NORTHWEST PIPE CO
EX-10.25
<DOCUMENT>
<TYPE>EX-10.25
<SEQUENCE>3
<FILENAME>j1267_ex10d25.htm
<DESCRIPTION>EX-10.25
<TEXT>
<html>

<head>
<title>Prepared by MerrillDirect</title>
</head>

<body>

<div>

<p align=center><font size=2>CREDIT
AGREEMENT</font></p>

<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; THIS
AGREEMENT is entered into as of May 30, 2001 by and between <b>NORTHWEST
PIPE COMPANY</b>, an Oregon
Corporation (&quot;<u>Borrower</u>&quot;), and <b>WELLS FARGO BANK, NATIONAL ASSOCIATION </b>(&quot;<u>Bank</u>&quot;).</font></p>

<p align=center><u><font size=2>RECITALS</font></u></p>

<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Borrower
has requested that Bank extend or continue credit to Borrower as described
below, and Bank has agreed to provide such credit to Borrower on the terms and
conditions contained herein.</font></p>

<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; NOW,
THEREFORE, for valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, Bank and Borrower hereby agree as follows:</font></p>

<p align=center><u><font size=2>ARTICLE
I</font></u><font size=2><br>
<u>CREDIT TERMS</u></font></p>

<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; SECTION
1.1.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; LINE OF CREDIT.</font></p>

<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (a)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>Line of Credit</u>. Subject to the
terms and conditions of this Agreement, Bank hereby agrees to make advances to
Borrower from time to time up to and including June 30, 2003 not to exceed at
any time the aggregate principal amount of
Thirty Million Dollars ($30,000,000.00) (&quot;<u>Line of Credit</u>&quot;),
the proceeds of which shall be used for working capital and general corporate
purposes. Borrower's obligation to repay advances under the Line of Credit
shall be evidenced by a promissory note substantially in the form of Exhibit
&quot;A&quot; attached hereto (&quot;<u>Line of Credit Note</u>&quot;), all
terms of which are incorporated herein by this reference.</font></p>

<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (b)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>Letter of Credit Subfeature</u>. As a
subfeature under the Line of Credit, Bank agrees from time to time during the
term thereof to issue or cause an affiliate to issue Standby letters of credit
for the account of Borrower to finance borrower's self insurance for worker's
compensation (each, a &quot;<u>Letter of Credit</u>&quot; and collectively,
&quot;<u>Letters of Credit</u> &quot;); provided however, that the aggregate
undrawn amount of all outstanding Letters of Credit shall not at any time
exceed One Million Five Hundred Thousand Dollars ($1,500,000.00). No Letter of
Credit shall have an expiration date subsequent to the maturity date of the
Line of Credit. The undrawn amount of all Letters of Credit shall be reserved
under the Line of Credit and
shall not be available for borrowings thereunder. Each Letter of Credit shall
be subject to the additional terms and conditions of the Letter of Credit
agreements, applications and any related documents required by Bank in
connection with the issuance thereof. Each draft paid under a Letter of Credit
shall be deemed an advance under the Line of Credit and shall be repaid by
Borrower in accordance with the terms and conditions of this Agreement
applicable to such advances; provided however, that if advances under the Line
of Credit are not available, for any reason, at the time any draft is paid,
then Borrower shall immediately pay to Bank the full amount of such draft,
together with interest thereon from the date such draft is paid to the date
such amount is fully repaid by Borrower, at the Prime Rate-based rate of
interest applicable to advances under the Line of Credit. In such event
Borrower agrees that Bank, in its sole discretion, may debit any account
maintained by Borrower with Bank for the amount of any such draft.<page></font></p>

<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (c)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>Borrowing and Repayment</u>.
Borrower may from time to time during the term of the Line of Credit borrow,
partially or wholly repay its outstanding borrowings, and reborrow, subject to
all of the limitations, terms and conditions contained herein or in the Line of
Credit Note; provided however, that the total outstanding borrowings under the
Line of Credit shall not at any time exceed the maximum principal amount
available thereunder, as set forth above.</font></p>

<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; SECTION
1.2.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; INTEREST/FEES.</font></p>

<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (a)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>Interest</u>. The outstanding
principal balance of the Line of Credit shall bear interest at the rate(s) of
interest set forth in the Line of Credit Note.</font></p>

<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (b)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>Computation and Payment</u>. Interest
shall be computed on the basis of a 360-day year, actual days elapsed. Interest
shall be payable at the times and place set forth in the Line of Credit Note.</font></p>

<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (c)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>Commitment Fee</u>. Borrower shall
pay to Bank a non-refundable commitment fee for the Line of Credit equal to Ten
Thousand Dollars, which fee shall be due and payable in full on the date of
Borrower's execution of this Agreement.</font></p>

<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (d)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>Unused Commitment Fee</u>. Borrower
shall pay to Bank a fee equal to one-fifth percent (0.20%) per annum (computed
on the basis of a 360-day year, actual days elapsed) on the average daily
unused amount of the Line of Credit, which fee shall be calculated on a monthly
basis by Bank and shall be due and payable by Borrower in arrears within five
(5) days after each billing is sent by Bank.</font></p>

<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (e)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>Letter of Credit Fees</u>. Borrower
shall pay to Bank fees (i) upon the issuance of each Letter of Credit equal to
one and three quarters percent (1.75%) per annum (computed on the basis of a
360-day year, actual days elapsed) of the face amount thereof, and (ii) upon
the payment or negotiation of each
draft under any Letter of Credit and upon the occurrence of any other
activity with respect to any Letter of Credit (including without limitation,
the transfer, amendment or cancellation of any Letter of Credit) determined in
accordance with Bank's standard fees and charges then in effect for such
activity.</font></p>

<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; SECTION
1.3.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; COLLECTION OF PAYMENTS.
Borrower authorizes Bank to collect all interest and fees due under each credit
subject hereto by charging Borrower's deposit account number 4496887373 with
Bank, or any other deposit account maintained by Borrower with Bank, for the
full amount thereof. Should there be insufficient funds in any such deposit
account to pay all such sums when due, the full amount of such deficiency shall
be immediately due and payable by Borrower.</font></p>

<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; SECTION
1.4.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; GUARANTIES. All
indebtedness of Borrower to shall be guaranteed jointly and severally by
Southwestern Pipe, Inc.; North American Pipe, Inc.; and P &amp; H Tube
Corporation (collectively, together with any other entity, incorporated under
the laws of any state or territory of the United States of America, hereafter
formed or acquired, which is required under generally accepted accounting
principles, consistently applied (&quot;GAAP&quot;) to be included in
Borrower's consolidated financial statements, the &quot;Domestic
Subsidiaries&quot;) in the principal amount of Thirty Million Dollars
($30,000,000.00) each, as evidenced by and subject to the terms of guaranties
in form and substance satisfactory to Bank. Southwestern Pipe, Inc.; North
American Pipe, Inc.; and P &amp; H Tube Corporation, together with any other
hereafter formed or acquired entity constituted or incorporated under the laws
of any state or territory of the United
States of America, which is required under generally accepted accounting
principles, consistently applied (&quot;<u>GAAP</u>&quot;) to be included in
Borrower's consolidated financial statements, are referred to hereinafter as,
individually, a &quot;<u>Domestic Subsidiary</u>&quot;, and collectively as the
&quot;<u>Domestic Subsidiaries</u>&quot;. Borrower shall cause each hereafter
acquired or formed Domestic Subsidiary to execute and deliver to Bank a
guaranty and resolution, in the same form as executed by the existing Domestic
Subsidiaries, contemporaneously with such acquisition or formation.</font></p>

<page>


<p align=center><u><font size=2>ARTICLE II</font></u><font size=2><br>
<u>REPRESENTATIONS AND WARRANTIES</u></font></p>

<p><b><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </font></b><font size=2>Except as set forth on Schedule I attached to this
Agreement, Borrower makes the following representations and warranties to Bank,
which representations and warranties shall survive the execution of this
Agreement and shall continue in full force and effect until the full and final
payment, and satisfaction and discharge, of all obligations of Borrower to Bank
subject to this Agreement.</font></p>

<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; SECTION 2.1.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; LEGAL STATUS. Borrower is a Corporation, duly
organized and existing and in good standing under the laws of the State of
Oregon, and is qualified or licensed to do business (and is in good standing as
a foreign corporation, if applicable) in all jurisdictions in which such
qualification or licensing is required or in which the failure to so qualify or
to be so licensed could have a material adverse effect on the operations,
business or condition (including financial condition) of Borrower and
Subsidiaries, taken as a whole. with &quot;<u>Subsidiaries</u>&quot; defined as
all Domestic Subsidiaries, as defined in Section 1.4, together with Thompson
Tanks Mexico S.A. de C.V. and any other foreign entity(ies) required under GAAP
to be included in Borrower&#146;s consolidated financial statements. Except as set
forth in the preceding sentence, as of the date hereof Borrower has no
subsidiaries which would be required under generally accepted accounting
principles to be consolidated with Borrower.</font></p>

