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CorrespondenceRelease of collateral for Stratford Village Ph. 1 Subject: Release of collateral for Stratford Village Ph. 1 Bate: Tue, 31 Dec 2002 13:39:39 -0700 From: "Narda Wilson" <tricitynarda@centurytel.net> To: "Carol Kostman (E-mail)" <ckostman@kalispell.com> Hi Carol - The developer called about his release of collateral for Stratford Village Ph. 1 which was a letter of credit for around $91K. As you know we received the final plat for Stratford Village Ph 2 which has a subdivision improvements agreement with it. The subdivision improvements agreement for Ph. 2 includes a little bit of work still needed in Phase 1 and is included in the "new" letter of credit. The improvements associated with Phase 1 were certfied by Jackola Engineering as being completed except for some paving of the alleys. You should send the developer his orignal letter of credit filed with Phase 1, but I think it might have expired Dec. 1, 2002 anyway. Thanks and have a great new year, Narda I of 1 1/6/2003 8:28 AM �1_141te� THE CITY OF KALISPELL, MONTANA 312 First Avenue East — P.O. Box 1997, Kalispell, MT 59903-1997 Telephone (406) 758-7750, Fax No. (406) 758-7847, E-Mail ckostman@kalispell.com December 31, 2002 Banner Bank Attention: Jeanne Varnier Loan Officer 10125 Main Street Bothell, WA 98011 RE: Stratford Subdivision Credit Number 49101 Applicant: Apex 1, LLC Irrevocable Letter of Credit Dear Ms. Varnier, The City of Kalispell is releasing the letter of credit dated December 12, 2001 in the amount of Ninety One Thousand Seven Hundred One Dollars and 25/100' ( $91,701.25), which expired December 1, 2002. We have a received a new Letter of Credit in the amount of Eighteen ThousandSix Hundred Seventy Five and no/100 ( $18,675.00), which will expire on November 18, 2003. Sincerely, Carol L. Kostman Assistant Finance Director RECEIVED 2 �4 JUN 24 AM 10: 30 KALISPELL CITY CLERK og aJyc �rhYu+t. SurvcYtio9 � June 22, 2004 City of Kalispell Department of Public Works P.O. Box 1997 Kalispell, Montana 59903 ATTN: Mr. Frank Castles, Assistant City Engineer RE: Stratford Village, Phase 3; Reception No. 200412510050 request for reduction in subdivision improvement amount from $408,712.50 to $187,895.00 Dear Mr. Castles: 4 This letter is a request by the developer, Norman Sanderson of Apex 1, LLC through this office, to reduce the amount of the subdivision improvement agreement from the $408,712.50 to a reduced amount of $187,895.00. The basis for the request is that the project is 84.68% complete at this point with work continuing as weather permits. The $187,895.00 amount includes the 125% multiplier on the remaining work. We respectfully request the City of Kalispell to allow this request and process the reduction of the agreement to the currently requested amount of $187,895.00. A revised engineers estimate of completion is attached. Sincerely, Jackola Engineering and Architecture, P.C. or A. Jackol i Enclosures: Revised engineer's estimate of completion - Dated 6/21/04. Copy — Original subdivision improvement agreement Stratford Village, Phase IIl. CC: Norman Sanderson, Apex 1, LLC David Hofstad Theresa White — City Clerk Narda Wilson — Try -City Planning Office (P)406.755.3208 (F)406.755.3218 PO Boxl 134 -1830 3`d Ave E Suite 302, Kalispell,MT.59901 City of Kalispell Public Works Department Post Office Box 1997, Kalispell, Montana 59903-1997 - Telephone (406)758-7720, Fax (406)758-7831 MEMORANDUM July 1, 2004 To: Carol Kostman, Assistant Finance Director From: Frank Castles, P.E., Assistant City Engineer RE: Stratford Village, Phase 3; Reception No. 200412510050 request for reduction in subdivision improvement amount from $408,712.50 to $187,895.00 Attached is a copy of the request by the developer to reduce the amount of the subdivision improvement financial security to $187,895.00. A cursory examination of the referenced project was performed recently. We concur that the items remaining to be constructed are as they appear in EXHIBIT A (dated 6/21/04). The developer should provide a revised Letter of Credit, Cashier's Check, or suitable financial security prior to releasing the current security for the referenced project. Cc w/o attachments: Norm Sanderson, Apex 1, LLC Via fax: 206-860-8514 David Hofstad Theresa White — City Clerk Narda Wilson — Tri-City Planning Office Thor Jackola, Jackola Engineering E r. City of Kalispell Public Works Department Post Office Box 1997, Kalispell, Montana 59903-1997 - Telephone (406)758-7720, Fax (406)758-7831 December 21, 2005 Thor Jackola Jackola, P. C. P. O. Box 1134 Kalispell, Montana 59901 Re: Stratford Village, Phases 1, 2 & 3 Dear Thor; copy Thank you for taking the time to meet with Mr. Hofstad and myself last week. As we discussed, the City has some outstanding issues with the development. They need to be dealt with in a timely manner. Extending the letter of credit is a step in the right direction. We have reviewed the engineering estimate provided by your office for the above referenced project. We are prepared to accept the reduced security ($30,750.00) provided that said security shall include: ➢ The repair of pavement patches that have not been completed satisfactorily. ➢ The installation of stop signs within the subdivision. All traffic control devices shall be in conformance with the latest edition of Manual of Uniform Traffic Control Devices. All remaining items shall be completed by June 30, 2006. The letter of credit will be issued to September 1, 2006. Should you have any questions regarding these issues, do not hesitate to call this office. Sincerely, Mark Crowley CC: Carol Kostman Q` oy O J¢ oa �h��`�h+re, survcyS^g � December 19, 2005 City of Kalispell Public Works Department P.O. Box 1997 Kalispell, Montana 59903-1997 Attn: Mr. Mark Crowley Construction Manager RE: Stratford Village Subdivision Combined Phase I, II, and III Security Agreement Amount reduced to $30,750.00 Dear Mr. Crowley: This letter is a request by the Developer, Norman Sanderson of Apex 1, LLC through this office to reduce the Phasel, Phase II and Phase III security amount from $59,800.00 to $30,750.00. Exhibit "A" is part of this letter of request. It is the Developers plan that Phase IV, which is currently under construction and any issues remaining in the previous phase will be completed by June 30, 2006. The revised letter of credit will be