EIGHTH AMENDMENT TO CREDIT AGREEMENT
Exhibit
99.2
EIGHTH
AMENDMENT TO CREDIT AGREEMENT
This
Eighth Amendment to Credit Agreement (this "Amendment") is dated as of January
20, 2006, and is by and among General Electric Capital Corporation, a Delaware
corporation, individually as a Lender and as Agent and Security Trustee for
the
Lenders, and Analysts International Corporation, a Minnesota corporation
("Borrower").
W
I T
N E S S E T H:
WHEREAS,
pursuant to a certain Credit Agreement dated as of April 11, 2002, by and among
General Electric Capital Corporation, a Delaware corporation, individually
as a
Lender and as Agent and Security Trustee for the Lenders, the other Credit
Parties signatory from time to time thereto, and Borrower (as amended or
otherwise modified from time to time, the "Credit Agreement"; capitalized terms
used herein and not otherwise defined herein shall have the meaning ascribed
to
such terms in the Credit Agreement), Agent and Lenders agreed, subject to the
terms and provisions thereof, to provide certain loans and other financial
accommodations to Borrower;
WHEREAS,
Borrower has requested that Agent and Lenders agree to amend the Credit
Agreement in certain respects, as set forth below.
NOW,
THEREFORE, in consideration of the premises and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the
parties hereto agree as follows:
1. Amendments.
(a) Section
1.3
of the
Credit Agreement is hereby amended by amending and restating clause (a) thereof
in its entirety, as follows:
"(a) Voluntary
Reductions in Revolving Loan Commitments.
Borrower may at any time on at least 5 days' prior written notice to Agent
permanently reduce (but not terminate) the Revolving Loan Commitment;
provided
that
(A) any such reductions shall be in a minimum amount of $5,000,000 and
integral multiples of $250,000 in excess of such amount, (B) the Revolving
Loan Commitment shall not be reduced to an amount less than the amount of the
Revolving Loan outstanding, and (C) after giving effect to such reductions,
Borrower shall comply with Section
1.3(b)(i).
Borrower may at any time on at least ten 10 days' prior written notice to Agent
terminate the Revolving Loan Commitment, provided
that
upon such termination all Loans and other Obligations shall be immediately
due
and payable in full and all Letter of Credit Obligations shall be cash
collateralized or otherwise satisfied in accordance with Annex B
hereto.
Any voluntary reduction or termination of the Revolving Loan Commitment must
be
accompanied by payment of the applicable Fee required by the GE Capital Fee
Letter, if any, plus the payment of any LIBOR funding breakage costs in
accordance with Section
1.13(b).
Upon
any such reduction or termination of the Revolving Loan Commitment, Borrower's
right to request Revolving Credit Advances, or request that Letter of Credit
Obligations be incurred on its behalf, or request Swing Line Advances, shall
simultaneously be permanently reduced or terminated, as the case may be;
provided
that a
permanent reduction of the Revolving Loan Commitment shall require a
corresponding pro rata reduction in the L/C Sublimit.
(b) Section
1.6
of the
Credit Agreement is hereby amended by amending and restating clause (i) of
clause (k) thereof, as follows:
"(i) the
Account is not paid within 90 days (increased to the earlier of 120 days past
invoice date and 90 days past due date, where either IBM Corporation is the
Account Debtor, or where any other Person rated BBB- or higher by Standard
&
Poor's Corporation, or a comparable rating from any other nationally recognized
rating agency, is the Account Debtor, and such Person is approved in writing
by
Agent for extended payment terms for purposes of this clause (i)) following
its
original invoice date;"
(c) Section
1.6
of the
Credit Agreement is hereby amended by amending and restating clause (q) thereof,
as follows:
"(q) to
the
extent that such Account, together with all other Accounts owing by such Account
Debtor and its Affiliates as of any date of determination, exceed 10% of all
Accounts (increased to (x) 20% of all Accounts in the case of IBM Corporation
and its Affiliates, but not to exceed $15,000,000 with respect to all
outstanding Eligible Accounts at any time outstanding for which IBM Corporation
or any of its Affiliates is the Account Debtor and (y) 15% of all Accounts
in
the case of up to two Account Debtors, other than IBM Corporation, rated BBB-
or
higher by Standard & Poor's Corporation, or a comparable rating from any
other nationally recognized rating agency);"
(d) Sections
3.2, 3.5, 3.6, 3.7, 3.8, 3.11, 3.13, 3.15, 3.17, 3.18, 3.19, 3.20,
3.21
and
3.22
of the
Credit Agreement are hereby amended by deleting each reference to "Closing
Date"
therein and inserting in each instance a reference to "Eighth Amendment
Effective Date" in lieu thereof.
