Document:

EXHIBIT 10.7

                              EMPLOYMENT AGREEMENT

         THIS AGREEMENT, made effective as of the first day of July, 1999,
entered into by and between CHRONIMED INC, a Minnesota corporation (the
"Company") and MAURICE R. TAYLOR, II (the "Employee").

         WHEREAS, the Company desires to employ the Employee as its Chairman and
Chief Executive Officer (CEO) in accordance with the following terms, conditions
and provisions; and

         WHEREAS, the Employee desires to perform such services for the Company,
all in accordance with the following terms, conditions and provisions;

         NOW THEREFORE, in consideration of the mutual covenants herein
contained, it is agreed as follows:

1.       EMPLOYMENT AND DUTIES.

         The Company hereby continues Employee's employment, and Employee hereby
accepts and agrees to serve the Company as the Company's Chairman and CEO,
consistent with the job description for this position, and with duties subject
to review and modification from time to time at the direction of the Company's
Board of Directors (the "Board"). The Employee shall remain a member of the
Company's Board of Directors, subject to election by the shareholders of the
Company. The Employee shall apply his best efforts and devote substantially all
of his time and attention to the Company's affairs.

2.       TERM.

         The term of this Agreement and Employee's employment under this
Agreement shall commence on July 1, 1999, and shall continue thereafter for a
period of three years. Upon the expiration of the original term of this
Agreement, this Agreement shall automatically renew for successive two-year
terms, subject to termination as provided in Section 7.

3.       COMPENSATION.

         The Company shall compensate the Employee for his services at the
following salary, bonus, and benefits:

         A.       Base Salary

                  The Employee shall be paid a base salary of $325,800 per year,
         payable on the Company's normal payroll cycle. This base salary is the
         minimum salary during the term of this Agreement, and may be increased
         from time to time at the discretion of the Board of Directors. Employee
         shall receive an annual performance review, and, contingent upon
         satisfactory review results, shall be eligible for increase of such
         base salary at the direction of the Board of Directors.

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         B.       Bonus.

                  The Employee shall continue to participate in a Company
         Management Incentive Plan, as approved and amended by the Board of
         Directors from time to time, and which is designed to deliver an annual
         bonus consistent with current levels established for this position by
         the Board of Directors. Employee shall periodically meet with the Board
         of Directors, to establish quantitative and qualitative initiatives and
         objectives for the purpose of assessing the amount of bonus to be paid
         to Employee at the end of the associated bonus period.

         C.       Stock Options.

                  The Employee shall be eligible to participate in the annual
         grant of the Company's Stock Option Plan, consistent with its terms and
         conditions, and with amounts of options, including exercise price and
         vesting provisions determined by the Board of Directors from time to
         time. Provisions under this item 3C, stock options, are also subject to
         the provisions found in Section 7, under termination of Agreement.

         D.       Employee Benefits Plans.

                  The Employee shall be entitled to participate in any and all
         Company employee benefit plans, in accordance with the eligibility
         requirements and other terms and provisions of such plan or plans.

         E.       Insurance.

                  The Employee agrees that the Company, at the discretion of its
         Board of Directors, may apply for and procure on its own behalf, life
         insurance on the life of the Employee, for the purpose of protecting
         the Company against loss caused by the death of the Employee (commonly
         referred to as "Key" insurance). Employee agrees to cooperate and
         submit to medical examination, and to execute or deliver any
         documentation reasonably required by the Company's insurer in order to
         effectuate such insurance.

1.       VACATION AND TIME OFF.

         The Employee shall be entitled to four weeks of paid vacation in each
year of employment under the terms of this Agreement, without reduction of
salary. Unused vacation time may be carried over to future years of employment,
consistent with Company policy affecting use of employee vacation time. In
addition, Employee shall be entitled to such additional time off from work,
without loss of compensation, for attendance at professional meetings,
conventions, approved "other business activities", as per Section 10, and
educational

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courses in accordance with the Company's general policies in this regard, and as
from time to time determined by its Board of Directors.

2.       EXPENSES.

         The Company will reimburse Employee for reasonable expenses incurred by
the Employee in connection with the business of the Company, according to
policies promulgated from time to time by the Board of Directors, and upon
presentation by Employee of appropriate substantiation for such expenses.
Further, the Company will reimburse Employee for Employee's monthly dues for
country club or private club membership. Also, the Company will provide
reimbursement under its published policies for tax/financial planning assistance
and preparation, as well as supplemental medical examinations.

                  A.       Automobile Allowance.

                           During the term of this Agreement, Employee shall
                  receive an automobile allowance of $800.00 per month.

         1.       DISABILITY.

         Not withstanding any other provision of this Agreement, if employee is
totally disabled, as defined below, for an aggregate of 180 calendar days in any
one calendar year of employment, the company shall not be obligated to pay
employee the compensation provided in this contract for any period of total
disability during such year in excess of 120 days. In such event, Employee's
salary under Section 3 shall be prorated for such year of employment in the same
manner as if this Agreement had been terminated at the end of such 120th day.

         The Company agrees that, while on disability leave of absence, and for
the duration of such disability, Employee may continue to receive Employer's
group insurance plan coverage by compliance with the provisions of the
Consolidated Omnibus Budget Reconciliation Act ("COBRA"), until the end of such
disability leave, or upon attainment of the age of 65, whichever is earlier.

         For purposes of this Agreement, Employee shall be considered to be
totally disabled when he is considered to be as such by any insurance company
used by the Company to provide disability benefits for the Employee, and
Employee shall continue to be considered totally disabled until such insurance
company ceases to recognize him as totally disabled for purposes of disability
benefits. If no such disability policies are in effect for the benefit of the
Employee or for any reason an insurance company fails to make a determination of
the question of whether Employee is totally disabled, Employee shall be
considered to be totally disabled if, because of mental or physical illness or
other cause, he is unable to perform the majority of his usual duties on behalf
of the Company. The existence of a total disability of the Employee, the date it
commenced, and the date it ceases, shall be determined by the Board of Directors
and the Employee, under these circumstances. If the parties cannot agree on the
foregoing questions of disability, then any such determination shall be made
after examination of Employee by medical

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doctor selected by the Board of Directors, and a medical doctor selected by the
Employee. If the medical doctor so selected cannot agree on the foregoing
questions of disability, a third medical doctor shall be selected by the two and
the opinion of a majority of all three shall be binding.

2.       TERMINATION.

         This Agreement shall terminate upon the occurrence of any of the
         following:

                  A.       Mutual agreement, in writing, of the parties to
                           terminate;

                  A. Employee's death. Under circumstance of Employee's death,
                  Company agrees to make termination payments to Employee's
                  designated beneficiaries, in the amount of one year of base
                  salary, and annual bonus payment for bonus payable in the
                  fiscal year in which Employee's death occurred. Additionally,
                  any unexercised, vested stock options which were available to
                  Employee immediately prior to date of death shall be
                  exercisable by beneficiaries in accordance with the Company's
                  stock option plan. In addition, Employee's designated
                  beneficiaries may, at their option, continue to pay and to
                  receive insurance coverage under the COBRA provisions, and
                  beyond, for a period of up to two years following death, or
                  upon attainment of age 65 of beneficiary, whichever is
                  earlier.

