Noticed Parking Violations regardless of whether there is one (1) Noticed Parking Violation or multiple Noticed Parking Violations on any given day. 7. MAINTENANCE, REPAIRS AND ALTERATIONS. 7.1 Tenant's Obligations. Other than as hereinafter provided in Paragraph 7.4, and subject to latent defects which shall be a Landlord expense, Tenant shall keep in good order, condition and repair the Premises and every part thereof, including the floor surface, roof membrane, skylights, all adjacent sidewalks, landscaping, driveways, parking lots, fences located in the areas which are adjacent to and included in the Premises. At the reasonable cost and expense of Tenant, the landscaping shall be maintained by a professional gardener and the exterior of the building shall be repainted (with color and paint scheme to be approved by Landlord) every five (5) years. Tenant shall be responsible for their pro rata share of painting costs, which shall be amortized over five (5) years at an annual rate of ten percent (10%) and payable monthly by Tenant for the remainder of the Term or extension thereof. Tenant's obligation to pay these amortized painting costs shall terminate at the end of the Lease Term or at any extension thereof. 7.2 Surrender. Except for damage to the extent caused by Landlord, casualty, condemnation, ordinary wear and tear or Tenant Improvements, in which case the obligation for repair shall be covered by other Paragraphs of this Lease, on the last day of the Term hereof, or on any sooner termination, Tenant shall surrender the Premises to Landlord in substantially the same condition as when received, clean and free of debris. Tenant shall repair any damage to the Premises occasioned by the removal of Tenant's trade fixtures, furnishings and equipment. Tenant shall leave the air lines, power panels, electrical distribution systems, lighting fixtures, space heaters, air conditioning, plumbing and fencing on the Premises in good operating condition. 7.3 Landlord Rights. If Tenant fails to perform Tenant's obligations under this Paragraph 7, or under any other paragraph of this Lease, Landlord may, at its option (but shall not be required to), enter upon the Premises, after ten (10) days' prior written notice to Tenant (except in the case of an emergency, in which case no notice shall be required), perform such obligations on Tenant's behalf and put the same in good order, condition and repair, and the cost thereof shall become due and payable as additional Rent to Landlord together with Tenant's next Rent payment. 7.4 Landlord's Obligations. Landlord shall maintain the structural roof, walls, floor (but not floor surface) and foundation of the Premises. Except for the obligations of Landlord under this Paragraph 7.4, Paragraph 9 and Paragraph 14, it is intended by the parties hereto that Landlord have no obligation, in any manner whatsoever, to repair and maintain the Premises nor the building located thereon nor the equipment therein, whether structural or non-structural, all of which obligations are intended to be that of the Tenant. Except as hereinafter provided in the sentence immediately following this sentence, Tenant hereby waives the provisions of California Civil Code Section 1941 and 1942 or any related or successor provision of law which would otherwise afford Tenant the right to make repairs at Landlord's expense, or to terminate this Lease because of Landlord's failure to keep the Premises in good order, condition and repair. After Tenant has provided the notice(s) required by Paragraph 13.3, and so long as Landlord has taken no action or has not provided Tenant with written confirmation that Landlord will be performing the required obligations, within the time periods provided herein for Landlord to respond, then Tenant shall have the right to perform Landlord's obligation, and set off the expenses incurred by Tenant to complete Landlord's obligation against payments of Rent as they become due. 7.5 Alterations and Additions. (a) Tenant shall not, without Landlord's prior written consent which shall not be unreasonably withheld, make any alterations, improvements, additions or Utility Installations in, on or about the Premises, except for non-structural alterations not exceeding Fifty Thousand Dollars ($50,000.00) in cumulative costs, during the Term of this Lease. Landlord's written consent of alteration shall specify which items to be installed are to be removed by Tenant upon Surrender of Premises. As used in this Paragraph 7.5, the term "Utility Installations" shall include carpeting, window coverings, air lines, power panels, electrical distribution systems, lighting fixtures, space heaters, air conditioning, plumbing, and fencing. Tenant shall not, without Landlord's prior written consent, make any roof penetrations. Landlord shall have the right and sole discretion to approve the location and form of any roof penetrations. Upon written notice from Landlord, sixty (60) days or more before termination of the Lease, Landlord may require Tenant to remove any or all of said alterations, improvements, additions or Utility Installations prior to the expiration of the Term, and restore the Premises to their original condition. Landlord may require that Tenant remove any or all of said alterations, improvements, additions or Utility Installations at the expiration of the Term, and restore the Premises to their prior condition. Landlord may require Tenant to provide Landlord with, at Tenant's sole cost and expense, a lien and completion bond in an amount equal to one and one-half times the estimated cost of such improvements, to insure Landlord against any liability for mechanic's and materialmen's liens and to insure completion of work. In the event a mechanic's or materialmen's lien is filed against the Premises, or the Property of which the Premises are a part, Tenant shall be required to immediately provide a bond to remove the lien from title. Failure to immediately remove any type of mechanic's or materialmen's lien from the Premises shall be a material default of this Lease. Should Tenant make any alterations, improvements, additions or Utility Installations without the prior approval of Landlord, Landlord may require that Tenant immediately remove any or all of the same and restore the Premises to their prior condition. The immediately preceding two sentences above shall survive the termination of this Lease. (b) Any alterations, improvements, additions or Utility Installations in, or about the Premises, that Tenant shall desire to make, and which require the consent of the Landlord, shall be presented to Landlord in written form, with proposed detailed plans. If Landlord shall give its consent, the consent shall be deemed conditioned upon Tenant acquiring a payment or performance bond as provided in Paragraph 7.5(a) and a permit to do so from appropriate governmental agencies, the furnishing of a copy thereof to Landlord prior to the commencement of the work and the compliance by Tenant with all conditions of said permit in a prompt and expeditious manner. (c) Tenant shall pay, when due, all claims for labor or materials furnished or alleged to have been furnished to or for Tenant at or for use in or on the Premises, which claims are or may be secured by any mechanics' or materialmen's lien against the Premises or any interest therein. Tenant shall give Landlord not less than ten (10) days' notice prior to the commencement of any work in or on the Premises, and Landlord shall have the right to post notices of non-responsibility in or on the Premises as provided by law. (d) Unless Landlord requires their removal, as set forth in Paragraph 7.5(a), all alterations, improvements, additions and Utility Installations, which may be made on the Premises, shall become the property of Landlord and remain upon and be surrendered with the Premises at the expiration of the Term. Notwithstanding the provisions of this Paragraph 7.5(d),Tenant's machinery, equipment, and trade fixtures, other than that which is affixed to the Premises so that it cannot be removed without material damage to the Premises, shall remain the property of Tenant and may be removed by Tenant subject to the provisions of Paragraph 7.2. 7.6 Common Area Maintenance. Landlord, at Landlord's option, may arrange for any portion of the exterior or Common Area maintenance and repair. Tenant shall pay to Landlord upon demand a reasonable proportion of such exterior or Common Area maintenance and repair expenses and costs as reasonably determined by Landlord. Landlord and Tenant hereby acknowledge that the Tenant deposit identified in Paragraph 5.1 is an estimate of the taxes, insurance and Common Area maintenance expenses for the Premises and that, upon reconciliation by Landlord of actual expenses, Tenant may receive a credit or additional demand from Landlord. Tenant shall not be obligated to reimburse Landlord for the actual additional expenses more than twice in any calendar year. Tenant shall have the right once a year to audit Common Area Maintenance expenses. Common Area shall be defined to be the grounds of the approximate 70 acre industrial center on which the Premises are located. 8. INSURANCE, INDEMNITY. 