**EXHIBIT10.29**

 

# **LEASEAGREEMENT**

 

THISLease made and entered into this 1st day of April,2002, by and between DIRK INVESTMENTS, INC., a Delaware corporationwith its principal office located 2331 S. Pullman Street, Santa Ana,California, 92705 (hereinafter referred to as “Lessor”), and TROY Group, Inc.,a corporation duly organized and existing under the laws of the State ofDelaware, with its principal office at 1 Bryan Drive, Wheeling, West Virginia26003 (hereinafter referred to as “Lessee”).

 

WITNESSETH: That Lessor doeshereby let, lease and demise unto Lessee the premises located inthe City of Wheeling, County of Ohio, State of West Virginia, described asfollows, to-wit:

 

## DESCRIPTION OF PREMISES

 

All of the office area andwarehouse space containing approximately 78,000 square feet, including allimprovements therein, as shownon the plot plan attached hereto and made a part hereof, (The “DemisedPremises” shall include the residential property described in exhibit A-1attached hereto.) “ Exhibit A “, hereinafter referred to as the “DemisedPremises”. Said Demised Premises is a complex situated on 43.342 acres of landas shown on the plot planattached hereto and made a part hereof, “Exhibit B”, hereinafterreferred to as the “Building”, designated by street address as One Bryan Drive,Wheeling, WestVirginia 26003, together with the right in common with Lessorto use and to have ingress and egress on, over and across and to permitLessee’s employees, invitees and customers to use and to have ingress andegress on, over and across all the parking, driving, walking and other commonareas of the Building as shown on Exhibit B; provided, however, that Lesseeshall comply with the parking restrictions set forth in Paragraph 26 of thisLease and shall not block the driveway or otherwise interfere with the ingressand egress to and from the building;

 

in consideration of the followingmutual covenants, agreements, terms and conditions hereby agreed to by andbetween Lessor and Lessee, to-wit:

 

1. TERM: The term of thisLease and Lessee’s obligation to pay rent hereunder shall commence upon April 1, 2002**and shall thereafter continue for aperiod of six (6) consecutive years ending on the last day of the sixth (6th)full lease year as said term lease year is hereinafter defined.

 

The first leaseyear shall begin on the date of the commencement of the term hereof, if thedate of commencement of the term hereof shall occur on the first (1st) day of acalendar month. If not, then the first lease year shall commence upon the first(1st) day of the calendar month next following the date of commencement of theterm hereof. Each succeeding lease year shall commence upon the anniversarydate of the first lease year without notice by either Lessor or Lessee anycustom, usage, practice, law, statute or ordinance to the contrarynotwithstanding.

 

a.               Renewal of Term:This agreement shall be renewed automatically for additional periods of six (6)year terms at the end of its current term unless either Party provides to theother a written notice of its intention not to renew the agreement at leastsixty (60) days prior to the end of the then current term.

 

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2. RENT: Lessee agrees topay the sum of Twenty Two Thousand Four Hundred Seventy Two Dollars($22,472.00) per month as rent, which payments shall be made without demand bychecks made payable to Lessor and mailed by United States Mail addressed toLessor or to the address or to whom Lessor may designate in writing on thefirst day of every month to be received by the fifth (5th) business day ofevery month for which rent is due hereunder. Lesser reserves the right toincrease the rent on an annual basis at a rate of up to six (6%) percent.

 

3. SECURITY DEPOSIT:Lessor reserves the right to request and require Lessee to provide a SecurityDeposit in an amount equal to that of one (1) months base rent. Lessee shalldeposit with Lessor upon execution hereof the Security Deposit as security forLessee’s faithful performance of its obligations under this Lease. If Lesseefails to pay Rent, or otherwise Defaults under this Lease, Lessor may use,apply or retain all or any portion of said Security Deposit for the payment ofany amount due Lessor or to reimburse or compensate Lessor for any liability,expense, loss or damage which Lessor may suffer or incur by reason thereof. IfLessor uses or applies all or any portion of said Security Deposit, Lesseeshall within ten (10) days after written request therefore deposit monies withLessor sufficient to restore said Security Deposit to the full amount requiredby this Lease. If the Base Rent increases during the term of this Lease, Lesseeshall, upon written request from Lessor, deposit additional moneys with Lessorso that the total amount of the Security Deposit shall at all times bear thesame proportion to the increased Base Rent as the initial Security Deposit boreto the initial Base Rent. Should the Agreed Use be amended to accommodate amaterial change In the business of Lessee or to accommodate a sub lessee orassignee, Lessor shall have the right to Increase the Security Deposit to theextent necessary, In Lessor’s reasonable judgment, to account for any increasedwear and tear that the Premises may suffer as a result thereof. If a change incontrol of Lessee occurs during this Lease and following such change thefinancial condition of Lessee is, in Lessor’s reasonable judgment,significantly reduced, Lessee shall deposit such additional monies with Lessoras shall be sufficient to cause the Security Deposit to be at a commercially reasonablelevel based on said change in financial condition. Lessor shall not be requiredto keep the Security Deposit separate from its general accounts. Withinfourteen (14) days after the expiration or termination of this Lease, unlessLessor elects to apply the Security Deposit to unpaid Rent or otherwise aspermitted above, within thirty-days (30) after the Premises have been vacatedby Lessee, Lessor shall return that portion of the Security Deposit not so usedor applied by Lessor. No part of the Security Deposit shall be considered to beheld in trust, to bear interest or to be prepayment for any monies to be paidby Lessee under this Lease.

