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EXHIBIT 10.16
LOAN AGREEMENT
BETWEEN
ITRON, INC.,
AS BORROWER,
AND
BANK OF AMERICA NW, N.A.
AND
WASHINGTON TRUST BANK,
AS LENDERS,
AND
BANK OF AMERICA NW, N.A.,
AS AGENT.
DATED AS OF THE 1ST DAY OF JULY, 1996
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TABLE OF CONTENTS
ARTICLE 1
DEFINITIONS............................... 1
1.1 Certain Defined Terms...................................... 1
1.2 Accounting Terms........................................... 8
ARTICLE 2
THE CREDIT................................ 8
2.1 The Revolving Credit....................................... 8
2.2 Manner of Borrowing........................................ 9
2.3 Repayment of Principal..................................... 10
2.4 Interest................................................... 10
2.5 Conversion/Continuation.................................... 10
2.6 Promissory Notes........................................... 11
2.7 Prepayment................................................. 11
2.8 Manner of Payments; Computations........................... 12
2.9 Fees....................................................... 13
2.10 Sharing of Payments, Etc................................... 13
ARTICLE 3
THE EFFECTIVE DATE; CONDITIONS PRECEDENT TO LENDING............ 13
3.1 Conditions Precedent to Effective Date..................... 13
3.2 Conditions to All Loans and to Refinancing................. 14
3.3 Effective Date Events...................................... 15
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF BORROWER................ 15
4.1 Corporate Existence and Power.............................. 15
4.2 Corporate Authorization.................................... 15
4.3 Government Approvals, Etc.................................. 16
4.4 Binding Obligations, Etc................................... 16
4.5 Litigation................................................. 16
4.6 Financial Condition........................................ 16
4.7 Title and Liens............................................ 17
4.8 Taxes...................................................... 17
4.9 Other Agreements........................................... 17
4.10 Federal Reserve Regulations................................ 17
4.11 ERISA...................................................... 18
4.12 Subsidiaries............................................... 18
4.13 Representations as Whole................................... 19
ARTICLE 5
AFFIRMATIVE COVENANTS OF BORROWER...................... 19
5.1 Use of Proceeds............................................ 19
5.2 Preservation of Corporate Existence, Etc................... 19
5.3 Visitation Rights.......................................... 19
5.4 Keeping of Books and Records............................... 19
5.5 Maintenance of Property, Etc............................... 20
5.6 Compliance with Laws, Etc.................................. 20
5.7 Other Obligations.......................................... 20
5.8 Insurance.................................................. 20
5.9 Financial Information...................................... 20
5.10 Notification............................................... 22
5.11 Additional Payments; Additional Acts....................... 22
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5.12 Working Capital............................................ 22
5.13 Total Liabilities to Tangible Capital Ratio................ 23
ARTICLE 6
NEGATIVE COVENANTS OF BORROWER...................... 23
6.1 Liquidation, Merger, Sale of Assets........................ 23
6.2 Indebtedness, Guaranties, Etc.............................. 24
6.3 Liens...................................................... 24
6.4 Operations................................................. 24
6.5 Permissible Loans.......................................... 24
6.6 Contracts.................................................. 25
6.7 Securities................................................. 25
6.8 ERISA Compliance........................................... 25
6.9 Payments on Subordinated Debt; Prepayments
of Indebtedness.......................................... 25
ARTICLE 7
EVENTS OF DEFAULT............................. 26
7.1 Events of Default.......................................... 26
7.2 Consequences of Default.................................... 28
ARTICLE 8
AGENT.................................. 28
8.1 Authorization and Action................................... 28
8.2 Duties and Obligations..................................... 29
8.3 Dealings Between Agent and Borrower........................ 30
8.4 Lender Credit Decision..................................... 30
8.5 Indemnification............................................ 30
8.6 Successor Agent............................................ 30
ARTICLE 9
MISCELLANEOUS.............................. 31
9.1 No Waiver; Remedies Cumulative............................. 31
9.2 Governing Law.............................................. 31
9.3 Consent to Jurisdiction; Waiver of Immunities.............. 31
9.4 Notices.................................................... 31
9.5 Assignment................................................. 31
9.6 Severability............................................... 32
9.7 Conditions Not Fulfilled................................... 32
9.8 Entire Agreement; Amendment................................ 32
9.9 Conflicting Agreements..................................... 32
9.10 Oral Agreements............................................ 32
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 1 -- Prepayment Fee Calculation
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LOAN AGREEMENT
THIS LOAN AGREEMENT (this "Agreement") is dated as of July 1, 1996,
between BANK OF AMERICA NW, N.A., doing business as Seafirst Bank, and
WASHINGTON TRUST BANK, as Lenders, BANK OF AMERICA NW, N.A., doing business as
Seafirst Bank, as agent for Lenders ("Agent"), and ITRON, INC., as Borrower,
and renews, restates, and replaces the Loan Agreement between the parties (Bank
of America NW, N.A. being the successor by name change to Seattle-First
National Bank effective March 1, 1996) dated April 30, 1992 (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:
"Agent" means Bank of America NW, N.A. in its capacity as
agent for Lenders.
"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 Prime Rate Loan;
(b) 30, 90 or 180 days thereafter in the case of a
CD Loan as specified in the Notice of Borrowing or Notice of Refinancing given
by Borrower in respect of such Loan;
(c) 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 Prime Rate, the CD 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.
"Assessment Rate" for any Applicable Interest Period
shall mean for any date the minimum annual percentage rate
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established by the Federal Deposit Insurance Corporation (or any successor) for
the assessment due from members of the Bank Insurance Fund (or any successor)
in effect for the assessment period during which said day occurs based on
deposits maintained at such members' offices located in the United States.
"Available Commitment" has the meaning defined in Section
2.1.
"Borrower" means Itron, Inc., a Washington corporation,
and any Successor.
"Business Day" means a day, other than Saturday or
Sunday, on which banks are open for business in Seattle, Washington.
"CD Loan" means a Loan bearing interest at the CD Rate.
"CD Rate" means an interest rate per annum equal to the
sum of (a) the CD Spread and (b) the product arrived at by multiplying the
Fixed CD Rate in effect for the Applicable Interest Period by Statutory
Reserves in effect on the day as of which such Fixed CD Rate is determined for
any Applicable Interest Period, plus (c) the Assessment Rate in effect on the
day as of which such Fixed CD Rate is determined for any Applicable Interest
Period.
