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EXHIBIT

10-t




 




THIRD

AMENDMENT TO NOTE PURCHASE AGREEMENT




 




THIS THIRD AMENDMENT dated as of December 28, 2001

(the “Third Amendment”), by and among ANALYSTS INTERNATIONAL CORPORATION, a

Minnesota corporation (the “Company”) and the holders of the Company’s Notes

(as defined below) appearing on the signature pages hereof (such holders are

referred to herein individually as a “Noteholder,” and collectively as the “Noteholders”).




 




 




RECITALS:




 




A.            The

Company and each of the Noteholders have heretofore entered into a Note

Purchase Agreement dated as of December 30, 1998, as amended by the First

Amendment to Note Purchase Agreement and the Second Amendment to Note Purchase

Agreement (as so amended, the “Note Purchase Agreement”) pursuant to which

the Company originally issued and sold to the Noteholders an aggregate

principal amount of Twenty Million Dollars ($20,000,000) of the Company’s

Senior Notes due December 30, 2006 (the “Notes”).




 




B.            The

Noteholders are the registered holders or the beneficial owners of one hundred

percent (100%) of the Notes outstanding as of the date hereof.




 




C.            Capitalized terms used herein shall

have the respective meanings ascribed thereto in the Note Purchase Agreement

unless herein defined or the context shall otherwise require.




 




AGREEMENT:




 




NOW,

THEREFORE, for

valuable consideration, the receipt and sufficiency of which are hereby

acknowledged, the parties hereto agree as follows:




 




1.              AMENDMENTS TO NOTE

PURCHASE AGREEMENT.




 




The Company and,

subject to the satisfaction of the conditions set forth in Section 3 hereof,

the Noteholders, hereby consent and agree to the amendments to the Note

Purchase Agreement set forth in this Section 1.




 




1.1            Amendment of 

Section 7.1




 




 





























 




Section 7.1 is

hereby amended by  inserting a new

subsection 7.1(i) as follows:




 




“(i)          Monthly Statements—within ten

(10) Business Days after the end of each month, duplicate copies of




(i)            consolidated and consolidating

balance sheets of the Company and its subsidiaries as at the end of such month,




 




(ii)           consolidated and consolidating

statements of income, changes in shareholders’ equity and cash flows of the

Company and its Subsidiaries, for such month, and




 




(iii)          a written report describing all

material refinancing efforts and activities of the Company to date and anticipated

future efforts and activities, along with all material written information in

support of same.”




 




1.2            Amendment to Section 7.2.  The introductory language to Section 7.2 is hereby modified

to read in its entirety as follows:




 




“Each set of financial statements delivered to a holder of Notes

pursuant to Section 7.1 hereof shall be accompanied by a certificate of a

Senior Financial Officer setting forth:”




 




1.3            Amendment of 

Section 8.1.




 




Section 8.1 is

hereby amended and restated to read in its entirety as follows:




 




“8.1        Required Payments.




 




On the dates set

forth below, the Company will pay the principal amounts set forth below (or

such lesser principal amount as shall then be outstanding):




 




(a)  On March 29, 2002, the Company shall pay to

the Noteholders the principal amount of One Million Five Hundred Thousand

Dollars ($1,500,000); and




 




(b)  On June 30, 2002, the Company shall pay to

the Noteholders all outstanding principal amounts, interest and Make-Whole

Amounts.  For purposes of calculating

the Make-Whole Amounts, the Called Principal, the interest rate, the scheduled

dates of payment and the maturity date of the Notes in effect immediately

preceding the effectiveness of the Third Amendment to Note Purchase Agreement

shall be used;




 




2





























 




provided,

that (i) any

partial prepayment of the Notes pursuant to Section 8.2 shall be deemed applied

first to the amount due at maturity and then to the amount of the scheduled

principal prepayments required by this Section 8.1 in inverse order of their

maturity, and (ii) upon any purchase of the Notes permitted by Section 8.5 the

principal amount of each required prepayment of the Notes becoming due under

this Section 8.1 on and after the date of such prepayment or purchase shall be

reduced in the same proportion as the aggregate unpaid principal amount of the

Notes is reduced as a result of such purchase.”




 




1.4            Amendment of 

Section 8.6




 




The defined term

“Remaining Scheduled Payments” is hereby amended and restated to read in its

entirety as follows:




 




“Remaining Scheduled Payments” — means, with respect to the Called

Principal of any Note, all payments of such Called Principal and interest

thereon that would be due after the Settlement Date with respect to such Called

Principal if no payment of such Called Principal were made prior to its

scheduled due date, provided that if such Settlement Date is not a date

on which interest payments are due to be made under the terms of the Notes,

then the amount of the next succeeding scheduled interest payment will be

reduced by the amount of interest accrued to such Settlement Date and required

to be paid on such Settlement Date pursuant to Section 8.2 or 12.1.  For purposes of this definition, the Called

Principal, the interest rate, the scheduled dates of payment and the maturity

date of the Notes immediately preceding the effectiveness of the Third

Amendment to Note Purchase Agreement shall be employed.




