Exhibit
10.7


CONTINUING LETTER
OF CREDIT AGREEMENT


 


	
   

  	
   

  	
  Date  June 20,
  2005

  



 


	
  TO:

  	
   

  	
  HSBC Bank USA, National
  Association

  452 Fifth Avenue

  New York, New York 10018

  



Gentlemen:


Unless otherwise agreed
in writing, the following Terms and Conditions shall apply to our application
for and your issuance of each letter of credit on our behalf, including
amendments or modifications thereto. Each such letter of credit shall
hereinafter be referred to as the “Credit”. These Terms and Conditions are
being entered into in connection with the Financing Agreement dated the date
hereof among us, Verrazano, Inc, any of our other subsidiaries that become
guarantors of our obligations thereunder from time to time, you and the other
lenders now or hereafter a party thereto, and you, as agent for such lenders
(as amended, restated, modified or supplemented from time to time, the
“Financing Agreement”). Defined terms used in these Terms and Conditions but
not defined herein shall have the meanings specified in the Financing Agreement.
If any provision of these Terms and Conditions is inconsistent with any
provision of the Financing Agreement or any security agreement delivered
pursuant thereto, the term of the Financing Agreement or such security
agreement shall control.


1.                         Prepayment/Reimbursement. We agree in the
case of each Draft, whether or not the Credit calls for Deferred Payments, to
reimburse you at your principal banking office at the above address or at such
other banking office of yours as you and we may agree upon in writing, at once,
in United States currency in immediately available funds, the amount paid on
such Draft, or, if so demanded by you, to pay to you at your office in advance,
at least in time for cover to reach the place of payment at maturity, in United
States currency in immediately available funds, the amount required to pay such
Draft.


2.                         (a) Commissions.
We agree to pay you, on demand, (i) your commission in connection with the
Credit, at your customary rates in effect at the time of the Application (or at
any special rate on which you shall agree with us, in writing), as well as (ii)
the commission(s) of any correspondent, confirming, paying, accepting or
negotiating banks at their customary rates in effect at the time of their
taking any action in connection with the Credit. (b) Interest. Except as expressly provided for elsewhere in this
Agreement or otherwise in writing signed or accepted by you, any and all
amounts due you from us under this Agreement and/or the Application, including
without limitation our obligations under paragraph 1 of this Agreement, shall
bear interest at the rate and be payable at the times specified in the
Financing Agreement. (c) Fees, Costs and
Expenses. We agree to pay or reimburse you and your correspondents
on demand for, and to indemnify and hold harmless you and your correspondents
from and against, all costs, charges, and expenses, including reasonable
attorneys’ fees and expenses incurred by you and your correspondents arising in
any manner, from, out of, or in connection with (i) the Application, (ii) this
Agreement, (iii) the Credit, (iv) compliance with governmental exchange
regulations applicable to the purchase of foreign currency, (v) collection of
our Liabilities, (vi) protection of any of your or your correspondents’ rights
or interests in connection with any of the foregoing, and (vii) any litigation
in connection with any of the foregoing. The foregoing obligation to pay,
reimburse and indemnify shall not apply to the extent that any such costs,
charges or expenses result from your or your correspondents’ own gross
negligence or bad faith. (d) Payments Free of
Taxes. Except to the extent qualified or otherwise provided in the
Financing Agreement, any and all payments made to you under this Agreement
shall be made free and clear of and without deduction for any present or future
taxes, levies, imposts, deductions, charges, or withholdings, and all
liabilities with respect thereto, in any jurisdiction worldwide, excluding
taxes imposed on your net income and all income and franchise taxes imposed on
you. All such non-excluded taxes, levies, imposts, deductions, charges,
withholdings and liabilities which are imposed with respect to this Agreement
or any amount payable under it are hereinafter called “Taxes”. Except as otherwise
provided in the Financing Agreement, if we shall be required by law to deduct
any Taxes from or in respect of any sum payable under this Agreement, (i) the
sum payable shall be increased as may be necessary so that, after making all
required deductions (including deductions applicable to additional sums payable
under this subparagraph), you shall receive an amount equal to the sum you
would have received had no such deductions been made, (ii) we shall make such
deductions, and (iii)


