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.”


 

















 


“‘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

  	
   

  



 


 


2

















 


“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.


 


3

















 


(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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