Exhibit 10.15
LOAN AGREEMENT
between
ITRON, INC.,
as Borrower,
and
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION
and
U.S. BANK NATIONAL ASSOCIATION,
as Lenders,
and
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION,
as Agent.
Dated as of the 30th day of September, 1998
TABLE OF CONTENTS
ARTICLE 1 - DEFINITIONS.................................................... 1
1.1 CERTAIN DEFINED TERMS............................................ 1
1.2 ACCOUNTING TERMS................................................. 11
ARTICLE 2 - THE CREDIT..................................................... 12
2.1 THE REVOLVING CREDIT............................................. 12
2.2 MANNER OF BORROWING.............................................. 12
2.3 REPAYMENT OF PRINCIPAL........................................... 12
2.4 INTEREST......................................................... 13
2.5 CONVERSION/CONTINUATION.......................................... 13
2.6 PROMISSORY NOTES................................................. 14
2.7 PREPAYMENT....................................................... 14
2.8 MANNER OF PAYMENTS; COMPUTATIONS................................. 15
2.9 FEES............................................................. 15
2.10 SHARING OF PAYMENTS, ETC......................................... 17
2.11 LETTERS OF CREDIT................................................ 17
2.12 COLLATERAL....................................................... 17
ARTICLE 3 - THE EFFECTIVE DATE; CONDITIONS PRECEDENT TO LENDING............ 17
3.1 CONDITIONS PRECEDENT TO EFFECTIVE DATE........................... 17
3.2 CONDITIONS TO ALL LOANS AND TO REFINANCING....................... 18
ARTICLE 4 - REPRESENTATIONS AND WARRANTIES OF BORROWER..................... 18
4.1 CORPORATE EXISTENCE AND POWER.................................... 19
4.2 CORPORATE AUTHORIZATION.......................................... 19
4.3 GOVERNMENT APPROVALS, ETC........................................ 19
4.4 BINDING OBLIGATIONS, ETC......................................... 19
4.5 LITIGATION....................................................... 19
4.6 FINANCIAL CONDITION.............................................. 20
4.7 TITLE AND LIENS.................................................. 20
4.8 TAXES............................................................ 21
4.9 OTHER AGREEMENTS................................................. 21
4.10 FEDERAL RESERVE REGULATIONS...................................... 21
4.11 ERISA............................................................ 21
4.12 SUBSIDIARIES..................................................... 22
4.13 REPRESENTATIONS AS A WHOLE....................................... 22
4.14 YEAR 2000 COMPLIANCE............................................. 22
ARTICLE 5 - AFFIRMATIVE COVENANTS OF BORROWER.............................. 22
5.1 USE OF PROCEEDS.................................................. 23
5.2 PRESERVATION OF CORPORATE EXISTENCE, ETC......................... 23
5.4 KEEPING OF BOOKS AND RECORDS..................................... 24
5.5 MAINTENANCE OF PROPERTY, ETC..................................... 24
5.6 COMPLIANCE WITH LAWS, ETC........................................ 24
5.7 OTHER OBLIGATIONS................................................ 24
5.8 INSURANCE........................................................ 24
5.9 FINANCIAL INFORMATION............................................ 26
5.10 NOTIFICATION..................................................... 26
5.11 ADDITIONAL PAYMENTS; ADDITIONAL ACTS............................. 27
5.12 WORKING CAPITAL.................................................. 27
5.13 TOTAL DEBT TO TANGIBLE CAPITAL RATIO............................. 27
ARTICLE 6 - NEGATIVE COVENANTS OV BORROWER................................. 28
6.1 LIQUIDATION, MERGER, SALE OF ASSETS.............................. 28
6.2 INDEBTEDNESS, GUARANTIES, ETC.................................... 28
6.3 LIENS............................................................ 29
6.4 OPERATIONS....................................................... 29
6.5 PERMISSIBLE LOANS................................................ 30
6.6 CONTRACTS........................................................ 30
6.7 SECURITIES....................................................... 30
6.8 ERISA COMPLIANCE................................................. 30
6.9 PAYMENTS ON SUBORDINATED DEBT; PREPAYMENTS OF INDEBTEDNESS....... 30
ARTICLE 7 - EVENTS OF DEFAULT.............................................. 32
7.1 EVENTS OF DEFAULT................................................ 32
ARTICLE 8 - AGENT.......................................................... 35
8.1 AUTHORIZATION AND ACTION......................................... 35
8.2 DUTIES AND OBLIGATIONS........................................... 35
8.3 DEALINGS BETWEEN AGENT AND BORROWER.............................. 35
8.4 LENDER CREDIT DECISION........................................... 36
8.5 INDEMNIFICATION.................................................. 36
8.6 SUCCESSOR AGENT.................................................. 36
8.7 RISK PARTICIPATION............................................... 36
ARTICLE 9 - MISCELLANEOUS.................................................. 37
9.1 NO WAIVER; REMEDIES CUMULATIVE................................... 37
9.2 GOVERNING LAW.................................................... 37
9.3 CONSENT TO JURISDICTION; WAIVER OF IMMUNITIES.................... 37
9.4 NOTICES.......................................................... 37
9.5 ASSIGNMENT....................................................... 37
9.6 SEVERABILITY..................................................... 38
9.7 INDEMNIFICATION.................................................. 38
9.8 CONDITIONS NOT FULFILLED......................................... 39
9.9 ENTIRE AGREEMENTA AMENDMENT...................................... 39
9.10 CONFLICTING AGREEMENTS........................................... 39
9.11 ORAL AGREEMENTS.................................................. 39
EXHIBITS:.................................................................. 41
EXHIBIT A -FORM OF NOTICE OF BORROWING.................................. 41
EXHIBIT B -FORM OF NOTICE OF REFINANCING................................ 41
EXHIBIT C -FORM OF REVOLVING NOTE....................................... 41
EXHIBIT D -LIST OF SUBSIDIARIES......................................... 41
EXHIBIT E -FORM OF SUBSIDIARY GUARANTY.................................. 41
EXHIBIT F -COMMITMENT AMOUNTS........................................... 41
EXHIBIT G -FORM OF COMPLIANCE CERTIFICATE............................... 41
EXHIBIT H -FORM OF BORROWING BASE CERTIFICATE........................... 41
EXHIBIT I -PREPAYMENT FEE CALCULATION................................... 41
LOAN AGREEMENT
THIS LOAN AGREEMENT (this "Agreement") is dated as of September 30,
1998, between BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, a national
banking association, and U.S. BANK NATIONAL ASSOCIATION, a national banking
association, as Lenders, BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION
as agent for Lenders ("Agent"), and ITRON, INC., as Borrower, and renews,
restates, and replaces the Loan Agreement between the parties (Bank of America
National Trust and Savings Association being the successor by merger to Bank of
America NW, N.A., and U.S. Bank National Association having substituted as a
Lender for Washington Trust Bank) dated July 1, 1996 (as subsequently amended,
the "Prior Loan Agreement"). For mutual consideration, Lenders, Borrower, and
Agent enter into this Agreement.
ARTICLE 1
DEFINITIONS
1.1 CERTAIN DEFINED TERMS
As used in this Agreement, the following terms have the
following meanings, which apply to both the singular and plural forms of the
terms defined:
"ACCOUNT" means all accounts, as such term is defined in the
Uniform Commercial Code of Washington, of Borrower or a Subsidiary of Borrower.
"ACCOUNT DEBTOR" means any person or entity who is or who may
become obligated under, or on account of, an Account.
"AGENT" means Bank of America National Trust and Savings
Association in its capacity as agent for Lenders.
"AGENT-RELATED PERSONS" means Bank of America and any
successor agent arising under Section 8.6, together with their respective
affiliates, and the officers, directors, employees, agents and attorneys-in-fact
of such persons, entities and affiliates.
"APPLICABLE INTEREST PERIOD" means, with respect to any Loan,
the period commencing on the date such Loan was made pursuant to Section 2.2 or
converted or continued pursuant to Section 2.5 and ending:
(a) At the end of the Commitment Period in the case of
a Base Rate Loan;
(b) one, two, three or six months thereafter in the case
of a LIBOR Loan as specified in the Notice of Borrowing or Notice of Refinancing
given by Borrower in respect of such Loan;
PROVIDED, HOWEVER, that no Applicable Interest Period may end later than the
expiration of the Commitment Period.
"APPLICABLE INTEREST RATE" means, for each Loan (or portion of
a Loan), the Base Rate or the LIBOR Rate as designated by Borrower and specified
in the Notice of Borrowing or the Notice of Refinancing given with respect to
that Loan (or portion of a Loan) or as otherwise determined pursuant to Section
2.5.
1
"ATTORNEY COSTS" means and includes all reasonable fees and
disbursements of any law firm or other external counsel, the allocated cost of
internal legal services and all disbursements of internal counsel.
"AVAILABLE COMMITMENT" as to each Lender shall mean (A) the
lesser of its Pro Rata Share of the Commitment or its Pro Rata Share of the
Borrowing Base, minus (B) its Pro Rata Share of all outstanding Loans (including
as Loans the outstanding principal amount of all Letters of Credit).
"BASE RATE" means an interest rate per annum equal to the
sum of (1) the Base Rate Spread, plus (2) the higher of:
(A) the rate of interest publicly announced from time to
time by Bank of America National Trust and Savings Association ("BofA") in San
Francisco, California, as its "Reference Rate." The Reference Rate is set based
on various factors, including BofA's costs and desired return, general economic
conditions, and other factors, and is used as a reference point for pricing some
loans. BofA may price loans to its customers at, above, or below the Reference
Rate. Any change in the Reference Rate shall take effect at the opening of
business on the day specified in the public announcement of a change in the
Reference Rate; or
(B) the sum of 0.50% plus the "Federal Funds" rate, as
quoted by Xxxxxx Guybutler on page 5 of Telerate on such day (or if said broker
or Telerate shall cease to quote or report the "Federal Funds" rate, the
"Federal Funds" rate shall be as quoted by another broker and as reported on any
other electronic or printed medium selected by Agent), changing as such "Federal
Funds" rate changes.
For purposes hereof, the term "Base Rate Spread" shall be as set forth
below depending upon the ratio of Total Debt to EBITDA, which ratio shall be
determined on a trailing four-quarter basis as shown on the most recent
Compliance Certificate delivered by Borrower (subject to verification of
calculations on such Compliance Certificate by Agent). Any change in the ratio,
as reflected in a newly-delivered Compliance Certificate, causing the Base Rate
Spread to increase or decrease, shall become effective on the date the
Compliance Certificate is received by Agent, and shall change the Base Rate
Spread on each Base Rate Loan outstanding, in addition to each Base Rate Loan
subsequently created. If the Compliance Certificate is not delivered to Agent by
the date required under Section 5.9(c), the Base Rate Spread shall immediately
increase to 2.00% above the Base Rate Spread otherwise in effect until delivery
of a new Compliance Certificate occurs:
--------------------------------------- -----------------
TOTAL DEBT TO EBITDA BASE RATE SPREAD
--------------------------------------- -----------------
> 5.95 2.25%
--------------------------------------- -----------------
> 5.00 but < = 5.95 2.0%
--------------------------------------- -----------------
> 4.25 but < = 5.00 1.5%
--------------------------------------- -----------------
> 3.75 but < = 4.25 1.00%
--------------------------------------- -----------------
> 3.25 but < = 3.75 0.50%
--------------------------------------- -----------------
> 2.25 but < = 3.25 0.25%
--------------------------------------- -----------------
< = 2.25 0.00%
--------------------------------------- -----------------
"BASE RATE LOAN" means a Loan bearing interest at the Base
Rate.
"BORROWER" means Itron, Inc., a Washington corporation, and
any Successor.