<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; SECTION 2.2.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; AUTHORIZATION AND VALIDITY. This Agreement and each
promissory note, contract, instrument and other document required hereby or at
any time hereafter delivered to Bank in connection herewith (collectively, the
&quot;Loan Documents&quot;) have been duly authorized, and upon their execution
and delivery in accordance with the provisions hereof will constitute legal,
valid and binding agreements and obligations of Borrower or the party which
executes the same, enforceable in accordance with their respective terms.</font></p>

<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; SECTION 2.3.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; NO VIOLATION. The execution, delivery and performance
by Borrower of each of the Loan Documents and by Domestic Subsidiaries of the
guaranties do not violate any provision of any law or regulation, or contravene
any provision of the Articles of Incorporation or By-Laws of Borrower or any
Domestic Subsidiary, or result in any breach of or default under any contract,
obligation, indenture or other instrument to which Borrower is a party or by
which Borrower or any Domestic Subsidiary may be bound.</font></p>

<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; SECTION 2.4.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; LITIGATION. There are no pending, or to the best of
Borrower&#146;s knowledge threatened, actions, claims, investigations, suits or
proceedings by or before any governmental authority, arbitrator, court or
administrative agency which could have a material effect on Borrower or its
Subsidiaries, other than those disclosed by Borrower to Bank in writing prior
to the date hereof.<page></font></p>

<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; SECTION 2.5.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; CORRECTNESS OF FINANCIAL STATEMENT. The financial
statement of Borrower dated December 31, 2000 a true copy of which has been
delivered by </font><font size=2>Borrower to Bank prior
to the date hereof, (a) is complete and correct and presents fairly the
financial condition of Borrower, (b) discloses all liabilities of Borrower and
Subsidiaries that are required to be reflected or reserved against under
generally accepted accounting principles, whether liquidated or unliquidated,
fixed or contingent, and (c) has been prepared in accordance with GAAP. Since
the date of such financial statement there has been no material adverse change
in the financial condition of Borrower or any Subsidiary, nor has Borrower or
any Subsidiary mortgaged, pledged, granted a security interest in or otherwise
encumbered any of its assets or properties except in favor of Bank or as
otherwise permitted by Bank in writing.</font></p>

<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; SECTION
2.6.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; INCOME TAX RETURNS.
Borrower has no knowledge of any pending assessments or adjustments of its or
any Subsidiary's income tax payable with respect to any year.</font></p>

<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; SECTION
2.7.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; NO SUBORDINATION.
There is no agreement, indenture, contract or instrument to which Borrower or a
Domestic Subsidiary is a party or by which Borrower or a Domestic Subsidiary
may be bound that requires the subordination in right of payment of any of
Borrower's or a Domestic Subsidiary's obligations to Bank to any other
obligation of Borrower.</font></p>

<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; SECTION
2.8.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; PERMITS, FRANCHISES.
Borrower and each Subsidiary possesses, and will hereafter possess, all
permits, consents, approvals, franchises and licenses required and rights to
all trademarks, trade names, patents, and fictitious names, if any, necessary
to enable it to conduct the business in which it is now engaged in compliance
with applicable law.</font></p>

<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; SECTION
2.9.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; ERISA. To the best of
Borrower's knowledge, Borrower and each Domestic Subsidiary is in compliance in
all material respects with all applicable provisions of the Employee Retirement
Income Security Act of 1974, as amended or recodified from time to time
(&quot;ERISA&quot;); neither Borrower nor any Domestic Subsidiary has violated
any provision of any defined employee pension benefit plan (as defined in
ERISA) maintained or contributed to by Borrower (each, a &quot;Plan&quot;); no
Reportable Event as defined in ERISA has occurred and is continuing with
respect to any Plan initiated by Borrower or a Domestic Subsidiary; Borrower
and each Domestic Subsidiary has met its minimum funding requirements under
ERISA with respect to each Plan; and each Plan will be able to fulfill its
benefit obligations as they come due in accordance with the Plan documents and
under generally accepted accounting principles.</font></p>

<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; SECTION
2.10.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; OTHER OBLIGATIONS.
Neither Borrower nor any Subsidiary is in default on any obligation for
borrowed money, any purchase money obligation or any other material lease, commitment,
contract, instrument or obligation.</font></p>

<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; SECTION
2.11.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; ENVIRONMENTAL MATTERS.
Borrower and each Subsidiary is in compliance in all material respects with all
applicable federal or state environmental, hazardous waste, health and safety
statutes, and any rules or regulations adopted pursuant thereto, which govern
or affect any of Borrower's operations and/or properties, including without
limitation, with respect to Borrower and Domestic Subsidiaries, the
Comprehensive Environmental Response, Compensation and Liability Act of 1980,
the Superfund Amendments and Reauthorization Act of 1986, the Federal Resource
Conservation and Recovery Act of 1976, and the Federal Toxic Substances Control
Act, as any of the same may be amended, modified or supplemented from time to
time. None of the operations of Borrower or any Subsidiary is the subject of
any federal or state investigation evaluating whether any remedial action
involving a material expenditure is needed to respond to a release of any toxic
or hazardous waste or substance into the environment. Neither Borrower nor any
Subsidiary has any material contingent liability in connection with any release
of any toxic or hazardous waste or substance into the environment.</font></p>

<page>


<p align=center><u><font size=2>ARTICLE III<br>
CONDITIONS</font></u></p>

<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; SECTION
3.1.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; CONDITIONS OF INITIAL
EXTENSION OF CREDIT. The obligation of Bank to extend any credit contemplated
by this Agreement is subject to the fulfillment to Bank's satisfaction of all
of the following conditions:</font></p>

<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (a)
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>Approval of Bank Counsel</u>.
All legal matters incidental to the extension of credit by Bank shall be
satisfactory to Bank's counsel.</font></p>

<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (b)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>Documentation</u>. Bank shall have
received, in form and substance satisfactory to Bank, each of the following,
duly executed:</font></p>

<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (i)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; This Agreement and each promissory note
or other instrument required hereby.</font></p>

<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (ii)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Addendum to Promissory Note.</font></p>

<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (iii)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Guaranties.</font></p>

<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (iv)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Certificates of Incumbency.</font></p>

<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (v)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Borrowing and Guaranty Resolutions.</font></p>

<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (vi)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Such other documents as Bank may require
under any other Section of this Agreement.</font></p>

<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (c)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>Financial Condition</u>. There shall
have been no material adverse change in the operations, business or condition
(including financial condition) of Borrower and Subsidiaries, taken as a
whole..</font></p>

<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (d)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>Sale-Leaseback Financing</u>.
Borrower shall have delivered to Bank evidence of Borrower having closed a
sale-leaseback transaction on terms reasonably satisfactory to Bank in an
amount not less than $40,000,000.00,</font></p>

<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; SECTION
3.2.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; CONDITIONS OF EACH
EXTENSION OF CREDIT. The obligation of Bank to make each extension of credit
requested by Borrower hereunder shall be subject to the fulfillment to Bank's
satisfaction of each of the following conditions:</font></p>

<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (a)
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>Compliance</u>. The
representations and warranties contained herein and in each of the other Loan
Documents shall be true on and as of the date of the signing of this Agreement
and on the date of each extension of credit by Bank pursuant hereto, with the
same effect as though such representations and warranties had been made on and
as of each such date, and on each such date, no Event of Default as defined
herein, and no condition, event or act which with the giving of notice or the
passage of time or both would constitute such an Event of Default, shall have
occurred and be continuing or shall exist.</font></p>

<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (b)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>Documentation</u>. Bank shall have
received all additional documents which may be required in connection with such
extension of credit.</font></p>

<page>


<p align=center><font size=2 face=Times>ARTICLE IV<br>
AFFIRMATIVE COVENANTS</font></p>

<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Borrower
covenants that so long as Bank remains committed to extend credit to Borrower
pursuant hereto, or any liabilities (whether direct or contingent, liquidated
or unliquidated) of Borrower to Bank
under any of the Loan Documents remain outstanding, and until payment in full
of all obligations of Borrower subject hereto, Borrower shall, and shall cause
each Subsidiary to, unless Bank otherwise consents in writing:</font></p>

<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; SECTION 4.1.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; PUNCTUAL PAYMENTS. Punctually pay all principal,
interest, fees or other liabilities due under any of the Loan Documents at the
times and place and in the manner specified therein.</font></p>

<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; SECTION 4.2.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; ACCOUNTING RECORDS. Maintain adequate books and
records in accordance with generally accepted accounting principles
consistently applied, and permit any representative of Bank, at any reasonable
time, to inspect, audit and examine such books, and records, to make copies of the same, and to inspect the real
and personal property of Borrower
or any Subsidiary.</font></p>

<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; SECTION 4.3.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; FINANCIAL STATEMENTS. Provide to Bank all of the
following, in form and detail satisfactory to Bank:</font></p>

<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (a) &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; As soon as available, and in any event within 105 days after
the end of each fiscal year of Borrower, the Annual Report and 10-K report of
Borrower. Unless already included within the annual report and 10-K report,
Borrower will deliver to Bank, as soon as available, and in any event within
105 days after the end of each fiscal year of Borrower, the consolidated
balance sheet of Borrower and its 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 Borrower and its Subsidiaries
for such fiscal year, accompanied by the audit report thereon by independent
certified public accountants selected by Borrower and reasonably acceptable to
Bank (which reports shall be prepared in accordance with GAAP and shall not be
qualified by reason of qualified or restricted examination of any material
portion of the records of Borrower or any Subsidiary and shall contain no
disclaimer of opinion or adverse opinion except such as Bank in its sole
discretion determines to be immaterial);</font></p>

