CREDIT AGREEMENT
BETWEEN
ANALYSTS INTERNATIONAL CORPORATION
AND
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION
CLOSING DATE: JANUARY 31, 2000
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$25,000,000 REVOLVING CREDIT FACILITY
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[LOGO]
TABLE OF CONTENTS
ARTICLE I DEFINITIONS......................................................................1
Section 1.1 Definitions..............................................................1
ARTICLE II AMOUNT AND TERMS OF THE LOANS; LETTERS OF CREDIT................................8
Section 2.1 Facility..................................................................8
Section 2.2 Procedure for Advances....................................................8
Section 2.3 Interest on Note..........................................................9
Section 2.4 Letters of Credit.......................................................10
Section 2.5 Payments.................................................................11
Section 2.6 Fees.....................................................................11
Section 2.7 Prepayments..............................................................12
Section 2.8 Termination of Facility or Reduction of the Facility Amount.............12
Section 2.9 Payments.................................................................12
Section 2.10 Increased Costs; Capital Adequacy; Funding Exceptions...................13
Section 2.11 Funding Losses..........................................................16
Section 2.12 Discretion of Bank as to Manner of Funding..............................17
Section 2.13 Conclusiveness of Statements; Survival of Provisions....................17
Section 2.14 Computation of Interest and Fees.......................................17
ARTICLE III CONDITIONS PRECEDENT..........................................................17
Section 3.1 Initial Conditions Precedent............................................17
Section 3.2 Conditions Precedent to All Advances and Letters of Credit.............18
ARTICLE IV REPRESENTATIONS AND WARRANTIES.................................................19
Section 4.1 Existence and Power.....................................................19
Section 4.2 Authorization of Borrowing; No Conflict as to Law or Agreements.........19
Section 4.3 Legal Agreements........................................................19
Section 4.4 Subsidiaries............................................................20
Section 4.5 Financial Condition.....................................................20
Section 4.6 Adverse Change..........................................................20
Section 4.7 Litigation..............................................................20
Section 4.8 Hazardous Substances....................................................20
Section 4.9 Regulation U............................................................20
Section 4.10 Taxes..................................................................21
Section 4.11 Titles and Liens.......................................................21
Section 4.12 ERISA..................................................................21
ARTICLE V AFFIRMATIVE COVENANTS...........................................................21
Section 5.1 Financial Statements....................................................22
Section 5.2 Books and Records; Inspection and Examination...........................23
Section 5.3 Compliance with Laws....................................................24
Section 5.4 Payment of Taxes and Other Claims.......................................24
Section 5.5 Maintenance of Properties...............................................24
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Section 5.6 Insurance...............................................................24
Section 5.7 Preservation of Corporate Existence.....................................25
Section 5.9 Cash Flow Leverage Ratio................................................25
Section 5.10 Debt Service Coverage Ratio............................................25
Section 5.11 Capitalization Ratio...................................................25
ARTICLE VI NEGATIVE COVENANTS.............................................................25
Section 6.1 Liens...................................................................25
Section 6.2 Indebtedness............................................................27
Section 6.3 Guaranties..............................................................27
Section 6.4 Investments.............................................................28
Section 6.5 Restricted Payments.....................................................28
Section 6.7 Sale of Assets..........................................................29
Section 6.8 Transactions with Affiliates.............................................29
Section 6.9 Consolidation and Merger................................................29
Section 6.10 Sale and Leaseback.....................................................30
Section 6.11 Subordinated Debt......................................................30
Section 6.12 Amendments to Note Purchase Agreement...................................30
Section 6.13 Capital Expenditures...................................................31
Section 6.15 Hazardous Substances...................................................31
Section 6.16 Restrictions on Nature of Business.....................................31
ARTICLE VII EVENTS OF DEFAULT, RIGHTS AND REMEDIES........................................31
Section 7.1 Events of Default.......................................................31
Section 7.2 Rights and Remedies.....................................................33
Section 7.3 Pledge of Cash Collateral Account.......................................34
ARTICLE VIII MISCELLANEOUS................................................................35
Section 8.1 No Waiver; Cumulative Remedies..........................................35
Section 8.2 Amendments, Etc.........................................................35
Section 8.3 Notice..................................................................35
Section 8.4 Participations..........................................................35
Section 8.5 Disclosure of Information...............................................36
Section 8.6 Costs and Expenses.......................................................36
Section 8.7 Indemnification by Borrower..............................................36
Section 8.8 Execution in Counterparts...............................................36
Section 8.9 Binding Effect, Assignment..............................................37
Section 8.10 Governing Law..........................................................37
Section 8.11 Consent to Jurisdiction.................................................37
Section 8.12 Waiver of Jury Trial....................................................37
Section 8.13 Severability of Provisions.............................................37
Section 8.14 Prior Agreements.......................................................37
Section 8.15 Headings...............................................................38
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CREDIT AGREEMENT
Dated as of January 31, 2000
Analysts International Corporation, a Minnesota corporation
(the "Borrower"), and Norwest Bank Minnesota, National Association, a national
banking association (the "Bank"), agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 DEFINITIONS.
For all purposes of this Agreement, except as otherwise expressly provided or
unless the context otherwise requires:
(a) the terms defined in this Article have the
meanings assigned to them in this Article, and include the
plural as well as the singular; and
(b) all accounting terms not otherwise defined herein
have the meanings assigned to them in accordance with GAAP.
"Advance" means an advance by the Bank to the Borrower
pursuant to Article II.
"Affiliate" means (a) any director or officer of the Borrower,
(b) any Person who, individually or with his immediate family, directly
or indirectly beneficially owns or holds 5% or more of the voting
interest of the Borrower, or (c) any corporation, partnership or other
Person in which any Person or group of Persons described above directly
or indirectly owns a 5% or greater equity interest.
"Agreement" means this Credit Agreement.
"Base Rate" means an annual rate equal to the higher of:
(a) the rate of interest publicly announced from
time to time by the Bank as its "prime" or
"base" rate or, if the Bank ceases to
announce a rate so designated, any similar
successor rate designated by the Bank, or
(b) the Federal Funds Rate plus 50 basis points
(0.50% per annum).
"Business Day" means a day other than a Saturday, Sunday,
United States national holiday or other day on which banks in Minnesota
are permitted or required by law to close. Whenever the context relates
to a Eurodollar Rate Funding or the fixing of a Eurodollar Rate,
"Business Day" means a day (i) that meets the foregoing
definition, and (ii) on which dealings in U.S. dollar deposits are
carried on in the London interbank eurodollar market.
"Capital Expenditure" means any expenditure of money for the
purchase or construction of fixed assets or for the purchase or
construction of any other assets, or for improvements or additions
thereto, which are capitalized on the Borrower's balance sheet.
"Capitalization Ratio" means, at any Covenant Computation
Date, the ratio of (A) total Funded Debt as at that Covenant
Computation Date, to (B) total Funded Debt as at that Covenant
Computation Date plus Net Worth as at that Covenant Computation Date,
all determined with respect to the Borrower and its Subsidiaries on a
consolidated basis in accordance with GAAP.
"Cash Collateral Account" means an account maintained with
the Bank in which funds are deposited pursuant to Section 2.4(f) or
Section 7.2(c).
"Cash Flow Leverage Ratio" means, at any Covenant Computation
Date, the ratio of (A) total Funded Debt as at that Covenant
Computation Date, to (B) EBITDA during the Covenant Computation Period
then ending, all determined with respect to the Borrower and its
Subsidiaries on a consolidated basis in accordance with GAAP.
"Change of Control" means either (i) the acquisition by any
"person" or "group" (as those terms are used in Sections 13(d) and
14(d) of the Exchange Act) of beneficial ownership (as defined in Rules
13d-3 and 13d-5 of the Securities and Exchange Commission, except that
a Person shall be deemed to have beneficial ownership of all securities
that such Person has the right to acquire, whether such right is
exercisable immediately or only after the passage of time), directly or
indirectly, of 25% or more of the then-outstanding voting capital stock
of the Borrower; or (ii) a change in the composition of the board of
directors of the Borrower such that continuing directors cease to
constitute more than 50% of such board of directors. As used in this
definition, "continuing directors" means (i) those members of the board
of directors of the Borrower who assumed office prior to the date
hereof, and (ii) those members of the board of directors of the
Borrower who assume office after the date hereof and whose appointment
or nomination for election by the Borrower's shareholders was approved
by a vote of at least 50% of the directors of the Borrower in office
immediately prior to such appointment or nomination.
"Compliance Certificate" means a certificate in substantially
the form of Exhibit C, or such other form as the Borrower and the Bank
may from time to time agree upon in writing, executed by the chief
financial officer of the Borrower, stating (i) that any financial
statements delivered therewith have been prepared in accordance with
GAAP, subject to year-end adjustments, (ii) whether or not such officer
has knowledge of the occurrence of any Default or Event of Default
hereunder not theretofore reported and remedied and, if so, stating in
reasonable detail the facts with
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respect thereto and (iii) all relevant facts in reasonable detail to
evidence, and the computations as to, whether or not the Borrower is in
compliance with the Financial Covenants.
"Covenant Computation Date" means the last day of each fiscal
quarter of the Borrower.
"Covenant Computation Period" means any period of 12 calendar
months ending on a Covenant Computation Date.
"Debt Service Coverage Ratio" means, at any Covenant
Computation Date, the ratio of (i) EBITDA less Capital Expenditures,
taxes and Restricted Payments (excluding Restricted Payments permitted
under Section 6.5(a)) during the Covenant Computation Period then
ending, to (ii) Debt Service Requirements as of that Covenant
Computation Date, all determined with respect to the Borrower and its
Subsidiaries on a consolidated basis in accordance with GAAP.
"Debt Service Requirements" means, at any Covenant Computation
Date, the sum of all payments of principal and interest required to be
paid by the Borrower or any Subsidiary during the immediately
succeeding Covenant Computation Period on any Funded Debt in accordance
with the terms of the instruments evidencing such Funded Debt. For
purposes of determining Debt Service Requirements with respect to any
Funded Debt bearing interest at a floating rate, the floating rate
shall be assumed to be fixed for the period in question at the floating
rate in effect on the first day of such period.
"Default" means an event that, with the giving of notice, the
passage of time or both, would constitute an Event of Default.
"EBITDA" means, with respect to a Covenant Computation Period,
Pre-Tax Earnings (excluding non-cash income) PLUS Interest Expense and
Non-Cash Charges, in each case excluding extraordinary items,
determined with respect to the Borrower during such Covenant
Computation Period.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) that is, along with the Borrower, a member of a
controlled group of corporations or a controlled group of trades or
businesses, as described in sections 414(b) and 414(c), respectively,
of the Internal Revenue Code of 1986, as amended.
"Environmental Law" means the Comprehensive Environmental
Response, Compensation and Liability Act, 42 U.S.C. Section 9601
ET SEQ., the Resource Conservation and Recovery Act, 42 U.S.C.
Section 6901 ET SEQ., the Hazardous Materials Transportation Act,
49 U.S.C. Section 1802 ET SEQ., the Toxic Substances Control Act,
15 U.S.C. Section 0000 XX
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XXX., the Federal Water Pollution Control Act, 33 U.S.C. Section 1252
ET SEQ., the Clean Water Act, 33 U.S.C. Section 1321 ET SEQ., the Clean
Air Act, 42 U.S.C. Section 7401 ET SEQ., and any other federal, state,
county, municipal, local or other statute, law, ordinance or regulation
which may relate to or deal with human health or the environment, all
as may be from time to time amended.
"Eurodollar Rate" means the annual rate equal to the sum of
(i) the rate obtained by dividing (a) the rate (rounded up to the
nearest 1/16 of 1%) determined by the Bank to be the average rate at
which U.S. dollar deposits are offered to the Bank by major banks in
the London interbank market for funds to be made available on the first
day of any Interest Period in an amount approximately equal to the
amount for which a Eurodollar Rate quotation has been requested and
maturing at the end of such Interest Period, by (b) a percentage equal
to 100% minus the Federal Reserve System requirement (expressed as a
percentage) applicable to such deposits, and (ii) the applicable
Margin.
