Exhibit 10.24

 

WELLS FARGO

CONTINUING GUARANTY

TO: WELLS FARGO BANK, NATIONAL ASSOCIATION

 

1.         GUARANTY; DEFINITIONS. In consideration of any credit or other
financial accommodation heretofore, now or hereafter extended or made to Medtox
Scientific, Inc., Medtox Diagnostics, Inc. and Medtox Laboratories, Inc.
("Borrowers"), or any of them, by WELLS FARGO BANK, NATIONAL ASSOCIATION
("Bank"), and for other valuable consideration, the undersigned New Brighton
Business Center LLC ("Guarantor"), jointly and severally unconditionally
guarantees and promises to pay to Bank or order, on demand in lawful money of
the United States of America and in immediately available funds, any and all
Indebtedness of any of the Borrowers to Bank. The term "Indebtedness" is used
herein in its most comprehensive sense and includes any and all advances, debts,
obligations and liabilities of Borrowers, or any of them, heretofore, now or
hereafter made, incurred or created, whether voluntary or involuntary and
however arising, whether due or not due, absolute or contingent, liquidated or
unliquidated, determined or undetermined, and whether Borrowers may be liable
individually or jointly with others, or whether recovery upon such Indebtedness
may be or hereafter becomes unenforceable. This Guaranty is a guaranty of
payment and not collection.

 

2.         MAXIMUM LIABILITY; SUCCESSIVE TRANSACTIONS; REVOCATION; OBLIGATION
UNDER OTHER GUARANTIES. This is a continuing guaranty and all rights, powers and
remedies hereunder shall apply to all past, present and future Indebtedness of
each of the Borrowers to Bank, including that arising under successive
transactions which shall either continue the Indebtedness, increase or decrease
it, or from time to time create new Indebtedness after all or any prior
Indebtedness has been satisfied, and notwithstanding the death, incapacity,
dissolution, liquidation or bankruptcy of any of the Borrowers or Guarantor or
any other event or proceeding affecting any of the Borrowers or Guarantor. This
Guaranty shall not apply to any new Indebtedness created after actual receipt by
Bank of written notice of its revocation as to such new Indebtedness; provided
however, that loans or advances made by Bank to any of the Borrowers after
revocation under commitments existing prior to receipt by Bank of such
revocation, and extensions, renewals or modifications, of any kind, of
Indebtedness incurred by any of the Borrowers or committed by Bank prior to
receipt by Bank of such revocation, shall not be considered new Indebtedness.
Any such notice must be sent to Bank by registered U.S. mail, postage prepaid,
addressed to its office at Minneapolis RCBO, Sixth and Marquette, Minneapolis,
MN 55479, or at such other address as Bank shall from time to time designate.
Any payment by Guarantor with respect to the Indebtedness shall not reduce
Guarantor's maximum obligation hereunder unless written notice to that effect is
actually received by Bank at or prior to the time of such payment. The
obligations of Guarantor hereunder shall be in addition to any obligations of
Guarantor under any other guaranties of any liabilities or obligations of any of
the Borrowers or any other persons heretofore or hereafter given to Bank unless
said other guaranties are expressly modified or revoked in writing; and this
Guaranty shall not, unless expressly herein provided, affect or invalidate any
such other guaranties.

 

3.         OBLIGATIONS JOINT AND SEVERAL; SEPARATE ACTIONS; WAIVER OF STATUTE OF
LIMITATIONS; REINSTATEMENT OF LIABILITY. The obligations hereunder are joint and
several and independent of the obligations of Borrowers, and a separate action
or actions may be brought and prosecuted against Guarantor whether action is
brought against any of the Borrowers or any other person, or whether any of the
Borrowers or any other person is joined in any such action or actions. Guarantor
acknowledges that this Guaranty is absolute and unconditional, there are no
conditions precedent to the effectiveness of this Guaranty, and this Guaranty is
in full force and effect and is binding on Guarantor as of the date written
below, regardless of whether Bank obtains collateral or any guaranties from
others or takes any other action contemplated by Guarantor. Guarantor waives the
benefit of any statute of limitations affecting Guarantor's liability hereunder
or the enforcement thereof, and Guarantor agrees that any payment of any
Indebtedness or other act which shall toll any statute of

 

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limitations applicable thereto shall similarly operate to toll such statute of
limitations applicable to Guarantor's liability hereunder. The liability of
Guarantor hereunder shall be reinstated and revived and the rights of Bank shall
continue if and to the extent that for any reason any amount at any time paid on
account of any Indebtedness guaranteed hereby is rescinded or must otherwise be
restored by Bank, whether as a result of any proceedings in bankruptcy or
reorganization or otherwise, all as though such amount had not been paid. The
determination as to whether any amount so paid must be rescinded or restored
shall be made by Bank in its sole discretion; provided however, that if Bank
chooses to contest any such matter at the request of Guarantor, Guarantor agrees
to indemnify and hold Bank harmless from and against all costs and expenses,
including reasonable attorneys' fees, expended or incurred by Bank in connection
therewith, including without limitation, in any litigation with respect thereto.

