-----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, G6Isy37/qanxMkim3wJI5KFcq2NWgMxeqPXKqKMei1bBVYaUk9WKXExsOjByWvVn IF62shYpVL/zw+HZCMSuEA== 0000950115-97-000718.txt : 19970604 0000950115-97-000718.hdr.sgml : 19970604 ACCESSION NUMBER: 0000950115-97-000718 CONFORMED SUBMISSION TYPE: 10-K/A PUBLIC DOCUMENT COUNT: 13 CONFORMED PERIOD OF REPORT: 19961231 FILED AS OF DATE: 19970509 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: SCAN GRAPHICS INC CENTRAL INDEX KEY: 0000764843 STANDARD INDUSTRIAL CLASSIFICATION: 3577 IRS NUMBER: 954091769 STATE OF INCORPORATION: PA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 000-15864 FILM NUMBER: 97599777 BUSINESS ADDRESS: STREET 1: 700 ABBOTT DR CITY: BROOMALL STATE: PA ZIP: 19008-4373 BUSINESS PHONE: 6103281040 MAIL ADDRESS: STREET 1: 700 ABBOTT DR CITY: BROOMALL STATE: PA ZIP: 19008 FORMER COMPANY: FORMER CONFORMED NAME: CAPTIVE VENTURE CAPITAL INC DATE OF NAME CHANGE: 19870519 10-K/A 1 AMENDMENT TO ANNUAL REPORT SECURITIES AND EXCHANGE COMMISSION Washington, DC 02549 FORM 1O-K AMENDMENT 1 _X_ Annual report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934 for the fiscal year ended December 3l, 1996 or ___ Transition report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from ________ to _________ Commission file number 0-15864 ------- SCAN-GRAPHICS, INC. ------------------------------------------------------ (Exact name of registrant as specified in its charter) Pennsylvania 95-4091769 ------------------------------- ------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 700 Abbott Drive, Broomall, PA 19008 ---------------------------------------- --------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, (including area code) 610-328-1040 ------------ Securities registered pursuant to Section 12(b) of the Act: None ---- Securities registered pursuant to Section 12(g) of the Act: Common Stock. par value $.001 Per share --------------------------------------- (Title of class) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No --- --- Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K X. --- The aggregate market value of the Voting Stock held by non-affiliates of the registrant computed by reference to the closing price as reported on the NASDAQ system as of February 28, 1997 was $55,317,613. The number of shares of the registrant's Common Stock issued and outstanding as of February 28, 1997 was 15,665,165 shares. DOCUMENTS INCORPORATED BY REFERENCE Portions of the registrant's definitive Proxy Statement for its 1996 Annual Meeting of Shareholders are incorporated by reference into Part III. This amendment to the 1996 Scangraphics, Inc. Form 10-K is filed to incorporate the Financial Data Schedule and related exhibits which should have been submitted with our original filing. ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES. AND REPORTS ON FORM 8-K Item 14(a) 1 and 2 Financial Statements and Schedules. See "Index to Financial Statements and Schedules" on F-1. (b) Reports on Form 8-K None filed in the last quarter of the period covered by this report. (c) Exhibits The following is a list of exhibits filed as part of this annual report on Form 10-K. Where so indicated by footnote, exhibits which were previously filed are incorporated by reference. For exhibits incorporated by reference, the location of the exhibit in the previous filing is indicated in parenthesis. 3.1 Articles of incorporation (2) (Exhibit 3.1). 3.2 Bylaws (2) (Exhibit 3.2). 3.3 Amendment to Articles of Incorporation. (7) 4.1 Specimen copy of stock certificate for shares of Common Stock of the Registrant. (5) 4.2 Specimen copy of stock certificate for shares of Class A Convertible Preferred Stock Series A (1) (Exhibit 4.2). 4.3 Specimen copy of stock certificate for shares of Class B Preferred Stock (1) (Exhibit 4.3). 4.4 Restricted Common Stock Registration Rights (l) (Exhibit 4.1). 4.5 Form of Common Stock Warrant (l) (Exhibit 4.4). 4.6 Form of Redeemable Common Stock Purchase Warrant and Subscription Agreement (l) (Exhibit 4-5). 4.8 Specimen copy of stock certificate for shares of Class A Convertible Preferred Stock Series C. (7) ** lO.1 Employment Contract - Andrew E. Trolio (1) (Exhibit 10.l). ** 10.2 Employment Contract - Anthony M. Trolio (1) (Exhibit 10.4). ** 10.4 Form of Common Stock Option (1) (Exhibit 10.6). ** 10.5 SCAN-GRAPHICS, Inc. 1992 Long Term Incentive Plan (3) (Exhibit 2.1 - Annex E). 10.6 Facility Lease, 700 Abbott Drive, Broomall, PA (6) (Exhibit 10.6). 10.7 Form of Selling Shareholder Agreement (4) (Exhibit 10.2). 10.8 Agreement between SCAN-GRAPHICS, Inc. and Howard L. Morgan and the ARCA Group, Inc. (5) (Exhibit 10.9). 2 ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K (Continued) 10.9 Agreement between SCAN-GRAPHICS, Inc. and Michael A. Mulshine and Osprey Partners. (Exhibit 10.9)(6) * 10.9.1 Agreement between SCAN-GRAPHICS, Inc. and Michael A. Mulshine and Osprey Partners. (Exhibit 10.9.1) * 10.9.2 Agreement between SCAN-GRAPHICS, Inc. and Michael A. Mulshine and Osprey Partners. (Exhibit 10.9.2) * 10.9.3 Finders Fee Agreement between SCAN-GRAPHICS, Inc. and Osprey Partners and C&F Global Enterprises. (Exhibit 10.9.3) * 10.10 Facility Lease, 649 N. Lewis Road, Limerick, PA. (Exhibit 10.10) * 10.10.1 Addendum to Facility Lease, 649 N. Lewis Road, Limerick, PA. (Exhibit 10.10.1) *,**10.11 Employment Contract - Laurence L. Osterwise (Exhibit 10.11) *,**10.12 Employment Contract - Richard L. Rex (Exhibit 10.12) *,**10.13 Employment Contract - Bruce Downing (Exhibit 10.13) *,**10.14 Employment Contract - William Hubbard (Exhibit 10.14) * 10.15 License Agreement between The Ohio State University Research Foundation and Sedon GeoServices, Inc. (Exhibit 10.15) 23.1 Consent of BDO Seidman, LLP With respect to the registration statement on Form S-3 (33-47127) (Exhibit 23.1) * 23.2 Consent of BDO Seidman, LLP with respect to the registration statement on Form S-3 (333-3719). (Exhibit 23.2) 25.1 Power of attorney (included on the signature page to this Form 10-K). * 27 Financial Data Schedule. * Filed herewith. ** Executive Compensation Plans and Arrangements. (1) Filed as an Exhibit to the Annual Report on Form 10-K for the fiscal year ended December 31, 1991, as amended by Amendment No. 1 on Form 8 dated June 12, 1992 and Amendment No 2 on Form 8 dated July 27, 1992. (2) Filed as an Exhibit to the Company's Current report on Form 8-K dated June 15,1992. (3) Filed as an Exhibit to the Registration Statement on Form 8-K, filed under the Securities Exchange Act of 1934, dated June 19, 1992. 3 ITEM 14, EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K (continued) (4) Filed as an Exhibit to Pre-Effective Amendment No. 1 to the Registration Statement on Form S-3 (Registration No. 33-47127) filed on July 2, 1992. (5) Filed as an Exhibit to the Annual Report on Form 10-K for the fiscal year ended December 31, 1992, as amended by Amendment No. 1 on Form 8 dated April 21, 1993. (6) Filed as an Exhibit to the Annual Report on Form 10-K for the fiscal year ended December 31, 1994. (7) Filed as an Exhibit to the Annual Report on Form 10-K for the fiscal year ended December 31, 1995. 4 SIGNATURES Pursuant to the requirements of Sections 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. SCAN-GRAPHICS, INC. May 5, 1997 /s/ Andrew E. Trolio - - ----------- ----------------------------------- Date Andrew E. Trolio Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant, in the capacities and on the dates indicated. Each person in so signing also makes, constitutes and appoints Andrew E. Trolio, Chairman of the Board of Directors, President and Chief Executive officer, his true and lawful attorney-in-fact, in his name, place and stead, to execute and caused to be filed with the Securities and Exchange Commission, any or all amendments to this report. Signatures By /s/ Andrew E. Trolio Date May 5, 1997 - - -------------------------------------------- ----------- Andrew E. Trolio Chairman of the Board of Directors, President and Chief Executive Officer By /s/ Denis P. Kelly Date May 5, 1997 - - -------------------------------------------- ----------- Denis P. Kelly Director, Corporate Finance {Principal Financial and Accounting Officer) By /s/ Michael A. Mulshine Date May 5, 1997 - - -------------------------------------------- ----------- Michael A. Mulshine Director and Secretary By /s/ R. Barry Borden Date May 5, 1997 - - -------------------------------------------- ----------- R. Barry Borden Director By /s/ David S. Hirsch Date May 5, 1997 - - -------------------------------------------- ----------- David S. Hirsch Director By /s/ Jack Pellicci Date May 5, 1997 - - -------------------------------------------- ----------- Jack Pellicci Director By /s/ James C. Sargent Date May 5, 1997 - - -------------------------------------------- ----------- James C. Sargent Director 5 EX-10.9.1 2 COMPENSATION AGREEMENT OSPREY PARTNERS =============================================================================== INVESTMENT BANKING o MANAGEMENT CONSULTING CONFIDENTIAL Shareholder/Investor Relations Compensation Aqreement The following sets forth the terms of the engagement of OSPREY PARTNERS, 2517 Route 35, Suite D-201, Manasquan, NJ 08736 ("Osprey") by SCAN-GRAPHICS, INC., 700 Abbott Drive, Broomall, PA 19008 (the "Company") for the year ending December 31. 1996. 1. With regard to Osprey's shareholder and investor relations activities on the Company's behalf, Osprey will, in concert with the Company's management, assist in the preparation of the Company's News Releases, Annual Reports, Notice of Annual Meeting of Shareholders, Proxy Statements and other SEC required reports; and continue to handle shareholder and financial community public relations for the Company. 2. In consideration of Osprey's services pursuant shareholder and investor relations activities on the Company's behalf, Osprey shall be entitled to receive, and the Company agrees to pay Osprey the following compensation: Upon execution of this Agreement for services from January 1, 1996 through December 31, 1996 the Company shall issue to Osprey warrents to purchase up to 60,000 shares of its common stock, such warrants to vest at the rate of 5,000 shares on the first of each month for the twelve (12) months starting January 1, 1996, such warrants to be exerciseable at $3.00 per share through December 31, 2000. These Warrants will vest in the fashion described whether or not the holder continues to be employed by the Company, with such Warrants having "piggyback" rights of registration on the next Registration Statement to be filed by the Company, and subject to the terms, conditions and limitations set forth herein. The Company reserves the right to pay Osprey in cash at the rate of $1.25 per warrant (share) up to $6,250 before the first of each month in lieu of up to the 5,000 warrants that otherwise would have vested on the first of that month. (Example: If the Company pays Osprey a retainer in the amount of $1,250 before the first of any month of 1996, 1,000 of the 5,000 warrants to vest upon the first of that month would be canceled, and the remaining 4,000 warrants would vest in Osprey.) 3. The Company agrees to reimburse, upon request from time-to-time, all out-of-pocket expenses incurred by Osprey in connection with its activities on behalf of the Company. CONFIDENTIAL Accepted and Agreed to: OSPREY PARTNERS SCAN-GRAPHICS, INC. By: /s/ Michael A. Mulshine By: /s/ Andrew E. Trolio ----------------------- -------------------- Michael A. Mulshine Andrew E. Trolio President President Date: 4/25/96 Date: 4/29/96 --------------------- ------------------ 2517 Route 35 o Suite D-201 o Manasquan, NJ 08736 908-528-8585 o FAX: 908-223-9803 o E-Mail: GRXY60A@PRODIGY.COM A Mulshine Group Company EX-10.9.2 3 CONSULTING AGREEMENT OSPREY PARTNERS =============================================================================== INVESTMENT BANKING o MANAGEMENT CONSULTING CONFIDENTIAL Consulting Aqreement The following sets forth the terms of the engagement of OSPREY PARTNERS 2517 Route 35, Suite D-201, Manasquan, NJ 08736 ("Osprey") by SCAN-GRAPHICS, INC., 700 Abbott Drive, Broomall, PA 19008 (the "Company"). 1. Osprey shall provide services pursuant to shareholder and investor relations activities on the Company's behalf. Osprey will in concert with the Company's management, continue to assist in the preparation of the Company's News Releases, Annual Reports, Notice of Annual Meeting of Shareholders, Proxy Statements, and other SEC required reports; and continue to handle shareholder and financial community public relations for the Company. In consideration of Osprey's services pursuant to shareholder and investor relations activities on the Company's behalf, Osprey shall be entitled to receive, and the Company agrees to pay Osprey the following compensation: Upon execution of this Agreement for services the Company shall pay Osprey a monthly retainer in the amount of $5,000, which amount shall be due and payable on the first day of each month starting January 1 1997. 2. The term of this agreement shall be one (1) year commencing on January 1, 1997, and thereafter shall continue from year-to-year unless and until either party shall give notice to the other at least 90 days prior to the end of the original or then current renewal term of its intention to terminate at the end of said term. Further this agreement may be terminated at any time upon 90 days notice by either party to the other 3. The Company agrees to reimburse Osprey, upon request from time-to-time all reasonable out-of-pocket expenses (supported by receipts) incurred by Osprey in connection with its activities on behalf of the Company. CONFIDENTIAL Accepted and Agreed to: OSPREY PARTNERS SCAN-GRAPHICS, INC. By: /s/ Michael A. Mulshine By: /s/ Andrew E. Trolio ----------------------- -------------------- Michael A. Mulshine Andrew E. Trolio President President Date: 12/31/96 Date: 12/31/96 --------------------- ------------------ 2517 Route 35 o Suite D-201 o Manasquan, NJ 08736 908-528-8585 o FAX: 908-223-9803 o E-Mail: GRXY60A@PRODIGY.COM A Mulshine Group Company EX-10.9.3 4 FINDER'S FEE AGREEMENT OSPREY PARTNERS =============================================================================== INVESTMENT BANKING o MANAGEMENT CONSULTING CONFIDENTIAL Finder's Fee Aqreement The following sets forth the terms of the engagement of C&F GLOBAL ENTERPRISES, INC., an Ohio Corporation ("C&F"), and OSPREY PARTNERS, 2517 Route 35, Suite D-201, Manasquan NJ 08736 ("Osprey"), together to be referenced as "C&F/Osprey", by SCAN-GRAPHICS, INC., 700 Abbott Drive. Broomall, Pa 19008 (the "Company") for the specific task of raising up to S5,000,000 by way of the private placement of certain equity securities of the Company as described in the attached Subscription Agreement or any modification thereof. 1. C&F/Osprey will assist the Company as management consultant and financial advisor in connection with this financing. In connection with C&F/Osprey's activities on the Company's behalf: C&F/Osprey will in concert with the Company's management a) prepare descriptive information as required, for the purpose of soliciting Candidates; b) contact and elicit interest, with the Company's management assistance, as needed, from Candidates. 2. In connection with C&F/Osprey's activities on the Company's behalf the Company will furnish C&F/Osprey with all information and data concerning the Company which C&F/Osprey and the Company agree to be appropriate and will provide C&F/Osprey and any Candidates with access to the Company's officers, directors, employees, independent accountants and legal counsel as is determined to be appropriate to the particular Candidates requirements. 3. In consideration of C&F/Osprey's services pursuant to this Agreement, C&F/Osprey shall be entitled to receive, and the Company agrees to pay C&F/Osprey the following compensation: a) In the event a Transaction is consummated with any Candidate through the efforts of C&F/Osprey, then the Company shall pay C&F/Osprey upon such consummation a cash fee equal to eight percent (8%) of any amount raised in (or the value of the Transaction, with such cash fee to be paid at the rate of five percent (5%) to C&F and three percent (3%) to Osprey. b) C&F Osprey will also be issued 1,000 warrants per Unit placed of the private placement as described in the attached Subscription Agreement, such warrants to be exercisable for up to five (5) years at an exercise price equal to the "Closing Bid" on the date of closing of such units Any warrants issued under this agreement shall be issued fifty percent (50%) to C&F and fifty percent (50%) to Osprey. 4. The above compensation will be paid to C&F/Osprey in the event any Transaction occurs within twenty four (24) months following the term of this Agreement, or any extension thereof, with any party with whom C&F/Osprey, had negotiated on behalf of the Company provided that 2517 Route 35 o Suite D-201 o Manasquan, NJ 08736 908-528-8585 o FAX: 908-223-9803 o E-Mail: GRXY60A@PRODIGY.COM A Mulshine Group Company OSPREY PARTNERS such a party is identified on a written list of prospective Candidates to be provided to the Company within fifteen (15) days after the expiration or termination of this Agreement. 5. This Agreement may be terminated by any party by the giving of written notice of termination to the other parties. 6. The benefits of this Agreement shall inure to the respective successors and assigns of the parties hereto and of the indemnified parties hereunder and their successors and assigns and representatives, and the obligations and liabilities assumed in this Agreement by the parties hereto shall be binding upon their respective successors and assigns. Accepted and Agreed to: C&F GLOBAL ENTERPRISES, INC. By: /s/ [CLIENT SUPPLY] ------------------------ Its: President ----------------------- Date: 2/7/96 ---------------------- OSPREY PARTNERS SCANGRAPHICS, INC. By: /s/ Michael A. Mulshine By: /s/ Andrew E. Trolio ----------------------- -------------------- Michael A. Mulshine Andrew E. Trolio President President Date: 2/12/96 Date: 2/12/96 --------------------- ------------------- OSPREY PARTNERS =============================================================================== INVESTMENT BANKING o MANAGEMENT CONSULTING March 24, 1996 TO: Andy Trolio FM: Mike Mulshine RE: Broad Capital Associates - $3,100,000 "Reg D" Investment As discussed, the additional 200,000 A Warrants and 200,000 B Warrants were negotiated into the transaction so as to eliminate certain restrictions that Broad Capital wanted to put on the use of proceeds. I will discuss this with you further. 1) Investment: - $3,100,000 Reg D -- Structured as 62 Units of $50,000. Each Unit consists of a $50,000 note, 19,355 A Warrants, and 19,355 B Warrants. Warrant totals are 1,200,000 A Warrants and 1,200,000 B Warrants. 2) Term of Notes: Convertible within 1-year, 8% interest, increases to 12% in 120 days and to 18% in 180 days if Registration Statement is not yet effective. Interest payable at maturity unless converted. Subject to "Reg D Registration" within 120 days. Net Proceeds of $3,000,000 to be wired to Scangraphics account on Wednesday, March 27, 1996. 3) Terms of Note Conversion: 65% of "Market Price" at conversion, but conversion price is never more than $3.00 per share. Market Price is computed as the average "closing Bid" price of the stock for the last 5 trading days prior to conversion, but not higher than $3.00 per share. Conversions will be in minimum amounts of $250,000 at a time, and all amounts must be converted within one (1) year of closing. 4) A & B Warrants: The following A and B Warrants, to be exercisable for up to three {3) years from closing. a) 19,355 A Warrants per Unit, with the exercise price to "float" with the exercise price of the convertible, i.e. at the same 35% discount from the then current "closing Bid" for the average of the prior five trading days, but not higher than $3.00 per share. b) 1,000,000 B Warrants, with an exercise price of $4.00 per share. 5) Finders Fee: $100,000 to Mueller Trading. 6) Consultant: Bryan Finkel will retained by the Scangraphics under a consulting agreement for one (1) year, and will put in at least 2 days per week at the Company. Mr. Finkel will be paid a consulting fee of $4,000 per month and will be granted 200,000 A Warrants. 2517 Route 35 o Suite D-201 o Manasquan, NJ 08736 908-528-8585 o FAX: 908-223-9803 o E-Mail: GRXY60A@PRODIGY.COM A Mulshine Group Company OSPREY PARTNERS 7) Investment Banking & Management Consulting Fee: Osprey will invoice Scangraphics as follows: On $3,000,000 cash upon initial invest of Broad Capital: a) Cash Fee of 8% due to Osprey upon receipt of net proceeds by Scangraphics (of which Osprey will retain 3% and 5% will be paid to C&F Global); and b) Warrant Fee of 60,000 Wts to Osprey and 60,000 Wts to C&F Global, based on ratio of agreed 200,000 Wts (100,000 each) for $5,000,000 of capital. On Cash into Company upon exercise of The A Warrants: a) Cash Fee of 8% due to Osprey upon receipt of net proceeds by Scangraphics (of which Osprey will retain 3% and 5% will be paid to C&F Global); and b) Warrant Fee of 50,000 Wts to Osprey and 50,000 Wts to C&F Global, exercisable at $3.00 for up to 5 years, vesting upon exercise of the A Warrants by Broad Capital. c) Osprey will not invoice Scangraphics against proceeds that may be received by the Company by way of Bryan Finkel's 200,000 A Warrants. On Cash into Company upon exercise of the B Warrants: a) Cash Fee of 8% due to Osprey upon receipt of net proceeds by Scangraphics (of which Osprey will retain 3% and 5% will be paid to C&F Global); and b) Warrant Fee of 50,000 Wts to Osprey and 50,000 Wts to C&F Global, exercisable at $4.00 for up to 5 years, vesting upon exercise of the B Warrants by Broad Capital. The above cash and warrant fees are based on the percentages and structure previously agreed to by the Board of Directors of Scangraphics. cc C&F Global BC4.SCN MAM/mif EX-10.10 5 LEASE AGREEMENT INDEX TO LEASE AGREEMENT BETWEEN LEWIS ROAD ASSOCIATES, LANDLORD AND SEDONA - GEOSERVICES, INC., TENANT Paragraph # Heading Page # - - ----------- ------- ------ 1 Demised Premises 1 2 Use of Premises 2 3 Name or Designation of Business 3 4 Term of Lease 3 5 Base Rent 6 6 Common Cost of Taxes, Maintenance & Operating Expenses, Additional Rent 13 7 Utilities 13 8 Condition of Premises; Construction; Alterations and Improvements 15 9 Landlords Financial Assistance to Tenant 20 10 Security Deposit 21 11 Common Areas 23 12 Cleaning of Demised Premises 26 13 Heating & Air Conditioning, Plumbing & Electrical Services 26 14 Indemnification Waiver of Claim & Subrogation 27 59 Paragraph # Heading Page # - - ----------- ------- ------ 15 Insurance 30 16 No Partnership 33 17 Eminent Domain 33 18 Destruction of Demised Premises 36 19 Security on Demised Premises 39 20 Fire Exits 40 21 Tenants Affirmative Covenants 40 22 Tenants Negative Covenants 43 23 Rights Reserved by the Landlord 48 24 Additional Rent, Late Charges, Interest and Bad Check Charges 53 25 Documentary Stamps as Additional Rent 54 26 Tenants Failure to Comply with Covenants of Lease 54 27 Events of Default 55 28 Landlord's Rights & Remedies Upon Tenants Default 58 29 Waivers 62 30 Confession of Judgment -- Money 63 31 Confession of Judgment -- Possession of Demised Premise 65 32 Conclusion Evidence of Facts in Action for Judgment By Confession 66 33 Release of Errors 67 34 Landlord's Right to Assign Remedies 67 35 Landlord's Remedies Cumulative 67 36 Subordination of Lease 68 37 Waiver 68 38 Accord and Satisfaction 68 60 Paragraph # Heading Page # - - ----------- ------- ------ 39 Notices 69 40 Quiet Enjoyment 69 41 Captions & Index 70 42 Entire Agreement 70 43 Recording 71 44 Partial Invalidity 71 45 Tenant Defined; Use Of Pronoun 71 46 Negotiation Of Landlord's Personae Liability 72 47 Successors 73 48 Construction 74 49 Submission Of Lease To Tenant 74 50 Management Agent 74.1 61 Exhibits Attached to Lease Agreement Exhibit A -- Legal Description of Land Upon Which Professional Center is Situate. Exhibit B -- Specht Building Site Plan. Exhibit C -- Items in Need of Repair as of the Commencement Date of this Lease. Exhibit D -- Landlords Work and Tenants Work Exhibit E -- Landlords Financial Assistance to Tenant Exhibit F -- Addresses for Mailing of Notices Exhibit G -- Tenants Insurance Policies Exhibit H -- Common Costs Exhibit I -- Addendum Exhibit J -- Floor Plan 61 LEASE AGREEMENT This agreement, made this 1st day of July 1996, is by and between Lewis Road Associates, a Pennsylvania General Partnership, with principal office located at 649 N. Lewis Road, Limerick, Pennsylvania 19468, hereinafter referred to as "Landlord". -AND- Sedona - Geoservices, Inc., 649 N. Lewis Road, Suite #220, Limerick, PA 19468 1. Demised Premises. Landlord hereby demises and lets unto Tenant, and Tenant hereby leases from Landlord, in accordance with all of the provisions of this Lease, a certain portion of interior space in the Specht Building, situated at Montgomery County, Pennsylvania (hereinafter referred to as the "Professional Building"). The Office Center property is more fully bounded and described in accordance with Exhibit "A" attached hereto and incorporated herein. The interior space in the Office Center 62 leased by the Tenant measures Ave. _____ feet in front and _____ feet in depth for a leased area totaling 2793 square feet, said area being bounded by vertical walls or partitions with the interior surfaces thereof constituting a part of the leased space (sometimes referred to as the "leased space" or "demised premises"). The demised premises consists of a portion of the second floor of the building marked "Professional Building" on the site plan of the Office Center attached hereto and incorporated herein as Exhibit "B". Landlord grants to Tenant the right to the non-exclusive use in common with others entitled to the use of the same all such automobile parking areas, driveways, courts, corridors, footways, loading facilities and other facilities as may be designated by Landlord from time to time as more fully set forth herein and subject to the terms and conditions of this Lease and to such reasonable rules and regulations for the use thereof as may be prescribed from time to time by the Landlord in accordance with Paragraph 23(a) of this Lease. 