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:
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2.
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Lessor reserves, and Lessee agrees to pay Lessor
Base Rent, payable in advance without written notice, in monthly
installments of the following amounts:
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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:
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3.
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Lessee shall pay to Lessor throughout the term of
this Lease the following:
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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
