EXHIBIT 10.60

 

SECOND AMENDMENT TO AMENDED AND RESTATED CREDIT AND SECURITY AGREEMENT

 

This Amendment, dated as of  May 10, 2002, is made by and between MEDTOX
SCIENTIFIC, INC., a Delaware corporation (“Scientific”), MEDTOX LABORATORIES,
INC., a Delaware corporation (“Laboratories”), MEDTOX DIAGNOSTICS, INC., a
Delaware corporation (“Diagnostics”), and CONSOLIDATED MEDICAL SERVICES, INC., a
Delaware corporation (“Consolidated”, and together with Scientific, Laboratories
and Diagnostics, collectively, the “Borrowers”, and each a “Borrower”), and
WELLS FARGO BUSINESS CREDIT, INC., a Minnesota corporation formerly known as
Norwest Business Credit, Inc. (the “Lender”).

 

Recitals

 

The Borrowers and the Lender are parties to an Amended and Restated Credit and
Security Agreement dated as of May 7, 2001 but effective as of March 31, 2001,
as amended by a First Amendment to Amended and Restated Credit and Security
Agreement dated as of October 24, 2001 (as so amended, the “Credit Agreement”). 
Capitalized terms used in these recitals have the meanings given to them in the
Credit Agreement unless otherwise specified.

 

The Borrowers have requested that certain amendments be made to the Credit
Agreement, which the Lender is willing to make pursuant to the terms and
conditions set forth herein.

 

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

 

1.                                       DEFINED TERMS. CAPITALIZED TERMS USED
IN THIS AMENDMENT WHICH ARE DEFINED IN THE CREDIT AGREEMENT SHALL HAVE THE SAME
MEANINGS AS DEFINED THEREIN, UNLESS OTHERWISE DEFINED HEREIN.  IN ADDITION,
SECTION 1.1 OF THE CREDIT AGREEMENT IS AMENDED BY ADDING OR AMENDING, AS THE
CASE MAY BE, THE FOLLOWING DEFINITIONS:

 

“‘Maturity Date’ means March 31, 2005.”

 

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“‘Revolving Floating Rate’ means an annual rate equal to the sum of the Prime
Rate plus one-half percent (0.50%), which annual rate shall change when and as
the Prime Rate changes.”

 

“‘Term Floating Rate’ means an annual rate equal to the sum of the Prime Rate
plus three-quarters percent (0.75%), which annual rate shall change when and as
the Prime Rate changes.”

 

2.                                       REQUESTS FOR 2001 CAPEX ADVANCES. 
SECTION 2.9(A) IS AMENDED BY CHANGING THE DATE “MARCH 15, 2002” TO “JUNE 15,
2002.”

 

3.                                       Financial Covenants. Sections 6.13 –
6.16 and 7.10 are amended to read as follows:

 

“SECTION 6.13 MINIMUM DEBT SERVICE COVERAGE RATIO.  THE BORROWERS WILL MAINTAIN,
ON A CONSOLIDATED BASIS, DURING EACH YEAR-TO-DATE PERIOD DESCRIBED BELOW, THEIR
DEBT SERVICE COVERAGE RATIO, DETERMINED AS AT THE END OF EACH PERIOD, AT NOT
LESS THAN THE RATIO SET FORTH OPPOSITE SUCH PERIOD:

 

Year-to-date period ending

 

Minimum Debt Service
Coverage Ratio

 

March 31, 2002

 

1.50 to 1.00

 

June 30, 2002

 

1.75 to 1.00

 

September 30, 2002

 

1.75 to 1.00

 

December 31, 2002

 

1.75 to 1.00

 

 

“SECTION 6.14 MINIMUM NET INCOME.  THE BORROWERS WILL ACHIEVE AS OF EACH DATE
LISTED BELOW, ON A CONSOLIDATED BASIS, NET INCOME OF NOT LESS THAN THE AMOUNT
SET FORTH OPPOSITE SUCH DATE:

 

Date

 

Minimum Net Income

 

March 31, 2002

 

$

400,000

 

June 30, 2002

 

$

1,000,000

 

September 30, 2002

 

$

1,900,000

 

December 31, 2002

 

$

2,750,000

 

 

 

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“SECTION 6.15 MINIMUM BOOK NET WORTH.  THE BORROWERS WILL MAINTAIN ON EACH DATE
LISTED BELOW, ON A CONSOLIDATED BASIS, BOOK NET WORTH OF NOT LESS THAN THE
AMOUNT SET FORTH OPPOSITE SUCH DATE:

 

Date

 

Minimum Book Net Worth

 

March 31, 2002

 

$

22,750,000

 

June 30, 2002

 

$

23,700,000

 

September 30, 2002

 

$

24,800,000

 

December 31, 2002

 

$

25,700,000

 

 

“SECTION 6.16 MAXIMUM DEBT TO BOOK NET WORTH RATIO.  THE BORROWERS WILL
MAINTAIN, ON A CONSOLIDATED BASIS, THE RATIO OF THEIR DEBT TO THEIR BOOK NET
WORTH, DETERMINED AS AT THE END OF EACH PERIOD, AT NOT MORE THAN 1.75 TO 1.00.