8.1 Coverage. The following insurance and any additional insurance coverage that may be required by law, or holders of mortgages or deeds of trust, shall be carried protecting Landlord and the holders of any mortgages or deeds of trust covering the Premises. Any insurance polices provided by Tenant shall provide that such policies are primary and non-contributing with any insurance carried by the Landlord. (a) Insurance covering loss or damage to the Premises in the amount of the full replacement value thereof, as the same may exist from time to time, but in no event less than the total amount required by lenders having liens on the Premises, against all perils included within the classification of fire, extended coverage, vandalism, malicious mischief, and special extended perils ("all risk" as such term is used in the insurance industry). Said insurance shall provide for payment of loss thereunder to Landlord or to the holders of mortgages or deeds of trust on the Premises. A stipulated value or agreed amount endorsement deleting the co-insurance provision of the policy shall be procured with said insurance. If such insurance coverage has a deductible clause, the deductible amount shall not exceed $5,000 per occurrence, and Tenant shall be liable for such deductible amount. (b) Comprehensive general liability (Landlord's risk only including without limitation bodily injury, personal injury and property damage insurance) in the amount of three (3) million dollars or such higher limits as Landlord may reasonably require. (c) Insurance against abatement or loss of rent in case of fire or other casualty in an amount equal to the Rent, Real Property Taxes, maintenance costs and expenses and insurance premium payments to be made by Tenant during one (1) year; and (d) Commercial general liability insurance (including without limitation bodily injury, personal injury and property damage), with limits at least as high as the amounts respectively stated in Paragraph 1 or such higher limits as Landlord may reasonably require. If insurance with a general aggregate limit is used, the general aggregate limit shall apply separately to the Premises. 8.2 Payment of Premiums. Tenant shall obtain the insurance policy called for in Paragraph 8.1 (d). Landlord shall obtain the insurance policies called for in Paragraphs 8.1 (a), (b), and (c) and Tenant shall pay the cost thereof upon demand as additional rent. If the insurance premium(s) for the Facility do not break out the portion applicable to the Premises, then Tenant's portion shall be an equitable portion of the premium(s) as reasonably determined by Landlord. Landlord's reasonable determination thereof, in good faith, shall be conclusive. If Tenant fails to maintain insurance which Tenant has undertaken to provide, Tenant shall pay for any loss or cost resulting from said failure. 8.3 Insurance Policies. Insurance required hereunder shall be with companies holding a Best's Insurance Guide "General Policyholder's Rating" of at least "A" and a "Financial Size Category" rating of at least Class VII. Insurance policies shall not be cancelable or subject to reduction in coverage or other modification except after thirty (30) days' prior written notice to Landlord and mortgage holders to the extent required by any promissory note(s), loan agreement(s) or documents, or deed(s) of trust encumbering the Premises. Subject to the terms of any deeds of trust encumbering the Premises, any policy required to be maintained by Tenant under this Lease may be maintained under a so-called "blanket policy" insuring other parties and/or locations, so long as the amount of insurance and type of coverage required to be provided hereunder is not thereby diminished, changed or adversely affected. The insuring party shall deposit with such mortgage holders as Landlord may require, policies, duplicates or certificates as such holders may require, and shall in all cases furnish the other party with policies, duplicates and certificates. Tenant shall not violate or permit to be violated any of the conditions or provisions of any policy provided for in Paragraph 8.1, and Tenant shall so perform and satisfy the requirements of the companies writing such policies so that at all times companies of good standing reasonably satisfactory to Landlord shall be willing to write and/or continue such insurance. 8.4 Waiver of Subrogation. Tenant and Landlord each hereby release and relieve the other, and waive their entire right of recovery against the other for loss or damage arising out of or incident to the perils insured against hereunder, which perils occur in, on or about the Premises, whether due to the negligence of Tenant or Landlord or their agents, employees, contractors and/or invitees. Tenant and Landlord shall, upon obtaining the policies of insurance required hereunder, give notice to the insurance carrier or carriers that the foregoing mutual waiver of subrogation is contained in this Lease. 8.5 Indemnity. Tenant shall indemnify and hold harmless Landlord from and against any and all claims arising from Tenant's use of the Premises, or from the conduct of Tenant's business or from any activity, work or things done, permitted or suffered by Tenant in or about the Premises or elsewhere, and shall further indemnify and hold harmless Landlord from and against any and all claims arising from any breach or default in the performance of any obligation on Tenant's part to be performed under the terms of this Lease, or arising from any negligence of Tenant, or any of Tenant's agents, contractors, or employees, and from and against all costs, attorneys' fees and disbursements, and liabilities incurred in the defense of any such claim or any action or proceeding brought thereon including such costs and expenses arising from discovery and trial whether or not Landlord is a party to such action; and in case any action or proceeding be brought against Landlord by reason of any such claim, Tenant, upon notice from Landlord, shall defend the same at Tenant's expense by counsel reasonably satisfactory to Landlord. Tenant, as a material part of the consideration to Landlord, hereby assumes all risk of damage to property or injury to persons, in, upon or about the Premises arising from any cause other than for Landlord's gross negligence, willful misconduct or breach of the Lease, and Tenant hereby waives all claims in respect thereof against Landlord. 8.6 Exemption of Landlord from Liability. Tenant hereby agrees that Landlord shall not be liable for injury to Tenant's business or any loss of income therefrom, or for damage to the goods, wares, merchandise or other property of Tenant, Tenant's employees, invitees, customers, guests, or any other person in or about the Premises; nor shall Landlord be liable to the person of Tenant, Tenant's employees, agents or contractors whether such damage or injury is caused by or results from fire, steam, electricity, gas, water or rain, or from the breakage, leakage, obstruction or other defects of pipes, sprinklers, wires, appliances, plumbing, air-conditioning or lighting fixtures, or from any other cause, whether such damage or injury results from conditions arising upon the Premises or upon other portions of the building of which the Premises are a part, or from other sources or places, regardless of whether the cause of such damage or injury or the means of repairing same is inaccessible to Tenant other than those damages or injuries resulting from Landlord's gross negligence, willful misconduct or breach of the Lease. Landlord shall not be liable for any damages arising from any act or neglect of any other tenant, if any, of the building or complex in which the Premises are located. 9. DAMAGE OR DESTRUCTION. 9.1 Partial Damage--Insured. Subject to the provisions of Paragraphs 9.3 and 9.4, if the Premises are damaged and such damage was caused by a casualty covered under an insurance policy, Landlord shall, repair such damage to Tenant's reasonable satisfaction as soon as reasonably possible and this Lease shall continue in full force and effect. If the insurance proceeds received by Landlord are not sufficient to effect such repair, and Landlord elects to repair, Tenant shall pay to Landlord upon demand any costs incurred by Landlord not fully covered by insurance proceeds. If Tenant repairs the damage, Landlord shall reimburse Tenant for the costs of repair to the extent of insurance proceeds received by Landlord. Landlord must disclose to Tenant, within thirty (30) days of such occurrence, Landlord's intention to repair, and the timing of such repairs. In the event that Landlord can not complete the repairs to the reasonable satisfaction of the Tenant within 120 days of the occurrence, Tenant shall have the option to terminate the Lease, effective as of the occurrence of the partial damage. If the Landlord can repair such partial damage, and the Tenant does not terminate the Lease, any uninsured portion of the cost of the repairs (e.g. deductible portion of insurance proceeds) shall be amortized over its useful life at ten percent (10%) and charged to the Tenant on a monthly basis as additional Rent. In the event Tenant terminates the Lease, Tenant shall have no ongoing obligation for the Premises. 9.2 Partial Damage--Uninsured. Subject to the provisions of Paragraphs 9.3 and 9.4, if at any time during the Term hereof the Premises are damaged, except by a negligent or willful act of Tenant (in which event Tenant shall make the repairs at its expense); such damage was caused by a casualty not covered under an insurance policy required to be maintained pursuant to Paragraph 8.1; and the cost of the damage exceeds $100,000, Landlord may, at Landlord's option, either (a) repair such damage as soon as reasonably possible at Landlord's expense, in which event this Lease shall continue in full force and effect, or (b) give written notice to Tenant, within thirty (30) days after the date of the occurrence of such damage, of Landlord's intention to cancel and terminate this Lease as of the date of the occurrence of such damage. In the event Landlord elects to give such notice of Landlord's intention to cancel and terminate this Lease, Tenant shall have the right within ten (10) days after the receipt of such notice to give written notice to Landlord of Tenant's intention to repair such damage at Tenant's expense, without reimbursement from Landlord, in which event this Lease shall continue in full force and effect, and Tenant shall proceed to make such repairs as soon as reasonably possible. If Tenant does not give such notice within such ten (10) day period, this Lease shall be canceled and terminated as of the date of the occurrence of such damage. If the cost of the damage was less than $100,000, then Landlord shall repair the damage as soon as reasonably possible in which event this Lease shall continue in full force and effect. Landlord must disclose to Tenant within thirty (30) days of such occurrence, Landlord's intention to repair and the timing of such repairs. In the event that Landlord can not complete the repairs to the reasonable satisfaction of the Tenant within 120 days of the occurrence, Tenant shall have the option to terminate the Lease, effective as of the occurrence of the partial damage. If the Landlord can repair such partial damage, and the Tenant does not terminate the Lease, any uninsured portion of the cost of the repairs (e.g. deductible portion of insurance proceeds) shall be amortized over its useful life at ten percent (10%) and charged to the Tenant on a monthly basis as additional Rent. In the event Tenant terminates the Lease, Tenant shall have no ongoing obligation for the Premises. 