issued to September 1, 2006 to include the 60 day beyond completion requirement. Sincerely, /Thor A. Jack P.E. Enclosure: Exhibit "A" — Revised Engineer's Estimate of Completion Dated 12/19/05. CC: Norm Sanderson, Apex 1, LLC David Hofstad Theresa White, City Clerk Narda Wilson, City Planning Office (P)406.755.3208 (F)406.755.3218 PO Box1134 -1830 P Ave E Suite 302, Kalispell,MT.59901 EXHIBIT A t' ✓ ENGINEERS ESTIMATE OF CONSTRUCTION PROGRESS PHASE 1 (16 Lots), PHASE II (27 Lots), & Phase III (58 Lots) &RATFORD VILLAGE SUBDIVISION, KALISPELL, MONTANA 4/15/04 Completion adjustment as of 6/21/04 Completion adjustment as of 12/22/04 Completion adjustment as of 12/19/05 PHASE I PHASE II PHASE III ITEM EST. TOTAL COST PERCENT COMP REMAIN EST. TOTAL COST PERCENT COMP REMAIN EST. TOTAL COST PERCENT COMP REMAIN 1. Roads a. Exc and Grade to Subbase 68,000.00 100% -0- b. Base, Crush Rock 22,568.00 100% -0- 43,509.00 100% -0- 54,900.00 100% -0- c.. Paving 34,020.00 100% -0- 65,589,00 100% -0- 80,500.00 100% -0- d. Sidewalks 19,809.00 100% -0- 61,245.00 100% -0- 74,000.00 100% -0- e. Site Concrete / Lights and Bases 6,000.00 100% -0- 14,534.00 100% -0- 18,800.00 100% -0- e. Curbs 11,600.00 100% -0- 39,832.00 100% -0- 54,000.00 100% -0- 2. Alleys a. Base, Crush 4,346.00 100% -0- 9,596.00 100% -0- 7,900.00 100% -0- b. Paving 3,370.00 100% -0- 7,370.00 100% -0- 8,300.00 100% -0- 3. Sewer a. Manholes 12,000.00 100% -0- Sewer total: 100% Sewer total: 20,000.00 100% -0- b. 10" Sewer Mains 16,290.00 100% -0- 45,115.00 100% -0- 6,300.00 100% -0- c. 8 "Sewer Mains 6,440.00 100% -0- 100% 28,300.00 100% -0- d. Services 10,800.00 100% -0- 100% 49,200.00 100% -0- e. Lift Station 78,000.00 100% -0- 4. Water a. 8" Water Mains 18,176.00 100% -0- Water total: 100% Water total: 43,900.00 100% -0- b. 8" Valves 5,600.00 100% -0- 64,274.00 100% -0- 5,600.00 100% -0- c. 6" Hydrants with valves 9,000,00 100% -0- 100% 20,500.00 100% -0- d. Services 12,000.00 100% -0- 100% 55,000.00 100% -0- 5. Storm Water a. 12" Main 6,630.00 100% -0- Storm total: 100% Storm total: 1,600.00 100% -0- b. 10" Main 5,612.00 100% -0- 17,792.00 100% -0- 7,200.00 100% -0- c. 8" Main 10,304.00 100% -0- 100% 17,300.00 100% -0- d. Catch Basins 8,500.00 100% -0- 100% 12,800.00 100% -0- e. Manholes and Tankage 16,800.00 100% -0- 100% 18,000.00 100% -0- f. Retention Basin 58,646.00 1 100% -0- 6. Postal Service a. Mailboxes and Mounting 2,500.00 100% -0- 7. Si na e a. Street Signs 1,200.00 100% -0- 3,200.00 100% -0- 4,700.00 100% -0- b. Traffic signs 1,800.00 100% -0- 4,800.00 100% -0- 6,000.00 100% -0- 8. Landscape a. Trees 10,800.00 100% -0- 11,300.00 100% -0- 18,200.00 100% -0- b. Seeds and Repair 2,100.00 100% -0- 2,100.00 100% -0- 24,600.00 1 -0- 24,600.00 9. Utilities a. Electric 22,000.00 100% -0- 37,537.00 100% -0- 50,287.00 100% -0- b. Gas 11,000.00 100% -0- 18,538.00 100% -0- 16,211.25 100% -0- c. Telephone 14,000.00 100% -0- 13,912.00 100% -0- 18,299.95 100% -0- d. Cable 3,000.00 100% -0- 4,000.00 100% -0- 6,000.00 100% -0- e. Trench,Conduit.,Vaults 40,289.00 100% -0- 48,400.00 100% -0- Subtotal 310,365.00 100% -0- 506,632.00 100% -0- 981,444.20 96.65% 24,600.00 PHASE III: Security Amount Required(1.25) (24,600.00) 30,750.00 City of Kalispell Post Office Box 1997 - Kalispell, Montana 59903-1997 - Telephone (406)758-7700 Fax (406)758-7758 December 20, 2006 Apex 1, LLC 10 East Roanoke Street #8 Seattle, WA 98102 Re: Release of security $30,500.00 Stratford Village, Phases I, II, and III Gentlemen, I am returning the security on Stratford Village, Phases I, II, and III per instructions of the Public Works department. The work has been completed as required. If you have any questions, please call me at 758-7750. Sincerely, Deb Deist City Treasurer CO m o ao ON a Q Q at '.00 M. U a a x LU w a Q co uj O U z o o z Q3 i �1 O 44 �4 4J tl] I U N W N N i." 4J 4) s4 0 N H 0 N c—i �—I 1 0 l0 O O N N x-1 1` CD 11 O1 M r-1 x U U A 90 > 0 0 > z m 0 m o T 00 c X ;a 0 m 2: X > m < cz =r (D > M (D 3 rn M X 0 CL 0 m > (0 0 < 0 Ef U) Co o -n 0 ;u 0 , ca K) c 0 X m 0 z z ;a 0 co m M z 0 > -1 69 Ol 9 00 0 > 0 < ol (D zi G) 6 I > C, 0 z \ k Z� r Ol CA CD F - City of Kalispell Public Works Department Post Office Box 1997, Kalispell, Montana 59903-1997 - Telephone (406)758-7720, Fax (406)758-7831 MEMORANDUM November 22, 2006 To: Deb Deist, City Treasurer From: Frank Castles, P.E., Deputy Public Works Director/Assistant City Enginee RE: Stratford Village, Phase I, II, & III The referenced project was constructed in accordance with the approved plans and specifications. Public Works approves the release of the financial security held for the referenced project(s). Cc w/o attachments: Dave Hofstad Hilzac Corp. P.O. Box 8226 Kalispell, MT 59904 Apex 1, LLC 10 East Roanoke Street #8 Seattle, Washington 98102 Jackola Engineering and Architecture P.O. Box 1134 Kalispell, Montana 59903 Sean Conrad, Kalispell Planning Office 7qq0- 0�41 City of Kalispell Public Works Department Post Office Box 1997, Kalispell, Montana 59903-1997 - Telephone (406)758-7720, Fax (406)758-7831 October 11, 2006 Banner Bank International Department 2815 Second Avenue, Suite 360 Seattle, Washington 98121 Re: Banner Bank Standby Letter of Credit #490501 Dated: September 6, 2006 For: Stratford Village Subdivision Attention: Ayahito Tsukimura Dear Ayahito; Attached is a copy of the following: Banner Bank Standby Letter of Credit #490501 Expiration Date: October 31, 2006 Apex 1, LLC has failed to make the necessary improvements and/or repairs to the referenced subdivision in accordance with the Subdivision Improvements Agreement. The City hereby calls on the referenced Letter of Credit. In accordance with the City's agreement with the developer, we require that funds in the amount of $30,750.00 be deposited in the City bank account. These funds are required to cover the cost of completion of the pavement and sidewalk repairs, valve adjustments and other unspecified items. Sincerely, James H. Patrick, City Manager Cc: Apex 1, LLC; 10 E. Roanoke Street; #8; Seattle, WA 98102 Jackola Engineering, PC; PO Box 1134; Kalispell, MT 59901 Kalispell Planning Department ��„� iolaylo� City of Kalispell Post Office Box 1997 - Kalispell, Montana 59903-1997 - Telephone (406)758-7700 Fax (406)758-7758 October 24, 2006 Banner Bank International Dept. 2815 2°d Avenue, Suite. 