BANK OF AMERICA
U.S. BANK
NORTHWEST PIPE COMPANY
THOMPSON PIPE AND STEEL COMPANY
THOMPSON STEEL PIPE COMPANY
AMENDED AND RESTATED
LOAN AGREEMENT
Dated: June 30, 1998
TABLE OF CONTENTS
ARTICLE 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
Section 1.1 Certain Defined Terms.. . . . . . . . . . . . . . . . . . . . . . . .2
Section 1.2 General Principles Applicable to Definitions... . . . . . . . . . . 11
Section 1.3 Accounting Terms... . . . . . . . . . . . . . . . . . . . . . . . . 11
ARTICLE 2. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 2.1 Revolving Loans.. . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 2.2 Manner of Borrowing . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 2.3 Agent's Right to Fund . . . . . . . . . . . . . . . . . . . . . . . 12
Section 2.4 Repayment of Principal. . . . . . . . . . . . . . . . . . . . . . . 13
Section 2.5 Optional Conversion of up to $10,000,000 of Revolving Loans.. . . . 13
Section 2.6 Interest on Loans.. . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 2.7 Prepayments.. . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 2.8 Manner of Payments. . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 2.9 Fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 2.10 Sharing of Payments, Etc.. . . . . . . . . . . . . . . . . . . . . 18
Section 2.11 Application of Payments. . . . . . . . . . . . . . . . . . . . . . 18
ARTICLE 3. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 3.1 Conditions to Loans . . . . . . . . . . . . . . . . . . . . . . . . 19
ARTICLE 4. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 4.1 Corporate Existence and Power . . . . . . . . . . . . . . . . . . . 20
Section 4.2 Corporate Authorization . . . . . . . . . . . . . . . . . . . . . . 20
Section 4.3 Government Approvals, Etc.. . . . . . . . . . . . . . . . . . . . . 21
Section 4.4 Binding Obligations, Etc. . . . . . . . . . . . . . . . . . . . . . 21
Section 4.5 Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 4.6 Financial Condition . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 4.7 Title, Liens and Environmental Matters. . . . . . . . . . . . . . . 21
Section 4.8 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 4.9 Laws, Orders, Other Agreements. . . . . . . . . . . . . . . . . . . 22
Section 4.10 Federal Reserve Regulations. . . . . . . . . . . . . . . . . . . . 22
Section 4.11 Year 2000 Compliance . . . . . . . . . . . . . . . . . . . . . . . 22
Section 4.12 ERISA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 4.13 Investment Company; Public Utility Holding Company . . . . . . . . 23
Section 4.14 Solvency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 4.15 Representations as a Whole . . . . . . . . . . . . . . . . . . . . 24
ARTICLE 5. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 5.1 Use of Proceeds from Loans/Use of Letters of Credit . . . . . . . . 24
Section 5.2 Preservation of Corporate Existence, Etc. . . . . . . . . . . . . . 24
Section 5.3 Visitation and Examination Rights . . . . . . . . . . . . . . . . . 25
Section 5.4 Keeping of Books and Records. . . . . . . . . . . . . . . . . . . . 25
Section 5.5 Maintenance of Property, Etc. . . . . . . . . . . . . . . . . . . . 25
Section 5.6 Compliance with Laws, Etc.. . . . . . . . . . . . . . . . . . . . . 25
Section 5.7 Other Obligations . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 5.8 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 5.9 Financial Information . . . . . . . . . . . . . . . . . . . . . . . 26
Section 5.10 Notification . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 5.11 Additional Payments; Additional Acts . . . . . . . . . . . . . . . 27
Section 5.12 Minimum Debt Service Coverage Ratio. . . . . . . . . . . . . . . . 28
Section 5.13 Maximum Funded Debt to EBITDA. . . . . . . . . . . . . . . . . . . 29
Section 5.14 Minimum Tangible Net Worth . . . . . . . . . . . . . . . . . . . . 29
ARTICLE 6. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 6.1 Restriction on Borrowings, Capital Leases and Contract
Purchases. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 6.2 Liquidation, Merger, Sale of Assets . . . . . . . . . . . . . . . . 29
Section 6.3 Restrictions on Liens - Negative Pledge . . . . . . . . . . . . . . 29
Section 6.4 Guaranties, Etc.. . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 6.5 Restrictions on Loans and Advances. . . . . . . . . . . . . . . . . 31
Section 6.6 Restriction on Acquisitions . . . . . . . . . . . . . . . . . . . . 31
Section 6.7 Change in Business. . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 6.8 ERISA Compliance. . . . . . . . . . . . . . . . . . . . . . . . . . 31
ARTICLE 7. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 7.1 Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 7.2 Consequences of Default . . . . . . . . . . . . . . . . . . . . . . 34
ARTICLE 8. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 8.1 Authorization and Action. . . . . . . . . . . . . . . . . . . . . . 34
Section 8.2 Duties and Obligations. . . . . . . . . . . . . . . . . . . . . . . 35
Section 8.3 Dealings Between Agent and Borrowers. . . . . . . . . . . . . . . . 36
Section 8.4 Lender Credit Decision. . . . . . . . . . . . . . . . . . . . . . . 36
Section 8.5 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 8.6 Successor Agent . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 8.7 Independent Determination for Funding and Closing . . . . . . . . . 37
ARTICLE 9. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 9.1 Letters of Credit . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 9.2 Manner of Requesting Letters of Credit. . . . . . . . . . . . . . . 38
Section 9.3 Indemnification; Increased Costs. . . . . . . . . . . . . . . . . . 39
Section 9.4 Payment by Borrowers. . . . . . . . . . . . . . . . . . . . . . . . 38
Section 9.5 Sale of Risk Participations . . . . . . . . . . . . . . . . . . . . 39
Section 9.6 Procedure for Participations. . . . . . . . . . . . . . . . . . . . 39
Section 9.7 Payment Obligations.. . . . . . . . . . . . . . . . . . . . . . . . 39
ARTICLE 10 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Section 10.1 Bank of America Secured Letter of Credit Facility. . . . . . . . . 41
Section 10.2 Northwest Pipe Company Security. . . . . . . . . . . . . . . . . . 41
Section 10.3 Cross-Default. . . . . . . . . . . . . . . . . . . . . . . . . . . 41
ARTICLE 11 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Section 11.1 No Waiver; Remedies Cumulative . . . . . . . . . . . . . . . . . . 41
Section 11.2 Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Section 11.3 Mandatory Arbitration. . . . . . . . . . . . . . . . . . . . . . . 42
Section 11.4 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Section 11.5 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . 42
Section 11.6 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Section 11.7 Additional Lenders . . . . . . . . . . . . . . . . . . . . . . . . 43
Section 11.8 Joint and Several Liability; Reason for Execution. . . . . . . . . 43
Section 11.9 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Section 11.10 Executed in Counterparts . . . . . . . . . . . . . . . . . . . . . 43
Section 11.11 Entire Agreement; Amendment, Waiver. . . . . . . . . . . . . . . . 43
Section 11.12 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Section 11.13 Waiver of Jury Trial . . . . . . . . . . . . . . . . . . . . . . . 44
Section 11.14 Certain Agreements Not Enforceable . . . . . . . . . . . . . . . . 44
AMENDED AND RESTATED LOAN AGREEMENT
This Amended and Restated Loan Agreement ("Agreement") is made as of June
30, 1998, by and among the following parties:
Bank of America National Trust and Savings Association ("Bank of America"
and a "Lender")
U.S. Bank National Association ("U.S. Bank" and a "Lender")
Each of the several financial institutions which subsequently become a
party to this Agreement pursuant to Section 11.7 (each individually a "Lender")
Bank of America National Trust and Savings Association, in its capacity as
Agent ("Agent")
Northwest Pipe Company, an Oregon corporation (a "Borrower")
Thompson Pipe and Steel Company, a Colorado corporation (a "Borrower")
Thompson Steel Pipe Company, a Delaware corporation (a "Borrower")
RECITALS
A. Borrowers and Bank of America and Agent entered into a loan agreement
dated October 20, 1997 which was amended by five subsequent amendments.
Contemporaneously with the Fifth Amendment, U.S. Bank became a Lender.
B. The parties now desire to amend and restate the loan agreement of
October 20, 1997 as it was amended by the first through fifth amendments thereto
by execution of this Amended and Restated Loan Agreement, which will be referred
to herein as "this Agreement."
C. At the time this Agreement is executed, Bank of America and U.S. Bank
are the only Lenders. However, Bank of America may select one or more financial
institutions to become Lenders in the future pursuant to Section 11.7.
Therefore, in consideration of the premises and the mutual covenants
contained herein, the parties agree as follows:
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AGREEMENT
ARTICLE 1
DEFINITIONS
Section 1.1 CERTAIN DEFINED TERMS. As used in this Agreement, the
following terms have the following meanings:
"AFFILIATE" means, as to any Person, any other Person which, directly
or indirectly, is in control of, is controlled by, or is under common control
with, such Person. A Person shall be deemed to control another Person if the
controlling Person possesses, directly or indirectly, the power to direct or
cause the direction of a management and policies of the other Person, whether
through the ownership of voting securities, membership interests, by contract or
otherwise.
"AGENT" means Bank of America National Trust and Savings Association
and any successor agent selected pursuant to Section 8.6.
"APPLICABLE INTEREST PERIOD" means with respect to any Loan or portion
thereof accruing interest at an Offshore Related Rate or Long Term Rate, the
period commencing on the first date Borrowers select to have such Offshore
Related Rate or Long Term Rate applied to such Loan or portion thereof pursuant
to Section 2.6(b) and ending on the date specified in the Interest Rate Notice
given in respect of such Loan or portion thereof, provided that the Applicable
Interest Period for Offshore Related Rate Loans based on LIBOR shall be in
increments of one month, two months, three months, four months, five months or
six months and for Offshore Related Rate Loans based on IBOR shall be in
increments of one month, two months, three months, four months, five months and
six months. The Applicable Interest Period for Long Term Rate Loans shall be
one year or more. Applicable Interest Period means with respect to any Loan or
portion thereof accruing interest at the Reference Related Rate, the period
commencing on the date of this Agreement or the date Borrowers select to have
such rate applied to such Loan or portion thereof and ending on the date
Borrowers select to have another rate applied to such Loan or portion thereof.
No Applicable Interest Period extending beyond Revolving Loan Maturity Date may
be selected for a Revolving Loan.
"APPLICABLE INTEREST RATE" means for each Loan the Reference Related
Rate, Long Term Rate or an Offshore Related Rate, as designated by Borrowers in
an Interest Rate Notice given with respect to such Loan or portion of such Loan
or as otherwise determined pursuant to Section 2.6.
"APPLICABLE MARGIN" means, with respect to Offshore Related Rate
Loans, a margin determined as set forth below depending on the ratio of Funded
Debt to EBITDA. Adjustments, with respect to borrowings or selections of
Applicable Interest Rates, will be effective the first day of the month after
Agent has received financial information needed to determine the relevant ratio
with respect to future selections or borrowings. However, if such information
is not given to Agent within the time required by Section 5.9, Agent may, at its
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option, adjust the Applicable Margin for Offshore Related Rate upwards, if
applicable, as of the first day of the month following the date by which such
information should have been received. The Applicable Margin in effect on the
date of this Agreement is 1.05 percent.
RATIO AT END OF PRIOR APPLICABLE MARGIN FOR
FISCAL QUARTER OFFSHORE RELATED RATE LOANS
- --------------------------------------------------------------------------------
Less than 1.5:1 .65%
Equal to or greater than 1.5:1 .75%
Up to and including 2.25:1
Greater than 2.25:1 .875%
Up to and including 3.00:1
Greater than 3.00:1 1.050%
Up to and including 3.25:1
Greater than 3.25:1 1.50%
For purposes of calculating this ratio, the EBITDA for the prior
fiscal year for the "Acquisitions," as defined in SECTION 6.6 shall be
included in the calculation. The Acquisitions' EBITDA shall be
incorporated on a decreasing pro-rata basis, with 100% of the
Acquisitions' EBITDA included in the calculation for the first
calendar quarter-end following closing of the Acquisitions, 75%
included in the second quarter-end, 50% included in the third
quarter-end, and 25% included in the fourth quarter-end. Beginning
with the fifth quarter following the closing of the Acquisitions, the
EBITDA for the Acquisitions' prior fiscal year shall no longer be
incorporated in this calculation.
"BORROWERS" means Northwest Pipe Company, Thompson Pipe and Steel
Company and Thompson Steel Pipe Company.
"BUSINESS DAY" means any day other than Saturday, Sunday or another
day on which banks are authorized or obligated to close in Seattle, Washington,
except in the context of the selection of an Offshore Related Rate Loan or the
calculation of the IBOR Rate or the LIBOR Rate for any Applicable Interest
Period, in which event "Business Day" means any day other than Saturday or
Sunday on which dealings in foreign currencies and exchange between banks may be
carried on in London, England and Seattle, Washington.
"CODE" means the Internal Revenue Code of 1986, as amended from time
to time.
"COMMERCIAL LETTER OF CREDIT" means any commercial letter of credit
issued by Agent pursuant to the terms of Article 9.
"COMMERCIAL LETTER OF CREDIT USAGE" means, as of any date of
determination, the sum of (i) the aggregate face amount of all outstanding
unmatured Commercial Letters of Credit issued pursuant to Article 9 PLUS (ii)
the aggregate amount of all payments made by Agent under Commercial Letters of
Credit and not yet reimbursed by Borrowers pursuant to Section 9.4.
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"COMMITMENT" means, with respect to each Lender, its obligation to
extend Revolving Loans under this Agreement, and its obligation to purchase
Letter of Credit Risk Participations pursuant to Article 9.5. In the case of
Agent, "Commitment" also means its obligation to issue Letters of Credit under
this Agreement.
"CONTROLLED GROUP" means all members of a controlled group of
corporations and all trades or businesses (whether or not incorporated) under
common control which, together with Borrowers, are treated as a single employer
under Section 414(b) or 414(c) of the Code. The term "Controlled Group" shall
also include all members of a group of corporations or trades or businesses
(whether or not incorporated) that together with Borrowers constitute an
"affiliated service group," as defined in Code Section 414(m).
"DEFAULT" means any event which but for the passage of time or the
giving of notice or both would be an Event of Default.
"EBITDA" means, for any period, net income (or net loss), plus the sum
of (a) interest expense, (b) income tax expense, (c) depreciation expense, and
(d) amortization expense, in each case determined in accordance with GAAP.
"EMPLOYEE PLAN" means any and all plans, programs and arrangement that
constitute a Pension Plan or a Welfare Plan.
"ENVIRONMENTAL LAWS" means all federal, state and local statutes,
regulations, ordinances, and requirements, now or hereafter in effect,
pertaining to environmental protection, contamination or cleanup, including
without limitation (i) the Federal Resource Conservation and Recovery Act of
1976 (42 U.S.C. Section 6901, ET SEQ.), (ii) the Federal Comprehensive
Environmental Response, Compensation, and Liability Act (42 U.S.C. Section 9601
ET SEQ.), (iii) the Federal Hazardous Materials Transportation Control Act
(49 U.S.C. Section 1801, ET SEQ.), (iv) the Federal Clean Air Act (42 U.S.C.