(e) A
new
Section
3.24
is
hereby added to the Credit Agreement immediately after Section
3.23
to read
as follows:
| 3.24 |
Bonding;
Licenses.
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Except
as
set forth on Disclosure
Schedule (3.24),
as of
the Eighth Amendment Effective Date, no Credit Party is a party to or bound
by
any surety bond agreement or bonding requirement that is in effect with respect
to either (x) products or services sold by it or (y) any trademark or patent
license agreement with respect to products sold by it.
(f) Section
5.6
of the
Credit Agreement is hereby amended by deleting the reference therein to "the
Closing Date" and inserting a reference to "the Closing Date or the Eighth
Amendment Effective Date" in lieu thereof.
(g) Section
6.3(a)
of the
Credit Agreement is hereby amended by deleting clause (vi) therein in its
entirety.
(h) Section
6.4(a)
of the
Credit Agreement is hereby amended by deleting the reference therein to "the
date hereof" and inserting a reference to "the Eighth Amendment Effective Date"
in lieu thereof.
(i) Section
6.7
of the
Credit Agreement is hereby amended by (i) deleting the reference to "the date
hereof" in clause (b) in the first sentence thereof and inserting a reference
to
"the Eighth Amendment Effective Date" in lieu thereof and (ii) deleting clause
(c) in the first sentence thereof in its entirety and inserting the following
in
lieu thereof:
"(c)
Liens created after the date hereof by conditional sale or other title retention
agreements (including Capital Leases) or in connection with purchase money
Indebtedness with respect to Equipment and Fixtures acquired by any Credit
Party
in the ordinary course of business, involving the incurrence of an aggregate
amount of purchase money Indebtedness and Capital Lease Obligations of not
more
than the sum of (i) Qualifying Hardware Reseller Indebtedness plus (ii)
$3,000,000 outstanding at any one time for all such Liens (provided
that
such Liens attach only to the assets subject to such purchase money debt and
such Indebtedness is incurred within 20 days following such purchase and does
not exceed 100% of the purchase price of the subject assets)."
(j) Section
6.14
of the
Credit Agreement is hereby amended by deleting the reference to "or Section
6.22"
in
clause (c) thereof.
(k) Section
6.22
of the
Credit Agreement is hereby deleted in its entirety.
(l) Exhibit
4.1(b)
to the
Credit Agreement (Borrowing Base Certificate) shall be deemed amended to give
effect to the amendments to Section
1.6
of the
Credit Agreement.
(m) Annex
A
to the
Credit Agreement (Definitions) is hereby amended by deleting the date "October
31, 2006" set forth in the definition of "Commitment Termination Date", and
by
inserting in lieu thereof the date "January 20, 2010".
(n) Annex
A
to the
Credit Agreement (Definitions) is hereby amended to add the following defined
terms in proper alphabetical order:
"EBITDA"
means,
with respect to any Person for any fiscal period, without duplication, an amount
equal to (a) consolidated net income of such Person for such period, determined
in accordance with GAAP, minus
(b) the
sum of (i) income tax credits, (ii) interest income, (iii) gain from
extraordinary items for such period, (iv) any aggregate net gain (but not any
aggregate net loss) during such period arising from the sale, exchange or other
disposition of capital assets by such Person (including any fixed assets,
whether tangible or intangible, all inventory sold in conjunction with the
disposition of fixed assets and all securities), and (v) any other non-cash
gains that have been added in determining consolidated net income, in each
case
to the extent included in the calculation of consolidated net income of such
Person for such period in accordance with GAAP, excluding for purposes of this
clause (v), any such non-cash items to the extent it represents a reversal
of an
accrual or reserve for potential cash item in any prior period), but without
duplication, plus
(c) the
sum of (i) any provision for income taxes, (ii) Interest Expense, (iii) loss
from extraordinary items for such period, (iv) depreciation and amortization
for
such period, (v) amortized debt discount for such period, (vi) the amount of
any
deduction to consolidated net income as the result of any grant to any members
of the management of such Person of any Stock, and (vii) to the extent
occurring during Fiscal Year 2005, the amounts described on Disclosure
Schedule A-1,
pertaining to non-recurring charges incurred in connection with
(A) corporate restructurings, (B) headcount reductions, (C) severance
charges, (D) impairment of goodwill and other intangible assets or (E)
losses related to the failed merger with Computer Horizons (but in any
event excluding any such items to the extent they represent a payment or accrual
for a breakup fee or other reimbursement as a result of such failed merger).