                  B. Upon the expiration of the initial or any renewal term of
                  this Agreement, following 120 days of written notice by one
                  party to the other indicating the party's intention not to
                  renew;

                  C. At the Company's option, if Employee shall be totally
                  disabled, as defined above for a continuous period in excess
                  of nine months. The Company's option to terminate in such
                  event shall be exercised upon at least 30 days written notice
                  to Employee;

                  D. Termination by the Company for cause.

                           For purposes of this provision of this Agreement,
                           cause shall be defined as:

                           1. Failure of the Employee to substantially perform
                           any duties reasonably required by the Company that
                           are consistent with Employees position (except as a
                           result of any disabling injury for which Employee has
                           been receiving benefits under a short term or long
                           term disability program);and

                           2. The commission by Employee of any criminal act, or
                           act of fraud or dishonestly by Employee related to or
                           in connection with his Employment by

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                           the Company; or

                           3. Employee breaches Employee's other covenants
                           contained in this Agreement.

         A.       Change of employment or termination without cause by the
                  Company.

                  A Change in Employment shall be deemed to have occurred if,
                  without Employee's consent,

                           1. Employee's position, duties, or title are
                           materially and adversely changed without cause: or

                           2. Employee's salary or benefits are reduced without
                           cause, or

                           3. The location of performance of most of Employee's
                           duties is moved from the general geographic location
                           in which Employee performed such duties prior to the
                           move.

                  The effective date of a change in employment shall be the date
         Employee elects, by written notice to the Company, to treat such action
         as termination due to change in employment, provided it occurs within
         90 days of the date Employee is notified of the change in employment.
         Failure to treat a particular change in employment as a termination of
         employment shall not preclude Employee from treating a subsequent
         change of employment as a termination of employment.

         A.       Termination Payments.

                  In the event Employee's employment with the Company is
         terminated without cause, or a change in employment occurs and employee
         elects to treat the change in employment as a termination of employment
         and so notifies the Company of such election within 90 days following
         the change of employment (with a date of notice to be deemed the
         effective date of termination) or the geographic location changes as
         defined above, or upon non-renewal of this agreement by the Company,
         then:

                  (a) Employee shall receive payment equal to 12 months of
                  Employee's then current annualized salary; plus the average of
                  any bonus or incentive compensation paid or payable for the
                  most recent two fiscal years, or other period generally used
                  by the Company to determine such bonus or incentive
                  compensation , and at Employee's election, may pay out such
                  salary and bonus or incentives over a period of one year

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                  consistent with the Company's routine employee payment
                  schedules, or in a lump sum; and all unvested stock options
                  held by Employee shall immediately vest.

                  (b) Employee shall be entitled to continue participation in
                  the healthcare coverage, life insurance and general employee
                  benefit plans of the Company. The Company shall for two years
                  following the effective date of the termination under this
                  Section 7G, or until Employee becomes eligible for such
                  insurance coverages with another employer, continue to provide
                  such coverage for Employee and his dependents to the same
                  extent and cost the Company is then providing for other
                  employees with comparable coverage during this two year
                  period.

                  (c) In the event of a termination of employment under this
                  Section 7G, the Company agrees that in the event of a dispute
                  by the executive over any terms or provisions contained in
                  this agreement, or interpretation thereof, the Company will
                  pay all reasonable legal expenses incurred by Employee as a
                  result of Employee's efforts to resolve the dispute.

                  A.       Termination due to change in control.

                           For purposes of this provision, a change in control
                  will be defined as follows:

                           (a) When any "person" as defined in Section 3(a)(9)
                           of the Securities Exchange Act as used in sections
                           13(d) and 14(d) thereof, including a "group" as
                           defined in Section 13(d) of the Securities Exchange
                           Act, but excluding the Company or any subsidiary or
                           parent or any employee benefit plan sponsored or
                           maintained by the Company or any subsidiary or parent
                           (including any trustee of such plan acting as
                           trustee), directly or indirectly, becomes the
                           "beneficial owner" (as defined in Rule 13d-3 under
                           the Securities Exchange Act, as amended from time to
                           time), of securities of the Company representing
                           greater than 50 (fifty) percent of the combined
                           voting power of the Company's then outstanding
                           securities; or

                           (b) When, subsequent to the effective date of this
                           agreement, the individuals who, at the beginning of
                           such period, constitute the Board ("Incumbent
                           Directors") cease for any reason other than death to
                           constitute at least a majority thereof; provided
                           however that a Director who was not a Director at the
                           beginning of this period will be deemed to have
                           satisfied the definition of "Incumbent Director" if
                           such Director was elected by, or with the approval of
                           at least 60% (sixty percent) of the Directors who
                           then qualified as Incumbent Directors; or

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                           (c) The approval by the shareholders of any sale,
                           lease, exchange or other transfer (in one transaction
                           or a series of related transactions) of all or
                           substantially all of the assets of the Company or the
                           adoption of any plan or proposal for the liquidation
                           or dissolution of the Company.

                           If during a two year period subsequent to a change in
                  control, Employee is terminated without cause, or Employee is
                  asked by the Board to assume a position, duties, or level of
                  responsibility which are unacceptable to the Employee, or
                  Employee is asked by the Board to relocate geographically to a
                  location which is unacceptable to the Employee, the then
                  controlling Company agrees to pay Employee base salary equal
                  to 36 months of Employee's then current annualized salary;
                  plus the average of any bonus or incentive compensation paid
                  or payable for the most recent three calendar years, in
                  aggregate, and at Employee's election, may be paid out
                  consistent with Company's routine employment payment schedule
                  over a period of three years, or in a lump sum. Additionally,
                  unvested stock options will vest according to the terms of the
                  Company's Stock Option Plan in effect at the time of the
                  change in control, or as defined in Section 7G(a).

                           In the event of termination of this Agreement due to
                  change in control, Company agrees to provide for reasonable
                  expenses incurred on Employee's behalf in the event of a legal
                  action or dispute in connection with the change of control, or
                  termination of employment caused by such change in control.

         8.       POOLING CONTINGENCY.

         In the event a possible acquirer ("Acquirer") notifies the Company's
Board of Directors (the "Board") in writing, in conjunction with the Acquirer's
proposal to merge with or purchase all or part of the Company, that the Acquirer
has determined that any element of Section 7C, 7F, 7G, or 7H would prevent the
Acquirer from applying pooling accounting to the acquisition or merger, and the
Board agrees with the Acquirer's assessment of the risk to pooling availability,
then the Board may strike the Section 7C, 7F, 7G or 7H that the Acquirer and the
Board deem to constitute a pooling risk. The Acquirer's written notice must
state that the Acquirer's public accounting firm has advised the Acquirer that
it may apply pooling accounting except solely for the existence or operation of
the Section(s) of this Agreement subject to deletion. If the Board strikes
Section 7F and the corresponding severance elements of Section 7G, then Section
11(e) of the parties' July 1, 1996 Employment Agreement shall be deemed to
remain in effect and become a part of this Agreement. In the event the Board
strikes Section 7H, or Section 7C and the corresponding severance element of
Section 7G, then the remainder of the Agreement shall remain in effect without
addition, modification, or reference to the July 1, 1996 Employment Agreement.
Any modification or deletion of Section 7 shall be contingent upon and deemed
effective as of the closing of the Acquirer's acquisition or merger.

