Exhibit 10.2

COMMERCIAL LEASE

 

This indenture of lease, dated this 28th day of July, 2000, by and between St.
Paul Properties, Inc., a Delaware Corporation, hereinafter referred to as
“Lessor,” and MEDTOX Laboratories, Inc., A Delaware Corporation, hereinafter
referred to as “Lessee.”

 

DEFINITIONS:

“Premises” -- That certain real property located in the City of Roseville,
County of Ramsey and State of Minnesota and legally described on Exhibit “A”
attached hereto and made a part hereof, including all buildings and site
improvements located thereon.

 

“Building” -- That certain building containing approximately 48,000 square feet
located upon the Premises and commonly described as 2021-2033 West County Road
C-2, Roseville, MN 55113.

 

“Demised Premises” -- That certain portion of the Building located at 2033 West
County Road C-2, Roseville, MN consisting of approximately 30,000 square feet
(3,000 square feet of office space and 27,000 square feet of warehouse space),
as measured from the outside walls of the Demised Premises to the center of the
partition wall, as shown on the floor plan attached hereto as Exhibit “B” and
made a part hereof. The Demised Premises include a non-exclusive easement for
access to common areas, as hereinafter defined, and all licenses and easements
appurtenant to the Demised Premises.

 

“Common Areas” -- The term “common area” means the entire areas to be used for
the non-exclusive use by Lessee and other lessees in the Building, including,
but not limited to, driveways, parking lots, and landscaped areas. Subject to
reasonable rules and regulations promulgated by Lessor, the common areas are
hereby made available to Lessee and its employees, agents, customers, and
invitees for reasonable use in common with other lessees, their employees,
agents, customers, and invitees.

 

WITNESSETH:

 

TERM:

 

1.       For and in consideration of the rents, additional rents, terms,
provisions, and covenants herein contained, Lessor hereby lets, leases, and
demises to Lessee the Demised Premises for the term of 84 months commencing on
the 1st day of September, 2000 (sometimes called “the Commencement Date”), and
expiring the 31st day of August, 2007 (sometimes called “Expiration Date”),
unless sooner terminated as hereinafter provided.

 

BASE RENT:

 

2.

Lessor reserves, and Lessee agrees to pay Lessor Base Rent, payable in advance
without written notice, in monthly installments of the following amounts:

 

September 1, 2000 through August 31, 2001, the monthly Base Rent will be Ten
Thousand Five Hundred and No/100 Dollars ($10,500.00), calculated at an annual
rate of $4.20 per square foot.

 

September 1, 2001 through August 31, 2002, the monthly Base Rent will be Ten
Thousand Eight Hundred Seventy-five and No/100 Dollars ($10,875.00), calculated
at an annual rate of $4.35 per square foot.

 

September 1, 2002 through August 31, 2003, the monthly Base Rent will be Eleven
Thousand Two Hundred Fifty and No/100 Dollars ($11,250.00), calculated at an
annual rate of $4.50 per square foot.

 

September 1, 2003 through August 31, 2004, the monthly Base Rent will be Eleven
Thousand Six Hundred Twenty-five and No/100 Dollars ($11,625.00), calculated at
an annual rate of $4.65 per square foot.

 

September 1, 2004 through August 31, 2005, the monthly Base Rent will be Twelve
Thousand and No/100 Dollars ($12,000.00), calculated at an annual rate of $4.80
per square foot.

 

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September 1, 2005 through August 31, 2006, the monthly Base Rent will be Twelve
Thousand Three Hundred Seventy-five and No/100 Dollars ($12,375.00), calculated
at an annual rate of $4.95 per square foot.

 

September 1, 2006 through August 31, 2007, the monthly Base Rent will be Twelve
Thousand Seven Hundred Fifty and No/100 Dollars ($12,750.00), calculated at an
annual rate of $5.10 per square foot.

 

In the event the Commencement Date falls on a date other than the first day of a
month, the rental for that month shall be prorated and adjusted accordingly.

 

ADDITIONAL RENT:

 

3.

Lessee shall pay to Lessor throughout the term of this Lease the following:

a.        Lessee shall pay a sum equal to sixty-two and 1/2 percent (62.5%) of
the Real Estate taxes. The term “Real Estate Taxes” shall mean all real estate
taxes, all assessments and any taxes in lieu thereof which may be levied upon or
assessed against the Premises of which the Demised Premises are a part. Lessee,
in addition to all other payments to Lessor by Lessee required hereunder shall
pay to Lessor, in each year during the term of this Lease and any extension or
renewal thereof, Lessee’s proportionate share of such real estate taxes and
assessments paid in the first instance by Lessor.

Any tax year commencing during any lease year shall be deemed to correspond to
such lease year. In the event the taxing authorities include in such real estate
taxes and assessments the value of any improvements made by Lessee, or of
machinery, equipment, fixtures, inventory or other personal property or assets
of Lessee, then Lessee shall pay all the taxes attributable to such items in
addition to its proportionate share of said aforementioned real estate taxes and
assessments. A photostatic copy of the tax statement submitted by Lessor to
Lessee shall be sufficient evidence of the amount of taxes and assessments
assessed or levied against the Premises of which the Demised Premises are a
part, as well as the items taxed.

b.        A sum equal to sixty-two and 1/2 percent (62.5%) of the annual
aggregate operating expenses incurred by Lessor in the operation, maintenance,
and repair of the Premises. The term “Operating Expenses” shall include, but not
be limited to, maintenance, repair, replacement, and care of all common area
lighting, common area plumbing and roofs, parking and landscaped areas, signs,
snow removal, non-structural repair and maintenance of the exterior of the
Building, insurance premiums, management fee, wages and fringe benefits of
personnel employed for such work, costs of equipment purchased and used for such
purposes, and the cost or portion thereof properly allocable to the Premises
(amortized over the useful life of such equipment together with the interest at
the rate of 14% per annum on the unamortized balance) of any capital
improvements made to the Building by Lessor after the Base Year which result in
a reduction of Operating Expenses or made to the Building by Lessor that are
required under any governmental law or regulation that was not applicable to the
Building at the time it was constructed.

Notwithstanding the foregoing, the amounts included in Operating Expense for
management fees, from time to time, shall not exceed the amounts then being paid
to professional property management companies pursuant to property management
contracts to manage comparable properties in the Minneapolis-St. Paul
Metropolitan Area.

Notwithstanding the foregoing the replacement of all or a major portion of the
roof and/or parking surface shall be deemed Capital Improvements. The cost of
the above Capital Improvements shall not be included in Operating Expenses and
chargeable to Lessee.

To the best of Lessor's knowledge, the building is in compliance with all
governmental laws and regulations which are applicable to the Building and being
enforced as of the date of this Lease.

c.        The payment of the sums set forth in this Article 3 shall be in
addition to the Base Rent payable pursuant to Article 2 of this Lease. All sums
due hereunder shall be due and payable within thirty (30) days of delivery of
written certification by Lessor setting forth the computation of the amount due
from Lessee. In the event the Lease term shall begin or expire at any time
during the calendar year, the Lessee shall be responsible for his pro-rata share
of Additional Rent under subdivisions a. and b. during the Lease and/or
occupancy time.

Prior to commencement of this Lease, and prior to the commencement of each
calendar year thereafter commencing during the term of this Lease or any renewal
or extension thereof, Lessor may estimate for each calendar year (i) the total
amount of Real Estate Taxes; (ii) the total amount of Operating Expenses; (iii)
Lessee’s share of Real Estate Taxes for such calendar year; (iv) Lessee’s share
of Operating Expenses for such calendar year; and (v) the computation of the
annual and monthly rental payable during such calendar year as a result of
increases or decreases in Lessee’s share of Real Estate Taxes and Operating
Expenses. Said estimates will be in writing and will be delivered or mailed to
Lessee at the Premises.