For purposes hereof, the term "CD Spread" shall be as set forth
below depending upon the ratio of Total Liabilities to Tangible Capital, which
ratio shall be determined by the most recently delivered quarterly financial
statements of Borrower. Any change in the ratio, as reflected in a newly-
delivered quarterly financial statement, causing the CD Spread to increase or
decrease, shall become effective retroactively to the first day of the quarter
following the quarter being reported on, and shall change the CD Spread on each
CD Loan outstanding, in addition to each CD Loan subsequently created:
Total Liabilities to Tangible Capital CD Spread
--------------------------------------------------------------------------------
Greater than .50 to 1 1.125% per annum
--------------------------------------------------------------------------------
Less than or equal to .50 to 1 1.000% per annum
--------------------------------------------------------------------------------
For purposes hereof, the term "Fixed CD Rate" shall mean for any
Applicable Interest Period that per annum rate, calculated on the basis of
actual number of days elapsed over a year of 360 days, set forth as the rate in
effect as of the first day of the Applicable Interest Period for a period equal
to the Applicable Interest Period in the weekly statistical release H.15(519)
published by the Board of Governors of the Federal Reserve System under the
caption "CDs (Secondary Market)", or, if said rate is not published as of the
first day of the Applicable
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Interest Period, the rate for a period equal to the Applicable Interest Period
appearing as of said date under the caption "Certs of Deposit" on the display
designated as "Page 120" on the Telerate Service (or such other page as may
replace Page 120 on such service or, if none, such other available service
displaying a composite of rates offered for U.S. Dollar Certificates of Deposit
as reported by the Federal Reserve System). If there is no period equal to the
Applicable Interest Period on the display, the Fixed CD Rate shall be
determined by straight-line interpolation to the nearest month (or week or day
if expressed in weeks or days) corresponding to the Applicable Interest Period
between the two nearest neighboring periods on the display.
For purposes hereof, "Statutory Reserves" shall mean 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 marginal, special,
emergency or supplemental 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 determining the reserve requirements of
Agent in respect of new negotiable time deposits in dollars of over $100,000
with maturities approximately equal to the Applicable Interest Period, such
reserve requirements including, without limitation, those imposed under
Regulation D of such Board of Governors. Statutory Reserves shall be adjusted
automatically on and as of the effective date of any change in such percentage.
"Code" means the Internal Revenue Code of 1986, as
amended from time to time.
"Commitment" and "Commitment Period" have the meanings
defined in Section 2.
"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 414(c) of the Code.
"Effective Date" means July 1, 1996.
"ERISA" means the Employee Retirement Income Security Act
of 1974, as amended from time to time.
"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
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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.
"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 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, 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.
"Lenders" mean Bank of America NW, N.A., doing business
as Seafirst Bank (in its separate capacity, "Seafirst") and Washington Trust
Bank, and any Successors.
"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 Liabilities to Tangible Capital, which
ratio shall be determined by the most recently delivered quarterly financial
statements of Borrower. Any change in the ratio, as reflected in a newly-
delivered quarterly financial statement, causing the LIBOR Spread to increase
or decrease, shall become effective retroactively to the first day of the
quarter following the quarter being reported on, and shall change the LIBOR
Spread on each LIBOR Loan outstanding, in addition to each LIBOR Loan
subsequently created:
Total Liabilities to Tangible Capital LIBOR Spread
------------------------------------------------------------------------------
Greater than .50 to 1 1.000% per annum
------------------------------------------------------------------------------
Less than or equal to .50 to 1 0.875% per annum
------------------------------------------------------------------------------
For purposes hereof, the term "Euro-dollar Rate" shall be determined
on the basis of the offered rate for deposits in U.S.
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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 ▇▇▇▇▇▇ 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 11:00 a.m.,
London time, on the day that is two Business Days preceding the Reset Date. If
at least two such offered rates appear on such ▇▇▇▇▇▇'▇ screen LIBO page, the
Euro-dollar Rate in respect of that Reset Date will be the arithmetic means of
such offered rates. If fewer than two offered rates appear, the Euro-dollar
Rate will be 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 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 change in any 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; (ii) 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
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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.
"Loan Documents" means this Agreement, the Notes, 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 Closing Date are described on Exhibit D.
"Note" and "Notes" have the meaning defined in Section
2.6.
"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 fixed amount over a
period of time, either directly or through joint ventures with utilities and
other industry participants.
"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.
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"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.
"Prime Rate" means an interest rate per annum equal to the
higher of:
(A) the publicly announced prime rate
charged on that day by Agent at its principal office
(which prime rate is a reference rate and not necessarily
the lowest rate of interest charged by Agent to its prime
customers), changing as such prime rate changes, or
(B) the sum of 1.50% plus the "Federal
Funds" rate, as quoted by ▇▇▇▇▇▇ 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.
"Prime Rate Loan" means a Loan bearing interest at the
Prime Rate.
"Pro Rata Share" means 86% as to Bank of America NW,
N.A., doing business as Seafirst Bank, and 14% as to Washington Trust Bank.
"Standby Commitment" has the meaning defined in Section
2.1.
"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.
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"Tangible Capital" has the meaning defined in Section
5.13.
"Total Liabilities" has the meaning defined in Section
5.13.
"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 not specifically defined shall be construed, and all
accounting procedures shall be performed, in accordance with generally accepted
United States accounting principles consistently applied.
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 May 31, 1997 (the "Commitment Period"),
provided that after giving effect to any such Loan 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 sum of the "Available Commitment" plus
the "Standby Commitment" as set forth below (the "Commitment"):
Time Period Available Commitment Standby Commitment
----------- -------------------- ------------------
Effective Date through 9/29/96 $20,000,000 $30,000,000
9/30/96 through 12/30/96 $30,000,000 $20,000,000
After 12/30/96 $50,000,000 $0
If at any time any portion of the Standby Commitment is used as a Loan, the
"Available Commitment" shall be permanently increased by, and the "Standby
Commitment" shall be permanently reduced by, the dollar amount of each such
Loan, for each time period specified above. The Loans described in this
Section 2.1 constitute a revolving credit and, subject to the terms and
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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 Prime Rate Loan and not less than $500,000 if such
Loan is a CD Loan or 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 Prime Rate Loan, and at least one (1) Business Day's written
notice (by telecopy or otherwise) of each intended borrowing of a CD Loan, and
at least two (2) 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 11:00 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 2:00 p.m. Seattle time on the specified date of borrowing pay such
Lender's pro rata share of the requested borrowing in Seattle clearinghouse
funds to Agent at its Commercial Loan Service Center. 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. The initial Loan will be in an amount equal to or greater than the
amount necessary to repay all amounts then outstanding under the Prior Loan
Agreement and shall be used to repay all amounts then outstanding under the
Prior Loan Agreement. If the initial Loan is greater than the amount necessary
to repay all amounts then outstanding under the Prior Loan Agreement, the
excess amount after repayment shall be disbursed to the ordinary checking
account maintained by Borrower at Agent's Commercial Accounts Service Center.
All future Loans shall be disbursed to the ordinary checking account maintained
by Borrower at Agent's Commercial Accounts Service Center.
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
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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.
