Exhibit
10.58


 


FIRST AMENDMENT TO

AMENDED AND RESTATED CREDIT AND SECURITY AGREEMENT


                                This Amendment, dated as of  October 24, 2001, is made by and among
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 (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 the
Lender consent to the acquisition of the stock of Leadtech Corporation, a New
Jersey corporation, the financing for that acquisition, and that certain
amendments be made to the Credit Agreement. The Lender is willing to grant the
Borrowers’ requests 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:


“‘Borrowing Base’ means,
at any time and subject to change from time to time in the Lender’s sole
discretion: (i) for Laboratories, 85% of the Eligible Accounts of
Laboratories plus the lesser of 85% of the Eligible Leadtech Accounts or
$250,000;

















 


and (ii) for each other Borrower, 85% of the
Eligible Accounts of the Borrower requesting the Revolving Advance.”


“‘Collateral’ means all
of each Borrower’s Accounts, chattel paper, deposit accounts, documents,
Equipment, General Intangibles, goods, instruments, Inventory, Investment
Property, letter-of-credit rights, letters of credit, all sums on deposit in
any Collateral Account, and any items in any Lockbox; together with
(i) all substitutions and replacements for and products of any of the
foregoing; (ii) in the case of all goods, all accessions; (iii) all
accessories, attachments, parts, equipment and repairs now or hereafter
attached or affixed to or used in connection with any goods; (iv) all
warehouse receipts, bills of lading and other documents of title now or
hereafter covering such goods; (v) all collateral subject to the Lien of
any Security Document; (vi) any money, or other assets of the Borrowers
that now or hereafter come into the possession, custody, or control of the
Lender; (vii) all sums on deposit in the Special Account; and
(viii) proceeds of any and all of the foregoing.”


“‘Companies’ means the
Borrowers, the St. Paul Real Estate Subsidiary and Leadtech, and ‘Company’
means any of them.”


“‘Eligible Equipment’
means all Equipment owned by any Borrower for which the Lender has evidence
satisfactory to it that such Equipment is free and clear of Liens other than
the Security Interest.”


 “‘Eligible Leadtech Accounts’ means all
Leadtech Accounts, arising out of the sale or lease of goods or rendition of
services by Leadtech occurring after the consummation of the Leadtech
Acquisition Documents, net of any credits, but excluding any of the following:


(i)                                     that portion of Leadtech Accounts unpaid
90 days or more after the invoice date;


(ii)                                  that portion of Leadtech Accounts that is
disputed or subject to a claim of offset or a contra account;


(iii)                               that portion of Leadtech Accounts not yet
earned by the final delivery of goods or rendition of services, as applicable;


(iv)                              Leadtech Accounts owed by any unit of
government whether foreign or domestic;


(v)                                 Leadtech Accounts owed by an account
debtor located outside the United States which are not (A) backed by a
bank letter of credit 


 


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                                                naming the Lender as beneficiary or
assigned to the Lender, in the Lender’s possession or control, and with respect
to which a control agreement concerning the letter-of-credit rights is in
effect, and acceptable to the Lender in all respects, in its sole discretion,
or (B) covered by a foreign receivables insurance policy acceptable to the
Lender in its sole discretion;


(vi)                              Leadtech Accounts owed by an account
debtor that is insolvent, the subject of bankruptcy proceedings or has gone out
of business;


(vii)                           Leadtech Accounts owed by a shareholder,
Subsidiary, Affiliate, officer or employee of any of the Borrowers or Leadtech;


(viii)                        Leadtech Accounts not subject to a duly
perfected security interest in the Lender’s favor or which are subject to any
lien, security interest or claim in favor of any Person other than the Lender
including without limitation any payment or performance bond;


(ix)                                that portion of Leadtech Accounts that
has been restructured, extended, amended or modified;


(x)                                   that portion of Leadtech Accounts that constitutes
advertising, finance charges, service charges or sales or excise taxes;


(xi)                                Leadtech Accounts owed by an account
debtor, regardless of whether otherwise eligible, if 25% or more of the total
amount due under Leadtech Accounts from such debtor is ineligible under
clauses (i), (ii), or (ix) above; and


(xii)                             Leadtech Accounts, or portions thereof,
otherwise deemed ineligible by the Lender in its sole discretion.”


“‘Leadtech’ means
Leadtech Corporation, a New Jersey corporation.”


“‘Leadtech Accounts’
means all of Leadtech’s accounts, as such term is defined in the UCC, including
without limitation the aggregate unpaid obligations of customers and other
account debtors to Leadtech arising out of the sale or lease of goods or
rendition of services by Leadtech on an open account or deferred payment
basis.”