 

















 


we shall pay the full amount deducted to the relevant
taxation authority or other authority in accordance with applicable law. We
will indemnify you for the full amount of Taxes to the extent provided for
herein and in the Financing Agreement, whether or not such Taxes were correctly
or legally asserted. Payment pursuant to this indemnification shall be made
upon written demand therefor. Within 30 days after the date of any payment of
Taxes we will furnish you with evidence thereof. (e) Reserves, Assessment Charges, Capital Requirements and Other Regulatory
Costs. Except to the extent qualified or otherwise provided in the
Financing Agreement, in the event that you are required by, or as a result of
any action or policy position taken by, any regulatory authority, to pay,
institute, increase, maintain at any particular level or otherwise to incur any
reserves, assessment charges or capital requirements or other regulatory costs
in connection with or as a result of this Agreement or the Credit, in order for
you to be in compliance with any present or future applicable law or
governmental, regulation, guideline, order, interpretation (including but not
limited to an interpretation by a court or any regulatory authority that any
law or regulation requires or permits the imposition of such specified costs in
connection with or as a result of this Agreement or the Credit) or request
(whether or not having the force of law), we agree to pay you on demand and to
indemnify and hold you harmless from and against all costs and expenses of, or
of establishing or maintaining, such specified costs, as such costs and
expenses shall be reasonably determined by you.


3.                         Definitions.
As used in this Agreement: (a) “Bank Affiliate” shall include any person, firm
or entity acting as nominee or agent for you, and any corporation which is
directly or indirectly owned or controlled by, or under common control with
you; (b) “Deferred Payment” shall mean an arrangement provided for in the
Credit pursuant to which the Beneficiary shall have the right or obligation to
present Documents for examination by you in advance of presenting a Drafts or
Draft drawn under the Credit; (c) “Documents” shall mean any and all
certificates, documents and statements accompanying or relating to the Credit
and/or to Drafts drawn under the Credit, but shall not mean Drafts; (d) “Draft”
shall mean a written request, order or demand for the payment of money, whether
or not negotiable; (e) “Liabilities” shall include any and all of the
obligations and liabilities under or with reference to the Credit, the
Application, this Agreement, any other letter of credit issued by you; (f)
“Party” shall include (i) us, (ii) any guarantor, surety or accommodation party
with respect to, or any party that provides any collateral as security for, or
any party that provides a comfort letter, letter of awareness, letter of intent
or similar document with respect to any of the Liabilities, and (iii) if any
Party is a partnership, any general partner of such Party; (g) “Property” shall
mean any and all goods, merchandise, securities, funds, chosen in action, and
any and all other forms of property whether real, personal or mixed, tangible
or intangible, and any right or interest therein; (h) “UCC” shall mean the New
York Uniform Commercial Code, as in effect from time to time; and (i) “UCP”
shall mean the Uniform Customs and Practice for Documentary Credits adopted by
the Congress of the International Chamber of Commerce (“ICC”), 1993 revision,
ICC Publication No. 500 as amended or substituted for and as in effect from
time to time.


4.                         Acceptable
Documents Under the Credit; Administrative Agreements. (a) Substantial Compliance. Except as
expressly provided otherwise on the Application, we authorize you to accept as
complying with the Credit any Drafts and/or Documents which are in substantial
but not strict compliance with the Credit without affecting or relieving us of
any of our Liabilities under this Agreement. Nevertheless, you may in your
discretion, refuse to accept any or all such Drafts and/or Documents unless
they are in strict compliance with the Credit. (b) Applicant’s Instructions. In administering the Credit, you and
your correspondents may act in reliance upon any oral, telephonic, telegraphic,
facsimile, electronic or written request, agreement, notice, consent, waiver or
other communication believed in good faith to have been authorized by us,
whether or not actually given or signed by an authorized person. (c) Applicable Standards. Except as otherwise
expressly provided, you and/or your correspondents may, to the extent that you
or they deem appropriate: (i) consider applicable to the Credit and any or all
transactions thereunder any laws, regulations, customs, or usages, foreign or
domestic, deemed appropriate and not inconsistent with the UCP; (ii) accept as
“bills of lading” documents acknowledging receipt of property, for
transportation by or on behalf of carriers, and, as “steamer bills of lading,”
such documents of carriers whether or not the entire transportation is by
water; (iii) accept bills of lading not marked “notify the account party named
in the Credit” or not indicating the letter of credit number notwithstanding
anything herein specified to the contrary. (d) Insurance. We will cause the properly covered by the Credit to
be insured in accordance with the Financing Agreement and the Other Documents.
(e) Compliance with Regulations.
We shall procure promptly necessary import, export or shipping licenses for the
property


