**EXHIBIT10-t**

** **

**THIRDAMENDMENT TO NOTE PURCHASE AGREEMENT**

 

THIS THIRD AMENDMENT dated as of December 28, 2001(the “Third Amendment”), by and among **ANALYSTS INTERNATIONAL CORPORATION**, aMinnesota corporation (the “**Company**”) and the holders of the Company’s Notes(as defined below) appearing on the signature pages hereof (such holders arereferred to herein individually as a **“Noteholder,”**and collectively as the **“Noteholders”**).

 

 

**RECITALS:**

 

A.            TheCompany and each of the Noteholders have heretofore entered into a NotePurchase Agreement dated as of December 30, 1998, as amended by the FirstAmendment to Note Purchase Agreement and the Second Amendment to Note PurchaseAgreement (as so amended, the “**Note Purchase Agreement”)** pursuant to whichthe Company originally issued and sold to the Noteholders an aggregateprincipal amount of Twenty Million Dollars ($20,000,000) of the Company’sSenior Notes due December 30, 2006 (the “**Notes**”).

 

B.            TheNoteholders are the registered holders or the beneficial owners of one hundredpercent (100%) of the Notes outstanding as of the date hereof.

 

C.            Capitalized terms used herein shallhave the respective meanings ascribed thereto in the Note Purchase Agreementunless herein defined or the context shall otherwise require.

 

**AGREEMENT:**

 

**NOW,THEREFORE,** forvaluable consideration, the receipt and sufficiency of which are herebyacknowledged, the parties hereto agree as follows:

 

# **1.**              AMENDMENTS TO NOTEPURCHASE 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 NotePurchase Agreement set forth in this Section 1.

 

## **1.1**            Amendment of Section 7.1

 

 

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Section 7.1 ishereby amended by  inserting a newsubsection 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 consolidatingbalance sheets of the Company and its subsidiaries as at the end of such month,

 

(ii)           consolidated and consolidatingstatements of income, changes in shareholders’ equity and cash flows of theCompany and its Subsidiaries, for such month, and

 

(iii)          a written report describing allmaterial refinancing efforts and activities of the Company to date and anticipatedfuture efforts and activities, along with all material written information insupport of same.”

 

## **1.2**            Amendment to Section 7.2.  The introductory language to Section 7.2 is hereby modifiedto read in its entirety as follows:

 

“Each set of financial statements delivered to a holder of Notespursuant to Section 7.1 hereof shall be accompanied by a certificate of aSenior Financial Officer setting forth:”

 

## **1.3**            Amendment of Section 8.1.

 

Section 8.1 ishereby amended and restated to read in its entirety as follows:

 

**“8.1        Required Payments*.***

 

On the dates setforth below, the Company will pay the principal amounts set forth below (orsuch lesser principal amount as shall then be outstanding):

 

(a)  On March 29, 2002, the Company shall pay tothe Noteholders the principal amount of One Million Five Hundred ThousandDollars ($1,500,000); and

 

(b)  On June 30, 2002, the Company shall pay tothe Noteholders all outstanding principal amounts, interest and Make-WholeAmounts.  For purposes of calculatingthe Make-Whole Amounts, the Called Principal, the interest rate, the scheduleddates of payment and the maturity date of the Notes in effect immediatelypreceding the effectiveness of the Third Amendment to Note Purchase Agreementshall be used;

 

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*provided,*that (i) anypartial prepayment of the Notes pursuant to Section 8.2 shall be deemed appliedfirst to the amount due at maturity and then to the amount of the scheduledprincipal prepayments required by this Section 8.1 in inverse order of theirmaturity, and (ii) upon any purchase of the Notes permitted by Section 8.5 theprincipal amount of each required prepayment of the Notes becoming due underthis Section 8.1 on and after the date of such prepayment or purchase shall bereduced in the same proportion as the aggregate unpaid principal amount of theNotes 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 itsentirety as follows:

 

**“Remaining Scheduled Payments”** — means, with respect to the CalledPrincipal of any Note, all payments of such Called Principal and interestthereon that would be due after the Settlement Date with respect to such CalledPrincipal if no payment of such Called Principal were made prior to itsscheduled due date, provided that if such Settlement Date is not a dateon 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 bereduced by the amount of interest accrued to such Settlement Date and requiredto be paid on such Settlement Date pursuant to Section 8.2 or 12.1.  For purposes of this definition, the CalledPrincipal, the interest rate, the scheduled dates of payment and the maturitydate of the Notes immediately preceding the effectiveness of the ThirdAmendment to Note Purchase Agreement shall be employed.