 

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The amount of Lessee’s share of Real Estate Taxes and Operating Expenses for
each calendar year, so estimated, shall be payable as Additional Rent in equal
monthly installments, in advance, on the first day of each month during such
calendar year at the option of Lessor. In the event that such estimate is
delivered to Lessee before the first day of January of such calendar year, said
amount, so estimated, shall be payable as additional rent in equal monthly
installments, in advance, on the first day of each month during such calendar
year. In the event that such estimate is delivered to Lessee after the first day
of January of such calendar year, said amount, so estimated, shall be payable as
additional rent in equal monthly installments, in advance, on the first day of
each month over the balance of such calendar year, with the number of
installments being equal to the number of full calendar months remaining in such
calendar year.

Upon completion of each calendar year during the term of this Lease or any
renewal or extension thereof, Lessor shall cause its accountants to determine
the actual amount of the Real Estate Taxes and Operating Expenses payable in
such calendar year and Lessee’s share thereof and deliver a written
certification of the amounts thereof to Lessee. If Lessee has underpaid its
share of Real Estate Taxes or Operating Expenses for such calendar year, Lessee
shall pay the balance of its share of same within thirty (30) days after the
receipt of such statement. If Lessee has overpaid its share of Real Estate Taxes
or Operating Expenses for such calendar year, Lessor shall within thirty (30)
days of deliver of such statement, at Lessor’s option either (i) refund such
excess or (ii) credit such excess against the most current monthly installment
or installments due Lessor for its estimate of Lessee’s share of Real Estate
Taxes and Operating Expenses for the next following calendar year. A prorata
adjustment shall be made for a fractional calendar year occurring during the
term of this Lease or any renewal or extension thereof based upon the number of
days of the term of the Lease during said calendar year as compared to three
hundred sixty-five (365) days and all additional sums payable by Lessee or
credits due Lessee as a result of the provisions of this Article 3 shall be
adjusted accordingly.

 

COVENANT TO PAY RENT:

 

4.        The covenants of Lessee to pay the Base Rent and the Additional Rent
are each independent of any other covenant, condition, provision, or agreement
contained in this Lease. All rents are payable to:

 

St. Paul Properties, Inc.

PO Box 86

SDS 12-1633

Minneapolis, MN 55486-1633

 

UTILITIES:

 

5.        Lessor shall provide mains and conduits to supply water, gas,
electricity, and sanitary sewage to the Premises. Lessee shall pay when due, all
charges for sewer usage or rental, garbage, disposal, refuse removal, water,
electricity, gas, fuel oil, L.P. gas, telephone, and/or other utility services
or energy source furnished to the Demised Premises during the term of this
Lease, or any renewal or extension thereof. If Lessor elects to furnish any of
the foregoing utility services or other services furnished or caused to be
furnished to Lessee, then the rate charged by Lessor shall not exceed the rate
Lessee would be required to pay to a utility company or service company
furnishing any of the foregoing utilities or services. The charges thereof shall
be deemed Additional Rent in accordance with Article 3.

 

CARE AND REPAIR OF DEMISED PREMISES:

 

6.        Lessee shall, at all times throughout the term of this Lease,
including renewals and extensions, and at its sole expense, keep and maintain
the Demised Premises in a clean, safe, sanitary, and first class condition
reasonable wear and tear accepted and in compliance with all applicable laws,
codes, ordinances, rules, and regulations. Lessee’s obligations hereunder shall
include, but not be limited to the maintenance, repair and replacement, if
necessary, of heating, air conditioning fixtures, equipment and systems, all
lighting and plumbing fixtures and equipment, fixtures, motors and machinery,
all interior walls, partitions, doors and windows, including the regular
painting thereof, all exterior entrances, windows, doors and docks, and the
replacement of all broken glass. When used in this provision, the term “repairs”
shall include replacements or renewals when necessary, and all such repairs made
by the Lessee shall be equal in quality and class to the original work. The
Lessee shall keep and maintain all portions of the Demised Premises and the
sidewalk and areas adjoining the same in a clean and orderly condition, free of
accumulation of dirt, rubbish, snow, and ice.

 

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If Lessee fails, refuses, or neglects to maintain or repair the Demised Premises
as required in this Lease after notice shall have been given Lessee, in
accordance with Article 33 of this Lease, Lessor may make such repairs without
liability to Lessee for any loss or damage that may accrue to Lessee’s
merchandise, fixtures, or other property or to Lessee’s business by reason
thereof, and upon completion thereof, Lessee shall pay to Lessor all costs plus
15% for overhead incurred by Lessor in making such repairs upon presentation to
Lessee of bill therefore.

Lessor shall repair, at its expense, the structural portions of the Building,
provided, however, where structural repairs are required to be made by reason of
the acts of Lessee, the costs thereof shall be borne by Lessee and payable by
Lessee to Lessor upon demand.

The Lessor shall be responsible for all outside maintenance of the Demised
Premises, including grounds and parking areas. All such maintenance which is the
responsibility of the Lessor shall be provided as reasonably necessary to the
comfortable use and occupancy of Demised Premises during business hours, except
Saturdays Sundays, and holidays, upon the condition that the Lessor shall not be
liable for damages for failure to do so due to causes beyond its control.

Notwithstanding the foregoing, snow removal will be required if the total
snowfall during any given twenty-four (24) hour period exceeds an accumulated
depth of three (3) inches.

Notwithstanding the foregoing, in such case that Lessor provides existing HVAC
units ("Existing Equipment"), Lessor warrants that such Existing Equipment shall
be in good working order and in compliance with current local codes in effect at
the time the Demised Premises are delivered to Lessee.

 

SIGNS:

 

7.        Any sign, lettering, picture, notice, or advertisement installed on or
in any part of the Premises and visible from the exterior of the Building, or
visible from the exterior of the Demised Premises, shall be approved and
installed by Lessor at Lessee’s sole cost and expense. Said signs are to be
maintained by Lessor at Lessee’s expense. In the event of a violation of the
foregoing by Lessee, Lessor may remove any unauthorized signs without any
liability to Lessor and may charge the expense incurred by such removal to
Lessee.

 

ALTERATIONS, INSTALLATION, FIXTURES:

 

8.       Except as hereinafter provided, Lessee shall not make any alterations,
additions, or improvements in or to the Demised Premises or add, disturb, or in
any way change any plumbing or wiring therein without the prior written consent
of the Lessor. In the event alterations are required by any governmental agency
by reason of the use and occupancy of the Demised Premises by Lessee, Lessee
shall make such alternations at its own cost and expense after first obtaining
Lessor’s written approval of plans and specifications therefore and furnishing
such indemnification as Lessor may reasonably require against liens, costs,
damages, and expenses arising out of such alterations. Lessee shall pay Lessor
additional Base Rent and Additional Rent based on the additional number of
rentable square feet in the Demised Premises after construction of any
alteration or addition. Alterations or additions by Lessee must be built in
compliance with all laws, ordinances, and governmental regulations affecting the
Premises and Lessee shall warrant to Lessor that all such alternations,
additions, or improvements shall be in strict compliance with all relevant laws,
ordinances, governmental regulations, and insurance requirements. Construction
of such alterations or additions shall commence only upon Lessee obtaining and
exhibiting to Lessor the requisite approvals, licenses, and permits and
indemnification against liens. All alterations, installations, physical
additions or improvements to the Demised Premises made by Lessee shall at once
become the property of Lessor and shall be surrendered to Lessor upon the
termination of this Lease; provided, however, this clause shall not apply to
movable equipment or furniture owned by Lessee which may be removed by Lessee at
the end of the term of this Lease without damaging the Demised Premises and if
Lessee is not then in default.

 

POSSESSION:

 

9.       Except as hereinafter provided Lessor shall deliver possession of the
Demised Premises to Lessee in the condition required by this Lease on or before
the Commencement Date, but delivery of possession prior to or later than such
Commencement Date shall not affect the expiration date of this Lease. The
rentals herein reserved shall commence on the date when possession of the
Demised Premises is delivered by Lessor to Lessee. Any occupancy by Lessee prior
to the beginning of the term shall in all respects be the same as that of a
Lessee under this Lease. Lessor shall have no responsibility or liability for
loss or damage to fixtures, facilities, or equipment installed or left on the
Demised Premises. If Demised Premises are not ready for occupancy by
Commencement Date and possession is later than Commencement Date, rent shall
begin on date of possession.