 


 


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covered by the Credit, comply with all governmental
regulations, foreign or domestic (including exchange regulations) with regard
thereto or the financing thereof, and furnish to you, at your request,
certificates evidencing the foregoing, and on demand, pay to you, any amount(s)
you may be required to expend in respect thereto. (f) Release of Property or Documents - Trust Receipts.
If you deliver to us or upon our order any of the property, documents or
instruments relative to the Credit, or held by you as security hereunder, prior
to payment in full of all of our obligations secured thereby, we will deliver
to you trust receipts therefor, or other security agreements and statements of
trust receipt financing, or other financing statements, complying with
applicable law and in such form as you may request, and pay all necessary
filing fees, it being understood that any such delivery is made in reliance
upon this Agreement and that your rights specified herein shall be in addition
to your rights under any such applicable law, trust receipt or security
agreement. (g) Steamship Guaranty, Etc.
(i) In case we ask you, orally or by written request, at any time prior to your
receipt of documents relative to the Credit, to issue your Steamship Guaranty,
Delivery Order or Air Release to the carrier company or its agent to enable us
to receive the property covered by the Credit, we hereby indemnify and hold you
harmless from all consequences of the delivery of said Guaranty, Delivery Order
or Air Release and agree to pay you on demand any and all claims, losses and/or
expenses that may arise under or in respect of said Guaranty, Delivery Order or
Air Release. You also may at any time pay, compromise or adjust any such claim
and we agree to pay you on demand any amount required or expended by you for
such purpose. We will immediately upon receipt of the original bill(s) of
lading arrange for the prompt release or return to you of any guaranty or
release issued by you in connection with the Credit.


5.                         Modifications, Extensions and Increases.
Any agreement to modify the Credit shall require the Beneficiary’s consent. In
your discretion, the Beneficiary’s consent need not be in writing and may be
indicated by the Beneficiary’s acquiescence in modifications communicated to and
received by the Beneficiary.