360 Seattle, WA. 98121 Attn: Jenai Zhang RE: Letter of credit #490501 Apex 1, LLC Stratford Village phase 1, 2, 3 Please route the proceeds of the letter of credit called by the City October 16, 2006 to our bank account. Glacier Bank ABA # 292970825 ACCOUNT # 010163583 Please contact me if you need any other information. Sincerely, Amy H. Robertson, Finance Director Cc: Jim Patrick, City Manager CITY OF KALISPELL 10/24/06 12:04 PM trs RECEIPT NO:C004791 FMSM STRATFORD VILLAGE APEX 1, SEIZED LETTER OF PAYMENT RECEIVED CK ACH/APEX 1 TOTAL AMOUNT 30,500.00 CREDIT AMOUNT 30,500.00 30,500.00 Tran sacti°ons Page 1 of 1 10/24/2006 Wire Transfer Credit APEX I, LLC 10 E. ROANOKE STREET, NO 8 SEATTLE, WA 98102 RE: APEX I, LLC, STANDBY LC 49 https://www.netteller.com/glacierbank/hbAccountDetails.cfm 10/25/2006 11/27/06 14:56:35 CITY OF KALISPELL Page 1 gb620-iq ACCOUNT HISTORY trs G/L#: 7940-000-021413-000 From: 07/01/2006 Output: Printer Descr: DEPOSIT PAY/STRATFORD VILLAGE PH123 To: 11/30/2006 DATE AMOUNT BTCH DESCRIPTION / NAME / INV# / PO 10/24/06 30,500.00- C/R 17798 C004791 FROM:STRATFORD VILLAGE FOR: STRATFORD VILLAGE — DEBITS: .00 CREDITS: 30,500.00- NET: 30,500.00- C/R DB: .00 CR: 30,500.00- - City of Kalispell Public Works Department 7 Post Office Box 1997, Kalispell, Montana 59903-1997 - Telephone (406)758-7720, Fax (406)758-7831 November 13, 2006 Apex 1, LLC 10 East Roanoke Street, #8 Seattle, Washington 98102 RE: Stratford Village Subdivision, Phase III Gentlemen: The requested repairs to the sidewalks and paving have been completed. The Stratford Village, Phase III, city owned and maintained improvements have been constructed in accordance with the approved plans and specifications. The one year warranty commenced on November 9, 2006. Upon receipt of a 10% warranty and maintenance bond covering the city owned and maintained improvements, the city will return the financial security held for completion of the project. If you have any questions, please do not hesitate to contact this office. Since ely, rank Castles, P.E. Deputy Public Works Director/Assistant City Engineer CC: Sean Conrad, Senior Planner Kalispell Planning Office Deb Deist, City Treasurer Thor Jackola, P.E. Jackola Engineering and Architecture Dave Hofstad Hilzac Corporation P.O. Box 8226 Kalispell, Montana 59904 City of Kalispell Public Works Department Post Office Box 1997, Kalispell, Montana 59903-1997 - Telephone (406)758-7720, Fax (406)758-783 I December 21, 2005 Thor Jackola Jackola, P. C. P. O. Box 1134 Kalispell, Montana 59901 Re: Stratford Village, Phases 1, 2 & 3 Dear Thor; Thank you for taking the time to meet with Mr. Hofstad and myself last week. As we discussed, the City has some outstanding issues with the development. They need to be dealt with in a timely manner. Extending the letter of credit is a step in the right direction. We have reviewed the engineering estimate provided by your office for the above referenced project. We are prepared to accept the reduced security ($30,750.00) provided that said security shall include: ➢ The repair of pavement patches that have not been completed satisfactorily. ➢ The installation of stop signs within the subdivision. All traffic control devices shall be in conformance with the latest edition of Manual of Uniform Traffic Control Devices. All remaining items shall be completed by June 30, 2006. The letter of credit will be issued to September 1, 2006. Should you have any questions regarding these issues, do not hesitate to call this office. Sincerely, Mark Crowley CC: Carol Kostman 7 A�'h/tccfu�r. SvrveY��g Vca December 19, 2005 City of Kalispell Public Works Department P.O. Box 1997 Kalispell, Montana 59903-1997 Attn: Mr. Mark Crowley Construction Manager RE: Stratford Village Subdivision Combined Phase I, II, and III Security Agreement Amount reduced to $30,750.00 Dear Mr. Crowley: This letter is a request by the Developer, Norman Sanderson of Apex 1, LLC through this office to reduce the Phasel, Phase II and Phase III security amount from $59,800.00 to $30,750.00, Exhibit "A" is part of this letter of request. It is the Developers plan that Phase IV, which is currently under construction and any issues remaining in the previous phase will be completed by June 30, 2006. The revised letter of credit will be issued to September 1, 2006 to include the 60 day beyond completion requirement. Sincerely, /Thor A. Jack .E. c Enclosure: Exhibit "A" — Revised Engineer's Estimate of Completion Dated 12/19/05. CC: Norm Sanderson, Apex 1, LLC David Hofstad Theresa White, City Clerk Narda Wilson, City Planning Office (P)406.755.3208 (F)406.755.3218 PO Boxl 134 -1830 3`d Ave E Suite 302, Kalispell,MT.59901 EXHIBIT A s%►i4 I iTA A-i _•. 4/15/04 ENGINEERS ESTIMATE OF CONSTRUCTION PROGRESS 11, PHASE 1 (16 Lots), P. a 9XRATFORD VILLAGE . t SASE H (27 Lots), & Phase III (58 Lots) SUBDIVISION, KALISPELL, MONTANA Completion adjustment as of 6/21/04 Completion adjustment as of 12/22/04 Completion adjustment as of 12/19/05 PHASE I PHASE II PHASE III ITEM EST. TOTAL COST PERCENT COMP REMAIN EST. TOTAL COST PERCENT COMP REMAIN EST. TOTAL COST PERCENT COMP REMAIN 1. Roads a. Exc and Grade to Subbase 68,000.00 100% -0- b. Base, Crush Rock 22,568.00 100% -0- 43,509.00 100% -0- 54,900.00 100% -0- c.. Paving 34,020.00 100% -0- 65,589.00 100% -0- 80,500.00 100% -0- d. Sidewalks 19,809.00 100% -0- 61,245.00 100% -0- 74,000.00 100% -0- e. Site Concrete / Lights and Bases 6,000.00 100% -0- 14,534.00 100% -0- 18,800.00 100% -0- e. Curbs 11,600.00 100% -0- 39,832.00 100% -0- 54,000.00 100% -0- 2. Alleys a. Base, Crush 4,346.00 100% -0- 9,596.00 100% -0- 7,900.00 100% -0- b. Paving 3,370.00 100% -0- 7,370.00 100% -0- 8,300.00 100% -0- 3. Sewer a. Manholes 12,000.00 100% -0- Sewer total: 100% Sewer total: 20,000.00 100% -0- b. 10" Sewer Mains 16,290.00 100% -0- 45,115.00 100% -0- 6,300.00 100% 1 -0- c. 8 "Sewer Mains 6,440.00 100% -0- 100% 28,300.00 100% -0- d. Services 10,800.00 100% -0- 100% 49,200.00 100% -0- e. Lift Station 78,000.00 100% -0- 4. Water a. 8" Water Mains 18,176.00 100% -0- Water total: 100% Water total: 43,900.00 100% -0- b. 8" Valves 5,600.00 100% -0- 64,274.00 1000/. -0- 5,600.00 100% -0- c. 6" Hydrants with valves 9,000.00 100% -0- 100% 20,500.00 100% -0- d. Services 12,000.00 100% -0- 100% 55,000.00 100% -0- 5. Storm Water a. 12" Main 6,630.00 100% -0- Storm total: 100% Storm total: 1,600.00 100% -0- b. 10" Main 5,612.00 100% -0- 17,792.00 100% -0- 7,200.00 