<PAGE>   1
================================================================================

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

(mark one)
[X]     QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
        EXCHANGE ACT OF 1934

                        FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2000

                                       OR

[ ]     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
        EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
             FOR THE TRANSITION PERIOD FROM            TO

                         COMMISSION FILE NUMBER 0-22418


                                   ITRON, INC.
             (Exact name of registrant as specified in its charter)

         WASHINGTON                                    91-1011792
 (State of Incorporation)                (I.R.S. Employer Identification Number)


                            2818 NORTH SULLIVAN ROAD
                         SPOKANE, WASHINGTON 99216-1897
                                 (509) 924-9900
   (Address and telephone number of registrant's principal executive offices)


      Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]

    As of April 30, 2000, there were outstanding 15,098,911 shares of the
registrant's common stock, no par value, which is the only class of common or
voting stock of the registrant.


================================================================================


<PAGE>   2

                                   ITRON, INC.

                                TABLE OF CONTENTS



<TABLE>
<CAPTION>
                                                                            PAGE
                                                                            ----
<S>                                                                         <C>

PART 1: FINANCIAL INFORMATION


   ITEM 1: FINANCIAL STATEMENTS (UNAUDITED)

          Consolidated Statements of Operations                                1
          Consolidated Balance Sheet                                           2
          Consolidated Statements of Cash Flows                                3


          Notes to Consolidated Financial Statements
                 Note 1: Basis of Presentation                                 4
                 Note 2: Earnings Per Share and Capital Structure              4
                 Note 3: Restructuring                                         4
                 Note 4: Balance Sheet Components                              5
                 Note 5: Segment Information                                   5
                 Note 6: Contingencies                                         7


 
  ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION       8-11
          AND RESULTS OF OPERATIONS
                 Revenues                                                      8
                 Gross Margin                                                  9
                 Operating Expense                                            10
                 Other Income                                                 10
                 Income Tax                                                   11
                 Extraordinary Item                                           11
                 Cash Flow                                                    11

PART 2: OTHER INFORMATION


               Item 1: Legal Proceedings                                      13

               Item 6: Exhibits and Reports on Form 8-K                       14

        SIGNATURE                                                             14
</TABLE>



<PAGE>   3

                          PART 1: FINANCIAL INFORMATION


ITEM 1:  FINANCIAL STATEMENTS

                                   ITRON, INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                (Unaudited, in thousands, except per share data)



<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,                               2000             1999
----------------------------------------------------------------------------------
<S>                                                      <C>              <C>     
REVENUES
     Sales                                               $ 35,666         $ 39,209
     Service                                               11,992           12,736
                                                         --------         --------
     Total revenues                                        47,658           51,945
COST OF REVENUES
     Sales                                                 20,890           24,237
     Service                                                8,692            9,044
                                                         --------         --------
     Total cost of revenues                                29,582           33,281
                                                         --------         --------

GROSS PROFIT                                               18,076           18,664

OPERATING EXPENSES
   Sales and marketing                                      5,119            5,797
   Product development                                      6,176            6,602
   General and administrative                               4,516            3,025
   Amortization of intangibles                                466              490
   Restructuring charges                                     (185)           1,121
                                                         --------         --------
   Total operating expenses                                16,092           17,035
                                                         --------         --------

OPERATING INCOME                                            1,984            1,629

OTHER INCOME (EXPENSE)
   Equity in affiliates                                       507             (165)
   Interest, net                                           (1,567)          (1,875)
   Other                                                      341               20
                                                         --------         --------
   Total other income (expense)                              (719)          (2,020)

Income (loss) before income taxes and
    extraordinary item                                      1,265             (391)
Income tax (provision) benefit                               (480)             160
                                                         --------         --------
INCOME (LOSS) BEFORE EXTRAORDINARY ITEM                       785             (231)
  Extraordinary gain on early retirement of debt,
    net of income taxes of $570 and $1,970                  1,047            3,660
                                                         --------         --------
NET INCOME                                               $  1,832         $  3,429
                                                         ========         ========


EARNINGS PER SHARE
BASIC AND DILUTED:
  Income (loss) before extraordinary item                $   0.05         $  (0.02)
  Extraordinary item                                         0.07             0.25
                                                         --------         --------
  Net income                                             $   0.12         $   0.23
</TABLE>



The accompanying notes are an integral part of these financial statements.



                                       1

<PAGE>   4

                                   ITRON, INC.
                           CONSOLIDATED BALANCE SHEETS
                            (Unaudited, in thousands)


<TABLE>
<CAPTION>
                                                            MARCH 31,        DECEMBER 31,
                                                              2000               1999
-----------------------------------------------------------------------------------------
<S>                                                         <C>              <C>      
ASSETS
Current assets
   Cash and cash equivalents                                $  36,032         $   1,538
   Accounts receivable, net                                    41,963            46,561
   Current portion of long-term contracts receivable            2,246             2,579
   Inventories, net                                            15,491            15,300
   Equipment held for sale, net                                    --            32,750
   Deferred income tax asset                                    7,060             8,016
   Other                                                          989             1,340
                                                            ---------         ---------
   Total current assets                                       103,781           108,084
                                                            ---------         ---------

Property, plant and equipment, net                             30,560            31,627
Equipment used in outsourcing, net                              6,944             5,951
Intangible assets, net                                         14,647            15,196
Deferred income tax asset                                      26,817            26,922
Long-term contracts receivable                                  2,952             1,813
Other                                                           1,923             2,486
                                                            ---------         ---------

TOTAL ASSETS                                                $ 187,624         $ 192,079
                                                            =========         =========

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
   Short-term borrowings                                    $   4,071         $   3,646
   Accounts payable and accrued expenses                       38,566            35,369
   Wages and benefits payable                                  11,063            16,396
   Deferred revenue                                             7,728             8,413
                                                            ---------         ---------
   Total current liabilities                                   61,428            63,824
                                                            ---------         ---------

Convertible subordinated debt                                  53,459            57,234
Mortgage notes and leases payable                               6,029             6,280
Project financing                                               7,084             7,216
Warranty and other obligations                                  9,974            10,000
                                                            ---------         ---------
   Total liabilities                                          137,974           144,554
                                                            ---------         ---------

Shareholders' equity
   Common stock                                               107,937           107,603
   Retained deficit                                           (56,674)          (58,506)
   Accumulated other comprehensive income                      (1,613)           (1,572)
                                                            ---------         ---------
   Total shareholders' equity                                  49,650            47,525
                                                            ---------         ---------

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                  $ 187,624         $ 192,079
                                                            =========         =========
</TABLE>



The accompanying notes are an integral part of these financial statements.



                                       2

<PAGE>   5

                                   ITRON, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                            (Unaudited, in thousands)



<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,                                              2000             1999
-------------------------------------------------------------------------------------------------
<S>                                                                     <C>              <C>     
OPERATING ACTIVITIES
Net income                                                              $  1,832         $  3,429
Noncash charges (credits) to income:
Depreciation and amortization                                              4,060            4,668
Deferred income tax provision (benefit)                                      491             (166)
Equity in affiliates, net                                                   (316)             165
Extraordinary gain on early extinguishment of debt, net of taxes          (1,047)          (3,660)
Changes in operating accounts:
         Accounts receivable                                               5,404            9,142
         Inventories                                                        (191)             487
         Accounts payable and accrued expenses                             4,101           (2,242)
         Wages and benefits payable                                       (5,333)             699
         Long-term contracts receivable                                     (806)          (1,959)
         Deferred revenue                                                   (685)          (2,933)
         Other, net                                                         (311)          (1,533)
                                                                        --------         --------
Cash provided by operating activities                                      7,199            6,097
                                                                        --------         --------

INVESTING ACTIVITIES
Acquisition of property, plant and equipment                              (1,254)          (1,543)
Equipment used in outsourcing                                             (1,654)          (2,109)
Proceeds from sale of equipment used in outsourcing                       32,000
Proceeds from sale of business interest                                      431
Other, net                                                                  (539)             199
                                                                        --------         --------
Cash used by investing activities                                         28,984           (3,453)
                                                                        --------         --------

FINANCING ACTIVITIES
Change in short-term borrowings, net                                         425           (3,630)
Payments on project financing                                               (132)            (123)
Issuance of common stock                                                     334              376
Purchase and retirement of subordinated debt                              (2,098)
Other, net                                                                  (217)             (93)
                                                                        --------         --------
Cash provided (used) by financing activities                              (1,688)          (3,470)

Increase in cash and cash equivalents                                     34,495             (826)
Cash and cash equivalents at beginning of period                           1,538            2,743
                                                                        --------         --------
Cash and cash equivalents at end of period                              $ 36,032         $  1,917
                                                                        ========         ========
</TABLE>



The accompanying notes are an integral part of these financial statements.



                                       3

<PAGE>   6

                                   ITRON, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2000


NOTE 1:  BASIS OF PRESENTATION

The consolidated financial statements presented in this Form 10-Q are unaudited
and reflect, in the opinion of management, all normal recurring adjustments
necessary for a fair presentation of operations for the three-month period ended
March 31, 2000. Certain information and footnote disclosures normally included
in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to the rules and
regulations of the Securities and Exchange Commission regarding interim results.
These condensed consolidated financial statements should be read in conjunction
with the audited consolidated financial statements and the notes thereto
included in our Form 10-K for the year ended December 31, 1999, as filed with
the Securities and Exchange Commission on March 30, 2000. The results of
operations for the three month period ended March 31, 2000 are not necessarily
indicative of the results expected for the full fiscal year or for any other
fiscal period.

NOTE 2: EARNINGS PER SHARE AND CAPITAL STRUCTURE


<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,                                    2000          1999
-----------------------------------------------------------------------------------
                                                                  (in thousands)
<S>                                                            <C>           <C>   
Weighted average shares outstanding                            15,033        14,757
Effect of dilutive securities:
  Stock options                                                   345           555
  Convertible debt                                                 --            --
                                                               ------        ------
Weighted average shares outstanding assuming conversion        15,378        15,312
                                                               ======        ======
</TABLE>


Options to purchase common stock have been granted at fair market value to
directors, employees and other key personnel. These options will dilute the
ownership of our stock if they are exercised. The dilutive effect of these
options is included for purposes of calculating dilutive earnings per share
using the "treasury stock" method. We also have subordinated convertible notes
outstanding. These notes are not included in the above calculation as the shares
are anti-dilutive in all periods when using the "if converted" method.

NOTE 3: RESTRUCTURING

We have recorded restructuring charges over the past six quarters related to
improving efficiencies and reducing costs. In 1998, we recorded restructuring
charges of $3.9 million, related to workforce reductions, the write-off of
certain of our intangible assets and the closure and consolidation of
facilities. In 1999, we aggressively extended our restructuring activities to
further reduce spending and to realign the Company into six market-focused
business units. These spending reduction measures included additional workforce
reductions, facility closures, and the disposition of excess manufacturing
equipment. Total 1999 restructuring expenses were $16.7 million. In the first
quarter of 2000, our restructuring net credit resulted from an adjustment for
equipment to be sold or disposed, partially offset by the finalization of
certain workforce reductions.



                                       4

<PAGE>   7

Restructuring reserves and activity for the first quarter of 2000 are detailed
below (in thousands).



<TABLE>
<CAPTION>
                                                 RESERVE                                         RESERVE
                                  CASH/          BALANCE      RESTRUCTURING                      BALANCE
                                NON-CASH        12/31/99         CHARGE          ACTIVITY        3/31/00
                                --------        --------      -------------      --------        --------
<S>                             <C>             <C>           <C>                <C>             <C>     
Severance and related charges       Cash        $  8,988        $    315         $  5,253        $  4,050
Asset impairment                Non-cash           3,600            (500)           2,202             898
Consolidation of facilities         Cash           2,981              --              169           2,812
                                                --------        --------         --------        --------
Totals                                          $ 15,569        $   (185)        $  7,624        $  7,760
</TABLE>



NOTE 4:  BALANCE SHEET COMPONENTS


<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,                     2000            1999
-----------------------------------------------------------------------
                                                    (in thousands)
<S>                                            <C>             <C>     
INVENTORIES
   Raw material                                $  7,355        $  6,428
   Work in process                                1,640           1,462
   Finished goods                                 4,852           5,702
   Field inventories awaiting installation          420             466
                                               --------        --------
   Total manufacturing inventories               14,267          14,058
   Service inventories                            1,224           1,242
                                               --------        --------
   Total inventories                           $ 15,491        $ 15,300
                                               ========        ========
</TABLE>



NOTE 5:  SEGMENT INFORMATION

Effective January 2000, we reorganized internally around strategic business
units ("SBUs") focused on the customer segments that we serve. These SBUs
include Electric, Natural Gas, Water and Public Power, Energy Information
Systems, and International. We have also created an SBU focused on new business
opportunities.

Sales for these SBUs include hardware, custom and licensed software, consulting,
project management, and installation and support activities. Service revenues
are derived from post-sale maintenance support and outsourcing services, where
we own, and operate systems for a periodic fee. Intersegment revenues are
immaterial.

Management reviews the operating results of each segment after allocations of
corporate expenses. As of the date of this report, allocations of operating
expenses and other income/expense were not yet complete. It is management's
intention to complete these allocations over the course of 2000. Allocation
methods may change over time. Certain amounts in the 1999 financial statements
have been reclassified to conform with the 2000 presentation.



                                       5

<PAGE>   8

Segment revenues and gross profits for the comparable quarters are detailed
below.



<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,                                      2000             1999
-----------------------------------------------------------------------------------------
                                                                      (in thousands)
<S>                                                             <C>              <C>     
REVENUES
  Electric                                                      $ 15,463         $ 18,837
  Natural Gas                                                     12,319            8,734
  Water & PP                                                      11,107           17,649
  EIS                                                              5,248            3,651
  International                                                    3,014            3,074
  New businesses                                                     505                0
                                                                --------         --------
Total revenues                                                    47,658           51,945

GROSS PROFIT
  Electric                                                         5,147            4,092
  Natural Gas                                                      5,592            4,330
  Water & PP                                                       2,997            6,978
  EIS                                                              2,541            2,358
  International                                                    1.425              906
  New businesses                                                     374                0
                                                                --------         --------
Total gross profit                                                18,076           18,664

CORPORATE ITEMS

OPERATING EXPENSES
  Sales and marketing                                              5,119            5,797
  Product development                                              6,176            6,602
  General and administrative                                       4,516            3,025
  Amortization of intangibles                                        466              490
  Restructuring charges                                             (185)           1,121
                                                                --------         --------
Total operating expenses                                          16,092           17,035

Operating income                                                   1,984            1,629

Other income (expense)
  Equity in affiliates                                               507             (165)
  Interest, net                                                   (1,567)          (1,875)
  Other                                                              341               20
                                                                --------         --------
  Total other income (expense)                                      (719)          (2,020)
                                                                --------         --------

Income (loss) before income taxes and extraordinary item        $  1,265         $   (391)
                                                                ========         ========
</TABLE>




                                       6

<PAGE>   9

Restated 1999 revenues and gross profit by quarter and by business segment are
detailed below (in thousands).



<TABLE>
<CAPTION>
                                       FIRST             SECOND            THIRD            FOURTH              1999
REVENUES                              QUARTER           QUARTER           QUARTER           QUARTER         CONSOLIDATED
                                     ---------         ---------         ---------         ---------        ------------
<S>                                  <C>               <C>               <C>               <C>              <C>      
 Electric                            $  18,837         $  12,506         $  16,594         $   9,565         $  57,502
 Natural Gas                             8,734            16,915            10,885            13,430            49,964
 Water & PP                             17,649            13,901            11,075            10,588            53,213
 EIS                                     3,651             3,327             4,347             4,665            15,990
 International                           3,074             4,572             5,632             3,465            16,743
 New businesses                              0                 0                 0                 0                 0
                                     ---------         ---------         ---------         ---------         ---------
Total                                $  51,945         $  51,221         $  48,533         $  41,713         $ 193,412

GROSS PROFIT
 Electric                                4,092              (958)            3,652           (69,960)          (63,174)
 Natural Gas                             4,330             9,260             5,315             4,441            23,346
 Water & PP                              6,978             5,284             3,840             3,306            19,408
 EIS                                     2,358             1,777             2,535             2,250             8,920
 International                             906             1,355             2,284            (2,276)            2,269
 New businesses                              0                 0                 0                 0                 0
                                     ---------         ---------         ---------         ---------         ---------
Total                                   18,664            16,718            17,626           (62,239)           (9,231)

CORPORATE ITEMS

OPERATING EXPENSES
 Sales and Marketing                     5,797             6,578             6,338             6,528            25,241
 Product development                     6,602             6,953             5,961             7,248            26,764
 General and administrative              3,025             3,362             3,050             4,060            13,497
 Amortization of intangibles               490               490               453               553             1,986
 Restructuring charges                   1,121                --             8,828             6,737            16,686
                                     ---------         ---------         ---------         ---------         ---------
Total operating expenses                17,035            17,383            24,630            25,126            84,174
                                     ---------         ---------         ---------         ---------         ---------

Other income (expense)
 Equity in affiliates                     (165)             (146)             (102)             (187)             (600)
 Interest and other, net                (1,855)           (1,443)           (1,283)           (1,680)           (6,261)
                                     ---------         ---------         ---------         ---------         ---------
 Total other income (expense)           (2,020)           (1,589)           (1,385)           (1,867)           (6,861)
Loss before income taxes and
  extraordinary items                $    (391)        $  (2,254)        $  (8,389)        $ (89,232)        $(100,266)
                                     =========         =========         =========         =========         =========
</TABLE>



NOTE 6:  CONTINGENCIES

We are a party to various lawsuits and claims, both as plaintiff and defendant,
and have contingent liabilities arising from the conduct of business, none of
which, in the opinion of management, is expected to have a material effect on
our financial position or results of operations. We believe that we have made
adequate provisions for such contingent liabilities.



                                       7

<PAGE>   10


I
TEM 2:   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND 
RESULTS OF OPERATIONS

OVERVIEW

We are a leading global provider of integrated systems solutions for utilities
and other customers to collect, communicate, analyze, and manage information
about energy and water usage. We design, develop, manufacture, market, install
and service hardware, software and integrated systems that enable customers to
obtain, analyze and use meter data.

Our solutions integrate a broad array of meter modules, radio and
telephone-based communications systems, and data management, delivery and
storage applications. In addition, we have handheld computers and supporting
products to record visually obtained meter data.

Sales include hardware, custom and licensed software, consulting, project
management and installation and sales support activities. Services include
post-sale maintenance support and outsourcing services where we own and operate
systems for a periodic fee.

We currently derive the majority of our revenues from sales of products and
services to utilities; however, our business may increasingly consist of sales
to other energy and water industry participants such as energy service
providers, end user customers, wholesale power markets, and others. We have
experienced variability of operating results on both an annual and a quarterly
basis due primarily to utility purchasing patterns and delays of purchasing
decisions. In recent years these delays have generally been a result of changes
or potential changes to federal and state regulation of the electric utility
industry and mergers and acquisitions in the utility industry, many of which are
also driven by deregulation.

                              RESULTS OF OPERATIONS

REVENUES


<TABLE>
<CAPTION>
                                                        INCREASE
THREE MONTHS ENDED MARCH 31,                2000       (DECREASE)         1999
-------------------------------------------------------------------------------
(in millions)
<S>                                        <C>         <C>               <C>
Electric                                   $ 15.5           (18%)        $ 18.8
Natural Gas                                  12.3            41%            8.7
Water and Public Power                       11.2           (37%)          17.6
Energy Information                            5.2            44%            3.7
International                                 3.0            (2%)           3.1
New businesses                                 .5           100%              0
                                           ------                        ------
Total revenues                             $ 47.7            (8%)        $ 51.9
                                           ======                        ======
</TABLE>


Total revenues decreased 8% in the first quarter of 2000 compared to the first
quarter of 1999.

Sales of electric meter modules increased 37% in the first quarter of 2000
compared to the first quarter of 1999 from add-on shipments to existing
customers and increased volume to meter manufacturers. However, current period
Electric SBU revenues were 18% less than the comparable period in 1999 due to
significant installation revenues related to a network system in the first
quarter of last year, which was substantially completed in the second quarter of
last year. On March 31, 2000 we completed the sale of our network system at
Duquesne Light Company to an affiliate of Duquesne. Outsourcing revenues related
to that system were $2.7 million and $4.0 million in the first quarter of 2000
and 1999, respectively, and are reflected in electric revenues. In conjunction
with the sale of the system, we entered into a warranty and maintenance support
services agreement with Duquesne, which will result in approximately $695,000 in
annual revenues through 2013.



                                       8

<PAGE>   11

Sales of gas meter modules were 35% higher in the first quarter of 2000 compared
to the first quarter of 1999 resulting in a 41% increase in revenues for the
Natural Gas SBU. The majority of the revenues were from large add-on orders to
existing customers for mobile and off-site meter reading operations.

Water meter module shipments were down 27% in the first quarter of 2000 from
1999's first quarter, contributing to the 37% lower revenues for the Water and
Public Power SBU. The 1999 revenues included significant meter module shipments
to two large water municipalities as well as installation services revenues for
one of those installations, both of which were completed in the first half of
1999. Current quarter revenues included shipments to another significant water
municipal customer, which is in year 2 of an expected 4-year installation
schedule. Additionally, the current quarter's revenues included a significant
sale to an affiliate, which lowered average selling prices as compared to last
year. The subsequent resale by the affiliate to end-customers is reported using
the equity method of accounting (see "Other Income/Expense" below).

Revenues in the Energy Information Systems SBU increased 44% over the comparable
quarter as a result of substantial consulting and software customization
activities for a wholesale energy settlement system in Ontario, Canada. Revenues
for this system were approximately $2.5 million in the first quarter of 2000.

International revenues of $3 million were approximately equal to the first
quarter of 1999. International revenues during both periods were primarily from
sales of handheld systems.

Revenues from New Businesses primarily include sales of new products for the
water submetering market. Submetering is the automated process of collecting
consumption data and generating invoices to directly bill tenants of apartment
complexes for their actual water usage.

GROSS MARGIN

The following table shows gross margin as a percentage of corresponding revenue
and the percentage change in gross profit by SBU:


<TABLE>
<CAPTION>
                                                       INCREASE
 THREE MONTHS ENDED MARCH 31,             2000        (DECREASE)         1999
------------------------------------------------------------------------------
<S>                                      <C>          <C>               <C>
 Electric                                    33%            11%             22%
 Natural Gas                                 46%            (4%)            50%
 Water and Public Power                      27%           (13%)            40%
 Energy Information                          48%           (17%)            65%
 International                               47%            18%             29%
 New businesses                              69%            69%              0%
Total gross margin                           38%             2%             36%
</TABLE>


Total company gross margin was 38% of revenues in the first quarter of 2000
compared to 36% of revenues in the first quarter of last year.

Gross margin for the Electric SBU improved to 33% of revenue in the current
quarter compared to 22% for the first quarter last year. The gross margin
increase is a result of changes in the revenue mix. During the first quarter of
1999, there were substantial low margin network installation activities. There
were no corresponding activities in the first quarter of 2000. In addition, the
first quarter of 2000 includes a large software license sale for a handheld
system.

Gross margin for the Natural Gas SBU was 46% of revenues in 2000 compared to 50%
of revenues in 1999.



                                       9

<PAGE>   12

Water and Public Power SBU gross margins at 27% of the associated revenues were
13% lower than the comparable period one year ago due to a higher mix of sales
through indirect channels, and lower service revenues. Lower service revenues
resulted from upgrade sales of handheld systems in 1999 in which we do not
receive post-sale service revenue during the warranty period, typically one
year.

The Q1 gross margin for New Businesses is unusually high as certain material
costs were expensed when purchased instead of when the product shipped to
customers. Gross margin of these products/services going forward is expected to
be closer to our overall company gross margins.