“‘Leadtech Acquisition
Documents’ means the Stock Purchase Agreement among, Scientific, Leadtech and
the Sellers, dated as of
           , 2001, the 


 


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Noncompetition Agreements among Scientific and each of
the Sellers, the promissory notes issued by Scientific in favor of each Seller,
the Guaranty by Diagnostics and Laboratories in favor of the Seller, the
subordinated notes in the aggregate amount of $1,000,000 issued by Scientific,
the warrants issued by Scientific in connection with such subordinated notes,
the related private placement memorandum and each other document executed and
delivered in connection with the foregoing.”


“‘Leadtech Sellers’ means
Raoul D. Rudelli, M.D., Karl Verebey, Ph.D., and Michael Greenstein.”


Section 1.1 of the Credit Agreement is further amended by amending
clause (v) of the definition of “Eligible Accounts to read as follows:


“(v)         Accounts owed by an account debtor located
outside the United States which are not (C) backed by a bank letter of
credit naming the Lender as beneficiary or assigned to the Lender, in the
Lender’s possession or control, and with respect to which a control agreement
concerning the letter-of-credit rights is in effect, and acceptable to the
Lender in all respects, in its sole discretion, or (D) covered by a
foreign receivables insurance policy acceptable to the Lender in its sole
discretion;”


2.             Rules
of Interpretation. Section 1.2 of the Credit Agreement is amended to read
as follows:


“Section
1.2 Other Definitional Terms; Rules of Interpretation. The words
“hereof”, “herein” and “hereunder” and words of similar import when used in
this Agreement shall refer to this Agreement as a whole and not to any
particular provision of this Agreement. All accounting terms not otherwise
defined herein have the meanings assigned to them in accordance with GAAP. All
terms defined in the UCC and not otherwise defined herein have the meanings
assigned to them in the UCC. References to Articles, Sections, subsections,
Exhibits, Schedules and the like, are to Articles, Sections and subsections of,
or Exhibits or Schedules attached to, this Agreement unless otherwise expressly
provided. The words “include”, “includes” and “including” shall be deemed to be
followed by the phrase “without limitation”. Unless the context in which used
herein otherwise clearly requires, “or” has the inclusive meaning represented
by the phrase “and/or”. Defined terms include in the singular number the plural
and in the plural number the singular. Reference to any agreement (including
the Loan Documents), document or instrument means such agreement, document or
instrument as amended or modified and in effect from time to time in accordance
with the terms thereof (and, if applicable, in accordance with the terms hereof
and the other Loan Documents), except where otherwise explicitly provided, and
reference to any promissory note includes any promissory note which is an 


 


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extension or renewal thereof or a substitute or
replacement therefor. Reference to any law, rule, regulation, order, decree,
requirement, policy, guideline, directive or interpretation means as amended,
modified, codified, replaced or reenacted, in whole or in part, and in effect
on the determination date, including rules and regulations promulgated
thereunder.”


3.             Payments
on 2001 Capex Note. Section 2.10(c)(i) of the Credit Agreement is amended
to read as follows:


“(i) The amount of each 2001 Capex Advance shall
be due and payable beginning on the first day of the first month after the date
on which that 2001 Capex Advance is made, and continuing on the first day of
each month thereafter, in substantially equal monthly installments in an amount
sufficient to fully amortize the principal balance of that 2001 Capex Advance
using one of the following amortization schedules, to be determined by the
Lender in its sole discretion: (i) 48 equal monthly installments or (ii) 60
equal monthly installments; the principal amount to be paid each month on the
2001 Capex Note shall be the sum of such monthly installments; and”


4.             Permitted
Indebtedness. Section 7.2 of the Credit Agreement is amended to add the
following new subsection (d-1) immediately after subsection (d):


“(d-1)      unsecured indebtedness of not more than
$1,200,000 owed to the Leadtech Sellers to finance the Leadtech Acquisition;”


5.             Investments
and Subsidiaries. Section 7.4(b) of the Credit Agreement is amended to read
as follows:


“(b)         The Borrowers will not create or permit
to exist any Subsidiary, other than the Subsidiaries in existence on the date
hereof and listed in Schedule 5.4, the St. Paul Real Estate Subsidiary and
Leadtech.”


6.             Financing
Statements. Section 3.6 of the Credit Agreement is amended by adding the
following new sentence before the first sentence of that Section:


“Each Borrower authorizes the Lender to file from time
to time where permitted by law, such financing statements against collateral
described as “all personal property” or describing specific items of collateral
including commercial tort claims as the Lender deems necessary or useful to
perfect the Security Interest.”