         9.       COVENANT NOT TO COMPETE.

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         Employee hereby covenants and agrees that during the initial and any
renewal term of this Agreement, and for a period of one year following the
termination of this Agreement, Employee shall not be engaged within the United
States, either directly or indirectly, in any matter or capacity, whether as an
advisor, principal, agent, partner, officer, director, employee, member of an
association, or otherwise, in any business or activity, or own beneficially or
of record, five percent or more of the outstanding stock of any class of equity
securities in any corporation in competition with the business then being
conducted by the Company. If Employee should breach the foregoing covenant, the
Company will cease making payments described in the previous section regarding
Termination of Agreement, and any associated payments contained therein; and
remaining unexercised stock options shall immediately be cancelled and benefit
plan provisions described in the Termination Section 7 shall be immediately
discontinued.

         Additionally, at the option of the Board of Directors, the Company may
choose to extend the covenant not to compete set forth herein for a period of up
to an additional twelve months, beyond the initial twelve month period already
stipulated herein. In consideration for such election, the Company agrees to
make payment to the Employee the annualized salary and bonus equal to that in
effect during the fiscal year at the time of termination.
         During this additional period of extension and payment, Employee agrees
not to solicit, directly or indirectly, any current employee of the Company for
employment or engagement in any capacity outside of the Company, its
subsidiaries or affiliates.

         10.      CONFIDENTIALITY.

         Employee will, in the course of his employment with the Company have
access to confidential and proprietary data or information belonging to the
Company. Employee will not at any time divulge or communicate to any person
(other than to a person bound by confidentiality obligations to the Company
similar to those contained in this Agreement) or use to the detriment of the
Company, or for the benefit of any other person such data or information. The
provisions of this section shall survive Employee's employment hereunder
regardless of the cause of termination of employment or this Agreement. The
phase "confidential or proprietary data or information" shall mean information
not generally available to the public, including, but not limited to, personnel
information, financial information, customer lists, supplier lists, trade
secrets, secret processes, computer data and programs, pricing, marketing and
advertising data. Employee acknowledges and agrees that any confidential or
proprietary information that Employee has already acquired was in fact received
in confidence in Employees fiduciary capacity with respect to the Company.

         All written materials, records and documents made by Employer or coming
into Employee's possession during the term of employment concerning any product,
processes, information or services used, developed, investigated or considered
by the Company, or otherwise concerning the business or affairs of the Company,
shall be the sole property of the Company and upon termination of Employee's
employment for any reason, or upon request of the Board of Directors during
Employee's employment, Employee shall promptly deliver the same to the Company.
In addition, upon termination of Employee's employment for any reason, or upon
request of the Board of Directors during Employee's employment, Employee shall
deliver to the Company all of the property of the Company in Employee's
possession or under

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Employee's control, including, but not limited to, financial statements,
marketing and sales data, computers, and Company credit cards.

11.      OTHER BUSINESS ACTIVITIES.

         Employee shall not serve as an officer of another company, whether for
compensation or otherwise, requiring more than nominal duties by the Employee,
during the term of this contract without the express prior written consent of
the Company's Board of Directors. Employee may not serve as a Director of any
other organization without express prior written approval by the Company's Board
of Directors.

12.      INVENTIONS AND PATENTS.

         Employee agrees to assign all rights, ownership and related privileges
and benefits associated with inventions and patents to the Company. Employee
agrees that any inventions or patents obtained in association with ideas or
concepts initiated by Employee related to the Company's business are deemed to
be Company property. This includes but is not limited to product ideas, changes
or improvements; process ideas, changes or improvements; pertinent intellectual
property, or other pertinent information.

13.      ARBITRATION/DISPUTE RESOLUTION.

         The Company and the Employee agree that as a first option prior to any
legal action arising out of the dispute over provisions in this agreement,
parties may seek arbitration, and submit to authority of binding arbitration.

14.      COOPERATION IN CLAIMS.

         Both during employment and post employment, Employee agrees that in the
event of a legal action against the Company, or legal action initiated by the
Company against another party, in which Employee is deemed by the Company to be
a material witness or affiant, Employee agrees to make reasonable and best
efforts to cooperate with the Company in such matters. If Employee is no longer
employed, Company will reimburse Employee for time and expenses incurred as a
result of cooperation for this purpose.

15.      INDEMNIFICATION.

         The Company agrees to make its best efforts to indemnify and hold
harmless the Employee from liability incurred as a result of performance of
duties as an Officer and member of the Board of Directors. This includes but is
not limited to applicable statute, as well as efforts to secure coverage under
pertinent insurance policies.

16.      NOTICES.

                  All notices, requests, demands and other communications
         provided for by this Contract shall be in writing and shall be deemed
         to have been given when mailed at any general or branch United States
         Post Office enclosed in a certified postpaid envelope,

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         return receipt requested, and addressed to the address of the
         respective party stated below or to such changed address as the party
         may have fixed by notice:

         If to the Employee:

         Maurice R. Taylor, II
         550 E. Long Lake Road
         Wayzata, MN  55391

         If to the Company:

         Chairman of The Board of Directors
         Chronimed Inc.
         10900 Red Circle Drive
         Minnetonka,  MN  55343

         Any notice of change of address shall only be effective, however, when
received.

         17.      SUCCESSORS AND ASSIGNS.

                  This Contract shall inure to the benefit of, and be binding
upon, the Company, its successors and assigns, including, without limitation,
any corporation which may acquire all or substantially all of the Company's
assets and business or into which the Company may be consolidated or merged, and
the Employee, his heirs, executors, administrators and legal representatives.
The Employee may assign his right to payment, and his obligations, under this
Contract.

         18.      APPLICABLE LAW.

                  This Contract shall be governed by the laws of the State of
         Minnesota.

         19.      OTHER AGREEMENTS

                  This Contract supersedes all prior understandings and
         agreements between the parties. It may not be amended orally, but only
         by a writing signed by the parties hereto.

         20.      NON-WAIVER.

                  No delay or failure by either party in exercising any right
         under this Contract, and no partial or single exercise of that right,
         shall constitute a waiver of that or any other right.

         21.      HEADINGS.

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         Headings in this Contract are for convenience only and shall not be
used to interpret or construe its provisions.

         22.      COUNTERPARTS.

         This Contract may be executed in two or more counterparts, each of
which shall be deemed an original but all of which together shall constitute one
and the same instrument.

CHRONIMED INC.

By____________________________

Its____________________________

AND__________________________

Its Chairman, Compensation Committee

EMPLOYEE

______________________________
         Maurice R. Taylor, II

                                       11EXHIBIT 10.8.1
                                      LEASE

         THIS LEASE, made and entered into this 10th day of June 1997, by and
between JORANDCOR, INC., a Minnesota corporation (hereinafter referred to as
"Landlord"), and CHRONIMED, INC., a Minnesota corporation (hereinafter referred
to as "Tenant");

         WITNESETH:

         1. LEASED PREMISES. In consideration of the rents, terms, provisions
and covenants of this Lease, Landlord hereby leases, lets and demises to Tenant
that portion of the following described premises outlined in red on Exhibit A
attached hereto, and designated "leased premises" (hereinafter referred to as
the "Leased Premises"), and containing 18,040 square feet, situated in the
building located at 6214-6222 Bury Drive, including the nonexclusive right to
use the common areas identified on Exhibit A.