6.                         Division of Responsibilities. (a) Applicant’s Responsibilities. In the event
you are compelled by any binding judgment, decree, order or award to make any
payment under the Credit or to honor any Drafts or Documents as complying with
the Credit, our obligations arising under this Agreement to reimburse you shall
continue to apply or, if previously expired, shall be immediately restored,
upon the rendering of any such judgment, decree, order or award, regardless of
whether or not such judgment, decree, order or award shall be rendered, or any
payment pursuant thereto shall be made, after the expiration of the Credit. (b)
Non-responsibility of Banks.
Subject to paragraph 7 of this Agreement, neither you nor your correspondents
shall be liable for any of the following: (i) Lack
of Control. Any matter or event beyond your or your correspondents’
reasonable control; (ii) Documents.
The truthfulness or accuracy of any statement contained in any Document, or the
validity, sufficiency, or genuineness of Documents or Drafts, even if such
Documents or Drafts should in fact prove to be in any or all respects invalid,
insufficient, fraudulent or forged; (iii) Parties
Issuing Documents. The solvency or responsibility of any party
issuing any Document; (iv) Arrival of
Documents. Any delay in arrival or failure to arrive of any
Documents relating to the Credit; (v) Notices.
Any delay in giving or failure to give any notice; (vi) Local Laws. Any laws, acts, decrees,
customs or regulations, legal or illegal, of any government or governmental
agency or of any authority actually in control, of or which may be effective
in, places of negotiation and/or payment of the Credit or otherwise relating to
the Credit, Documents, or Drafts under the Credit; (vii) War. Any declared or undeclared war or any
military, guerrilla or terrorist operation; (viii) Compliance With Credit Terms. Failure of any Draft or Document
to bear any reference or adequate reference to the Credit; failure of Documents
to accompany any Draft at negotiation; or failure of any person to note the
amount of any Draft on the reverse of the Credit or to surrender or take up the
Credit or to send or forward Documents apart from Drafts as requited by the
terms of the Credit; it is agreed that each of the provisions referred to in
this subparagraph 6(b)(viii), if appearing as a requirement in the Credit
itself, may be waived by you; (ix) Communications.
Errors, omissions, mutilations, losses, failures, defaults, interruptions or
delays in transmission, delivery, receipt, or recording of any messages, by
mail, telex, cable, telegraph, wireless, facsimile, SWIFT, or otherwise,
whether or not arising out of the use of codes; (x) Correspondents. Any act, error, neglect, default, insolvency
or failure in business of any of your correspondents, or of correspondents of
your correspondents except that any such correspondent shall be liable, if at
all, solely for its own bad faith or gross negligence, or if and solely to the
extent required by law and not disclaimable, for its own negligence; (xi) Invalid Instructions. Any consequence
resulting from the fact that any instructions, oral or written, given to you
purporting to be by us or on our behalf and believed by you in good faith and
in the exercise of ordinary care to be valid, which pertain to the


 


 


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opening of the Credit, payments against Documents
despite discrepancies, any modification of the Credit or any other action to be
taken or omitted in connection with the Credit were, wholly or in part,
unauthorized, fraudulent or otherwise invalid; (xii) Uniform Customs and Practice. Any matter as to which banks
assume no liability or responsibility pursuant to the UCP; (xiii) Translations. Any consequence resulting
from errors in or inadequacy of any translation of or in connection with: (A)
the Application, if not entirely written in English, (B) the Credit, if the
Credit is requested to be written in any language other than English, or (C)
any Document or Draft not entirely written in English; or (xiv) Good Faith. Without limiting the foregoing,
any act or omission of you or your correspondents in good faith except,
respectively, solely for your or your correspondent’s own gross negligence or
bad faith or, if and solely to the extent required by law and not disclaimable,
for your or its own negligence. In any event, neither you nor any correspondent
shall have any liability for any special, consequential or punitive damages.
(c) Payments by Correspondents; Failure to
Receive Transmitted Documents. If the Credit provides that payment
is to be made by your correspondent, neither you nor such correspondent shall
be responsible for your failure to receive any of the Documents specified in
the Credit or for any delay in connection with them. Our obligation to make
reimbursement shall not be affected by any such failure or delay. (d) Delivery of Documents. (i) if the Credit
calls for sight Drafts without providing for Deferred Payments, Documents
presented under the Credit shall be released by you to us or at our instruction
promptly after you pay the respective Draft, once we shall have complied with
paragraph 1; (ii) if the Credit calls for Deferred Payments, Documents
presented under the Credit in advance of Drafts shall be released by you to us
or at our instruction promptly after you examine the Documents, provided they
conform to the terms and conditions of the Credit, but such release shall not
affect or reduce our obligations under paragraph 1.


7.                         Indemnity. In addition to our obligations
under other provisions of this Agreement, we hereby agree to indemnify and hold
you harmless from and against any and all costs, expenses (including reasonable
attorneys’ fees and expenses), losses, claims, obligations and liabilities
arising in any manner from, out of, or in connection with, the Application,
this Agreement or the Credit, and your issuing the Credit or acting thereunder
or hereunder, or in connection with any action, suit or proceeding seeking to
enjoin or restrain you from acting pursuant to the Credit, the Application or
this Agreement, including but not limited to all obligations and
responsibilities imposed by foreign law and usages and any and all claims
resulting from the endorsement and/or Transfer to us or at our request of any
Documents and/or your acting in accordance with our instructions, unless caused
by your gross negligence or bad faith or, if and solely to the extent required
by law and not disclaimable, for your negligence. We hereby similarly indemnify
and hold harmless each and every correspondent acting in connection with the
Credit, except with respect to any such correspondent’s gross negligence or bad
faith or, if and solely to the extent required by law and not disclaimable,
negligence.