"BORROWING BASE" means the sum of (a) 75% of the value of all
Eligible Accounts, plus (b) 30% of the value of all Unbilled Accounts, plus (c)
the lesser of $12,000,000 or 40% of the value of all Eligible Inventory, valued
at the lower of cost or market.
2
"BORROWING BASE CERTIFICATE" means a certificate duly executed
by the chief financial officer or treasurer of Borrower, substantially in the
form of Exhibit H attached.
"BUSINESS DAY" means a day, other than Saturday or Sunday, on
which banks are open for business in Seattle, Washington, and San Francisco,
California.
"CHANGE OF CONTROL" means the acquisition by any person or
entity, or any two or more persons or entities acting in concert, of beneficial
ownership (within the meaning of Rule 13d3 of the Securities and Exchange
Commission) of outstanding shares of voting stock of Borrower representing more
than 50% of voting control of Borrower, which person(s) or entity(ies) currently
have beneficial ownership of 50% or less of the outstanding voting shares of
voting stock of Borrower.
"CODE" means the Internal Revenue Code of 1986, as amended
from time to time.
"COLLATERAL" has the meaning defined in Section 2.12.
3
"COMMITMENT" shall mean, as to each Lender, the sum set forth
next to such Lender's name on Exhibit F attached and, as to Lenders together,
the amount set forth as "Total Commitment" on Exhibit F attached. Borrower may
reduce the Commitment, in minimum increments of $1,000,000, upon five Business
Days' notice to Agent, so long as the combined outstanding balance of all Loans
(including Letters of Credit, and unreimbursed draws under Letters of Credit)
does not exceed the reduced Available Commitment amount.
"COMMITMENT PERIOD" has the meaning defined in Section 2.
"COMPLIANCE CERTIFICATE" shall mean a certificate
substantially in the form of Exhibit G attached, signed by the chief executive
officer, chief financial officer, or other principal financial officer of
Borrower.
"CONTROLLED GROUP" means all members of a controlled group of
corporations and all trades or businesses (whether or not incorporated) under
common control which, together with Borrower, are treated as a single employer
under Section 414(b) or 41 4(c) of the Code.
"EBITDA" has the meaning defined in Section 5.13.
"EFFECTIVE DATE" means September 30, 1998.
"ELIGIBLE ACCOUNTS" means, at the time of any determination
thereof, any Account of Borrower or a Subsidiary of Borrower as to which each of
the following requirements has been met to the satisfaction of the Agent:
(a) Borrower or such Subsidiary has lawful and
absolute title to such Account and such Account is, in Borrower's reasonable
judgment, collectible in the ordinary course of business;
(b) Such Account is not subject to a bona fide
dispute, setoff, counterclaim or other claim or defense on the part of any
person or entity (including the Account Debtor of the Account) denying
liability under such Account;
(c) Such Account is not subject to any Lien
in favor of any person or entity, except Liens permitted by Section 6.3;
(d) Such Account is a bona fide Account (which
with respect to an Account arising FROM a sale of goods, was created as a
result of a sale on an absolute basis and not on consignment, approval, or
sale-and-return basis) of Borrower or a Subsidiary of Borrower arising in the
ordinary course of such entity's business and which:
(i) if an Account arising from the
sale of goods covers goods which have been shipped or delivered and on which
have been taken all other actions necessary to create a binding obligation on
the part of the Account Debtor on such Account;
(ii) if an Account relating to the
furnishing of services, covers services which have been performed and
completed and on which have been taken all other actions necessary to create a
binding obligation on the part of the Account Debtor on such Account;
(e) The Account Debtor on such Account is not:
4
(i) Borrower or a Subsidiary of
Borrower;
(ii) located outside the United States
or its territories; or
(iii) to the best of Borrower's
knowledge the subject of any reorganization, bankruptcy, receivership,
custodianship, insolvency. or other proceeding analogous to those described
in Section 7.1 (f), (g), or (h); original due date; and
5
(f) Such Account is not outstanding more than
120 days past its
(g) Such Account is the subject of a first
priority perfected security interest in favor of Agent as agent for Lenders,
securing the obligations of Borrower under the Loan Documents.
ELIGIBLE INVENTORY" means, at the time of any determination
thereof, each item of Inventory (for purposes of this definition, an "Item") of
Borrower or a Subsidiary of Borrower acquired in the ordinary course of business
and as to which each of the following requirements has been fulfilled to the
satisfaction of Agent:
(a) The Item is located in the continental
United States;
(b) The Item does not consist of:
(i) An Item in the custody of third
parties for processing or manufacture, including any Item the sale or
delivery of which has constituted an "Unbilled Account" as set forth in any
Borrowing Base Certificate;
(ii) An Item in Borrower's or such
Subsidiary's possession but intended by Borrower or such Subsidiary for return
to the supplier thereof;
(iii) An Item belonging to third parties
that has been consigned to Borrower or such Subsidiary, or to another Person
for the account of Borrower or such Subsidiary, or is otherwise in the custody
or possession of Borrower or such Subsidiary, or such other Person for account
of Borrower or such Subsidiary; or
(iv) An Item in Borrower's or such
Subsidiary's custody or possession on a sale-on approval or sale-or-return
basis or subject to any other repurchase or return agreement; or
(v) An Item consisting of work in
process, or consisting of raw materials or finished goods which have not met
Borrower's material review board standards, or have been set aside as
potentially defective pending or pursuant to Borrower's material review board
inspection;
(c) The Item is not unsalable, obsolete,
damaged, or otherwise unfit for sale or consumption in the normal course
of business of Borrower or such Subsidiary;
(d) The Item is not subject to any Lien in
favor of any person or entity, except for Liens permitted under Section 6.3;
and
(e) The Item is subject to a first priority
perfected security interest in favor of Agent as agent for Lenders, securing
the obligations of Borrower under the Loan Documents.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended
"EVENT OF DEFAULT" has the meaning defined in Section 7.1.
"GOVERNMENT APPROVAL" means an approval, permit, license,
authorization, certificate, or consent of any Governmental Authority.
"GOVERNMENTAL AUTHORITY" means the government of the United
States or any State or any foreign country or any political subdivision of any
thereof or any branch, department, agency, instrumentality, court, tribunal or
regulatory authority which constitutes a part or exercises any sovereign power
of any of the foregoing.
6
"INDEBTEDNESS" means for any person (i) all items of
indebtedness or liability (except capital, surplus, deferred credits and
reserves, as such) which would be included in determining total liabilities as
shown on the liability side of a balance sheet as of the date as of which
indebtedness is determined, (ii) indebtedness secured by any Lien, whether or
not such indebtedness shall have been assumed, (iii) any other indebtedness or
liability, including but not limited to indebtedness or liability for borrowed
money or for the deferred purchase price of property or services, for which such
person is directly or contingently liable as obligor, guarantor, or otherwise,
including but not limited to performance guaranties and surety bond obligations,
or in respect of which such person otherwise assures a creditor against loss,
and (iv) any other obligations of such person under leases which shall have been
or should be recorded as capital leases.
"INVENTORY" means all inventory, as such term is defined in
the Uniform Commercial Code of Washington, of Borrower or a Subsidiary of
Borrower.
"LENDERS" mean Bank of America National Trust and Savings
Association (in its separate capacity, "Bank of America") and U.S. National
Association, and any Successors.
"LETTER(S) OF CREDIT" shall have the meaning given in
Section 2.11 of the Agreement.
"LIBOR LOAN" means any portion of a Loan bearing interest at
the LIBOR Rate.
"LIBOR RATE" shall mean, with respect to any LIBOR Loan for
any Applicable Interest Period, an interest rate per annum (rounded upwards, if
necessary, to the next 1/16 of 1%) equal to the sum of (a) the LIBOR Spread and
(b) the product of (i) the Euro-dollar Rate in effect for such Applicable
Interest Period and (ii) Euro-dollar Reserves in effect on the first day of such
Applicable Interest Period.
For purposes hereof, the term "LIBOR Spread" shall be as set forth
below depending upon the ratio of Total Debt to EBITDA, which ratio shall be
determined on a trailing four-quarter basis as shown on the most recent
Compliance Certificate delivered by Borrower (subject to verification of
calculations on such Compliance Certificate by Agent). Any change in the ratio,
as reflected in a newly-delivered Compliance Certificate, causing the LIBOR
Spread to increase or decrease, shall become effective on the date the
Compliance Certificate is received by Agent, and shall change the LIBOR Spread
on each LIBOR Loan outstanding, in addition to each LIBOR Loan subsequently
created. If the Compliance Certificate is not delivered to Agent by the date
required under Section 5.9(c), the LIBOR Spread shall immediately increase to
2.00% above the LIBOR Rate Spread otherwise in effect until delivery of a new
Compliance Certificate occurs:
--------------------------------------------------------
TOTAL DEBT TO EBITDA BASE RATE SPREAD
-------------------------------------- -----------------
> 5.95 3.50%
-------------------------------------- -----------------
> 5.00 but < = 5.95 3.25%
-------------------------------------- -----------------
> 4.25 but < = 5.00 2.75%
-------------------------------------- -----------------
> 3.75 but < = 4.25 2.25%
-------------------------------------- -----------------
> 3.25 but < = 3.75 1.75%
-------------------------------------- -----------------
> 2.25 but < = 3.25 1.50%
-------------------------------------- -----------------
< = 2.25 1.00%
-------------------------------------- -----------------
For purposes hereof, the term "Euro-dollar Rate" shall be determined on
the basis of the lower of (a) the offered rate for deposits in U.S. Dollars for
the Applicable Interest Period commencing on the first day of such Applicable
Interest Period (the "Reset Date") which appears on the display designated as
the "LIBO" page on the Xxxxxx Monitor Money Rates Service (or such other page as
may replace the LIBO page on that service for the purpose of displaying London
interbank offered rates of major banks) as of
7
11:00 a.m., London time, on the day that is two Business Days preceding the
Reset Date, or (b) the British Bankers' Association interest settlement rate
at 11:00 a.m., London time, on the day that is two Business Days preceding the
Reset Date, as reported on page 3750 of Telerate Systems, Inc. under the U.S.
dollar column. If at least two such offered rates appear on either service's
screen LIBO page, the Euro-dollar Rate in respect of that Reset Date will be
based on the arithmetic means of such offered rates. If no such rate is
available, the Euro-dollar Rate will be determined on the basis of the rates
at which deposits in U.S. Dollars are offered by four major banks (selected by
Agent) in the London interbank market at approximately 11:00 a.m., London
time, on the day that is two Business Days preceding the Reset Date to prime
banks in the London interbank market for the Applicable Interest Period. Agent
will request the principal London office of each of the four banks to provide
a quotation of its rate. The Euro-dollar Rate will be the arithmetic means of
the quotations.
For purposes hereof, the term "Euro-dollar Reserves" means a fraction
(expressed as a decimal), the numerator of which is the number one and the
denominator of which is the number one minus the aggregate of the maximum
reserve percentages (including, without limitation, any special, supplemental,
marginal or emergency reserves) expressed as a decimal established by the Board
of Governors of the Federal Reserve System and any other banking authority to
which Agent is subject, for Eurocurrency Liability (as defined in Regulation D
of such Board of Governors). Euro-dollar Reserves shall be adjusted
automatically on and as of the effective date of any char reserve percentage.
"LIEN" means, for any person, any security interest, pledge,
mortgage, charge, assignment, hypothecation, encumbrance, attachment,
garnishment, execution or other voluntary or involuntary lien upon or affecting
the revenues of such person or any real or personal property in which such
person has or hereafter acquires any interest, EXCEPT (i) liens for Taxes which
are not delinquent or which remain payable without penalty or the validity or
amount of which is being contested in good faith by appropriate proceedings upon
stay of execution of the enforcement thereof; 60 liens imposed by law (such as
mechanics' liens) incurred in good faith in the ordinary course of business
which are not delinquent or which remain payable without penalty or-the validity
or amount of which is being contested in good faith by appropriate proceedings
upon stay of execution of the enforcement thereof; and (iii) deposits or pledges
under workmen's compensation, unemployment insurance, social security or other
similar laws or made to secure the performance of bids, tenders, contracts
(except for repayment of borrowed money), or leases, or to secure statutory
obligations or surety or appeal bonds or to secure indemnity, performance or
other similar bonds given in the ordinary course of business.