 




1.5            Amendment of 

Section 9.6




 




Section 9.6 is

hereby amended and restated to read in its entirety as follows:




 




“9.6        Minimum EBITDA.




 




For each EBITDA Covenant Computation Period, the Company shall achieve,

at a minimum, the amount of EBITDA set forth below opposite such period. 




 








	

  Covenant

  Computation Period Ending


  	

   


  	

  Monthly

  EBITDA


  	

   


  
	

   


  	

   


  	

   


  	

   


  
	

  December 31, 2001


  	

   


  	

  $


  	

  (1,500,000


  	

  )


  
	

   


  	

   


  	

   


  	

   


  
	

  January 31, 2002


  	

   


  	

  150,000


  	

   


  
	

   


  	

   


  	

   


  	

   


  
	

  February 28, 2002


  	

   


  	

  (450,000


  	

  )


  
	

   


  	

   


  	

   


  	

   


  
	

  March 31, 2002


  	

   


  	

  200,000


  	

   


  
	

   


  	

   


  	

   


  	

   


  
	

  April 30, 2002


  	

   


  	

  430,000


  	

   


  
	

   


  	

   


  	

   


  	

   


  
	

  May 31, 2002


  	

   


  	

  580,000”


  	

   


  
					










 




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1.6            Amendment of 

Section 9.7




 




Section 9.7 is

hereby amended and restated to read in its entirety as follows:




 




“9.7        NetCash Flow.




 




For each Net Cash Flow Computation Period, the Company shall achieve,

at a minimum, the Net Cash Flow set forth below opposite such period.




 








	

  Net

  Cash Flow Computation Period Ending


  	

   


  	

  Net

  Cash Flow


  	

   


  
	

   


  	

   


  	

   


  	

   


  
	

  December 31, 2001


  	

   


  	

  $


  	

  (1,750,000


  	

  )


  
	

   


  	

   


  	

   


  	

   


  
	

  January 31, 2002


  	

   


  	

  (2,750,000


  	

  )


  
	

   


  	

   


  	

   


  	

   


  
	

  February 28, 2002


  	

   


  	

  (3,250,000


  	

  )


  
	

   


  	

   


  	

   


  	

   


  
	

  March 31, 2002


  	

   


  	

  (2,750,000


  	

  )


  
	

   


  	

   


  	

   


  	

   


  
	

  April 30, 2002


  	

   


  	

  (2,350,000


  	

  )


  
	

   


  	

   


  	

   


  	

   


  
	

  May 31, 2002


  	

   


  	

  (1,350,000”


  	

  )


  
					










 




1.7            Amendment of 

Section 10.3




 




Section 10.3 is

hereby amend and restated to read in its entirety as follows:




 




“10.3      Merger, Consolidation and Sales of Assets.




 




Neither the Company nor any of its Subsidiaries will consolidate with

or be a party to a merger with any Person, or sell, lease, transfer or

otherwise dispose of all or any Substantial Part of its assets.”




 




1.8            Amendment of 

Section 10.4




 




Section 10.4 is

hereby amended and restated in its entirety as follows:




 




“10.4      Limitation on Investments.




 




The Company will not and will not permit any

Subsidiary to, make any Investment other than:




 




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(a)                            Investments in property to be used in the

ordinary course of business of the Company and its Subsidiaries;




(b)                           current assets arising from the sale of

goods and services in the ordinary course of business of the Company and its

Subsidiaries;




(c)                            Investments existing on the date hereof

in Subsidiaries;




(d)                           Investments in direct obligations of the

United States of America or any agency or instrumentality thereof whose

obligations constitute full faith and credit obligations of the United States

of America having a maturity of one year or less, commercial paper issued by

U.S. corporations rated “A-1” or “A-2” by Standard & Poors Corporation or

“P-1” or “P-2” by Moody’s Investors Service or certificates of deposit or

bankers’ acceptances having a maturity of one year or less issued by members of

the Federal Reserve System having deposits in excess of $100,000,000; and




(e)                            Investments aggregating not more than

$5,000,000 in one or more mutual funds which invest solely in corporate or

municipal bonds of investment grade quality.”




 




1.9            Amendment of 

Section 10.5




 




Section 10.5 is

hereby amended and restated in its entirety as follows:




 




“10.5      Limitation on Indebtedness




 




The Company will not and will not permit any

Subsidiary to create, assume, incur, or suffer to exist or in any manner be or

become liable in respect of any Indebtedness, except:




 




(a)                            Indebtedness evidenced by the Notes;




 




 




(b)                           Indebtedness incurred in accordance with

the terms of the Revolving Credit Agreement as in effect on the Amendment

Closing Date; and




 




(c)                            other Indebtedness of the Company or any

Subsidiary existing at the Amendment Closing Date and set forth on Schedule 1.9

to the Third Amendment to Note Purchase Agreement.”