 

4. USE: The DemisedPremises may be used and occupied by Lessee only for the manufacture of wiredand wireless print servers, magnetic ink character recognition ribbons andtoner and the manufacture and assembly of other office supplies and the storageand warehousing of same.

 

5. ASSIGNMENT AND SUBLET:This Lease shall not be assigned nor the premises sublet in wholeor in part by Lessee without the prior written consent of Lessor. Lessorhereby agrees not to withhold or delay unreasonably Lessor’s consent toassignment or subletting in the event Lessee requests said consent. Lessor’sconsent shall not be required for: (a) an assignment or subletting to theparent or subsidiary company of Lessee; (b) the merger with or consolidationinto any other corporation by Lessee or the reorganization or redistribution ofthe manner by which Lessee is held, owned or operated; or (c) any othertransfer of the Demised Premises, this Lease, or any part of either, occasionedby a consolidation, merger, reorganization or other sale or similar eventinvolving all or, substantially all of the assets or stock of Lessee, providedthat in each instance the successor to Lessee’s interest assumes in full, forthe benefit of Lessor, all of the obligations of Lessee under this Lease. Asused herein, the phrase “withhold or delay unreasonably Lessor’s consent” shallnot entitle Lessor to demand or receive in exchange therefore or as a conditionthereto an amount or sum of rent or other financial consideration not

 

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expressly required pursuant to theterms of this Lease. Anyassignment or subletting (including, without limitation, an, assignmentor subletting which does not require Lessor’s consent) shall not affect orlimit, in any way, the liability of Lessee under the terms of this Lease.  Lessee shall not mortgage, pledge orotherwise encumber the Demised Premises without the prior written consent ofLessor (which consent shall not be unreasonably withheld). Lessor reserves theright to assign its right to receive rents under the terms of this Lease ascollateral for loans from time to time.

 

6. SIGNS: Lessee, withLessor’s approval (which approval shall not be unreasonably withheld), shallhave the right to construct,erect, place, put, maintain and control on the Demised Premisesand in common areas at points of ingress and egress to the Building any sign orsigns which may be removed by Lessee at any time provided that: (a) said signor signs are constructed, erected and removed in a workmanlike manner andcomply with the rules, regulations, laws, statutes and ordinances of the cityand state in which the Demised Premises are located; and (b) the location,dimensions, design, appearance and construction of such sign or signs areapproved by Lessor in writing (which approval shall not be unreasonablywithheld). Prior to the termination of this Lease, Lessee shall remove suchsign or signs and shall repair any damage to the Demised Premises caused bysuch removal.

 

7. LESSEE’S EQUIPMENT:Lessee shall have the right to install and maintain in and on the DemisedPremises such equipment as is necessary to the conduct of its business, all ofwhich shall remain the property of Lessee and may be removed by Lessee at anytime. Prior to the termination of this Lease, Lessee shall remove Lessee’sequipment from the Demised Premises and shall repair any damage to the DemisedPremises, which shall have resulted from removing Lessee’s equipment.

 

Lessee’s equipment shall meanfixtures, machinery, equipment, furniture and furnishings (whether or notaffixed to the Demised Premises) installed andmaintained by Lessee for use in connection with the operation of its businessas distinguished from the operation of the Demised Premises as a real estateunit.

 

8. ALTERATIONS: Lesseeshall have the right to make any interior, non-structural alterations,additions, changes or improvements on the Demised Premises at Lessee’s cost,provided that said alterations, additions, changes, or improvements do not costin excess of One Thousand Dollars ($1,000.00) in each instance and do notimpair the value of the Demised Premises. All other alterations, additions,changes or improvements on or to the Demised Premises shall require the priorwritten consent of Lessor, which consent shall not be unreasonably withheld.Any alterations, additions, changes or improvements made by Lessee of the typepermitted in this paragraph(including, without limitation those requiring the prior writtenconsent of Lessor), excluding Lessee’s equipment, shall become a part of theDemised Premises and, at the expiration or earlier termination of this Lease,Lessee, upon written request by Lessor, may be required, with the exception ofnormal wear and tear, to restore the Demised Premises to the condition theywere in prior to the making of any said alterations, additions, changes orimprovements.

 

Lessee shall pay, when due, allclaims for labor or materials furnished to or for Lessee and shall keep theBuilding free and clear of any mechanics’ or materialmen’s liens arising fromany alterations, additions, changes or improvements performed by or for Lessee.