"LOAN" means a loan by Lenders to Borrower pursuant to Article
2. Each Lender's Pro Rata Share of the Letters of Credit shall be deemed an
outstanding "Loan" by such Lender for purposes of calculating fees under Section
2.9 of the Agreement, for purposes of calculating availability under Section 2.1
of the Agreement, and for all other purposes under the Agreement other than the
calculation of interest. Any amount drawn under the Letters of Credit, and not
reimbursed to Agent on the same Business Day, shall be deemed a Base Rate Loan
under the Agreement.
"LOAN DOCUMENTS" means this Agreement, the Notes, all security
agreements and other documents, agreements and instruments entered into with
regard to this Agreement, and all amendments, modifications and renewals to
those documents.
"MATERIAL SUBSIDIARY" means any Subsidiary which, because of
its size or the nature of its business, is material to the business, operations
or financial condition of the enterprise comprised of Borrower and its
Subsidiaries taken as a whole. The Subsidiaries that are Material Subsidiaries
as of the Effective Date are described on Exhibit D.
"NOTE" AND "NOTES" have the meaning defined in Section 2.6.
8
"NOTICE OF BORROWING" has the meaning defined in Section
2.2 and shall be in the form attached hereto as Exhibit A.
"NOTICE OF REFINANCING" has the meaning defined in
Section 2.5 and shall be in the form attached hereto as Exhibit B.
"OUTSOURCING CONTRACTS" means contracts or arrangements in
which Borrower, either directly or through Subsidiaries, performs meter reading
and other services for a utility in return for a scheduled amount over a period
of time, either directly or through joint ventures with utilities and other
industry participants.
"PAYMENT ADDRESS" means "GPO - Agency Administrative Services
#5596, 0000 Xxxxxxx Xxxxxxxxx, Xxxxxxx, Xxxxxxxxxx 00000, Reference: ltron;" or
such other location as Agent shall notify Borrower and Lenders by a notice given
in compliance with Section 9.4.
"PBGC" means the Pension Benefit Guaranty Corporation or any
entity succeeding to any or all of its functions under ERISA.
"PENSION PLAN" OR "PLAN" shall mean, at any time, an employee
pension benefit plan which is covered by Title IV of ERISA or subject to the
minimum funding standards under Section 412 of the Internal Revenue Code and is
either (a) maintained by Borrower or any member of a Controlled Group for
employees of Borrower or any member of such Controlled Group, or (b) maintained
pursuant to a collective bargaining agreement or any other arrangement under
which more than one employer makes contributions and to which Borrower or any
member of a Controlled Group is then making or accruing an obligation to make
contributions or has within the preceding 5 plan years made contributions.
"POTENTIAL EVENT OF DEFAULT" means an act, action or event set
forth in Article 7 which would constitute an Event of Default except that the
notice required by Article 7 has not been given or the cure period set forth in
Article 7 has not expired.
"PRO RATA SHARE" means 65% as to Bank of America, and 35% as
to U.S. Bank
"SUBORDINATED DEBT" means Indebtedness for borrowed money of
Borrower which shall have been subordinated to the Loans and other obligations
of Borrower under the Loan Documents, on terms and conditions which provide, in
form satisfactory to Agent, that no payments may be made by Borrower in respect
of such Indebtedness at any time when an Event of Default or Potential Event of
Default shall have occurred and be continuing.
"SUBSIDIARY" means any corporation of which a majority (by
number of shares or by number of votes) of any class of outstanding capital
stock normally entitled to vote for the election of one or more directors
(regardless of any contingency which does or may suspend or dilute the voting
rights of such class) is at such time owned directly or indirectly by Borrower
or one or more subsidiaries.
"SUCCESSOR" means, for any corporation or banking association,
any successor by merger or consolidation, or by acquisition of substantially all
of the assets of the predecessor.
"TANGIBLE CAPITAL" has the meaning defined in Section 5.13.
"TOTAL DEBT" has the meaning defined in Section 5.13.
9
"TURNKEY CONTRACTS" means contracts between Borrower or a
Subsidiary and third parties for the purchase of meter reading systems, where
such Borrower or Subsidiary remains responsible for installation of the system,
and the customer's obligation to pay and responsibility to operate the system
occurs upon installation and/or acceptance of the system.
"UNBILLED ACCOUNTS" means Accounts which otherwise meet all
requirements of Eligible Accounts, except that they represent Accounts not yet
due because goods that have been shipped to generate such Account, while having
been shipped to a purchaser's location, are awaiting installation or acceptance,
and job completion.
"UNFUNDED VESTED LIABILITIES" means, with respect to any Plan,
at any time, the amount (if any) by which (a) the present value of all vested
nonforfeitable benefits under such Plan exceeds (b) the fair market value of all
Plan assets allocable to such benefits, all determined as of the then most
recent valuation date for such Plan, but only to the extent that such excess
represents a potential liability of Borrower or any member of the Controlled
Group to the PBGC or the Plan under Title IV of ERISA.
1.2 ACCOUNTING TERMS
Except as otherwise provided herein, accounting terms no
specifically defined shall be construed, and all accounting procedures shall be
performed, in accordance with generally accepted United States accounting
principles consistently applied.
10
ARTICLE 2
THE CREDIT
2.1 THE REVOLVING CREDIT
Each Lender severally agrees on the terms and conditions of
this Agreement to make revolving loans to Borrower (the "Loans") from time to
time on Business Days during the period beginning on the Effective Date and
ending on September 30, 1999, or such earlier date as the Commitment may be
terminated pursuant to Section 7.2 (the "Commitment Period"), PROVIDED that
after giving effect to any such Loan or the issuance of any Letter of Credit
pursuant to Section 2.11, the aggregate unpaid principal amount of all such
Loans made by such Lender shall not exceed at any time such Lender's Pro Rata
Share of the Available Commitment. The Loans described in this Section 2.1
constitute a revolving credit and, subject to the terms and conditions hereof,
within the amount and time specified, Borrower may pay, prepay and reborrow.
Each Loan requested by Borrower under this Section 2.1 shall be in an amount
(for both Lenders combined) of not less than $250,000 if such Loan or advance is
a Base Rate Loan and not less than $500,000 if such Loan is a LIBOR Loan.
2.2 MANNER OF BORROWING
Borrower shall give Agent at least same Business Day's written
notice (by telecopy or otherwise) of each intended borrowing of a Base Rate
Loan, and at least three (3) Business Day's written notice (by telecopy or
otherwise) of each intended borrowing of a LIBOR Loan. Each such notice (herein
a "Notice of Borrowing") shall be in the form of Exhibit A and shall specify the
date of the intended borrowing, and the initial Applicable Interest Rate and
Applicable Interest Period selected by Borrower in respect of the anticipated
Loan. Each Notice of Borrowing shall be effective upon receipt, except that
notices received by Agent after 10:30 a.m., Seattle time, on a Business Day
shall be deemed to be received on the immediately succeeding Business Day. All
such notices shall be irrevocable and shall constitute a representation and
warranty by Borrower that as of the date of the notice the statements set forth
in Article 4 hereof are true and correct and that no Event of Default or
Potential Event of Default shall have occurred and be continuing. On receipt of
such Notice of Borrowing, Agent shall promptly (on the same day, if possible)
notify each Lender by telephone (confirmed promptly by telex or telecopy), telex
or telecopy of the information set forth in the Notice of Borrowing. Each Lender
shall before 12:00 p.m. Seattle time on the specified date of borrowing pay such
Lender's Pro Rata Share of the requested borrowing in immediately available
funds to Agent at its Payment Address. Upon fulfillment to Agent's satisfaction
of the applicable conditions set forth in Article 3, and after receipt by Agent
of such funds, Agent will make such funds available to Borrower. All Loans
outstanding under the Prior Loan Agreement shall immediately upon the Effective
Date be deemed Loans under this Agreement, with the same payment terms and
Interest Period as then in effect, but with the LIBOR Spread increased to that
applicable under this Agreement.
Each Lender may, at its option, fund its own Commitment
hereunder notwithstanding any default by the other Lender in advancing its
Commitment. In such event, Agent shall thereafter take such disproportionate
funding into account in allocating principal and interest repayments to Lenders.
The foregoing right of a Lender to advance funds in spite of the other Lender's
default shall not prejudice or limit in any respect the rights of such Lender or
Borrower against the defaulting Lender.
2.3 REPAYMENT OF PRINCIPAL
Borrower shall repay to Lender the principal amount of the
Loans on or before the last day of the Commitment Period. On each date when the
aggregate outstanding principal amount of the
11
Loans (including outstanding Letters of Credit) exceeds the Borrowing Base,
Borrower shall make a prepayment of the Loans in an amount equal to such
excess.
2.4 INTEREST
(a) Borrower agrees to pay interest on the
unpaid principal amount of each Loan from the date of the Loan until the end
of the Commitment Period at the Applicable Interest Rate and thereafter at a
rate which is two (2) percentage points per annum above the Applicable
Interest Rate (changing as the Applicable Interest Rate changes). Accrued but
unpaid interest on each Loan shall be paid (i) as to Base Rate Loans, on the
first day of each calendar month for the period ending on the last day of the
preceding calendar month, and 00 as to LIBOR Loans, on the last day of the
Applicable Interest Period and, for Applicable Interest Periods longer than
three months, also on the day three months after the first day of the '
Applicable Interest Period. Notwithstanding the foregoing, accrued interest on
any Loan shall be payable on demand after the occurrence and during
continuation of an Event of Default.
(b) In the event, and on each occasion, that Agent
shall have determined (which determination shall be conclusive and binding)
that the LIBOR Rate cannot be ascertained for any reason (including, without
limitation, the inability or failure of Agent to obtain sufficient bids in
accordance with the terms of the definition of the LIBOR Rate) or Agent shall
determine that due to a change in the financial markets not specifically
related to the unique funding capabilities of either Lender the LIBOR Rate
will not adequately and fairly reflect the cost to Lenders of making or
maintaining the principal amount of a LIBOR Loan during the Applicable
Interest Period for such LIBOR Loan, Lender shall, as soon as practicable
thereafter, give notice of such determination to Borrower and any request for
a LIBOR Loan pursuant to Section 2.2 or for conversion to or continuation of a
LIBOR Loan pursuant to Section 2.5 shall be deemed to be a request for a Base
Rate Loan.
2.5 CONVERSION/CONTINUATION
(a) Subject to the limitations as to amount
and time set forth in the definitions of "Applicable Interest Rate" and
"Applicable Interest Period," Borrower shall have the option (i) to convert
all or a portion of any LIBOR Loan or Base Rate Loan to a Loan bearing
interest at a different permissible reference rate, with availability of such
alternative rate at the sole discretion of Lenders, or 00 at the expiration of
the Applicable Interest Period for a LIBOR Loan, to continue such Loan as a
LIBOR Loan for a new Applicable Interest Period; PROVIDED, however, (x) no
outstanding Loan may be continued as, or be converted into, a LIBOR Loan when
any Potential Event of Default or Event of Default has occurred and is
continuing and (y) a LIBOR Loan may only be converted at the conclusion of an
Applicable Interest Period.
