Form: 10-Q

Quarterly report pursuant to Section 13 or 15(d)

May 15, 2002

Published on May 15, 2002






March 31, 2002



Barrett Business Services, Inc.
4724 SW Macadam Avenue
Portland, OR 97201

Gentlemen:

This letter amendment (this "Amendment") is to confirm the changes agreed
upon between WELLS FARGO BANK, NATIONAL ASSOCIATION ("Bank") and BARRETT
BUSINESS SERVICES, INC. ("Borrower") to the terms and conditions of that certain
letter agreement between Bank and Borrower dated as of May 31, 2000, as amended
from time to time (the "Agreement").

RECITALS

WHEREAS, Pursuant to the Agreement, Borrower remains indebted to Bank under
a line of credit in the maximum principal amount of Thirteen Million Dollars
($13,000,000.00) (the "Line of Credit"), which is evidenced by that certain
Revolving Line of Credit Note dated May 31, 2001, as modified from time to time
(the "Line of Credit Note"). The Line of Credit Note shall mature and become due
and payable in full on July 1, 2002 and as of the date hereof, the outstanding
principal balance under the Line of Credit is $2,611,313.84, plus accrued but
unpaid interest.

WHEREAS, Pursuant to the Agreement, Borrower remains indebted to Bank under
a term loan in the original principal amount of Six Hundred Ninety-three
Thousand Seven Hundred Fifty Dollars ($693,750.00) (the "Term Loan A"), which is
evidenced by that certain Promissory Note dated August 12, 1993 (the "Term Note
A"). Term Note A will mature and became due and payable in full on August 1,
2003 and as of the date hereof, the outstanding principal balance under Term
Loan A is $384,135.36, plus accrued but unpaid interest.

WHEREAS, Pursuant to the Prior Agreement, Borrower remains indebted to Bank
under a term loan in the original principal amount of Eight Million Dollars
($8,000,000.00) (the "Term Loan B"), which is evidenced by that certain Term
Note dated May 31, 1999 (the "Term Note B"). Term Note B will mature and will
became due and payable in full on May 31, 2002 and as of the date hereof, the
outstanding principal balance under Term Loan B is $183,330.00, plus accrued but
unpaid interest.

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

Barrett Business Services, Inc.
March 31, 2002
Page 2


NOW, THEREFORE, for valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, subject to the terms and conditions described
herein, the parties hereto agree that the Agreement shall be amended as follows;
provided, however, that nothing shall terminate any security interests or other
documents in favor of Bank, all of which shall remain in full force and effect
unless expressly amended hereby:

1. Amendment to first sentence of Paragraph I.1(b). The first sentence of
Paragraph I.1(b) is hereby deleted in its entirety, and the following
substituted therefor:

" 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 (each, a "Letter
of Credit" and collectively, "Letters of Credit"); provided however,
that the aggregate undrawn amount of all outstanding Letters of Credit
shall not at any time exceed Five Million Five Hundred Thousand
Dollars ($5,500,000.00)."


2. Amendment to Paragraph V.9(b). Paragraph V.9(b) is hereby deleted in its
entirety, and the following substituted therefor:

"(b) EBITDA not less than negative $1,600,000.00 as of fiscal quarter
ending March 31, 2002 and not less than negative $1,875,000.00 as of
fiscal quarter ending June 30, 2002, measured on a trailing
four-quarter basis, with "EBITDA" defined as net profit before tax
plus interest expense (net of capitalized interest expense),
depreciation expense and amortization expense."

3. Amendment to Paragraph V.9(c). Paragraph V.9(c) is hereby deleted in its
entirety, without substitution.

4. Conditions Precedent. The obligation of Bank to amend the terms and
conditions of the Agreement as provided herein, is subject to the fulfillment to
Bank's satisfaction of all of the following conditions by no later than April
30, 2002:

(a) Bank shall have received, in form and substance satisfactory to Bank, each
of the following, duly executed:

(i) This Amendment.
(ii) Corporate Resolution: Borrowing.
(iii) Certificate of Incumbency.
(iv) Such other documents as Bank may require under any other section
of this Amendment.

(b) Other Fees and Costs. In addition to Borrower's obligations under the
Agreement and the other Loan Documents, Borrower shall have paid to Bank the
full amount of all costs and expenses, including reasonable attorneys' fees
(including the allocated costs of Bank's in-house counsel) expended or incurred
by Bank in connection with the negotiation and preparation of this Amendment,
for which Bank has made demand.