"Eurodollar Rate Funding" means any Advance or Note, or any
portion thereof, bearing interest at a Eurodollar Rate.
"Event of Default" has the meaning specified in Section 7.1.
"Facility" means the revolving credit facility established
under Section 2.1.
"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 December 31, 2002, or the
earlier date of termination of the Facility pursuant to Section 2.8 or
7.2(a).
"Federal Funds Rate" means at any time an interest rate per
annum equal to the weighted average of the rates for overnight federal
funds transactions with members of the Federal Reserve System arranged
by federal funds brokers, as published for such day by the Federal
Reserve Bank of New York, or, if such rate is not so published for any
day which is a Business Day, the average of the quotations for such day
for such transactions received by the Bank from three federal funds
brokers of recognized standing selected by it, it being understood that
the Federal Funds Rate for any day which is not a Business Day shall be
the Federal Funds Rate for the next preceding Business Day.
"Financial Covenant" means any of the Borrower's obligations
set forth in Sections 5.8, 5.9, 5.10 and 6.12 of this Agreement
"Floating Rate" means an annual rate equal to the sum of the
Base Rate and the applicable Margin, which rate shall change when and
as the Base Rate or the Margin changes.
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"Floating Rate Funding" means any Advance or Note, or any
portion thereof, bearing interest at the Floating Rate.
"Funded Debt" of any Person means (i) all items of
indebtedness or liability which in accordance with GAAP would be
included in determining total liabilities as shown on the liabilities
side of a balance sheet of that Person as at the date as of which
Funded Debt is to be determined, excluding, however, accounts payable
and accrued liabilities incurred in the ordinary course of that
Person's business that are owed to sellers of goods or services to that
Person and are in an amount not greater than the cost of such goods or
services, (ii) indebtedness secured by any Lien on property owned by
such Person, whether or not the indebtedness secured thereby shall have
been assumed, (iii) obligations of such Person to pay money under
non-compete, consulting or similar agreements (specifically excluding
deferred compensation for which the Borrower has provided adequate
reserves in accordance with XXXX or, if less, in an amount acceptable
to the Bank), and (iv) guaranties and endorsements (other than for
purposes of collection in the ordinary course of business) by such
Person and other contingent obligations of such Person in respect of,
or to purchase or otherwise acquire, indebtedness of others. For
purposes of determining a Person's aggregate Funded Debt at any time,
"Funded Debt" shall also include the aggregate payments required to be
made by such Person at any time under any lease that is considered a
capitalized lease under GAAP. Unless otherwise stated, Funded Debt
means Funded Debt of the Borrower and its Subsidiaries.
"Funding" means a Floating Rate Funding or a Eurodollar Rate
Funding.
"GAAP" means generally accepted accounting principles as in
effect from time to time applied on a basis consistent with the
accounting practices applied in the financial statements of the
Borrower and its Subsidiaries referred to in Section 4.5.
"Hazardous Substance" means any asbestos, urea-formaldehyde,
polychlorinated biphenyls ("PCBs"), nuclear fuel or material, chemical
waste, radioactive material, explosives, known carcinogens, petroleum
products and by-products and other dangerous, toxic or hazardous
pollutants, contaminants, chemicals, materials or substances listed or
identified in, or regulated by, any Environmental Law.
"Interest Expense" means, with respect to a Covenant
Computation Period, the total gross interest expense on all Funded Debt
during such period, and shall in any event include, without limitation
and without duplication, (a) accrued interest (whether or not paid) on
all Funded Debt, (b) the amortization of Funded Debt discounts, (c) the
amortization of all fees payable in connection with the incurrence of
Funded Debt to the extent included in interest expense, and (d) the
interest portion of any capitalized lease expenditure, all determined
with respect to the Borrower and its Subsidiaries on a consolidated
basis in accordance with GAAP.
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"Interest Period" means, with respect to any Eurodollar Rate
Funding, a period of one, two, three or six months beginning on a
Business Day, as elected by the Borrower.
"L/C Amount" means the sum of (i) the aggregate face amount of
any issued and outstanding Letters of Credit, plus (ii) amounts drawn
under Letters of Credit for which the Bank has neither been reimbursed
nor made any Advance.
"L/C Sublimit" means $5,000,000.
"Letter of Credit" has the meaning set forth in Section 2.4.
"Level Status" means Level I, Level II or Level III, each as
defined in Exhibit A and determined pursuant to Section 2.3(e) and
Exhibit A.
"Lien" means any mortgage, deed of trust, lien, pledge,
security interest or other charge or encumbrance, of any kind
whatsoever, including but not limited to the interest of the lessor or
titleholder under any capitalized lease, title retention contract or
similar agreement.
"Loan Documents" means this Agreement and the Note.
"Margin" means (i) with respect to the Floating Rate, the
annual percentage set forth opposite the applicable Level Status below
the heading "Floating Rate Margin" in Exhibit A; (ii) with respect to
any Eurodollar Rate, the annual percentage set forth opposite the
applicable Level Status below the heading "Eurodollar Rate Margin" in
Exhibit A; (iii) with respect to letter of credit fees payable under
Section 2.4(d), the annual percentage set forth opposite the applicable
Level Status below the heading "Eurodollar Rate Margin" in Exhibit A;
and (iv) with respect to the Non-Usage Fee, the annual percentage set
forth opposite the applicable Level Status below the heading "Non-Usage
Fee" in Exhibit A, as such percentages may be adjusted from time to
time pursuant to Section 2.3.
"Material Adverse Effect" means a material adverse effect on
the condition (financial or otherwise), properties, or operations of
the Borrower or any Subsidiary.
"Multiemployer Plan" means a "multiemployer plan" as defined
in Section 4001(a)(3) of ERISA.
"Net Income" means, with respect to a Covenant Computation
Period, after-tax net income, determined with respect to the Borrower
and its Subsidiaries on a consolidated basis in accordance with GAAP.
"Net Worth" means the aggregate of capital and retained
earnings, all determined with respect to the Borrower and its
Subsidiaries on a consolidated basis in accordance with GAAP.
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"Non-Cash Charges" means, with respect to a Covenant
Computation Period, depreciation, amortization, deferred taxes and
other non-cash charges which have the effect of reducing Pre-Tax
Earnings or Net Income, all determined with respect to the Borrower and
its Subsidiaries on a consolidated basis in accordance with GAAP.
"Note" means the Borrower's promissory note in the form of
Exhibit B hereto.
"Note Purchase Agreement" means the Note Purchase Agreement
dated December 30, 1998, pursuant to which the Borrower has issued its
7.00% Senior Notes due December 30, 2006. Unless otherwise stated
herein, "Note Purchase Agreement" means such Note Purchase Agreement
without regard to any modification, amendment, waiver or termination
thereof except as expressly approved by the Bank for purposes of this
Agreement.
"Person" means any individual, corporation, partnership,
limited liability company, joint venture, association, joint-stock
company, trust, unincorporated organization or government or any agency
or political subdivision thereof.
"Plan" means an employee benefit plan or other plan maintained
for employees of the Borrower or any Subsidiary or ERISA Affiliate and
covered by Title IV of ERISA.
"Pre-Tax Earnings" means, with respect to a Covenant
Computation Period, Net Income, PLUS any provision for income taxes,
all determined with respect to the Borrower and its Subsidiaries on a
consolidated basis in accordance with GAAP.
"Reportable Event" means (i) a "reportable event" described in
Section 4043 of ERISA and the regulations issued thereunder, (ii) a
withdrawal from any Plan, as described in Section 4063 of ERISA, (iii)
an action to terminate a Plan for which a notice is required to be
filed under Section 4041 of ERISA, (iv) any other event or condition
that might constitute grounds for termination of, or the appointment of
a trustee to administer, any Plan, or (v) a complete or partial
withdrawal from a Multiemployer Plan as described in Sections 4203 and
4205 of ERISA.
"Restricted Payment" means any payment made by the Borrower on
account of any equity interest in the Borrower, including but not
limited to any dividend and any payment in purchase, redemption or
other retirement of any stock or membership interest.
"Subordinated Debt" means Funded Debt of the Borrower or any
Subsidiary which is subordinated in right of payment to all
indebtedness of the Borrower to the Bank, on terms that have been
approved in writing by the Bank and that have been noted by appropriate
legend on all instruments evidencing the Subordinated Debt.
"Subsidiary" means (i) any corporation of which more than 50%
of the outstanding shares of capital stock having general voting power
under ordinary
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circumstances to elect a majority of the board of directors of such
corporation, irrespective of whether or not at the time stock of any
other class or classes shall have or might have voting power by reason
of the happening of any contingency, is at the time directly or
indirectly owned by the Borrower, by the Borrower and one or more other
Subsidiaries, or by one or more other Subsidiaries, (ii) any
partnership of which 50% or more of the partnership interests therein
are directly or indirectly owned by the Borrower, by the Borrower and
one or more other Subsidiaries, or by one or more other Subsidiaries,
and (iii) any limited liability company or other form of business
organization the effective control of which is held by the Borrower,
the Borrower and one or more other Subsidiaries, or by one or more
other Subsidiaries.
"Welfare Plan" means a "welfare plan" as defined in Section
3(1) of ERISA.
ARTICLE II
AMOUNT AND TERMS OF THE LOANS; LETTERS OF CREDIT
SECTION 2.1 FACILITY.
The Bank agrees, on the terms and subject to the conditions hereinafter set
forth, to make Advances to the Borrower from time to time during the period from
the date hereof to and including the Facility Termination Date in an aggregate
amount not to exceed at any time outstanding the Facility Amount, less the L/C
Amount. The proceeds of each Advance shall be used for the Borrower's general
corporate purposes. Each Advance shall be in the amount of $250,000 or a
multiple thereof. Within the limits of the Facility Amount, the Borrower may
borrow, prepay pursuant to Section 2.7 and reborrow under this Section 2.1. All
Advances shall be evidenced by the Note, payable to the order of the Bank. The
Note shall bear interest on the unpaid principal amount thereof from the date
thereof until paid as set forth in Section 2.3.
SECTION 2.2 PROCEDURE FOR ADVANCES.
Each Advance shall be made on at least one Business Day's prior written request
from the Borrower to the Bank or telephonic request from any person purporting
to be authorized to request Advances on behalf of the Borrower, which request
shall specify the date of the requested Advance and the amount thereof. Upon
fulfillment of the applicable conditions set forth in Article III, the Bank
shall disburse the amount of the requested Advance by crediting the same to the
Borrower's demand deposit account maintained with the Bank or in such other
manner as the Bank and the Borrower may from time to time agree. The Borrower
shall promptly confirm each telephonic request for an Advance by executing and
delivering an appropriate confirmation certificate to the Bank. The Borrower
shall be obligated to repay all Advances notwithstanding the failure of the Bank
to receive such confirmation and notwithstanding the fact that the person
requesting same was not in fact authorized to do so. Any request for an Advance
shall be deemed to be a representation that the statements set forth in Section
3.2 are correct.
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SECTION 2.3 INTEREST ON NOTE.
(a) FLOATING RATE FUNDINGS. Unless the Borrower elects a
Eurodollar Rate pursuant to this Section, the principal balance of the
Note shall bear interest at the Floating Rate.
(b) EURODOLLAR RATE FUNDINGS. So long as no Default or Event
of Default exists, the Borrower may request that a portion of any
requested Advance constitute a Eurodollar Funding, or may convert all
or any part of any outstanding Floating Rate Funding into a Eurodollar
Rate Funding, or may request that a Eurodollar Rate Funding be
converted at the end of the applicable Interest Period to another
Eurodollar Rate Funding, by giving notice to the Bank of such request
or conversion not later than 10:30 a.m. (Minneapolis time) on a
Business Day which is at least three Business Days prior to the date of
the requested Advance or conversion. Each such notice shall be
effective upon receipt by the Bank, shall be in writing or by telephone
or telecopy transmission, shall specify the date and amount of such
Advance or conversion, and the Interest Period therefor. The Interest
Period applicable to each Eurodollar Rate Funding shall begin on a
Business Day, and the amount of each Eurodollar Rate Funding shall be
equal to an integral multiple of $500,000. Subject to the terms and
conditions hereof, the principal amount specified by the Borrower in
the applicable request for a Eurodollar Rate Funding shall bear
interest from and including the first day of the Interest Period
specified therein to but not including the last day of such Interest
Period, at the Eurodollar Rate applicable thereto, determined as set
forth herein (subject to fluctuations in the applicable Margin). Unless
the Borrower requests a new Eurodollar Rate Funding in accordance with
the procedures set forth above, or prepays the principal of an
outstanding Eurodollar Rate Funding at the expiration of an Interest
Period, the Bank shall automatically and without request of the
Borrower convert each Eurodollar Rate Funding to a Floating Rate
Funding on the last day of the relevant Interest Period.
