Document:

Document

Exhibit

10-l

FIFTH AMENDMENT TO CREDIT

AGREEMENT

This Amendment, dated as

of December 28, 2001, is made by and between Analysts International

Corporation, a Minnesota corporation (the “Borrower”), and Wells Fargo Bank,

National Association, assignee of Wells Fargo Bank Minnesota, National

Association, f/k/a Norwest Bank Minnesota, National Association (the “Bank”).

Recitals

The Borrower and the Bank have entered into a Credit

Agreement dated as of January 31, 2000 as amended by a First Amendment to

Credit Agreement dated as of December 12, 2000, a Second Amendment to Credit

Agreement dated as of April 2, 2001, but effective as of March 30, 2001, a

Third Amendment dated as of August 6, 2001, and a Fourth Amendment dated as of

November 30, 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 Borrower has

requested that certain amendments be made to the Credit Agreement, which the

Bank 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:

“‘Advance Request Worksheet’ means the form attached

to the Fifth Amendment as Exhibit B, certifying the Borrower’s compliance with

the Leverage Ratio Covenant under Section 5.10.”

“‘Covenant Computation

Date’ means the last day of the most recently completed month.”

“‘Covenant Computation

Period’ means the EBITDA Covenant Computation Period when determining

compliance with Section 5.8, the Net Cash Flow Computation Period when

determining compliance with Section 5.9 and the Leverage Covenant Computation

Period when determining compliance with Section 5.10”

 

1

 

“‘EBITDA’ means, Pre-Tax

Earnings (excluding non-cash income) plus noncash expenses associated

with the write-off of the Borrower’s investment in CDXC Corporation, Interest

Expense, depreciation and amortization, determined with respect to the Borrower

in accordance with GAAP during the Covenant Computation Period.”

“‘EBITDA Covenant

Computation Period’ means the calendar month ending on the Covenant Computation

Date.”

“‘Facility Amount’ means

$25,000,000, unless said amount is reduced pursuant to Section 2.8, in which

event it means the amount to which said amount is reduced.”

“‘Facility Termination

Date’ means the earlier of (i) June 30, 2002, 

(ii) termination of the Facility pursuant to Section 2.8 or 7.2(a), or

(iii) the date of payment of any principal amount to the Note Purchasers other

than a payment of $1,500,000.00 on March 29, 2002.”

 “‘Fifth

Amendment’ means the Fifth Amendment to Credit Agreement dated as of December

28, 2001 by and between the Borrower and the Bank.”

“‘Leverage Covenant Computation Period’ means the

twelve consecutive months ending on the 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

determined in accordance with GAAP during such Net Cash Flow Covenant

Computation period.”

“‘Net Cash Flow Computation Period’ means the three

consecutive calendar months ending on the Covenant Computation Date.”

“‘Note Purchase Amendment’ means the Third Amendment

to Note Purchase Agreement dated as of December 28, 2001 by and among the

Borrower and the Note Purchasers.”

2.             Interest.  Effective upon the execution and delivery of

this Amendment, Section 2.3(a) of the Credit Agreement is deleted in its

entirety and replaced with the following:

“(a)         Interest

Rate.  The principal balance

of the Note shall bear interest at the rate of nine percent (9.00%) per annum.”

 

2

 

Between December 28, 2001 and the date this Amendment is executed and

delivered, interest shall continue to accrue at the Floating Rate.

3.             Eurodollar Funding; Margins.  Sections 2.3(b), (c), (d) and (e) of the

Credit Agreement are deleted in their entirety.  The Borrower shall not be entitled to a elect Eurodollar Rate.

4.             Letters of Credit.  Section 2.4 of the Credit Agreement is

deleted in its entirety.  The Borrower

shall not be entitled to request the issuance of Letters of Credit.

5.             Non-Usage Fees.  Section 2.6(b) of the Credit Agreement is

deleted in its entirety.  The Borrower

shall not be required to pay any non-usage fees.