100% -0- c. 8" Main 10,304.00 100% -0- 100% 17,300.00 100% -0- d. Catch Basins 8,500.00 100% -0- 100% 12,800.00 100% -0- e. Manholes and Tankage 16,800.00 100% -0- 100% 18,000.00 100% -o- f Retention Basin 58,646.00 100% -0- 6. Postal Service a. Mailboxes and Mounting 2,500.00 100% -0- 7. Si na e a. Street Signs 1,200.00 100% -0- 3,200.00 100% -0- 4,700.00 100% -0- b. Traffic signs 1,800.00 100% -0- 4,800.00 100% -0- 6,000.00 100% -0- 8. Landscape a. Trees 10,800.00 100% -0- 11,300.00 100% -0- 18,200.00 100% -0- b. Seeds and Repair 2,100.00 100% -0- 2,100.00 100% -0- 24,600.00 -0- 24,600.00 9. Utilities a. Electric 22,000.00 100% -0- 37,537.00 100% -0- 50,287.00 100% -0- b. Gas 11,000.00 100% -0- 18,538.00 100% -0- 16,211.25 100% -0- c. Telephone 14,000.00 100% -0- 13,912.00 100% -0- 18,299.95 100% -0- d. Cable 3,000.00 100% -0- 4,000.00 100% -0- 6,000.00 100% -0- e. Trench,Conduit.,Vaults 40,289.00 100% -0-_48,400.00 100% -0- Subtotal 310,365.00 100% -0- 506,632.00 100% -0- 981,444.20 96.65% 24,600.00 PHASE III: Security Amount Required(1.25) (24,600.00) 30,750.00 ADVICE OF AMENDMENT STANDBY LETTER OF CREDIT Date: October 19, 2005 City of Kalispell PO Box 1997 Kalispell, Montana 59903-1997 Re: Our Letter of Credit Issuance Amount: Issue Date: Applicant: Amendment No.: 490501 USD59,800.00 01 /27/06 Apex I, LLC 01 Please find enclosed one original and one copy of the amendment of the above referenced Letter of Credit, which we have amended on behalf of the applicant. Please kindly sign and return the copy of the said amendment in the enclosed envelope signifying your acceptance. If you have any questions, please call: Jennifer Lim 206-269-8382 For any future inquiries, please refer to our above reference. Best Regards, 151� Jennifer Lim /a .z y . o y- :R JK International Department • 2815 Second Avenue, Suite 360 • Seattle, WA 98121 121 Phone 206-269-8380 • Fax 206-269-8389 • www.bannerbank.com LENDER Member FDIC, Equal Housing Lender IRREVOCABLE STANDBY LETTER OF CREDIT AMENDMENT Date: October 19, 2005 Beneficiary: City of Kalispell PO Box 1997 Kalispell, Montana 59903-1997 I_1TIl N ►1 L lz [ 1 Letter of Credit No. Amount: In Words: NNER BANK USD59,800 (Fifty Nine Thousand Eight Hundred and No/100 US Dollars) We hereby amend the above Standby Letter of Credit, on behalf of Apex I, LLC,10 E Roanoke St, #8, Seattle, WA 98102, as follows: 1. Draft(s) must now be drawn on and documents must be presented to Banner Bank, International Department, 2815 Second Avenue, Suite 360, Seattle, WA 98121. 2. This Letter of Credit now expires at the counter of Banner Bank, International Department, 2815 Second Avenue, Suite 360, Seattle, WA 98121. All other terms and conditions remain unchanged. (CA Authorized ' ignature Please sign below signifying your acceptance of this amendment and return to us: (Beneficiary), Ci of Kalispell Date International Department • 2815 Second Avenue, Suite 360 • Seattle, WA 98121 1121 Phone 206-269-8380 • Fax 206-269-8389 • www.bannerbank.com LENDER Member FDIC, Equal Housing Lender City of Kalispell Public Works Department Post Office Box 1997, Kalispell, Montana 59903-1997 - Telephone (406) 758-7720, Fax (406) 758-7831 January 24, 2006 Amy Robertson Finance Department City of Kalispell Re: Stratford Village Subdivision Phase 3 in Kalispell, Montana Apex 1, LLC Dear Amy, I have been working with Mr. Norm Sanderson of Apex 1, LLC to extend his letter of credit #490501 for the above -referenced subdivision. Today, our office received the new letter of credit (attached). Per an agreement with this office and the developers engineer, the amount of the bond has been reduced and the time has been extended. All improvements are to be completed by June 30, 2006. The expiration date is September 1, 2006. If you have any questions, please do not hesitate to call this office. Sincerel Mark Crowley Construction Manager Cc: Apex 1, LLC; 10 E. Roanoke Street; #8; Seattle, WA 98102 Jackola Engineering, PC; PO Box 1134; Kalispell, MT 59901 Kalispell Planning Department IRREVOCABLE STANDBY LETTER OF CREDIT Date: January 23, 2006 Beneficiary: City of Kalispell Letter of Credit No.: 490501 PO Box 1997 Amount: USD59,800.00 Kalispell, Montana 59903-1997 In words: (Fifty Nine Thousand Eight Hundred and No/100 US Dollars) AMENDMENT NUMBER: 02 We hereby amend the above Standby Letter of Credit, on behalf ofApex I, LLC, 10 E Roanoke St. #8, Seattle, WA 98102, as follows: 1. Amount decreased by USD29,050.00 (Twenty Nine Thousand Fifty and No/100 US Dollars), for a new total of USD30,750.00 (Thirty Thousand Seven Hundred Fifty and No/100 US Dollars). 2. Expiration date extended to September 1, 2006. All other terms and conditions remain unchanged. This amendment is subject to the Uniform Customs and Practice for Documentary Credits (1993 Revision), ICC Publication No. 500. i orized Signature International Department • 2815 Second Avenue, Suite 360 • Seattle, WA 98121 121 Phone 206-269-8380 • Fax 206-269-8389 • www.bannerbank.com LENDER Member FDIC, Equal Housing Lender February 17, 2005 City of Kalispell Public Works Department Attn: Carol Kostman PO Box 1997 Kalispell, Montana 59903-1997 Dear Carol, I am enclosing our "corrected" Irrevocable Letter of Credit in favor of the City of Kalispell for our mutual customer Apex I LLC. This $59,800.00 Letter replaces all other existing Letters. Please release your interest in any other outstanding letters. If you have any questions, please feel free to contact the undersigned. Thank you for your help in expediting this transaction. Sincerely, L J. Tate Mason Vice President 10125 Main St. • Bothell, WA 98011 • P.O. Box 2105 • Bothell, WA 98041 121 425-398-0559 • Fax 425-398-8549 • www.bannerbank.com LENDER Member FDIC, Equal Housing Lender City of Kalispell Post Office Box 1997 - Kalispell, Montana 59903-1997 - Telephone (406)758-7700 Fax (406)758-7758 February 23, 2005 Mr.Tate Mason Vice President Banner Bank P.O. Box 2105 Bothell, WA 98041-2105 Re: Apex I LLC Stratford Village Subdivision Phase I, II, III Dear Mr. Mason, Thank you for the new Letter of Credit in the amount of $59,800.00 for the above referenced subdivision. I am releasing the original Letter of Credit in the amount of $187,895.00, which covered Phase III only. If you have any questions, please contact me at (406) 758-7750, Fax (406-758-7750 or e-mail me at ckostman(a�,kalispell.com. Sincerely, OaA cz /'� Carol L. Kostman Treasurer Enclosure: 1 IRREVOCABLE .