 




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1.10                Amendment of  Section 10.6




 




Section 10.6 is

hereby amended and restated in its entirety as follows:




 




“10.6      Limitation on Subsidiary Indebtedness.




 




The Company will not at any time permit any Subsidiary

to, directly or indirectly, create, incur, assume, guarantee, have outstanding,

or otherwise become or remain directly or indirectly liable with respect to any

Indebtedness other than:




 




(a)                            Indebtedness of Subsidiaries existing at

the Amendment Closing Date and set forth on Schedule 1.9 to the Third Amendment

to Note Purchase Agreement; and




 




(b)                           Indebtedness of a Subsidiary owed to the

Company or a Wholly-Owned Subsidiary.”




 




1.11                                                Amendment of  Section 10.7




 




Section 10.7 is

hereby amended and restated in its entirety as follows:




 




“10.7      Limitation on Liens.




 




The Company will not and will not permit any

Subsidiary to create or incur, or suffer to be incurred or to exist, any Lien

on its or their property or assets, including any capital stock of any

Subsidiary, whether now owned or hereafter acquired, or upon any income or

profits therefrom, or transfer any property for the purpose of subjecting the

same to the payments of obligations in priority to the payment of its or their

general creditors, or acquire or agree to acquire, or permit any Subsidiary to

acquire, any property or assets upon conditional sales agreements or other

title retention devices, unless the Notes are equally and ratably secured

except:




 




(a)                                        Liens for taxes and assessments or other

governmental charges or levies not yet due or which are being contested in good

faith by appropriate proceedings promptly initiated and diligently conducted in

accordance with Section 9.4 hereof, provided that payment thereof is not at the

time required by Section 9.4 hereof;




 




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(b)                                       Liens of or resulting from any judgment

or award, the time for the appeal or petition for rehearing of which shall not

have expired, or in respect of which the Company or a Subsidiary shall at any

time in good faith be prosecuting an appeal or a proceeding for a review shall

have been secured, provided that payment thereof is not at the time required by

Section 9.4 hereof;




 




(c)                                        Liens incidental to the normal conduct of

the business or the ownership of properties and assets of the Company or any

Subsidiary (including Liens in connection with worker’s compensation,

unemployment insurance, old age pensions, other social security benefits or

obligations and other like laws, warehousemen’s, mechanics’, materialmen’s and

attorney’s liens and statutory landlord’s liens) and Liens to secure statutory

obligations, surety, penalty or appeal bonds or other Liens of like general

nature incurred in the ordinary course of business and not in connection with

the incurrence of Indebtedness and which do not in the aggregate materially

impair the use of such property or assets in the operation of the business of

the Company, and the Company and its Subsidiaries taken as a whole, or the

value of such property or assets for the purposes of such business; provided in

each case, the obligation secured is not overdue (or, with respect to

warehousemen’s, mechanics’ and materialmens’ lien, not overdue for a period

longer than 30 days), or if so overdue, is being contested in good faith by

appropriate actions or proceedings;




 




(d)                                       Liens existing existing at the Amendment

Closing Date and set forth on Schedule 1.11 to the Third Amendment to Note

Purchase Agreement.”;




 




(e)                                        any Lien renewing, extending or refunding

any Lien permitted by paragraph (d) of this Section 10.7, provided that (i) the

principal amount of Indebtedness secured by such Lien immediately prior to such

extension, renewal or refunding is not increased or the maturity thereof

reduced, (ii) such Lien is not extended to any other property, and (iii)

immediately after such extension, renewal or refunding no Default or Event of

Default would exist;




 




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(f)                                          Liens on property or assets of any

Subsidiary securing Indebtedness owing to the Company or to any of its

Wholly-Owned Subsidiaries; and




 




(g)                                       (i) any Lien on property (other than the

land and improvements comprising the Company’s office building located at 3601

West 76th Street, Edina, Minnesota 55435) to secure all or a part of

the purchase price or cost of the construction of such property created

contemporaneously with, or within 180 days after, such acquisition or the

completion of such construction, or (ii) any Lien in property existing in such

property at the time of acquisition thereof, whether or not the Indebtedness

secured thereby is assumed by the Company or such Subsidiary, or (iii) any Lien

existing in the property of a corporation at the time such corporation is

merged into or consolidated with the Company or a Subsidiary or at the time of

a sale, lease or other disposition of the properties of a corporation or firm

as an entirety or substantially as an entirety to the Company or a Subsidiary;

provided, however, that the Indebtedness secured by any Lien permitted by this

paragraph (g) shall not in the aggregate exceed 100% of the fair market value

of the related property.”




 




1.12                                                Amendment of  Section 10.9




 




Section 10.9 is

hereby amended and restated in its entirety as follows:




 




“10.9                      Restricted Payments.