(c) SETTING OF EURODOLLAR RATES. The applicable Eurodollar
Rate for each Interest Period shall be determined by the Bank between
the opening of business and 12:00 Noon, Minneapolis, Minnesota time, on
the second Business Day prior to the beginning of such Interest Period,
whereupon notice thereof (which may be by telephone) shall be given by
the Bank to the Borrower. Each such determination of the applicable
Eurodollar Rate shall be conclusive and binding upon the parties
hereto, in the absence of demonstrable error. The Bank, upon written
request of the Borrower, shall deliver to the Borrower a statement
showing the computations used by the Bank in determining the applicable
Eurodollar Rate hereunder.
(d) LIMITATIONS ON EURODOLLAR RATE FUNDINGS. In no event shall
more than three Eurodollar Rate Fundings be outstanding at any one
time. In no event may the Borrower request a Eurodollar Rate Funding
if, after giving effect to such Eurodollar Rate Funding, the Borrower
would be required to prepay a Eurodollar Rate Funding in order to make
any regularly scheduled principal payment.
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(e) MARGINS. Until the first adjustment as specified below,
the Borrower's Level Status shall be deemed to be Level I, and the
initial Margins shall be determined accordingly as set forth in Exhibit
A. The Borrower's Level Status and Margins shall be adjusted each
fiscal quarter of the Borrower on the basis of the Cash Flow Leverage
Ratio of the Borrower as at the end of the previous fiscal quarter, in
accordance with the pricing grid set forth in Exhibit A. Reductions and
increases in the Margins will be made quarterly within five calendar
days following receipt of the Borrower's financial statements and
quarterly Compliance Certificates required under Section 5.1.
Notwithstanding the foregoing, (i) if the Borrower fails to deliver any
financial statements or Compliance Certificates when required under
Section 5.1, the Bank may, by notice to the Borrower, deem the
Borrower's Level Status to be Level III and accordingly increase the
Margins to the highest rates set forth in Exhibit A until such time as
the Bank has received all such financial statements and Compliance
Certificates, and (ii) no reduction in the Borrower's Level Status or
the applicable Margins will be made if a Default or an Event of Default
has occurred and is continuing at the time that such reduction would
otherwise be made.
(f) DEFAULT RATE. From and after the occurrence of any Default
or Event of Default and continuing thereafter until such Default or
Event of Default shall be remedied to the written satisfaction of the
Bank, the outstanding principal balance of the Note shall bear
interest, until paid in full, at an annual rate equal to the sum of (i)
the interest rate otherwise in effect with respect to each Funding and
(ii) 200 basis points (2.00%) (the "Default Rate"). Calculation of
interest at the Default Rate shall not be deemed a waiver or excuse of
any such Default or Event of Default.
SECTION 2.4 LETTERS OF CREDIT.
(a) PROCEDURE. The Borrower may from time to time request that
the Bank issue one or more irrevocable standby or documentary letters
of credit (each, a "Letter of Credit") for the account of the Borrower.
No Letter of Credit shall be issued if, immediately following such
issuance, (i) the L/C Amount would exceed the L/C Sublimit, or (ii) the
L/C Amount plus and the principal balance of the Note then outstanding
would exceed the Facility Amount. Each Letter of Credit shall be used
for the Borrower's general corporate purposes.
(b) LETTER OF CREDIT APPLICATION. At least five days prior to
the issuance of each Letter of Credit, the Borrower shall (if requested
by the Bank) execute a letter of credit application and reimbursement
agreement in such form as the Bank may require.
(c) FORM AND TERM. Each Letter of Credit shall be issued in a
form acceptable to the Bank. Unless otherwise approved by the Bank, no
Letter of Credit shall have an initial or any renewal term of more than
one year or a term (including renewals thereof) extending beyond the
Facility Termination Date.
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(d) FEES. A fee shall be due and payable to the Bank upon
issuance of each Letter of Credit, computed at an annual rate equal to
the applicable Margin applied to the face amount of that Letter of
Credit outstanding from time to time, from and including the date of
issuance of that Letter of Credit until the expiration thereof, payable
in advance on the date of issuance and on the first day of each
calendar quarter thereafter. In addition to such fee, the Borrower
shall pay to the Bank, on demand any and all of the Bank's standard
fees in connection with the issuance of and any drawings under any
Letters of Credit, which fees shall be subject to review and adjustment
by the Bank in its sole discretion at any time and from time to time.
(e) REPAYMENT. The Borrower shall pay the amount of each draft
drawn under any Letter of Credit to the Bank on demand, together with
interest at the Floating Rate from the date that such draft is paid by
the Bank until payment of such amount in full. The Bank may (at its
option) charge any deposit account maintained by the with the Bank for
the amount of any draft drawn under a Letter of Credit. At the option
of the Bank, any payment by the Bank under a Letter of Credit may be
deemed an Advance payable under the Note.
(f) CASH COLLATERAL ACCOUNT. Unless otherwise agreed by the
Bank in writing, the Borrower shall deposit in the Cash Collateral
Account, on the Facility Termination Date, an amount equal to the
aggregate face amount of all Letters of Credit then outstanding, less
the balance (if any) then outstanding in the Cash Collateral Account.
SECTION 2.5 PAYMENTS.
(a) INTEREST. Interest accruing on the principal balance of
the Note each month shall be due and payable on the last day of that
month, commencing on the last day of the month hereof. Notwithstanding
any other provision of this Agreement or the Note, interest on any
Eurodollar Rate Funding shall be due and payable on the last day of the
applicable Interest Period or, if such Interest Period is in excess of
three months, on the last day of each three-month period during such
Interest Period/calendar quarter, and on the last day of such Interest
Period.
(b) PRINCIPAL. The principal balance of the Note shall be due
and payable in full on the Facility Termination Date.
SECTION 2.6 FEES.
(a) ORIGINATION FEE. Concurrent with the execution hereof, the
Borrower shall pay the Bank an origination fee in the amount of
$20,000. Such fee shall be deemed fully earned by the Bank upon
entering into this Agreement.
(b) NON-USAGE FEES. The Borrower shall pay the Bank a
non-usage fee at the applicable Margin applied to the average daily
unused amount of the Facility Amount from the date hereof to and
including the Facility Termination Date, payable
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quarterly on the last day of each calendar quarter. Any non-usage fee
remaining unpaid on the Facility Termination Date shall be due and
payable on that date.
(c) AUDIT FEES. The Borrower shall pay to the Bank, on written
demand, reasonable fees charged by the Bank in connection with audits
or inspections (if any) by the Bank of any collateral or the operations
or businesses of the Borrower, together with actual out-of-pocket costs
and expenses incurred in conducting any such audit or inspection. All
such audits and inspections shall be for the sole benefit of the Bank.
SECTION 2.7 PREPAYMENTS.
(a) VOLUNTARY PREPAYMENTS. Subject to the conditions set forth
herein, the Borrower from time to time may voluntarily prepay the Note
in whole or in part; provided that (i) the Borrower may not prepay any
Eurodollar Rate Funding in part, (ii) any prepayment of the full amount
of the Note shall include accrued interest thereon, and (iii) each
partial prepayment shall be in an aggregate amount equal to an integral
multiple of $100,000.
(b) PREPAYMENTS GENERALLY. All prepayments hereunder (whether
voluntary or mandatory) shall be applied, first, to the principal
installments of the Note in inverse order of their maturities, and
second, to interest and fees with respect thereto. Any prepayment of a
Eurodollar Rate Funding shall be accompanied by accrued interest on
such partial prepayment through the date of prepayment and additional
compensation calculated in accordance with Section 2.11.
SECTION 2.8 TERMINATION OF FACILITY OR REDUCTION OF THE FACILITY AMOUNT.
The Borrower may at any time and from time to time upon three Business Days'
prior notice to the Bank permanently terminate the Facility in whole or
permanently reduce the Facility Amount in part, provided that (i) the Facility
may not be terminated while any Advances or Letters of Credit remain
outstanding, (ii) each partial reduction shall be in the amount of $500,000 or a
multiple thereof, and (iii) no reduction shall reduce the Facility Amount to an
amount less than the aggregate amount of the Advances and L/C Amount outstanding
at the time.
SECTION 2.9 PAYMENTS.
(a) MAKING OF PAYMENTS. All payments of principal of and
interest due under the Note shall be made to the Bank at its office in
Bloomington, Minnesota, not later than 12:00 Noon, Minneapolis,
Minnesota, time, on the date due, in immediately available funds, and
funds received after that hour shall be deemed to have been received by
the Bank on the next following Business Day. The Borrower hereby
authorizes the Bank to charge the Borrower's demand deposit account
maintained with the Bank for the amount of any such payment on its due
date, or (at the option of the Bank) to make an Advance in such amount,
all without receipt of any request for such charge or Advance, but the
Bank's failure to so charge such account or make
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such Advance shall in no way affect the obligation of the Borrower to
make any such payment.
(b) SETOFF. The Borrower agrees that the Bank shall have all
rights of setoff and bankers' lien provided by applicable law, and in
addition thereto, the Borrower agrees that if at any time any amount is
due and owing by the Borrower under this Agreement to the Bank at a
time when an Event of Default has occurred and is continuing hereunder,
the Bank may apply any and all balances, credits, and deposits,
accounts or moneys of the Borrower then or thereafter in the possession
of the Bank (excluding, however, any trust or escrow accounts held by
the Borrower for the benefit of any third party) to the payment
thereof.
(c) DUE DATE EXTENSION. If any payment of principal of or
interest on any Floating Rate Funding or any fees payable hereunder
falls due on a day which is not a Business Day, then such due date
shall be extended to the next following Business Day, and (in the case
of principal) additional interest shall accrue and be payable for the
period of such extension.
(d) APPLICATION OF PAYMENTS. Except as otherwise provided
herein, so long as no Default or Event of Default has occurred and is
continuing hereunder, each payment received from the Borrower shall be
applied to such obligation as the Borrower shall specify by notice
received by the Bank on or before the date of such payment, or in the
absence of such notice, as the Bank shall determine in its discretion.
Except as otherwise provided herein, after the occurrence of a Default
or Event of Default, the Bank shall have the right to apply all
payments received by the Bank from the Borrower as the Bank may
determine in its discretion. The Borrower agrees that the amount shown
on the books and records of the Bank as being the principal balance of
and interest on the Note shall be conclusive absent demonstrable error.
SECTION 2.10 INCREASED COSTS; CAPITAL ADEQUACY; FUNDING EXCEPTIONS.