OPERATING EXPENSES


<TABLE>
<CAPTION>
                                                       INCREASE
THREE MONTHS ENDED MARCH 31,              2000        (DECREASE)         1999
------------------------------------------------------------------------------
(in millions)
<S>                                      <C>          <C>               <C>   
Sales and marketing                      $  5.1            (12%)        $  5.8
Product development                         6.2             (6%)           6.6
General and administrative                  4.5             49%            3.0
Amortization of intangibles                  .5             (5%)            .5
Restructuring charge                        (.2)          (117%)           1.1
                                         ------                         ------
Total operating expenses                 $ 16.1             (6%)        $ 17.0
                                         ======                         ======
</TABLE>


Effective January 1, 2000 we re-organized into strategic business units. With
the reorganization, certain personnel related to management and sales support
that had been classified as sales and marketing in previous years are now
classified as general and administrative. Substantially all of the decrease in
sales and marketing expenses is due to this reclassification.

Product development expenses decreased 6% from the comparable quarter last year
as a result of restructuring. Restructuring measures in 1999 included the
closure of several product development locations, and associated staff
reductions.

General and administrative expenses increased 49% over the comparable quarter
from: a) the reclassification of personnel previously included in sales and
marketing; b) expenses for executive recruiting and relocation; and c) increased
legal and consulting costs. Higher legal costs in the current quarter are mostly
the result of increased patent and FCC licensing activity.

Amortization of intangibles remained relatively constant from quarter to
quarter.

Restructuring charges in the first quarter of 2000 were slightly negative due to
the partial reversal of costs of equipment to be sold or disposed. We had
recorded $4.8 million of restructuring costs in 1999 for the disposal of excess
manufacturing equipment. Actual disposals have been less than that originally
estimated. This reversal more than offset additional involuntary termination
expenses for employees that were terminated as part of the corporate
restructuring. Restructuring activities are substantially complete.

OTHER INCOME (EXPENSE)


<TABLE>
<CAPTION>
                                                       INCREASE
THREE MONTHS ENDED MARCH 31,              2000        (DECREASE)       1999
----------------------------------------------------------------------------
(in millions)
<S>                                      <C>          <C>             <C>    
Equity in affiliates                     $  0.5         $   .7        $ (0.2)
Interest, net                              (1.5)            .3          (1.8)
Other                                       0.3             .3            --
                                         ------         ------        ------
Total other income (expense)             $ (0.7)        $  1.3        $ (2.0)
                                         ======         ======        ======
</TABLE>




                                       10

<PAGE>   13

We have a 50% ownership interest in an affiliate, which acts as a distributor
for our products in specific regions of the U.S. Equity in affiliates was
approximately $500,000 in the first quarter of 2000 due to increased sales by
this affiliate, and from a $150,000 net gain on the sale of our interest in
another affiliate.

Net interest expense decreased 16% from the similar quarter last year due to a
reduction of subordinated debt and lower average bank borrowings. The reduction
in subordinated debt resulted from a debt exchange transaction in 1999 and a
debt repurchase transaction in 2000. The gain on the early retirement of
subordinated debt for each period is reflected as an extraordinary item on the
statement of operations.

Other in the current quarter includes the gain on sale of a non-core business
activity in Europe in January 2000.

INCOME TAXES

The effective income tax rate was approximately 38% for the comparative
quarters. Our effective income tax rate can vary from period to period because
of fluctuations in foreign operating results, changes in the valuation
allowances for deferred tax assets, new or revised tax legislation, and changes
in the level of business performed in differing tax jurisdictions.

EXTRAORDINARY ITEM - GAIN ON EARLY RETIREMENT OF DEBT

In the first quarter of 2000 we repurchased $3.8 million principal amount of
subordinated debt for $2.1 million in cash. The gain on this early retirement of
debt, net of expenses and income taxes, was $1.0 million. In March 1999 we
completed an offer to exchange $15.8 million principal amount of new
subordinated debt for $22.0 million principal amount of original subordinated
debt. The after-tax effect of the transaction, net of expenses, was a gain of
$3.7 million.


                               FINANCIAL CONDITION


<TABLE>
<CAPTION>
                                                       INCREASE
THREE MONTHS ENDED MARCH 31,              2000        (DECREASE)       1999
----------------------------------------------------------------------------
(in millions)
<S>                                      <C>          <C>             <C>   
CASH FLOW INFORMATION
Operating activities                     $  7.2         $  1.1        $  6.1
Investing activities                       29.0           32.4          (3.4)
Financing activities                       (1.7)           1.8          (3.5)
                                         ------         ------        ------
Increase (decrease) in cash              $ 34.5         $ 35.3        $ (0.8)
                                         ======         ======        ======
</TABLE>


Cash flow from operating activities was slightly higher in the first quarter of
2000 compared to the first quarter last year. Severance payments related to
restructuring measures required $5.3 million of cash in the first quarter of
2000. Additional severance payments of approximately $4.0 million will be made
in the second and third quarters of 2000.

On March 31, 2000 we received $32 million from the sale of our network
installation at Duquesne Light Company to an affiliate of Duquesne, which is
reflected in investing activities. An additional $1 million is being held in
escrow pending certain post-closing items. Other investing activities required
$3 million in the first quarter, and consisted of normal capital additions and
the acquisition of equipment for our outsourcing contract with Southern
California Edison. Total capital additions for 2000, including outsourcing
equipment requirements, are expected to be approximately $10 million.



                                       11

<PAGE>   14

Financing activities used $1.7 million in the first quarter of 2000, $2.1
million of which was for the repurchase and retirement of subordinated debt.

In January 2000, we signed an agreement with a bank for a four-year revolving
line of credit up to a maximum amount of $35 million. Borrowings available under
the new facility are based on accounts receivable and inventory. Outstanding
borrowings of $4.1 million under the credit facility were repaid in April 2000
from the proceeds of the Duquesne sale. Management believes that existing cash
resources and available borrowings under the credit facility are more than
adequate to meet the Company's needs for the remainder of 2000.


CERTAIN FORWARD-LOOKING STATEMENTS

When included in this discussion, the words "expects," "intends," "believes,"
"anticipates," "plans," "projects" and "estimates," and similar expressions are
intended to identify forward-looking statements. Such statements are inherently
subject to a variety of risks and uncertainties that could cause actual results
to differ materially from those reflected in such forward-looking statements.
Such risks and uncertainties include, among others, changes in laws or
regulations (including FCC licensing actions), the rate of customer demand for
our products, the effectiveness of our cost reductions programs, our ability to
effect additional initiatives for growth and profitability, delays or
difficulties in introducing new products and acceptance of those products,
ability to obtain project financing in amounts necessary to fund future
outsourcing agreements, increased competition and various other matters, many of
which are beyond the Company's control. For a more complete description of these
and other risks, see "Recent FCC Actions" section in this document and "Certain
Risk Factors" and "Description of Business - FCC Regulation" included in the
Company's Annual Report of Form 10-K for the year ended December 31, 1999. These
forward-looking statements speak only as of the date of this report. The Company
expressly disclaims any obligation or undertaking to release publicly any
updates or revisions to any forward-looking statement contained herein to
reflect any change on the Company's expectations with regard thereto or any
change in events, conditions or circumstances on which any such statement is
based.



                                       12

<PAGE>   15

 
                           PART 2: OTHER INFORMATION


ITEM 1: LEGAL PROCEEDINGS

        On April 3, 1999, the Company served Ralph Benghiat, an individual; with
        a Complaint seeking a declaratory judgment that a patent owned by
        Benghiat is invalid and not infringed. Benghiat has filed a counterclaim
        alleging patent infringement in the United States District Court for the
        District of Minnesota. The patent infringement allegations relate to
        certain of the Company's handheld meter reading technology. The matter
        is currently in the discovery stage with a trial ready date in October
        2000. While the Company believes the allegations of infringement are
        incorrect, there can be no assurance that it will prevail in this
        matter, or that if it does prevail, that legal costs incurred in
        connection therewith will not have a material adverse effect on its
        financial condition.

        FCC REGULATION

        We have been issued a non-exclusive nationwide FCC license to operate in
        the 1427-1432 MHz band. With the exception of meter modules that operate
        in MAS bands and the 910-920 MHz band, our network products operate in
        this band. At the time our license was issued, the 1427-1432 MHz band
        was allocated primarily for the use of the federal government, which
        consented to our use of the band on a secondary, non-interference basis.
        Current government use of the band is limited to a discrete number of
        well-defined locations, and we do not expect the fact that we are
        secondary to federal government operations to have a material impact on
        our business.

        The 1427-1432 MHz band is among 235 MHz of spectrum that has been
        earmarked for reallocation from federal government users to private
        sector users (to be licensed by the FCC). The band is subject to
        continuing federal government use in specified areas through 2004. The
        FCC initially decided to include the 1427-1432 MHz band in a spectrum
        reserve that would not be reallocated and assigned until 2006. In July
        1999, however, the FCC proposed to accelerate this timetable and
        allocate the upper portion of the band for medical telemetry operations.
        We have filed a petition for rulemaking proposing instead that the band
        be allocated for automatic meter reading and utility telemetry
        operations. We are also in discussions with the FCC and the medical
        telemetry community concerning the possibility of sharing the band. In
        addition, we are bringing the impact of this issue to the attention of
        our congressional delegations in Washington, Minnesota and North
        Carolina. While we believe we will reach an acceptable solution for a
        shared band, there can be no assurance that the FCC will adopt an
        allocation for the band that is compatible with Itron's business.

        If we are not successful in our efforts to continue operations in the
        1427 to 1432 MHz band, we anticipate that current installations will be
        grandfathered. However, in such an event, our network products would
        have to be redesigned to operate at a different frequency spectrum for
        new installations, which could have a material adverse effect on our
        business. For further discussion, please see "FCC Regulation
        Intellectual Property" and "Certain Risk Factors - Availability and
        Regulation of Radio Spectrum" in our Annual Report on Form 10K on file
        with the SEC.

        The Company is not involved in any other material legal proceedings.



                                       13

<PAGE>   16


ITEM 6: EXHIBITS AND REPORTS ON FORM 8-K

a)      Exhibits

        Exhibit 10.19 - Asset Purchase Agreement between Itron, Inc. and DataCom
           Information Systems, LLC (e.g. an affiliate of Duquesne Light
           Company) dated March 30, 2000.

        Exhibit 10.20 - Warranty and Maintenance Agreement between Itron, Inc.
           and DataCom Information Systems, LLC dated March 30, 2000.

        Exhibit 27 - Financial Data Schedule

b)      Reports on Form 8-K

The following reports on Form 8-K were filed during the first quarter. Each
report was filed pursuant to Item 5 of the form.


<TABLE>
<CAPTION>
REPORT DATE           DATE FILED            SUBJECT (s)
--------------------------------------------------------------------------------------
<S>                   <C>                   <C>
January 18, 2000      January 18, 2000      Date of annual shareholders meeting
January 26, 2000      January 26, 2000      New credit facility
March 13, 2000        March 15, 2000        Management change announcement and
                                              revised annual shareholders meeting date
March 31, 2000        March 31, 2000        Closing of Duquesne project sale;
                                              revised 1999 financial results; second
                                              amendment to loan agreement
</TABLE>




                                    SIGNATURE


Pursuant to the requirements of the Securities Exchange Commission Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.


                                        ITRON, INC.
                                        (Registrant)



                                        By:    /s/ David G  Remington
                                               ---------------------------------
                                               David G. Remington
                                               Vice President and
                                               Chief Financial Officer
                                               (Authorized Officer and Principal
                                               Financial Officer)


Date:  May 12, 2000



                                       14





<PAGE>   1
                                                                   EXHIBIT 10.19








--------------------------------------------------------------------------------


                            ASSET PURCHASE AGREEMENT

                           dated as of March 30, 2000

                                 by and between

                        DATACOM INFORMATION SYSTEMS, LLC

                                       AND

                                   ITRON, INC.


--------------------------------------------------------------------------------


<PAGE>   2

                                TABLE OF CONTENTS



<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------
                                                                                          Page
<S>     <C>                                                                               <C>
I.      DEFINITIONS; PURCHASE AND SALE.......................................................2
        1.1    Defined Terms.................................................................2
        1.2    Purchase and Sale.............................................................2
        1.3    Licenses......................................................................3
        1.4    Consideration to be Paid......................................................4
        1.5    Assignment and Assumption Agreement...........................................4
        1.6    Liabilities...................................................................4
        1.7    The Closing...................................................................4
        1.8    Assignment of Contracts and Rights............................................4

II.     REPRESENTATIONS AND WARRANTIES OF THE COMPANY........................................4
        2.1    Due Organization..............................................................5
        2.2    Authorization.................................................................5
        2.3    Financial Statements..........................................................5
        2.4    Liabilities and Obligations...................................................6
        2.5    Permits and Intangibles.......................................................6
        2.6    Personal Property; Real Property; Contracts...................................6
        2.7    Insurance.....................................................................7
        2.8    Compensation; Employment Agreements; Organized Labor Matters..................8
        2.9    Employee Benefit Plans........................................................8
        2.10   Conformity with Law; Litigation...............................................9
        2.11   Taxes.........................................................................9
        2.12   No Violations; All Required Consents Obtained................................10
        2.13   Absence of Changes...........................................................11
        2.14   Environmental Matters........................................................12
        2.15   Intellectual Property........................................................12
        2.16   Powers of Attorney...........................................................13
        2.17   Assets.......................................................................13
        2.18   Disclosure...................................................................13
        2.19   Notices and Consents.........................................................13
        2.20   Design Specifications........................................................13

III.    REPRESENTATIONS AND WARRANTIES OF PURCHASER.........................................13
        3.1    Due Organization.............................................................13
        3.2    Authorization................................................................14
        3.3    No Violations................................................................14
        3.4    Validity of Obligations......................................................14
</TABLE>




                                      -ii-

<PAGE>
   3


<TABLE>
<S>     <C>                                                                               <C>
IV.     DELIVERIES..........................................................................14
        4.1    Instruments of Transfer......................................................14
        4.2    Opinion of Counsel...........................................................14
        4.3    Warranty and Maintenance Agreement...........................................15
        4.4    Good Standing Certificates...................................................15
        4.5    Resolutions of Board of Directors of the Company.............................15
        4.6    Resolutions of Board of Directors of Purchaser...............................15
        4.7    Escrow Agreement.............................................................15
        4.8    Letter of Credit.............................................................15
        4.9    Termination Agreement........................................................15
        4.10   Secretary's Certificate of the Company.......................................15
        4.11   Secretary's Certificate of the Purchaser.....................................15
        4.12   Software License Agreement...................................................16
        4.13   Amendment to Partnership Agreement...........................................16
        4.14   Comfort Letter...............................................................16
        4.15   Consents.....................................................................16
        4.16   Radio Frequency Sharing Agreement............................................16
        4.17   EnSite Agreement.............................................................16

V.      POST-CLOSING COVENANTS..............................................................16
        5.1    Future Cooperation...........................................................16
        5.2    Expenses.....................................................................16
        5.3    Transfer Taxes...............................................................16
        5.4    Certain Employee Matters.....................................................17
        5.5    Patents and Intellectual Property............................................17
        5.6    Settling of Accounts.........................................................17
        5.7    Transitional Expenses........................................................18

VI.     INDEMNIFICATION.....................................................................18
        6.1    Survival of Representations and Warranties...................................18
        6.2    General Indemnification by the Company ......................................18
        6.3    Indemnification by Purchaser.................................................19
        6.4    Third Person Claims..........................................................20
        6.5    Method of Payment............................................................20

VII.    TRANSACTIONS SUBSEQUENT TO THE CLOSING..............................................20
        7.1    Non-solicitation.............................................................20
        7.2    Independent Covenant.........................................................20
        7.3    Injunctive Relief............................................................20

VIII.   MISCELLANEOUS.......................................................................20
        8.1    Successors and Assigns.......................................................20
</TABLE>




                                     -iii-

<PAGE>   4


<TABLE>
<S>     <C>                                                                               <C>
        8.2    Entire Agreement.............................................................20
        8.3    Counterparts.................................................................21
        8.4    Brokers and Agents...........................................................21
        8.5    Notices......................................................................21
        8.6    Governing Law................................................................22
        8.7    Disclaimer...................................................................22
        8.8    Survival of Representations and Warranties...................................22
        8.9    Effect of Investigation......................................................22
        8.10   Exercise of Rights and Remedies..............................................22
        8.11   Reformation and Severability.................................................23
        8.12   Captions.....................................................................23
        8.13   Press Releases and Public Announcements......................................23
        8.14   No Third-Party Beneficiaries.................................................23
</TABLE>




                                      -iv-

<PAGE>   5

                                    EXHIBITS


Exhibit A         -      Defined Terms


                                     ANNEXES


Annex I           -      Form of General Conveyance, Transfer and Assignment

Annex II          -      Form of Assignment and Assumption Agreement

Annex III         -      Form of Opinion of Counsel to the Company

Annex IV          -      Form of Warranty and Maintenance Agreement

Annex V           -      Form of Source Code Escrow Agreement

Annex VI          -      Form of Software License Agreement

Annex VII         -      Form of Amendment to Partnership Agreement

Annex VIII        -      Form of Escrow Agreement

Annex IX          -      Form of Radio Frequency Sharing Agreement

Annex X           -      Form of EnSite Agreement



                                      -v-

<PAGE>   6

                                    SCHEDULES


Schedule 1.2(a)       -      Equipment

Schedule 1.2(d)       -      Company Intellectual Property

Schedule 1.2(e)       -      Third Party Intellectual Property

Schedule 1.5          -      Liabilities

Schedule 1.8          -      Excluded Assets

Schedule 2.4          -      Liabilities and Obligations

Schedule 2.5          -      Permits and Intangibles

Schedule 2.6          -      Property; Contracts

Schedule 2.7          -      Insurance

Schedule 2.8          -      Employee Matters

Schedule 2.9          -      Employee Benefits

Schedule 2.10         -      Litigation

Schedule 2.11         -      Taxes

Schedule 2.12         -      Consents

Schedule 2.13         -      Absence of Changes

Schedule 2.14         -      Environmental Matters

Schedule 2.15         -      Intellectual Property

Schedule 2.16         -      Power of Attorney

Schedule 5.6          -      Designated Employees



                                      -vi-

<PAGE>   7

                            ASSET PURCHASE AGREEMENT

        THIS ASSET PURCHASE AGREEMENT (this "Agreement") is made and entered
into as of the 30th day of March, 2000 by and between DATACOM INFORMATION
SYSTEMS, LLC, a Delaware limited liability company ("Purchaser"), and ITRON,
INC., a Washington corporation (the "Company").

        WHEREAS, Purchaser is an affiliate of Duquesne Light Company, a
Pennsylvania corporation ("DLC");

        WHEREAS, DLC and the Company are parties to that certain Amended and
Restated Utility Automated Meter Data Acquisition Equipment Lease and Services
Agreement dated January 15, 1996, as amended (as so amended, the "Services
Agreement");

        WHEREAS, pursuant to the Services Agreement, the Company has been
providing equipment, software, facilities and services for the operation and
maintenance of a communications network for measuring electric power usage (the
"Fixed Network") from, among other places, the Company's operations center
located at Seven Parkway Center, Suite 440, Pittsburgh, Pennsylvania (the
"Greentree Operations Center");

        WHEREAS, concurrently herewith, the Company and DLC are terminating the
Services Agreement;

        WHEREAS, the Company desires to sell or license to Purchaser, as the
case may be, (i) all assets and rights, whether owned, leased, licensed or
otherwise, which are operated from or which constitute the Greentree Operations
Center, (ii) all assets located in the Service Territory leased by or used to
provide services to DLC under the Services Agreement, and (iii) all rights under
leases, licenses and arrangements (A) in effect for the use of currently
required capacity of the Fixed Network or (B) arising out of the Greentree
Operations Center (collectively, together with the property set forth in Section
1.2, but not including the Excluded Assets, the "Assets") (the Assets, the Fixed
Network and the operation of the Assets from the Greentree Operations Center, as
of the effective date of this Agreement, constitute the "Business"), and
Purchaser desires to purchase the Assets and acquire the Business from the
Company upon the terms and conditions set forth in this Agreement (the
"Transaction");

        WHEREAS, concurrently with the execution and delivery hereof, the
parties hereto are consummating the Transaction:



                                      -1-

<PAGE>   8

        NOW, THEREFORE, in consideration of the premises and of the mutual
agreements, representations, warranties, provisions and covenants contained
herein, the parties hereto, intending to be legally bound, agree as follows:

I.      DEFINITIONS; PURCHASE AND SALE

        1.1 DEFINED TERMS. In addition to other words and terms defined
elsewhere in this Agreement (including the preamble and recitals), when used in
this Agreement and in the exhibits and schedules to this Agreement, the
capitalized words and terms set forth in Exhibit A attached hereto and
incorporated herein by reference shall have the meanings set forth in Exhibit A
unless otherwise defined herein or the context otherwise clearly requires.

        1.2 PURCHASE AND SALE. Upon the terms and subject to the conditions of
this Agreement, the Company hereby sells, conveys, transfers, assigns and
delivers to Purchaser, and Purchaser hereby purchases from the Company, the
Assets, free and clear of all liens, claims and encumbrances of any kind. The
Assets include, but are not limited to, the following:

               (a) Equipment. All of the equipment, encoder receiver
transmitters, cell control units, network control nodes, sentry meter modules,
single phase meters, telenetics omega cabinets, repeaters, computer hardware,
furniture, vehicles, machinery, fixtures, inventory, supplies, spare parts and
all other tangible personal property of every kind and description owned by the
Company and used in the operation of the Business (collectively, the
"Equipment"), including all warranties relating to such Equipment. The Equipment
consists of all of the items listed or described in Schedule 1.2(a).

               (b) Leases. All right, title and interest of the Company in and
to the leases listed or described on Schedule 2.6 and the property, whether real
or personal, leased pursuant to such leases (the "Leases").

               (c) Licenses, Franchises and Permits. Sufficient rights to and
under all FCC licenses, franchises, permits, authorizations, certificates,
approvals, registrations and other authorizations of governmental authorities
(collectively, the "Licenses") necessary to the operation of the Business or any
of the Assets, as set forth on Schedule 2.5.

               (d) Company Intellectual Property License. A nonexclusive,
nontransferable, perpetual, irrevocable, fully paid up license, without right to
sublicense, on terms satisfactory to the Parties, (i) to use, in connection with
the Business the Intellectual Property belonging solely to the Company as
identified in Schedule 1.2(d) (the "Company Intellectual Property"); and (ii) to
reproduce and create, in connection with the Business (or have created)
derivative works from the



                                      -2-

<PAGE>   9

Records and other copyrightable works.

               (e) Third Party Intellectual Property Licenses. An assignment of
the licenses for third party Intellectual Property identified on Schedule
1.2(e).

               (f) Patent License. A non-exclusive, nontransferable, perpetual,
irrevocable, fully paid up license, without the right to sublicense, to make or
have made and use for its internal requirements related to the Fixed Network
only, all inventions which are products which are described in the Deposit
Materials and described in any patent or patent application held by Company or
its successors or assigns, whether now or in the future, provided, however, that
Purchaser agrees not to exercise the rights relating to manufacture of such
inventions unless and until the Deposit Materials are delivered to Purchaser
pursuant to the Source Code Escrow Agreement.

               (g) Books and Records. Copies of the Company's operating manuals,
procedures, warranties, books, records, papers and instruments of whatever
nature, and wherever located and in whatever medium that relate to the Greentree
Operations Center or the Assets or which are required or necessary in order for
Purchaser to Conduct the Business from and after the date hereof in the manner
in which it is presently being conducted (the "Records"); provided, however,
that such Records relating solely to the Company's obligations under the
Warranty and Maintenance Agreement shall not be transferred to Purchaser but
shall be made available for Purchaser to review.

The Company shall pay any fees required by any third parties for the rights
granted to Purchaser pursuant to this Section 1.2.