 

“SECTION 7.10 CAPITAL EXPENDITURES. DURING EACH FISCAL YEAR-TO-DATE PERIOD
DESCRIBED BELOW, THE BORROWERS AND THEIR SUBSIDIARIES WILL NOT INCUR OR CONTRACT
TO INCUR IN THE AGGREGATE, CAPITAL EXPENDITURES OF MORE THAN THE AMOUNT SET
FORTH OPPOSITE SUCH PERIOD:

 

Year-to-date period ending

 

Capital Expenditures

 

March 31, 2002

 

$

750,000

 

June 30, 2002

 

$

3,750,000

 

September 30, 2002

 

$

5,000,000

 

December 31, 2002

 

$

5,000,000

 

 

4.                                       NO OTHER CHANGES.  EXCEPT AS EXPLICITLY
AMENDED BY THIS AMENDMENT, ALL OF THE TERMS AND CONDITIONS OF THE CREDIT
AGREEMENT SHALL REMAIN IN FULL FORCE AND EFFECT AND SHALL APPLY TO ANY ADVANCE
OR LETTER OF CREDIT THEREUNDER.

 

5.                                       CONDITIONS PRECEDENT. THIS AMENDMENT
SHALL BE EFFECTIVE WHEN THE LENDER SHALL HAVE RECEIVED AN EXECUTED ORIGINAL
HEREOF.

 

6.                                       REPRESENTATIONS AND WARRANTIES. THE
BORROWERS HEREBY REPRESENT AND WARRANT TO THE LENDER AS FOLLOWS:

 

(A)                                  EACH BORROWER HAS ALL REQUISITE POWER AND
AUTHORITY TO EXECUTE THIS AMENDMENT AND TO PERFORM ALL OF ITS OBLIGATIONS
HEREUNDER, AND THIS AMENDMENT HAS BEEN DULY EXECUTED AND DELIVERED BY EACH
BORROWER AND CONSTITUTES THE LEGAL, VALID AND BINDING OBLIGATION OF EACH
BORROWER, ENFORCEABLE IN ACCORDANCE WITH ITS TERMS.

 

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(B)                                 THE EXECUTION, DELIVERY AND PERFORMANCE BY
EACH BORROWER OF THIS AMENDMENT HAVE BEEN DULY AUTHORIZED BY ALL NECESSARY
CORPORATE ACTION AND DO NOT (I) REQUIRE ANY AUTHORIZATION, CONSENT OR APPROVAL
BY ANY GOVERNMENTAL DEPARTMENT, COMMISSION, BOARD, BUREAU, AGENCY OR
INSTRUMENTALITY, DOMESTIC OR FOREIGN, (II) VIOLATE ANY PROVISION OF ANY LAW,
RULE OR REGULATION OR OF ANY ORDER, WRIT, INJUNCTION OR DECREE PRESENTLY IN
EFFECT, HAVING APPLICABILITY TO ANY BORROWER, OR THE ARTICLES OF INCORPORATION
OR BY-LAWS OF ANY BORROWER, OR (III) RESULT IN A BREACH OF OR CONSTITUTE A
DEFAULT UNDER ANY INDENTURE OR LOAN OR CREDIT AGREEMENT OR ANY OTHER AGREEMENT,
LEASE OR INSTRUMENT TO WHICH ANY BORROWER IS A PARTY OR BY WHICH IT OR ITS
PROPERTIES MAY BE BOUND OR AFFECTED.

 

(C)                                  ALL OF THE REPRESENTATIONS AND WARRANTIES
CONTAINED IN ARTICLE V OF THE CREDIT AGREEMENT ARE CORRECT ON AND AS OF THE DATE
HEREOF AS THOUGH MADE ON AND AS OF SUCH DATE, EXCEPT TO THE EXTENT THAT SUCH
REPRESENTATIONS AND WARRANTIES RELATE SOLELY TO AN EARLIER DATE.