<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (b)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
As soon as available, and in any event within 105 days after the end of each
fiscal year of Borrower, a copy of the unaudited division and product line
consolidating income statements of Borrower and Subsidiaries as of the end of
such fiscal year.</font></p>

<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (c)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; As
soon as available, and in any event within 60 days after the end of each fiscal
quarter of Borrower, except for fiscal year end, the 10-Q report of Borrower.
Unless already included within the 10-Q report, Borrower will deliver to Bank,
as soon as available, and in any event within 60 days after the end of each
such fiscal quarter, the unaudited consolidated balance sheet of Borrower and
its Subsidiaries as of the end of such fiscal quarter. At the same time,
Borrower shall deliver to Bank the division and product line consolidating
income statements of Borrower and Subsidiaries as of the end of such fiscal
quarter;</font></p>

<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (d)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
contemporaneously with each annual and quarterly financial statement of
Borrower required hereby, a certificate of chief financial officer of Borrower
that said financial statements are accurate and that there exists no Event of
Default nor any condition, act or event which with the giving of notice or the
passage of time or both would constitute an Event of Default, together with
calculations demonstrating compliance with financial covenants;</font></p>

<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (e)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; not
later than 30 days after and as of the end of each month, an asset coverage
report;</font><font size=2><page></font></p>

<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (f)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; from time to time such other
information as Bank may reasonably request.</font></p>

<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; SECTION
4.4.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; COMPLIANCE. Preserve
and maintain all licenses, permits, governmental approvals, rights, privileges
and franchises necessary for the conduct of its business; and comply with the
provisions of all documents pursuant to which Borrower and each Subsidiary is
organized and/or which govern Borrower's or such Subsidiary's continued
existence and with the requirements of all laws, rules, regulations and orders
of any governmental authority applicable to Borrower, Subsidiaries and their
business.</font></p>

<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; SECTION
4.5.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; INSURANCE. Maintain
and keep in force insurance of the types and in amounts customarily carried in
lines of business similar to that of Borrower and its Subsidiaries, including
but not limited to fire, extended coverage, public liability, flood, property
damage and workers' compensation, with all such insurance carried with
companies and in amounts satisfactory to Bank, and deliver to Bank from time to
time at Bank's request schedules setting forth all insurance then in effect.</font></p>

<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; SECTION
4.6.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; FACILITIES. Keep all
properties useful or necessary to Borrower's and each Subsidiary's business in
good repair and condition, and from time to time make necessary repairs,
renewals and replacements thereto so that such properties shall be fully and
efficiently preserved and maintained.</font></p>

<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; SECTION
4.7.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; TAXES AND OTHER
LIABILITIES. Pay and discharge when due any and all indebtedness, obligations,
assessments and taxes, both real or personal, including without limitation
federal and state income taxes and state and local property taxes and
assessments, except such (a) as Borrower or any Subsidiary may in good faith
contest or as to which a bona fide dispute may arise, and (b) for which
Borrower or such Subsidiary has made provision, to Bank's satisfaction, for
eventual payment thereof in the event Borrower is obligated to make such
payment.</font></p>

<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; SECTION
4.8.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; LITIGATION. Promptly
give notice in writing to Bank of any litigation pending or threatened against
Borrower or any Subsidiary in excess of $500,000.00 to the extent not covered
by insurance.</font></p>

<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; SECTION
4.9.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; FINANCIAL CONDITION.
Maintain Borrower's consolidated financial condition as follows in accordance
with GAAP (except to the extent modified by the definitions herein):</font></p>

<dir>
<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (a)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Tangible
Net Worth, determined as of each fiscal quarter end, not less than an aggregate
of (i) $85,000,000.00, plus (ii) 75% of cumulative consolidated net income for
all fiscal quarters ending after December 31, 2000, in which such net income was
greater than zero, and (iii) the amount by which the consolidated shareholders
equity has increased or shall increase after December 31, 2000 solely as a
result of the issuance of common or preferred stock or the conversion of debt
securities into such stock, with &quot;<u>Tangible Net Worth</u>&quot; defined
as the aggregate of total stockholders' equity plus subordinated debt less any
intangible assets.</font></p>
</dir>

<dir>
<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (b)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; EBITDA
Coverage Ratio not less than 1.75 to 1.0, determined as of each fiscal quarter
end on a trailing four (4) fiscal quarter basis, with &quot;<u>EBITDA</u>&quot;
defined as net profit before tax plus interest expense (net of capitalized
interest expense), depreciation expense and amortization expense, and with
&quot;<u>EBITDA Coverage Ratio</u>&quot; defined as EBITDA divided by the
aggregate of total interest expense plus the prior period current maturity of
long-term debt, the prior period current maturity of capital leases and the
prior period current maturity of subordinated debt.<page></font></p>
</dir>

<dir>
<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (c)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Ratio
of Funded Debt to EBITDA, determined as of each fiscal quarter end, not greater
than 2.75 to 1.00 to and including September 30, 2002, and 2.50 to 1.00
thereafter, with &quot;<u>Funded Debt</u>&quot; defined as the aggregate of all
interest bearing obligations, inclusive of (without duplication) letters of credit, capital leases and
guaranteed indebtedness, and with &quot;<u>EBITDA</u>&quot; as defined above.</font></p>
</dir>

<dir>
<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (d)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Ratio
of unsecured Funded Debt to Asset Coverage, determined as of the end of each
month, not greater than 1.00 to 1.00, with &quot;Funded Debt&quot; as defined
above, and with &quot;<u>Asset Coverage</u>&quot; defined as the aggregate of
(i) seventy-five percent (75%) of Borrower's and Domestic Subsidiaries'
accounts receivable aged to 60 days past due or less, plus (ii) fifty percent
(50%) of the book value of Borrower's and Domestic Subsidiaries' inventory
under contract, and without duplication, of raw materials and finished goods,
plus (iii) 50% of the net book value of Borrower's and Domestic Subsidiaries'
unencumbered real estate located in the United States, plus (iv) 50% of the net
book value of Borrower's and Domestic Subsidiaries' unencumbered machinery and
equipment located in the United States.</font></p>
</dir>

<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; SECTION
4.10.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; NOTICE TO BANK.&nbsp; Promptly (but in no event more than five (5)
days after the occurrence of each such event or matter) give written notice to
Bank in reasonable detail of: (a) the occurrence of any Event of Default, or
any condition, event or act which with the giving of notice or the passage of
time or both would constitute an Event of Default; (b) any change in the name
or the organizational structure of Borrower or any Subsidiary; (c) the
occurrence and nature of any Reportable Event or Prohibited Transaction, each
as defined in ERISA, or any funding deficiency with respect to any Plan; or (d)
any termination or cancellation of any insurance policy which Borrower or any
Subsidiary is required to maintain, or any uninsured or partially uninsured
loss through liability or property damage, or through fire, theft or any other
cause affecting Borrower&#146;s property.</font></p>

<p align=center><u><font size=2>ARTICLE V</font></u><font size=2><br>
<u>NEGATIVE COVENANTS</u></font></p>

<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Borrower
further covenants that so long as Bank remains committed to extend credit to
Borrower pursuant hereto, or any liabilities (whether direct or contingent,
liquidated or unliquidated) of Borrower to Bank under any of the Loan Documents
remain outstanding, and until payment in full of all obligations of Borrower
subject hereto, Borrower will not, and will not cause or permit any Subsidiary
to, without Bank's prior written consent:</font></p>

<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; SECTION
5.1.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; USE OF FUNDS. Use any
of the proceeds of any credit extended hereunder except for the purposes stated
in Article I hereof.</font></p>

<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; SECTION
5.2.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; OTHER INDEBTEDNESS.
Create, incur, assume or permit to exist any indebtedness or liabilities
resulting from borrowings, capital leases, loans or advances, whether secured
or unsecured, matured or unmatured, liquidated or unliquidated, joint or
several, except (a) the liabilities of Borrower to Bank, (b) any other
liabilities of Borrower existing as of, and disclosed to Bank prior to, the
date hereof, and (c) additional purchase money indebtedness, not to exceed an
aggregate principal amount of $3,500,000.00 per calendar year, provided that
such indebtedness shall be fully secured by equipment and/or real estate. For
purposes of clause (c), the amount of indebtedness under capital leases shall
be determined in accordance with GAAP. Operating leases are excluded from the
scope of this Section.<page></font></p>

<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; SECTION
5.5.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; MERGER, CONSOLIDATION,
TRANSFER OF ASSETS. Merge into or consolidate with any other entity in except
(i) to the extent permitted in Section 5.8 hereof, and (ii) merger of any
Subsidiary into Borrower or into another Subsidiary; make any substantial
change in the nature of Borrowers or any Subsidiary's business as conducted as
of the date hereof; acquire all or substantially all of the assets of any other entity except to the
extent permitted in Section 5.8 below; nor sell, lease, transfer or otherwise
dispose of all or a substantial or material portion <i>of </i>Borrower's assets except
in the ordinary course of its business.</font></p>