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 three (3) percentage points per annum above the Prime Rate (changing
as the Prime Rate changes). Accrued but unpaid interest on each Loan shall be
paid (i) as to Prime Rate Loans, on the first day of each calendar month for
the period ending on the last day of the preceding calendar month, and (ii) as
to CD Loans and 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 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 CD Rate or 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 CD Rate or 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 CD
Rate or LIBOR Rate will not adequately and fairly reflect the cost to Lenders
of making or maintaining the principal amount of a CD Loan or LIBOR Loan during
the Applicable Interest Period for such CD Loan or LIBOR Loan, Lender shall, as
soon as practicable thereafter, give notice of such determination to Borrower
and any request for a CD Loan or LIBOR Loan pursuant to Section 2.2 or for
conversion to or continuation of a CD Loan or LIBOR Loan pursuant to Section
2.5 shall be deemed to be a request for a Prime 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, CD Loan, or Prime Loan to a Loan bearing interest at
a different permissible reference rate, or (ii) at the expiration of the
Applicable Interest Period for a CD Loan or a LIBOR Loan, to continue such Loan
as a CD Loan or LIBOR Loan for a new Applicable Interest Period; provided,
however, (x) no outstanding Loan may be continued as, or be converted into, a
CD Loan or a LIBOR Loan when any Potential Event of Default or Event of Default
has
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occurred and is continuing and (y) a CD Loan or 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 11:00 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 CD Loan or 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.
(c) In the event that at the conclusion of an
Applicable Interest Period for a CD Loan or 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 CD Loan or 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 Prime
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.
(b) No fee shall be assessed in connection with the
prepayment of a Prime Rate Loan. If a CD Loan or 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
or a CD Loan is paid prior to the end of the Applicable Interest
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Period, regardless of whether such payment is voluntary or mandatory 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 Seafirst 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 CD Loans or 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 Prime 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 11:00 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
Commercial Loan Service Center not later than 2:00 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 Prime Rate Loan
interest shall be made on the basis of a year of 365 or 366 days and all
computations of interest on CD Loans and 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 day) 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.
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2.9 Fees. Borrower agrees to pay to each Lender a commitment
fee computed quarterly in arrears, as follows, to be paid fifteen days after
the end of each quarter (and fifteen days after the expiration of the
Commitment Period, if such expiration should occur on a day other than the end
of a quarter):
(a) 0.18% per annum on the average daily unused
amount of such Lender's Pro Rata Share of the Available Commitment
during the preceding quarter; plus
(b) 0.10% per annum on the average daily unused
amount of such Lender's Pro Rata Share of the Standby Commitment
during the preceding quarter; plus
(c) 0.08% per annum of such Lender's Pro Rata Share
of the principal portion, if any, of the Standby Commitment which
converted to "Available Commitment" pursuant to the last paragraph
of Section 2.1, calculated retroactively for the 90 days preceding
the date upon which such portion of the Standby Commitment was
advanced as a Loan to Borrower (but calculated no farther backwards
than the Effective Date).
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.
ARTICLE 3
THE EFFECTIVE DATE; CONDITIONS PRECEDENT TO LENDING
3.1 Conditions Precedent to Effective Date. In addition to
the conditions set forth in Sections 3.2 and 3.3, 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. Each Lender shall have received
all of the following Loan Documents, each duly executed and delivered by the
respective parties thereto, and satisfactory to 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.
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(b) Corporate Certificates. Agent shall have
received all of the following, each satisfactory to 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 may reasonably
request.
3.2 Conditions to All Loans and to Refinancing. The
obligation of Lenders to fund any Loans hereunder, including the initial Loan
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 (if there had then been Loans outstanding).
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(d) Conditions to the Effective Date. All conditions
to the Effective Date shall have been satisfied.
3.3 Effective Date Events. On the Effective Date, subject to
satisfaction of the conditions set forth in Section 3.1 and 3.2, the following
events will occur:
(a) Return of Prior Notes. Upon satisfaction of
Section 3.3(b), Lenders shall ▇▇▇▇ the promissory notes that were issued under
the Prior Loan Agreement "CANCELLED" and shall return same to Borrower (the
"Prior Notes").
(b) Payment of Prior Loan Agreement Advances. All
accrued but unpaid interest and outstanding principal balances plus payment of
any accrued fees under the Prior Notes shall be paid in full.
(c) Termination of Prior Loan Agreement. The Prior
Loan Agreement and the Prior Notes shall be deemed terminated and shall be of
no further force or effect.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF BORROWER
Borrower represents and warrants to each Lender as follows:
4.1 Corporate Existence and Power. 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, (ii) 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)
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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. The consolidated balance sheet of
Borrower and its consolidated Subsidiaries as at December 31, 1995, 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
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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.
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
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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.
(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 Closing 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
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22
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.
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:
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.
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.
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23
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 Subsidiaries 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, 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. Borrower will on request furnish to Agent
certificates of insurance or duplicate policies evidencing such coverage.
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
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24
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 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) Within 100 days after the close of each fiscal
year of Borrower, and within 50 days after the end of each fiscal quarter, a
certificate signed by the chief executive officer, chief financial officer, or
other principal financial officer of Borrower stating that as of the close of
such fiscal year or fiscal quarter, as applicable, no Potential Event of
Default or Event of Default has occurred and is continuing;
(d) 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
(e) 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.
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5.10 Notification. 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 legal fees, actually incurred by Agent or
Lenders in connection with the preparation of the Loan Documents or the making
of any Loan or the administration of the transactions described in the Loan
Documents or the enforcement by judicial proceedings or otherwise of any of the
rights of Lenders under the Loan Documents; (b) 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. If there are Loans then outstanding,
Borrower and its consolidated Subsidiaries shall have, at the end of each
calendar month, a ratio of current assets to current liabilities of at least
1.25 to 1. For purposes of this section, (a) current assets shall not include
(i) any deferred assets other than prepaid items such as insurance,
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26
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, together with accrued but unpaid interest
thereon but shall not include any portion of Subordinated Debt.
5.13 Total Liabilities to Tangible Capital Ratio. If there
are Loans then outstanding, Borrower and its consolidated Subsidiaries shall
have, at the end of each calendar month, a ratio of Total Liabilities to
Tangible Capital of no more than 1.00 to 1, and a Tangible Capital of not less
than $90,000,000. "Total Liabilities" means all the liabilities of Borrower
and its consolidated Subsidiaries as reported on the consolidated balance sheet
of Borrower and such Subsidiaries under generally accepted accounting
principles, plus guaranties permitted under Section 6.2 (but excluding
performance bond obligations which are permitted under Section 6.2), minus
Subordinated Debt. "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 (i) 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.