(a) INCREASED COSTS ON EURODOLLAR RATE FUNDINGS. If Regulation
D of the Board of Governors of the Federal Reserve System or after the
date of this Agreement the adoption of any applicable law, rule or
regulation, or any change in any existing law, or any change in the
interpretation or administration thereof by any governmental authority,
central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by the Bank with any request or
directive (whether or not having the force of law) of any such
authority, central bank or comparable agency, shall:
(i) subject the Bank to or cause the withdrawal or
termination of any exemption previously granted to
the Bank with respect to, any tax, duty or other
charge with respect to its Eurodollar Rate Fundings
or its obligation to make Eurodollar Rate Fundings,
or shall change the basis of taxation of payments to
the Bank of the principal of or interest under
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this Agreement in respect of its Eurodollar Rate
Fundings or its obligation to make Eurodollar Rate
Fundings (except for changes in the rate of tax on
the overall net income of the Bank imposed by the
jurisdictions in which the Bank's principal executive
office is located); or
(ii) impose, modify or deem applicable any reserve
(including, without limitation, any reserve imposed
by the Board of Governors of the Federal Reserve
System, but excluding any reserve included in the
determination of interest rates pursuant to Section
2.3), special deposit or similar requirement against
assets of, deposits with or for the account of, or
credit extended by, the Bank; or
(iii) impose on the Bank any other condition affecting its
making, maintaining or funding of its Eurodollar Rate
Fundings or its obligation to make Eurodollar Rate
Fundings;
and the result of any of the foregoing is to increase the cost to the
Bank of making or maintaining any Eurodollar Rate Funding, or to reduce
the amount of any sum received or receivable by the Bank under this
Agreement or under its Note with respect to a Eurodollar Rate Funding,
then the Bank will notify the Borrower of such increased cost and
within fifteen (15) days after demand by the Bank (which demand shall
be accompanied by a statement setting forth the basis of such demand
and representing that the Bank has made similar demand on one or more
other commercial borrowers with revolving or term loans in excess of
$500,000) the Borrower shall pay to the Bank such additional amount or
amounts as will compensate the Bank for such increased cost or such
reduction; provided, however, that no such increased cost or such
reduction shall be payable by the Borrower for any period longer than
ninety (90) days prior to the date on which notice thereof is delivered
to the Borrower. The Bank will promptly notify the Borrower of any
event of which it has knowledge, occurring after the date hereof, which
will entitle the Bank to compensation pursuant to this Section 2.10. If
the Borrower receives notice from the Bank of any event which will
entitle the Bank to compensation pursuant to this Section 2.10, the
Borrower may prepay any then outstanding Eurodollar Rate Fundings or
notify the Bank that any pending request for a Eurodollar Rate Funding
shall be deemed to be a request for a Floating Rate Funding, in each
case subject to the provisions of Section 2.11.
(b) CAPITAL ADEQUACY. If the Bank determines at any time that
its Return has been reduced as a result of any Capital Adequacy Rule
Change, the Bank may require the Borrower to pay it the amount
necessary to restore the Bank's Return to what it would have been had
there been no Capital Adequacy Rule Change. For purposes of this 2.10,
the following definitions shall apply:
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(i) "Return", for any calendar quarter or shorter period,
means the percentage determined by dividing (A) the
sum of interest and ongoing fees earned by the Bank
under this Agreement during such period by (B) the
average capital the Bank is required to maintain
during such period as a result of its being a party
to this Agreement, as determined by the Bank based
upon its total capital requirements and a reasonable
attribution formula that takes account of the Capital
Adequacy Rules then in effect. Return may be
calculated for each calendar quarter and for the
shorter period between the end of a calendar quarter
and the date of termination in whole of this
Agreement.
(ii) "Capital Adequacy Rule" means any law, rule,
regulation or guideline regarding capital adequacy
that applies to the Bank, or the interpretation
thereof by any governmental or regulatory authority.
Capital Adequacy Rules include rules requiring
financial institutions to maintain total capital in
amounts based upon percentages of outstanding loans,
binding loan commitments and letters of credit.
(iii) "Capital Adequacy Rule Change" means any change in
any Capital Adequacy Rule occurring after the date of
this Agreement, but does not include any changes in
applicable requirements that at the date hereof are
scheduled to take place under the existing Capital
Adequacy Rules or any increases in the capital that
the Bank is required to maintain to the extent that
the increases are required due to a regulatory
authority's assessment of the Bank's financial
condition.
(iv) "Bank" includes (but is not limited to) the Bank, as
defined elsewhere in this Agreement, and any assignee
of any interest of the Bank hereunder and any
participant in the loans made hereunder.
The initial notice sent by the Bank shall be sent as promptly as
practicable after the Bank learns that its Return has been reduced,
shall include a demand for payment of the amount necessary to restore
the Bank's Return for the quarter in which the notice is sent, shall
state in reasonable detail the cause for the reduction in the Bank's
Return and the Bank's calculation of the amount of such reduction, and
shall include the Bank's representation that it has made similar demand
on one or more other commercial borrowers with revolving or term loans
in excess of $500,000. Thereafter, the Bank may send a new notice
during each calendar quarter setting forth the calculation of the
reduced Return for that quarter and including a demand for payment of
the amount necessary to restore the Bank's Return for that quarter. The
Bank's calculation in any such notice shall be conclusive and binding
absent demonstrable error.
(c) BASIS FOR DETERMINING INTEREST RATE INADEQUATE OR UNFAIR.
If with respect to any Interest Period:
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(i) the Bank determines that deposits in U.S. dollars
(in the applicable amounts) are not being offered in
the London interbank eurodollar market for such
Interest Period; or
(ii) the Bank otherwise determines that by reason of
circumstances affecting the London interbank
eurodollar market adequate and reasonable means do
not exist for ascertaining the applicable Eurodollar
Rate; or
(iii) the Bank determines that the Eurodollar Rate as
determined by the Bank will not adequately and fairly
reflect the cost to the Bank of maintaining or
funding a Eurodollar Rate Funding for such Interest
Period, or that the making or funding of Eurodollar
Rate Fundings has become impracticable as a result of
an event occurring after the date of this Agreement
which in the opinion of the Bank materially affects
such Eurodollar Rate Fundings;
then the Bank shall promptly notify the Borrower and (A) upon the
occurrence of any event described in the foregoing clause (i) the
Borrower shall enter into good faith negotiations with the Bank in
order to determine an alternate method to determine the Eurodollar Rate
for the Bank, and during the pendency of such negotiations with the
Bank, the Bank shall be under no obligation to make any new Eurodollar
Rate Fundings, and (B) upon the occurrence of any event described in
the foregoing clauses (ii) or (iii), for so long as such circumstances
shall continue, the Bank shall be under no obligation to make any new
Eurodollar Rate Fundings.
(d) ILLEGALITY. If any change in (including the adoption of
any new) applicable laws or regulations, or any change in the
interpretation of applicable laws or regulations by any governmental
authority, central bank, comparable agency or any other regulatory body
charged with the interpretation, implementation or administration
thereof, or compliance by the Bank with any request or directive
(whether or not having the force of law) of any such authority, central
bank, comparable agency or other regulatory body, should make it or, in
the good faith judgment of the Bank, shall raise a substantial question
as to whether it is unlawful for the Bank to make, maintain or fund
Eurodollar Rate Fundings, then (i) the Bank shall promptly notify the
Borrower, (ii) the obligation of the Bank to make, maintain or convert
into Eurodollar Rate Fundings shall, upon the effectiveness of such
event, be suspended for the duration of such unlawfulness, and (iii)
for the duration of such unlawfulness, any notice by the Borrower
requesting the Bank to make or convert into Eurodollar Rate Fundings
shall be construed as a request to make or to continue making Floating
Rate Fundings.
SECTION 2.11 FUNDING LOSSES.
Upon demand by the Bank (which demand shall be accompanied by a statement
setting forth the basis for the calculations of the amount being claimed), the
Borrower shall indemnify the
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Bank against any loss or expense which the Bank may have sustained or incurred
(including, without limitation, any net loss or expense incurred by reason of
the liquidation or reemployment of deposits or other funds acquired by the Bank
to fund or maintain Eurodollar Rate Fundings) or which the Bank may be deemed to
have sustained or incurred, as reasonably determined by the Bank, (i) as a
consequence of any failure by the Borrower to make any payment when due of any
amount due hereunder in connection with any Eurodollar Rate Fundings, (ii) due
to any failure of the Borrower to borrow or convert any Eurodollar Rate Fundings
on a date specified therefor in a notice thereof or (iii) due to any payment or
prepayment of any Eurodollar Rate Funding on a date other than the last day of
the applicable Interest Period for such Eurodollar Rate Funding. For this
purpose, all notices under Section 2.3(b) shall be deemed to be irrevocable.
SECTION 2.12 DISCRETION OF BANK AS TO MANNER OF FUNDING.
Notwithstanding any provision of this Agreement to the contrary, the Bank shall
be entitled to fund and maintain all or any part of its Eurodollar Rate Fundings
in any manner it deems fit, it being understood, however, that for the purposes
of this Agreement (specifically including, without limitation, Section 2.11
hereof) all determinations hereunder shall be made as if the Bank had actually
funded and maintained each Eurodollar Rate Funding during each Interest Period
for such Eurodollar Rate Funding through the purchase of deposits having a
maturity corresponding to such Interest Period and bearing an interest rate
equal to the appropriate Eurodollar Rate for such Interest Period.
SECTION 2.13 CONCLUSIVENESS OF STATEMENTS; SURVIVAL OF PROVISIONS.
Determinations and statements of the Bank pursuant to Section 2.10 and 2.11
shall be conclusive absent demonstrable error. Without limiting the generality
of the foregoing, the Borrower shall have no right to review any records of the
Bank or its other customers to determine the accuracy of any statement by the
Bank under Section 2.10(a) or 2.10(b) regarding the Bank's demands upon other
customers of the Bank. The Bank may use reasonable averaging and attribution
methods in determining compensation pursuant to such Sections 2.10 and 2.11 and
the provisions of Sections 2.10 and 2.11 shall survive termination of this
Agreement.
SECTION 2.14 COMPUTATION OF INTEREST AND FEES.
Interest under the Note and the fees hereunder shall be computed on the basis of
actual number of days elapsed in a year of 360 days.
ARTICLE III
CONDITIONS PRECEDENT
SECTION 3.1 INITIAL CONDITIONS PRECEDENT.
The obligation of the Bank to make any Advance or to issue any Letter of Credit
is subject to the condition precedent that the Bank shall have received on or
before the day of the first
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Advance or Letter of Credit all of the following, each dated (unless otherwise
indicated) as of the date hereof, in form and substance satisfactory to the
Bank:
(a) The Note, properly executed on behalf of the Borrower.
(b) Current searches of appropriate filing offices showing
that (i) no state or federal tax liens have been filed and remain in
effect against the Borrower or any Subsidiary, and (ii) no financing
statements have been filed and remain in effect against the Borrower or
any Subsidiary except financing statements perfecting only Liens
permitted under Section 6.1.
(c) A certificate of the secretary of the Borrower and each
Subsidiary (i) certifying that the execution, delivery and performance
of the Loan Documents and other documents contemplated hereunder to
which such corporation is a party have been duly approved by all
necessary action of the Board of Directors of the Borrower or such
Subsidiary, as the case may be, and attaching true and correct copies
of the applicable resolutions granting such approval, (ii) certifying
that attached to such certificate are true and correct copies of the
articles of incorporation and bylaws of the Borrower or such
Subsidiary, as the case may be, together with such copies, and (iii)
certifying the names of the officers of the Borrower and its
Subsidiaries that are authorized to sign the Loan Documents and other
documents contemplated hereunder, including requests for Advances,
together with the true signatures of such officers. The Bank may
conclusively rely on such certificate until it shall receive a further
certificate of the Secretary or Assistant Secretary of the Borrower
canceling or amending the prior certificate and submitting the
signatures of the officers named in such further certificate.
(d) Certificates of good standing of the Borrower and its
Subsidiaries, dated not more than ten days before such date.
(e) A signed copy of an opinion of counsel for the Borrower,
addressed to the Bank as to matters referred to in Sections 4.1, 4.2,
4.3 and 4.7, and as to such other matters as the Bank may reasonably
request, with that opinion being acceptable to the Bank's counsel. In
the case of Section 4.7, the opinion may be to the best knowledge of
such counsel, and, in the case of Section 4.3, insofar as it relates to
enforcement of remedies, it may be subject to applicable bankruptcy,
insolvency, reorganization or similar laws affecting the rights of
creditors generally from time to time, and to usual equity principles.
(f) The origination fee required under Section 2.6(a).
SECTION 3.2 CONDITIONS PRECEDENT TO ALL ADVANCES AND LETTERS OF CREDIT.
The obligation of the Bank to make any Advance or to issue any Letter of Credit
shall be subject to the further conditions precedent that on the date of such
Advance or Letter of Credit:
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(a) the representations and warranties contained in Article IV
are correct on and as of the date of such Advance or Letter of Credit
as though made on and as of such date, except to the extent that such
representations and warranties relate solely to an earlier date; and
(b) no event has occurred and is continuing, or would result
from such Advance or Letter of Credit, which constitutes a Default or
an Event of Default.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to the Bank as follows:
SECTION 4.1 EXISTENCE AND POWER.