8.                         Governmental Compliance. (a) Compliance. We agree: (i) to comply with
all applicable foreign and United States governmental laws, rules, regulations,
orders and other requirements, including without limitation those arising under
or relating to international agreements, relating to the transactions in
connection with the Credit, and (ii) to furnish such documentation and
certificates regarding compliance with governmental requirements as you may at
any time require; (b) Import and Export
Restrictions, etc. Without limiting the foregoing, we warrant and
represent that every transaction in connection with the Credit will be in
compliance with, and will not be prohibited under, any applicable governmental
law, rule, regulation, licensing requirement or order regarding foreign asset
controls, export controls, import controls, antiboycott requirements, foreign
funds controls and foreign sanctions.


9.                         Rules Governing Credit. The Credit applied
for by the Application shall be subject to and interpreted in accordance with
the UCP as in effect on the date the Credit shall be issued and, if and to the
extent so provided by you in your discretion in the Credit and to the extent
not inconsistent with the UCP, to the internal law (excluding conflict of laws
rules) of the State of New York including without limitation Article 5 of the
UCC.


10.                   Warranties and Representations. We warrant
and represent to you: (a) If we purport to be a partnership or corporation,
that we have been duly formed under applicable law and are in good standing in
the jurisdiction where we have been organized. (b) That we are authorized to do
business in each jurisdiction where we are doing business, unless the failure
to be qualified would not have a Material Adverse Effect. (c) That the Application
and this Agreement have been and are duly


 


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authorized and validly executed in accordance with
applicable law and all governing documents and agreements. (d) That the
Application and this Agreement are our legal, valid and binding obligations and
are enforceable against us in accordance with their terms. (e) That no
authorization, consent or approval of any governmental or regulatory authority
is or will be required or, if required, that each such authorization, consent
or approval has been duly acquired, in connection with all matters relating to
the Application, this Agreement and the Credit. (f) That no document executed
or thing done in connection with the Application, this Agreement or the Credit
is or shall be in conflict with or constitute a default under any agreement,
instrument or applicable law to which we are a party or by which we are bound.


11.                   [Intentionally
Omitted].


12.                   Security Interest; Set-Off. You shall have
a continuing lien and right of set-off on, and are hereby granted a first
priority security interest in, all of our deposits (general and special) and
credits at any time maintained with you or any Bank Affiliate, and may apply
all or part of the same to any Liabilities, at any time or times, without prior
notice. As security for the prompt and unconditional payment of any and all
Liabilities, you have been granted a continuing lien on, and a first priority
security interest in, all of our the Collateral under the Financing Agreement
and the Other Documents; including, without limitation: (i) all documents or
instruments accompanying or relative to drafts under the Credit and all
property shipped, stored or otherwise disposed of in connection with the Credit
or in any way relating thereto and all proceeds of the foregoing; and (ii) all
our rights and causes of action against all parties arising from or in
connection with the contract of sale or purchase of the property covered by the
Credit, or any guarantees, agreements or other undertakings (including those in
effect between us and any other account party or the beneficiary named in the
Credit), credits, policies of insurance or other assurances in connection
therewith. When an Event of Default has occurred and is continuing, you shall
thereupon have, in addition to all other rights and remedies under applicable
law, the rights and remedies of a secured party under the Uniform Commercial
Code of New York. Your rights and remedies provided for hereunder (including
but not limited to the right to accelerate Liabilities and to realize on any
security for Liabilities) are cumulative with your rights and remedies
available under any other instrument or agreement or under applicable law.