For
purposes of this definition, the following items shall be excluded in
determining consolidated net income of a Person: (1) the income (or deficit)
of
any other Person accrued prior to the date it became a Subsidiary of, or was
merged or consolidated into, such Person or any of such Person's Subsidiaries;
(2) the income (or deficit) of any other Person (other than a Subsidiary) in
which such Person has an ownership interest, except to the extent any such
income has actually been received by such Person in the form of cash dividends
or distributions; (3) the undistributed earnings of any Subsidiary of such
Person to the extent that the declaration or payment of dividends or similar
distributions by such Subsidiary is not at the time permitted by the terms
of
any contractual obligation or requirement of law applicable to such Subsidiary;
(4) any restoration to income of any contingency reserve, except to the extent
that provision for such reserve was made out of income accrued during such
period; (5) any write-up of any asset; (6) any net gain from the collection
of
the proceeds of life insurance policies; (7) any net gain arising from the
acquisition of any securities, or the extinguishment, under GAAP, of any
Indebtedness, of such Person; (8) in the case of a successor to such Person
by
consolidation or merger or as a transferee of its assets, any earnings of such
successor prior to such consolidation, merger or transfer of assets; and (9)
any
deferred credit representing the excess of equity in any Subsidiary of such
Person at the date of acquisition of such Subsidiary over the cost to such
Person of the investment in such Subsidiary.
"Eighth
Amendment"
means
that certain Eighth Amendment to Credit Agreement dated as of the Eighth
Amendment Effective Date between Borrower and GE Capital, individually as a
Lender, as Agent and as Security Trustee.
"Eighth
Amendment Effective Date"
means
January 20, 2006.
"Fixed
Charges"
means,
with respect to any Person for any fiscal period, (a) the aggregate of all
Interest Expense paid or accrued during such period, plus
(b)
scheduled payments of principal with respect to Indebtedness during such period,
plus
(c)
Capital Expenditures during such period (other than that portion of such Capital
Expenditures financed by lenders other than the Lenders hereunder), plus
(d)
income taxes paid or payable in cash with respect to such fiscal period.
"Fixed
Charge Coverage Ratio"
means,
with respect to any Person for any fiscal period, the ratio of EBITDA to Fixed
Charges.
"Funded
Debt"
means,
with respect to any Person, without duplication, all Indebtedness for borrowed
money evidenced by notes, bonds, debentures, or similar evidences of
Indebtedness and that by its terms matures more than one year from, or is
directly or indirectly renewable or extendible at such Person's option under
a
revolving credit or similar agreement obligating the lender or lenders to extend
credit over a period of more than one year from the date of creation thereof,
and specifically including Capital Lease Obligations, current maturities of
long-term debt, revolving credit and short-term debt extendible beyond one
year
at the option of the debtor, and also including, in the case of Borrower, the
Obligations and, without duplication, Guaranteed Indebtedness consisting of
guaranties of Funded Debt of other Persons.
"Interest
Expense"
means,
with respect to any Person for any fiscal period, interest expense (whether
cash
or non-cash) of such Person determined in accordance with GAAP for the relevant
period ended on such date, including interest expense with respect to any Funded
Debt of such Person and interest expense for the relevant period that has been
capitalized on the balance sheet of such Person.
"Qualifying
Hardware Reseller Indebtedness"
means
any Indebtedness incurred by Borrower in connection with a purchase of Equipment
by Borrower for
resale to a customer of Borrower in favor of the vendor of such Equipment that
is indefeasibly paid in full within 30 days of the original acquisition by
Borrower of such Equipment.
(o) Annex
B
to the
Credit Agreement (Letters of Credit) is hereby amended by deleting the clause
"3% per annum", set forth in paragraph (d) thereof, and by inserting in lieu
thereof the clause "2% per annum".