6.             Prepayments.  Section 2.7(a)(iii) of the Credit Agreement

is deleted; the Borrower may make prepayments in any amount.  In addition, Section 2.7 is amended to add

the following new paragraph:

“(c)         Mandatory

Prepayments.  Each Business

Day the Borrower shall prepay the Note in an amount equal to the difference

between (y) the Borrower’s cash balances in its depository and investment

accounts that day and (z) the amount necessary to cover disbursements in the

ordinary course on the next Business Day, plus the amount necessary to pre-fund

ACH payroll disbursements as of the date such ACH payroll file authorization is

initiated; provided, however, that in no event shall the

Borrower’s overnight aggregate cash balance exceed $6,000,000.00 and any amount

in excess shall be delivered to the Bank as a prepayment of the Note.  These mandatory prepayments shall be made by

wire transfer each Business Day that they become due.”

7.             Condition Precedent to All Advances.  Section 3.2 of the Credit Agreement is

amended by adding the following new paragraph:

“(c)         delivery

to the Bank of a completed Advance Request Worksheet certifying the Borrower’s

compliance with the Leverage Ratio Covenant of Section 5.10 as of the date of

the requested Advance.”

8.             Financial Reporting.  Section 5.1 of the Credit Agreement is

amended by deleting the reference in paragraph (c) to “paragraph (a) or (b),”

replacing it with the reference “paragraph (m),” and adding the following new

paragraphs:

“(m)        As

soon as available and in any event within 10 Business Days after the end of

each month, (i) consolidated statement of financial condition, earnings and

cash flow of the Borrower and its Subsidiaries, prepared in accordance with

GAAP, and (ii) a worksheet or schedule of the Borrower’s computations of the

financial

 

3

 

covenants in Sections 5.8 and 5.9, all in form and substance sufficient

for the Bank to review compliance with the financial covenants of Sections 5.8

and 5.9.

(n)           On

the last Business Day of each month, a written report of the Borrower’s efforts

to obtain new financing in compliance with the requirements of Section 5.13,

including copies of all material correspondence between the Borrower and any

financial institutions considering the extension of new financing to the

Borrower.

(o)           On

the next Business Day following a request by the Bank, a detailed cash receipts

and disbursements projection (including the forecasted beginning and ending

daily cash balances and any necessary Advances) covering the next five

consecutive Business Days, commencing with the date the information request is

made by the Bank.”

9.             EBITDA.  Section 5.8 of the Credit Agreement is

deleted in its entirety and replaced with the following:

“Section 5.8 Monthly EBITDA.  The Borrower will achieve at a minimum the

EBITDA as of each Covenant Computation Date set forth below:

 

	

  Covenant

  Computation Date

  	

   

  	

  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”

  	

   

  

 

10.           Net Cash Flow.  Section 5.9 of the Credit Agreement is

deleted in its entirety and replaced with the following:

“Section 5.9 Net Cash Flow.  The Borrower will achieve at a minimum the

trailing three month net cashflow as of each Covenant Computation Date set

forth below:

 

4

 

	

  Covenant Computation Date

  	

   

  	

  Trailing 3 Month Net Cashflow

  
	

  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)”

  
	

   

  	

   

  	

   

  

11.           Leverage.  Section 5.10 of the Credit Agreement is

deleted in its entirety and replaced with the following:

“Section 5.10 Leverage Ratio.  At all times the sum of outstanding (i)

Advances under the Credit Agreement and (ii) principal under the Note Purchase

Agreement (“Total Principal Indebtedness”) shall never exceed four and one-half

times (4.5x) EBITDA; provided, however, that Total Principal

Indebtedness shall not exceed four times (4.0x) EBITDA during the time period

between the first day of each month and the actual date the financial reports

required by Section 5.1(m) are delivered to the Bank by the Borrower.”

12.           Other

Financial Covenants.  Sections 5.11,

5.12 and 6.12 of the Credit Agreement are deleted in their entirety.

13.           New Financing.  Section 5.13 is added to the Credit Agreement

as follows:

“Section 5.13  New

Financing.  On or prior to June 30,

2002, the Borrower will cause a financial institution other than the Bank to

fund financing to the Borrower in an amount not less than the sum of all

amounts then outstanding under the Credit Agreement and the Note Purchase

Agreement, and such financing shall be immediately applied to payment in full

of the amounts outstanding under the Credit Agreement and the Note Purchase

Agreement .”

14.           Investments. Sections 6.4 (b)

and (g) of the Credit Agreement are deleted in their entirety.