13.                   Charge to Deposit Account. Each amount
which may become due and payable to you under this Agreement may, in your
discretion and if not otherwise paid, be charged by you to any account of ours
with you, without prior notice to us, either against any available funds then
in such account, or creating an overdraft. The amount of any overdraft shall
bear interest, payable on demand, in accordance with subparagraph 2(b) of this
Agreement.


14.                   Events of Default. An Event of Default
under the Financing Agreement constitutes an Event of Default under this
Agreement.


15.                   Consequences of Default. If any Event of
Default shall occur, then you shall have the rights and remedies provided in
the Financing Agreement and the Other Documents.


16.                   Number of Parties. One Applicant. If this
Agreement is signed by one individual, the terms “we,” “our,” and “us” shall be
read throughout as “I,” “my,” and “me”, as the case may be. (b) Joint and Several Liability. If this
Agreement is signed by two or more parties, it shall be the joint and several
agreement of such parties and they shall be jointly and severally liable.


17.                   Transfers, Successors and Assigns. (a) Continuing Obligations. The Liabilities
shall bind us, our heirs, executors, administrators, successors and permitted
assigns and shall continue after the expiration or cancellation of the Credit
and until all of the Liabilities shall have been paid, satisfied and performed
in full. (b) Transfers by Bank; Waiver of
Defenses. (i) All rights, benefits and privileges hereby conferred
on you shall be and hereby are extended to and conferred upon and may be
enforced by your successors and assigns. Without limiting your rights
hereunder, to the extent and in the manner provided in the Financing Agreement,
you may transfer the Credit and whether or not in connection therewith, you may
transfer all or part of your rights and obligations under (A) this Agreement
(B) any collateral, mortgage, lien or security interest, however denominated,
securing this Agreement, (C) any guaranty of, any subordination to, and any
other of your rights against any third party(ies) in connection with this
Agreement, and/or (D) any document or instrument evidencing or relating to the
foregoing.


 


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(ii) In connection with any such transfer transaction,
we authorize you to disclose any information you may have or acquire about us
to any prospective or actual transferee, subject to compliance with the
confidentiality terms of the Financing Agreement, (iii) We hereby waive all
defenses (except such defenses as may be asserted against a holder in due
course of a negotiable instrument) which we may have or acquire against any
transferee who takes this Agreement, or any complete or partial interest in it,
for value, in good faith and without notice that any of our obligations
hereunder are overdue or have been dishonored or of any defense against or
claim to it on the part of any person. (c) No
Transfers by Applicant. Without your express written permission, we
shall have no right to assign any of our rights or delegate any of our
obligations and any such purported assignment or delegation shall be void. (d) Partnership Applicants. The obligations of
this Agreement shall continue in force and shall apply, notwithstanding any
change in the membership of any partnership executing this Agreement, whether
arising from the death or retirement of one or more partners or the admission
of one or more new partners.


18.                   Partial Unenforceability. Any provision of
this Agreement which is prohibited, unenforceable or not authorized in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition, unenforceability or non-authorization, without invalidating
the remaining provisions hereof in that or any other jurisdiction and without
affecting the validity, enforceability or legality of such provision in any
other jurisdiction.


19.                   Submission to Jurisdiction; Applicable Law.
This Agreement and all rights, obligations and liabilities arising hereunder
shall be construed according to the internal laws of the State of New York,
without giving effect to conflict of laws principles. (a) Submission. We hereby submit to the
non-exclusive jurisdiction of the federal and state courts sitting in the
County of New York, State of New York, with respect to any dispute arising
from, out of, or in connection with the Application, the Credit, this Agreement
or any Document. (b) Sovereign Immunity
Waiver. In connection with any action, suit or proceeding we hereby
irrevocably waive any sovereign immunity we may have or hereafter acquire,
including but not limited to immunity from jurisdiction of any court, from any
legal process (whether through service, notice or otherwise) from attachment
prior to judgment, from attachment in aid of execution, from execution or
otherwise, with respect to ourselves or our Property. (c) Service of Process. Service may be made on
us by mailing a copy of the legal process to us at the Applicant’s address
appearing on the Application (unless your department handling the transaction
shall have received notice of change of address, in which case such legal
process shall be mailed to us at such changed address). (d) New York Law. This Agreement and all
rights, obligations and liabilities arising hereunder shall be construed
according to the internal laws of the State of New York, without giving effect
to conflict of laws principles.