 

## **1.5**            Amendment of Section 9.6

 

Section 9.6 ishereby 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 ishereby 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 ishereby 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 withor be a party to a merger with any Person, or sell, lease, transfer orotherwise dispose of all or any Substantial Part of its assets.**”**

 

## **1.8**            Amendment of Section 10.4

 

Section 10.4 ishereby amended and restated in its entirety as follows:

 

**“10.4      Limitation on Investments.**

 

The Company will not and will not permit anySubsidiary to, make any Investment other than:

 

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(a)                            Investments in property to be used in theordinary course of business of the Company and its Subsidiaries;

(b)                           current assets arising from the sale ofgoods and services in the ordinary course of business of the Company and itsSubsidiaries;

(c)                            Investments existing on the date hereofin Subsidiaries;

(d)                           Investments in direct obligations of theUnited States of America or any agency or instrumentality thereof whoseobligations constitute full faith and credit obligations of the United Statesof America having a maturity of one year or less, commercial paper issued byU.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 orbankers’ acceptances having a maturity of one year or less issued by members ofthe 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 ormunicipal bonds of investment grade quality.”

 

## **1.9**            Amendment of Section 10.5

 

Section 10.5 ishereby amended and restated in its entirety as follows:

 

**“10.5      Limitation on Indebtedness**

 

The Company will not and will not permit anySubsidiary to create, assume, incur, or suffer to exist or in any manner be orbecome liable in respect of any Indebtedness, except:

 

(a)                            Indebtedness evidenced by the Notes;

 

 

(b)                           Indebtedness incurred in accordance withthe terms of the Revolving Credit Agreement as in effect on the AmendmentClosing Date; and

 

(c)                            other Indebtedness of the Company or anySubsidiary existing at the Amendment Closing Date and set forth on Schedule 1.9to the Third Amendment to Note Purchase Agreement.”

 

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## **1.10                Amendment of  Section 10.6**

 

Section 10.6 ishereby amended and restated in its entirety as follows:

 

**“10.6      Limitation on Subsidiary Indebtedness.**

 

The Company will not at any time permit any Subsidiaryto, directly or indirectly, create, incur, assume, guarantee, have outstanding,or otherwise become or remain directly or indirectly liable with respect to anyIndebtedness other than:

 

(a)                            Indebtedness of Subsidiaries existing atthe Amendment Closing Date and set forth on Schedule 1.9 to the Third Amendmentto Note Purchase Agreement; and

 

(b)                           Indebtedness of a Subsidiary owed to theCompany or a Wholly-Owned Subsidiary.”

 

## **1.11**                                                Amendment of  Section 10.7

 

Section 10.7 ishereby amended and restated in its entirety as follows:

 

**“10.7      Limitation on Liens.**

 

The Company will not and will not permit anySubsidiary to create or incur, or suffer to be incurred or to exist, any Lienon its or their property or assets, including any capital stock of anySubsidiary, whether now owned or hereafter acquired, or upon any income orprofits therefrom, or transfer any property for the purpose of subjecting thesame to the payments of obligations in priority to the payment of its or theirgeneral creditors, or acquire or agree to acquire, or permit any Subsidiary toacquire, any property or assets upon conditional sales agreements or othertitle retention devices, unless the Notes are equally and ratably securedexcept:

 

(a)                                        Liens for taxes and assessments or othergovernmental charges or levies not yet due or which are being contested in goodfaith by appropriate proceedings promptly initiated and diligently conducted inaccordance with Section 9.4 hereof, provided that payment thereof is not at thetime required by Section 9.4 hereof;

 