(b) At any time Borrower wishes to cause a
conversion or continuation of a Loan pursuant to Paragraph (a) above,
Borrower shall deliver (by telecopy or otherwise) a written notice of
refinancing (herein a "Notice of Refinancing") in the form of Exhibit B hereto
to Agent no later than 10:30 a.m., Seattle time, on a Business Day at least as
far in advance of such desired conversion or continuation as would be required
if the Loan as converted or continued were being originally made pursuant to
Section 2.2. The Notice of Refinancing shall specify: (i) the proposed
conversion/continuation date (which shall be a Business Day), (ii) the amount
of the Loan to be converted/continued, (iii) the nature of the proposed
conversion or continuation, and (iv) in the case of a conversion to, or
continuation of, a LIBOR Loan, the new Applicable Interest Period. A Notice of
Refinancing shall be irrevocable and Borrower shall be bound to convert or
continue in accordance therewith.
12
(c) In the event that at the conclusion of an
Applicable Interest Period for a LIBOR Loan, Borrower has not furnished a
Notice of Refinancing complying with the terms of this Agreement or, if at
such time, Borrower is not entitled to convert a Loan to, or continue it as, a
LIBOR Loan, such Loan shall as of the last day of the expiring Applicable
Interest Period be deemed to have been converted to a Base Rate Loan.
2.6 PROMISSORY NOTES
Borrower shall execute and deliver to each Lender on or prior
to the Effective Date, a promissory note (for each Lender, the "Note", and,
collectively, the "Notes") in the principal amount of such Lender's commitment
and otherwise substantially in the form of Exhibit C hereto.
2.7 PREPAYMENT
(a) Any portion of the principal of a Loan may be paid
prior to its maturity (herein a "prepayment"). Any prepayment of principal
shall be accompanied by all accrued but unpaid interest on the principal
amount prepaid. Absent a designation by Borrower and in any event during the
continuance of an Event of Default, prepayments shall be applied to such Loans
as shall be designated by Agent, in its sole discretion.
13
(b) No fee shall be assessed in connection with the
prepayment of a Base Rate Loan. If a LIBOR Loan is paid prior to the end of
the Applicable Interest Period, Borrower shall pay a premium on the date of
such payment in an amount determined pursuant to Exhibit 1 hereto. Such
premiums shall apply in all circumstances where principal on a LIBOR Loan is
paid prior to the end of the Applicable Interest Period, regardless of whether
such payment is voluntary or mandatory (including but not limited to
prepayments required in connection with a voluntary reduction of the
Commitment by Borrower) or the result of Agent's collection efforts.
2.8 MANNER OF PAYMENTS; COMPUTATIONS.
(a) Borrower shall have on deposit on the day of any
scheduled payments hereunder sufficient funds in Borrower's Bank of America
checking account no. 67130-500 to make such scheduled payments of principal,
interest and/or fees on the Loans and Commitments as those amounts become due
for payment hereunder and under the related documents. Agent shall give
Borrower written notice of the expected amount of interest on LIBOR Loans at
least five Business Days prior to the date of each scheduled payment thereof,
but will give same-day fax notice of the expected amount of interest payments
on Base Rate Loans. All scheduled payments of principal, interest and/or fees
due hereunder by Borrower to Lender shall be made by charging such amounts
against Borrower's aforesaid checking account after 10:30 a.m., Seattle time,
on the day on which such payments shall become due. All other amounts payable
hereunder by Borrower to Agent or Lenders shall be made by paying the same in
United States Dollars and in immediately available funds to Agent at its
Payment Address not later than 12:00 p.m., Seattle time, on the date on which
such payment shall become due.
(b) In addition to the scheduled payment withdrawal
authorization set out in paragraph (a) above, Borrower hereby authorizes Agent
and each Lender, if and to the extent any payment is not promptly made
pursuant to this Agreement or any Note and an Event of Default exists, to
charge from time to time against any or all of the accounts of Borrower with
Agent or Lenders any amount due hereunder or under any Note.
(c) All computations of fees and of Base Rate Loan
interest shall be made on the basis of a year of 365 or 366 days and all
computations of interest on LIBOR Loans shall be made on the basis of a year
of 360 days, in either case, for the actual number of days (including the
first day but excluding the last dav) occurring in the period for which such
interest or fees are payable.
(d) Whenever any payment hereunder or under any Note
shall be stated to be due or whenever the last day of any Applicable Interest
Period would otherwise occur on a day other than a Business Day, such payment
shall be made and the last day of such Applicable Interest Period shall occur
on the next succeeding Business Day and such extension of time shall in such
case be included in the computation of payment of interest or commitment fees,
as the case may be; PROVIDED, HOWEVER, in the case of an interest payment due
at the end of an Applicable Interest Period on a LIBOR Loan, if such next
succeeding Business Day is the first Business Day of a calendar month, such
interest payment shall be made on the next preceding Business Day.
2.9 FEES
(a) Borrower agrees to pay to Agent for the account of
Lenders a commitment fee computed quarterly in arrears, as follows, to be paid
fifteen days after the end of each quarter (and upon the expiration of the
Commitment Period, if such expiration should occur on a day other than the end
of a quarter): 0.50% per annum on the actual daily unused amount of such
Lender's Pro Rata Share of the Commitment during the preceding quarter.
"Unused amount" shall mean the daily difference between (i)
14
the Commitment, and (ii) the sum of all Loans outstanding plus all Letters of
Credit outstanding;
(b) to pay to Agent for the account of Lenders an
amendment fee of $70,000.00; and
(c) to pay to Agent for Agent's own account the fees
set forth in the fee letter dated August 26, 1998, from Xxxxx X. Xxxxx to
Xxxxx X. Xxxxxxxxx.
15
2.10 SHARING OF PAYMENTS, ETC.
If any Lender shall obtain any payment from Borrower (whether
voluntary or involuntary through the exercise of any right of setoff or
otherwise) in excess of its Pro Rata Share of all payments due Lenders
hereunder, such Lender shall hold such excess payment in trust for Agent and
shall forthwith remit the same to Agent for distribution to Lenders in
accordance with their Pro Rata Shares.
2.11 LETTERS OF CREDIT
Upon Borrower's execution of Agent's standard form Application
and Agreement for Standby Letter of Credit, and upon at least four Business
Days' written notice to Agent, Agent shall issue irrevocable standby letters of
credit (the "Letters of Credit") in an aggregate amount of up to $10,000,000
(provided that (a) each Letter of Credit shall be in a minimum amount of
$1,000,000, and (b) no Letter of Credit shall be issued if it would cause the
aggregate amount of all Letters of Credit outstanding, plus all Loans
outstanding, to exceed the Available Commitment), to beneficiaries to be
specified by Borrower, with tenors not to extend beyond September 30, 1999. The
rights and obligations of Borrower as account party and Agent as issuer of each
Letter of Credit shall be governed by, and construed in accordance with, the
Uniform Customs and Practice for Documentary Credits (1993 Revision),
International Chamber of Commerce Publication No. 500 ("UCP"), and with the
Uniform Commercial Code as enacted in Washington (RCW 62A.5-1 01, ET SEQ.) to
the extent not inconsistent with the UCP. Borrower shall pay a fee to Agent, for
the account of Lenders, equal to a percentage of the face amount of the Letter
of Credit equal to the LIBOR Spread then in effect, calculated on a per annum
basis, for issuance of the Letter of Credit, payable quarterly in arrears on the
last Business Day of each June, September, December, and March.
2.12 COLLATERAL
Borrower and each of its Subsidiaries have granted or shall
grant to Agent, as agent for Lenders, a first-lien security interest in each
such entity's Accounts, Inventory, and related collateral described in security
agreements satisfactory to Lenders (the "Collateral"), to secure all obligations
of Borrower under this Agreement, the Notes and the other Loan Documents.
ARTICLE 3
THE EFFECTIVE DATE; CONDITIONS PRECEDENT TO LENDING
3.1 Conditions Precedent to Effective Date
In addition to the conditions set forth in Section 3.2, the
obligation of Lenders to make the initial Loan is subject to fulfillment of the
following conditions on or prior to the Effective Date:
(a) LOAN DOCUMENTS. Agent shall have received all of the
following Loan Documents, each duly executed and delivered by the respective
parties thereto, and satisfactory to Agent and each Lender in form and
substance:
(i) this Agreement;
(ii) the Notes; and
(iii) Certificate signed by the chief executive
officer, chief financial officer or other principal financial officer of
Borrower, certifying compliance as of the Effective Date with Sections 3.2(b)
and (c) hereof.
16
(b) CORPORATE CERTIFICATES. Agent shall have received
all of the following, each satisfactory to Agent and the Lenders in form and
substance:
(i) Certified copies of the articles of
incorporation and bylaws of Borrower;
(ii) Certificate of good standing issued by
the Secretary of the State of Washington with respect to Borrower;
(iii) Certified copy of resolution adopted
by the board of directors of Borrower authorizing the execution, delivery
and performance by Borrower of this Agreement and the Notes;
(iv) Incumbency certificates describing the
office and identifying the specimen signatures of the individuals signing
the Loan Documents on behalf of Borrower.
(c) OTHER INFORMATION. Agent shall have received such
other statements, opinions, certificates, documents and information with
respect to the matters contemplated by this Agreement as it or any Lender may
reasonably request.
3.2 CONDITIONS TO ALL LOANS AND TO REFINANCING
The obligation of Lenders to fund any Loans hereunder, or to
permit any refinancing pursuant to Section 2.5, is subject to fulfillment of the
following conditions:
(a) NOTICE OF BORROWING OR REFINANCING. Agent shall have
received the Notice of Borrowing or Notice of Refinancing, as the case may be,
in respect of such Loan.
(b) NO DEFAULT. At the date of the Loan or the
refinancing, no Potential Event of Default or Event of Default shall have
occurred and be continuing or will occur as a result of the making of the
Loans; and the representations of' Borrower in Article 4 shall be true on and
as of such date with the same force and effect as if made on and as of such
date. .
(c) COMPLIANCE WITH QUARTERLY FINANCIAL COVENANTS. At
the end of the last calendar quarter preceding such Loan or refinancing,
Borrower and its consolidated Subsidiaries were in compliance with Sections
5.12 and 5.13 (applying such covenants as if the Loans being requested were
outstanding as of the end of such calendar quarter) and, since the end of such
calendar quarter, neither Borrower nor any consolidated Subsidiary has
redeemed any equity or repaid any Subordinated Debt which, if they had
occurred immediately prior to the end of the calendar quarter, would have
resulted in a violation of Sections 5.12 or 5.13.
(d) CONDITIONS TO THE EFFECTIVE DATE. All conditions to
the Effective Date shall have been satisfied, as evidenced in writing by the
Agent.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF BORROWER
Borrower represents and warrants to each Lender as follows:
4.1 CORPORATE EXISTENCE AND POWER
17
Borrower and each Subsidiary are corporations duly
incorporated, validly existing and in good standing under the laws of their
respective jurisdictions of incorporation. Borrower and each Subsidiary are duly
qualified to do business in each other jurisdiction where the nature of their
respective activities or the ownership of their respective properties requires
such qualification, except to the extent that failure to be so qualified does
not have a material adverse effect on the business, operations or financial
condition of the enterprise comprised of Borrower and its Subsidiaries taken as
a whole. Borrower and each Subsidiary have full corporate power, authority and
legal right to carry on their business as presently conducted, and to own and
operate their properties and assets. Borrower has full corporate power,
authority and legal right to execute, deliver and perform all Loan Documents to
which it is a party.
4.2 CORPORATE AUTHORIZATION
The execution, delivery and performance by Borrower of the
Loan Documents and any borrowing hereunder and thereunder (i) have been duly
authorized by all necessary corporate action of Borrower, 00 do not require any
shareholder approval or the approval or consent of any trustee or the holders of
any Indebtedness of Borrower or any subsidiary except such as have been obtained
(certified copies thereof having been delivered to Agent), (iii) do not
contravene any law, regulation, rule or order binding on Borrower or any
subsidiary or its Articles of Incorporation or Bylaws, and (iv) do not
contravene the provisions of or constitute a default under any indenture,
mortgage, contract or other agreement or instrument to which Borrower or any
Subsidiary is a party or by which Borrower or any Subsidiary or any of their
properties may be bound or affected, except for a contravention or default by a
Subsidiary that would not have a material adverse effect on the business,
operations or financial condition of the enterprise comprised of Borrower and
its Subsidiaries taken as a whole.