Section 7401, ET SEQ.), (v) the Federal Water Pollution Control Act, Federal
Clean Water Act (33 U.S.C. Section 1251 ET SEQ.), (vi) the Federal Insecticide,
Fungicide, and Rodenticide Act, Federal Pesticide Act (7 U.S.C. Section 136,
ET SEQ.), (vii) the Federal Toxic Substances Control Act (15 U.S.C. Section 2601
ET SEQ.), (viii) the Federal Safe Drinking Water Act (42 U.S.C. Section fm
ET SEQ.), (ix) Hazardous Substances, Radiation Sources, ORS Sections 453.01 ET
SEQ., (x) Solid Waste Control, ORS Sections 459.005 ET SEQ., (xi) Hazardous
Waste and Hazardous Materials I, ORS Sections 465.003 ET SEQ., (xii) Hazardous
Waste and Hazardous Materials II, ORS Sections 466.005 ET SEQ., (xiii) Air
Quality, ORS Sections 468A.005 ET SEQ., (xiv) Water Quality, ORS Section
Section 468B.005 ET SEQ., (xv) Oregon Drinking Water Quality Act, ORS 448.115 ET
SEQ., (xvi) Ground Water Act of 1955, ORS Sections 537.505 ET SEQ.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"EVENT OF DEFAULT" has the meaning given in Section 7.1.
"FEDERAL FUNDS RATE" means, for any period, a fluctuating interest
rate per annum equal, for each day during such period, to the weighted average
of the rates on overnight federal
4
funds transactions with members of the Federal Reserve System arranged by
federal funds brokers, as published for such day (or, if such day is not a
Business Day, for the next preceding Business 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 on transactions
received by Agent from three federal funds brokers of recognized standing
selected by Agent.
"FRB" means the Board of Governors of the Federal Reserve System, and
any Governmental Authority succeeding to any of its principal functions.
"FUNDED DEBT" means the aggregate amount for Borrowers and all
Subsidiaries of:
(a) any interest bearing indebtedness other than such indebtedness,
the payment of which is secured by any Standby Letter of Credit
described in Article 9 or Article 10, plus
(b) any other obligations of Borrowers or any Subsidiary under leases
which have been or should have been recorded as capital leases,
plus
(c) all outstanding letters of credit whether commercial or standby,
including Letters of Credit described in Article 9 or Article 10,
and all other letters of credit, plus
(d) all obligations guaranteed by any Borrower or Subsidiary.
"FUNDED PRO RATA SHARE" shall mean, with respect to each Lender, a
fraction. The numerator of the fraction will equal the sum of:
(a) the aggregate outstanding principal amount of all such Lender's
Loans, plus
(b) the aggregate outstanding principal amount of all payments made
by such Lender pursuant to Section 9.7(a) (including payments
deemed made by Bank of America in its capacity as Lender to
Agent), plus
(c) in the case of Bank of America, the aggregate of the amounts paid
by Agent under Letters of Credit to the extent Agent has not
received payment with respect to Letters of Credit from Borrowers
hereunder or from Lenders pursuant to Section 9.7(a).
The denominator of the fraction will equal the sum of:
(a) the aggregate outstanding principal amount of the Loans of all
Lenders (including the Lender whose Funded Pro Rata Share is
being calculated), plus
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(b) the aggregate face amount of all amounts paid by Agent under the
Letters of Credit (to the extent not already paid or reimbursed
by Borrowers).
"GAAP" shall have the meaning given in Section 1.3.
"GOVERNMENT APPROVAL" means an approval, permit, license,
authorization, certificate, or consent of any Governmental Authority.
"GOVERNMENTAL AUTHORITY" means the government of the United States or
any State or any foreign country or any political subdivision of any thereof or
any branch, department, agency, instrumentality, court, tribunal or regulatory
authority which constitutes a part or exercises any sovereign power of any of
the foregoing.
"HAZARDOUS SUBSTANCES" means any substance or material defined or
designated as hazardous or toxic waste, hazardous or toxic material, a
hazardous, toxic or radioactive substance, or other similar terms, by any
federal, state or local environmental statute, regulation or ordinance presently
in effect, including but not limited to the Environmental Laws.
"INTEREST RATE NOTICE" shall have the meaning given in Section 2.6(b).
"LENDERS" has the meaning set forth in the introductory paragraph
hereof.
"LETTERS OF CREDIT" means Commercial Letters of Credit and Standby
Letters of Credit.
"LETTER OF CREDIT RISK PARTICIPATION" with respect to each Lender,
means a risk participation purchased by such Lender pursuant to Article 9 with
respect to a Letter of Credit (including risk participations deemed purchased
from Agent by Bank of America in its capacity as Lender).
"LETTER OF CREDIT USAGE" means Commercial Letter of Credit Usage PLUS
Standby Letter of Credit Usage.
"LIEN" means, for any of Borrowers or Subsidiaries any security
interest, pledge, mortgage, charge, assignment, hypothecation, encumbrance,
attachment, garnishment, execution or other voluntary or involuntary lien upon
or affecting the revenues of such person or any real or personal property in
which such person has or hereafter acquires any interest, EXCEPT (a) liens for
Taxes which are not delinquent or which remain payable without penalty or the
validity or amount of which is being contested in good faith by appropriate
proceedings upon stay of execution of the enforcement thereof; (b) liens imposed
by law (such as mechanics' liens) incurred in good faith in the ordinary course
of business which are not delinquent or which remain payable without penalty or
the validity or amount of which is being contested in good faith by appropriate
proceedings upon stay of execution of the enforcement thereof with, in the case
of liens on property of either Borrowers or any Subsidiary, provision having
been made to the satisfaction of Agent for the payment thereof in the event the
contest is determined adversely to either Borrowers or any Subsidiary; and
(c) deposits or pledges under worker's compensation,
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unemployment insurance, social security or other similar laws or made to secure
the performance of bids, tenders, contracts (except for repayment of borrowed
money), or leases, or to secure statutory obligations or surety or appeal bonds
or to secure indemnity, performance, customs or other similar bonds given in the
ordinary course of business.
"LOAN DOCUMENTS" means this Agreement and all other certificates,
instruments and other documents executed by or on behalf of Borrowers and/or
their Subsidiaries in connection with this Agreement or the transactions
contemplated hereby.
"LOANS" means the Revolving Loans and the Term Loans.
"LONG TERM RATE" means the fixed interest rate the Agent, the
Borrowers and the Majority Lenders agree will apply to the Long Term Rate Loan
in question during the Applicable Interest Period.
"LONG TERM RATE LOANS" means a borrowing that bears interest at the
Long Term Rate.
"MAJORITY LENDERS" means at any time Lenders having an aggregate
Funded Pro Rata Share of at least eighty-four percent (84%).
"MONEY MARKET" means one or more wholesale funding markets available
to Agent, including domestic negotiable certificates of deposit, eurodollar
deposits, bank deposit notes or other appropriate money market instruments
selected by Agent.
"NET INCOME" means, for any period, the consolidated net income of
Borrowers and Subsidiaries for such period, determined in accordance with GAAP.
"NOTICE OF BORROWING" means a written or oral request for a Loan from
Borrowers delivered to Agent in the manner, at the time, and containing the
information required under Section 2.2.
"OFFICER'S CERTIFICATE" means a certificate executed and delivered on
behalf of Borrowers by their chief executive officer, chief operating officer or
chief financial officer.
"OFFSHORE RATE" means for any Applicable Interest Period, with respect
to Offshore Related Rate Loans comprising part of the same Borrowing, the rate
of interest per annum (rounded to five decimal places) determined by the Agent
as follows:
Offshore Rate = [LIBOR OR IBOR]
------------------------------------
1.00 - Eurodollar Reserve Percentage
Where,
"EURODOLLAR RESERVE PERCENTAGE" means for any day for any
Applicable Interest Period the maximum reserve percentage, expressed
as a decimal, in effect
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on such day (whether or not applicable to any Lender) under
regulations issued from time to time by the FRB for determining the
maximum reserve requirement (including any emergency, supplemental or
other marginal reserve requirement) with respect to Eurocurrency
funding (currently referred to as "Eurocurrency liabilities"); and
"LIBOR" means the rate of interest per annum (rounded to five
decimal places) at which Bank of America's London branch would offer
dollar deposits in the approximate amount of the relevant Offshore
Related Rate Loan having a maturity comparable to the Applicable
Interest Period in the London interbank market at approximately 11:00
a.m. (London time) two Business Days prior to the commencement of such
Applicable Interest Period.
"IBOR" means the rate of interest per annum (rounded to five
decimal places) at which dollar deposits in the approximate amount of
the relevant Offshore Related Rate Loan for the Applicable Interest
Period would be offered by Bank of America's Grand Cayman Branch,
Grand Cayman B.W.I to major banks in the offshore dollar interbank
market at approximately 11:00 a.m. (New York City time) on the
commencement of such Applicable Interest Period.
"OFFSHORE RELATED RATE" means, for any Interest Period, with respect
to Offshore Related Rate Loans comprising part of the same Borrowing, the rate
of interest equal to the sum of (a) the Applicable Margin and (b) the Offshore
Rate.
"OFFSHORE RELATED RATE LOAN" means a Borrowing that bears interest
based on the Offshore Related Rate.
"PENSION PLAN" means an "employee pension benefit plan" (as such term
is defined in ERISA) from time to time maintained by Borrowers or a member of
the Controlled Group.
"PERSON" means an individual, partnership, corporation, limited
liability company, business trust, joint stock company, trust, unincorporated
association, joint venture or Governmental Authority.
"PLAN" shall mean, at any time, an employee pension benefit plan which
is covered by Title IV of ERISA or subject to the minimum funding standards
under Section 412 of the Code and is either (a) maintained by Borrowers or any
member of the Controlled Group for employees of Borrowers or any member of the
Controlled Group or (b) maintained pursuant to a collective bargaining agreement
or any other arrangement under which more than one employer makes contributions
and to which Borrowers or any member of the Controlled Group is then making or
accruing an obligation to make contributions or has within the preceding five
(5) plan years made contributions.
"REFERENCE RATE" means the rate of interest publicly announced from
time to time by Bank of America, as its Reference Rate. Reference Rate is set
based on various factors,
8
including Bank of America's costs and desired return, general economic
conditions and other factors, and is used as a reference point for pricing some
loans. Bank of America may price loans to its customers at, above, or below the
Reference Rate. Any change in the Reference Rate shall take effect at the
opening of business on the day specified in the public announcement of a change
in the Reference Rate.
"REFERENCE RELATED RATE" means for any interest period with respect to
Reference Related Rate Loans comprising part of the same Borrowing, the rate of
interest equal to the Reference Rate less .50%.
"REFERENCE RELATED RATE LOAN" means a Borrowing that bears interest
based at the Reference Related Rate.
"REIMBURSEMENT AGREEMENTS" shall have the meaning given in
Section 9.2.
"REVOLVING LOAN MATURITY DATE" means September 30, 2000. Agent and
Lenders will consider a one year extension to the Revolving Loan Maturity Date
on each anniversary of this Agreement. However, any extension will require the
consent of Agent and all Lenders in their sole discretion.
"REVOLVING LOAN PRO RATA SHARE" means for Bank of America, 75 percent,
and for U.S. Bank, 25 percent, subject to adjustment as provided in Section
11.7.
"REVOLVING LOANS" has the meaning given in Section 2.1.
"SOLVENT" means with respect to any Borrower, that on a particular
date, (a) the fair saleable value of the property of such Borrower (including
all tangible and intangible property) is greater than the total amount of
liabilities (including unmatured and contingent liabilities) of such Borrower,
(b) such Borrower is able to pay its debts, commitments and other liabilities
(including unmatured and contingent liabilities) as they mature in the normal
course of business, (c) such Borrower does not have an unreasonably small
capital, and (d) such Borrower is generally paying its debts as and when such
debts become due.
"STANDBY LETTER OF CREDIT" means any standby letter of credit issued
by Agent pursuant to the terms of Article 9.
"STANDBY LETTER OF CREDIT USAGE" means, as of any date of
determination, the sum of (i) the aggregate face amount of all outstanding
unmatured Standby Letters of Credit issued pursuant to Article 9 PLUS (ii) the
aggregate amount of all payments made by Agent under Standby Letters of Credit
and not yet reimbursed by Borrowers pursuant to Section 9.4.
"SUBSIDIARY" shall mean any corporation directly or indirectly
controlled by Borrowers. For the purposes of this definition, "controlled by"
shall mean the possession, directly or indirectly of the power to direct or
cause the direction of the management and policies of such Subsidiary, whether
through the ownership of voting securities, by contract or otherwise.
9
"SUCCESSOR" means, for any corporation or banking association, any
successor by merger or consolidation, or by acquisition of substantially all of
the assets of the predecessor.
"TAX" means, for any person, any tax, assessment, duty, levy, impost
or other charge imposed by any Governmental Authority on such person or on any
property, revenue, income, or franchise of such person and any interest or
penalty with respect to any of the foregoing.
"TANGIBLE NET WORTH" means, for Borrowers and Subsidiaries on a
consolidated basis, the excess of total assets over total liabilities, but
excluding intangible assets. Tangible Net Worth will be determined pursuant to
GAAP.
"TERM LOAN" means any Term Loan resulting from a conversion of a
portion of the revolving loans as described in Section 2.5.
"TOTAL COMMITMENT" means $40,000,000.
"TOTAL REVOLVING LOAN COMMITMENT" means the amount of the Total
Commitment less, at any time, the then total Letter of Credit Usage, and less
the original amount of any Term Loans. The Total Revolving Loan Commitment will
not increase as Term Loans are paid down.
"TOTAL UTILIZATION" shall mean, as of any date of determination, the
sum of the aggregate amount of all outstanding Revolving Loans, plus the Letter
of Credit Usage, and plus the Term Loans, if any.
"UNUSED COMMITMENT FEE" shall have the meaning given in Section
2.9(b).
"UNUSED COMMITMENT FEE RATE" means an annual rate determined as set
forth below depending upon the ratio of Funded Debt to EBITDA. The adjustment
will be effective the first day of the month after Agent has received
information needed to determine the relevant ratio. However, if such
information is not given to Agent within the time required by Section 5.9, Agent
may, at its option, adjust the Annual Unused Commitment Fee Rate upwards, if
applicable, as of the first day of the month following the date by which such
information should have been received. The Unused Commitment Fee Rate in effect
upon the date of this Agreement is .25 percent.
RATIO AT END OF PRIOR ANNUAL UNUSED
FISCAL QUARTER COMMITMENT FEE RATE
- -------------------------------------------------------------
Less than 1.5:1 .175%
- -------------------------------------------------------------
Equal to or greater than 1.5:1 .200%
Up to and including 2.25:1
- -------------------------------------------------------------
Greater than 2.25:1 .225%
Up to and including 3.00:1
- -------------------------------------------------------------
Greater than 3.00:1 .250%
- -------------------------------------------------------------
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For purposes of calculating this ratio, the EBITDA for the prior
fiscal year for the "Acquisitions," as defined in SECTION 6.6, shall
be included in the calculation. The Acquisitions' EBITDA shall be
incorporated on a decreasing pro-rata basis, with 100% of the
Acquisitions' EBITDA included in the calculation for the first
calendar quarter-end following closing of the Acquisitions, 75%
included in the second quarter-end, 50% included in the third
quarter-end, and 25% included in the fourth quarter-end. Beginning
with the fifth quarter following the closing of the Acquisitions, the
EBITDA for the Acquisitions' prior fiscal year shall no longer be
incorporated in this calculation.
"WELFARE PLAN" means an "employee welfare benefit plan" (as such term
is defined in ERISA) from time to time maintained by Borrowers or a member of
the Controlled Group.
Section 1.2 GENERAL PRINCIPLES APPLICABLE TO DEFINITIONS. Definitions
given herein shall be equally applicable to both singular and plural forms of
the terms therein defined and references herein to "he" or "it" shall be
applicable to persons whether masculine, feminine or neuter. References herein
to any document including, but without limitation, this Agreement shall be
deemed a reference to such document as it now exists, and as, from time to time
hereafter, the same may be amended. References herein to a "person" or
"persons" shall be deemed to be references to an individual, corporation,
partnership, trust, unincorporated association, joint venture, joint-stock
company, government (including political subdivisions), Governmental Authority
or agency or any other entity. References herein to any article, Section,
subSection, schedule or exhibit shall, unless otherwise indicated, be deemed a
reference to Sections and subSections within and schedules and exhibits to this
Agreement.
