Exhibit 10.1

STANDBY LETTER OF CREDIT AGREEMENT

To: WELLS FARGO BANK, NATIONAL ASSOCIATION

Applicant hereby agrees for good and valuable consideration that the Existing
Agreement, regardless of whether it was addressed to you or some other person or
entity, be replaced in its entirety by this Agreement so that the Existing
Credits which were originally issued under and in connection with the Existing
Agreement will now be deemed for all purposes Credits issued under and in
connection with this Agreement and not the Existing Agreement. Applicant also
hereby requests that you, Wells Fargo Bank, National Association (“Wells
Fargo”), issue in your name and at your sole option, unless provided otherwise
in any Loan Document, one or more standby letters of credit pursuant to
Applications for the issuance of such Credits and the terms and conditions of
this Agreement. The Existing Credits were issued at Applicant’s request for
Applicant’s account, and Each other Credit will be issued at Applicant’s request
and for its account, and, unless otherwise specifically provided in any Loan
Document, at your option. Applicant agrees that the terms and conditions in this
Agreement shall apply to each Application and the Credit issued pursuant to each
Application, and to transactions under each Application, each Credit and this
Agreement.

        SECTION 1. DEFINITIONS. As used in this Agreement, the following terms
shall have the meanings set forth after each term: “Agreement” means this
Standby Letter of Credit Agreement as it may be revised or amended from time to
time. “Applicant” means collectively each person and/or entity signing this
Agreement as Applicant. “Application” means the Existing Application and your
printed form titled “Application For Standby Letter of Credit” or any other form
acceptable to you on which Applicant applies for the issuance by you of a Credit
and/or an application for amendment of a Credit or any combination of such
applications, as the context may require. “Beneficiary” means the person or
entity named on an Application as the beneficiary or any transferee of such
beneficiary. “Collateral” means the Property, together with the proceeds of such
Property, securing any or all of Applicant’s obligations and liabilities at any
time existing under or in connection with any L/C Document and/or any Loan
Document. “Commission Fee” means the fee, computed at the commission fee rate
specified by you or specified in any Loan Document, charged by you at the time
or times specified by you on the amount of each Credit and on the amount of each
increase in a Credit for the time period each Credit is outstanding. “Credit”
means the Existing Credits and any instrument or document titled “Irrevocable
Standby Letter of Credit” or “Standby Letter of Credit”, or any instrument or
document whatever it is titled or whether or not it is titled functioning as a
standby letter of credit, issued under or pursuant to an Application, and all
renewals, extensions and amendments of such instrument or document.. “Demand”
means any sight draft, electronic or telegraphic transmission or other written
demand drawn or made, or purported to be drawn or made, under or in connection
with any Credit. “Document” means any instrument, statement, certificate or
other document referred to in or related to any Credit or required by any Credit
to be presented with any Demand. “Dollars” means the lawful currency at any time
for the payment of public or private debts in the United States of America.
“Event of Default” means any of the events set forth in Section 13 of this
Agreement.. “Expiration Date” means the date any Credit expires. “Existing
Agreement” means that certain Standby Letter of Credit Agreement dated
December 8, 2000 signed by Applicant in favor of Wells Fargo Bank, National
Association, as such Existing Agreement may have been amended or replaced from
time to time. “Existing Applications” means that certain (1) Application For
Standby Letter of Credit dated December 18, 1998 signed by Applicant in favor of
Wells Fargo Bank, National Association requesting the issuance of Existing
Credit number NZS314605, (2) Application For Standby Letter of Credit dated
June 20, 2001 signed by Applicant in favor of Wells Fargo Bank, National
Association requesting the issuance of the Existing Credit numbed NZS401574,
(3) Application For Standby Letter of Credit dated December 5, 2003 signed by
Applicant in favor of Wells Fargo Bank, National Association requesting the
issuance of the Existing Credit number NZS504587, and (4) Application For
Standby Letter of Credit dated April 7, 2006 signed by Applicant in favor of
Wells Fargo Bank, National Association requesting the issuance of the Existing
Credit number NZS568994, as such Existing Applications may have been amended or
replaced from time to time. “Existing Credits” means that certain (1) standby
letter of credit number NZS314605 issued on December 18, 1998 by you for the
account of Applicant, (2) standby letter of credit number NZS401574 issued on
June 20, 2001 by you for the account of Applicant, (3) standby letter of credit
number NZS504587 issued on December 8, 2003 by you for the account of Applicant,
and (4) standby letter of credit number NZS568994 issued on April 11, 2006 by
you for the account of Applicant, as such Existing Credits may have been amended
or replaced from time to time. “Guarantor” means any person or entity
guaranteeing the payment and/or performance of any or all of Applicant’s
obligations under or in connection with any L/C Document and/or any Loan
Document. “Holding Company” means any company or other entity directly or
indirectly controlling you. “L/C Document” means this Agreement, each
Application, each Credit, and each Demand. “Loan Document” means each and any
promissory note, loan agreement, security agreement, pledge agreement, guarantee
or other agreement or document executed in connection with, or relating to, any
extension of credit under which any Credit is issued. “Maximum Rate” means the
maximum amount of interest (as defined by applicable laws), if any, permitted to
be paid, taken, reserved, received, collected or charged under applicable laws,
as the same may be amended or modified from time to time. “Negotiation Fee”
means the fee, computed at the negotiation fee rate specified by you or
specified in any Loan Document, charged by you on the amount of each Demand paid
by you or any other bank specified by you when each Demand is paid. “Payment
Office” means the office specified by you or specified in any Loan Document as
the office where reimbursements and other payments under or in connection with
any L/C Document are to be made by Applicant. “Prime Rate” means the rate of
interest most recently announced within Wells Fargo at its principal office as
its Prime Rate, with the understanding that the Prime Rate is one of Wells
Fargo’s base rates and serves as the basis upon which effective rates of
interest are calculated for those loans making reference thereto, and is
evidenced by the recording thereof after its announcement in such internal
publication or publications as Wells Fargo may designate. “Property” means all
forms of property, whether tangible or intangible, real, personal or mixed.
“Rate of Exchange” means Wells Fargo’s then current selling rate of exchange in
San Francisco, California for sales of the currency of payment of any Demand, or
of any fees or expenses or other amounts payable under this Agreement, for cable
transfer to the country of which such currency is the legal tender. “UCP” means
the Uniform Customs and Practice for Documentary Credits, an International
Chamber of Commerce publication, or any substitution therefor or replacement
thereof. “Unpaid and Undrawn Balance” means at any time the entire amount which
has not been paid by you under all the Credits issued for Applicant’s account,
including, without limitation, the amount of each Demand on which you have not
yet effected payment as well as the amount undrawn under all such Credits.
“Wells Fargo & Company” means Wells Fargo & Company, a Delaware corporation.