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SECURITY AND DAMAGE DEPOSIT:

 

10.      Lessee contemporaneously with the execution of this Lease, has
deposited with Lessor the sum of Fifteen Thousand Fifty and NO/100 Dollars
($15,050.00), receipt of which is acknowledged hereby by Lessor, which deposit
is to be held by Lessor, without liability for interest, as a security and
damage deposit for the faithful performance by Lessee during the term hereof or
any extension hereof. Prior to the time when Lessee shall be entitled to the
return of this security deposit, Lessor may co-mingle such deposit with Lessor’s
own funds and to use such security deposit for such purpose as Lessor may
determine. In the event of the failure of Lessee to keep and perform any of the
terms, covenants, and conditions of this Lease to be kept and performed by
Lessee during the term hereof or any extension hereof, then Lessor, either with
or without terminating this Lease, may (but shall not be required to) apply such
portion of said deposit as may be necessary to compensate or repay Lessor for
all losses or damages sustained or to be sustained by Lessor due to such breach
on the part of Lessee, including, but not limited to overdue and unpaid rent,
any other sum payable by Lessee to Lessor pursuant to the provisions of this
Lease, damages, or deficiencies in the reletting of Demised Premises, and
reasonable attorney’s fees incurred by Lessor. Should the entire deposit or any
portion thereof, be appropriated and applied by Lessor, in accordance with the
provisions of this paragraph. Lessee upon written demand by Lessor, shall remit
forthwith to Lessor a sufficient amount of cash to restore said security deposit
to the original sum deposited, and Lessee’s failure to do so within five (5)
days after receipt of such demand shall constitute a breach of this Lease. Said
security deposit shall be returned to Lessee, less any depletion thereof as the
result of the provisions of this paragraph, at the end of the term of this Lease
or any renewal thereof, or upon the earlier termination of this Lease. Lessee
shall have no right to anticipate return of said deposit by withholding any
amount required to be paid pursuant to the provision of this Lease or otherwise.

In the event Lessor shall sell the Premises, or shall otherwise convey or
dispose of its interest in this Lease, Lessor may assign said security deposit
or any balance thereof to Lessor’s assignee, whereupon Lessor shall be released
from all liability for the return or repayment of such security deposit and
Lessee shall look solely to the said assignee for the return and repayment of
said security deposit. Said security deposit shall not be assigned or encumbered
by Lessee without the written consent of Lessor, and any assignment of
encumbrance without such consent shall not bind Lessor. In the event of any
rightful and permitted assignment of this Lease by Lessee, said security deposit
shall be deemed to be held by Lessor as a deposit made by the assignee, and
Lessor shall have no further liability with respect to the return of said
security deposit to the Lessee.

 

USE:

 

11.      The Demised Premises shall be used and occupied by Lessee for the
purpose of clean-up and maintenance of company vehicles, courier service
operations, warehousing and distribution activities, and Lessee agrees that such
use shall be in compliance with all applicable laws, ordinances, and
governmental regulations affecting the Building and Premises. Lessee shall
immediately discontinue any use of the Demised Premises which is not in
compliance with any applicable laws, ordinances, or governmental regulations.
The Demised Premises shall not be used in such manner that, in accordance with
any requirement of law or of any public authority, Lessor shall be obliged on
account of the purpose or manner of said use to make any addition or alternation
to or in the Building. The Demised Premises shall not be used in any manner
which will increase the rates required to be paid for public liability or for
fire and extended coverage insurance covering the Premises. Lessee shall occupy
the Demised Premises, conduct its business and control its agents, employees,
invitees, and visitors in such a way as is lawful, and reputable and will not
permit or create any nuisance, noise, odor, or otherwise interfere with, annoy,
or disturb any other tenant in the Building in its normal business operations or
Lessor in its management of the Building. Lessee’s use of the Demised Premises
shall conform to all the Lessor’s rules and regulations relating to the use of
the Premises. Outside storage on the Premises of any type of equipment,
property, or materials owned or used on the Premises by Lessee or its customers
and suppliers shall not be permitted.

 

ACCESS TO DEMISED PREMISES:

 

12.      Lessee agrees to permit Lessor and the authorized representatives of
Lessor to enter the Demised Premises at all times during usual business hours
for the purpose of inspecting the same and making any necessary repairs to the
Demised Premises and performing any work therein that may be necessary to comply
with any laws, ordinances, rules, regulations, or requirements of any public
authority or of the Board of Fire Underwriters or any similar body or that
Lessor may deem necessary to prevent waste or deterioration in connection with
the Demised Premises. Nothing herein shall imply any duty upon the part of
Lessor to do any

 

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such work which, under any provision of this Lease, Lessee is required to
perform and the performance thereof by Lessor shall not constitute a waiver of
the Lessee’s default in failing to perform the same. Lessor may, during the
progress of any work in the Demised Premises, keep and store upon the Demised
Premises all necessary materials, tools, and equipment, subject to mutual and
reasonable agreement of Lessor and Lessee. Lessor shall not in any event be
liable for inconvenience, annoyance, disturbance, loss of business, or other
damage of the Lessee by reason of making repairs or the performance of any work
in the Demised Premises, or on account of bringing materials, supplies and
equipment into or through the Demised Premises during the course thereof and the
obligations of the Lessee under this Lease shall not thereby be affected in any
manner whatsoever.

Lessor reserves the right to enter upon the Demised Premises (a) at any time in
the event of an emergency and (b) at reasonable hours to exhibit the Demised
Premises to prospective purchasers or others; and to exhibit the Demised
Premises to prospective tenants and to display “For Rent” or similar signs on
windows or doors in the Demised Premises during the last one hundred twenty
(120) days of the term of this Lease, all without hindrance or molestation by
Lessee.

 

EMINENT DOMAIN:

 

13.      In the event of any eminent domain or condemnation proceeding or
private sale in lieu thereof in respect to the Premises during the term thereof,
the following provisions shall apply:

a.        If the whole of the Premises shall be acquired or condemned by eminent
domain for any public or quasipublic use or purpose, then the term of this Lease
shall cease and terminate as of the date possession shall be taken in such
proceeding and all rentals shall be paid up to that date.

b.        If any part constituting less than the whole of the Premises shall be
acquired or condemned as aforesaid, and in the event that such partial taking or
condemnation shall materially affect the Demised Premises so as to render the
Demised Premises unsuitable for the business of the Lessee, in the reasonable
opinion of Lessor and Lessee, then the term of this Lease shall cease and
terminate as of the date possession shall be taken by the condemning authority
and rent shall be paid to the date of such termination.