`i OF 490402 LENDER NAME AND ADDRESS: BANNER BANK/ BOTHELL BRANCH PO BOX 2105, BOTHELL WA 98041 CUSTOMER(s): APEX I,LLC 10 E ROANOKE STREET, #8 SEATTLE, WA 98102 HONE: ID NUMBER: BENEFICIARY: CITY OF KALISPELL PO BOX 1997 KALISPELL, MONTANA 59903-1997 PHONE: ID NUMBER: EXPIRATION DATE This letter of credit shall expire upon the earlier of: 1. the close of business on n4/1R/n5 and all drafts and accompanying statements or documents must be presented to Lender on or before that time; or 2, the day that Lender honors a draw under which the full amount of this Letter of Credit has been drawn. Lender hereby establishes at the request and for the account of Customer, an Irrevocable Letter of Credit in favor of Beneficiary for a sum of 9NF HUNDRED Fir 11TYS VFN THntl AND EIGHT HUNDRED NINETY FIV not II_ARS Dollars ( S S 187 895 00 ). These funds shall be made available to Beneficiary upon Lender's receipt from Beneficiary of sight drafts drawn on Lender at Lender's address indicated above (or such other address that Lender may provide Beneficiary in writing) during regular business hours and accompanied by the signed written statements or documents indicated below. Vv A' RKING TO BENEFICSARY: PLEASE EXAMINE THIS LETTER OF CREDIT AT ONCE. IF YOU FEEL UNABLE TO MEET ANY OF ITS REQUIREMENTS, EITHER SINGLY OR TOGETHER, YOU SHOULD CONTACT THE CUSTOMER IMMEDIATELY TO SEE IF THE LETTER OF CREDIT CAN BE AMENDED. OTHERWISE, YOU WILL RISK LOSING PAYMENT UNDER THIS LETTER OF CREDIT FOR FAILURE TO COMPLY STRICTLY WITH ITS TERMS AS WRITTEN. 1. DRAFT TERMS AND CONDITIONS Lender shall honor drafts submitted by Beneficiary under the following terms and conditions: BENEFICIARY'S STATEMENT PURPORTEDLY SIGNED BY AN AUTHORIZED INDIVIDUAL OF BENEFICIARY CERTIFYING CUSTOMER, HAS NOT PERFORMED OR FULFILLED ALL THE UNDERTAKINGS, COVENANTS AND CONDITIONS IN ACCORDANCE WITH THE TERMS OF THE AGREEMENT BETWEEN CUSTOMER AND BENEFICIARY, RE: STRATFORD VILLAGE PHASE III Upon Lender's honor of such drafts, Lender shall be fully discharged of its obligations under this Letter of Credit and shall not be obligated to make any further payments under this Letter of Credit once the full amount of credit available under this Letter of Credit has been drawn. If a non -conforming demand is made, Lender shall notify Beneficiary of its dishonor on or before the time specified in Paragraph 5 below. Beneficiary shall have no recourse against Lender for any amount paid under this Letter of Credit once Lender has honored any draft or other document which complies strictly with this Letter of Credit, and which on its face appears otherwise in order but which is signed, issued, or presented by a party or under the name of a party purporting to act for Beneficiary, purporting to claim through Beneficiary, or posing as Beneficiary without Beneficiary's authorization. By paying an amount demanded in accordance with this Letter of Credit, Lender makes no representation as to the correctness of the amount demanded and Lender shall not be liable to Beneficiary, or any other person, for any amount paid or disbursed for any reason whatsoever, including, without limitation, any nonapplication or misapplication by Beneficiary of the proceeds of such payment. By presenting upon Lender or a confirming bank, Beneficiary certifies that Beneficiary has not and will not present upon the other, unless and until Beneficiary meets with dishonor. Beneficiary promises to return to Lender any funds received by Beneficiary in excess of the Letter of Credit's maximum drawing amount. 2. USE RESTRICTIONS All drafts must be marked "DRAWN UNDER BANNER BANK'S _ IRREVOCABLE LETTER OF CREDIT NO. 4gn402 DATED nmi/04 " and the amount of each draft shall be marked on the draft. Only Beneficiary or Beneficiary's Transferee (if this Letter of Credit is transferable) may complete a draft and accompanying statements or documents required by this Letter of Credit and make a draw under this Letter of Credit. This original Letter of Credit must accompany any draft drawn hereunder. Partial draws0 are permitted ❑ are not permitted under this Letter of Credit. Lender's honor of a partial draw shal I correspondingly reduce the amount of credit available under this Letter of Credit. Following a partial draw, Lender shall return this original Letter of Credit to Beneficiary with the partial draw noted hereon; in the alternative, and in its sole discretion, Lender may issue a substitute Letter of C redit to Beneficiary in the amount shown above, less any partial draw(s). 3. PERMITTED TRANSFEREES ❑ If checked, this Letter of Credit may be transferred by Beneficiary upon prior written notice to Lender of the transfer. The Transferee shall be deemed the new Beneficiary of this Letter of Credit and the documents of the Transferee, including drafts required under this Letter of Credit, will be processed by Lender (or any intermediary) without the original Beneficiary's intervention and without any further obligation of Lender to the original Beneficiary. ❑ If checked, the right to draw under this Letter of Credit shall be nontransferable, except for: A. A transfer (in its entirety, but not in part) by direct operation of law to the original Beneficiary's administrator, executor, bankruptcy trustee, receiver, liquidator, successor, or other representative at law; and B. The first immediate transfer (in its entirety, but not in part) by such legal representative to a third party after express approval of a governmental body (judicial, administrative, or executive). 4. TRANSFEREE'S REQUIRED DOCUMENTS When the presenter is a permitted Transferee under paragraph 3 above, the documents required for a draw shall include: LCLOC XS (Rev. 07104) #4370 @ Harland Financial Solutions, Inc. 2001,2004. All rights reserved. To reorder, call Harland Financial Solutions at 1-877-505-8278. A. All documents required elsewhere in this Letter of Credit, except that such documents may be in the name of and executed by either the original Beneficiary or the presenter permitted by paragraph 3; and B. When the presenter is a permitted Transferee under paragraph 3.A. or a third party under paragraph 3.B., a certified copy of the one or more documents which show the presenter's authority to claim through or to act with authority for the original Beneficiary. 