SECTION 2. HONORING DEMANDS AND DOCUMENTS. You may receive, accept and honor, as
complying with the terms of any Credit, any Demand and any Documents
accompanying such Demand; provided, however, that such Demand and accompanying
Documents appear on their face to comply substantially with the provisions of
such Credit and are, or appear on their face to be, signed or issued by (a) a
person or entity authorized under such Credit to draw, sign or issue such Demand
and accompanying Documents, or (b) an administrator, executor, trustee in
bankruptcy, debtor in possession, assignee for the benefit of creditors,
liquidator, receiver or other legal representative or successor in interest by
operation of law of any such person or entity.

SECTION 3. REIMBURSEMENT FOR PAYMENT OF DEMANDS. Applicant shall reimburse you
for all amounts paid by you on each Demand, including, without limitation, all
such amounts paid by you to any paying, negotiating or other bank. If in
connection with the issuance of any Credit, you agree to pay any other bank the
amount of any payment or negotiation made by such other bank under such Credit
upon your receipt of a cable, telex or other written telecommunication advising
you of such payment or negotiation, or authorize any other bank to debit your
account for the amount of such payment or negotiation, Applicant agrees to
reimburse you for all such amounts paid by you, or debited to your account with
such other bank, even if any Demand or Document specified in such Credit fails
to arrive in whole or in part or if, upon the arrival of any such Demand or
Document, the terms of such Credit have not been complied with or such Demand or
Document does not conform to the requirements of such Credit or is not otherwise
in order.

SECTION 4. FEES AND EXPENSES. Applicant agrees to pay to you (a) all Commission
Fees, Negotiation Fees, cable fees, amendment fees, non-usance fees, and
cancellation fees of, and all out-of-pocket expenses incurred by, you under or
in connection with any L/C Document, and (b) all fees and charges of banks or
other entities other than you under or in connection with any L/C Document if
any Application (i) does not indicate who will pay such fees and charges,
(ii) indicates that such fees and charges are to be paid by Applicant, or
(iii) indicates that such fees and charges are to be paid by the Beneficiary and
the Beneficiary does not, for any reason whatsoever, pay such fees or charges.
There shall be no refund of any portion of any Commission Fee in the event any
Credit is used, reduced, amended, modified or terminated before its Expiration
Date.

 

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SECTION 5. DEFAULT INTEREST. Unless otherwise specified in any Loan Document, or
on an Application and agreed to by you, all amounts to be reimbursed by
Applicant to you, and all fees and expenses to be paid by Applicant to you, and
all other amounts due from Applicant to you under or in connection with any L/C
Documents, will bear interest (to the extent permitted by law), payable on
demand, from the date you paid the amounts to be reimbursed or the date such
fees, expenses and other amounts were due until such amounts are paid in full,
at a rate per annum (computed on the basis of a 360-day year, actual days
elapsed) which is the lesser of (a) four percent (4%) above the Prime Rate in
effect from time to time, or (b) the Maximum Rate.

SECTION 6. TIME AND METHOD OF REIMBURSEMENT AND PAYMENT. Unless otherwise
specified in this Section, in any Loan Document, or on an Application and agreed
to by you, all amounts to be reimbursed by Applicant to you, all fees and
expenses to be paid by Applicant to you, and all interest and other amounts due
to you from Applicant under or in connection with any L/C Documents will be
reimbursed or paid at the Payment Office in Dollars in immediately available
funds without setoff or counterclaim (i) on demand or, (ii) at your option by
your debiting any of Applicant’s accounts with you, with each such debit being
made without presentment, protest, demand for reimbursement or payment, notice
of dishonor or any other notice whatsoever, all of which are hereby expressly
waived by Applicant. Each such debit will be made at the time each Demand is
paid by you or, if earlier, at the time each amount is paid by you to any
paying, negotiating or other bank, or at the time each fee and expense is to be
paid or any interest or other amount is due under or in connection with any L/C
Documents. If any Demand or any fee, expense, interest or other amount payable
under or in connection with any L/C Documents is payable in a currency other
than Dollars, Applicant agrees to reimburse you for all amounts paid by you on
such Demand, and/or to pay you all such fees, expenses, interest and other
amounts, in one of the three following ways, as determined by you in your sole
discretion in each case: (a) at such place as you shall direct, in such other
currency; or (b) at the Payment Office in the Dollar equivalent of the amount of
such other currency calculated at the Rate of Exchange on the date determined by
you in your sole discretion; or (c) at the Payment Office in the Dollar
equivalent, as determined by you (which determination shall be deemed correct
absent manifest error), of such fees, expenses, interest or other amounts or of
the actual cost to you of paying such Demand. Applicant assumes all political,
economic and other risks of disruptions or interruptions in any currency
exchange.