 

4.         AUTHORIZATIONS TO BANK. Guarantor authorizes Bank either before or
after revocation hereof, without notice to or demand on Guarantor, and without
affecting Guarantor's liability hereunder, from time to time to: (a) alter,
compromise, renew, extend, accelerate or otherwise change the time for payment
of, or otherwise change the terms of, the Indebtedness or any portion thereof,
including increase or decrease of the rate of interest thereon; (b) take and
hold security for the payment of this Guaranty or the Indebtedness or any
portion thereof, and exchange, enforce, waive, subordinate or release any such
security; (c) apply such security and direct the order or manner of sale
thereof, including without limitation, a non-judicial sale permitted by the
terms of the controlling security agreement, mortgage or deed of trust, as Bank
in its discretion may determine; (d) release or substitute any one or more of
the endorsers or any other guarantors of the Indebtedness, or any portion
thereof, or any other party thereto; and (e) apply payments received by Bank
from any of the Borrowers to any Indebtedness of any of the Borrowers to Bank,
in such order as Bank shall determine in its sole discretion, whether or not
such Indebtedness is covered by this Guaranty, and Guarantor hereby waives any
provision of law regarding application of payments which specifies otherwise.
Bank may without notice assign this Guaranty in whole or in part. Upon Bank's
request, Guarantor agrees to provide to Bank copies of Guarantor's financial
statements.

 

5.         REPRESENTATIONS AND WARRANTIES. Guarantor represents and warrants to
Bank that: (a) this Guaranty is executed at Borrowers' request; (b) Guarantor
shall not, without Bank's prior written consent, sell, lease, assign, encumber,
hypothecate, transfer or otherwise dispose of all or a substantial or material
part of Guarantor's assets other than in the ordinary course of Guarantor's
business; (c) Bank has made no representation to Guarantor as to the
creditworthiness of any of the Borrowers; and (d) Guarantor has established
adequate means of obtaining from each of the Borrowers on a continuing basis
financial and other information pertaining to Borrowers' financial condition.
Guarantor agrees to keep adequately informed from such means of any facts,
events or circumstances which might in any way affect Guarantor's risks
hereunder, and Guarantor further agrees that Bank shall have no obligation to
disclose to Guarantor any information or material about any of the Borrowers
which is acquired by Bank in any manner.

 

6.

GUARANTOR'S WAIVERS.

 

6.1        Guarantor waives any right to require Bank to: (a) proceed against
any of the Borrowers or any other person; (b) marshal assets or proceed against
or exhaust any security held from any of the Borrowers or any other person; (c)
give notice of the terms, time and place of any public or private sale or other
disposition of personal property security held from any of the Borrowers or any
other person; (d) take any action or pursue any other remedy in Bank's power; or
(e) make any presentment or demand for performance, or give any notice of
nonperformance, protest, notice of protest or notice of dishonor hereunder or in
connection with any obligations or evidences of indebtedness held by Bank as
security for or which constitute in whole or in part the Indebtedness guaranteed
hereunder, or in connection with the creation of new or additional Indebtedness.

 

6.2       Guarantor waives any defense to its obligations hereunder based upon
or arising by reason of: (a) any disability or other defense of any of the
Borrowers or any other person; (b) the cessation or limitation from any cause
whatsoever, other than payment in full, of the Indebtedness of any of the

 