2. Use of Premises. Tenant is leasing the space, and will use and manage the space exclusively, for operating and conducting the following business: Professional Office for Engineering Services. No other use of this space shall be permitted during the term of this Lease without the prior written consent of Landlord. Such consent shall not be unreasonably withheld by 2 Landlord, but consideration of such matters as the mix of businesses occupying the Office Center and potential dilution of trade with other Tenants shall not be construed as an unreasonable basis for Landlord's decision. 3. Name or Designation of Business. The name under which Tenant will conduct business in the demised premises shall be Sedona, GeoServices, Inc., and will remain such and will not be changed during the term of this Lease without the prior written consent of Landlord, which consent will not be withheld unreasonably, provided that, in allowed changes, Tenant shall be solely responsible for any costs and expenses in changing the name as it is featured in any signs of the Office Center or in any business advertising as may be done or provided by Landlord. 4. Term of Lease. (a) The term of this Lease shall be Thirty Nine (39) months, Plus One Twenty Four (24) Month Option, plus the period, if any, between the "commencement date" (as established by Paragraph 4(b) of this Lease) if it falls on a day other than the first day of a month and the first day of the first full calendar month in the original term. (b) The "original term" of this Lease (hereinafter defined) and Tenant's obligation to pay rent and occupy the demised premises in accordance with the terms hereof shall 3 commence on the earlier of the following dates (such earlier date being herein called the "Commencement Date"): (i) the date Tenant initially opens the demised premises for business or (2) the date which is forty-five (45) days after the Landlord or the Landlord's supervisory architect notifies Tenant in writing that the Landlord's Work (as defined in Paragraph 8(b)) specified in Exhibit "D" has been substantially completed and the demised premises are ready for the installation of Tenants fixtures, notwithstanding that insubstantial details of construction or mechanical adjustment remain to be performed, the noncompletion of which would not materially interfere with Tenant's use of the premises. Tenant's entry into the demised premises shall be deemed an acknowledgment that Tenant has accepted Landlord's Work as being completed to Tenant's satisfaction. Within ten (10) days after the date of such notice Tenant shall enter the demised premises and promptly install its trade fixtures and equipment and shall diligently pursue such installation to timely completion and will open the demised premises for business not later than the expiration of such forty-five (45) day period referred to above. (c) At any time after the commencement date of the term of the Lease the parties shall complete Paragraph 4(f) of this lease and/or shall execute and deliver to each other, at the option of Landlord, either an instrument in recordable form or 4 A Letter agreement prepared by Landlord, wherein Tenant shall: (1) certify that the Lease is in full force and effect and (2) certify the commencement and termination dates of the original term of this Lease. (d) This lease and the tenancy here by created shall cease and terminate at the end of the term hereof without the necessity of any notice from either Landlord or Tenant to terminate the same, and Tenant hereby waives notice to vacate the premises and agrees that Landlord shall be entitled to the benefit of all provisions of law respecting the summary recovery of possession of premises from a Tenant holding over to the same extent as if statutory notice had been given. (e) The period commencing on the date hereof and terminating on the date immediately prior to the commencement date is herein referred to as the "initial term", and the period from the commencement date to the stated expiration date (and all extensions or renewals thereof) or earlier termination of this lease is herein referred to as the "original term." For the purposes of this Lease the words "the term of this Lease" and "the term hereof" shall be deemed to mean the initial term and the original term of this Lease and all extensions or renewals thereof. During the initial term, all of the provisions, covenants and conditions hereof shall be in full force and 5 effect, but Tenants monetary obligations hereunder shall be abated until the original term has commenced. (f) The commencement date of this Lease is July 1, 1996 and the original term of this Lease shall expire at 12:01 A.M. On September 30, 1999. 5. Base rent. (a) Tenant shall pay to Landlord as rent for the demised premises those amounts set forth herein as base rent and those amounts hereinafter mentioned as items of additional rent. The total base rent for the Thirty Nine (39) month period shall be Ninety Three Thousand, Seven Hundred and Twenty One and 05/100 ($93,721.05). The base rent for the demised premises shall vary through the term of this Lease in accordance with the following schedule: Monthly Period Base Rent Installment ------ --------- ----------- 7/1/96 - 9/31/96 Free Utilities Only 10/1/96 - 9/30/97 $26,018.73 $2,890.97 10/1/97 - 9/30/98 $33,851.16 $2,890.97 10/1/98 - 9/30/99 $33,851.16 $2,890.97 Option Period Base Rent Monthly $ ------------- --------- --------- 10/1/99 - 9/30/2000 $35,247.66 $2,937.30 10/1/2000 - 10/30/2001 $35,247.66 $2,937.30 6 Tenant shall pay base rent to Landlord, without prior demand by Landlord, in monthly installments of the amounts set forth on the foregoing schedule, which monthly installments shall be due and payable, in advance, on or before the first day of each and every calendar month throughout the term of this Lease beginning on July 1, 1996, and continuing until such time as the base rent obligation of Tenant shall be paid in full. In the event that the commencement date of this Lease shall be a day other than the first day of the first full calendar month in the term hereof, Tenant's first payment of base rent shall be prorated for the fractional month between the commencement date and the first day of the first full calendar month in the term hereof on a per diem basis (calculated on a thirty (30) day month) and the same shall be paid to the Landlord on or before the commencement date. (b) Security Deposit. Tenant contemporaneously with the execution of this Lease, has deposited with Landlord the sum of Two Thousand Eight Hundred and Ninety 97/100 Dollars ($2,890.97) receipt of which is hereby acknowledged by Landlord, which deposit is now the property of the Landlord and is to be held as security for the faithful performance by Tenant of all of the terms, covenants and conditions of this Lease by said Tenant to be kept and performed during the term hereof, subject to Paragraph 10 of this Lease. Notwithstanding Section 10(c) interest will acrue at $233.33 on Security Deposit to be returned at the time of Lease Termination. 7 6. Tenant's proportionate Share of Taxes, Operating Expenses and Insurances as Additional Rent. During each calendar year of the term of this Lease, prorated for any period less than a year, Tenant shall pay to Landlord as additional rent Tenant's proportionate share of all real estate taxes, operating expenses and the cost of Landlord's policies of insurance. Tenant's proportionate share shall be .07% which is the percentage of the Office Center's total rentable area of 38,138 s.f. which Tenant leases pursuant hereto. (a) "Taxes" as used in this Paragraph 6 shall include all real estate taxes attributable to improvements now or hereafter made to the Office Center or any part thereof or attributable to the present or future installation in the Office Center or any part thereof of fixtures, machinery or equipment, all real estate taxes, assessments, water and sewer (if provided by a municipal agency and not separately metered among the various Tenants of the Office Center) and other governmental impositions and charges of every kind and nature whatsoever, non-recurring as well as recurring. Special or extraordinary as well as ordinary, foreseen and unforeseen and each and every installment thereof which shall during the term hereof be levied, assessed or imposed upon or become due and payable and which arise in connection with the use, occupancy or possession of, or any interest in, the Office Center or any part thereof, or any land, and buildings 8 and other improvements situate upon the land, as is described in Exhibit "A" hereto, or any portion thereof. The fiscal year of any taxing authority shall be deemed to correspond to the calendar year in which such fiscal year ends. (b) "Operating Expenses" as used in this Paragraph 6 shall include all expenses, costs, disbursements and expenditures of every kind and nature which Landlord shall pay or become obligated to pay because of or in connection with the management, operation, maintenance and repair of the Office Center, The Land, and Buildings and other improvements situate upon the land described in Exhibit "A" hereto ("the premises"), except leasing commissions, payment of principal and interest on any mortgages upon the premises and those expenditures which are generally referred to as "Capital Expenditures" where the amount paid or incurred by the Landlord was for new buildings or for permanent improvements or betterments made for the purpose of increasing the value of or substantially extending the useful life of the premises. However, expenditures for improvements which are required by law or generally expensed or regarded as deferred expenses or intended by Landlord to result in savings or deductions in operating expenses shall be included in operating expenses over such period of time as Landlord shall deem appropriate. Operating expenses shall also include but not be limited to, all costs and expenses whether expended or incurred for operating, repairing, lighting, cleaning, painting and maintaining (including, but not limited to preventive maintenance) such common 9 areas of the Office Center, removing snow, ice, rubbish and debris, inspecting, the rental of sweepers, trucks and other equipment; depreciation (over a period not exceeding sixty (60) months) of machinery and equipment and other non real estate assets used in the operation and maintenance of the Office Center; the repair of paving, roofs, curbs, walkways, landscaping, drainage, on-site water lines, sanitary sewer lines, heating, ventilating and air conditioning systems, floors, floor coverings, canopies, skylights, fountains, electrical lines and other equipment serving the property on which the Office Center or any part thereof is constructed; the rental of music programs, services and loud speaker systems including the furnishing of electricity therefore; all costs incurred by Landlord in compliance with any environmental or other similar laws, rules, regulations, guidelines or orders; the cost of all on-site personnel required to supervise and accomplish the foregoing and an administrative charge equal to twenty percent (20%) of the total of all such operating expenses. Operating expenses shall not include depreciation other than specifically referred to herein. In the event of any dispute as to whether an item represents an expense or a capital item, Landlord's accounting practices shall be determinative and binding on the parties. (c) The cost of Landlord's policies of insurance shall include the cost of the premiums on Landlord's policy of fire insurance with extended coverage insuring portions of the Office Center and may also include, at Landlord's option, the 10 costs of the premiums for the following types of Landlord insurances applicable to the Office Center: liability insurance covering personal injury, deaths and property damage with a personal injury endorsement covering false arrest, detention or imprisonment, malicious prosecution, libel and slander, and wrongful entry or eviction, worker's compensation insurance, plate glass insurance, contractual liability insurance and fidelity bonds. Tenant shall have no right, title, claim or interest in any insurance policy purchased and maintained by the Landlord pursuant hereto, nor in any proceeds thereof. (d) At the time of the commencement of this Lease, and annually within sixty (60) days after the end of each calendar year during the term hereof, Landlord shall deliver to Tenant a statement certified by Landlord and showing in reasonable detail real estate taxes, operating expenses, and the cost of Landlord's insurances as herein defined, for the calendar year last ending. Each such statement shall be sufficient proof of the accuracy thereof. Together with such statement Landlord shall submit to Tenant its good faith estimate of the real estate taxes, operating expenses and Landlord's insurance costs for the then current calendar year. Tenant shall pay to Landlord, without prior demand by Landlord, at and with each monthly installment of Tenants base rent such sum as shall represent one-twelfth (1/12) of Tenant's proportionate share of Landlord's good faith estimate of the real estate taxes, operating 11 expenses and Landlord's insurance costs for the then current year: provided, however, that such payments of additional rent by Tenant shall continue to be determined by reference to the estimate last provided by Landlord, until such time as Landlord has provided Tenant with Landlord's good faith estimate of such expenses for the then current year. For the calendar year ending December 31, 1996 all costs, expenses, disbursements and expenditures for real estate taxes, operating expenses, and Landlord's policies of insurance shall be based on the real estate taxes, operating expenses and Landlord's insurance costs for the calendar year ending December 31, 1995 as provided by the Landlord. (e) If the commencement date hereof shall not be the first day of a calendar month, Tenant's payment of its proportionate share of real estate taxes, operating expenses, and Landlord's insurance costs for the fractional month between the commencement date and the first day of the first full calendar month in the term shall be prorated on a per diem basis (calculated on a thirty (30) day month) and shall be paid together with the first payment of Base Rent on or before the commencement date. (f) At the time that Landlord provides Tenant with the certified statement of actual real estate taxes and operating expenses for the calendar year last ending, Landlord shall also provide Tenant with a statement showing the amount, if any, by which Tenants payments of estimated real estate taxes, operating expenses and insurance costs for such previous calendar year, or prorated portion thereof, 12 have either exceeding or fallen short of Tenants proportionate share of the actual real estate taxes, operating expenses and insurance costs. (i) In the event that such statement evidences an underpayment by Tenant, Tenant shall pay to Landlord the amount representing the deficiency within thirty (30) days of Tenant's receipt of Landlord's statement. (2) In the event that such statement evidences an overpayment by Tenant, and the Tenant is not in default hereunder or otherwise indebted to the Landlord, the amount representing the excess shall be allowed as a credit against the next payment(s) of prorated expenses due from Tenant to Landlord for the then current calendar year. (3) The amount of the Tenant's excess payments shall be refunded to Tenant when Tenant has fully performed all of its obligations under this lease, is not indebted to Landlord and has vacated in accordance with the provisions of this lease. (4) In the event that Tenant is indebted to the Landlord for any reason whatsoever, Landlord may deduct such amount owed from such overpayment. 7. Utilities. (a) Tenant shall be solely responsible for arranging and paying for all sewer rents and water (if provided by a municipality and separately metered and billed), electric, gas and telephone service to the demised premises. Landlord shall whenever possible provide separate metering devices to measure water, sewer, electric and gas service to the demised premises. 13 Should Landlord elect or be required to supply or make available any utility used or consumed at the demised premises, Tenant agrees to purchase and pay for same, as additional rent, every month in the term hereof as billed by the Landlord, such payment to be made to the Landlord within ten (10) days of Tenant's receipt of Landlord's bill. (b) In the event the local authority, municipality, utility or other body collects for the water and/or sewage or sanitary service and/or consumption, as aforesaid, Tenant covenants and agrees to pay the water and sewer rent charge (both minimum and otherwise) and any other tax, rent, levy, connection fee or meter or other charge which now or hereafter is assessed, imposed or may become a lien upon the demised premises, or the realty of which they are a part, pursuant to law, order or regulation made or issued in connection with the use, consumption, maintenance or supply of water, or the water or sewage connection or system. In the event Landlord shall have advanced on Tenant's behalf any of the aforesaid sums, Tenant shall reimburse Landlord on demand for Tenant's share of such costs plus administrative costs of Landlord in a sum equal to twenty percent (20%) of such sums as additional rent. (c) Landlord may, after thirty (30) days' notice to Tenant, cease to furnish any one or more of the utility services to the demised premises, without any responsibility to Tenant 14 except to connect Tenants distribution facilities therefore with another source for the utility service so discontinued. (d) In no event shall Landlord be liable to Tenant in damages or otherwise for any interruption, curtailment or suspension of any of the foregoing utility services in the event of a default by Tenant under this Lease or due to repairs, action of public authority, strikes, acts of God or public enemy, or any other cause, whether similar or dissimilar to the aforesaid. 8. Condition of Premises: Construction: Alterations and Improvements. (a) Tenant acknowledges and agrees that the demised premises is, as of the commencement of the original term of this Lease, in good condition and state of repair except for such items, if any, as may be specifically set forth on an Exhibit "C" attached hereto and signed by all parties to this Lease Agreement. Unless the Landlord specifically acknowledges in writing as its duty the obligation to change, repair or improve the items referred to on said Exhibit "C", Landlord shall have no duty or obligation to make such changes, repairs or improvements and the Tenant shall accept and occupy the demised premises in its then current condition and thereafter Tenant shall be solely liable for any injury to person or property which may be related or attributed thereto in whole or in part. The items referred to on Exhibit "C" which are not to be or in fact are not changed, 15 repaired or improved by the Landlord shall be used, in part, by the parties hereto, at the termination of this Lease in calculating the amount, if any, of the security deposit to be returned by Landlord to Tenant pursuant to Paragraph 10 hereof. (b) Construction by Landlord. Landlord, at its cost and expense, shall construct, remodel, improve or alter the demised premises incorporating in such construction all items of work, if any, described as Landlords Work in Exhibit "D" attached hereto and made a part hereof (all such items are hereinafter collectively referred to as "Landlord's work"). Landlord shall have the exclusive right to determine the architectural design and the structural, mechanical and other standard details and specifications of Landlord's work, including, but not limited to, the type of materials and the manufacturer and supplier thereof. (c) Tenant's Improvements. 1. Within ten (10) days after receipt of the written notice referred to in paragraph 4(b) hereof, Tenant shall, at its sole cost and expense commence and thereafter promptly complete all the work and other requirements imposed upon Tenant in Exhibit "D", (all such items being herein referred to as "Tenant's Work"). In the event Landlord, or any person on Tenants behalf, shall perform any work or install any equipment included in Tenant's Work, Tenant, within fifteen (15) days after 16 receipt of a bill therefor, shall pay to Landlord, as additional rent, a sum equal to all sums paid and costs incurred by Landlord in performing such work and/or installing such equipment plus administrative costs of Landlord in a sum equal to twenty percent (20%) of such sums and/or costs. Notwithstanding anything contained in this Paragraph 8(c) to the contrary, Landlord shall not be responsible or liable to Tenant, its agents, servants, employees, licensees, or contractors, or their respective agents, servants, employees, licensees or contractors, for any loss or damage to the property of such party occurring prior to or subsequent to the commencement date of the term unless and solely to the extent caused by the negligence of Landlord, or its agents, servants, or employees. 2. All labor and materials necessary to the modification or completion of the Tenant's Work shall be provided at the sole expense of Tenant. Notwithstanding the foregoing, however, Tenant shall not do any work in or about the demised premises or make any alterations or additions thereto without the prior written consent of Landlord, which consent shall not be unreasonably withheld. All of Tenant's Work to which Landlord consents shall be performed and installed at Tenant's sole cost and expense, in accordance with plans and specifications prepared at Tenant's expense and approved by Landlord, and by contractors, subcontractors and suppliers of labor and material who shall in 17 all instances be subject to Landlord's approval. During the continuance of Tenant's Work, Tenant shall maintain such insurance as Landlord may reasonably require for the benefit of Landlord and such other parties as Landlord may designate. Tenant shall, upon request of the Landlord, furnish a guarantee by each of its prime contractors and materialmen for the benefit of Landlord, Tenant and such other parties as Landlord may designate that all of Tenant's Work, materials and equipment shall be in accordance with the plans and specifications as approved by Landlord and that such contractors or materialmen will, upon notice from Landlord or Tenant, promptly correct and repair at their own cost and expense any deficiency, defect, fault or imperfection of materials, equipment or workmanship which appears within one (1) year after completion of such work or installation. 3. None of the Tenant's Work at the demised premises shall be done by anyone other than Landlord except after the filing of a waiver of the right to file any lien therefor (commonly known as a "mechanics' and/or materialmen's lien") with Landlord, and the recording of the same, at Tenant's expense, with the Court of Common Pleas of Montgomery County, Pennsylvania, so as to constitute an effective waiver by anyone having a right to file such a lien. If any such lien is filed, Tenant shall, at its expense, cause such lien to be discharged or satisfied within 15 days after the filing thereof. 18 4. None of the Tenant's Work shall be performed or installed except by workmen and mechanics working in harmony with and not interfering with labor employed by Landlord, Landlord's mechanics or their contractors or by any other tenants of the building or their contractors. Any violation hereof shall permit Landlord to withdraw its prior consent to or permission for any such work or installation. 5. Any alterations, improvements or additions made by Tenant shall remain upon the demised premises at the expiration or earlier termination of this Lease and shall become the property of Landlord unless, prior to such termination, Landlord shall have given Tenant written notice to remove the same, in which event Tenant shall remove such items as Landlord has designated in such notice and shall restore the demised premises to the same good order and condition in which they were at the time of delivery of possession to Tenant, normal wear and tear excepted. Should Tenant fail to do so, Landlord may do so and Tenant shall immediately upon presentment of a bill therefor by Landlord, pay to Landlord as additional rent the cost and expense thereof plus administrative costs of Landlord in a sum equal to twenty percent (20%) of such sums and/or costs as additional rent. 6. Upon the termination of this Lease, items such as desks, chairs, tables, counters, shelves, trade equipment and 19 other normally easily removable items may be removed by Tenant. With any damage or injury to the demised premises resulting from such removal being repaired at Tenant's expense. Tenant shall promptly restore the premises to their original order and condition upon removal of such items. No such items shall be removed without the prior written consent of the Landlord if Tenant shall then be in default pursuant to the terms of this Lease. 7. All other fixtures installed by Tenant in the demised premises, such as lighting and plumbing fixtures, air-conditioning and heating equipment, built-in cabinets, display cases, shelving, desks and sinks and the like, shall not be removed without the prior written consent of the Landlord. At the termination of this Lease, all of such fixtures shall automatically become Landlord's property and shall remain upon and be surrendered with the demised premises as part thereof and without the payment of any further consideration by Landlord. 