15.           Restricted

Payments.  Section 6.5 of the Credit

Agreement is deleted in its entirety and replaced with the following:

“Section 6.5 Restricted Payments.  The Borrower shall not make any Restricted

Payments.  The Bank acknowledges that

purchases of the Borrower’s

 

5

 

common stock in the ordinary course of business for the sole purpose of

funding matching contributions by the Borrower to its employees’ 401(k) plan is

not a Restricted Payment.”

16.           Consolidation or Merger.  Section 6.8(b) of the Credit Agreement is

deleted in its entirety.

17.           Ordinary Course of Business.  Until the Facility Termination Date, the

Borrower shall continue to operate in the ordinary course of business as

established prior to the date of this Amendment.  The Borrower shall not incur or pay any extraordinary obligations

or expenses (including but not limited to employee salaries and benefits), nor

undertake any new or unusual business activity.

Notwithstanding

the foregoing, the Bank consents to (i) a payment in the amount of

$1,500,000.00 to the Note Purchasers on March 29, 2002, pursuant to the terms

of the Note Purchase Amendment, and (ii) a lump sum payment not to exceed $2.7

million under paragraph 4e of the Borrower’s retirement plan to a person who

was an active executive employee of the Borrower on the date of this Amendment

and elects to retire prior to the Termination Date (the “Special Retirement

Payment”).  However, the Special

Retirement Payment shall be funded solely from the Variable Universal

Life Insurance Policies (the “Insurance Policies”) held by Wells Fargo Bank

Minnesota, National Association, as Trustee (the “Trustee”) for the Borrower’s

retirement trust account, and then, only to the extent the value of the

Insurance Policies is insufficient, from the Multi-funded Annuity Contracts

(“Annuities”) also held by the Trustee in the retirement trust account.  In no event shall the Special Retirement

Payment be funded from operating cash or other assets of the Borrower.

18.           New Compliance Certificate.

Exhibit C to the Credit Agreement is hereby amended in its entirety and

replaced with Exhibit A to this Amendment.

19.           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 thereunder.

20.           Amendment Fee.  In consideration of the Bank’s entering into

this Amendment, the Borrower shall pay to the Bank an amendment fee in the

amount of $62,500 upon execution and delivery of this Amendment.  Such fee shall be deemed fully earned by the

Bank’s execution and delivery of this Amendment.

21.           Conditions Precedent. This

Amendment shall be effective when the Bank shall have received an executed

original hereof, together with each of the following, each in substance and

form acceptable to the Bank in its sole discretion:

 

6

 

(a)           Payment of the fee described in

Paragraph 20.

(b)           Payment of all fees and expenses

incurred by the Bank in connection with the preparation of this Amendment and

all related documents and instruments, including but not limited to the

Amendment to Intercreditor Collateral Agreement dated as of December 28, 2001

(the “Intercreditor Amendment”) and all related documents and instruments.

(c)           A first priority mortgage covering

the Borrower’s real property located in Edina, Minnesota in the amount of

$15,000,000.00 to secure the Borrower’s obligations under the Credit Agreement

and the Note Purchase Agreement.

(d)           A Collateral Pledge Agreement and any

ancillary documents necessary to grant and perfect a lien on, and interest in,

certain Variable Universal Life Insurance Policies and Multi-funded Annuity

Contracts owned by the Borrower to secure the Borrower’s obligations under the

Credit Agreement and the Note Purchase Agreement.

(e)           A fully executed copy of the Note

Purchase Amendment.

(f)            A fully executed copy of the

Intercreditor Amendment.

(g)           An opinion of counsel to the Borrower

with respect to, among other things, the due authorization and enforceability

of this Amendment, the Intercreditor Agreement, the Mortgage, the Collateral

Pledge Agreement and related documents.

(h)           Such other documents or instruments

as the Bank may require.

22.           Representations and Warranties.

The Borrower hereby represents and warrants to the Bank as follows:

(a)           The 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 the

Borrower and constitutes the legal, valid and binding obligation of the

Borrower, enforceable in accordance with its terms.

(b)           The execution, delivery and

performance by the 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 the Borrower, or the articles of

incorporation or by-laws of the Borrower, or (iii) result in a breach of

or constitute a

 

7

 

default under any indenture or loan or credit

agreement or any other agreement, lease or instrument to which the 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 IV 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.

