EXHIBIT 10.20

 

SECOND AMENDMENT TO CREDIT AGREEMENT

 

THIS SECOND AMENDMENT TO CREDIT AGREEMENT (this “Amendment”) is entered into as
of June 30, 2002, by and between NORTHWEST PIPE COMPANY, an Oregon corporation
(“Borrower”), and WELLS FARGO BANK, NATIONAL ASSOCIATION (“Bank”).

 

RECITALS

 

WHEREAS, Borrower is currently indebted to Bank pursuant to the terms and
conditions of that certain Credit Agreement between Borrower and Bank dated as
of May 30, 2001, as amended from time to time (“Credit Agreement”).

 

WHEREAS, Bank and Borrower have agreed to certain changes in the terms and
conditions set forth in the Credit Agreement and have agreed to amend the Credit
Agreement to reflect said changes.

 

NOW, THEREFORE, for valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree that the Credit Agreement
shall be amended as follows:

 

1.             Section 1.1 (a) is hereby amended by deleting “June 30, 2003” as
the last day on which Bank will make advances under the Revolving Line of
Credit, and by substituting for said date “September 30, 2003,” with such change
to be effective upon the execution and delivery to Bank of a promissory note
substantially in the form of Exhibit ”A” attached hereto (which promissory note
shall replace and be deemed the Revolving Line of Credit Note defined in and
made pursuant to the Credit Agreement) and all other contracts, instruments and
documents required by Bank to evidence such change.

 

2.             Section 6.1 (g) is hereby deleted in its entirety, and the
following substituted therefor:

 

“There shall occur any material adverse change in the operations, business or
condition (including the financial condition) of the Borrower and Subsidiaries,
taken as a whole, after the date of this Agreement and at a time when the
outstanding principal balance of the Line of Credit (inclusive, without
limitation, of contingent letter of credit liabilities) exceeds 75% of the
maximum amount available under the Line of Credit.”

 

3.             Except as specifically provided herein, all terms and conditions
of the Credit Agreement remain in full force and effect, without waiver or
modification.  All terms defined in the Credit Agreement shall have the same
meaning when used in this Amendment.  This Amendment and the Credit Agreement
shall be read together, as one document.

 

4.             Borrower hereby remakes all representations and warranties
contained in the Credit Agreement and reaffirms all covenants set forth
therein.  Borrower further certifies that as of the date of this Amendment there
exists no Event of Default as defined in the Credit Agreement, nor any
condition, act or event which with the giving of notice or the passage of time
or both would constitute any such Event of Default.

 

UNDER OREGON LAW, MOST AGREEMENTS, PROMISES AND COMMITMENTS MADE BY BANK AFTER
OCTOBER 3, 1989 CONCERNING LOANS AND OTHER CREDIT EXTENSIONS WHICH ARE NOT FOR
PERSONAL, FAMILY OR HOUSEHOLD PURPOSES OR SECURED SOLELY BY THE BORROWER’S
RESIDENCE MUST BE IN WRITING, EXPRESS CONSIDERATION AND BE SIGNED BY BANK TO BE
ENFORCEABLE.

 

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed
as of the day and year first written above.

 

 

WELLS FARGO BANK,

 

NORTHWEST PIPE COMPANY

NATIONAL ASSOCIATION

 

 

By:

 

/s/ John Murakami

 

By:

 

/s/ S. Myers

 

 

VP - CFO

 

Stanton Myers, Vice President

 

2

--------------------------------------------------------------------------------

 

REVOLVING LINE OF CREDIT NOTE

 

$30,000,000.00

 

Portland, Oregon

 

 

June 30, 2002

 

FOR VALUE RECEIVED, the undersigned NORTHWEST PIPE COMPANY (“Borrower”) promises
to pay to the order of WELLS FARGO BANK, NATIONAL ASSOCIATION (“Bank”) at its
office at Portland RCBO, 1300 S.W. Fifth Avenue T-13, Portland, Oregon, or at
such other place as the holder hereof may designate, in lawful money of the
United States of America and in immediately available funds, the principal sum
of Thirty Million Dollars ($30,000,000.00), or so much thereof as may be
advanced and be outstanding, with interest thereon, to be computed on each
advance from the date of its disbursement as set forth herein.