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(b)                                       Liens of or resulting from any judgmentor award, the time for the appeal or petition for rehearing of which shall nothave expired, or in respect of which the Company or a Subsidiary shall at anytime in good faith be prosecuting an appeal or a proceeding for a review shallhave been secured, provided that payment thereof is not at the time required bySection 9.4 hereof;

 

(c)                                        Liens incidental to the normal conduct ofthe business or the ownership of properties and assets of the Company or anySubsidiary (including Liens in connection with worker’s compensation,unemployment insurance, old age pensions, other social security benefits orobligations and other like laws, warehousemen’s, mechanics’, materialmen’s andattorney’s liens and statutory landlord’s liens) and Liens to secure statutoryobligations, surety, penalty or appeal bonds or other Liens of like generalnature incurred in the ordinary course of business and not in connection withthe incurrence of Indebtedness and which do not in the aggregate materiallyimpair the use of such property or assets in the operation of the business ofthe Company, and the Company and its Subsidiaries taken as a whole, or thevalue of such property or assets for the purposes of such business; provided ineach case, the obligation secured is not overdue (or, with respect towarehousemen’s, mechanics’ and materialmens’ lien, not overdue for a periodlonger than 30 days), or if so overdue, is being contested in good faith byappropriate actions or proceedings;

 

(d)                                       Liens existing existing at the AmendmentClosing Date and set forth on Schedule 1.11 to the Third Amendment to NotePurchase Agreement.”;

 

(e)                                        any Lien renewing, extending or refundingany Lien permitted by paragraph (d) of this Section 10.7, *provided* that (i) theprincipal amount of Indebtedness secured by such Lien immediately prior to suchextension, renewal or refunding is not increased or the maturity thereofreduced, (ii) such Lien is not extended to any other property, and (iii)immediately after such extension, renewal or refunding no Default or Event ofDefault would exist;

 

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(f)                                          Liens on property or assets of anySubsidiary securing Indebtedness owing to the Company or to any of itsWholly-Owned Subsidiaries; and

 

(g)                                       (i) any Lien on property (other than theland and improvements comprising the Company’s office building located at 3601West 76th Street, Edina, Minnesota 55435) to secure all or a part ofthe purchase price or cost of the construction of such property createdcontemporaneously with, or within 180 days after, such acquisition or thecompletion of such construction, or (ii) any Lien in property existing in suchproperty at the time of acquisition thereof, whether or not the Indebtednesssecured thereby is assumed by the Company or such Subsidiary, or (iii) any Lienexisting in the property of a corporation at the time such corporation ismerged into or consolidated with the Company or a Subsidiary or at the time ofa sale, lease or other disposition of the properties of a corporation or firmas an entirety or substantially as an entirety to the Company or a Subsidiary;provided, however, that the Indebtedness secured by any Lien permitted by thisparagraph (g) shall not in the aggregate exceed 100% of the fair market valueof the related property.”

 

## **1.12**                                                Amendment of  Section 10.9

 

Section 10.9 ishereby amended and restated in its entirety as follows:

 

**“10.9                      Restricted Payments.**

 

The Company will not (i) pay any amount on account ofany equity interest in the Company, including, without limitation,  dividends in cash or property (other thandividends consisting of capital stock of the Company or options, warrants andrights to acquire such capital stock); (ii) directly or indirectly purchase,redeem or otherwise retire, any shares of any class of its capital stock otherthan purchases of stock necessary to fund the Company’s matching contributionobligations to a Plan; or (iii) make any payment of principal with respect tothe Revolving Credit Agreement other than payments required by section 2.7(c)thereof (collectively, “Restricted Payments”).”

 

 

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## **1.13**                                                Amendment of  Section 10.10

 

Section 10.10 ishereby amended and restated in its entirety as follows:

 

**“10.10                   Restrictions on Issuance andSale of Subsidiary Stock.**

 

The Company will not (i) permit any Subsidiary toissue or sell any shares of its capital stock of any class to any Person otherthan the Company, or (ii) sell, transfer or otherwise dispose of any shares ofcapital 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 otherSubsidiary.”