The Borrower is a corporation duly incorporated, validly existing and in good
standing under the laws of Minnesota. Each Subsidiary is a corporation duly
incorporated, validly existing and in good standing under the laws of its
jurisdiction of incorporation. The Borrower and its Subsidiaries are each duly
licensed or qualified to transact business in all jurisdictions where the
character of the property owned or leased or the nature of the business
transacted by it makes such licensing or qualification necessary. The Borrower
has all requisite power and authority, corporate or otherwise, to conduct its
business, to own its properties and to execute and deliver, and to perform all
of its obligations under, the Loan Documents.
SECTION 4.2 AUTHORIZATION OF BORROWING; NO CONFLICT AS TO LAW OR AGREEMENTS.
The execution, delivery and performance by the Borrower of the Loan Documents
and the borrowings from time to time hereunder have been duly authorized by all
necessary corporate action and do not and will not (i) require any consent or
approval of the stockholders of the Borrower, or 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 (including, without limitation, Regulation X of the Board of
Governors of the Federal Reserve System) or of any order, writ, injunction or
decree presently in effect having applicability to the Borrower or of the
articles of incorporation or bylaws of the Borrower, (iii) result in a breach of
or constitute a default under any indenture or loan or credit agreement or any
other agreement, lease or instrument to which the Borrower is a party or by
which it or its properties may be bound or affected, or (iv) result in, or
require, the creation or imposition of any Lien or other charge or encumbrance
of any nature upon or with respect to any of the properties now owned or
hereafter acquired by the Borrower.
SECTION 4.3 LEGAL AGREEMENTS.
This Agreement and the other Loan Documents constitute, the legal, valid and
binding obligations of the Borrower enforceable against the Borrower in
accordance with their respective terms.
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SECTION 4.4 SUBSIDIARIES.
Schedule 4.4 hereto is a complete and correct list of all present Subsidiaries
and of the percentage of the ownership of the Borrower or any other Subsidiary
in each as of the date of this Agreement. Except as otherwise indicated in that
Schedule, all shares of each Subsidiary owned by the Borrower or by any such
other Subsidiary are validly issued and fully paid and nonassessable.
SECTION 4.5 FINANCIAL CONDITION.
The Borrower has heretofore furnished to the Bank its audited financial
statement as of June 30, 1999, and its unaudited interim financial statement as
of September 30, 1999. Those financial statements fairly present the financial
condition of the Borrower and its Subsidiaries on the dates thereof and the
results of their operations and cash flows for the periods then ended, and were
prepared in accordance with GAAP.
SECTION 4.6 ADVERSE CHANGE.
There has been no material adverse change in the business, properties or
condition (financial or otherwise) of the Borrower any Subsidiary since the date
of the latest financial statement referred to in Section 4.5.
SECTION 4.7 LITIGATION.
There are no actions, suits or proceedings pending or, to the knowledge of the
Borrower, threatened against or affecting the Borrower or any Subsidiary or the
properties of the Borrower or any Subsidiary before any court or governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign, which, if determined adversely to the Borrower or that Subsidiary,
would have a Material Adverse Effect.
SECTION 4.8 HAZARDOUS SUBSTANCES.
To the best of the Borrower's knowledge after reasonable inquiry, neither the
Borrower nor any Subsidiary nor any other Person has ever caused or permitted
any Hazardous Substance to be disposed of in any manner which might result in
any material liability to the Borrower or any Subsidiary on, under or at any
real property which is operated by the Borrower or any Subsidiary or in which
the Borrower or any Subsidiary has any interest; and no such real property has
ever been used (either by the Borrower, any Subsidiary or any other Person) as a
dump site or permanent or temporary storage site for any Hazardous Substance.
SECTION 4.9 REGULATION U.
The Borrower is not engaged in the business of extending credit for the purpose
of purchasing or carrying margin stock (within the meaning of Regulation U of
the Board of Governors of the Federal Reserve System), and no part of the
proceeds of any Advance will
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be used to purchase or carry any margin stock or to extend credit to others for
the purpose of purchasing or carrying any margin stock.
SECTION 4.10 TAXES.
The Borrower and its Subsidiaries have each paid or caused to be paid to the
proper authorities when due all federal, state and local taxes required to be
withheld by them. The Borrower and its Subsidiaries have each filed all federal,
state and local tax returns which to the knowledge of the officers of the
Borrower are required to be filed, and the Borrower and its Subsidiaries have
each paid or caused to be paid to the respective taxing authorities all taxes as
shown on said returns or on any assessment received by them to the extent such
taxes have become due, other than taxes whose amount, applicability or validity
is being contested in good faith by appropriate proceedings and for which the
Borrower or Subsidiary has provided adequate reserves in accordance with GAAP.
SECTION 4.11 TITLES AND LIENS.
The Borrower has good title to each of the properties and assets reflected in
the latest balance sheet referred to in Section 4.5 (other than any sold, as
permitted by Section 6.6, or held by a Subsidiary of the Borrower and so
disclosed in such balance sheet), free and clear of all Liens and encumbrances,
except for Liens permitted by Section 6.1 and covenants, restrictions, rights,
easements and minor irregularities in title which do not materially interfere
with the business or operations of the Borrower or such Subsidiary as presently
conducted. No financing statement naming the Borrower or any Subsidiary as
debtor is on file in any office except to perfect only Liens permitted by
Section 6.1.
SECTION 4.12 ERISA.
No Plan established or maintained by the Borrower, any Subsidiary or any ERISA
Affiliate that is subject to Part 3 of Subtitle B of Title I of ERISA had an
accumulated funding deficiency (as such term is defined in Section 302 of ERISA)
in excess of $1,000,000 as of the last day of the most recent fiscal year of
such Plan ended prior to the date hereof, and no liability to the Pension
Benefit Guaranty Corporation or the Internal Revenue Service in excess of such
amount has been, or is expected by the Borrower, any Subsidiary or any ERISA
Affiliate to be, incurred with respect to any Plan of the Borrower, any
Subsidiary or any ERISA Affiliate. The Borrower has no contingent liability with
respect to any post-retirement benefit under a Welfare Plan, other than
liability for continuation coverage described in Part 6 of Subtitle B of Title I
of ERISA.
ARTICLE V
AFFIRMATIVE COVENANTS
So long as the Note shall remain unpaid or the Facility shall
be outstanding, the Borrower will comply with the following requirements, unless
the Bank shall otherwise consent in writing:
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SECTION 5.1 FINANCIAL STATEMENTS.
The Borrower will deliver to the Bank:
(a) As soon as available, and in any event within 120 days
after the end of each fiscal year of the Borrower, a copy of the annual
audit report of the Borrower prepared on a consolidated basis with the
unqualified opinion of independent certified public accountants
selected by the Borrower and acceptable to the Bank, which annual
report shall include the consolidated balance sheet of the Borrower and
its Subsidiaries as at the end of such fiscal year and the related
consolidated statements of income, shareholders' equity and cash flows
of the Borrower and its Subsidiaries for the fiscal year then ended,
all in reasonable detail and all prepared in accordance with GAAP,
together with (A) a report signed by such accountants stating that in
making the investigations necessary for said opinion they obtained no
knowledge, except as specifically stated, of any Default or Event of
Default hereunder and all relevant facts in reasonable detail to
evidence, and the computations as to, whether or not the Borrower is in
compliance with the Financial Covenants; (B) if requested by the Bank,
a copy of such accountants' management letter issued to the Borrower
for such year; and (C) a statement of such accountants stating that
they understand that the Bank is relying on such audit report.
(b) As soon as available and in any event within 45 days after
the end of each fiscal quarter of the Borrower, consolidated balance
sheets of the Borrower and its Subsidiaries as at the end of such
quarter and related consolidated statements of earnings and cash flows
of the Borrower and its Subsidiaries for such quarter and for the year
to date, in reasonable detail and stating in comparative form the
figures for the corresponding date and period in the previous year, all
prepared in accordance with GAAP, and certified by the chief financial
officer of the Borrower, subject to year-end audit adjustments.
(c) Concurrent with the delivery of any financial statements
under paragraph (a) or (b), a Compliance Certificate, duly executed by
the chief financial officer of the Borrower.
(d) Not less than 30 days prior to the end of each fiscal year
of the Borrower, projections for the Borrower's financial performance
during the following fiscal year, including projections of income, cash
flows and balance sheets, all presented on a quarter-by-quarter basis
in such detail as the Bank may request and certified by the chief
financial officer of the Borrower as being identical to the projections
used by the Borrower for internal planning purposes.
(e) Promptly upon their distribution, copies of all financial
statements, reports and proxy statements which the Borrower or any
Subsidiary shall have sent to its stockholders.
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(f) Promptly after the sending or filing thereof, copies of
all regular and periodic financial reports which the Borrower or any
Subsidiary shall file with the Securities and Exchange Commission or
any national securities exchange.
(g) Immediately after the commencement thereof, notice in
writing of all litigation and of all proceedings before any
governmental or regulatory agency affecting the Borrower or any
Subsidiary of the type described in Section 4.7 or which seek a
monetary recovery against the Borrower or any Subsidiary in excess of
$150,000.
(h) As promptly as practicable (but in any event not later
than five business days) after an officer of the Borrower or any
Subsidiary obtains knowledge of the occurrence of any Default or Event
of Default, notice of such occurrence, together with a detailed
statement by a responsible officer of the Borrower or the appropriate
Subsidiary of the steps being taken by the Borrower or the appropriate
Subsidiary to cure the effect of such event.
(i) Promptly upon becoming aware of any Reportable Event or
any prohibited transaction (as defined in Section 4975 of the Internal
Revenue Code or Section 406 of ERISA) in connection with any Plan or
any trust created thereunder, a written notice specifying the nature
thereof, what action the Borrower has taken, is taking or proposes to
take with respect thereto, and, when known, any action taken or
threatened by the Internal Revenue Service, the Pension Benefit
Guaranty Corporation or the Department of Labor with respect thereto.
(j) Promptly upon their receipt or filing, copies of (i) all
notices received by the Borrower, any Subsidiary or any ERISA Affiliate
of the Pension Benefit Guaranty Corporation's intent to terminate any
Plan or to have a trustee appointed to administer any Plan, and (ii)
all notices received by the Borrower, any Subsidiary or any ERISA
Affiliate from a Multiemployer Plan concerning the imposition or amount
of withdrawal liability pursuant to Section 4202 of ERISA.
(k) Upon request of the Bank, copies of the most recent annual
report (Form 5500 Series), including any supporting schedules, filed by
the Borrower, any Subsidiary or any ERISA Affiliate with the Internal
Revenue Service with respect to any Plan.
(l) Such information (in addition to that specified elsewhere
in this Section) respecting the financial condition and results of
operations of the Borrower or any Subsidiary as the Bank may from time
to time reasonably request.
SECTION 5.2 BOOKS AND RECORDS; INSPECTION AND EXAMINATION.
The Borrower will keep, and will cause each Subsidiary to keep, accurate books
of record and account for itself in which true and complete entries will be made
in accordance with GAAP and, upon request of the Bank, will give any
representative of the Bank access to, and
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permit such representative to examine, copy or make extracts from, any and all
books, records and documents in its possession, to inspect any of its properties
and to discuss its affairs, finances and accounts with any of its principal
officers, all at such times during normal business hours and as often as the
Bank may reasonably request.
SECTION 5.3 COMPLIANCE WITH LAWS.
The Borrower will, and will cause each Subsidiary to, comply with the
requirements of applicable laws and regulations, the noncompliance with which
would have a Material Adverse Effect.
SECTION 5.4 PAYMENT OF TAXES AND OTHER CLAIMS.
