THIRD AMENDMENT TO LOAN AGREEMENT
This amendment to Loan Agreement ("Third Amendment") is made as of March
6, 1998 by and among the following parties:
Bank of America National Trust and Savings Association ("Bank of America"
and "Lender")
Bank of America National Trust and Savings Association, in its capacity as
Agent ("Agent")
Northwest Pipe Company, an Oregon corporation (a "Borrower")
Xxxxxxxx Pipe and Steel Company, a Colorado corporation (a "Borrower")
Xxxxxxxx Steel Pipe Company, a Delaware corporation (a "Borrower")
R E C I T A L S
The Borrowers, the Lender and the Agent are parties to that certain Loan
Agreement dated as of October 20, 1997, as amended by that certain First
Amendment to Loan Agreement dated as of October 20, 1997, and a Second Amendment
to Loan Agreement dated as of November 26, 1997 as the same may be amended,
modified or extended from time to time (the "Loan Agreement") and the related
Loan Documents described therein.
The Borrowers have requested that the Lender and Agent increase the Total
Commitment, as defined in the Loan Agreement, provide their consent to certain
acquisitions described in SECTION 6.6 as amended herein, and make certain other
modifications to the Loan Documents.
The Parties now wish to amend the Loan Documents to increase the Total
Commitment, as defined therein, subject to the terms and conditions set forth
herein.
NOW, THEREFORE, the parties agree as follows:
A G R E E M E N T
1. DEFINITIONS. Capitalized terms used herein and not otherwise defined
shall have the meaning given in the Loan Agreement.
2. AMENDMENTS TO LOAN AGREEMENT. The Loan Agreement is amended as
follows:
(a) AMENDMENT TO DEFINITIONS. In SECTION 1.1, amendments are made to
the definitions, as follows:
(1) APPLICABLE MARGIN. The definition of "Applicable Margin" is
amended and restated to read as follows:
Page 1 - THIRD AMENDMENT TO LOAN AGREEMENT
"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 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 Third
Amendment to Loan Agreement is .65 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
For purposes of calculating this ratio, the EBITDA for the prior
fiscal year for the "Acquisitions," as defined in SECTION 6.6 as amended
herein, shall be included in the calculation. The Acquistions' 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.
(2) TOTAL COMMITMENT. The definition of "Total Commitment" is
amended and restated to read as follows:
"Total Commitment" means $55,000,000. However, Total Commitment will
be reduced to $40,000,000 on the earliest of April 15, 1998, or the
date that any Borrower receives the net proceeds from the currently
anticipated private placement of notes in the amount of at least
$20,000,000. Borrowers hereby consent to Bank of America's sale of at
least $10,000,000 of the Loans and Commitment, consistent with SECTION
11.7 of the Loan Agreement, within sixty (60) days of execution of
this Third Amendment to Loan Agreement.
Page 2 - THIRD AMENDMENT TO LOAN AGREEMENT
(3) UNUSED COMMITMENT FEE RATE. The definition of "Unused
Commitment Fee Rate" is amended and restated to read as follows:
"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 Third Amendment to Loan Agreement is .175 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%
Up to and including 3.25:1
For purposes of calculating this ratio, the EBITDA for the prior
fiscal year for the "Acquisitions," as defined in SECTION 6.6 as
amended herein, shall be included in the calculation. The Acquistions'
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.
(b) AMENDMENTS TO SECTION 2.9 FEES. SECTION 2.9 is hereby amended to
add subsection (c) as follows:
(c) Borrowers agree to pay Bank of America, the sole Lender on
the date of this Third Amendment to Loan Agreement, a fee of $21,250,
representing 0.075% of the permanent $15,000,000 increase in the Total
Commitment amount and a $10,000 fee for the bridge commitment of
$15,000.000.
(c) AMENDMENTS TO SECTION 5.12 MINIMUM DEBT SERVICE COVERAGE RATIO.
SECTION 5.12 is hereby amended and restated as follows:
Page 3 - THIRD AMENDMENT TO LOAN AGREEMENT
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.