 

## **1.14**                                                Amendment of  Section 10.11

 

Section 10.11 ishereby amended and restated in its entirety as follows:

 

**“10.11                   Sale and Lease Back.**

 

The Company will not, and will not permit anySubsidiary to enter into any arrangement with any bank, insurance company orother lender or investor or to which such lender or investor is a partyproviding for the leasing by the Company or any Subsidiary of real or personalproperty which has been or is to be sold or transferred by the Company or anySubsidiary to such lender or investor or to any person to whom funds have beenor are to be advanced by such lender or investor on the security of suchproperty or rental obligations of the Company or any Subsidiary.”

 

 

## **1.15**                                                Leverage Ratios.

 

A new Section10.14 is hereby added to the Note Purchase Agreement to read as follows:

 

 

**“10.14                   Leverage Ratio.**

 

 At all timesthe sum of outstanding (i) principal under the Revolving Credit CreditAgreement, and (ii) principal under the Note Purchase Agreement (“TotalPrincipal Indebtedness”) shall not exceed

 

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four and one-half times (4.5x) EBITDA for the period of twelveconsecutive months then most recently ended; provided, however, thatTotal Principal Indebtedness shall not exceed four times (4.0x) such EBITDAduring the time period between the first day of each month and the date thefinancial reports required by Section 7.1(i) are delivered to the Noteholdersby the Company.”

 

## **1.16**                                                Other Financial Covenants.

 

Section 9.7(Current Ratio) and Section 10.8 (Consolidated Net Worth) are hereby deleted intheir entirety.

 

## **1.17**                                                Additional Event of Default.

 

Section  11 is hereby amended by adding thereto a newsubsections (k) and (l) to read as follows:

 

“(k)   theCompany shall have failed to deliver to the Collateral Agent by March 1, 2002such documents as the Collateral Agent and the holders of the Notes deemnecessary to create and perfect a first priority lien upon the annuitycontracts and policies of life insurance listed on Schedule 5.8 to the ThirdAmendment to Note Purchase Agreement; or

(l)   theCompany shall make a payment (or series of related payments) to any Person inan aggregate amount exceeding $1,500,000*, except* payments of trade payables in theordinary course of business, budgeted capital expenditures, and one ormore  lump sum payments (not to exceed$2,700,000 in the aggregate) pursuant to paragraph 4e of the  Company’s retirement plan, provided that anysuch lump sum payment is funded entirely with the proceeds of one or more lifeinsurance policies or annuity contracts listed on Schedule 5.8 to the ThirdAmendment to Note Purchase Agreement.”

 

## **1.18**                                                Amendment of  Definitions.

 

The present definition of EBITDA is deleted and the followingdefinitions are hereby added to Schedule B to the Note Purchase Agreement, intheir respective alphabetical order, as follows:

 

**“Amendment Closing Date”**  means           2002 [insert date this AmendmentNo.3 is executed by all parties]

 

**“Collateral Agent”**  means WellsFargo Bank, National Association, or its successor under the IntercreditorAgreement.

 

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**“Covenant Computation Date”** means, at anytime, the last day of the most recently completed month.

 

**“Covenant Computation Period”**  means theEBITDA Covenant Computation Period when determining compliance with Section9.6, the Net Cash Flow Computation Period when determining compliance withSection 9.7, and the Leverage Coverage Computation Period when determiningcompliance with Section 10.14.

 

**“EBITDA”**  means, withrespect to any Covenant Computation Period, Pre-Tax Earnings (excludingnon-cash income) plus noncash expenses associated with the write-off of theCompany’s investment in CDXC Corporation, Interest Expense, depreciation andamortization, all as determined with respect to the Company in accordance withGAAP 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 tothis Note Purchase Agreement, dated as of March 30, 2001, among the Company andthe Noteholders.

 

**“Intercreditor Agreement” **means thatcertain Intercreditor Collateral Agreement dated as of June 20, 2001 among theCompany, the Noteholders and Wells Fargo Bank, National Association, as lenderand as Collateral Agent, as amended from time to time.