 

9. REPAIRS: Lessee agreesto maintain in good repair, at Lessee’s cost, the roof, outer walls (which willinclude the bulkheads under plate glass windows), downspouts, undergroundplumbing, exterior lighting, fire protection (dry system), electrical wiringand ceilings, support of floors, and structural portions of the Buildingand Demised Premises. Lessee agrees to make repairs to the interiorof the Demised Premises including, without limitation, repairs and seasonalservicing to the air conditioning and heating equipment serving the Demised Premises.Lessee shall not be required or obligated to make

 

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any repairs to the Demised Premiseswhen the repairs or replacements are made necessary by reason of fire, flood,windstorm, earthquake or other casualty covered by standard fire and extended coverageinsurance sold in West Virginia. Lessee agrees to surrender the DemisedPremises at the expiration or earlier termination of this Lease in as good a condition as at the commencementof the term of this Lease, except Lessee shall not be responsible for therepair or condition of those portions of the Building and Demised Premiseswhich Lessor agrees to maintain, nor damage by dry rot, termites, sinking offloors, ordinary wear and. tear, fire, flood, earthquake, windstorm or othercasualty.

 

10. WARRANTY: Lessorrepresents and warrants that Lessor has the authority to enter into this Leaseas Lessor. Lessee represents and warrants that Lessee has the authorityto enter into this Lease as Lessee.

 

11. FIRE CLAUSE: In theevent the Building or the Demised Premises shall be damaged by fire, flood,windstorm, earthquake or any other casualty to such an extent that, in thewritten opinion (certified as such) of a mutually acceptable licensedarchitect, they cannot be restored to as good a condition as they were prior tosuch damage within one hundred fifty (150) days after the date of suchcasualty, Lessor and Lessee shall each have the right to cancel and terminate this Lease bydelivering written notice of such termination to the other party within thirty(30) days after receipt of such architect’s opinion (with the rental obligationbeing reduced from thedate of such damage to the date of such termination in such proportionas will compensate Lessee for any space not usable by Lessee).  If Lessor or Lessee does not exercise suchright to cancel this Lease within such thirty (30) day period or if sucharchitect shall have certified that such repairs can be made within a period ofone hundred fifty (150) days, Lessor agrees to repair the Building and the DemisedPremises with due diligence and, in the meantime, the rent shall be reduced insuch proportion as will compensate Lessee for the space not in proper conditionduring such repair period. Notwithstanding any terms to the contrary in this Lease, Lessor andLessee may each terminate this Lease if the damage is not covered by theinsurance policies that Landlord must maintain, pursuant to Paragraph24 of this Lease.

 

It is furtherprovided that in the event the Demised Premises is substantially destroyed byfire, flood, windstorm, earthquake or any other casualty within one (1) yearprior to the expiration or earlier termination of the lease term, both Lessorand Lessee shall have the mutual right to terminate this Lease as of the dateof such damage with written notice to the other party.

 

12. EMINENT DOMAIN: Inthe event the entire Building is acquired by the exercise of the power ofeminent domain, Lessee shall be relieved, after possession is required to besurrendered, of all rent payments and other obligations provided for herein andany rent which has been paid in**advanceshall be prorated and a refund made by Lessor for any unexpired period forwhich Lessee does not have possession and for which rent has beenpaid in advance.

 

In the event only a portion ofthe Building or Demised Premises (including parking area which Lessee has theright to use hereunder) is acquired by the exercise of the power of eminentdomain but, in the reasonable opinion of Lessee, Lessee can no longersatisfactorily operate its business in the space and/or with the amount ofparking arearemaining, Lessee shall have the right to terminate and cancel thisLease effective at the time possession of such portion of the Building orDemised Premises must be surrendered. To exercise its right to cancel underthis paragraph, Lessee must notify Lessor by written notice, mailed to Lessorat the address designated for the forwarding of rent payments due hereunder,not later than fifteen (15) days prior to the time when possession must be surrendered.In theevent Lessee elects to remain, after the taking of a portion of the Building orDemised Premises through the power of eminent domain, Lessoragrees to make promptly all necessary alterations, changes and repairs neededfor Lessee’s continued occupancy (but only to the extent funds designatedtherefore are received by Lessor

 

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from the condemningauthority) and the rent due hereunder is to be reduced pro rata in proportionto the ratio of the number of square feet of space taken to the original numberof square feet.

 

The rights of Lessee, as setforth in this paragraph, shall in no way prejudice or interfere with any claimwhich Lessee may have against the authority exercising the power of eminentdomain for damages or otherwise and Lessee specifically reserves its right todamages against the authority exercising the power of eminentdomain.

 

13. VACATION: In the eventLessee vacates the Demised Premises before the expiration of the term of thisLease or any extension thereof, which Lessee shall have the right to do, Lesseeshall not thereby be relieved from the payment of rent or any other of itsduties or obligations under this Lease during the remaining term or anyextension thereof.

 

14. HOLDING OVER: In theevent Lessee shall hold over after the expiration or termination of the term ofthis Lease or any extension thereof with prior written consent from Lessor,said holding over shall not be deemed to be a renewal or extension of thisLease or any extension thereof or the exercise of any option to extend or renewthis Lease, but said holding over shall be deemed a tenancy from calendar monthto calendar month at a monthly rent equal to the rent for the last month underthis Lease.  A month to month tenancyarising by holding over under this paragraph may be terminatedby either Lessor or Lessee giving written notice thirty (30)days in advance to the other party hereto.