9.3 Total Destruction. If at any time during the Term of this Lease there is damage, whether or not an insured loss (including destruction required by any authorized public authority), to the building of which the Premises are a part to the extent that the cost of repair exceeds fifty percent (50%) of the then replacement cost of such building as a whole, then this Lease shall automatically terminate as of the date of such destruction. Landlord must disclose to Tenant, within thirty (30) days of such occurrence, Landlord's intention to repair and the timing of such repairs. In the event that Landlord can not complete the repairs to the reasonable satisfaction of the Tenant within 120 days of the occurrence, Tenant shall have the option to terminate the Lease, effective as of the occurrence of the total destruction. If Landlord can repair such total destruction and the Tenant does not terminate the Lease, any uninsured portion of the cost of the repairs (e.g. deductible portion of insurance proceeds) shall be amortized over its useful life at ten percent (10%) and charged to the Tenant on a monthly basis as additional Rent. In the event Tenant terminates the Lease, Tenant shall have no ongoing obligation for the Premises. 9.4 Damage Near End of Term. If the Premises are damaged during the last year of the Term of this Lease, Landlord may, at Landlord's option, cancel and terminate this Lease as of the date of occurrence of such damage by giving written notice to Tenant of Landlord's election to do so within thirty (30) days after the date of occurrence of such damage. 9.5 Abatement of Rent. In the event of damage described in Paragraphs 9.1 or 9.2, and Landlord or Tenant repairs or restores the Premises, Rent for the period during which such damage, repair or restoration continues shall be abated in proportion to the degree to which Tenant's use of the Premises is impaired, but only to the extent of any proceeds received by Landlord from rental abatement insurance described in Paragraph 8. 1. Except for the abatement of Rent, if any, Tenant shall have no claim against Landlord for any damage suffered by reason of any such damage, destruction, repair or restoration. 9.6 Waiver. Tenant and Landlord hereby waive the provisions of California Civil Code Paragraphs 1932 (2) and 1933 (4) or any related or successor provision of law which relate to termination of leases when the thing leased is destroyed and agree that such event shall be governed by the terms of this Lease. 10. REAL PROPERTY TAXES. 10.1 Payment of Taxes. Tenant shall pay the real property tax, as defined in Paragraph 10.2, applicable to the Premises during the Term of this Lease. If payment is made directly by Tenant, then, upon payment by Tenant, Tenant shall immediately provide Landlord with proof of payment. If deposits collected for real property taxes as provided in Paragraph 5.1 are not sufficient to discharge Tenant's obligations, upon written request of Landlord, payment of the balance shall be made at least ten (10) days prior to the delinquency date by depositing the balance with Landlord. If any such taxes paid by Tenant shall cover any period of time after the expiration of the Term hereof, Tenant's share of such taxes shall be equitably prorated to cover only the period of time within the tax fiscal year during which this Lease shall be in effect, and Landlord shall reimburse Tenant to the extent required within thirty (30) days following expiration of the Term. If Tenant shall fail to pay any such taxes, Landlord shall have the right to pay the same, in which case Tenant shall repay such amount to Landlord with Tenant's next Rent installment, together with interest at the maximum rate then allowable by law. 10.2 Definition of "Real Property Tax". As used herein, the term Real Property Tax shall include any form of real estate tax or assessment, general, special, ordinary or extraordinary, and any license fee, commercial rental tax, improvement bond or bonds, levy or tax (other than inheritance, personal income or estate taxes) imposed on the Premises by any authority having the direct or indirect power to tax, including any city, state or federal government, or any school, agricultural, sanitary, fire, street, drainage or other improvement district thereof, as against any legal or equitable interest of Landlord in the Premises, or in the real property of which the Premises are a part, as against Landlord's right to rent or other income therefrom, and as against Landlord's business of leasing the Premises. Real Property Tax shall also include any tax, fee, levy, assessment or charge (i) in substitution of, partially or totally, any tax, fee, levy, assessment or charge hereinabove included within the definition of Real Property Tax or (ii) the nature of which was hereinbefore included within the definition of Real Property Tax. 10.3 Joint Assessment. If the Premises are not separately assessed, Tenant's liability shall be an equitable proportion of the Real Property Taxes for all of the land and improvements included within the tax parcel assessed, such proportion to be determined by Landlord from the respective valuations assigned in the assessor's work sheets or such other information as may be reasonably available. Landlord's reasonable determination thereof, in good faith, shall be conclusive. 10.4 Personal Property Taxes. Tenant shall pay prior to delinquency all taxes assessed against and levied upon trade fixtures, furnishings, equipment and all personal property of Tenant contained in the Premises or elsewhere. When possible, Tenant shall cause said trade fixtures, furnishings, equipment and all other personal property to be assessed and billed separately from the real property of Landlord. 11. UTILITIES. Tenant shall pay for heat, water, gas, electricity, and any other utilities and services supplied to the Premises, together with taxes thereon. Tenant shall be responsible for any installation or hook-up charge to the Premises after the Commencement Date. Landlord shall not be liable to Tenant for interruption in or curtailment of any utility service, nor shall any such interruption in or curtailment constitute a constructive eviction or grounds for rental abatement. If any such services are not separately metered to Tenant, Tenant shall pay a reasonable proportion, to be determined by Landlord, of all charges jointly metered with other premises. Landlord shall use Landlord's reasonable efforts to avoid disruption of electrical service to the Premises. To the extent that Landlord is advised of the possibility of a disruption, Landlord shall give Tenant as much notice as reasonably possible. Further, upon leasing of the remainder of the building of which the Premises are a part, Landlord shall use reasonable efforts to separate the delivery of electricity to Tenant, from the new tenant, so as to minimize disruption of delivery of electricity to Tenant. 12. ASSIGNMENT AND SUBLETTING. 12.1 Landlord's Consent Required. Tenant shall not voluntarily or by operation of law, assign, mortgage, sublet, or otherwise transfer or encumber all or any part of Tenant's interest in this Lease or in the Premises without Landlord's prior written consent. Landlord shall not unreasonably withhold, delay or condition its consent to an assignment or sublet, provided the proposed assignee or subtenant is reasonably satisfactory to Landlord as to credit, reputation and responsibility and will occupy and use the Premises for a use reasonably compatible with other uses in the industrial center, and; provided that such assignment or subletting shall not be effective unless and until such successor of Tenant shall have agreed in writing to be bound by this Lease and the terms, conditions and obligations hereunder, and to perform all obligations of Tenant required to be performed by Tenant hereunder. Any attempted assignment, transfer, mortgage, encumbrance or subletting without such consent shall constitute a breach of this Lease and be voidable at Landlord's election. Tenant shall pay to Landlord all of Landlord's reasonable costs and expenses, including, without limitation, reasonable attorneys' fees and disbursements, reasonable fees, costs and expenses of consultants, and $200 per hour for the services and time of Landlord's personnel in connection with any request by Tenant for Landlord's consent. If Landlord's costs and expenses are anticipated to exceed two thousand dollars ($2,000), Tenant shall not be obligated to reimburse Landlord for, and Landlord shall not be obligated to continue with, any work beyond the two thousand dollar ($2,000) amount relating to a Tenant requested act as identified in the previous sentence, until Tenant has agreed in writing to pay Landlord's additional costs in excess of two thousand dollars ($2,000). The following actions by Tenant shall not be considered an assignment or sublease of the Premises for purposes of this Section 12.1 (i) assignment of the Lease pursuant to a merger, consolidation or reorganization; (ii) a sale of all or substantially all of the assets of Tenant; (iii) a sale or transfer of all or any portion of the stock of Tenant; or (iv) the transfer through whatever means of the Lease to any parent, subsidiary, or other entity directly or indirectly affiliated with Tenant. 