Section 1.3 ACCOUNTING TERMS. Except as otherwise provided herein,
accounting terms not specifically defined shall be construed, and all accounting
procedures shall be performed, in accordance with generally accepted United
States accounting principles consistently applied ("GAAP") and as in effect on
the date of application.
ARTICLE 2
THE LOANS
Section 2.1 REVOLVING LOANS. Subject to the terms and conditions of
this Agreement, each Lender hereby severally agrees during the period beginning
on the date hereof and ending on the Revolving Loan Maturity Date to make
revolving loans duly requested hereunder (the "Revolving Loans") to Borrowers in
amounts equal to such Lender's Revolving Loan Pro Rata Share of each requested
loan PROVIDED that, after giving effect to any requested loan, absent such
Lender's consent, the aggregate of all Revolving Loans outstanding from such
Lender will not exceed at any one time its Revolving Loan Pro Rata Share of the
Total Revolving Loan Commitment. The Revolving Loans described in this Section
constitute a revolving credit and within the amount and time specified,
Borrowers may pay, prepay and reborrow.
11
Section 2.2 MANNER OF BORROWING. For each requested Loan, Borrowers
shall deliver to Agent a Notice of Borrowing specifying the date of a requested
Borrowing and the amount thereof. Borrowers may give a Notice of Borrowing on
the same day it wishes a Loan to be made, provided said Notice of Borrowing is
received by Agent no later than 11:00 a.m. (Seattle time) on the date of the
requested borrowing. Each Notice of Borrowing shall be given in writing or
orally and promptly confirmed in writing, provided, however, that Agent may rely
on any oral Notice of Borrowing even if Agent does not receive a written
confirmation. If Borrowers simultaneously elect to have interest accrue on a
Revolving Loan at an Offshore Related Rate calculated by reference to LIBOR by
giving an Interest Rate Notice described in Section 2.6(b) in respect of such
borrowing, the Notice of Borrowing shall be given no later than 11:00 a.m. three
Business Days prior to the date of the requested borrowing. Requests for
borrowing, or confirmations thereof, received after the designated hour will be
deemed received on the next succeeding Business Day. Each such Notice of
Borrowing shall be irrevocable and shall be deemed to constitute a
representation and warranty by Borrowers that as of the date of such notice the
statements set forth in Article 4 are true and correct and that no Default or
Event of Default has occurred and is continuing. Agent is authorized to make
Loans upon the request of any person authorized in writing by the President or
the CEO of the Northwest Pipe Company to make such requests. Each Loan
requested by Borrowers under this Section shall be in an amount of not less than
$100,000 and an integral multiple of $100,000. On receipt of a Notice of
Borrowing, Agent shall promptly notify each Lender by telephone, telex or
telefax of the date of the requested borrowing and the amount thereof. Each
Lender shall before 1:00 p.m. (Seattle time) on the date of the requested
borrowing, pay such Lender's Revolving Loan Pro Rata Share of the aggregate
principal amount of the requested borrowing in immediately available funds to
Agent at its Commercial Loan Processing Center in Seattle, Washington. Upon
fulfillment to Agent's satisfaction of the applicable conditions set forth in
Article 3, and after receipt by Agent of such funds, Agent will promptly make
such funds available to Borrowers by depositing them to the ordinary checking
account maintained by Borrowers with Agent.
Section 2.3 AGENT'S RIGHT TO FUND. Unless Agent shall have received
notice from a Lender prior to 12:00 Noon (Seattle time) on the date of any
requested borrowing that such Lender will not make available to Agent its share
of the requested borrowing, Agent may assume that such Lender has made such
funds available to Agent on the date such Loan is to be made in accordance with
Section 2.2 and Agent may, in reliance upon such assumption, make available to
Borrowers on such date a corresponding amount. If and to the extent that such
Lender shall not have so made such portion available to Agent, such Lender and
Borrowers jointly and severally agree to pay to Agent forthwith on demand such
corresponding amount, together with interest thereon for each day from the date
such amount is made available to Borrowers until the date such amount is repaid
to Agent, at (a) in the case of Borrowers, the Reference Related Rate and (b) in
the case of such Lender, the Federal Funds Rate. Any such repayment by
Borrowers shall be without prejudice to any rights it may have against the
Lender that has failed to make available its funds for any requested borrowing.
12
Section 2.4 REPAYMENT OF PRINCIPAL.
(a) On each day that the Total Utilization exceeds the Total
Commitment, Borrowers shall repay Revolving Loans in such an amount as is
necessary to reduce such Total Utilization to an amount equal to or less than
the Total Commitment. If Borrowers shall pay any Offshore Related Rate Loan
pursuant to this Section prior to the end of the Applicable Interest Period,
Borrowers shall include with such payment any amount payable pursuant to
Section 2.7 and applicable to the payment of such Offshore Related Rate Loan
prior to the termination of the Applicable Interest Period.
(b) Borrowers shall repay the principal amount of the Revolving Loans
on or before the Revolving Loan Maturity Date.
Section 2.5 OPTIONAL CONVERSION OF UP TO $10,000,000 OF REVOLVING LOANS.
On the first day of any month, up to and including October 1, 1999, if at that
time, the conditions set forth in Section 3.1 are satisfied, Borrowers may
convert a portion of not less than $500,000 of the Revolving Loans in increments
of $100,000 to a Term Loan, but Borrowers shall not convert more than a total of
$10,000,000 of Revolving Loans to Term Loans. Each such conversion will be
accomplished by Borrowers giving written notice to Agent at least 5 business
days prior to the date selected by Borrowers for conversion. Such notice will
specify what portions of the Term Loan will bear interest at the available
alternative rates described in Section 2.6(b). Principal payments on each Term
Loan will be paid in 16 equal consecutive quarterly installments with the first
principal payment being due at the end of the calendar quarter following
conversion. Interest on each Term Loan will be payable monthly in arrears. All
then unpaid principal and interest on each Term Loan will be due and payable no
later than 48 months following such conversion .
Section 2.6 INTEREST ON LOANS.
(a) GENERAL PROVISIONS. Borrowers agree to pay to Lenders interest
on the unpaid principal amount of each Loan from the date of such Loan until
such Loan shall be due and payable at a per annum rate equal to the Applicable
Interest Rate in effect from time to time with respect to such Loan (or
respective portions thereof). In addition, at Lenders' option, during any
period of time while an Event of Default has occurred and is continuing,
interest shall accrue and be paid on the unpaid principal amount of each Loan or
portion thereof at a per annum rate equal to 3% above the Applicable Interest
Rate for such Loan or portion thereof. Accrued but unpaid interest on each Loan
or portion thereof shall be paid in arrears on the first business day of each
calendar month, and at the applicable maturity date.
(b) SELECTION OF ALTERNATIVE RATES.
(1) Borrowers may, subject to the requirements of this Section,
elect on any Business Day to have interest accrue on any Loan or any portion
thereof at an Offshore Related Rate for an Applicable Interest Period.
Borrowers may also, subject to the requirements of this Section, elect on any
Business Day to have interest accrue on any Term Loan or portion thereof at a
Long Term Rate for an Applicable Interest Period. Such notice (herein, an
"Interest
13
Rate Notice") shall be deemed delivered when communicated to Agent (in the case
of an oral notice) or when received by Agent (in the case of written notice)
except that an Interest Rate Notice communicated to or received by Agent after
the specified time on any Business Day, shall be deemed to have been delivered
or received on the immediately succeeding Business Day. Any oral Interest Rate
Notice shall be promptly confirmed in writing, provided, however, that Agent may
rely on any oral Interest Rate Notice even if Agent does not receive a written
confirmation. Such Interest Rate Notice shall identify, subject to the
conditions of this Section, the Loan or portions thereof to accrue interest at
the Offshore Related Rate or the Long Term Rate and the Applicable Interest
Period which Borrowers select. Any such Interest Rate Notice shall be
irrevocable and shall constitute a representation and warranty by Borrower that
as of the date of such Interest Rate Notice, the statements set forth in
Article 4 are true and correct and that no Default or Event of Default has
occurred and is continuing. An Interest Rate Notice specifying a LIBOR rate
shall be given before 11:00 a.m. (Seattle time) three Business Days prior to the
commencement of the Applicable Interest Period. An Interest Rate Notice
specifying an IBOR rate shall be given before 9:00 a.m. (Seattle time) on the
date of commencement of the Applicable Interest Period. An Interest Rate Notice
specifying a Long Term Rate given at the time of a conversion described in
Section 2.5 shall be given concurrently with the notice of conversion after
agreement on the rate has been reached, and the rate so agreed upon and
specified in the Interest Rate Notice will be effective for the Applicable
Interest Period. An Interest Rate Notice specifying a Long Term Rate which is
given other than in connection with a conversion described in Section 2.5 shall
be given before 9:00 a.m. (Seattle time) on the date of commencement of the
Applicable Interest Period. Any Interest Rate Notice which specifies an
Offshore Related Rate but fails to identify an Applicable Interest Period shall
be deemed to request an Applicable Interest Period of one month. Any Interest
Rate Notice which specifies a Long Term Rate but fails to identify an Applicable
Interest Period shall be deemed to request an Applicable Interest Period of one
year.
(2) Borrowers' right to select the Offshore Related Rate or Long
Term Rate to apply to a Loan or any portion thereof shall be subject to the
following conditions: (i) the aggregate of all Loans, or portions thereof, to
accrue interest at a particular Offshore Related Rate or Long Term Rate for the
same Applicable Interest Period shall be an integral multiple of $100,000 and
not less than $500,000; (ii) no such rate may be selected for any Revolving
Loan, or Term Loan, or portion thereof, which is already accruing interest at an
Offshore Related Rate or Long Term Rate unless such selection is only to become
effective at the maturity of the Applicable Interest Period then in effect;
(iii) no Lender shall have given notice pursuant to Section 2.6(d) that the
selected Offshore Rate or Long Term Rate is not available; and (iv) no Default
or Event of Default shall have occurred and be continuing.
(3) In the absence of an effective request for the application
of an Offshore Related Rate or Long Term Rate, the Revolving Loans, Term Loans
or remaining portions thereof shall accrue interest at the Reference Related
Rate.
(4) The Interest Rate Notice may be given with and contained in
any Notice of Borrowing.
14
(5) If Borrowers deliver an Interest Rate Notice with any Notice
of Borrowing for a Loan and Borrowers thereafter declines to take such Loan or a
condition precedent to the making of such Loan is not satisfied or waived,
Borrowers shall indemnify Agent and each Lender for all losses and any costs
which Agent or any Lender may sustain as a consequence thereof including,
without limitation, the costs of re-employment of funds at rates lower than the
cost to Lenders of such funds. Payment of the amount owed shall be due within
fifteen (15) days after Borrowers' receipt of Agent's statement calculating the
sum due.
(c) APPLICABLE DAYS FOR COMPUTATION OF INTEREST. Computations of
interest shall be made on the basis of a year of 360 days, for the actual number
of days (including the first day but excluding the last day) occurring in the
period for which such interest is payable.
(d) UNAVAILABLE OFFSHORE RELATED RATE OR LONG TERM RATE. If any
Lender reasonably determines that for any reason, fair and adequate means do not
exist for establishing a particular Offshore Related Rate or Long Term Rate, or
that an Offshore Related Rate or Long Term Rate will not adequately and fairly
reflect the cost to it of making or maintaining the principal amount of a
particular Offshore Related Rate Loan or Long Term Rate Loan or that accruing
interest on any Offshore Related Rate Loan or Long Term Rate Loan has become
unlawful or is contrary to any internal policies (of general application), such
Lender may give notice of that fact to Agent and Borrowers. After such notice
has been given and until such Lender notifies Borrowers and Agent that the
circumstances giving rise to such notice no longer exist, the interest rate or
rates so identified in such notice shall no longer be available. Any subsequent
request by Borrowers to have interest accrue at such an Offshore Related Rate or
Long Term Rate, as the case may be, shall be deemed to be a request for interest
to accrue at the Reference Related Rate. If the circumstances giving rise to
the notice described herein no longer exist, the Lender who had previously given
notice of the unavailability of rate(s) shall notify Agent and Borrowers in
writing of that fact, and Borrowers shall then once again become entitled to
request that such Offshore Related Rate or Long Term Rate apply to the Loans in
accordance with Section 2.6(b).
(e) COMPENSATION FOR INCREASED COSTS. In the event that after the
date hereof any change occurs in any applicable law, regulation, treaty or
directive or interpretation thereof by any Governmental Authority charged with
the administration or interpretation thereof, or any condition is imposed by any
Governmental Authority after the date hereof or any change occurs in any
condition imposed by any Governmental Authority on or prior to the date hereof
which:
(1) subjects any Lender to any Tax (other than any Tax measured
by such Lender's net or gross income), or changes the basis of taxation of any
payments to any Lender on account of principal of or interest on any Offshore
Related Rate Loan or Long Term Rate Loan or fees in respect of such Lender's
obligation to make Long Term Rate Loans or Offshore Related Rate Loans or other
amounts payable with respect to such Loans; or
(2) imposes, modifies or determines applicable any reserve,
deposit or similar requirements against any assets held by, deposits with or for
the account of, or loans or commitments by, the relevant office of any Lender in
connection with its Long Term Rate Loans or Offshore Related Rate Loans to the
extent the amount of which is in excess of, or was not
15
applicable at the time of computation of, the amounts provided for in the
definition of such Long Term Rate or Offshore Related Rate; or
(3) affects the amount of capital required or expected to be
maintained by banks generally or corporations controlling banks and any Lender
determines that the amount by which it or any corporation controlling it is
required or expected to maintain or increase its capital is increased by, or
based upon, the existence of this Agreement or of any Lender's Loans or
Commitments hereunder;
(4) imposes upon any Lender any other condition with respect to
its Offshore Loans or its obligation to make Long Term Rate or Offshore Related
Rate Loans; which, as a result thereof, (i) increases the cost to any Lender of
making or maintaining its Loans or its Commitments hereunder, or (ii) reduces
the net amount of any payment received by any Lender in respect of its Long Term
Rate Loans or Offshore Related Rate Loans (whether of principal, interest,
commitment fees or otherwise), or (iii) requires any Lender to make any payment
on or calculated by reference to the gross amount of any sum received by it in
respect of its Long Term Rate or Offshore Related Rate Loans, in each case by an
amount which any such Lender in its reasonable judgment deems material, then and
in any such case Borrowers shall pay to Agent for the account of such Lender on
demand such amount or amounts as will compensate such Lender for any increased
cost, deduction or payment actually incurred or made by such Lender, PROVIDED,
HOWEVER, Borrowers shall not be obligated for amounts hereunder unless, within
60 days after learning thereof any such Lender shall have advised Borrowers of
the subjection, change, requirement or other condition forming the basis for
such Lender's request for additional payment hereunder. If Borrowers are
advised of any such subjection, change, requirement or other condition prior to
the expiration of an Applicable Interest Period for any Long Term Rate Loan or
Offshore Related Rate Loan, Borrowers may elect to prepay the Long Term Rate
Loan or Offshore Related Rate Loan, as applicable, without penalty or premium if
such prepayment would reduce or eliminate the amounts which Borrowers would
otherwise be obligated to pay any Lender under the terms of this Section. The
demand for payment by any Lender shall be delivered to both Agent and Borrowers
and shall state the subjection or change which occurred or the reserve or
deposit requirements or other conditions which have been imposed upon such
Lender or the request, direction or requirement with which it has complied,
together with the date thereof, the amount of such cost, reduction or payment
and the manner in which such amount has been calculated.