 

15. QUIET ENJOYMENT:Lessor covenants and agrees that Lessee, on payment of the rent and theperformance of all of the covenants and agreements of this Lease, shall and maypeaceably and quietly have, hold and enjoy the DemisedPremises.

 

16. RULES OF PUBLIC OFFICERS:Lessee agrees to comply with the rules, regulations, orders, laws, statutes andordinances of the duly constituted public authoritiesgoverning the use and occupancy of the Demised Premises, but Lessee shall notbe required to make any repairs, alterations, changes and/or improvements tothe Demised Premises or the appurtenances thereto because of any requirementsof the public authorities (unless such repairs, alterations, changes and/orimprovements are required as a result of or in connection with any businessconducted by Lessee on the Demised Premises or any alterations, changes orimprovements which Lessee elects to make to the Demised Premises).  In the event of such requirements by thepublic authorities, which, under this paragraph, are the responsibility ofLessor, Lessor agrees to make promptly, at its cost, such required repairs,alterations, changes and/or improvements.

 

17. LESSEE’S BREACH OFCOVENANT: In the event Lessee shall: (a) fail to make any payment of rentas herein provided when it becomes due, which failure continues uncorrected for aperiod of ten (10) days or more after written notice thereof from Lessorto Lessee; or (b) fails to perform or otherwise violates any of the covenants,agreements and conditions of this Lease, which violation continues uncorrectedfor a period of thirty (30) days or more after notice thereof from Lessor toLessee (unless such failure or violation, if it is curable, requires work to beperformed or acts to be done or remedies which by their nature cannot beperformed, done or remedied  within suchthirty (30) day period and Lessee shall continue to pursue such cure, it shallhave such additional period of time as may be reasonably necessary to cure same), then in either ofsuch events, Lessor shall have the right, in addition to all other rightsand remedies available to Lessor at law or in equity, to re-enter the DemisedPremises, repossess said Demised Premises, evict Lessee and/or others therein,remove the property of Lessee and others therein  and in the discretion of Lessor, relet the Demised Premises.  Repossession made by Lessor, as provided forin this paragraph, shall not relieve Lessee from the payment ofrent during the unexpired portion of the term of this Lease or the unexpiredportion of any extension thereof, but in the event Lessor

 

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relets the Demised Premises after suchrepossession and prior to the expiration of this Lease or any extensionthereof, Lessee’s liability for rent under this paragraph shall be creditedmonthly (except Lessee shall receive no surplus over and above its liabilityfor rent) with all rent received by Lessor from said reletting (after deductingfrom such rent all reasonable costs and expenses incurred by Lessor inconnection with such reletting) from the time of reletting to the expiration ofthis Lease or any extension thereof.

 

Unpaid installments of rent andother unpaid monetary obligations of Lessee under this Lease shall bearinterest from the date due at a rate equal to the lesser of twelve percent(12%) per annum or the maximum rate then allowable by law. In addition to thepayment of such interest, if any installment of rent or any other sum due fromLessee is not received by Lessor within ten (10) days after written noticethereof from Lessor to Lessee that such amount is due, then Lessee shall pay toLessor a late charge equal to five percent (5%) of such overdue amount.

 

18. LESSOR’S BREACH OFCOVENANT: In the event Lessor shall fail to perform the covenants and/oragreements of this Lease which are required to be performed by Lessor and/orthere is a breach of any express warranty made herein by Lessor, then Lesseemay require Lessor to remedy said default or defaults by the service of writtennotice on Lessor or Lessor’s agent at the address to which rent payments dueunder this Lease are forwarded and, if at the expiration of thirty (30) daysfrom the receipt of said notice from Lessee to Lessor (unless such failure orviolation, if it is curable, requires work to be performed or acts to be doneor remedies which by their nature cannot be performed, done or remedied withinsuch thirty (30) dayperiod and Lessor shall continue to pursue such cure, it shall have suchadditional period of time as may be reasonably necessary to cure same), then ineither of such events, Lessee, in addition to its rights under state and locallaws, shall have the right to remedy said breach of covenants, agreements,and/or warranties and the cost of such action shall be deducted by Lessee fromthe unpaid rents, which shall accrue under the unexpired term of this Lease orany extensionthereof.

 

19. INSPECTION BY LESSOR:Lessor and Lessor’s agents, servants and employees shall have the right toenter the Demised Premises at all reasonable times to inspect and examine theDemised Premises and to make alterations, changes or repairs to the DemisedPremises and/or to make repairs for the preservation or maintenance of theDemised Premises. During the last ninety (90) days of the term of this Lease orany extension thereof, Lessor shall have the right to post “For Rent” and/or“For Sale” signs on the Demised Premises and, during said period, Lessor andLessor’s agents, servants and employees shall have the right to show theDemised Premises to prospective tenants or purchasers at all reasonable times.