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Borrowers or any other person; (c) any lack of authority of any officer,
director, partner, agent or other person acting or purporting to act on behalf
of any of the Borrowers which is a corporation, partnership or other type of
entity, or any defect in the formation of any such Borrower; (d) the application
by any of the Borrowers of the proceeds of any Indebtedness for purposes other
than the purposes represented by Borrowers to, or intended or understood by,
Bank or Guarantor; (e) any act or omission by Bank which directly or indirectly
results in or aids the discharge of any of the Borrowers or any portion of the
Indebtedness by operation of law or otherwise, or which in any way impairs or
suspends any rights or remedies of Bank against any of the Borrowers; (f) any
impairment of the value of any interest in any security for the Indebtedness or
any portion thereof, including without limitation, the failure to obtain or
maintain perfection or recordation of any interest in any such security, the
release of any such security without substitution, and/or the failure to
preserve the value of, or to comply with applicable law in disposing of, any
such security; (g) any modification of the Indebtedness, in any form whatsoever,
including any modification made after revocation hereof to any indebtedness
incurred prior to such revocation, and including without limitation the renewal,
extension, acceleration or other change in time for payment of, or other change
in the terms of, the Indebtedness or any portion thereof, including increase or
decrease of the rate of interest thereon; or (h) any requirement that Bank give
any notice of acceptance of this Guaranty. Until all Indebtedness shall have
been paid in full, Guarantor shall have no right of subrogation, and Guarantor
waives any right to enforce any remedy which Bank now has or may hereafter have
against any of the Borrowers or any other person, and waives any benefit of, or
any right to participate in, any security now or hereafter held by Bank.
Guarantor further waives all rights and defenses Guarantor may have arising out
of (i) any election of remedies by Bank, even though that election of remedies,
such as a non-judicial foreclosure with respect to any security for any portion
of the Indebtedness, destroys Guarantor's rights of subrogation or Guarantor's
rights to proceed against any of the Borrowers for reimbursement, or (ii) any
loss of rights Guarantor may suffer by reason of any rights, powers or remedies
of any of the Borrowers in connection with any anti-deficiency laws or any other
laws limiting, qualifying or discharging Borrowers' Indebtedness, whether by
operation of law or otherwise, including any rights Guarantor may have to a fair
market value hearing to determine the size of a deficiency following any
foreclosure sale or other disposition of any real property security for any
portion of the Indebtedness.

 

7.         BANK'S RIGHTS WITH RESPECT TO GUARANTOR'S PROPERTY IN BANK'S
POSSESSION. In addition to all liens upon and rights of setoff against the
monies, securities or other property of Guarantor given to Bank by law, Bank
shall have a lien upon and a right of setoff against all monies, securities and
other property of Guarantor now or hereafter in the possession of or on deposit
with Bank, whether held in a general or special account or deposit or for
safekeeping or otherwise, and every such lien and right of setoff may be
exercised without demand upon or notice to Guarantor. No lien or right of setoff
shall be deemed to have been waived by any act or conduct on the part of Bank,
or by any neglect to exercise such right of setoff or to enforce such lien, or
by any delay in so doing, and every right of setoff and lien shall continue in
full force and effect until such right of setoff or lien is specifically waived
or released by Bank in writing.

 

8.         SUBORDINATION. Any Indebtedness of any of the Borrowers now or
hereafter held by Guarantor is hereby subordinated to the Indebtedness of
Borrowers to Bank. Such Indebtedness of Borrowers to Guarantor is assigned to
Bank as security for this Guaranty and the Indebtedness and, if Bank requests,
shall be collected and received by Guarantor as trustee for Bank and paid over
to Bank on account of the Indebtedness of Borrowers to Bank but without reducing
or affecting in any manner the liability of Guarantor under the other provisions
of this Guaranty. Any notes or other instruments now or hereafter evidencing
such Indebtedness of any of the Borrowers to Guarantor shall be marked with a
legend that the same are subject to this Guaranty and, if Bank so requests,
shall be delivered to Bank. Bank is hereby authorized in the name of Guarantor
from time to time to file financing statements and continuation statements and
execute such other documents and take such other action as Bank deems necessary
or appropriate to perfect, preserve and enforce its rights hereunder.

 

 

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9.         REMEDIES; NO WAIVER. All rights, powers and remedies of Bank
hereunder are cumulative. No delay, failure or discontinuance of Bank in
exercising any right, power or remedy hereunder shall affect or operate as a
waiver of such right, power or remedy; nor shall any single or partial exercise
of any such right, power or remedy preclude, waive or otherwise affect any other
or further exercise thereof or the exercise of any other right, power or remedy.
Any waiver, permit, consent or approval of any kind by bank of any breach of
this Guaranty, or any such waiver of any provisions or conditions hereof, must
be in writing and shall be effective only to the extent set forth in writing.