The protection of this Section shall be available to each Lender regardless
of any possible contention of invalidity or inapplicability of the relevant law,
regulation, treaty, directive, condition or interpretation thereof. In the
event that Borrowers pay any Lender the amount necessary to compensate such
Lender for any charge, deduction or payment incurred or made by such Lender as
provided in this Section, and such charge, deduction or payment or any part
thereof is subsequently returned to such Lender as a result of the final
determination of the invalidity or inapplicability of the relevant law,
regulation, treaty, directive or condition, then such Lender shall remit to
Borrowers the amount paid by Borrowers which has actually been returned to such
Lender (together with any interest actually paid to such Lender on such returned
amount), less such Lender's costs and expenses incurred in connection with such
governmental regulation or any challenge made by such Lender with respect to its
validity or applicability.
16
Section 2.7 PREPAYMENTS. Reference Related Rate Loans may be repaid at
any time without penalty or premium. Except as provided in Section 2.6(e), if
an Offshore Related Rate Loan or Long Term Rate Loan is paid prior to the end of
the Applicable Interest Period, a fee computed in the manner set out in
Schedule 1 shall be assessed and paid at the time of such payment. Such fee
shall be calculated by Agent. Except as provided in Section 2.6(e), such fee
shall apply in all circumstances where an Offshore Related Rate Loan or Long
Term Rate Loan is paid prior to the end of the Applicable Interest Period,
regardless of whether such payment is voluntary, mandatory (including, without
limitation, payments required pursuant to Section 2.4) or the result of Agent's
or any Lender's collection efforts.
Section 2.8 MANNER OF PAYMENTS.
(a) Agent is authorized to deduct all interest and all other fees and
expenses due from any of Borrowers' checking accounts maintained with Agent. If
such payments are not taken from Borrowers' checking accounts, all payments and
prepayments of principal and interest on any Loan and all other amounts payable
hereunder by Borrowers to Agent or any Lender shall be made by paying the same
in United State Dollars and in immediately available funds to Agent at its
Commercial Loan Processing Center, Seattle, Washington not later than 12:00 Noon
(Seattle time) on the date on which such payment or prepayment shall become due.
(b) Borrowers hereby authorizes Agent and each Lender, if and to the
extent any payment is not promptly made pursuant to this Agreement or any other
Loan Document, to charge from time to time against any or all of the accounts of
Borrowers with Agent or any Lender or any Affiliate of any Lender any amount due
hereunder or under such other Loan Document.
(c) Whenever any payment hereunder or under any other Loan Document
shall be stated to be due would otherwise occur on a day other than a Business
Day, such payment shall be made on the next succeeding Business Day. In the
case of an Offshore Loan or Long Term Base Loan, whenever the last day of any
Applicable Interest Period would otherwise occur on a day other than a Business
Day, the last day of such Applicable Interest Period shall occur, on the next
succeeding Business Day and such extension of time shall in such case be
included in the computation and payment of interest, UNLESS, such extension
would cause the last day of such Applicable Interest Period to occur in the next
following calendar month, in which case the last day of such Applicable Interest
Period shall occur, on the preceding Business Day and the calculation of
interest will be adjusted accordingly.
Section 2.9 FEES.
(a) Upon execution of this Agreement, Borrowers agree to pay Agent
for the benefit of Lenders a fee of $7,500 to be divided equally between them.
(b) Borrowers agree to pay Agent for the account of Lenders in
proportion to their respective Revolving Loan Pro Rata Shares an Unused
Commitment Fee. This fee will be payable quarterly in arrears on the last day
of each calendar quarter, and will be computed by
17
multiplying the Unused Commitment Fee Rate, based upon a 360-day year by the
daily amount by which the Total Revolving Loan Commitment exceeds the aggregate
of the Revolving Loans.
Section 2.10 SHARING OF PAYMENTS, ETC. If any Lender shall obtain any
payment in respect of Borrowers' obligations under the Loan Documents (whether
voluntary or involuntary, through the exercise of any right of set off or
otherwise) in excess of the amount it would have received if all payments had
been made directly to Agent and apportioned in accordance with the terms hereof,
such Lender shall hold such excess payment in trust for Agent and Lenders and
shall forthwith remit the same to Agent for Agent's Lenders' accounts as herein
provided.
Section 2.11 APPLICATION OF PAYMENTS. Any payment made by Borrowers in
respect of amounts owing by them under any of the Loan Documents, in the absence
of a continuing Event of Default shall be applied in the manner directed by
Borrowers, and in the absence of such direction shall be applied as follows:
(a) FIRST, to fees, expenses and indemnities due under any Loan
Document;
(b) SECOND, to interest due under provision of any Loan Document;
(c) THIRD, to any principal payment then due under any Loan;
(d) FOURTH, to prepay the principal amount of any Reference Rate
Related Loan then outstanding but not yet due; and
(e) FIFTH, to prepay the principal amount of any Offshore Related
Rate Loan or Long Term Base Rate Related Loan then outstanding but not yet due.
Any payments made by Borrowers on the Loans or received for Borrowers' account
and from any source after the occurrence and during the continuation of an Event
of Default shall be applied as follows:
(a) FIRST, to fees, expenses and indemnities due under any Loan
Document;
(b) SECOND, to interest due under provision of any Loan Document;
(c) THIRD, to any principal payment then due under any Loan;
(d) FOURTH, to any liability of Borrowers under any Reimbursement
Agreement or pursuant to Section 9.4.
(e) FIFTH, to prepay the principal amount of any Reference Rate
Related Loan then outstanding, whether or not due;
(f) SIXTH, to prepay the principal amount of any Offshore Related
Rate Loan or Base Rate Related Loan then outstanding, whether or not due; and
18
(g) SEVENTH, as cash collateral security for Borrowers' obligations
in respect of unmatured and unreimbursed Letters of Credit.
ARTICLE 3
CONDITIONS TO LOANS
Section 3.1 CONDITIONS TO LOANS. The obligation of each Lender to make
any Loan and the obligation of Agent to issue any Letter of Credit is subject to
fulfillment of the following conditions:
(a) LOAN DOCUMENTS. Agent shall have received the Loan Documents,
each been duly executed and delivered by Borrowers and the other parties
thereto, and shall be satisfactory to Agent and each Lender in form and
substance.
(b) BORROWER AUTHORITY. Agent shall have received in form and
substance satisfactory to it (i) a copy of a resolution adopted by the Board of
Directors of Borrowers authorizing the execution, delivery and performance of
this Agreement and the other Loan Documents certified by the Secretary of
Borrowers; (ii) evidence of the authority and specimen signatures of the persons
who have signed this Agreement and the other Loan Documents; and (iii) such
other evidence of corporate authority as Agent shall reasonably require.
(c) LEGAL OPINION. Agent on behalf of each Lender shall have
received the legal opinion of the law firm of Ater Wynne Hewitt Dodson &
Skerritt, L.L.P., as counsel to Borrowers, substantially in the form attached as
Exhibit 3.1 and dated as of the date hereof.
(d) FEES. Agent shall have received payment from Borrowers of the
fees described in Section 2.9(a).
(e) MATERIAL ADVERSE CHANGE. There has been no material adverse
change in the operations, business, or condition, including financial condition
of the Borrowers and their Subsidiaries, taken as a whole since March 31, 1998.
(f) NOTICE OF BORROWING. Agent shall have received the Notice of
Borrowing in respect of such Loan.
(g) NO DEFAULT. At the date of the Loan, no Default or Event of
Default shall have occurred and be continuing or will have occurred as the
result of the making of the Loan; and the representations and warranties of
Borrowers in Article 4 shall be true on and as of such date with the same force
and effect as if made on and as of such date.
(h) OTHER INFORMATION. Agent and each Lender shall have received
such other statements, opinions, certificates, documents and information as it
may reasonably request in order to satisfy itself that the foregoing conditions
have been fulfilled.
ARTICLE 4
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REPRESENTATIONS AND WARRANTIES
Borrowers represent and warrant as follows:
Section 4.1 CORPORATE EXISTENCE AND POWER. Northwest Pipe Company is a
corporation duly incorporated and validly existing under the laws of the State
of Oregon. Thompson Pipe and Steel Company is a corporation duly incorporated
and validly existing under the laws of the State of Colorado and is a wholly
owned subsidiary of Northwest Pipe Company. Thompson Steel Pipe Company is a
corporation duly incorporated and validly existing under the laws of the State
of Delaware and is a wholly owned subsidiary of Thompson Pipe and Steel Company.
Borrowers are duly qualified to do business in each other jurisdiction where the
nature of their activities or the ownership of their properties requires such
qualification, except to the extent that failure to be so qualified does not
have a material adverse effect on its business, operations or financial
condition. Borrowers have full corporate power and authority to carry on their
business as presently conducted, to own and operate their properties and assets,
and to execute, deliver and perform the Loan Documents. Except as described in
this Section, no Borrower has any Subsidiary except that Northwest Pipe Company
has as subsidiaries Southwestern Pipe, Inc., a Texas corporation, and P & H Tube
Corporation, a Texas corporation.
Section 4.2 CORPORATE AUTHORIZATION. The execution, delivery and
performance by Borrowers and their Subsidiaries of the Loan Documents and any
borrowing thereunder, has been duly authorized by all necessary corporate
action, and does not require any shareholder approval or the approval or consent
of any trustee or the holders of any Funded Indebtedness of Borrowers except
such as have been obtained (certified copies thereof having been delivered to
Agent), does not contravene any law, regulation, rule or order binding on them
or their Articles of Incorporation or Bylaws and does not contravene the
provisions of or constitute a default under any indenture or any material
mortgage, contract or other agreement or instrument to which Borrowers or any of
their Subsidiaries are a party or by which Borrowers or any of their
Subsidiaries, or any of their properties, may be bound or affected.
Section 4.3 GOVERNMENT APPROVALS, ETC. No Government Approval or filing
or registration with any Governmental Authority is required for the making and
performance by Borrowers of the Loan Documents or in connection with any of the
transactions contemplated hereby or thereby, except such as have been heretofore
obtained and are in full force and effect (certified copies thereof having been
delivered to Agent), or except such approvals, filings or registrations, the
absence of which would not have a material adverse effect on the business of
Borrowers.
Section 4.4 BINDING OBLIGATIONS, ETC. This Agreement has been duly
executed and delivered by Borrowers and constitutes, and the other Loan
Documents when duly executed and delivered by Borrowers will constitute, the
legal, valid and binding obligations of Borrowers enforceable against Borrowers
in accordance with their respective terms except as such enforceability may be
limited by applicable bankruptcy, insolvency, or similar laws affecting the
enforcement of creditors' rights generally or by the exercise of judicial
discretion in accordance with general principles of equity.
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Section 4.5 LITIGATION. Except as described on Schedule 4.5, there are
no actions, proceedings, investigations, or claims against or affecting
Borrowers or their Subsidiaries now pending before any court, arbitrator or
Governmental Authority, which, if determined adversely to Borrowers or any
Subsidiary, would be likely to have a material adverse effect on the Borrowers
or any Subsidiary, or which seeks a judgment in excess of $500,000 which is not
fully insured. Also, Borrowers do not have knowledge that any of the foregoing
have been threatened or that a basis for any of the foregoing exists.
Section 4.6 FINANCIAL CONDITION. The consolidated balance sheet of
Borrowers and their Subsidiaries as at March 31, 1998, and the related
statements of income and retained earnings of Borrowers and their Subsidiaries
for the fiscal year then ended, copies of which have been furnished to Agent and
Lenders, fairly present the consolidated financial condition of Borrowers and
their Subsidiaries as at such date and the consolidated results of operations of
Borrowers for the period then ended, all in accordance with GAAP. Neither
Borrowers nor their Subsidiaries had on such date any material contingent
liabilities, unusual forward or long-term commitments or unrealized or
anticipated losses from any unfavorable commitments, except as referred to or
reflected or provided for in that balance sheet and in the notes to those
financial statements and since that date there has been no material adverse
change in the financial condition or operations of Borrowers or their
Subsidiaries.
Section 4.7 TITLE, LIENS AND ENVIRONMENTAL MATTERS. Borrowers or their
Subsidiaries have good and marketable title to each of the properties and assets
reflected on the financial statements described in Section 4.6 (except such as
have been since sold or otherwise disposed of in the ordinary course of
business). No assets or revenues of Borrowers or their Subsidiaries are subject
to any material Lien except as required or permitted by this Agreement,
disclosed in the financial statements described in Section 4.6 or otherwise
disclosed to the Agent in writing prior to the date of this Agreement. Except
as set forth in Schedule 4.7, to the best of Borrowers' knowledge, all
properties of Borrowers and their Subsidiaries, and their use thereof comply in
all material respects with applicable zoning and use restrictions and with
applicable laws and regulations relating to the environment. Except as
disclosed in Schedule 4.7, to the best of Borrowers' knowledge, there are no
past or present events, conditions, circumstances, activities, practices,
incidents or actions at or in connection with any of the realty or other
premises owned, leased, operated, used or held at any time by Borrowers or their
subsidiaries which could reasonably be expected to interfere with or prevent the
continued material compliance with any laws or regulations relating to
underground storage tanks or any other Environmental Laws or give rise to any
material legal liability or otherwise form the basis of any claim, action, suit,
proceedings, hearings or investigation against or affecting Borrowers in a
material way under the Environmental Laws. Neither Borrowers nor their
Subsidiaries have commissioned or otherwise come to possess any environmental
audit or report concerning such premises or any portion thereof except such as
have been disclosed to Lenders prior to the date hereof.
Section 4.8 TAXES. Borrowers and their subsidiaries have filed all tax
returns and reports required of them, have paid all Taxes which are shown to be
due and payable on such returns and reports, or have provided adequate reserves
for payment all contested Tax payments. The charges, accruals and reserves on
the books of Borrowers in respect of Taxes for all fiscal periods to date are
accurate in all material respects and there are no material questions or
21
disputes between Borrowers and any Governmental Authority with respect to any
Taxes except as disclosed in the balance sheet referred to in Section 4.6 or
otherwise disclosed to Agent in writing prior to the date of this Agreement.
Section 4.9 LAWS, ORDERS, OTHER AGREEMENTS. Neither Borrowers nor any
of their Subsidiaries is in violation of or subject to any contingent liability
on account of any laws, statutes, rules, regulations and orders of any
Governmental Authority, except for violations which in the aggregate do not have
a material adverse effect on the business, operations or financial condition of
Borrowers or such Subsidiary. Neither Borrowers nor any of their Subsidiaries
is in material breach of or default under any material agreement to which it is
a party or which is binding on it or any of its assets.
Section 4.10 FEDERAL RESERVE REGULATIONS. Borrowers are not engaged
principally or as one of its important activities in the business of extending
credit for the purpose of purchasing or carrying any margin stock (within the
meaning of Federal Reserve Regulation U), and no part of the proceeds of any
Loan will be used to purchase or carry any such margin stock or to extend credit
to others for the purpose of purchasing or carrying any such margin stock or for
any other purpose that violates the applicable provisions of any Federal Reserve
Regulation. Borrowers will furnish to any Lender on request a statement
conforming with the requirements of Regulation U.
Section 4.11 YEAR 2000 COMPLIANCE. Each Borrower has made an assessment
of the effect of the Year 2000 issue on its hardware, operating and applications
software. Each Borrower has or is obtaining certification that its primary
operating systems and application software packages will properly recognize
calendar dates beginning in the year 2000. In addition, each Borrower is
discussing with its major vendors and customers the possibility of interface or
service difficulties relating to the Year 2000 issue. Each Borrower plans to
complete its examination of the effect of the Year 2000 issue on all of its
application and operating systems by the end of 1998. To date, no significant
concerns have been identified and accordingly the Borrowers do not currently
expect to incur material costs in connection with the Year 2000 issue.