<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; SECTION
5.6.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; GUARANTIES. Guarantee
or become liable in any way as surety, endorser (other than as endorser of
negotiable instruments for deposit or collection in the ordinary course of
business), accommodation endorser or otherwise for, nor pledge or hypothecate
any assets of Borrower as security for, any liabilities or obligations of any
other person or entity, except any of the
foregoing in favor of Bank.</font></p>

<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; SECTION
5.7.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; LOANS, ADVANCES,
INVESTMENTS. Make any loans or advances to or investments in any person or entity,
except (i) any of the foregoing existing as of, and disclosed to Bank prior to,
the date hereof, (ii) without duplication of any advances included in clause
(i), advances for travel and other expenses in the ordinary course of business
in an aggregate outstanding amount of $500,000.00, and (iii) investments to the
extent permitted in Section 5.8 below.</font></p>

<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; SECTION
5.8.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; PERMITTED
ACQUISITIONS. Acquire any business (whether by merger, acquisition of all or
substantially all of the assets of any other entity, investment, or otherwise)
without Bank's prior review and consent if the total of all such acquisitions
in any fiscal year exceeds 10% of Tangible Net Worth as of the end ofthe prior fiscal year.&nbsp; For purposes of the 10% limitation above,
acquisitions shall be valued at the fair market value of all consideration
given, including without limitation, cash, notes, assumption of debt and stock.
All acquisitions otherwise permitted hereunder shall be approved by the board
of directors of the entity owning the business to be acquired or otherwise not
considered &quot;hostile&quot; by Bank.</font></p>

<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; SECTION
5.9.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; PLEDGE OF ASSETS.
Mortgage, pledge, grant or permit to exist a security interest or lien
(collectively, &quot;Lien&quot;) in or upon, all or any portion of Borrower's
assets now owned or hereafter acquired, except:</font></p>

<dir>
<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (a)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Liens
in favor of Bank;</font></p>
</dir>

<dir>
<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (b)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Liens
which are existing as of, and disclosed to Bank in writing prior to, the date
hereof;</font></p>
</dir>

<dir>
<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (c)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Liens
securing indebtedness permitted under Section 5.2(c);</font></p>
</dir>

<dir>
<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (d)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Liens
for taxes which are not delinquent or which remain payable without penalty or
the validity or amount of which are being contested in good faith by
appropriate proceedings by stay of execution of enforcement thereof;<page></font></p>
</dir>

<dir>
<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (e)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 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 are being contested in good
faith by appropriate proceedings by stay of execution of enforcement thereof,
with, in the case of liens on property of Borrower or any Subsidiary under this
clause (e) or clause (d), provision having been made, to the satisfaction of
Bank, for the payment thereof in the event the contest is determined adversely
to either Borrower or such Subsidiary; and</font></p>
</dir>

<dir>
<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (d) deposits or pledges under
worker's compensation.</font></p>
</dir>

<p align=center><u><font size=2>ARTICLE
VI<br>
EVENTS OF DEFAULT</font></u></p>

<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; SECTION
6.1.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; The occurrence of any of the following<b>&nbsp; </b>shall constitute an &quot;Event
of Default&quot; under this Agreement:</font></p>

<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (a)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Borrower shall fail to pay any
principal when due, or any interest, fees or other amounts payable under any of
the Loan Documents within 5 calendar days from the applicable due date.</font></p>

<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (b)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Any financial statement or certificate
furnished to Bank in connection with, or any representation or warranty made by
Borrower or any other party under this Agreement or any other Loan Document
shall prove to be incorrect, false or misleading when furnished or made and
which could reasonably be anticipated to have a material adverse effect on the
operations, business or condition (including financial condition) of Borrower
and Subsidiaries, taken as a whole.</font></p>

<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (c)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Any default in the performance of or
compliance with any obligation, agreement or other provision contained herein
or in any other Loan Document (other than those referred to in subsections (a)
and (b) above), and with respect to any such default (other than a breach of
Section 4.9 or of any Section of Article V), such default shall continue for a
period of thirty (30) days the date Borrower first knew (or using reasonable
due diligence, should have known) of its occurrence</font></p>

<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (d)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Any default in the payment or
performance of any obligation, or any defined event of default, under the terms
of any contract or instrument (other than any of the Loan Documents) pursuant
to which Borrower or any Subsidiary has incurred any debt or other liability to
any person or entity, including Bank, and, if such debt or liability is owed to
a party other than Bank (i) the aggregate amount thereof exceeds $250,000.00
and such default continues beyond any applicable grace period, (ii) the holder
of such debt or liability has the right to accelerate the same by reason of
such default, or (iii) such debt or liability is or has been declared to be due
and payable or required to be prepaid (other than by regularly scheduled
required prepayment) prior to the stated maturity date.</font></p>

<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (e)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; The filing of a notice of judgment lien
against Borrower or any Subsidiary; or the recording of any abstract of
judgment against Borrower or any Subsidiary in any county in which Borrower or
such Subsidiary has an interest in real property; or the service of a notice of
levy and/or of a writ of attachment or execution, or other like process,
against the assets of Borrower or any Subsidiary or the entry of a judgment
against Borrower or any Subsidiary; and with respect to any of the foregoing,
the amount thereof exceeds $500,000.00 (to the extent not fully insured) and
the proceeding is not dismissed or vacated within 30 days after its occurrence.<page></font></p>

<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (f)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Borrower or any Subsidiary shall become
insolvent, or shall suffer or consent to or apply for the appointment of a
receiver, trustee, custodian or liquidator of itself or any or a material
portion of its property, or shall generally fail to pay its debts as they
become due, or shall make a general assignment for the benefit of creditors;
Borrower or any Subsidiary shall file a voluntary petition in bankruptcy, or
seeking reorganization, in order to effect a plan or other arrangement with
creditors or any other relief under the Bankruptcy Reform Act, Title 11 of the
United States Code, as amended or recodified from time to time
(&quot;Bankruptcy Code&quot;), or under any state or federal law granting
relief to debtors, whether now or hereafter in effect; or any involuntary
petition or proceeding pursuant to the Bankruptcy Code or any other applicable
state or federal law relating to bankruptcy, reorganization or other relief for
debtors is filed or commenced against Borrower or any Subsidiary (and, if filed
against Borrower or a Subsidiary, the proceeding is not dismissed within 90
days after such filing), or Borrower or any such Subsidiary shall file an
answer admitting the jurisdiction of the court and the material allegations of
any involuntary petition; or Borrower or any such Subsidiary shall be
adjudicated a bankrupt, or an order for relief shall be entered against
Borrower or any such Subsidiary by any court of competent jurisdiction under
the Bankruptcy Code or any other applicable state or federal law relating to
bankruptcy, reorganization or other relief for debtors.</font></p>

<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (g)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; There shall occur any material adverse
change in the operations, business or condition (including the financial
condition), of the Borrower and Subsidiaries, taken as a whole after the date
of this Agreement.</font></p>

<p><font size=2>.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (h)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; The dissolution or liquidation of
Borrower or any Subsidiary; or Borrower or any such Subsidiary, or any of their
directors, stockholders or members, shall take action seeking to effect the
dissolution or liquidation of Borrower or such Subsidiary, except as otherwise
permitted in this Agreement.</font></p>

<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; SECTION
6.2.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; REMEDIES. Upon the
occurrence of any Event of Default: (a) all indebtedness of Borrower under each
of the Loan Documents, any term thereof to the contrary notwithstanding, shall
at Bank's option and without further notice become immediately due and payable
without presentment, demand, protest or notice of dishonor, all of which are
hereby expressly waived by each Borrower; (b) the obligation, if any, of Bank
to extend any further credit under any of the Loan Documents shall immediately
cease and terminate; and (c) Bank shall have all rights, powers and remedies
available under each of the Loan Documents, or accorded by law, including
without limitation the right to resort to any or all security for any credit
subject hereto and to exercise any or all of the rights of a beneficiary or
secured party pursuant to applicable law. All rights, powers and remedies of
Bank may be exercised at any time by Bank and from time to time after the
occurrence of an Event of Default, are cumulative and not exclusive, and shall
be in addition to any other rights, powers or remedies provided by law or
equity.</font></p>

<p align=center><u><font size=2>ARTICLE
VII<br>
MISCELLANEOUS</font></u></p>

<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; SECTION
7.1.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; NO WAIVER. No delay,
failure or discontinuance of Bank in exercising any right, power or remedy
under any of the Loan Documents shall affect or operate as a waiver of such
right, power or remedy; nor shall any single or partial exercise of any such
right, power or remedy preclude, waive or otherwise affect any other or further
exercise thereof or the exercise of any other right, power or remedy. Any
waiver, permit, consent or approval of any kind by Bank of any breach of or
default under any of the Loan Documents must be in writing and shall be effective
only to the extent set forth in such writing.<page></font></p>

<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; SECTION
7.2.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; NOTICES. All notices,
requests and demands which any party is required or may desire to give to any
other party under any provision of this Agreement must be in writing delivered
to each party at the following address:</font></p>