12.2 No Release of Tenant. Regardless of Landlord's consent, no subletting or assignment shall release Tenant of Tenant's obligation, or alter the primary liability of Tenant to pay the Rent and to perform all other obligations to be performed by Tenant hereunder. The acceptance of Rent by Landlord from any other person shall not be deemed to be a waiver by Landlord of any provision hereof. Consent to one assignment or subletting shall not be deemed consent to any subsequent assignment or subletting. 12.3 Recapture of Premises. In connection with any proposed assignment or sublease, Tenant shall submit to Landlord in writing (a) the name of the proposed assignee or subtenant, (b) such information as to its credit history, financial responsibility and standing as Landlord may reasonably require, and (c) all of the terms and conditions upon which the proposed assignment or subletting is to be made. If the square footage of the portion of the Premises proposed to be assigned or sublet by Tenant is fifty percent (50%) or greater of the total square footage of the Premises, then Landlord shall have an option to cancel and terminate this Lease with respect to all, or such portion, of the Premises which is to be assigned or sublet. Landlord may exercise said option in writing within fifteen (15) days after its receipt from Tenant of such request to assign or sublease the Premises. If Landlord shall exercise its option, Tenant shall surrender possession of the portion thereof which is the subject of the option. If this Lease is canceled as to a portion of the Premises only, the Rent after the date of cancellation shall be reduced in the proportion that the floor area of the canceled portion bears to the total floor area of the Premises. 12.4 Excess Sublease Rental. If, on account of or in connection with any assignment or sublease, Tenant receives rent or other consideration in excess of the Rent called for hereunder, or in the case of the sublease of a portion of the Premises, in excess of the pro rata Rent based on the floor area of such portion, after appropriate adjustments to assure all other payments to Landlord called for hereunder are appropriately taken into account, Tenant shall pay to Landlord fifty percent (50%) of the excess of such payment of rent or other consideration received by Tenant promptly after its receipt. Excess Rent shall be defined as rent actually paid by Subtenant less Rent payable by Tenant and less the cost of any brokerage commissions, reasonable attorney fees, tenant improvements and any other reasonable costs incurred by Tenant in subleasing the Premises. 12.5 Additional Security Deposit. If, on account of or in connection with any assignment or sublease, Tenant receives a security deposit, Tenant shall deposit such security deposit received from any assignee or sublessee with Landlord as further security for Tenant's obligations under this Lease. 13. DEFAULTS; REMEDIES. 13.1 Defaults. The occurrence of any one or more of the following events shall constitute a material default and breach of this Lease by Tenant: (a) The abandonment of the Premises by Tenant. (b) The failure by Tenant to make any payment of Rent or any other payment required to be made by Tenant hereunder, as and when due, where such failure shall continue for a period of ten (10) days after written notice thereof from Landlord to Tenant. (c) The failure by Tenant to observe or perform any of the covenants, conditions or provisions of this Lease to be observed or performed by Tenant, other than described in Paragraph 13.1 (b), where such failure shall continue for a period of thirty (30) days after written notice thereof from Landlord to Tenant; provided, however, that if the nature of Tenant's default is such that more than thirty (30) days are reasonably required for its cure, then Tenant shall not be deemed to be in default if Tenant commences such cure within said thirty (30) day period and thereafter diligently prosecutes such cure to completion. (d) (i) The making by Tenant of any general arrangement or assignment for the benefit of creditors; (ii) the filing by or against Tenant of a petition to have Tenant adjudged a bankrupt or insolvent, for an order for relief or a petition for reorganization, arrangement or liquidation under any law relating to bankruptcy (unless, in the case of a petition filed against Tenant, the same is dismissed within sixty (60) days); (iii) the appointment of a trustee or receiver to take possession of substantially all of Tenant's assets located at the Premises or of Tenant's interest in this Lease, where possession is not restored to Tenant within thirty (30) days; (iv) the winding up or dissolution of Tenant, or commencement of any proceeding therefor; or (v) the attachment, execution or other judicial seizure of substantially all of Tenant's assets located at the Premises or of Tenant's interest in this Lease, where such seizure is not discharged within thirty (30) days. (e) The discovery by Landlord that any financial statement given to Landlord by Tenant, any assignee of Tenant, any subtenant of Tenant, any successor in interest or any guarantor of Tenant's obligations hereunder was materially false. (f) (i) The making by any guarantor of Tenant's obligations hereunder of any general arrangement or assignment for the benefit of creditors; (ii) the filing by or against any such guarantor of a petition to have guarantor adjudged a bankrupt or insolvent, for an order for relief, or a petition for reorganization, arrangement or liquidation under any law relating to bankruptcy (unless, in the case of a petition filed against such guarantor, the same is dismissed within sixty (60) days); (iii) the revocation or attempt to revoke any guaranty by any guarantor of Tenant's obligations under this Lease; or (iv) the winding up or dissolution or commencement of any proceeding therefor with respect to any such guarantor. 13.2 Remedies. In the event of any material default or breach by Tenant, Landlord may at any time thereafter, with or without notice or demand, and without limiting Landlord in the exercise of any right or remedy which Landlord may have by reason of such default or breach: (a) Terminate Tenant's right to possession of the Premises, in which case this Lease shall terminate and Tenant shall immediately surrender possession of the Premises to Landlord. In such event, Landlord shall be entitled to recover from Tenant all damages incurred by Landlord by reason of Tenant's default including, but not limited to, the cost of recovering possession of the Premises; expenses of reletting including necessary renovation and alteration of the Premises, reasonable attorneys' fees and disbursements, and any real estate commission actually paid; the worth at the time of award by the court having jurisdiction thereof of the amount which the unpaid Rent for the balance of the Term after the time of such award exceeds the amount of such rental loss for the same period that Tenant proves could be reasonably avoided; and that portion of the leasing commission actually paid by Landlord applicable to the unexpired Term of this Lease. Unpaid installments of Rent or other sums shall bear interest from the date due at the maximum rate then allowable by law. (b) Maintain Tenant's right to possession in which case this Lease shall continue in effect whether or not Tenant shall have abandoned the Premises. In such event, Landlord shall be entitled to enforce all of Landlord's rights and remedies under this Lease, including the right to recover the Rent as it becomes due hereunder. (c) Pursue any other remedy now or hereafter available to Landlord under the laws or judicial decisions of the State of California. 13.3 Default by Landlord. Landlord shall not be in default unless Landlord fails to perform obligations required of Landlord within thirty (30) days after written notice by Tenant to Landlord, and to the holder of any mortgage or deed of trust covering the Premises whose name and address shall have theretofore been furnished to Tenant in writing, specifying wherein Landlord has failed to perform such obligations; provided however, that if the nature of Landlord's obligation is such that more than thirty (30) days are required for performance, then Landlord shall not be in default if Landlord commences performance within thirty (30) days of written notice of default and thereafter diligently prosecutes the same to completion. In the event that the Landlord can not perform its obligations within 30 days, or to the extent the obligation will require more than thirty (30) days to complete, and Landlord does not use its best efforts to perform its obligations after 30 days, Tenant shall have the right to perform such Landlord obligations and deduct the cost from the Rent. 13.4 Late Charges. Tenant hereby acknowledges that late payment by Tenant to Landlord of Rent and other sums due hereunder will cause Landlord to incur costs not contemplated by this Lease, the exact amount of which will be extremely difficult to ascertain. Such costs include, but are not limited to, processing and accounting charges, and late charges which may be imposed on Landlord by the terms of any mortgage or trust deed covering the Premises. Accordingly, if any installment of Rent or any other sum due from Tenant shall not be received by Landlord or Landlord's designee within five (5) days after such amount shall be due, then, without any requirement for notice to Tenant, Tenant shall pay to Landlord a late charge equal to six percent (6%) of such overdue amount. The parties hereby agree that such late charge represents a fair and reasonable estimate of the costs Landlord will incur by reason of late payment by Tenant. Acceptance of such late charge by Landlord shall in no event constitute a waiver of Tenant's default with respect to such overdue amount, nor prevent Landlord from exercising any of the other rights and remedies granted hereunder. 