4.3 GOVERNMENT APPROVALS, ETC.
No Government Approval or filing or registration with any Governmental Authority
is required for the making and performance by Borrower of any Loan Document to
which it is a party or in connection with any of the transactions contemplated
hereby, except such as have been heretofore obtained and are in full force and
effect (certified copies thereof having been delivered to Agent).
4.4 BINDING OBLIGATIONS, ETC.
The Loan Documents have been duly executed and delivered by
Borrower, and constitute the legal, valid and binding obligations of Borrower
enforceable against Borrower in accordance with their respective terms.
4.5 LITIGATION
There are no actions, proceedings, investigations, or claims
against or affecting Borrower or any Subsidiary now pending before any court,
arbitrator or Governmental Authority (nor to the knowledge of Borrower has any
thereof been threatened nor does any basis exist therefor) which has a
reasonable likelihood of being determined adversely to Borrower or any
Subsidiary and which, if so determined, would be likely to have a material
adverse effect on the business, operations or financial condition of the
enterprise comprised of Borrower and its Subsidiaries taken as a whole, or to
result in a judgment or order against Borrower or any Subsidiary (in excess of
insurance coverage) for more than $250,000 in any one case or $500,000 in the
aggregate, except as reflected in the financial statements referred to in
Section 4.6.
4.6 FINANCIAL CONDITION
18
The consolidated balance sheet of Borrower and its
consolidated Subsidiaries as at December 31, 1997, and the related consolidated
statements of income and cash flows of Borrower ' and its consolidated
Subsidiaries for the fiscal year then ended, copies of which have been furnished
to each Lender, fairly present the consolidated financial condition of Borrower
and its consolidated Subsidiaries as at such date and the results of operations
of Borrower and its consolidated Subsidiaries for the period then ended, all in
accordance with generally accepted accounting principles consistently applied.
Borrower and its consolidated Subsidiaries did not have on such date any
contingent liabilities for Taxes, unusual forward or long-term commitments or
unrealized or anticipated losses from any unfavorable commitments, except as
referred to or reflected or provided for in that balance sheet and in the notes
to those financial statements. Since that date, there has been no material
adverse change in the business, operations or financial condition of the
enterprise comprised of Borrower and its Subsidiaries taken as a whole.
4.7 TITLE AND LIENS
Borrower and its Material Subsidiaries have good and
marketable title to each of the properties and assets reflected in the balance
sheet referred to in Section 4.6 (except such as are held under leases or have
been since sold or otherwise disposed of in the ordinary course of business). No
assets or revenues of Borrower or its Material Subsidiaries are subject to any
Lien except as permitted under Section 6.3. All properties. of Borrower and its
Subsidiaries and their use thereof comply with applicable zoning and use
restrictions and with applicable laws and regulations relating to the
environment, except for violations that do not have a material adverse effect
upon the business, operations or financial condition of the enterprise comprised
of Borrower and its Subsidiaries taken as a whole.
19
4.8 TAXES
Borrower and its Material Subsidiaries have filed all tax
returns and reports required of them, have paid all taxes which are due and
payable or as to which there is no good faith contest or dispute as to the
amount or validity of the assessment against Borrower and its Material
Subsidiaries, and have provided adequate reserves for payment of any tax whose
payment is being contested. All Subsidiaries that are not Material
Subsidiaries have filed all tax returns and reports required of them, have
paid all taxes which are due and payable or as to which there is no good faith
contest or dispute as to the amount or validity of the assessment, and have
provided adequate reserves for payment of any tax where payment is being
contested, except in respect of taxes in an aggregate amount equal to or less
than Ten Thousand Dollars ($10,000). The charges, accruals and reserves on the
books of Borrower and its Subsidiaries in respect of taxes for all fiscal
periods to date are accurate. There are no questions or disputes between
Borrower or any Subsidiary and any Governmental Authority with respect to any
taxes except as disclosed in the balance sheet referred to in Section 4.6 or
otherwise previously disclosed to both Lenders in writing.
4.9 OTHER AGREEMENTS
Neither Borrower nor any subsidiary is in breach of or default
under any material agreement to which it is a party or which is binding on it or
any of its assets, the breach of which agreement would have a material adverse
effect upon the business, operations or financial condition of the enterprise
comprised of Borrower and its Subsidiaries taken as a whole.
4.10 FEDERAL RESERVE REGULATIONS
Neither Borrower nor any Subsidiary is engaged principally or
as one of its important activities in the business of extending credit for the
purpose of purchasing or carrying any margin stock (within the meaning of
Federal Reserve Regulation U), and no part of the proceeds of any Loan will be
used to purchase or carry any such margin stock or to extend credit to others
for the purpose of purchasing or carrying any such margin stock or for any other
purpose that violates the applicable provisions of any Federal Reserve
Regulation. Borrower will furnish on request to Agent a statement conforming
with the requirements of Regulation U.
4.11 ERISA
(a) The present value of all benefits vested under all
Pension Plans did not, as of the most recent valuation date of such Pension
Plans, exceed the value of the assets of the Pension Plans allocable to such
vested benefits by an amount which would represent a potential material
liability of Borrower and its Material Subsidiaries or affect materially the
ability of Borrower to perform its obligations under the Loan Documents.
(b) No Plan or trust created thereunder, or any trustee
or administrator thereof, has engaged in a "prohibited transaction" (as such
term is defined in Section 406 or Section 2003(a) of ERISA) which could
subject such Plan or any other Plan, any trust created thereunder, or any
trustee or administrator thereof, or any party dealing with any Plan or any
such trust to the tax or penalty on prohibited transactions imposed by Section
502 or Section 2003(a) of ERISA.
(c) No Pension Plan or trust created thereunder has been
terminated, and there have been no "reportable events" (as that term is
defined in Section 4043 of ERISA) since the effective date of ERISA.
20
(d) No Pension Plan or trust created thereunder has
incurred any "accumulated funding deficiency" (as such term is defined in
Section 302 of ERISA) whether or not waived, since the effective date of ERISA.
(e) Neither Borrower nor any Material Subsidiary is
now, nor has it been, a party to or had any employees who are covered by any
multi-employer pension or benefit plan.
(f) The required allocations and contributions to
Pension Plans will not violate Section 415 of the Internal Revenue Code.
4.12 SUBSIDIARIES
In respect of Subsidiaries, Exhibit D to this Agreement sets
forth as of the date of this Agreement the authorized capitalization of each
Material Subsidiary, the number of shares of each class of capital stock issued
and outstanding of each Material Subsidiary, and the number and percentage of
outstanding shares of each such class of capital stock owned by Borrower or by
any Material Subsidiary, and describes the Material Subsidiaries as of the
Effective Date. Exhibit D sets forth the name and address of each Subsidiary and
the percentage of outstanding shares owned by Borrower. Borrower will promptly
notify Lender in writing of any change in the identity of the Material
Subsidiaries, which will be subject to Lenders' approval. The outstanding shares
of each Subsidiary have been duly authorized and validly issued and are fully
paid and nonassessable. Borrower and each Subsidiary owns beneficially and of
record and has good title to all the shares it is listed as owning on Exhibit D,
free and clear of any Lien.
4.13 REPRESENTATIONS AS A WHOLE
This Agreement, the financial statements referred to in
Section. 4.6, and all other instruments, documents, certificates and statements
furnished to the Lender by Borrower, taken as a whole, do not contain any untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements contained herein or therein not misleading.
4.14 YEAR 2000 COMPLIANCE
Borrower has developed and budgeted for a comprehensive program to
address the "Year 2000 problem" (that is, the inability of computers, as well as
embedded microchips in non-computing devices, to perform properly date-sensitive
functions with respect to certain dates prior to and after December 31, 1999).
Borrower has implemented that program substantially in accordance with its
timetable and budget and reasonably anticipates that it will substantially avoid
the Year 2000 problem as to all computers, as well as embedded microchips in
non-computing devices, that are material to Borrower's business, properties, or
operations. Borrower has developed feasible contingency plans adequately to
ensure uninterrupted and unimpaired business operation in the event of failure
of its own or a third party's systems or equipment due to the Year 2000 problem,
including those of vendors, customers, and suppliers, as well as a general
failure of or interruption in its communications and delivery infrastructure.
ARTICLE 5
AFFIRMATIVE COVENANTS OF BORROWER
So long as Lenders shall have any Commitment hereunder and until
payment in full of each Loan and Note and performance of all other obligations
of Borrower under the Loan Documents, Borrower agrees that all of the following
shall be done unless each Lender shall otherwise consent in writing:
21
5.1 USE OF PROCEEDS
Borrower will use the proceeds of the Loan exclusively for
general corporate purposes subject to the provisions of this Agreement.
5.2 PRESERVATION OF CORPORATE EXISTENCE, ETC.
Borrower will cause to be done all things necessary to
preserve and maintain the corporate existence, franchises and privileges of
Borrower in Washington, and all other Material Subsidiaries in their respective
jurisdictions of incorporation. Borrower will qualify, and thereafter remain
qualified, and will cause each Material Subsidiary to qualify and remain
qualified as a foreign corporation in each jurisdiction where such qualification
is necessary or advisable in view of Borrower's or such Material Subsidiary's
business and operations or the ownership of its properties.
22
5.3 VISITATION RIGHTS
At any reasonable time, and from time to time, upon reasonable
notice, Borrower will permit Lenders to examine and make copies of and abstracts
from the records and books of account of and to visit the properties of Borrower
and its Material Subsidiaries and to discuss the affairs, finances and accounts
of Borrower and its Material Subsidiaries with its chief executive officer,
chief financial officer or other principal financial officer, if any.
5.4 KEEPING OF BOOKS AND RECORDS
Borrower will keep and will cause its Subsidiaries to keep
adequate records and books of account in which complete entries will be made, in
accordance with generally accepted accounting principles consistently applied,
reflecting all financial transactions of Borrower and its Subsidiaries.
5.5 MAINTENANCE OF PROPERTY, ETC.
Borrower will maintain and preserve and will cause its
Subsidiaries to maintain and preserve all of their properties in good working
order and condition, ordinary wear and tear excepted, and Borrower will, and
will cause its Su ' bsidiaries to from time to time make all needed repairs,
renewals or replacements so that the efficiency of such properties shall be
fully maintained and preserved; and Borrower and its Subsidiaries will also
maintain its rights and interests in all patents, copyrights, and other
intellectual property owned or licensed by Borrower or any such Subsidiary,
provided that Borrower shall not be required to comply with this Section 5.5 if
failure to comply would not be likely to have a material adverse effect on the
business, operations or financial condition of the enterprise comprised of
Borrower and its Subsidiaries taken as a whole.
5.6 COMPLIANCE WITH LAWS, ETC
Borrower will comply and will cause each Subsidiary to comply
in all material respects with all laws, regulations, rules, and orders of
Governmental Authorities applicable to Borrower and its subsidiaries or to their
operations or property, except any thereof whose validity is being contested in
good faith by appropriate proceedings upon stay of execution of the enforcement
thereof.
5.7 OTHER OBLIGATIONS
Borrower will and will cause each Subsidiary to pay and discharge
before the same shall become delinquent all Indebtedness, all taxes and all
other obligations for which Borrower or its Subsidiaries are liable or to which
their income or property is subject (except to the extent that failure to pay
such other obligations would not be likely to have a material adverse effect
upon the business, operations or financial condition of the enterprise comprised
of Borrower and its Subsidiaries taken as a whole), and all claims for labor and
materials or supplies which, if unpaid, might become by law a lien upon assets
of Borrower or its Subsidiaries, except any thereof whose validity or amount is
being contested in good faith by Borrower or its Subsidiaries in appropriate
proceedings with provision having been made to the reasonable satisfaction of
Agent for the payment thereof in the event the contest is determined adversely
to Borrower or its Subsidiaries.