9. Landlord's Financial Assistance to Tenant. Landlord may, at its sole option and discretion, choose to provide assistance to Tenant with respect to the financing of Tenant's Work described in Paragraph 8 hereof. In the event that Landlord shall provide such financial assistance to Tenant, the terms of any such loan or other financial arrangement between Landlord and Tenant shall be set forth in a document to be attached hereto and 20 incorporated herein as an Exhibit "E" to this Lease. Notwithstanding the time when such loan or other financial arrangement may be entered into between Landlord and Tenant, any and all sums as shall become due from Tenant to Landlord pursuant to the terms thereof shall be deemed and conclusively presumed to be additional rent and subject to all provisions of this Lease respecting rent, and Landlord shall have upon default in payment thereof, in addition to all remedies provided for in the documents concerning such loan or other financial arrangement, all remedies herein provided for breach of Tenant's obligations respecting payment of rent. Notwithstanding any contrary term or provision set forth in Exhibit "E" or the current status of Tenant's payments to Landlord under this Paragraph 9, any and all balances due Landlord pursuant to such loan or other financial arrangement shall be deemed to have been matured and accelerated with the entire remaining balance thereof immediately due and owing to Landlord in the event of the expiration or sooner termination of this Lease for any reason whatsoever. 10. Security Deposit. (a) Landlord acknowledges receipt from Tenant of the sum set forth in Paragraph 5(b) of this Lease, the same to be held as security for the payment of any rent and all other sums of money payable by Tenant under this Lease and for the faithful performance of all covenants and agreements of Tenant hereunder. 21 no part of the security deposit may be used by Tenant toward the payment of any obligation of Tenant hereunder without the prior written consent of Landlord. Landlord shall have the right at any time to apply any part of said security deposit to cure any default of Tenant hereunder or to compensate Landlord for any loss or damage suffered by reason of Tenant's default; and Tenant shall, upon demand by Landlord, restore said security to the original sum deposited. (b) Tenant hereby waives the benefit of any provision of law requiring such security deposit to be held in escrow and/or in trust, and such security deposit shall be deemed to be the property of Landlord and may be commingled with Landlord's other funds. (c) Landlord shall, within sixty (60) days following the expiration or sooner termination of this Lease without Tenant default, return to Tenant the unused balance of the security deposit, without interest, which remains to Tenants credit, provided that Tenant has given to Landlord prior to the time such refund shall become due, in a writing requiring Landlord's acknowledgement of receipt, an address to which such refund may be sent to Tenant. In the event that Tenant shall have failed to provide Landlord with such address in the form mentioned within forty-five (45) days following the expiration or sooner termination of this Lease, any refund otherwise due Tenant shall 22 be deemed and conclusively presumed to have been forfeited to Landlord, and Landlord shall have no further liability of any nature whatsoever to Tenant with respect thereto and Tenant hereby affirmatively and knowingly waives any right, title, claim or interest therein and waives its right to thereafter bring any proceeding in any Court for the return or recovery thereof from the Landlord. (d) Landlord may deliver the security deposit to any purchaser of Landlord's interest in the demised premises, in the event that such interest be sold, and thereupon Landlord shall be discharged from any further liability with respect to such security deposit, and Tenant agrees to look solely to such purchaser for the return of such security deposit. 11. Common Areas. All areas, spaces, facilities, equipment, and signs, to the extent made available by Landlord for the common and joint use and benefit of Landlord, Tenant and other Tenants and occupants of the Office Center, and their respective employees, agents, subtenants, concessioners, licensees, customers and other invitees, are collectively referred to herein as "Common Areas". If and to the extent made available by Landlord, Common Areas shall include, but shall not be limited to the sidewalks, parking areas, access roads and drives, driveways, parking decks, bridges, landscaped areas, truck serviceways, tunnels, loading docks, open and enclosed 23 pedestrian walkways, corridors, courts, stairs, ramps, comfort and first aid stations, public washrooms, community hall or auditorium, parcel pick-up stations, utility lines and utility rooms. All Common Areas in or about the Office Center shall be subject to the exclusive control of Landlord. Landlord shall at its expense (subject to reimbursement as set forth in Paragraph 6(b) of this Lease) operate, manage, equip, police, light, surface and maintain the Common Areas all in such manner as Landlord, in its sole discretion, may from time to time determine and Landlord shall have the sole right and exclusive authority to empty and discharge all personnel with respect thereto. Landlord hereby expressly reserves the right from time to time to construct, maintain and operate lighting and other facilities, equipment and signs on all of the Common Areas; to police and maintain security for the Common Areas; to use and allow others to use the Common Areas for any purpose; to change the size, area, level, location and arrangement of the Common Areas; to build multi-story and/or subterranean parking facilities; to regulate parking by Tenants and other occupants of the Office Center and their respective employees, agents, subtenants, concessioners and licensees; to enforce parking charges (by operation of meters, or otherwise) with appropriate provisions for parking ticket validation for Tenants; to close temporarily all or any portion of the Common Areas for the purpose of making 24 repairs, changes or alterations thereto or performing necessary maintenance in connection with any emergency, in connection with closings resulting from adverse weather conditions or for any other purpose whatsoever, whether such purpose is similar or dissimilar to the foregoing; to discourage non-customer parking; to establish, modify and enforce reasonable rules and regulations with respect to the Common Areas and the use to be made thereof. For the term of this Lease, Tenant is hereby given a license in common with all others to whom Landlord has or may hereafter grant rights to use, the Common Areas as they may from time to time exist; provided, however, that if such license shall at any time be revoked, in whole or in part, or if the size, area, level, location or arrangement of such Common Areas or the type of facilities at any time forming a part thereof shall be changed, altered, rearranged or diminished, Landlord shall not be subject to any liability therefor, nor shall Tenant be entitled to any compensation or diminution or abatement of rent therefor, nor shall such alteration, rearrangement, revocation, change or diminution of such Common Areas be deemed a constructive or actual eviction or otherwise be grounds for terminating or modifying this Lease. In order to establish that the Office Center or any portion thereof is and will continue to remain private property and to prevent a dedication thereof or the accrual of any rights to any person or to the public thereon, 25 Landlord hereby reserves the unrestricted right, in Landlord's sole discretion, to close all or any portion of the Common Areas to such extent as, in the opinion of the Landlord's counsel, may be legally sufficient to prevent such dedication thereof or accrual of any rights to any person or the public thereon; provided, however, Landlord reserves the right at any time and from time to time to dedicate to public use part or all of the ring roads, access roads, drives and utility lines, together with all easements required to effectuate such dedications. As it may see fit. 12. Cleaning of demised premises. Tenant shall, during the term of this Lease, be solely responsible for the interior cleaning of the demised premises, including window cleaning both interior and exterior. In the event that Tenant shall fail to perform such cleanup, or in the event that Tenant and Landlord shall enter into an arrangement whereby such cleaning is provided by Landlord, the cost and expense thereof, plus administrative costs of Landlord in a sum equal to twenty percent (20%) of such sums and/or costs, shall be paid by Tenant within ten (10) days of Tenant's receipt of Landlord's billing therefor, and such cost and expense shall constitute an item of additional rent. 13. Heating and Air conditioning, Plumbing & Electrical service. Landlord shall keep in operation heating and air conditioning apparatus for the purpose of supplying heat and air 26 conditioning to the demised premises during such times of the year as the same shall be necessary and at such temperatures as will prevent the freezing or bursting of pipes. Without liability or responsibility to Tenant and without diminution of o??????, deduction from rent, Landlord may from time to time, with adequate notice to Tenant, suspend operation of the heating, air conditioning, plumbing and electrical systems, or any service required to be rendered to Tenant under this Lease, when such suspension shall become necessary in Landlord's judgment for repairs, alterations or improvements thereto or by reason of strike, accident, emergency of any other cause beyond Landlord's control. 14. Indemnification, Waiver of Claim and Subrogation. (a) Tenant shall indemnify and save Landlord harmless from any and all liabilities, obligations, damages, judgments, fines, penalties, claims, costs, charges and expenses, (including but not limited to counsel fees and disbursements), which may be imposed upon or incurred by or asserted against Landlord by reason of (1) personal injury, death or damage to property or business arising from, related to, or in connection with the occupancy of the demised premises; or, (2) occasioned wholly or in part by act or omission of Tenant, its contractors, subcontractors, subtenants, licensees or concessioners or its or their respective agents, servants or employees regardless of where the same has occurred. Tenant shall not, however, be liable 27 for nor shall it indemnify and save Landlord harmless from any and all liabilities, etc., for damages or injuries occasioned by the negligence or willful acts of Landlord or its agents, servants, or employees, unless such damage or injury arises from perils against which Tenant is required by this Lease to insure. Tenant shall also pay all costs, expenses and reasonable attorney's fees that may be expended or incurred by Landlord in successfully enforcing the covenants and agreements of this Lease. (b) Unless, and then solely to the extent such damage is caused by the negligent acts or omission of Landlord, its agents, servants and employees, neither Landlord nor Landlord's agents, servants and employees shall be liable for, and Tenant, in consideration of Landlord's execution of this Lease, hereby expressly releases Landlord and Landlord's agents, servants and employees from, any and all claims for injury, death or damage to persons or loss of or damage to property (including disappearance or theft of property and loss or interruption of business) sustained by Tenant or by any person claiming through Tenant or sustained by any other person, resulting from any fire, accident, occurrence or condition in or upon the demised premises, the Office Center, the land, or any streets, sidewalks or other areas abutting or adjacent to the land or Office Center including but not limited to such claims for damage 28 resulting from (1) any defect in or failure of plumbing, heating or air-conditioning equipment, electric wiring or installation thereof, water pipes, stairs, railings or walks; (2) any equipment or appurtenances being out of repair; (3) the bursting, leaking or running of any tank, washstand, water closet, waste pipe, drain or any other pipe or tank in, upon or around the land, buildings or demised premises; (4) the backing up of any sewer pipe or downspout; (5) the escape of steam or hot water; (6) water, snow or ice being upon or coming through the roof or any other place upon or near the demised premises or the building of which the same is a part or otherwise; (7) the falling or any fixture, plaster or stucco: (8) broken glass; (9) any act or omission of other Tenants or other occupants of the Office Center or adjoining or contiguous property or buildings; (10) the exercise of any rights by Landlord under this Lease; (11) any act or omission of Landlord, its agents, servants and employees, whether occurring on, prior to, or subsequent to the commencement date of this Lease, unless said act or omission shall constitute a willful breach of law; and, (12) any act or omission of parties other than Landlord, its employees or agents. The foregoing waiver and reLease is intended by Landlord and Tenant to be absolute, unconditional and without exception and to supersede any specific repair obligation which may be imposed upon Landlord pursuant to any other Paragraph of this Lease. 29 (c) Landlord and Tenant hereby reLease each other from any and all liability or responsibility to the other or anyone claiming through or under them by way of subrogation or otherwise for any loss or damage to property covered by any insurance then in force, even if such loss or damage shall have been caused by the fault or negligence of the other party or anyone for whom such party may be responsible provided, however, that this release shall be applicable and in force and effect only with respect to any loss or damage occurring during such time as the policy or policies of insurance covering said loss shall contain a clause or endorsement to the effect that this release shall not adversely affect or impair said insurance or prejudice the right of the insured to recover thereunder. Landlord and Tenant each agree to attempt to procure such a clause or endorsement, provided no additional charge is made therefor. If such clause or endorsement can be obtained only upon payment of an additional charge, then the party benefiting from the clause or endorsement shall pay such additional charge upon demand or shall be deemed to have agreed that the party obtaining the insurance coverage shall not be further obliged to obtain such clause or endorsement. 15. Insurance. (a) Tenant will keep in force in companies licensed to do business in the Commonwealth of Pennsylvania at Tenant's 30 expense at all times during the term of this Lease and during such other times as Tenant occupies the demised premises or any part thereof: 1. Comprehensive general liability insurance with respect to the demised premises, the sidewalks, if any, abutting and adjoining the demised premises, and the business operated by Tenant and any subtenants, licensees and concessioners of Tenant in or from the demised premises with minimum limits of Five Hundred Thousand Dollars ($500,000.00) on account of bodily injuries to or death of one person. And One Million Dollars ($1,000,000.00). If the nature of Tenant's operation is such as to place any or all of its employees under the coverage of local workmen's compensation or similar statutes, Tenant shall also keep in force, at its own expense, workmen's compensation or similar insurance affording statutory coverage and containing statutory limits. Such liability insurance shall, in addition, extend to any liability of Tenant arising out of the indemnities provided in Paragraphs 14(a) and (b) hereof. 2. Fire insurance, with standard broad form extended coverage endorsement covering (1) all of Tenants stock 31 in trade, trade fixtures, furniture, furnishings and such equipment as is not affixed to the demised premises, and (2) of at least eighty percent (80%) of their collective insurable value, without co-insurance. (b) Upon request, Tenant will deposit with Landlord policies of insurance required by the provisions of Paragraph 15(a) or certificates thereof, together with satisfactory evidence of the payment of the required premium or premiums thereof to be attached hereto and incorporated herein as Exhibit "G". The insurance required hereby may be maintained by means of a policy or policies of blanket insurance so long as the provisions of this Paragraph are fully satisfied. (c) All policies of insurance required to be carried by Tenant shall provide that the policy shall not be subject to cancellation, termination or change except after ten (10) days prior written notice to Landlord and the policies referred to in Paragraph 15(a) shall name Landlord as a named insured as its interest may appear. In addition, such policies of insurance shall contain a provision substantially as follows: "It is understood and agreed that the insurance afforded by this policy or policies for more than one named insured shall not operate 32 to increase the limits of the companies' liability, but otherwise shall not operate to limit or void the coverage of any one named insured as respects claims against the same named insured by any other named insured or the employees of such other named insured." (d) If for any reason whatsoever Tenant fails to provide and keep in force any or all of the insurance policies set forth in Paragraph 15(a) hereof, then in such event Tenant shall indemnify and hold Landlord harmless against any loss which would have been covered by such insurance. 16. No Partnership. Landlord and Tenant shall not under any circumstances be deemed to be partners or joint ventures, either as between each other or as to any third parties, with respect to any activity conducted upon the demised premises or any goods or services provided by anyone upon the demised premises. 17. Eminent Domain. (a) Tenant hereby waives as to Landlord and the condemning authority any loss or damage or claim therefor resulting from the exercise of the power of eminent domain condemnation or expropriation by any government or other party exercising the same, or deed given in lieu thereof, whether such loss or damage results from condemnation of part or all of the demised premises or any portion of the land or building, except 33 that Tenant may claim against the condemning authority any damages for loss of good will, machinery and moving expenses payable to Tenants under the Pennsylvania Eminent Domain Code of 1964, as amended, but in no event shall Tenant make any claim against Landlord or the condemning authority or any party having an interest in the land or building for the value of the unexpired term of this Lease or for any other item which, if paid to Tenant, will result in the diminution or reduction in the award to the Landlord for the land and building. (b) In the event that the whole or substantially all of the demised premises shall be taken as a result of the exercise of the power of eminent domain, this Lease shall terminate as of the date on which possession of the demised premises is taken by the condemning authority, rent shall be apportioned as of said date and Tenant shall have no claim against Landlord or the condemning authority for the value of any unexpired term of this Lease. (c) If only a part of the demised premises shall be so taken and the taking or conveyance is not extensive enough to render the demised premises unsuitable for the business of Tenant, then this Lease shall not be terminated but shall remain in full force and effect except that the rent shall be abated in proportion to the demised premises so taken, as of such date. 34 (d) If, (1) more than one-third (1/3) of the floor area of the buildings of which the demised premises are a part or more than one-third (1/3) of the Common Areas shall be so taken or conveyed or, (2) any part of the parking area in the Office Center is so taken or conveyed and as a result of such partial taking or conveyance the size, layout or location of the remaining parking facilities will violate the requirements of the applicable zoning or similar law (or any permitted variance or exception thereto) then in any or all such events, notwithstanding the fact that the demised premises are not so taken or conveyed, Landlord shall have the right and power, at its option to be exercised by written notice to Tenant, to terminate this Lease effective either the date title vests in the condemning authority or the date Landlord is required to deliver possession of the part so taken or conveyed; provided, however, in the event of a taking or conveyance as described in clause 2 of this Paragraph 17(c) if Landlord shall take immediate steps towards eliminating such violation, this Lease shall be unaffected and shall remain in full force and effect. In any event, Tenant shall have no claim against Landlord or the condemning authority for the value of any unexpired term of this Lease. 35 18. Destruction of Demised Premises. (a) If the demised premises shall be damaged by fire or other casualty covered by Landlord's policies of fire and broad form extended coverage insurance but are not thereby rendered untenantable in whole or in part, subject to the limitations hereafter set forth, Landlord, at its own expense, shall cause such damage to be repaired in an expeditious and timely manner, and the rent shall not be abated. If by reason of such occurrence, the demised premises shall be rendered untenantable in whole or in part, subject to the limitations hereafter set forth, Landlord, at its own expense, shall cause the damage to be repaired and the Base Rent shall be abated proportionately as to the portion of the demised premises rendered untenantable until the completion of Landlord's repairs thereto. If the demised premises shall be damaged or destroyed by a fire or casualty not covered by Landlord's policies of fire and broad form extended coverage insurance and the Landlord, at its option, decides not to repair and restore the demised premises, Landlord shall have the right, to be exercised by notice in writing delivered to Tenant within thirty (30) days from and after the occurrence of such damage or destruction, to cancel and terminate this Lease. Either party shall have the right, to be exercised by notice in writing, delivered to the other within thirty (30) days from and after any occurrence which renders the demised premises wholly untenantable 36 to cancel this Lease, and if said destruction of the premises occurs within the last three (3) years of the term of this Lease, said cancellation to take effect thirty (30) days from and after the receipt of such notice by the other party, and in such event this Lease and the tenancy hereby created shall cease as of the aforesaid date (except that such cancellation shall not affect the obligations of the parties which have accrued theretofore and remain unpaid), the rent to be adjusted as of such date; provided, however, that if Landlord shall commence repairs or reconstruction of the destroyed premises during the period prior to the cancellation date, the tenancy shall remain in effect and said notice of cancellation shall be considered void. In no event shall Landlord be obligated to expend for any repairs or reconstruction pursuant to this Paragraph 18 an amount in excess of the insurance proceeds recovered by it and allocable to the damage to the demised premises after deduction therefrom of Landlord's reasonable expenses in obtaining such proceeds and any amounts required to be paid to Landlord's mortgagee. (b) If the Landlord is required to repair or reconstruct the leased premises pursuant to the provisions of Paragraph 18(a), its obligation shall be limited to the building shell and other construction to be performed by Landlord pursuant to the Landlord's Work provision of Exhibit "D" hereof, which work Landlord shall commence and complete within a reasonable time. Tenant shall submit to Landlord for Landlord's approval detailed plans 37 and specifications for all other work not required to be done by Landlord and upon approval of such plans and specifications and, within fifteen (15) days after the Tenant has been notified that the Landlord has completed its work on the premises, Tenant shall re-enter the demised premises and thereafter diligently pursue to completion such work at Tenant's expense and thereafter commence doing business all in accordance with the provisions of this Lease. Landlord shall not be liable for delays occasioned by cause, so long as Landlord shall proceed in good faith. (c) Notwithstanding anything set forth herein to the contrary, Tenant alone shall be responsible for all repairs and replacements of damage and/or destruction of the demised premises necessitated by burglary or attempted burglary, or by any other illegal or forcible entry into the demised premises. (d) Tenant covenants that it will give notice to Landlord of any accident or damage whether such damage is caused by insured or uninsured casualty, occurring in, on or about the demised premises within seventy-two (72) hours after Tenant has knowledge of the occurrence of such accident or damage. If Tenant breaches its covenant set forth in this Paragraph 18(d), Landlord, in addition to all other rights and remedies under this Lease, at law or in equity shall, at its option, be relieved of any of its obligations under Paragraph 18. 38 (e) In the event that fifty percent (50%) or more of the total rentable area of the Office Center shall be damaged or destroyed by fire or other casualty, notwithstanding that the demised premises may be unaffected by such fire or other cause, either party shall have the right, to be exercised by notice in writing delivered to the other within thirty (30) days after said occurrence, to cancel and terminate this Lease. Upon the giving of such notice, the term of this Lease shall expire by lapse of time upon the fifteenth (15th) day after such notice is given and Tenant shall vacate the demised premises and surrender the same to Landlord. 