20.                   Your Right to Arbitration. (a) WE AGREE
THAT ANY ACTION, DISPUTE, PROCEEDING, CLAIM OR CONTROVERSY BETWEEN OR AMONG YOU
AND US WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE (“DISPUTE” OR
“DISPUTES”) SHALL, AT YOUR ELECTION, WHICH ELECTION MAY BE MADE AT ANY TIME
PRIOR TO THE COMMENCEMENT OF A JUDICIAL PROCEEDING BY YOU, OR IN THE EVENT OF A
JUDICIAL PROCEEDING INSTITUTED BY US AT ANY TIME PRIOR TO THE LAST DAY TO ANSWER
AND/OR RESPOND TO A SUMMONS AND/OR COMPLAINT MADE BY YOU, BE RESOLVED BY
ARBITRATION IN NEW YORK, NEW YORK IN ACCORDANCE WITH THE PROVISIONS OF THIS
PARAGRAPH 21 AND SHALL, AT YOUR ELECTION, INCLUDE ALL DISPUTES ARISING OUT OF
OR IN CONNECTION WITH (I) THIS AGREEMENT OR ANY RELATED AGREEMENTS OR
INSTRUMENTS, (II) ALL PAST, PRESENT AND FUTURE AGREEMENTS INVOLVING THE
PARTIES, (III) THE CREDIT OR ANY OTHER TRANSACTION CONTEMPLATED HEREBY AND ALL
PAST AND FUTURE TRANSACTIONS INVOLVING THE PARTIES, AND (IV) ANY ASPECT OF THE
PAST, PRESENT OR FUTURE RELATIONSHIP OF THE PARTIES. You may elect to require
arbitration of any Dispute with us without thereby being required to arbitrate
all Disputes between you and us. Any such Dispute shall be resolved by binding arbitration
in accordance with Title 9 of the U.S. Code and the Commercial Arbitration
Rules of the American Arbitration Association (“AAA”). In the event of any
inconsistency between such Rules and these arbitration provisions, these
provisions shall supersede such Rules. All statutes of limitations which would
otherwise be applicable shall apply to any arbitration proceeding under this
subparagraph 21(a). In any arbitration proceeding subject to these provisions,
the arbitration panel (the “arbitrator”) is specifically empowered to decide
(by


 


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documents only, or with a hearing, at the arbitrator’s
sole discretion) pre-hearing motions which are substantially similar to
pre-hearing motions to dismiss and motions for summary adjudication. In any
such arbitration proceeding, the arbitrator shall not have the power or
authority to award punitive damages to any party. Judgment upon the award
rendered may be entered in any court having jurisdiction. Whenever an arbitration
is required, the parties shall select an arbitrator in the manner provided in
subparagraph 2l(d). (b) No provision of, nor the exercise of any rights under,
subparagraph 21(a) shall limit the right of any party (i) to foreclose against
any real or personal property collateral through judicial foreclosure, by the
exercise of a power of sale under a deed of trust, mortgage or other security
agreement or instrument, pursuant to applicable provisions of the Uniform
Commercial Code, or otherwise pursuant to applicable law, (ii) to exercise self
help remedies including but not limited to setoff and repossession, or (iii) to
request and obtain from a court having jurisdiction before, during or after the
pendency of any arbitration, provisional or ancillary remedies and relief
including but not limited to injunctive or mandatory relief or the appointment
of a receiver. The institution and maintenance of an action or judicial
proceeding for, or pursuit of, provisional or ancillary remedies or exercise of
self help remedies shall not constitute a waiver of your right, even if you are
the plaintiff, to submit the Dispute to arbitration if you would otherwise have
such right. (c) You may require arbitration of any Dispute(s) concerning the
lawfulness, unconscionableness, propriety, or reasonableness of any exercise by
you of your right to take or dispose of any collateral or your exercise of any
other right in connection with collateral including, without limitation,
judicial foreclosure, exercising a power of sale under a deed of trust or
mortgage, obtaining or executing a writ of attachment, taking or disposing of
property with or without judicial process pursuant to Article 9 of the Uniform
Commercial Code or otherwise as permitted by applicable law, notwithstanding
any such exercise by you. (d) Whenever an arbitration is required under
subparagraph 21(a), the arbitrator shall be selected, except as otherwise
herein provided, in accordance with the Commercial Arbitration Rules of the
AAA. A single arbitrator shall decide any claim of $100,000 or less and he or
she shall be an attorney with at least five years’ experience. Where the claim
of any party exceeds $100,000, the Dispute shall be decided by a majority vote
of three arbitrators, at least two of whom shall be attorneys (at least one of
whom shall have not less than five years’ experience representing commercial
banks). The arbitrator shall have the power to award recovery of all costs and
fees (including attorneys’ fees, administrative fees, arbitrator’s fees, and
court costs) to the prevailing party. In the event of any Dispute governed by
this paragraph 21, each of the parties shall, subject to the award of the
arbitrator, pay an equal share of the arbitrator’s fees.