<table border=0 cellspacing=0 cellpadding=0 width="100%">
 <tr>
  <td width="3%" valign=top>&nbsp;</td>
  <td width="14%" valign=top><font size=2>BORROWER:</font></td>
  <td width="82%" valign=top><font size=2>NORTHWEST
  PIPE COMPANY</font></td>
 </tr>
 <tr>
  <td width="17%" colspan=2 valign=top>&nbsp;</td>
  <td width="82%" valign=top><font size=2>200
  S.W. MARKET STREET, SUITE 1800</font></td>
 </tr>
 <tr>
  <td width="17%" colspan=2 valign=top>&nbsp;</td>
  <td width="82%" valign=top><font size=2>PORTLAND
  OR 97201</font></td>
 </tr>
 <tr>
  <td width="17%" colspan=2 valign=top>&nbsp;</td>
  <td width="82%" valign=top>&nbsp;</td>
 </tr>
 <tr>
  <td width="3%" valign=top>&nbsp;</td>
  <td width="14%" valign=top><font size=2>BANK:</font></td>
  <td width="82%" valign=top><font size=2>WELLS
  FARGO BANK, NATIONAL ASSOCIATION</font></td>
 </tr>
 <tr>
  <td width="17%" colspan=2 valign=top>&nbsp;</td>
  <td width="82%" valign=top><font size=2>PORTLAND
  RCBO</font></td>
 </tr>
 <tr>
  <td width="17%" colspan=2 valign=top>&nbsp;</td>
  <td width="82%" valign=top><font size=2>1300
  S.W. Fifth Avenue T-13</font></td>
 </tr>
 <tr>
  <td width="17%" colspan=2 valign=top>&nbsp;</td>
  <td width="82%" valign=top><font size=2>Portland
  OR 97201</font></td>
 </tr>
</table>

<p><font size=2>or to such other address as any party may
designate by written notice to all other parties. Each such notice, request and
demand shall be deemed given or made as follows: (a) if sent by hand delivery,
upon delivery; (b) if sent by mail, upon the earlier of the date of receipt or
three (3) days after deposit in the U.S. mail, first class and postage prepaid;
and (c) if sent by telecopy, upon receipt.</font></p>

<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; SECTION
7.3.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; COSTS, EXPENSES AND
ATTORNEYS' FEES. Borrower shall pay to Bank immediately upon demand the full amount of all payments, advances, charges, costs and expenses,
including reasonable attorneys' fees (to include outside counsel fees and all
allocated costs of Bank's in-house counsel), expended or incurred by Bank in
connection with (a) the negotiation and preparation of this Agreement and the
other Loan, Bank's continued administration hereof and thereof, and the
preparation of any amendments and waivers
hereto and thereto, (b) the enforcement of Bank's rights and/or the
collection of any amounts which become due to Bank under any of the Loan
Documents, and (c) the prosecution or defense of any action in any way related
to any of the Loan Documents, including without limitation, any action for
declaratory relief, whether incurred at the trial or appellate level, in an arbitration
proceeding or otherwise, and including any of the foregoing incurred in
connection with any bankruptcy proceeding (including without limitation, any
adversary proceeding, contested matter or motion brought by Bank or any other
person) relating to any Borrower or any other person or entity.</font></p>

<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; SECTION
7.4.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; SUCCESSORS,
ASSIGNMENT. This Agreement shall be binding upon and inure to the benefit of
the heirs, executors, administrators, legal representatives, successors and
assigns of the parties; provided however, that Borrower may not assign or
transfer its interest hereunder without Bank's prior written consent. Bank
reserves the right, subject to Borrower's prior written consent, not to be
unreasonably withheld, to sell, assign, transfer, negotiate or grant
participations in all or any part of, or any interest in, Bank's rights and
benefits under each of the Loan Documents. Notwithstanding the foregoing, Bank
may sell participations, without Borrower's consent, in all or any portion of
the Line of Credit and the Loan Documents, but such sales shall not entitle the
participant(s) to any direct rights against Borrower under the terms of this
Agreement or any of the other Loan Documents. Any outright sale or assignment
of Bank's rights hereunder 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 $100,000,000.00. In connection with any assignment or
participation hereunder, Bank may disclose all documents and information which
Bank now has or may hereafter acquire relating to any credit subject hereto,
Borrower or its business, any guarantor hereunder or the business of such
guarantor, or any collateral required hereunder, subject to the terms of a
confidentiality agreement customarily used by Bank in connection therewith.<b><page></b></font></p>

<p><b><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </font></b><font size=2>SECTION 7.5.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; ENTIRE
AGREEMENT; AMENDMENT. This Agreement and the other Loan Documents constitute
the entire agreement between Borrower and Bank with respect to each credit
subject hereto and supersede all prior negotiations, communications,
discussions and correspondence concerning the subject matter hereof. This
Agreement may be amended or modified only in writing signed by each party
hereto.</font></p>

<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; SECTION 7.6.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; NO THIRD PARTY BENEFICIARIES. This Agreement is made
and entered into for the sole protection and benefit of the parties hereto and
their respective permitted successors and assigns, and no other person or
entity shall be a third party beneficiary of, or have any direct or indirect
cause of action or claim in connection with, this Agreement or any other of the
Loan Documents to which it is not a party.</font></p>

<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; SECTION 7.7.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; TIME. Time is of the essence of each and every
provision of this Agreement and each other of the Loan Documents.</font></p>

<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; SECTION 7.8.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; SEVERABILITY OF PROVISIONS. If any provision of this
Agreement shall be prohibited by or invalid under applicable law, such
provision shall be ineffective only to the extent of such prohibition or
invalidity without invalidating the remainder of such provision or any
remaining provisions of this Agreement.</font></p>

<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; SECTION 7.9.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which when executed and delivered shall be
deemed to be an original, and all of which when taken together shall constitute
one and the same Agreement.</font></p>

<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; SECTION 7.10.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; GOVERNING LAW. This Agreement
shall be governed by and construed in accordance with the laws of the State of
Oregon.</font></p>

<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; SECTION 7.11.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; ARBITRATION.</font></p>

<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (a)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>Arbitration</u>.
The parties hereto agree, upon demand by any party, to submit to binding
arbitration all claims, disputes and controversies between or among them (and
their respective employees, officers, directors, attorneys, and other agents),
whether in tort, contract or otherwise arising out of or relating to in any way
(i) the loan and related Loan Documents which are the subject of this Agreement
and its negotiation, execution, collateralization, administration, repayment,
modification, extension, substitution, formation, inducement, enforcement, default
or termination; or (ii) requests for additional credit.</font></p>

<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (b)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>Governing
Rules</u>. Any arbitration proceeding will (i) proceed in a location in Oregon
selected by the American Arbitration Association (&quot;AAA&quot;); (ii) be
governed by the Federal Arbitration Act (Title 9 of the United States Code),
notwithstanding any conflicting choice of law provision in any of the documents
between the parties; and (iii) be conducted by the AAA, or such other
administrator as the parties shall mutually agree upon, in accordance with the
AAA's commercial dispute resolution procedures, unless the claim or
counterclaim is at least $1,000,000.00 exclusive of claimed interest,
arbitration fees and costs in which case the arbitration shall be conducted in
accordance with the AAA's optional procedures for large, complex commercial
disputes (the commercial dispute resolution procedures or the optional
procedures for large, complex commercial disputes to be referred to, as
applicable, as the &quot;Rules&quot;). If there is any inconsistency between
the terms hereof and the Rules, the terms and procedures set forth herein shall
control. Any party who fails or refuses to submit to arbitration following a
demand by any other party shall bear all costs and expenses incurred by such
other </font><font size=2>party in compelling arbitration of any
dispute. Nothing contained herein shall be deemed to be a waiver by any party
that is a bank of the protections afforded to it under 12 U.S.C. &#167;91 or any
similar applicable state law.<page></font></p>

<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (c)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>No Waiver of Provisional Remedies, Self-Help and Foreclosure</u>. The arbitration requirement does not
limit the right of any party to (i) foreclose against real or personal property
collateral; (ii) exercise self-help remedies relating to collateral or proceeds
of collateral such as setoff or repossession; or (iii) obtain provisional or
ancillary remedies such as replevin, injunctive relief, attachment or the
appointment of a receiver, before during or after the pendency of any
arbitration proceeding. This exclusion does not constitute a waiver of the
right or obligation of any party to submit any dispute to arbitration or
reference hereunder, including those arising from the exercise of the actions
detailed in sections (i), (ii) and (iii) of this paragraph.</font></p>

