SECOND LEASE AMENDMENT
THIS SECOND LEASE AMENDMENT ( the "Amendment" ) is executed
this 6th day of December, 1996 by and between GOVERNOR'S HILL
PARTNERS, an Ohio general partnership ("Landlord"), and MEDPLUS,
INC., an Ohio corporation ("Tenant").
W I T N E S S E T H:
WHEREAS, Landlord and Tenant entered into a certain Lease
dated April 24, 1995 as amended May 31, 1996 (collectively, the
"Lease" ), whereby Tenant leased from Landlord certain premises
consisting of approximately 20,000 rentable square feet of space
(the "Leased Premises" ) located in a building commonly known as
0000 Xxxxxxxx'x Xxxx Xxxxx, Xxxxxx 000 xxx 000, Xxxxxxxxxx, Xxxx
00000; and
WHEREAS, Landlord and Tenant desire to terminate Tenant's
option to terminate this Lease for the reason that Landlord has
accommodated Tenant's expansion needs; and
WHEREAS, Landlord and Tenant desire to amend certain
provisions of the Lease to reflect such termination, changes and
addition to the Lease;
NOW, THEREFORE, in consideration of the foregoing premises,
the mutual covenants herein contained and each act performed
hereunder by the parties, Landlord and Tenant hereby agree that
the Lease is amended as follows:
1. Amendment of Section 18.19. Right of First Refusal.
Section 18.19 of the Lease is hereby amended to add the following:
"Provided that Tenant is not in default hereunder and subject
to any rights of other tenants to the Refusal Space, Tenant shall
have the right of first refusal ("Refusal Option") to lease any
additional space in the Building ("Refusal Space")as such space
becomes available for leasing during the Lease Term. The term for
the Refusal Space shall be coterminous with the Lease Term,
provided however, that the minimum term for the Refusal Space
shall be five (5) years. The Refusal Space shall be offered to
Tenant at the rental rate and upon such other terms and
conditions, excluding free rent and other concessions, as are then
being offered by Landlord to a specific third party prospective
tenant for such space, but in no event shall such rental rate be
less than the then current rental rate under this Lease. In the
event that the Refusal Space is not leased to the initial third
party prospective tenant, then this Refusal Option shall remain in
effect in the event of an offer to any other specific third party
prospective tenant and the Refusal Space shall again be offered to
Tenant in accordance herewith.
Upon notification in writing by Landlord that the Refusal
Space is available, Tenant shall have five (5) business days in
which to notify Landlord in writing of its election to lease the
Refusal Space at such rental rates described above, in which event
this Lease shall be amended to incorporate such Refusal Space.
In the event Tenant declines or fails to elect to lease the
Refusal Space, then this Refusal Option shall automatically
terminate and shall thereafter be null and void as to such space.
It is understood and agreed that this Refusal Option shall
not be construed to prevent any tenant in the building from
extending or renewing its lease."
2. Amendment of Section 18.20. Termination Option. Section 18.20
of the Lease is hereby deleted in its entirety and is of no
further force or effect.
3. Additional Provisions. The following new sections shall be
added to the Lease:
"18.23. Parking. Landlord hereby agrees to provide Tenant
with two (2) additional reserved parking spaces designated by
Landlord.
18.24 Storage Space. Landlord hereby leases to Tenant and
Tenant hereby Leases from Landlord 2,200 rentable square feet of
storage space in the area designated on the attached Exhibit A-1
("Storage Space" ) at a gross rental rate equal to Seventeen
Thousand Six Hundred Dollars and Four Cents ($17,600.04) per year
payable in monthly installments of One Thousand Four Hundred
Sixty-six Dollars and Sixty-seven Cents ($1,466.67) for the term
of the Lease. Landlord shall deliver the Storage Space to Tenant
and Tenant accepts the Storage Space "As Is" except that Landlord
shall add one (1) HVAC box and remove piping and slabs on which
equipment was placed in the Storage Space. Tenant shall pay the
rent for such Storage Space in the same manner as provided in
Section 3.01. The Storage Space rent includes all operating
expenses associated with such Storage Space."
4. Tenant's Representatives and Warranties. The undersigned
represents and warrants to Landlord that (i) Tenant is duly
organized, validly existing and in good standing in accordance
with the laws of the state under which it was organized; (ii) all
action necessary to authorize the execution of this Amendment has
been taken by Tenant; and (iii) the individual executing and
delivering this Amendment on behalf of Tenant has been authorized
to do so, and such execution and delivery shall bind Tenant.
Tenant, at Landlord's request, shall provide Landlord with
evidence of such authority.
5. Examination of Amendment. Submission of this instrument for
examination or signature to Tenant does not constitute a
reservation or option, and it is not effective until execution by
and delivery to both Landlord and Tenant.