         2. TERM. Subject to and upon the conditions set forth below, the term
of this Lease shall commence on September 1, 1997 ("Commencement Date"), and
shall terminate on August 31, 2002.

         3. RENT. Landlord reserves and Tenant covenants to pay the Landlord,
without demand at its offices at 6250 Bury Drive, or at such other address as
the Landlord may from time to time designate in writing, in advance, rent as
follows:

         (a)      From September 1, 1997 to August 31, 1999, Tenant shall pay
                  base rent for the Leased Premises of $XXX per square foot
                  ($XXX per month); and

         (b)      From September 1, 1999 to August 31, 2000, Tenant shall pay
                  base rent for the Leased Premises of $XXX per square foot
                  ($XXX per month); and

         (c)      From September 1, 2000 to August 31, 2001, Tenant shall pay
                  base rent for the Leased Premises of $XXX per square foot
                  ($XXX per month); and

         (d)      From September 1, 2001 to August 31, 2002, Tenant shall pay
                  base rent for the Leased Premises of $XXX per square foot
                  ($XXX per month).

<PAGE>

         The total base rent for the five year lease term will be $XXX.

         The base rent includes the payment on Landlord's Work based on an
amortization schedule of $XXX over five years at X% interest ("Amortization
Schedule") for past work completed on the Leased Premises.

         4. ADDITIONAL RENT. As additional rental for the entire term of this
Lease, Tenant agrees to pay to the Landlord its pro-rata share of the operating
expenses of the building, as herein defined. If this Lease commences or
terminates on a day other than the first or last day of a calendar year, the
amount of additional rent payable by Tenant applicable to the year in which such
commencement or termination occurs shall be pro-rated in accordance with the
number of days during such year this Lease was in effect. Landlord shall invoice
Tenant for estimated operating costs for each calendar year at the beginning of
such calendar year, and Tenant agrees to prepay monthly, due at the same time as
and together with the Base Rent above provided, one-twelfth of such estimated
amount. Within a reasonable time after the end of each calendar year, Landlord
will provide Tenant with an accounting showing the operating expenses for such
year and Tenant's share thereof. Tenant shall have the right, at its sole
expense and at a reasonable time convenient to Landlord, no more frequently than
once each year, to audit Landlord's books relevant to the additional rent due
hereunder. In the event that the estimated amount paid for such year exceeds the
amount due for such year based on such accounting, Landlord agrees to return
such amount to the Tenant, together with said accounting. In the event that the
estimate is less than the operating expenses for such calendar year, Tenant
agrees to reimburse Landlord for such amount within thirty (30) days of receipt
of the above-referenced accounting.

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         The term "operating expenses" as used in this paragraph includes all
expenses incurred with respect to the ownership, repair, maintenance and
operation of the building of which the Leased Premises are a part, and
underlying land and other improvements thereon excluding repair and maintenance
of sewer and water to the building, but including, without limitation, snow
removal, reasonable internal management costs, fees, costs of cleaning exterior
of building and grounds, the cost of any common utilities, costs of maintaining
and repairing the building and all fixtures therein, all insurance premiums
provided for in Paragraph 12(a) hereof, and all real property taxes and
installments of special assessments which accrue against the building of which
the Leased Premises are a part during the term of this Lease and all other costs
of any nature which for federal income tax purposes may be expensed rather than
capitalized. Notwithstanding the foregoing, whether "capitalized" or "expenses",
operating expenses shall also include the yearly amortization of capital costs
incurred by the Landlord for improvements or structural repairs to the building
required to comply with any change in the laws, rules or regulations of any
governmental authority having jurisdiction. In addition, if any increase in the
fire and extended coverage insurance premiums paid by Landlord for the building
in which Tenant occupies space is caused by Tenant's use and occupancy of the
Leased Premises, or if Tenant vacates the Leased Premises and causes an increase
in such premiums, then Tenant shall pay as additional rent the amount of such
increase. Except as provided above, the term "operating expenses" does not
include any capital improvement to the building, outside management fees, any
expenses incurred in leasing to or procuring tenants for the building, or any
costs of renovating space for new tenants. For purposes of this paragraph, the
building in which the Leased Premises are a part is 50,200 square feet, and
Tenant's pro-rata share shall be 35.94%.

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         The operating costs for the Lease Premises have been estimated at $XXX
per square foot. True operating expenses will be calculated pursuant to the
terms of this Section.

         5. LATE PENALTY AND WAIVER OF SETOFF. Tenant waives and disclaims any
present or future right to apply any payment or part payment of rent, including
additional rent, or to set-off or counterclaim in any action for rent, including
additional rent, against any obligation of Landlord, however incurred, and
agrees that it will not claim or assert such right, set-off or counterclaim.
Other remedies for non-payment of rent notwithstanding, if the monthly rental
payment, including both Base Rent and additional rent, is not received by
Landlord on or before the tenth (10th) day of the month for which such rent is
due, or if any other payment due Landlord by Tenant is not received by Landlord
on or before ten (10) days after the due date thereof, a service charge of five
percent (5%) of such past due amount shall become due and payable in addition to
and together with such amounts owed under this Lease. In addition, interest at
the rate of twelve percent (12%) per annum shall be added to all amounts which
are over thirty (30) days past due and shall be due together therewith.

         6. USE OF PREMISES.

         (a)      The Leased Premises shall be used and occupied by Tenant for
                  the purposes of distribution of pharmacy and related products
                  and to manufacture and sell products and services to the
                  medical industry, and for no other purposes whatsoever without
                  the written consent of Landlord. Such use and occupancy shall
                  be in compliance with all applicable laws, ordinances and
                  governmental regulations. The Leased Premises shall not be
                  used in such a manner that, in accordance with any requirement
                  of law or of any public authority, the Landlord shall be
                  required to make any additions or alterations to or in the
                  building.

         (b)      Tenant shall promptly comply with all laws, ordinances and
                  regulations affecting the Leased Premises and promulgated by
                  duly constituted

                                       4
<PAGE>

                  governmental authorities affecting the cleanliness, safety,
                  use and occupation of the Leased Premises.

         (c)      Tenant shall promptly comply with and use the Leased Premises
                  and the common areas serving or within the building, including
                  parking facilities, in accordance with such rules and
                  regulations as may from time to time be made by the Landlord
                  for the general safety, comfort and convenience of the
                  Landlord, the occupants and tenants of the building, and
                  Tenant agrees to cause its customers, employees and invitees
                  to abide by such rules and regulations.

         (d)      Tenant shall not perform any acts or carry on any practices
                  which may injure the improvements on the property, and shall
                  keep the property in clean, safe, sanitary and first class
                  condition, and clean and free from rubbish and dirt at all
                  times, and shall store all trash and garbage in the agreed
                  upon designated common area. In addition, Tenant agrees to
                  occupy the Leased Premises, conduct its business and control
                  its agents, employees, invitees and visitors so as not to
                  create any nuisance or otherwise interfere with, annoy or
                  disturb any other tenant in its normal business operations.

         7. UTILITIES. Tenant agrees to procure and promptly pay all bills for
electricity, gas, heat, fuel oil, and any and all other utilities used in the
Leased Premises during the term of this Lease, except water, which shall be
billed to Tenant as a portion of the operating expenses. Landlord agrees to use
its best efforts to restore any interrupted utility service, but shall not be
responsible or liable for any interruption in the supply of any utilities to the
Leased Premises beyond Landlord's reasonable control.