23.           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 Loan Documents  to

the Credit Agreement shall be deemed to refer to the Credit Agreement as

amended by this Amendment.

24.           Release. The Borrower

absolutely and unconditionally releases and forever discharges the Bank, 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

the 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.

25.           Costs and Expenses. The

Borrower reaffirms its agreement under the Credit Agreement to pay or reimburse

the Bank on demand for all costs and expenses incurred by the Bank in

connection with the Loan Documents and all other documents contemplated

thereby, including without limitation all reasonable fees and disbursements of

legal counsel. Without limiting the generality of the foregoing, the Borrower

specifically agrees to pay all fees and disbursements of counsel to the Bank

for the services performed by such counsel in connection with the preparation

of this Amendment and all related documents and instruments. The Borrower

agrees that the Bank may, at any time or from time to time in its sole

discretion and without further authorization by the Borrower, make a loan to

the Borrower under the Credit Agreement, or apply the proceeds of any loan, for

the purpose of paying any such fees, disbursements, costs and expenses and the

fee required under paragraph 20 of this Amendment.

26.           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.

8

 

IN WITNESS WHEREOF, the

parties hereto have caused this Amendment to be duly executed as of the date

first written above.

 

	

  WELLS FARGO BANK, NATIONAL ASSOCIATION

  	

  ANALYSTS INTERNATIONAL CORPORATION

  
	

   

  	

   

  
	

   

  	

   

  
	

  By

  	

   

  	

   

  	

  By

  	

   

  	

   

  
	

   

  	

  Ellen J. Trach

  	

   

  	

  Marti R. Charpentier

  
	

   

  	

  Its Vice President

  	

   

  	

  Its Vice President — Finance

  
	

   

  	

   

  	

   

  	

   

  
						

M1:832170.05

 

 

9

Exhibit A to Fifth Amendment

to Credit Agreement

 

COMPLIANCE CERTIFICATE

, 2002

Wells Fargo Bank National Association

Sixth and Marquette Avenues

Minneapolis, Minnesota 55479

Attention: Ellen J. Trach

Compliance Certificate

Ladies and Gentlemen:

Reference is made to the Credit Agreement dated as of

January 31, 2000, as amended by a First Amendment to Credit Agreement dated as

of December 12, 2000, a Second Amendment to Credit Agreement dated as of March

30, 2001, but effective as of April 2, 2001, a Third Amendment to Credit

Agreement dated as of August 6, 2001, a Fourth Amendment to Credit Agreement

dated as of November 30, 2001, and a Fifth Amendment to Credit Agreement dated

as of December 28, 2001 (as so amended, the “Credit Agreement”), entered into

between Wells Fargo Bank, National Association, a national banking association

and Analysts International Corporation, a Minnesota corporation (the

“Borrower”).

All terms defined in the Credit Agreement and not

otherwise defined herein shall have the meanings given them in the Credit

Agreement.

This is a Compliance Certificate submitted in

connection with the Borrower’s reporting obligations under Section 5.1(c) of

the Credit Agreement as of and for the month ending                      , 2002 (the “Reporting Date”) and includes

the Borrower’s financial statements (the “Statements”) prepared as of and for

the Reporting Date.

I hereby certify to you as follows:

1.                                       I am the chief financial officer of the

Borrower, and I am familiar with the financial statements and financial affairs

of the Borrower.

2.                                       The Statements, and the computations

below, have been prepared in accordance with GAAP.

3.                                       The following computations set forth the

Borrower’s compliance or non-compliance with the requirements set forth in the

Financial Covenants as of the Reporting Date:

 

10

 

Section

5.8 Monthly EBITDA

EBITDA                                           $___________

 

A.            Pursuant to Section 5.8  of the Credit Agreement, as of the Reporting

Date, the Borrower’s Monthly EBITDA o satisfies

o does not satisfy the requirement set

forth in the table below:

	

  Covenant Computation Date

  	

   

  	

  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

  

 

Section

5.9 Trailing 3 Month Net Cashflow

 

Trailing 3 Month

Net Cashflow $_____________________

B.            Pursuant to Section 5.9 of the

Credit Agreement, as of the Reporting Date, the Borrower’s trailing 3 month net

cash flow o satisfies o does

not satisfy the requirement set forth in the table below:

	

  Covenant Computation Date

  	

   

  	

  Trailing 3 Month Net Cashflow

  
	

  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)

  

 

Attached hereto are all relevant facts in reasonable detail to

evidence, and the computations of, the financial covenants referred to above.