Section 4.12 ERISA.
(a) No Employee Plan or trust created thereunder, or any trustee or
administrator thereof, has engaged in a "prohibited transaction" (as such term
is defined in Section 406 of ERISA or Section 4975 of the Code) which could
subject such Employee Plan or any other Employee Plan, any trust created
thereunder, or any trustee or administrator thereof, or any party dealing with
any Employee Plan or any such trust to any material tax or penalty on prohibited
transactions imposed by Section 502 of ERISA or Section 4975 of the Code.
(b) Each Employee Plan has been operated in material compliance with
its terms and applicable provisions of ERISA and the Code. Each Pension Plan
intended to qualify under Section 401(a) of the Code has obtained (or is in the
process of obtaining) a favorable determination letter from the IRS.
22
(c) Except for underfunding revealed on Schedule B of 1996 IRS Form
5500, for both the Thompson Pipe & Steel Company Union Pension Plan and the
Thompson Pipe & Steel Company Retirement Plan, (i) there is no "accumulated
funding deficiency" (as defined in Section 302 of ERISA and Section 412 of the
Code) with respect to any Employee Plan; (ii) no event has occurred, or is
threatened or about to occur, that would constitute a "reportable event" within
the meaning of Section 4043(b) of ERISA; (iii) neither Borrowers nor any
Affiliate have incurred any liability to the Pension Benefit Guaranty
Corporation ("PBGC"), except for the payment of premiums, which have been paid
on a timely basis; (iv) with respect to any Employee Plan subject to Title IV of
ERISA, such plan could be terminated as of the date of this Agreement without
Borrowers incurring any liability under Title IV of ERISA, and all benefits
accrued up to the date of this Agreement (whether or not vested) would be fully
funded in accordance with the actuarial assumptions and methods utilized by such
Employee Plan for valuation purposes; and (v) with respect to any Employee Plans
that are "multiemployer plans" under Section 3(37) of ERISA, (1) neither
Borrowers nor any Affiliate have incurred any withdrawal liability within the
meaning of Section 4201 of ERISA, or had such liability asserted, (2) no such
Employee Plan is in reorganization (under Section 4241(a) of ERISA), and (3) the
vested and accrued liabilities of the Employee Plans are fully funded and if
Borrowers or Affiliates were to withdraw from such plans, there would be no
withdrawal liability, as defined in Title IV, subtitle E of ERISA.
Section 4.13 INVESTMENT COMPANY; PUBLIC UTILITY HOLDING COMPANY.
Borrowers are not (a) an "investment company" or a company "controlled" by an
investment company within the meaning of the Investment Company Act of 1940, as
amended; or (b) a "holding company" or a "subsidiary company" of a "holding
company" or an "Affiliate" of either a "holding company" or a "subsidiary
company" within the meaning of the Public Utility Holding Company Act of 1935,
as amended.
Section 4.14 SOLVENCY. Each Borrower is Solvent and shall be Solvent
immediately after the consummation of the transactions contemplated by this
Agreement. Borrowers are not incurring the obligations contemplated by this
Agreement for the purposes of hindering or delaying or defrauding their
respective present or future creditors.
Section 4.15 REPRESENTATIONS AS A WHOLE. This Agreement, the other Loan
Documents, the financial statements referred to in Section 4.6, and all other
instruments, documents, certificates and statements furnished to Agent and
Lenders by Borrowers, taken as a whole, do not contain any untrue statement of a
material fact or omit to state any material fact necessary in order to make the
statements contained herein or therein not misleading. Without limiting the
foregoing, each of the representations and warranties made by Borrowers in the
other Loan Documents is true and correct on and as of the date when made, on and
as of the date hereof, and on and as of each date this representation is deemed
made hereunder with the same force and effect as if made on and as of such
dates.
ARTICLE 5
AFFIRMATIVE COVENANTS
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So long as Agent or any Lender shall have any Commitment hereunder or
there shall be any outstanding Letters of Credit and until payment in full of
each Loan and performance of all other obligations of Borrowers under this
Agreement and the other Loan Documents, Borrowers agree to do all of the
following unless the Majority Lenders shall otherwise consent in writing.
Section 5.1 USE OF PROCEEDS FROM LOANS/USE OF LETTERS OF CREDIT. The
proceeds of the Loans will be used to repay existing secured debt, to finance
accounts receivable and inventory of Borrowers and their Subsidiaries and in
connection with the general corporate requirements incurred in the ordinary
course of Borrowers' business. The Letters of Credit will be used to replace
existing letters of credit supporting Caldwell County, Kentucky and "KREDA"
industrial revenue bonds, or general corporate purposes.
Section 5.2 PRESERVATION OF CORPORATE EXISTENCE, ETC. Borrowers will,
and will cause their Subsidiaries to, preserve and maintain their corporate
existence, rights, franchises and privileges in the jurisdictions of their
incorporation and will, and will cause their Subsidiaries to, qualify and remain
qualified as foreign corporations in each jurisdiction where qualification is
necessary in view of their business and operations or the ownership of their
properties.
Section 5.3 VISITATION AND EXAMINATION RIGHTS. At any reasonable time,
and from time to time, Borrowers will, and will cause each Subsidiary, to permit
Agent and Lenders to examine and make copies of and abstracts from the records
and books of account of and to visit the properties of Borrowers and each
Subsidiary and to discuss the affairs, finances and accounts of Borrowers and
each Subsidiary with any of its officers or directors.
Section 5.4 KEEPING OF BOOKS AND RECORDS. Borrowers will keep adequate
records and books of account in which complete entries will be made, in
accordance with GAAP, reflecting all financial transactions of Borrowers and
their Subsidiaries.
Section 5.5 MAINTENANCE OF PROPERTY, ETC. Borrowers will maintain and
preserve and will cause each Subsidiary to maintain and preserve all of their
respective properties in reasonably good working order and condition, ordinary
wear and tear excepted, and will from time to time make all needed repairs,
renewals and replacements so that the efficiency of such properties shall be
fully maintained and preserved.
Section 5.6 COMPLIANCE WITH LAWS, ETC. Borrowers will comply and will
cause each Subsidiary to comply in all material respects with all laws,
regulations, rules, and orders of Governmental Authorities, including without
limitation, Environmental Laws applicable to Borrowers or any Subsidiary or to
their respective operations or property, except any thereof whose validity is
being contested in good faith by appropriate proceedings upon stay of execution
of the enforcement thereof.
Section 5.7 OTHER OBLIGATIONS. Borrowers will pay and discharge and
cause each Subsidiary to pay and discharge before the same shall become
delinquent all material Funded Debt, Taxes and other material obligations for
which either Borrowers or any Subsidiary is liable or to which their income or
property is subject and all material claims for labor and materials or
24
supplies which claims if unpaid might become by law a Lien upon assets of either
Borrowers or any Subsidiary. However, Borrowers and Subsidiaries may refuse to
pay any item described above whose validity or amount is being contested in good
faith by a Borrowers or Subsidiary in appropriate proceedings with provision
having been made to the satisfaction of Agent for the payment thereof in the
event the contest is determined adversely to such Borrowers or such Subsidiary.
Section 5.8 INSURANCE. Borrowers will keep in force and will cause each
Subsidiary to keep in force upon all of their respective properties and
operations policies of insurance carried with responsible companies in such
amounts and covering all such risks as shall be customary in the industry and
reasonably satisfactory to Agent.
Section 5.9 FINANCIAL INFORMATION. Borrowers will deliver to Agent in
sufficient copies for distribution to Agent and each Lender:
(a) ANNUAL 10-K AND ANNUAL REPORT AND AUDITED FINANCIAL STATEMENTS.
As soon as available, and in any event within 105 days after the end of each
fiscal year of Northwest Pipe Company the Annual Report and 10-K report of
Northwest Pipe Company. Unless already included within the annual report and
10-K report, Borrowers will deliver to Agent, as soon as available, in any event
within 105 days after the end of each fiscal year of Borrowers, the consolidated
balance sheet of Borrowers and their Subsidiaries as of the end of such fiscal
year and the related consolidated statements of income and retained earnings and
statement of changes in financial position of Borrowers and their Subsidiaries
for such fiscal year, accompanied by the audit report thereon by independent
certified public accountants selected by Borrowers and reasonably satisfactory
to Agent (which reports shall be prepared in accordance with GAAP and shall not
be qualified by reason of restricted or limited examination of any material
portion of the records of Borrowers or any Subsidiary and shall contain no
disclaimer of opinion or adverse opinion except such as Agent in its sole
discretion determines to be immaterial).
(b) ANNUAL CONSOLIDATING STATEMENTS. As soon as available, and in
any event within 105 days after the end of each fiscal year of Northwest Pipe
Company, a copy of the unaudited division and product line consolidating income
statements of the Borrowers and Subsidiaries as of the end of such year.
(c) QUARTERLY 10-Q REPORT, UNAUDITED FINANCIAL STATEMENTS AND
CONSOLIDATING STATEMENTS. As soon as available and in any event within 60 days
after the end of each fiscal quarter, except for fiscal year end, the 10-Q
report of Northwest Pipe Company. Unless already included within the 10-Q
report, Borrowers will deliver to Agent, as soon as available, and in any event
within 60 days after the end of each such fiscal quarter, the unaudited
consolidated balance sheet and statement of income of Borrowers and their
Subsidiaries as of the end of such quarter. At the same time, Borrowers shall
deliver to Agent the division and product line consolidating income statements
of Borrowers and their Subsidiaries as of the end of such fiscal quarter. The
statements required in this subSection shall be accompanied by a certificate of
the chief financial officer of Borrowers certifying that the balance sheets and
statements required in this subSection have been prepared in accordance with
GAAP and present fairly the financial
25
position and results of Borrowers and each Subsidiary, and that there has been
no material adverse change in the financial condition or operations of Borrowers
and their Subsidiaries as shown on the balance sheet as of such date.
(d) QUARTERLY COMPLIANCE REPORTS. Within 60 days after the end of
each of the first three fiscal quarters and within 105 days of Borrowers' fiscal
year end, a certificate of the chief financial officer of Borrowers, that as of
the close of such fiscal quarter or fiscal year no Event of Default had
occurred, and was continuing, and that as of such date, Borrowers were in
compliance with the provisions of Sections 5.12, 5.13 and 5.14. Such
certificate shall show Borrowers' calculations with respect to Sections 5.12,
5.13 and 5.14.
(e) FINANCIAL FORECAST AND BUDGET. As soon as available, and in any
event within 90 days after the end of each fiscal year of Borrowers, a budget
and a financial forecast forecasting the results of operations for the ensuing
fiscal year in form satisfactory to Agent. Such budget and financial forecast
will be in quarterly format and include both income and balance sheet forecasts.
(f) OTHER. All other statements, reports and other information as
Agent or any Lender may reasonably request concerning the financial condition
and business affairs of Borrowers and their Subsidiaries.
Section 5.10 NOTIFICATION. Promptly after learning thereof, Borrowers
shall notify Agent of:
(a) any action, proceeding, investigation or claim against or
affecting Borrowers or any of their Subsidiaries instituted
before any court, arbitrator or Governmental Authority or, to
Borrowers' knowledge, threatened to be instituted, which might
reasonably be determined adversely to Borrowers or any Subsidiary
and which, if determined adversely, would be likely to have a
material adverse effect on Borrowers or any Subsidiary, or which
seeks a judgment exceeding $500,000, which is not fully insured;
(b) any substantial dispute between either Borrowers or any
Subsidiary and any Governmental Authority;
(c) any labor controversy which has resulted in or, to Borrowers'
knowledge, threatens to result in a strike which would materially
affect the business operations of Borrowers or any Subsidiary;
and
(d) the occurrence of any Event of Default or Default. In the case
of the occurrence of an Event of Default or Default, Borrowers
will deliver to Agent an Officer's Certificate specifying the
nature thereof, the period of existence thereof, and what action
Borrowers propose to take with respect thereto.
26
Section 5.11 ADDITIONAL PAYMENTS; ADDITIONAL ACTS. From time to time,
Borrowers will:
(a) pay or reimburse Agent and Lenders on request for all Taxes
(other than Taxes imposed on the net or gross income of Agent or
Lenders) imposed on any Loan Document or payment and for all
reasonable expenses, including legal fees, incurred by Agent in
connection with the preparation of the Loan Documents or the
making or administrating of the Loans or the issuance of any
letter of credit;
(b) pay or reimburse Agent and any Lender for all reasonable
expenses, including legal fees, incurred by Agent or any Lender
in connection with the enforcement by judicial proceedings of any
of the rights of Agent or any Lender under the Loan Document, in
which Lender or Agent prevails;
(c) obtain and promptly furnish to Agent evidence of all such
Government Approvals as may be required to enable Borrowers to
comply with its obligations under the Loan Documents and to
continue in business as conducted on the date hereof without
material interruption or interference; and
(d) execute and deliver all such instruments and perform all such
other acts as Agent or any Lender may reasonably request to carry
out the transactions contemplated by the Loan Documents.
Section 5.12 MINIMUM DEBT SERVICE COVERAGE RATIO. Borrowers, and their
Subsidiaries, on a consolidated basis, shall maintain a minimum debt service
coverage ratio of not less than 2.0:1. The minimum debt service coverage
ratio will be computed by dividing:
(a) EBITDA, less
(b) income taxes paid in cash,
(c) less dividends paid in cash
by the sum of:
(a) current portion of long term debt, plus
(b) interest expense, plus
(c) current portion of capital leases
The minimum debt service coverage ratio will be based upon the then ended fiscal
quarter plus the preceding three fiscal quarters. The current portion of long
term debt, including the current portion of capital leases, will be measured as
of the last day of the preceding fiscal year.
27
For purposes of calculating this covenant, the EBITDA for the prior fiscal year
for the "Acquisitions," as defined in SECTION 6.6, shall be included in the
calculation. The Acquisitions' EBITDA shall be incorporated on a decreasing
pro-rata basis, with 100% of the Acquisitions' EBITDA included in the
calculation for the first calendar quarter-end following closing of the
Acquisitions, 75% included in the second quarter-end, 50% included in the third
quarter-end, and 25% included in the fourth quarter-end. Beginning with the
fifth quarter following the closing of the Acquisitions, the EBITDA for the
Acquisitions' prior fiscal year shall no longer be incorporated in this
calculation.
Section 5.13 MAXIMUM FUNDED DEBT TO EBITDA. Borrowers and their
Subsidiaries, on a consolidated basis, shall maintain for each period of four
consecutive fiscal quarters a ratio of Funded Debt to EBITDA of no greater than:
PERIOD RATIO
For the four consecutive fiscal quarters ending June 3.75:1
30, 1998, and September 30, 1998
For the four consecutive fiscal quarters ending 3.25:1
December 31, 1998, and March 31, 1999
For the four consecutive fiscal quarters ending June 3.00:1
30, 1999, December 31, 1999, and March 31, 2000
For the four consecutive fiscal quarters ending at 2.75:1
the end of any fiscal quarter after March 21, 2000
For purposes of calculating this covenant, the EBITDA for the
prior fiscal year for the "Acquisitions," as defined in Section 6.6,
shall be included in the calculation. The Acquisitions' EBITDA shall
be incorporated on a decreasing pro-rata basis, with 100% of the
Acquisitions' EBITDA included in the calculation for the first
calendar quarter-end following closing of the Acquisitions, 75%
included in the second quarter-end, 50% included in the third
quarter-end, and 25% included in the fourth quarter-end. Beginning
with the fifth quarter following the closing of the Acquisitions, the
EBITDA for the Acquisitions' prior fiscal year shall no longer be
incorporated in this calculation.