In the event of a partial taking or condemnation of the Premises which shall not
materially affect the Demised Premises so as to render the Demised Premises
unsuitable for the business of the Lessee, in the reasonable opinion of the
Lessor and Lessee, this Lease shall continue in full force and effect but with a
proportionate abatement of the Base Rent and Additional Rent based on the
portion, if any, of the Demised Premises taken. Lessor reserves the right, at
its option, to restore the Building and the Demised Premises to substantially
the same condition as they were prior to such condemnation. In such event,
Lessor shall give written notice to Lessee, within 30 days following the date
possession shall be taken by the condemning authority, of Lessor’s intention to
restore. Upon Lessor’s notice of election to restore, Lessor shall commence
restoration and shall restore the Building and the Demised Premises with
reasonable promptness, subject to delays beyond Lessor’s control and delays in
the making of condemnation or sale proceeds adjustments by Lessor; and Lessee
shall have no right to terminate this Lease except as herein provided. Upon
completion of such restoration, the rent shall be adjusted based upon the
portion, if any, of the Demised Premises restored.

c.        In the event of any condemnation or taking as aforesaid, whether whole
or partial, the Lessee shall not be entitled to any part of the award paid for
such condemnation and Lessor is to receive the full amount of such award, the
Lessee hereby expressly waiving any right to claim to any part thereof.

d.        Although all damages in the event of any condemnation shall belong to
the Lessor whether such damages are awarded as compensation for diminution in
value of the leasehold or to the fee of the Demised Premises, Lessee shall have
the right to claim and recover from the condemning authority, but not from
Lessor, such compensation as may be separately awarded or recoverable by Lessee
in Lessee’s own right on account of any and all damage to Lessee’s business by
reason of the condemnation and for or on account of any cost or loss to which
Lessee might be put in removing Lessee’s merchandise, furniture, fixtures,
leasehold improvements, and equipment. However, Lessee shall have no claim
against Lessor or make any claim with the condemning authority for the loss of
its leasehold estate, any unexpired term or loss of any possible renewal or
extension of said lease or loss of any possible value of said Lease, any
unexpired term, renewal, or extension of said Lease.

 

DAMAGE OR DESTRUCTION:

 

14.      In the event of any damage or destruction to the Premises by fire or
other cause during the term hereof, the following provisions shall apply:

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a.        If the Building is damaged by fire or any other cause to such extent
that the cost of restoration, as estimated by Lessor will equal or exceed thirty
percent (30%) of the replacement value of the Building (exclusive of
foundations) just prior to the occurrence of the damage, then Lessor may, not
later than the sixtieth (60th) day following the damage, give Lessee written
notice of Lessor’s election to terminate this Lease.

b.        If the cost of restoration as estimated by Lessor will equal or exceed
fifty percent (50%) of said replacement value of the Building and if the Demised
Premises are not suitable as a result of said damage for the purposes for which
they are demised hereunder, in the reasonable opinion of Lessee, then Lessee
may, no later than the sixtieth (60th) day following the damage, give Lessor a
written notice of election to terminate this Lease.

c.        If the cost of restoration as estimated by Lessor shall amount to less
than thirty percent (30%) of said replacement value of the Building, or if,
despite the cost, Lessor does not elect to terminate this Lease, Lessor shall
restore the Building and the Demised Premises with reasonable promptness,
subject to delays beyond Lessor’s control and delays in the making of insurance
adjustments by Lessor, and Lessee shall have no right to terminate this Lease
except as herein provided. Lessor shall not be responsible for restoring or
repairing leasehold improvements of the Lessee.

d.        In the event of either of the elections to terminate, this Lease shall
be deemed to terminate on the date of the receipt of the notice of election and
all rentals shall be paid up to that date. Lessee shall have no claim against
Lessor for the value of any unexpired term of this Lease.

e.        In any case where damage to the Building shall materially affect the
Demised Premises so as to render them unsuitable in whole or in part for the
purposes for which they are demised hereunder, then, unless such destruction was
wholly or partially caused by the negligence or breach of the terms of this
Lease by Lessee, its employees, contractors, or licensees, a portion of the rent
based upon the amount of the extent to

which the Demised Premises are rendered unsuitable shall be abated until
repaired or restored. If the destruction or damage was wholly or partially
caused by negligence or breach of the terms of this Lease by Lessee as aforesaid
and if Lessor shall elect to rebuild, the rent shall not abate and the Lessee
shall remain liable for the same.

f.        Notwithstanding anything contained herein to the contrary, in the
event the Demised Premises are damaged or destroyed and this Lease is not
terminated as provided above, the Lessee shall have the right to terminate this
Lease by giving written notice to Lessor if (i) repair or reconstruction of the
Demised Premises for which Lessor is responsible is not substantially completed
within 180 days from the date on which the Demised Premises were damaged or
destroyed; or (ii) at the time of said damage or destruction, less than one (1)
full lease year remains in the original term or the extended term of the Lease,
as the case may be, and Lessee's fixtures, equipment and leasehold improvements
are damaged or destroyed to the extent of more than fifty percent (50%) of the
total replacement cost at the time of said damage or destruction. Termination
pursuant to this Paragraph shall be effective on the date Lessee gives notice to
Lessor. However, if Lessee fails to give notice of termination to Lessor
pursuant to clause "(ii)" above within thirty (30) days after the date of such
damage or destruction, Lessee shall have no right to terminate this Lease
pursuant to such clause "(ii)".

 

CASUALTY INSURANCE:

 

15.      a.      Lessor shall at all times during the term of this Lease, at its
expense, (subject to participation by Lessee by payment of Operating Expenses
under Article 3b) maintain a policy or policies of insurance with premiums paid
in advance issued by an insurance company licensed to do business in the State
of Minnesota insuring the Building against loss or damage by fire, explosion, or
other insurable hazards and contingencies for the full replacement value,
provided that Lessor shall not be obligated to insure any furniture, equipment,
machinery, goods, or supplies not covered by this Lease which Lessee may bring
upon the Demised Premises or any additional improvements which Lessee may
construct or install on the Demised Premises. Lessor may self insure.

b.        Lessee shall not carry any stock of goods or do anything in or about
the Demised Premises which will in any way impair or invalidate the obligation
of the insurer under any policy of insurance required by this Lease.

c.        Lessor hereby waives and releases all claims, liabilities, and causes
of action against Lessee and its agents, servants and employees for loss or
damage to, or destruction of, the Premises or any portion thereof, including the
buildings and other improvements situated thereon, resulting from fire,
explosion, or the other perils included in standard extended coverage insurance,
whether caused by the negligence of any of said persons or otherwise. Likewise,
Lessee hereby waives and releases all claims, liabilities, and causes of action

 

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against Lessor and its agents, servants, and employees for loss or damage to, or
destruction of, any of the improvements, fixtures, equipment, supplies,
merchandise, and other property, whether that of Lessee or of others in, upon or
about the Premises resulting from fire, explosion, or the other perils included
in standard extended coverage insurance, whether caused by the negligence of any
of said persons or otherwise. The waiver shall remain in force whether or not
the Lessee’s insurer shall consent thereto.

d.        In the event that the use of the Demised Premises by Lessee increases
the premium rate for insurance carried by Lessor on the improvements of which
the Demised Premises are a part, Lessee shall pay Lessor, upon demand, the
amount of such premium increase. If Lessee installs any electrical equipment
that overloads the power lines to the building or its wiring, Lessee shall, at
its own expense, make whatever changes are necessary to comply with the
requirements of the insurance underwriter, insurance rating bureau, and
governmental authorities having jurisdiction.

 

PUBLIC LIABILITY INSURANCE:

 

16.      Lessee shall, during the term hereof keep in full force and effect at
its expense, a policy or policies of public liability insurance with respect to
the Demised Premises and the business of Lessee, on terms and with companies
approved in writing by Lessor, in which both Lessee and Lessor shall be covered
by being named as insured parties under reasonable limits of liability not less
than: $500,000 for injury/death to any one person; $1,000,000 for injury/death
to more than one person; and $500,000 with respect to damage to property. Such
policy or policies shall provide that ten (10) days written notice must be given
to Lessor prior to cancellation thereof. Lessee shall furnish evidence
satisfactory to Lessor at the time this Lease is executed that such coverage is
in full force and effect.