5. TIMING OF DISHONOR Lender may rely upon any reason for dishonor which it communicates to Beneficiary or the presenter within three (3) Banking Days after Lender has received the last document forming Beneficiarys presentment (the 'Three -Day Period"). Lender shall be entitled to rely upon such reason without regard to either (i) the timing of any presentment made before the Expiration Date, or (ii) the timing inside the Three -Day Period of any preliminary communication(s) from Lender concerning the dishonor decision or any reason for dishonor. For any reason for dishonor given during the Three -Day Period. Lender shall be conclusively deemed to have met the "reasonable time", "without delay", and other timing requirements as the Uniform Customs and Practice for Documentary Credits, 1993 Revision, [CC Publication No 500, as most recently published by the International Chamber of Commerce (the "UCP') may impose. The Expiration Date shall not be extended to accommodate a presentment made less than three (3) Banking Days before the Expiration Date, and Beneficiary shall not be entitled to submit a draw request or provide Lender with any documents in support of a draw after the Expiration Date. Lender shall not be required to communicate a dishonor decision or its reasons within a time less than the Three -Day Period. "Banking Day" means any day, except Saturday, on which commercial banks located in wASlIINQTnN are open. 6. COMPLIANCE BURDEN Lender is not responsible for any impossibility or other difficulty in achieving strict compliance with the requirements of this Letter of Credit precisely as written. Beneficiary understands and acknowledges: (1) that unless and until the present wording of this Letter of Credit is amended with Lender's prior written consent, the burden of complying strictly with such wording remains solely upon Beneficiary; and (ii) that Lender is relying upon the lack of such amendment as constituting Beneficiary's initial and continued approval of such wording. 7. NON-SEVERABILITY If any aspect of this Letter of Credit is ever declared unenforceable for any reason by any court or governmental body having jurisdiction, Lender's entire engagement under this Letter of Credit shall be deemed null and void ab initio, and both Lender and Beneficiary shall be restored to the position each would have occupied with all rights available as though this Letter of Credit had never occurred. This non-severability provision shall override all other provisions in this Letter of Credit, no matter where such provision appears within this Letter of Credit. 8. CHOICE OF LAYS`/JURISDICTION This Letter of Credit is subject to the UCP. This Letter of Credit shall be governed by and construed in accordance with the laws of the State of WASHINC,ZTON , United States of America, except to the extent such laws are inconsistent with the UCP. Lender and Beneficiary consent to the jurisdiction and venue of any court selected by Lender in its discretion located in the State of WASNINGIQU _ in the event of any legal proceeding under this Letter of Credit. 9. EXPIRATION Lender hereby agrees with Beneficiary that drafts drawn under and in compliance with the terms of this Letter of Credit will be duly honored if presented to the Lender on or before the Expiration Date. DATED: __—__J0&03104— - LENDER:-AN.NER_BAUK1_BB-QIHELL}3RAN-QH--__—__p ENDORSEMENT OF DRAFTS DRAWN Amount Amount Date Negotiated By In Words In Figures [financia[.center LPMAST6021 Q Harland Financial Solutions, Inc. 2001, 2003. (9/3/96) All rights reserved. .4 . City of Kalispell Public Works Department Post Office Box 1997, Kalispell, Montana 59903-1997 - Telephone (406)758-7720, Fax (406)758-7831 MEMORANDUM December 23, 2004 To: Carol Kostman, Assistant Finance Director From: Frank Castles, P.E., Assistant City Engineer RE: Stratford Village Subdivision, Phase I, II, & III Attached is a copy of the request by the developer to reduce the amount of the subdivision improvement financial security to $59,800.00. A cursory examination of the referenced project was performed recently. We concur that the items remaining to be constructed are as they appear in EXHIBIT A (dated 12/22/04). The developer should provide financial security in the above amount of $59,800.00. Cc w/o attachments: Jackola Engineeing Via fax: 755-3218 Theresa White — City Clerk Narda Wilson — Tri-City Planning Office Js oa �,��un. Surveyfn4•V December 22, 2004 City of Kalispell Public Works Department P.O. Box 1997 Kalispell, Montana 59903-1997 ATTN: Mr. Frank Castles, P.E. Assistant City Engineer RE: Stratford Village Subdivision Combined Phase I, II, and III Security agreement amount to $59,800 Dear Mr. Castles: This letter is a request by the Developer, Norman Sanderson of Apex 1, LLC through this office to reduce the Phase III security amount from $187,895.00 to $41,125.00. It is also requested that the carry forward security amounts for Phase I ($4,212.50) and Phase II ($14,462.50) be combined and added to the Phase III amount of $41,125.00 for a combined Phase I, II, and III security amount of $59,800.00. This would allow the security amount to be inclusive of all current three phases under one security agreement. Exhibit "A" is part of this letter of request. We respectfully request the City of Kalispell to allow the security reduction request and process the reduction of the current Phase III agreement amount from $187,895.00 to $59,800.00 which includes the amount carried forward from Phase I and Phase II. This would allow the current Phase I and II agreement amount of $18,675.00 to expire as a result of it being included with Phase III required security amount for the total of $59,800.00. The Developer is planning to begin Phase IV in the spring of 2005 when weather permits as well as resolve the corrective measures under the security agreement of concern with the City. A revised engineer's estimate is attached. (P)406.755.3208 (F)406.755.3218 PO Box1134 -1830 3rd Ave E Suite 302, Kalispell,MT.59901 Sincerely, Jackola Engineering and Architecture, P.C. CFRI' M Encl: Exhibit "A" — Revised engineers estimate of completion dated 12/22/2004 Cc: Norman Sanderson, Apex 1 LLC David Hofstad Theresa White, City Clerk Narda Wilson, Try -City Planning Office (P)406.755.3208 (F)406.755.3218 PO Boxl 134 -1830 3rd Ave E Suite 302, Kalispell,MT.59901 EXHIBIT A 4/15/04 g&GINEERS ESTIMATE OF CONSTRUCTION PROGRESS