Section 5.14 MINIMUM TANGIBLE NET WORTH. Borrowers, and their
Subsidiaries, on a consolidated basis shall have a minimum Tangible Net Worth
equal to or greater than the sum of:
(a) $41,000,000, plus
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(b) 70% of the cumulative Net Income of Borrowers and their
Subsidiaries for all fiscal quarters ending after December 31, 1997 in which
such Net Income was greater than zero, plus
(c) 90% of the amount by which the shareholders' equity of Borrowers
and their Subsidiaries has increased after December 31, 1997 solely as a result
of the issuance of common or preferred stock or the conversion of debt
securities into such stock.
ARTICLE 6
NEGATIVE COVENANTS
So long as Agent or any Lender shall have any Commitment hereunder or there
shall be any outstanding Letter of Credit and until payment in full of each Loan
and performance of all other obligations of Borrowers under this Agreement and
the other Loan Documents, Borrowers agree that it will not do any of the
following unless the Majority Lenders shall otherwise consent in writing.
Section 6.1 RESTRICTION ON BORROWINGS, CAPITAL LEASES AND CONTRACT
PURCHASES. Borrowers shall not and shall not permit any Subsidiary to borrow
money, enter into capital leases or enter into contracts to purchase any item on
deferred payments in any fiscal year if the total of such borrowings, leases and
contracts exceeds 3.5% of Borrowers' Tangible Net Worth in existence at the end
of Borrowers' prior fiscal year. This restriction shall not apply to the
issuance by Northwest Pipe Company of up to $75,000,000 in private placement
notes or to the Loans, or the Letters of Credit described in Articles 9 and 10.
(The limitation on the issuance of private placement notes shall apply to the
aggregate of all such notes issued since October 20, 1997.)
Section 6.2 LIQUIDATION, MERGER, SALE OF ASSETS. Borrowers shall not,
and shall not permit any Subsidiary to liquidate, dissolve or enter into any
merger, consolidation, partnership or other combination, except that Thompson
Pipe and Steel Company and/or Thompson Steel Pipe Company may be merged into
Northwest Pipe Company and, except that Borrowers may make acquisitions by
merger, as provided in Section 6.6 when Northwest Pipe Company is the survivor.
Borrowers shall not sell, lease, or dispose of assets other than in the ordinary
course of business, except that Borrowers in any one fiscal year may sell assets
not in the ordinary course of business so long as the total of such sales does
not exceed 20% of Tangible Net Worth as of the end of the prior fiscal year. In
addition, Borrowers' existing facilities in the State of Kentucky may be sold
and such sale will not be considered in applying the 20% of Tangible Net Worth
restriction set forth in this Section.
Section 6.3 RESTRICTIONS ON LIENS - NEGATIVE PLEDGE. Borrowers shall
not, and shall not permit any Subsidiary to create or suffer any Liens upon
their property except for liens securing the letter of credit facility described
in Article 10. New Liens securing amounts not exceeding $500,000 in any one
fiscal year are permitted. In addition, new liens secured by newly purchased
tangible property are permitted subject, however, to the limits described in
Section 6.1.
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Section 6.4 GUARANTIES, ETC. Borrowers shall not, and shall not permit
any Subsidiary to assume, guaranty, endorse or otherwise become directly or
contingently liable for, nor obligated to purchase, pay or provide funds for
payment of, any obligation of any other Person, other than (a) by endorsement of
negotiable instruments for deposit or collection or by similar transactions in
the ordinary course of business. Notwithstanding the foregoing restriction, any
Borrower may guaranty the obligation of any other Borrower.
Section 6.5 RESTRICTIONS ON LOANS AND ADVANCES. Borrowers shall not,
and shall not permit any Subsidiary to make any loan or advance to any officer,
director, employee or Affiliate, except for advances for travel or other
expenses in the ordinary course of business so long as the total of all advances
and loans outstanding at any one time do not exceed $500,000.
Section 6.6 RESTRICTION ON ACQUISITIONS. Borrowers shall not and shall
not permit any Subsidiary to acquire any business without Agent's prior review
and consent if the total of all business acquisitions in any one fiscal year
exceeds 10% of Tangible Net Worth as of the end of the prior fiscal year. For
purposes of 10% limitation above, acquisitions accomplished by merger shall be
valued at the fair value of all consideration given, including, without
limitation, cash, notes, assumption of debt and stock. In addition, Borrowers
shall not and shall not permit any Subsidiary to acquire any business if such
acquisition is not approved by the board of directors of the company owning such
business or is deemed by Agent to involve a hostile takeover.
Section 6.7 CHANGE IN BUSINESS. Borrowers shall not, and shall not
permit any Subsidiary to enter into a new business of substantial size which is
unrelated to Borrowers' present business.
Section 6.8 ERISA COMPLIANCE. Borrowers will not, and will not permit
any member of the Controlled Group nor any Employee Plan to:
(a) engage in any "prohibited transaction" (as such term is defined
in Section 406 of ERISA or Section 4975 of the Code) which could result in a
material liability to Borrowers;
(b) violate state or federal securities laws applicable to any
Employee Plan in any material respect; or
(c) take any action that renders the representations of Section 4.11
of this Agreement inaccurate.
ARTICLE 7
EVENTS OF DEFAULT
Section 7.1 EVENTS OF DEFAULT. The occurrence of any of the following
events shall constitute an "Event of Default" hereunder:
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(a) PAYMENT DEFAULT. Borrowers shall fail to pay when due any amount
of principal of or interest on any Loan or any other amount payable by it under
this Agreement or under any Reimbursement Agreement with Agent; or
(b) BREACH OF WARRANTY. Any representation or warranty made or
deemed made by Borrowers under or in connection with this Agreement or any Loan
Document shall prove to have been incorrect in any material respect when made or
any of Borrowers' representations regarding the year 2000 problem cease to be
true, whether or not true when made, and as a result the Majority Lenders
reasonably believe that Borrowers' financial condition or their ability to pay
their debts as they become due will be materially impaired; or
(c) BREACH OF CERTAIN COVENANTS. Borrowers shall have failed to
comply with Sections 5.12, 5.13 or 5.14 or any provision of Article 6 of this
Agreement; or
(d) BREACH OF OTHER COVENANT. Borrowers shall fail to perform or
observe any other material covenant, obligation or term of any Loan Document
executed by it and such failure shall remain unremedied for thirty (30) days
after written notice thereof shall have been given to Borrowers by Agent; or
(e) CROSS-DEFAULT. Borrowers or any Subsidiary shall fail (i) to pay
when due (whether by scheduled maturity, required prepayment, acceleration,
demand or otherwise) any indebtedness, other than an indebtedness arising under
this Agreement, which in the aggregate exceeds $250,000 and such failure shall
continue after the applicable grace period, if any, specified in the agreement
or instrument relating to such indebtedness, or (ii) to perform any term or
covenant on its part to be performed under any agreement or instrument relating
to any such indebtedness and required to be performed and such failure shall
continue after the applicable grace period, if any, specified in such agreement
or instrument, if the effect of such failure to perform is to accelerate or to
permit the acceleration of the maturity of such indebtedness, or (iii) any such
indebtedness shall be declared to be due and payable or required to be prepaid
(other than by regularly scheduled required prepayment) prior to the stated
maturity thereof; or
(f) CROSS-DEFAULT - SECURED LETTER OF CREDIT FACILITY. An event of
default shall occur under any agreement with Bank of America with respect to the
Secured Letter of Credit Facility described in Article 10; or
(g) VOLUNTARY BANKRUPTCY, ETC. Borrowers or any Subsidiary shall:
(i) file a petition seeking relief for itself under Title 11 of the United
States Code, as now constituted or hereafter amended, or file an answer
consenting to, admitting the material allegations of or otherwise not
controverting, or fail timely to controvert a petition filed against it seeking
relief under Title 11 of the United State Code, as now constituted or hereafter
amended; or (ii) file such petition or answer with respect to relief under the
provisions of any other now existing or future applicable bankruptcy,
insolvency, or other similar law of the United States of America or any state
thereof or of any other country or jurisdiction providing for the
reorganization, winding-up or liquidation of corporations or an arrangement,
composition, extension or adjustment with creditors; or
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(h) INVOLUNTARY BANKRUPTCY, ETC. Either an order for relief shall be
entered against Borrowers or any Subsidiary under Title 11 of the United States
Code, as now constituted or hereafter amended, which order is not stayed; or
upon the entry of an order, judgment or decree by operation of law or by a court
having jurisdiction in the premises which is not stayed adjudging it a bankrupt
or insolvent under, or ordering relief against it under, or approving as
properly filed a petition seeking relief against it under the provisions of any
other now existing or future applicable bankruptcy, insolvency or other similar
law of the United States of America or any state thereof or of any other country
or jurisdiction providing for the reorganization, winding-up or liquidation of
corporations or any arrangement, composition, extension or adjustment with
creditors; or appointing a receiver, liquidator, assignee, sequestrator, trustee
or custodian of Borrowers, or any Subsidiary or of any substantial part of its
or their property, or ordering the reorganization, winding-up or liquidation of
its or their affairs; or upon the expiration of ninety (90) days after the
filing of any involuntary petition against it seeking any of the relief
specified in Section 7.1(g) or this Section without the petition being dismissed
prior to that time; or
(i) INSOLVENCY, ETC. Borrowers or any Subsidiary shall (i) make a
general assignment for the benefit of its creditors or (ii) consent to the
appointment of or taking possession by a receiver, liquidator, assignee,
trustee, or custodian of all or a substantial part of the property of Borrowers
or any Subsidiary, as the case may be, or (iii) admit its insolvency or
inability to pay its debts generally as they become due, or (iv) fail generally
to pay its debts as they become due, or (v) take any action (or suffer any
action to be taken by its directors or shareholders) looking to the dissolution
or liquidation of Borrowers or any Subsidiary, as the case may be; or
(j) JUDGMENT. A final judgment or order for the payment of money in
excess of $500,000 (to the extent not fully insured) shall be rendered against
Borrowers or any Subsidiary and such judgment or order shall continue
unsatisfied and in effect for a period of thirty (30) consecutive days; or
(k) GOVERNMENT APPROVALS. Any Government Approval or registration or
filing with any Governmental Authority now or hereafter required in connection
with the performance by Borrower of its obligations set forth in the Loan
Documents shall be revoked, withdrawn or withheld or shall fail to remain in
full force and effect unless in the reasonable opinion of Agent such revocation,
withdrawal or withholding would not be likely to have a material adverse effect
on the ability of Borrowers to perform their obligations under the Loan
Documents; or
(l) OTHER GOVERNMENT ACTION. Any act of any Governmental Authority
shall, in the reasonable opinion of Agent, deprive Borrowers or any Subsidiary
of any substantial right, privilege, or franchise or substantially restrict the
exercise thereof and such act is not revoked or rescinded within sixty (60) days
after it becomes effective or within thirty (30) days after notice from Agent,
whichever first occurs; or
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(m) MATERIAL ADVERSE CHANGE. There occurs a material adverse change
in the operations, business or condition, including financial condition, of the
Borrowers and their Subsidiaries, taken as a whole after the date of this
Agreement.
Section 7.2 CONSEQUENCES OF DEFAULT. If an Event of Default described
in Section 7.1(g), 7.1(h) or 7.1(i) shall occur and be continuing, then in any
such case, the Commitment shall be immediately terminated and, if any Loans
shall have been made or issued, the principal of and interest on the Loans, and
all other sums payable by Borrowers under the Loan Documents and the face amount
of the Letters of Credit shall become immediately due and payable all without
notice or demand of any kind.
If any other Event of Default shall occur and be continuing, then in any
such case and at any time thereafter so long as any such Event of Default shall
be continuing, Agent shall at the request, or may with the consent of the
Majority Lenders, immediately terminate the Commitments, and, if any Loans or
Letters of Credit shall have been made or issued, Agent shall at the request, or
may with the consent of the Majority Lenders, declare the principal of and the
interest on the Loans, the face amount of the Letters of Credit and all other
sums payable by Borrowers under the Loan Documents immediately due, whereupon
the same shall become immediately due and payable all without protest,
presentment, notice or demand, all of which Borrowers expressly waives.
ARTICLE 8
THE AGENT
Section 8.1 AUTHORIZATION AND ACTION. Each Lender hereby appoints and
authorizes Agent to take such action as agent on its behalf and to exercise such
powers under this Agreement as are delegated to Agent by the terms hereof,
together with such powers as are reasonably incidental thereto. Agent shall
have no duties or responsibilities except those expressly set forth in this
Agreement. The duties of Agent shall be mechanical and administrative in
nature; Agent shall not have by reason of this Agreement a fiduciary
relationship in respect of any Lender; and nothing in this Agreement or the
other Loan Documents, expressed or implied, is intended to or shall be so
construed as to impose upon Agent any obligations in respect of this Agreement
or the other Loan Documents except as expressly set forth herein. In any
instance where Agent is required or permitted to consent to or approve any
action of Borrowers under this Agreement, such consent or approval shall be
deemed to be administrative in nature and may be given or withheld in Agent's
sole discretion unless the Loan Document states otherwise. As to any matters
not expressly provided for by this Agreement, including enforcement or
collection of the Loans, Agent shall not be required to exercise any discretion
or take any action, but shall be required to act or to refrain from acting (and
shall be fully protected in so acting or refraining) upon the instructions of
the Majority Lenders, and such instructions shall be binding on all Lenders,
PROVIDED that Agent shall not be required to take any action which exposes Agent
to personal liability or which is contrary to the Loan Documents or applicable
law. Without the consent of all Lenders, the Agent shall not:
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- Change any Lender's Commitment or the total of all Lenders'
Commitments.
- Change the definition of Majority Lenders.
- Change the timing or rates of interest payments.
- Change the timing or amounts of principal payment due in respect
of Loans.
- Amend this Section 8.1.
The terms of this Article shall not be amended without the prior written consent
of Agent (acting for its own account). In the absence of instructions from the
Majority Lenders, Agent shall have authority (but not the obligation), in its
sole discretion, to take or not to take any action, unless this Agreement
specifically requires the consent of Lenders, and any such action or failure to
act shall be binding on all Lenders. Each Lender shall execute and deliver such
additional instruments, including powers of attorney in favor of Agent, as may
be necessary or desirable to enable Agent to exercise its powers hereunder.
Section 8.2 DUTIES AND OBLIGATIONS.
(a) Neither Agent nor any of its directors, officers, agents or
employees shall be liable for any action taken or omitted to be taken by it or
any of them under or in connection with this Agreement or any other Loan
Document except for its or their own gross negligence or willful misconduct.
Without limiting the generality of the foregoing, Agent (i) may treat each
Lender which is a party hereto as the party entitled to receive payments
hereunder until Agent receives written notice of the assignment of such Lender's
interest herein signed by such Lender and made in accordance with the terms
hereof and a written agreement of the assignee that it is bound hereby to the
same extent as it would have been had it been an original party hereto, in each
case in form satisfactory to Agent; (ii) may consult with legal counsel
(including counsel for Borrowers), independent public accountants and other
experts selected by it and shall not be liable for any action taken or omitted
to be taken in good faith by it in accordance with the advice of such experts;
(iii) makes no warranty or representation to any Lender and shall not be
responsible to any Lender for any statements, warranties or representations made
in or in connection with this Agreement, any other Loan Document, or in any
instrument or document furnished pursuant hereto or thereto; (iv) shall not have
any duty to ascertain or to inquire as to the performance of any of the terms,
covenants, or conditions of the Loan Documents, or of any instrument or document
furnished pursuant thereto on the part of Borrowers or as to the use of the
proceeds of any Loan or the proceeds received in respect of any Letter of
Credit; (v) shall not be responsible to any Lender for the due execution,
legality, validity, enforceability, genuineness, effectiveness, or value of this
Agreement, of any other Loan Document, or of any instrument or document
furnished pursuant hereto or thereto; and (vi) shall incur no liability under or
in respect to this Agreement or any other Loan Document by acting upon any oral
or written notice, consent, certificate or other instrument or writing (which
may be by cable, telex or telefax) believed by it to be genuine and signed, sent
or made by the proper party or parties or
34
by acting upon any representation or warranty of Borrowers made or deemed to be
made in this Agreement or any other Loan Document. Agent may execute any of its
duties under this Agreement or any other Loan Document by or through agents,
employees or attorneys-in-fact and shall be entitled to advice of counsel
concerning all matters pertaining to such duties. Agent shall not be
responsible for the negligence or misconduct of any agent or attorney-in-fact
that it selects with reasonable care.