 

DEFAULT OF LESSEE:

 

17.      a.      In the event of any failure of Lessee to pay any rental due
hereunder within ten (10) days after the same shall be due, and after written
notice thereof from Lessor, except if such notice is given two times in any
twelve month period, then no notice shall be required by Lessor in the case of
any additional occurrences during such twelve month period and default begins on
the date, 10 days after any rental is due and not pad by Lessee or any failure
to perform any other of the terms, conditions, or covenants of this Lease to be
observed or performed by Lessee for more than thirty (30) days after written
notice of such failure shall have been given to Lessee, or if Lessee or an agent
of Lessee shall falsify any report required to be furnished to Lessor pursuant
to the terms of this Lease, or if Lessee or any guarantor of this Lease shall
become bankrupt or insolvent, or file any debtor proceedings or any person shall
take or have against Lessee or any guarantor of this Lease in any court pursuant
to any statute either of the United States or of any state a petition in
bankruptcy or insolvency or for reorganization or for the appointment of a
receiver or trustee of all or a portion of Lessee’s or any such guarantor’s
property, or if Lessee or any such guarantor makes an assignment for the benefit
of creditors, or petitions for or enters into an arrangement with its creditors,
or if Lessee shall abandon the Demised Premises or suffer this Lease to be taken
under any writ of execution, then in any such event Lessee shall be in default
hereunder, and Lessor, in addition to other rights of remedies it may have,
shall have the immediate right of re-entry and may remove all persons and
property from the Demised Premises and such property may be removed and stored
in a public warehouse or elsewhere at the cost of, and for the account of
Lessee, without being guilty of trespass or becoming liable for any loss or
damage which may be occasioned thereby.

b.       Should Lessor elect to re-enter the Demised Premises, as herein
provided, or should it take possession of the Demised Premises pursuant to legal
proceedings or pursuant to any notice provided for by law, it may either
terminate this Lease or it may from time to time, without terminating this
Lease, make such alterations and repairs as may be necessary in order to relet
the Demised Premises, and relet the Demised Premises or any part thereof for
such term or terms (which may be for a term extending beyond the term of this
Lease) and at such rental or rentals and upon such other terms and conditions as
Lessor in its sole discretion may deem advisable. Upon each such subletting all
rentals received by the Lessor from such reletting shall be applied first to the
payment of any indebtedness other than rent due hereunder from Lessee to Lessor;
second, to the payment of any costs and expenses of such reletting, including
brokerage fees and attorney’s fees and costs of such alterations and repairs;
third, to the payment of the rent due and unpaid hereunder, and the residue, if
any, shall be held by Lessor and applied in payment of future rent as the same
may become due and payable hereunder. If such rentals received from such
reletting during any month be less than that to be paid during that month by
Lessee hereunder, Lessee, upon demand, shall pay any such deficiency to Lessor.
No such re-entry or taking possession of the Demised Premises by Lessor shall be
construed as an election on its part to

 

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terminate this Lease unless a written notice of such intention be given to
Lessee or unless the termination thereof be decreed by a court of competent
jurisdiction. Notwithstanding any such reletting without termination, Lessor may
at any time after such re-entry and reletting elect to terminate this Lease for
such previous breach. Should Lessor at any time terminate this Lease for any
such breach, in addition to any other remedies it may have, it may recover from
Lessee all damages it may incur by reason of such breach, including the cost of
recovering the Demised Premises, attorney’s fees, and costs, the unamortized
portion of any leasehold improvements made by Lessor for Lessee and including
the worth at the time of such termination of the excess, if any, of the amount
of rent and charges equivalent to rent reserved in this Lease for the remainder
of the stated term over the then reasonable rental value of the Demised Premises
for the remainder of the stated term, all of which amounts shall be immediately
due and payable from Lessee to Lessor.

c.        Lessor may, at its option, instead of exercising any other rights or
remedies available to it in this Lease or otherwise by law, statute, or equity,
spend such money as is reasonably necessary to cure any default of Lessee herein
and the amount so spent, and costs incurred, including attorney’s fees in curing
such default, shall be paid by Lessee, as additional rent, upon demand.

d.        In the event suit shall be brought for recovery of possession of the
Demised Premises, for the recovery of rent or any other amount due under the
provisions of this Lease, or because of the breach of any other covenant herein
contained on the part of Lessee to be kept or performed, and a breach shall be
established, Lessee shall pay to Lessor all expenses incurred therefore,
including attorney’s fees and costs, together with interest on all such expenses
at the rate of fourteen percent (14%) per annum from the date of such breach of
the covenants of this Lease.

e.        Lessee waives any demand for possession of the Demised Premises, and
any demand for payment of rent and any notice of intent to re-enter the Demised
Premises, or of intent to terminate this Lease, other than the notices above
provided in this Article, and any other notice or demand prescribed by any
applicable statutes or laws.

f.        No remedy herein or elsewhere in this Lease or otherwise by law,
statute or equity, conferred upon or reserved to Lessor or Lessee shall be
exclusive of any other remedy, but shall be cumulative, and may be exercised
from time to time and as often as the occasion may arise.

 

COVENANTS TO HOLD HARMLESS:

 

18.      Unless the liability for damage or loss is caused by the gross
negligence or willful misconduct of Lessor, its agents or employees, Lessee
shall hold harmless Lessor from any liability for damages to any person or
property in or upon the Demised Premises and the Premises, including the person
and property of Lessee and its employees and all persons in the Building at its
or their invitation or sufferance, and from all damages resulting from Lessee’s
failure to perform the covenants of this Lease. All property kept, maintained or
stored on the Demised Premises shall be so kept, maintained or stored at the
sole risk of Lessee. Lessee agrees to pay all sums of money in respect of any
labor, service, materials, supplies or equipment furnished or alleged to have
been furnished to Lessee in or about the Premises, and not furnished on order of
Lessor, which may be secured by any mechanic’s material-men’s or other lien to
be discharged at the time performance of any obligation secured thereby matures,
provided that Lessee may contest such lien, but if such lien is reduced to final
judgment and if such judgment or process thereon is not stayed, or if stayed and
said stay expires, then and in each such event, Lessee shall forthwith pay and
discharge said judgment. Lessor shall have the right to post and maintain on the
Demised Premises notices of non-responsibility under the laws of the State of
Minnesota.

 

NON-LIABILITY:

 

19.      Subject to the terms and conditions of Article 14 hereof, Lessor shall
not be liable for any damage to property of Lessee or of others located on the
Premises, nor for the loss of or damage to any property of Lessee or of others
by theft or otherwise. Lessor shall not be liable for any injury or damage to
persons or property resulting from fire, explosion, failing plaster, steam, gas,
electricity, water, rain or snow, or leaks from any part of the Premises or from
the pipes, appliances, or plumbing works or from the roof, street, or subsurface
or from any other place or by dampness or by any other cause of whatsoever
nature. Lessor shall not be liable for any such damage caused by other Lessees
or persons in the Premises, occupants of adjacent property, of the buildings, or
the public or caused by operations in construction of any private, public, or
quasi-public work. Lessor shall not be liable for any latent defect in the
Demised Premises. All property of Lessee kept or stored on the Demised Premises
shall be so kept or stored at the risk of Lessee only and Lessee shall hold
Lessor harmless from any claims arising out of damage to the same, including
subrogation claims by Lessee’s insurance carrier.

 

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SUBORDINATION:

 

20.      This Lease shall be subordinated to any mortgages that may now exist or
that may hereafter be placed upon the Demised Premises and to any and all
advances made thereunder, and to the interest upon the

indebtedness evidenced by such mortgages, and to all renewals, replacements, and
extensions thereof. In the event of execution by Lessor after the date of this
Lease of any such mortgage, renewal, replacement, or extension, Lessee agrees to
execute a subordination agreement with the holder thereof which agreement shall
provide that:

a.       Such holder shall not disturb the possession and other rights of Lessee
under this Lease so long as Lessee is not in default hereunder,

b.        In the event of acquisition of title to the Demised Premises by such
holder, such holder shall accept the Lessee as Lessee of the Demised Premises
under the terms and conditions of this Lease and shall perform all the
obligations of Lessor hereunder, and

c.        The Lessee shall recognize such holder as Lessor hereunder. Lessee
shall, upon receipt of a request from Lessor therefore, execute and deliver to
Lessor or to any proposed holder of a mortgage or trust deed or to any proposed
purchaser of the Premises, a certificate in recordable form, certifying that his
Lease is in full force and effect, and that there are no offsets against rent
nor defenses to Lessee’s performance under this Lease, or setting forth any such
offsets or defenses claimed by Lessee, as the case may be.