 

20. ZONING: In the event,during the term of this Lease or any extension thereof, the Demised Premisesmay not be used for the operation of the business which is conducted by Lesseeon the Demised Premises on the date of the execution of this Lease due tozoning changes, Lessee shall have the right to terminate this Lease by givingLessor at least ten (10) days written notice of its election so to do, thenotice to set forth the termination date selected by Lessee.

 

21. TAXES: Lessee shallpay all taxes assessed against or by reason of property which it owns and hasthe right to remove from the Demised Premises and all licenses and other feescharged against it by reason of its business conducted in the Demised Premises (including,without limitation, any service fees imposed by any local governingauthority).  In addition, Lessee shallpay all real estate taxes assessed against the subject property.

 

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22. UTILITIES: Lesseeagrees to pay for all gas, water, sewerage, electricity, telephone and otherutilities and services used and consumed by Lessee in the Demised Premises.Lessor, at its sole cost, shall be responsible for utility servicemodifications necessary and shall provide metered billing for Lessee. In theevent Lessee should install outside of the Demised Premises an approvedaddition, alteration, change, improvement or a sign that serves the DemisedPremises, as provided for in Paragraphs 8 and 6 respectively, Lessee shall beresponsible for all costs associated with any additional utility servicenecessary to service the addition, alteration, change, improvement or sign.

 

23. INSURANCE AND INDEMNITY:

 

(a) Lessee’sInsurance - Lessee shall, at its sole cost and expense, procure and keep infull force and effect during the term of this Lease: (i) comprehensive generalliability insurance with respect to the Demised Premises and the operations ofor on behalf of Lessee in, on or about the Demised Premises, which policiesshall be written on an “occurrence” basis and for not less than Two MillionDollars ($2,000,000) combined single limit per occurrence for bodily injury, death, and propertydamage liability, or the current limit of liability carried by Lessee,whichever is greater (subject to such increases in amounts as may be deemedreasonable and appropriate under the circumstances within the insuranceindustry); (ii) workers’ compensation insurance coverage as required by law,together with employers’ liability insurance coverage; and (iii) insuranceagainst fire,vandalism, malicious mischief and such other additional perils as may beincluded in a standard “all risk” form in general use in Wheeling,West Virginia, insuring Lessee’s furniture, fixtures, equipment, improvementsand personal property in an amount equal to not less than ninety percent (90%)of their actual replacement cost. In no event shall the limits of any policy beconsidered as limiting the liability of Lessee under this Lease.

 

(b) PolicyRequirements - All policies of insurance required to be carried by Lesseepursuant to this paragraph shall be written by responsible insurance companies authorized to do business in the Stateof West Virginia and shall be reasonably acceptable to Lessor. Lessee shallprovide Lessor with a certificate of insurance evidencing such coverageprovided for herein, together with satisfactory evidence of renewal at leastthirty-days (30) prior to the expiration of coverage. Each insurance policyrequired to be carried by Lessee pursuant to this Lease shall contain thefollowing provisions and/or clauses: (i) a provision that the policy and thecoverage provided shall be primary and that any coverage carried by Lessorshall be noncontributory with respect to any policies carried by Lessee; (ii) aprovision including Lessor and any other parties in interest designated byLessor as an additional insured, except as to workers, compensation insurance;(iii) a waiver by the insurer of any right to subrogation against Lessor, itsshareholders, directors, officers, employees, agents and representatives whicharises or might arise by reason of any payment under the policy or by reason ofany act or omission of Lessor, its shareholders, directors, officers,employees, agents or representatives; and (iv) a provision that the insurerwill not cancel or change the coverage provided by the policy without firstgiving Lessor thirty (30) days prior written notice.

 

(c) Indemnity- Lessee shall indemnify, defend, protect and hold harmless Lessor and Lessor’sshareholders, directors, officers, employees, agents and representatives(individually referred to as an “Indemnitee”) from and against any and allclaims, demands, liabilities, damages, losses, costs and expenses, collectivelyreferred to as “Claims” (including, without limitation, attorneys’ fees) ,arising from or relating to (i) any accident, injury or damage occurring on orabout the Demised Premises; (ii) any accident, injury or damage occurring on orabout any other portions of the Building when such accident, injury or damagehas been caused by any act or omission of Lessee or any of Lessee’s officers,employees, agents, representatives, contractors, licensees, invitees orsubtenants; (iii) the conduct of Lessee’s business or Lessee’s use or occupancyof the Demised Premises or the Building; (iv) any activity, work or thing done,

 

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permitted or suffered by Lesseein or about the Demised Premises or the Building; or (v) any default by Lesseeunder the terms of this Lease. The preceding indemnity shall not apply to anyClaims arising from Lessor’s sole negligent acts or Lessor’s failure to performany of its obligations under this Lease. In the event that any actionor proceeding is brought against an Indemnitee for a matter coveredby this indemnity, Lessee, at the request of such Indemnitee, shall defend suchaction or proceeding by counsel reasonably satisfactory to such Indemnitee. Theprovisions of this paragraph shall survive the expiration or earliertermination of this Lease.