 




The Company will not (i) pay any amount on account of

any equity interest in the Company, including, without limitation,  dividends in cash or property (other than

dividends consisting of capital stock of the Company or options, warrants and

rights to acquire such capital stock); (ii) directly or indirectly purchase,

redeem or otherwise retire, any shares of any class of its capital stock other

than purchases of stock necessary to fund the Company’s matching contribution

obligations to a Plan; or (iii) make any payment of principal with respect to

the Revolving Credit Agreement other than payments required by section 2.7(c)

thereof (collectively, “Restricted Payments”).”




 




 




8





























 




1.13                                                Amendment of  Section 10.10




 




Section 10.10 is

hereby amended and restated in its entirety as follows:




 




“10.10                   Restrictions on Issuance and

Sale of Subsidiary Stock.




 




The Company will not (i) permit any Subsidiary to

issue or sell any shares of its capital stock of any class to any Person other

than the Company, or (ii) sell, transfer or otherwise dispose of any shares of

capital stock of any class of any Subsidiary, or permit any Subsidiary to sell,

transfer or otherwise dispose of any shares of the capital stock of any other

Subsidiary.”




 




1.14                                                Amendment of  Section 10.11




 




Section 10.11 is

hereby amended and restated in its entirety as follows:




 




“10.11                   Sale and Lease Back.




 




The Company will not, and will not permit any

Subsidiary to enter into any arrangement with any bank, insurance company or

other lender or investor or to which such lender or investor is a party

providing for the leasing by the Company or any Subsidiary of real or personal

property which has been or is to be sold or transferred by the Company or any

Subsidiary to such lender or investor or to any person to whom funds have been

or are to be advanced by such lender or investor on the security of such

property or rental obligations of the Company or any Subsidiary.”




 




 




1.15                                                Leverage Ratios.




 




A new Section

10.14 is hereby added to the Note Purchase Agreement to read as follows:




 




 




“10.14                   Leverage Ratio.




 




 At all times

the sum of outstanding (i) principal under the Revolving Credit Credit

Agreement, and (ii) principal under the Note Purchase Agreement (“Total

Principal Indebtedness”) shall not exceed




 




9





























 




four and one-half times (4.5x) EBITDA for the period of twelve

consecutive months then most recently ended; provided, however, that

Total Principal Indebtedness shall not exceed four times (4.0x) such EBITDA

during the time period between the first day of each month and the date the

financial reports required by Section 7.1(i) are delivered to the Noteholders

by the Company.”




 




1.16                                                Other Financial Covenants.




 




Section 9.7

(Current Ratio) and Section 10.8 (Consolidated Net Worth) are hereby deleted in

their entirety.




 




1.17                                                Additional Event of Default.




 




Section  11 is hereby amended by adding thereto a new

subsections (k) and (l) to read as follows:




 




“(k)   the

Company shall have failed to deliver to the Collateral Agent by March 1, 2002

such documents as the Collateral Agent and the holders of the Notes deem

necessary to create and perfect a first priority lien upon the annuity

contracts and policies of life insurance listed on Schedule 5.8 to the Third

Amendment to Note Purchase Agreement; or




(l)   the

Company shall make a payment (or series of related payments) to any Person in

an aggregate amount exceeding $1,500,000, except payments of trade payables in the

ordinary course of business, budgeted capital expenditures, and one or

more  lump sum payments (not to exceed

$2,700,000 in the aggregate) pursuant to paragraph 4e of the  Company’s retirement plan, provided that any

such lump sum payment is funded entirely with the proceeds of one or more life

insurance policies or annuity contracts listed on Schedule 5.8 to the Third

Amendment to Note Purchase Agreement.”




 




1.18                                                Amendment of  Definitions.




 




The present definition of EBITDA is deleted and the following

definitions are hereby added to Schedule B to the Note Purchase Agreement, in

their respective alphabetical order, as follows:




 




“Amendment Closing Date”  means           2002 [insert date this Amendment

No.3 is executed by all parties]




 




“Collateral Agent”  means Wells

Fargo Bank, National Association, or its successor under the Intercreditor

Agreement.




 




10





























 




“Covenant Computation Date”  means, at any

time, the last day of the most recently completed month.




 




“Covenant Computation Period”  means the

EBITDA Covenant Computation Period when determining compliance with Section

9.6, the Net Cash Flow Computation Period when determining compliance with

Section 9.7, and the Leverage Coverage Computation Period when determining

compliance with Section 10.14.




 




“EBITDA”  means, with

respect to any Covenant Computation Period, Pre-Tax Earnings (excluding

non-cash income) plus noncash expenses associated with the write-off of the

Company’s investment in CDXC Corporation, Interest Expense, depreciation and

amortization, all as determined with respect to the Company in accordance with

GAAP for such Covenant Computation Period.




 




“EBITDA Covenant Computation Period” 

means the calendar month ending on the Covenant Computation Date.