For purposes of calculating this covenant, the EBITDA for the
prior fiscal year for the "Acquisitions," as defined in SECTION 6.6 as
amended herein, shall be included in the calculation. The Acquistions'
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.
(d) AMENDMENTS TO SECTION 5.13 MINIMUM FUNDED DEBT TO EBITDA. SECTION
5.13 is hereby amended and restated as follows:
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
From the date of this Agreement through, and 3.25:1
including the four fiscal quarters ending
March 31, 1999
For the four consecutive fiscal quarters 3.00:1
ending June 30, 1999, and continuing
through March 21, 2000
For the four consecutive fiscal quarters 2.75:1
ending June 30, 2000 and thereafter
For purposes of calculating this covenant, the EBITDA for the prior fiscal
year for the "Acquisitions," as defined in SECTION 6.6 as amended herein, shall
be
Page 4 - THIRD AMENDMENT TO LOAN AGREEMENT
included in the calculation. The Acquistions' 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.
(e) AMENDMENTS TO SECTION 5.14 MINIMUM TANGIBLE NET WORTH. SECTION
5.14 is hereby amended and restated as follows:
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
(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
(f) AMENDMENTS TO SECTION 6.1 RESTRICTION ON BORROWINGS, CAPITAL
LEASES AND CONTRACT PURCHASES. SECTION 6.1 is hereby amended and restated as
follows:
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 $65,000,000 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.)
(g) AMENDMENTS TO SECTION 6.6 RESTRICTION ON ACQUISITIONS. SECTION
6.6 is hereby amended and restated as follows:
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 the
10% limitation above, acquisitions
Page 5 - THIRD AMENDMENT TO LOAN AGREEMENT
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. Agent hereby consents to the
acquisition of (i) Southwestern Pipe, Inc. and P&H Tube Corporation, and
(ii) certain assets comprising the Parkersburg Plant from X.X. Xxxxxx
Company (together, the "Acquisitions").
(h) AMENDMENTS TO SECTION 9.2 MANNER OF REQUESTING LETTERS OF
CREDIT. SECTION 9.2(b) is hereby amended and restated as follows:
(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. 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.
3. CONDITIONS TO EFFECTIVENESS. Notwithstanding anything contained
herein to the contrary, this Amendment shall not become effective until each of
the following conditions is fully and simultaneously satisfied:
(a) DELIVERY OF AMENDMENT. The Borrowers, the Agent and the Lender
shall have executed and delivered counterparts of this Amendment to the Agent;
(b) REIMBURSEMENT FOR EXPENSES. The Borrowers shall have reimbursed
the Agent for all expenses actually incurred by the Agent in connection with the
preparation of the Loan Agreement and the other Loan Documents and shall have
paid all other amounts due and owing under the Loan Documents.
(c) CORPORATE AUTHORITY. The Agent shall have received in form and
substance reasonably satisfactory to it (1) a copy of resolutions adopted by the
Boards of Directors of the Borrowers authorizing the execution, delivery and
performance of this Amendment, certified by the Secretaries of the Borrowers;
(2) evidence of the authority and specimen signatures of the persons who have
signed the Amendment Documents on behalf of the Borrowers; and (3) such
Page 6 - THIRD AMENDMENT TO LOAN AGREEMENT
other evidence of corporate authority as the Agent or any Lender shall request;
(d) LEGAL OPINION. The Agent shall have received the written legal
opinion of Ater Xxxxx Xxxxxx Xxxxxx & Xxxxxxxx, LLP, counsel for the Borrowers,
addressed to the Agent and the Lender, dated as of the date hereof opining that
(1) the Borrowers are duly incorporated, validly existing, and in good standing
under the state law of their respective states of organization, (2) the
execution and delivery of the Amendment has been duly authorized by the
Borrowers, (3) the Amendment when duly executed and delivered by the Borrowers
will constitute a legal, valid and binding obligation of the Borrowers
enforceable in accordance with its terms, and the Loan Agreement as amended
hereby will constitute a legal, valid, binding obligation of the Borrowers
enforceable in accordance with its terms, and (4) the execution and delivery of
the Amendment by the Borrowers will not conflict with, result in any breach of
any of the terms and provisions of, or constitute (with or without notice or
lapse of time) a default under the Articles of Incorporation or Bylaws of the
borrowers or any indenture, loan agreement, mortgage, deed of trust, or other
agreement or instrument to which the Borrowers or any of their properties may be
bound or affected, or violate any law or any order, rule, or regulation binding
on the Borrowers;
(e) REPRESENTATIONS TRUE; NO DEFAULT. The representations of the
Borrowers as set forth in ARTICLE 4 of the Loan Agreement shall be true on and
as of the date of this Amendment with the same force and effect as if made on
and as of this date. No Event of Default and no event which, with notice or
lapse of time or both, would constitute an Event of Default, shall have occurred
and be continuing or will occur as a result of the execution of the Amendment.