 

DEFINITIONS:

 

As used herein, the following terms shall have the meanings set forth after
each, and any other term defined in this Note shall have the meaning set forth
at the place defined:

 

(a)           “Business Day” means any day except a Saturday, Sunday or any
other day on which commercial banks in Oregon are authorized or required by law
to close.

 

(b)           “Fixed Rate Term” means a period commencing on a Business Day and
continuing for 1, 2, 3 or 6 months, as designated by Borrower, during which all
or a portion of the outstanding principal balance of this Note bears interest
determined in relation to LIBOR; provided however, that no Fixed Rate Term may
be selected for a principal amount less than Two Hundred and Fifty Thousand
Dollars ($250,000.00); and provided further, that no Fixed Rate Term shall
extend beyond the scheduled maturity date hereof.  If any Fixed Rate Term would
end on a day which is not a Business Day, then such Fixed Rate Term shall be
extended to the next succeeding Business Day.

 

(c)           “LIBOR” means the rate per annum (rounded upward, if necessary, to
the nearest whole 1/8 of 1%) and determined pursuant to the following formula:

 

LIBOR =

Base LIBOR

 

 

100% - LIBOR Reserve Percentage

 

 

(i)            “Base LIBOR” means the rate per annum for United States dollar
deposits quoted by Bank as the Inter-Bank Market Offered Rate, with the
understanding that such rate is quoted by Bank for the purpose of calculating
effective rates of interest for loans making reference thereto, on the first day
of a Fixed Rate Term for delivery of funds on said date for a period of time
approximately equal to the number of days in such Fixed Rate Term and in an
amount approximately equal to the principal amount to which such Fixed Rate Term
applies.  Borrower understands and agrees that Bank may base its quotation of
the Inter-Bank Market Offered Rate upon such offers or other market indicators
of the Inter-Bank Market as Bank in its discretion deems appropriate including,
but not limited to, the rate offered for U.S. dollar deposits on the London
Inter-Bank Market.

 

(ii)           “LIBOR Reserve Percentage” means the reserve percentage
prescribed by the Board of Governors of the Federal Reserve System (or any
successor) for “Eurocurrency Liabilities” (as defined in Regulation D of the
Federal Reserve Board, as amended), adjusted by Bank for expected changes in
such reserve percentage during the applicable Fixed Rate Term.

 

(d)           “Prime Rate” means at any time the rate of interest most recently
announced within Bank at its principal office as its Prime Rate, with the
understanding that the Prime Rate is one of Bank’s base rates and serves as the
basis upon which effective rates of interest are calculated for those loans
making reference thereto, and is evidenced by the recording thereof after its
announcement in such internal publication or publications as Bank may designate.

 

3

--------------------------------------------------------------------------------

 

INTEREST:

 

(a)           Interest.  The outstanding principal balance of this Note shall
bear interest (computed on the basis of a 360-day year, actual days elapsed)
either (i) at a fluctuating rate per annum fifty hundredths percent (.50%) below
the Prime Rate in effect from time to time, or (ii) at a fixed rate per annum
determined by Bank to be one and one half percent above LIBOR in effect of the
first day of each Fixed Rate Term.  When interest is determined in relation to
the Prime Rate, each change in the rate of interest hereunder shall become
effective on the date each Prime Rate change is announced within Bank.  With
respect to each LIBOR selection hereunder, Bank is hereby authorized to note the
date, principal amount, interest rate and Fixed Rate Term applicable thereto and
any payments made thereon on Bank’s books and records (either manually or by
electronic entry) and/or on any schedule attached to this Note, which notations
shall be prima facie evidence of the accuracy of the information noted.