        1.3 CONSIDERATION TO BE PAID. As consideration for the Assets, and
subject to the terms and conditions of this Agreement, the aggregate purchase
price shall be Thirty-Three Million Dollars ($33,000,000.00) (the "Purchase
Price") payable as follows on the Closing; provided that the Letter of Credit
has been delivered into an escrow satisfactory to Purchaser:

               (a) to order of the Company for deposit with Wells Fargo Bank,
National Association Account No. 4375688967, the amount of Five Million One
Hundred Thousand Dollars ($5,100,000.00) in immediately available funds by wire
transfer;

               (b) to Mellon Bank, N.A., as Escrow Agent, the amount of One
Million Dollars ($1,000,000.00) to be distributed in accordance with the Escrow
Agreement attached hereto as Annex VIII (the "Escrow Agreement"); and



                                      -3-

<PAGE>   10

               (c) to order of the Company for deposit with Wells Fargo Bank,
National Association Account No. 4761060433, the amount of Twenty-Six Million
Nine Hundred Thousand Dollars ($26,900,000.00) in immediately available funds by
wire transfer.

        1.4 ASSIGNMENT AND ASSUMPTION AGREEMENT. Simultaneously with the
execution hereof, Purchaser and the Company shall deliver an agreement whereby
the Company assigns and Purchaser assumes, subject to any third party rights,
the Company's rights and obligations under the Leases and any contracts,
agreements, software licenses, and intellectual property licenses (as
applicable) disclosed on Schedule 2.6, in each case to the extent, and only to
the extent, that (1) the property, services or rights under the assumed
contract, agreements and licenses are to be provided or employed, as applicable,
after the Closing Date; (2) any obligations of Purchaser under the assumed
contracts, agreements, Leases and Licenses arise solely from responsibilities
arising after the Closing Date; and (3) neither the Company nor the other
parties thereto are in default thereunder as of the Closing Date.

        1.5 LIABILITIES. Except as expressly set forth on Schedule 1.5,
Purchaser does not assume or agree to pay, perform or discharge, and shall not
be responsible for, any liabilities or obligations of the Company, whether
accrued, absolute, contingent or otherwise. The Company agrees that it shall
remain solely responsible for, and it hereby agrees to indemnify and hold
Purchaser harmless from, any and all liabilities and obligations of the Company
whether accrued, absolute, contingent or otherwise, which are not expressly
assumed by Purchaser hereunder.

        1.6 THE CLOSING. The closing of the transactions contemplated by this
Agreement (the "Closing") is occurring concurrently with the execution and
delivery hereof.

        1.7 ASSIGNMENT OF CONTRACTS AND RIGHTS. Anything in this Agreement to
the contrary notwithstanding, this Agreement shall not constitute an agreement
to assign any Assets if an attempted assignment thereof, without the consent of
a third party thereto, would constitute a breach thereof or in any way affect
the rights of Purchaser or of the Company thereunder. If such consent is not
obtained, or if an attempted transfer or assignment thereof would be ineffective
or would affect the rights of the Company thereunder so that Purchaser would not
in fact receive all such rights, the Company will, at the Company's expense, (i)
use commercially reasonable efforts to obtain such consents; and (ii) provide
Purchaser with all the benefits under any such claims, contracts, licenses,
leases or commitments, necessary to Conduct the Business, until such consents
are obtained.

        1.8 EXCLUDED ASSETS. Purchaser acknowledges and agrees that the Assets
do not include (a) the assets listed on Schedule 1.8 and (b) the rights granted
to the Company under Section 8.6 of the Services Agreement (collectively, the
"Excluded Assets").



                                      -4-

<PAGE>   11

II.     REPRESENTATIONS AND WARRANTIES OF THE COMPANY

        The Company represents and warrants to Purchaser as follows:

        2.1 DUE ORGANIZATION. The Company is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Incorporation, and has full power and authority to own and operate its Assets
and to carry on its business as it is now being conducted. The Company is duly
authorized or qualified to do business and is in good standing in each
jurisdiction in which the nature of its business or the ownership or leasing of
its properties makes such qualification necessary, except where the failure to
be so authorized or qualified would not have a Material Adverse Effect. True,
complete and correct copies of the Charter Documents have been provided to
Purchaser.

        2.2 AUTHORIZATION. (i) The representative of the Company executing this
Agreement on behalf of the Company has full power and authority to execute and
deliver this Agreement and (ii) the Company has full power and authority to
enter into this Agreement and all other agreements, documents and/or instruments
executed and/or delivered herewith (collectively, the "Transaction Documents")
and to perform its obligations hereunder and thereunder and to consummate the
transactions contemplated hereby and thereby. The Transaction Documents and the
transactions contemplated hereby have been duly approved by the Board of
Directors of the Company, and copies of resolutions adopted by the Board of
Directors of the Company approving the Transaction Documents and the
transactions contemplated hereby, certified by the Secretary or an Assistant
Secretary of the Company, have been delivered to Purchaser. This Agreement has
been duly and validly executed and delivered by the Company and constitutes the
legal, valid and binding obligation of the Company enforceable against the
Company in accordance with its terms, except as may be limited by bankruptcy,
insolvency, reorganization or similar laws now or hereafter in effect relating
to creditors' rights generally.

        2.3 FINANCIAL STATEMENTS. The Company has previously delivered to
Purchaser correct and complete copies of (i) the unaudited consolidated
statement of operations and balance sheet of the Company as of December 31,
1999; (ii) unaudited consolidating balance sheet and statement of income of the
Company as of and for its fiscal year ended December 31, 1999; and (iii) audited
consolidated financial statements of the Company as of and for its fiscal years
ended December 31, 1998, 1997 and 1996 (collectively, the "Financial
Statements"). The audited Financial Statements have been prepared from the books
and records of the Company in conformity with generally accepted accounting
principles applied on a basis consistent with preceding years and throughout the
periods involved ("GAAP"), and all the Financial Statements present fairly in
all material respects the financial position and results of operations of the
Company as of the dates of such statements and for the periods covered thereby.
The books of account of the Company have been



                                      -5-

<PAGE>   12

kept accurately in all material respects in the ordinary course of business, the
transactions entered therein represent bona fide transactions, and the revenues,
expenses, assets and liabilities of the Company have been properly recorded
therein in all material respects.

        2.4 LIABILITIES AND OBLIGATIONS. Other than liabilities arising in the
ordinary course of business after the Balance Sheet Date, and except as and to
the extent disclosed and adequately provided for in the Financial Statements
(including any notes thereto) or on Schedule 2.4 hereto, the Company has no
liabilities or obligations of any kind, whether accrued, absolute, secured or
unsecured, contingent or otherwise, which would be required to be reflected or
reserved against in a year-end balance sheet (including the notes thereto).
Except and to the extent disclosed on the Financial Statements (including any
notes thereto) or on Schedule 2.4, there are no claims, liabilities or
obligations pertaining to the Business, nor any reasonable basis for assertion
against the Company, of any claim, liability or obligation pertaining to the
Business, of any nature whatsoever.

        2.5 PERMITS AND INTANGIBLES. The Company holds all Licenses required in
connection with the Business. Schedule 2.5 sets forth an accurate list of all
such Licenses, including permits, titles, licenses, and certificates owned or
held by the Company or any of its employees necessary to Conduct the Business
(collectively with the Licenses, the "Intangible Assets"). The Intangible Assets
and other governmental authorizations listed on Schedule 2.5 are valid and in
full force and effect and represent all the Licenses and other governmental
authorizations necessary for Purchaser to Conduct the Business and to own,
occupy or use the Assets. The Company has not received any notice that any
Person intends to cancel, terminate or not renew any such Intangible Assets or
other governmental authorization. The Company has conducted and is conducting
the Business in compliance with the requirements, standards, criteria and
conditions set forth in the Intangible Assets and other governmental
authorizations listed on Schedule 2.5 and is not in violation of any of the
foregoing. Except as set forth on Schedule 2.5, (a) the transactions
contemplated by this Agreement will not result in a default under or a breach or
violation of, or adversely affect the rights and benefits afforded to the
Business by, any such Intangible Assets or other governmental authorizations,
and (b) all of such rights and benefits are transferable to Purchaser and are
being transferred to Purchaser on the date hereof. Except as set forth on
Schedule 2.5, no violations have been recorded against any such Intangible
Asset, no citation, notice or warning has been issued by any governmental entity
with respect to any such Intangible Asset, no investigation or hearing has been
held by or before any governmental entity with respect to any such Intangible
Asset, the Company has not received any notice from any governmental entity that
it intends to cancel, revoke, terminate, suspend or not renew any such
Intangible Asset and the Company has no knowledge of any basis for any of the
foregoing.

        2.6 PERSONAL PROPERTY; REAL PROPERTY; CONTRACTS. Schedule 2.6 hereto is
a correct and complete list setting forth the following information with respect
to the Assets (including in each



                                      -6-

<PAGE>   13

case, where appropriate, whether or not the consent by a third party is required
for transfer to Purchaser):

               (a) all leases of personal property by the Company in effect on
the date hereof necessary to Conduct the Business;

               (b) all leases of real property to which the Company is a party
and necessary to Conduct the Business, and a brief description of the principal
buildings and structures located thereon and the Equipment located therein;

               (c) all contracts pursuant to which the Company provides products
or renders services to third parties relating to the Business;

               (d) all contracts pursuant to which the Company receives services
relating to the Business; and

               (e) a description of each vehicle or other asset subject to a
state registry statute owned or leased by the Company and being transferred
hereunder, the state of registration thereof, the vehicle identification number
of each such vehicle, the odometer reading of each and, if subject to a lease
agreement, the name and address for notice of the lessor thereof.

Except as set forth on Schedule 2.6, (i) all personal property used by the
Company in connection with the Business is either owned by the Company or leased
by the Company pursuant to a lease included on Schedule 2.6, (ii) all of the
personal property listed on Schedule 2.6 is in good working order and condition,
ordinary wear and tear excepted, is suitable for the purposes for which it is
used and constitutes all personal property necessary to Conduct the Business,
and (iii) all contracts, leases and agreements included on Schedule 2.6 are in
full force and effect and constitute valid and binding agreements of the Company
(and, to the Company's knowledge, of the other parties to such agreements),
enforceable in accordance with their respective terms. Except as set forth on
Schedule 2.6, the Company has good and marketable title to, or a valid leasehold
interest in, the tangible and intangible personal property included in the
Assets, including without limitation, the Assets listed on Schedule 2.6, subject
to no security interest, pledge, lien, claim, conditional sales agreement,
encumbrance, charge or restriction on transfer.

        2.7 INSURANCE. Schedule 2.7 sets forth a correct and complete list of
all insurance policies of which the Company is the owner, insured, loss payee or
beneficiary and which relate to the Business or any of the Assets and indicates
for each such policy the carrier, the risks insured against, the amounts of
coverage and deductibles, the annual premium, the cash surrender value, if any,
the expiration date and any pending claims thereunder. Such policies are
sufficient in the



                                      -7-

<PAGE>   14

aggregate to cover all reasonably foreseeable damage to and liabilities arising
out of the Business and the Assets arising on or prior to the Closing. There is
no default with respect to any provision contained in any such policy, nor has
there been any failure to give any notice or present any material claim under
any such policy in a timely fashion or as otherwise required by such policy.
Except as otherwise disclosed on Schedule 2.7: (i) all premiums under such
policies which were due and payable on or prior to the date hereof have been
paid in full; (ii) no such policy provides for retrospective or retroactive
premium adjustments; (iii) the Company has not received notice of any material
increase in the premium under, cancellation or non-renewal of or disallowance of
any claim under any such policy; (iv) the Company has not been refused any
insurance, nor has its coverage been limited by any carrier; and (v) during the
four (4) year period prior to the date hereof, the Company has maintained, or
been the beneficiary of, general liability and product liability policies
reasonable, in both scope and amount, in light of the risks attendant to the
Business and which provide coverage comparable to coverage customarily
maintained by others in similar lines of business, and such policies have been
"occurrence" policies and not "claims made" policies.

        2.8 COMPENSATION; EMPLOYMENT AGREEMENTS; ORGANIZED LABOR MATTERS.
Schedule 2.8 sets forth an accurate list showing all employees of the Company
employed at the Greentree Operations Center. As it relates to the Business,
except as otherwise disclosed on Schedule 2.8, the Company is not a party to any
employment, consulting or similar agreement, written or oral with any Person. As
it relates to the Business, except as otherwise disclosed on Schedule 2.8, (i)
no employees of the Company are represented by any labor union or similar
organization, (ii) the Company is not party to any collective bargaining or
similar agreement covering any of its employees and (iii) no labor union or
similar organization or group of employees has made a demand for recognition,
filed a petition seeking a representation proceeding or given the Company notice
of any intention to hold an election of a collective bargaining representative
at any time during the past three years. Upon consummation of the Transaction,
the Company shall not incur any liability pursuant to the Worker Adjustment and
Retraining Notification Act.

        2.9 EMPLOYEE BENEFIT PLANS. Schedule 2.9 sets forth an accurate list
showing all Employee Benefit Plans of the Company relating to employees in
respect of the Business, copies of which have been provided to Purchaser. Each
Employee Benefit Plan that is intended to be qualified under Section 401(a) of
the Internal Revenue Code of 1986, as amended (the "Code") and exempt from tax
under Section 501(a) of the Code has been determined by the Internal Revenue
Service to be so qualified and exempt, and any such determination remains in
effect and has not been revoked.

        Except for the Employee Benefit Plans described on Schedule 2.9, neither
the Company nor its ERISA Affiliates sponsor, maintain or contribute to, and
have not in the past sponsored, maintained or contributed to, any plan, program,
fund or arrangement relating to employees in respect of the Business that
constitutes an "employee pension benefit plan" as defined in Section 3(2)



                                      -8-

<PAGE>   15

of the Employee Retirement Income Security Act ("ERISA"), including a defined
benefit plan subject to Title IV of ERISA or any "multi-employer plan" as
defined in Section 3(37) of ERISA. Neither the Company nor any ERISA Affiliate
has any current or contingent obligation to any "multi-employer plan." The
Company is not required to contribute to any retirement plan pursuant to the
provisions of any collective bargaining agreements establishing the terms and
conditions of employment of any of the Company's employees in respect of the
Business except as set forth on Schedule 2.9.

        2.10 CONFORMITY WITH LAW; LITIGATION. Except as set forth on Schedule
2.10, there are no claims, actions, suits or proceedings, pending or to the best
knowledge of the Company threatened against or affecting the Business or any of
the Assets, at law or in equity, or before or by any federal, state, municipal
or other governmental department, commission, board, bureau, agency or
instrumentality having jurisdiction over the Company, the Business or any of the
Assets. Except as set forth on Schedule 2.10, no notice of any such claim,
action, suit or proceeding, whether pending or threatened, has been received by
the Company during the last three (3) years and to the best knowledge of the
Company, there is no basis therefor. Except as set forth on Schedule 2.10, the
Company has conducted for the past three (3) years and now conducts the Business
in compliance with all Governmental Rules, writs, injunctions, decrees and
orders of governmental authorities applicable to the Company with respect to the
Business or the Assets. The Company, with respect to the Business, is not in
violation of any Governmental Rules or any order of any court or federal, state,
municipal or other governmental department, commission, board, bureau, agency or
instrumentality having jurisdiction over it. The Company has conducted and is as
of the date hereof conducting the Business in compliance with the requirements,
standards, criteria and conditions set forth in applicable Governmental Rules
and Licenses set forth on Schedule 2.5, except where any failure to comply has
not had and will not have a Material Adverse Effect and will not require any
material expenditure in connection with the ownership of the Assets or the
operation of the Business after the date hereof.

        2.11 TAXES. With respect to the Business and the Assets:

               (a) the Company has duly and timely filed all Tax Returns and has
paid all Taxes shown to be due thereon;

               (b) the Company has paid all Taxes required to be paid and has
made sufficient provision in the Financial Statements for the payment of all
Taxes required to be accrued which are not yet payable. Without limiting the
foregoing, amounts required to have been withheld and paid by the company have
been withheld and paid prior to the date hereof to the proper governmental
entities or have been properly deposited in anticipation of such payment, and
all estimated Tax



                                      -9-

<PAGE>   16

payments have been made and are sufficient to discharge all income Taxes with
respect to the periods covered;

               (c) the Company's Tax Returns are true, complete and correct in
all respects;

               (d) no deficiency in the payment of any Taxes for any period to
the date hereof has been assessed against the Company by any Taxing authority
which has not been discharged in full;

               (e) except as listed on Schedule 2.11, no audits or other
proceedings have ever been instituted against the Company and, to the knowledge
of the Company, no audits or other proceedings are proposed or threatened
against the Company for any Taxes;

               (f) except as set forth on Schedule 2.11, there are no
outstanding and unresolved notices from the Internal Revenue Service or any
other governmental entity of any proposed examination or of any proposed change
in reported information which may result either in a deficiency or assessment
against the Company;

               (g) there are not now in force any waivers of, or agreements by
the Company to waive, any statute of limitation for the assessment of any Tax;

               (h) there are no tax allocation or tax sharing agreements; and

               (i) the Company has no liability for the taxes of any other
Person under Treasury Regulations Section 1.1502-6 or any similar provision of
state, local or foreign tax law.

        2.12 NO VIOLATIONS; ALL REQUIRED CONSENTS OBTAINED. The Company is not
in violation of its Charter Documents. Neither the Company nor, to the best
knowledge of the Company, any other party thereto, is in default under any
Material Contracts. Except as set forth in Schedule 2.12, (a) the execution of
the Transaction Documents by the Company and the performance by the Company of
its obligations hereunder and thereunder and the consummation by the Company of
the transactions contemplated hereby (including, without limitation, the
assignment to Purchaser of the rights and benefits to which the Company is
entitled under the Material Contracts) will not result in any violation or
breach or constitute a default under, (i) any of the terms or provisions of the
Material Contracts or the Charter Documents, (ii) any Governmental Rule; or
(iii) any order, writ, judgment, injunction or decree issued by any governmental
entity, and (b) at and immediately subsequent to the Closing, Purchaser will be
entitled to the rights and benefits under the Material Contracts to which the
Company, with respect to the Business, is entitled immediately prior to the
Closing, and such rights and benefits will enable Purchaser to Conduct the
Business. Except as set forth on



                                      -10-

<PAGE>   17

Schedule 2.12 (and except for consents already obtained), none of the Material
Contracts requires notice to, or the consent or approval of, any governmental
agency or other third party with respect to any of the transactions contemplated
hereby in order to remain in full force and effect and consummation of the
transactions contemplated hereby will not give rise to any right to termination,
cancellation or acceleration or loss of any right or benefit thereunder. Except
as set forth on Schedule 2.12, none of the Material Contracts prohibits the use
or publication of the name of any other party to such Material Contract, and
none of the Material Contracts prohibits or restricts the Company or,
immediately subsequent to the Closing, will prevent or restrict Purchaser from
freely providing services to any Person.

        2.13 ABSENCE OF CHANGES. Since the Balance Sheet Date, the Company has
conducted the Business in the ordinary course of business and, except as set
forth on Schedule 2.13, there has not been:

               (a) any Material Adverse Effect (contingent or otherwise);

               (b) any damage, destruction or loss (whether or not covered by
insurance) affecting any of the Assets or the Business;

               (c) any increase or any commitment to increase the compensation,
bonus, sales commissions or fee arrangement payable or to become payable by the
Company to any of its employees, consultants or agents in respect of the
Business, other than those that are normal, customary and consistent with past
practices;

               (d) any sale or transfer, or any agreement to sell or transfer,
any of the Assets to any Person in the ordinary course of business;

               (e) any plan, agreement or arrangement granting any preferential
rights to purchase or acquire any interest in any of the Assets (other than this
Agreement) or to obtain any service or Asset provided by the Business or
requiring consent of any party to the transfer and assignment of the Assets;

               (f) any waiver, release or lapse of any material rights or claims
of the Company necessary to Conduct the Business;

               (g) any amendment or termination of any Material Contract
necessary to Conduct the Business and to which the Company is a party;



                                      -11-

<PAGE>   18

               (h) any transaction by the Company that relates to the Business
which is outside the ordinary course of the business;

               (i) any cancellation or termination of a Material Contract
necessary to Conduct the Business with a customer, supplier, service provider or
client prior to the scheduled termination date; or

               (j) any mortgage or other lien or encumbrance upon the Assets
created, except (1) with respect to purchase money liens incurred in connection
with the acquisition of Equipment with an aggregate cost not in excess of
$10,000 necessary or desirable for the conduct of the Business, (2) (A) liens
for Taxes either not yet due or being contested in good faith and by appropriate
proceedings (and for which contested Taxes adequate reserves have been
established and are being maintained) or (B) materialmen's, mechanics',
workers', repairmen's, employees' or other like liens arising in the ordinary
course of business.


        2.14 ENVIRONMENTAL MATTERS. Except as otherwise disclosed on Schedule
2.14:

               (a) The Company's conduct of the Business, including without
limitation its possession and use of the Assets and its generation, use,
processing, treatment, storage, release, transport or disposal of Hazardous
Substances, is and has been in compliance with all applicable Environmental
Rules and has not given rise to any Damages under any Environmental Rule;

               (b) The Company has not released any Hazardous Substances at the
Greentree Operations Center during Company's occupation thereof except as
permitted by applicable Environmental Rules; and

               (c) No claim, demand, action or proceeding has been commenced or
asserted or, to the knowledge of Company, threatened and, to the knowledge of
Company, no investigation has been commenced, asserted or threatened alleging
(1) that any activity of the Company, or failure to act by the Company, has
given rise to any Damages under any Environmental Rule, (2) that the Company has
failed to comply with any Environmental Rules in its Conduct of the Business, or
(3) that the Company has potential responsibility for the release of Hazardous
Substances at the Greentree Operations Center during Company's occupation
thereof.

        2.15 INTELLECTUAL PROPERTY. Except as disclosed in Schedule 2.15, (i)
Schedule 1.2(d) sets forth a correct and complete list of all proprietary
software, owned by the Company and used in connection with the Business as
currently conducted; (ii) Schedule 1.2(e) sets forth a correct and complete list
of all licenses or other agreements pursuant to which the Company has the right
to use



                                      -12-

<PAGE>   19

any Intellectual Property that is owned by others and used in connection with
the Business as currently conducted, together with the names of the licensors
thereunder, the Intellectual Property covered thereby, the annual fee or other
consideration payable thereunder and the duration thereof, including any renewal
options; (iii) Schedules 1.2(d) and 1.2(e) collectively set forth a correct and
complete list of all Intellectual Property (other than patents) used in
connection with the Business as currently conducted; (iv) the Company has the
lawful right to make and use all Intellectual Property (including, but not
limited to, patent rights) that is necessary to Conduct the Business, and (v)
subject to the limitations of Section 6.6 of this Agreement, neither the
Company's use thereof nor Purchaser's use of such Intellectual Property
following the Closing infringes upon the lawful rights of any other Person.
Schedule 2.15 also identifies all consents which must be obtained, all filings
which must be made, and all other actions which must be taken in order to assign
or otherwise transfer the Company's rights in any Intellectual Property to
Purchaser to the extent contemplated by Section 1.2.

        2.16 POWERS OF ATTORNEY. Schedule 2.16 sets forth a list as of the date
of this Agreement of the name of each Person holding any general or special
power of attorney from the Company which relates to the Business or the Assets
and a description of the terms of each such power.

        2.17 ASSETS. The Assets being conveyed hereunder will permit Purchaser
to Conduct the Business.

        2.18 DISCLOSURE. The Company has provided Purchaser with all available
information that Purchaser has requested in analyzing whether to consummate the
Transaction contemplated hereby. None of the information so provided nor any
representation or warranty of the Company contained in this Agreement is false
or misleading in any material respect, contains any untrue statement of a
material fact or omits to state a material fact necessary in order to make the
statements herein or therein, in light of the circumstances under which they
were made, not misleading. There is no fact known to the Company which has
specific application to the Business or the Assets which materially adversely
affects or, so far as the Company can reasonably foresee, materially threatens,
the condition (financial or otherwise), prospects, or results of operations of
the Business or the Assets, which has not been described in this Agreement or
the Schedules hereto.

        2.19 NOTICES AND CONSENTS. The Company has given any notices to third
parties and obtained any third party consents that may be necessary under the
terms of any Material Contract to transfer the Business and the Assets to
Purchaser pursuant to this Agreement.