 

**“Leverage Computation Period”**means the twelve consecutive months ending on aCovenant Computation Date.

 

**“Net Cash Flow”**  means, withrespect to a Net Cash Flow Computation Period, EBITDA plus cash received fromtax refunds, less cash paid for taxes, Capital Expenditures, cash paid forrestructuring charges, Interest Expense and cash paid as principal under theNote Purchase Agreement, all as determined with respect to the Company in accordance with GAAP for suchNet Cash Flow Covenant Computation Period.

 

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**“Net Cash Flow Computation Period”** means the three consecutive calendarmonths ending on a Covenant Computation Date.

 

**“Restated Notes”**  Section 3.2hereof.

 

“***Revolving Credit Agreement***” means the Credit Agreementbetween the Company and Wells Fargo Bank, National Association, dated as ofJanuary 31, 2000 as amended through the date hereof

 

**“*Second Amendment to Note Purchase Agreement* **means that certain Second Amendment to this NotePurchase Agreement, dated as of June 30, 2001, among the Company and theNoteholders.”

 

**“*Third Amendment to Note Purchase Agreement*”** means that certain Third Amendment tothis Note Purchase Agreement, dated as of December 28, 2001, among the Companyand the Noteholders.

 

 

## **1.19                Amendment of  Exhibit 1**

 

The form of Noteattached to the Note Purchase Agreement as Exhibit 1 is amended and restated inits entirety to read as set forth on Exhibit 1 hereto.

 

# **2.**              WARRANTIES ANDREPRESENTATIONS.

 

To induce theNoteholders to execute and deliver this Amendment (which representation shallsurvive the execution and delivery of this Amendment), the Company representsand warrants to the Noteholders that:

 

**(a)          **each of this Amendment, the RestatedNotes and the Collateral Documents has been duly authorized, executed anddelivered by the Company and constitutes its legal, valid and bindingobligation, 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 limitingcreditors’ rights generally;

 

**(b)          **each of the Note Purchase Agreement, asamended by this Amendment, the Restated Notes and the Collateral Documents,constitutes the legal, valid and binding obligation, contract and agreement ofthe Company enforceable against it in accordance with its terms, except asenforcement may be limited by bankruptcy, insolvency, reorganization,moratorium or similar laws or 

 

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equitable principlesrelating to or limiting creditors’ rights generally;

 

**(c)          **the execution, delivery and performanceby the Company of this Amendment, the Restated Notes and the CollateralDocuments (i) has been duly authorized by all requisite corporate actions and,if required, shareholder action, (ii) does not require the consent or approvalof any governmental or regulatory body or agency, and (iii) will not (A)violate (1) any provision of law, statute, rule or regulation or its articlesof incorporation or bylaws, (2) any order of any court or any rule, regulationor order of any  agency or governmentbinding upon it, or (3) any provision of any material indenture, agreement orother instrument to which it is a party or by which its properties or assetsare or may be bound, or (B) result in a breach or constitute (alone or with duenotice or lapse of time or both) a default under any indenture, agreement orother instrument referred to in clause (iii)(A)(3) of this Section 2.1(c);

 

**(d)**           each of the CollateralDocuments creates the Lien it purports to create upon the property purportedlyencumbered thereby, and all such Liens have been duly perfected; and

 

**(e)**           as of the AmendmentClosing Date and after giving effect to this Amendment, no Default or Event ofDefault will exist.

 

 

# **3.**              CONDITIONS PRECEDENT.

 

Each of theamendments provided for herein shall become effective as of December 28, 2001(the **“EffectiveDate”**) if all of the following conditions precedent shall have beensatisfied

 

### **3.1**                 Execution and Delivery of this Amendment

 

The Company andeach of the Noteholders shall have executed and delivered a counterpart of thisAmendment.

 

### **3.2**                 Execution and Delivery of Amended and Restated Notes

 

The Company shallhave executed and delivered to the Noteholders amended and restated Notes inthe form of Exhibit 1 hereto (the “Restated Notes”).

 

### **3.3**                 Execution of Collateral Documents

 

The Company shallhave executed and delivered to the Collateral Agent a mortgage upon itsheadquarters located at 3601 West 76th Street, Minneapolis, Minnesota, suchmortgage and all matters relating to title shall be acceptable to the 

 

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Collateral Agent and the Noteholders in all respects,and such mortgage shall be in form acceptable for recording in the appropriateoffice to perfect the lien thereof.