 




“First Amendment to Note Purchase Agreement” means that certain First Amendment to

this Note Purchase Agreement, dated as of March 30, 2001, among the Company and

the Noteholders.




 




“Intercreditor Agreement” 

means that

certain Intercreditor Collateral Agreement dated as of June 20, 2001 among the

Company, the Noteholders and Wells Fargo Bank, National Association, as lender

and as Collateral Agent, as amended from time to time.




 




“Leverage Computation Period” means the twelve consecutive months ending on a

Covenant Computation Date.




 




“Net Cash Flow”  means, with

respect to a Net Cash Flow Computation Period, EBITDA plus cash received from

tax refunds, less cash paid for taxes, Capital Expenditures, cash paid for

restructuring charges, Interest Expense and cash paid as principal under the

Note Purchase Agreement, all as 

determined with respect to the Company in accordance with GAAP for such

Net Cash Flow Covenant Computation Period.




 




11





























 




“Net Cash Flow Computation Period” means the three consecutive calendar

months ending on a Covenant Computation Date.




 




“Restated Notes”  Section 3.2

hereof.




 




“Revolving Credit Agreement” means the Credit Agreement

between the Company and Wells Fargo Bank, National Association, dated as of

January 31, 2000 as amended through the date hereof




 




“Second Amendment to Note Purchase Agreement  means that certain Second Amendment to this Note

Purchase Agreement, dated as of June 30, 2001, among the Company and the

Noteholders.”




 




“Third Amendment to Note Purchase Agreement” means that certain Third Amendment to

this Note Purchase Agreement, dated as of December 28, 2001, among the Company

and the Noteholders.




 




 




1.19                Amendment of  Exhibit 1




 




The form of Note

attached to the Note Purchase Agreement as Exhibit 1 is amended and restated in

its entirety to read as set forth on Exhibit 1 hereto.




 




2.              WARRANTIES AND

REPRESENTATIONS.




 




To induce the

Noteholders to execute and deliver this Amendment (which representation shall

survive the execution and delivery of this Amendment), the Company represents

and warrants to the Noteholders that:




 




(a)           each of this Amendment, the Restated

Notes and the Collateral Documents has been duly authorized, executed and

delivered by the Company and constitutes its legal, valid and binding

obligation, contract and agreement, enforceable in accordance with its terms,

except as enforcement may be limited by bankruptcy, insolvency, reorganization,

moratorium or similar laws or equitable principles relating to or limiting

creditors’ rights generally;




 




(b)           each of the Note Purchase Agreement, as

amended by this Amendment, the Restated Notes and the Collateral Documents,

constitutes the legal, valid and binding obligation, contract and agreement of

the Company enforceable against it in accordance with its terms, except as

enforcement may be limited by bankruptcy, insolvency, reorganization,

moratorium or similar laws or 




 




12





























 




equitable principles

relating to or limiting creditors’ rights generally;




 




(c)           the execution, delivery and performance

by the Company of this Amendment, the Restated Notes and the Collateral

Documents (i) has been duly authorized by all requisite corporate actions and,

if required, shareholder action, (ii) does not require the consent or approval

of any governmental or regulatory body or agency, and (iii) will not (A)

violate (1) any provision of law, statute, rule or regulation or its articles

of incorporation or bylaws, (2) any order of any court or any rule, regulation

or order of any  agency or government

binding upon it, or (3) any provision of any material indenture, agreement or

other instrument to which it is a party or by which its properties or assets

are or may be bound, or (B) result in a breach or constitute (alone or with due

notice or lapse of time or both) a default under any indenture, agreement or

other instrument referred to in clause (iii)(A)(3) of this Section 2.1(c);




 




(d)           each of the Collateral

Documents creates the Lien it purports to create upon the property purportedly

encumbered thereby, and all such Liens have been duly perfected; and




 




(e)           as of the Amendment

Closing Date and after giving effect to this Amendment, no Default or Event of

Default will exist.




 




 




3.              CONDITIONS PRECEDENT.




 




Each of the

amendments provided for herein shall become effective as of December 28, 2001

(the “Effective

Date”) if all of the following conditions precedent shall have been

satisfied




 




3.1                 Execution and Delivery of this Amendment




 




The Company and

each of the Noteholders shall have executed and delivered a counterpart of this

Amendment.




 




3.2                 Execution and Delivery of Amended and Restated Notes




 




The Company shall

have executed and delivered to the Noteholders amended and restated Notes in

the form of Exhibit 1 hereto (the “Restated Notes”).




 




3.3                 Execution of Collateral Documents




 




The Company shall

have executed and delivered to the Collateral Agent a mortgage upon its

headquarters located at 3601 West 76th Street, Minneapolis, Minnesota, such

mortgage and all matters relating to title shall be acceptable to the 




 




13





























 




Collateral Agent and the Noteholders in all respects,

and such mortgage shall be in form acceptable for recording in the appropriate

office to perfect the lien thereof.