(p) Annex
G
to the
Credit Agreement (Financial Covenants) is hereby amended by inserting the clause
"(increased to $3,500,000, solely with respect to Fiscal Year 2005)" immediately
following the clause "of more than $3,000,000 in the aggregate during any Fiscal
Year", set forth in clause (a) thereof.
(q) Annex
G
to the
Credit Agreement (Financial Covenants) is hereby amended by amending and
restating clause (c) thereof in its entirety, as follows:
"(c) Minimum
Fixed Charge Coverage Ratio.
In the
event that, following termination of the Collection Reserve in accordance with
the terms of the Eighth Amendment, average daily Borrowing Availability for
any
Fiscal Month (the "Trigger Month") is less than $7,000,000, then Borrower and
its Subsidiaries shall have on a consolidated basis at the end of each Fiscal
Month, commencing with the Trigger Month, a Fixed Charge Coverage Ratio for
the
twelve (12) Fiscal Month period then ended of not less than 1.0 to
1.0."
(r) The
Disclosure Schedules (other than Disclosure Schedules 1.4, 3.4(A), 3.4(B),
3.4(C) and 5.1) to the Credit Agreement are hereby amended and restated as
set
forth on Exhibit
A
hereto.
(s) Disclosure
Schedule A-1 is hereby added to the Credit Agreement, as set forth on
Exhibit
A
hereto.
2. Collection
Reserve.
Pursuant to the Loan Documents, Agent established, prior to the date hereof,
a
Collection Reserve in the amount of $3,200,000. Agent hereby agrees that if
Borrower and its Subsidiaries timely deliver to Agent Financial Statements
for
Borrower and its Subsidiaries evidencing a Fixed Charge Coverage Ratio for
any
period of twelve (12) consecutive Fiscal Months, commencing with the twelve
(12)
Fiscal Month period ending on the first Fiscal Month following the date of
this
Amendment, of 1.15 to 1.0 or greater, then Agent shall promptly terminate the
Collection Reserve (without limitation of Agent's rights to establish and adjust
Reserves).
3. Conditions
Precedent.
The
effectiveness of the consents and amendments contemplated hereby is subject
to
the prior receipt by Agent of each of the following documents and agreements,
each in form and substance acceptable to Agent in its sole
discretion:
(a) Agent
shall have received a fully executed copy of this Amendment;
(b) Agent
shall have received copies of the agreements, documents and instruments set
forth on the Closing Checklist, attached hereto as Exhibit
B,
each
fully executed, as applicable, and each in form and substance reasonably
acceptable to Agent;
(c) No
Default or Event of Default shall have occurred and be continuing;
and
(d) All
proceedings taken in connection with the transactions contemplated by this
Amendment and all agreements, documents, instruments and other legal matters
incident thereto shall be satisfactory to Agent and its legal
counsel.
4. Representations
and Warranties.
To
induce Agent to enter into this Amendment, the Borrower hereby represents and
warrants to Agent that:
(a) The
execution, delivery and performance by each Credit Party of this Amendment
and
each other agreement and document contemplated hereby are within their corporate
or limited liability company power, have been duly authorized by all necessary
corporate or limited liability company action, have received all necessary
governmental approval (if any shall be required), and do not and will not
contravene or conflict with any provision of law applicable to any Credit Party,
the articles of incorporation, articles of organization, by-laws or operating
agreement of any Credit Party, any order, judgment or decree of any court or
governmental agency, or any agreement, instrument or document binding upon
any
Credit Party or any of their respective properties;
(b) Each
of
the Credit Agreement, the other Loan Documents, and each other agreement and
document contemplated hereby is the legal, valid and binding obligation of
the
applicable Credit Party, enforceable against such Credit Party in accordance
with their terms, except as such enforceability may be limited by applicable
bankruptcy, reorganization, moratorium, fraudulent transfer or other similar
laws affecting creditors' rights generally or by principles governing the
availability of equitable remedies;
(c) The
representations and warranties contained in the Credit Agreement and the other
Loan Documents are true and accurate as of the date hereof with the same force
and effect as if such had been made on and as of the date hereof;
(d) Each
Credit Party has performed all of its obligations under the Credit Agreement
and
the Loan Documents to be performed by it on or before the date hereof and as
of
the date hereof, each Credit Party is in compliance with all applicable terms
and provisions of the Credit Agreement and each of the Loan Documents to be
observed and performed by it and, except to the extent otherwise waived by
the
provisions hereof, no Event of Default or other event which, upon notice or
lapse of time or both, would constitute an Event of Default, has
occurred.