        2.20 DESIGN SPECIFICATIONS. The design specifications being placed in
escrow by the Company pursuant to the Source Code Escrow Agreement are all the
drawings, designs, inventions



                                      -13-

<PAGE>   20

and know-how memorialized in writing in the Company's possession related to the
manufacture of the products set forth in Exhibit B to the Source Code Escrow
Agreement (the "Deposit Materials").

III.    REPRESENTATIONS AND WARRANTIES OF PURCHASER

        Purchaser represents and warrants to the Company as follows:

        3.1 DUE ORGANIZATION. Purchaser is a limited liability company duly
organized, validly existing and in good standing under the laws of the State of
Delaware, and has the full power and authority to carry on its business as it is
now being conducted.

        3.2 AUTHORIZATION. (i) The representative of Purchaser executing this
Agreement on behalf of Purchaser has the full power and authority to enter into
and bind Purchaser to the terms of this Agreement, and (ii) Purchaser has the
full legal right, power and authority to enter into this Agreement and the
transactions contemplated hereby.

        3.3 NO VIOLATIONS. The execution and delivery of this Agreement by
Purchaser and the performance of its obligations hereunder and the consummation
by Purchaser of the transactions contemplated hereby will not result in any
violation or breach or constitute a default under any of the terms or provisions
of the Certificate of Formation or Operating Agreement of Purchaser.

        3.4 VALIDITY OF OBLIGATIONS. The execution and delivery of this
Agreement by Purchaser and the performance by Purchaser of the transactions
contemplated herein have been duly and validly authorized by the Board of
Directors of Purchaser. This Agreement has been duly and validly authorized by
all necessary action, has been validly executed and delivered by Purchaser and
constitutes a legal, valid and binding obligation of Purchaser, enforceable in
accordance with its terms, except as may be limited by bankruptcy, insolvency,
reorganization or similar laws now or hereafter in effect relating to creditor's
rights generally. A copy of the resolutions adopted by the Board of Directors
approving this Agreement and the transactions contemplated hereby, certified by
the Secretary or an Assistant Secretary of Purchaser, has been delivered to the
Company.

IV.     DELIVERIES

        Concurrently with or prior to the execution and delivery of this
Agreement, in addition to the deliveries described elsewhere herein, the parties
hereto are taking the following actions:

        4.1 INSTRUMENTS OF TRANSFER. The Company and Purchaser are executing and
delivering to each other (a) a completed General Conveyance, Transfer and
Assignment, in the form attached as Annex I hereto, covering all of the Assets,
(b) an Assignment and Assumption Agreement, in the



                                      -14-

<PAGE>   21

form attached hereto as Annex II, (c) Certificates of Title to any of the Assets
that consist of motor vehicles, (d) Intellectual Property licenses, and (e) such
other instruments of transfer as may be reasonably necessary or appropriate to
vest in Purchaser good and indefeasible title to the Assets. At all times
hereafter as may be necessary, the Company shall execute and deliver to
Purchaser such additional instruments of transfer as shall be reasonably
necessary or appropriate to vest in Purchaser good and indefeasible title to the
Assets and to comply with the purposes and intent of this Agreement.

        4.2 OPINION OF COUNSEL. Counsel to the Company is delivering an opinion
dated the date hereof to Purchaser in the form attached as Annex III hereto.

        4.3 WARRANTY AND MAINTENANCE AGREEMENT. The Company and Purchaser are
executing and delivering to each other a Warranty and Maintenance Agreement in
the form attached hereto as Annex IV (the "Warranty and Maintenance Agreement").

        4.4 GOOD STANDING CERTIFICATES. The Company is delivering to Purchaser
certificates, dated as of a date no earlier than ten days prior to the date
hereof, duly issued by the appropriate governmental authority in the State of
Incorporation and in the Commonwealth of Pennsylvania, showing the Company is in
good standing and authorized to do business.

        4.5 RESOLUTIONS OF BOARD OF DIRECTORS OF THE COMPANY. The Company is
delivering to Purchaser a certified copy of the resolutions of the Board of
Directors of the Company approving the Transaction Documents and authorizing the
consummation of the transactions contemplated hereby.

        4.6 RESOLUTIONS OF BOARD OF DIRECTORS OF PURCHASER. Purchaser is
delivering to the Company a certified copy of the resolutions of the Board of
Directors of Purchaser approving the Transaction Documents and authorizing the
consummation of the transactions contemplated hereby.

        4.7 SOURCE CODE ESCROW AGREEMENT. Purchaser, the Company and Fort Knox
Escrow Services, Inc., as escrow agent are executing and delivering a Source
Code Escrow Agreement in the form attached hereto as Annex V (the "Source Code
Escrow Agreement") pursuant to which each of the source code of the Intellectual
Property and design specifications for manufactured Equipment will be escrowed.

        4.8 LETTER OF CREDIT. The Company is causing ABN AMRO Bank N.V. to issue
an Irrevocable Standby Letter of Credit for the benefit of Purchaser in the
amount of $5,000,000 (the "Letter of Credit").



                                      -15-

<PAGE>   22

        4.9 TERMINATION AGREEMENT. The Company and DLC are executing and
delivering a Termination Agreement pursuant to which all provisions not intended
to survive termination of the Services Agreement shall terminate.

        4.10 SECRETARY'S CERTIFICATE OF THE COMPANY. The Company is delivering
to Purchaser a certificate of its corporate secretary or assistant secretary
dated as of the Closing and certifying its Charter Documents and incumbency of
its officers executing on its behalf this Agreement or any documents or
instruments in connection therewith.

        4.11 SECRETARY'S CERTIFICATE OF PURCHASER. Purchaser is delivering to
the Company a certificate of its secretary or assistant secretary dated as of
the Closing and certifying its Certificate of Formation, Operating Agreement and
incumbency of its officers executing on its behalf this Agreement or any
document or instrument in connection therewith.

        4.12 SOFTWARE LICENSE AGREEMENT. Purchaser and the Company are executing
and delivering a Software License Agreement in the form attached hereto as Annex
VI.

        4.13 AMENDMENT TO PARTNERSHIP AGREEMENT. Purchaser and the Company are
each causing their respective affiliates to execute and deliver Amendment No. 2
to Agreement of Limited Partnership by and between JLK Technology, Inc. and
Genesis Services Pittsburgh, Inc. in the form attached hereto as Annex VII.

        4.14 COMFORT LETTER. The Company has delivered to Purchaser a comfort
letter from Deloitte & Touche regarding accelerated depreciation treatment.

        4.15 CONSENTS. Except as otherwise provided in the Escrow Agreement, the
Company is delivering to Purchaser all third party consents necessary under the
terms of any Material Contract to transfer the Assets to Purchaser under this
Agreement, as set forth on Schedule 2.12.

        4.16 RADIO FREQUENCY SHARING AGREEMENT. Purchaser and the Company are
executing and delivering a Radio Frequency Sharing Agreement in the form
attached hereto as Annex IX.

        4.17 ENSITE AGREEMENT. EnSite, L.P., the Company and Purchaser are
executing and delivering an agreement in the form attached hereto as Annex X.

V.      POST-CLOSING COVENANTS

        The parties to this Agreement further covenant and agree as follows:



                                      -16-

<PAGE>   23

        5.1 FUTURE COOPERATION. The Company and Purchaser shall each deliver or
cause to be delivered to the other following the date hereof such additional
instruments as the other may reasonably request for the purpose of transferring,
assigning and delivering to Purchaser and its assigns the Assets and the
Business and fully carrying out the intent of this Agreement. In the event
Purchaser shall assign any of its rights hereunder, or under any other
Transaction Documents, to an affiliate, the Company shall cooperate, at
Purchaser's cost, with Purchaser to obtain any necessary third party consents or
assignments.

        5.2 EXPENSES. Purchaser will pay the fees, expenses and disbursements of
Purchaser and its agents, representatives, financial advisors, accountants and
counsel incurred in connection with the execution, delivery and performance of
this Agreement. The Company will pay the fees, expenses and disbursements of the
Company and its agents, representatives, financial advisors, accountants and
counsel incurred in connection with the execution, delivery and performance of
this Agreement.

        5.3 TRANSFER TAXES. Purchaser shall pay any sales, use, transfer, real
property transfer, recording, gains, stock transfer and other similar taxes and
fees ("Transfer Taxes") imposed in connection with the Transaction. Purchaser
shall file all necessary documentation and returns with respect to such Transfer
Taxes.

        5.4    CERTAIN EMPLOYEE MATTERS.

               (a) Nothing in this Agreement (i) requires Purchaser to hire, or
to offer to hire, any employees of the Company, (ii) constitutes an offer to
employ such employees or (iii) requires Purchaser to pay any such Persons
severance pay in the event of termination of employment. Notwithstanding the
foregoing, Purchaser has made or will make offers of employment effective as of
April 1, 2000, to those employees of the Company working in the Business and
identified on Schedule 5.4, and the Company shall use its best efforts (which
shall not include the payment by the Company of any compensation in excess of
that which is owed to the employees in the form of salary, benefits and all
other obligations as of the Closing) to persuade such employees to accept such
offers.

               (b) Purchaser does not and shall not assume or be responsible for
any obligations or liabilities arising out of any employment relationship
between the Company and any employee or former employee except as expressly
stated herein. Without limiting the generality of the foregoing, except as
expressly stated herein Purchaser shall have no liability or obligation in
connection with the Company's employees or former employees and their
beneficiaries for (i) contributions to or payment under employee benefit plans,
stock options, programs, arrangements or understandings, (ii) accrued, but
unused, sick leave, vacation pay and severance pay, if any, (iii)



                                      -17-

<PAGE>   24

liabilities or obligations under any collective bargaining agreement or
bargaining relationship, or (iv) claims, demands, administrative proceedings or
suits arising out of or in connection with alleged unlawful employment practices
of the Company.

        5.5 PATENTS AND INTELLECTUAL PROPERTY. The Company shall not enter into
any agreement, understanding or other arrangement that would adversely interfere
with or degrade the rights to Intellectual Property granted to Purchaser under
Section 1.2 of this Agreement.

        5.6 SETTLING OF ACCOUNTS. Not later than 45 days after the Closing, the
parties shall reconcile all outstanding payments owed by either party to the
other pursuant to the Services Agreement.

        5.7 TRANSITIONAL EXPENSES. Purchaser agrees to reimburse the Company for
any actual expenses incurred by the Company for services provided by third
parties to Purchaser that become Purchaser's responsibility after the Closing.
Purchaser reserves the right to audit the amount of all invoices submitted by
the Company to Purchaser for payment pursuant to this Section.

VI.     INDEMNIFICATION

        The Company and Purchaser each make the following covenants that are
applicable to them, respectively:


        6.1    SURVIVAL OF REPRESENTATIONS AND WARRANTIES.

               (a) The representations and warranties of the Company made in
this Agreement and in the documents and certificates delivered in connection
herewith shall survive for a period of three (3) years from the date hereof,
except that:

               (i) such representations and warranties that relate to Taxes, as
        set forth in Section 2.11, shall survive until the expiration of the
        applicable statutes of limitations for such Taxes (including any
        extensions thereof); and

               (ii) such representations and warranties that relate to illegal
        acts and fraud and abuse ("Illegal Acts"), and such representations and
        warranties as set forth in Sections 2.5 (Permits and Intangibles), 2.9
        (Employee Benefits Plans), 2.10 (Litigation), 2.14 (Environmental) and
        2.15 (Intellectual Property) and 2.17 (Assets) hereof, shall survive for
        a period of five (5) years after the date hereof.



                                      -18-

<PAGE>   25

provided, however, that representations and warranties with respect to which a
claim is made within the applicable survival period shall survive until such
claim is finally determined and paid.

               (b) The representations and warranties of Purchaser made in this
Agreement and in the documents and certificates delivered in connection herewith
shall survive for a period of three (3) years following the date hereof,
provided, however, that representations and warranties with respect to which a
claim is made within such three (3) year period shall survive until such claim
is finally determined and paid.

               (c) The date on which a representation or warranty expires as
provided herein is herein called the "Expiration Date." No claim for
indemnification may be made with respect to a representation or warranty after
the Expiration Date, other than claims based on fraud.

        6.2 GENERAL INDEMNIFICATION BY THE COMPANY. The Company covenants and
agrees that it will indemnify, defend, protect, and hold harmless Purchaser and
its subsidiaries, officers, directors, employees, stockholders, agents,
representatives and affiliates from and against all claims, damages, actions,
suits, proceedings, demands, assessments, adjustments, costs, fines, penalties
and expenses (including specifically, but without limitation, reasonable
attorneys' fees and expenses of investigation) (collectively "Damages") incurred
by such indemnified Person or entity as a result of or incident to (i) any
breach of any representation or warranty of the Company set forth herein or in
the certificates or other documents delivered in connection herewith, (ii) any
breach or nonfulfillment of any covenant or agreement by the Company under this
Agreement, (iii) any violation of any laws of the Commonwealth of Pennsylvania
governing bulk sales, which is occasioned by the consummation of any of the
transactions contemplated hereby, (iv) any liability arising out of the
ownership or operation of the Assets or the Business prior to the Closing no
matter when reported; or (v) any liability arising out of obligations to
employees of the Business prior to the Closing no matter when reported.

        6.3 INDEMNIFICATION BY PURCHASER. Purchaser covenants and agrees that it
will indemnify, defend, protect and hold harmless the Company, its officers,
directors and employees and the respective agents, representatives and
affiliates thereof from and against all Damages incurred by such indemnified
Person or entity as a result of (i) any breach of any representation or warranty
of Purchaser set forth herein or in the certificates or other documents
delivered in connection herewith; (ii) any breach or nonfulfillment of any
covenant or agreement by Purchaser under this Agreement; (iii) any liability
arising out of the ownership or operation of the Assets or the Business after
the Closing except for those obligations of the Company under any other
Transaction Document.



                                      -19-

<PAGE>   26

        6.4 THIRD PERSON CLAIMS. Promptly after any party hereto (the
"Indemnified Party") has received notice of or has knowledge of any claim by a
Person not a party to this Agreement ("Third Person") or the commencement of any
action or proceeding by a Third Person that may give rise to a right of
indemnification hereunder, such Indemnified Party shall give to the party
obligated to provide indemnification hereunder (an "Indemnifying Party") written
notice of such claim or the commencement of such action or proceeding; provided,
however, that the failure to give such notice will not relieve such Indemnifying
Party from liability under this Section with respect to such claim, action or
proceeding, except to the extent that the Indemnifying Party has been actually
prejudiced as a result of such failure. The Indemnifying Party (at its own
expense) shall have the right and shall be given the opportunity to associate
with the Indemnified Party in the defense of such claim, suit or proceedings,
provided that counsel for the Indemnified Party shall act as lead counsel in all
matters pertaining to the defense or settlement of such claims, suit or
proceedings. The Indemnified Party shall not, except at its own cost, make any
settlement with respect to any such claim, suit or proceeding without the prior
written consent of the Indemnifying Party, which consent shall not be
unreasonably withheld or delayed. It is understood and agreed that in situations
where failure of the Indemnifying Party to settle a claim expeditiously could
have an adverse effect on the Indemnified Party, the failure of the Indemnifying
Party to act upon the Indemnified Party's request for consent to such settlement
within five business days of the Indemnifying Party's receipt of written notice
thereof from the Indemnified Party shall be deemed to constitute consent by the
Indemnifying Party of such settlement for purposes of this Section.

        6.5 METHOD OF PAYMENT. All claims for indemnification shall be paid in
cash. If Purchaser reasonably believes that it or any other Indemnified Party
affiliated with it has suffered Damages for which it or such other Indemnified
Party would be entitled to indemnification pursuant to this Section, Purchaser
may, at its sole option and by notice in writing to the Company, elect to
set-off an amount equal to the amount of such Damages from any amounts then
owing by Purchaser to the Company; including any amounts owing under the
Warranty and Maintenance Agreement. Nothing in this Section is intended to limit
or restrict the ability of the parties to exercise any and all other remedies
under this Agreement or any other agreement at law or in equity.

        6.6 LIMITED REMEDY FOR BREACH OF INTELLECTUAL PROPERTY INFRINGEMENT
CLAIMS. Company will have no liability under this Agreement for Damages of an
Indemnified Party for an allegation that the Intellectual Property infringes
rights of another Person except to the extent such Damages arise from an actual
or threatened claim by a Third Person against an Indemnified Party that the
Intellectual Property infringes the lawful rights of a Third Person. If a claim
is made by an Indemnified Party for Damages resulting from such an actual or
threatened claim, or the use of any Intellectual Property by an Indemnified
Party is enjoined by a court of competent jurisdiction, Company, shall, at
Company's option and sole cost and expense, either (a) procure the right to
continue use of such Intellectual Property, (b) replace the Intellectual
Property with material that is



                                      -20-

<PAGE>   27

substantially similar in functionality and performance, but noninfringing, or
(c) modify the Intellectual Property to eliminate the infringement or
misappropriation, provided, however, that failure of Company to so procure,
replace, or modify shall not relieve Company of its indemnity obligations under
Section 6.2. Company will have no liability under this Article 6 or Section 2.15
for any infringement or misappropriation due to any repair, maintenance, service
modification to or alteration of the Fixed Network performed by any personnel
other than Company personnel (including its employees, agents and contractors)
or Company-trained Purchaser personnel (including its employees, agents and
contractors) after the date of this Agreement and which has not been approved by
Company in accordance with the terms of the Warranty and Maintenance Agreement;
or (ii) any combination of the Fixed Network in whole or in part with any
material or software not included in the Fixed Network which has not been
installed by Company personnel or Company-trained Purchaser personnel and which
has not been approved by Company in accordance with the terms of the Warranty
and Maintenance Agreement.

VII.    TRANSACTIONS SUBSEQUENT TO THE CLOSING

        7.1 NON-SOLICITATION. The Company agrees that for a period of two (2)
years commencing on the Closing Date, it shall refrain, and cause its affiliates
to refrain, from (i) hiring any individual set forth on Schedule 5.4 or (ii)
directly or indirectly soliciting or inducing any individual identified on
Schedule 5.4 to leave the employ of the Purchaser or any of its affiliates.

        7.2 INDEPENDENT COVENANT. The Company acknowledges that its covenant set
forth in the Article VII is a material condition to Purchaser's execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby.

        7.3 INJUNCTIVE RELIEF. The Company acknowledges and agrees that the
covenants and agreements set forth in this Article VII are necessary to protect
the legitimate business interests of Purchaser and that any breach of such
covenants and agreements will cause immediate and irreparable harm to Purchaser.
The Company acknowledges that damages for the violation of any such covenant or
agreement will not give full and sufficient relief to Purchaser and agrees that,
in the event of any violation of any such covenant or agreement, Purchaser shall
be entitled to injunctive relief with respect to any such breach, which remedy
shall be in addition to any other remedy which Purchaser may have on account of
such breach.



                                      -21-

<PAGE>   28

VIII.   MISCELLANEOUS

        8.1 SUCCESSORS AND ASSIGNS. This Agreement and the rights of the parties
hereunder may not be assigned (except as expressly permitted hereby or by
operation of law) and shall be binding upon and shall inure to the benefit of
the parties hereto, the successors of the Company and Purchaser and their
permitted assigns. Purchaser may assign its rights and obligations under this
Agreement, and/or any other Transaction Document, to any affiliate of Purchaser
at any time upon notice to the Company.

        8.2 ENTIRE AGREEMENT. This Agreement (including the schedules, exhibits
and annexes attached hereto) and the documents delivered pursuant hereto
constitute the entire agreement and understanding of the Company and Purchaser
and supersede any prior agreement and understanding relating to the Transaction.
This Agreement, upon execution, constitutes a valid and binding agreement of the
parties hereto enforceable in accordance with its terms and may be modified or
amended only by a written instrument executed by the Company and Purchaser,
acting through their respective officers, duly authorized by their respective
Boards of Directors.

        8.3 COUNTERPARTS. This Agreement may be executed simultaneously in two
or more counterparts, each of which shall be deemed an original and all of which
together shall constitute but one and the same instrument.

        8.4 BROKERS AND AGENTS. Each party represents and warrants that it
employed no broker or agent in connection with this transaction and agrees to
indemnify the other party hereto against all loss, cost, damages or expense
arising out of claims for fees or commission of brokers employed or alleged to
have been employed by such indemnifying party.

        8.5 NOTICES. All notices and communications required or permitted
hereunder shall be in writing and may be given (i) by depositing the same in
United States mail, addressed to the party to be notified, postage prepaid and
registered or certified with return receipt requested, (ii) by overnight
delivery service, addressed to the party to be notified, or (iii) by delivering
the same in Person or by facsimile to an officer or agent of such party, as
follows:



                                      -22-

<PAGE>   29

               If to Purchaser, addressed to it at:

                      DataCom Information Systems, LLC
                      875 Greentree Road
                      Seven Parkway Center, Suite 440
                      Pittsburgh, PA  15220
                      Attn: President

               With a copy to:

                      Duquesne Light Company
                      Legal Unit, 16-006
                      411 Seventh Avenue
                      Pittsburgh, PA  15219

               If to the Company, addressed to it at:

                      Itron, Inc.
                      2818 N. Sullivan Road
                      P.O. Box 15280
                      Spokane, WA  99216
                      Attn: President

or to such other address as any party hereto shall specify pursuant to this
Section from time to time.

        8.6 GOVERNING LAW. This Agreement shall be construed in accordance with
the laws of the Commonwealth of Pennsylvania other than its principles governing
conflicts of laws. The parties irrevocably submits to the jurisdiction of the
Court of Common Pleas of Allegheny County, Pennsylvania and to the jurisdiction
of the United States District Court for the Western District of Pennsylvania for
the purposes of any action or proceeding arising out of or relating to this
Agreement or the other Transaction Documents or the subject matter hereof or
thereof and brought by any other party.

        8.7 DISCLAIMER. EXCEPT AS OTHERWISE SET FORTH HEREIN OR IN ANY OTHER
TRANSACTION DOCUMENT, THE COMPANY HEREBY DISCLAIMS ALL OTHER WARRANTIES,
OBLIGATIONS AND LIABILITIES OF THE COMPANY, EXPRESS OR IMPLIED, ARISING BY LAW
OR OTHERWISE, WITH RESPECT TO ALL EQUIPMENT SOLD BY THE COMPANY HEREUNDER OR ANY
OTHER ITEMS SUBJECT TO THIS AGREEMENT, INCLUDING WITHOUT LIMITATION: (a) ANY
IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR



                                      -23-

<PAGE>   30

PURPOSE; (b) ANY IMPLIED WARRANTY ARISING FROM COURSE OF DEALING, COURSE OF
PERFORMANCE OR USAGE OF TRADE; AND (c) ANY IMPLIED WARRANTY OF NON-INFRINGEMENT.

        8.8 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations,
warranties, covenants and agreements of the parties made herein or in writing
delivered pursuant to the provisions of this Agreement shall survive the
consummation of the transactions contemplated hereby and any examination on
behalf of the parties until the applicable Expiration Date, or as otherwise
provided herein.

        8.9 EFFECT OF INVESTIGATION. No investigation by the parties hereto in
connection with this Agreement or otherwise shall affect the representations and
warranties of the parties contained herein or in any certificate or other
document delivered in connection herewith and each such representation and
warranty shall survive such investigation.

        8.10 EXERCISE OF RIGHTS AND REMEDIES. Except as otherwise provided
herein, no delay of or omission in the exercise of any right, power or remedy
accruing to any party as a result of any breach or default by any other party
under this Agreement shall impair any such right, power or remedy, nor shall it
be construed as a waiver of or acquiescence in any such breach or default, or of
any similar breach or default occurring later; nor shall any waiver of any
single breach or default be deemed a waiver of any other breach or default
occurring before or after that waiver.

        8.11 REFORMATION AND SEVERABILITY. In case any provision of this
Agreement shall be invalid, illegal or unenforceable, it shall, to the extent
possible, be modified in such manner as to be valid, legal and enforceable but
so as to most nearly retain the intent of the parties, and if such modification
is not possible, such provision shall be severed from this Agreement, and in
either case the validity, legality and enforceability of the remaining
provisions of this Agreement shall not in any way be affected or impaired
thereby.