 

10.        COSTS, EXPENSES AND ATTORNEYS' FEES. Guarantor shall pay to Bank
immediately upon demand the full amount of all payments, advances, charges,
costs and expenses, including reasonable attorneys' fees (to include outside
counsel fees and all allocated costs of Bank's in-house counsel), expended or
incurred by Bank in connection with the enforcement of any of Bank's rights,
powers or remedies and/or the collection of any amounts which become due to Bank
under this Guaranty, and the prosecution or defense of any action in any way
related to this Guaranty, whether incurred at the trial or appellate level, in
an arbitration proceeding or otherwise, and including any of the foregoing
incurred in connection with any bankruptcy proceeding (including without
limitation, any adversary proceeding, contested matter or motion brought by Bank
or any other person) relating to Guarantor or any other person or entity. All of
the foregoing shall be paid by Guarantor with interest from the date of demand
until paid in full at a rate per annum equal to the greater of ten percent (10%)
or Bank's Prime Rate in effect from time to time, but not in excess of the
maximum rate permitted under applicable Minnesota law.

 

11.        SUCCESSORS; ASSIGNMENT. This Guaranty shall be binding upon and inure
to the benefit of the heirs, executors, administrators, legal representatives,
successors and assigns of the parties; provided however, that Guarantor may not
assign or transfer any of its interests or rights hereunder without Bank's prior
written consent. Guarantor acknowledges that Bank has the right to sell, assign,
transfer, negotiate or grant participations in all or any part of, or any
interest in, any Indebtedness of Borrowers to Bank and any obligations with
respect thereto, including this Guaranty. In connection therewith, Bank may
disclose all documents and information which Bank now has or hereafter acquires
relating to Guarantor and/or this Guaranty, whether furnished by Borrowers,
Guarantor or otherwise. Guarantor further agrees that Bank may disclose such
documents and information to Borrowers.

 

12.        AMENDMENT. This Guaranty may be amended or modified only in writing
signed by Bank and Guarantor.

 

13.        APPLICATION OF SINGULAR AND PLURAL. In all cases where there is but a
single Borrower, then all words used herein in the plural shall be deemed to
have been used in the singular where the context and construction so require;
and when there is more than one Borrower named herein, or when this Guaranty is
executed by more than one Guarantor, the word "Borrowers" and the word
"Guarantor" respectively shall mean all or any one or more of them as the
context requires.

 

14.        UNDERSTANDING WITH RESPECT TO WAIVERS; SEVERABILITY OF PROVISIONS.
Guarantor warrants and agrees that each of the waivers set forth herein is made
with Guarantor's full knowledge of its significance and consequences, and that
under the circumstances, the waivers are reasonable and not contrary to public
policy or law. If any waiver or other provision of this Agreement shall be held
to be prohibited by or invalid under applicable public policy or law, such
waiver or other provision shall be ineffective only to the extent of such
prohibition or invalidity, without invalidating the remainder of such waiver or
other provision or any remaining provisions of this Agreement.

 

15.        GOVERNING LAW. This Guaranty shall be governed by and construed in
accordance with the laws of the State of Minnesota.

 

16.

ARBITRATION.

 

 

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16.1      Arbitration. The parties hereto agree, upon demand by any party, to
submit to binding arbitration all claims, disputes and controversies between or
among them (and their respective employees, officers, directors, attorneys, and
other agents), whether in tort, contract or otherwise arising out of or relating
to in any way (a) the loan and related loan and security documents which are the
subject of this Guaranty and its negotiation, execution, collateralization,
administration, repayment, modification, extension, substitution, formation,
inducement, enforcement, default or termination; or (b) requests for additional
credit.

 

16.2      Governing Rules. Any arbitration proceeding will (a) proceed in a
location in Minnesota selected by the American Arbitration Association ("AAA");
(b) be governed by the Federal Arbitration Act (Title 9 of the United States
Code), notwithstanding any conflicting choice of law provision in any of the
documents between the parties; and (c) be conducted by the AAA, or such other
administrator as the parties shall mutually agree upon, in accordance with the
AAA's commercial dispute resolution procedures, unless the claim or counterclaim
is at least $1,000,000.00 exclusive of claimed interest, arbitration fees and
costs in which case the arbitration shall be conducted in accordance with the
AAA's optional procedures for large, complex commercial disputes (the commercial
dispute resolution procedures or the optional procedures for large, complex
commercial disputes to be referred to, as applicable, as the "Rules"). If there
is any inconsistency between the terms hereof and the Rules, the terms and
procedures set forth herein shall control. Any party who fails or refuses to
submit to arbitration following a demand by any other party shall bear all costs
and expenses incurred by such other party in compelling arbitration of any
dispute. Nothing contained herein shall be deemed to be a waiver by any party
that is a bank of the protections afforded to it under 12 U.S.C. §91 or any
similar applicable state law.