The Borrower will pay or discharge, and will cause each Subsidiary to pay or
discharge, when due, (a) all taxes, assessments and governmental charges levied
or imposed upon it or upon its income or profits, or upon any properties
belonging to it, prior to the date on which penalties attach thereto, (b) all
federal, state and local taxes required to be withheld by it, and (c) all lawful
claims for labor, materials and supplies which, if unpaid, might by law become a
Lien or charge upon any properties of the Borrower or any Subsidiary; provided,
that neither the Borrower nor any Subsidiary shall be required to pay any such
tax, assessment, charge or claim whose amount, applicability or validity is
being contested in good faith by appropriate proceedings and for which the
Borrower or such Subsidiary has provided adequate reserves in accordance with
GAAP.
SECTION 5.5 MAINTENANCE OF PROPERTIES.
The Borrower will keep and maintain, and will cause each Subsidiary to keep and
maintain, all of its properties necessary or useful in its business in good
condition, repair and working order; provided, however, that nothing in this
Section shall prevent the Borrower or any Subsidiary from discontinuing the
operation and maintenance of any of its properties if such discontinuance is, in
the judgment of the Borrower or the appropriate Subsidiary, desirable in the
conduct of its business and not disadvantageous in any material respect to the
Bank as holder of the Note.
SECTION 5.6 INSURANCE.
The Borrower will, and will cause each Subsidiary to, obtain and maintain
insurance with insurers believed by the Borrower to be responsible and
reputable, in such amounts and against such risks as is usually carried by
companies engaged in similar business and owning similar properties in the same
general areas in which the Borrower or such Subsidiary operates. All casualty
insurance policies required hereunder shall include a standard lenders' loss
payable clause in favor of the Bank to the extent of its interest. All liability
policies required hereunder shall name the Bank as an additional insured.
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SECTION 5.7 PRESERVATION OF CORPORATE EXISTENCE.
The Borrower will, and will cause each Subsidiary to, preserve and maintain its
corporate existence and all of its rights, privileges and franchises; provided,
however, that neither the Borrower nor any Subsidiary shall be required to
preserve any of its rights, privileges and franchises if its Board of Directors
shall determine that the preservation thereof is no longer desirable in the
conduct of the business of the Borrower or the appropriate Subsidiary and that
the loss thereof is not disadvantageous in any material respect to the Bank as a
holder of the Note.
SECTION 5.8 CASH FLOW LEVERAGE RATIO.
The Borrower will at all times maintain its Cash Flow Leverage Ratio, determined
as of each Covenant Computation Date, at not more than 2.0 to 1.
SECTION 5.9 DEBT SERVICE COVERAGE RATIO.
The Borrower will at all times maintain its Debt Service Coverage Ratio,
determined as of each Covenant Computation Date, at not less than 1.50 to 1.
SECTION 5.10 CAPITALIZATION RATIO.
The Borrower will at all times maintain its Capitalization Ratio, determined as
of each Covenant Computation Date, at not more than 0.30 to 1.
ARTICLE VI
NEGATIVE COVENANTS
So long as the Note shall remain unpaid or the Facility shall
be outstanding, the Borrower agrees that, without the prior written consent of
the Bank:
SECTION 6.1 LIENS.
The Borrower will not, and will not permit any Subsidiary to, create, incur,
assume or suffer to exist any Lien or other charge or encumbrance of any nature
on any of its assets, now owned or hereafter acquired, or assign or otherwise
convey any right to receive income or give its consent to the subordination of
any right or claim of the Borrower or any Subsidiary to any right or claim of
any other Person; excluding, however, from the operation of the foregoing:
(a) Liens for taxes or assessments or other governmental
charges to the extent not required to be paid by Section 5.4.
(b) Materialmen's, merchants', carriers' worker's, repairer's,
or other like liens arising in the ordinary course of business to the
extent not required to be paid by Section 5.4.
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(c) Pledges or deposits to secure obligations under worker's
compensation laws, unemployment insurance and social security laws, or
to secure the performance of bids, tenders, contracts (other than for
the repayment of borrowed money) or leases or to secure statutory
obligations or surety or appeal bonds, or to secure indemnity,
performance or other similar bonds in the ordinary course of business.
(d) Zoning restrictions, easements, licenses, restrictions on
the use of real property or minor irregularities in title thereto,
which do not materially impair the use of such property in the
operation of the business of the Borrower or any Subsidiary or the
value of such property for the purpose of such business.
(e) Purchase money Liens (which term for purposes of this
subsection shall include conditional sale agreements or other title
retention agreements and leases in the nature of title retention
agreements) upon or in property acquired after the date hereof, or
Liens existing in such property at the time of acquisition thereof, or,
in the case of any Person which thereafter becomes a Subsidiary, Liens
upon or in its property, existing at the time such Person becomes a
Subsidiary, provided that:
(i) no such Lien extends or shall extend to or cover any
property of the Borrower or such Subsidiary, as the
case may be, other than the property then being
acquired and fixed improvements then or thereafter
erected thereon;
(ii) the aggregate principal amount of all Funded Debt of
the Borrower and all Subsidiaries secured by all
Liens described in this subsection (e) shall not
exceed $3,000,000 at any one time outstanding; and
(iii) the aggregate principal amount of Funded Debt secured
by Liens described in this subsection (e) at the time
of acquisition of the property subject thereto shall
not exceed 80% of the cost of such property or of the
then fair market value of such property as determined
by the Board of Directors of the Borrower, whichever
shall be less, and the aggregate amount of payments
made thereunder in any period of 12 consecutive
months will not result in a violation of the
restriction contained in Section 6.12.
(f) Liens created by any Subsidiary as security for Funded
Debt owing to the Borrower or to another Subsidiary.
(g) Liens on any property of the Borrower or any Subsidiary
(other than those described in subsection (e) and (f)) securing any
indebtedness for borrowed money in existence on the date hereof and
listed in Schedule 6.1 hereto.
(h) Liens arising out of a judgment against the Borrower or
any Subsidiary for the payment of money not exceeding $50,000 with
respect to which an appeal is being prosecuted and a stay of execution
pending such appeal has been secured, but
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only so long as all such Liens are subordinate in all respect to all
Liens in favor of the Bank.
Without limiting the Bank's right to refuse its consent to any Lien not
specifically permitted under this Section, the Borrower agrees that, if at any
time the Borrower grants any Lien to any lender or group of lenders to secure
any Funded Debt or other obligation of the Borrower, other than Liens
specifically permitted above, the Borrower shall, concurrent with the granting
of such Lien, grant to the Bank a Lien covering the same collateral, for the
purpose of securing the Borrower's obligations hereunder. Such Lien granted to
the Bank shall be equal in rank and priority with the Lien granted to such other
lender or lenders.
SECTION 6.2 INDEBTEDNESS.
The Borrower will not, and will not permit any Subsidiary to, incur, create,
assume or permit to exist any indebtedness or liability on account of deposits
or advances or any indebtedness for borrowed money, or any other indebtedness or
liability evidenced by notes, bonds, debentures or similar obligations, except:
(a) Indebtedness to the Bank.
(b) Indebtedness of the Borrower or any Subsidiary in
existence on the date hereof and listed in Schedule 6.2 hereto, but not
including any extensions or renewals thereof.
(c) Indebtedness of a Subsidiary to the Borrower on account of
borrowings from the Borrower, so long as the aggregate amount of such
indebtedness outstanding at any one time does not exceed $1,000,000.
(d) Purchase money indebtedness of the Borrower or any
Subsidiary secured by Liens permitted by subsection 6.1(e).
(e) Indebtedness not otherwise permitted under this Section
6.2, so long as the aggregate amount of all such indebtedness permitted
only under this paragraph (e) outstanding at any one time does not
exceed $3,000,000.
SECTION 6.3 GUARANTIES.
The Borrower will not, and will not permit any Subsidiary to, assume, guarantee,
endorse or otherwise become directly or contingently liable in connection with
any obligations of any other Person, except:
(a) The endorsement of negotiable instruments by the Borrower
or any Subsidiary for deposit or collection or similar transactions in
the ordinary course of business.
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(b) Guaranties, endorsements and other direct or contingent
liabilities in connection with the obligations of other Persons in
existence on the date hereof and listed in Schedule 6.3 hereto.
SECTION 6.4 INVESTMENTS.
The Borrower will not, and will not permit any Subsidiary to, purchase or hold
beneficially any stock or other securities or evidence of indebtedness of, make
or permit to exist any loans or advances to, or make any investment or acquire
any interest whatsoever in, any other Person, except:
(a) 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 Xxxxx'x 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.
(b) Investments in Persons (other than investments covered
elsewhere in this Section 6.4 or by Section 6.8), so long as the
aggregate amount so invested by the Borrower and its Subsidiaries after
the date hereof as to all such investments does not exceed $10,000,000.
(c) Any existing investment by the Borrower or any other
Subsidiary in the stock of any Subsidiary.
(d) Loans and advances by the Borrower to a Subsidiary, so
long as the indebtedness arising therefrom does not violate Section
6.2(c).
(e) Travel advances to officers and employees of the Borrower
or any Subsidiary in the ordinary course of business.
(f) Advances in the form of progress payments, prepaid rent or
security deposits.
(g) Acquisitions permitted under Section 6.8(b).
SECTION 6.5 RESTRICTED PAYMENTS.
The Borrower will not make any Restricted Payment, except that the foregoing
shall not prohibit:
(a) The making of payments in repurchase of the Borrower's
stock so long as (i) the aggregate amount of all such payments after
the date hereof does not exceed $12,000,000, (ii) all such payments are
funded solely from excess cash reserves or the proceeds of the
Facility, (iii) no Default or Event of Default has occurred and is
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continuing at the time that such Restricted Payment is to be made, and
(iv) the making of such Restricted Payment is in all other respects
acceptable to the Bank in its sole discretion.
(b) The making of additional Restricted Payments to the extent
not prohibited under Section 10.9 of the Note Purchase Agreement.
SECTION 6.6 SALE OF ASSETS.
The Borrower will not, and will not permit any Subsidiary to, sell, lease,
assign, transfer or otherwise dispose of all or a material part of its assets
(whether in one transaction or in a series of transactions) to any other Person
other than in the ordinary course of business, except that the foregoing shall
not prohibit:
(a) The sale, lease or transfer by a wholly-owned Subsidiary
of the Borrower of all or a substantial part of its assets to the
Borrower or another wholly-owned Subsidiary of the Borrower.
(b) Any sale of assets (other than those qualifying under any
other subsection of this Section) of the Borrower or any Subsidiary to
a Person other than the Borrower or a Subsidiary so long as (i) no
Default or Event of Default has occurred and is continuing at the time
of, or would be caused by, such sale, and (ii) after giving effect to
such sale, the aggregate book value of all such assets sold by the
Borrower and all of its Subsidiaries during any single fiscal year of
the Borrower does not exceed 10% of the aggregate book value of all
assets of the Borrower and its Subsidiaries as of the close of the
immediately preceding fiscal year of the Borrower, as determined on a
consolidated basis in accordance with GAAP.
SECTION 6.7 TRANSACTIONS WITH AFFILIATES.
The Borrower will not, and will not permit any Subsidiary to, make any loan or
capital contribution to, or any other investment in, any Affiliate, or make any
Restricted Payment to any Affiliate, or make any other cash transfer to any
Affiliate, except that the foregoing shall not prohibit:
(a) The making of any loan by the Borrower to any Subsidiary
to the extent not prohibited by Section 6.4.
(b) The making of any Restricted Payment to the extent not
prohibited by Section 6.5.
SECTION 6.8 CONSOLIDATION AND MERGER.
The Borrower will not, and will not permit any Subsidiary to, consolidate with
or merge into any Person, or permit any other Person to merge into it, or
acquire (in a transaction analogous in purpose or effect to a consolidation or
merger) all or substantially all of the
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assets of any other Person; provided, however, that the restrictions contained
in this Section shall not apply to or prevent:
(a) The consolidation or merger of a Subsidiary with, or a
conveyance or transfer of its assets to, the Borrower (if the Borrower
shall be the continuing or surviving entity) or another then-existing
wholly-owned Subsidiary of the Borrower.