6. Definitions. Except as otherwise provided herein, the
capitalized terms used in this Amendment shall have the
definitions set forth in the Lease.
7. Incorporation. This Amendment shall be incorporated into and
made a part of the Lease, and all provisions of the Lease not
expressly modified or amended hereby shall remain in full force
and effect.
IN WITNESS WHEREOF, the parties have caused this Amendment to be
executed on the day and year first written above.
LANDLORD:
GOVERNOR'S HILL PARTNERS, an
WITNESSES: Ohio general partnership
/s/ Xxxxx Xxxxxxxxx
Xxxxx Xxxxxxxxx By:/s/ Xxxxxxx X. Xxxxxxx
(Printed) Xxxxxxx X. Xxxxxxx
/s/ Xxxxxx X. Xxxxxxx Manager
Xxxxxx X. Xxxxxxx
(Printed)
TENANT:
WITNESSES: MEDPLUS, INC., an Ohio corporation
/s/ Xxxxxx X. Xxxxxxxxx
Xxxxxx X. Xxxxxxxxx
(Printed) By: /s/ Xxxxxx X. Xxxxxx
/s/ Xxxxxxx X. Xxxxxx
Xxxxxxx X. Xxxxxx Printed: Xxxxxx X. Xxxxxx
(Printed)
Title: Vice President, Finance
STATE OF OHIO )
) SS:
COUNTY OF XXXXXXXX )
Before me, a Notary Public in and for said County and State,
personally appeared Xxxxxxx X. Xxxxxxx, by me known and by be
known to be the Manager of Governor's Hill Partners, and Ohio
general partnership, who acknowledged the execution of the
foregoing "Second Lease Amendment" on behalf of said partnership.
WITNESS my hand and Notarial Seal this 31st day of December,
1996.
/s/ Xxxxxx X. Xxxxxxx
Notary Public
Xxxxxx X. Xxxxxxx
(Printed Signature)
My Commission Expires: 10-31-00
My County of Residence: __________________
STATE OF OHIO )
) SS:
COUNTY OF XXXXXXXX )
Before me, a Notary Public in and for said County and State,
personally appeared Xxxxxx X. Xxxxxx, by me known and by me known
to be the Vice President, Finance of MedPlus, Inc., an Ohio
corporation, who acknowledged the execution of the foregoing
"Second Lease Amendment" on behalf of said corporation.
WITNESS my hand and Notarial Seal this 6th day of December,
1996.
/s/ Xxx X. Xxxxx
Notary Public
Xxx X. Xxxxx
(Printed Signature)
My Commission Expires: 9-5-01
My County of Residence: Xxxxxx
January 31, 1997
Xxxxxx X. Xxxxxxxx
President
Dialogos, Inc.
0000 Xxxxxxx Xxxxxx
Xxxxxxxxxx, Xxxx 00000
RE: AMENDMENT TO LETTER OF AGREEMENT: MedPlus, Inc. Financing
Commitment to and Possible Acquisition of Common Stock of
Dialogos, Inc.
Dear Xx. Xxxxxxxx:
This letter shall serve as an amendment to that certain
Letter of Agreement between MedPlus, Inc., an Ohio corporation
("MedPlus") and Dialogos, Inc., a Delaware corporation (the
"Company"), dated July 12, 1996 (the "Letter of Agreement")
pursuant to which MedPlus agreed to provide or obtain specified
financing for the operations of the Company, and the Company
agreed to issue to MedPlus or grant MedPlus an option to purchase,
as the case may be, a certain percentage of the Company's common
stock (all of the Company's common stock hereinafter referred to
as the "Common Shares") in exchange for such financing. Now,
therefore, and in consideration of the mutual covenants and
agreements herein contained, the Company and MedPlus hereby agree
that the Letter of Agreement shall be amended and restated in its
entirety as follows:
1. MedPlus shall, on or before March 31, 1998, either (a)
agree to pay $1.65 million (the "Total Funding Amount") to the
Company as consideration for 75% of the Common Shares, (b) secure
a funding commitment for the Company's operations in an amount
equal to the Total Funding Amount from investors ("Investors"),
some of which may be designated by MedPlus as "Initial Investors"
for purposes hereof, and/or lenders ("Lenders") with financing
terms reasonably agreed to by the Company and MedPlus or (c) agree
to pay a portion of the Total Funding Amount to the Company as
consideration for less than 75% of the Common Shares, as more
specifically described in paragraph 4 hereof, and secure a funding
commitment for the remainder of the Total Funding Amount from
Investors and/or Lenders as described in paragraph 1(b) above
((a), (b) and (c) collectively are the "Obligation"). In the
event MedPlus satisfies the Obligation by securing a funding
commitment from Investors and/or Lenders for any portion of the
Total Funding Amount, the Company shall grant MedPlus the option,
which option shall be immediately exercisable and remain open
until December 31, 1999, to purchase that percentage of the Common
Shares which equals 75% less any percentage of the Common Shares
already purchased by MedPlus and/or the Initial Investors (the
"Option Percentage") (the "MedPlus Option").