         8. REPAIRS AND MAINTENANCE.

         (a)      Landlord shall maintain and keep in good order and repair only
                  the exterior portions of the building of which the Leased
                  Premises are a part (excluding all windows, window glass,
                  plate glass and doors serving or allowing access solely to any
                  leased portion of the building), the common areas of the
                  building and fixtures and equipment located therein and the
                  parking areas and other common areas serving the building.
                  Tenant agrees to immediately give written notice to Landlord
                  of the need for repairs of which Tenant has knowledge, for
                  which Landlord may be responsible under this paragraph.
                  Landlord agrees to make such repairs within a reasonable time
                  after receiving such notice. Landlord shall not be liable to
                  Tenant except as expressly provided in this Lease for any
                  damage or inconvenience, and

                                       5
<PAGE>

                  Tenant shall not be entitled to any abatement or reduction of
                  rent by reason of any repairs made by Landlord under this
                  Lease. In addition, Landlord shall have no responsibility for
                  the maintenance of any fixtures or other improvements
                  installed or made by or at the request of Tenant. In addition,
                  Tenant shall be liable for the cost of any repairs required by
                  reason of the negligence or misuse of Tenant, its agents,
                  employees and invitees which are not covered by the fire and
                  extended coverage insurance maintained by Landlord pursuant to
                  this Lease.

         (b)      Except as provided in Subparagraph (a) above, Tenant shall, at
                  its own cost and expense, maintain the Leased Premises
                  including doors and windows serving or allowing access solely
                  to such Leased Premises and improvements and all equipment and
                  fixtures in or on the Leased Premises in good repair and
                  condition, including all necessary replacements and replace
                  all glass which is broken by Tenant with glass of comparable
                  quality. Tenant shall not allow any damage to be committed on
                  any portion of the Leased Premises, and at termination of this
                  Lease, by lapse of time or otherwise, Tenant shall deliver the
                  Leased Premises to Landlord in as good a condition as existed
                  at the commencement or completion date of this Lease, ordinary
                  wear and tear excepted. The cost and expense of any repairs
                  necessary to restore the condition of the Leased Premises
                  shall be borne by Tenant, and if Landlord undertakes to
                  restore the Leased Premises, it shall have a right of
                  reimbursement against Tenant. Should Tenant neglect to keep
                  and maintain the Leased Premises as required herein, then
                  Landlord shall have the right, but not the obligation, to have
                  the work done and to charge the cost thereof to Tenant as
                  additional rent, which shall become payable by Tenant with the
                  payment of the rent next due hereunder. All materials and
                  workmanship in such maintenance or replacement shall be of
                  comparable quality to the initial materials and workmanship
                  and shall be compatible with the building and the Leased
                  Premises.

         9. INSTALLATION AND ALTERATIONS.

         (a)      Tenant shall have the right to install its own trade fixtures
                  and equipment, which shall at all times remain its property,
                  and, on condition that it is not in default hereunder, shall
                  have the right to remove the same immediately upon the
                  expiration or earlier termination of this Lease, provided that
                  it repairs any damage occasioned by the removal thereof.

         (b)      Tenant shall not make any repairs, alterations or additions to
                  the Leased Premises, including alterations prior to the
                  commencement of this Lease, or make any contracts therefor,
                  without first procuring Landlord's written consent, which the
                  Landlord agrees not to unreasonably withhold, and delivering
                  to Landlord any plans and specifications and copies of
                  proposed

                                       6
<PAGE>

                  contracts and necessary permits, including the alterations
                  which Tenant shall, at Tenant's expense, cause to be performed
                  on the Leased Premises more fully described as "Tenant's
                  Work," if any, in Exhibit B attached hereto. Notwithstanding
                  anything to the contrary, Tenant may make alterations or
                  repairs to the Leased Premises if said alterations or repairs
                  cost less than Five Thousand and No/100 Dollars ($5,000.00);
                  and if prior to said alteration or repair, Tenant notifies
                  Landlord in writing the identity (including names and
                  addresses) of all contractors, subcontractors and/or material
                  suppliers providing labor and/or materials to the Leased
                  Premises. Prior to Tenant's commencement of any repairs,
                  alterations or additions to the Leased Premises, including
                  Tenant's Work described in Exhibit B, Tenant shall furnish
                  such indemnification against liens, costs, damages and
                  expenses as may be required by the Landlord including, without
                  limitation, a payment or performance bond. All alterations,
                  additions, improvements and fixtures, other than trade
                  fixtures, which may be made or installed by either of the
                  parties hereto upon the Leased Premises, and which are in any
                  manner attached to the floors, walls or ceilings at the
                  termination of this Lease shall become the property of
                  Landlord and shall remain upon and be surrendered with the
                  Leased Premises as a part thereof, without damage or injury
                  unless Landlord requests that such alterations or improvements
                  be removed, in which event the same shall be removed by the
                  Tenant at the expiration of the term of this Lease at its own
                  expense, and it shall be obligated to repair any damages
                  occasioned thereby. Tenant shall not place any signs on the
                  exterior of the Leased Premises or the building of which the
                  Leased Premises are a part without the Landlord's written
                  consent, which Landlord agrees not to unreasonably withhold.

         (c)      In the event that the alteration or improvement of the Leased
                  Premises by Tenant results in any increase in the assessed
                  value of the building for real estate tax purposes, and such
                  amount can be ascertained, the Tenant shall pay the increase
                  in real estate taxes resulting therefrom as and together with
                  additional rent due hereunder.

         (d)      Tenant shall pay when due, and indemnify, defend and hold
                  Landlord harmless from, all claims for labor or materials
                  furnished or alleged to have been furnished to Tenant for use
                  in the Leased Premises, which claims are or may be secured by
                  any lien against the Leased Premises, or any interest therein.
                  Tenant may, at its sole cost and expense, contest a mechanics
                  lien; provided, however, that during such contest the Tenant
                  shall, at the request of Landlord, provide security
                  satisfactory to the Landlord, including but not limited to
                  satisfaction of the requirements of Minn. Stat.ss.514.10. If
                  at any time payment of the mechanics lien or any other
                  obligation becomes necessary to prevent the foreclosure of the
                  Leased Premises, the Tenant shall pay the same in sufficient
                  time to prevent such foreclosure.

                                       7
<PAGE>

         10. INDEMNITY.

         (a)      Tenant accepts the Leased Premises in its present condition as
                  of the completion of Landlord's Work and without any
                  representation or warranty by Landlord as to the condition of
                  said Leased Premises or its suitability to Tenant's use or
                  occupancy and the taking of possession of the Leased Premises
                  by Tenant shall be conclusive evidence that it was in good and
                  satisfactory condition at such time.