 

(b)           Selection of Interest Rate Options.  At any time any portion of
this Note bears interest determined in relation to LIBOR, it may be continued by
Borrower at the end of the Fixed Rate Term applicable thereto so that all or a
portion thereof bears interest determined in relation to the Prime Rate or to
LIBOR for a new Fixed Rate Term designated by Borrower.  At any time any portion
of this Note bears interest determined in relation to the Prime Rate, Borrower
may convert all or a portion thereof so that it bears interest determined in
relation to LIBOR for a Fixed Rate Term designated by Borrower.  At such time as
Borrower requests an advance hereunder or wishes to select a LIBOR option for
all or a portion of the outstanding principal balance hereof, and at the end of
each Fixed Rate Term, Borrower shall give Bank notice specifying: (i) the
interest rate option selected by Borrower; (ii) the principal amount subject
thereto; and (iii) for each LIBOR selection, the length of the applicable Fixed
Rate Term. Any such notice may be given by telephone (or such other electronic
method as Bank may permit) so long as, with respect to each LIBOR selection, (A)
if requested by Bank, Borrower provides to Bank written confirmation thereof not
later than three (3) Business Days after such notice is given, and (B) such
notice is given to Bank prior to 10:00 a.m. on the first day of the Fixed Rate
Term, or at a later time during any Business Day if Bank, at it’s sole option
but without obligation to do so, accepts Borrower’s notice and quotes a fixed
rate to Borrower.  If Borrower does not immediately accept a fixed rate when
quoted by Bank, the quoted rate shall expire and any subsequent LIBOR request
from Borrower shall be subject to a redetermination by Bank of the applicable
fixed rate.  If no specific designation of interest is made at the time any
advance is requested hereunder or at the end of any Fixed Rate Term, Borrower
shall be deemed to have made a Prime Rate interest selection for such advance or
the principal amount to which such Fixed Rate Term applied.

 

(c)           Taxes and Regulatory Costs.  Borrower shall pay to Bank
immediately upon demand, in addition to any other amounts due or to become due
hereunder, any and all (i) withholdings, interest equalization taxes, stamp
taxes or other taxes (except income and franchise taxes) imposed by any domestic
or foreign governmental authority and related in any manner to LIBOR, and (ii)
future, supplemental, emergency or other changes in the LIBOR Reserve
Percentage, assessment rates imposed by the Federal Deposit Insurance
Corporation, or similar requirements or costs imposed by any domestic or foreign
governmental authority or resulting from compliance by Bank with any request or
directive (whether or not having the force of law) from any central bank or
other governmental authority and related in any manner to LIBOR to the extent
they are not included in the calculation of LIBOR.  In determining which of the
foregoing are attributable to any LIBOR option available to Borrower hereunder,
any reasonable allocation made by Bank among its operations shall be conclusive
and binding upon Borrower.

 

(d)           Payment of Interest.  Interest accrued on this Note shall be
payable on the last day of each Month, commencing July 31, 2002.

 

(e)           Default Interest.  From and after the maturity date of this Note,
or such earlier date as all principal owing hereunder becomes due and payable by
acceleration or otherwise, the outstanding principal balance of this Note shall
bear interest until paid in full at an increased rate per annum (computed on the
basis of a 360-day year, actual days elapsed) equal to three percent (3%) above
the rate of interest from time to time applicable to the credit agreement dated
May 30, 2001.

 

BORROWING AND REPAYMENT:

 

(a)           Borrowing and Repayment.  Borrower may from time to time during
the term of this Note borrow, partially or wholly repay its outstanding
borrowings, and reborrow, subject to all of the limitations, terms and

 

4

--------------------------------------------------------------------------------

 

conditions of this Note and of any document executed in connection with or
governing this Note; provided however, that the total outstanding borrowings
under this Note shall not at any time exceed the principal amount stated above. 
The unpaid principal balance of this obligation at any time shall be the total
amounts advanced hereunder by the holder hereof less the amount of principal
payments made hereon by or for any Borrower, which balance may be endorsed
hereon from time to time by the holder.  The outstanding principal balance of
this Note shall be due and payable in full on September 30, 2003.

 

(b)           Advances.  Advances hereunder, to the total amount of the
principal sum stated above, may be made by the holder at the oral or written
request of (i) Paul Parsons, Mike Van Note, Al Rose or John Murakami, any one
acting alone, who are authorized to request advances and direct the disposition
of any advances until written notice of the revocation of such authority is
received by the holder at the office designated above, or (ii) any person, with
respect to advances deposited to the credit of any deposit account of any
Borrower, which advances, when so deposited, shall be conclusively presumed to
have been made to or for the benefit of each Borrower regardless of the fact
that persons other than those authorized to request advances may have authority
to draw against such account.  The holder shall have no obligation to determine
whether any person requesting an advance is or has been authorized by any
Borrower.