 

24. GENERAL LIABILITY ANDFIRE AND EXTENDED COVERAGE: Lessor agrees to carry fire and extendedcoverage insurance on the Building, including the Demised Premises, in an amountnot less than ninety percent (90%) of the replacement value of said Buildingand Demised Premises in some good and solvent insurance company, and Lessorwill pay all premiums on said insurance policy or policies when due. Inaddition, Lessor shall maintain comprehensive general liability insurance withrespect to the portion of the building and parking occasioned by Lessor. Saidpolicy shall be written on a per occurrence basis and for not less than TwoMillion Dollars ($2,000,000.00) combined single limit per occurrence. Lessorshall furnish to Lessee a certificate of insurance evidencing the coverage asprovided for herein. Lessor’s insurance shall not cover Lessee’s furniture,fixtures, equipment, improvements and/or personal property.

 

25. ESTOPPEL CERTIFICATE:Both Lessor and Lessee each agree that at any time and from time-to-time, uponnot less than ten (10) days prior written request by the other party to thisLease Agreement, to execute, acknowledge and deliver to the requesting party anestoppel certificate. It is**intendedthat any statements made in such estoppel certificate may be relied upon by anylender of either Lessor or Lessee, or such lender’s successors or assigns, orby any transferee or assignee of Lessor or Lessee’s interest (or any partthereof) in the Building or the Demised Premises or by any other partyproviding any form of financing (including by sale of stock, debt, orotherwise) to either Lessor or Lessee.

 

26. COMMON AREA MAINTENANCE:Lessee agrees to maintain at all times during the term of this Lease or anyextension thereof, the common areas located adjacent to the Building, includingparking areas, driveways, sidewalks and landscaped areas, in good repair,serviceable, clean, neat and sanitary by the maintenance of a reasonably smoothall weather surface on all paved areas and the removal of snow, ice, dirt and trash from parking areas, driveways andsidewalks.

 

27. ATTORNMENT/NON-DISTURBANCE:RIGHT TO CURE LESSOR DEFAULTS:  ThisLease is and shall be subject and subordinate to the lien of any existing deedof trust or mortgage (collectively called the “Mortgage”) or any futureMortgage placed upon the Demised Premises provided that, in each such case themortgagee shall have executed and delivered to Lessee, in recordable form, anon-disturbance agreement which provides that, so long as Lessee is not indefault under this Lease beyond any applicable cure period, no default underthe Mortgage and no proceeding to foreclose the same, deed in lieu offoreclosure, or the exercise or attempted exercise of any right or remedy underthe Mortgage will disturb Lessee’s possession or other rights under the Lease(including any right of Lessee to renew or extend the term thereof) and theLease will not be affected or cut off thereby. Lessee shall execute from timeto time such subordination, attornment and other agreements as Lessor or anymortgagee may reasonably require to effectuate the terms of this  paragraph (which agreements may contain termsand conditions customarily required by institutional lenders), subject to thereasonable approval of Lessee.

 

28. [PURPOSEFULLY OMITTED]

 

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29. CANCELLATION BY LESSOR:In the event that Lessor requires the space contained in the Demised Premisesfor the purpose of expanding its business operation or the business operationof any affiliated company of Lessor or partnership in which Lessor is a partner, then Lessor shall have,at any time after the expiration of the primary term hereof, theoption to terminate the remaining primary term of the Lease or any renewalperiod as the case may be, by providing Lessee with one (1) year prior writtennotice of Lessor’s election to do so.

 

30. HAZARDOUS SUBSTANCES:Asused herein “Environmental Laws” means the Resource Conservation Recovery Act,the Comprehensive Environmental Responsibility Compensation and Liability Act,the Superfund Amendments and Reauthorization Act, the Toxic Substances ControlAct, the Hazardous Materials Transportation Act, the Clean Air Act, the CleanWater Act, and other similar federal, state and local laws, as amended,together with all regulations issued or promulgated thereunder, relating topollution, the protection of the environment or the health and safety ofworkers or the general public.  As usedherein “Hazardous Substance” means any hazardous substance, hazardous or toxicwaste, hazardous material, pollutant or contaminant, as those or similar termsare used in the Environmental Laws, including, without limitation, asbestos andasbestos-related products, chlorofluorocarbons, oils or petroleum derivedcompounds, polychlorinated biphenyls, pesticides and radon.Lessee shall not, without the prior’written consent of Lessor, use, store, manufacture, release, generate, disposeof or transport any Hazardous Substance on, under, about or near the DemisedPremises or the Building. Any Hazardous Substance used, stored, manufactured,released, generated, disposed of or transported on, under, about or near theDemised Premises or the Building by Lessee shall be done so inaccordance with all Environmental Laws as well as any other applicable laws,statutes, codes, ordinances, rules and regulations. In the event Lessee causesany contamination of the Demised Premises or the Building, or has caused anysuch contamination since Lessee first occupied the Demised Premises or theBuilding, even before the commencement of this Lease, Lessee shall, upon demandof Lessor and at Lessee’s sole cost and expense, promptly take all actionsreasonably required by Lessor to remedy any such contamination. Lessee shallindemnify, defend (with counsel reasonably acceptable to Lessor), protect andhold harmless Lessor (and Lessor’s directors, officers, shareholders, partners,affiliates, employees, attorneys, agents and representatives, the foregoing beingcollectively referred to as “Lessor’s Representatives”) from and against anyand all costs of remediation as well as any and all other claims, demands,liabilities, obligations, damages, causes of action, judgments, losses,penalties, fines, costs and expenses (including, without limitation, reasonableattorneys’ fees and expert witness fees) which Lessor or any of Lessor’sRepresentatives may incur or suffer by reason of or in connection with any use,storage, manufacture, release, generation, disposal or transport of anyHazardous Substance on, under, about or near the Demised Premises or theBuilding by Lessee or any of Lessee’s officers, employees, agents,representatives, contractors, licensees, invitees or subtenants. The provisionsof this paragraph shall survive the expiration or earlier termination of thisLease.

