Exhibit 10.1

FOURTH AMENDMENT TO CREDIT AGREEMENT

 

          THIS AMENDMENT TO CREDIT AGREEMENT (this "Amendment") is entered into
as of October 29, 2009, by and between MEDTOX SCIENTIFIC, INC., MEDTOX
DIAGNOSTICS, INC. and MEDTOX LABORATORIES, INC., each a Delaware corporation
(each individually a "Borrower"), and WELLS FARGO BANK, NATIONAL ASSOCIATION
("Bank"). Each reference herein to “Borrower” shall mean each and every party,
collectively and individually, defined above as a Borrower.

 

RECITALS

 

          WHEREAS, Borrower is currently indebted to Bank pursuant to the terms
and conditions of that certain Credit Agreement between Borrower and Bank dated
as of December 1, 2005, as amended from time to time ("Credit Agreement").

 

          WHEREAS, Bank and Borrower have agreed to certain changes in the terms
and conditions set forth in the Credit Agreement and have agreed to amend the
Credit Agreement to reflect said changes.

 

          NOW, THEREFORE, for valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree that the
Credit Agreement shall be amended as follows:

 

          1.         Section 1.1 (a) is hereby amended by deleting "November 1,
2009" as the last day on which Bank will make advances under the Line of Credit,
and by substituting for said date "August 31, 2011," with such change to be
effective upon the execution and delivery to Bank of a promissory note dated as
of October 29, 2009, (which promissory note shall replace and be deemed the Line
of Credit Note defined in and made pursuant to the Credit Agreement) and all
other contracts, instruments and documents required by Bank to evidence such
change.

 

          2.         Section 1.4 (e) is hereby deleted in its entirety, and the
following substituted therefor:

                      “(e) Unused Commitment Fee. Borrower shall pay to Bank a
fee equal to one quarter of one percent (0.25%) per annum (computed on the basis
of a 360-day year, actual days elapsed) on the average daily unused amount of
the Line of Credit, which fee shall be calculated on a quarterly basis by Bank
and shall be due and payable by Borrower in arrears within ten (1) days after
each billing is sent by Bank.”

 

          3.         Section 4.9 (a) is hereby deleted in its entirety, and the
following substituted therefor:

                      “(a) Tangible Net Worth not less than $40,000,000.00 at
any time, with “Tangible Net Worth” defined as the aggregate of total
stockholders’ equity plus subordinated debtless any intangible assets.”

 

 

4.

The following is hereby added to the Credit Agreement as Section 4.9 (d):

 

“(d) Current Ratio not less than 1.3 to 1.0 at each month end, with “Current
Ratio” defined as total current assets divided by total current
liabilities.”            

 

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          5.         Except as specifically provided herein, all terms and
conditions of the Credit Agreement remain in full force and effect, without
waiver or modification. All terms defined in the Credit Agreement shall have the
same meaning when used in this Amendment. This Amendment and the Credit
Agreement shall be read together, as one document.

 

          6.         Borrower hereby remakes all representations and warranties
contained in the Credit Agreement and reaffirms all covenants set forth therein.
Borrower further certifies that as of the date of this Amendment there exists no
Event of Default as defined in the Credit Agreement, nor any condition, act or
event which with the giving of notice or the passage of time or both would
constitute any such Event of Default.

 

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

 

 

WELLS FARGO BANK,

MEDTOX SCIENTIFIC, INC.

NATIONAL ASSOCIATION

 

By: /s/ Kevin J. Wiersma___________

By: /s/ Steven P. Johnson__________

 

Steven P. Johnson, Vice President

Title: V.P./CFO__________________

 

MEDTOX DIAGNOSTICS, INC.

 

By: /s/ Kevin J. Wiersma___________

 

Title: V.P./CFO__________________

 

MEDTOX LABORATORIES, INC.