(b) The acquisition of all or substantially all of the assets
of any other Person by the Borrower, or the merger of any Person into
the Borrower, so long as (i) no Default or Event of Default has
occurred and is continuing at the time of such acquisition or merger,
(ii) in the case of a merger, the Borrower is the surviving
corporation, (iii) the business of the target of such acquisition is
substantially identical to the existing business of the Borrower, and
(iv) the aggregate amount expended by the Borrower on account of such
acquisition or merger, and the fair market value of the assets or stock
so acquired, are in each case not more than 15% of the Borrower's Net
Worth immediately prior to such acquisition or merger.
SECTION 6.9 SALE AND LEASEBACK.
The Borrower will not, and will not permit any Subsidiary to, enter into any
arrangement, directly or indirectly, with any other Person whereby the Borrower
or such Subsidiary shall sell or transfer any real or personal property, whether
now owned or hereafter acquired, and then or thereafter rent or lease as lessee
such property or any part thereof or any other property which the Borrower or
such Subsidiary, as the case may be, intends to use for substantially the same
purpose or purposes as the property being sold or transferred.
SECTION 6.10 SUBORDINATED DEBT.
The Borrower will not, and will not permit any Subsidiary to, (i) make any
payment of, or acquire, any Subordinated Debt except as expressly permitted by
the subordination provision thereof; (ii) give security for all or any part of
such Subordinated Debt; (iii) amend or cancel the subordination provisions of
such Subordinated Debt; (iv) take or omit to take any action whereby the
subordination of such Subordinated Debt or any part thereof to the Note might be
terminated, impaired or adversely affected; or (v) omit to give the Bank prompt
written notice of any default under any agreement or instrument relating to such
Subordinated Debt by reason whereof such Subordinated Debt might become or be
declared to be immediately due and payable.
SECTION 6.11 AMENDMENTS TO NOTE PURCHASE AGREEMENT.
Without the Bank's prior written approval, the Borrower will not permit or agree
to any modification or amendment of the Note Purchase Agreement or any note or
other document issued thereunder or in connection therewith.
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SECTION 6.12 CAPITAL EXPENDITURES.
The Borrower will not, and will not permit any Subsidiary to, make any Capital
Expenditure (including payments under capitalized leases) if, after giving
effect to such expenditure, the aggregate amount of Capital Expenditures made by
the Borrower and its Subsidiaries in any period of 12 consecutive months will
exceed $5,000,000. The restriction contained in this Section is subject to the
further limitations imposed by Section 6.1(e) if any asset is acquired under a
purchase money Lien referred to in that Section.
SECTION 6.13 HAZARDOUS SUBSTANCES.
The Borrower will not, and will not permit any Subsidiary to, cause or permit
any Hazardous Substance to be disposed of, in any manner which might result in
any material liability to the Borrower or any Subsidiary, on, under or at any
real property which is operated by the Borrower or any Subsidiary or in which
the Borrower or any Subsidiary has any interest.
SECTION 6.14 RESTRICTIONS ON NATURE OF BUSINESS.
The Borrower will not, and will not permit any Subsidiary to, engage in any line
of business materially different from that presently engaged in by the Borrower
or such Subsidiary.
ARTICLE VII
EVENTS OF DEFAULT, RIGHTS AND REMEDIES
SECTION 7.1 EVENTS OF DEFAULT.
"Event of Default", wherever used herein, means any one of the following events:
(a) Default in the payment of any principal of or
interest on the Note when it becomes due and payable.
(b) Default in the payment of any fees required under
Section 2.6(b) when the same become due and payable.
(c) Default in the performance, or breach, of any
covenant or agreement on the part of the Borrower contained in Section
2.4(e) or in any Financial Covenant.
(d) Default in the performance, or breach, of any
covenant or agreement of the Borrower in this Agreement (other than a
covenant or agreement a default in whose performance or whose breach is
elsewhere in this Section specifically dealt with), and the continuance
of such default or breach for a period of 30 days after the Bank has
given notice to the Borrower specifying such default or breach and
requiring it to be remedied.
(e) Any representation or warranty made by the Borrower
in this Agreement or by the Borrower (or any of its officers) in any
certificate, instrument, or statement contemplated by or made or
delivered pursuant to or in connection with this
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Agreement, shall prove to have been incorrect or misleading in any
material respect when made.
(f) An Event of Default, as defined in the Note Purchase
Agreement, shall occur and be continuing.
(g) A default under any bond, debenture, note or other
evidence of indebtedness of the Borrower (other than a default
specifically dealt with elsewhere in this Section 7.1) or under any
indenture or other instrument under which any such evidence of
indebtedness has been issued or by which it is governed and the
expiration of the applicable period of grace, if any, specified in such
evidence of indebtedness, indenture or other instrument; provided,
however, that if such default shall be cured by the Borrower, or waived
by the holders of such indebtedness, in each case prior to the
commencement of any action under Section 7.2 and as may be permitted by
such evidence of indebtedness, indenture or other instrument, then the
Event of Default hereunder by reason of such default shall be deemed
likewise to have been thereupon cured or waived.
(h) An event of default shall occur under any security
agreement, mortgage, deed of trust, assignment or other instrument or
agreement directly or indirectly securing any obligations of the
Borrower hereunder or under the Note or any guaranty of such
obligations.
(i) Default in the payment of any amount owed by the Borrower
to the Bank other than hereunder or under the Note.
(j) The Borrower or any Subsidiary shall be adjudicated a
bankrupt or insolvent, or admit in writing its inability to pay its
debts as they mature, or make an assignment for the benefit of
creditors; or the Borrower or any Subsidiary shall apply for or consent
to the appointment of any receiver, trustee, or similar officer for it
or for all or any substantial part of its property; or such receiver,
trustee or similar officer shall be appointed without the application
or consent of the Borrower or such Subsidiary, as the case may be, and
such appointment shall continue undischarged for a period of 30 days;
or the Borrower or any Subsidiary shall institute (by petition,
application, answer, consent or otherwise) any bankruptcy, insolvency,
reorganization, arrangement, readjustment of debt, dissolution,
liquidation or similar proceeding relating to it under the laws of any
jurisdiction; or any such proceeding shall be instituted (by petition,
application or otherwise) against the Borrower or any Subsidiary; or
any judgment, writ, warrant of attachment or execution or similar
process shall be issued or levied against a substantial part of the
property of the Borrower or any Subsidiary and such judgment, writ, or
similar process shall not be released, vacated or fully bonded within
30 days after its issue or levy.
(k) A petition shall be filed by or against the Borrower or
any Subsidiary under the United States Bankruptcy Code naming the
Borrower or that Subsidiary as debtor.
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(l) A Change of Control shall occur.
(m) The rendering against the Borrower of a final judgment,
decree or order for the payment of money if the amount of such
judgment, decree or order, together with the amount of all other such
judgments, decrees and orders then outstanding, less (in each case) the
portion thereof covered by insurance proceeds, is greater than $500,000
and if such judgment, decree or order remains unsatisfied and in effect
for any period of 30 consecutive days without a stay of execution.
(n) A writ of attachment, garnishment, levy or similar process
shall be issued against or served upon the Bank with respect to (i) any
property of the Borrower or any Subsidiary in the possession of the
Bank, or (ii) any indebtedness of the Bank to the Borrower or any
Subsidiary.
(o) Any Plan shall have been terminated, or a trustee shall
have been appointed by an appropriate United States District Court to
administer any Plan, or the Pension Benefit Guaranty Corporation shall
have instituted proceedings to terminate any Plan or to appoint a
trustee to administer any Plan, or withdrawal liability shall have been
asserted against the Borrower, any Subsidiary or any ERISA Affiliate by
a Multiemployer Plan; or the Borrower, any Subsidiary or any ERISA
Affiliate shall have incurred liability to the Pension Benefit Guaranty
Corporation, the Internal Revenue Service, the Department of Labor or
Plan participants in excess of $1,000,000 with respect to any Plan; or
any Reportable Event that the Bank may determine in good faith might
constitute grounds for the termination of any Plan, for the appointment
by the appropriate United States District Court of a trustee to
administer any Plan or for the imposition of withdrawal liability with
respect to a Multiemployer Plan, shall have occurred and be continuing
30 days after written notice to such effect shall have been given to
the Borrower by the Bank.
SECTION 7.2 RIGHTS AND REMEDIES.
Upon the occurrence of an Event of Default or at any time thereafter until such
Event of Default is cured to the written satisfaction of the Bank, the Bank may
exercise any or all of the following rights and remedies:
(a) The Bank may, by notice to the Borrower, declare the
Facility to be terminated, whereupon the same shall forthwith
terminate.
(b) The Bank may, by notice to the Borrower, declare the
entire unpaid principal amount of the Note then outstanding, all
interest accrued and unpaid thereon, and all other amounts payable
under this Agreement to be forthwith due and payable, whereupon the
Note, all such accrued interest and all such amounts shall become and
be forthwith due and payable, without presentment, demand, protest or
further notice of any kind, all of which are hereby expressly waived by
the Borrower.
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(c) If any Letter of Credit remains outstanding, the Bank may,
by notice to the Borrower, require the Borrower to deposit in the Cash
Collateral Account immediately available funds equal to the aggregate
face amount of all such outstanding Letters of Credit.
(d) The Bank may, without notice to the Borrower and without
further action, apply any and all money owing by the Bank to the
Borrower to the payment of the Note then outstanding, including
interest accrued thereon, and of all other sums then owing by the
Borrower hereunder.
(e) The Bank may exercise any other rights and remedies
available to it by law or agreement.
Notwithstanding the foregoing, upon the occurrence of an Event of Default
described in Section 7.1(k) or 7.1(n) hereof, the entire unpaid principal amount
of the Note then outstanding, all interest accrued and unpaid thereon, and all
other amounts payable under this Agreement shall be immediately due and payable
without presentment, demand, protest or notice of any kind.
SECTION 7.3 PLEDGE OF CASH COLLATERAL ACCOUNT.
The Borrower hereby pledges, and grants the Bank a security interest in, all
sums held in the Cash Collateral Account from time to time and all proceeds
thereof as security for the payment of all amounts due and to become due from
the Borrower to the Bank pursuant to this Agreement, including but not limited
to both principal of and interest on the Note and all renewals, extensions and
modifications thereof and any notes issued in substitution therefor, and
specifically including the Borrower's obligation to reimburse the Bank for any
amount drawn under any Letter of Credit, whether such reimbursement obligation
arises directly under this Agreement or under a separate reimbursement
agreement. Upon request of the Borrower, the Bank shall permit the Borrower to
withdraw from the Cash Collateral Account the lesser of (i) the Excess Balance
(as defined below), or (ii) the balance of the Cash Collateral Account. As used
herein, "Excess Balance" means (i) at any time following the Facility
Termination Date or the occurrence of a Default or Event of Default (unless each
such Default or Event of Default has been waived by the Bank in writing), the
amount by which the balance of the Cash Collateral Account exceeds the aggregate
amount secured by the sums held in the Cash Collateral Account, and (ii) at all
other times, the amount by which the balance of the Cash Collateral Account
exceeds the L/C Amount. The Bank shall have full ownership and control of the
Cash Collateral Account, and, except as set forth above, the Borrower shall have
no right to withdraw the funds maintained in the Cash Collateral Account.
-34-
ARTICLE VIII
MISCELLANEOUS
SECTION 8.1 NO WAIVER; CUMULATIVE REMEDIES.
No failure or delay on the part of the Bank in exercising any right, power or
remedy under the Loan Documents shall operate as a waiver thereof; nor shall the
Bank's acceptance of payments while any Default or Event of Default is
outstanding operate as a waiver of such Default or Event of Default, or any
right, power or remedy under the Loan Documents; nor shall any single or partial
exercise of any such right, power or remedy preclude any other or further
exercise thereof or the exercise of any other right, power or remedy under the
Loan Documents. The remedies provided in the Loan Documents are cumulative and
not exclusive of any remedies provided by law.
SECTION 8.2 AMENDMENTS, ETC.
No amendment, modification, termination or waiver of any provision of any Loan
Document or consent to any departure by the Borrower therefrom shall be
effective unless the same shall be in writing and signed by the Bank and then
such waiver or consent shall be effective only in the specific instance and for
the specific purpose for which given. No notice to or demand on the Borrower in
any case shall entitle the Borrower to any other or further notice or demand in
similar or other circumstances.