 

16.3     No Waiver of Provisional Remedies, Self-Help and Foreclosure. The
arbitration requirement does not limit the right of any party to (a) foreclose
against real or personal property collateral; (b) exercise self-help remedies
relating to collateral or proceeds of collateral such as setoff or repossession;
or (c) obtain provisional or ancillary remedies such as replevin, injunctive
relief, attachment or the appointment of a receiver, before during or after the
pendency of any arbitration proceeding. This exclusion does not constitute a
waiver of the right or obligation of any party to submit any dispute to
arbitration or reference hereunder, including those arising from the exercise of
the actions detailed in sections (a), (b) and (c) of this paragraph.

 

16.4      Arbitrator Qualifications and Powers. Any arbitration proceeding in
which the amount in controversy is $5,000,000.00 or less will be decided by a
single arbitrator selected according to the Rules, and who shall not render an
award of greater than $5,000,000.00. Any dispute in which the amount in
controversy exceeds $5,000,000.00 shall be decided by majority vote of a panel
of three arbitrators; provided however, that all three arbitrators must actively
participate in all hearings and deliberations. The arbitrator will be a neutral
attorney licensed in the State of Minnesota or a neutral retired judge of the
state or federal judiciary of Minnesota, in either case with a minimum of ten
years experience in the substantive law applicable to the subject matter of the
dispute to be arbitrated. The arbitrator will determine whether or not an issue
is arbitratable and will give effect to the statutes of limitation in
determining any claim. In any arbitration proceeding the arbitrator will decide
(by documents only or with a hearing at the arbitrator's discretion) any
pre-hearing motions which are similar to motions to dismiss for failure to state
a claim or motions for summary adjudication. The arbitrator shall resolve all
disputes in accordance with the substantive law of Minnesota and may grant any
remedy or relief that a court of such state could order or grant within the
scope hereof and such ancillary relief as is necessary to make effective any
award. The arbitrator shall also have the power to award recovery of all costs
and fees, to impose sanctions and to take such other action as the arbitrator
deems necessary to the same extent a judge could pursuant to the Federal Rules
of Civil Procedure, the Minnesota Rules of Civil Procedure or other applicable
law. Judgment upon the award rendered by the arbitrator may be entered in any
court having jurisdiction. The institution and maintenance of an action for
judicial relief or pursuit of a provisional or ancillary remedy shall not
constitute a waiver of the right of any party, including the plaintiff, to
submit the controversy or claim to arbitration if any other party contests such
action for judicial relief.

 

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16.5     Discovery. In any arbitration proceeding discovery will be permitted in
accordance with the Rules. All discovery shall be expressly limited to matters
directly relevant to the dispute being arbitrated and must be completed no later
than 20 days before the hearing date and within 180 days of the filing of the
dispute with the AAA. Any requests for an extension of the discovery periods, or
any discovery disputes, will be subject to final determination by the arbitrator
upon a showing that the request for discovery is essential for the party's
presentation and that no alternative means for obtaining information is
available.

 

16.6      Class Proceedings and Consolidations. The resolution of any dispute
arising pursuant to the terms of this Guaranty shall be determined by a separate
arbitration proceeding and such dispute shall not be consolidated with other
disputes or included in any class proceeding.

 

16.7      Payment Of Arbitration Costs And Fees. The arbitrator shall award all
costs and expenses of the arbitration proceeding.

 

16.8      Miscellaneous. To the maximum extent practicable, the AAA, the
arbitrators and the parties shall take all action required to conclude any
arbitration proceeding within 180 days of the filing of the dispute with the
AAA. No arbitrator or other party to an arbitration proceeding may disclose the
existence, content or results thereof, except for disclosures of information by
a party required in the ordinary course of its business, by applicable law or
regulation, or to the extent necessary to exercise any judicial review rights
set forth herein. If more than one agreement for arbitration by or between the
parties potentially applies to a dispute, the arbitration provision most
directly related to the documents between the parties or the subject matter of
the dispute shall control. This arbitration provision shall survive termination,
amendment or expiration of any of the documents or any relationship between the
parties.

 

IN WITNESS WHEREOF, the undersigned Guarantor has executed this Guaranty as of
March 16, 2006.

 

New Brighton Business Center LLC

 

By:  Kevin J. Wiersma     

 

Title:   CFO                     

 

 

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