 

31. TIME OF ESSENCE: Timeis of the essence with respect to the performance of all obligations to beperformed or observed by the parties under this Lease.

 

32. CUMULATIVE REMEDIES:No remedy or election hereunder shall be deemed exclusive but shall, wheneverpossible, be cumulative with all other remedies at law or inequity.

 

33. ATTORNEYS’ FEES: Ifeither party brings an action or a proceeding to enforce the termshereof or declare the rights hereunder, the prevailing party shallbe entitled to reasonable attorneys’ fees. Lessor shall be entitled toreasonable attorneys’ fees, costs and expenses incurred in the preparation andservice of any notices of default for payment of rent, whether or not a legalaction is subsequently commenced.

 

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34. NOTICE: By the termsof this Lease, whenever notice shall or may be given either to Lessor orLessee, such notice shall be in writing and shall be delivered in hand or sentby Certified Mail, Return Receipt Requested, postage prepaid:

 

If intended for Lessor,addressed to it at the then current address for making rental payments or atsuch other address as may from time to time be designated by Lessor by likenotice; and

 
| If intended for Lessee, addressed to: |   | TROY GROUP, INC.            |
|---------------------------------------|--------|-----------------------------|
|                                  |   |                        |
|                                  |   | 2331 South Pullman Street   |
|                                  |   |                        |
|                                  |   | Santa Ana, California 92705 |
|                                  |   |                        |
| Attention:                            |   |                        | Chief Financial Officer |
|                                       |        |                             |  |

 

or at suchother addresses as may from time to time be designated by Lessee by likenotice.

 

35. SUCCESSORS: Subjectto the terms of Paragraph 5 of this Lease, the covenants, agreements, terms,conditions and warranties of this Lease shall be binding upon and inure to thebenefit of Lessor and Lessee and their respective heirs, executors,administrators, successors and assigns.

 

IN WITNESS WHEREOF, the partieshereto have signed and sealed the foregoing Lease Agreement on the day and yearfirst written above.

 

 
|      |   | **DIRK INVESTMENTS,  INC.**(Lessor) |
|-----------|--------|-------------------------------------|
|      |   |                                |   |
|      |   |                                |   |
| Attest:   |   |                                |   |
|      |   |                                |   |
|      |   | By:                                 |    Suzanne Anderson |   |
|      |   |                                |   |   |
|      |   | (Title):                            |    Treasurer |   |
|      |   |                                |   |
| (Title)   |   |                                |   |   |
|      |   |                                |   |
|      |   |                                |   |
|      |   | **TROY GROUP, INC.**(Lessee)        |
|      |   |                                |   |
|      |   |                                |   |
| Attest:   |   |                                |   |
|      |   |                                |   |
|      |   | By:                                 |    James Klingler |   |
|      |   |                                |   |   |
|      |   | (Title)                             |    Chief Financial  Officer |   |
|      |   |                                |   |
| Secretary |   |                                |   |
|           |        |                                     |  |  |  |

 
| STATE OF CALIFORNIA     | )           |
|-------------------------|-------------|
|                    | )  SS. |
| COUNTY OF ORANGE ) |        |

 

On the          day of                          ,2002, before me personally appeared Suzanne Anderson, to me personally known,who, being by me duly sworn, says that she is a duly authorized officer of DirkInvestments, Inc., that one of the seals affixed to the foregoing instrument isthe corporate seal of said corporation, that said instrument was signed andsealed on behalf of said corporation by authority of its Board of Directors andshe acknowledged that the execution of the foregoing instrument was the free actand deed of said corporation.

 

 
| SEAL   |           |   |
|--------|----------------|--------|
|   | Notary  Public |   |

 

 
| STATE OF CALIFORNIA     | )           |
|-------------------------|-------------|
|                    | )  SS. |
| COUNTY OF ORANGE ) |        |

 

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On the          day of                          ,2002, before me personally appeared James Klingler, to me personally known,who, being by me duly sworn, says that he is a duly authorized officer of TroyGroup, Inc., that one of the seals affixed to the foregoing instrument is thecorporate seal of said corporation, that said instrument was signed and sealedon behalf of said corporation by authority of its Board of Directors and heacknowledged that the execution of the foregoing instrument was the free actand deed of said corporation.