 

By: /s/ Kevin J. Wiersma___________

 

Title: V.P./CFO__________________

 

 

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REVOLVING LINE OF CREDIT NOTE

 

$8,000,000.00

Minneapolis, Minnesota

_____________________

 

          FOR VALUE RECEIVED, the undersigned MEDTOX SCIENTIFIC, INC., MEDTOX
DIAGNOSTICS, INC., and MEDTOX LABORATORIES, INC. ("Borrower") promises to pay to
the order of WELLS FARGO BANK, NATIONAL ASSOCIATION ("Bank") at its office at
6th and Marquette, Minneapolis, Minnesota 55479, or at such other place as the
holder hereof may designate, in lawful money of the United States of America and
in immediately available funds, the principal sum of Eight Million Dollars
($8,000,000.00), or so much thereof as may be advanced and be outstanding, with
interest thereon, to be computed on each advance from the date of its
disbursement as set forth herein.

 

DEFINITIONS:

 

          As used herein, the following terms shall have the meanings set forth
after each, and any other term defined in this Note shall have the meaning set
forth at the place defined:

 

          (a)       "Business Day" means any day except a Saturday, Sunday or
any other day on which commercial banks in Minnesota are authorized or required
by law to close.

 

          (b)       "Daily Three Month LIBOR" means, for any day, the rate of
interest equal to LIBOR then in effect for delivery for a three (3) month
period.

 

          (c)       "LIBOR" means the rate per annum (rounded upward, if
necessary, to the nearest whole 1/8 of 1%) and determined pursuant to the
following formula:

 

LIBOR =

Base LIBOR

 

 

100% - LIBOR Reserve Percentage

 

 

                      (i)        "Base LIBOR" means the rate per annum for
United States dollar deposits quoted by Bank as the Inter-Bank Market Offered
Rate, with the understanding that such rate is quoted by Bank for the purpose of
calculating effective rates of interest for loans making reference thereto, for
delivery of funds for three (3) months in an amount equal to the outstanding
principal balance of this Note. Borrower understands and agrees that Bank may
base its quotation of the Inter-Bank Market Offered Rate upon such offers or
other market indicators of the Inter-Bank Market as Bank in its discretion deems
appropriate including, but not limited to, the rate offered for U.S. dollar
deposits on the London Inter-Bank Market.

 

                      (ii)       "LIBOR Reserve Percentage" means the reserve
percentage prescribed by the Board of Governors of the Federal Reserve System
(or any successor) for "Eurocurrency Liabilities" (as defined in Regulation D of
the Federal Reserve Board, as amended), adjusted by Bank for expected changes in
such reserve percentage during the term of this Note.

 

INTEREST:

 

          (a)       Interest. The outstanding principal balance of this Note
shall bear interest (computed on the basis of a 360-day year, actual days
elapsed) at a fluctuating rate per annum determined by Bank to be two and one
quarter of one percent (2.25%) above Daily Three Month

 

 

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LIBOR in effect from time to time. Each change in the rate of interest hereunder
shall become effective on each Business Day a change in Daily Three Month LIBOR
is announced within Bank. Bank is hereby authorized to note the date and
interest rate applicable to this Note and any payments made thereon on Bank's
books and records (either manually or by electronic entry) and/or on any
schedule attached to this Note, which notations shall be prima facie evidence of
the accuracy of the information noted.

 

          (b)       Taxes and Regulatory Costs. Borrower shall pay to Bank
immediately upon demand, in addition to any other amounts due or to become due
hereunder, any and all (i) withholdings, interest equalization taxes, stamp
taxes or other taxes (except income and franchise taxes) imposed by any domestic
or foreign governmental authority and related in any manner to LIBOR, and (ii)
future, supplemental, emergency or other changes in the LIBOR Reserve
Percentage, assessment rates imposed by the Federal Deposit Insurance
Corporation, or similar requirements or costs imposed by any domestic or foreign
governmental authority or resulting from compliance by Bank with any request or
directive (whether or not having the force of law) from any central bank or
other governmental authority and related in any manner to LIBOR to the extent
they are not included in the calculation of LIBOR. In determining which of the
foregoing are attributable to any LIBOR option available to Borrower hereunder,
any reasonable allocation made by Bank among its operations shall be conclusive
and binding upon Borrower.

 

          (c)       Payment of Interest. Interest accrued on this Note shall be
payable on the first day of each month, commencing November 1, 2009.