(f) OTHER DOCUMENTS. The Agent and the Lender shall have received
such other documents, instruments, and undertakings as the Agent and the Lender
may reasonably request.
4. NO FURTHER AMENDMENT. Except as expressly modified by this Amendment,
the Loan Agreement and the other Loan Documents shall remain unmodified and in
full force and effect and the parties hereby ratify their respective obligations
thereunder. Without limiting the foregoing, the Borrower expressly reaffirms
and ratifies its obligation to pay or reimburse the Agent and the Lender on
request for all reasonable expenses, including legal fees, actually incurred by
the Agent or such Lender in connection with the preparation of this Amendment,
the other Amendment Documents, and the closing of the transactions contemplated
hereby and thereby.
5. MISCELLANEOUS.
(a) ENTIRE AGREEMENT. This Amendment comprises the entire agreement
of the parties with respect to the subject matter hereof and supersedes all
prior oral or written agreements, representations or commitments.
Page 7 - THIRD AMENDMENT TO LOAN AGREEMENT
(b) COUNTERPARTS. This Amendment may be executed in any number of
counterparts and by different parties hereto 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 Amendment.
(c) GOVERNING LAW. This Amendment and the other agreements provided
for herein and the rights and obligations of the parties hereto and thereto
shall be construed and interpreted in accordance with the laws of the State of
Oregon.
(d) 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 THE LENDERS TO BE ENFORCEABLE.
EXECUTED AND DELIVERED by the duly authorized officers of the parties as of
the date first above written.
BORROWERS: NORTHWEST PIPE COMPANY
By:
-----------------------------------
Its:
-----------------------------------
Address: 00000 X. Xxxxxxx
Xxxxxxxx, XX 00000
Fax No. (000) 000-0000
XXXXXXXX PIPE AND STEEL COMPANY
By:
-----------------------------------
Its:
-----------------------------------
Address: 00000 X. Xxxxxxx
Xxxxxxxx, XX 00000
Fax No. (000) 000-0000
XXXXXXXX STEEL PIPE COMPANY
Page 8 - THIRD AMENDMENT TO LOAN AGREEMENT
By:
-----------------------------------
Its:
-----------------------------------
Address: 00000 X. Xxxxxxx
Xxxxxxxx, XX 00000
Fax No. (000) 000-0000
LENDER: BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION
By:
-----------------------------------
Its:
-----------------------------------
Address: Commercial Banking
000 X.X. Xxxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxxx, XX 00000
Fax No. (000) 000-0000
Attn: Xxxxxx X. Xxxxxxxxxx
AGENT: BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION
By:
-----------------------------------
Its:
-----------------------------------
Address: Agency Services
000 Xxxxx Xxxxxx, Xxxxx 00
Xxxxxxx, XX 00000
Fax No. (000) 000-0000
Attn: Xxxx X. Xxxxx
Page 9 - THIRD AMENDMENT TO LOAN AGREEMENT