        SECTION 7. AGREEMENTS OF APPLICANT. Applicant agrees that (a) unless
otherwise specifically provided in any Loan Document, you shall not be obligated
at any time to issue any Credit for Applicant’s account; (b) unless otherwise
specifically provided in any Loan Document, if any Credit is issued by you for
Applicant’s account, you shall not be obligated to issue any further Credit for
Applicant’s account or to make other extensions of credit to Applicant or in any
other manner to extend any financial consideration to Applicant; (c) you have
not given Applicant any legal or other advice with regard to any L/C Document or
Loan Document; (d) if you at any time discuss with Applicant the wording for any
Credit, any such discussion will not constitute legal or other advice by you or
any representation or warranty by you that any wording or Credit will satisfy
Applicant’s needs; (e) Applicant is responsible for the wording of each Credit,
including, without limitation, any drawing conditions, and will not rely on you
in any way in connection with the wording of any Credit or the structuring of
any transaction related to any Credit; (f) Applicant, and not you, is
responsible for entering into the contracts relating to the Credits between
Applicant and the Beneficiaries and for causing Credits to be issued; (g) you
may, as you deem appropriate, modify or alter and use in any Credit the
terminology contained on the Application for such Credit; (h) unless the
Application for a Credit specifies whether the Documents to be presented with a
Demand under such Credit must be sent to you in one parcel or in two parcels or
may be sent to you in any number of parcels, you may, if you so desire, make
such determination and specify in the Credit whether such Documents must be sent
in one parcel or two parcels or may be sent in any number of parcels; (i) you
shall not be deemed Applicant’s agent or the agent of any Beneficiary or any
other user of any Credit, and neither Applicant, nor any Beneficiary nor any
other user of any Credit shall be deemed your agent; (j) Applicant will promptly
examine all Documents and each Credit if and when they are delivered to
Applicant and, in the event of any claim of noncompliance of any Documents or
any Credit with Applicant’s instructions or any Application, or in the event of
any other irregularity, Applicant will promptly notify you in writing of such
noncompliance or irregularity, Applicant being conclusively deemed to have
waived any such claim of noncompliance or irregularity unless such notice is
promptly given; (k) all directions and correspondence relating to any L/C
Document are to be sent at Applicant’s risk; (l) if any Credit has a provision
concerning the automatic extension of its Expiration Date, you may, at your sole
option, give notice of nonrenewal of such Credit and if Applicant does not at
any time want such Credit to be renewed Applicant will so notify you at least
fifteen (15) calendar days before you are to notify the Beneficiary of such
Credit or any advising bank of such nonrenewal pursuant to the terms of such
Credit; (m) Applicant will not seek to obtain, apply for, or acquiesce in any
temporary or permanent restraining order, preliminary or permanent injunction,
permanent injunction or any other pretrial or permanent injunctive or similar
relief, restraining, prohibiting or enjoining you, any of your correspondents or
any advising, confirming, negotiating, paying or other bank from paying or
negotiating any Demand or honoring any other obligation under or in connection
with any Credit; and (n) Applicant will have a net loss of no more than
$8,000,000 for the fiscal year ending December 31, 2009 and maintain a net
income after taxes of not less than $1.00 on an annual basis thereafter,
determined as of the end of each of Applicant’s fiscal years; (o) Applicant will
maintain liquid assets (defined as unencumbered cash, cash equivalents, and
publicly traded and quoted marketable securities acceptable to you) having an
aggregate fair market value not at any time less than $10,000,000.00, determined
as of the end of each of Applicant’s fiscal quarters; (p) Applicant will deliver
to you, not later than 95 calendar days after the end of each of Applicant’s
fiscal years, copies of all Applicant’s filings with the Securities and Exchange
Commission for the fiscal year just ended, including, without limitation,
Applicant’s 10K filing for the fiscal year just ended; (q) Applicant will
deliver to you, not later than 50 calendar days after the end of each of
Applicant’s fiscal quarters, copies of all Applicant’s filings with the
Securities and Exchange Commission for the fiscal quarter just ended, including,
without limitation, Applicant’s 10Q filing for the fiscal quarter just ended;
(r) Applicant will not mortgage, pledge, grant or permit to exist a security
interest in, or a lien upon, all or any portion of Borrower’s assets now owned
or hereafter acquired, except for any of the foregoing in your favor and except
for security interests covering purchase money indebtedness which does not at
any time exceed $500,000.00; (s) Applicant will not create, incur, assume or
permit to exist any indebtedness or liabilities resulting from borrowings, loans
or advances, whether secured or unsecured, matured or unmatured, liquidated or
unliquidated, joint or several, except the liabilities of Applicant to you and
except for purchase money indebtedness which Applicant incurs in an amount not
exceeding $500,000.00 during each of Applicant’s fiscal years; and (t) except
for Applicant’s obligations specifically affected by those actions or failures
to act referred to in subsections (ii) and (vii) of this Section 7(t) which you
have performed or approved or accepted, Applicant’s obligations under or in
connection with each L/C Document and Loan Document shall be absolute,
unconditional and irrevocable, and shall be performed strictly in accordance
with the terms of each such L/C Document and Loan Document under all
circumstances whatsoever, including, without limitation, the following
circumstances, the circumstances listed in Section 12(b) through (u) of this
Agreement, and any other event or circumstance similar to such circumstances:
(i) any lack of validity or enforceability of any L/C Document, any Loan
Document, any Document or any agreement relating to any of the foregoing;
(ii) any amendment of or waiver relating to, or any consent to or departure
from, any L/C Document, any Loan Document or any Document; (iii) any release or
substitution at any time of any Property held as Collateral; (iv) your failure
to deliver to Applicant any Document you have received with a drawing under a
Credit because doing so would, or is likely to, violate any law, rule or
regulation of any government authority; (v) the existence of any claim, set-off,
defense or other right which Applicant may have at any time against you or any
Beneficiary (or any person or entity for whom any Beneficiary may be acting) or
any other person or entity, whether under or in connection with any L/C
Document, any Loan Document, any Document or any Property referred to in or
related to any of the foregoing or under or in connection with any unrelated
transaction; (vi) any breach of contract or other dispute between or among any
two or more of you, Applicant, any Beneficiary, any transferee of any
Beneficiary, any person or entity for whom any Beneficiary or any transferee of
any Beneficiary may be acting, or any other person or entity; or (vii) any
delay, extension of time, renewal, compromise or other indulgence granted or
agreed to by you with or without notice to Applicant, or Applicant’s approval,
in respect of any of Applicant’s indebtedness or other obligations to you under
or in connection with any L/C Document or any Loan Document.