 




 




3.4                 Opinion of Counsel




 




The Company shall

have delivered to the Noteholders a favorable opinion of counsel (which counsel

shall be satisfactory to the Noteholders) as to the subject matter covered by

Sections 2(a), 2(b), 2(c) and 2(d) hereof.




 




3.5                 Execution and Delivery of Revolver Amendment




 




The Company and

Wells Fargo Bank, as agent shall have entered into an amendment to the

Revolving Credit Agreement which (i) reduces the total amount of the commitment

to $25,000,000, (ii) amends financial covenants so as to be substantially

identical to the financial covenants in the Note Purchase Agreement, as amended

hereby, and (iii) is otherwise acceptable to the Noteholders.




 




3.6                 Intercreditor Amendment




 




The parties to the Intercreditor Agreement shall have

executed and delivered an amendment thereto substantially in the form of

Exhibit 2 hereto.




 




3.7                 Amendment Fee




 




The Company shall

have paid to each Noteholder a fee in the amount equal to 0.25% of the

outstanding aggregate principal amount of the Notes held by each such

Noteholder on the Effective Date.




 




3.8                 Payment of Accrued Interest; Fees and Expenses




 




The Company shall

have paid (a) all unpaid interest on the Notes accrued to (but not including)

February 1, 2002, and (b) all costs and expenses of the Noteholders relating to

this Amendment in accordance with Section 15.1 of the  Note Purchase Agreement (including, without limitation,

attorney’s fees and disbursements).




 




14





























 




3.9                 Representations and Warranties; No Default




 




The representations and warranties set forth in

Section 2 hereof shall be true and correct, and no Default or Event of Default

shall exist.




 




3.10           Proceedings Satisfactory




 




All proceedings

taken in connection with this Amendment and all documents and papers relating

hereto shall be reasonably satisfactory to the Noteholders and their special

counsel.  The Noteholders and their

special counsel shall have received copies of such documents and papers

(whether or not specifically referred to above in this Section 3) as they

may reasonably request in connection therewith, in form and substance

satisfactory to them.




 




4.              INTERPRETATION OF

THIS AMENDMENT.




 




4.1      Terms Defined




 




The terms used in

this Agreement and not otherwise defined herein shall have the meanings

assigned to such terms in the Note Purchase Agreement.  As used in this Amendment, the following

terms have the respective meanings specified below or set forth in the Section

or other part hereof following such term (such definitions, unless otherwise

provided, to be equally applicable to both the singular and the plural forms of

the terms defined):




 




                Amendment,

this — the introductory paragraph hereof.




 




 




                Collateral

Agent — Wells Fargo Bank, National Association, or its successor

under the Intercreditor Agreement




 




                Collateral

Documents — means and includes all security agreements, mortgages,

collateral assignments and similar documents pursuant to which the Company, at

any time, grants to the Collateral Agent a Lien for the equal and ratable

benefit of the Noteholders and the lenders under the Revolving Credit

Agreement.




 




                Company

— the introductory paragraph hereof.




 




                Effective

Date — Section 3 hereof.




 




                Intercreditor

Agreement — means that certain Intercreditor Collateral Agreement

dated as of June 20, 2001 among the Company, the Noteholders and Wells Fargo

Bank, National Association, as lender and as Collateral Agent, as amended to

and including the Effective Date.




 




15





























 




Note Purchase Agreement — Recital A hereof.




 




                Noteholders—the

introductory paragraph hereof.




 




                Notes

— Recital A hereof.




 




Restated Notes 3⁄4

Section 3.2 hereof.




 




Revolving Credit Agreement — means that certain Revolving Credit

Agreement, dated as of January 31, 2000, by and among the Company and Wells

Fargo Bank, National Association, as amended to and including the date hereof.




 




 




4.2      Section Headings, etc.




 




The titles of the

Sections appear as a matter of convenience only, do not constitute a part

hereof and shall not affect the construction hereof.  The words “herein,”  “hereof,”  “hereunder,”

and “hereto”

refer to this Amendment as a whole and not to any particular Section or other

subdivision.




 




 




5.              MISCELLANEOUS.




 




5.1      Effect of Amendments




 




Except as

expressly provided herein, (a) no terms or provisions of the Note Purchase

Agreement or any Note are modified or changed by this Amendment, (b) the terms

of this Amendment shall not operate as a waiver by the Noteholders of, or

otherwise prejudice, the Noteholders’ rights, remedies or powers under, the

Note Purchase Agreement or the Notes or under any applicable law and (c) the

terms and provisions of the Note Purchase Agreement and the Notes are hereby

ratified and shall continue in full force and effect and are not subject to any

defenses or offsets, except to the extent specifically amended or waived

hereby.




 




5.2      Successors and Assigns




 




This Amendment

shall inure to the benefit of and be binding upon the successors and assigns of

each of the parties hereto.  The

provisions hereof are intended to be for the benefit of the Noteholders and

shall be enforceable by any successor or assign of any Noteholder, whether or

not an express assignment of rights hereunder shall have been made by any

Noteholder or its successors or assigns.