         (b)      Tenant agrees to indemnify and save the Landlord, its
                  successors and assigns, harmless against any and all claims,
                  demands, damages, and costs and expenses, including reasonable
                  attorneys' fees, for the defense thereof, arising from the
                  conduct of or management of the business being conducted by
                  Tenant in the Leased Premises, or from any breach or default
                  on the part of Tenant in the performance of any covenant or
                  agreement on the part of Tenant to be performed pursuant to
                  the terms of this Lease, or from any act or negligence of
                  Tenant, its agents, contractors, servants, employees,
                  sublessees, in or about the Leased Premises, the sidewalks
                  adjoining the same, and the loading docks adjacent to the
                  Leased Premises. In case of any action or proceeding by or
                  against the Landlord by reason of any such claims, upon notice
                  from Landlord, Tenant covenants to defend such action or
                  proceeding with counsel reasonably satisfactory to Landlord.
                  Landlord shall not be liable to Tenant, and Tenant waives all
                  claims for damages to person or property sustained by Tenant
                  or Tenant's employees, agents, servants, invitees and
                  customers or to any other person resulting from the Leased
                  Premises or any equipment or appurtenances thereto becoming
                  out of repair or resulting from any accident or occurrence in
                  or about the Leased Premises, or the building in which they
                  are situated. This shall apply especially, but not
                  exclusively, to the flooding of the basement or any surface
                  areas, and the damage caused by refrigerators, sprinkling
                  devices, air conditioning apparatus, if any, water, snow,
                  frost, steam, excessive heat or cold, falling plaster, broken
                  glass, sewage, gas odors or noise, or the bursting or leaking
                  of pipes or plumbing fixtures. All property belonging to
                  Tenant or any other occupant of the Leased Premises shall be
                  there at the sole risk of Tenant or of any other such person
                  only, and Landlord shall not be liable for any damages
                  thereto, or for theft or misappropriation thereof.

         11. MUTUAL WAIVER OF RIGHT OF SUBROGATION. Each party hereto expressly
waives any and all claims which arise or may arise in his or its favor and
against the other party hereto, or its respective agents, servants or employees,
during the term of this Lease hereinabove provided, or any extension thereof,
for any and all loss of or damage to any of his or its property located within
or upon or constituting a part of the building of which

                                       8
<PAGE>

the Leased Premises are a part or underlying land, resulting from any peril or
risk customarily covered by standard Minnesota fire insurance policy with
extended coverage provisions (whether such insurance is in effect or not),
notwithstanding said injury or damage is caused by the negligence of either of
the parties hereto, their agents, servants or employees. Each of the parties
agrees to look to his or its own insurance carrier for recovery of any damages
sustained to his or its property, hereby waiving any rights of subrogation
against the other.

         12. INSURANCE.

         (a)      Landlord shall, at all times during the term of this Lease,
                  maintain a policy or policies of insurance issued by and
                  binding upon some solvent insurance company insuring the
                  building against all risk of direct physical loss in an amount
                  equal to 100% of the full replacement cost of the building
                  structure and its improvements as of the date of the loss;
                  provided that Landlord shall not be obligated in any way or
                  manner to insure any personal property or fixtures of Tenant
                  or which Tenant may have upon, within or installed within the
                  Leased Premises, or any additional improvements which Tenant
                  may construct on the Leased Premises. Tenant agrees that the
                  cost of maintaining such insurance shall be an operating
                  expense within the meaning of Paragraph 4 hereof, and it
                  shall, therefore, reimburse Landlord for its pro-rata share of
                  such insurance premiums.

         (b)      Tenant agrees to procure and maintain a policy or policies of
                  insurance at its own cost and expense, insuring the Landlord,
                  its successors and assigns, as well as Tenant, from all
                  claims, demands or actions for injury or death to any person,
                  or property damage, in an amount reasonably agreed to by
                  Landlord. Said insurance shall not be subject to cancellation
                  except after thirty (30) days prior written notice to
                  Landlord. The policy or policies, or duly executed
                  certificate(s) for same, together with satisfactory evidence
                  of the payment of the premium thereof, shall be deposited with
                  the Landlord at the commencement of the term and renewals
                  thereof not less then thirty (30) days prior to the expiration
                  of the term of such insurance. If Tenant fails to comply with
                  such requirements, Landlord may obtain such insurance and keep
                  the same in effect, and Tenant shall pay Landlord the premium
                  cost thereof upon demand as a part of the additional rent due
                  hereunder.

         (c)      In addition, Tenant agrees to procure and maintain at its own
                  cost and expense all risk fire and extended coverage insurance
                  for the full

                                       9
<PAGE>

                  replacement value of Tenant's leasehold improvements, fixtures
                  and furnishings.

         13. DAMAGE BY FIRE OR OTHER CASUALTIES.

         (a)      In case the Leased Premises shall be partially or totally
                  destroyed by fire or other casualty so as to render fifty
                  percent (50%) or more of the Leased Premises untenantable or
                  fifty percent (50%) or more of the building of which the
                  Leased Premises are a part untenantable, either the Landlord
                  or Tenant may terminate this Lease by notice in writing within
                  sixty (60) days after such destruction or damage. In the event
                  that the Landlord does not terminate this Lease as above
                  provided, or the damage or destruction does not exceed the
                  percentage of the Leased Premises or building above set forth,
                  the Landlord shall rebuild or otherwise restore the building
                  to good condition and fit for occupancy within a reasonable
                  period of time after such destruction or damage, and a just
                  and proportionate part of the rent shall be abated until so
                  repaired, based upon the time and to the extent the Leased
                  Premises are rendered untenantable. In any event, if the
                  repair or restoration of the Leased Premises is not
                  substantially completed within 180 days after the damage or
                  destruction, Tenant may, at its option, terminate this Lease
                  by delivering a written notice of termination to Landlord,
                  whereupon all rights and obligations under this Lease shall
                  cease to exist.

         (b)      Under no circumstances shall the Landlord be obligated to
                  repair or replace any of Tenant's betterments or leasehold
                  improvements, or any of its personal property or fixtures.
                  Tenant shall be obligated to repair and/or restore the same at
                  its own expense.

         14. EMINENT DOMAIN. In the event of the acquisition of the Leased
Premises, or any part thereof, by eminent domain proceedings, or negotiated sale
in lieu thereof, the following provisions shall apply:

         (a)      Total Condemnation of Leased Premises. If the whole of the
                  Leased Premises shall be so acquired, then the term of this
                  Lease shall cease and terminate as of the date possession
                  shall be taken in such proceeding or sale, and all rentals
                  shall be paid up to that date.

         (b)      Partial Condemnation. If only part of the Leased Premises
                  shall be so acquired, and such partial acquisition shall
                  render the Leased Premises unsuitable for the purposes of the
                  business of Tenant, then the term of this Lease shall cease
                  and terminate as of the date of possession, and rent shall be
                  adjusted to the date of such termination. In the event of a
                  partial taking or

                                       10
<PAGE>

                  condemnation which is not extensive enough to render the
                  premises unsuitable for the business of Tenant, then Landlord
                  may, at its option, promptly restore the Leased Premises so as
                  to constitute the remaining premises a complete architectural
                  unit, and this Lease shall continue in full force and effect
                  with a proportionate abatement of the rent, based upon the
                  portion of the Leased Premises taken, or terminate this Lease
                  by written notice to Tenant. The rent shall also abate during
                  the restoration as to the portion of the Leased Premises
                  rendered untenantable.