(b) Agent will promptly transmit to each Lender copies of all
documents received from Borrowers pursuant to the requirements of this Agreement
other than documents which by the terms of this Agreement, Borrowers are
obligated to deliver directly to Lenders.
(c) Each Lender or its assignee shall furnish to Agent in a timely
fashion such documentation (including, but not limited to, IRS Forms Nos. W-8,
1001 and 4224) as may be reasonably requested by Agent to establish such
Lender's status for tax withholding purposes.
(d) Agent shall not be deemed to have knowledge or notice of the
occurrence of any Default or Event of Default under any of the Loan Documents
unless Agent has received written notice from a Lender or Borrowers referring to
one or more of the Loan Documents, describing such Default or Event of Default
and stating that such notice is a "notice of default." In the event that Agent
receives such a notice, Agent shall promptly notify each Lender.
Section 8.3 DEALINGS BETWEEN AGENT AND BORROWERS. With respect to its
Commitment and the Loans made by it, Agent shall have the same rights, powers
and responsibilities under this Agreement and the other Loan Documents as any
other Lender and may exercise the same as though it were not Agent, and the term
"Lender" as used herein and in the other Loan Documents shall unless otherwise
expressly indicated include Agent in its Lender capacity. The limitations,
disclaimers, waivers and the like set forth in Article 8 shall apply to the
Agent solely in its capacity as Agent for Lenders, and not in its capacity as a
Lender. Agent may accept deposits from, lend money to, act and generally engage
in any kind of business with Borrowers and any person which may do business with
Borrowers, all as if Agent were not Agent hereunder and without any duty to
account therefor to Lenders.
Section 8.4 LENDER CREDIT DECISION. Each Lender acknowledges that it
has, independently and without reliance upon Agent or the other Lenders and
based upon such documents and information as it has deemed appropriate, made its
own credit analysis and decision to enter into this Agreement and the other Loan
Documents. Each Lender also acknowledges that it will, independently and
without reliance upon Agent or the other Lenders and based upon such documents
and information as it shall deem appropriate at the time, continue to make its
own credit decisions in taking or not taking action under this Agreement and the
other Loan Documents.
Section 8.5 INDEMNIFICATION. Lenders agree to indemnify Agent (to the
extent not reimbursed by Borrowers) ratably according to their respective Funded
Pro Rata Shares from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind or nature whatsoever which may be imposed on, incurred by or
asserted against Agent in any way relating to or arising out of this Agreement
or any other Loan Document or any action taken or omitted by Agent under this
Agreement or
35
any other Loan Document, except any such as result from Agent's gross negligence
or willful misconduct. Without limiting the foregoing, each Lender agrees to
reimburse Agent promptly on demand in proportion to its Funded Pro Rata Share
for any out-of-pocket expenses, including legal fees, incurred by Agent in
connection with the administration or enforcement or preservation of any rights
under any Loan Document (to the extent that Agent is not reimbursed for such
expenses by Borrowers) including without limitation, expenses incurred in
connection with any Letter of Credit.
Section 8.6 SUCCESSOR AGENT. The Agent may, and at the request of the
Majority Banks shall, resign as Agent upon 30 days' notice to the Banks. If the
Agent resigns under this Agreement, the Majority Banks shall appoint from among
the Banks a successor agent for the Banks which successor agent shall be
approved by Borrowers. If no successor agent is appointed prior to the
effective date of the resignation of the Agent, the Agent may appoint, after
consulting with the Banks and Borrowers, a successor agent from among the Banks.
Upon the acceptance of its appointment as successor agent hereunder, such
successor agent shall succeed to all the rights, powers and duties of the
retiring Agent and the term "Agent" shall mean such successor agent and the
retiring Agent's appointment, powers and duties as Agent shall be terminated.
After any retiring Agent's resignation hereunder as Agent, the provisions of
this Article 8 and other applicable Sections of this Agreement shall inure to
its benefit as to any actions taken or omitted to be taken by it while it was
Agent under this Agreement. If no successor agent has accepted appointment as
Agent by the date which is 30 days following a retiring Agent's notice of
resignation, the retiring Agent's resignation shall nevertheless thereupon
become effective and the Banks shall perform all of the duties of the Agent
hereunder until such time, if any, as the Majority Banks appoint a successor
agent as provided for above.
Any company into which Agent may be merged or converted or with which it
may be consolidated or any company resulting from any merger, conversion or
consolidation to which it shall be a party or any company to which Agent may
sell or transfer all or substantially all of its agency relationships shall be
the successor to Agent without the execution or filing of any paper or further
act, anything herein to the contrary notwithstanding.
Section 8.7 INDEPENDENT DETERMINATION FOR FUNDING AND CLOSING. For
purposes of determining compliance with the conditions specified in Section 3.1
each Lender that has executed this Agreement shall be deemed to have consented
to, approved or accepted or to be satisfied with each document or other matter
sent by the Agent to such Lender for consent, approval, acceptance or
satisfaction, or required thereunder to be consented to or approved by or
acceptable or satisfactory to the Lender. This Section is solely for the benefit
of the Agent and not for the benefit of Borrowers or any other person.
ARTICLE 9
LETTERS OF CREDIT
Section 9.1 LETTERS OF CREDIT. Borrowers may request that Agent issue
letters of credit for Borrowers' account in accordance with the terms and
conditions of this Article.
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Section 9.2 MANNER OF REQUESTING LETTERS OF CREDIT.
(a) From time to time, Borrowers may request that Agent issue Standby
or Commercial Letters of Credit for Borrowers' account or extend or renew any
existing Letters of Credit. Such request will be made by delivering a written
request for the issuance, extension or renewal of such a Letter of Credit to
Agent. Each such request shall be deemed to constitute a representation and
warranty by Borrowers that as of the date of such request, statements set forth
in Article 4 are true and correct and that no Default or Event of Default has
occurred and is continuing. Each such request shall specify the face amount of
the requested Letter of Credit, the proposed date of expiration, the name of the
intended beneficiary thereof, and whether such Letter of Credit is a Standby
Letter of Credit or a Commercial Letter of Credit or an extension or renewal
thereof.
(b) Borrowers shall pay Agent for the account of Lenders such letter
of credit fees calculated and payable in accordance with Agent's normal and
customary practices for commercial letters of credit and shall pay 9/10ths of 1%
per annum of the face amount of any Standby Letter of Credit. Borrowers shall
be required to pay Agent only one-half of the letter of credit fee for certain
standby letters of credit issued in favor of CIT Group/Business Credit, Inc.,
which guaranteed Dai-Ichi Kangyo Bank letters of credit replaced by Agent
shortly prior to the date of this Agreement. The letter of credit fees shall be
paid on issuance and annually thereafter. Each letter of credit requested
hereunder shall be in a face amount such that after issuance of such letter of
credit, the Total Utilization will not exceed the Total Revolving Loan
Commitment. In addition, after such issuance, the Total Letter of Credit Usage
must not exceed $6,000,000. Each Letter of Credit requested shall be issued
with a maximum maturity of one year and shall have an expiration date not later
than one year after the Revolving Loan Maturity Date. The maturity date for
each Standby Letter of Credit may be automatically extended each year for an
additional year unless the Agent gives Borrowers 45 days written notice to the
contrary.
(c) Borrowers shall execute a letter of credit application. Either
as part of the application or as a separate document, Borrowers shall, at
Agent's request, execute a reimbursement agreement, in the standard form then
used by Agent, in respect of each Letter of Credit requested hereunder. Such
reimbursement agreements may be amended from time to time, and are collectively
referred to herein as the "Reimbursement Agreements".
(d) Subject to the satisfaction of the conditions precedent set forth
in Article 3 and Borrowers' compliance with the terms of this Section, Agent
shall issue and deliver its letter of credit to Borrowers or to the designated
beneficiary at such address as Borrowers may specify. New Letters of Credit and
extensions or renewals of any existing Letters of Credit shall contain terms and
conditions customarily included in Agent's letters of credit and shall otherwise
be in a form acceptable to Agent.
(e) Borrowers and Lenders have executed Pledge and Security
Agreements dated May 27, 1998 with respect to certain Bonds supported by letters
of credit governed by this Article 9. Such Pledge Agreements continue to be in
force.
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(f) In the event of any conflict between the terms of any
Reimbursement Agreement or Letter of Credit and the terms of this Agreement, the
terms of this Agreement shall control, unless Agent has otherwise agreed in a
writing.
Section 9.3 INDEMNIFICATION; INCREASED COSTS. Borrowers agree to
indemnify Agent, and any Lender on demand for any and all additional costs,
expenses, or damages reasonably incurred by such Agent or Lender, directly or
indirectly, arising out of the issuance of any Letter of Credit or the purchase
of any Letter of Credit Risk Participation, including, without limitation, any
costs of maintaining reserves in respect thereof and any premium rates imposed
by the Federal Deposit Insurance Corporation.
If at any time after the date of this Agreement, the introduction of or any
change in applicable law, rule or regulation or in the interpretation or
administration thereof by any Governmental Authority charged with the
interpretation of administration thereof, or compliance by Agent or Lender with
any requests directed by such Governmental Authority (whether or not having the
force of law) shall, with respect to any Letter of Credit or Letter of Credit
Risk Participation, subject Agent or such Lender to any Tax or impose, modify or
deem applicable any reserve, special deposit or similar requirements against the
assets of, deposits with or for the account of Agent, or such Lender or shall
impose on Agent or such Lender any other conditions affecting the Letters of
Credit or Letter of Credit Risk Participations and the result of any of the
foregoing is to increase the cost to Agent, or such Lender of issuing a Letter
of Credit or holding a Letter of Credit Risk Participation or to reduce the
amount of any sum received or receivable by Agent, or such Lender with respect
to the Letters of Credit or Letter of Credit Risk Participations, then, upon
demand by Agent, or such Lender, Borrowers shall pay to Agent or such Lender
such additional amount or amounts as will compensate Agent, or such Lender for
such increased cost or reduction.
Borrowers agree to indemnify and hold Agent and Lenders (each, an
"Indemnitee") harmless from and against any and all (a) Taxes payable in
connection with Letters of Credit, Letter of Credit Risk Participations or the
provisions of this Agreement relating thereto, and (b) actions, claims, damages,
losses, liabilities, fines, penalties, costs, and expenses of every nature,
including reasonable attorney's fees, suffered or incurred by the Indemnitee
otherwise arising out of or relating to this Article, any Letter of Credit, or
any Letter of Credit Risk Participations; PROVIDED, HOWEVER, said
indemnification shall not apply to the extent that any such action, claim,
damage, loss, liability, fine, penalty, cost or expense arises out of or is
based solely upon the Indemnitee's willful misconduct or gross negligence.
Section 9.4 PAYMENT BY BORROWERS. Borrowers agree to fully reimburse
Agent for all amounts paid by Agent under, or in respect of, any Letter of
Credit and to pay interest thereon at the Reference Related Rate then applicable
to Revolving Loans from the date Agent makes such payment until the date of
reimbursement pursuant to any demand for reimbursement by Agent. Such
reimbursement shall be made in immediately available funds at Agent's Commercial
Loan Processing Center not later than 11:00 a.m. (Seattle time) one day after
Borrowers are first notified by Agent that Agent has made payment under the
Letter of Credit. In addition, if Agent so elects pursuant to the terms of
Section 7.2, following the occurrence of an Event of Default, the face amount of
each Letter of Credit shall become immediately due and payable. If
38
Borrowers shall default in its obligations to reimburse Agent or make any other
payment required hereunder, interest shall accrue on the unpaid amount thereof
at a per annum rate equal to 3% above the Reference Related Rate changing as
such Reference Related Rate changes from the date such amount becomes due and
payable until payment in full by Borrower. Interest on such unpaid amounts
shall be calculated on the basis of a year of 360 days and shall be payable on
demand.
Section 9.5 SALE OF RISK PARTICIPATIONS. Agent agrees to sell to each
Lender (including itself), and each Lender severally agrees to unconditionally
and irrevocably purchase from Agent, Letter of Credit Risk Participations. Each
Letter of Credit Risk Participation sold hereunder shall be sold to Lenders in
fractional amounts in proportion to their Revolving Loan Pro Rata Shares.
Section 9.6 PROCEDURE FOR PARTICIPATIONS. Via telephone, telex, or
facsimile, Agent will advise each Lender of its respective Loan Advance Pro Rata
Share of each Letter of Credit on the same day Agent issues such Letter of
Credit as requested by Borrowers pursuant to this Article. The notice shall
contain the following information: (i) the face amount of the Letter of Credit
issued, (ii) the number of Letter of Credit, (iii) the date of acceptance or
issuance, (iv) the maturity or expiration date, and (v) the amount of such
Lender's Revolving Pro Rata Share of any letter of credit fees received by Agent
in respect of the Letter of Credit issued. Agent shall not have any duty to
ascertain or to inquire as to the accuracy of the information furnished by
Borrowers.
Section 9.7 PAYMENT OBLIGATIONS.
(a) REIMBURSEMENTS TO AGENT. In the event Borrowers fails to fully
reimburse Agent for amounts disbursed under a Letter of Credit ("Letter of
Credit Payment") by 12:00 Noon (Seattle time) on the date reimbursement is
demanded, each Lender shall, upon receipt of notice from Agent of such failure,
pay to Agent the amount of such Lender's Revolving Loan Pro Rata Share of the
face amount of such Letter of Credit Payment, PROVIDED, HOWEVER, if Borrowers
pay a portion but less than all of the face amount of any such Letter of Credit
Payment, Lenders shall pay Agent only their respective Revolving Loan Pro Rata
Shares of the difference between the face amount of the Letter of Credit
Payment, as the case may be, and the amount paid by Borrowers on account of such
Letter of Credit Payment. Each and every payment to be made by Lenders to Agent
under this Section shall be made by federal wire transfer in immediately
available funds. If any Lender receives notice from Agent by 1:00 p.m. (Seattle
time) on any Business Day of its obligation to make payments under this
subSection, then such Lender shall make such payment no later than 2:00 p.m.
(Seattle time) on the day such notice is received. If any Lender receives such
notice after 1:00 p.m. (Seattle time) on any Business Day, then such Lender
shall make such payment by no later than 1:00 p.m. (Seattle time) on the next
succeeding Business Day. If any Lender fails to make such payment by the date
and time required, its obligation shall bear interest from and including the
date when such payment was due until paid at the per annum rate equal to the
Federal Funds Rate.
(b) PAYMENTS TO LENDERS. Agent shall immediately remit to each
Lender, via federal wire transfer of funds, such Lender's Revolving Loan Pro
Rata Share of any principal,
39
interest, letter of credit fees or other amounts received from or for the
account of Borrowers in respect of any Letter of Credit, PROVIDED, HOWEVER,
Agent shall not remit to any Lender any amounts received from or for the account
of Borrowers in payment of the face amount. In the event Agent is required to
refund any amount which is paid to it or received by it from or for the account
of Borrowers, then Lenders, to the extent they shall have previously received
their Revolving Loan Pro Rata Share of such amount, agree to repay to Agent
their respective Revolving Loan Pro Rata Shares of such amount.