14. CONDEMNATION. If the Premises or any portion thereof are taken under the power of eminent domain, or sold under the threat of the exercise of said power (all of which are herein called "Condemnation"), this Lease shall terminate as to the part so taken as of the date the condemning authority takes title or possession, whichever first occurs. If more than ten percent (10%) of the floor area of the building or the Premises, or more than twenty-five percent (25%) of the land area of the Premises which is not occupied by any building, is taken by Condemnation; then Tenant may, at Tenant's option to be exercised in writing only within ten (10) days after Landlord shall have given Tenant written notice of such taking (or in the absence of such notice, within ten (10) days after the condemning authority shall have taken possession), terminate this Lease as of the date the condemning authority takes such possession. If Tenant does not terminate this Lease in accordance with the foregoing, this Lease shall remain in full force and effect as to the portion of the Premises remaining, except that the Rent shall be reduced in the proportion that the floor area taken bears to the total floor area of the building situated on the Premises. No reduction in Rent shall occur if the only area taken is that which does not have a building located thereon; nor shall Landlord be under any obligation or liable to provide any replacement of any exclusive parking, if any, assigned to Tenant, located on any condemned land area. Any award for the taking of all or any part of the Premises under the power of eminent domain, or any payment made under threat of the exercise of such power, shall be the property of Landlord, whether such award shall be made as compensation for diminution in value of the leasehold or for the taking of the fee, or as severance damages; provided, however, that Tenant shall be entitled to any award for loss or damage to Tenant's trade fixtures and removable personal property. In the event that this Lease is not terminated by reason of such Condemnation, Landlord shall, to the extent of severance damages received by Landlord in connection with such Condemnation, repair any damage to the Premises caused by such Condemnation, except to the extent that Tenant has been reimbursed therefor by the condemning authority. If Tenant does not terminate this Lease in accordance with the provisions of this Paragraph 14, Tenant shall pay any amount in excess of such severance damages required to complete such repair. In the event the Lease is terminated due to condemnation, Tenant shall have no ongoing obligation for the Premises under the Lease. 15. EXAMINATION OF LEASE. Submission of this instrument for examination or signature by Tenant does not constitute a reservation of, or option to, lease. This instrument is not effective as a lease or otherwise until execution and delivery by Landlord and Tenant. 16. ESTOPPEL CERTIFICATE. (a) Tenant shall, at any time during the Term, upon fifteen (15) days prior written notice from Landlord or its lenders, execute, acknowledge and deliver to Landlord a statement in writing in the form attached hereto as Exhibit "D" (i) certifying that this Lease is unmodified and in full force and effect (or, if modified, stating the nature of such modification, and certifying that this Lease, as so modified, is in full force and effect) and the date to which the Rent and other charges are paid in advance, if any, and (ii) acknowledging that there are not, to Tenant's knowledge, any uncured defaults on the part of Landlord hereunder, or specifying such defaults if any are claimed. Any such statement may be conclusively relied upon by any of Landlord's lenders, prospective purchaser or encumbrancer of the Premises. (b) At Landlord's option, Tenant's failure to deliver such statement, within fifteen (15) days of receipt of written notice, shall be a material breach of this Lease or shall be conclusive upon Tenant (i) that this Lease is in full force and effect, without modification except as may be represented by Landlord, (ii) that there are no uncured defaults in Landlord's performance, and (iii) that not more than one month's Rent has been paid in advance. (c) If Landlord desires to finance, refinance or sell the Premises, or any part thereof, Tenant hereby agrees, upon fifteen (15) days prior written notice, to deliver to Landlord such financial statements of Tenant as may be reasonably required by a lender or purchaser. Such statement shall include the past three years' financial statements of Tenant. All such financial statements shall be received by Landlord in confidence and shall be used only for the purposes herein set forth. 17. LANDLORD'S LIABILITY. Whenever Landlord conveys its interest in the Premises, Landlord shall be automatically released from all liability as respects the further performance of covenants on the part of Landlord herein contained provided the assignee executes an assumption agreement agreeing to assume all of Landlord's obligations with respect to this Lease. If requested, Tenant shall execute a form of release and such other documentation as may be required to further effect these provisions. Tenant agrees to look solely to Landlord's estate and interest in the Premises for the satisfaction of any liability, duty or obligation of Landlord in respect to this Lease, or the relationship of Landlord and Tenant hereunder, and no other assets of Landlord shall be subject to any liability therefor. Tenant agrees it will not seek, and hereby waives, any recourse against the individual partners, members, directors, officers, employees or shareholders of Landlord, or any of their personal assets, for such satisfaction. 18. SEVERABILITY. The invalidity of any provision of this Lease as determined by a court of competent jurisdiction shall in no way affect the validity of any other provision hereof. 19. INTEREST ON PAST-DUE OBLIGATIONS. Except as expressly herein provided, any amount due to Landlord or Tenant not paid when due, shall bear interest at the maximum rate then allowable by law from the date due. Payment of such interest shall not excuse or cure any default by Tenant under this Lease. 20. TIME OF ESSENCE. Time is of the essence in this Lease and every provision thereof. 21. ADDITIONAL RENT. Any monetary obligations of Tenant to Landlord under the terms of this Lease shall be deemed to be Rent. 22. NOTICES. Any notice required or permitted to be given hereunder shall be in writing and may be given by personal service or by certified mail, return receipt requested or by nationally recognized overnight courier. Notice by certified mail shall be deemed served on the date of delivery as shown on the postal receipt. Either party may, by notice to the other, specify a different address for notice purposes, except that, upon Tenant's taking possession of the Premises, the Premises shall constitute Tenant's address for notice purposes, with a copy to the attention of: Director of Operations, Metatec Corporation, 7001 Metatec Blvd., Dublin, Ohio, 43017. A copy of all notices to be given to Landlord hereunder shall be concurrently transmitted by Tenant to such party or parties at such addresses as Landlord may hereafter designate by notice to Tenant. 23. WAIVERS. No waiver by Landlord of any provision hereof shall be deemed a waiver of any other provision hereof or of any subsequent breach by Tenant of the same or any other provision. Landlord's consent to or approval of any act shall not be deemed to render unnecessary the obtaining of Landlord's consent to or approval of any subsequent act by Tenant. The acceptance of Rent hereunder by Landlord shall not be a waiver of any preceding breach by Tenant or of any provision hereof, other than the failure of Tenant to pay the particular Rent so accepted, regardless of Landlord's knowledge of such preceding breach at the time of acceptance of such Rent. Partial or incomplete payments accepted by Landlord shall not be a waiver or considered an accord and satisfaction of any amounts due. 24. HOLDING OVER. If Tenant remains in possession of the Premises or any part thereof after the expiration of the Term without the express written consent of Landlord, such occupancy shall be a tenancy from month to month at a rental equal to the Rent during the last month of the Term increased by fifty percent (50%) and upon all the terms hereof applicable to a month-to-month tenancy. If Tenant fails, at the expiration, or earlier termination, of the Term, to surrender the Premises or any part thereof immediately and in the condition required by the Lease, Tenant shall indemnify and hold harmless Landlord from all liability, costs, expenses and damages thereby suffered or incurred by Landlord, including, without limitation, any claim made by any succeeding tenant resulting from Tenant's failure to surrender. 25. CUMULATIVE REMEDIES. No remedy or election hereunder shall be deemed exclusive but shall, wherever possible, be cumulative with all other remedies at law, in equity or hereunder. 26. COVENANTS AND CONDITIONS. Each provision of this Lease performable by any party shall be deemed both a covenant and a condition. 27. BINDING EFFECT; CHOICE OF LAW. Subject to the provisions of Paragraphs 12 and 17, this Lease shall be binding upon and inure to the benefit of the parties hereto and their respective successors, assigns and legal representatives. This Lease shall be governed by the laws of the State of California and any litigation between Landlord and Tenant shall be initiated in the county in which the Premises are located. 