ARTICLE 6
NEGATIVE 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 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)
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27
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 foregoing, Borrower and its Subsidiaries may
incur long-term Indebtedness, 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 shall in addition be permitted to incur and guaranty outstanding
Indebtedness not exceeding $15,000,000 in the aggregate (excluding performance
bond obligations), 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, (ii) a Lien to ▇▇▇▇▇▇▇ Development Company in the
original principal amount of $5,600,000 to finance acquisition of Borrower's
corporate headquarters and manufacturing facility in Spokane, Washington, (iii)
Liens on fixed assets used in carrying out Outsourcing Contracts, (iv) Liens on
accounts receivable 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 not exceeding $3,000,000 in the aggregate.
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.
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 $15,000,000 in the aggregate; and (c) loans to
Subsidiaries in any amount if such Subsidiary provides to Lender prior to the
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28
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), (ii)
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 term is defined in 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. Borrower will not make any payments on Subordinated Debt or
prepayments of principal of any Indebtedness during any period when there are
loans outstanding and a Potential Event of Default or an Event of Default has
occurred and is continuing or would be caused by such act. Additionally,
Borrower shall not at any time when there are Loans outstanding, repay any
Subordinated Debt which, at the end of the preceding calendar quarter, was
necessary to Borrower's compliance with Section 5.13.
- 25 -
29
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
(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;
provided 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
maturity thereof; or
(f) Voluntary Bankruptcy, Etc. Borrower or any
Subsidiary shall: (1) file a petition seeking relief for itself under Title 11
of the United States Code, as now constituted or hereafter amended, or file an
answer consenting to, admitting the
- 26 -
30
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
(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 $250,000 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,
- 27 -
31
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
(l) 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.
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.
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)
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32
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; (v) 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.
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33
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 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 legal
fees, 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 Twenty-Five Million Dollars ($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
- 30 -
34
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.
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
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
- 31 -
35
such assignment or transfer purported to be made without such consent shall be
ineffective.
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 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.
9.8 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.
9.9 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.
9.10 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.
- 32 -
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 date first above written.
BORROWER: ITRON, INC.
By
-----------------------------------
Title
--------------------------------
Address:
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Treasurer
LENDERS: BANK OF AMERICA NW, N.A.
By
-----------------------------------
Title
--------------------------------
Address:
Northwest National Division
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
LENDERS: WASHINGTON TRUST BANK
By
-----------------------------------
Title
--------------------------------
Address:
West 717 ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇▇
- 33 -
37
AGENT: BANK OF AMERICA NW, N.A.
By
-----------------------------------
Title
--------------------------------
Address:
Seafirst Agency Services
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇
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38
EXHIBIT A
FORM OF NOTICE OF BORROWING
Pursuant to that certain Loan Agreement dated as of July 1, 1996,
(the "Loan Agreement") among Itron, Inc., as Borrower, Bank of America NW, N.A.
and Washington Trust Bank as Lenders, and Bank of America NW, N.A. as Agent,
Borrower requests to borrow on ___________________ _____ from Lenders on a pro
rata basis $___________________ as [Prime Rate] [CD] or [LIBOR] Loans. [The
Applicable Interest Period for such Loans is requested to be a
_____________________ period.]*
Borrower certifies that:
(i) the representations and warranties of Borrower
contained in the Loan Agreement are true, correct and complete in all material
respects on and as of the date hereof to the same extent as though made on and
as of the date hereof;
(ii) no Event of Default or Potential Event of
Default has occurred and is continuing under the Loan Agreement or will result
from the proposed borrowing; and
(iii) at the end of the last calendar quarter
preceding the Loan requested herein, Borrower was in compliance with Sections
5.12 and 5.13 of the Loan Agreement (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, Borrower has not redeemed any equity or
repaid any Subordinated Debt which, if it had occurred immediately prior to the
end of the calendar quarter, would have resulted in a violation of Sections
5.12 or 5.13 (if there had then been Loans outstanding).
DATED as of _______________________.
ITRON, INC.
By
-----------------------------------
Title
--------------------------------
* Complete this sentence if the Loan is a CD Loan or a LIBOR Loan
39
EXHIBIT B
FORM OF NOTICE OF REFINANCING
Pursuant to that certain Loan Agreement dated as of July 1, 1996,
(the "Loan Agreement") among Itron, Inc., as Borrower, Bank of America NW, N.A.
and Washington Trust Bank as Lenders, and Bank of America NW, N.A. as Agent,
this represents Borrower's request to [complete either (a) or (b)]:
(a) convert $ ______________ in principal amount of Loans to
_____________________ Loans on __________________, 19____; or
(b) continue as _______________ Loans $___________ in
principal amount of presently outstanding ____________________ Loans with an
Applicable Interest Period ending on __________________, 19____.
The Applicable Interest Period for such converted or continued Loans is
requested to be a ___________________ period.]*
Borrower certifies that:
(i) the representations and warranties of Borrower
contained in the Loan Agreement are true, correct and complete in all material
respects on and as of the date hereof to the same extent as though made on and
as of the date hereof;
(ii) no Event of Default or Potential Event of
Default has occurred and is continuing under the Loan Agreement or will result
from the proposed borrowing; and
(iii) at the end of the last calendar quarter
preceding the conversion or continuation requested herein, Borrower was in
compliance with Sections 5.12 and 5.13 of the Loan Agreement (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, Borrower
has not redeemed any equity or repaid any Subordinated Debt which, if it had
occurred immediately prior to the end of the calendar quarter, would have
resulted in a violation of Sections 5.12 or 5.13 (if there had then been Loans
outstanding).
DATED as of _______________________.
ITRON, INC.
By
------------------------------
Title
---------------------------
* Complete this sentence if the converted or continued Loan is to be a CD Loan
or a LIBOR Loan.
40
EXHIBIT C
FORM OF REVOLVING NOTE
$_______________________________ Date: July 1, ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
This REVOLVING NOTE ("Note") is made pursuant to and is subject to
the terms and conditions of that certain Loan Agreement dated as of July 1,
1996, (the "Loan Agreement") among Itron, Inc., as Borrower, Bank of America
NW, N.A. and Washington Trust Bank as Lenders, and Bank of America NW, N.A. as
Agent, for Lenders. Terms used herein that are not otherwise defined shall
have the respective meanings set forth in the Loan Agreement.
FOR VALUE RECEIVED, Borrower promises to pay to the order of
_____________________________________________________________ ("Lender") the
principal amount of each Loan made by Lender to Borrower as part of such
Lender's Commitment (each such loan or advance being hereinafter individually
referred to as a "Lender Loan" and collectively as the "Lender Loans") on the
date and in the manner set forth in the Loan Agreement.
Borrower also hereby promises to pay to the order of Lender interest
on the unpaid principal amount of each Lender Loan from the date of such Loan
until such principal amount is paid in full at such interest rates and at such
times as are specified in the Loan Agreement.