SECTION 8.3 NOTICE.
Except as otherwise expressly provided herein, all notices and other
communications hereunder shall be in writing and shall be (i) personally
delivered, (ii) transmitted by registered mail, postage prepaid, (iii) sent by
Federal Express or similar expedited delivery service, or (iv) transmitted by
telecopy, in each case addressed to the party to whom notice is being given at
its address as set forth by its signature below, or, if telecopied, transmitted
to that party at its telecopier number set forth by its signature below; or, as
to each party, at such other address or telecopier number as may hereafter be
designated in a notice by that party to the other party complying with the terms
of this Section. All such notices or other communications shall be deemed to
have been given on (i) the date received if delivered personally or by mail,
(ii) the date of receipt, if delivered by Federal Express or similar expedited
delivery service, or (iii) the date of transmission if delivered by telecopy,
except that notices or requests to the Bank pursuant to any of the provisions of
Article II shall not be effective until received.
SECTION 8.4 PARTICIPATIONS.
The Bank may grant participations in the Note and this Agreement to any
institutional investor without the consent of the Borrower. The Borrower shall
assist the Bank in granting any such participations.
-35-
SECTION 8.5 DISCLOSURE OF INFORMATION.
The Borrower authorizes the Bank to disclose to any participant or assignee
(each, a "Transferee") and any prospective Transferee any and all financial and
other information in the Bank's possession concerning the Borrower which has
been delivered to the Bank by the Borrower pursuant to this Agreement or which
has been delivered to the Bank by the Borrower in connection with the Bank's
credit evaluation of the Borrower before entering into this Agreement.
SECTION 8.6 COSTS AND EXPENSES.
The Borrower agrees to pay on demand all costs and expenses incurred by the Bank
in connection with the negotiation, preparation, execution, amendment or
enforcement of the Loan Documents and the other instruments and documents to be
delivered hereunder and thereunder, including the reasonable fees and
out-of-pocket expenses of counsel for the Bank with respect thereto, whether
paid to outside counsel or allocated to the Bank by in-house counsel.
SECTION 8.7 INDEMNIFICATION BY BORROWER.
The Borrower hereby agrees to indemnify the Bank and each officer, director,
employee and agent thereof (herein individually each called an "Indemnitee" and
collectively called the "Indemnitees") from and against any and all losses,
claims, damages, reasonable expenses (including, without limitation, reasonable
attorneys' fees) and liabilities (all of the foregoing being herein called the
"Indemnified Liabilities") incurred by an Indemnitee in connection with or
arising out of the execution or delivery of this Agreement or any agreement or
instrument contemplated hereby, the performance by the parties hereto of their
respective obligations hereunder or the use of the proceeds of any Advance or
Letter of Credit hereunder (including but not limited to any such loss, claim,
damage, expense or liability arising out of any claim in which it is alleged
that any Environmental Law has been breached with respect to any activity or
property of the Borrower), except for any portion of such losses, claims,
damages, expenses or liabilities incurred solely as a result of the gross
negligence or willful misconduct of the applicable Indemnitee. If and to the
extent that the foregoing indemnity may be unenforceable for any reason, the
Borrower hereby agrees to make the maximum contribution to the payment and
satisfaction of each of the Indemnified Liabilities which is permissible under
applicable law. All obligations provided for in this Section shall survive any
termination of this Agreement.
SECTION 8.8 EXECUTION IN COUNTERPARTS.
This Agreement and the other Loan Documents may be executed in any number of
counterparts, each of which when so executed and delivered shall be deemed to be
an original and all of which counterparts of this Agreement or such other Loan
Document, as the case may be, taken together, shall constitute but one and the
same instrument.
-36-
SECTION 8.9 BINDING EFFECT, ASSIGNMENT.
The Loan Documents shall be binding upon and inure to the benefit of the
Borrower and the Bank and their respective successors and assigns, except that
the Borrower shall not have the right to assign its rights thereunder or any
interest therein without the prior written consent of the Bank.
SECTION 8.10 GOVERNING LAW.
The Loan Documents shall be governed by, and construed in accordance with, the
laws of the State of Minnesota.
SECTION 8.11 CONSENT TO JURISDICTION.
The Borrower irrevocably (i) agrees that any suit, action or other legal
proceeding arising out of or relating to this Agreement or any other Loan
Document may be brought in a court of record in Hennepin County in the State of
Minnesota or in the courts of the United States located in such State, (ii)
consents to the jurisdiction of each such court in any suit, action or
proceeding, (iii) waives any objection which it may have to the laying of venue
of any such suit, action or proceeding in any such courts and any claim that any
such suit, action or proceeding has been brought in an inconvenient forum, and
(iv) agrees that a final judgment in any such suit, action or proceeding shall
be conclusive and may be enforced in other jurisdictions by suit on the judgment
or in any other manner provided by law.
SECTION 8.12 WAIVER OF JURY TRIAL.
THE BORROWER AND THE BANK HEREBY WAIVE TRIAL BY JURY IN ANY JUDICIAL PROCEEDING
INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT,
CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH
THIS AGREEMENT AND THE NOTE OR THE RELATIONSHIPS ESTABLISHED HEREUNDER.
SECTION 8.13 SEVERABILITY OF PROVISIONS.
Any provision of this Agreement which is prohibited or unenforceable shall be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof.
SECTION 8.14 PRIOR AGREEMENTS.
This Agreement and the other Loan Documents and related documents described
herein restate and supersede in their entirety any and all prior agreements and
understandings, oral or written, between the Bank and the Borrower.
-37-
SECTION 8.15 HEADINGS.
Article and Section headings in this Agreement are included herein for
convenience of reference only and shall not constitute a part of this Agreement
for any other purpose.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective officers thereunto duly authorized
as of the date first above written.
Address: ANALYSTS INTERNATIONAL CORPORATION
0000 Xxxx 00xx Xxxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000-0000
Attention: Xxxxx X. Xxxxxxxxxxx
Telecopier: 000-000-0000 By
--------------------------------------
Xxxxx X. Xxxxxxxxxxx
Its Chief Financial Officer
Address: NORWEST BANK MINNESOTA,
0000 Xxxxxx Xxxxxx Xxxxx, Xxxxx 000 NATIONAL ASSOCIATION
Xxxxxxxxxxx, Xxxxxxxxx 00000-0000
Attention: Xxxxxxx X. Xxxxxxxx
Telecopier: 000-000-0000 By
--------------------------------------
Xxxxxxx X. Xxxxxxxx
Its Vice President
-38-
EXHIBITS AND SCHEDULES
Exhibit A Pricing Grid
Exhibit B Note
Exhibit C Form of Compliance Certificate
------------------------------
Schedule 4.4 Subsidiaries
Schedule 6.1 Permitted Liens
Schedule 6.2 Permitted Indebtedness
Schedule 6.3 Permitted Guaranties
EXHIBIT A
PRICING GRID
------------------- ---------------------------- -------------------- --------------------- --------------------
SUMMARY CRITERIA (CASH EURODOLLAR RATE
LEVEL FLOW LEVERAGE RATIO) BASE RATE MARGIN MARGIN UNUSED FEE
------------------- ---------------------------- -------------------- --------------------- --------------------
I < 1.00 0.00% 0.750% 0.175%
------------------- ---------------------------- -------------------- --------------------- --------------------
II 1.00 but < 1.50 0.00% 0.875% 0.250%
------------------- ---------------------------- -------------------- --------------------- --------------------
III 1.50 0.00% 1.050% 0.300%
------------------- ---------------------------- -------------------- --------------------- --------------------
"Level I Status" exists if, as of the date of determination,
the Cash Flow Leverage Ratio of the Borrower is less than 1.00 to 1.
"Level II Status" exists if, as of the date of determination,
the Cash Flow Leverage Ratio of the Borrower is 1.00 to 1 or greater, but less
than 1.50 to 1.
"Level III Status" exists if, as of the date of determination,
the Cash Flow Leverage Ratio of the Borrower is 1.50 to 1 or greater.
EXHIBIT B
PROMISSORY NOTE
$25,000,000 Minneapolis, Minnesota
January 31, 2000
For value received, Analysts International Corporation, a
Minnesota corporation (the "Borrower"), promises to pay to the order of Norwest
Bank Minnesota, National Association, a national banking association (the
"Bank"), at its main office in Minneapolis, Minnesota, or at such other place as
the holder hereof may hereafter from time to time designate in writing, in
lawful money of the United States of America and in immediately available funds,
the principal sum of Twenty-Five Million Dollars and No Cents ($25,000,000), or
so much thereof as is advanced by the Bank to the Borrower pursuant to the
Credit Agreement of even date herewith between the Borrower and the Bank
(together with all amendments, modifications and restatements thereof, the
"Credit Agreement"), and to pay interest on the principal balance of this Note
outstanding from time to time at the rate or rates determined pursuant to the
Credit Agreement.
This Note is issued pursuant to, and is subject to, the Credit
Agreement, which provides (among other things) for the amount and date of
payments of principal and interest required hereunder, for the acceleration of
the maturity hereof upon the occurrence of an Event of Default (as defined
therein) and for the voluntary prepayment hereof. This Note is the "Note," as
defined in the Credit Agreement.
The Borrower shall pay all costs of collection, including
reasonable attorneys' fees and legal expenses, if this Note is not paid when
due, whether or not legal proceedings are commenced.
Presentment or other demand for payment, notice of dishonor
and protest are expressly waived.
ANALYSTS INTERNATIONAL CORPORATION
By
-------------------------------------------
Xxxxx X. Xxxxxxxxxxx
Its Chief Financial Officer
EXHIBIT C
COMPLIANCE CERTIFICATE
--------------------------, ------
Norwest Bank Minnesota, National Association
0000 Xxxxxx Xxxxxx Xxxxx, Xxxxx 000
Xxxxxxxxxxx, Xxxxxxxxx 00000-0000
Attention: Xxxxxxx X. Xxxxxxxx
COMPLIANCE CERTIFICATE
Ladies and Gentlemen:
Reference is made to the Credit Agreement (the "Credit
Agreement") dated January 31, 2000 entered into between Norwest Bank Minnesota,
National Association and Analysts International 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 financial statements (the "Statements") as of
_____________________, 200__ (the "Effective 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. If the Effective Date is a Covenant Computation Date, the
following computations set forth the Borrower's compliance or
non-compliance with the requirements set forth in the
Financial Covenants as of the Effective Date:
ACTUAL REQUIRED
SECTION 5.9 CASH FLOW LEVERAGE RATIO
Total Funded Debt $___________
EBITDA $___________
Total Funded Debt:EBITDA __________________ 2.0:1
ACTUAL REQUIRED
SECTION 5.10 DEBT SERVICE COVERAGE RATIO
EBITDA
- Capital Expenditures $___________
- Taxes $___________
- Restricted Payments $___________
+ Permitted Restricted
Payments (Section 6.5(a)) $___________
= Debt Service Cash Flow (a) $___________
Debt Service Requirement
Principal Payments $___________
+Interest Payments $___________
=Total Debt Service
Requirements (b) $___________
Debt Service Coverage Ratio (a:b) __________________ 1.50:1
SECTION 5.11 CAPITALIZATION RATIO
Total Funded Debt (a) $___________
Total Funded Debt (b) $___________
Net Worth (c) $___________
Capitalization Ratio (a:(b+c)) __________________ 0.30:1
SECTION 6.13 CAPITAL EXPENDITURES
Capital Expenditures $___________________ < $5,000,000/
12 months
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
-------------------------------------------
SCHEDULE 4.4
SUBSIDIARIES
ENTITY JURISDICTION OF ORGANIZATION OWNERSHIP BY BORROWER
------ ---------------------------- ----------------------
AiC Analysts Ltd. United Kingdom 100%
SCHEDULE 6.1
PERMITTED LIENS
None
SCHEDULE 6.2
PERMITTED INDEBTEDNESS
Note Purchase Agreement dated December 30, 1998 for $20,000,000 7.00% Senior
Notes Due December 30, 2006.
SCHEDULE 6.3
PERMITTED GUARANTIES
None