28. SUBORDINATION. (a) This Lease, at Landlord's option, shall be subordinate to any mortgage, deed of trust or any other hypothecation or security now of record or hereafter placed upon the real property of which the Premises are a part, and to any and all advances made on the security thereof, and to all amendments, renewals, modifications, consolidations, restructurings, replacements and extensions thereof. Landlord's election to subordinate this Lease to any mortgage, deed of trust or any other hypothecation or security hereafter placed upon the real property of which the Premises are a part shall not be effective unless the mortgagee or trustee shall execute with Tenant a subordination, non-disturbance and attornment agreement recognizing, among other things, that Tenant's right to quiet possession of the Premises shall not be disturbed, if Tenant is not in default, and so long as Tenant shall pay the Rent and observe and perform all the provisions of this Lease. If any mortgagee or trustee shall elect to have this Lease prior to the lien of its mortgage or deed of trust, and shall give written notice thereof to Tenant, this Lease shall be deemed prior to such mortgage or deed of trust, whether this Lease is dated prior or subsequent to the date of said mortgage or deed of trust or the date of recording thereof. (b) Tenant agrees to execute any documents required by Landlord or its lenders to effectuate an attornment, a subordination or to make this Lease prior to the lien of any mortgage, deed of trust or ground lease, as the case may be. Tenant's failure to execute such documents within fifteen (15) days after written demand shall constitute a default by Tenant hereunder. 29. AS IS. Except for the express representations and warranties of Landlord contained herein, upon the Commencement Date Tenant is leasing the Premises "AS IS" without any warranty of Landlord, express or implied, as to the nature or condition of, or title to the Premises, or its fitness for Tenant's intended use of same. Tenant is relying solely upon its own independent inspection, investigation and analysis of the Premises as it deems necessary or appropriate in so leasing the Premises from Landlord (including, without limitation, any and all matters concerning the condition, use or suitability of the Premises). With regard to Tenant's proposed Uses of the Premises, Tenant is not relying in any way upon any representations, statements, agreements, warranties, studies, plans, reports, descriptions, guidelines or other information or material furnished by Landlord or its representatives, whether oral or written, express or implied, of any nature whatsoever. 30. LANDLORD'S ACCESS. Landlord and Landlord's agents shall have the right to enter the Premises upon reasonable notice and at reasonable times for the purpose of inspecting the same, showing the same to prospective purchasers, lenders, or tenants, and making such tests, alterations, repairs, improvements or additions to the Premises, or to the building of which they are a part, as Landlord may deem necessary or desirable; provided, however, that Landlord and Landlord's agents shall have such rights of access and entry without notice at any time as result of an emergency. Landlord may, at any time during the last one hundred eighty (180) days of the Term hereof, place on or about the Premises any ordinary "For Sale" or "For Lease" signs, all without rebate of Rent or liability to Tenant. 31. AUCTIONS. Tenant shall not conduct any auction without Landlord's prior written consent. 32. SIGNS. Any sign placed on the Premises shall contain only Tenant's name or the name of any affiliate of Tenant actually occupying the Premises, but no advertising matter. No such sign shall be erected until Tenant has obtained Landlord's written approval, of the location, materials, size, design, and content thereof and any necessary permit therefor. Tenant shall remove any such sign upon termination and return the Premises to their condition prior to the placement of said sign. 33. MERGER. The voluntary or other surrender of this Lease by Tenant, or a mutual cancellation thereof, or a termination by Landlord, shall not work a merger and shall, at the option of the Landlord, terminate all or any existing subtenancies or may, at the option of Landlord, operate as an assignment to Landlord of any or all of such tenancies. 34. EASEMENTS, BOUNDARY CHANGES. Landlord reserves to itself the right, from time to time, to grant such easements, rights, dedications and enact boundary and common area configuration adjustments which Landlord deems necessary or desirable and to cause the recordation of parcel maps and restrictions, so long as they do not unreasonably interfere with the use of the Premises by Tenant. Tenant shall sign any of the aforementioned documents upon request of Landlord and failure to do so shall constitute a breach of this Lease by Tenant. 35. QUIET POSSESSION. Upon Tenant's paying the Rent, additional rent and other sums provided hereunder and observing and performing all of the covenants, conditions and provisions on Tenant's part to be observed and performed hereunder, Tenant shall have quiet possession of the Premises for the entire Term hereof, subject to the provisions of this Lease. 36. GUARANTOR. It shall constitute a Default of the Tenant under this Lease if any Guarantor fails or refuses, upon reasonable request by Landlord to give: a) evidence of the due execution of the guaranty called for by this Lease, including the authority of the Guarantor (and of the party signing on Guarantor's behalf) to obligate such Guarantor on said guaranty, and including in the case of a corporate Guarantor, a certified copy of a resolution of its board of directors authorizing the making of such guaranty, together with a certificate of incumbency showing the signature of the persons authorized to sign on its behalf, (b) current financial statements of Guarantor as may from time to time be requested by Landlord or (c) written confirmation that the guaranty is still in effect. 37. LANDLORD'S LIEN. Not applicable. 38. UNIFORM COMMERCIAL CODE. Not applicable. 39. NO RECORDING OF LEASE. The parties agree that this Lease shall not be recorded by either party. 40. SECURITY MEASURES. Tenant hereby acknowledges that the Rent payable to Landlord hereunder does not include the cost of guard service or other security measures, and that Landlord shall have no obligation whatsoever to provide same. Tenant assumes all responsibility for the protection of the Premises, Tenant, its agents, guests, customers and invitees and their property from the acts of third parties. 41. AUTHORITY. If Tenant is a corporation, limited liability entity, trust or partnership, each individual executing this Lease on behalf of such entity represents and warrants that he/she is duly authorized to execute and deliver this Lease on behalf of said entity. If Tenant is a corporation, limited liability entity, trust or partnership, Tenant shall, within thirty (30) days after execution of this Lease, deliver evidence of such authority satisfactory to Landlord. 42. DISCLAIMERS ON AUTHORSHIP. Landlord and Tenant have contributed to the final form of this Lease. Therefore, neither Landlord or Tenant should be considered to be the author of this Lease should authorship affect the interpretation of this Lease by any tribunal. 43. AMENDMENTS. This Lease may be modified only in writing, signed by the Landlord and Tenant at the time of the modification. The parties shall amend this Lease from time to time to reflect any adjustments that are made to the Rent or other amounts payable under this Lease. As long as they do not materially change Tenant's obligations hereunder, Tenant agrees to make such reasonable non-monetary modifications to this Lease as may be reasonably required by an institutional, insurance company, or pension plan Lender in connection with the obtaining of normal financing or refinancing of the property of which the Premises are a part. Tenant shall pay to Landlord all of Landlord's costs and expenses, including, without limitation, reasonable attorney's fees and disbursements, reasonable fees, costs and expenses of consultants, and $200 per hour for the services and time of Landlord's personnel in connection with any request by Tenant for Landlord's consent, for any waiver or any amendment, modification, renewal, replacement, restructure, extension or workout of this Lease. Landlord shall pay to Tenant all of Tenant's costs and expenses, including, without limitation, reasonable attorney's fees and disbursements, reasonable fees, costs and expenses of consultants, and $200 per hour for the services and time of Tenant's personnel in connection with any request by Landlord for Tenant's consent, for any waiver or any amendment, modification, renewal, replacement, restructure, extension or workout of this Lease. 44. LEGAL FEES. In the event of the bringing of any action or suit by a party hereto against another party hereunder by reason of any breach of any of the terms, covenants or agreements or any inaccuracies in any of the representations and warranties on the part of the other party arising out of this Agreement, then in that event, the prevailing party in such action or dispute, whether by final judgment, or out of court settlement shall be entitled to have and recover of and from the other party all costs and expenses of suit, including actual attorneys' fees and disbursements. 45. COUNTERPARTS. This Agreement may be executed in multiple counterparts, each of which shall be deemed an original, but all of which, together, shall constitute one and the same instrument but shall not be deemed fully executed and binding until each party has received an original counterpart signature from the other party. 46. FEES AND OTHER EXPENSES. Except as otherwise provided herein, each of the parties shall pay its own fees and expenses in connection with this Agreement. 