 




16





























 




5.3      Governing Law




 




THIS AMENDMENT SHALL BE GOVERNED BY,

AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES

SHALL BE GOVERNED BY, THE LAW OF THE STATE OF MINNESOTA EXCLUDING CHOICE-OF-LAW

PRINCIPLES OF THE LAW OF SUCH STATE THAT WOULD REQUIRE THE APPLICATION OF THE

LAWS OF A JURISDICTION OTHER THAN SUCH STATE.




 




 




 




5.4      Waivers and Amendments




 




Neither this

Amendment nor any term hereof may be changed, waived, discharged or terminated

orally, or by any action or inaction, but only by an instrument in writing

signed by each of the parties signatory hereto.




 




5.5      Costs and Expenses




 




The Company

confirms its obligations under Section 15.1 of the Note Purchase Agreement and

agree that, on the Effective Date, they will pay all costs and expenses of the

Noteholders relating to this Amendment, including, but not limited to, the

statement for reasonable fees and disbursements of the Noteholders’ special

counsel.




 




5.6      Duplicate Originals, Execution in

Counterpart




 




Two or more

originals of this Amendment may be signed by the parties, each of which shall

be an original but all of which together shall constitute one and the same

instrument.  This Amendment may be

executed in one or more counterparts and shall be effective when at least one

counterpart shall have been executed by each party hereto, and each set of

counterparts which, collectively, show execution by each party hereto shall

constitute one duplicate original.




 




 




5.7      No Claims or

Defenses.




 




The Company hereby represents, warrants, acknowledges

and agrees that (i) there are no set-offs, counter-claims or defenses against

the Note Purchase Agreement, the Notes or any of the Collateral Documents, and

(ii) there are no 




 




17





























 




claims (absolute or

contingent, matured or unmatured) or causes of action by the Company against

any Noteholder. Notwithstanding the immediately preceding sentence and as further

consideration for the agreements and understandings contained herein, the

Company hereby releases the Noteholders, their respective predecessors,

officers, directors, employees, agents, attorneys, affiliates, subsidiaries,

successors and assigns, from any liability, claim, right or cause of action

which now exists or hereafter arises as a result of acts, omissions or events

occurring on or prior to the date hereof, whether known or unknown, in any way

related to the Note Purchase Agreement or any of the Notes.




 




5.8                                  Additional Collateral.




 




On or before March 1, 2002, the Company shall deliver

to the Collateral Agent such documents as the Collateral Agent and the holders

of the Notes deem necessary to create and perfect a first priority lien upon

the proceeds of the annuity contracts and policies of life insurance listed on

Schedule 5.8 to this Third Amendment to Note Purchase Agreement.




 




5.9                                   Entire Agreement




 




This Amendment

constitutes the final written expression of all of the terms hereof and is a

complete and exclusive statement of those terms.




[Remainder

of page left intentionally blank; Next page is the signature page.]




 




18





























 




                IN WITNESS

WHEREOF, the parties hereto have caused this Amendment to be executed

on their behalf by a duly authorized officer or agent thereof, as the case may

be, as of the date first above written.




 




 




	

  ANALYSTS INTERNATIONAL CORPORATION


  
	

   


  
	

   


  
	

   


  
	

  By:


  	

   


  	

   


  
	

  Name:


  
	

  Title:


  





 




Noteholders:




 




 




	

  Accepted and

  Agreed to:


  
	

   


  
	

  GREAT-WEST

  LIFE & ANNUITY INSURANCE COMPANY


  
	

   


  
	

  By:


  	

   


  	

   


  
	

   


  
	

  Its:

  


  	

   


  	

   


  
	

   


  
	

  and


  
	

   


  
	

  By:


  	

   


  	

   


  
	

   


  
	

  Its:


  	

   


  	

   


  
	

   


  
	

  NORTHERN

  LIFE INSURANCE COMPANY


  
	

   


  
	

  By:  ING Investment Management LLC


  
	

  Its

  Agent


  
	

   


  
	

  By:


  	

   


  	

   


  
	

   


  
	

  Its:


  	

   


  	

   


  





 




19





























 




	

  RELIASTAR

  LIFE INSURANCE COMPANY


  
	

   


  
	

  By:  ING Investment Management LLC


  
	

  Its

  Agent


  
	

   


  
	

  By:


  	

   


  	

   


  
	

   


  
	

  Its:


  	

   


  	

   


  
	

   


  
	

  SECURITY

  CONNECTICUT LIFE INSURANCE COMPANY


  
	

   


  
	

  By:  ING Investment Management LLC


  
	

  Its

  Agent


  
	

   


  
	

  By:


  	

   


  	

   


  
	

   


  
	

  Its:


  	

   


  	

   


  





 




20





























 




EXHIBIT 1




 




FORM OF

NOTE




 




THIS

NOTE HAS BEEN PURCHASED FOR INVESTMENT AND NOT WITH A VIEW TO

DISTRIBUTION.  NO SALE, OFFER TO SELL,

PLEDGE, TRANSFER OR OTHER DISPOSITION OF THIS NOTE SHALL BE MADE UNLESS A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, AS AMENDED, WITH

RESPECT TO THIS NOTE IS THEN IN EFFECT OR UNLESS SUCH DISPOSITION MAY BE

EFFECTED WITHOUT VIOLATION OF THE SECURITIES ACT OF 1933, AS AMENDED, AND

APPLICABLE STATE SECURITIES LAWS.