<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (d)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;  <u>Arbitrator Qualifications and Powers</u>.
Any arbitration proceeding in which the amount in controversy is $5,000,000.00
or less will be decided by a single arbitrator selected according to the Rules,
and who shall not render an award of greater than $5,000,000.00. Any dispute in
which the amount in controversy exceeds $5,000,000.00 shall be decided by
majority vote of a panel of three arbitrators: provided however, that all three
arbitrators must actively participate in all hearings and deliberations. The
arbitrator will be a neutral attorney licensed in the State of Oregon or a
neutral retired judge of the state or federal judiciary of Oregon, in either
case with a minimum of ten years experience in the substantive law applicable
to the subject matter of the dispute to be arbitrated. The arbitrator will
determine whether or not an issue is arbitratable and will give effect to the
statutes of limitation in determining any claim. In any arbitration proceeding
the arbitrator will decide (by documents only or with a hearing at the
arbitrator's discretion) any pre-hearing motions which are similar to motions
to dismiss for failure to state a claim or motions for summary adjudication.
The arbitrator shall resolve all disputes in accordance with the substantive
law of Oregon and may grant any remedy or relief that a court of such state
could order or grant within the scope hereof and such ancillary relief as is
necessary to make effective any award. The arbitrator shall also have the power
to award recovery of all costs and fees, to impose sanctions and to take such
other action as the arbitrator deems necessary to the same extent a judge could
pursuant to the Federal Rules of Civil Procedure, the Oregon Rules of Civil
Procedure or other applicable law. Judgment upon the award rendered by the
arbitrator may be entered in any court having jurisdiction. The institution and
maintenance of an action for judicial relief or pursuit of a provisional or
ancillary remedy shall not constitute a waiver of the right of any party,
including the plaintiff, to submit the controversy or claim to arbitration if
any other party contests such action for judicial relief.</font></p>

<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (e)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>Discovery</u>. In any arbitration
proceeding discovery will be permitted in accordance with the Rules. All
discovery shall be expressly limited to matters directly relevant to the
dispute being arbitrated and must be completed no later than 20 days before the
hearing date and within 180 days of the filing of the dispute with the AAA. Any
requests for an extension of the discovery periods, or any discovery disputes,
will be subject to final determination by the arbitrator upon a showing that
the request for discovery is essential for the party's presentation and that no
alternative means for obtaining information is available.</font></p>

<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (f)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>Class Proceedings and Consolidations</u>.
The resolution of any dispute arising pursuant to the terms of this Agreement
shall be determined by a separate arbitration proceeding and such dispute shall
not be consolidated with other disputes or included in any class proceeding.<page></font></p>

<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (g)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>Payment Of Arbitration Costs And Fees</u>.
The arbitrator shall award all costs and expenses of the arbitration
proceeding.</font></p>

<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (h)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>Miscellaneous</u>. To the maximum
extent practicable, the AAA, the arbitrators and the parties shall take all
action required to conclude any arbitration proceeding within 180 days of the
filing of the dispute with the AAA. No arbitrator or other party to an
arbitration proceeding may disclose the existence, content or results thereof,
except for disclosures of information by a party required in the ordinary
course of its business or by applicable law or regulation. If more than one
agreement for arbitration by or between the parties potentially applies to a
dispute, the arbitration provision most directly related to the Loan Documents
or the subject matter of the dispute shall control. This arbitration provision,
as it pertains to the Loan Documents and the Line of Credit, shall survive
termination, amendment or expiration of any of the Loan Documents or any
relationship between the parties.</font></p>

<p><b><u><font size=2>UNDER OREGON LAW, MOST AGREEMENTS, PROMISES AND COMMITMENTS
MADE BY BANK AFTER OCTOBER 3, 1989 CONCERNING LOANS AND OTHER CREDIT EXTENSIONS
WHICH ARE NOT FOR PERSONAL, FAMILY OR HOUSEHOLD PURPOSES OR SECURED SOLELY BY
THE BORROWER'S RESIDENCE MUST BE IN WRITING, EXPRESS CONSIDERATION AND BE
SIGNED BY BANK TO BE ENFORCEABLE.</font></u></b></p>

<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
as of the day and year first written above.</font></p>

<table border=0 cellspacing=0 cellpadding=0 width="100%">
 <tr>
  <td width="46%" valign=top><font size=2>NORTHWEST
  PIPE COMPANY</font></td>
  <td width="3%" valign=top>&nbsp;</td>
  <td width="50%" valign=top><font size=2>WELLS
  FARGO BANK, NATIONAL ASSOCIATION</font></td>
 </tr>
 <tr>
  <td width="46%" valign=top>&nbsp;</td>
  <td width="3%" valign=top>&nbsp;</td>
  <td width="50%" valign=top>&nbsp;</td>
 </tr>
 <tr>
  <td width="46%" valign=top><font size=2>By:
  /s/ BRIAN W. DUNHAM</font></td>
  <td width="3%" valign=top>&nbsp;</td>
  <td width="50%" valign=top><font size=2>By:
  /s/ STEPHEN J. DAY</font></td>
 </tr>
 <tr>
  <td width="46%" valign=top>
<hr size=2 width="95%" noshade color=black align=right></td>
  <td width="3%" valign=top>&nbsp;</td>
  <td width="50%" valign=top>
<hr size=2 width="95%" noshade color=black align=right></td>
 </tr>
 <tr>
  <td width="46%" valign=top>&nbsp;</td>
  <td width="3%" valign=top>&nbsp;</td>
  <td width="50%" valign=top><font size=2>Stephen
  J. Day</font></td>
 </tr>
 <tr>
  <td width="46%" valign=top><font size=2>Title:
  President &amp; CEO</font></td>
  <td width="3%" valign=top>&nbsp;</td>
  <td width="50%" valign=top><font size=2>Title:
  Vice President</font></td>
 </tr>
</table>

<page>


<p align=center><font size=2>EXHIBIT
A</font></p>

<p align=center><font size=2>REVOLVING LINE OF CREDIT NOTE</font></p>

<table border=0 cellspacing=0 cellpadding=0 width="100%">
 <tr>
  <td width="80%" valign=top><font size=2>$30,000,000.00</font></td>
  <td width="20%" valign=top><font size=2>Portland,
  Oregon</font></td>
 </tr>
 <tr>
  <td width="80%" valign=top>&nbsp;</td>
  <td width="20%" valign=top><font size=2>May
  30, 2001</font></td>
 </tr>
</table>

<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; FOR
VALUE RECEIVED, the undersigned NORTHWEST PIPE COMPANY (&quot;Borrower&quot;)
promises to pay to the order of WELLS FARGO BANK, NATIONAL ASSOCIATION
(&quot;Bank&quot;) at its office at Portland RCBO, 1300 S.W. Fifth Avenue T-13,
Portland, Oregon, or at such other place as the holder hereof may designate, in
lawful money of the United States of America and in immediately available
funds, the principal sum of Thirty Million Dollars ($30,000,000.00), or so much
thereof as may be advanced and be outstanding, with interest thereon, to be
computed on each advance from the date of its disbursement as set forth herein.</font></p>

<p><font size=2>DEFINITIONS:</font></p>

<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; As
used herein, the following terms shall have the meanings set forth after each,
and any other term defined in this Note shall have the meaning set forth at the
place defined:</font></p>

<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (a)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &quot;Business Day&quot; means any day
except a Saturday, Sunday or any other day on which commercial banks in Oregon
are authorized or required by law to close.</font></p>

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

<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (c)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &quot;LIBOR&quot; means the rate per
annum (rounded upward, if necessary, to the nearest whole 1/8 of 1%) and
determined pursuant to the following formula:</font></p>

<table border=0 cellspacing=0 cellpadding=0 width="67%">
 <tr>
  <td  align=right width="55%" rowspan=3><font size=2>LIBOR</font></td>
  <td width="3%" valign=top>&nbsp;</td>
  <td  align=center width="40%" valign=bottom><font size=2>Base LIBOR</font></td>
 </tr>
 <tr>
  <td  align=center width="3%"><font size=2>=</font></td>
  <td  align=center width="40%">
<hr size=1 width="80%" noshade color=black align=center></td>
 </tr>
 <tr>
  <td width="3%" valign=top>&nbsp;</td>
  <td  align=center width="40%" valign=top><font size=2>100% &#150; LIBOR
  Reserve Percentage</font></td>
 </tr>
</table>

<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (i)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &quot;Base LIBOR&quot; means the rate
per annum for United States dollar deposits quoted by Bank as the Inter-Bank
Market Offered Rate, with the understanding that such rate is quoted by Bank
for the purpose of calculating effective rates of interest for loans making reference
thereto, on the first day of a Fixed Rate Term for delivery of funds on said
date for a period of time approximately equal to the number of days in such
Fixed Rate Term and in an amount approximately equal to the principal amount to
which such Fixed Rate Term applies. Borrower understands and agrees that Bank
may base its quotation of the Inter-Bank Market Offered Rate upon such offers
or other market indicators of the Inter-Bank Market as Bank in its discretion
deems appropriate including, but not limited to, the rate offered for U.S.
dollar deposits on the London Inter-Bank Market.</font></p>

<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (ii)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &quot;LIBOR Reserve Percentage&quot;
means the reserve percentage prescribed by the Board of Governors of the
Federal Reserve System (or any successor) for &quot;Eurocurrency Liabilities&quot;
(as defined in Regulation D of the Federal Reserve Board, as amended), adjusted by Bank for expected changes
in such reserve percentage during the applicable Fixed Rate Term.<page></font></p>

<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (d)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &quot;Prime Rate&quot; means at any time
the rate of interest most recently announced within Bank at its principal
office as its Prime Rate, with the understanding that the Prime Rate is one of
Bank's base rates and serves as the basis upon which effective rates of
interest are calculated for those loans making reference thereto, and is
evidenced by the recording thereof after its announcement in such internal
publication or publications as Bank may designate.</font></p>