        8.12 CAPTIONS. The headings of this Agreement are inserted for
convenience only, and shall not constitute a part of this Agreement or be used
to construe or interpret any provision hereof.

        8.13 PRESS RELEASES AND PUBLIC ANNOUNCEMENTS. The Company shall not
issue any press release or make any public announcement relating to the subject
matter of this Agreement or the other Transaction Documents without the prior
written approval of Purchaser, which approval shall not be unreasonably
withheld; provided, however, that this Agreement (with confidential treatment
requested as appropriate) and a description of the Transaction may be included
in the Company's required filings with the Securities and Exchange Commission
and other regulatory agencies.



                                      -24-

<PAGE>   31

        8.14 NO THIRD-PARTY BENEFICIARIES. This Agreement shall not confer any
rights or remedies upon any Person other than the parties and their respective
successors and permitted assigns.


           * * * * * SIGNATURES APPEAR ON THE FOLLOWING PAGE * * * * *



                                      -25-

<PAGE>   32

        IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.

                                   DATACOM INFORMATION SYSTEMS, LLC


                                   By:
                                      ------------------------------------------
                                   Name:  Edmund P. Finamore
                                   Title:  President



                                   ITRON, INC.


                                   By:
                                      ------------------------------------------
                                   Name:  LeRoy D. Nosbaum
                                   Title:  President and Chief Executive Officer




                                      -26-

<PAGE>   33

                                    EXHIBIT A

                                  DEFINED TERMS


               "Agreement" shall mean this Asset Purchase Agreement including
all exhibits, schedules and annexes hereto.

               "Assets" shall have the meaning set forth in the preamble to this
Agreement.

               "Balance Sheet Date" shall mean December 31, 1999.

               "Business" shall have the meaning set forth in the preamble to
this Agreement.

               "Charter Documents" shall mean the Articles of Incorporation and
By-laws, each as amended to date, of the Company.

               "Closing" shall have the meaning set forth in Section 1.6.

               "Code" shall have the meaning set forth in Section 2.9.

               "Company" shall have the meaning set forth in the preamble to
this Agreement.

               "Conduct the Business" shall mean the ability of Purchaser to own
and operate the Assets from and after the Closing in a manner sufficient to
enable, and capable of enabling Purchaser to perform all services (including,
but not limited to, data collection) as were actually provided by the Company
under the Services Agreement.

               "Company Intellectual Property" shall have the meaning set forth
in Section 1.2(d).

               "DLC" shall have the meaning set forth in the preamble to this
Agreement.

               "Damages" shall have the meaning set forth in Section 6.2.

               "Deposit Materials" shall have the meaning set forth in Section
2.20.

               "Equipment" shall have the meaning set forth in Section 1.2(a).

               "Employee Benefit Plan" shall mean any pension, retirement,
profit-sharing, deferred compensation, bonus, incentive, performance, stock
option, phantom stock, stock purchase, restricted



                                      -27-

<PAGE>   34

stock, premium conversion, medical, hospitalization, vision, dental or other
health, life, disability, severance, termination or other employee benefit plan,
program, arrangement, agreement or policy, whether written or unwritten to which
the Company contributes, is obligated to contribute to, is a party to or is
otherwise bound, or with respect to which the Company may have any liabilities.

               "Environmental Rule" shall mean any Governmental Rule which
relates to pollution or protection of human health, the environment or natural
resources and includes, without limitation, any Governmental Rule relating to
the generation, use, processing, treatment, storage, release, transport or
disposal of Hazardous Substances.

               "ERISA Affiliate" shall mean (1) a member of any "controlled
group" (as defined in section 414(b) of the Code) of which the Company is a
member; (2) a trade or business, whether or not incorporated, under common
control (within the meaning of Section 414(c) of the Code) with the Company; or
(3) a member of any affiliated service group (within the meaning of Section
414(m) of the Code) of which the Company is a member.

               "Excluded Assets" shall have the meaning set forth in Section
1.8.

               "Escrow Agreement" shall have the meaning set forth in Section
1.3(b).

               "Expiration Date" shall have the meaning set forth in Section
6.1(c).

               "Financial Statements" shall have the meaning set forth in
Section 2.3.

               "Fixed Network" shall have the meaning set forth in the preamble
to this Agreement.

               "GAAP" shall have the meaning set forth in Section 2.3.

               "Governmental Rule" shall mean any law, rule, regulation,
ordinance or code of any governmental entity.

               "Greentree Operations Center" shall have the meaning set forth in
the preamble to this Agreement.

               "Hazardous Substance" shall mean any substance which constitutes,
in whole or in part, toxic or hazardous substance or waste under any
Environmental Rule.

               "Indemnified Party" shall have the meaning set forth in Section
6.4.



                                      -28-

<PAGE>   35

               "Indemnifying Party" shall have the meaning set forth in Section
6.4.

               "Intangible Assets" shall have the meaning set forth in Section
2.5.

               "Intellectual Property" shall mean software, registered and
unregistered trademarks, service marks, registered and common law copyrights,
and all applications therefor.

               "Leases" shall have the meaning set forth in Section 1.2(b).

               "Letter of Credit" shall have the meaning set forth in Section
4.8.

               "Licenses" shall have the meaning set forth in Section 1.2(c).

               "Material Adverse Effect" shall mean any occurrence of events or
circumstances of whatever nature which have a material adverse effect on the
business, prospects, operations or condition (financial or otherwise) of the
Company, Business, the Assets or Purchaser's ownership or operation of the
Assets or the Business.

               "Material Contracts" shall mean any lease, instrument, License,
or agreement relating to the Business to which the Company is a party or by
which the Company or the Assets are bound.

               "Person" shall mean any individual, corporation, joint venture,
general or limited partnership, limited liability company, trust, association,
unincorporated organization or other business entity.

               "Purchase Price" shall have the meaning set forth in Section 1.3.

               "Purchaser" shall have the meaning set forth in the preamble to
this Agreement.

               "Records" shall have the meaning set forth in Section 1.2(g).

               "Services Agreement" shall have the meaning set forth in the
preamble to this Agreement.

               "Service Territory" shall mean the service territory of DLC as of
the Closing.

               "State of Incorporation" shall mean the State of Washington.



                                      -29-

<PAGE>   36

               "Tax Return" shall mean any return (including any information
return), report, statement, declaration, estimate, schedule, notice,
notification, form, election, certificate or other document or information filed
with or submitted to, or required to be filed with or submitted to, any
governmental entity in connection with the determination, assessment, collection
or payment of any Tax or in connection with the administration, implementation
or enforcement of or compliance with any applicable laws, regulations, orders,
judgments and decrees relating to any Tax.

               "Taxes" shall mean all taxes, charges, fees, levies or other
assessments including, without limitation, income, gross receipts, excise,
property, sales, withholding, social security, unemployment, occupation, use,
service, license, payroll, franchise, transfer and recording taxes, fees and
charges, imposed by the United States or any state, local or foreign government
or subdivision or agency thereof, whether computed on a separate, consolidated,
unitary, combined or any other basis, and any interest, fines, penalties or
additional amounts attributable to or imposed with respect to any such taxes,
charges, fees, levies or other assessments.

               "Third Person" shall have the meaning set forth in Section 6.4.

               "Transaction" shall have the meaning set forth in the preamble to
this Agreement.

               "Transaction Documents" shall have the meaning set forth in
Section 2.2.

               "Transfer Taxes" shall have the meaning set forth in Section 5.3.

               "Warranty and Maintenance Agreement" shall mean the Warranty and
Maintenance Agreement executed by Company and Purchaser in the form attached
hereto as Annex IV.



                                      -30-

<PAGE>   37

                                     ANNEX I

                   GENERAL CONVEYANCE, TRANSFER AND ASSIGNMENT

        Reference is hereby made to the Asset Purchase Agreement dated of even
date herewith (the "Asset Purchase Agreement") by and between DataCom
Information Systems, LLC, a Delaware limited liability company (the
"Purchaser"), and Itron, Inc., a Washington corporation (the "Seller"). Terms
defined in the Asset Purchase Agreement and not otherwise defined herein are
used herein with the meanings so defined.

        1. For good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the Seller hereby sells, conveys, transfers,
assigns and delivers to the Purchaser all right, title and interest in and to
all of the Assets, to have and to hold the Assets hereby conveyed, transferred,
assigned and delivered, or intended so to be, unto the Purchaser, its successors
and assigns forever. All of the Assets are hereby sold to the Purchaser free and
clear of any option, lien, pledge, mortgage, security interest or other
encumbrance of any kind.

        2. The Seller hereby irrevocably constitutes and appoints the Purchaser,
its successors and assigns, the true and lawful attorney of the Seller, with
full power of substitution, in the name of the Seller or otherwise, and on
behalf and for the benefit of the Purchaser, its successors and assigns, to
demand and receive from time to time any and all of the Assets hereby conveyed,
transferred, assigned and delivered, or intended so to be, and to institute,
defend and compromise any and all actions, suits or proceedings in respect of
any of the Assets hereby conveyed, transferred, assigned and delivered, or
intended so to be, that the Purchaser, its successors or assigns shall
reasonably deem desirable, and to do all acts and things in relation to the
Assets and interests which the Purchaser, its successors or assigns reasonably
deem desirable. The Seller hereby declares that the foregoing powers are coupled
with an interest and shall be irrevocable by it in any manner or for any reason.

        3. The Seller further covenants and agrees that it will, from time to
time, make, execute, and deliver or cause to be made, executed, and delivered
all such other instruments, documents, and other assurances, usual and
customary, as the Purchaser may reasonably require to confirm, or more
effectively convey, transfer to and vest in the Purchaser, title to the Assets
as set for the herein.

        4. This instrument shall be binding upon and inure to the benefit of the
respective successors and assigns of the Purchaser and the Seller.



                                      -31-

<PAGE>   38

        IN WITNESS WHEREOF, the Seller has caused this instrument to be duly
executed as of the ______ day of March, 2000.

                                             ITRON, INC.

                                             By:
                                                --------------------------------
                                             Name:
                                                  ------------------------------
                                             Title:
                                                   -----------------------------



                                      -32-



<PAGE>   1
                                                                   EXHIBIT 10.20








--------------------------------------------------------------------------------


                       WARRANTY AND MAINTENANCE AGREEMENT

                           dated as of March 30, 2000

                                 by and between

                        DATACOM INFORMATION SYSTEMS, LLC

                                       AND

                                   ITRON, INC.


--------------------------------------------------------------------------------


<PAGE>   2

                                TABLE OF CONTENTS



<TABLE>
<CAPTION>
                                                                                    Page
<S>            <C>                                                                  <C>
Section 1      Definitions............................................................1

Section 2      Itron Services.........................................................8
        2.1    Standard Services......................................................8
        2.2    Software Releases and Support..........................................8
        2.3    Technical Support......................................................9
        2.4    Fixed Network Installation, Investigation and Maintenance.............10
        2.5    Fixed Network Expansion...............................................11
        2.6    Additional Charge for Standard Services...............................12
        2.7    Failure to Perform Standard Services..................................13
        2.8    Supplemental Services.................................................14
        2.9    Warranties and Performance Standards..................................16
        2.10   Personnel Qualifications..............................................17
        2.11   Interference with DataCom's Facilities................................18
        2.12   Assumption of Risk and Insurance......................................18
        2.13   Change Control........................................................19
        2.14   Itron Reports.........................................................19

Section 3      Licenses..............................................................20
        3.1    Licenses..............................................................20
        3.2    Ownership of Software and Software Releases...........................20

Section 4      Implementation........................................................20
        4.1    Cooperation...........................................................20
        4.2    General Obligations...................................................20
        4.3    Obligations of DataCom................................................24

Section 5      Compensation; Conditions Precedent....................................26
        5.1    Initial Fee...........................................................26
        5.2    Annual Fee for Standard Services......................................26
        5.3    Fees for supplemental Services........................................26
        5.4    Letter of Credit......................................................27
        5.5    Conditions of Letter of Credit........................................27
</TABLE>




                                                                          PAGE i

<PAGE>   3


<TABLE>
<CAPTION>
                                                                                   Page
<S>            <C>                                                                  <C>
Section 6      Events of Default.....................................................27
        6.1
    Events of Default.....................................................27
        6.2    Remedies for Events of Defaults.......................................28
        6.3    Change in Control.....................................................29

Section 7      Term and Termination..................................................29
        7.1    Term..................................................................29
        7.2    Termination by DataCom................................................29
        7.3    Termination by Itron..................................................29

Section 8      Indemnification.......................................................30
        8.1    Of DataCom............................................................30
        8.2    Of Itron..............................................................30
        8.3    Intellectual Property Indemnification.................................31
        8.4    Procedure.............................................................31
        8.5    Payment of Indemnification Claims.....................................32

Section 9      Limitation on Liability...............................................32
        9.1    Disclaimer............................................................32
        9.2    Limitation on Liability...............................................32

Section 10     Miscellaneous.........................................................33
        10.1   Excusable Delay.......................................................33
        10.2   Nondisclosure.........................................................33
        10.3   Assignment............................................................34
        10.4   Notices...............................................................34
        10.5   Waiver................................................................35
        10.6   Independent Contractor................................................35
        10.7   Counterparts..........................................................36
        10.8   Headings..............................................................36
        10.9   Governing Law.........................................................36
        10.10  Entire Agreement......................................................36
        10.11  Dispute Resolution....................................................36
        10.12  Consent...............................................................37
</TABLE>




                                                                         PAGE ii

<PAGE>   4

                       WARRANTY AND MAINTENANCE AGREEMENT

               This Warranty and Maintenance Agreement (this "AGREEMENT") is
effective March 30, 2000 (the "EFFECTIVE DATE") and is between DataCom
Information Systems, LLC, a Delaware limited liability company with its
principal office located in Greentree, Pennsylvania ("DATACOM"), and Itron,
Inc., a Washington corporation with its principal office located in Spokane,
Washington ("ITRON").

                                    RECITALS

        A. DataCom is an affiliate of Duquesne Light Company, a Pennsylvania
corporation ("DLC"). DLC and Itron are parties to the Amended and Restated
Utility Automated Meter Data Acquisition Equipment Lease and Services Agreement
dated January 15, 1996, as amended (the "DUQUESNE CONTRACT"), pursuant to which
Itron has been providing equipment, software, facilities and services for the
operation and maintenance of the Fixed Network (as defined below).

        B. Concurrently with the execution and delivery of this Agreement, DLC
and Itron have terminated the Duquesne Contract by mutual agreement and,
pursuant to the Purchase Agreement (as defined below), DataCom has purchased,
licensed or otherwise acquired from Itron certain Equipment, facilities,
Software and other assets owned, leased or licensed by Itron, and/or
constituting or used in connection with the Fixed Network.

        C. The Parties desire for Itron to continue to provide certain
maintenance and support services for the Fixed Network under this Agreement.

                                    AGREEMENT

SECTION 1. DEFINITIONS

        In this Agreement:

        "APPLICABLE LAWS" means any law, statute, rule, regulation, ordinance,
order, code, interpretation, judgment, decree, directive, or decision in effect
from time to time of any national, state or local government, any political
subdivision thereof or any other governmental, judicial, public or statutory
instrumentality, authority, body, agency, department, bureau, commission or
other governmental entity, which is applicable to or affects this Agreement.

        "BANKRUPTCY CODE" means Title 11 of the United States Code, 11 U.S.C.
Section 101-1330, as in effect on the date hereof.



                                                                          PAGE 1

<PAGE>   5

        "BUSINESS DAY" means a day other than a day on which commercial banks in
Pittsburgh, Pennsylvania are required or authorized to be closed. Unless
qualified by the term "Business", references in this Agreement to "day" or
"days" shall refer to a calendar day or calendar days, respectively.

        "CCU" means cell control unit.

        "CHANGE IN CONTROL" means any of the following events: (i) any Person
becomes the beneficial owner (as defined in Rule 13(d)(3) under the Securities
Exchange Act of 1934), directly or indirectly, of securities of Itron
representing 50% or more of the combined voting power of Itron's then
outstanding voting securities; (ii) the individuals who as of the date of this
Agreement are members of the Board of Directors of Itron (the "INCUMBENT
Board"), cease for any reason to constitute at least a majority of the Board of
Directors of Itron (provided, however, that if the election, or nomination for
election by Itron's shareholders, of any new director was approved by a vote of
at least a majority of the Incumbent Board, such new director will be considered
to be a member of the Incumbent Board); (iii) an agreement by Itron to
consolidate or merge with any other entity pursuant to which Itron will not be
the continuing or surviving corporation or pursuant to which shares of the
common stock of Itron would be converted into cash, securities or other
property, other than a merger of Itron in which holders of the common stock of
Itron immediately prior to the merger would have the same proportion of
ownership of common stock of the surviving corporation immediately after the
merger; (iv) an agreement of Itron to sell, lease, exchange or otherwise
transfer in one transaction or a series of related transactions substantially
all the assets of Itron; (v) the adoption of any plan or proposal for a complete
or partial liquidation or dissolution of Itron; or (vi) an agreement to sell
more than 50% of the outstanding voting securities of Itron in one or a series
of related transactions.

        "CONFIDENTIAL INFORMATION" means all nonpublic information disclosed by
a Disclosing Party to the Receiving Party that is designated as confidential or
that, given the nature of the information or the circumstances surrounding its
disclosure, reasonably should be considered as confidential. Confidential
Information includes, but is not limited to, security codes, computer passwords,
customer information, trade secrets, documents, designs, drawings, manufacturing
processes, research developments, business activities and operations, inventions
and engineering concepts. The Parties acknowledge and agree that all information
concerning DataCom's and DLC's customers is highly confidential and is the
Confidential Information of DataCom. Confidential Information does not include
any information that (i) has become publicly available without breach of this
Agreement, (ii) can be shown by documentation to have been known to the
Receiving Party at the time of its receipt from the Disclosing Party, (iii) is
received from a third party who did not acquire or disclose such information by
a wrongful act or (iv) can be



                                                                          PAGE 2

<PAGE>   6

shown by documentation to have been independently developed by the Receiving
Party without reference to any Confidential Information.

        "CONFIGURATION CHANGE" means any change to the Fixed Network requested
by DataCom to improve and support the performance of the Fixed Network or
requested by Itron as necessary to maintain and enhance the Fixed Network within
its designed functionality as existing on the Effective Date or as expanded
thereafter pursuant to the provisions of this Agreement.

        "COVERED COMPONENTS" means (i) the components of the Fixed Network
identified in Schedule "C" hereto; (ii) other components (including equipment,
Software and Software Releases) that are added to the Fixed Network (A) pursuant
to Itron's provision of Standard Services or Supplemental Services, (B) pursuant
to the EnSite Agreement or (C) by agreement of the Parties from time to time;
and (iii) Software.

        "CRITICAL MAINTENANCE RELEASE" means a revision to Software that
corrects a Critical Nonconformity.

        "CRITICAL NONCONFORMITY" means (a) a Nonconformity resulting in a
material degradation in (i) the backup systems and reliability of the Fixed
Network, or (ii) the ability of DataCom to (A) read, collect or pass daily or
interval meter data, (B) collect or pass customer billing data, (C) operate the
Outage Management System or the Sentry MRP System or (D) operate the Fixed
Network; or (b) aggregate monthly CCU Nonconformities in excess of 4% of the
deployed CCUs in the Fixed Network.

        "CUSTOM RELEASE" means any revision to Software that (i) Itron may
prepare or have prepared in response to a written request received from DataCom
and (ii) is not a scheduled Maintenance Release, Critical Maintenance Release or
Configuration Change.

        "DATACOM SERVICE ADMINISTRATOR" has the meaning set forth in Paragraph
4.2(a).

        "DCU" means a data command unit.

        "DISASTER RECOVERY SERVICES" has the meaning set forth in Paragraph
2.3(c).

        "DISCLOSING PARTY" means a Party that discloses Confidential Information
to the other Party under this Agreement.

        "DLC" means Duquesne Light Company.

        "DNI" means Diverse Networks, Inc.

        "DNI AGREEMENT" means the agreement between Itron and DNI under which
Itron implemented system backup and automation functions for the Fixed Network.



                                                                          PAGE 3

<PAGE>   7

        "DUQUESNE CONTRACT" has the meaning set forth in Recital A.

        "ENSITE AGREEMENT" means the Agreement of Limited Partnership between
JLK Technology, Inc. and Genesis Services Pittsburgh, Inc. dated February 8,
1996, as amended.

        "ENVIRONMENTAL LAWS" has the meaning set forth in Paragraph 2.9(g)(ii).

        "EQUIPMENT" means the items of Covered Components which are not
Software.

        "ERT" means an encoder receiver transmitter device installed in a
standard residential meter for the purpose of communicating meter data over the
Fixed Network.

        "ESCROW AGREEMENT" shall mean the escrow agreement by and among Itron,
DataCom, and an escrow agent satisfactory to DataCom and Itron which shall
provide for, among other things, (i) delivery by Itron of (A) the source code of
all Itron owned Software, Software Releases and all upgrades, updates or
modifications thereto and (B) design documents for the Equipment and certain
other material; (ii) release conditions; and (iii) term.

        "EXCLUDED EQUIPMENT" means equipment that is not a Covered Component.

        "FCC" means the Federal Communications Commission.

        "FINAL CURE DATE" has the meaning set forth in Paragraph 2.9(a)(ii).

        "FIXED NETWORK" means the Covered Components and communications system
consisting of local area and wide area networks that communicate remotely with
meters that measure electric power usage or other applications, as installed
pursuant to the Duquesne Contract, and as maintained and expanded from time to
time pursuant to this Agreement and the EnSite Agreement.

        "FIXED NETWORK EXPANSION" has the meaning set forth in Paragraph 2.5.

        "FORCE MAJEURE EVENT" means epidemics, major storms, floods, lightning,
earthquakes, fires, riots, civil disturbances, labor strikes or unrest,
vandalism, or sabotage beyond the reasonable control of a Party, acts of God, or
any cause or condition beyond a Party's reasonable control, provided that a
Party shall not be excused from liability or performance hereunder where its
delay or failure to perform is due to its financial inability to perform.

         "GENESIS SYSTEM" means the Itron communications network bearing the
same trademark name.



                                                                          PAGE 4

<PAGE>   8

        "GREENTREE OPERATIONS CENTER" means the operations center for the Fixed
Network currently located at Seven Parkway Center, Suite 440, Pittsburgh,
Pennsylvania, as the same may be moved from time to time.

        "INFRINGING MATERIAL" has the meaning set forth in Paragraph 8.3.

        "INITIAL CURE PERIOD" has the meaning set forth in Paragraph 2.9(a)(i).

        "INITIAL FEE" has the meaning set forth in Paragraph 5.1.

        "ITRON EQUIPMENT" means the equipment and materials, as set forth in
Schedule "E", that are in Pittsburgh as of the Effective Date and used
extensively for maintenance of the Covered Components and that will remain Itron
assets and be used in performing the Services.

        "ITRON HOLIDAY" means each of the dates in a year, not to exceed a total
of 10 in number per year, that are designated as holidays in writing by Itron to
DataCom by December 15 of the preceding year.

        "ITRON SERVICE ADMINISTRATOR" has the meaning set forth in Paragraph
4.2(a).

        "L/C AMOUNT" means an amount equal to $5,000,000 less all amounts drawn
by DataCom against the Letter of Credit.

        "LETTER OF CREDIT" has the meaning set forth in Paragraph 5.4.

        "LOSSES" has the meaning set forth in Paragraph 8.1

        "MAINTENANCE INVENTORY" has the meaning set forth in Paragraph 4.2(h).

        "MAINTENANCE RELEASE" means any revision to Software that Itron may
prepare, or that Itron may have prepared by or may receive from any third party,
from time to time after the Effective Date that maintains or enhances Software
operability and functionality, including available fixes for reported or
identified Software problems and Nonconformities which are not Critical
Nonconformities, but not including Custom Releases.

        "MAMR" means mobile automated meter reading.