 

ASSIGNMENT OR SUBLETTING:

 

21.      Lessee agrees to use and occupy the Demised Premises throughout the
entire term hereof for the purpose or purposes herein specified and for no other
purposes, in the manner and to substantially the extent now intended, and not to
transfer or assign this Lease or sublet said Demised Premises, or any part
thereof, whether by voluntary act, operation of law, or otherwise, without
obtaining the prior consent of Lessor in each instance which shall not be
unreasonably withheld or delayed provided such sublet is not to a party who is
either a Lessee of Lessor or a current leasing prospect actively working with
Lessor. Lessee shall seek such consent of Lessor by a written request therefore,
setting forth such information as Lessor may deem necessary.

 

Consent by Lessor to any assignment of this Lease or to any subletting of the
Demised Premises shall not be a waiver of Lessor’s right under this Article as
to any subsequent assignment or subletting. Lessor’s rights to assign this Lease
are and shall remain unqualified. No such assignment or subleasing shall relieve
the Lessee from any of Lessee’s obligations in this Lease contained, nor shall
any assignment or sublease or other transfer of this Lease be effective unless
the assignee, sublessee or transferee shall at the time of such assignment,
sublease or transfer, assume in writing for the benefit of Lessor, its
successors or assigns, all of the terms, covenants, and conditions of this Lease
thereafter to be performed by Lessee and shall agree in writing to be bound
thereby. Should Lessee sublease in accordance with the terms of this Lease,
fifty percent (50%) of any increase in rental received by Lessee over the per
square foot rental rate which is being paid by Lessee shall be forwarded to and
retained by Lessor less any reasonable costs incurred by Lessee to sublease the
space, which increase shall be in addition to the Base Rent and Additional Rent
due Lessor under this Lease.

 

ATTORNMENT:

 

22.      In the event of a sale or assignment of Lessor’s interest, in the
Premises, or the Building in which the Demised Premises are located, or this
Lease, or if the Premises come into custody or possession of a mortgagee or any
other party whether because of a mortgage foreclosure, or otherwise, Lessee
shall attorn to such assignee or other party and recognize such party as Lessor
hereunder, provided, however, Lessee’s peaceable possession will not be
disturbed so long as Lessee faithfully performs its obligations under this
Lease. Lessee shall execute, on demand, any attornment agreement required by any
such party to be executed, containing such provisions as such party may require.
Lessor shall have no further obligations under this Lease after any such
assignment.

 

NOVATION IN THE EVENT OF SALE:

 

23.      In the event of the sale of the Demised Premises, Lessor shall be and
hereby is relieved of all of the covenants and obligations created hereby
accruing from and after the date of sale, and such sale shall result
automatically in the purchaser assuming and agreeing to carry out all the
covenants and obligations of Lessor herein.

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The Lessee agrees at any time and from time to time upon not less than ten (10)
days prior written request by the Lessor to execute, acknowledge, and deliver to
the Lessor a statement in writing certifying that this Lease is unmodified and
in full force and effect as modified and stating the modifications, and the
dates to which the basic rent and other charges have been paid in advance, if
any, it being intended that any such statement delivered pursuant to this
paragraph may be relied upon by any prospective purchaser of the fee or
mortgagee or assignee of any mortgage upon the fee of the Demised Premises.

 

SUCCESSORS AND ASSIGNS:

 

24.      The terms, covenants, and conditions hereof shall be binding upon and
inure to the successors and assigns of the parties hereto.

 

REMOVAL OF FIXTURES:

 

25.      Notwithstanding anything contained in Article 8, 29, or elsewhere in
this Lease, if Lessor requests then Lessee will promptly remove at the sole cost
and expense of Lessee all fixtures, equipment, and alterations made by Lessee
simultaneously with vacating the Demised Premises and Lessee will promptly
restore said Demised Premises to the condition that existed immediately prior to
said fixtures, equipment, and alterations having been made all at the sole cost
and expense of Lessee.

 

QUIET ENJOYMENT:

 

26.      Lessor warrants that it has full right to execute and to perform this
Lease and to grant the estate demised, and that Lessee, upon payment of the
rents and other amounts due and the performance of all the terms, conditions,
covenants and agreements on Lessee’s part to be observed and performed under
this Lease, may peaceably and quietly enjoy the Demised Premises for the
business uses permitted hereunder, subject, nevertheless, to the terms and
conditions of this Lease.

 

RECORDING:

 

27.      Lessee shall not record this Lease without the written consent of
Lessor. However, upon the request of either party hereto, the other party shall
join in the execution of the Memorandum lease for the purposes of recordation.
Said Memorandum lease shall describe the parties, the Demised Premises, and the
term of the Lease and shall incorporate this Lease by reference. This Article 27
shall not be construed to limit Lessor’s right to file this Lease.

 

OVERDUE PAYMENTS:

 

28.      All monies due under this Lease from Lessee to Lessor shall be due on
demand, unless otherwise specified and if not paid when due, shall result in the
imposition of a service charge for such late payment in the amount of fourteen
percent (14% ) of the amount due.

 

SURRENDER:

 

29.      On the Expiration Date or upon the termination hereof upon a day other
than the Expiration Date, Lessee shall peaceably surrender the Demised Premises
broom-clean in good order, condition, and repair, reasonable wear and tear only
excepted. On or before the Expiration Date or upon termination of this Lease on
a day other than the Expiration Date, Lessee shall, at its expense, remove all
trade fixtures, personal property, and equipment and signs from the Demised
Premises and any property not removed shall be deemed to have been abandoned.
Any damage caused in the removal of such items shall be repaired by Lessee and
at its expense. All alterations, additions, improvements, and fixtures (other
than trade fixtures) which shall have been made or installed by Lessor or Lessee
upon the Demised Premises and all floor covering so installed shall remain upon
and be surrendered with the Demised Premises as a part thereof, without
disturbance, molestation or injury, and without charge, at the expiration or
termination of this Lease. If the Demised Premises are not surrendered on the
Expiration Date or the date of termination, Lessee shall indemnify Lessor
against loss or liability, claims, without limitation, made by any succeeding
Lessee founded on such delay. Lessee shall promptly surrender all keys for the
Demised Premises to Lessor at the place then fixed for payment of rent and shall
inform Lessor of combinations of any locks and safes on the Demised Premises.

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HOLDING OVER:

 

30.      In the event of a holding over by Lessee after expiration or
termination of this Lease without the consent in writing of Lessor, Lessee shall
be deemed a lessee at sufferance and shall pay rent for such occupancy at the
rate of one and one-half times the last current aggregate Base and Additional
Rent, prorated for the entire holdover period, plus all attorney’s fees and
expenses incurred by Lessor in enforcing its rights hereunder, plus any other
damages occasioned by such holding over. Except as otherwise agreed, any holding
over with the written consent of Lessor shall constitute Lessee a month-to-month
lessee.

 

ABANDONMENT:

 

31.      In the event Lessee shall remove its fixtures, equipment, or machinery
or shall vacate the Demised Premises or any part thereof prior to the Expiration
Date of this Lease, or shall discontinue or suspend the operation of its
business conducted on the Demised Premises for a period of more than thirty (30)
consecutive days (except during any time when the Demised Premises may be
rendered untenantable by reason of fire or other casualty), then in any such
event Lessee shall be deemed to have abandoned the Demised Premises and Lessee
shall be in default under the terms of this lease.

 

CONSENTS BY LESSOR:

 

32.      Whenever provision is made under this Lease for Lessee securing the
consent of approval by Lessor, such consent or approval shall only be in
writing.

 

NOTICES:

 

33.      Any notice required or permitted under this Lease shall be deemed
sufficiently given or secured if sent by registered or certified return receipt
mail to Lessee at MEDTOX Laboratories, Inc., 402 West County Road D, New
Brighton, MN 55112; and to Lessor at C/O Equity Commercial Services, Inc., 3775
North Dunlap Street, Arden Hills, MN 55112 and either party may by like written
notice at any time designate a different address to which notices shall
subsequently be sent or rent to be paid.