19. Security of Demised Premises. It is expressly agreed by and between Landlord and Tenant that Landlord shall have no responsibility whatsoever relative to providing security to the leased space beyond Landlord's obligation to provide doors with locking mechanisms at the commencement of the Lease term. Upon notice from tenant, and within a reasonable period of time after Landlord's receipt of such notice, Landlord shall repair or replace such locking mechanisms where the same shall become nonfunctional through no fault or neglect of Tenant, or of Tenant's agents, servants, employees or business invitees. Landlord shall throughout the term of this Lease have keys which permit it to enter upon the demised premises at any time. 39 20. Fire Exits. Tenant shall at all times refrain from obstructing IN ANY MANNER WHATSOVER any doors to the demised space which shall be deemed or considered to be fire exits by the Pennsylvania Department of Labor and Industry. 21. Tenants Affirmative Covenants. Tenant covenants and agrees that Tenant shall: (a) Pay the rent and all sums due under this Lease without notice or demand on the days and times and at the places that the same are payable without abatement, deduction or set-off; (b) Keep the demised premises and all corridors and loading areas immediately adjoining the demised premises clean and in good order and repair, reasonable wear and tear and damage by any casualty not occurring through act or negligence of Tenant or Tenant's agents, employees or business invitees excepted, and on demand, pay Landlord, as additional rent, the cost of repair or restoration of the demised premises or the building or any part thereof damaged in whole or in part by the act or negligence of Tenant or Tenant's agents, employees or business invitees; (c) Peaceably deliver up and surrender possession of the demised premises at the expiration or sooner possession of this Lease, in the same condition in which Tenant has agreed to keep said premises during the continuance of this Lease, broom-clean, and at such time without demand or delay deliver to 40 Landlord all keys for the demised premises, and upon failure to deliver possession as aforesaid to pay to Landlord, at Landlord's option, an amount as liquidated damages which shall be computed by applying, for the period Tenant remains in possession after expiration or sooner termination of this Lease, twice the highest monthly rental rate provided under this Lease; (d) Promptly correct any violation and comply with all laws, ordinances, notices, permits, statements of occupancy, requirements, orders, regulations and recommendations now or hereafter in effect, of whatever nature, of all federal, state, county, municipal and other authorities and of the Board of Fire Underwriters and any insurance organizations, associations or companies, with respect to Tenants conduct or use of the demised premises and, on demand, pay to Landlord as additional rent, any and all increases in premiums on insurance policies now or hereafter carried by Landlord covering the demised premises or the land or buildings which are caused in any way by Tenant's occupancy or breach of any of the provisions of this Lease; (e) Use every reasonable precaution against fire or other casualty, including furnishings and maintaining in the demised premises fire extinguishers of the type, size and quantity required by local codes; (f) Give to Landlord prompt written notice of any accident, fire, casualty or damage occurring on or to the demised 41 premises, and of any defects in an apparatus in the demised premises which is supplied by Landlord; (g) Within ten (10) days after request therefor by Landlord, deliver to Landlord in recordable form a certificate addressed to such person as Landlord may designate certifying (if such be the case) that this Lease is in full force and effect and that there are no alleged defaults by Landlord or set-offs by Tenant hereunder (or stating those claimed by Tenant) and the date to which rent is paid: (h) Close all windows, lock all doors and turn out all lights (except security lights) in the demised premises before leaving the premises unoccupied: (i) Cause all occupants of the demised premises to conduct themselves in such manner as shall not be deemed improper or objectionable by Landlord: (j) Operate and/or advertise the business operated at or from the demised premises only under the name set forth in Paragraph 3 of this Lease, unless and until the use of another name is permitted in writing by the Landlord: (k) Warehouse, store and/or stock in the demised premises only such goods, wares and merchandise as Tenant uses in the conduct of its business and/or intends to offer for sale at retail in, at or from the demised premises; 42 (l) Replace promptly with glass of a like kind and quality any plate glass or window glass of the demised premises which may become cracked or broken; and, (m) Remove all refuse and keep the same in odor-proof, rat proof containers within the interior of the demised premises shielded from the view of the general public until removed therefrom and placed in such storage and/or hauling facilities or containers as Landlord shall from time to time designate and place about the Office Center. If Landlord provides facilities or containers for the collection, storage and/or hauling of refuse it shall cause all such refuse in said facilities or containers to be removed periodically from the Office Center site and the cost of the same shall be deemed a component of operating expenses pursuant to Paragraph 6(b) of this Lease and shall be prorated among Tenants. If Landlord declines to offer collection, storage and/or hauling containers and declines to contract for the removal of refuse from the Office Center, all of Tenant's refuse shall be removed periodically by such person or company as Tenant, subject to Landlord's approval, shall select. 22. Tenant's Negative Covenants. Tenant covenants and agrees that it shall not, without the prior written consent of Landlord, do or permit its agents, employees or invitees to do any of the following: 43 (a) Occupy the demised premises in any manner or for any purpose except as permitted in this Lease; (b) Assign, mortgage or pledge this Lease or underlet or sublease the demised premises or any part thereof, or permit any other person, firm or corporation to occupy the demised premises or any part thereof; without the written approval of Landlord which will not be unreasonably withheld. (c) Make any alterations, improvements or additions to the demised premises except as permitted and as provided in Paragraph 8 hereof; (d) Use or operate any machinery that, in Landlord's opinion, is harmful to the building or disturbing to tenants occupying other parts thereof; (e) Place any weights in any portion of the buildings beyond the safe carrying capacity of the structure; (f) Remove, attempt to remove or manifest, in Landlord's opinion, an intention to remove Tenant's goods or property from the demised premises, other than in the ordinary course of business, without having first paid Landlord all rent which may become due during the entire term of this Lease; (g) Vacate or desert the demised premises during the term of this Lease, or permit the same to be empty and unoccupied for a period of seven (7) or more consecutive days; (h) Permit any odor, noise, sound or vibration which may, in Landlord's opinion, in any way tend to impair the use of 44 any part of the Office Center or interfere with the business or occupancy of any other tenant, or make or permit any disturbance of any kind in the buildings, or interfere in any way with other tenants or those having business in the buildings, or allow any occupant of the demised premises to conduct himself in a manner which Landlord deems improper or objectionable; (i) Execute or deliver any financing or security agreement which might be considered to create a lien upon the demised premises or the Office Center; (j) Obstruct any sidewalks, halls, passageways, elevators, stairways or other Common Areas of the Office Center, or use the same for any purpose other than ingress and egress to and from the demised premises, or use the same as a waiting room or lounging place for Tenant or its agents, employees or invitees; (k) Cover or obstruct any of the floors, walls, partitions, ceilings, windows or doors which reflect or admit light into any Common Areas of the buildings; (l) Use or permit any of the toilet rooms, water closets, sinks or other apparatus or systems to be used for any purpose other than those for which they were constructed, or permit any sweepings, rubbish, rags, ashes, chemicals, refuse or other unsuitable substances to be thrown or placed therein and the expense of repairing any breakage, stoppage, seepage or 45 damage, whether occurring on or off the demised premises, resulting from a violation of this provision by Tenant or Tenant's employees, agents or invitees shall be borne by tenant. All grease traps and other plumbing traps shall be kept clean and operable by Tenant at Tenant's own expense; (m) Bring in or remove from the buildings any heavy or bulky objects except by experienced movers or riggers approved by Landlord or Landlord's agent, and only after Tenant shall have notified Landlord of the weight and size of the objects and the time, method and manner of bringing in or removing the same, or bring in or remove from the buildings any furniture or freight except during the hours designated by Landlord; (n) Use or allow to be used on the demised premises any article or substance having an offensive odor or any dangerous, explosive or rapidly-burning matter or material of any kind; (o) Use electricity in the demised premises in excess of the capacity of any of the electrical apparatus in or service to the demised premises, or add to or alter the electrical systems serving the demised premises; (p) Use or occupy the demised premises in violation of the use regulation permit or statement of occupancy issued for the building or in violation of any statute, ordinance or 46 requirement of any public authority, and the use permitted by this Lease shall not be deemed a representation or guarantee by Landlord that such use is lawful or permitted under any permit or statement of occupancy; (q) If Tenant is a corporation, merge with another entity or liquidate or dissolve itself: (r) Place in, upon or under any portion of the demised premises, or in, upon or under any portion of the Office Center: 1. Any hazardous substances (as hazardous substances is defined in Section 101(14) of the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA), 42 U.S.C. 9601 (14), as amended by the Superfund Amendments and Re-authorization Act of 1986 (Pub. L. No. 99-400, 100 Stat. 1613 (1986) (SARA)) or hazardous waste or solid waste (as defined in 40 CFR 261); 2. Any hazardous waste, residual waste or solid waste, as those terms are defined in Section 103 of the Pennsylvania Solid Waste Management Act, 35 P.S. 6018.103 and/or 25 Pa. Code 75.260 and 75.261; 3. Any polychlorinated biphenyls (PCBs) or substances containing PCBs, any asbestos or materials containing asbestos, or any urea formaldehyde foam insulation; or, 47 4. Any underground or above-ground storage tanks; (s) Use, generate, treat, store, dispose of, or otherwise introduce any hazardous substance, hazardous waste, residual waste or solid waste (as defined above), PCBs, asbestos or urea formaldehyde, into or on the demised premises, or any portion of the Office Center, nor cause, suffer, allow, or permit anyone else to do so, nor will Tenant dispose of any hazardous substance, hazardous waste, residual waste or solid waste, PCBs, asbestos or urea formaldehyde on the said property or otherwise take or omit to take any action which would violate any applicable federal, state, municipal or other environmental law, ordinance or regulation. 23. Rights Reserved by the Landlord. Landlord shall have and it does hereby reserve unto itself the right, but not the affirmative obligation, to do the following things at any time or times and from time to time in or about the demised premises and the Office Center: (A) Make, amend and supplement such rules and regulations from time to time throughout the term of this Lease as in its reasonable judgment are necessary for the safety, care and cleanliness of the demised premises, the Office Center, the land or buildings designated on Exhibit "A" and for the preservation of good order therein. Such rules and regulations, 48 after notice to Tenant, shall be part of this Lease, unless found unreasonable and Landlord's rights and remedies in the event Tenant shall fail to comply with and observe such rules and regulations shall be the same as though such rules and regulations were set forth in Paragraph 21 and/or Paragraph 22 of this Lease; (b) Discontinue any facility or service not expressly covenanted for herein, as they constitute no part of the consideration for this Lease; (c) Control and prevent access to any part of the buildings or land by all persons whose presence in the opinion of Landlord or Landlord's employees will be prejudicial to the safety, character, reputation or interest of the buildings or its other tenants; (d) Prevent access to the buildings by any person during any emergency, invasion, mob riot, public excitement or other commotion by closing the doors or otherwise; (e) Prescribe the hours and the method and manner by which any merchandise, furniture or heavy or bulky objects shall be brought in or taken out of the buildings, and limit and prescribe the weight, size and proper position thereof; (f) Install, place upon or affix to the roof or exterior walls of the demised premises or the buildings any equipment, signs, displays, antennae or other object or structure, provided it does not interfere with Tenants occupancy; 49 (g) Change the arrangement and location and regulate or eliminate the use of all entrances, passageways, doorways, corridors and other common areas in the Office Center, whether or not connecting with any street, sidewalks, transportation facility or other buildings, and of all elevators, stairs, toilets and public conveniences which are not within the demised premises, provided that same shall not unreasonably interfere with Tenant's use of the demised premises: (h) Use all or any part of the roof, exterior walls and air space above the finished ceiling of the demised premises for any purpose and to erect scaffolds, protective barriers or other aids to construction on, around and about the exterior of the demised premises, provided that access to the demised premises shall not be substantially denied: (i) Make alterations or additions to, and to build additional stories on, and to build adjoining any buildings in the Office Center, including the building in which the demised premises are contained, and to construct other buildings or improvements in the Office Center which Landlord finds necessary and/or desirable and Tenant shall have no interest of any kind whatsoever in the said additions or additional stories or adjoining buildings. Landlord also reserves the right to 50 reduce or enlarge the area of the Office Center by excluding portons of the ground therefrom or adding additional ground thereto from time to time and, whether or not so reduced or enlarged, to construct double-deck, elevated or subterranean parking facilities; (j) If any excavation shall be made or authorized to be made upon land adjacent to the demised premises, Tenant shall afford to the person causing or authorized to cause such excavation a license to enter upon the demised premises for the purpose of doing such work as Landlord shall deem necessary to preserve the wall or the building of which the demised premises form a part from injury or damage and to support the same by proper foundations, without any claim for damages or indemnification against Landlord or diminution or abatement of rent; (k) Landlord reserves the right to install heating, air-conditioning, ventilating equipment, kiosks, fountains, benches, seating arrangements, promotional activities, seasonal displays, temporary stores, amusement devices and other amenities in certain portions of the Common Areas selected by Landlord from time to time, all of which shall be done at Landlord's sole cost and expense and without any approval and consent of Tenant. Landlord also reserves the right to enclose any open sections of the Office Center; 51 (l) Name the building and change the name, number or designation by which the building is commonly known; (m) At all reasonable times during the term of this Lease enter and go upon the demised premises and every part thereof by itself or its duly authorized agents, by a master key or by forceable entry without rendering Landlord or its agents liable or subject to any action or prosecution therefor and without affecting the obligations of Tenant under this Lease, for the purpose of doing any of the following things: 1. To inspect the demised premises and to make decorations, repairs, alterations and additions thereto and to the buildings and to run wires, utility systems or appurtenances thereto and to take material as required into and upon the demised premises, all as Landlord shall deem necessary or desirable for the safety, improvement, preservation or restoration of the buildings or the demised premises, or for the safety or convenience of the present or future occupants thereof, provided that, except in an emergency, reasonable notice thereof shall be given to Tenant; 2. To exhibit the demised premises to prospective Tenants, mortgages, or purchasers and anyone else having an interest or prospective interest therein; 3. To render any service to the building or any Tenant or occupant, or to exercise any of the Landlords rights; 52 4. To take possession of the demised premises and alter, renovate and redecorate the same at any time within one month prior to the expiration of this Lease (or any extension or renewal thereof) if Tenant has then removed all or substantially all of its property therefrom. 24. Additional Rent, Late Charges, Interest And Bad Check Charges. All sums payable by Tenant or which are at the expense of Tenant hereunder, whether or not the same have been specifically designated as "additional rent" herein, shall for all purposes hereunder be deemed and shall be paid by Tenant as rent and, if not paid, Landlord shall have with respect thereto all the rights and remedies provided for herein and by law for non-payment of rent. In addition, Tenant shall pay as additional rent and not as a penalty, a late charge in the amount of 10% of the outstanding delinquent balance or Fifty Dollars ($50.00), Whichever is greater, for any payment of rent or charges not made within ten (10) days after the due date thereof, to cover the extra expense involved in handling delinquent payments. The late charge may be assessed only once with respect to each delinquent payment. If any rent or charges are not paid within thirty (30) days after the due date thereof an interest charge of fifteen percent (15.00%) Per annum computed from the original due date thereof to the date of actual payment shall be applicable to such delinquent rent to charges in addition to the aforesaid late 53 charge. In the event any check tendered by Tenant to Landlord is not honored on initial presentation, Tenant shall pay Landlord the sum of Fifty Dollars ($50.00) on account of Landlord's bank charges and extra administrative expense involved in handling such returned check. 25. Documentary Stamps as Additional Rent. In the event that any documentary stamp tax or other local, state or federal tax is levied on the rental, leasing or letting of the premises or is required to be paid by reason of the execution hereof, the cost thereof shall be paid by Tenant to Landlord within seven (7) days of Landlord's presentment of an invoice therefor. 26. Tenants Failure to Comply with Covenants Of Lease. Except for the payment of rent, which includes base rent and all items of additional rent which shall be paid when due without prior demand, Tenant shall perform all covenants and agreements herein expressed on its part to be performed and will promptly upon receipt of written notice of non-performance thereof comply with the requirements of such notice. If Tenant does not comply with such notice to Landlord's satisfaction within (10) days after delivery thereof (or if compliance cannot be reasonably completed within ten days, if Tenant shall not begin to comply within such period and thereafter proceed to completion with due diligence), Landlord may, at its option, do or cause to be done any or all of the things specified in such notice and, in so 54 doing, Landlord shall have the right to cause its agents, employees and contractors to enter upon the demised premises without liability to Tenant for any loss or damage resulting therefrom; and Tenant shall pay as additional rent any cost or expense incurred by Landlord in taking such action plus administrative costs of Landlord in a sum ec;ual to twenty percent (20%) of such costs and/or expense. 27. Events of Default. Each of the following shall constitute an event of default hereunder: (a) Tenants failure to take possession of the demised premises within ten (10) days after receipt of notice of completion of the Landlord's work given by Landlord to Tenant pursuant to the provisions of Paragraph 5(b) hereof; (b) Tenants discontinuing the conduct of its business in the demised premises; (c) The filing of a petition by or against Tenant for adjudication as a bankrupt or insolvent, or for reorganization or appointment of a receiver or trustee of Tenant's property; an assignment by Tenant for the benefit of creditors; or the taking of possession of Tenant's property by any governmental officer or agency pursuant to statutory authority for the dissolution or liquidation of Tenant, or if the Tenant admits in writing its inability to pay debts generally as they become due; 55 (d) Tenant's failure to pay when due (and in no event later than the expiration of the ten (10) day grace period as herein provided for) any installment of rent hereunder or any other sum herein required to be paid by Tenant more than two (2) times in any period of twelve (12) consecutive months, then notwithstanding that such failures shall have been eventually cured, any further similar failure within such twelve (12) month period; (e) Tenant's failure to perform any other covenant, agreement or condition of this Lease within ten (10) days after receipt of written notice of such failure to perform or, if the performance thereof requires more than 10 days to complete, Tenant's failing to begin performance thereof within such ten-day period and proceeding diligently to completion thereafter more than three (3) times in any period of twelve (12) consecutive months, then, notwithstanding that such failures shall have been timely or eventually cured, any further similar failure within such twelve (12) month period; (f) Tenant's removing, attempting to remove or manifesting an intention to remove its goods or property from the demised premises, except in the ordinary course of business, without having first paid Landlord all rent which may become due for the balance of the term of this Lease: (g) Tenant's vacating or deserting the demised premises or permitting the same to be empty or unoccupied for a period of ten (10) or more consecutive days; 56 (h) The filing by or against any guarantor or surety of this Lease of a petition for adjudication as a bankrupt or insolvent, or for the reorganization or appointment of a receiver or trustee of the property of such guarantor or surety, or the making of an assignment by such guarantor or surety for the benefit of creditors, or the taking of possession of the property of such guarantor or surety by any governmental officer or agency pursuant to statutory authority for the dissolution or liquidation of such guarantor or surety; (i) DELETED (j) If any attachment, levy or garnishment is issued against or if an involuntary lien is filed against any property of the Tenant, unless the Tenant can demonstrate to the Landlord's satisfaction that he has the ability to make the rental payments; (k) If there shall occur any change in the financial or other condition of the Tenant which, in the sole, good faith judgment of the Landlord, impairs the prospects of payment or performance by such Tenant. However, if Tenant shows to Landlord's satisfaction that he can make the rental payments, Tenant will not be in default; and/or, (l) If the Tenant is a corporation or partnership, such Tenant becomes involved in a dissolution, merger, consolidation or reorganization without the express prior consent of the Landlord. 57 Listing the above does not limit Landlord's action upon default where other or similar causes or applications exist. 