47. LEASE DOCUMENTS. The following leases cover the larger industrial park in which the Premises are located: (a) that certain Ground Lease Agreement dated as of January 28, 1985 (the "Ground Lease"), by and between Alpha Beta Company ("Alpha Beta"), as lessor, and Fleming Foods of California, Inc. ("Fleming Foods"), as lessee; and (b) that certain Sublease Agreement dated as of January 28, 1985 (the "Master Lease"), by and between Alpha Beta, as lessor, and Fleming Foods, as lessee, as amended by Amendment of Sublease dated as of October 19, 1990, as the Ground Lease and Master Lease may be amended. Landlord is the current lessor and lessee under the Ground Lease and the Master Lease, and the Ground Lease and Master Lease are currently in force and effect. Notwithstanding the terms of the Ground Lease and the Master Lease, Landlord and Tenant hereby agree that: (i) the Ground Lease and the Master Lease shall not apply to or otherwise affect this Lease or the Premises; (ii) neither the Landlord nor the Tenant, as between themselves, shall have any rights or obligations under the Ground Lease or the Master Lease with respect to this Lease or the Premises; and (iii) upon expiration or earlier termination of the Ground Lease or the Master Lease, this Lease shall continue unmodified and in full force and effect, subject to and in accordance with the terms hereof. Landlord represents and warrants that: i) Landlord is the owner of the fee estate and leasehold improvements for the property and Premises; ii) no other third parties have a leasehold interest or fee interest in the Premises; and iii) Landlord shall not take any action to void, transfer, or assign the rights under the Ground Lease or Master Lease which would materially impair Tenant's rights under the Lease. 48. FURTHER ASSURANCES. Promptly after request by either party, the other party shall execute such documents and take such actions as reasonably requested by the first party to effectuate the intent of the parties as contemplated hereunder. 49. WAIVER OF JURY TRIAL. TO FACILITATE THE DESIRE OF LANDLORD AND TENANT TO RESOLVE DISPUTES IN AN EFFICIENT AND ECONOMICAL MANNER, LANDLORD, BY ITS ACCEPTANCE OF THIS LEASE, AND TENANT, BY ITS EXECUTION HEREOF EXPRESSLY WAIVE ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION: (A) ARISING UNDER THIS LEASE, OR (B) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF LANDLORD AND TENANT, OR EITHER OF THEM, WITH RESPECT TO THIS LEASE, OR THE TRANSACTIONS RELATED HERETO OR THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER ARISING IN CONTRACT OR TORT OR OTHERWISE. ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY. Tenant or Landlord may file an original counterpart or a copy of this Paragraph with any court as written evidence of the consent of Tenant and Landlord hereto to the waiver of their right to trial by jury. 50. TENANT IMPROVEMENT ALLOWANCE. During the first year of the Term, Landlord shall provide a Tenant Improvement Allowance (the "Improvement Allowance") up to a maximum amount of $1,400,000.00 (One Million Four Hundred Thousand Dollars and no/00) for costs (including design, permits and construction costs) associated with Tenant Improvements to the Premises. Any modification to the Premises, whether structural or nonstructural, necessitated by the Tenant Improvements shall be at Tenant's sole expense and subject to Landlord's prior written approval pursuant to the provisions of Paragraph 7.5 hereto. 51. EARLY ENTRY. With the prior written consent of Landlord, Tenant shall have the right, prior to the Scheduled Term Commencement Date at its sole risk, cost and expense, to enter upon and install Tenant Improvements in the Premises, and to store Tenant's inventory, and the same will not cause Rent to commence; provided that (a) Tenant shall have paid for and provided evidence to Landlord of all insurance required under the Lease having been secured, (b) Tenant shall pay all utility charges and other costs and expenses incurred by Landlord in respect to such early entry by Tenant, and (c) Tenant shall execute an indemnity agreement in favor of Landlord in form and substance satisfactory to Landlord indemnifying Landlord with respect to any costs that may be incurred. Prior to the Scheduled Term Commencement Date Tenant shall be allowed to use the Premises for the storage of inventory, but shall not otherwise commence the operation of business, without the express prior written consent of Landlord. Upon execution of the Lease, to the extent that Landlord has not leased the space in the building adjoining the Premises, Tenant will be allowed to store inventory in that space in compliance with items (a), (b) and (c) above, until the Commencement Date. In the event Landlord leases the adjoining space prior to the Commencement Date, Tenant's right to store inventory in the adjoining space shall terminate as of the date of lease execution for the adjoining space. 52. RIGHT OF FIRST REFUSAL. In further consideration of the rent, covenants, and conditions to be paid, performed, and observed by Tenant, Landlord hereby grants to Tenant a Right of First Refusal to lease the adjoining 43,550 sq. ft. (the "Additional Space") to the north of the Premises in Building #1 of the industrial center. In the event Landlord received a bona fide offer from a third party to lease the Additional Space, Landlord shall promptly notify Tenant in writing of the offer, including the amount of rent offered and other terms and conditions of the offer. Tenant shall have ten (10) business days within which to notify Landlord in writing whether Tenant agrees to lease the Additional Space as of the date provided for rent commencement in the third party offer. If Tenant does not provide Landlord with written notice of Tenant's agreement to lease the Additional Space within the aforementioned ten (10) business day period, then Landlord shall have the right to enter into a lease with the third party on terms generally in accordance with those outlined in Landlord's notification letter, and Tenant shall have no further Right of First Refusal relating to the Additional Space unless and until the Additional Space again becomes available for lease during the Term. In the event Tenant elects to lease the Additional Space, the lease of the Additional Space shall be for the remaining Term of the initial Lease, and shall be subject to the same terms and conditions as the existing Lease, with the exception that the rent for the Additional Space shall be the same rent as the rent proposed in the third party offer, with the exception that if Tenant does not require the same tenant improvement allowance as proposed in the third party offer, then the monthly rent for the Additional Space shall be determined by first decreasing the proposed monthly third party rent by the monthly amount required to fully amortize the proposed third party tenant improvement allowance over the proposed lease term in the third party offer at an annual rate of ten percent (10%). After reducing the monthly proposed third party rent by the monthly amortization amount, the remaining figure shall be the monthly Additional Space base rent. The amount of tenant improvement allowance required by Tenant for the Additional Space shall then be fully amortized over the remaining Term of the initial Lease at an annual rate of ten percent (10%), which monthly amount shall be added to the monthly Additional Space base rent and, when the two amounts are combined, shall constitute the initial monthly rent (the "Additional Space Rent") for the Additional Space. Such Additional Space Rent shall be subject to all the terms and conditions as the Rent for the Premises. Notwithstanding the previous calculation of the Additional Space Rent, under no circumstances shall the Additional Space Rent be less than $25,700 per month during the first twelve months of the Term, which minimum monthly Additional Space Rent shall be increased by four percent (4%) every twelve months during the Term. Further, upon determination of the Additional Space Rent, this Additional Space Rent shall be increased by four percent (4%) for the reminder of the Term on the same date as the increase in Rent for the Premises provided for in Paragraph 53 of this Lease. 53. RENTAL INCREASES. The Rent for the Term shall be as follows: Month 1= $0; Months 2-12 $55,700.00/month. Thereafter, the monthly Rent shall be increased by 4% from the Rent due for the previous month, which new amount shall be the Rent for the next twelve months, as of the first day of the 13th, 25th, 37th, 49th, 61st, 73rd, 85th, 97th , 109th and 121st month of the Term. Tenant shall pay as additional Rent, on a monthly basis the amount required to completely amortize the amount of the Improvement Allowance expended by Landlord, over the ten (10) year and one (1) month Term of the Lease, at an annual interest rate of ten percent (10%). Upon determination of the final Improvement Allowance amount, Tenant and Landlord shall execute an amendment to the Lease confirming the Commencement Date, and the revised Rent for the Term incorporating the monthly amortization amount. 54. OPTION TO EXTEND TERM. In the event that Tenant is not in default upon notice of exercise of this Option, and on the last day of the Term, Tenant is hereby granted the Option to extend the Term of this Lease for an additional five (5) years (the "Extension Term") by giving Landlord written notice of its intention to do so at least nine (9) months prior to the expiration of the initial Term of this Lease. The terms and conditions contained in this Lease shall remain in effect during the Extension Term, except that the monthly Rent for the first twelve (12) months of the Extension Term shall be the greater of i) ninety-five percent (95%) of Market Rent (as hereinafter defined) for comparable space to the Premises, or ii) Seventy-nine thousand two hundred seventy-two and 78/l00 dollars ($79,272.78). During the Extension Term, the monthly Rent shall be increased every twelve months by four percent (4%) from the monthly Rent due for the previous twelve (12) months. "Market Rent" shall be the prevailing monthly rental rate for new leases (executed within twelve months of the commencement date of the Extension Term) for comparable office/manufacturing facilities containing approximately 20% office space, 30% manufacturing/assembly space and 50% warehouse space which are less than 10 years old and are located within a 10 mile radius of the Premises. If the parties are unable to agree upon the Market Rent, then Market Rent shall be determined by arbitration in accordance with the then prevailing Commercial Rules of the American Arbitration Association. 