1. This Note evidences a revolving line of credit to
Borrower from Lender, and during the Commitment Period, Borrower may borrow
money from Lender in an aggregate principal amount not to exceed the sum of
__________________________ Dollars ($______________) subject to the terms and
conditions of the Loan Agreement. This Note is given to avoid execution of an
individual promissory note for each Lender Loan. Each Lender Loan (and each
conversion or continuation thereof pursuant to Section 2.5 of the Loan
Agreement), whether such Loan is a CD Loan, a Prime Rate Loan or a LIBOR Loan,
and, in the case of a CD Loan or a LIBOR Loan, the Applicable Interest Period
and all payments made on account of the principal of the Lender Loans shall be
recorded by Lender in its records; the failure to so record any such amount or
any error in so recording such amount shall not, however, limit or otherwise
affect the obligations of Borrower to repay the outstanding principal amount of
the Lender Loans together with all interest accruing thereon.
2. Each maker, surety, guarantor and endorser of this Note
expressly waives all notices, demands for payment, presentations for payment,
notices of intention to accelerate the maturity, protest and notice of protest
as to this Note.
Revolving Note
Page 1
41
3. Borrower promises to pay all costs and expenses,
including reasonable attorneys' fees, incurred in the collection and
enforcement of this Note.
4. This Note shall be governed by, and shall be construed
and enforced in accordance with the laws of the State of Washington.
5. This Note is one of the Notes described in the Loan
Agreement to which reference is hereby made for a more complete statement of
the terms and conditions under which the Lender Loans are made and are to be
repaid. The Loan Agreement contains, among other things, provisions for
acceleration of the maturity hereof upon the happening of certain stated events
and also for the terms and conditions of principal prepayments prior to the
maturity.
6. This Note is executed and delivered concurrently with the
execution of the Loan Agreement and is one of the promissory notes described in
Section 2.6 thereof.
ITRON, INC.
By
------------------------------
Title
---------------------------
Revolving Note
Page 2
42
Exhibit 1 -- PREPAYMENT FEES
If the principal balance of this note is prepaid in whole or in part,
whether by voluntary prepayment, operation of law, acceleration or otherwise, a
prepayment fee, in addition to any interest earned, will be immediately payable
to the holder of this note.
The amount of the prepayment fee depends on the following:
(1) The amount by which interest reference rates as defined below have changed
between the time the loan is prepaid and either a) the time the loan was
made for fixed rate loans, or b) the time the interest rate last changed
(repriced) for variable rate loans.
(2) A prepayment fee factor (see "Prepayment Fee Factor Schedule" on reverse).
(3) The amount of principal prepaid.
If the proceeds from a CD or time deposit pledged to secure the loan are used
to prepay the loan resulting in payment of an early withdrawal penalty for the
CD, a prepayment fee will not also be charged under the loan.
DEFINITION OF PREPAYMENT REFERENCE RATE FOR VARIABLE RATE LOANS
The "Prepayment Reference Rate" used to represent interest rate levels for
variable rate loans shall be the index rate used to determine the rate on this
loan having maturities equivalent to the remaining period to interest rate
change date (repricing) of this loan rounded upward to the nearest month. The
"Initial Prepayment Reference Rate" shall be the Prepayment Reference Rate at
the time of last repricing and a new Initial Prepayment Reference Rate shall be
assigned at each subsequent repricing. The "Final Prepayment Reference Rate"
shall be the Prepayment Reference Rate at the time of prepayment.
DEFINITION OF PREPAYMENT REFERENCE RATE FOR FIXED RATE LOANS
The "Prepayment Reference Rate" used to represent interest rate levels on fixed
rate loans shall be the bond equivalent yield of the average U.S. Treasury rate
having maturities equivalent to the remaining period to maturity of this loan
rounded upward to the nearest month. The "Initial Prepayment Reference Rate"
shall be the Prepayment Reference Rate at the time the loan was made. The
"Final Prepayment Reference Rate" shall be the Prepayment Reference Rate at
time of prepayment.
The Prepayment Reference Rate shall be interpolated from the yields as
displayed on Page 119 of the Dow ▇▇▇▇▇ Telerate Service (or such other page or
service as may replace that page or service for the purpose of displaying rates
comparable to said U.S. Treasury rates) on the day the loan was made (Initial
Prepayment Reference Rate) or the day of prepayment (Final Prepayment Reference
Rate).
An Initial Prepayment Reference Rate of N/A % has been assigned to
this loan to represent interest rate levels at origination.
CALCULATION OF PREPAYMENT FEE
If the Initial Prepayment Reference Rate is less than or equal to the Final
Prepayment Reference Rate, there is no prepayment fee.
If the Initial Prepayment Reference Rate is greater than the Final Prepayment
Reference Rate, the prepayment fee shall be equal to the difference between the
Initial and Final Prepayment Reference Rates (expressed as a decimal),
multiplied by the appropriate factor from the Prepayment Fee Factor Schedule,
multiplied by the principal amount of the loan being prepaid.
Form 51-6325: Page 1 of 2
43
EXAMPLE OF PREPAYMENT FEE CALCULATION
VARIABLE RATE LOAN: A non-amortizing 6-month LIBOR based loan with principal of
$250,000 is fully prepaid with 3 months remaining until next interest rate
change date (repricing). An Initial Prepayment Reference Rate of 7.0% was
assigned to the loan at last repricing. The Final Prepayment Reference Rate
(as determined by the 3-month LIBOR index) is 6.5%. Rates therefore have
dropped 0.5% since last repricing and a prepayment fee applies. A prepayment
fee factor of 0.31 is determined from Table 3 below and the prepayment fee is
computed as follows:
Prepayment Fee = (0.07 -- 0.065) x (0.31) x ($250,000) = $387.50
FIXED RATE LOAN: An amortizing loan with remaining principal of $250,000 is
fully prepaid with 24 months remaining until maturity. An Initial Prepayment
Reference Rate of 9.0% was assigned to the loan when the loan was made. The
Final Prepayment Reference Rate (as determined by the current 24-month U.S.