28. Landlord's Rights and Remedies Upon Tenant's Default. Upon or after the occurrence of any one or more events of default hereunder. Landlord may, at its option: (a) If the term of this Lease shall not have commenced, Landlord may immediately cancel this Lease by written notice to the Tenant, or if the term shall have commenced Landlord may serve upon Tenant a written notice that this Lease and the term will terminate on a date to be specified therein, and in either event, Tenant shall have ten (10) days to avoid the cancellation or termination by payment of any sum due or by performance of any condition, term or covenant broken; (b) Upon the date specified in the aforesaid notice of termination this Lease and the term hereof shall terminate and come to an end as fully and completely as if such date were the day herein definitely fixed for the end and expiration of this Lease and such term, and Tenant shall then quit and surrender the demised premises to Landlord, but notwithstanding any statute, rule of law, or decision of any Court to the contrary, Tenant shall remain liable as set forth hereinafter; (c) Declare the entire remaining portion of the rent, and items of additional rent, reserved hereunder due and payable immediately, anything herein contained to the contrary 58 notwithstanding, and proceed, with or without notice, as herein provided or otherwise, to collect the same; (d) Reenter the premises and repossess them by force, summary proceedings, ejectment or otherwise, and may dispossess Tenant and all other persons and property from the premises and may have, hold and enjoy the demised premises together with all alterations, additions or improvements and the right to receive all rental income therefrom all without being liable to prosecution or damages therefor. At any time after any such expiration, Landlord may relet the demised premises or any part thereof, in the name of Landlord or otherwise, for such term (which may be greater or less than the period which would otherwise have constituted the balance of the term of this Lease) and on such reasonable conditions as Landlord, in its uncontrolled discretion, may determine, and may collect and receive the rent therefor. Landlord shall in no way be responsible or liable for any failure to relet the demised premises or any part thereof, or for any failure to collect any rent due upon any such reletting. No such expiration of this Lease shall relieve Tenant of its liability and obligations under this Lease, and such liability and obligations shall survive any such expiration, whether or not the demised premises or any part thereof shall have been relet, and Tenant shall pay to Landlord the rent and additional rent required to be 59 paid by Tenant up to the time of such expiration, and thereafter Tenant, until the end of what would have been the original term of this Lease in the absence of such expiration, shall be liable to Landlord for and shall pay to Landlord on the days on which the rent and additional rent would have been payable under this Lease if it were still in effect, as and for liquidated and agreed current damages for Tenants default, the equivalent of the amount of the rent and additional rent which would be payable under this Lease by Tenant if this Lease were still in effect less the net proceeds of any reletting effected as set out hereinabove, if any, after deducting all Landlord's expenses in connection with such reletting including, without limitation, all repossession costs, commissions, legal expenses, reasonable attorney's fees and disbursements, repair, alteration and/or decoration costs and all other such expenses of preparation for such reletting; (e) Recover from Tenant, on demand, whether or not Landlord shall have collected any monthly deficiency, as and for liquidated and agreed final damages for Tenant's default, an amount equal to the difference between the rent and additional rent reserved hereunder for the unexpired portion of the original lease term and the then fair and reasonable rental value of the demised premises for the same period. In the computation of such damages the difference between any installment of rent becoming 60 due hereunder after the date of termination and the fair and reasonable rental value of the demised premises for the period for which such installment was payable shall be discounted to the date of termination at the rate of 4% per annum. If the demised premises or any part thereof is relet by Landlord for the unexpired term of this Lease or any part thereof, the amount of rent reserved upon such reletting shall be deemed conclusively to be the fair and reasonable rental value for the part or the whole of the demised premise so relet during the term of the reletting. Nothing herein contained shall limit or prejudice the right of Landlord to prove or obtain as liquidated damages by reason of such termination an amount equal to the maximum allowed by any statute or rule of law in effect at the time when, and governing the proceedings in which, such damages are to be proved, whether or not such amount be greater, equal to or less than the amount of the difference referred to above; (f) In the event of a breach or a threatened breach by Tenant of any of the covenants or provisions hereof, Landlord shall have the right of injunction and the right to invoke any remedy allowed at law or in equity as if re-entry, summary proceedings and other remedies were not herein provided for; (g) Exercise any and all other rights and remedies granted or allowed Landlord by any existing or future statute, act of assembly or other law of this Commonwealth in cases where 61 a Landlord seeks to enforce rights arising under a Lease agreement against a Tenant who has defaulted or otherwise breached the terms of such Lease agreement; (h) Exercise any and all other rights and remedies contained in this Lease, including, but not limited to the rights and remedies provided by Paragraphs 24, 27 and 28 hereof. 29. Waivers. Tenant expressly waives: (a) The benefit of all laws, now or hereafter in force, exempting any goods on the demised premises, or elsewhere, from distraint, levy or sale in any legal proceedings taken by Landlord to enforce any rights under this Lease; (b) The benefit of all laws existing now or hereafter enacted regarding any limitation as to the goods upon which, or the time within which, distress is to be made after removal of goods of the Tenant or others from the demised premises and, further, Tenant hereby relieves Landlord of the obligation of proving or identifying the goods distrained, it being the purpose and intent of this provision that all goods of Tenant, whether upon the demised premises or not, shall be liable to distress for rent at any time after Tenants default under this Lease, including particularly, but not limited to those goods removed from the demised premises clandestinely and fraudulently; (c) The right to issue a writ of replevin for the recovery of any goods seized under a distress for rent or levy upon an execution for rent, damages or otherwise; 62 (d) The right to delay execution on any real estate that may be levied upon to collect any amount which may become due under the terms and conditions of this Lease and any right to have the same appraised, and Tenant authorized any prothonotary or clerk of court to enter a writ of execution or other process upon Tenant's voluntary waiver and further agrees that said real estate may be sold on a writ of execution or other process; (e) All rights relating to the Landlord-Tenant relationship under the law, ordinance or statute, to the extent that they might limit Landlord's right to cause the distrained goods to be sold, Tenant now specifically and knowingly authorizes Landlord to sell any goods distrained for rent at a public auction sale to be held at any time at least ten (10) days after that distraint without appraisement and condemnation of the goods, but upon five (5) days' notice to Tenant of the date, place and terms of sale, including Landlord's right to purchase all or any of the property; and, (f) the right to three (3) months' notice and/or fifteen (15) or thirty (30) days' notice required under certain circumstances by the Landlord and Tenant act of 1951, P.L. 69, as amended, hereby agreeing that ten (10) days' notice shall be sufficient in either or any such case. 30. Confession of Judgment - Money. Tenant covenants and agrees that if the rent or any charges reserved in this Lease as 63 rent (including all accelerations of rent permissible under the provisions of this Lease) shall remain unpaid ten (10) days after the same are required to be paid, then and in that event, Landlord may cause judgment to be entered against Tenant, and for that purpose Tenant hereby authorizes and empowers Landlord or any Prothonotary, Clerk of Court or Attorney of any Court of Record to appear for Tenant and to confess judgment against Tenant and agrees that Landlord may commence an action pursuant to Pennsylvania Rules of Civil Procedure no. 2950 et seq. for the recovery from Tenant of all rent hereunder (including all accelerations of rent permissible under the provisions of this Lease) and/or for all charges reserved hereunder as rent, as well as for interest at the rate herein provided and costs and attorney's commissions, for which authorization to confess judgment this Lease, or a true and correct copy hereof, shall be sufficient warrant. Such judgment may be confessed against Tenant for the amount of rent in arrears (including all accelerations of rent permissible under the provisions of this leasse) and/or for all charges reserved hereunder as rent as well as for interest at the rate herein provided and costs together with an attorney's commission of 10% of the full amount of Landlord's claim against Tenant. Neither the right to institute an action pursuant to Pennsylvania Rules of Civil Procedure no. 2950 et seq. nor the authority to confess judgment granted herein shall be exhausted 64 by one or more exercises thereof, but successive complaints may be filed and successive judgments may be entered for the aforementioned sums ten (10) days or more after they become due as well as after the expiration of the original term or any extension or renewal of this Lease. Tenant agrees that any judgment for money obtained by the Landlord shall bear interest at the rate of fifteen percent (15%) per annum as herein provided from the date of the entry of judgment until such date as the same is paid any statute, Rule of Court, custom or practice to the contrary notwithstanding. 31. Confession of Judgment - Possession of Demised Premises. Tenant covenants and agrees that if this Lease shall be terminated (either because of conditions broken during the original term of this Lease or any renewal or extension thereof or when the term hereby created or any extension thereof shall have expired) then and in that event Landlord may cause judgment in ejectment to be entered against Tenant for possession of the demised premise, and for that purpose Tenant hereby authorizes and empowers any Prothonotary, Clerk of Court or Attorney of any Court of Record to appear for Tenant and to confess judgment against Tenant in ejectment for possession of the demised premises and agrees that Landlord may commence an action pursuant to Pennsylvania Rules of Civil Procedure no. 2970 et seq. for the entry of an order in ejectment for the possession of real property, 65 and Tenant further agrees that a Writ of Possession pursuant thereto may issue forthwith, for which authorization to confess judgment and for the issuance of writs of possession pursuant thereto this Lease, or a true and correct copy hereof, shall be sufficient warrant. Tenant further covenants and agrees that if, for any reason whatsoever after said action shall have commenced, the action shall be terminated and possession of the demised premises shall remain in or be restored to Tenant, Landlord shall have the right upon any subsequent default or defaults, or upon the termination of this Lease as above set forth, to commence successive actions for possession of real property and to cause the entry of successive judgments by confession in ejectment for possession of the premises demised hereunder. 32. Conclusive Evidence of Facts in Action for Judgment by Confession. In any procedure or action to enter Judgment by Confession for Money pursuant to Paragraph 30 hereof, or to enter Judgment by Confession in Ejectment for possession of real property pursuant to Paragraph 31 hereof, if Landlord shall first cause to be filed in such action an affidavit, complaint or averment of the facts constituting the default or occurrence or event the happening of which authorized and empowered Landlord to cause the entry of judgment by confession, such affidavit, complaint or averment shall be conclusive evidence of such facts, default, occurrence, or event (and of the truth of which such 66 affidavit, complaint or averment shall be sufficient evidence); and if a true copy of this Lease be filed in such procedure or action, it shall not be necessary to file the original as a Warrant of Attorney, any rule of court, custom or practice to the contrary notwithstanding. 33. Release of Errors. Tenant hereby releases to Landlord and to any and all attorneys who may appear for Tenant all errors in any procedure or action to enter Judgment by Confession by virtue of the warrants of attorney contained in this Lease, and all liability therefor. 34. Landlord's Right to Assign Remedies. The right to enter judgment against Tenant by confession and to enforce all of the other provisions of this Lease herein provided for may, at the option of any assignee of this Lease, be exercised by any assigns of the Landlord's right, title and interest in this Lease in his, her, its or their own name, any statute, rule of court, custom or practice to the contrary notwithstanding. 35. Landlord's Remedies Cumulative. All of the remedies hereinbefore given to Landlord and all rights and remedies given to it by law and equity shall be cumulative and concurrent. No termination of this Lease or the taking or recovering of possession of the demised premises shall deprive Landlord of any of its remedies or actions against Tenant for rent then due or which under the terms hereof would in the future have become due 67 if there had been no termination, nor shall the bringing of any action for rent or breach of covenant, or the resort to any other remedy herein provided for the recovery of rent, be construed as a waiver of the right to obtain possession of the demised premises. 36. Subordination of Lease. This Lease may, at Landlord's sole discretion and without the consent of Tenant, be made subordinate to any lien or encumbrance now or hereafter placed upon, or permitted to be placed upon, the demised premises by Landlord. However, so long as Tenant is not in default under the terms of this Lease, the mortgagees or its assigns will not disturb the possession of the Tenant. 37. Waiver. Landlord shall have the right at all times to enforce the covenants and conditions of this Lease in strict accordance with the terms hereof despite any conduct, usage or custom on the part of Landlord in refraining from so doing at any time or times and despite any contrary law, usage or custom or any failure by Landlord to enforce its Rights at any time or times. The subsequent acceptance by Landlord of rent due hereunder or of any or all other monetary obligations of Tenant hereunder, whether or not denoted as rent hereunder, shall not be deemed to be a waiver of any preceding breach by Tenant of any term, covenant or condition of this Lease, other than the failure of Tenant to make the particular payment so accepted, regardless of Landlord's knowledge of such preceding breach at the time of acceptance of such rent. No covenant, term or condition of this Lease shall be deemed to have been waived by Landlord, unless such waiver be in writing and executed by Landlord. 68 38. Accord and Satisfaction. No payment by Tenant or receipt by Landlord of a lesser amount than any payment of rent or additional rent herein stipulated shall be deemed to be other than on account of the earliest stipulated rent or additional rent then due and payable. Tenant agrees that Landlord shall not be bound by any endorsement or statement on any check or any letter accompanying any check or payment and no such endorsement, statement or letter shall be deemed an accord and satisfaction, and Landlord or Landlord's bank may accept such check or payment without prejudice to Landlord's right to recover the balance of such rent or pursue any other remedy provided in this Lease, at law or in equity. 39. Notices. All notices, requests and demands upon the respective parties hereto shall be in writing and shall be either personally delivered with written acknowledgement of receipt therefore or sent postage prepaid by U.S. certified mail, return receipt requested, to the address(es) as shall be set forth on a schedule to be attached hereto and incorporated herein as Exhibit "F". All notices shall be deemed to have been given on the date when deposited in the U.S. mail receptacles or, in the case of notices delivered in person to Tenant, when so delivered. 40. Quiet Enjoyment. So long as Tenant shall pay the rents and other charges herein provided within the respective times provided therefor, and provided and so long as Tenant observes 69 and performs all the covenants, terms and conditions on Tenant's part to be observed and performed, Tenant shall peaceably and quietly hold and enjoy the demised premises for the term of this Lease without hindrance or interruption by Landlord or any other person or persons lawfully claiming by, through or under Landlord, subject, nevertheless, to the terms and conditions of this Lease. Landlord's liability under this Paragraph shall cease upon a conveyance by Landlord of the premises. 41. Captions and Index. The captions and index appearing in this Lease are inserted only as a matter of convenience and in no way define, limit, construe or describe the scope or intent of such sections, paragraphs or articles of this Lease nor in any way affect this Lease. 42. Entire Agreement. This Lease, including the Exhibits, Addendums and Riders, if any, is the only agreement between the parties hereto pertaining to the demised premises and all negotiations and oral agreements acceptable to the parties are included herein. All prior communications, negotiations, arrangements, representations, agreements and understandings, whether oral, written or both, between the parties hereto, and their representatives, are merged herein and extinguished, this Lease superseding and canceling the same. Except as herein otherwise provided, no subsequent alteration, amendment, change or addition to this Lease shall be binding upon Landlord or 70 Tenant unless reduced to writing and executed by the party against which such subsequent alteration, amendment, change or modification is to be enforced. If any provisions contained in any Rider or Addendum hereto is inconsistent with any printed provisions of this Lease, the provision contained in such Rider or Addendum shall supersede said printed provision. 43. Recording. This Lease may not be placed on public record by Tenant, and any such recordation by Tenant without the prior written consent of Landlord shall, at Landlord's option, constitute a breach of this Lease by Tenant. 44. Partial Invalidity. If any provision of this Lease is held to be invalid, the remaining provisions shall not be affected thereby but shall continue in full force and effect. Furthermore, each covenant, agreement, obligation and other provision contained in this Lease is and shall be deemed and construed as a separate and independent covenant of the party bound by, undertaking or making the same, and not dependent on any other provision of this Lease unless expressly so provided. 45. Tenant Defined: Use of Pronoun. The term "Tenant" shall refer to each and every person or party mentioned as a Tenant herein, be the same one or more. If there shall be more than one Tenant. They shall be bound jointly and severally by all the terms, covenants and agreements of this Lease, and any notice required or permitted by the terms of this Lease may be given by 71 or to any one thereof and shall have the same force and effect as if given by or to all. The use of the neuter or the masculine singular pronoun to refer to Landlord or Tenant may be an individual, a partnership, a corporation, a female or a group of two or more individuals or corporations. The necessary grammatical changes required to make the provisions of this Lease apply in the plural number where there is more than one Landlord or Tenant and to either corporations, associations, partnerships or individuals, males or females, shall in all instances be assumed as though in each case fully expressed. 46. Negation of Landlord's Personal Liability. The term Landlord as used in this Lease shall refer only to the owner for the time being of the Landlord's estate in the demised premises or land or the building of which it is a part. Landlord shall be and is hereby relieved of all covenants and obligations of Landlord hereunder after the date of transfer of Landlord's estate in the land or the demised premises or the building of which it is a part, and it shall be construed without further agreement between the parties that the transferee has assumed and agreed to carry out any and all covenants and obligations of Landlord hereunder during such time as said transferee shall own or hold Landlord's estate or interest in the land or the demised premises or the building of which it is a part. The provisions 72 of this part shall apply to each successive transfer of Landlord's interest or estate. The liability of Landlord under this Lease shall be and is hereby limited to Landlord's interest in the land and the demised premises and the building of which it is a part, and no other asset of Landlord's shall be affected by reason of any liability which Landlord may have to Tenant or to any other person by reason of this Lease, the execution hereof or the acquisition of Landlord's interest in the land or the buildings and, in the event Tenant obtains a judgment against Landlord, the judgment docket shall be so noted. This Paragraph shall inure to the benefit of Landlord's successors and assigns and their respective principals. 47. Successors. All rights, obligations and liabilities herein given to or imposed upon the respective parties hereto shall extend to and bind the several respective heirs, executors, administrators, trustees, receivers, legal representatives, successors and assigns of the said parties; and if there shall be more than one Tenant, they shall all be bound jointly and severally by the terms, covenants and agreements herein. No rights, however, shall inure to the benefit of any assignee, legal representative of Tenant unless the assignment to such party has been approved by Landlord in writing as provided in Paragraph 22(b) hereof. Landlord shall have the unrestricted 73 right to assign this Lease and upon any such assignment, Landlord shall automatically be released from all liability hereunder from and after the date of such assignment. 48. Construction. It is the intent of the parties hereto that if any term, covenant, condition or agreement of this Lease is capable of two or more constructions, one or more of which would render the provision void, and the other or others of which would render the provision valid, then the provision shall have the meaning or meanings which would render it valid. Although the printed provisions of this Lease were drawn by Landlord, this Lease shall not be construed for or against Landlord or Tenant but this Lease shall be interpreted in accordance with the general tenor of the language in an effort to reach the intended result. The laws of the Commonwealth of Pennsylvania shall govern the validity, interpretation, performance and enforcement of this Lease. 49. Submission of Lease to Tenant. The submission by Landlord to Tenant of this Lease shall have no binding force or effect, shall not constitute an option for the leasing of the demised premises, nor shall the same confer any rights or impose any obligations upon either party until the execution thereof by Landlord and the delivery of an executed original copy executed in any number of counterparts, all of which taken together shall constitute one and the same instrument. 74 IN WITNESS WHEREOF, and intending to be legally bound hereby, the parties hereto have individually, or by their authorized representatives, as appropriate, set their hands and seals hereto as of the day and year first above written. LANDLORD BY: [CLIENT SUPPLY] 6/18/96 ------------------------- TENANT BY: ------------------------- Andrew E. Trolio Sedona-GeoServices, Inc. 75 GUARANTY The undersigned Guarantor on behalf of himself, his successors and assigns, unconditionally guarantees to Landlord, and its successors and assigns, complete and punctual performance of the foregoing Lease and all its provisions, and the provisions of all documents attached and incorporated by reference, for the term of the Lease or in any extensions of such. Guarantor waives any right, requirement or necessity for any notice of default under the Lease and/or that the Landlord exhaust any right or take any action against the Tenant or any other person or entity as any condition for enforcement of the guaranty against Guarantor. Guarantor agrees that no assertion by Landlord of any other forms of remedy or relief available to it under this Lease or the law generally will diminish or otherwise interfere with separate and independent claims made against this guaranty. Guarantor waives any defense under this guaranty stemming from any circumstances whatsoever outside the course of this Lease and resulting in the termination of Tenant's liability such as, but not limited to, modification. 76 Guarantor agrees to pay any and all expenses (including attorney's fees and disbursements incurred by Landlord) in enforcing its rights under this guaranty. The Guarantor will not exercise any rights which it may acquire by way of subrogation under this guaranty, by any payment made hereunder or otherwise until all obligations of the Tenant under the Lease have been met and all sums due Landlord thereunder Guarantor on account of such subrogation rights at anytime when all such obligations to the Landlord shall not have been paid in full, such amount shall be received and held in trust by the Guarantor for the benefit of the Landlord and shall forthwith be paid to the Landlord to be credited and applied against the obligations of the Tenant under the Lease, whether matured or unmatured, in accordance with the terms of the Lease. Landlord relies upon the fact and security of this Guaranty as a substantial inducement to execution of the foregoing Lease. If more than one signature appears below, as Guarantor, each such individual signing shall be jointly and severally liable for the proper performance of this Guaranty. 