7.             Liens. Section 7.1 of the
Credit Agreement is amended by adding the following sentence at the end:


 


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“No Borrower will amend any financing statements in
favor of the Lender except as permitted by law.”


8.             Notices.
Section 9.5 of the Credit Agreement is amended by adding the following at the
end thereof:


“All requests under Section 9-210 of the UCC
(i) shall be made in a writing signed by a person authorized under Section
2.3(a), (ii) shall be personally delivered, sent by registered or
certified mail, return receipt requested, or by overnight courier of national
reputation (iii) shall be deemed to be sent when received by the Lender
and (iv) shall otherwise comply with the requirements of Section 9-210. The
Borrowers request that the Lender respond to all such requests which on their
face appear to come from an authorized individual and release the Lender from
any liability for so responding. The Borrowers shall pay the Lender the maximum
amount allowed by law for responding to such requests.”


9.             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.


10.           Amendment Fee. The Borrowers
shall pay the Lender as of the date hereof a fully earned, non-refundable fee
in the amount of $5,000 in consideration of the Lender’s execution and delivery
of this Amendment.


11.           Conditions Precedent. This
Amendment shall be effective when the Lender shall have received an executed
original hereof, together with each of the following, each in substance and
form acceptable to the Lender in its sole discretion:


(a)           Copies of the Acquisition Documents,
properly executed on behalf of the parties thereto, certified by the Secretary
or Assistant Secretary of Laboratories as being true and correct copies
thereof, and the Lender shall have reviewed and approved such Acquisition
Documents in its sole discretion.


(b)           A separate guaranty, properly
executed by Leadtech, pursuant to which Leadtech unconditionally guarantees the
full and prompt payment of all Obligations.


(c)           A security agreement, duly executed
by Leadtech.


(d)           Evidence that the Borrowers have
received cash proceeds of not less than $700,000 in Subordinated Debt to
partially finance the acquisition of Leadtech.


 


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(e)           A certificate of the secretary of
Leadtech certifying as to (ix) the resolutions of the board of
directors  and, if required,
shareholders, of that company authorizing the execution, delivery and
performance of the guaranty executed and delivered to the Lender by it;
(x) the company’s articles of incorporation and bylaws; and (xi) the
signatures of the officers or agents authorized to execute and deliver such
guaranty on behalf of such company.


(f)            Current searches of appropriate
filing offices showing that (xii) no state or federal tax or judgment
liens have been filed and remain in effect against Leadtech, (xiii) no
financing statements have been filed and remain in effect against Leadtech
except financing statements acceptable to the Lender in its sole discretion,
and (xiv) the Lender has duly filed all financing statements necessary to
perfect its security interests in the property of Leadtech, to the extent such
security interests are capable of being perfected by filing.


(g)           An opinion of the Borrowers’ counsel
as to the matters set forth in paragraphs 12(a) and 12(b) hereof and as to such
other matters as the Lender shall require.


(h)           An opinion of Leadtech’s counsel as
to such other matters as the Lender shall require.


(i)            Payment of the fee described in
Paragraph 10.


(j)            Such other matters as the Lender may
require.


12.           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.


(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 


 


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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.


13.           Acquisition Documents. The
Borrowers have furnished to the Lender true, complete and correct copies of all
Acquisition Documents. The Acquisition Documents have not subsequently been
amended, supplemented or modified. The Acquisition Documents constitute the
complete understanding among the parties thereto in respect of the matters and
transactions covered thereby. The Acquisition Documents have been duly executed
and delivered by the parties thereto and are in full force and effect. All
representations and warranties made by the Borrowers in the Acquisition
Documents, and, to the best knowledge of the Borrowers after due inquiry, all
representations and warranties made by the other parties to the Acquisition
Documents, are true and correct in all material respects.


14.           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.


15.           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.


16.           Release. Each Borrower hereby
absolutely and unconditionally releases and forever discharges the Lender, and
any and all 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 Agreement, 


 


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whether such claims, demands and causes of action are
matured or unmatured or known or unknown.


17.           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 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 and the fee required under
paragraph 10 hereof.


18.           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, 

  
	
  By

  	
   

  	
   

  	
  INC. 

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Its Vice President

  	
   

  	
  By

  	
   

  	 

	
   

  	
   

  	
   

  	
   

  	
  Richard J Braun 

  	 

	
   

  	
   

  	
   

  	
  Their Chief Executive Officer

  
	
   

  	
   

  	
   

  	
   

  



M1:801850.04


3/27/03 1:30 PM


 


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