 

 

### **3.4**                 Opinion of Counsel

 

The Company shallhave delivered to the Noteholders a favorable opinion of counsel (which counselshall be satisfactory to the Noteholders) as to the subject matter covered bySections 2(a), 2(b), 2(c) and 2(d) hereof.

 

### **3.5**                 Execution and Delivery of Revolver Amendment

 

The Company andWells Fargo Bank, as agent shall have entered into an amendment to theRevolving Credit Agreement which (i) reduces the total amount of the commitmentto $25,000,000, (ii) amends financial covenants so as to be substantiallyidentical to the financial covenants in the Note Purchase Agreement, as amendedhereby, and (iii) is otherwise acceptable to the Noteholders.

 

### **3.6**                 Intercreditor Amendment

 

The parties to the Intercreditor Agreement shall haveexecuted and delivered an amendment thereto substantially in the form ofExhibit 2 hereto.

 

### **3.7**                 Amendment Fee

 

The Company shallhave paid to each Noteholder a fee in the amount equal to 0.25% of theoutstanding aggregate principal amount of the Notes held by each suchNoteholder on the Effective Date.

 

### **3.8**                 Payment of Accrued Interest; Fees and Expenses

 

The Company shallhave 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 tothis Amendment in accordance with Section 15.1 of the  Note Purchase Agreement (including, without limitation,attorney’s fees and disbursements).

 

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### **3.9**                 Representations and Warranties; No Default

 

The representations and warranties set forth inSection 2 hereof shall be true and correct, and no Default or Event of Defaultshall exist.

 

### **3.10**           Proceedings Satisfactory

 

All proceedingstaken in connection with this Amendment and all documents and papers relatinghereto shall be reasonably satisfactory to the Noteholders and their specialcounsel.  The Noteholders and theirspecial counsel shall have received copies of such documents and papers(whether or not specifically referred to above in this Section 3) as theymay reasonably request in connection therewith, in form and substancesatisfactory to them.

 

# **4.**              INTERPRETATION OFTHIS AMENDMENT.

 

**4.1      Terms Defined**

 

The terms used inthis Agreement and not otherwise defined herein shall have the meaningsassigned to such terms in the Note Purchase Agreement.  As used in this Amendment, the followingterms have the respective meanings specified below or set forth in the Sectionor other part hereof following such term (such definitions, unless otherwiseprovided, to be equally applicable to both the singular and the plural forms ofthe terms defined):

 

                **Amendment,this —**the introductory paragraph hereof.

 

 

                **CollateralAgent** — Wells Fargo Bank, National Association, or its successorunder the Intercreditor Agreement

 

                **CollateralDocuments —**means and includes all security agreements, mortgages,collateral assignments and similar documents pursuant to which the Company, atany time, grants to the Collateral Agent a Lien for the equal and ratablebenefit of the Noteholders and the lenders under the Revolving CreditAgreement.

 

                **Company**— the introductory paragraph hereof.

 

                **EffectiveDate**— Section 3 hereof.

 

                **IntercreditorAgreement** — means that certain Intercreditor Collateral Agreementdated as of June 20, 2001 among the Company, the Noteholders and Wells FargoBank, National Association, as lender and as Collateral Agent, as amended toand including the Effective Date.

 

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**Note Purchase Agreement** — Recital A hereof.

 

                **Noteholders**—theintroductory paragraph hereof.

 

                **Notes**— Recital A hereof.

 

**Restated Notes**3⁄4Section 3.2 hereof.

 

**Revolving Credit Agreement —**means that certain Revolving CreditAgreement, dated as of January 31, 2000, by and among the Company and WellsFargo Bank, National Association, as amended to and including the date hereof.

 

 

**4.2      Section Headings, etc.**

 

The titles of theSections appear as a matter of convenience only, do not constitute a parthereof 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 othersubdivision.