sgp� PHASE 1 (16 Lots), PHASE H (27 Lots), & Phase III (58 Lots) TFORD VILLAGE SUBDIVISION, KALISPELL, MONTANA ��'\�' Z�yZ. �, `� Completion adjustment as of 6/21/04 Completion adjustment as of 12/22/04 PHASE I PHASE H PHASE HI ITEM EST. TOTAL COST PERCENT COMP REMAIN EST. TOTAL COST PERCENT COMP REMAIN EST. TOTAL COST PERCENT COMP REMAIN 1. Roads a. Exc and Grade to Subbast 1 68,000.00 100% -0- b. Base, Crush Rock 22,568.00 100% -0- 43,509.00 100% -0- 54,900.00 100% 1 -0- c.. Paving 34,020.00 1000/0 -0- 65,589.00 1000/0 -0- 80,500.00 100% -0- d. Sidewalks 19,809.00 100% -0- 61,245.00 100% -0- 74,000.00 100% -0- e. Site Concrete / Lights and Bases 6,000.00 100% -0- 14,534.00 100% -0- 18,800.00 100% -0- e. Curbs 11,600.00 100% -0- 39,832.00 100% -0- 54,000.00 100% -0- 2. Alleys a. Base, Crush 4,346.00 100% -0- 9,596.00 100% -0- 7,900.00 100% -0- b. Paving 3,370.00 100% -0- 7,370.00 100% -0- 8,300.00 -0- 8,300.00 3. Sewer a. Manholes 12,000.00 100% -0- Sewer total: 100% Sewer total: 20,000.00 100% -0- b. 10" Sewer Mains 16,290.00 100% -0- 45,115.00 100% -0- 6,300.00 100% -0- c. 8 "Sewer Mains 6,440.00 100% -0- 100% 28,300.00 100% -0- d. Services 10,800.00 100% -0- 100% 49,200.00 100% -0- e. Lift Station 78,000.00 100% -0- 4. Water a. 8" Water Mains 18,176.00 100% -0- Water total: 1000/. Water total: 43,900.00 100% -0- b. 8" Valves 5,600.00 100% -0- 64,274.00 100% -0- 5,600.00 100% -0- c. 6" Hydrants with valves 9,000.00 100% -0- 100% 20,500.00 100% -0- d. Services 12,000.00 100% -0- 100% 55,000.00 100% -0- 5. Storm Water a. 12" Main 6,630.00 100% -0- Storm total: 100% Storm total: 1,600.00 100% -0- b. 10" Main 5,612.00 100% -0- 17,792.00 1000/0 -0- 7,200.00 100% -0- c. 8" Main 10,304.00 100% -0- 100% 17,300.00 100% -0- d. Catch Basins 8,500.00 100% -0- 100% 12,800.00 100% -0- e. Manholes and Tankage 16,800.00 100% -0- 100% 18,000.00 100% -0- f. Retention Basin 58,646.00 100% -0- 6. Postal Service a. Mailboxes and Mounting 2,500.00 100% -0- 7. Si na e a. Street Signs 1,200.00 100% -0- 3,200.00 100% -0- 4,700.00 100% -0- b. Traffic signs 1,800.00 100% -0- 4,800.00 100% -0- 6,000.00 100% -0- 8. Landscape a. Trees 10,800.00 1000/0 -0- 11,300.00 100% -0- 18,200.00 1000/0 -0- b. Seeds and Repair 2,100.00 100% -0- 2,100.00 100% -0- 24,600.00 -0- 24,600.00 9. Utilities a. Electric 22,000.00 100% -0- 37,537.00 100% -0- 50,287.00 100% -0- b. Gas 11,000.00 1000/0 -0- 18,538.00 100% -0- 16,211.25 100% -0- c. Telephone 14,000.00 100% -0- 13,912.00 100% -0- 18,299.95 100% -0- d. Cable 3,000.00 100% -0- 4,000.00 100% -0- 6,000.00 100% -0- e. Trench,Conduit.,Vaults 40,289.00 100% -0- 48,400.00 100% -0- Subtotal 310,365.00 100% -0- 506,632.00 1000% -0- 981,444.20 96.65% 32,900.00 PRASE I: Security Amount carried forward 4,212.50 PRASE II: Security Amount carried forward 14,462.50 PHASE III: Security Amount Required(1.25) 12,900.00.00 41,125.00 Total security amount required as of 12/22/04 for Phase I, Phase II, and Phase III of Stratford Subdivision $59,800.00 City of Kalispell Public Works Department Post Office Box 1997, Kalispell, Montana 59903-1997 - Telephone (406)758-7720, Fax (406)758-7831 December 13, 2004 Jackola, P.C. 1830 3rd Avenue East Kalispell, Montana 59901 Via fax: 755-3218 Attention: Thor Jackola RE: Stratford Village Subdivision, Phase I & II Letter of Credit Dear Mr. Jackola, The Letter of Credit for the referenced project on file with the City of Kalispell in the approximate amount of $18,675.00 expires on December 31, 2004. Please provide a Letter of Credit with an expiration date for year 2005. The Letter of Credit should expire approximately sixty (60) days after the repairs to the pavement are anticipated. Failure to provide an updated Letter of Credit will force the City to execute the existing Letter of Credit on December 30, 2004. If you have any questions, please do not hesitate to contact this office. Sin Zely, Frank Castles, P.E. Assistant City Engineer Cc: Carol Kostman, Assistant Finance Director Narda Wilson, Tri-City Planning Office Apex 1, LLC, Norm Sanderson 10 East Roanoke, Suite 8 Seattle, WA 98102 City of Kalispell Post Office Box 1997 - Kalispell, Montana 59903-1997 - Telephone (406)758-7700 Fax (406)758-7758 February 1, 2005 Mr. Tate Mason Vice President Banner Bank P.O. Box 2105 Bothell, WA 98041-2105 Re: Apex I LLC Stratford Village Subdivision Phase III Dear Mr. Mason, Fax No. (425) 398-8549 The City of Kalispell will release the Letter of Credit in the amount of $187,895.00 as soon as we receive the replacement Letter of Credit in the amount of $59,800.00. If you have any questions, please contact me at (406) 758-7750, Fax (406-758-7750 or e-mail me at ckostmangkalispell.com. Sincerely, Carol L. Kostman Treasurer Confirmation Report— Memory Send Job number Date To Number of pages Start time End time Pages sent Status Job number 674 Page : 001 Date & Time: Feb-01-05 04:llpm Line 1 Machine ID 674 Feb—01 04:11pm 5914253988549--463 001 Feb—01 04:11pm Feb—01 04:11pm 001 OK *** SEND SUCCESSFUL ** City of Kalispell Yoaz OSice Bm 1997 - X—U.pell. MoO—. 59903-1997-'r-lcpl oan (406)758-7700 V— (406)758-7758 Fobr.aary 1, 2005 N1r_ Tate Mason Vice President Banner Ban3c P.O_ Box 21 O5 Bo,amM, WA 98041-2105 Fax No. (425) 398-8549 Re: Apex I LLC Stratford Village Subdivisi.o Phase III Dear Mr. Mason, Tile City of Kalispell will rcicase the Letter c r Credit in the arranunt of S 187,895.00 as soon as we receive the replacenmcmt Letter of Credit in the amount of S59,800.00. if you have any questions, please contact me at (4O6) 758-7750, Fax (406-758-7750 or c =ail me at cl:astman�iu.lco.iisnell_com_ Sincerely, Carol L_ 1<ost x arl rreeasurcr =R JK August 5, 2004 City of Kalispell Public Works Department Attn: Carol Kostman PO Box 1997 Kalispell, Montana 59903-1997 Dear Carol, I am enclosing our Irrevocable Letter of Credit in favor of the City of Kalispell for our mutual customer Apex I LLC. This $187,895.00 Letter replaces the one issued for $408,712.50. If you have any questions, please feel free to contact the undersigned. Thank you for your help in expediting this transaction. Sincerely, / JA"" Tate Mason Vice President 10125 Main St. • Bothell, WA 98011 • P.O. Box 2105 • Bothell, WA 98041 121 425-398-0559 • Fax 425-398-8549 • www.bannerbank.com LENDER Member FDIC, Equal Housing Lender Clity of Kalispell Charles iA. Harball Office of City Attorney City Attorney 312 First Avenue East P.O. Box 