 

(c)           Application of Payments.  Each payment made on this Note shall be
credited first, to any interest then due and second, to the outstanding
principal balance hereof.  All payments credited to principal shall be applied
first, to the outstanding principal balance of this Note which bears interest
determined in relation to the Prime Rate, if any, and second, to the outstanding
principal balance of this Note which bears interest determined in relation to
LIBOR, with such payments applied to the oldest Fixed Rate Term first.

 

PREPAYMENT:

 

(a)           Prime Rate.  Borrower may prepay principal on any portion of this
Note which bears interest determined in relation to the Prime Rate at any time,
in any amount and without penalty.

 

(b)           LIBOR.  Borrower may prepay principal on any portion of this Note
which bears interest determined in relation to LIBOR at any time and in the
minimum amount of One Hundred Thousand Dollars ($100,000.00); provided however,
that if the outstanding principal balance of such portion of this Note is less
than said amount, the minimum prepayment amount shall be the entire outstanding
principal balance thereof.  In consideration of Bank providing this prepayment
option to Borrower, or if any such portion of this Note shall become due and
payable at any time prior to the last day of the Fixed Rate Term applicable
thereto by acceleration or otherwise, Borrower shall pay to Bank immediately
upon demand a fee which is the sum of the discounted monthly differences for
each month from the month of prepayment through the month in which such Fixed
Rate Term matures, calculated as follows for each such month:

 

(i)                                     Determine the amount of interest which
would have accrued each month on the amount prepaid at the interest rate
applicable to such amount had it remained outstanding until the last day of the
Fixed Rate Term applicable thereto.

 

(ii)                                  Subtract from the amount determined in (i)
above the amount of interest which would have accrued for the same month on the
amount prepaid for the remaining term of such Fixed Rate Term at LIBOR in effect
on the date of prepayment for new loans made for such term and in a principal
amount equal to the amount prepaid.

 

(iii)                               If the result obtained in (ii) for any month
is greater than zero, discount that difference by LIBOR used in (ii) above.

 

Each Borrower acknowledges that prepayment of such amount may result in Bank
incurring additional costs, expenses and/or liabilities, and that it is
difficult to ascertain the full extent of such costs, expenses and/or
liabilities.  Each Borrower, therefore, agrees to pay the above–described
prepayment fee and agrees that said amount represents a reasonable estimate of
the prepayment costs, expenses and/or liabilities of Bank.  If Borrower fails to
pay any prepayment fee when due, the amount of such prepayment fee shall
thereafter bear interest until paid at a rate per annum two percent (2.00%)
above the Prime Rate in effect from time to time (computed on the basis of a
360–day

 

5

--------------------------------------------------------------------------------

 

year, actual days elapsed).  Each change in the rate of interest on any such
past due prepayment fee shall become effective on the date each Prime Rate
change is announced within Bank.

 

EVENTS OF DEFAULT:

 

This Note is made pursuant to and is subject to the terms and conditions of that
certain Credit Agreement between Borrower and Bank dated as of May 30th, 2001,
as amended from time to time (the “Credit Agreement”).  Any default in the
payment or performance of any obligation under this Note, after the expiration
of any applicable notice or cure periods as may be provided in the Credit
Agreement, or any defined event of default under the Credit Agreement, shall
constitute an “Event of Default” under this Note.