 

 

# **5.**              MISCELLANEOUS.

 

**5.1      Effect of Amendments**

 

Except asexpressly provided herein, (a) no terms or provisions of the Note PurchaseAgreement or any Note are modified or changed by this Amendment, (b) the termsof this Amendment shall not operate as a waiver by the Noteholders of, orotherwise prejudice, the Noteholders’ rights, remedies or powers under, theNote Purchase Agreement or the Notes or under any applicable law and (c) theterms and provisions of the Note Purchase Agreement and the Notes are herebyratified and shall continue in full force and effect and are not subject to anydefenses or offsets, except to the extent specifically amended or waivedhereby.

 

**5.2      Successors and Assigns**

 

This Amendmentshall inure to the benefit of and be binding upon the successors and assigns ofeach of the parties hereto.  Theprovisions hereof are intended to be for the benefit of the Noteholders andshall be enforceable by any successor or assign of any Noteholder, whether ornot an express assignment of rights hereunder shall have been made by anyNoteholder or its successors or assigns.

 

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**5.3      Governing Law**

 

**THIS AMENDMENT SHALL BE GOVERNED BY,AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIESSHALL BE GOVERNED BY, THE LAW OF THE STATE OF MINNESOTA EXCLUDING CHOICE-OF-LAWPRINCIPLES OF THE LAW OF SUCH STATE THAT WOULD REQUIRE THE APPLICATION OF THELAWS OF A JURISDICTION OTHER THAN SUCH STATE.**

 

 

 

**5.4      Waivers and Amendments**

 

Neither thisAmendment nor any term hereof may be changed, waived, discharged or terminatedorally, or by any action or inaction, but only by an instrument in writingsigned by each of the parties signatory hereto.

 

**5.5      Costs and Expenses**

 

The Companyconfirms its obligations under Section 15.1 of the Note Purchase Agreement andagree that, on the Effective Date, they will pay all costs and expenses of theNoteholders relating to this Amendment, including, but not limited to, thestatement for reasonable fees and disbursements of the Noteholders’ specialcounsel.

 

**5.6      Duplicate Originals, Execution inCounterpart**

 

Two or moreoriginals of this Amendment may be signed by the parties, each of which shallbe an original but all of which together shall constitute one and the sameinstrument.  This Amendment may beexecuted in one or more counterparts and shall be effective when at least onecounterpart shall have been executed by each party hereto, and each set ofcounterparts which, collectively, show execution by each party hereto shallconstitute one duplicate original.

 

 

**5.7      No Claims orDefenses.**

 

The Company hereby represents, warrants, acknowledgesand agrees that (i) there are no set-offs, counter-claims or defenses againstthe Note Purchase Agreement, the Notes or any of the Collateral Documents, and(ii) there are no 

 

17

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claims (absolute orcontingent, matured or unmatured) or causes of action by the Company againstany Noteholder. Notwithstanding the immediately preceding sentence and as furtherconsideration for the agreements and understandings contained herein, theCompany 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 actionwhich now exists or hereafter arises as a result of acts, omissions or eventsoccurring on or prior to the date hereof, whether known or unknown, in any wayrelated to the Note Purchase Agreement or any of the Notes.

 

**5.8****                                 ****Additional Collateral.**

 

On or before March 1, 2002, the Company shall deliverto the Collateral Agent such documents as the Collateral Agent and the holdersof the Notes deem necessary to create and perfect a first priority lien uponthe proceeds of the annuity contracts and policies of life insurance listed onSchedule 5.8 to this Third Amendment to Note Purchase Agreement.

 

**5.9****                                 ****Entire Agreement**

 

This Amendmentconstitutes the final written expression of all of the terms hereof and is acomplete and exclusive statement of those terms.

[Remainderof page left intentionally blank; Next page is the signature page.]

