The principal financial covenants are consistent with those described  in our Amended Credit Agreement. The Canadian Revolver contains  a “material adverse effect” clause. A “material adverse effect” is  defined as a material change in the operations of Powell or Powell  Canada in relation to our financial condition, property, business  operations, expected net cash flows, liabilities or capitalization. There were no borrowings outstanding under the U.S. Revolver as  of September 30, 2013. Amounts available under the U.S. Revolver  were $55.0 million at September 30, 2013. The U.S. Revolver  expires on December 31, 2016.  The U.S. Revolver provides for the issuance of letters of credit which  reduce the amounts that may be borrowed under this revolver. The  amount available under the U.S. Revolver was reduced by $20.0  million for our outstanding letters of credit at September 30, 2013. The Canadian Revolver is secured by the assets of our Canadian  operations and provides for customary events of default and carries  cross-default provisions with our existing debt agreements. If an  event of default (as defined in the Canadian Revolver) occurs and is  continuing, per the terms and subject to the conditions set forth in  the Canadian Revolver, amounts outstanding under the Canadian  Revolver may be accelerated and may become immediately due  and payable. As of September 30, 2013, we were in compliance  with all of the financial covenants of the Canadian Revolver. The Amended Credit Agreement contains certain restrictive and  maintenance-type covenants, such as restrictions on the amount  of capital expenditures allowed. It also contains financial covenants  defining various financial measures and the levels of these measures  with which we must comply, as well as a “material adverse change”  clause. A “material adverse change” is defined as a material change  in our operations, business, properties, liabilities or condition  (financial or otherwise) or a material impairment of our ability to  perform our obligations under our credit agreements.  We borrowed $8.0 million in October 2001 through a loan agreement  funded with proceeds from tax-exempt industrial development  revenue bonds (Bonds). These Bonds were issued by the Illinois  Development Finance Authority and were used for the completion  of our Northlake, Illinois facility. Pursuant to the Bond issuance, a  reimbursement agreement between us and a major domestic bank  required an issuance by the bank of an irrevocable direct-pay letter  of credit (Bond LC), as collateral, to the Bonds’ trustee to guarantee  payment of the Bonds’ principal and interest when due. The Bond  LC is subject to both early termination and extension provisions  customary to such agreements, as well as various covenants, for  which we were in compliance at September 30, 2013. While the  Bonds mature in 2021, the reimbursement agreement requires  annual redemptions of $0.4 million that commenced on October  25, 2002. A sinking fund is used for the redemption of the Bonds.  At September 30, 2013, the balance in the restricted sinking fund  was approximately $0.4 million and was recorded in cash and cash  equivalents. The Bonds bear interest at a floating rate determined  weekly by the Bonds’ remarketing agent, which was the underwriter  for the Bonds and is an affiliate of the bank. This interest rate was  0.25% per year on September 30, 2013.  The Amended Credit Agreement is collateralized by a pledge of 100%  of the voting capital stock of each of our domestic subsidiaries and  66% of the voting capital stock of each non-domestic subsidiary,  excluding Powell Canada. The Amended Credit Agreement provides  for customary events of default and carries cross-default provisions  with other existing debt agreements. If an event of default (as defined  in the Amended Credit Agreement) occurs and is continuing, on  the terms and subject to the conditions set forth in the Amended  Credit Agreement, amounts outstanding under the Amended Credit  Agreement may be accelerated and may become immediately due  and payable. As of September 30, 2013, we were in compliance  with all of the financial covenants of the Amended Credit Agreement.  We have a $9.5 million credit agreement with a major international  bank in Canada (the Canadian Revolver) to provide working  capital support and letters of credit for our operations in Canada.  The issuance of letters of credit reduces the amounts which may  be borrowed under the Canadian Revolver. The amount available  under the Canadian Revolver was reduced by $0.1 million for an  outstanding letter of credit at September 30, 2013. There were no borrowings outstanding under the Canadian  Revolver, and $9.4 million was available at September 30, 2013.  The Canadian Revolver expires on February 28, 2015. The interest  rate for amounts outstanding under the Canadian Revolver is a  floating interest rate based upon either the Canadian Prime Rate,  or the lender’s Bankers’ Acceptance Rate. Once the applicable rate  is determined, a margin of 0.50% to 1.75%, as determined by our  consolidated leverage ratio, is added to the applicable rate. At September 30, 2013, we had $15 million of gross foreign operating  loss carryforwards which are subject to a 20-year carryforward  period, the first of which expire in 2031. As of September 30, 2013,  we have released a valuation allowance that was recorded against  Canadian deferred tax assets, resulting in a $7 million tax benefit.  We believe these deferred tax assets are more likely than not to be  utilized by future taxable income. We believe that our deferred tax  assets in other tax jurisdictions are more likely than not realizable  through future reversals of existing taxable temporary differences  and our estimate of future taxable income.  H. INCOME TAXES Canadian Revolver  Industrial Development Revenue Bonds 35