Treasury rate on Page 119 of Telerate) is 7.5%. Rates therefore have dropped
1.5% since the loan was made and a prepayment fee applies. A prepayment fee
factor of 1.3 is determined from Table 1 below and the prepayment fee is
computed as follows:
Prepayment Fee = (0.09 -- 0.075) x (1.3) x ($250,000) = $4,875
PREPAYMENT FEE FACTOR SCHEDULE
TABLE I: FULLY AMORTIZING LOANS
Proportion of Remaining Principal Amount
Being Prepaid Months Remaining To Maturity/Repricing(1)
----------------------------------------------------------------------------------------------------------------------------------
0 3 6 9 12 24 36 48 60 84 120 240 360
----------------------------------------------------------------------------------------------------------------------------------
90-100% 0 .21 .36 .52 .67 1.3 1.9 2.5 3.1 4.3 5.9 10.3 13.1
60-89% 0 .24 .44 .63 .83 1.6 2.4 3.1 3.9 5.4 7.5 13.2 17.0
30-59% 0 .28 .53 .78 1.02 2.0 3.0 4.0 5.0 7.0 9.9 18.5 24,4
0-29% 0 .31 .63 .92 1.22 2.4 3.7 5.0 6.3 9.0 13.4 28.3 41.8
TABLE II: PARTIALLY AMORTIZING (BALLOON) LOANS
Proportion of Remaining Principal Amount
Being Prepaid Months Remaining To Maturity/Repricing(1)
----------------------------------------------------------------------------------------------------------------------------
0 3 6 9 12 24 36 48 60 84 120 240 360
----------------------------------------------------------------------------------------------------------------------------
90-100% 0 .26 .49 .71 .94 1.8 2.7 3.4 4.2 5.6 7.4 11.6 14.0
60-89% 0 .30 .59 .86 1.15 2.2 3.3 4.3 5.3 7.1 9.4 15.0 18.1
30-59% 0 .31 .63 .95 1.27 2.6 3.9 5.3 6.6 9.1 12.6 21.2 26.2
0-29% 0 .31 .63 .95 1.27 2.6 4.0 5.4 7.0 10.2 15.7 33.4 46.0
TABLE III: NONAMORTIZING (INTEREST ONLY) LOANS
Proportion of Remaining Principal Amount
Being Prepaid Months Remaining To Maturity/Repricing(1)
------------------------------------------------------------------------------------------------------------------------------
0 3 6 9 12 24 36 48 60 84 120 240 360
------------------------------------------------------------------------------------------------------------------------------
0-100% 0 .31 .61 .91 1.21 2.3 3.4 4.4 5.3 6.9 8.9 13.0 14.8
(1) For the remaining period to maturity/repricing between any two
maturities/repricings shown in the above schedules, interpolate between the
corresponding factors to the closest month.
The holder of this note is not required to actually reinvest the prepaid
principal in any U.S. Government Treasury Obligations, or otherwise prove its
actual loss, as a condition to receiving a prepayment fee as calculated above.
Form 51-6325: Page 2 of 2
44
FIRST AMENDMENT TO LOAN AGREEMENT
This Amendment amends that certain Loan Agreement dated July 1, 1996
("Agreement"), among Itron, Inc., as "Borrower," Bank of America NW, N.A.,
doing business as Seafirst Bank, and Washington Trust Bank as "Lenders," and
Bank of America NW, N.A., doing business as Seafirst Bank, as "Agent." All
terms defined in the Agreement shall have the same meaning when used in this
Amendment, except as may be otherwise provided in this Amendment. Bank of
America NW, N.A. has since merged into Bank of America National Trust and
Savings Association, but continues to do business in the state of Washington as
"Seafirst Bank." References to "Seafirst" or "Bank of America NW, N.A." in
this Amendment and in the Agreement shall mean Bank of America National Trust
and Savings Association, doing business as Seafirst Bank. For mutual
consideration, the parties agree as follows:
1. Lenders. The initial paragraph of the Agreement and the
definition of "Lenders" in Section 1.1 of the Agreement are both amended to
provide that "Lenders" shall be Seafirst, Washington Trust Bank, U.S. Bank of
Washington, National Association, and The Bank of Nova Scotia. References in
the Agreement to "both Lenders" shall be deemed references to "all Lenders."
2. Definitions. Section 1.1 of the Agreement is amended to
change the definition of "Pro Rata Share" to read as follows: "'Pro Rata
Share' means 57-1/3% as to Seafirst, 9-1/3% as to Washington Trust Bank,
16-2/3% as to U.S. Bank of Washington, National Association, and 16-2/3% as to
The Bank of Nova Scotia.
3. Prime Rate. Paragraph (A) of the definition of "Prime Rate"
in Section 1.1 of the Agreement is amended to read as follows:
"the rate of interest publicly announced from time to time by Agent in
San Francisco, California, as its "Reference Rate." The Reference Rate
is set based on various factors, including Agent's costs and desired
return, general economic conditions, and other factors, and is used as
a reference point for pricing some loans. Agent 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"
4. Available Commitment. Section 2.1 of the Agreement is amended
to change the amount "$50,000,000" in the bottom row of column two of the table
set forth therein to "$75,000,000."
5. Working Capital. The first sentence of Section 5.12 of the
Agreement is amended to read as follows: "If there are Loans then outstanding,
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
1.25 to 1."
6. Capital Ratio. The first sentence of Section 5.13 of the
Agreement is amended to read as follows: "If there are Loans then outstanding,
Borrower and its consolidated Subsidiaries shall have, at the end of each
fiscal quarter, a ratio of Total Liabilities to Tangible Capital of no more
than 1.00 to 1, and a Tangible Capital of not less than $90,000,000."
7. Exhibits. The forms of Exhibits A, B, and C to the Agreement
shall be as shown in Exhibits A, B, and C, respectively, attached to this
Amendment.
8. Addition of Lenders. Upon execution of this Amendment,
Borrower shall pay a fee of $12,500 each to U.S. Bank of Washington, National
Association, and The Bank of Nova Scotia (the "New Lenders"); and the New
Lenders shall each fund to Agent their respective Pro Rata Share of all
outstanding Loans (with Agent to redistribute such funds to Lenders such that
each Lender shall have
- 1 -
45
funded its Pro Rata Share of all outstanding Loans). All outstanding LIBOR
Loans shall be deemed to have been prepaid on such date, and new LIBOR Loans
funded, with Applicable Interest Periods to be designated by Borrower to Agent
in writing. Lenders waive all prepayment fees with regard to the prepayment
described in this paragraph only.
9. Notices. Section 9.4 of the Agreement is amended to provide
that the address for each Lender shall be as set forth on the signature page of
the Agreement or of any amendment thereto.
10. Other Terms. Except as specifically amended by this
Amendment, all other terms, conditions, and definitions of the Agreement shall
remain in full force and effect.
DATED as of January 15, 1997.