55. CAPTIONS. The headings and captions included in this Lease are for convenience only and do not limit its provisions. 56. PHASED DEVELOPMENT. Tenant and Landlord acknowledge that, due to the phased development of the larger industrial center of which the Premises are a part, the exact percentage of property taxes, insurance and maintenance expenses will change as the industrial center development progresses. During the development of the industrial center, Landlord agrees to use its reasonable efforts in accordance with standard industry practice, applied consistently across the industrial center, to allocate expenses equitably across the various tenants of the industrial center. The terms of this Paragraph 56 are specifically intended to apply to those instances specified in Paragraphs 7.6, 8.2, 10.3 and 11 where Landlord may use its reasonable discretion in allocating expenses. 57. ENTIRE AGREEMENT. This Agreement supersedes any prior agreements, negotiations and communications, oral or written, and contains the entire agreement between Buyer and Seller as to the subject matter hereof. No subsequent agreement, representation, or promise made by either party hereto, or by or to an employee, officer, agent or representative of either party shall be of any effect unless it is in writing and executed by the party to be bound thereby. The Parties hereto have executed this Lease on the dates above their respective signatures. "Landlord" Fleming Business Park LLC By: 4 WPI Montague Expressway LP, Member By: Warehouse Properties, Inc., General Partner /s/ David Denton ----------------------------------------------------- David Denton, CEO Dated: November 9, 1998 -------------------------------------------------------- "Tenant" Metatec Acquisition Corporation By: /s/ Chris Winslow --------------------------------------------------------- Chris Winslow, Senior VP Operations Dated: November 12, 1998 -------------------------------------------------------- Tenant's signature is required to be notarized State of Ohio County of Franklin On this 12th day of November, 1998, before me, Mary McDonald, the undersigned Notary Public, personally appeared Chris Winslow, personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. WITNESS my hand and official seal. /s/ Mary McDonald - ----------------------------------------------------- Mary McDonald AMENDMENT NO. 1 TO STANDARD INDUSTRIAL LEASE THIS AMENDMENT NO. 1 TO STANDARD INDUSTRIAL LEASE (this "Amendment") is dated as of July 15, 1999, by and between Fleming Business Park LLC, a Delaware limited liability company ("Landlord"), and Metatec Acquisition Corporation, an Ohio corporation ("Tenant"). RECITALS A. Landlord and Tenant are parties to that certain Standard Industrial Lease dated as of October 30, 1998 (the "Lease"). All capitalized terms used but not defined herein will have the meanings given to them in the Lease. B. Landlord and Tenant, pursuant to Paragraph 53 of the Lease, desire to amend the Lease as provided in this Amendment. NOW, THEREFORE, in consideration of the foregoing Recitals, and for other good and valuable consideration, the receipt of which is hereby acknowledged, Landlord and Tenant hereby agree as follows: 1. Term. Landlord and Tenant hereby agree, acknowledge and confirm that the Term of the Lease (a) commenced on, and the Commencement Date was, May 1, 1999 and (b) ends on May 30, 2009. 2. Rental. The rental for the Term shall be as follows: MONTHS TOTAL MONTHLY RENT DUE ------ ---------------------- 1 $18,411.96 2-12 $74,111.96 13-24 $76,339.96 25-36 $78,657.08 37-48 $81,066.88 49-60 $83,573.08 61-72 $86,179.53 73-84 $88,890.23 85-96 $91,709.36 97-108 $94,641.26 109-120 $97,690.43 121 $100,861.57 3. No Other Amendments. Except as amended in this Amendment, the Lease shall continue unmodified and in full force and effect. IN WITNESS WHEREOF, the parties have executed this Amendment as of the date first above written. TENANT METATEC ACQUISITION CORPORATION AN OHIO CORPORATION By: /s/ Chris Winslow ----------------------------------------- Print Name: Chris Winslow --------------------------------- Its: Senior VP Operations ------------------------------------------------- LANDLORD FLEMING BUSINESS PARK LLC, A DELAWARE LIMITED LIABILITY COMPANY By: 4 WPI Montague Expressway LP, Member By: Warehouse Properties, Inc., General Partner By: /s/ David R. Denton ---------------------- David R. Denton, Chief Executive Officer AMENDMENT NO. 2 TO STANDARD INDUSTRIAL LEASE THIS AMENDMENT NO. 2 TO STANDARD INDUSTRIAL LEASE (this "Amendment") is dated as of August 30, 1999, by and between Fleming Business Park LLC, a Delaware limited liability company ("Landlord"), and Metatec International, Inc., an Ohio corporation as successor to Metatec Acquisition Corporation ("Tenant"). RECITALS A. Landlord and Tenant are parties to that certain Standard Industrial Lease dated as of October 30, 1998 (the "Lease"). All capitalized terms used but not defined herein will have the meanings given to them in the Lease. B. Landlord and Tenant have previously amended the Lease pursuant to Amendment #1 to Standard Industrial Lease dated July 15, 1999. C. Landlord and Tenant, pursuant to Paragraph 52 of the Lease, desire to further amend the Lease as provided in this Amendment. NOW, THEREFORE, in consideration of the foregoing Recitals, and for other good and valuable consideration, the receipt of which is hereby acknowledged, Landlord and Tenant hereby agree as follows: 1. Description of the Premises. Pursuant to Paragraph 52 of the Lease, Tenant has exercised its Right of First Refusal on the adjoining 43,550 sq. ft. of Additional Space in Building #1. Accordingly, the Premises are hereby redefined to be 147,950 sq. ft. including 10,000 sq. ft. of second floor office (see attached Exhibit "A"). 4. Rental. The rental for the Term shall be as follows: MONTHS TOTAL MONTHLY RENT DUE ------ ---------------------- 1 $18,411.96 2-11 $74,111.96 12 $99,781.96 13-24 $102,009.96 25-36 $105,353.88 37-48 $108,831.56 49-60 $112,448.34 61-72 $116,209.80 73-84 $120,121.71 85-96 $124,190.10 97-108 $128,421.22 109-120 $132,821.60 121 $137,397.98 3. Taxes, Insurance and Maintenance Reserve Deposit. Tenant shall not be responsible for payment of the Taxes, Insurance and Maintenance Expenses for the Additional Space until April 1, 2000. Commencing on April 1, 2000, Tenant's share of Building #1 expenses shall be increased to 100% for the remainder of the Term. Tenant's Taxes, Insurance and Maintenance Deposit shall be increased to $15,350/month. 4. Option to Extend Term. Paragraph 54 of the Lease provides Tenant with an option to extend the Term of the Lease for an additional five (5) years. Due to Tenant's expansion of the Premises as hereintofore provided, the minimum initial monthly Rent amount of Seventy-Nine Thousand Two Hundred Seventy-Two and 78/100 dollars ($79,272.78) as provided in (ii) of Paragraph 54 is hereby increased to One Hundred Fifteen Thousand Eight Hundred Nine and 19/100 dollars ($115,809.19). 5. Tenant Improvement Allowance for Additional Space. So long as Tenant's application for cost reimbursement is received on or before 12/31/00, Landlord shall provide a tenant improvement allowance (the "Additional Space Improvement Allowance") up to a maximum amount of Two Hundred Sixty-One Thousand Three Hundred and no/100 dollars ($261,300.00) for costs (including design, permits and construction costs) associated with tenant improvements to the Additional Space. Should Tenant fail to make application for the Additional Space Improvement Allowance on or before 12/31/00, Landlord shall have no further obligation to provide said allowance. The Additional Space Improvement Allowance shall be provided to Tenant by Landlord upon presentation of invoices for the costs relating to improvements to the Additional Space, and upon receipt by Landlord of the appropriate releases from the contractor and related subcontractors for the work in the Additional Space. Any modification to the Additional Space, or the Premises of which the Additional Space is a part, whether structural or non-structural, necessitated by the Additional Space Tenant Improvements, shall be at Tenant's sole expense, subject to reimbursement from the Additional Space Improvement Allowance, and subject to Landlord's prior written approval pursuant to the provisions of Paragraph 7.5 of the Lease. Upon determination of the amount expended by Tenant which is applicable to the Additional Space Improvement Allowance, this amount shall be fully amortized at an annual rate of 10% over the remaining Term of the Lease and shall be payable to Landlord as additional Rent. Upon determination of this additional Rent amount, Landlord and Tenant shall immediately enter into an amendment to the Lease documenting this additional Rent. 6. No Other Amendments. Except as amended in Amendment #1 and in this Amendment, the Lease shall continue unmodified and in full force and effect. IN WITNESS WHEREOF, the parties have executed this Amendment as of the date first above written. TENANT METATEC INTERNATIONAL, INC. AN OHIO CORPORATION By: /s/ Chris Winslow ----------------------------------------- Print Name: Chris Winslow --------------------------------- Its: Senior VP Operations ------------------------------------------------- LANDLORD FLEMING BUSINESS PARK LLC, A DELAWARE LIMITED LIABILITY COMPANY By: 4 WPI Montague Expressway LP, Member By: Warehouse Properties, Inc., General Partner By: /s/ David R. Denton -------------------------------- David R. Denton, Chief Executive Officer -----END PRIVACY-ENHANCED MESSAGE-----