 

7.                                       REFERENCES. ALL REFERENCES IN THE
CREDIT AGREEMENT TO “THIS AGREEMENT” SHALL BE DEEMED TO REFER TO THE CREDIT
AGREEMENT AS AMENDED HEREBY; AND ANY AND ALL REFERENCES IN THE SECURITY
DOCUMENTS TO THE CREDIT AGREEMENT SHALL BE DEEMED TO REFER TO THE CREDIT
AGREEMENT AS AMENDED HEREBY.

 

8.                                       NO WAIVER.  THE EXECUTION OF THIS
AMENDMENT AND ACCEPTANCE OF ANY DOCUMENTS RELATED HERETO SHALL NOT BE DEEMED TO
BE A WAIVER OF ANY DEFAULT OR EVENT OF DEFAULT UNDER THE CREDIT AGREEMENT OR
BREACH, DEFAULT OR EVENT OF DEFAULT UNDER ANY SECURITY DOCUMENT OR OTHER
DOCUMENT HELD BY THE LENDER, WHETHER OR NOT KNOWN TO THE LENDER AND WHETHER OR
NOT EXISTING ON THE DATE OF THIS AMENDMENT.

 

9.                                       RELEASE. EACH BORROWER HEREBY
ABSOLUTELY AND UNCONDITIONALLY RELEASES AND FOREVER DISCHARGES THE LENDER, AND
ANY AND ALL PARTICIPANTS, PARENT CORPORATIONS, SUBSIDIARY CORPORATIONS,
AFFILIATED CORPORATIONS, INSURERS, INDEMNITORS, SUCCESSORS AND ASSIGNS THEREOF,
TOGETHER WITH ALL OF THE PRESENT AND FORMER DIRECTORS, OFFICERS, AGENTS AND
EMPLOYEES OF ANY OF THE FOREGOING, FROM ANY AND ALL CLAIMS, DEMANDS OR CAUSES OF
ACTION OF ANY KIND, NATURE OR DESCRIPTION, WHETHER ARISING IN LAW OR EQUITY OR
UPON CONTRACT OR TORT OR UNDER ANY STATE OR FEDERAL LAW OR OTHERWISE, WHICH ANY
BORROWER HAS HAD, NOW HAS OR HAS MADE CLAIM TO HAVE AGAINST ANY SUCH PERSON FOR
OR BY REASON OF ANY ACT, OMISSION, MATTER, CAUSE OR THING WHATSOEVER ARISING
FROM THE BEGINNING OF TIME TO AND INCLUDING THE DATE OF THIS AMENDMENT, WHETHER
SUCH CLAIMS, DEMANDS AND CAUSES OF ACTION ARE MATURED OR UNMATURED OR KNOWN OR
UNKNOWN.

 

10.                                 COSTS AND EXPENSES. THE BORROWERS HEREBY
REAFFIRM THEIR AGREEMENT UNDER THE CREDIT AGREEMENT TO PAY OR REIMBURSE THE
LENDER ON DEMAND FOR ALL COSTS AND EXPENSES INCURRED BY THE LENDER IN CONNECTION
WITH THE LOAN DOCUMENTS, INCLUDING WITHOUT

 

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limitation all reasonable fees and disbursements of legal counsel. Without
limiting the generality of the foregoing, the Borrowers specifically agree to
pay all fees and disbursements of counsel to the Lender for the services
performed by such counsel in connection with the preparation of this Amendment
and the documents and instruments incidental hereto. The Borrowers hereby agree
that the Lender may, at any time or from time to time in its sole discretion and
without further authorization by the Borrowers, make a loan to the Borrowers
under the Credit Agreement, or apply the proceeds of any loan, for the purpose
of paying any such fees, disbursements, costs and expenses.

 

11.                                 MISCELLANEOUS. THIS AMENDMENT MAY BE
EXECUTED IN ANY NUMBER OF COUNTERPARTS, EACH OF WHICH WHEN SO EXECUTED AND
DELIVERED SHALL BE DEEMED AN ORIGINAL AND ALL OF WHICH COUNTERPARTS, TAKEN
TOGETHER, SHALL CONSTITUTE ONE AND THE SAME INSTRUMENT.

 

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly
executed as of the date first written above.

 

WELLS FARGO BUSINESS CREDIT, INC.

MEDTOX SCIENTIFIC, INC.
MEDTOX DIAGNOSTICS, INC.
MEDTOX LABORATORIES, INC
CONSOLIDATED MEDICAL SERVICES, INC.

By

 

 

 

 

Kimberly Leppanen

 

 

Its Vice President

 

 

 

 

 

 

By

 

 

 

 

Richard J. Braun

 

 

 

Their Chief Executive Officer

 

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