77 Signed and sealed, with intent to be legally bound hereby, this __________ day of ____________ 199 . By: /s/ Gregory A. Dinnocenti 6/18/96 --------------------------------- Gregory A Dinnocenti - Lewis Road Associates By: ________________________________ Andrew E. Trolio - Guarantor Sedona-GeoServices, Inc. 78 EXHIBIT "A" CZOP / SPECTER, INC. Consulting Engineers & Surveyors 1741 VALLEY FORGE ROAD - RTE. 363 P.O. BOX 669 WORCESTER. PA 19490 ===== 215-584 0880 LEGAL DESCRIPTION D & L PROFESSIONAL BUILDING LEWIS ROAD AND D & L DRIVE ALL THAT CERTAIN tract of land with a building and improvements situate on Lewis Road and D & L Drive, in the Township of Limerick, County of Montgomery, Commonwealth of Pennsylvania, bounded and described as shown on Site plan (Sheet 1 of 4) for D & L Associates by Czop/Specter, Inc., dated 8/31/87, last revised 10/23/87, as follows to wit: BEGINNING at a point, said point being located North 46 degrees 15 minutes 00 seconds West, 614.59 feet from the intersection of the centerline of Lewis Road (60 feet wide) and Southwest right-of-way line of:__ D & L Drive belonging to D & L Associates; thence extending from said point of beginning South 46 degrees 15 minutes 00 seconds East 564.19 feet to a point of a curve, which point is measured on the arc of a curve curving to the right having a radius of 15 feet the arc distance of 23.94 feet to a point of tangency; thence from said point along the right-of-way of Lewis Road the following three courses; 1) South 45 degrees 12 minutes 00 seconds West 120.79 feet, 2) North 44 degrees 48 minutes 00 seconds West 20 feet, 3) South 45 degrees 12 minutes 00 seconds West 64.39 feet to a point a corner of lands now or late of Harry F. Leeson; thence from said point along lands now or late of Harry F. Leeson North 46 degrees 15 minutes 00 seconds West 555.96 feet to a point a corner of which lands now or late of D & L Associates; thence from said point along other lands now or late of D & L Associates North 44 degrees 10 minutes 00 seconds East 200.00 feet to the first mentioned point and place of BEGINNING. CONTAINING 114,215.87 square feet or 2.62 acres more or less. 79A EXHIBIT "G" In the printed document, there appears a blueprint showing reserved parking layout. 79B EXHIBIT "C" Items in need of repair by the Landlord as of the commencement date of this lease: 1. Light Fixtures - Yes/No COMMENTS: 2. Walls - Yes/No COMMENTS: 3. Door(s) - Yes/No COMMENTS: 4. Floor - Yes/No COMMENTS: 5. Ceiling - Yes/No COMMENTS: 6. Window - Yes/No COMMENTS: 7. Bathroom - Yes/No COMMENTS: 8. Other Dated: ________________________ ________________________ 80 ACKNOWLEDGEMENT OF REPAIRS COMPLETED TO THE SATISFACTION OF THE PARTIES Except as otherwise noted below, all repairs to be made by the Landlord as set forth above, have been completed to the satisfaction of the parties, and Tenant agrees to accept possession of the demised premises in its present condition. Exceptions: Dated: ______________________ __________________ 81 Exhibit "D" Page 1 Schedule of "Landlord's Work" and "Tenants Work" I. LANDLORD'S WORK. A. Repair damaged drywall as needed. B. Touch-up Paint as needed, where patching of drywall was performed. C. Steam Clean Carpet Throughout. D. Landlord's allowance to tenant will be Two Thousand Seven Hundred and Ninety Three Dollars 00/100 (2,793.00), which does not include the above cited items. 82 EXHIBIT "D" Page 2 II. Tenant's work: All other work not specifically designated as Landlord's work by Article 1 which is necessary to complete the demised premises and which is necessary for the demised premises to be ready to open for business with the public by the commencement date, in the manner set forth in the Lease, shall be done by Tenant at Tenant's own cost and expense. All of the aforesaid work, all other work which is not specifically designated as Landlord's work and all other work Tenant may do in the demised premises at any time, is herein collectively referred to as Tenant's work. A. All of Tenant's Work shall be completed at Tenant's sole cost and expense. In performing Tenant's Work, Tenant shall comply with the following requirements: 1. In addition to, and not in lieu of the other policies of insurance required by this Lease, at all times between the start and completion of Tenants Work (such period is herein referred to as "Tenant's Construction Period"), Tenant, at its own cost and expense, shall maintain in effect with a responsible insurance company, a policy of "All Risk" Builder's Risk Insurance in the standard form for the State where the Center is located. Said insurance shall cover the full replacement value of work done and fixtures and equipment installed or to be installed at the demised premises by Tenant, without co-insurance and without any deductible clauses. 2. At all times during Tenant's Construction Period, Tenant's contractors and subcontractors shall maintain in effect workers compensation insurance as required by the laws of the Commonwealth of Pennsylvania. 3. Repair and/or reconstruction of all or any portion of Tenant's Work 83 damaged or destroyed by any casualty occurring during Tenant's Construction Period. EXHIBIT "D" Page 3 commenced by Tenant as soon as possible after such casualty; provided that if all or any portion of Landlord's Work is also damaged or destroyed by such casualty, Landlord shall notify Tenant when repairs or reconstruction of Landlord's Work is substantially completed and, within fifteen (15) days after receipt of such notice, Tenant shall diligently pursue such repair and/or reconstruction to completion. 4. Any approval or consent by Landlord of any or all of Tenant's criteria, systems, plans, specifications or drawings shall neither constitute an assumption of responsibility by Landlord for any aspect of such criteria, systems, plans, specifications or drawings including, but not limited to, their accuracy or efficiency nor obligate Landlord in any manner with respect to Tenant's Work and Tenant shall be solely responsible for any deficiency in design or construction of all portions of Tenant's Work. 5. Tenant shall obtain and pay for all necessary permits and shall pay for all other fees required by public authorities or utility companies with respect to Tenant's Work. 6. Tenant shall maintain the demised premises and the Common Area adjoining the same in a clean and orderly condition during construction. Tenant shall promptly remove all unused construction materials, equipment shipping containers, packaging, debris and waste from the Office Center, and deposit it in receptacles, if any, provided by Landlord or otherwise remove the construction materials, equipment, fixtures, merchandise, shipping containers and debris within the demised 84 premises. Parking areas, sidewalks, courts, arcades, public corridors, service corridors and the exterior of the building will be clear of Tenant's equipment, merchandise, refuse and debris at all times. EXHIBIT "D" Page 4 7. To the end there shall be no labor disputes which would interfere with and construction occurring in the Office Center or the operation thereof, or any part thereof including but not limited to, the demised premises, in performing any Tenant's Work, Tenant agrees to use its best efforts to engage the services of only such contractors or subcontractors as will work in harmony and without causing any labor dispute with each other, with Landlord's employees, contractors and subcontractors thereof, and Tenant shall require its contractors and subcontractors to employ only such labor as will work in harmony and without causing any labor dispute with each other, with Landlord's employees, contractors and subcontractors and with the employees, contractors and subcontractors of all others working in or upon the Office Center or any part thereof. Furthermore, only those contractors and subcontractors as have been duly licensed by the authority having jurisdiction over the appropriate profession and which have been approved in writing by Landlord may perform any portion of Tenant's Work for Tenant in or upon the demised premises. 8. At any time and from time to time during the performance of Tenant's Work, Landlord, Landlord's architect and/or Landlord's general contractor may enter upon the demised premises and inspect the work being performed by Tenant and take such steps as they may deem necessary or desirable to assure the protection of the 85 building and/or any premises adjacent to the demised premises. In addition, Tenant's Work shall be performed in a thoroughly first-class and workmanlike manner, shall incorporate only new materials and shall be in good and usable condition at the date of completion. 9. Tenant's work shall be coordinated with all work being performed or to be EXHIBIT "D" Page 5 performed by Landlord and other occupants of the Office Center nor interfere with or delay the completion of any other construction within the Center, and each such contractor and subcontractor shall comply with all procedures and regulations prescribed by Landlord for integration of Tenant's work with that to be performed in connection with any construction in the Office Center and in connection with the operation of the Office Center. 10. Neither Tenant nor its contractors or subcontractors may use any space within the Office Center (except the demised premises) for storage, handling and moving of materials and equipment, and if Tenant or such contractors and/or subcontractors shall use any space in the Office Center (except the demised premises) for any of the aforesaid purposes without obtaining Landlord's prior written approval therefore, Landlord shall have the right to terminate such use or remove all of Tenant's and such contractor's or subcontractor's material, equipment and other property from such space without Landlord being liable to Tenant and/or such contractors or subcontractors and the cost of such termination and/or removal shall be immediately paid by Tenant to Landlord. It shall be Tenant's responsibility to cause each contractor and subcontractor to maintain continuous protection of 86 adjacent property and improvements against damage by reason of Tenant's work, including at Landlord's request, the installation of lights, guard rails, barricades and temporary store fronts of a design approved by Landlord, or at Landlord's option, Tenant shall reimburse Landlord, on demand, for the cost incurred in Landlord's installation of such items plus administrative costs of Landlord in a sum equal to twenty percent (20%) of such sums and/or costs. EXHIBIT "D" Page 6 III. PLANS AND SPECIFICATIONS. In the event Tenant desires to perform any Tenant's work, prior to doing so, Tenant shall deliver to Landlord detailed plans and specifications prepared by Tenant's licensed architect disclosing the proposed work. Landlord shall review such plans and specifications and advise Tenant of any changes required by Landlord; Tenant shall promptly revise such plans to Landlord within twenty (20) days after being advised of Landlord's changes. Landlord may require further changes in such plans and Tenant shall similarly revise and resubmit the same to Landlord within an additional period of twenty (20) days. Tenant shall not commence any part of such work until such plans and specifications have been approved in writing by Landlord. 87 EXHIBIT "F" SCHEDULE OF ADDRESSES OF THE PARTIES Rosedale Associates Sedona - GeoServices, Inc. 649 N. Lewis Rd. 700 Abbott Drive Suite #200 Broomall, Pa 19008-4373 Limerick, Pa 19468 (610) 328-1040 (610) 495-5960 88 EXHIBIT "H" ESTIMATES COMMON COSTS FOR PERIOD ONE Cost per Square Foot ----------- 1. Real Estate Taxes $1.36 2. Annual Insurance 0.04 3. Lawn/Snow Maint. 0.20 4. Dumpsters 0.09 5. Common Area Elec. O.14 6. Janitorial 0.28 7. Water 0.04 8. Sewer 0.07 9. Plant Care 0.02 10. Elevator 0.06 11. HVAC O.10 12. Misc. Labor/Matl's 0.04 TOTAL COMMON COSTS -- $2.38/sq.ft. 89 EXHIBIT I ADDENDUM (Part I) 1. Lessor is aware that the Tenant may or may not expand in the future. Lessor is also aware that several Tenants within the building may be desirous of downsizing. Landlord will work with all Tenants involved in accommodating Sedona, GeoServices, Inc. with their expansion requirements. 90 Addendum (Part II) 1. Sedona Geoservices, Inc. has hereby been given permission by Specht Realty, to utilize the Specht Realty Training Room, located on the Second Floor, on an "as need" basis. Tenant agrees that a minimum of five (5) days' notice will be given to Specht Realty to schedule such use for this room. Tenant agrees to pay for a full day use, irregardless of actual hours that they will be occupying the space each day. Tenant understands that Specht Realty is not able to offer availability of this room on Tuesdays, at the present time, due to prescheduled seminars throughout the year. Tenant agrees to abide by the advance notice schedule that will be coordinated directly between Mr. David Specht and Mr. Andrew Trolio (or representative for Mr. Trolio). The daily Rental Rate for the Training Room will be Forty Eight Dollars and 26/100 ($48.26). This Rental Rate was calculated as follows: Training Room Size = 25' X 41' = 1,025 s.f. 1,025 X 1.07% Common Factor = 1,097 $16.00 = Rental rate with utilities X 1,097 = $17,568 per year for room 52 Weeks/year X 7 days per week = 364 work days per year $17,568 divided by 364 days = $48.26 rental rate per day Sedona, GeoServices, Inc. will make payment directly to Specht Realty for said rental on a monthly basis. 91 EX-10.10(1) 6 ADDENDUM TO LEASE AGREEMENT ADDENDUM TO LEASE AGREEMENT December 9, 1996 Whereas: Sedona - GeoServices. Inc. ("Tenant") entered into a Lease Agreement with Lewis Road Associates, a Pennsylvania Partnership, ("Landlord"), dated July 1st, 1996. Whereas: The existing Lease Agreement comprises 2.793 square feet in the office building situated at 649 N. Lewis Road, Limerick, PA. which is labeled suite #220 Whereas: The Tenant is desirous of leasing additional office space in the building on the southwest corner of the second floor comprising 3,734 square feet labeled suite #210. Whereas: Since the Tenant will be occupying space currently leased by the Metropolitan Life Insurance Company, Tenant will be leasing said space at a rate more favorable than current market rates or a combined base rate and common area expenses of $29,922.50 per year or $2,493.54 per month for the first twelve (12) months of the lease term commencing on January 15th, 1997 and ending on January 14, 1998. Whereas: The second full year lease term will be at $15.00 per square foot, which includes both Base Rate and Common Area Expenses, and when multiplied by the 3,734 square feet of space will yield an annual rental rate of $56,010 or a monthly rate of $4,667.50. Therefore: Intending to be legally bound, Tenant and Landlord agree to the above terms and conditions. All rights contained in the Lease Agreement will apply to this Addendum and its related space. The Brokerage Commission for the first year of the lease of $1,795.35 will be the responsibility of the Landlord. The Landlord is including a $1.00 per square foot fitout allowance to the Tenant of $3,734.00. Addendum to Lease December 9, 1996 Page Two - - ------------------------------------- ------------------------------------- Witness Landlord Gregory A. Dinnocenti - - ------------------------------------- ------------------------------------- Witness Tenant Andrew E. Trolio Sedona GeoServices, Inc. ADDENDUM II TO LEASE AGREEMENT January 7, 1997 January 7, 1997 Mr. Peter E. Delle Donne Sr. V.P. Sedona GeoServices, Inc. 649 N. Lewis Rd. Suite #220 Limerick, Pa. 19468 Dear Peter: As per our telephone conversation on Tuesday, December 31, 1996, I have provided a breakdown of renovation costs for you for the old Metropolitan Life Insurance space as follows: Items to be paid for directly by Tenant: Electrical - No items specified Carpeting - $2,892.00 (Rev.'d 1/7/97) 1.) Replace carpet in end office. 2.) Replace worn carpets in all hallways. 3.) Replace carpet in bay area. New Paint -(work 90% completed) $2,190.00 1.) Repaint walls as per walkthrough. 2.) Repaint walls to cover dark blue wallpaper in corner executive office/ conference room. General Construction - $1,500.00 New Cabinetry - $ 230.00 1.) Install cabinets with doors over counter area. Addendum II to Lease January 7, 1997 Page Two As per this cost breakdown, you are responsible to pay for any costs incurred over and above the allowance given to you by the Landlord ($3,734.00). The total of these items comes to $6,812.00. The difference that you will be directly responsible to pay for is $3,078.00. - - ------------------------------------- ------------------------------------- Witness Landlord Gregory A. Dinnocenti - - ------------------------------------- ------------------------------------- Witness Tenant Sedona GeoServices, Inc. EX-10.11 7 EMPLOYMENT AGREEMENT EMPLOYMENT AGREEMENT This Agreement made as of this 1st day of November, 1996, by and between Scangraphics, Inc., a Corporation of the Commonwealth of Pennsylvania (the "Company"), and Laurence L. Osterwise (the "Employee"). WITNESSETH: 1. Employment. The Company hereby agrees to employ Employee and Employee hereby accepts employment by the Company for the period and the terms and conditions hereinafter set forth. 2. Capacity and Duties. a) Employee shall be employed by the Company in the capacity of Chief Operating Officer of Scangraphics, Inc. and President of Sedona GeoServices, Inc. (a Subsidiary) and Employee shall have such authority and shall perform such key executive duties and responsibilities as may from time-to-time reasonably be specified by the Chief Executive Officer of the Company with respect to the Company and its affiliates. It is the present expectation of the parties that Employee will be re-elected during the entire term of this Agreement to serve as Chief Operating Officer of Scangraphics, Inc. and President of Sedona GeoServices, Inc., and Employee agrees to serve in such capacities without any compensation in addition to that herein provided. Employee acknowledges that neither the Company nor its Board of Directors is legally obligated to elect or re-elect Employee as Chief Operating Officer of Scangraphics, Inc. and President of Sedona GeoServices, Inc. 1 b) During the term of this Agreement, Employee shall devote all of his time, in exercising his best efforts to the performance of his duties hereunder. c) Notwithstanding the foregoing, Employee shall be entitled to have investments in other enterprises provided, however, that he shall not have any investments or financial interest in any business enterprise which conducts business activities competitive with any business activities conducted by the Company now or at any time during the term of the Employee's employment hereunder (other than an investment of no more than 5% of any class of equity securities of a company the securities of which are traded on a national securities exchange). However, in the event the Company enters into a new field in which the Employee has previously invested, the Employee agrees to disclose his investment, if said investment exceeds 5% of equity of the company in which the Employee has invested. If the Employee is so requested by the Board of Directors of the Company, the Employee shall divest himself of the said investment within one year after said request. 3. Compensation. Employee's compensation shall be as reflected in Exhibit 1. 4. Expenses. Employee is authorized to incur reasonable expenses for promoting the business of the Company and in carrying out his duties hereunder, including without limitation, reasonable expenses for automobile, travel and similar items. The Company shall reimburse Employee for all such ordinary and necessary expenses upon the presentation by Employee from time-to-time of an itemized account of such expenditures. Employee shall present an itemized account of expenditures not less frequently than monthly. 2 5. Term of Agreement; Separation. a) The term of this Employment Agreement, shall be Three (3) years and Two (2) months commencing on the date hereof, and thereafter shall automatically continue from year-to-year at an agreed upon salary (not less than $250,000) unless and until either party shall give notice to the other at least twelve (12) months prior to the end of the original, or the then current renewal term. b) The Company may terminate this Employment Agreement for cause, defined as follows: 1) Deliberate disclosure of Company secrets for consideration; or 2) Conviction of Employee of a felony involving moral turpitude, or of any other law which may reasonably be deemed to cause a detrimental effect upon the Company as a result of mutual association. If the Company separates the Employee for cause, the Company will have no further liability or obligation except to pay the Employee earned and unpaid compensation. c) The Company may separate the Employee; a) without cause, or b) should the Employee die or become disabled such that the Employee has been unable to perform any duties hereunder for ninety (90) days during any year of this Employment Agreement or for any period of sixty (60) consecutive days. In the event of such separation. the severance package described in Exhibit 1, Section 5 applies. 3 d) In the event, at any time during the initial term of this Employment Agreement, or any extension thereof, Employee shall be involuntarily removed as Chief Operating Officer of Scangraphics, Inc. and/or President of Sedona GeoServices, Inc., then Employee may terminate this Employment Agreement and receive severance in accordance with Exhibit 1, Section 5. e) In the event of change of control of the Company, Employee may elect to terminate his employment in which event he shall receive the severance package described in Exhibit 1, Section 5. For these purposes, change of control includes the following: Sale of a majority of the outstanding shares or assets of the Company, Change in composition of more than 50% of the Board of Directors as presently constituted, or should Andrew E. Trolio cease as Chairman of the Board and Chief Executive Officer (unless Employee becomes CEO). 6) Restrictions on Competition. Employee covenants and agrees that: (a) during the initial term and any renewal terms of his employment hereunder and, (b) if, but only if, this Employment Agreement is terminated by the Employee (as hereinafter defined) during the initial term, or any renewal term hereof, for a period on one (1) year after termination of his employment hereunder, he shall not, directly or indirectly, engage in any business activities within the limits of the Continental United States, the same as, or in competition with, business activities carried on by the Company during the period of the Employee's employment by the Company, or in the definitive planning stages at the time of termination of Employee's employment. 4 The term "engage in" shall include, without being limited to, activities as proprietor, partner, stockholder, principal, agent, employee or consultant. However, nothing contained in this Paragraph shall prevent Employee from having investments of the types permitted in Subparagraph 2(c) hereof. These restrictions shall not apply if separation is by the Company under Section 5c and 5d or if separation is by Employee under Section 5e of this Employment Agreement. 7. Trade Secrets. During the term of employment under this Employment Agreement, the Employee will have access to, and become familiar with, various trade secrets, consisting of formulas, patterns, devices, secret inventions, processes, compilation of information, records and specifications, which are owned by the Company and which are regularly used in the operation of the business of the Company. The Employee shall not disclose any of the aforesaid trade secrets, directly or indirectly, nor use them in any way, either during the term of this Agreement or at any time thereafter, except as required in the course of his employment by the Company. All files, records, documents, drawings, specifications, equipment, and similar items relating to the business of the Company, whether prepared by the Employee or otherwise coming into his possession, shall remain the exclusive property of the Company and be returned to the Company by request of the Company, provided the same information is not available to the general public. 5 8. Miscellaneous Provisions. a) Any notices pursuant to this Agreement shall be validly given or served if in writing and delivered personally or sent by registered or certified mail, postage prepaid, to the following addresses: If to Company: SCAN-GRAPHICS, Inc. 700 Abbott Drive Broomall, PA 19008 Attn: President If to Employee: Laurence L. Osterwise 360 Spring Mill Road Villanova, PA 19085 or to such other addresses as either party may hereafter designate to the other in writing. b) Notices delivered personally shall be deemed communicated as of the actual receipt; notices mailed shall be deemed communicated as of five (5) days after mailing. c) If any provision of this Agreement shall be or become illegal or unenforceable in whole or in part for any reason whatsoever, the remaining provisions shall nevertheless be deemed valid, binding and subsisting. d) The waiver by either party of a breach or violation of any provision of this Employment Agreement shall not operate or be construed as a waiver of any subsequent breach or violation thereof. e) This writing represents the entire Employment Agreement and understanding of the parties with respect to the subject matter hereof; it may not be altered or amended except by agreement in writing. 