Barrett Business Services, Inc.
March 31, 2002
Page 3

(d) Interest. Interest under the Line of Credit Note shall have been paid
current.

(e) Interest and Principal. Interest and principal under Term Note A and
Term Note B shall have been paid current.

5. General Release. In consideration of the benefits provided to Borrower
under the terms and provisions hereof, Borrower hereby agrees as follows
("General Release"):

(a) Borrower, for itself and on behalf of its successors and assigns, does
hereby release, acquit and forever discharge Bank, all of Bank's predecessors in
interest, and all of Bank's past and present officers, directors, attorneys,
affiliates, employees and agents, of and from any and all claims, demands,
obligations, liabilities, indebtedness, breaches of contract, breaches of duty
or of any relationship, acts, omissions, misfeasance, malfeasance, causes of
action, defenses, offsets, debts, sums of money, accounts, compensation,
contracts, controversies, promises, damages, costs, losses and expenses, of
every type, kind, nature, description or character, whether known or unknown,
suspected or unsuspected, liquidated or unliquidated, each as though fully set
forth herein at length (each, a "Released Claim" and collectively, the "Released
Claims"), that Borrower now has or may acquire as of the later of: (i) the date
this Amendment becomes effective through the satisfaction (or waiver by Bank) of
all conditions hereto; (ii) the date that Borrower has executed and delivered
this Amendment to Bank (hereafter, the "Release Date"), including without
limitation, those Released Claims in any way arising out of, connected with or
related to any and all prior credit accommodations, if any, provided by Bank, or
any of Bank's predecessors in interest, to Borrower, and any agreements, notes
or documents of any kind related thereto or the transactions contemplated
thereby or hereby, or any other agreement or document referred to herein or
therein.

(b) Borrower hereby acknowledges, represents and warrants to Bank that it
agrees to assume the risk of any and all unknown, unanticipated or misunderstood
defenses and Released Claims which are released by the provisions of this
General Release in favor of Bank, and Borrower hereby waives and releases all
rights and benefits which it might otherwise have under any state or local laws
or statutes with regard to the release of such unknown, unanticipated or
misunderstood defenses and Released Claims.

(c) Each person signing below on behalf of Borrower acknowledges that he or
she has read each of the provisions of this General Release. Each such person
fully understands that this General Release has important legal consequences,
and each such person realizes that they are releasing any and all Released
Claims that Borrower may have as of the Release Date. Borrower hereby
acknowledges that it has had an opportunity to obtain a lawyer's advice
concerning the legal consequences of each of the provisions of this General
Release.

(d) Borrower hereby specifically acknowledges and agrees that: (i) none of
the provisions of this General Release shall be construed as or constitute an
admission of any liability on the part of Bank; (ii) the provisions of this
General Release shall constitute an absolute bar to any Released Claim of any
kind, whether any such Released Claim is based on contract, tort, warranty,
mistake or any other theory, whether legal, statutory or equitable; and (iii)
any attempt to assert a Released Claim barred by the provisions of this General
Release shall subject Borrower to the provisions of applicable law setting forth
the remedies for the bringing of groundless, frivolous or baseless claims or
causes of action.
Barrett Business Services, Inc.
March 31, 2002
Page 4

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

7. Reaffirmation; Certification. Borrower hereby remakes all
representations and warranties contained in the Agreement and reaffirms all
covenants set forth therein. Borrower further certifies that as of the date of
Borrower's acknowledgment set forth below there exists no default or defined
event of default under the Agreement or any promissory note or other contract,
instrument or document executed in connection therewith, nor any condition, act
or event which with the giving of notice or the passage of time or both would
constitute such a default or defined event of default.

Borrower's acknowledgment of this Amendment shall constitute acceptance of
the foregoing terms and conditions.

Sincerely,

WELLS FARGO BANK,
NATIONAL ASSOCIATION

By: /s/ Clifford N. Van Curen
--------------------------
Clifford N. Van Curen
Vice President


Acknowledged and accepted as of 4-30-02 :
----------------

BARRETT BUSINESS SERVICES, INC.

By: /s/ Michael D. Mulholland
----------------------------
Michael D. Mulholland
Vice President-Finance