SECTION 8. COMPLIANCE WITH LAWS AND REGULATIONS. Applicant represents and
warrants to you that no Application, Credit or transaction under any Application
and/or Credit will contravene any law or regulation of the government of the
United States or any state thereof. Applicant agrees (a) to comply with all
federal, state and foreign exchange regulations and other government laws and
regulations now or hereafter applicable to any L/C Document, to any payments
under or in connection with any L/C Document, to each transaction under or in
connection with any L/C Document, or to the import, export, shipping or
financing of the Property referred to in or shipped under or in connection with
any Credit, and (b) to reimburse you for such amounts as you may be required to
expend as a result of such laws or regulations, or any change therein or in the
interpretation thereof by any court or administrative or government authority
charged with the administration of such laws or regulations.

 

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SECTION 9. TAXES, RESERVES AND CAPITAL ADEQUACY REQUIREMENTS. In addition to,
and notwithstanding any other provision of any L/C Document or any Loan
Document, in the event that any law, treaty, rule, regulation, guideline,
request, order, directive or determination (whether or not having the force of
law) of or from any government authority, including, without limitation, any
court, central bank or government regulatory authority, or any change therein or
in the interpretation or application thereof, (a) does or shall subject you to
any tax of any kind whatsoever with respect to the L/C Documents, or change the
basis of taxation of payments to you of any amount payable thereunder (except
for changes in the rate of tax on your net income); (b) does or shall impose,
modify or hold applicable any reserve, special deposit, assessment, compulsory
loan, Federal Deposit Insurance Corporation insurance or similar requirement
against assets held by, deposits or other liabilities in or for the account of,
advances or loans by, other credit extended by or any other acquisition of funds
by, any of your offices; (c) does or shall impose, modify or hold applicable any
capital adequacy requirements (whether or not having the force of law); or
(d) does or shall impose on you any other condition; and the result of any of
the foregoing is (i) to increase the cost to you of issuing or maintaining any
Credit or of performing any transaction under any L/C Document, (ii) to reduce
any amount receivable by you under any L/C Document, or (iii) to reduce the rate
of return on your capital or the capital of the Holding Company to a level below
that which you or the Holding Company could have achieved but for any
imposition, modification or application of any capital adequacy requirement
(taking into consideration your policy and the policy of the Holding Company, as
the case may be, with respect to capital adequacy), and any such increase or
reduction is material (as determined by you or the Holding Company, as the case
may be, in your or the Holding Company’s sole discretion); then, in any such
case, Applicant agrees to pay to you or the Holding Company, as the case may be,
such amount or amounts as may be necessary to compensate you or the Holding
Company for (A) any such additional cost, (B) any reduction in the amount
received by you under any L/C Document, or (C) to the extent allocable (as
determined by you or the Holding Company, as the case may be, in your or the
Holding Company’s sole discretion) to any L/C Document, any reduction in the
rate of return on your capital or the capital of the Holding Company.