5.8 INSURANCE
Borrower will keep and will cause its Material Subsidiaries to
keep in force upon all of their properties and operations policies of insurance
carried with responsible companies in such amounts and covering all such risks
as shall be customary in the industry and reasonably satisfactory to Agent and
Lenders, with all policies covering tangible Collateral to name Agent as loss
payee, as its interest may appear. Borrower will on request furnish to Agent
certificates of insurance or duplicate policies evidencing such coverage.
23
5.9 FINANCIAL INFORMATION
Borrower will deliver to Agent and to each Lender:
(a) As soon as available and in any event within 100 days
after the end of each fiscal year of Borrower, the consolidated balance sheet of
Borrower and its consolidated Subsidiaries as of the end of such fiscal year,
the related consolidated statements of income, the related consolidated
statements of cash flows, and the related consolidated statements of
shareholders' equity of Borrower and its consolidated Subsidiaries for such
year, setting forth in comparative form the corresponding consolidated figures
for the appropriate periods in the preceding fiscal year, accompanied by an
audit report of the consolidated balance sheet, statements of income and cash
flows and statement of shareholders' equity of Borrower and its consolidated
Subsidiaries for such year by independent certified public accountants of
recognized standing selected by Borrower (which reports shall be prepared in
accordance with generally accepted accounting principles consistently applied
and shall not be qualified by reason of restricted or limited examination of any
material portion of Borrower's and the Subsidiaries' records and shall contain
no disclaimer of opinion or adverse opinion except such as Lenders in their sole
discretion determine to be immaterial);
(b) As soon as available and in any event within 50
days after the end of each of the first three fiscal quarters of Borrower each
fiscal year, the internally prepared unaudited consolidated balance sheet and
the related consolidated statements of income and cash flows of Borrower and
its consolidated Subsidiaries as of the end of such fiscal quarter (and for
the period from the beginning of the fiscal year to the end of such fiscal
quarter), setting forth in comparative form the corresponding consolidated
figures for the appropriate periods in the preceding fiscal year, accompanied
by a certificate of the chief executive officer, chief financial officer or
other principal financial officer of Borrower that such unaudited consolidated
balance sheet and statement of income and cash flows have been prepared in
accordance with generally accepted accounting principles consistently applied
and present fairly the financial position and the results of operations of
Borrower and its consolidated Subsidiaries as of the end of and for such
fiscal quarter and that since the fiscal year-end report referred to in clause
(a) there has been no material adverse change in the financial condition or
operations of Borrower and its consolidated Subsidiaries as shown on the
consolidated balance sheet as of said date;
(c) Concurrently with the financial statements
delivered pursuant to Sections 5.9(a) and 5.9(b), a Compliance Certificate;
(d) as soon as available and in any event within 15
days after the e month, W the internally-prepared unaudited consolidated
balance sheets and consolidated statements of income and cash flows of
Borrower as of the end of such month; and (ii) Borrowing Base Certificate as
at the end of such month.
(e) All other statements, reports and other information
as either Lender may reasonably request concerning the financial condition and
business affairs of Borrower and its subsidiaries; and
(f) As soon as required to be filed, all 10Ks, 10Qs, 8Ks,
annual reports, quarterly reports, and other filings or submittals made to
shareholders or to the Securities and Exchange Commission.
5.10 NOTIFICATION
24
Promptly after learning thereof, Borrower will notify Agent
of (a) the details of any action, proceeding, investigation or claim against
or affecting Borrower or any Subsidiary instituted before any court,
arbitrator or Governmental Authority or, to Borrower's knowledge threatened to
be instituted, which, if determined adversely to Borrower or any Subsidiary
would be likely to have a material adverse effect on the business, operations
or financial condition of the enterprise comprised of Borrower and its
Subsidiaries taken as a whole or to result in a judgment or order against
Borrower or any Subsidiary (in excess of insurance coverage) for more than
$250,000 or, when combined with all other pending or threatened claims, more
than $500,000; (b) any substantial dispute between Borrower or any Subsidiary
and any Governmental Authority which, if determined adversely to Borrower or
any Subsidiary would be likely to have a material adverse effect on the
business, operations or financial condition of the enterprise comprised of
Borrower and its Subsidiaries taken as a whole; (c) any labor controversy
which has resulted in or, to Borrower's knowledge, threatens to result in a
strike which would materially affect the business operations of Borrower; (d)
if Borrower or any member of the Controlled Group gives or is required to give
notice to the PBGC of any "reportable event" (as defined in subsections (b
(1), (2), (5) or (6) of Section 4043 of ERISA) with respect to any Plan (or
the Internal Revenue Service gives notice to the PBGC of any "reportable
event" as defined in subsection (c) (2) of Section 4043 of ERISA and Borrower
obtains knowledge thereof) which might constitute grounds for a termination of
such Plan under Title IV of ERISA, or knows that the plan administrator of any
Plan has given or is required to give notice of any such reportable event, a
copy of the notice of such reportable event given or required to be given to
the PBGC; and (e) the occurrence of any Potential Event of Default or Event of
Default.
5.11 ADDITIONAL PAYMENTS; ADDITIONAL ACTS
From time to time, Borrower will (a) pay or reimburse Agent
and Lenders on request for all reasonable expenses, including but not limited
to legal fees (including the allocated cost of in-house counsel), actually
incurred by Agent or Lenders in connection with the preparation of the Loan
Documents and all amendments thereto and waivers of provisions thereof, or the
making of any Loan or the administration of the transactions described in the
Loan Documents (including the reasonable costs of periodic collateral
evaluation reviews) or the enforcement by judicial proceedings or otherwise of
any of the rights of Lenders under the Loan Documents; M obtain and promptly
furnish to Agent evidence of all such Government Approvals as may be required
to enable Borrower to comply with its obligations under the Loan Documents;
and (c) execute and deliver all such instruments and perform all such other
acts as Agent may reasonably request to carry out the transactions
contemplated by this Agreement.
5.12 WORKING CAPITAL
Borrower and its consolidated Subsidiaries shall have, at
the end of each fiscal quarter, a ratio of current assets to current
liabilities of at least 1.50 to 1, and a difference between current assets and
current liabilities of at least $45,000,000. For purposes of this section, (a)
current assets shall not include (i) any deferred assets other than prepaid
items such as insurance, taxes, or other similar items or those deferred
against a current contract, or (ii) any accounts receivable, loans or other
amounts due from corporations, joint ventures, partnerships and other entities
which are Subsidiaries or otherwise affiliated with Borrower, other than
accounts receivable generated from the sale of Borrower's products in arm's
length transactions with such corporations, joint ventures, partnerships and
other entities and occurring in the ordinary course of Borrower's business,
and (b) current liabilities shall include all outstanding Loans (excluding
Letters of Credit), together with accrued but unpaid interest thereon but
shall not include any portion of Subordinated Debt.
5.13 TOTAL DEBT TO TANGIBLE CAPITAL RATIO
Borrower and its consolidated Subsidiaries shall have, at the
end of each fiscal quarter:
25
(a) a ratio of Total Debt to EBITDA, determined on a
trailing four-quarter basis, of no more than 5.20 to 1 for quarter ending
September 30, 1998, 5.95 to 1 for quarter ending December 31, 1998, 5.40 to 1
for quarter ending March 30, 1999, 4.80 to 1 for quarter ending June 30, 1999,
and 3.75 to 1 for quarter ending September 30, 1999; and
(b) a Tangible Capital of not less than $150,000,000,
increasing at the end of each fiscal quarter, beginning quarter ending September
30, 1998, by 50% of net income earned during (without reduction for net losses),
plus 75% of new equity contributed during, the quarter then ending.
"Total Debt" means total debt of Borrower and its Subsidiaries, on a
consolidated basis, for borrowed money or funded debt including, but not limited
to, short-term borrowings, mortgage notes payable, convertible subordinated
debt, and project financing, being categories of debt shown on Borrower's
December 31, 1997 balance sheet. "Tangible Capital" means the difference between
(a) the sum of (i) shareholders' equity in Borrower and its consolidated
subsidiaries as of such date of determination (such figure to reflect a
deduction for all loans and advances to Borrower's and its Subsidiaries'
officers and employees for purchase of Borrower's and its Subsidiaries' stock,
as applicable), plus (ii) to the extent not included in such shareholders'
equity, Subordinated Debt and (b) the sum of W all assets which should be
classified as intangible assets, such as goodwill, patents, trademarks,
copyrights, franchises, unamortized debt discount, research and development
costs and deferred charges (unless deferred against a current contract), (ii)
capitalized software costs, and (iii) "other assets" as presently reported on
Borrower's balance sheet as non-current assets, other than (i.e., excluding)
long-term accounts receivable from utility customers under Outsourcing
Contracts. "EBITDA" means earnings before interest expense, taxes, depreciation,
and amortization, on a consolidated basis, for Borrower and its Subsidiaries,
with the lesser of (A) $4,084,000, or (B) all restructuring charges (as such
term is defined in accordance with GAAP), to be excluded from the calculation of
earnings.
ARTICLE 6
NEGATIVE COVENANTS OV BORROWER
So long as Lenders shall have any Commitment hereunder and until
payment in full of each Loan and Note and performance of all other obligations
of Borrower under the Loan Documents, Borrower agrees that none of the following
shall be done, unless each Lender shall otherwise consent in writing.
6.1 LIQUIDATION, MERGER, SALE OF ASSETS
Borrower shall not, and shall cause its Material Subsidiaries
not to (a) liquidate or dissolve, (b) enter into any material merger or
consolidation except that any Material subsidiary may merge or consolidate into
any other Subsidiary or into Borrower, nor (c) sell, lease, or dispose of such
portion of their business or assets (excepting sales of goods in the ordinary
course of business) as constitutes in the reasonable opinion of Agent a
substantial portion thereof; provided, that, notwithstanding this provision,
Borrower shall be permitted to sell its accounts receivable generated from
Outsourcing Contracts.
6.2 INDEBTEDNESS, GUARANTIES, ETC.
Borrower shall not, and shall cause its Subsidiaries not to,
create, incur, assume, permit to exist, or otherwise become committed for any
Indebtedness, nor assume, guaranty, endorse or otherwise become directly or
contingently liable for, nor obligated to purchase, pay or provide funds for
payment of, any obligation or Indebtedness of any other person, except by
endorsement of negotiable instruments for deposit or collection or by similar
transactions in the ordinary course of business. Notwithstanding the
26
foregoing, Borrower and its Subsidiaries may incur Subordinated Debt and
nonrecourse indebtedness without limit; may obtain performance bonds in an
unlimited amount to support its obligations and those of its Subsidiaries with
regard to outsourcing Contracts and Turnkey Contracts; may maintain
Indebtedness existing as of the Effective Date, or any refinance of such
Indebtedness without an increase in the unpaid principal amount thereof; and
shall in addition be permitted to incur and guaranty outstanding Indebtedness
not exceeding $7,500,000 in the aggregate (excluding performance bond
obligations), provided that the proceeds of all such new Indebtedness (other
than performance bonds and the proceeds of foreign currency loans made by a
Lender or commercial or standby letters of credit issued by a Lender) are used
to pay down the Loans; and Borrower and any Subsidiary may guaranty the
Indebtedness of one another.