5. Amendment
Fee.
Borrower hereby agrees to pay to Agent a fee in respect of the transactions
contemplated pursuant to this Amendment in the amount of $25,000, which amount
shall be fully earned as of the date hereof.
6. Reaffirmation.
Each
of
Medical Concepts Staffing, Inc., a Minnesota corporation ("MCS"), Analysts
International Management Services, LLC, a Minnesota limited liability company
("AIMS"), Analysts International Business Solution Services, LLC, a Minnesota
limited liability company ("AIBSS"), Analysts International Business Resource
Services, LLC, a Minnesota limited liability company ("AIBRS") and Analysts
International Strategic Sourcing Services, LLC, a Minnesota limited liability
company ("AISSS"; AIMS, AIBSS, AIBRS and AISSS are collectively the "Staffing
Subsidiaries" and each a "Staffing Subsidiary") hereby consents to Borrower's
execution and delivery of this Amendment and agrees to be bound hereby. MCS
hereby affirms that nothing contained herein shall modify in any respect
whatsoever its obligations under the Loan Documents, including, without
limitation, its guaranty of the obligations of Borrower to Agent and Lenders
pursuant to the terms of that certain Guaranty, dated as of April 7, 2003 (the
"MCS Guaranty"), executed by MCS in favor of Agent and Lenders and reaffirms
that the MCS Guaranty is and shall continue to remain in full force and effect.
Each Staffing Subsidiary hereby affirms that nothing contained herein shall
modify in any respect whatsoever its obligations under the Loan Documents,
including, without limitation, its guaranty of the obligations of Borrower
to
Agent and Lenders pursuant to the Guaranty, dated December 31, 2003, executed
by
such Staffing Subsidiary in favor of Agent and Lenders and reaffirms that such
Guaranty is and shall continue to remain in full force and effect. Although
MCS
and each Staffing Subsidiary has been informed of the matters set forth herein
and has acknowledged and agreed to same, such Person understands that Agent
and
Lenders have no obligation to inform any such Person of such matters in the
future or to seek any such Person's acknowledgment or agreement to future
consents or waivers, and nothing herein shall create such a duty.
7. Counterparts.
This
Amendment may be executed in any number of counterparts and by the different
parties on separate counterparts, and each such counterpart shall be deemed
to
be an original, but all such counterparts shall together constitute but one
and
the same Amendment.
8. Continued
Effectiveness.
Except
as amended hereby, the Credit Agreement and each of the Loan Documents shall
continue in full force and effect according to its terms.
9. Costs
and Expenses.
Borrower hereby agrees that all expenses incurred by Agent in connection with
the preparation, negotiation and closing of the transactions contemplated
hereby, including, without limitation, reasonable attorneys' fees and expenses,
shall be part of the Obligations.
10. Governing
Law.
This
Amendment shall be a contract made under and governed by the internal laws
of
the State of Illinois.
[REMAINDER
OF PAGE LEFT INTENTIONALLY BLANK]
IN
WITNESS WHEREOF, this Amendment has been executed as of the day and year first
written above.
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ANALYSTS
INTERNATIONAL CORPORATION
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By
______________________________________
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Its
______________________________________
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MEDICAL
CONCEPTS STAFFING, INC.
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By
______________________________________
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Its
______________________________________
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ANALYSTS
INTERNATIONAL MANAGEMENT
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SERVICES,
LLC
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By
______________________________________
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Its
______________________________________
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ANALYSTS
INTERNATIONAL BUSINESS
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SOLUTION
SERVICES, LLC
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By
______________________________________
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Its
______________________________________
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ANALYSTS
INTERNATIONAL BUSINESS
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RESOURCE
SERVICES, LLC
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By
______________________________________
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Its
______________________________________
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ANALYSTS
INTERNATIONAL STRATEGIC
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SOURCING
SERVICES, LLC
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By
______________________________________
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Its
______________________________________
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GENERAL
ELECTRIC CAPITAL CORPORATION,
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As
Agent, Security Trustee and Lender
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By
_______________________________________
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An Authorized Signatory
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