2. Prior to exercising the MedPlus Option, MedPlus shall
have entered into an agreement to either (a) pay to any Investors,
except the Initial Investors, and/or Lenders an amount equal to
their investment, including appreciation thereof as indicated in
such agreement, or their loan, including any interest accrued with
respect thereto, made by them in or to the Company (such payment
hereinafter referred to as the "Buy-Out Amount") or (b) pay to the
Company an amount equal to the Buy-Out Amount. The exercise price
of the MedPlus Option shall be equal to the Buy-Out Amount.
Immediately upon actual payment of the Buy-Out Amount to either
the Investors and/or Lenders or the Company, MedPlus shall receive
that number of the Common Shares which equals the Option
Percentage thereof.
3. The Common Shares will be transferred to MedPlus and/or
the Initial Investors free, clear and unencumbered.
4. MedPlus shall fund the general operations of the Company
from the date of this Letter of Agreement until the Obligation has
been satisfied and funding has actually begun pursuant to either
paragraph 1(a), (b) or (c) above (the "Interim Funding"). The
Interim Funding shall be provided from time to time in amounts
reasonably requested by the Company, which amounts are consistent
with funding required to execute the financial plan provided to
MedPlus by the Company during June, 1996. If MedPlus or any of
the Initial Investors decides or decide to fund directly any
portion of the Total Funding Amount, then, at any time prior to
March 31, 1998 and at MedPlus' or such Initial Investor's option,
as the case may be, any amount so paid to the Company, including
the Interim Funding (with Interest thereon, as hereinafter
defined), shall be considered payment for a certain percentage of
the Common Shares (an "Interim Option"). Upon exercise of an
Interim Option, MedPlus or an Initial Investor shall immediately
be issued 1% of the Common Shares for every $22,000 paid to the
Company as a portion of the Total Funding Amount or as Interim
Funding. In the alternative, if MedPlus secures a funding
commitment for the Company's operations for any portion of the
Total Funding Amount from Investors and/or Lenders pursuant to
paragraph 1(b) above, then, immediately upon the Company's receipt
of such funding and at MedPlus' request, the Company shall
reimburse MedPlus in the amount of such funding for any and all
monies paid to or on behalf of the Company by MedPlus to effect
the Interim Funding, plus Interest. For purposes of this
paragraph 4, "Interest" shall mean interest equal to the prime
rate, as announced from time to time by the Provident Bank,
Cincinnati, Ohio, plus 1% per annum.
5. The Company shall require each employee and/or consultant
thereto to execute a confidentiality agreement, reasonably similar
to confidentiality agreements executed by employees and/or
consultants in the technology industry, with respect to
information obtained by him or her as a result of his or her
relationship with the Company.
6. It is a condition precedent to the obligations of MedPlus
hereunder that Xxxxxx X. Xxxxxxxx, President and majority
stockholder of the Company ("Xxxxxxxx"), shall have executed a
voting agreement, in the form attached hereto as Exhibit A,
whereby Xxxxxxxx agrees to vote all Common Shares owned by him in
favor of electing one person designated by MedPlus as member of
the Company's Board of Directors. In addition, the holders of any
and all shares issued by the Company before the earlier of (i) the
exercise of the MedPlus Option or any Interim Option, (ii) the
Rejection, as hereinafter defined, or (iii) the expiration of the
MedPlus Option shall be required by the Company to execute a
voting agreement in substantially the form attached hereto as
Exhibit A. The failure to enforce any portion of this Section 6
at any time by MedPlus shall not be construed as a waiver of its
rights hereunder.
7. In the event MedPlus exercises the MedPlus Option and
MedPlus and/or the Initial Investors acquire(s) greater than 50%
of the Common Shares, MedPlus and the Company agree that the
Company shall amend any existing employment agreements with
Xxxxxxxx and other key employees of the Company (the "Key
Employees") to provide that, for each year during the three-year
period ending December 31, 1999, the Key Employees may be granted
options to purchase Common Shares ("Incentive Options").
Incentive Options may only be granted by the Company pursuant to
the following terms and conditions:
(a) The determination of whether to grant Incentive
Options in either 1997, 1998 or 1999 shall be based on the
achievement of a certain "Contribution Margin" of the Company as
budgeted for that fiscal year. (For purposes hereof,
"Contribution Margin" shall mean "pre-tax income" as used by
MedPlus in its internal financial reporting system).