 

MISCELLANEOUS:

 

(a)           Remedies.  Upon the occurrence of any Event of Default, the holder
of this Note, at the holder’s option, may declare all sums of principal and
interest outstanding hereunder to be immediately due and payable without
presentment, demand, notice of nonperformance, notice of protest, protest or
notice of dishonor, all of which are expressly waived by each Borrower, and the
obligation, if any, of the holder to extend any further credit hereunder shall
immediately cease and terminate.  Each Borrower shall pay to the holder
immediately upon demand the full amount of all payments, advances, charges,
costs and expenses, including reasonable attorneys’ fees (to include outside
counsel fees and all allocated costs of the holder’s in–house counsel), expended
or incurred by the holder in connection with the enforcement of the holder’s
rights and/or the collection of any amounts which become due to the holder under
this Note, and the prosecution or defense of any action in any way related to
this Note, including without limitation, any action for declaratory relief,
whether incurred at the trial or appellate level, in an arbitration proceeding
or otherwise, and including any of the foregoing incurred in connection with any
bankruptcy proceeding (including without limitation, any adversary proceeding,
contested matter or motion brought by Bank or any other person) relating to any
Borrower or any other person or entity.

 

(b)           Obligations Joint and Several.  Should more than one person or
entity sign this Note as a Borrower, the obligations of each such Borrower shall
be joint and several.

 

(c)           Governing Law.  This Note shall be governed by and construed in
accordance with the laws of the State of Oregon.

 

UNDER OREGON LAW, MOST AGREEMENTS, PROMISES AND COMMITMENTS MADE BY BANK AFTER
OCTOBER 3, 1989 CONCERNING LOANS AND OTHER CREDIT EXTENSIONS WHICH ARE NOT FOR
PERSONAL, FAMILY OR HOUSEHOLD PURPOSES OR SECURED SOLELY BY THE BORROWER’S
RESIDENCE MUST BE IN WRITING, EXPRESS CONSIDERATION AND BE SIGNED BY BANK TO BE
ENFORCEABLE.

 

IN WITNESS WHEREOF, the undersigned has executed this Note as of the date first
written above.

 

NORTHWEST PIPE COMPANY

 

 

 

By:

 

 /s/ John Murakami

 

 

 

 

Title:

VP - CFO

 

 

ADDENDUM TO PROMISSORY NOTE

(LIBOR PRICING ADJUSTMENTS)

 

THIS ADDENDUM is attached to and made a part of that certain promissory note
executed by NORTHWEST PIPE COMPANY (“Borrower”) and payable to WELLS FARGO BANK,
NATIONAL ASSOCIATION (“Bank”), or order, dated as of June 30, 2002, in the
principal amount of Thirty Million Dollars ($30,000,000.00) (the “Note”).

 

6

--------------------------------------------------------------------------------

 

The following provisions are hereby incorporated into the Note to reflect the
interest rate adjustments agreed to by Bank and Borrower:

 

INTEREST RATE ADJUSTMENTS:

 

(a)           Initial LIBOR Margin.  The initial LIBOR margin applicable to this
Note shall be as set forth in the “Interest” paragraph herein.

 

(b)           LIBOR Rate Adjustments.  Bank shall adjust the LIBOR margin used
to determine the rate of interest applicable to LIBOR options selected by
Borrower under this Note on a quarterly basis, commencing with Borrower’s fiscal
quarter ending June 30, 2002, if required to reflect a change in Borrower’s
ratio of Total Liabilities to Tangible Net Worth (as defined in the Credit
Agreement referenced herein), in accordance with the following grid:

 

Funded Debt to
EBITDA

 

Applicable
LIBOR
Margin

 

 

 

 

 

2.50 to 1.0 or greater

 

2.00

%

 

 

 

 

at least 2.00 to 1.0 but equal to or less than 2.50 to 1.0

 

1.50

%

 

 

 

 

at least 1.5 to 1.0 but equal to or less than 2.00 to 1.0

 

1.25

%

 

 

 

 

Equal to or less than 1.5 to 1.0

 

1.00

%

 

Each such adjustment shall be effective on the first Business Day of Borrower’s
fiscal quarter following the quarter during which Bank receives and reviews
Borrower’s most current quarter-end financial statements in accordance with any
requirements established by Bank for the preparation and delivery thereof.

 

IN WITNESS WHEREOF, this Addendum has been executed as of the same date as the
Note.

 

NORTHWEST PIPE COMPANY

 

 

 

By:

 

/s/ John Murakami

 

 

 

 

Title:

VP - CFO

 

 

7

--------------------------------------------------------------------------------