21.                   Notices. Any notice to you shall be deemed
effective only if sent to and when received at your department conducting the
transaction or transactions in question relating to the Credit, the Application
or this Agreement. Any notice to or demand on any of us shall be binding on all
of us and shall be deemed effective when first delivered by hand or when sent
to the Applicant named on the Application by mail, telegraph, telex, facsimile,
SWIFT, cable, radio, telephone or otherwise to the Applicant’s address or
telephone number appearing on the Application or to such other address as we
shall have notified you. Each of us hereby irrevocably designates the Applicant
as agent to receive notice hereunder on his or its behalf.


 


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22.                   Changes, Captions. This Agreement and the
Application may not be changed or terminated orally. Except as provided in
subparagraph 4(c), this Agreement and the Application may not be supplemented
by any oral agreement whatsoever. The captions in this Agreement are inserted for
reference only and shall not modify the text of any provision or be considered
parts of this Agreement.


23.                   Jury Trial Waiver; Other Waivers. (a) YOU
AND EACH OF US HEREBY WAIVE TRIAL BY JURY IN ANY ACTION, SUIT OR PROCEEDING, IN
RESPECT OF OR ARISING OUT OF THIS AGREEMENT, THE CREDIT, OR ANY RELATED
DOCUMENTS OR INSTRUMENTS AND EACH OF US ALSO WAIVES THE RIGHT TO INTERPOSE ANY
SETOFF OR COUNTERCLAIM OF ANY NATURE OR DESCRIPTION, ANY OBJECTION BASED ON
FORUM NON CONVENIENS OR VENUE, AND ANY CLAIM FOR CONSEQUENTIAL, PUNITIVE OR
SPECIAL DAMAGES. (b) No provision hereof and no right or remedy of yours may be
waived by any future action or course of dealing. You shall not be deemed to
have waived any of your rights hereunder, unless you or your authorized agent
shall have signed an express waiver in writing. No such waiver, unless
expressly stated, otherwise therein, shall be effective as to any transaction
which occurs subsequent to the date of such waiver, nor as to any continuance
of a breach after such waiver. (c) Neither your failure nor any delay to
exercise any right in connection with this Agreement shall operate as a waiver
thereof or preclude any other or further exercise thereof, nor shall any single
or partial waiver of any such right preclude any other or further exercise
thereof, or the exercise of any other right, which is hereby waived.


The opening of the Credit shall be subject to the
foregoing Application and the terms and conditions of this Agreement.


 


	
   

  	
   

  	
  AGREED TO:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Applicant’s
  Name: 

  	
  Glenn S. Palmer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (Signature) By: 

  	
  /s/ Glenn S.
  Palmer

  
	
   

  	
   

  	
  Print Name: 

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Print Title: 

  	
  Chief Executive
  Officer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Applicant’s
  Taxpayer Identification/

  	
   

  
	
   

  	
   

  	
  Social Security
  Number:

  	
   

  
							



 


 


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