 

 
| SEAL   |           |   |
|--------|----------------|--------|
|   | Notary  Public |   |

 

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EXHIBIT “B”

 

FIRST

 

ALL that certain tract ofland situate on the westerly side of the Greggsville, Clinton and Potomac Road,partially in the City of Wheeling and partially in Richland - WashingtonDistrict (formerly Richland District), Ohio County, West Virginia, and beingmore particularly bounded and described as follows:

 

BEGINNINGat a point in the Greggsville, Clinton and Potomac Road at a common corner toLot No.1, Map of Washington Acres, said map being recorded in the Office of theClerk of the County Court of Ohio County, West Virginia, in**Deed Book Volume 309, page 118, and themost southerly corner of the 14 and 111/1000 acre tract of land which wasconveyed by Lawrence Washington Farms, Inc., to John E. Griffith and Norma V.Griffith, by deed dated October 30, 1978 and recorded in said County Clerk’sOffice in Deed Book Volume 586, page 399; thence from said beginning point withsaid Greggsville, Clinton and Potomac Road, South 21 degrees 46 minutes 40seconds West 325 and 72/100 feet to a point at the most easterly corner of the3 and 276/1000 acre tract of land that was conveyed by Emma Landmyer to theWheeling Dollar Savings and Trust Company by deed dated June 15, 1960 andrecorded in said County Clerk’s Office in Deed Book Volume 418, page 440;thence leaving said road and with lines of the said 3 and 276/1000 acre tractthe following three (3) bearings and distances: North 71 degrees 51 minutes 40seconds West 334 and 91/100 feet to a point; thence North 71 degrees 47 minutesWest 146 and 17/100 feet to a point; thence North 67 degrees 27 minutes West722 and 61/100 feet to a point in lands now or formerly owned by AugustSchafer; thence with said Schafer tract the following six (6) bearings anddistances: North 86 degrees 14 minutes 20 seconds East 391 and 42/100 feet to apoint; thence North 29 degrees 36 minutes 20 seconds West 403 and 75/100 feetto a point; thence North 19 degrees 41 minutes West 214 and 5/10 feet to apoint: thence North 11 degrees 11 minutes West 1567 feet to a point; thenceNorth 09 degrees 19 minutes East 560 feet to a point; thence South 81 degrees41 minutes East 165 feet to a point in lines of Lawrence Washington Farms,Inc.: thence with said Lawrence Washington Farms, Inc., the following two (2)bearings and distances: South 11 degrees 55 minutes 10 seconds East 412 and5/10 feet to a point; thence South 21 degrees 55 minutes 10 seconds East (at550 feet passing the most westerly corner of the 50 and 671/1000 acre tract ofland which was conveyed by Lawrence Washington Farms, Inc., to County Estates,Inc., by deed dated April 12, 1979 and recorded in said County Clerk’s Officein Deed Book Volume 589, page 273, and 2,162 and 1/100 feet passing thedivision line between the said 50 and 671/1000 acre tract of land and the 14and 111/1000 acre tract of land) 2,442 feet to a point: thence continuing withsaid 14 and 111/1000 acre tract. South 39 degrees 25 minutes 10 seconds East257 and 4/100 feet to the place of beginning, containing 42,037 acres, more orless, and as shown on the map prepared by Stegman and Schellhase, Inc., CivilEngineers and Surveyors, dated February 24, 1981.

 

SECOND ALL that certain tract of landsituate in Richland District, Ohio County, and State of West Virginia, beingmore particularly bounded and described as follows:

 

BEGINNING at a point inthe Greggsville, Clinton and Potomac Road at the most easterly corner of the 3and 276/1000 acre tract of land that was conveyed by Emma Landmyer to theWheeling Dollar Savings & Trust Company by deed dated June 15, 1960 andrecorded in the office of the Clerk of the County Court of Ohio County, WestVirginia, in Deed Book 418, at page 440; thence from said beginning point andwith said road. South 23 degrees 38’ 20” West, 100 and 46/100 feet to a point;thence leaving said road and with the northerly lines of D.M. Alexander’sSecond Addition, a copy of said plat being on file in said Clerk’s office inPlat Book 1, at page 86 and the easterly and westerly extensions of same thefollowing two (2) bearings and distances: North 71 degrees 51’ 40” West, 329and 12/100 feet to a point; thence North 71 degrees 47’ West, 146 and 28/100 feet to a point;thence crossing through said 3 and 276/1000 acre tract, North 18 degrees 13’East, 100 feet to a concrete monument in a northerly line of said 3 and

 

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276/1000acre tract; thence with same the following two (2) bearings and distances:South 71 degrees 47’ East, 146 and 17/100 feet to an iron pin; thence South 71degrees 51’ 40” East, (at 271 and 69/100 feet passing an iron pin) 338 and68/100 feet to the place of beginning, containing 1 1/10 acres, more or less,as compiled from surveys by Stegman & Schellhase, Inc., Civil Engineers andSurveyors.

 

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