        "MATERIALS OF ENVIRONMENTAL CONCERN" means chemicals, pollutants,
contaminants, wastes, toxic or hazardous substances, petroleum and petroleum
products and residual wastes.



                                                                          PAGE 5

<PAGE>   9

        "MV90" means a system component of the Fixed Network that processes
meter reading data generally originating from commercial and industrial meters.

        "MVWEB" means a software component of the Fixed Network that operates in
connection with the MV90 to post customer data to a website.

        "MV-PBS" means a system component of the Fixed Network that processes
billing data provided by MV90 for the purpose of generating custom designed
bills for customers.

        "NCN" means network control node.

        "95% COVERAGE" means 95% (520,000 as of the Effective Date, to increase
by no more than 2% per annum) of DLC's residential and small commercial
customers in the Service Territory.

        "NONCONFORMING" means having a Nonconformity.

        "NONCONFORMITY" means, with respect to a Covered Component or Fixed
Networth and Disaster Recovery communications circuits, a deviation from normal
functionality or a failure to conform to the requirements of this Agreement,
including, without limitation, the warranties set forth herein.

        "OUTAGE MANAGEMENT SYSTEM" means the system implemented by DLC for the
purpose of processing outage messages from the Fixed Network as of the Effective
Date and as expanded hereafter pursuant to the Agreement.

        "PARTY" or "PARTIES" means DataCom and Itron, individually or
collectively as the case may be.

        "PERSON" means any individual, company, corporation, partnership or
other legal entity.

        "PREFERRED PRICE" means, with respect to any goods or services, the
lowest of (i) the most favorable price or rate then offered by Itron to any
Person for the same quantity of such goods or services, (ii) if such goods or
services are the subject of a then current list price published by Itron, (a)
for goods, a quantity discount based on the accumulated quantity of such goods
purchased by DataCom since the Effective Date and (b) for services, a 20%
discount off the list price, (iii) the price determined by Itron as commercially
reasonable for such goods or services, or (iv) if DataCom is not satisfied with
the price under (i), (ii) or (iii), then such price as the Parties may negotiate
in good faith.

        "PREMIUM STANDARD SERVICE" has the meaning set forth in Paragraph 2.6.



                                                                          PAGE 6

<PAGE>   10

        "PUC" means the Pennsylvania Public Utility Commission.

        "PURCHASE AGREEMENT" means the Asset Purchase Agreement dated the date
of this Agreement between DataCom and Itron.

         "QUALIFYING BANK" means ABN AMRO Bank N.V. or a commercial bank
reasonably acceptable to DataCom with a minimum credit rating of at least two of
the following ratings: (i) AA as determined by Standard & Poor's Corporation, or
(ii) Aa2 as determined by Moody's Investors Service, Inc., or (iii) a comparable
rating by another nationally recognized rating service reasonably acceptable to
DataCom.

        "RADIO FREQUENCY SHARING AGREEMENT" means the Radio Frequency Sharing
Agreement dated the date of this Agreement between DataCom and Itron.

        "RECEIVING PARTY" means a Party that receives Confidential Information
from the other Party under this Agreement.

        "RESERVE INVENTORY" has the meaning set forth in Paragraph 4.2(g).

        "RMA" has the meaning set forth in Paragraph 4.2(f).

        "SENTRY DEVICE" means the telephone based meter device used for reading
residential and small commercial meters over the Fixed Network.

        "SENTRY MRP SYSTEM" means a system component of the Fixed Network that
processes meter data to determine the outage and restoration of electrical
service.

         "SERVICE TERRITORY" means the service territory of DLC as of the
Effective Date.

        "SERVICES" means the Itron responsibilities identified in Section 2 of
this Agreement, as such may be expanded from time to time pursuant to this
Agreement or by the agreement of the Parties.

        "SOFTWARE" means all licensed and unlicensed Genesis System network
software, computer programming object code, DNI software, and other software now
or hereafter owned by Itron or licensed from third parties and necessary for
effective system operation of the Fixed Network from time to time and all
related documentation and scripts furnished by or through Itron, as identified
in Schedule "C" and as added to the Fixed Network from time to time pursuant to
this Agreement, and all Software Releases.

        "SOFTWARE RELEASES" means Maintenance Releases, Critical Maintenance
Releases and Custom Releases. Software Releases include any now or hereafter
existing Itron or third party programs or computer programming code that (i)
involve or support the installation or use of any computer software or hardware
that is a Covered Component,



                                                                          PAGE 7

<PAGE>   11

(ii) is required to install the release, (iii) becomes a Covered Component, (iv)
is added through use of Supplemental Services, or (v) is necessary for the
continued satisfactory operation of the Fixed Network.

        "SPOKANE OPERATIONS CENTER" means the Itron customer support center
located in Spokane, Washington, as the same may be moved from time to time.

        "STANDARD SERVICES" has the meaning set forth in Paragraph 2.1.

        "SUPPLEMENTAL SERVICES" has the meaning set forth in Paragraph 2.8.

        "TERM" has the meaning set forth in Paragraph 7.1.

SECTION 2. ITRON SERVICES

        2.1    STANDARD SERVICES

               During the Term, Itron will perform the Services described in
Paragraphs 2.2, 2.3, 2.4 and 2.5 for the Fixed Network and all Covered
Components ("Standard Services").

        2.2    SOFTWARE RELEASES AND SUPPORT

                (a) Critical Maintenance Releases. Whenever Itron prepares or
has prepared a Critical Maintenance Release, Itron shall provide DataCom an
electronic copy of, and obtain all necessary licenses for DataCom to use, the
Critical Maintenance Release. Unless directed otherwise by DataCom in writing,
Itron shall (i) give any request for a Critical Maintenance Release priority
over all other DataCom reported problems and (ii) provide DataCom with
corrective action reports and project timetables with respect to the Critical
Nonconformity on not less than a weekly frequency. Itron shall provide, at its
sole cost and expense, assistance and on-site support to DataCom for the
implementation of Critical Maintenance Releases in the form of installation,
testing and training of designated DataCom personnel identified in writing to
Itron.

               (b) Test Releases. Upon the receipt of a written request from
DataCom, Itron shall provide DataCom with an electronic copy of any Critical
Maintenance Release both before and after Itron has completed its full test of
the Critical Maintenance Release. Itron will have no responsibility for
installation or Standard Services for, or for results, errors or damages caused
by DataCom's use of, a pre-test version of any Critical Maintenance Release
provided by Itron under this paragraph.

               (c) Maintenance Releases. Itron shall provide DataCom an
electronic copy of and, if necessary, a license to use, all Maintenance Releases
as soon as they have been prepared or received, and tested for release, by
Itron. All Maintenance Releases,



                                                                          PAGE 8

<PAGE>   12

and related training of DataCom personnel as required, will be provided upon
DataCom's request without any additional cost or expense to DataCom; provided,
however, that Itron shall not be obligated to provide Maintenance Releases for,
or to otherwise support, any Software which is not a Covered Component. Itron
shall notify DataCom promptly upon scheduling of and completion of any
Maintenance Release and upon its receipt of a Maintenance Release from a third
party. Such notice shall describe, in reasonable detail, the nature and subject
of the forthcoming Maintenance Release.

               (d) Documentation. Itron shall provide DataCom such
documentation, including commands and/or scripts, as may be necessary to install
and operate the Fixed Network, the Covered Components, Software and Software
Releases. Such publications need not, however, include engineering blue prints,
source code, proprietary protocols, and other Itron technical documents unless
otherwise agreed to in writing by the Parties. Technical publications, object
and source codes, protocols, and other proprietary Itron information not
provided under this Agreement shall be made available to DataCom pursuant to the
terms of the Escrow Agreement.

               (e) Software Release Support. During the installation of, and for
a period of ninety (90) days after the installation of any Software Release,
Itron shall make one or more qualified technical representatives available via
the toll-free telephone number set forth in Schedule "D" during the routine
support hours set forth in Schedule "D", to assist the DataCom Service
Administrator with installation, use and maintenance of the Software Release.

               (f) Third Party Software. If and when necessary to support Fixed
Network operations, Itron shall maintain third party Software at levels that are
supported by the respective third party vendors. Itron shall provide Maintenance
Releases of Itron Software to insure compatibility of Itron Software with
supported releases of third party Software.

        2.3    TECHNICAL SUPPORT

               (a) Fixed Network and Covered Components Routine Technical
Support. Itron shall make one or more qualified technical representatives
available via the toll-free telephone number set forth in Schedule "D" during
the routine support hours set forth in Schedule "D", to assist the DataCom
Service Administrator with technical support for routine Nonconformities and
other general technical support for the Fixed Network and Covered Components
that may be required from time to time.

               (b) Fixed Network and Covered Components Critical Technical
Support. Itron shall make one or more qualified technical representatives
available via the toll-free telephone number set forth in Schedule "D" on a
twenty-four (24) hour basis to assist the DataCom Service Administrator with any
Critical Nonconformity. Such assistance shall



                                                                          PAGE 9

<PAGE>   13

include, if requested by the DataCom Service Administrator, the dispatch of a
technician to correct the Critical Nonconformity within the time periods set
forth in Schedule "D" and in accordance with the other requirements set forth in
this Agreement.

               (c) Configuration Changes. Upon request from DataCom or Itron's
personnel, Itron shall take such actions as shall be necessary to support a
Configuration Change. If the Parties have a good faith dispute over whether a
requested change is a Configuration Change, such dispute shall be submitted for
resolution to an officer of DataCom and an officer of Itron who shall have the
authority to settle the dispute.

               (d) Disaster Recovery. Itron shall continue and, by October 31,
2000 shall complete its installation of, and shall thereafter operate and
maintain, a disaster recovery program at its Spokane Operations Center for the
Greentree Operations Center. Itron shall provide DataCom with the disaster
recovery services listed in Schedule "F" (the "DISASTER RECOVERY SERVICES") for
the identified Covered Components, on a 24 hour per day basis for a period of up
to 96 consecutive hours following commencement of Disaster Recovery Services.
Thereafter, Itron will provide Disaster Recovery Services, including operations
personnel for up to eight hours per day, and DataCom shall be responsible for
providing operations personnel for the remaining hours per day, unless DataCom's
requirement for Disaster Recovery Services was caused by Itron's negligence,
willful misconduct or failure to perform its obligations hereunder, in which
case, Itron shall continue to provide, at its cost and expense, Disaster
Recovery Services on a 24 hour per day basis until completed. All Disaster
Recovery Services after the first 96 hours will be deemed Supplemental Services.

               (e) Advice. At DataCom's reasonable request, Itron will advise
DataCom regarding the technical effects of any changes to the Fixed Network
contemplated or implemented by DataCom or on DataCom's behalf.

        2.4    FIXED NETWORK INSTALLATION, INVESTIGATION AND MAINTENANCE

               (a) Field Investigations. In situations where DataCom's standard
troubleshooting activities in accordance with Paragraph 4.3(f) cannot identify
or correct a Nonconformity, and problem analysis by telephone or remote system
access is neither successful nor expedient, and upon receipt of a service
request from DataCom, Itron will provide services as set forth in Schedule "D",
and shall dispatch appropriate employees or contract personnel to investigate
any Nonconformity. As part of its field investigation process, Itron will make
available all labor, material, exchange equipment, tools, and consumable
supplies (e.g., wire, batteries, brackets, and cables) necessary for
de-installation and re-installation of Nonconforming Covered Components, as well
as CCUs requiring battery replacement. If Itron discovers site characteristics
that adversely impact CCU performance, Itron will attempt to relocate the
affected CCU to an alternative site if



                                                                         PAGE 10

<PAGE>   14

an alternative site is available within fifty (50) yards of the original site
location. If CCU performance cannot be restored, Itron will remove the CCU from
the field and report the site(s) to DataCom as out of service. In any case,
Itron will take such action as may be necessary to eliminate the Nonconformity.

               (b) Covered Components Corrective Maintenance. Itron shall
provide corrective maintenance for Nonconforming Covered Components during
regular hours at Itron's servicing location, within the response/return times
documented in Schedule "D". Upon receiving the Covered Component at the
servicing location, Itron will complete the corrective maintenance, or arrange
for all corrective maintenance necessary, to return the Covered Component to its
original operating specifications, excluding minor cosmetic deficiencies (e.g.,
minor cracks, dents, and scratches). Itron will furnish all parts and materials
necessary to complete the corrective maintenance and eliminate any
Nonconformity. Parts furnished will be new, or in a condition equivalent to new,
and shall be functionally equivalent to those parts removed from service.
Nonconforming, malfunctioning or inoperative parts so replaced by Itron will
become Itron property.

               (c) Covered Component Installation and Maintenance. Itron will
ensure all Covered Components have been installed properly as of the Effective
Date, and subsequently if installed by or under Itron's direction pursuant to
this Agreement or the EnSite Agreement. Itron will maintain all Covered
Components within manufacturer specifications, including performing all
necessary or appropriate preventative maintenance on such Covered Components.

        2.5    FIXED NETWORK EXPANSION

               (a) Fixed Network Expansion to 95%. Itron shall install, using
the most economical means that balances both Parties' interests, such Equipment
and Software and provide such other related services as are necessary to expand
the Fixed Network to 95% Coverage (the "FIXED NETWORK EXPANSION") on or before
December 31, 2002. Itron shall, at its own cost and expense, provide all labor,
material, equipment, tools and consumable supplies necessary for the Fixed
Network Expansion. All Equipment and Software installed in connection with the
Fixed Network Expansion shall become the property of DataCom and become Covered
Components. Itron shall not be required to commence the Fixed Network Expansion
prior to January 1, 2001, and shall not be required to expend more than $2
million in total costs for the Fixed Network Expansion during 2001. In the event
that the Fixed Network Expansion is not completed on or before December 31,
2002, in addition to all other remedies which may be available to DataCom
hereunder, the fee payable by DataCom pursuant to Paragraph 5.2 may be reduced,
at DataCom's sole option, by up to 15% until such time as the Fixed Network
Expansion is completed. In no event shall any amount by which such fee is
reduced be recoverable by Itron.



                                                                         PAGE 11

<PAGE>   15

               (b) Telenetics Installation. Itron shall provide and install such
number of telenetics boxes and Sentry Devices as are necessary to support up to
1,500 additional residential or demand meters to be installed in the Fixed
Network and become Covered Components. Itron shall, at its own cost and expense,
provide all labor, material, equipment, tools and consumable supplies necessary
for such installation, and all telenetics boxes so installed shall become the
property of DataCom. DataCom shall procure for Itron the access it requires to
perform such installation and shall subsequently be responsible for all
communication costs associated with the installed telenetics boxes and Sentry
Devices.

               (c) MV90 Upgrade. At DataCom's request and in accordance with
DataCom's requirements, Itron will provide equipment, materials, software and
services necessary to upgrade the MV-Web and MV-90 applications systems included
in the Fixed Network to support (i) DataCom's e-business applications agreeable
to both Parties and (ii) posting of power quality data to MV-Web. Itron shall
bear all costs and expenses for all of the foregoing, including, but not limited
to, development and implementation charges, up to a maximum of $250,000.

               (d) Sentry MRP System. Itron, at its sole cost and expense, shall
complete, on or before June 30, 2001 (provided that, by September 30, 2000,
DataCom shall have defined, and Itron shall have approved, such approval not to
be unreasonably withheld, the specifications for the system), the development,
testing and installation of, and shall provide DataCom with a license to use,
Software for implementation of a Sentry MRP outage notification system designed
to accommodate up to 10,000 customers. Such Software license shall be
unrestricted as to the number of customers within the service territory as of
the Effective Date, of DLC and any of its Affiliates that may be serviced.
DataCom, at its sole cost and expense, shall provide all equipment and
communication circuits necessary for such system, provided that DataCom shall
have the right to purchase any such equipment which is available from Itron at
the Preferred Price.

        2.6    ADDITIONAL CHARGE FOR STANDARD SERVICES

               If, but only to the extent that, Itron is required to perform any
Standard Services as a result of any of the following events or circumstances (a
"PREMIUM STANDARD SERVICE"), then (i) Itron shall use its reasonable best
efforts to perform said Premium Standard Services, in which case the provisions
of Schedule D and Paragraph 2.9(a) shall not apply, and (ii) at Itron's option,
DataCom shall pay for such Premium Standard Service as if it were a Supplemental
Service at the Preferred Price;

               (a) Any repair, maintenance, service, modification to or
alteration of the Fixed Network performed after the Effective Date by any
personnel other than Itron personnel (including its employees, agents and
contractors) or Itron-trained DataCom



                                                                         PAGE 12

<PAGE>   16

personnel (including its employees, agents and contractors) after the Effective
Date without prior notice to and approval by Itron, which approval shall not be
unreasonably withheld;

               (b) Any damage to or accident involving the Fixed Network or
Covered Components due primarily to the negligence of, or an intentional act of
sabotage by, DataCom or any of its employees, contractors, subcontractors or
agents;

               (c) Any material breach by DataCom of its obligations under this
Agreement;

               (d) Any Nonconformity resulting from a major modification to or
alteration of the Fixed Network by DataCom which had not been approved or
otherwise permitted pursuant to the Change Control procedures attached as
Schedule "A"; or

               (e) Any Service required because DataCom did not operate the
Fixed Network or Covered Components within the normal operating standards
employed at the Greentree Operations Center as of the Effective Date and as
modified from time to time pursuant to this Agreement.

        2.7    FAILURE TO PERFORM STANDARD SERVICES

               Itron shall perform the Standard Services within the time periods
set forth in Schedule "D" or as otherwise required by this Agreement, and such
Standard Services shall comply with all performance standards and other
requirements of this Agreement. In the event that Itron fails to perform any of
the Standard Services as and when required under the terms of this Agreement,
and provided that DataCom has followed the escalation process provided in
Schedule "G", then, in addition to any other rights and remedies it may have
hereunder, at law, in equity or otherwise, upon written notice to Itron, DataCom
may perform or cause a third party to perform such Standard Services and shall
be entitled to (i) offset the costs and expenses of performing or having
performed such Standard Services against any amounts owed to Itron pursuant to
Section 5, and (ii) upon offsetting all such amounts then due and payable to
Itron pursuant to Section 5, draw upon the Letter of Credit for payment of the
costs and expenses of such Standard Services.



                                                                         PAGE 13

<PAGE>   17

        2.8    SUPPLEMENTAL SERVICES

               Upon receipt of a written request from DataCom, Itron shall
provide the following Supplemental Services to DataCom, each of which shall be
at the Preferred Price:

               (a) Excluded Equipment. At DataCom's request and after Itron's
agreement, which will not be unreasonably withheld, Itron shall make
commercially reasonable efforts to provide Services at a commercially reasonable
price for any Excluded Equipment.

               (b) Custom Releases. Within 30 days of receipt of a written
request from DataCom for a Custom Release, Itron shall provide DataCom with a
firm estimate of Itron's price and time required to prepare or cause preparation
of the Custom Release. The firm estimate shall include, but not be limited to,
the following information: a requirements definition, and estimates and
descriptions of project management, design, tooling, programming, documentation,
testing, implementation and on-going service. If DataCom provides Itron with a
written notice to proceed within 30 days of the receipt of the firm estimate,
Itron shall, as soon as commercially reasonable, (i) prepare or cause to be
prepared, (ii) provide DataCom an electronic form copy of, and (iii) obtain all
necessary licenses for DataCom to use, the Custom Release in accordance with the
firm estimate, and shall otherwise perform all services and obligations as set
forth in the firm estimate.

               (c) Optional Support and Training Services. Within 15 days of
receipt of a written request from DataCom, Itron shall provide DataCom with a
firm estimate of Itron's price and time required to provide DataCom with support
and/or training services that are not Standard Services, in each case as may be
set forth in the request. If DataCom provides Itron with a written notice to
proceed within 30 days of the receipt of the firm estimate, Itron shall provide
the services in accordance with the firm estimate.

               (d) Covered Component Upgrades. Within 30 days of receipt of a
written request from DataCom, Itron shall provide DataCom with a firm estimate
of Itron's price and time required to prepare or cause preparation of and to
implement an upgrade of or enhancement to a Covered Component that is not
otherwise provided for in this Agreement. If DataCom provides Itron with a
written notice to proceed within 30 days of the receipt of the firm estimate,
Itron shall prepare and implement the upgrade or enhancement in accordance with
the firm estimate.



                                                                         PAGE 14

<PAGE>   18

               (e) Other Supplemental Services. Upon request from DataCom, Itron
shall provide the following Supplemental Services at the Preferred Price for
labor, materials, and expenses:

                      (i) Services and expenses outlined as obligations of
DataCom in this Agreement;

                      (ii) Service requests that include services, overtime or
holiday coverage, response/return times, special freight or expenses over and
above the Standard Services;

                      (iii) Additional services that are required due to
DataCom's inability to provide Itron with reasonable access to system
performance data and use of operational tools available to the Fixed Network;

                      (iv) Any field investigations or corrective maintenance
that are not otherwise caused by Nonconformities or Critical Nonconformities;

                      (v) Field investigation support for meters, ERTs, Sentry
Devices and Excluded Equipment;

                      (vi) Installation and/or acceptance tests, data, reports,
documentation, upgrades and/or enhancements not specifically related to Covered
Components or included as part of this Agreement;

                      (vii) Assistance to DataCom for the implementation of a
Maintenance Release in the form of installation and testing;

                      (viii) Support services for any pre-test version of a
Critical Maintenance Release; and

                      (ix) Services that are required in connection with a move
of the Greentree Operations Center.

               (f) Fixed Network Expansion to 100%. At DataCom's request, Itron
will provide equipment, materials and services necessary to expand the Fixed
Network beyond 95% Coverage and up to 100% coverage of DLC's residential and
small commercial customers in the Service Territory at the Preferred Price,
unless the expansion is requested pursuant to the EnSite Agreement, in which
case the terms of the EnSite Agreement shall apply.

               (g) MV-PBS Upgrade. At DataCom's request, Itron will provide, at
the Preferred Price, equipment, materials and services necessary to upgrade the
MV-PBS to (i) automate DLC's current S-bill programs, edits, and interfaces used
for large customer



                                                                         PAGE 15

<PAGE>   19

billing, and (ii) support market requirements for new complex tariffs and other
billing requirements imposed by Pennsylvania's customer choice legislation.

        2.9    WARRANTIES AND PERFORMANCE STANDARDS

               (a) Critical Nonconformities. Notwithstanding anything to the
contrary set forth elsewhere in this Agreement and except as otherwise provided
in Paragraph 2.6, in performing the Standard Services, the following
requirements shall apply to any and all Critical Nonconformities:

                      (i) Itron shall exercise its reasonable best efforts to
eliminate a Critical Nonconformity within 120 hours after it receives written
notice from DataCom that a Critical Nonconformity exists (the "INITIAL CURE
PERIOD"). If a Critical Nonconformity has not been eliminated within the Initial
Cure Period, DataCom shall have the option, exercisable in its sole discretion,
to require Itron to pay a penalty of $5,000 to DataCom within ten days after the
end of the Initial Cure Period.

                      (ii) With respect to any Critical Nonconformity which has
not been eliminated within the Initial Cure Period, Itron shall exercise its
best efforts to eliminate such Critical Nonconformity as soon as possible, but
in any event on or before the date which is 15 days after the end of the Initial
Cure Period (the "FINAL CURE DATE"). If a Critical Nonconformity has not been
eliminated on or before the Final Cure Date (as it may be extended pursuant to
(iii) below), an Event of Default under Paragraph 6.1 shall be deemed to exist.

                      (iii) If it would not be possible through the exercise of
best efforts for Itron or any other similar company to eliminate the Critical
Nonconformity on or before the Final Cure Date, then the Final Cure Date may be
extended at DataCom's sole discretion if DataCom is satisfied that continuing
best efforts by Itron will eliminate the Critical Nonconformity.

               (b) Itron Warranties. Itron represents, warrants and guarantees
that any Services provided under this Agreement shall be (i) provided in
accordance with the requirements of this Agreement; (ii) provided in a timely,
skillful, workmanlike and professional manner; and (iii) suitable for providing
the Services required hereunder.