 

RULES AND REGULATIONS:

 

34.      Lessee shall observe and comply with such further reasonable rules and
regulations as Lessor may prescribe, on written notice to Lessee for the safety,
care and cleanliness of the Building.

 

INTENT OF PARTIES:

 

35.      Except as otherwise provided herein, the Lessee covenants and agrees
that if it shall any time fail to pay any cost or expense required to be paid by
it, or fail to take out, pay for, maintain or deliver any of the insurance
policies above required, or fails to make any other payment or perform any other
act on its part to be made or performed as in this Lease provided, then the
Lessor may, but shall not be obligated to do so, and without waiving or
releasing the Lessee from any obligations of the Lessee in this Lease contained,
and after previous notice to Lessee, pay any such cost or expense, effect any
such insurance coverage and pay premiums therefore, and may make any other
payment or perform any other act on the part of the Lessee to be made and
performed as in this Lease provided, in such manner and to such extent as the
Lessor may deem desirable, and in exercising any such right, to also pay all
necessary and incidental costs and expenses, employ counsel and incur and pay
reasonable attorneys’ fees. All sums so paid by Lessor and all necessary and
incidental costs and expenses in connection with the performance of any such act
by the Lessor, together with interest thereon at the rate of fourteen percent
(14%) per annum from the date of making such expenditure, by Lessor, shall be
deemed additional rent hereunder, and shall be payable to Lessor on demand.
Lessee covenants to pay any such sums with interest as aforesaid and the Lessor
shall have the same rights and remedies in the event of the non-payment thereof
by Lessee as in the case of default by Lessee in the payment of the Base Rent
payable under this Lease.

 

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GENERAL:

 

36.   a.       The Lease does not create the relationship of principal and agent
or of partnership or of joint venture or of any association between Lessor and
Lessee, the sole relationship between the parties hereto being that of Lessor
and Lessee.

b.        No waiver of any default of Lessee hereunder shall be implied from any
omission by Lessor to take any action on account of such default if such default
persists or is repeated, and no express waiver shall affect any default other
then the default specified in the express waiver and that only for the time and
to the extent therein stated. One or more waivers by Lessor shall not then be
construed as a waiver of a subsequent breach of the same covenant, term or
condition. The consent to or approval by Lessor of any act by Lessee requiring
Lessor’s consent or approval shall not waive or render unnecessary Lessor’s
consent to or approval of any subsequent similar act by Lessee. No action
required or permitted to be taken by or on behalf of Lessor under the terms or
provisions of this Lease shall be deemed to constitute an eviction or
disturbance of Lessee’s possession of the Demised Premises. All preliminary
negotiations are merged into and incorporated in this Lease. The laws of the
State of Minnesota shall govern the validity, performance and enforcement of
this Lease.

c.        This Lease and the exhibits, if any, attached hereto and forming a
part hereof, constitute the entire agreement between Lessor and Lessee affecting
the Demised Premises and there are no other agreements, either oral or written,
between them other than are herein set forth. No subsequent alteration,
amendment, change or addition to this Lease shall be binding upon Lessor or
Lessee unless reduced to writing and executed in the same form and manner in
which this Lease is executed.

d.        If any agreement, covenant, or condition of this Lease or the
application thereof to any person or circumstance shall, to any extent, be
invalid or unenforceable, the remainder of this Lease, or the application of
such agreement, covenant, or condition to persons or circumstances other than
those as to which it is held invalid or unenforceable, shall not be affected
thereby and each agreement, covenant or condition of this Lease shall be valid
and be enforced to the fullest extent permitted by law.

e.        The captions are inserted only as a matter of convenience and for
reference, and in no way define, limit or describe the scope of this Lease nor
the intent or any provision thereof.

f.        Submission of this instrument to Lessee or proposed Lessee or his
agents or attorneys for examination, review, consideration or signature does not
constitute or imply an offer to lease, reservation of space, or option to lease,
and this instrument shall have no binding legal effect until execution hereof by
both Lessor/Owner and Lessee or its agents.

 

EXHIBITS:

 

37.      Reference is made to Exhibits A through C, inclusive, which Exhibits
are attached hereto and made a part hereof.

 

Exhibit

Description

 

 

A

Legal Description

 

B

Demised Premises

 

C

Building Standards

AGENT:

 

38.      It is understood that Equity Commercial Services is representing St.
Paul Properties, Inc., Lessor and that Scott Kummel agent or broker with
Colliers Towle Real Estate Company is representing Lessee.

 

 

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AMERICANS WITH DISABILITIES ACT:

 

39.      Lessor and Lessee agree that the Demised Premises is a “Commercial
Facility” as that term is defined in the Americans with Disabilities Act (the
“ADA”). Lessor shall be responsible for base building improvements outside the
Demised Premises and in common areas which Lessor deems necessary to cause the
same to comply with the ADA. Lessee shall make, at its sole expense, any other
alterations or improvements to the Demised Premises required by the ADA or any
attributable to Lessee’s use of the space. Any such improvements or alterations
by Lessee shall comply with the provisions of Article 8 of this Lease.

 

RELOCATION:

 

40.      I.       Lessor may anytime after August 31, 2007, upon not less than
thirty (30) days notice require Lessee to relocate to Substituted Demised
Premises provided:

a.        The square footage of the Substituted Demised Premises is not less
than ninety percent (90%) of the square footage of the present Demised Premises,
and

b.        At Lessor’s option the square footage of the Substitute Demised
Premises may be greater than that of the present Demised Premises, then for
purposes of computing Base Rent and Lessee’s share of Real Estate Taxes and
Operating Expenses, the square footage shall be deemed to increase no more than
ten percent (10%), and

c.        Lessor shall at its sole expense provide leasehold improvements in the
Substitute Demised Premises which are reasonably comparable to those in the
present Demised Premises and will also pay the reasonable expenses incurred in
moving Lessee’s furniture and equipment to the Substitute Demised Premises.

d.        The parking available in the Substitute Demised Premises is within 20%
of the parking available in the present Demised Premises.

Except as expressly provided herein, Lessor shall have no further obligations
with respect to such relocation.

II.      Upon the date of relocation as specified in the Lessor’s notice:

a.        Lessee shall promptly vacate and surrender its previous Demised
Premises in the condition required by this Lease, time being of the essence, and

b.        The new Substitute Demised Premises shall become the Demised Premises
for the purposes of this Lease.

III.      If Lessee is not in agreement with the location of the Substitute
Demised Premises, Lessee agrees to cancel this Lease by written notice within
fifteen (15) days of relocation notice from Lessor provided:

a.        Lessee will vacate the current Demised Premises within sixty (60) days
of relocation notice from Lessor, and

b.        Lessee will pay a penalty equal to the unamortized cost of the Tenant
Improvements to the current Demised Premises.

 

HAZARDOUS MATERIALS:

 

41.      Without the prior written consent of Lessor in its absolute discretion,
Lessee shall not cause or permit to be brought upon or kept or used in, on or
about the Demised Premises by Lessee, its employees, agents, contractors or
invitees any toxic or hazardous materials, substance or waste, or any other
material which may adversely affect the environment. Without limiting the
indemnification obligations of Lessee under Article 18, if the presence of any
such material, substance or waste caused or permitted by Lessee, its employees,
agents, contractors or invitees results in any contamination of the Premises,
then Lessee shall promptly take all actions at its sole expense as are necessary
to return the Premises to the condition existing prior to the introduction of
any such material, substance or waste to the Premises, provided that Lessor’s
approval of such actions shall first be obtained.

 

DEMOLITION CLAUSE:

 

42.      Not withstanding anything in the Lease to the contrary, Lessor may
terminate the Lease at any time during the term of this Lease with not less than
six (6) months prior notice to Lessee if it is Lessor’s intention to demolish or
substantially renovate all or a substantial part of the Premises.