6 f) The Employment Agreement has been made in and its validity, performance and effect shall be determined in accordance with the laws of the Commonwealth of Pennsylvania. g) The headings of paragraphs in this Employment Agreement are for convenience only; they form no part of this Agreement and shall not affect its interpretation. h) This Employment Agreement supersedes any earlier Employment Agreement and as such is the only Employment Agreement in force. IN WITNESS WHEREOF, and intending to be legally bound, the parties have executed this Employment Agreement under seal on the day and year first above written. SCAN-GRAPHICS, INC. ATTEST: /s/ Victoria R. [CLIENT SUPPLY] /s/ Andrew E. Trolio ------------------------------- ------------------------ Secretary Chief Executive Officer, President and Chairman of the Board EMPLOYEE: /s/ Laurence L. Osterwise -------------------------- Laurence L. Osterwise 7 Scangraphics. Inc. Exhibit 1 COMPENSATION AND BENEFITS COMPENSATION PLAN FOR Laurence L. Osterwise POSITION: Chief Operating Officer of Scangraphics, Inc. and President of Sedona GeoServices, Inc. a Subsidiary of Scangraphics, Inc. 1) BASE SALARY: By RESOLUTION of the Board of Directors, dated on October 31 1996 your base rate of annual remuneration was established as follows: $180,000 through 12/31/97 $225,000 through 12/31/98 $250,000 through 12/31/99 2) INCENTIVE COMPENSATION: In addition to the Base Salary, as set forth above, an incentive bonus plan is provided in the event certain goals or levels of achievement are reached, as reflected herein: BONUS (Based on income of Scangraphics, Inc. from operations exclusive of income resulting from acquisitions and/or mergers) o Balance of 1996 - None o Year 1997 - 5% (5K/100K) of net to 100K or a sum of 100K, in the event the market price of the Company's common stock attains and maintains a minimum bid price of $8.00 per share for 22 consecutive trading days, whichever is greater, which bonus is payable 2/15/98. o Year 1998 and beyond - Lehman's Formula, i.e. 5% 1st Mil 4% of 2nd Mil, 3% of 3rd Mil 2% thereafter to Max. of $250,000, or a sum of 250K in the event the price of the Company's common stock attains and maintains a minimum bid price of $15.00 per share and $20.00 per share for 22 consecutive trading days, whichever is greater, in the years 1998 and 1999, respectively. 3) EQUITY - OPTIONS 300,000 Options to Purchase Common Shares for a period of 5 years at an exercise price of $3.00 (based on the bid price on 10/26/96, the date of agreement to the basic terms of Employment), with vesting as follows: 100,000 shares - 12/31/96 100,000 shares - 12/31/97 100,000 shares - 12/31/98 1 4) LONG TERM INCENTIVE PLAN: The Employee and the Company agree to move forward with the basic understanding of the position, base salary and equity warrants as reflected in this Employment Agreement and in addition; Under A Gentlemen's Agreement develop a Long Term Incentive Plan following introductions to the Company's business units and development of goals for the company. Goal for LTI plan to be: a) A cash incentive equal to annual bonus (i.e., $250,000/yr.) for meeting reasonable yet aggressive targets and b) A stock incentive equal to 2% of outstanding equity for exceeding "HOME RUN" targets. 5) SEPARATION: It is agreed that the inability of the Employee to perform in the areas listed below is reason for separation under Section 5c of the Employment Agreement. o Operations o Financial community o Attracting new corporate strategic partners o Controlling costs o Maximizing profits In the event of separation, under Section 5c, 5d or 5e the Company will provide a separation package as follows: a) salary for one (1) year, b) benefits for 1 year or until employee obtains full-time employment with benefits, c) prorata bonus per Section 2 above, d) ability to exercise vested equity warrants for a period of one (1) year, and: e) any accrued Long Term Incentive under Section 4 above. 6) BENEFITS, As a "Full Time" Employee, Employee will be compensated bi-weekly, and the Employee will be included in the Company's general employee benefit programs. Employee: For the Company: /s/ Laurence L. Osterwise /s/ Andrew E. Trolio - - --------------------------- ---------------------- Laurence L. Osterwise Andrew E. Trolio President & Chief Executive Officer Date: Date: 10/7/96 ------- ------- 2 EX-10.12 8 EMPLOYMENT AGREEMENT Scangraphics. Inc. August 22, 1996 700 Abbott Drive o Broomall, PA 19008 (610) 328-1040 o Fax: (610) 543-6257 Internet: www.scangraphics.com Richard L. Rex 825 North Easton Road Doylestown, PA 18901 RE: President -- Scanner Division of Scangraphics, Inc. Dear Dick, By this letter I hereby offer you the position of President of the Scanner Division of Scangraphics, Inc., subject to ratification by the Scangraphics Board of Directors. The following summarizes the general terms and conditions under which you will be employed by Scangraphics: Richard L. Rex - President of Scanner Division: Scangraphics will enter into an Employment Agreement with you, effective September 23, 1996, which will include, but not be limited to, the following conditions: 1) Base Salary: You will be paid a base salary of $4.807.69 biweekly, which annualized comes to $125,000 per year. This salary shall be subject to periodic review and increases upon approval of the Board of Directors. 2) Cash Bonus: You will be paid a cash bonus equal to the greater of: a) five percent (5%) of the Scanner Division's Before Tax Income (BTI), net of Corporate charges and taxes, and with interest to be debited and credited as appropriate, for the 1997 and 1998 fiscal years, or b) one percent (1%) of any increases in Gross Revenues per year of the Scanner Division over the prior year. For purposes of calculating the 1997 bonus, the 1996 actual Scanner Division revenues will be used as the basis. This cash bonus formula shall be reevaluated by the Board of Directors for possible adjustment for fiscal years beyond 1998. This cash bonus is to be paid upon completion of audits and filing of the 10-K, which typically is completed by the end of March of each year. 3) Medical coverage consistent with existing coverage at Scangraphics. 4) Annuity paid by the Company that will provide for at least $100,000 of life insurance, with the beneficiary being Richard L. Rex or his assignee. 5) A monthly auto allowance in the amount of $400.00 will be provided for the term of the Employment Agreement. 6) Term: The initial term of the Employment Agreement shall be through December 31, 1999, and shall thereafter be subject to renewal on a year to year basis, with 180 day notification requirement by either party 7) Scangraphics will issue a "Sign-On" Stock Option representing 10,000 Shares of Scangraphics Common Stock to Mr. Rex upon his beginning employment with the Company under the Employment Agreement, such Stock Option to be exercisable for up to five years and have an exercise price of $2.00 per Share which was the "Closing Bid" on the date of this letter. 8) Scangraphics will issue 51,000 Warrants to Mr. Rex, each such Warrant providing the right to purchase one share of Scangraphics Common Stock for up to five (5) years from the date of issuance. The exercise price of the Warrants will be $2.00 per Share, which was the "Closing Bid" on the date of this letter. These Warrants will vest at the rate of one-third (17,000 Wts) per year, on Mr. Rex's first, second and third anniversary of employment with the Company, and shall have "piggyback" registration rights on the next registration statement to be filed with the SEC by the Company. 9) The Company understands that Mr. Rex currently holds a major equity position in a privately held company, Printfold Company, Inc., and as such will be expected to continue to exercise certain management responsibilities. Sincerely, /s/ Andrew E. Trolio ------------------------ Andrew E. Trolio President and CEO Understood and accepted: Richard L Rex By: /s/ Richard L. Rex ------------------------- 9-6-96 Date:________________________ EX-10.13 9 EMPLOYMENT AGREEMENT EMPLOYMENT AGREEMENT This Employment Agreement entered into this 1st day of July, 1996, is between Bruce D. Downing, hereinafter referred to as "Employee" and Technology Resource Center, Inc., hereinafter referred to as the "Company" and together hereinafter referred to as the "Parties" with certain conditions and considerations as set forth herein. 1. Employment: The Company is desirous of employing Employee in the position of President and Employee is desirous of providing such services to the Company and is generally provided for in the job descriptor of President. The Employee will report directly to the Chief Executive Officer of the Company or his elect. 2. Compensation: The Parties having discussed the mutual desires of each other, do agree that a fair and equitable minimum compensation of the Employee's services are as follows: o Annualized base salary: $75,000, payable bi-weekly. o Annual bonus opportunity: Maximum of $25,000 (specific terms and conditions to be determined by the Employee and the Company after the Employee's July 1, 1996 start date). o Entitlement to participate fully in all available employee benefit programs. 3. Term of Agreement; Termination: The term of this Agreement shall be one (1) year commencing on July 1, 1996 and thereafter shall continue from year-to-year unless and until either Party shall give notice to the other at least 90 days prior to the end of the original or then current renewal term of his/her or its intention to terminate at the end of said term. Definition of Breach - It is understood that either Party may terminate this Agreement for convenience or for breach. Termination for BREACH shall be defined as follows: 1) Deliberate disclosure of Company secrets for consideration; or 2) Conviction, of either Party, of a felony involving moral turpitude, or breaking of any other law which may reasonably be deemed to cause a detrimental effect upon the other party as a result of the mutual association of the parties. 1 a) Notwithstanding the provisions of above, the Company (or the Employee) shall have the right to terminate this Agreement, without further liability or obligation hereunder in the event that Employee (or the Company) has breached this Agreement in any particular. b) The Company may additionally terminate the employment of the Employee for convenience (as opposed to termination for breach of this Agreement as herein defined), in the event that the Employee fails to perform in a manner which is reasonably consistent with the above mentioned duties; or dies; or becomes disabled such that he/she has been unable to perform any of his duties hereunder for sixty (60) days during any year of this Agreement or for any period of thirty (30) consecutive days; and Employee may terminate this Agreement in the event the Company goes into Bankruptcy or Receivership. 4. Separation Caused by Acquisition, Merger: a) In the event the Company formally announces that it is to be acquired, merged into another entity, consolidated, and/or reorganized (Acquired) during the life of this Agreement or any renewal term thereof and said acquisition is approved by the necessary votes of the Board of Directors and (if required) shareholders, and the acquirer chooses to terminate the Employee, the Company is obligated to pay the Employee an immediate lump sum severance payment equal to one (1) year annual salary, plus an amount equal to any deferred compensation, plus bonus. Annualized bonus will be payable based on the terms and conditions outlined in point 2 above. 5. Restrictions on Competition: Employee covenants and agrees that: (a) during the initial term and any renewal terms of his/her employment hereunder and, (b) if but only if this Agreement is terminated by Employee (as hereinafter defined) during the initial terms, or any renewal term hereof, for a period of one (1) year after termination of his/her employment hereunder, he/she shall not engage in any business activities within the Continental United States, the same as, or in competition with business activities carried on by the Company during the period of Employee's employment by the Company, or in the definitive planning stages at the time of termination of Employee's employment. The term "engage in" shall include, without being limited to, activities as proprietor, partner, stockholder, principal, agent, employee or consultant. For the purposes of this Paragraph, a termination of this Agreement by Employee shall be deemed to have occurred only if Employee shall cease to be employed by Company pursuant to; notice of election by Employee to terminate this Agreement during the initial term or any renewal term hereof, or if Company shall terminate this Agreement by reason of a breach of this Agreement by Employee. 2 6. Trade Secrets: During the term of employment under this Agreement the Employee will have access to and become familiar with various trade secrets, consisting of formulas, patterns, devices, secret inventions, processes, compilations of information, records, and specifications, which are owned by the Company and which are used in the operation of the business of the Company. The Employee shall not disclose any of the aforesaid trade secrets, directly or indirectly, nor use them in any way, either during the term of this Agreement or at any time thereafter, except as required in the course of his employment by the Company. All files, records, documents, drawings, specifications, equipment, and similar items relating to the business of the Company, whether prepared by the Employee or otherwise coming into his/her possession, shall remain the exclusive property of the Company. The Employee agrees to: 1. Promptly and fully disclose to the Company any and all inventions, discoveries and improvements made by him/her pertaining to or useful in the business of the Company, during his/her period of employment by the Company, said inventions, discoveries or improvements shall become and remain the property of the Company whether or not patent applications are filed thereon; 2. Upon request and at the expense of Company, make application through the attorneys for the Company, for Letters Patent of the United States and any and all countries foreign thereto, on said inventions, discoveries or improvements, and to assign and transfer all said applications, inventions, discoveries, and improvements to the Company, or its nominee, forthwith and without further consideration, and; 3. Upon request of the Company, execute all papers and to do all other things that may be reasonably required in order to protect the rights of the Company, and to vest in it, or its successors or assigns the entire right, title and interest in and to any and all inventions, discoveries and improvements and the applications for Letters Patent herein provided for. 7. Miscellaneous Provisions: a) Any notices pursuant to this Agreement shall be validly given or served if in writing and delivered personally or sent by registered or certified mail, postage prepaid, to the following addresses: If to Company: If to Employee: Technology Resource Center, Inc. Bruce D. Downing 700 Abbott Drive 200 Sycamore Mills Road Broomall, PA 19008 Media, PA 19063 Attn: Chief Executive Officer or to such other addresses as either party may hereafter designate to the other in writing. 3 b) Notices delivered personally shall be deemed communicated as of the actual receipt; notices mailed shall be deemed communicated as of five (5) days after mailing. c) If any provision of this Agreement shall be or become illegal or unenforceable in whole or in part for any reason whatsoever, the remaining provisions shall nevertheless be deemed valid, binding and subsisting. d) The waiver by either Party of a breach or violation of any provision of this Agreement shall not operate or be construed as a waiver of any subsequent breach or violation thereof. e) This writing represents the entire Agreement and understanding of the Parties with respect to the subject matter hereof; it may not be altered or amended except by agreement in writing signed by both Parties. f) The Agreement has been made in and its validity, performance and effect shall be determined in accordance with the laws of the Commonwealth of Pennsylvania. g) The headings of paragraphs in this Agreement are for convenience only; they form no part of this Agreement and shall not affect its interpretation. h) This Agreement supersedes any earlier Employment Agreement and as such is the only Agreement in force. IN WITNESS WHEREOF, and intending to be legally bound, the parties have executed this Agreement under seal on the day and year first above written. TECHNOLOGY RESOURCE CENTER, INC. ATTEST: ????? /s/ Andrew E. Trolio - - ------------------------------ ------------------------------------ ????? Chief Executive Officer and ????? Chairman of the Board /s/ Bruce D. Downing ------------------------------------ EX-10.14 10 EMPLOYMENT AGREEMENT EMPLOYMENT AGREEMENT This Employment Agreement entered into this 15th day of March, 1996, is between William C. Hubbard, hereinafter referred to as "Employee" and Scangraphics, Inc., hereinafter referred to as the "Company" and together hereinafter referred to as the "Parties" with certain conditions and considerations as set forth herein. 1. Employment: The Company is desirous of employing Employee in the position of Executive Vice President and Officer for the Company and Employee is desirous of providing such services to the Company as is generally provided for in the job descriptor of an Executive Vice President and Officer. The Employee will report directly to the President and Chief Executive Officer of the Company. 2. Compensation: The Parties having discussed the mutual desires of each other, do agree that a fair and equitable minimum compensation of the Employee's services are as follows: o Annualized base salary: $70,000, payable bi-weekly. o Commission on gross corporate sales: .5% (1/2%), payable quarterly (by the 30th day following the quarter end). o Annualized Warrants: 50,000, vesting at the rate of 4,167 per month for twelve (12) months. Warrant exercise price will be determined by the closing bid price of the Company's common shares as quoted on the NASDAQ Exchange on the day of execution of this agreement. Warrants will be exercisable over a five (5) year period from the date of issuance. Compete Terms and Conditions are stated on the attached warrant certificate. EXHIBIT 1. o Entitlement to participate fully in all available employee benefit programs. o Any additional bonuses and compensation that the Board of Directors, may, in its discretion, determine. 3. Term of Agreement; Termination: The term of this Agreement shall be one (1) year commencing on April 1, 1996 and thereafter shall continue from year-to-year unless and until either Party shall give notice to the other at least 90 days prior to the end of the original or then current renewal term of his/her or its intention to terminate at the end of said term. Definition of Breach - It is understood that either Party may terminate this Agreement for convenience or for breach. Termination for BREACH shall be defined as follows: 1 1) Deliberate disclosure of Company secrets for consideration; or 2) Conviction, of either Party, of a felony involving moral turpitude, or breaking of any other law which may reasonably be deemed to cause a detrimental effect upon the other party as a result of the mutual association of the parties. a) Notwithstanding the provisions of above, the Company (or the Employee) shall have the right to terminate this Agreement, without further liability or obligation hereunder in the event that Employee (or the Company) has breached this Agreement in any particular. b) The Company may additionally terminate the employment of the Employee for convenience (as opposed to termination for breach of this Agreement as herein defined), in the event that the Employee dies. Employee may terminate this agreement in the event the Company goes into Bankruptcy or Receivership. c) In the event of termination for convenience, the Employee, his/her heirs, executors or assigns shall immediately be deemed to have vested in them the Warrants to purchase the shares, as defined in the Common Stock Purchased Warrants Certificate attached hereto as EXHIBIT 1, of the Company's Common Stock. In such event, the Employee may exercise his/her right to purchase any Warrant shares at any time within the term as defined in EXHIBIT 1, regardless of the passage of time which would otherwise be required before the Employee could purchase those shares or any remaining part thereof. d) In the event that Employee voluntarily terminates his/her employment with the Company and so notifies the Company and the reason for the termination is for reasons attributed to personal hardship (such as illness, family crisis), which is supported by a written medical experts document and which could not be resolved by a personal leave of absence, the Employee will be permitted to vest in the Warrants (not yet vested) under the same terms and conditions as though the Employee had remained employed by the Company. 4. Separation Caused by Acquisition, Merger: a) In the event the Company formally announces that it is to be acquired, merged into another entity, consolidated, and/or reorganized (Acquired) during the life of this Agreement or any renewal term thereof, and said acquisition is approved by the necessary votes of the Board of Directors and (if required) shareholders, and the acquirer chooses to terminate the Employee, the Company is obligated to pay the Employee an immediate lump sum severance payment equal to one (1) year annual salary, plus an amount equal to any deferred compensation, plus commissions, plus annualized warrants, plus any additional bonuses and compensation, approved by the Board of Directors, if any. Annualized commissions will be payable based on the prorata or excess of the attached 3-year projections, EXHIBIT 2. In the event of such acquisition as outlined above and the acquirer chooses to terminate the Employee, or fails to renew the Agreement for at least one (1) year, the Employee shall immediately, as of the date of final approval, be deemed to have vested in him the Warrants to purchase the shares, as defined in EXHIBIT 1, of the Company's Common Stock. In such event, the Employee may exercise his/her right to purchase any Warrant shares at any time within the term as defined in EXHIBIT 1 ("exercise date") regardless of any conditions to the contrary contained in EXHIBIT 1. 2 b) Agreement to Purchase Warrants and Options. In the event of change of control of the Company and termination of employment, the Company shall, if the Employee so desires, purchase all outstanding warrants and options previously granted to the Employee at a cash purchase price equal to the amount of the aggregate "fair market value" of the shares, less the aggregate option price of such shares. Fair market value means the average value of the consideration paid per share to the Company Shareholders in connection with the transactions resulting in the change of control of the Company, or the current market value for such shares as of the date of Employee notification, whichever amount is greater. c) In the event of such an acquisition and the Employee is retained by the new owner of the Company, the Employee shall immediately (as of the date of final approval of the acquisition) be deemed to have vested in him/her the warrants to purchase the shares, as defined in EXHIBIT 1, of the Company's Common Stock. Unless otherwise agreed to by the Employee and the owner of the Company, the Company shall if the Employee so desires, purchase all outstanding warrants and options previously granted to the Employee at a cash purchase price equal to the amount of the aggregate "fair market value" of the shares. Less the aggregate option price of such shares. Fair market value means the average value of the consideration paid per share to the Company Shareholders in connection with the transactions resulting in the change of control of the Company, or the current market value for such shares as of the date of employee notification, whichever amount is greater. 5. Restrictions on Competition: Employee covenants and agrees that: (a) during the initial term and any renewal terms of his/her employment hereunder and, (b) if but only if this Agreement is terminated by Employee (as hereinafter defined) during the initial term, or any renewal term hereof, for a period of one (1) year after termination of his/her employment hereunder, he/she shall not engage in any business activities within the Continental United States, the same as, or in competition with business activities carried on by the Company during the period of Employee's employment by the Company, or in the definitive planning stages at the time of termination of Employee's employment. The term "engage in" shall include, without being limited to, activities as proprietor, partner, stockholder, principal, agent, employee or consultant. For the purposes of this Paragraph, a termination of this Agreement by Employee shall be deemed to have occurred only if Employee shall cease to be employed by Company pursuant to; notice of election by Employee to terminate this Agreement during the initial term or any renewal term hereof, or if Company shall terminate this Agreement by reason of a breach of this Agreement by Employee. 3 6. Trade Secrets: During the term of employment under this Agreement the Employee will have access to and become familiar with various trade secrets, consisting of formulas, patterns, devices, secret inventions, processes, compilations of information, records, and specifications, which are owned by the Company and which are used in the operation of the business of the Company. The Employee shall not disclose any of the aforesaid trade secrets, directly or indirectly, nor use them in any way, either during the term of this Agreement or at any time thereafter, except as required in the course of his employment by the Company. All files, records, documents, drawings, specifications, equipment, and similar items relating to the business of the Company, whether prepared by the Employee or otherwise coming into his/her possession, shall remain the exclusive property of the Company The Employee agrees to: 1. Promptly and fully disclose to Employer any and all inventions, discoveries and improvements made by him/her pertaining to or useful in the business of Employer, during his/her period of employment by the Employer, said inventions, discoveries or improvements shall become and remain the property of the Employer whether or not patent applications are filed thereon; 2. Upon request and at the expense of Employer, make application through the attorneys for the Employer, for Letters Patent of the United States and any and all countries foreign thereto, on said inventions, discoveries or improvements, and to assign and transfer all said applications, inventions, discoveries, and improvements to the Employer, or its nominee, forthwith and without further consideration; and; 3. Upon request of the Employer, execute all papers and to do all other things that may be reasonably required in order to protect the rights of the Employer, and to vest in it, or its successors or assigns the entire right, title and interest in and to any and all inventions, discoveries and improvements and the applications for Letters Patent herein provided for. 7. Miscellaneous Provisions: a) Any notices pursuant to this Agreement shall be validly given or served if in writing and delivered personally or sent by registered or certified mail, postage prepaid, to the following addresses If to Company: If to Employee: SCANGRAPHICS, Inc William C. Hubbard 700 Abbott Drive 1707 Hilliard Court Broomall, PA 19008 Maple Glen, PA 19002 Attn: President or to such other addresses as either party may hereafter designate to the other in writing. 