SECTION 10. COLLATERAL. In addition to, and not in substitution for, any
Property delivered, conveyed, transferred or assigned to you under any Loan
Document as security for any or all of Applicant’s obligations and liabilities
to you at any time existing under or in connection with any L/C Document or any
Loan Document, Applicant grants to you a security interest in and to the
following Collateral, whether or not any such Collateral is in your possession
or control or the possession or control of your agents or correspondents or in
transit to, or set apart for, you or your agents or correspondents, until such
time as all Applicant’s obligations and liabilities to you at any time existing
under or in connection with each L/C Document and each Loan Document have been
fully paid and discharged, all as security for such obligations and liabilities,
(a) all Applicant’s property, claims, demands, right, title and interest in and
to the balance of each of Applicant’s deposit accounts with you now or at any
time hereafter existing, and all evidences of such deposit accounts, (b) all
Property belonging to Applicant or in which it may have an interest, now or at
any time hereafter delivered, conveyed, transferred, assigned, pledged or paid
to you or your agents or correspondents in any manner whatsoever, whether as
security or for safekeeping or otherwise, including, without limitation, any
items received for collection or transmission, and the proceeds of such items,
whether or not such Property is in whole or in part released to Applicant on
trust or bailee receipt or otherwise, and (c) where Applicant is more than one
person or entity, all right, title and interest of each of Applicants in and to
all the Property which any of Applicants may now or hereafter obtain as security
for the obligations of any one or more of Applicants to one or more of the
others of Applicants arising under or in connection with the transaction to
which any Credit relates. Further, in addition to, and not in substitution for,
any Property delivered, conveyed, transferred or assigned to you under any Loan
Document as security for any or all of Applicant’s obligations and liabilities
to you at any time existing under or in connection with any L/C Document or any
Loan Document, Applicant agrees to deliver, convey, transfer and assign to you
on demand, as security, Property of a value and character satisfactory to you,
(i) if you at any time feel insecure about Applicant’s ability or willingness to
repay any amounts which you have paid or may pay in the future on any Demand or
in honoring any other of your obligations under or in connection with any
Credit, or (ii) without limiting the generality of the foregoing, if any
temporary or permanent restraining order, preliminary or permanent injunction,
or any other pretrial or permanent injunctive or similar relief is obtained
restraining, prohibiting or enjoining you, any of your correspondents, or any
advising, confirming, negotiating, paying or other bank from paying or
negotiating any Demand or honoring any other obligation under or in connection
with any Credit. Applicant agrees that the receipt by you or any of your agents
or correspondents at any time of any kind of security, including, without
limitation, cash, shall not be deemed a waiver of any of your rights or powers
under this Agreement. Applicant agrees to sign and deliver to you on demand, all
such deeds of trust, security agreements, financing statements and other
documents as you shall at any time request which are necessary or desirable (in
your sole opinion) to grant to you an effective and perfected security interest
in and to any or all of the Collateral. Applicant agrees to pay all filing and
recording fees related to the perfection of any security interest granted to you
in accordance with this Section. Applicant hereby agrees that any or all of the
Collateral may be held and disposed of as provided in this Agreement by you.
Upon any transfer, sale, delivery, surrender or endorsement of any Document or
Property which is or was part of the Collateral, Applicant will indemnify and
hold you and your agents and correspondents harmless from and against each and
every claim, demand, action or suit which may arise against you or any of your
agents or correspondents by reason of such transfer, sale, delivery, surrender
or endorsement.

        SECTION 11. INDEMNIFICATION. Except to the extent any of the following
are caused by your lack of good faith, gross negligence, willful misconduct,
failure to honor any Demand presented under any Credit when such Demand and its
accompanying Documents appear on their face to comply strictly with the terms of
such Credit, or honor of any Demand under a Credit when such Demand and its
accompanying Documents do not appear on their face to comply substantially with
the terms of such Credit, Applicant agrees, notwithstanding any other provision
of this Agreement, to reimburse and indemnify you for (a) all amounts paid by
you to any Beneficiary under or in connection with any guarantee or similar
undertaking issued by such Beneficiary to a third party at Applicant’s request,
whether such request is communicated directly by Applicant or through you to
such Beneficiary; and (b) all damages, losses, liabilities, actions, claims,
suits, penalties, judgments, obligations, costs or expenses, of any kind
whatsoever and howsoever caused, including, without limitation, attorneys’ fees
and interest, paid, suffered or incurred by, or imposed upon, you directly or
indirectly arising out of or in connection with (i) any L/C Document, any Loan
Document, any Document or any Property referred to in or related to any Credit;
(ii) Applicant’s failure to comply with any of its obligations under this
Agreement; (iii) the issuance of any Credit; (iv) the transfer of any Credit;
(v) any guarantee or similar undertaking, or any transactions thereunder, issued
by any Beneficiary to a third party at Applicant’s request, whether such request
is communicated directly by Applicant or through you to such Beneficiary;
(vi) any communication made by you, on Applicant’s instructions, to any
Beneficiary requesting that such Beneficiary issue a guarantee or similar
undertaking to a third party or the issuance of any such guarantee or similar
undertaking; (vii) the collection of any amounts Applicant owes to you under or
in connection with any L/C Document or any Loan Document; (viii) the foreclosure
against, or other enforcement of, any Collateral; (ix) the protection, exercise
or enforcement of your rights and remedies under or in connection with any L/C
Document or any Loan Document; (x) any court decrees or orders, including,
without limitation, temporary or permanent restraining orders, preliminary or
permanent injunctions, or any other pretrial or permanent injunctive or similar
relief, restraining, prohibiting or enjoining or seeking to restrain, prohibit
or enjoin you, any of your correspondents or any advising, confirming,
negotiating, paying or other bank from paying or negotiating any Demand or
honoring any other obligation under or in connection with any Credit; or
(xi) any Credit being governed by laws or rules other than the UCP in effect on
the date such Credit is issued. The indemnity provided in this Section will
survive the termination of this Agreement and the expiration or cancellation of
any or all the Credits. Without limiting any provision of this Agreement, it is
the express intention of the parties to this Agreement that the indemnity
contained in this Section shall apply to each person to be indemnified without
regard to the sole or contributory negligence of such person.

SECTION 12. LIMITATION OF LIABILITY. Notwithstanding any other provision of this
Agreement, neither you nor any of your agents or correspondents will have any
liability to Applicant for any action, neglect or omission under or in
connection with any L/C Document, Loan Document or Credit, including, without
limitation, the issuance or any amendment of any Credit, the failure to issue or
amend any Credit, or the honoring or dishonoring of any Demand under any Credit,
and such action or neglect or omission will bind Applicant, except to the extent
any such action or neglect or omission is caused by, or arises from, your lack
of good faith, gross negligence, willful misconduct, failure to honor any Demand
presented under any Credit when such Demand and its accompanying Documents
appear on their face to comply strictly with the terms of such Credit, or honor
of any Demand under a Credit when such Demand and its accompanying Documents do
not appear on their

 

