METATEC INTERNATIONAL INC
METATEC INTERNATIONAL    EXHIBIT 10.1
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<TYPE>EX-10.1
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<FILENAME>l96907aexv10w1.txt
<DESCRIPTION>METATEC INTERNATIONAL    EXHIBIT 10.1
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                                  EXHIBIT 10.1

                  Letter agreement dated October 9, 2002, among
                             DiscoVision Associates
                         and Metatec International, Inc.


                                 October 9, 2002



Duncan Taylor, SeniorAttorney
DiscoVision Associates
2355 Main Street
Suite 200
Irvine, California  92614

         Re:      Patent License Agreement for Disc Products

Dear Mr. Taylor:

         The purpose of this letter is to set forth our understanding and
confirm our agreement with respect to the royalty payments owed to DiscoVision
Associates ("DVA") by Metatec International, Inc., formerly doing business as
Discovery Systems, Inc. ("Metatec"), pursuant to the Patent License Agreement
for Disc Products, dated as of July 1, 1986 (the "License Agreement").

         Under Section 6.3 of the License Agreement, Metatec is required to
provide DVA with royalty reports within 60 days after a stated semi-annual
accounting period and to make royalty payments at the end of each such period,
in accordance with the formula provided in Section 5 of the License Agreement.
As of the semi-annual period ended December 31, 2001, the accrued royalties due
and owing by Metatec to DVA are $1,618,259.71 (the "Accrued Royalties").

         DVA has agreed to restructure Metatec's payments of the Accrued
Royalties, subject to the terms and conditions contained herein. Metatec shall
be obligated to repay $809,129.85 (the "Repayment Amount"), which represents
half of the Accrued Royalties, in installments, as set forth in the "Payment
Schedule" attached hereto as Exhibit A. Upon the acceptance of the terms
contained in this letter by DVA, Metatec shall execute and deliver a promissory
note for the Repayment Amount pursuant to the Payment Schedule, in the form of
the promissory note attached hereto as Exhibit B (the "Note").

         The remainder of the Accrued Royalties equal to $809,129.86 (the
"Released Debt") shall not be required to be repaid, and DVA shall forever
release Metatec from its obligation to pay the Released Debt from and after the
date on which the Note has been paid in full, so long as prior to such date
Metatec has, subject to its cure rights set forth below: (a) made all payments
due under the Note at the times and in the amounts shown on the Payment
Schedule; and (b) submitted all semi-annual royalty reports and makes all
semi-annual royalty payments as required under the License Agreement.




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         If Metatec fails to comply with the provisions of (a) or (b) above and
fails to cure such default within ten (10) business days of written notice by
DVA, then:

         (1)      The entire amount of Accrued Royalties (including the
                  Repayment Amount plus the Released Debt), less amounts paid
                  under the Note, plus interest as provided in the License
                  Agreement, shall be immediately due and payable;

         (2)      DVA shall be entitled to injunctive relief and/or confession
                  of judgment for the entire unpaid portion of the Accrued
                  Royalties; and

         (3)      DVA shall be entitled to an award of reasonable attorney fees
                  and costs for enforcement of this agreement.

         DVA and Metatec shall treat the contents of this agreement as
confidential information and shall not disclose it to third parties, except as
may be necessary by either party to enforce its rights hereunder to a
governmental body or in a court of law, or except as may be required by law or
the rules of any stock exchange or trading system to which Metatec is or may be
subject. Metatec may also disclose the contents of this agreement to: (a) a
financial institution (and its advisors, accountants and bankers) as necessary
to secure financing or obtain approval under its current financing; or (b) to a
prospective buyer (and its advisors, accountants and bankers) of Metatec as part
of a due diligence investigation; provided that, in the event of a prospective
disclosure under (b), DVA is informed in advance of such disclosure, a suitable
confidentiality agreement is executed between Metatec and the intended recipient
of the confidential information sufficient to protect the information hereunder
from disclosure to other parties, and DVA is provided with a copy of the
confidentiality agreement (excluding the name of the other party) before the
disclosure of any contents of this agreement.

         This agreement and the provisions herein shall be deemed to be an
amendment to the License Agreement to the extent of the express modifications
herein. Except as specifically stated in this agreement, the terms and
conditions of the License Agreement shall remain in full force and effect.

         If the contents of this agreement are acceptable to DVA, please
acknowledge your approval below and return a copy of this letter to me. At the
point that your approval is received, Metatec will deliver the Note.


                                              Very truly yours,

                                              /s/  Gary W. Qualmann
                                              ---------------------------
                                              Gary W. Qualmann
                                              Chief Financial Officer


Approved and accepted:

DISCOVISION ASSOCIATES


By /s/ Donna Fischel
   ---------------------
Donna Fischel

Its: President


Date: October 15, 2002





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