         (c)      Landlord's Damages. In the event any condemnation or taking as
                  aforesaid, whether whole or partial, the Tenant shall not be
                  entitled to any part of the award paid for such condemnation
                  and Landlord shall receive the full amount of such award.
                  Tenant hereby expressly waives any right or claim to any part
                  thereof and,' by this Lease, does hereby assign and transfer
                  to Landlord such award or payment as may be made therefor, and
                  does hereby further agree to execute such documents of
                  assignment and transfer as may be required by Landlord.

         (d)      Tenant's Damages. Tenant shall be entitled to seek and recover
                  from the condemning authority only the damages to which Tenant
                  is separately entitled by Minnesota Statutes for damages to
                  Tenant's business and removal of Tenant's fixtures and
                  equipment, and this shall be Tenant's sole remedy.

         15. ASSIGNMENT AND SUBLETTING.

         (a)      Tenant shall not assign or in any manner transfer this Lease
                  or any interest therein, nor sublet the Leased Premises or any
                  part or parts thereof, or permit occupancy by anyone with,
                  through or under it, without the previous written consent of
                  the Landlord, which the Landlord agrees not to unreasonably
                  withhold. Consent by Landlord to one or more assignments of
                  this Lease, or to one or more sublettings of the Leased
                  Premises shall not operate as a waiver of Landlord's rights
                  under this section to any subsequent assignment or subletting.
                  No assignment or subletting shall release Tenant of any of its
                  obligations under this Lease, or be construed or taken as a
                  waiver of any of Landlord's rights or remedies hereunder.
                  Every assignee or sublessee of this Lease shall be subject to
                  and be bound by all of the covenants, provisions and
                  conditions of this Lease to the same extent as the original
                  tenant. Tenant agrees to notify Landlord in writing of its
                  desire to assign this Lease or sublease all or a portion of
                  the Leased Premises at least thirty (30) days prior to such
                  proposed assignment or subletting.

                                       11
<PAGE>

         (b)      Neither this Lease nor any interest therein, nor any estate
                  thereby created, shall pass to any trustee or receiver in
                  bankruptcy, or any assignee for the benefit of creditors, or
                  by operation of law.

         (c)      In lieu of granting its consent to any proposed assignment or
                  subletting of this Lease, Landlord may, in its discretion,
                  terminate and cancel this Lease upon thirty (30) days written
                  notice to Tenant, whereupon this Lease shall terminate and
                  Tenant shall be released from all liabilities hereunder,
                  except for all accrued liabilities.

         16. ACCESS TO PREMISES. Landlord shall have the right to enter upon the
Leased Premises during business hours or upon twenty-four (24) hours notice,
except in emergencies when no notice is required, for the purposes of inspecting
the same or making any alterations or additions thereto, or to the building in
which the same are located, or for the purposes of exhibiting the same to
prospective tenants, purchasers or others, and shall have the right to place a
"For Rent" sign or signs upon the Leased Premises during the last 120 days of
the Lease term or any renewal thereof. Landlord shall not be liable to Tenant in
any manner for any expense, loss or damage by reason thereof (unless caused in
connection with alterations or additions), nor shall the exercise of such right
be deemed an eviction or disturbance of Tenant's use or possession.

         17. DEFAULT BY TENANT AND LANDLORD'S REMEDIES.

         (a)      The following shall be Events of Default by Tenant under this
                  Lease:

                  (1)      The failure of Tenant to pay an installment, or any
                           portion thereof, of base or additional rent within
                           ten (10) days after the due date thereof;

                  (2)      The continued default by Tenant in any of its other
                           covenants or conditions under this Lease after thirty
                           (30) days written notice of such default to Tenant;

                  (3)      The making by Tenant of an assignment for the benefit
                           of its creditors;

                                       12
<PAGE>

                  (4)      The Tenant ceases the conduct of active business
                           operations in, or abandons, the Leased Premises;

                  (5)      In the event proceedings are instituted by or against
                           Tenant for the reorganization, liquidation or
                           involuntary dissolution of Tenant, for its
                           adjudication as a bankrupt or insolvent or under
                           Chapter XI of the Bankruptcy Act, or for the
                           appointment of a receiver of the property of Tenant,
                           if involuntary, and said proceedings are not
                           dismissed, and any receiver, trustee or liquidator
                           appointed therein, discharged within thirty (30) days
                           after the institution of said proceedings;

                  (6)      The doing or permitting to be done by Tenant of any
                           act which creates a mechanic's lien or claim therefor
                           against the land or building of which the Leased
                           Premises are a part, except pursuant to Section 9(d).

         (b)      Upon the occurrence of any Event of Default set forth above,
                  Landlord, in addition to any of the remedies available at law
                  or equity, shall have the option to pursue any one or more of
                  the following remedies without any notice or demand:

                  (1)      Terminate this Lease and recover possession of the
                           Leased Premises in accordance with Minnesota law, in
                           which event Tenant shall immediately surrender the
                           Leased Premises to Landlord and, if Tenant fails to
                           surrender the Leased Premises, Landlord may, without
                           prejudice to any other remedy which it may have for
                           possession or recovery of rent, enter upon and take
                           possession of the Leased Premises, and lock out,
                           expel or remove Tenant and any other person who may
                           be occupying all or any part of the Leased Premises
                           without being liable for prosecution for any claim
                           for damages. Tenant agrees to pay on demand the
                           amount of all loss and damage which Landlord may
                           suffer by reason of the termination of the Lease
                           under this subsection, whether through the inability
                           to relet the Leased Premises on satisfactory terms or
                           otherwise. Upon termination of this Lease, the
                           Landlord shall be entitled to recover from Tenant
                           forthwith as its damages, the sum of money equal to a
                           total of (i) all costs of recovering the Leased
                           Premises, (ii) the unpaid rent owed at the time of
                           termination, plus interest thereon from the due date
                           at the maximum rate permitted by applicable law,
                           (iii) an amount equal to the balance of the rent for
                           the remainder of the terms, discounted to present
                           value, utilizing an eight percent (8%) discount
                           favor, and (iv) any other sum of money and damages
                           owed by Tenant to Landlord;

                                       13
<PAGE>

                  (2)      Recover possession of the Leased Premises in
                           accordance with Minnesota law without termination of
                           the Lease and, if necessary, expel or remove the
                           Tenant, and lock out, expel or remove Tenant and any
                           other person that may be occupying all or any part of
                           the Leased Premises without being liable for
                           prosecution for any claim for damages, and relet the
                           Leased Premises on behalf of Tenant, and receive
                           directly the rent by reason of subletting. Tenant
                           agrees to pay Landlord on demand any deficiency that
                           may arise, by reason of any reletting of the Leased
                           Premises and any expenditures made by Landlord for
                           remodeling or repairing in order to relet the Leased
                           Premises. No such re-entry or taking of possession of
                           the Leased Premises by Landlord shall be construed as
                           an election on its part to terminate this Lease
                           unless a written notice of such intention be given to
                           Tenant, or unless the termination thereof be decreed
                           by a court of competent jurisdiction;

         If the default can be cured by the expenditure of money, Landlord may,
at its option, cure such default, and Tenant shall be obligated to reimburse
Landlord upon demand, as additional rent hereunder, for all such expenditures,
together with interest, at the rate of twelve percent (12%) per annum or, if
lesser, the maximum rate permitted by law, and costs and reasonable attorneys'
fees incurred in connection with such cure and collecting such amounts from
Tenant.