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face to comply substantially with the terms of such Credit. Notwithstanding any
other provision of any L/C Document, but without in any way affecting, except as
specifically provided in this sentence, your obligation under this Agreement to
honor any Demand presented under any Credit when such Demand and its
accompanying Documents appear on their face to comply strictly with the terms of
such Credit and to dishonor any Demand under a Credit when such Demand and its
accompanying Documents do not appear on their face to comply substantially with
the terms of such Credit, in no event shall you or your officers or directors be
liable or responsible for the following, regardless of whether any claim is
based on contract or tort: (a) any special, consequential, indirect or
incidental damages, including, without limitation, lost profits, arising out of
or in connection with the issuance of any Credit or any action taken or not
taken by you in connection with any L/C Document, any Loan Document, or any
Document or Property referred to in or related to any Credit; (b) the honoring
of any Demand in accordance with any order or directive of any court or
government or regulatory body or entity requiring such honor despite any
temporary restraining order, restraining order, preliminary injunction,
permanent injunction or any type of pretrial or permanent injunctive relief or
any similar relief, however named, restraining, prohibiting or enjoining such
honor; (c) the dishonoring of any Demand in accordance with any legal or other
restriction in force at the time and in the place of presentment or payment;
(d) verifying the existence or reasonableness of any act or condition
referenced, or any statement made, in connection with any drawing or presentment
under any Credit; (e) the use which may be made of any Credit; (f) the validity
of any purported transfer of any Credit or the identity of any purported
transferee of any Beneficiary; (g) any acts or omissions of any Beneficiary or
any other user of any Credit; (h) the form, validity, sufficiency, correctness,
genuineness or legal effect of any Demand or any Document, or of any signatures
or endorsements on any Demand or Document, even if any Demand or any Document
should in fact prove to be in any or all respects invalid, insufficient,
fraudulent or forged; (i) payment by you of any Demand when the Demand and any
accompanying Documents appear on their face to comply substantially with the
terms of the Credit to which they relate or dishonor by you of any Demand when
the Demand and any accompanying Documents do not strictly comply on their face
with the terms of the Credit to which they relate; (j) the failure of any Demand
or Document to bear any reference or adequate reference to the Credit to which
it relates; (k) the failure of any Document to accompany any Demand; (l) the
failure of any person or entity to note the amount of any Demand on the Credit
to which it relates or on any Document; (m) the failure of any person or entity
to surrender or take up any Credit; (n) the failure of any Beneficiary to comply
with the terms of any Credit or to meet the obligations of such Beneficiary to
Applicant; (o) the failure of any person or entity to send or forward Documents
if and as required by the terms of any Credit; (p) any errors, inaccuracies,
omissions, interruptions or delays in transmission or delivery of any messages,
directions or correspondence by mail, cable, telegraph, wireless or otherwise,
whether or not they are in cipher; (q) any notice of nonrenewal of a Credit sent
by you not being received on time or at any time by the Beneficiary of such
Credit; (r) any inaccuracies in the translation of any messages, directions or
correspondence; (s) any Beneficiary’s use of the proceeds of any Demand; (t) any
Beneficiary’s failure to repay to you or Applicant the proceeds of any Demand if
the terms of any Credit require such repayment; or (u) any act, error, neglect,
default, negligence, gross negligence, omission, willful misconduct, lack of
good faith, insolvency or failure in business of any of your agents or
correspondents or of any advising, confirming, negotiating, paying or other
bank. Except to the extent caused by, or arising from, your lack of good faith,
gross negligence, willful misconduct, failure to honor any Demand presented
under any Credit when such Demand and its accompanying Documents appear on their
face to comply strictly with the terms of such Credit, or honor of any Demand
under a Credit when such Demand and its accompanying Documents do not appear on
their face to comply substantially with the terms of such Credit, the occurrence
of any one or more of the contingencies referred to in the preceding sentence
shall not affect, impair or prevent the vesting of your rights or powers under
this Agreement or any Loan Document or Applicant’s obligation to make
reimbursement or payment to you under this Agreement or any Loan Document. The
provisions of this Section will survive the termination of this Agreement and
any Loan Documents and the expiration or cancellation of any or all the Credits.