Specifically, prior to January 15th of 1997, 1998 and 1999,
MedPlus and the Company shall calculate the Contribution Margin to
be used as the basis for determining whether any Incentive Options
shall be granted to the Key Employees following the close of such
year. The Contribution Margin to be achieved so that Incentive
Options may be granted following the close of 1997 is described on
Exhibit B hereto.
(b) The exercise price per share of any options granted
as Incentive Options shall be determined by an independent
appraiser selected by the Company; in no event, however, shall
such exercise price be less than the price per share paid by
MedPlus in exercising the MedPlus Option.
(c) In no event shall the number of shares subject to
Incentive Options granted to all Key Employees for each of the
following years exceed in the aggregate (i) for 1997 and 1998, 3%
of all Common Shares outstanding at December 31, 1997 and 1998,
respectively and (ii) for 1999, 4% of all Common Shares
outstanding at December 31, 1999.
(d) If any Incentive Options are issued, then at the
time of issuance the Company shall issue to Xxxxxxxx and any Key
Employees who are then shareholders of the Company additional
shares such that the percentage ownership interest in the Company
held by Xxxxxxxx and/or each Key Employee after such issuance is
equal to the percentage ownership interest in the Company held by
him or her immediately prior to such issuance, plus the percentage
increase resulting from the issuance to Xxxxxxxx or a Key Employee
of an Incentive Option. This paragraph 7(d) is intended to
protect the ownership of Xxxxxxxx and the Key Employees from
dilution as the result of the issuance of Incentive Options.
(e) If the Company conducts an initial public offering
of the Common Shares at any time prior to December 31, 1999 (an
"IPO"), then, as of the date of such IPO, the Key Employees shall
no longer be entitled to receive Incentive Options as described in
this paragraph 7; provided that, MedPlus and the Company agree
that in the event of an IPO, they will use their respective best
efforts to establish a plan pursuant to which the Key Employees
may be granted options to purchase Common Shares. The Company
acknowledges, however, that in the event of an IPO, the percentage
ownership of all shareholders of the Company, including Xxxxxxxx
and the Key Employees, shall be diluted and any options granted to
employees of the Company following an IPO also will be subject to
dilution.
(f) The Company agrees that prior to December 31, 1999,
except for the Incentive Options described herein, it will not
issue any form of stock incentives to its employees.
8. The Company agrees that it shall be operated in the
normal and ordinary course until January 1, 2000, that all
necessary corporate and other actions will be taken pursuant to
law, and that all applicable laws and governmental regulations
will be complied with.
9. MedPlus contemplates the expenditure of substantial sums
of time and money in connection with legal, accounting, financial,
and due diligence work to be performed in conjunction with the
transaction(s) proposed herein. As consideration therefor, during
the period from the date of acceptance of this letter to MedPlus'
satisfaction of the Obligation or March 31, 1998, whichever is
earlier, the Company shall not, directly or indirectly, initiate
or hold discussions with any person or entity (other than MedPlus)
concerning a purchase, affiliation, or other transfer of any part
of the Company's business, directly or indirectly, whether by sale
of common shares, merger, consolidation, sale or lease of material
assets, affiliation, joint venture, or other material transaction.
After March 31, 1998 and until MedPlus affirmatively declines to
exercise the MedPlus Option (the "Rejection") or until December
31, 1999, whichever is earlier, the Company shall not accept
financial support for any reason from any third party without
first offering MedPlus the opportunity to provide such financial
support on terms reasonably similar to those offered by such third
party. MedPlus shall then have 30 days from the date of such offer
to elect to provide such financial support. If the offer is
affirmatively rejected by MedPlus or such 30 day period expires,
then the Company may accept financial support from such third
party on the same terms and conditions contained in the third
party's original financing offer.
10. The Company agrees to permit MedPlus' representatives,
agents, accountants and attorneys to have reasonable access during
regular business hours to the Company's books, records and
properties for the purpose of making a detailed examination of the
financial condition, assets, liabilities, legal compliance,
affairs, business and the conduct of the Company prior to MedPlus'
exercise of the MedPlus Option or the Rejection, whichever occurs
first. In addition, prior to MedPlus' exercise of the MedPlus
Option or the Rejection, whichever occurs first, Dialogos shall
have its financial statements audited annually by KPMG Peat
Marwick LLP.
It is understood and agreed that any public announcement of
this transaction will be through a mutually agreed upon joint
release.
Very truly yours,
MEDPLUS, INC.
/s/ Xxxxxx X. Xxxxxx
Xxxxxx X. Xxxxxx, Vice-President
of Finance and Chief Financial Officer
Accepted by:
DIALOGOS, INC.
/s/ Xxxxxx X. Xxxxxxxx
Xxxxxx X. Xxxxxxxx, President