<p><font size=2>INTEREST:</font></p>

<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (a)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>Interest</u>. The outstanding
principal balance of this Note shall bear interest (computed on the basis of a
360-day year, actual days elapsed) either (i) at a fluctuating rate per annum
one half percent (0.50%) below the Prime Rate in effect from time to time, or
(ii) at a fixed rate per annum determined by Bank to be one and one half
percent above LIBOR in effect of the first day of each Fixed Rate Term. When
interest is determined in relation to the Prime Rate, each change in the rate
of interest hereunder shall become effective on the date each Prime Rate change
is announced within Bank. With respect to each LIBOR selection hereunder, Bank
is hereby authorized to note the date, principal amount, interest rate and
Fixed Rate Term applicable thereto and any payments made thereon on Bank's
books and records (either manually or by electronic entry) and/or on any schedule
attached to this Note, which notations shall be prima facie evidence of the
accuracy of the information noted.</font></p>

<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (b)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>Selection of Interest Rate Options</u>.
At any time any portion of this Note bears interest determined in relation to
LIBOR, it may be continued by Borrower at the end of the Fixed Rate Term
applicable thereto so that all or a portion thereof bears interest determined
in relation to the Prime Rate or to LIBOR for a new Fixed Rate Term designated
by Borrower. At any time any portion of this Note bears interest determined in
relation to the Prime Rate, Borrower may convert all or a portion thereof so
that it bears interest determined in relation to LIBOR for a Fixed Rate Term
designated by Borrower. At such time as Borrower requests an advance hereunder
or wishes to select a LIBOR option for all or a portion of the outstanding
principal balance hereof, and at the end of each Fixed Rate Term, Borrower
shall give Bank notice specifying: (i) the interest rate option selected by
Borrower; (ii) the principal amount subject thereto; and (iii) for each LIBOR
selection, the length of the applicable Fixed Rate Term. Any such notice may be
given by telephone (or such other electronic method as Bank may permit) so long
as, with respect to each LIBOR selection, (A) if requested by Bank, Borrower
provides to Bank written confirmation thereof not later than three (3) Business
Days after such notice is given, and (B) such notice is given to Bank prior to
10:00 a.m. on the first day of the Fixed Rate Term, or at a later time during
any Business Day if Bank, at it's sole option but without obligation to do so,
accepts Borrower's notice and quotes a fixed rate to Borrower. If Borrower does
not immediately accept a fixed rate when quoted by Bank, the quoted rate shall
expire and any subsequent LIBOR request from Borrower shall be subject to a
redetermination by Bank of the applicable fixed rate. If no specific
designation of interest is made at the time any advance is requested hereunder
or at the end of any Fixed Rate Term, Borrower shall be deemed to have made a
Prime Rate interest selection for such advance or the principal amount to which
such Fixed Rate Term applied.<page></font></p>

<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (c)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>Taxes and Regulatory Costs</u>. Borrower shall pay to Bank
immediately upon demand, in addition to any other amounts due or to become due
hereunder, any and all (i) withholdings, interest equalization taxes, stamp
taxes or other taxes (except income and franchise taxes) imposed by any
domestic or foreign governmental authority and related in any manner to LIBOR,
and (ii) future, supplemental, emergency or other changes in the LIBOR Reserve
Percentage, assessment rates imposed by the Federal Deposit Insurance
Corporation, or similar requirements or costs imposed by any domestic or
foreign governmental authority or resulting from compliance by Bank with any
request or directive (whether or not having the force of law) from any central
bank or other governmental authority and related in any manner to LIBOR to the
extent they are not included in the calculation of LIBOR. In determining which
of the foregoing are attributable to any LIBOR option available to Borrower
hereunder, any reasonable allocation made by Bank among its operations shall be
conclusive and binding upon Borrower.</font></p>

<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (d)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>Payment of Interest</u>. Interest
accrued on this Note shall be payable on the first day of each month,
commencing June 1, 2001 and on the maturity date of this Note.</font></p>

<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (e)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>Default Interest</u>. From and after
the maturity date of this Note, or such earlier date as all principal owing hereunder
becomes due and payable by acceleration or otherwise, the outstanding principal
balance of this Note shall bear interest until paid in full at an increased
rate per annum (computed on the basis of a 360-day year, actual days elapsed)
equal to three percent (3.00%) above the rate of interest from time to time
applicable to this Note.</font></p>

<p><font size=2>BORROWING AND REPAYMENT:</font></p>

<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (a)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>Borrowing and Repayment</u>.
Borrower may from time to time during the term of this Note borrow, partially
or wholly repay its outstanding borrowings, and reborrow, subject to all of the
limitations, terms and conditions of this Note and of any document executed in
connection with or governing this Note; provided however, that the total
outstanding borrowings under this Note shall not at any time exceed the
principal amount stated above. The unpaid principal balance of this obligation
at any time shall be the total amounts advanced hereunder by the holder hereof
less the amount of principal payments made hereon by or for any Borrower, which
balance may be endorsed hereon from time to time by the holder. The outstanding
principal balance of this Note shall be due and payable in full on June 30,
2003.</font></p>

<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (b)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>Advances</u>. Advances hereunder, to
the total amount of the principal sum stated above, may be made by the holder
at the oral or written request of (i) Paul Parsons, Mike Van Note, Al Rose or
John Murakami, any one acting alone, who are authorized to request advances and
direct the disposition of any advances until written notice of the revocation of
such authority is received by the holder at the office designated above, or
(ii) any person, with respect to advances deposited to the credit of any
deposit account of any Borrower, which advances, when so deposited, shall be
conclusively presumed to have been made to or for the benefit of each Borrower
regardless of the fact that persons other than those authorized to request
advances may have authority to draw against such account. The holder shall have
no obligation to determine whether any person requesting an advance is or has
been authorized by any Borrower.</font></p>

<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (c)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>Application of Payments</u>. Each
payment made on this Note shall be credited first, to any interest then due and
second, to the outstanding principal balance hereof. All payments credited to
principal shall be applied first, to the outstanding principal balance of this
Note which bears interest determined in relation to the Prime Rate, if any, and
second, to the outstanding principal balance of this Note which bears interest
determined in relation to LIBOR, with such payments applied to the oldest Fixed
Rate Term first.</font></p>

<page>


<p><font size=2>PREPAYMENT:</font></p>

<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (a)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>Prime Rate</u>. Borrower may prepay
principal on any portion of this Note which bears interest determined in
relation to the Prime Rate at any time, in any amount and without penalty.</font></p>

<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (b)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>LIBOR</u>. Borrower may prepay
principal on any portion of this Note which bears interest determined in
relation to LIBOR at any time and in the minimum amount of One Hundred Thousand
Dollars ($100,000.00); provided however, that if the outstanding principal
balance of such portion of this Note is less than said amount, the minimum
prepayment amount shall be the entire outstanding principal balance thereof. In
consideration of Bank providing this prepayment option to Borrower, or if any such
portion of this Note shall become due and payable at any time prior to the last
day of the Fixed Rate Term applicable thereto by acceleration or otherwise,
Borrower shall pay to Bank immediately upon demand a fee which is the sum of
the discounted monthly differences for each month from the month of prepayment
through the month in which such Fixed Rate Term matures, calculated as follows
for each such month:</font></p>

<table border=0 cellspacing=0 cellpadding=0 width="100%">
 <tr>
  <td width=41 valign=top>&nbsp;</td>
  <td width=41 valign=top><font size=2>(i)</font></td>
  <td width=640 valign=top><u><font size=2>Determine</font></u><font   size=2>
  the amount of interest which would have accrued each month on the amount
  prepaid at the interest rate applicable to such amount had it remained
  outstanding until the last day of the Fixed Rate Term applicable thereto.</font></td>
 </tr>
 <tr>
  <td width=41 valign=top>&nbsp;</td>
  <td width=41 valign=top>&nbsp;</td>
  <td width=640 valign=top>&nbsp;</td>
 </tr>
 <tr>
  <td width=41 valign=top>&nbsp;</td>
  <td width=41 valign=top><font size=2>(ii)</font></td>
  <td width=640 valign=top><u><font size=2>Subtract</font></u><font   size=2>
  from the amount determined in (i) above the amount of interest which would
  have accrued for the same month on the amount prepaid for the remaining term
  of such Fixed Rate Term at LIBOR in effect on the date of prepayment for new
  loans made for such term and in a principal amount equal to the amount
  prepaid.</font></td>
 </tr>
 <tr>
  <td width=41 valign=top>&nbsp;</td>
  <td width=41 valign=top>&nbsp;</td>
  <td width=640 valign=top>&nbsp;</td>
 </tr>
 <tr>
  <td width=41 valign=top>&nbsp;</td>
  <td width=41 valign=top><font size=2>(iii)</font></td>
  <td width=640 valign=top><font size=2>If
  the result obtained in (ii) for any month is greater than zero, discount that
  difference by LIBOR used in (ii) above.</font></td>
 </tr>
</table>