SECTION 13. EVENTS OF DEFAULT. Each of the following shall constitute an Event
of Default under this Agreement: (a) Applicant’s or any Guarantor’s failure to
pay any principal, interest, fee or other amount when due under or in connection
with any L/C Document or any Loan Document; (b) Applicant’s failure to deliver
to you Property of a value and character satisfactory to you at any time you
have demanded security from Applicant pursuant to Section 10 of this Agreement;
(c) the occurrence and continuance of any default or defined event of default
under any Loan Document or any other agreement, document or instrument signed or
made by Applicant or any Guarantor in your favor; (d) Applicant’s or any
Guarantor’s failure to perform or observe any term, covenant or agreement
contained in this Agreement or any Loan Document (other than those referred to
in subsections (a), (b) and (c) of this Section, or the breach of any other
obligation owed by Applicant or any Guarantor to you, and any such failure or
breach shall be impossible to remedy or shall remain unremedied for thirty
(30) calendar days after such failure or breach occurs; (e) any representation,
warranty or certification made or furnished by Applicant or any Guarantor under
or in connection with any L/C Document, any Loan Document or any Collateral, or
as an inducement to you to enter into any L/C Document or Loan Document or to
accept any Collateral, shall be materially false, incorrect or incomplete when
made; (f) any material provision of this Agreement or any Loan Document shall at
any time for any reason cease to be valid and binding on Applicant or any
Guarantor or shall be declared to be null and void, or the validity or
enforceability thereof shall be contested by Applicant, any Guarantor or any
government agency or authority, or Applicant or any Guarantor shall deny that it
has any or further liability or obligation under this Agreement or any Loan
Document; (g) Applicant’s or any Guarantor’s failure to pay or perform when due
any indebtedness or other obligation Applicant or such Guarantor has to any
person or entity other than you if such failure gives the payee of such
indebtedness or the beneficiary of the performance of such obligation the right
to accelerate the time of payment of such indebtedness or the performance of
such obligation; (h) any guarantee of, or any security covering, any of
Applicant’s indebtedness to you arising under or in connection with any L/C
Document or any Loan Document fails to be in full force and effect at any time;
(i) any material adverse change in Applicant’s or any Guarantor’s financial
condition; (j) Applicant or any Guarantor suspends the transaction of its usual
business or is expelled or suspended from any exchange; (k) Applicant or any
Guarantor dies or is incapacitated; (l) Applicant or any Guarantor dissolves or
liquidates; (m) Applicant or any Guarantor is not generally paying its debts as
they become due; (n) Applicant or any Guarantor becomes insolvent, however such
insolvency may be evidenced, or Applicant or any Guarantor makes any general
assignment for the benefit of creditors; (o) a petition is filed by or against
Applicant or any Guarantor seeking Applicant’s or such Guarantor’s liquidation
or reorganization under the Bankruptcy Reform Act, Title 11 of the United States
Code, as amended or recodified from time to time, or a similar action is brought
by or against Applicant or any Guarantor under any federal, state or foreign
law; (p) a proceeding is instituted by or against Applicant or any Guarantor for
any relief under any bankruptcy, insolvency or other law relating to the relief
of debtors, reorganization, readjustment or extension of indebtedness or
composition with creditors; (q) a custodian or a receiver is appointed for, or a
writ or order of attachment, execution or garnishment is issued, levied or made
against, any of Applicant’s or any Guarantor’s Property or assets; (r) an
application is made by any of Applicant’s or any Guarantor’s judgment creditors
for an order directing you to pay over money or to deliver other of Applicant’s
or such Guarantor’s Property; or (s) any government authority or any court takes
possession of any substantial part of Applicant’s or any Guarantor’s Property or
assets or assumes control over Applicant’s or any Guarantor’s affairs.

        SECTION 14. REMEDIES. Upon the occurrence and continuance of any Event
of Default all amounts paid by you on any Demand which have not previously been
repaid to you, together with all interest on such amounts, and the Unpaid and
Undrawn Balance, if any, shall automatically be owing by Applicant to you and
shall be due and payable by Applicant on demand without presentment or any other
notice of any kind, including, without limitation, notice of nonperformance,
notice of protest, protest, notice of dishonor, notice of intention to
accelerate, or notice of acceleration, all of which are expressly waived by
Applicant. Upon payment of the Unpaid and Undrawn Balance to you Applicant shall
have no further legal or equitable interest therein, and you will not be
required to segregate on your books or records the Unpaid and Undrawn Balance
paid by Applicant. After you receive the Unpaid and Undrawn Balance, you agree
to pay to Applicant, upon termination of all of your liability under all the
Credits and Demands, a sum equal to the amount which has not been drawn under
all the Credits less all amounts due and owing to you from Applicant under or in
connection with the L/C Documents and the Loan Documents. Further, upon the
occurrence and continuance of any Event of Default, you may sell immediately,
without demand for payment, advertisement or notice to Applicant, all of which
are hereby expressly waived, any and all Collateral, received or to be received,
at private sale or public auction or at brokers’ board or upon any exchange or
otherwise, at your option, in such parcel or parcels, at such times and places,
for such prices and upon such terms and conditions as you may deem proper, and
you may apply the net proceeds of each sale, together with any sums due from you
to Applicant, to the payment of any and all obligations and liabilities due from
Applicant to you under or in connection with the L/C Documents and the Loan
Documents, all without prejudice to your rights against Applicant with respect
to any and all such obligations and liabilities which may be or remain unpaid.
If any such sale be at brokers’ board or at public auction or upon any exchange,
you may yourself be a purchaser at such sale free from any right of redemption,
which Applicant hereby expressly waive and release.

 

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All your rights and remedies existing under the L/C Documents and the Loan
Documents are in addition to, and not exclusive of, any rights or remedies
otherwise available to you under applicable law. In addition to any rights now
or hereafter granted under applicable law, and not by way of limitation of any
such rights, upon the occurrence and continuance of any Event of Default,
Applicant hereby authorizes you at any time or from time to time, without notice
to Applicant or to any other person (any such notice being hereby expressly
waived by Applicant) and to the extent permitted by law, to appropriate and to
apply any and all Applicant’s deposits (general or special, including, without
limitation, indebtedness evidenced by certificates of deposit) with you or
elsewhere, whether matured or unmatured, and any other indebtedness at any time
held or owing by you to or for Applicant’s credit or its account, against and on
account of Applicant’s obligations and liabilities to you under or in connection
with any of the L/C Documents or the Loan Documents, irrespective of whether or
not you shall have made any demand for payment of any or all such obligations
and liabilities or declared any or all such obligations and liabilities to be
due and payable, and although any or all such obligations and liabilities shall
be contingent or unmatured.

SECTION 15. GENERAL WAIVERS. No delay, extension of time, renewal, compromise or
other indulgence which may occur or be granted by you under any L/C Document or
any Loan Document shall impair your rights or powers under this Agreement or any
Application. You shall not be deemed to have waived any of your rights under
this Agreement or any Application unless such waiver is in writing signed by
your authorized representative. No such waiver, unless expressly provided
therein, shall be effective as to any transactions which occur subsequent to the
date of such waiver or as to the continuance of any Event of Default after such
waiver.