 

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LESSORS WORK:

 

43.      Lessor shall clean the Demised Premises to a reasonable condition prior
to the Commencement Date of the Lease. Lessor shall contribute up to Thirty
Thousand and No/100 Dollars ($30,000.00) to offset the cost of cleaning the
Demised Premises.

 

EXTENSION OF TERM:

 

44.      I.       Grant In the event there has been no default under the Lease,
Lessor hereby grants to Lessee the one-time option to, extend the Term upon the
terms and conditions set out in this Article 44, if:

a.        Lessee is not in default under this Lease at the time such option is
exercised and at the time such extension is to commence, and

b.        Lessee delivers to Lessor, not later than nine (9) months prior to the
end of the original Term written notice exercising its option to extend the
Term.

II.      Term During the extended Term:

a.        Base Rent shall be equal to an amount based on then current Market
Rent for comparable Premises as outlined in Article 45 (but in not event, less
than the highest amount set out in Article 2 of this Lease), and

b.        Additional Rent shall be determined in the manner set out in Lessor's
then current standard form of Lease for the Premises, and

c.        The Term shall be five (5) years, commencing upon expiration of the
original Term, and

d.        The other terms and conditions shall be as set out in the Lease,
except that there shall be no further right of renewal.

III.      Documentation Lessor and Lessee shall execute and deliver appropriate
documentation to evidence extension of the Term and terms and conditions of this
Lease during the extended Term.

IV.      Non-Severability The rights of Lessee under this Article 44 shall not
be severed from this Lease or separately sold, assigned, or otherwise
transferred, and shall expire on the expiration or earlier termination of this
Lease.

 

MARKET RENT:

 

45.      I.       Definition "Market Rent" means the amount of cash (exclusive
of Additional Rent), which a Lessor would receive annually by then renting the
space in question assuming the Lessor to be a prudent person willing to lease
but being under no compulsion to do so, assuming the Lessee to be a prudent
person willing to lease but being under no compulsion to do so, assuming a lease
term equal to the term in question, and assuming a lease containing the same
terms and provisions as those contained in this Lease.

II.       Determination of Market Rent Whenever Annual Base Rent under this
Lease is based on the Market Rent, Lessor shall initially determine the Market
Rent and shall thereupon give Lessee notice of the amount of Annual Base Rent
and the basis on which Lessor made its determination of that amount. Upon
receipt of that notice, Lessee shall pay the Annual Base Rent stated in that
notice in the manner set out in Article 2 of this Lease.

III.       Disagreement on Market Rent

a.        If Lessee does not agree with the Lessor's determination of Market
Rent, Lessee shall nevertheless pay to Lessor the amount set out in the notice
Lessor gives under this Article 45 and Lessee shall give notice to Lessor of
that disagreement within ten (10) days of receipt of that notice from Lessor.

b.        If Lessee gives Lessor notice of disagreement, Lessor shall
immediately refer the matter to an individual (the "Expert") selected by Lessor,
subject to approval by Lessee, such approval not to be unreasonably withheld,
who shall be deemed to be acting as an expert and not as an arbitrator. The
Expert shall make a determination of Market Rent as expeditiously as possible.

c.        If the Market Rent as determined by the Expert is greater than the
Lessee has paid in accordance with the notice given under this Article 45,
Lessee shall immediately pay to Lessor the difference and shall after that make
the payments of Annual Base Rent as determined by the Expert. If the Market Rent
as determined by the Expert is less than Lessee has paid in accordance with the
notice given under this Article 45, Lessor shall immediately pay to Lessee the
difference and Lessee shall after that make the payments of Annual Base Rent as
determined by the Expert.

 

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d.        If the Market Rent as determined by the Expert is less than 95% of the
amount set out in the notice under this Article 45, Lessor shall bear the costs
and reasonable expenses of the Expert. If the Market Rent as determined by the
Expert is 95% or more of the amount set out in the notice under this Article 45,
Lessee shall bear the costs and reasonable expenses of the Expert.

 

IN WITNESS HEREOF, the Lessor and the Lessee have executed this lease in form
and manner sufficient to bind them at law, as of the day and year first above
written.

 

LESSOR:

ST. PAUL PROPERTIES, INC.

LESSEE:

MEDTOX LABORATORIES, INC.

 

 

 

BY:

/s/ R. William Inserra

BY:

/s/ James Lockhart

 

R. William Inserra

James Lockhart

 

 

ITS:

Vice President, Asset Management

ITS:

CFO

 

 

DATE:

8/7/00

DATE:

8/4/00

 

 

 

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Exhibit “A”

to Lease dated

July 28, 2000

between

St. Paul Properties, Inc.

and

MEDTOX Laboratories, Inc.

 

LEGAL DESCRIPTION

 

The West 920 feet of the South 32 acres of the Southwest 1/4 of the Northwest
1/4 of Section 4, Township 29, Range 23, except the following 5 parcels:

 

1.

The West 450 feet of the South 700 feet thereof.

 

2.

The North 100 feet of the South 800 feet of the West 88 feet thereof.

 

3.

The North 20 feet of the East 150.5 feet of the West 200 feet thereof.

 

4.

The North 34.29 feet of the West 209.29 feet of the East 470 feet, excepting
therefrom a triangle at the Southeast corner measuring 34.29 feet on the East
line and 34.29 feet on the South line thereof.

 

5.

That part of premises contained in the North 8 acres of said Quarter.

 

 

All situated in Ramsey County, Minnesota.

 

 

 

 

 

 

 

 

 

building 5

 

 

 

 

 

 

 

 

 

 

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Exhibit “B”

to Lease dated

July 28, 2000

between

St. Paul Properties, Inc.

and

MEDTOX Laboratories, Inc.

 

DEMISED PREMISES

 

 

 

(Building 5 Floor Plan)

 

 

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Exhibit “C”

to Lease dated

July 28, 2000

between

St. Paul Properties, Inc.

and

MEDTOX Laboratories, Inc.

 

BUILDING STANDARD MATERIALS

 

In order to simplify the design process and to maintain a consistency in the
quality of the Lessee finishes, St. Paul Properties, Inc. assembled "building
standard materials" that are used in the construction of the office portion of
the Demised Premises. When required, these items include:

 

Acoustical Ceiling System

 

A.

Grid System - Suspended white metal interlocking grid - laser leveled in a 2x4
grid pattern.

 

 

B.

Ceiling Tile - 2x4 layin fissured surface acoustical tile.

 

Light Fixtures

Office fixtures will be 2'x4' - 4 lamp fluorescent light fixtures with acrylic
prismatic lens. Set into the ceiling system noted above.

 

Carpet

 

A.

Type 3 - 22 ounce level loop acrylic or equivalent installed in a direct glue
down application.

 

 

B.

Base - 4" vinyl base or 4” carpet base with a bound edge.

 

Resilient Flooring

Resilient flooring will be vinyl composition tile with 4” vinyl base or ceramic
tile in restrooms, when required, with 4” sanitary base.

 

Wall Finishes

Building standard flat latex enamel paint on standard walls as noted below.
Where required by building code a non-porous wall finish such as FRP board or
ceramic tile will be applied, colors to be selected from contractors samples.

 

Wall Construction

3-5/8" metal studs with 5/8" Gypson Board (both sides, taped and sanded to
accept paint).

 

Lessee Entrances

 

A.

Entrance door and store front of aluminum with full glass insert and 12" side
lights.

 

 

B.

Vestibule Doors, when supplied are 3'0" x 6'8" solid core oak stained as noted
below, with glass inset

 

Interior Doors

3'0" x 6'8" solid core oak doors - stained "Medium Oak"; with hollow metal
painted frames..

 

Hardware

 

A.

Entrance sets are a mortised lever style lock set with a brushed aluminum
finish.

 

 

B.

Interior passage sets are lever style with polished, satin or antique finish.

 

 

 

 

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