 

          (d)       Default Interest. From and after the maturity date of this
Note, or such earlier date as all principal owing hereunder becomes due and
payable by acceleration or otherwise, or at Bank's option upon the occurrence,
and during the continuance of an Event of Default, the outstanding principal
balance of this Note shall bear interest at an increased rate per annum
(computed on the basis of a 360-day year, actual days elapsed) equal to four
percent (4%) above the rate of interest from time to time applicable to this
Note.

 

BORROWING AND REPAYMENT:

 

          (a)       Borrowing and Repayment. Borrower may from time to time
during the term of this Note borrow, partially or wholly repay its outstanding
borrowings, and reborrow, subject to all of the limitations, terms and
conditions of this Note and of any document executed in connection with or
governing this Note; provided however, that the total outstanding borrowings
under this Note shall not at any time exceed the principal amount stated above.
The unpaid principal balance of this obligation at any time shall be the total
amounts advanced hereunder by the holder hereof less the amount of principal
payments made hereon by or for Borrower, which balance may be endorsed hereon
from time to time by the holder. The outstanding principal balance of this Note
shall be due and payable in full on August 31, 2011.

 

          (b)       Advances. Advances hereunder, to the total amount of the
principal sum stated above, may be made by the holder at the oral or written
request of (i) Richard J. Braun or Kevin J. Wiersma, any one acting alone, who
are authorized to request advances and direct the disposition of any advances
until written notice of the revocation of such authority is received by the
holder at the office designated above, or (ii) any person, with respect to
advances deposited to the credit of any deposit account of Borrower, which
advances, when so deposited, shall be conclusively presumed to have been made to
or for the benefit of Borrower regardless of the fact that persons other than
those authorized to request advances may have authority to draw

 

 

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against such account. The holder shall have no obligation to determine whether
any person requesting an advance is or has been authorized by Borrower.

 

          (c)       Application of Payments. Each payment made on this Note
shall be credited first, to any interest then due and second, to the outstanding
principal balance hereof.

 

EVENTS OF DEFAULT:

 

          This Note is made pursuant to and is subject to the terms and
conditions of that certain Credit Agreement between Borrower and Bank dated as
of December 1, 2005, as amended from time to time (the "Credit Agreement"). Any
default in the payment or performance of any obligation under this Note, or any
defined event of default under the Credit Agreement, shall constitute an "Event
of Default" under this Note.

 

MISCELLANEOUS:

 

          (a)       Remedies. Upon the occurrence of any Event of Default, the
holder of this Note, at the holder's option, may declare all sums of principal
and interest outstanding hereunder to be immediately due and payable without
presentment, demand, notice of nonperformance, notice of protest, protest or
notice of dishonor, all of which are expressly waived by Borrower, and the
obligation, if any, of the holder to extend any further credit hereunder shall
immediately cease and terminate. Borrower shall pay to the holder immediately
upon demand the full amount of all payments, advances, charges, costs and
expenses, including reasonable attorneys' fees (to include outside counsel fees
and all allocated costs of the holder's in-house counsel), expended or incurred
by the holder in connection with the enforcement of the holder's rights and/or
the collection of any amounts which become due to the holder under this Note,
and the prosecution or defense of any action in any way related to this Note,
including without limitation, any action for declaratory relief, whether
incurred at the trial or appellate level, in an arbitration proceeding or
otherwise, and including any of the foregoing incurred in connection with any
bankruptcy proceeding (including without limitation, any adversary proceeding,
contested matter or motion brought by Bank or any other person) relating to
Borrower or any other person or entity.

 

          (b)       Obligations Joint and Several. Should more than one person
or entity sign this Note as a Borrower, the obligations of each such Borrower
shall be joint and several.

 

          (c)       Governing Law. This Note shall be governed by and construed
in accordance with the laws of the State of Minnesota.

 

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          IN WITNESS WHEREOF, the undersigned has executed this Note as of the
date first written above.

 

MEDTOX SCIENTIFIC, INC.

 

By: /s/ Kevin J. Wiersma___________

 

Title: V.P./CFO__________________

 

MEDTOX DIAGNOSTICS, INC.

 

By: /s/ Kevin J. Wiersma___________

 

Title: V.P./CFO__________________

 

MEDTOX LABORATORIES, INC.

 

By: /s/ Kevin J. Wiersma___________

 

Title: V.P./CFO__________________

 

 

 

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