<p><font size=2>Each Borrower acknowledges that
prepayment of such amount may result in Bank incurring additional costs,
expenses and/or liabilities, and that it is difficult to ascertain the
full-extent of such costs, expenses and/or liabilities. Each Borrower,
therefore, agrees to pay the above-described prepayment fee and agrees that
said amount represents a reasonable estimate of the prepayment costs, expenses
and/or liabilities of Bank. If Borrower fails to pay any prepayment fee when
due, the amount of such prepayment fee shall thereafter bear interest until
paid at a rate per annum two percent (2.00%) above the Prime Rate in effect
from time to time (computed on the basis of a 360-day year, actual days
elapsed). Each change in the rate of interest on any such past due prepayment
fee shall become effective on the date each Prime Rate change is announced
within Bank.</font></p>

<p><font size=2>EVENTS OF DEFAULT:</font></p>

<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; This
Note is made pursuant to and is subject to the terms and conditions of that
certain Credit Agreement between Borrower and Bank dated as of May 1, 2001, as
amended from time to time (the &quot;Credit Agreement&quot;). Any defined event
of default under the Credit Agreement, shall constitute an &quot;Event of Default&quot;
under this Note.</font></p>

<page>


<p><font size=2>MISCELLANEOUS:</font></p>

<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (a)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>Remedies</u>. Upon the occurrence of
any Event of Default, the holder of this Note, at the holder's option and
without further notice, may declare all sums of principal and interest
outstanding hereunder to be immediately due and payable without presentment,
demand, notice of nonperformance, notice of protest, protest or notice of
dishonor, all of which are expressly waived by each Borrower, and the
obligation, if any, of the holder to extend any further credit hereunder shall
immediately cease and terminate. Each Borrower shall pay to the holder
immediately upon demand the full amount of all payments, advances, charges,
costs and expenses, including reasonable&nbsp;
attorneys' fees (to include outside counsel fees and all allocated costs
of the holder's in-house counsel), expended or incurred by the holder in
connection with the enforcement of the holders rights and/or the collection of
any amounts which become due to the holder under this Note, and the prosecution
or defense of any action in any way related to this Note, including without
limitation, any action for declaratory relief, whether incurred at the trial or
appellate level, in an arbitration proceeding or otherwise, and including any
of the foregoing incurred in connection with any bankruptcy proceeding
(including without limitation, any adversary proceeding, contested matter or
motion brought by Bank or any other person) relating to any Borrower or any
other person or entity.</font></p>

<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (b)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>Obligations Joint and Several</u>.
Should more than one person or entity sign this Note as a Borrower, the
obligations of each such Borrower shall be joint and several.</font></p>

<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (c)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>Governing Law</u>. This Note shall
be governed by and construed in accordance with the laws of the State of
Oregon.</font></p>

<p><b><u><font size=2>UNDER
OREGON LAW, MOST AGREEMENTS, PROMISES AND COMMITMENTS MADE BY BANK AFTER
OCTOBER 3, 1989 CONCERNING LOANS AND OTHER CREDIT EXTENSIONS WHICH ARE NOT FOR
PERSONAL, FAMILY OR HOUSEHOLD PURPOSES OR SECURED SOLELY BY THE BORROWER'S
RESIDENCE MUST BE IN WRITING, EXPRESS CONSIDERATION AND BE SIGNED BY BANK TO BE
ENFORCEABLE.</font></u></b></p>

<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; IN
WITNESS WHEREOF, the undersigned has executed this Note as of the date first
written above.</font></p>

<table border=0 cellspacing=0 cellpadding=0 width="50%">
 <tr>
  <td width="100%" valign=top><font size=2>NORTHWEST
  PIPE COMPANY</font></td>
 </tr>
 <tr>
  <td width="100%" valign=top>&nbsp;</td>
 </tr>
 <tr>
  <td width="100%" valign=top><font size=2>By:
  /s/ BRIAN W. DUNHAM</font></td>
 </tr>
 <tr>
  <td width="100%" valign=top>
<hr size=2 width="95%" noshade color=black align=right></td>
 </tr>
 <tr>
  <td width="100%" valign=top>&nbsp;</td>
 </tr>
 <tr>
  <td width="100%" valign=top><font size=2>Title:
  President &amp; CEO</font></td>
 </tr>
 <tr>
  <td width="100%" valign=top>
<hr size=2 width="95%" noshade color=black align=right></td>
 </tr>
</table>

<page>


<p align=center><br>
<font size=2>ADDENDUM TO PROMISSORY NOTE<br>
(LIBOR PRICING ADJUSTMENTS)</font></p>

<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; THIS
ADDENDUM is attached to and made a part of that certain promissory note
executed by NORTHWEST PIPE COMPANY (&quot;Borrower&quot;) and payable to WELLS
FARGO BANK, NATIONAL ASSOCIATION (&quot;Bank&quot;), or order, dated as of May&nbsp;30,
2001, in the principal amount of THIRTY MILLION Dollars ($30,000,000.00) (the
&quot;Note&quot;).</font></p>

<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; The
following provisions are hereby incorporated into the Note to reflect the
interest rate adjustments agreed to by Bank and Borrower:</font></p>

<p><font size=2>INTEREST RATE ADJUSTMENTS:</font></p>

<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (a)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>Initial LIBOR Margin</u>. The
initial LIBOR margin applicable to this Note shall be as set forth in the
&quot;<u>Interest</u>&quot; paragraph herein.</font></p>

<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (b)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>LIBOR Rate Adjustments</u>. Bank
shall adjust the LIBOR margin used to determine the rate of interest applicable
to LIBOR options selected by Borrower under this Note on a quarterly basis,
commencing with Borrower's fiscal quarter ending June 30, 2001, if required to
reflect a change in Borrower&#146;s ratio of Funded Debt to EBITDA (as defined in
the Credit Agreement referenced herein), in accordance with the following grid:</font></p>

<dir>
<table border=0 cellspacing=0 cellpadding=0 width="50%">
 <tr>
  <td width="55%" valign=bottom><b><font size=2>Ratio of Funded Debt to
  EBITDA</font></b></td>
  <td width="8%" valign=top>&nbsp;</td>
  <td width="35%" valign=top><b><font size=2>Applicable<br>
  LIBOR<br>Margin</font></b></td>
 </tr>
 <tr>
  <td width="55%" valign=top><div align=right><b><font size=2><hr size=1 width="100%" noshade color=black align=right></font></b></div></td>
  <td width="8%" valign=top>&nbsp;</td>
  <td width="35%" valign=top>
<hr size=1 width="100%" noshade color=black align=right></td>
 </tr>
 <tr>
  <td width="55%" valign=top bgcolor="#cceeff"><font size=2>Greater
  than 2.50 to 1.00</font></td>
  <td width="8%" valign=top bgcolor="#cceeff">&nbsp;</td>
  <td width="35%" valign=top bgcolor="#cceeff"><font size=2>2.00%</font></td>
 </tr>
 <tr>
  <td width="55%" valign=top><font size=2>Equal
  to or less than 2.50 to 1.00 and greater than 2.00 to 1.00</font></td>
  <td width="8%" valign=top>&nbsp;</td>
  <td width="35%" valign=top><font size=2>1.50%</font></td>
 </tr>
 <tr>
  <td width="55%" valign=top bgcolor="#cceeff"><font size=2>Equal
  to or less than 2.00 to 1.00 and greater than 1.50 to 1.00</font></td>
  <td width="8%" valign=top bgcolor="#cceeff">&nbsp;</td>
  <td width="35%" valign=top bgcolor="#cceeff"><font size=2>1.25%</font></td>
 </tr>
 <tr>
  <td width="55%" valign=top><font size=2>Equal
  to or less than 1.50 to 1.00</font></td>
  <td width="8%" valign=top>&nbsp;</td>
  <td width="35%" valign=top><font size=2>1.00%</font></td>
 </tr>
</table>
</dir>

<p><font size=2>Each such adjustment shall be effective
on the first Business Day of Borrower's fiscal quarter following the quarter
during which Bank receives and reviews Borrower's most current fiscal
quarter-end financial statements in accordance with any requirements
established by Bank for the preparation and delivery thereof.</font></p>

<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; IN
WITNESS WHEREOF, this Addendum has been executed as of the same date as the
Note.</font></p>

<table border=0 cellspacing=0 cellpadding=0 width="50%">
 <tr>
  <td width="100%" valign=top><font size=2>NORTHWEST
  PIPE COMPANY</font></td>
 </tr>
 <tr>
  <td width="100%" valign=top>&nbsp;</td>
 </tr>
 <tr>
  <td width="100%" valign=top><font size=2>By:
  /s/ BRIAN W. DUNHAM</font></td>
 </tr>
 <tr>
  <td width="100%" valign=top>
<hr size=2 width="95%" noshade color=black align=right></td>
 </tr>
 <tr>
  <td width="100%" valign=top>&nbsp;</td>
 </tr>
 <tr>
  <td width="100%" valign=top><font size=2>Title:
  President &amp; CEO</font></td>
 </tr>
 <tr>
  <td width="100%" valign=top>
<hr size=2 width="95%" noshade color=black align=right></td>
 </tr>
</table>

<p><font size=2>&nbsp;</font></p>

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