4 b) Notices delivered personally shall be deemed communicated as of the actual receipt; notices mailed shall be deemed communicated as of five (5) days after mailing. c) If any provision of this Agreement shall be or become illegal or unenforceable in whole or in part for any reason whatsoever, the remaining provisions shall nevertheless be deemed valid, binding and subsisting. d) The waiver by either Party of a breach or violation of any provision of this Agreement shall not operate or be construed as a waiver of any subsequent breach or violation thereof. e) This writing represents the entire Agreement and understanding of the Parties with respect to the subject matter hereof; it may not be altered or amended except by agreement in writing signed by both parties. f) The Agreement has been made in and its validity, performance and effect shall be determined in accordance with the laws of the Commonwealth of Pennsylvania. g) The headings of paragraphs in this Agreement are for convenience only; they form no part of this Agreement and shall not affect its interpretation. h) This Agreement supersedes any earlier Employment Agreement and as such is the only Agreement in force. IN WITNESS WHEREOF, and intending to be legally bound, the parties have executed this Agreement under seal on the day and year first above written. SCANGRAPHICS, INC. ATTEST: /s/ Victoria R. Franchetti /s/ Andrew E. Trolio - - --------------------------------- ---------------------------------- Victoria R. Franchetti Andrew E. Trolio Assistant Secretary Chief Executive Officer, President and Chairman of the Board /s/ William C. Hubbard ---------------------------------- 5 EXHIBIT 2 Scangraphics ------------ Projected Revenue Breakdown --------------------------- Division 1996 1997 1998 - - -------- ---- ---- ---- Scanners/Related Software 8.0M 9.0M 11.0M Sedona GeoServices 2.0M 11.0M 20.0M TRC 1.3M 3.0M 5.0M ------ ------ ------ $11.3M $23.0M $36.0M Example: Projected Commission on realized revenue .5% $56,500 $115 000 (Prorata or any excess thereof) EX-10.15 11 LICENSE AGREEMENT CONFIDENTIAL June 24, 1996 License Agreement between The Ohio State University Research Foundation and Sedona GeoServices, Inc. This agreement (hereinafter Agreement) effective June 24, 1996 is between the Ohio State University Research Foundation (hereinafter "OSURF") whose principal place of business is 1960 Kenny Road, Columbus, OH 43210-1063 and Sedona GeoServices, Inc. (hereinafter "SEDONA") a division of Scangraphics, Inc., a Pennsylvania Corporation whose principal place of business is 700 Abbott Drive, Broomall, Pennsylvania 19008. WHEREAS, The Ohio State University Center for Mapping (hereinafter "OSUCFM") has developed various procedures, software processes, and know-how, defined below as "DMCP TECHNOLOGY", used to convert analog maps to digital vector form, and WHEREAS, OSUCFM is using DMCP TECHNOLOGY to convert 7.5 minute, 1:24,000 quadrangle maps to digital vector form for the United States Geological Survey (hereinafter "USGS"), and WHEREAS, SEDONA is engaged in the business of providing Geographic Information System hardware, software, and services, and WHEREAS, OSURF holds the intellectual property rights to developments made by OSUCFM, including DMCP TECHNOLOGY, and WHEREAS, OSURF desires to license DMCP TECHNOLOGY so that the DMCP TECHNOLOGY will be further developed and commercialized for the good of the public and the nation, and WHEREAS, SEDONA has indicated a desire to acquire the license to DMCP TECHNOLOGY for commercialization, NOW, THEREFORE, the parties hereto, in consideration of the promises, terms and conditions set forth herein, mutually agree as follows: ARTICLE I - DEFINITIONS The following terms shall have the meanings set forth below: 1.1 "DMCP TECHNOLOGY" means the Digital Map Conversion Process Technology developed by OSUCFM to convert USGS 7.5 minute, 1:24,000 scale quadrangle maps 1 CONFIDENTIAL to digital vector form consistent with USGS DLG3 standards, as it exists on the effective date of this Agreement. as further identified in Appendix A attached hereto. 1.2 "LICENSED INTELLECTUAL PROPERTY" means the following items that cover or are used for or in the manufacture, use or sale of LICENSED PRODUCTS and/or LICENSED SERVICES: (i) patents U.S. and foreign, if any, covering DMCP TECHNOLOGY developed by OSUCFM; (ii) know-how including data, designs, specifications, procedures, drawings and technical information documenting DMCP TECHNOLOGY developed by OSUCFM; (iii) copyrights, software executable code (including source code), and documentation developed by OSUCFM as part of or used for or in connection with DMCP TECHNOLOGY developed by OSUCFM; not including existing technology already owned or licensed by SEDONA, or future technology developed by SEDONA, whether derived from or used for or in connection with DMCP TECHNOLOGY developed by OSUCFM. 1.3 "LICENSED PRODUCTS" means systems, apparatus, equipment, products, or vehicles including DMCP TECHNOLOGY and/or LICENSED INTELLECTUAL PROPERTY developed by OSUCFM; computer software executable code and documentation incorporated or derived from DMCP TECHNOLOGY developed by OSUCFM, not including existing technology already owned or licensed by SEDONA, or future technology developed by SEDONA, whether derived from or used for or in connection with DMCP TECHNOLOGY developed by OSUCFM. 1.4 "LICENSED SERVICES" means services employing DMCP TECHNOLOGY and/or LICENSED INTELLECTUAL PROPERTY developed by OSUCFM for the design and/or production of LICENSED PRODUCTS. ARTICLE II - LICENSE GRANT, ACCEPTANCE AND PERFORMANCE 2.1 Grant of License. Subject to the rights of others as set forth in Appendix B, OSURF hereby grants to SEDONA World wide exclusive rights to DMCP TECHNOLOGY and LICENSED INTELLECTUAL PROPERTY to make, have made, to reproduce, prepare derivative works based on, display, perform, use, sell and/or lease LICENSED PRODUCTS and/or LICENSED SERVICES. SEDONA shall have the right to sublicense others to do any and all of the above. (i) FEMA. SEDONA grants to OSURF the right to execute one (1) non-exclusive sublicense to DMCP TECHNOLOGY to the U.S. Federal Emergency Management Agency (FEMA), which shall be limited to internal use. This sublicense shall be executed at the sole discretion of OSURF. OSURF and FEMA are prohibited from transferring the 2 CONFIDENTIAL technology to any other party (ie. a private sector partner) that participates in the FEMA project. (ii) OSURF. SEDONA grants to OSURF an exclusive sublicense to use and commercialize, directly or through sublicenses, DMCP TECHNOLOGY limited to Medical Imaging, Semiconductor Design, and DNA Mapping applications. SEDONA (and SEDONA sublicensees) agree not to compete with OSURF or OSURF sublicensees in these three applications. (iii) EDUCATIONAL USE. SEDONA grants to OSURF the right to use the existing DMCP TECHNOLOGY for educational purposes; including revisions and enhancements developed by OSUCFM, after one (1) year of the revision or enhancement development completion date. (iv) TECHNICAL ASSISTANCE. SEDONA grants OSUCFM the right to use DMCP TECHNOLOGY for SEDONA technical assistance activities. 2.2 Representations and Warranties. Subject to the rights of the Federal Government as provided for under 37 CFR 401.14, OSURF hereby represents and warrants to SEDONA: (i) that OSURF has all of the right, title and interest in and to LICENSED INTELLECTUAL PROPERTY, and that it has the right to grant the license provided for herein; (ii) that as of the effective date of this Agreement OSURF has no notice, knowledge, information or belief that any LICENSED PRODUCTS or LICENSED SERVICES infringe any rights of others; and (iii) that OSURF will give notice to any future sub-licensee of DMCP TECHNOLOGY approved by SEDONA, that this Agreement is exclusive to SEDONA and that such non-exclusive sub-licensee will not have any rights to use DMCP TECHNOLOGY to develop and promote the commercial application of LICENSED PRODUCTS and/or LICENSED SERVICES, either directly or through sublicensees. HOWEVER, OSURF EXCLUDES ALL OTHER WARRANTIES, INCLUDING WARRANTIES OF MERCHANTABILITY, FITNESS FOR PARTICULAR PURPOSE AND FREEDOM FROM INFRINGEMENT OF THE RIGHTS OF OTHERS, AS TO DMCP TECHNOLOGY OR LICENSED PRODUCT OR SERVICE. 2.3 Diligence. SEDONA accepts the above license, and shall exert reasonable diligence to develop and promote the commercial application of LICENSED PRODUCTS and LICENSED SERVICES, either directly or through sublicensees. ARTICLE III - DELIVERABLES AND TECHNICAL ASSISTANCE 3.1 Deliverables. Within thirty (30) days of the effective date of this Agreement, OSURF shall deliver or cause OSUCFM to deliver to SEDONA one copy of all LICENSED INTELLECTUAL PROPERTY, including one copy of all drawings, 3 CONFIDENTIAL procedures, specifications and technical information, designs, plans, software, and any software documentation. 3.2 Training. OSURF shall cause OSUCFM to provide knowledgeable personnel to instruct SEDONA personnel in all relevant details of LICENSED INTELLECTUAL PROPERTY. Training shall be in Columbus, Ohio. OSUCFM will provide ten (10 business days of training at no cost to SEDONA. Additional training shall be available to SEDONA and OSUCFM and SEDONA shall arrange at times and places mutually agreed to for such instruction. SEDONA shall reimburse OSUCFM for the time and expenses of such OSUCFM personnel as mutually agreed. 3.3 Revisions and/or Enhancements. During the term of this Agreement, OSURF through OSUCFM will continue to undertake research in digital cartography that may result in revisions and/or enhancements to DMCP TECHNOLOGY. Such revisions and/or enhancements, to the extent they occur, will be immediately communicated to SEDONA and made available to SEDONA at no cost. Any revisions and/or enhancements of DMCP TECHNOLOGY will be exclusive to SEDONA and will not be made available to any other non-exclusive sub-licensees, without the express written consent of SEDONA. SEDONA grants OSURF the right to provide revisions and enhancements to FEMA (for internal use) and to OSURF sublicensees in Medical Imaging, Semiconductor Design, and DNA Mapping applications under section 2.1 (i) and (ii). 3.4 Technical Assistance. OSURF shall cause OSUCFM to provide knowledgeable personnel to conduct ongoing technical assistance at OSUCFM of at least two thousand (2000) manhours per year, for each year that annual royalties are paid by SEDONA. Technical assistance will be accomplished on a task order basis, according to a mutually defined schedule. and directed by a technical assistance team determined mutually by OSUCFM and SEDONA.--OSUCFM will document in quarterly and annual reports. all technical goals. plans and accomplishments. Any new technology, not previously owned by OSUCFM but developed by OSUCFM under SEDONA task orders will be owned by SEDONA. ARTICLE IV - ROYALTIES 4.1 Initial Royalty. SEDONA shall pay OSURF or cause OSURF to be paid one hundred twenty thousand U.S. dollars ($120,000) on July 1, 1996. SEDONA shall pay OSURF or cause OSURF to be paid one hundred thousand U.S. dollars ($100,000) on January 2, 1997. 4.2 Ongoing Royalty. SEDONA shall pay OSURF or cause OSURF to be paid one hundred ten thousand U.S. dollars ($110,000) on July 1, 1997 and one hundred ten thousand U.S. dollars ($110,000) on January 2, 1998 and one hundred ten thousand U.S. dollars ($110,000) bi-annually thereafter through January 2, 2002 for total Ongoing Royalty payments through July 1, 2002 of one million one hundred thousand U.S. dollars 4 CONFIDENTIAL ($1,100,000). The total of the Initial Royalty payment plus the Ongoing Royalty payments shall be one million three hundred twenty thousand U.S. dollars ($1,320,000). ARTICLE V - ENFORCEMENT 5.1 Notice of infringement. SEDONA will notify OSURF if it has reason to believe that others are infringing OSURF's intellectual property rights in DMCP TECHNOLOGY or LICENSED INTELLECTUAL PROPERTY RIGHTS, but OSURF assumes no obligation to abate such infringement. 5.2 Right to Pursue infringers. OSURF hereby grants to SEDONA the right to sue infringers of DMCP TECHNOLOGY and/or LICENSED INTELLECTUAL PROPERTY. SEDONA shall bear all costs of such suits and OSURF shall, at the request of SEDONA, join in such suits and cooperate in suits. SEDONA shall bear the costs incurred by OSURF for joining and cooperating in such suits. Nothing in this Agreement obligates SEDONA or OSURF to bring a suit for infringement or misappropriation. ARTICLE VI - FORCE MAJEURE 6.1. Force Majeure. Neither party shall incur any liability, consequential or otherwise, for any delay in performance or failure to perform its obligations under this Agreement, due to acts of God or public enemies, acts of other parties, requests or regulations of civil or military authority, labor disputes, accidents at the factory, lockouts, fire, riots, war or other outbreaks or hostilities, embargoes, inability to obtain shipping or raw material, delays of carriers or suppliers, machinery breakdowns, epidemics, floods. unusually severe weather, shortage of power or fuel, or any other causes whatsoever beyond the reasonable control of the party in question. ARTICLE VII - DURATION AND TERMINATION 7.1 Duration. This Agreement is effective as of the date given above through December 31, 2006. This section shall survive the normal termination of this Agreement. 7.2 Termination. Notwithstanding any other provisions of this Agreement, SEDONA, at its option, may terminate this Agreement upon six (6) months prior written notice to OSURF. Upon termination of this Agreement by SEDONA, SEDONA relinquishes all rights to make, have made, to reproduce, prepare derivative works based on, display, perform, use, sell and/or lease LICENSED PRODUCTS and/or LICENSED SERVICES, either directly or through sublicensees. OSURF may similarly terminate this Agreement should SEDONA fail to comply with or to perform when due any of its payments or other material obligations under this Agreement (including Sections 2.3, 4.1, 4.2, 5.1, 9.5, 9.6 and 9.7), and should such failure not be cured within sixty (60) days of written notice of such breach having been given by OSURF. Any termination pursuant to this Article 7.2 shall be in addition to, and not in place of, a party's other rights or remedies which were 5 CONFIDENTIAL in existence prior to such termination. In the event of termination by OSURF, this agreement shall inure to Sedona to allow a non-exclusive right to use the DMCP TECHNOLOGY (except in the Medical Imaging, Semiconductor Design, and DNA Mapping applications) if payments made to OSURF under this agreement total at least $320,000, otherwise all SEDONA's rights in DMCP TECHNOLOGY revert to OSURF. ARTICLE VIII - EXPORT CONTROLS 8.1 Export Controls. It is understood that OSURF is subject to United States laws and regulations controlling the export of technical data, computer software, laboratory prototypes and other commodities (including the Arms Export Control Act, as amended and the Export Administration Act of 1979), and that its obligations hereunder are contingent on compliance with applicable United States export laws and regulations. The transfer of certain technical data and commodities may require a license from the cognizant agency of the United States Government and/or written assurances by SEDONA that SEDONA shall not export data or commodities to certain foreign countries without prior approval of such agency. OSURF neither represents that a license shall not be required nor that if required. it shall be issued. ARTICLE IX - MISCELLANEOUS 9.1 Non-Waiver. The waiver by either party of a breach of any provision of this Agreement shall not be deemed to effect or imply a waiver of any other breach of such provision or a waiver of the provision itself. 9.2 Governing Law. This Agreement shall be governed by and construed in accordance with the substantive and procedural laws of the State of Ohio. 9.3 Assignment. This Agreement shall inure to the benefit of and be binding upon each of the parties and their successors and assigns. This Agreement is not assignable without the expressed written consent of the other party and any attempt to assign without such written consent is void. 9.4 Notices. Any notice. request. report or payment which may or must be given under this Agreement shall be in writing and sent to the other party at its address indicated below or to such other address as the addressee shall have theretofore furnished in writing to the addresser. IF TO OSURF: Office of Technology Transfer The Ohio State University Research Foundation 1960 Kenny Road Columbus, OH 43210-1063 ATTN: Director 6 CONFIDENTIAL with a copy to: Center for Mapping The Ohio State University 1216 Kinnear Road Columbus, OH 43212 ATTN: Director IF TO SEDONA SEDONA GeoServices, Inc. 700 Abbott Drive Broomall, PA 19008-4373 ATTN: Mr. William Hubbard Executive V.P. 9.5 Indemnification. SEDONA agrees to indemnify, hold harmless and defend OSURF, its officers, employees, and agents, against any and all claims, suits, losses, damage, costs, fees, and expenses resulting from or arising out of SEDONA's or sublicensee's use of DMCP TECHNOLOGY and/or LICENSED INTELLECTUAL PROPERTY in connection with this license. 9.6 Marking. SEDONA agrees that any material subject to an OSURF copyright and constituting all or part of a LICENSED PRODUCT produced or distributed under this Agreement, shall bear a copyright notice in the name of The Ohio State University Research Foundation and that any LICENSED PRODUCT covered by an OSURF patent or patent application, if any, may be marked with the number or such patent or the legend "patent pending", respectively. 9.7 Use of Name. SEDONA will not otherwise use, or authorize others to use, the name of OSURF, OSUCFM, or The Ohio State University, or of officers or employees of any of them, in connection with any commercial promotion accruing to the benefit of SEDONA or such others under this Agreement except with the prior written consent of OSURF, but any such consent shall not be deemed to constitute or imply the consent of any individual to the use of his or her own name. 9.8 Severability. If a court or other lawful authority of competent jurisdiction declares any provision of this Agreement invalid, illegal or unenforceable, this Agreement will continue in full force and effect with respect to all other provisions and Sections and all rights and remedies accrued under such other provisions and Sections will survive any such declaration. 9.9 Entire Agreement. The terms and provisions contained in this Agreement constitute the entire Agreement between the parties with respect to the subject matter hereof 7 integrating all previous communications, representations, agreements or understanding, either oral or written between the parties hereto, insofar as they might be asserted to vary the terms and provisions hereof, and no agreement or understanding varying or extending this Agreement will be binding upon either party hereto unless such agreement or understanding is in writing and specifically refers to this Agreement, is signed by duly authorized or representatives of the respective parties, and the provisions of this Agreement not specifically amended thereby shall remain in full force and effect according to their terms. IN WITNESS WHEREOF, the parties have caused their duly authorized officers to execute this Agreement, on the dates below indicated. FOR SEDONA: FOR OSURF: By: /s/ [CLIENT SUPPLY] By: /s/ [CLIENT SUPPLY] ------------------------------ ------------------------------- Title: Executive Vice President Title: Director Tech Transfer --------------------------- ---------------------------- Date: 6/24/96 Date: 6/24/96 ---------------------------- ----------------------------- 8 June 24, 1996 CONFIDENTIAL License Agreement between The Ohio State University Research Foundation and Sedona GeoServices, Inc. Appendix A Subject: Description of DMCP TECHNOLOGY. GISOM CURRENT CONVERSION METHODOLOGY -------- ------- -------- Scanning Warping Plotting -------- ------- -------- ------- ----------- QC/QA Vectorizing ------- Attributing ----------- The following are the specific steps followed by GISOM staff in the conversion of 7.5-minute quadrangles into DLG-3 files for the State of Ohio. The graphic package used on the PC-486/MS-DOS platform as well in the UNIX environment is Intergraph/Bentley's MicroStation Version 5. Time is given in manhours, and in generally, a single individual is used per task in the GISOM project.
Description Time per Quad Program Computer Platform of the Process (hours) Name Operating System - - -------------- ------------- ------- ----------------- Scanning -------- Source material evaluation 0.1-0.3 none none Source material scanning 0.3 SRIF (Intergraph) Intergraph/UNIX Creation of empty .DGN file 0.1 GEOUTM Intergraph/UNIX or (USGS/CFM) PC-486/MS-DOS Raster image evaluation 0.1-0.3 BRAS or IRASB Intergraph/UNIX or (Intergraph) PC-486/MS-DOS Warping ------- Warping of.RLE files 1.0-1.3 CFM_WARP (CFM) Sun/UNIX Plotting -------- Plotting of raster and/or 0.25-0.50 CFM_PLOT (CFM) PC-486/MS-DOS vector files Automatic Vectorizing --------------------- Contour raster-to-vector 75-2.0(*) I/VEC (Intergraph) Intergraph/UNIX conversion (no attributes)
9
CONFIDENTIAL Interactive Vectorizing ----------------------- Heads-up digitizing and 40.0-200.0(**) RETSAM_PC (CFM) PC486/MS-DOS attributing & elevation tagging Internal Consistency, Elevations, and Attribute QC/QA ----------------------------------------------------- Conversion of .DGN into 0.1-0.3 DGN_DO PC486/MS-DOS DLG optional (USGS/CFM) Generation of topology, 1.0-2.5 PROSYS (USGS) Sun/UNIX check internal consistency, contour elevations, and attributes. Conversion to .DGN 0.1-0.3 DD_DGN PC-486/MS-DOS (USGS/CFM) Description Time per Quad Program Computer Platform of the Process (hours) Name Operating System - - -------------- ------------- ------- ----------------- Visual QC/QA ------------ Checking of line work for 4.0-40.0(***) RETSAM_PC(CFM) PC-486/MS-DOS positional accuracy, and completeness Time Range: 47.8-247.9
* The program CFM_CONTOURS will replace I/VEC. This program automatically generates the attribute for each contour (including the elevation value). ** The use of CFM_CONTOURS will decrease the time in this step by about 40%. *** The program CFM_VQC will replace the visual QC for hypsography. This will decrease the time in this step by about 50%.
Software Being Tested --------------------- Description Completion Program Computer Platform of the Process date Name Operating System - - -------------- ---------- ------- ----------------- Highly automatic contour July, 1995 CFM_CONTOURS Pentium/UNIX Linnux Vectorizing and attributing (CFM) Highly automated Positional August, 1996 CFM_VQC (CFM) Sun/UNIX QC & completeness for hypsography Software Being Developed ------------------------ Interactive line following December, 996 CFM_HYD (CFM) PC-486/MS-DOS of hydrographic features
10 CONFIDENTIAL June 24, 1996 License Agreement between The Ohio State University Research Foundation and Sedona GeoServices, Inc. Appendix B Subject: Rights of Others to the DMCP TECHNOLOGY. 1. The U.S. Geological Survey of the Department of Interior and the Federal Government have certain rights under 37CFR401.14 to use the DMCP TECHNOLOGY for Government purposes. 2. Five State Government Agencies in addition to the U.S. Geological Survey are cooperatively funding a raster-to-vector map conversion project. The Ohio agencies are: * The Ohio Environmental Protection Agency * The Ohio Department of Transportation * The Ohio Department of Natural Resources * The Ohio Department of Administrative Services Development * The Ohio Department of Development The project, referred to as "Gathering Information Scanning Ohio Maps (GISOM)", is to convert the USGS 7.5" quadrangle maps covering the State of Ohio to the USGS DLG3 standard. The GISOM project, initiated in 1993 and expected to be completed in 1997, is the primary source of DMCP TECHNOLOGY. 11 EX-23.2 12 CONSENT OF BDO SEIDMAN IBDO BDO Seidman, LLP Accountants and Consultants 1601 Market Street Philadelphia, Pennsylvania 19103-2311 Telephone: (215) 241-1500 FAX: (215) 997-8314 CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS Scan-Graphics, Inc Broomall, Pennsylvania We hereby consent to the incorporation by reference in the Prospectus constituting a part of this Registration Statement of Form S-3 of our report dated March 8, 1996, except for Note 18, as to which the date is March 30, 1996, relating to the consolidated financial statements and schedule appearing in Scan-Graphics, Inc.'s Annual Report on Form 10-K for the year ended December 31, 1995. We also consent to the reference to us under the caption "Experts" in the Prospectus. /s/ BDO SEIDMAN, LLP ----------------------------- BDO SEIDMAN, LLP Philadelphia, Pennsylvania May 8, 1996 EX-27 13 FDS --
5 1,000 U.S. Dollars Year Dec-31-1996 Jan-01-1996 Dec-31-1996 1.000 1,081 0 1,033 189 1,174 3,190 3,376 (2,512) 4,092 1,386 0 0 2,250 15 291 4,092 5,060 5,060 4,013 4,672 214 0 432 (4,271) 0 (4,271) 0 0 0 (4,271) (.39) (.39)
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