BORROWER: AGENT:
ITRON, INC. SEAFIRST BANK
By By
----------------------------- -------------------------------
Title Title
-------------------------- ---------------------------
LENDERS:
SEAFIRST BANK WASHINGTON TRUST BANK
By By
----------------------------- -----------------------------
Title Title
-------------------------- -------------------------
U.S. BANK OF WASHINGTON, THE BANK OF NOVA SCOTIA
NATIONAL ASSOCIATION
By By
----------------------------- -----------------------------
Title Title
-------------------------- --------------------------
Address for Notices: Address for Notices:
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ 11 ▇▇▇ ▇.▇. ▇▇▇▇▇ ▇▇▇., ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇
- 2 -
46
EXHIBIT A
FORM OF NOTICE OF BORROWING
Pursuant to that certain Loan Agreement dated as of July 1, 1996 (the
"Loan Agreement"), among Itron, Inc., as Borrower, Seafirst Bank, Washington
Trust Bank, U.S. Bank of Washington, National Association, and The Bank of Nova
Scotia as Lenders, and Seafirst Bank as Agent, Borrower requests to borrow on
_________________________ from Lenders on a pro rata basis
$_________________________ as [Prime Rate] [CD] or [LIBOR] Loans. [The
Applicable Interest Period for such Loans is requested to be a
_____________________ period.]*
Borrower certifies that:
(i) the representations and warranties of Borrower
contained in the Loan Agreement are true, correct, and complete in all material
respects on and as of the date hereof to the same extent as though made on and
as of the date hereof;
(ii) no Event of Default or Potential Event of Default has
occurred and is continuing under the Loan Agreement or will result from the
proposed borrowing; and
(iii) at the end of the last calendar quarter preceding the
Loan requested herein, Borrower was in compliance with Sections 5.12 and 5.13
of the Loan Agreement (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, Borrower has not redeemed any equity or repaid any
Subordinated Debt which, if it had occurred immediately prior to the end of the
calendar quarter, would have resulted in a violation of Sections 5.12 or 5.13
(if there had then been Loans outstanding).
DATED as of _______________________.
ITRON, INC.
By
---------------------------------
Title
-----------------------------
* Complete this sentence if the Loan is a CD Loan or a LIBOR Loan
47
EXHIBIT B
FORM OF NOTICE OF REFINANCING
Pursuant to that certain Loan Agreement dated as of July 1, 1996 (the
"Loan Agreement"), among Itron, Inc., as Borrower, Seafirst Bank, Washington
Trust Bank, U.S. Bank of Washington, National Association, and The Bank of Nova
Scotia as Lenders, and Seafirst Bank as Agent, this represents Borrower's
request to [complete either (a) or (b)]:
(a) convert $ ______________ in principal amount of Loans to
_____________________ Loans on __________________, 19____; or
(b) continue as _______________ Loans $________________ in
principal amount of presently outstanding ____________________ Loans with an
Applicable Interest Period ending on __________________, 19____.
The Applicable Interest Period for such converted or continued Loans is
requested to be a ___________________ period.]*
Borrower certifies that:
(i) the representations and warranties of Borrower
contained in the Loan Agreement are true, correct and complete in all material
respects on and as of the date hereof to the same extent as though made on and
as of the date hereof;
(ii) no Event of Default or Potential Event of Default has
occurred and is continuing under the Loan Agreement or will result from the
proposed borrowing; and
(iii) at the end of the last calendar quarter preceding the
conversion or continuation requested herein, Borrower was in compliance with
Sections 5.12 and 5.13 of the Loan Agreement (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, Borrower has not redeemed any
equity or repaid any Subordinated Debt which, if it had occurred immediately
prior to the end of the calendar quarter, would have resulted in a violation of
Sections 5.12 or 5.13 (if there had then been Loans outstanding).
DATED as of _______________________.
ITRON, INC.
By
-----------------------------------
Title
-------------------------------
* Complete this sentence if the converted or continued Loan is to be a CD Loan
or a LIBOR Loan.
48
EXHIBIT C
FORM OF REVOLVING NOTE
$_______________________________ Date: January 15, ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
This REVOLVING NOTE ("Note") is made pursuant to and is subject to the
terms and conditions of that certain Loan Agreement dated as of July 1, 1996,
as subsequently amended (the "Loan Agreement"), among Itron, Inc., as Borrower,
Seafirst Bank, Washington Trust Bank, U.S. Bank of Washington, National
Association, and The Bank of Nova Scotia as Lenders, and Seafirst Bank as
Agent, for Lenders. Terms used herein that are not otherwise defined shall
have the respective meanings set forth in the Loan Agreement.
FOR VALUE RECEIVED, Borrower promises to pay to the order of
__________________________________________________________________________
("Lender") the principal amount of each Loan made by Lender to Borrower as part
of such Lender's Commitment (each such loan or advance being hereinafter
individually referred to as a "Lender Loan" and collectively as the "Lender
Loans") on the date and in the manner set forth in the Loan Agreement.
Borrower also hereby promises to pay to the order of Lender interest
on the unpaid principal amount of each Lender Loan from the date of such Loan
until such principal amount is paid in full at such interest rates and at such
times as are specified in the Loan Agreement.
1. This Note evidences a revolving line of credit to Borrower
from Lender, and during the Commitment Period, Borrower may borrow money from
Lender in an aggregate principal amount not to exceed the sum of
__________________________ Dollars ($______________) subject to the terms and
conditions of the Loan Agreement. This Note is given to avoid execution of an
individual promissory note for each Lender Loan. Each Lender Loan (and each
conversion or continuation thereof pursuant to Section 2.5 of the Loan
Agreement), whether such Loan is a CD Loan, a Prime Rate Loan or a LIBOR Loan,
and, in the case of a CD Loan or a LIBOR Loan, the Applicable Interest Period
and all payments made on account of the principal of the Lender Loans shall be
recorded by Lender in its records; the failure to so record any such amount or
any error in so recording such amount shall not, however, limit or otherwise
affect the obligations of Borrower to repay the outstanding principal amount of
the Lender Loans together with all interest accruing thereon.
2. Each maker, surety, guarantor and endorser of this Note
expressly waives all notices, demands for payment, presentations for payment,
notices of intention to accelerate the maturity, protest and notice of protest
as to this Note.
3. Borrower promises to pay all costs and expenses, including
reasonable attorneys' fees, incurred in the collection and enforcement of this
Note.
4. This Note shall be governed by, and shall be construed and
enforced in accordance with the laws of the State of Washington.
5. This Note is one of the Notes described in the Loan Agreement
to which reference is hereby made for a more complete statement of the terms
and conditions under which the Lender Loans are made and are to be repaid. The
Loan Agreement contains, among other things, provisions for acceleration of the
maturity hereof upon the happening of certain stated events and also for the
terms and conditions of principal prepayments prior to the maturity.
Revolving Note
Page 1
49
6. This Note is executed and delivered concurrently with the
execution of the Loan Agreement and is one of the promissory notes described in
Section 2.6 thereof.
ITRON, INC.
By
----------------------------------
Title
------------------------------
Revolving Note
Page 2
50
Exhibit 1 -- PREPAYMENT FEES
If the principal balance of this note is prepaid in whole or in part,
whether by voluntary prepayment, operation of law, acceleration or otherwise, a
prepayment fee, in addition to any interest earned, will be immediately payable
to the holder of this note.