6.3 LIENS
Borrower shall not, and shall cause its Material Subsidiaries
not to, create, assume or suffer to exist any Lien except (i) Liens in favor of
Agent, 00 a Lien to Xxxxxxx Development Company in the original principal amount
of $6,440,000 to finance acquisition of Borrower's corporate headquarters and
manufacturing facility in Spokane, Washington or any lien to secure a refinance
of such indebtedness on substantially the same or better terms, (iii) Liens on
fixed assets used in carrying out Outsourcing Contracts, (iv) Liens on long-term
contract receivables generated from Outsourcing Contracts, (v) Liens to secure
Indebtedness for the deferred price of property, but only if they are limited to
such property and its proceeds and do not exceed 80% of the fair market value
thereof (or, in the case of purchase money financing for personal property, do
not exceed 100% of the fair market value thereof), and (vi) other Liens securing
obligations owing to either one or both Lenders.
6.4 OPERATIONS
Borrower shall not, and shall cause its Material Subsidiaries
not, to engage in any activity which is substantially different from or
unrelated to their present business activities nor discontinue any portion of
their present business activities which constitutes a substantial portion
thereof.
27
6.5 PERMISSIBLE LOANS
Borrower shall not make any loan or advance to any Person
other than (a) advances made in the ordinary course of business; (b) loans to
Subsidiaries, and to joint ventures of which Borrower is a partner, not
exceeding $ 10,000,000 in the aggregate; and (c) loans to Subsidiaries in any
amount if such Subsidiary provides to Lender prior to the disbursement of such
loan a limited guaranty of the Obligations, in the form of Exhibit E hereto,
limited in principal amount to the principal amount of such loan. Upon repayment
to Borrower of any such Subsidiary loan, Lender shall, upon request by Borrower,
release such guaranty.
6.6 CONTRACTS
Borrower shall not, and shall cause its Material Subsidiaries
not to, enter into any significant contracts or other agreements except in the
usual course of its business.
6.7 SECURITIES
Borrower shall not, and shall cause its Material Subsidiaries
not to, issue, sell, or otherwise distribute any stock, bond, note, or debenture
or other security of Borrower and its Subsidiaries EXCEPT (i) common or
preferred stock (or warrants or options therefor), 00 notes or other debt
instruments evidencing Indebtedness Permitted by this Agreement, and (iii)
securities of any Subsidiary that are issued to Borrower.
6.8 ERISA COMPLIANCE
Neither Borrower nor any Plan will:
(a) engage in any "prohibited transaction" (as such
term is defined in Section 406 or Section 2003(a) of ERISA);
(b) incur any "accumulated funding deficiency" (as
such tern Section 302 of ERISA) whether or not waived;
(c) terminate any Pension Plan in a manner which could
result in the imposition of a Lien on any property of Borrower or any member
of the Controlled Group pursuant to Section 4068 of ERISA; or
(d) violate state or federal securities laws applicable
to any Plan which may result in material liability to Borrower or any member
of the Controlled Group.
6.9 PAYMENTS ON SUBORDINATED DEBT; PREPAYMENTS OF INDEBTEDNESS
Except in the case of Borrower's 6 3/4% Convertible
Subordinated Notes Due 2004, Borrower will not make any payments on Subordinated
Debt or prepayments of principal of any Indebtedness during any period when a
Potential Event of Default or an Event of Default has occurred and is continuing
or would be caused by such act. In the case of Borrower's 6 3/4% Convertible
Subordinated Notes Due 2004, Borrower will not make any payment of principal or
interest during any period when an Event of Default pursuant to Section 7.1 (a)
has occurred and is continuing. Additionally, Borrower shall not repay any
Subordinated Debt which, at the end of the preceding calendar quarter, was
necessary to Borrower's compliance with Section 5.13.
28
ARTICLE 7
EVENTS OF DEFAULT
7.1 EVENTS OF DEFAULT
The occurrence of any of the following events shall constitute
an "Event of Default" hereunder:
(a) PAYMENT DEFAULT. Borrower shall fail to pay, within
five (5) calendar days of when due, any amount of principal of or interest on
any Loan or Note or any commitment fees due hereunder or, within 30 days after
notice from Agent, any other amount payable to Agent or Lenders hereunder; or
(b) BREACH OF WARRANTY. Any representation or warranty
made by Borrower in any Loan Document shall prove to have been incorrect in
any material respect when made and shall prove to be material in any respect
when discovered, or any of Borrower's representations regarding the "year 2000
problem" cease to be true, whether or not true when made, and as a result
Lenders reasonably believe that Borrower's financial condition or its ability
to pay its debts as they come due will thereby be materially impaired; or
(c) BREACH OF CERTAIN COVENANTS. Any provision of
Sections 5.2 or 6.1 shall not have been complied with; or
(d) BREACH OF OTHER COVENANTS. Any other covenant or
obligation of Borrower in any Loan Document, except Section 5.7 of this
Agreement to the extent Section 5.7 relates to delinquent Indebtedness, shall
not have been complied with and such failure shall remain unremedied for 30 days
after written notice thereof shall have been given to Borrower by Agent; VOVIDED
that Lenders shall not unreasonably or arbitrarily withhold consent to an
extension of such period if corrective action is initiated within such period
and is being diligently pursued by Borrower; or
(e) CROSS-DEFAULT. Borrower or any Subsidiary shall
fail in respect of Indebtedness having an aggregate outstanding balance of
$500,000 (i) to pay when due (whether by scheduled maturity, required
prepayment, acceleration, demand or otherwise) any such Indebtedness (except
any Loan) or any interest or premium thereon and such failure shall continue
after the applicable grace period, if any, specified in the agreement or
instrument relating to such Indebtedness, or (ii) to perform any term or
covenant on its part to be performed under any agreement or instrument
relating to any such Indebtedness and required to be performed and such
failure shall continue after the applicable grace period, if any, specified in
such agreement or instrument, if the effect of such failure to perform is to
accelerate or to permit the acceleration of the maturity of such Indebtedness,
or (iii) any such Indebtedness shall be declared to be due and payable or
required to be prepaid (other than by regularly scheduled required prepayment)
prior to the stated maturitv thereof; or
(f) VOLUNTARY BANKRUPTCY, ETC. Borrower or any Subsidiary
shall: (1) file a petition seeking relief for itself under Title 11 of t he
United States Code, as now constituted or hereafter amended, or file an answer
consenting to, admitting the material allegations of or otherwise not
controverting, or fail timely to controvert a petition filed against it seeking
relief under Title 11 of the United State Code, as now constituted or hereafter
amended; or (2) file such petition or answer with respect to relief under the
provisions of any other now existing or future applicable bankruptcy,
insolvency, or other similar law of the United States of America or any State
thereof or of any other country or jurisdiction providing for the
reorganization, winding-up or liquidation of corporations or an arrangement,
composition, extension or adjustment with creditors; or
29
(g) INVOLUNTARY BANKRUPTCY, ETC. An order for relief
shall be entered against Borrower or any Subsidiary under Title 11 of the
United States Code, as now constituted or hereafter amended, which order is
not stayed within 90 days; or upon the entry of an order, judgment or decree
by operation of law or by a court having jurisdiction in the premises which is
not stayed adjudging it a bankrupt or insolvent under, or ordering relief
against it under, or approving as properly filed a petition seeking relief
against it under the provisions of any other now existing or future applicable
bankruptcy, insolvency or other similar law of the United States of America or
any State thereof or of any other country or jurisdiction providing for the
reorganization, winding-up or liquidation of corporations or any arrangement,
composition, extension or adjustment with creditors, or appointing a receiver,
liquidator, assignee, sequestrator, trustee or custodian of Borrower or any
Subsidiary or of any substantial part of its property, or ordering the
reorganization, winding-up or liquidation of its affairs, or upon the
expiration of 120 days after the filing of any involuntary petition against it
seeking any of the relief specified in Section 7.1 (f) or this Section 7.1 (g)
without the petition being dismissed prior to that time; or
(h) INSOLVENCY, ETC. Borrower or any Subsidiary shall
(i) make a general assignment for the benefit of its creditors or (ii) consent
to the appointment of or taking possession by a receiver, liquidator,
assignee, trustee, or custodian of all or a substantial part of the property
of Borrower or any Subsidiary, or (iii)'admit its insolvency or inability to
pay its debts generally as they become due, or (iv) fail generally to pay its
debts as they become due, or (v) take any action (or suffer any action to be
taken by its directors or shareholders) looking to the dissolution or
liquidation of Borrower or any Subsidiary; or
(i) JUDGMENT. A final judgment or order for the payment
of money in (excess of insurance coverage) for more than $250,000 in any one
case or $500,000 in the aggregate shall be rendered against Borrower or any
Subsidiary and such judgment or order shall continue unsatisfied and in effect
for a period of 90 consecutive days without having been appealed and stayed; or
(j) CONDEMNATION. Such portion of the property of
Borrower or any Subsidiary as in the opinion of Agent constitutes a
substantial portion shall be condemned, seized or appropriated, and such
condemnation, seizure or appropriation shall be likely to have a material
adverse effect on the business, operations or financial condition of the
enterprise comprised of Borrower and its Subsidiaries taken as a whole; or
(k) OTHER GOVERNMENT ACTION. Any act of any Governmental
Authority shall (in the opinion of Agent) deprive Borrower or any Subsidiary of
any right, privilege or franchise, or restrict the exercise thereof, the
deprivation or restriction of which shall have a material adverse effect on the
business, operations or financial condition of the enterprise comprised of
Borrower and its Subsidiaries taken as a whole, and such act shall not be
revoked or rescinded within sixty (60) days after it shall have become effective
or within thirty (30) days after notice from Agent, whichever first occurs; or
(1) ERISA. Borrower or any member of the Controlled Group
shall fail to pay when due an amount or amounts aggregating in excess of
$500,000 which it shall have become liable to pay to the PBGC or to a Plan under
Section 515 of ERISA or Title IV of ERISA; or notice of intent to terminate a
Plan or Plans (other than a multi-employer plan, as defined in Section 4001(3)
of ERISA), having aggregate unfunded vested liabilities in excess of $500,000
shall be filed under Title IV of ERISA by Borrower, any member of the Controlled
Group, any plan administrator or any combination of the foregoing; or the PBGC
shall institute proceedings under Title IV of ERISA to terminate any such Plan
or Plans; or
(m) CHANGE OF CONTROL. There occurs a Change of Control.
30
7.2 CONSEQUENCES OF DEFAULT. If any Event of Default shall occur and be
continuing, then in any such case and at any time thereafter so long as any such
Event of Default shall be continuing, Agent will at the request of both Lenders
immediately terminate the Commitments and, if any Loan shall have been made,
Agent will at the request of both Lenders declare the principal of and the
interest on any Loan and any Note and all other sums payable by Borrower
hereunder or thereunder to be immediately due and payable, whereupon the same
shall become immediately due and payable without protest, presentment, notice or
demand, all of which Borrower expressly waives. In such event, Agent may proceed
to exercise all of its legal and equitable remedies on behalf of Lenders,
including but not limited to commencing to realize on any or all Collateral by
any available means.
31
ARTICLE 8
AGENT
8.1 AUTHORIZATION AND ACTION
Each Lender hereby appoints and authorizes Agent to take such
action as agent on its behalf and to exercise such powers under this Agreement
and the other Loan Documents as are delegated to Agent by the terms hereof,
together with such powers as are reasonably incidental thereto. As to any
matters not expressly provided for in this Agreement, including enforcement or
collection of the Notes, Agent shall not be required to exercise any discretion
or take any action, but shall be required to act or to refrain from acting (and
shall be fully protected in so acting or refraining) upon the instructions of
both Lenders, except that Agent shall not be required to take any action which
exposes Agent to personal liability or which is contrary to this Agreement or
applicable law. Each Lender and holder of a Note shall execute and deliver such
additional instruments, including powers of attorney in favor of Agent, as may
be required by applicable law to enable Agent to exercise its powers hereunder.