SECTION 16. AMENDMENTS AND MODIFICATIONS TO THIS AGREEMENT AND THE CREDITS. No
amendment or modification of this Agreement shall be effective unless it is in
writing signed by Applicant’s and your authorized representative(s). At
Applicant’s verbal or written request, or with Applicant’s verbal or written
consent, and without extinguishing or otherwise affecting Applicant’s
obligations under this Agreement or any Loan Document, you may with respect to
any Credit, in writing or by any other action, but you will not be obligated to,
(a) increase the amount of such Credit, (b) extend the time for, and amend or
modify the terms and conditions governing, the making and honoring of any Demand
or Document or any other terms and conditions of such Credit, or (c) waive the
failure of any Demand or Document to comply with the terms of such Credit, and
any Collateral pledged or granted to you in connection with such Credit will
secure Applicant’s obligations to you with respect to such Credit as amended,
modified or waived. No amendment to, or modification of, the terms of any Credit
will become effective if the Beneficiary of such Credit or any confirming bank
objects to such amendment or modification. If any Credit is amended or modified
in accordance with this Section, Applicant shall be bound by, and obligated
under, the provisions of this Agreement with respect to such Credit as so
amended or modified, and any action taken by you or any advising, confirming,
negotiating, paying or other bank in accordance with such amendment or
modification.

SECTION 17. SUCCESSORS AND ASSIGNS. The terms and conditions of this Agreement
and each Application shall bind Applicant’s heirs, executors, administrators,
successors and assigns, and all rights, benefits and privileges conferred on you
under or in connection with each L/C Document and each Loan Document shall be
and hereby are extended to, conferred upon and may be enforced by your
successors and assigns. Applicant will not assign this Agreement or Applicant’s
obligations or liabilities to you under or in connection with any L/C Document
or Loan Document to any person or entity without your prior written approval.

SECTION 18. GOVERNING LAW. This Agreement and each Application, and Applicant’s
and your performance under this Agreement and each Application, shall be
governed by and be construed in accordance with the laws of the State of
California. Unless you otherwise specifically agree in writing, each Credit, the
opening of each Credit, the performance by you under each Credit, and the
performance by the Beneficiary and any advising, confirming, negotiating, paying
or other bank under each Credit, shall be governed by and be construed in
accordance with the UCP in force on the date of the issuance of each Credit.

SECTION 19. JURISDICTION AND SERVICE OF PROCESS. Any suit, action or proceeding
against Applicant under or with respect to any L/C Document may, at your sole
option, be brought in (a) the courts of the State of California, (b) the United
States District Courts in California, (c) the courts of Applicant’s jurisdiction
of incorporation or principal office, or (d) the courts of the jurisdiction
where any Beneficiary, any advising, confirming, negotiating, paying or other
bank, or any other person or entity has brought any suit, action or proceeding
against you with respect to any Credit or any Demand, and Applicant hereby
submits to the nonexclusive jurisdiction of such courts for the purpose of any
such suit, action, proceeding or judgment and waives any other preferential
jurisdiction by reason of domicile. Applicant will accept joinder in any suit,
action or proceeding brought in any court or jurisdiction against you by any
Beneficiary, any advising, confirming, negotiating, paying or other bank or any
other person or entity with respect to any Credit or any Demand. Applicant
irrevocably waives any objection, including, without limitation, any objection
of the laying of venue or any objection based on the grounds of forum non
conveniens, which Applicant may now or hereafter have to the bringing of any
such action or proceeding. Applicant further waives any right to transfer or
change the venue of any suit, action or proceeding brought against Applicant by
you under or in connection with any L/C Document. Applicant irrevocably consents
to the service of process in any action or proceeding in any court by the
mailing of copies thereof by registered or certified mail, postage prepaid, to
Applicant at its address specified next to its signature on this Agreement or at
such other address as Applicant shall have notified to you in writing, such
service to be effective ten (10) days after such mailing.

        SECTION 20. SEVERABILITY. Any provision of any L/C Document which is
prohibited or unenforceable in any jurisdiction shall be, only as to such
jurisdiction, ineffective to the extent of such prohibition or unenforceability,
but all the remaining provisions of such L/C Document and all the other L/C
Documents shall remain valid.

SECTION 21. HEADINGS. The headings used in this Agreement are for convenience of
reference only and shall not define or limit the provisions of this Agreement.

SECTION 22. COMPLETE AGREEMENT. The entire agreement with respect to each Credit
will consist of this Agreement and the Application for such Credit, together
with any written document or instrument signed by Applicant and you, or signed
by Applicant and approved by you, which specifically references such Credit, the
Application for such Credit, or this Agreement. Except as specifically provided
in this Agreement, in any Application or in any written document or instrument
referred to in the preceding sentence, no statements or representations not
contained in this Agreement, such Application or such written document or
instrument shall have any force or effect on this Agreement, such Application or
such written document or instrument.

SECTION 25. ORAL AGREEMENTS NOT ENFORCEABLE UNDER WASHINGTON LAW. ORAL
AGREEMENTS OR ORAL COMMITMENTS TO LOAN MONEY, EXTEND CREDIT OR FOREBEAR FROM
ENFORCING REPAYMENT OF A DEBT ARE NOT ENFORCEABLE UNDER WASHINGTON LAW.

This Agreement is signed by Applicant’s duly authorized representative or
representatives on June 30, 2009.

 

BARRETT BUSINESS SERVICES, INC.    

8100 NE Parkway Drive

By:  

/s/ James D. Miller

   

Suite 200

  Title:  

Vice President - Finance, Chief Financial Officer

   

Vancouver, WA 98662

        [ADDRESS]

 

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