         In the event that Tenant defaults in the performance of any of the
terms, covenants, agreements or conditions contained in this Lease, and Landlord
successfully enforces all or any part of this Lease or recovers possession of
the Leased Premises, Tenant agrees to pay or reimburse Landlord for all costs
and expenses incurred in connection therewith, including reasonable attorneys'
fees.

         ll rights and remedies of Landlord and Tenant herein shall be
cumulative and none shall exclude any right or remedy allowed by law, and said
rights and remedies may be exercised and enforced concurrently, and whenever and
as often as the occasion therefore arises.

         18. SURRENDER OF POSSESSION.

                                       14
<PAGE>

         (a)      At the expiration of the tenancy created hereunder, whether by
                  lapse of time or otherwise, Tenant shall promptly remove all
                  personal property belonging to Tenant or persons claiming
                  through Tenant and surrender the Leased Premises in good
                  condition and repair, broom-clean, reasonable wear and tear
                  and loss by fire or unavoidable casualty excepted.

         (b)      In the event Tenant remains in possession of the Leased
                  Premises after the expiration of the tenancy created
                  hereunder, and without the execution of a new lease, it shall
                  be deemed to be occupying the Leased Premises from
                  month-to-month, subject to all of the conditions, provisions
                  and obligations of this Lease insofar as the same are
                  applicable to a month-to-month tenancy, except that the base
                  rent payable shall be increased to 125% of the base rent
                  provided in Paragraph 3 hereof.

         (c)      Upon the expiration of the tenancy hereby created, if the
                  Landlord has requested Tenant to remove all of the additions,
                  fixtures and installations placed upon the Leased Premises by
                  Tenant and designated in said request, and to repair any
                  damage occasioned by such removal, and if Tenant fails to
                  remove the same or make such repairs, Landlord may effect such
                  removals and repairs, and Tenant shall pay to Landlord the
                  cost thereof, with interest at the rate of eight percent (8%)
                  per annum from the date of payment by Landlord.

         19. SUBORDINATION. Tenant agrees that this Lease shall be subordinate
to any mortgage currently or hereafter placed upon the building of which the
Leased Premises are a part by the Landlord, and agrees to execute any and all
documents necessary to indicate that this Lease is subordinate to any such
mortgage; provided, however, Tenant shall not be disturbed in its possession of
the Leased Premises by any mortgagee or purchaser at a mortgage foreclosure
sale, so long as Tenant is not in default under the terms hereof. Tenant shall
execute and deliver whatever instruments may be required for the above purposes,
and, failing to do so within ten (10) days after demand in writing, does hereby
make, constitute and irrevocably appoint Landlord as its attorney-in-fact and in
its name, place and stead so to do. Tenant further agrees to furnish within ten
(10) days of receipt of the form, from time to time upon request of Landlord or
Landlord's mortgagee

                                       15
<PAGE>

an estoppel certificate on the form prepared by Landlord and delivered to
Tenant, containing items customarily certified to therein. Tenant further agrees
to execute and deliver to Landlord within ten (10) days of receipt of the form
thereof, a memorandum or short form lease in recordable form, containing such
items of this Lease as Tenant shall request.

         20. NOTICES. Wherever under this Lease a provision is made for notice
of any kind, such notice shall be in writing and signed by or on behalf of the
party giving or making the same, and it shall be deemed sufficient notice and
service thereof if such notice is to Tenant and sent by registered or certified
mail, postage prepaid, to the address of Tenant at: Attention: Chronimed, Inc.,
Vice President of Finance, 13911 Ridgedale Drive, Minnetonka, Minnesota 55305
and Chronimed, Inc., 6214 Bury Drive, Eden Prairie, Minnesota 55346, and to the
Landlord for such purpose, at the place then fixed for payment of rent, or at
such other address as may be furnished by Landlord. By notice in the manner
above set forth, either party may designate a different location to which notice
shall be sent.

         21. COMMISSIONS. Landlord agrees to indemnify and hold Tenant harmless
against all claims, damages, costs or expenses (including costs incurred in
defending any claim) for any leasing fees or commissions resulting from the
execution of this Lease.

         22. GENERAL.

         (a)      The various rights and remedies herein contained and reserved
                  to each of the parties hereto shall not be considered as
                  exclusive of any other right or remedy of such party, but
                  shall be construed as cumulative and shall be in addition to
                  every other remedy now or hereafter existing at law, in
                  equity, or by statute. No delay or omission of the right to
                  exercise any power by either party shall impair any such right
                  or power, or shall be construed as a waiver

                                       16
<PAGE>

                  of any default, or as acquiescence therein. One or more
                  waivers of any covenant, term or condition of this Lease by
                  either party shall not be construed by the other party as a
                  waiver of any subsequent breach of the same covenant, term or
                  condition. The consent or approval by either party to or of
                  any act by the other party of a nature requiring consent or
                  approval shall not be deemed to waive or render unnecessary
                  consent or approval of a subsequent similar act.

         (b)      Tenant shall give written notice to Landlord in case of fire
                  or accidents in the Leased Premises, or of defects therein, or
                  in any fixtures or equipment.

         (c)      The headings of the several articles contained herein are for
                  convenience only and do not define, limit or construe the
                  contents of such articles.

         (d)      The covenants, agreements and obligations herein contained
                  shall extend to, bind or inure to the benefit of not only of
                  the parties hereto, but their respective personal
                  representatives, heirs, successors and assigns.

         (e)      Whenever a period of time is herein provided for the Landlord
                  to do or perform any act or thing, Landlord shall not be
                  liable or responsible for any delays due to strikes, riots,
                  acts of God, shortages of labor or materials, national
                  emergency, acts of a public enemy, governmental restrictions,
                  laws or regulations, or any other cause or causes whatever,
                  whether similar or dissimilar to those enumerated, beyond its
                  reasonable control.

         (f)      Tenant shall not record this Lease without the written consent
                  of Landlord.

         (g)      The laws of the State of Minnesota shall govern the validity,
                  performance and enforcement of this Lease.

         (h)      The invalidity or enforceability of any provision of this
                  Lease shall not affect or impair the validity of any other
                  provision.

         (i)      Landlord further covenants that Tenant, upon paying the
                  rentals provided for herein, and upon performing the covenants
                  and agreements to be performed by it, will have, hold and
                  enjoy quiet possession of the Leased Premises.

         (j)      This Lease constitutes the entire agreement of the parties in
                  respect of the Lease by Tenant of the Leased Premises and
                  there are no understandings or agreements not incorporated in
                  this Lease. Any other written agreements by and between the
                  parties are terminated upon the commencement of the term of
                  this Lease. This Lease may not be modified except in a writing
                  executed by all parties hereto, or their permitted assignees.

                                       17
<PAGE>

         (k)      Tenant has no right to light or air over the building or
                  underlying land.

         (l)      The word "Tenant" wherever used in this Lease shall be
                  considered to mean tenants in all cases where there is more
                  than one tenant and the necessary grammatical changes required
                  to make provisions hereof applicable to corporations,
                  partnerships or individuals shall in all cases be assumed as
                  though in each case fully expressed.

         IN WITNESS WHEREOF, Landlord and Tenant have hereunto set their hands
as of the date and year first above written.

LANDLORD:                               TENANT:

JORANDCOR, INC.                         CHRONIMED, INC.

By:                                     By:

Its:                                    Its:

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