               (c) Third Party Warranties. To the extent permitted and subject
to Paragraph 9.1, Itron will assign to DataCom, without recourse to Itron, all
third party manufacturer's warranties related to the Covered Components which
are in effect on the Effective Date. The expiration of such warranties, however,
shall not be acceptable cause for non-delivery, or unsatisfactory delivery, of
Services under this Agreement.



                                                                         PAGE 16

<PAGE>   20

               (d) Applicable Standards. Itron will perform, and will cause its
contractors to perform Services under Section 2 safely, reliably, efficiently,
in compliance with all Applicable Laws, including FCC and PUC requirements, in
conformance with industry standards and under conditions reasonably required by
DataCom's insurers.

               (e) CCU, NCN and Communications Equipment Performance. A CCU will
be considered Nonconforming when communications have failed for three (3)
consecutive days or if its continued operation interferes with other Fixed
Network components. Itron's Services shall be performed in a manner that ensures
that CCU/NCN reads (data collection) are successful for ninety-six percent (96%)
of the attempts during each month during the Term. Itron agrees that maintenance
and support activities will be reviewed and revised, if necessary, in
consultation with DataCom, if aggregate CCU/NCN read performance falls below
ninety-six percent (96%) for any consecutive seven day period.

               (f) Relations with Labor. Itron shall maintain good relations
with its employees and contractors with regard to its performance of the
Services. Itron shall promptly notify DataCom in writing of any material
complaint made by or any material dispute that arises with any of these Persons
in connection with the Services.

               (g) Environmental Compliance.

                      (i) Prior to commencement of any Services involving
Materials of Environmental Concern, Itron shall provide to DataCom a list of all
Materials of Environmental Concern that may be used or generated in connection
with the Services.

                      (ii) In furtherance of and not in limitation of any other
portion of this Agreement, Itron shall, and shall cause its subcontractors to
comply with all Applicable Laws relating to safety and the protection of the
environment including, but not limited to, handling, protection, transportation
and disposal of all Materials of Environmental Concern ("ENVIRONMENTAL LAWS").
The Services shall at all times comply with Environmental Laws.

               2.10   PERSONNEL AND QUALIFICATIONS

               (a) General. Itron shall provide all labor and personnel required
in connection with the performance of the Services. All personnel used by Itron
in the performance of Services shall be qualified by training, licenses or
certifications, as required, and experienced to perform their assigned tasks.
Itron shall ensure that all personnel assigned to perform Services are subject
to the same current background checks, security requirements and other
protective personnel procedures, including, without limitation, drug testing
procedures, as are personnel of DLC in similar positions. At DataCom's request,
Itron shall remove from performing Services any employee whom



                                                                         PAGE 17

<PAGE>   21

DataCom, in its reasonable discretion and with sufficient cause, deems
unqualified, incompetent, disorderly, insubordinate, careless or otherwise
objectionable (except that Itron shall have no obligation to remove any employee
if such removal would violate Applicable Law).

               (b) Use of Contractors. Itron may, at its sole discretion, use
contract personnel to perform any Services pursuant to this Agreement. Such
contract personnel shall possess the required qualifications, training and
experience necessary to perform the required tasks in accordance with applicable
industry standards. Such contract personnel will be dispatched by and
responsible to Itron. DataCom shall not direct Itron's contract personnel to
perform any tasks not included as Standard Services or Supplemental Services
under this Agreement.

        2.11   INTERFERENCE WITH DATACOM'S FACILITIES

               Itron shall not materially and adversely interfere or tamper with
any of DataCom's facilities in any way that is not necessary or appropriate to
the performance of the Services without the prior written consent of DataCom,
and Itron shall take all actions necessary or appropriate to prevent its
employees, other contractors or subcontractors from doing so.

        2.12   ASSUMPTION OF RISK AND INSURANCE

               (a) Assumption of Risk. Itron acknowledges that the Services to
be provided under this Agreement may involve work at or near energized electric
lines or equipment, above and below ground, and potential exposure to Materials
of Environmental Concern and that, for this reason, there are certain risks
attendant to the performance of the Services. Itron explicitly assumes these
risks and the risks of pre-existing conditions during the performance of the
Services, excluding any conditions resulting from DataCom's sole negligence or
willful misconduct.

               (b) Insurance. During the Term, Itron shall maintain, at no cost
to DataCom, at least the following kinds and amounts of insurance to cover
bodily injury (including death) and tangible property damage suffered or (in the
case of liability insurance) caused by Itron or its employees, if any, in
connection with the performance of the Services:

                      (i) Employer's Liability Insurance. Limit of not less than
$500,000.

                      (ii) Comprehensive General Liability Insurance. Includes
premises operation, independent contractor's protective, products, completed
operation, and blanket contractual liability coverage with a combined single
limit of not less than



                                                                         PAGE 18

<PAGE>   22

$1,000,000 per occurrence and $2,000,000 in the aggregate, and coverage for
blasting or explosion, collapse and underground work if applicable. The property
damage liability insurance shall include the broad form comprehensive general
liability coverage and shall include coverage (on a replacement cost basis) for
Covered Components while in the care, custody and possession of Itron.

                      (iii) Excess Umbrella Liability Insurance. Single limit of
not less than $15,000,000.

                      (iv) Worker's Compensation. A worker's compensation policy
in such coverage and with such limits as may be required from time to time by
Applicable Law.

               Itron's liability policies required under this paragraph shall
contain a waiver of subrogation in favor of DataCom. DataCom shall be named as
an additional insured on Itron's liability policies required under this
Paragraph, as its interests may appear. Upon DataCom's request, Itron shall
provide written evidence that Itron complies with the requirements of this
Paragraph, stating the policy number and the inception and expiration data of
all policies. A "notice of cancellation/material alteration" clause shall be
included in Itron's liability policies required under this Paragraph that shall
require the policy issuer or policy holder to give DataCom at least thirty (30)
days notice prior to cancellation or material alteration under such policy.

               2.13   CHANGE CONTROL

               The Change Control Policy attached as Schedule "A" will govern
material changes to the Fixed Network and the Fixed Network test environment.

               2.14   ITRON REPORTS

               Promptly after the filing with the Securities and Exchange
Commission thereof, Itron shall furnish or cause to be furnished to DataCom a
copy of each current, quarterly and annual report on Form 8-K, 10-Q and 10-K,
respectively, any amendment, supplement, modification or addition to any such
report, and any other report, definitive proxy statement and registration
statement filed by Itron with the Securities and Exchange Commission.
Concurrently with furnishing its 10-K, Itron shall provide to DataCom a
certificate, signed by its President or Chief Financial Officer, stating that no
Event of Default has occurred and is continuing or, if an Event of Default has
occurred and is continuing, a statement as to the nature thereof and any action
that Itron proposes to take with respect thereto.



                                                                         PAGE 19

<PAGE>   23

SECTION 3. LICENSES

        3.1    LICENSES

               To the extent permitted by third party licensors (if applicable)
and with no additional cost to Itron, Itron hereby grants DataCom a
non-exclusive, unrestricted, royalty-free license (for Itron owned Software) or
sublicense (for third party owned Software) to use, in connection with the Fixed
Network, all Software, including commands and/or scripts, and all subsequent
Software Releases. The terms of Itron's end-user license for any third party
Software as in effect on the Effective Date shall apply to any sublicense for
such third party Software under this paragraph. Notwithstanding the forgoing, if
the effective operation of the Fixed Network requires that DataCom own any
Software or Software Release, Itron shall, at its sole cost and expense, take
such commercially reasonably steps as may be necessary to procure for DataCom
the ownership of such Software or Software Release.

        3.2    OWNERSHIP OF SOFTWARE AND SOFTWARE RELEASES

               All Software and Software Releases not owned by a third party are
owned by Itron unless and until such ownership has been transferred to DataCom
pursuant to the Purchase Agreement or Paragraph 3.1 hereof.

SECTION 4. IMPLEMENTATION

        4.1    COOPERATION

               The Parties will cooperate in good faith in performing their
respective obligations under this Agreement.

        4.2    GENERAL OBLIGATIONS

               (a) Service Administrators. DataCom will identify at least two
employees to act as primary and backup service administrators (each, an "DATACOM
SERVICE ADMINISTRATOR"), and Itron will identify at least two employees to act
as primary and backup service administrators (each, an "ITRON SERVICE
ADMINISTRATORS"). The DataCom Service Administrators and the Itron Service
Administrators shall act as liaisons between DataCom and Itron for all Service
issues.

               (b) Service Requests.

                      (i) Itron shall maintain and make available to DataCom, a
staff of service personnel to respond to DataCom service requests in accordance
with Schedule "D", on the following basis:



                                                                         PAGE 20

<PAGE>   24

                             (A) 24 hours per day, seven days per week for
Critical Nonconformities, and

                             (B) Routine working hours for all other 
Nonconformities.

                      (ii) Service requests for Nonconformities other than
Critical Nonconformities shall be reported to Itron by DataCom's Service
Administrator via Itron's Customer Support Hotline at (800) 635-8725.

                      (iii) Service requests for Critical Nonconformities shall
be reported by the DataCom Service Administrator to the on-duty Itron Service
Administrator at (800) 635-8725. The on-duty Itron Service Administrator will
take all necessary action to restore service on an urgent basis, including
immediately dispatching a technician to the Greentree Operations Center if
necessary or if requested by DataCom as set forth in Schedule "D".

                      (iv) Upon initiating a Service Request, DataCom's Service
Administrator should provide, at a minimum, the following information:


                             Contact Name:
                             Telephone Number:
                             Description of Problem:
                             Type of Equipment:
                             Equipment Item/Part Number:
                             Software (Version):
                             Materials to be Returned:  Y/N

               (c) Security. DataCom, at its expense, shall establish and
maintain physical and remote access to the Fixed Network, which will include
security badges, facilities entry security, and computer passwords for mutually
designated service providers. At a minimum, Fixed Network access (24 hours per
day, seven days per week) and computer passwords will allow Itron service
personnel to access, but not, without DataCom's consent, to make changes to,
Fixed Network menus, commands, and databases as necessary for Itron to provide
Services. Itron shall hold, and shall cause each of its employees and
contractors to hold, all security badges, computer passwords and other security
codes and information relating to the Fixed Network in strict confidence, and
neither Itron nor any of its employees, contractors or agents shall permit any
unauthorized person to have any access to or possession of any of said items.

               (d) Technical Library. DataCom shall maintain, and provide Itron
with access to, a technical library at the Greentree Operation Center for
storage and maintenance of all related Fixed Network agreements, back-up
software, installation



                                                                         PAGE 21

<PAGE>   25

guides, operators manuals, service manuals, engineering change orders,
specifications, service bulletins and reports associated with installation,
operation, maintenance and administration of the Fixed Network and Software.
Itron will support DataCom as the co-proprietor of this library. Unless
specifically identified as "Public Information", all materials maintained in the
technical library shall be Confidential Information, and each Party agrees to
not copy, make available or distribute materials, documents, or Software from
the technical library to any third party for any reason without prior written
consent from the other Party.

               (e) Communications. Itron will maintain the routers and other
frame relay communications Equipment as set forth on Schedule "C" between the
NCN sites and the Greentree and Spokane Operation Centers at its own cost and
expense, other than the communications charges, which will be the responsibility
of DataCom. In addition to the circuits required for operation of the Fixed
Network, these circuits will include links to Itron for Disaster Recovery
Services and remote access support services. Itron shall use these support links
solely for its system maintenance and support activities as documented herein,
and shall not make changes to the Fixed Network without prior authorization of
DataCom. DataCom shall work with Itron and the communications service provider
toward establishing a working relationship that will enable Itron to perform the
Services hereunder.

               (f) Returned Materials. Prior to returning any Covered Component
to Itron for Service, DataCom will request Itron to assign a return materials
authorization ("RMA") number to the request. Upon issuance of the RMA, DataCom
will return the Covered Component via prepaid freight to Itron's servicing
location with reference to the assigned RMA number on all shipping labels and
documents. Upon receiving returned Covered Components from DataCom and
completion of Services, if applicable, Itron will return materials to DataCom
via prepaid freight.

               (g) Reserve Inventory. The following items (the "RESERVE
INVENTORY") are among the assets purchased by DataCom pursuant to the Asset
Purchase Agreement:


<TABLE>
<CAPTION>
                      Item                                       Quantity
                      ----                                       --------
<S>                                                              <C>
                      DataPak                                    1
                      ERTs                                       3,000
                      Sentry Devices                             1,000
                      CCUs                                       300
                      NCNs                                        2
</TABLE>




                                                                         PAGE 22

<PAGE>   26

DataCom shall have the right to hold and use the Reserve Inventory as and when
it, in its sole discretion, determines. Itron shall have no right to use any of
the Reserve Inventory in connection with its services hereunder without the
prior written approval of DataCom. Itron shall have no obligation to replenish
any of the Reserve Inventory used by DataCom.

               (h) Maintenance Inventory. The following items (the "MAINTENANCE
INVENTORY") are among the assets purchased by DataCom pursuant to the Asset
Purchase Agreement:


<TABLE>
<CAPTION>
                      Item                                       Quantity
                      ----                                       --------
<S>                                                              <C>
                      DCU                                        1
                      ERTs                                       2,000
                      Sentry Devices                             1,000
                      CCUs                                       200
                      NCNs                                       3
                      Routers                                    3
                      Telestructures                             10
</TABLE>


DataCom, at its expense, will own, warehouse and make available to Itron the
Maintenance Inventory for the performance of the maintenance responsibilities
described herein and at no cost to Itron. DataCom shall supply Itron with
information regarding the disposition of any such assets used for maintenance or
expansion purposes that are not Itron's responsibility under this Agreement.
DataCom agrees that the Maintenance Inventory will be used exclusively in
connection with the Fixed Network for exchange of field equipment on a "like for
like basis", or, upon payment of any associated incremental cost (including the
cost of additional CCU or NCN equipment that may be required to be installed),
on a "non-like for like" (e.g., Sentry to ERT, or ERT to Sentry), basis and,
will also make these materials available to Itron service representatives. As
additional consideration for the fees payable by DataCom pursuant to Section 5,
from time to time, within 30 Business Days after its receipt of a written report
from DataCom showing that the quantities of the Maintenance Inventory held by
DataCom are less than the numbers shown above, Itron, upon DataCom's request,
shall transfer title, free and clear of all liens and encumbrances, and deliver
to DataCom, such additional quantities of such materials as are necessary to
maintain the quantities of Maintenance Inventory as listed above.

               (i) Service Reports/Data. Itron and DataCom will complete
applicable installation, operation, and maintenance reports/data as documented
and listed in Schedule "B", relating to any/all services performed on Covered
Components. Reports may be submitted in a machine-readable format via standard
media or pre-determined file formats on a monthly basis.



                                                                         PAGE 23

<PAGE>   27

          4.3  OBLIGATIONS OF DATACOM

               (a) Software Releases. Any Software Releases provided to DataCom
pursuant to this Agreement are exclusively for DataCom's operation of the
Covered Components and Fixed Network. DataCom, in accordance with the terms of
the Agreement, shall install or permit Itron to install all fully tested and
approved Maintenance Releases made available by Itron that do not adversely
affect the functionality of any portion of the Fixed Network.

               (b) Covered Components. DataCom shall maintain a database of all
Equipment, Software, Software Releases and other Covered Components, including
installed quantities, in a format that allows printing of a report similar to
that set forth on Schedule "C". The database information will initially be
provided by Itron and will include manufacturer, model and serial numbers,
equipment and software revision numbers, physical location, accessories, etc.,
and be maintained in machine readable format with updated summaries prepared
every thirty (30) days and made available to Itron upon request.

               (c) Operation Standards. DataCom agrees to operate the Fixed
Network and Covered Components with appropriately trained personnel and in
accordance with the standard operating practices that were in effect as of the
Effective Date and modified from time to time thereafter pursuant to this
Agreement as provided to DataCom by Itron.

               (d) Leases, License and Permits. DataCom, with Itron's
cooperation as necessary, shall maintain all NCN site leases, City of Pittsburgh
license fees and FCC licenses required to operate the Fixed Network, except such
licenses as may be sub-licensed to DataCom by Itron pursuant to the Radio
Frequency Sharing Agreement, which licenses shall be maintained by Itron at its
sole cost and expense throughout the Term of this Agreement.

               (e) Facilities. DataCom shall make reasonable and appropriate
office space for four people and warehouse space for the Itron Equipment
available at no cost to Itron in connection with Itron's performance of its
obligations hereunder. DataCom will, in good faith, attempt to accommodate up to
an additional two people if reasonably required by Itron to perform Services
hereunder.

               (f) Troubleshooting. Prior to initiating any request for Standard
Service under Article II of this Agreement, DataCom shall follow the standard
operating procedures (as they exist on the Effective Date and as they may be
modified thereafter) for the Fixed Network data center to qualify and correct
operationally related Covered Component problems. These efforts include
activities that can be performed by DataCom as part of its Fixed Network data
center operations. Examples of such procedures include, but are not limited to,
normal execution of monitoring or diagnostic software, 



                                                                         PAGE 24

<PAGE>   28

system tests, communications tests, electrical power checks, component reset or
recovery routines. Once these efforts have been made, the Itron Customer Support
Center will be contacted for routine issues. DataCom may contact the Itron
Service Administrator immediately for Critical Nonconformity issues to review
other alternatives and to take such action as may be required by this Agreement.

               (g) System Data. Upon receipt of a written request from Itron,
DataCom shall provide such up-to-date Fixed Network configuration and system
performance data as is reasonably requested in writing by Itron in connection
with its delivery of Services as outlined herein, provided that if a Critical
Nonconformity exists, such request may be oral.

               (h) Test Environment. DataCom shall have and operate a test
environment that mirrors a portion of its production Fixed Network environment
for acceptance testing of Covered Components. DataCom will provide Itron with
assistance for Fixed Network testing of Covered Components as required prior to
installation into the Fixed Network. All test environment equipment is
considered a Covered Component.

               (i) DataCom Contractors. DataCom shall require that all
contractors who may perform DataCom's responsibilities as documented herein
incorporate Itron's published installation and/or operating procedures as a
contractor requirement. Itron may consider any request for Service (including
any Supplemental Service for which the charges pursuant to this Agreement will
apply) initiated by a contractor identified by DataCom to Itron in writing as an
"authorized DataCom contractor".

               (j) Field Investigation. DataCom shall dispatch appropriate
employee or contract personnel to investigate, and if necessary exchange,
Nonconforming ERTs, Sentry Devices, telenetics equipment and meters. As part of
its field investigation process, DataCom shall make available all labor,
materials, meters, equipment from the Maintenance Inventory, tools, and
consumable supplies (meter seals, wire, equipment, etc.), necessary for
de-installation and re-installation of ERTs, Sentry Devices and meters, as
necessary to restore proper operation.

               (k) Disposal. DataCom agrees to dispose of all DataCom owned
materials removed from service in accordance with Applicable Laws and reasonable
Itron recommendations. DataCom agrees that any DataCom-owned materials forwarded
to Itron that require disposal, exclusive of units returned for repair or
replacement at Itron's request, may be returned to DataCom at DataCom's expense.

               (l) Backup. DataCom shall follow standard operating practices to
periodically check the operation of all Fixed Network backup Covered Components
located in the Greentree Operations Center as of the Effective Date as modified
thereafter pursuant to the Agreement.



                                                                         PAGE 25

<PAGE>   29

               (m) Use of Covered Components. DataCom agrees to use all Covered
Components for the purpose of operating, maintaining and expanding the Fixed
Network pursuant to the Agreement.

SECTION 5. COMPENSATION; CONDITIONS PRECEDENT

        5.1    INITIAL FEE

               On or prior to the first anniversary of the Effective Date,
DataCom will pay to Itron the sum of four hundred and seventy five thousand
dollars ($475,000.00) (the "INITIAL FEE") payable via wire transfer as
instructed by Itron.

        5.2    ANNUAL FEE FOR STANDARD SERVICES

               (a) Initial Annual Fee. For each twelve month period of the Term,
DataCom will pay Itron, via wire transfer, for the Standard Services a fee of
six hundred and ninety five thousand five hundred dollars ($695,500.00), payable
in four (4) equal installments due on the last day of each consecutive three
month period of the Term, beginning June 30, 2000. Undisputed payments not
received within thirty (30) days after the date upon which such payment is due
will bear interest at a rate equal to the lesser of one and one-half percent
(1-1/2%) per month or the maximum rate permitted under Applicable Law. Payments
to be made under this Paragraph 5.2 are subject to offset and/or reduction
pursuant to the applicable provisions of this Agreement and the Purchase
Agreement.

               (b) Increases in Annual Fee. The fee payable pursuant to Section
5.2(a) is subject to increase from time to time, as agreed by the Parties, upon
the addition of additional Covered Components to the Fixed Network pursuant to
the EnSite Agreement or Supplemental Services (other than under Paragraph
2.8(g)).

               (c) Withholding of Annual Fee. In the event that all items
required to be initially delivered by Itron pursuant to the Escrow Agreement are
not so delivered on or before May 31, 2000, the fee payable by DataCom pursuant
to Section 5.2(a) may, at DataCom's option, be withheld until such delivery is
made, at which time all amounts so withheld by DataCom shall be paid to Itron.

        5.3    FEES FOR SUPPLEMENTAL SERVICES

               For all Supplemental Services, unless otherwise provided in this
Agreement, Itron will invoice DataCom at the Preferred Price. Payment will be
due within 30 days of submission. Undisputed invoices not paid within 30 days of
receipt will bear interest at a rate equal to the lesser of one and one-half
percent (1-1/2%) per month or the maximum rate permitted under Applicable Law.



                                                                         PAGE 26

<PAGE>   30

        5.4    LETTER OF CREDIT

               Itron shall, on or prior to the Effective Date, furnish and
throughout the Term maintain for the benefit of DataCom a standby letter of
credit, issued by a Qualifying Bank acceptable to DataCom (the "LETTER OF
CREDIT"), containing the terms and conditions set forth in Paragraph 5.5, and in
the L/C Amount. The Letter of Credit shall be security for Itron's faithful
performance of all Services and its other obligations hereunder during the Term
of this Agreement. Itron shall be responsible for making sure the Letter of
Credit does not expire (without renewal) prior to the expiration of the Term.

        5.5    Conditions of Letter of Credit

               (a) Conditions of Draw. DataCom shall be entitled to draw any
amounts up to the total amount available under the Letter of Credit established
under Paragraph 5.4 upon any of the following conditions:

                      (i) an Event of Default has occurred under Paragraph 6.1;

                      (ii) a replacement Letter of Credit has not been delivered
to DataCom on or before 30 days before the expiration of the Letter of Credit;
or

                      (iii) a draw on the Letter of Credit is permitted pursuant
to Paragraph 2.7 or Paragraph 8.5.

               (b) Other Conditions. The Letter of Credit shall provide (i) that
DataCom may draw on such Letter of Credit in any amount up to the total amount
of the Letter of Credit by providing a certificate executed by two officers of
DataCom stating that DataCom is entitled to draw on the Letter of Credit
pursuant to Paragraph 5.5 (a) and specifying the amount of such draw; and (ii)
that draws will be in immediately available funds no later than the next three
(3) Business Days following delivery of the certificate.