The amount of the prepayment fee depends on the following:
(1) The amount by which interest reference rates as defined below have changed
between the time the loan is prepaid and either a) the time the loan was
made for fixed rate loans, or b) the time the interest rate last changed
(repriced) for variable rate loans.
(2) A prepayment fee factor (see "Prepayment Fee Factor Schedule" on reverse).
(3) The amount of principal prepaid.
If the proceeds from a CD or time deposit pledged to secure the loan are used
to prepay the loan resulting in payment of an early withdrawal penalty for the
CD, a prepayment fee will not also be charged under the loan.
DEFINITION OF PREPAYMENT REFERENCE RATE FOR VARIABLE RATE LOANS
The "Prepayment Reference Rate" used to represent interest rate levels for
variable rate loans shall be the index rate used to determine the rate on this
loan having maturities equivalent to the remaining period to interest rate
change date (repricing) of this loan rounded upward to the nearest month. The
"Initial Prepayment Reference Rate" shall be the Prepayment Reference Rate at
the time of last repricing and a new Initial Prepayment Reference Rate shall be
assigned at each subsequent repricing. The "Final Prepayment Reference Rate"
shall be the Prepayment Reference Rate at the time of prepayment.
DEFINITION OF PREPAYMENT REFERENCE RATE FOR FIXED RATE LOANS
The "Prepayment Reference Rate" used to represent interest rate levels on fixed
rate loans shall be the bond equivalent yield of the average U.S. Treasury rate
having maturities equivalent to the remaining period to maturity of this loan
rounded upward to the nearest month. The "Initial Prepayment Reference Rate"
shall be the Prepayment Reference Rate at the time the loan was made. The
"Final Prepayment Reference Rate" shall be the Prepayment Reference Rate at
time of prepayment.
The Prepayment Reference Rate shall be interpolated from the yields as
displayed on Page 119 of the Dow ▇▇▇▇▇ Telerate Service (or such other page or
service as may replace that page or service for the purpose of displaying rates
comparable to said U.S. Treasury rates) on the day the loan was made (Initial
Prepayment Reference Rate) or the day of prepayment (Final Prepayment Reference
Rate).
An Initial Prepayment Reference Rate of N/A % has been assigned to
this loan to represent interest rate levels at origination.
CALCULATION OF PREPAYMENT FEE
If the Initial Prepayment Reference Rate is less than or equal to the Final
Prepayment Reference Rate, there is no prepayment fee.
If the Initial Prepayment Reference Rate is greater than the Final Prepayment
Reference Rate, the prepayment fee shall be equal to the difference between the
Initial and Final Prepayment Reference Rates (expressed as a decimal),
multiplied by the appropriate factor from the Prepayment Fee Factor Schedule,
multiplied by the principal amount of the loan being prepaid.
Form 51-6325: Page 1 of 2
51
EXAMPLE OF PREPAYMENT FEE CALCULATION
VARIABLE RATE LOAN: A non-amortizing 6-month LIBOR based loan with principal of
$250,000 is fully prepaid with 3 months remaining until next interest rate
change date (repricing). An Initial Prepayment Reference Rate of 7.0% was
assigned to the loan at last repricing. The Final Prepayment Reference Rate
(as determined by the 3-month LIBOR index) is 6.5%. Rates therefore have
dropped 0.5% since last repricing and a prepayment fee applies. A prepayment
fee factor of 0.31 is determined from Table 3 below and the prepayment fee is
computed as follows:
Prepayment Fee = (0.07 -- 0.065) x (0.31) x ($250,000) = $387.50
FIXED RATE LOAN: An amortizing loan with remaining principal of $250,000 is
fully prepaid with 24 months remaining until maturity. An Initial Prepayment
Reference Rate of 9.0% was assigned to the loan when the loan was made. The
Final Prepayment Reference Rate (as determined by the current 24-month U.S.
Treasury rate on Page 119 of Telerate) is 7.5%. Rates therefore have dropped
1.5% since the loan was made and a prepayment fee applies. A prepayment fee
factor of 1.3 is determined from Table 1 below and the prepayment fee is
computed as follows:
Prepayment Fee = (0.09 -- 0.075) x (1.3) x ($250,000) = $4,875
PREPAYMENT FEE FACTOR SCHEDULE
TABLE I: FULLY AMORTIZING LOANS
Proportion of Remaining Principal Amount
Being Prepaid Months Remaining To Maturity/Repricing(1)
-----------------------------------------------------------------------------------------------------------------------------------
0 3 6 9 12 24 36 48 60 84 120 240 360
-----------------------------------------------------------------------------------------------------------------------------------
90-100% 0 .21 .36 .52 .67 1.3 1.9 2.5 3.1 4.3 5.9 10.3 13.1
60-89% 0 .24 .44 .63 .83 1.6 2.4 3.1 3.9 5.4 7.5 13.2 17.0
30-59% 0 .28 .53 .78 1.02 2.0 3.0 4.0 5.0 7.0 9.9 18.5 24,4
0-29% 0 .31 .63 .92 1.22 2.4 3.7 5.0 6.3 9.0 13.4 28.3 41.8
TABLE II: PARTIALLY AMORTIZING (BALLOON) LOANS
Proportion of Remaining Principal Amount
Being Prepaid Months Remaining To Maturity/Repricing(1)
-----------------------------------------------------------------------------------------------------------------------------
0 3 6 9 12 24 36 48 60 84 120 240 360
-----------------------------------------------------------------------------------------------------------------------------
90-100% 0 .26 .49 .71 .94 1.8 2.7 3.4 4.2 5.6 7.4 11.6 14.0
60-89% 0 .30 .59 .86 1.15 2.2 3.3 4.3 5.3 7.1 9.4 15.0 18.1
30-59% 0 .31 .63 .95 1.27 2.6 3.9 5.3 6.6 9.1 12.6 21.2 26.2
0-29% 0 .31 .63 .95 1.27 2.6 4.0 5.4 7.0 10.2 15.7 33.4 46.0
TABLE III: NONAMORTIZING (INTEREST ONLY) LOANS
Proportion of Remaining Principal Amount
Being Prepaid Months Remaining To Maturity/Repricing(1)
-----------------------------------------------------------------------------------------------------------------------------
0 3 6 9 12 24 36 48 60 84 120 240 360
-----------------------------------------------------------------------------------------------------------------------------
0-100% 0 .31 .61 .91 1.21 2.3 3.4 4.4 5.3 6.9 8.9 13.0 14.8
1 For the remaining period to maturity/repricing between any two
maturities/repricings shown in the above schedules, interpolate between the
corresponding factors to the closest month.
The holder of this note is not required to actually reinvest the prepaid
principal in any U.S. Government Treasury Obligations, or otherwise prove its
actual loss, as a condition to receiving a prepayment fee as calculated above.
Form 51-6325: Page 2 of 2