 




ANALYSTS INTERNATIONAL CORPORTATION




 




9.00% SENIOR NOTE DUE JUNE 30, 2002




 




	

  No.

  [    ]


  	

  [Date]


  
	

  $[          ]


  	

  PPN


  





 




FOR VALUE

RECEIVED, the undersigned, ANALYSTS INTERNATIONAL CORPORATION (herein called

the “Company”), a corporation organized and existing under the laws of the

State of Minnesota, hereby promises to pay to [                   ], or registered assigns, the principal sum of

[                      ] DOLLARS on June

30, 2002, with interest (computed on the basis of a 360-day year of twelve

30-day months) (a) on the unpaid balance thereof at the rate of 9.00% per annum

from the date hereof, payable monthly, on the first day of each month

commencing with month next succeeding the date hereof, until the principal

hereof shall have become due and payable, and (b) to the extent permitted by

law on any overdue payment (including any overdue prepayment) of principal, any

overdue payment of interest and any overdue payment of a Make-Whole Amount (as

defined in the Note Purchase Agreement referred to below), payable monthly as

aforesaid (or, at the option of the registered holder hereof, on demand), at a

rate per annum from time to time equal to the greater of (i) 11.00% or (ii) 4%

over the rate of interest publicly announced by Wells Fargo Bank, National

Association from time to time as its “base” or “prime” rate.




 




Payments of

principal of interest on and any Make-Whole Amount with respect to this Note

are to be made in lawful money of the United States of America at the principal

office of the Company or at such other place as the Company shall have

designated by written notice to the holder of this Note as provided in the Note

Purchase Agreement referred to below.




 




 





























 




This Note is one

of a series of Senior Notes (herein called the “Notes”) in the aggregate

principal amount of $20,000,000 issued pursuant to the Note Purchase Agreement,

dated as of December 30, 1998 (as from time to time amended, the “Note Purchase

Agreement”), between the Company and the respective Purchasers named therein

and is entitled to the benefits thereof. 

Each holder of this Note will be deemed, by its acceptance hereof, (i)

to have agreed to the confidentiality provisions set forth in Section 20 of the

Note Purchase Agreement and (ii) to have made the representation set forth in

Section 6.2 of the Note Purchase Agreement.




 




This Note is a

registered Note.  As provided in the

Note Purchase Agreement, upon surrender of this Note for registration of

transfer, duly endorsed, or accompanied by a written instrument of transfer

duly executed by the registered holder hereof or such holder’s attorney duly

authorized in writing, a new Note for a like principal amount will be issued

to, and registered in the name of, the transferee.  Prior to due presentment for registration of transfer, the

Company may treat the person in whose name this Note is registered as the owner

hereof for the purpose of receiving payment and for all other purposes, and the

Company will not be affected by any notice to the contrary.




 




The Company will

make required prepayments of principal on the dates and in the amounts

specified in the Note Purchase Agreement. 

This Note is also subject to optional prepayment, in whole or from time

to time in part, at the times and on the terms specified in the Note Purchase

Agreement, but not otherwise.




 




If an Event of

Default, as defined in the Note Purchase Agreement, occurs and is continuing,

the principal of this Note may be declared (or otherwise become) due and

payable in the manner, at the price (including any applicable Make-Whole

Amount) and with the effect provided in the Note Purchase Agreement.




 




This Note shall be

construed and enforced in accordance with, and the rights of the parties shall

be governed by, the law of the State of Minnesota, excluding choice-of-law

principles of the law of such State that would require the application of the

laws of a jurisdiction other than such State.




 




	

  ANALYSTS

  INTERNATIONAL CORPORATION


  
	

   


  
	

  By:


  	

   


  	

   


  
	

   


  
	

  Its:


  	

   


  	

   


  





 




 




Exhibit

1-2





























 




EXHIBIT 2




 




 




Form

of Amendment to Intercreditor Agreement




 




Exhibit

1-2





























SCHEDULE 1.9




 




 




Indebtedness




 




 




Exhibit

1-2





























 




SCHEDULE  1.11




 




 




Liens




 




 




Exhibit

1-2





























 




SCHEDULE  5.8




 




 




Life

Insurance Policies




 




Exhibit

1-2