SECTION 6. EVENTS OF DEFAULT

        6.1    EVENTS OF DEFAULT

               (a) The following shall constitute Events of Default, each of
which shall entitle DataCom to exercise the remedies set forth in Paragraph 6.2
hereof:

                      (i) Itron's failure to perform its obligations pursuant to
Paragraph 2.9(a);

                      (ii) Itron's failure to perform its obligations pursuant
to Paragraph 5.4;



                                                                         PAGE 27

<PAGE>   31

                      (iii) Itron's sale of all or substantially all of its
assets or business to, any Person, and either (A) such Person does not
specifically assume all of Itron's obligations under this Agreement or (B) such
Person is not acceptable to DataCom in its sole discretion;

                      (iv) Itron assigns this Agreement in violation of
Paragraph 10.3; and

                      (v) The appointment of a receiver, custodian, or trustee
of Itron for all or substantially all of the property of Itron; Itron makes an
assignment for the benefit of creditors other than an assignment for security or
collateral purposes in connection with a financing; Itron convenes a meeting of
its creditors, or any class thereof, for purposes of effecting a moratorium upon
or extension or composition of its debts and thereafter is unable to obtain an
agreement with such creditors for a moratorium upon or extension or composition
of its debts; Itron shall have been adjudicated bankrupt or insolvent or all or
substantially all of its property shall have been sequestered by an order of
federal, state, foreign or other court of competent jurisdiction; there shall
have been a filing of an involuntary petition against Itron seeking liquidation,
reorganization, arrangement, readjustment of its debts or for any other relief
under the Bankruptcy Code or under any other act or law pertaining to insolvency
or debtor relief, whether state, federal or foreign, now or hereafter existing,
which petition shall not be dismissed within sixty (60) days after such filing;
Itron has commenced any bankruptcy, reorganization or insolvency proceeding or
other proceeding under the Bankruptcy Code or under any other act or law
pertaining to insolvency or debtor relief, whether federal, state or foreign,
now or hereafter existing, or Itron has consented to the taking of any of the
foregoing actions; or Itron voluntarily dissolves or terminates its corporate
existence or is terminated or dissolved, liquidates or is liquidated.

                      (b) In the event that Itron breaches or fails to perform
any of its covenants, agreements or obligations under this Agreement, and such
breach or failure continues for a period of forty-five (45) days following
Itron's receipt of written notice from DataCom of such breach or failure to
perform (the "CURE PERIOD"), then for each day following such Cure Period that
the breach or failure continues, DataCom shall have the option, exercisable in
its sole discretion, to withhold and deduct from the next scheduled fee payment
under Paragraph 5.2, an amount equal to (i) the annual fee then payable under
Paragraph 5.2, divided by (ii) 365. If such breach or failure to perform
continues for a period of thirty (30) days beyond the end of the Cure Period,
then DataCom shall have the right, at its option, to terminate the Agreement
pursuant to Paragraph 7.2, and upon such termination, DataCom may exercise any
or all of the remedies in Paragraph 6.2 (in addition to any other rights and
remedies it may have at law, in equity or otherwise, including those under this
Agreement, the Purchase Agreement, the Escrow Agreement and the Radio Frequency
Sharing Agreement). If 



                                                                         PAGE 28

<PAGE>   32

Itron has advised DataCom in writing that the breach or failure is not capable
of being cured within the Cure Period through the exercise of Itron's reasonable
best efforts, and provided that (x) Itron has commenced and is continuing to use
its reasonable best efforts to cure the breach or failure, and (y) DataCom is
satisfied that such reasonable best efforts will result in a timely cure, then
the Cure Period shall be extended for the additional time necessary to achieve
such cure.

        6.2    REMEDIES FOR EVENTS OF DEFAULTS

               Upon the occurrence of an Event of Default under Paragraph
6.1(a), and as permitted by Paragraph 6.1(b), DataCom shall be entitled to
exercise any or all of the following remedies in addition to any other rights
and remedies it may have, at law, in equity or otherwise, including those under
this Agreement, the Purchase Agreement, the Escrow Agreement and the Radio
Frequency Sharing Agreement:

               (a) DataCom may immediately draw down all or any portion of the
Letter of Credit required to be maintained at that time;

               (b) DataCom may cause all items held in escrow pursuant to the
Escrow Agreement to be delivered to it; and

               (c) DataCom may terminate this Agreement pursuant to Paragraph
7.2 hereof.

        6.3    CHANGE IN CONTROL

               Upon the occurrence of a Change in Control, DataCom may cause
all items held in escrow pursuant to the Escrow Agreement to be delivered to
it for its use, to the extent necessary in DataCom's sole judgement, in
connection with the Fixed Network.

SECTION 7.     TERM AND TERMINATION

        7.1    TERM

               The term of this Agreement will commence on the Effective Date,
unless earlier terminated as provided elsewhere in this Agreement, and will
automatically terminate at the end of December 31, 2013 (the "TERM"); provided,
however, that the Term shall be automatically extended for an additional two
year period at the end of the Term and at the end of each subsequent two year
extension period unless either (a) Itron has given DataCom written notice of its
intent not to renew at least two years prior to the end of the Term or any
extension period or (b) DataCom has given Itron notice of its intent not to
renew at least six months prior to the end of the Term or any extension period.
Each extension of Term shall be subject to a commercially reasonable adjustment



                                                                         PAGE 29

<PAGE>   33

to the compensation payable under Paragraphs 5.2 and 5.3 hereof. The Term shall
include each such additional extension period.

        7.2    TERMINATION BY DATACOM

               Without limiting any other rights or remedies (including, without
limitation, any right to seek damages and other monetary relief) that DataCom
may have in law or otherwise, DataCom may terminate this Agreement (a) upon the
occurrence of an Event of Default, (b) as provided in Paragraph 6.1(b), or (c)
at any time at its convenience upon 120 days notice to Itron. In the event of
such termination for convenience, Itron shall discontinue Services hereunder in
accordance with the termination notice, effective on the date of such
termination, the Parties shall mutually agree on the procedures for termination
and DataCom shall make payment to Itron in the amount of (i) $1.0 million if the
termination notice is given on or prior to the fifth anniversary of the
Effective Date, (ii) $500,000 if the termination notice is given after the fifth
anniversary but on or prior to the tenth anniversary of the Effective Date and
(iii) $250,000 if the termination notice is given after the tenth anniversary of
the Effective Date. Upon making such payment, DataCom shall receive from Itron
all licenses and other rights necessary or appropriate to operate the Fixed
Network and Covered Components.

        7.3    TERMINATION BY ITRON

               Without limiting any other rights or remedies (including, without
limitation, any right to seek damages and other monetary relief) that Itron may
have in law or otherwise, Itron may terminate this Agreement upon written notice
if:

               (a) DataCom breaches its obligations to make payments under
Section 5 hereof, unless such failure to pay is covered by a bona fide, good
faith dispute, provided that (i) Itron sends written notice to DataCom
describing the breach, and (ii) DataCom does not cure the breach within thirty
(30) days following its receipt of such notice; or

               (b) There is an appointment of a receiver, custodian, or trustee
of DataCom for all or substantially all of the property of DataCom; DataCom
makes an assignment for the benefit of creditors other than an assignment for
security or collateral purposes in connection with a financing; DataCom convenes
a meeting of its creditors, or any class thereof, for purposes of effecting a
moratorium upon or extension or composition of its debts and thereafter is
unable to obtain an agreement with such creditors for a moratorium upon or
extension or composition of its debts; DataCom shall have been adjudicated
bankrupt or insolvent or all or substantially all of its property shall have
been sequestered by an order of federal, state, foreign or other court of
competent jurisdiction; there shall have been a filing of an involuntary
petition against DataCom seeking liquidation, reorganization, arrangement,
readjustment of its debts or for any other relief under the Bankruptcy Code or
under any other act or law pertaining to



                                                                         PAGE 30

<PAGE>   34

insolvency or debtor relief, whether state, federal or foreign, now or hereafter
existing, which petition shall not be dismissed within sixty (60) days after
such filing; DataCom has commenced any bankruptcy, reorganization or insolvency
proceeding or other proceeding under the Bankruptcy Code or under any other act
or law pertaining to existing or DataCom has consented to the taking of any of
the foregoing actions; or DataCom voluntarily dissolves or terminates its
existence or is terminated or dissolved, liquidates or is liquidated.

SECTION 8. INDEMNIFICATION

        8.1    OF DATACOM

               Itron will indemnify, hold harmless and defend DataCom, its
directors, officers, employees and agents from and against any and all losses,
damages, liabilities, claims, penalties, fines and other costs and expenses,
including reasonable attorneys' fees and costs of settlement ("LOSSES") that
DataCom reasonably incurs arising from Itron's performance of or failure to
perform any Services required to be performed by Itron under this Agreement,
including, without limitation, customer claims relating to Sentry Device
telephone line seizures. However, Itron will have no such obligation regarding
any Losses to the extent they arise from DataCom's negligence or willful
misconduct.

        8.2    OF ITRON

               DataCom will indemnify, hold harmless and defend Itron, its
directors, officers, employees and agents from and against any and all Losses
that Itron reasonably incurs from DataCom's performance or failure to perform
any obligation under this Agreement. However, DataCom will have no such
obligation regarding any Losses to the extent they arise from Itron's negligence
or willful misconduct.

        8.3    INTELLECTUAL PROPERTY INDEMNIFICATION

               Itron will indemnify, hold harmless and defend DataCom, its
directors, officers, employees and agents from and against all Losses that
DataCom reasonably incurs in connection with any third party claim that any
Covered Component, Software or Software Release provided by Itron under this
Agreement infringes or misappropriates the U.S. copyright, trade secret or
trademark rights of a third party ("INFRINGING MATERIAL"). If the use of any
Infringing Material is enjoined by a court of competent jurisdiction, Itron,
shall, at Itron's option and sole cost and expense, either (a) procure for
DataCom the right to continue use of the Infringing Material, (b) replace the
Infringing Material with material that is substantially similar in functionality
and performance, but noninfringing, (c) modify the Infringing Material to
eliminate the infringement or misappropriation, or (d) terminate the enjoined
activity with an appropriate reduction in



                                                                         PAGE 31

<PAGE>   35

the Annual Fee; provided however, that such termination and reduction shall not
excuse Itron from performance of its obligations pursuant to its Agreement.
Itron will have no liability under this Paragraph for any infringement or
misappropriation due to any repair, maintenance, service modification to or
alteration of the Fixed Network performed by any personnel other than Itron
personnel (including its employees, agents and contractors) or Itron-trained
DataCom personnel (including its employees, agents and contractors) after the
Effective Date which has not been approved by Itron as required by the terms of
this Agreement; or (ii) any combination of the Fixed Network in whole or in part
with any material or software not included in the Fixed Network which has not
been installed by Itron personnel or Itron-trained DataCom personnel and which
has not been approved by Itron as required by the terms of this Agreement.

        8.4    PROCEDURE

               In connection with any claim or action described in this Section
8, the Party seeking indemnification will (a) give the indemnifying Party prompt
written notice of the claim, (b) cooperate with the indemnifying Party (at the
indemnifying Party's expense) in connection with the defense and settlement of
the claim, and (c) permit the indemnifying Party to control the defense and
settlement of the claim, provided that the indemnifying Party must diligently
defend the claim and may not settle the claim without the indemnified Party's
prior written consent (which will not be unreasonably withheld or delayed).
Further, the indemnified Party (at its cost) may participate in the defense and
settlement of the claim.



                                                                         PAGE 32

<PAGE>   36

        8.5    PAYMENT OF INDEMNIFICATION CLAIMS

               Losses which are indemnified against hereunder shall be paid by
the Indemnifying Party within 30 days after such Party's receipt of notice of
such Losses, which notice shall include such evidence as is reasonably necessary
to establish the amount of the Losses and the Indemnifying Party's liability
therefor. If and to the extent Itron does not pay for any indemnified Losses
within such 30 day period, then, in addition to any other rights and remedies it
may have at law, in equity or otherwise, including those under the Agreement,
the Purchase Agreement, the Escrow Agreement and the Radio Frequency Sharing
Agreement, DataCom may, at its option, (a) set off the full amount of such
unpaid Losses against the next payment(s) due under Paragraphs 5.2 and/or 5.3
hereof and/or (b) draw up to the full amount of such unpaid Losses under the
Letter of Credit.

SECTION 9. LIMITATION ON LIABILITY

        9.1    DISCLAIMER

               EXCEPT AS OTHERWISE SET FORTH HEREIN, ITRON HEREBY DISCLAIMS ALL
OTHER WARRANTIES, OBLIGATIONS AND LIABILITIES OF ITRON, EXPRESS OR IMPLIED,
ARISING BY LAW OR OTHERWISE, WITH RESPECT TO ALL SERVICES, EQUIPMENT, SOFTWARE,
GOODS, AND OTHER ITEMS FURNISHED BY ITRON HEREUNDER OR ANY OTHER ITEMS SUBJECT
TO THIS AGREEMENT, INCLUDING, WITHOUT LIMITATION: (A) ANY IMPLIED WARRANTY OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE; (B) ANY IMPLIED WARRANTY
ARISING FROM COURSE OF DEALING, COURSE OF PERFORMANCE OR USAGE OF TRADE; AND (C)
ANY IMPLIED WARRANTY OF NON-INFRINGEMENT.

        9.2    LIMITATION ON LIABILITY

               THE TOTAL CUMULATIVE LIABILITY OF ITRON WHETHER BASED ON
WARRANTY, CONTRACT, TORT (INCLUDING NEGLIGENCE AND STRICT LIABILITY), OR
OTHERWISE, ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE PERFORMANCE OF THE
SERVICES (INCLUDING, WITHOUT LIMITATION, AMOUNTS DRAWN AGAINST THE LETTER OF
CREDIT), SHALL IN NO CASE EXCEED $30 MILLION, AND DATACOM HEREBY RELEASES ITRON
FROM ANY LIABILITY IN EXCESS OF SUCH AMOUNT. THIS MONETARY LIMITATION SHALL
SURVIVE THE FAILURE OF ANY EXCLUSIVE REMEDY.

               ITRON SHALL NOT BE LIABLE, WHETHER BASED ON WARRANTY, CONTRACT,
TORT (INCLUDING NEGLIGENCE AND STRICT 



                                                                         PAGE 33

<PAGE>   37

LIABILITY), OR OTHERWISE, FOR ANY CONSEQUENTIAL, INDIRECT, SPECIAL, EXEMPLARY,
PUNITIVE OR INCIDENTAL LOSS OR DAMAGE, LOSS BY REASON OF SERVICE INTERRUPTION,
COSTS OF CAPITAL OR EXPENSES THEREOF, LOSS OF PROFITS OR REVENUES OR THE LOSS OF
USE THEREOF, CLAIM OF ANY THIRD PARTY FOR LOSS CAUSED BY DELAYS IN MANUFACTURE
OR OPERATION, AND DATACOM HEREBY RELEASES ITRON FROM ANY LIABILITY FOR ALL SUCH
LOSSES AND DAMAGES.

               THIS SECTION 9.2 SHALL NOT LIMIT OR RESTRICT THE AVAILABILITY
OF SPECIFIC PERFORMANCE OR OTHER INJUNCTIVE RELIEF TO THE EXTENT OTHERWISE
AVAILABLE UNDER APPLICABLE LAW.

SECTION 10. MISCELLANEOUS

        10.1   EXCUSABLE DELAY

               (a) Neither Party will be liable for, or be considered to be in
breach of or default under this Agreement because of a Force Majeure Event.

               (b) A Party affected by a Force Majeure Event shall notify the
other Party promptly after becoming aware of the Force Majeure Event, giving
details of the circumstances constituting the Force Majeure Event and the likely
duration thereof, if reasonably known, and shall keep the other Party informed
of any changes in circumstances, including when such Force Majeure Event ends.
Each Party shall also notify the other Party of any events of which it is aware
which may reasonably be expected, with the lapse of time or otherwise, to become
a Force Majeure Event. Following the receipt of such notice, the Parties shall
consult in good faith to assess the Force Majeure Event and any ways in which
the same may be avoided or its effects mitigated.

               (c) A Party affected by a Force Majeure Event shall use
reasonable best efforts to place itself in a position to fulfill its obligations
hereunder, and if unable to fulfill any obligation by reason of a Force Majeure
Event such Party shall exercise all reasonable best efforts to remove such
disability at the earliest practicable time.



                                                                         PAGE 34

<PAGE>   38

               (d) A Party's performance shall be excused only for the minimum
period necessary to return to performance hereunder through the exercise of all
reasonable best efforts. To the extent a Force Majeure Event prevents Itron from
performing any Services, DataCom shall be relieved of the obligation to make
payments for the pro rata period of time during which the Services are not
performed only if Itron is not exercising all reasonable best efforts to perform
the Services.

        10.2   NONDISCLOSURE

               Each Party will protect the Confidential Information of the other
Party from misappropriation and unauthorized use or disclosure, and at a
minimum, will take precautions at least as great as those taken to protect its
own confidential information of a similar nature. Without limiting the
foregoing, the Receiving Party will: (a) use such Confidential Information
solely for the purposes for which it has been disclosed; and (b) disclose such
Confidential Information only to those of its employees, agents, consultants,
and others who have a need to know the same for the purpose of performing this
Agreement and who are informed of and agree to a duty of nondisclosure. The
Receiving Party may also disclose Confidential Information of the Disclosing
Party to the extent necessary to comply with Applicable Law or legal process,
provided that the Receiving Party uses reasonable efforts to give the Disclosing
Party prompt advance notice thereof. Subject to the rights of DataCom under the
Escrow Agreement and the Purchase Agreement, upon request of the other Party, or
in any event upon any termination or expiration of the Term, each Party shall
return to the other all materials, in any medium, which contain, embody, reflect
or reference all or any part of any Confidential Information of the other Party.

        10.3   ASSIGNMENT

               Neither Party will assign all or any part of this Agreement or
any of its rights under this Agreement without the prior written consent of the
other Party, which may be given or withheld in such other Party's sole
discretion. However (a) either Party may assign all of its rights, title, and
interest in this Agreement, upon thirty (30) days' prior written notice to the
other Party, to an affiliate which controls, is controlled by or is under common
control with, such Party, where such successor agrees in writing to be bound by
all of the provisions of this Agreement and (b) DataCom may assign all of its
rights, title and interest in this Agreement with 30 days prior written notice
to Itron, to a non-affiliated Party which is not a competitor of Itron. No
assignment, with or without the other Party's consent, will relieve a Party from
its obligations under this Agreement. Subject to the foregoing restriction on
assignment, this Agreement will be fully binding upon, inure to the benefit of,
and be enforceable by the Parties and their respective successors and assigns.



                                                                         PAGE 35

<PAGE>   39

        10.4   NOTICES

               Any notice or other communication under this Agreement given by
either Party to the other Party shall be either (a) in writing and delivered by
first class, registered, or certified U.S. mail or overnight delivery service,
return receipt requested, postage prepaid, or (b) sent by telex or facsimile and
then acknowledged as received by return telex or facsimile by the intended
recipient. Notices shall be deemed received only upon actual receipt. Notices
shall be directed to the intended recipient at the address or numbers specified
below. Either Party may from time to time change such address or numbers by
giving the other Party notice of such change in accordance with this paragraph.

                      Itron:        Itron, Inc.
                                    2818 North Sullivan Road
                                    Spokane, Washington  99215
                                    Attn:  Chief Financial Officer
                                    Phone:  (509) 924-9900
                                    Fax:  (509) 928-1465

                      DataCom:      DataCom Information Systems, LLC
                                    Seven Parkway Center, Suite 440
                                    875 Greentree Road
                                    Pittsburgh, Pennsylvania  15220
                                    Attn:  President
                                    Phone:  (412) 937-4850
                                    Fax:  (412) 919-7546

                      With a copy to:

                                    Duquesne Light Company
                                    411 Seventh Avenue
                                    Mail Drop 16-006
                                    Pittsburgh, PA  15219
                                    Attn:  Legal Dept.
                                    Fax:  (412) 393-6645



        10.5   WAIVER

               The failure of either Party to insist upon or enforce strict
performance of any of the provisions of this Agreement or to exercise any rights
or remedies under this Agreement will not be a waiver to any extent of such
Party's right to assert or rely upon



                                                                         PAGE 36

<PAGE>   40

any such provisions, rights, or remedies in that or any other instance; rather,
the same will be and remain in full force and effect.

        10.6   INDEPENDENT CONTRACTOR

               Each Party is engaged in an independent business and will perform
its obligations under this Agreement as an independent contractor and not as an
agent, partner, franchisee, or representative of any other Party. Neither Party
will have any right or authority to create any obligation or make any
representation or warranty in the name or on behalf of the other Party.

        10.7   COUNTERPARTS

               This Agreement may be executed in any number of counterparts,
each of which will be deemed an original, but all of which together will
constitute one and the same instrument.

        10.8   HEADINGS

               The headings of sections, paragraphs, and subsections of this
Agreement are for convenience of reference only and are not intended to
restrict, affect or be of any weight in the interpretation or construction of
the provisions of this Agreement.

        10.9   GOVERNING LAW

               The laws of the Commonwealth of Pennsylvania will govern this
Agreement without regard to any choice of law principles to the contrary.

        10.10  ENTIRE AGREEMENT

               This Agreement and the exhibits hereto constitute the entire
agreement, and supersedes any and all prior agreements, between the Parties with
regard to the subject matter hereof. No amendment, modification or waiver of any
of the provisions of this Agreement will be valid unless set forth in a written
instrument signed by the Party to be bound thereby.

        10.11  DISPUTE RESOLUTION

               (a) Any dispute, controversy or claim arising out of or relating
to this Agreement (including all schedules and exhibits that are related to or
incorporated by the Agreement) or the breach, termination or validity thereof (a
"DISPUTE") shall be submitted to management of the Parties for resolution. In
the event said Dispute is not resolved within fourteen (14) days, then either
Party may chose to bring an action in a



                                                                         PAGE 37

<PAGE>   41

court of competent jurisdiction, or the Parties may, by mutual agreement, agree
to proceed with arbitration in accordance with Paragraph 10.11(b).

               (b)    Arbitration.

                      (i) Disputes may, by mutual agreement of the Parties, be
referred to arbitration administered by the American Arbitration Association
(the "AAA") under its Commercial Arbitration Rules then in effect (the "RULES")
except as modified herein. The arbitration shall be held in Pittsburgh,
Pennsylvania.

                      (ii) There shall be three arbitrators of whom each Party
shall select one within five (5) days of respondent's receipt of claimant's
demand for arbitration. The two Party-appointed arbitrators shall within five
(5) days of the selection of the second arbitrator, select a third arbitrator to
serve as chair of the tribunal, who shall be qualified by professional
experience and education to rule upon the issue presented. If any arbitrator has
not been appointed within the time limits specified herein, such appointment
shall be made by the AAA upon the written request of either Party within five
(5) days of such request.

                      (iii) The hearing shall be held no later than forty-five
(45) days following the appointment of the last of the three arbitrators and the
award shall be rendered no later than fifteen (15) days following the close of
the hearing.

                      (iv) The arbitral tribunal shall permit prehearing
discovery that is relevant to the subject mater of the Dispute taking into
account the Parties' desire that the arbitration be conducted expeditiously and
cost effectively. All discovery shall be completed within forty-five (45) days
of the appointment of the third arbitrator.

                      (v) The award of the arbitrators shall be final and
binding between the Parties, and a judgment may be entered enforcing it in any
court having jurisdiction over the Parties.

                      (vi) Each Party shall bear its own costs of arbitration,
and the costs of the arbitrators shall be divided equally between them. If a
Party chooses to file an appeal, however, and does not substantially prevail on
the merits of its claim, that Party shall bear all of the reasonable costs and
expenses of both Parties for the appeal.

               (c) Continued Performance. This Agreement and the rights and
obligations of the Parties shall remain in full force and effect pending the
resolution of any Dispute in any arbitration proceeding hereunder, and both
Parties shall continue to perform hereunder.



                                                                         PAGE 38

<PAGE>   42

        10.12  CONSENT

        Whenever the consent or authorization of a Party is required hereunder,
such consent or authorization shall not be unreasonably withheld or delayed,
unless specifically provided otherwise herein.



                                                                         PAGE 39

<PAGE>   43

               IN WITNESS WHEREOF, the Parties have caused this Agreement to be
signed by their duly authorized representatives as of the Effective Date with
the intent to be legally bound.


ITRON:                                       DATACOM:

ITRON, INC.                                  DATACOM INFORMATION SYSTEMS, LLC


By:                                          By:
    -------------------------------              -------------------------------
    LeRoy D. Nosbaum                             Edmund P. Finamore
    President and Chief Executive                President
    Officer



                                                                         PAGE 40



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<PERIOD-START>                             JAN-01-2000
<PERIOD-END>                               MAR-31-2000
<CASH>                                          36,032
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