8.2 DUTIES AND OBLIGATIONS
(a) Neither Agent nor any of its directors, officers,
agents or employees shall be liable for any action taken or omitted to be
taken by it or any of them under or in connection with this Agreement except
for its or their own gross negligence or willful misconduct. Without limiting
the generality of the foregoing, Agent (i) may treat the payee of any Note as
the holder thereof until Agent receives written notice of the assignment
thereof signed by such payee and a written agreement of the assignee that it
is bound hereby as it would have been had it been an original party hereto, in
each case in form satisfactory to Agent; (ii) may consult with legal counsel
(including counsel for Borrower), independent public accountants and other
experts selected by it and shall not be liable for any action taken or omitted
to be taken in good faith by it in accordance with the advice of such experts;
(iii) makes no warranty or representation to any Lender and shall not be
responsible to any Lender for any statements, warranties or representations
made in or in connection with this Agreement or in any instrument or document
furnished pursuant hereto; (iv) shall not have any duty to ascertain or to
inquire as to the performance of any of the terms, covenants, or conditions of
this Agreement on the part of Borrower or as to the use of the proceeds of any
Loan or, unless the officers of Agent active in their capacity as officers of
Agent on Borrower's account have actual knowledge thereof or have been
notified in writing thereof by a Lender, the existence or possible existence
of any Potential Event of Default or any Event of Default; M shall not be
responsible to any Lender for the due execution, legality, validity,
enforceability, genuineness, effectiveness, or value of this Agreement or of
any instrument or document furnished pursuant hereto; and (vi) shall incur no
liability under or in respect to this Agreement by acting upon any notice,
consent, certificate or other instrument or writing (which may be by telegram,
telecopy, cable or telex) believed by it to be genuine and signed or sent by
the proper party or parties or by acting upon any representation or warranty
of Borrower deemed to be made hereunder;
(b) Agent will account to each Lender for its Pro Rata
Share of payments of principal, interest and commitment fees received by Agent
from Borrower and will remit to Lenders entitled thereto all of the payments
received hereunder from Borrower for the account of Lenders. Agent will
transmit to each Lender copies of documents received from Borrower or others
pursuant to the requirements of this Agreement.
8.3 DEALINGS BETWEEN AGENT AND BORROWER
With respect to its Commitment, the Loan made by it, and the
Note issued to it, Agent shall have the same rights and powers under this
Agreement as any other Lender and may exercise the
32
same as though it were not Agent, and the term "Lender" shall unless otherwise
expressly indicated include Agent in its individual capacity. Agent may accept
deposits from, lend money to, act and generally engage in any kind of business
with Borrower and any person which may do business with Borrower, all as if
Agent were not Agent hereunder and without any duty to account therefor to
Lenders.
8.4 LENDER CREDIT DECISION
Each Lender acknowledges that it has, independently and
without reliance upon Agent or any other Lender and based upon such documents
and information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement. Each Lender also acknowledges that it
will, independently and without reliance upon Agent or any other Lender and
based upon such documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not taking action
under this Agreement.
8.5 INDEMNIFICATION
Lenders agree to indemnify Agent (to the extent not reimbursed
by Borrower) ratably according to their respective Commitments from and against
any and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind or nature
whatsoever which may be imposed on, incurred by or asserted against Agent in any
way relating to or arising out of this Agreement or any action taken or omitted
by Agent under this Agreement, except any such as result from Agent's gross
negligence or willful misconduct. Without limiting the foregoing, each Lender
agrees to reimburse Agent promptly on demand for its ratable share of any
out-of-pocket expenses, including Attorney Costs, incurred by Agent in
connection with the administration or enforcement of or the preservation of any
rights under this Agreement (to the extent that Agent is not reimbursed for such
expenses by Borrower).
8.6 SUCCESSOR AGENT
Agent may resign at any time by giving written notice thereof
to Lenders and Borrower and may be removed at any time with or without cause by
both Lenders. Upon any such resignation or removal, Lenders shall have the right
to appoint a successor Agent. If no successor Agent shall have been so appointed
by Lenders and shall have accepted such appointment within thirty (30) days
after the retiring Agents' giving of notice of resignation or Lenders' removal
of the retiring Agent, then the retiring Agent may on behalf of Lenders, appoint
a successor Agent, which shall be a bank organized under the laws of the United
States or of any state thereof, or any affiliate of such bank, and having a
combined capital and surplus of at least $25,000,000. Upon the acceptance of any
appointment as Agent hereunder by a successor Agent, such successor Agent shall
thereupon succeed to and become vested with all the rights, powers, privileges
and duties of the retiring Agent, and the retiring Agent shall be discharged
from its duties and obligations under this Agreement. After any retiring Agent's
resignation or removal hereunder as Agent, the provisions of this Article 8
shall inure to its benefit as to any actions taken or omitted to be taken by it
while it was Agent under this Agreement. If no successor agent is appointed
within 30 days, the resigning agent's resignation shall nevertheless become
effective and the Lenders shall perform the activities of the Agent.
8.7 RISK PARTICIPATION
Each Lender agrees for the benefit of Agent that it hereby
purchases a risk participation in each Letter of Credit and any unreimbursed
Letter of Credit draws equal to its respective Pro Rata Share of the outstanding
balance of such Letters of Credit plus the aggregate unreimbursed Letter of
33
Credit draws. Upon the occurrence of a draw under a Letter of Credit which is
not reimbursed by Borrower to Agent on the same Business Day, each Lender shall
fund to Agent, pursuant to this risk participation, such Lender's Pro Rata Share
of the aggregate unreimbursed Letter of Credit draws. Prior to its funding under
this Section, Lenders shall have no interest in any transaction fees, principal,
interest, fees, or expenses due to Agent with regard to the Letters of Credit,
except (a) those accruing after the date such participation is funded, and (b)
such Lender's Pro Rata Share of the issuance fees for the Letters of Credit.
ARTICLE 9
MISCELLANEOUS
9.1 NO WAIVER; REMEDIES CUMULATIVE
No failure by Agent or any Lender to exercise, and no delay in
exercising, any right, power or remedy under this Agreement or any Loan Document
shall operate as a waiver thereof, nor shall any single or partial exercise of
any right, power or remedy under any Loan Document preclude any other or further
exercise thereof or the exercise of any other right, power, or remedy. The
exercise of any right, power, or remedy shall in no event constitute a cure or
waiver of any Event of Default nor prejudice the right of Agent or any Lender in
the exercise of any right hereunder or thereunder, unless in the exercise of
such right, all obligations of Borrower under the Loan Documents are paid in
full. The rights and remedies provided herein and therein are cumulative and not
exclusive of any right or remedy provided by law.
9.2 GOVERNING LAW
This Agreement and any Note shall be governed by and construed
in accordance with the laws of the State of Washington, U.S.A.
9.3 CONSENT TO JURISDICTION; WAIVER OF IMMUNITIES
Borrower hereby irrevocably submits to the jurisdiction of any
state or federal court sitting in Spokane, Spokane County, Washington, in any
action or proceeding brought to enforce or otherwise arising out of or relating
any to Loan Document. Nothing herein shall impair the right of Agent or any
Lender to bring any action or proceeding against Borrower or its property in the
courts of any other jurisdiction.
9.4 NOTICES
All notices and other communications provided for in this
Agreement shall be in writing or (unless otherwise specified) by telex, telecopy
or telegram and shall be mailed or sent or delivered to each party at the
address set forth under its name on the signature page hereof or on the
signature page of any amendment hereto, or at such other address as shall be
designated by such party in a written notice to each other party. Except as
otherwise specified, all such notices and communications if duly given or made
shall be effective upon receipt.
9.5 ASSIGNMENT
This Agreement shall be binding upon and inure to the benefit
of the parties and their respective Successors and assigns, except that Borrower
may not assign or otherwise transfer all or any part of its rights or
obligations hereunder without the prior written consent of Lenders, and any such
assignment or transfer purported to be made without such consent shall be
ineffective.
34
9.6 SEVERABILITY
Any provision of this Agreement or any Note which is
prohibited or unenforceable in any jurisdiction shall as to such jurisdiction be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof or affecting the validity or
enforceability of such provision in any other jurisdiction. To the extent
permitted by applicable law, the parties waive any provision of law which
renders any provision hereof prohibited or unenforceable in any respect.
9.7 INDEMNIFICATION
Whether or not the transactions contemplated hereby are
consummated, Borrower shall indemnify, defend and hold the Agent-Related
Persons, and each Lender and each of its respective officers, directors,
employees, counsel, agents and attorneys-in-fact (each, an "Indemnified Person")
harmless from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, charges, expenses and disbursements
(including Attorney Costs) of any kind or nature whatsoever which may at any
time (including at any time following repayment of the Loans and the
termination, resignation or replacement of the Agent or replacement of any
Lender) be imposed on, incurred by or asserted against any such person or entity
in any way relating to or arising out of this Agreement or any document
contemplated by or referred to herein, or the transactions contemplated hereby,
or any action taken or omitted by any such Person under or in connection with
any of the foregoing, including with respect to any investigation, litigation or
proceeding (including any bankruptcy or insolvency proceeding or appellate
proceeding) related to or arising out of this Agreement or the Loans or the use
of the proceeds thereof, whether or not any Indemnified Person is a party
thereto (all the foregoing, collectively, the "Indemnified Liabilities");
PROVIDED, that Borrower shall have no obligation hereunder to any Indemnified
Person with respect to Indemnified Liabilities resulting solely from the gross
negligence or willful misconduct of such Indemnified Person. The agreements in
this Section shall survive payment of all Loans.
35
9.8 CONDITIONS NOT FULFILLED
If the Commitment or any portion thereof is not borrowed owing
to nonfulfillment of any condition precedent specified in Article 3, neither
Borrower nor either Lender shall be responsible to the others for any damage or
loss by reason thereof, except that Borrower shall in any event be liable to pay
the fees, taxes, and expenses for which it is obligated hereunder.
9.9 ENTIRE AGREEMENT AMENDMENT
This Agreement comprises the entire agreement of the parties
and may not be amended or modified except by written agreement of Borrower,
Agent and both Lenders. No provision of this Agreement may be waived except in
writing and then only in the specific instance and for the specific purpose for
which given.
9.10 CONFLICTING AGREEMENTS
In the event of any conflict between the terms of this
Agreement and the terms of any Note, the terms of this Agreement shall govern. .
9.11 ORAL AGREEMENTS
Borrower is hereby given the following notice:
ORAL AGREEMENTS OR ORAL COMMITMENTS TO LOAN MONEY, EXTEND CREDIT OR TO FORBEAR
FROM ENFORCING REPAYMENT OF A DEBT ARE NOT ENFORCEABLE UNDER WASHINGTON LAW.
36
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers or agents thereunto duly authorized to be
effective as of the Effective Date.
BORROWER: ITRON, INC.
---------------------------------------
By
Title
Address:
0000 X. XXXXXXXX XX.
XXXXXXX, XX 00000
ATTN: TREASURER
LENDERS: BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION
---------------------------------------
By
Title
Address:
U.S. CORPORATE GROUP - SEATTLE
000 XXXXX XXX., 00XX XXXXX
XXXXXXX, XX 00000
ATTN:
LENDERS: U.S. BANK NATIONAL ASSOCIATION
---------------------------------------
By
Title
Address:
0000 XXXXX XXX., XXXXX 00
XXXXXXX, XX 00000
ATTN:
37
EXHIBITS:
Exhibit A - Form of Notice of Borrowing
Exhibit B - Form of Notice of Refinancing
Exhibit C - Form of Revolving Note
Exhibit D - List of Subsidiaries
Exhibit E - Form of Subsidiary Guaranty
Exhibit F - Commitment Amounts
Exhibit G - Form of Compliance Certificate
Exhibit H - Form of Borrowing Base Certificate
Exhibit I - Prepayment Fee Calculation
38