 

18

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                **IN WITNESSWHEREO**F, the parties hereto have caused this Amendment to be executedon their behalf by a duly authorized officer or agent thereof, as the case maybe, 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

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| **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

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**EXHIBIT 1**

 

**FORM OFNOTE**

 

**THISNOTE HAS BEEN PURCHASED FOR INVESTMENT AND NOT WITH A VIEW TODISTRIBUTION.  NO SALE, OFFER TO SELL,PLEDGE, TRANSFER OR OTHER DISPOSITION OF THIS NOTE SHALL BE MADE UNLESS AREGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, AS AMENDED, WITHRESPECT TO THIS NOTE IS THEN IN EFFECT OR UNLESS SUCH DISPOSITION MAY BEEFFECTED WITHOUT VIOLATION OF THE SECURITIES ACT OF 1933, AS AMENDED, ANDAPPLICABLE STATE SECURITIES LAWS.**

 

ANALYSTS INTERNATIONAL CORPORTATION

 

9.00% SENIOR NOTE DUE JUNE 30, 2002

 
| No.  [    ]                                 | [Date] |
|------------------------------------------------------------|--------|
| $[          ] | PPN    |

 

FOR VALUERECEIVED, the undersigned, ANALYSTS INTERNATIONAL CORPORATION (herein calledthe “Company”), a corporation organized and existing under the laws of theState of Minnesota, hereby promises to pay to [                   ], or registered assigns, the principal sum of[                      ] DOLLARS on June30, 2002, with interest (computed on the basis of a 360-day year of twelve30-day months) (a) on the unpaid balance thereof at the rate of 9.00% per annumfrom the date hereof, payable monthly, on the first day of each monthcommencing with month next succeeding the date hereof, until the principalhereof shall have become due and payable, and (b) to the extent permitted bylaw on any overdue payment (including any overdue prepayment) of principal, anyoverdue payment of interest and any overdue payment of a Make-Whole Amount (asdefined in the Note Purchase Agreement referred to below), payable monthly asaforesaid (or, at the option of the registered holder hereof, on demand), at arate 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, NationalAssociation from time to time as its “base” or “prime” rate.

 

Payments ofprincipal of interest on and any Make-Whole Amount with respect to this Noteare to be made in lawful money of the United States of America at the principaloffice of the Company or at such other place as the Company shall havedesignated by written notice to the holder of this Note as provided in the NotePurchase Agreement referred to below.

 

 

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This Note is oneof a series of Senior Notes (herein called the “Notes”) in the aggregateprincipal 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 PurchaseAgreement”), between the Company and the respective Purchasers named thereinand 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 theNote Purchase Agreement and (ii) to have made the representation set forth inSection 6.2 of the Note Purchase Agreement.

 

This Note is aregistered Note.  As provided in theNote Purchase Agreement, upon surrender of this Note for registration oftransfer, duly endorsed, or accompanied by a written instrument of transferduly executed by the registered holder hereof or such holder’s attorney dulyauthorized in writing, a new Note for a like principal amount will be issuedto, and registered in the name of, the transferee.  Prior to due presentment for registration of transfer, theCompany may treat the person in whose name this Note is registered as the ownerhereof for the purpose of receiving payment and for all other purposes, and theCompany will not be affected by any notice to the contrary.

 

The Company willmake required prepayments of principal on the dates and in the amountsspecified in the Note Purchase Agreement. This Note is also subject to optional prepayment, in whole or from timeto time in part, at the times and on the terms specified in the Note PurchaseAgreement, but not otherwise.

 

If an Event ofDefault, as defined in the Note Purchase Agreement, occurs and is continuing,the principal of this Note may be declared (or otherwise become) due andpayable in the manner, at the price (including any applicable Make-WholeAmount) and with the effect provided in the Note Purchase Agreement.

 

This Note shall beconstrued and enforced in accordance with, and the rights of the parties shallbe governed by, the law of the State of Minnesota, excluding choice-of-lawprinciples of the law of such State that would require the application of thelaws of a jurisdiction other than such State.

 
| ANALYSTS  INTERNATIONAL CORPORATION |
|-------------------------------------|
|                                |
| By:                                 |   |   |
|                                |
| Its:                                |   |   |

 

 

Exhibit1-2

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**EXHIBIT 2**

 

 

**Formof Amendment to Intercreditor Agreement**

 

Exhibit1-2

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**SCHEDULE 1.9**

 

 

**Indebtedness**

 

 

Exhibit1-2

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**SCHEDULE  1.11**

 

 

**Liens**

 

 

Exhibit1-2

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**SCHEDULE  5.8**

 

 

**LifeInsurance Policies**

 

Exhibit1-2

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