ARTICLE 10
SECURED LETTER OF CREDIT FACILITY
Section 10.1 BANK OF AMERICA SECURED LETTER OF CREDIT FACILITY. By
separate agreement, Bank of America has agreed to provide a Secured Letter of
Credit Facility to Northwest Pipe Company of up to $3,500,000.
Section 10.2 NORTHWEST PIPE COMPANY SECURITY. All obligations of
Borrowers with respect to the Secured Letter of Credit Facility described above,
will be secured by security interests in Adelanto, California machinery,
equipment and fixtures.
Section 10.3 CROSS-DEFAULT. Any Event of Default under this Agreement
shall be an event of default under any agreement with respect to the Secured
Letter of Credit Facility.
ARTICLE 11
MISCELLANEOUS
Section 11.1 NO WAIVER; REMEDIES CUMULATIVE. No failure by Agent or any
Lender to exercise, and no delay in exercising, any right, power or remedy under
this Agreement or any other Loan Document shall operate as a waiver thereof, nor
shall any single or partial exercise of any right, power or remedy under this
Agreement or any other Loan Document preclude any other or further exercise
thereof or the exercise of any other right, power, or remedy. The exercise of
any right, power, or remedy shall in no event constitute a cure or waiver of any
Event of Default this Agreement or any other Loan Document or prejudice the
rights of Agent or Lenders in the exercise of any right hereunder or thereunder.
The rights and remedies provided herein and therein are cumulative and not
exclusive of any right or remedy provided by law.
Section 11.2 GOVERNING LAW. This Agreement and the other Loan Documents
shall be governed by and construed in accordance with the laws of the State of
Oregon.
Section 11.3 MANDATORY ARBITRATION. Any controversy or claim between or
among the parties, including those arising out of or relating to this Agreement
or the other Loan Documents and any claim based on or arising from an alleged
tort, shall at the request of any party be determined by arbitration in
Portland, Oregon. The arbitration shall be conducted in accordance with the
United States Arbitration Act (Title 9, U.S. Code), notwithstanding any
40
choice of law provision in this Agreement, and under the Commercial Rules of the
AAA. The arbitrator(s) shall give effect to statutes of limitation in
determining any claim. Any controversy concerning whether an issue is
arbitrable shall be determined by the arbitrator(s). Judgment upon the
arbitration award may be entered in any court having jurisdiction. No provision
of this Section shall limit the right of any party to this Agreement to exercise
self-help remedies such as set off, foreclosure against or sale of any
collateral or security, or to obtain provisional or ancillary remedies from a
court of competent jurisdiction before, after, or during the pendency of any
arbitration or other proceeding. The exercise of any such remedy does not waive
the right of either party to resort to arbitration.
Section 11.4 NOTICES. All notices and other communications provided for
in any Loan Document shall be in writing or (unless otherwise specified) by
facsimile and shall be mailed (with first class postage prepaid) or sent or
delivered to each party at the address or facsimile number set forth under its
name on the signature page hereof, or at such other address as shall be
designated by such party in a written notice to each other party. Except as
otherwise specified all notices sent by mail, if duly given, shall be effective
three (3) Business Days after deposit into the mails, all notices sent by a
nationally recognized overnight courier service, if duly given, shall be
effective one (1) Business Day after delivery to such courier service, and all
other notices and communications if duly given or made shall be effective upon
receipt. Neither Agent nor any Lender shall incur any liability to Borrowers
for actions taken in reliance on any telephonic notice referred to in this
Agreement which Agent believes in good faith to have been given by a duly
authorized officer or other person authorized to borrow or give such telephonic
notice hereunder on behalf of Borrowers.
Section 11.5 SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon and inure to the benefit of the parties and their respective Successors and
assigns, PROVIDED that Borrowers may not assign or otherwise transfer all or any
part of its rights or obligations hereunder or under any other Loan Document
without the prior written consent of Agent and all Lenders. Except as provided
in this Section or Section 11.7, no Lender shall have the right to sell or
assign all or any portion of its Loans or of its right, title and interest
therein or thereto or in or to any Loan Document to any other Person without
Agent's and Borrowers' prior written consent and without providing Agent with a
written agreement executed by such purchaser or assignee as provided in
Section 8.2(a)(i). Borrowers' consent shall not be unreasonably withheld.
Notwithstanding the foregoing, each Lender may grant participation, without
consent, in all or any portion of its Loans and Commitment but such grant shall
not entitle the participant to any direct rights against Borrowers under the
terms of this Agreement or any other Loan Document. Any outright sale or
assignment of a Lender's interest hereunder to another Lender must be to a
commercial bank organized under the laws of the United States or any state
thereof, having a combined capital and surplus of at least $100,000,000. Such
sale made in conformance with the terms of this Section shall result in a
corresponding adjustment to the selling and purchasing Lenders' Funded Pro Rata
Share.
Section 11.6 SEVERABILITY. Any provision of this Agreement or any other
Loan Document which is prohibited or unenforceable in any jurisdiction shall as
to such jurisdiction be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof or
affecting the validity or enforceability of such provision in any
41
other jurisdiction. To the extent permitted by applicable law, the parties
waive any provision of law which renders any provision hereof prohibited or
unenforceable in any respect.
Section 11.7 ADDITIONAL LENDERS. With Borrowers' prior written consent,
which will not be unreasonably withheld, Bank of America may select one or more
financial institutions to purchase a portion of the Loans and Commitment and
become a Lender or Lenders under this Agreement, but such financial institution
must be a commercial bank organized under the laws of the United States, or any
state thereof, having a combined capital and surplus of at least $100,000,000.
Upon such financial institution(s) executing a written agreement as provided in
Section 8.2(a)(i), and delivery of a copy thereof to Borrowers, any such
institution shall become a Lender with full rights as such and there shall be a
corresponding adjustment to the Funded Pro Rata Share of Bank of America and
such other Lender.
Section 11.8 JOINT AND SEVERAL LIABILITY; REASON FOR EXECUTION. All
liability of Borrowers hereunder is joint and several. Each Borrower is
executing this Loan Agreement because each will receive working capital from the
proceeds of the Loans. Loan proceeds will be allocated among Borrowers as they
collectively agree.
Section 11.9 SURVIVAL. The representations, warranties and indemnities
of Borrowers in favor of Agent and Lenders shall survive indefinitely and,
without limiting the foregoing, shall survive the execution and delivery of this
Agreement, the Loan Documents and the other Loan Documents, the making of any
Loans, the expiration of the Commitments and the repayment of all amounts due
under the Loan Documents.
Section 11.10 EXECUTED IN COUNTERPARTS. The Loan Documents may be
executed in any number of counterparts and by different parties in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same agreement.
Section 11.11 ENTIRE AGREEMENT; AMENDMENT, WAIVER. This Agreement
together with its schedules and exhibits comprise the entire agreement of the
parties and supersedes the loan agreement of October 20, 1997 referred to in
Recital B. This Agreement may not be amended or modified except by written
agreement of Borrowers and Agent executed in conformance with the terms hereof.
No provision of this Agreement may be waived except in writing and then only in
the specific instance and for the specific purpose for which given.
Section 11.12 HEADINGS. The headings of the various provisions of this
Agreement are for convenience of reference only, do not constitute a part
hereof, and shall not affect the meaning or construction of any provision
hereof.
Section 11.13 WAIVER OF JURY TRIAL. BORROWERS, LENDERS, AND AGENT WAIVE
THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED
UPON OUR RISING OUT OF OR RELATED TO THIS AGREEMENT, THE OTHER LOAN DOCUMENTS OR
THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT IN ANY ACTION, PROCEEDING OR
OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY PARTY
42
AGAINST ANY OTHER PARTY OR ANY AGENT-RELATED PERSON, PARTICIPANT OR ASSIGNEE
WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS OR OTHERWISE. WITHOUT
LIMITING THE FOREGOING, THE PARTIES FURTHER AGREE THAT THEIR RESPECTIVE RIGHTS
TO A TRIAL BY JURY AS WAIVED BY OPERATION OF THIS Section AS TO ANY ACTION,
COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE
THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS OR
ANY PROVISION THEREOF. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS. NOTHING CONTAINED IN THIS Section SHALL BE DEEMED TO IMPAIR OR
REDUCE THE EFFECTIVENESS OF ANY OTHER Section OF THIS AGREEMENT REQUIRING
ARBITRATION.
Section 11.14 CERTAIN AGREEMENTS NOT ENFORCEABLE. UNDER OREGON LAW, MOST
AGREEMENTS, PROMISES AND COMMITMENTS MADE BY THE LENDERS 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 LENDERS TO BE ENFORCEABLE.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers or agents thereunto duly authorized as of
the date first above written.
BORROWERS: NORTHWEST PIPE COMPANY
By: /s/ Brian Dunham
----------------------------------------
Its: President
---------------------------------------
Address: 12005 N. Burgard
Portland, OR 97203
Fax No. (503) 240-6615
THOMPSON PIPE AND STEEL COMPANY
By: /s/ Brian Dunham
----------------------------------------
Its:
---------------------------------------
Address: 12005 N. Burgard
Portland, OR 97203
Fax No. (503) 240-6615
THOMPSON STEEL PIPE COMPANY
43
By: /s/ Brian Dunham
----------------------------------------
Its:
----------------------------------------
Address: 12005 N. Burgard
Portland, OR 97203
Fax No. (503) 240-6615
LENDERS: BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION
By: /s/ Robert L. Countryman
----------------------------------------
Its: Vice President
---------------------------------------
Address: Commercial Banking
121 S.W. Morrison Street
Suite 1700
Portland, OR 97204
Fax No. (503) 275-1391
Attn: Robert L. Countryman
U.S. BANK NATIONAL ASSOCIATION
By: /s/ Rick S. Williams
----------------------------------------
Its: Vice President
---------------------------------------
Address: Oregon Corporate Banking, T-4
111 S.W. Fifth Avenue
Suite 400
Portland, OR 97208
Fax No. (503) 275-7290
Attn: Rick S. Williams
AGENT: BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION
By: /s/ Dora A. Brown
----------------------------------------
Its: Vice President
---------------------------------------
Address: Agency Services
701 Fifth Avenue, Floor 16
44
Seattle, WA 98104
Fax No. (206) 358-0971
Attn: Dora A. Brown
45
Schedule 1
PREPAYMENT FEES FOR OFFSHORE RELATED RATE LOANS
The amount of the fee to be paid pursuant to Section 2.7 shall depend on
the following:
(1) The amount by which interest rates have changed between the Reference
Date and the Prepayment Date. As used herein, "Reference Date" shall
mean the first day of an Applicable Interest Period. As used herein,
"Prepayment Date" shall mean the date Borrower either voluntarily or
involuntarily prepays an Offshore Related Rate Loan. Certain U.S.
Treasury rates are used as a benchmark to measure changes in interest
rate levels.
(a) A "reference rate" equal to the average interest rate yield at
the Reference Date for U.S. Government Securities having
maturities equivalent to that of the applicable Offshore Related
Rate Loan will be determined in the manner described below for
determining applicable rates but will be established as of the
Reference Date for the Applicable Interest Period. This rate
represents interest rate levels at the time a Loan is made or its
interest rate fixed.
(b) An "applicable rate," as determined as described below,
represents interest rate levels as of the Prepayment Date.
(2) The amount of principal prepaid.
(3) A payment fee factor (see "payment fee factor schedule" below). This
factor represents the economic loss to the Agent and Lenders resulting
from a one dollar payment if rates were to drop by one percent from
the time the rate was fixed.
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CALCULATION OF PREPAYMENT FEES FOR OFFSHORE
RELATED RATE LOANS
If the reference rate is lower than or equal to the applicable rate, there
is no payment fee.
If the applicable rate is lower than the reference rate, the payment fee
shall be equal to the difference between the reference rate and the applicable
rate (expressed as a decimal), multiplied by the appropriate factor from the
payment fee factor schedule, multiplied by the principal amount of the Offshore
Related Rate Loan which is prepaid.
EXAMPLE:
An Offshore Related Rate Loan with principal of $850,000 is
fully prepaid with 3 months remaining prior to the end of
the Applicable Interest Period. A reference rate of 10% was
assigned to the Offshore Related Rate Loan when the rate was
fixed. The applicable rate (as determined by current
4-month U.S. Treasury rates) is 8.5%. Rates are therefore
judged to have dropped by 1.5% since the rate was fixed, and
a payment fee applies.
A payment fee factor of .31 is determined from the tables
below, and the payment fee is computed as follows:
Payment Fee = (.10 - .085) x (.31) x ($850,000) = $3952.50
APPLICABLE RATES
The applicable rate is equal to the average interest rate yield at the time
of prepayment for U.S. Government Securities having maturities equivalent to the
remaining portion of the Applicable Interest Period.
The applicable rate shall be determined from the Federal Reserve
Statistical Release (Publication H.15(519)) in the "This Week" (most recent
week) column under the heading U.S. Government Securities - Treasury Bills -
Secondary Market, interpolated to the nearest month.
Rates listed in the Federal Reserve Statistical Release for maturities of
less than one year are on a discount rate basis, and these rates shall be
converted to a coupon equivalent basis, based upon a 360-day year. The
Statistical Release published on Monday shall be used for calculation of payment
fees payable on the following Tuesday through the following Monday, with
appropriate adjustment if the day of publication changes.
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PREPAYMENT FEE FACTOR SCHEDULES
FOR OFFSHORE RELATED RATE LOANS
MONTHS REMAINING IN THE
APPLICABLE INTEREST PERIOD FOR OFFSHORE RELATED RATE LOANS
0 1 2 3 4 5 6
Factors 0 .10 .20 .31 .41 .51 .61
- --------------------
(1) If the remaining Applicable Interest Period or time prior to scheduled
maturity is between any two time periods in the above schedules, interpolate
between the corresponding factors.
The Agent and the Lenders are not required to actually reinvest the paid
principal in any U.S. Government Treasury obligations as a condition to
receiving a payment fee as calculated above.
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PREPAYMENT FEES FOR LONG TERM RATE LOANS
The prepayment fee for Long Term Rate Loans will be the sum of fees
calculated separately for each Prepaid Installment, as follows:
(i) Agent will first determine the amount of interest which would
have accrued each month for the Prepaid Installment had it
remained outstanding until the applicable Original Payment Date,
using the Long Term Rate;
(ii) Agent will then subtract from each monthly interest amount
determined in (i) above, the amount of interest which would
accrue for that Prepaid Installment if it were reinvested from
the date of prepayment through the Original Payment Date, using
the Money Market Rate.
(iii) If (i) minus (ii) for the Prepaid Installment is greater than
zero, Agent will discount the monthly differences to the date of
prepayment by the rate used in (ii) above. The sum of the
discounted monthly differences is the prepayment fee for that
Prepaid Installment.
The following definitions will apply to the calculation of the prepayment
fee for Long Term Rate Loans:
"Money Market Rate" means the fixed interest rate per annum which Agent
determines could be obtained by reinvesting a specified Prepaid Installment in
the Money Market from the date of prepayment through the Original Payment Date.
"Original Payment Dates" mean the date on which principal of the Long Term
Rate Loan would have been paid if there had been no prepayment. If a portion of
the principal would have been paid later than the end of the interest period in
effect at the time of prepayment, then the Original Payment Date for that
portion will be the last day of the interest period.
"Prepaid Installment" means the amount of the prepaid principal of the Long
Term Rate Loan which would have been paid on a single Original Payment Date.
"Agent" may adjust the Money Market Rate to reflect the compounding,
accrual basis, or other costs of the Long Term Rate Loan. Each of the rates is
the Agent's estimate only and the Agent is under no obligation to actually
reinvest any prepayment. The rates will be based on information from either the
Telerate or Reuters information services, THE WALL STREET JOURNAL, or other
information sources Agent deems appropriate.
49