4.                                       I have no knowledge of the occurrence of

any Default or Event of Default under the Credit Agreement, except as set forth

in the attachments, if any, hereto.

	

  Very truly

  yours,

  
	

   

  
	

  ANALYSTS INTERNATIONAL CORPORATION

  
	

   

  
	

  By

  	

   

  
	

   

  
	

  Its

  	

   

  
			

 

 

11

 

Exhibit B to Fifth Amendment

to Credit Agreement

 

ADVANCE REQUEST WORKSHEET

, 2002

Wells Fargo Bank National

Association

Sixth and Marquette

Avenues

Minneapolis, Minnesota

55479

Attention: Ellen J. Trach

 

Worksheet and Compliance Certificate

Ladies and Gentlemen:

Reference is made to the Credit Agreement dated as of

January 31, 2000, as amended by a First Amendment to Credit Agreement dated as

of December 12, 2000, a Second Amendment to Credit Agreement dated as of March

30, 2001, but effective as of April 2, 2001, a Third Amendment to Credit

Agreement dated as of August 6, 2001, a Fourth Amendment to Credit Agreement

dated as of November 30, 2001, and a Fifth Amendment to Credit Agreement dated

as of December 28, 2001 (as so amended, the “Credit Agreement”), entered into

between Wells Fargo Bank, National Association, a national banking association

and Analysts International Corporation, a Minnesota corporation (the

“Borrower”).

All terms defined in the Credit Agreement and not

otherwise defined herein shall have the meanings given them in the Credit

Agreement.

This is a worksheet and compliance certificate

submitted in connection with the Borrower’s obligations under Section 5.10 of

the Credit Agreement as of and for the date set forth above on which the

Borrower has requested an Advance (the “Advance Request Date”) and in

satisfaction of the condition precedent under Section 3.2(c) of the Credit

Agreement.  I hereby certify:

1.                                       I am the chief financial officer of the

Borrower, and I am familiar with the financial statements and financial affairs

of the Borrower.

2.                                       The Borrower’s financial statements, and

the computations below, have been prepared in accordance with GAAP.

3.                                       The following computations set forth the

Borrower’s compliance or non-compliance with the Leverage Ratio requirements

set forth in Section 5.10 as of the Advance Request Date:

 

12

 

A.  EBITDA:  

$

(for the 12 months ending on the last day of the most recently completed month)

B. Calculation of Total

Principal Indebtedness

	

  Total Advances outstanding:

  	

   

  	

  $

  	

   

  
	

  Advance requested:

  	

   

  	

  $

  	

   

  
	

  Note Purchase Agmt

  principal outstanding:

  	

   

  	

  $

  	

   

  
	

   

  	

   

  	

   

  
	

  Total Principal

  Indebtedness:

  	

   

  	

  $

  	

   

  

 

C.  Ratio (choose one)

 

(i) Advance

Request Date is before prior month’s financial reports have been delivered to

Bank: Ratio = 4.0

 

(ii) Advance

Request Date is on or after prior month’s financial reports have been delivered

to Bank:  Ratio = 4.5

 

D.  Ratio x EBITDA =                     (“Leverage”)

 

E. Compliance

(check one)

 

___  Leverage is less than or equal to Total

Principal Indebtedness

         (Borrower is in compliance with

Section 5.10)

 

___  Leverage is greater than Total

Principal Indebtedness

         (Borrower is not in compliance with Section

5.10)

 

 

4.                                       I have no knowledge of the occurrence of

any Default or Event of Default under the Credit Agreement, except as set forth

in the attachments, if any, hereto.

	

  Very truly

  yours,

  
	

   

  
	

  ANALYSTS INTERNATIONAL CORPORATION

  
	

   

  
	

  By

  	

   

  
	

  Its

  	

   

  
			

 

 

13CTLeft.dot

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”

  	

   

  
					

 

3

 

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:

 

4

 

(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.”

 

5

 

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;

 

6

 

(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;

 

7

 

(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

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