1997 Kalispell, MT 59903-1997 July 29, 2004 Tate Mason Banner Bank 10125 ,Main Street P.O. Box 2105 Bothell, WA 98041 Tel 406.758.7708 Fax 406.758.7771 charball@kaiispell.com Re: Stratford Village Phase 3 — Apex, I, LLC — Irrevocable Letter of Credit Dear Sir: I have enclosed your previously issued Letter of Credit for the above matter in the amount of $408,712.10. It is my understanding that you shall be issuing a replacement for this Irrevocable Letter of Credit in the amount of $187,830.00 to secure the balance of the project. Thank you for your consideration. Sincerely, Charles A. arball City Att ney IRREVOCABLE LETTER OF CREDIT NO. 490401 ADDRESS: ?105 BOTHELL, WA 98041 L C STREET %E_'eTA 98102 BENEFICIARY: CITY OF KALISPELL PO BOX 1997 KALISPELL, MONTANA 59903-1997 j I PHONE: ID NUMBER: TION DA letter of credit shall expire upon the earlier of: 1. the close of business on 03/16/05 and all drafts and accompanying statements or documents must be presented to Lender on or before that time; or 2. the day that Lender honors a draw under which the full amount of this Letter of Credit has been drawn. Lender hereby establishes at the request and for the account of Customer, an Irrevocable Letter of Credit in favor of Beneficiary for a sum of FOUR HUNDRED AND EIGHT THOUSAND SEVEN HUNDRED TWELVE DOLLARS AND 50/100 !' Dollars( 1 $408,712.50 These funds shall be made available to Beneficiary upon Lender's receipt from Beneficiary of sight drafts drawn on Lender at Lender's address indicated above (or such other address that Lender may provide Beneficiary in writing) during regular business hours and accompanied by the signed written statements or documents indicated below. WARNING TO BENEFICIARY: PLEASE EXAMINE THIS LETTER OF CREDIT AT ONCE. IF YOU FEEL UNABLE TO MEET ANY OF ITS REQUIREMENTS, EITHER SINGLY OR TOGETHER, YOU SHOULD CONTACT THE CUSTOMER IMMEDIATELY TO SEE IF THE LETTER OF CREDIT CAN BE AMENDED. OTHERWISE, YOU WILL RISK LOSING PAYMENT UNDER THIS LETTER OF CREDIT FOR FAILURE TO COMPLY STRICTLY WITH ITS TERMS AS WRITTEN. 1. DRAFT TERMS AND CONDITIONS Lender shall honor drafts submitted by. Beneficiary under the following terms and conditions: BENEFICIARY'S STATEMENT PURPORTEDLY SIGNED BY AN AUTHORIZED INDIVIDUAL OF BENEFICIARY CERTIFYING CUSTOMER, HAS NOT PERFORMED OR FULFILLED ALL THE UNDERTAKINGS, COVENANTS AND CONDITIONS IN ACCORDANCE WITH THE TERMS OF THE AGREEMENT BETWEEN CUSTOMER AND BENEFICIARY. Reference: 'Stratford Village Phase d Upon Lender's honor of such drafts, Lender shall be fully discharged of its obligations under this Letter of Credit and shall not be obligated to make any further payments under this Letter of Credit once the full amount of credit available under this Letter of Credit has been drawn. If a non -conforming demand is made, Lender shall notify Beneficiary of, its dishonor on or before the time specified in Paragraph 5 below. Beneficiary shall have no recourse against Lender for any amount paid under this Letter of Credit once Lender has honored any draft or other document which complies strictly with this Letter of Credit, and which on its face appears otherwise in order but which is signed, issued, or presented by a party or under'the name of a party purporting to act for Beneficiary, purporting to claim through Beneficiary, or posing as Beneficiary without Beneficiary's authorization. By paying an amount demanded in accordance with this Letter of Credit, Lender makes no representation as to the correctness of the amount demanded and Lender shall not be liable to Beneficiary, or any other person, for any amount paid or disbursed for any reason whatsoever, including, without limitation; any nonapplication or misapplication by Beneficiary of the proceeds of such payment. By presenting upon Lender or a confirming bank, Beneficiarycertifies that Beneficiary has not and will not present upon the other, unless and until Beneficiary meets with dishonor. Beneficiary promises to return to Lender any funds received by Beneficiary in excess of the Letter of Credit's maximum drawing amount. 2. USE RESTRICTIONS All drafts must be marked "DRAWN UNDER BANNER BANK'S IRREVOCABLE LETTER OF CREDIT NO.490401; DATED 03/18/04 and the amount of each draft shall be marked on the draft. Only Beneficiary or Beneficiary's Transferee (if this Letter of Credit is transferable) may complete a draft and accompanying statements or documents required by this Letter of Credit ,and make a draw under this Letter of Credit. This original Letter of Credit must accompany any draft drawn hereunder. Partial draws X1 are permitted © are not permitted under this Letter of Credit. Lender's honor of a partial draw shall correspondingly reduce the amount of credit available under this Letter of Credit. Following a partial draw, Lender shall return this original Letter of Credit to Beneficiary with the partial draw noted hereon; in the alternative, and in its sole discretion, Lender may issue a substitute Letter of Credit to Beneficiary in the amount shown above, less any partial draw(s). 3. PERMITTED TRANSFEREES If checked, this Letter of Crad;t may be transferred by Beneficiary upon prior written notice to Lender of the transfer. The Transferee shall be deemed the new Beneficiary of this Letter of Credit and the documents of the Transferee, including drafts required under this Letter of Credit, will be processed by Lender (or any intermediary) without the original Beneficiary's intervention and without any further obligation of Lender to the original Beneficiary. 1771 If checked, the right to draw under this Letter of Credit shall be nontransferable, except for: A. A transfer (in its entirety, but not in part) by direct operation of law to the original Beneficiary's administrator, executor, bankruptcy trustee, receiver, liquidator, successor, or other representative at law;and B. The first immediate transfer (in its entirety, but not in part) by such legal representative to a third party after express approval of a governmental body (judicial, administrative, or executive). 4. TRANSFEREE'S REQUIRED DOCUMENTS When the presenter is a permitted Transferee under paragraph 3 above, the documents required for a draw shall include: A. All documents required elsewhere in this Letter of Credit, except that such documents may be in the name of and executed by either the original Beneficiary or the presenter permitted by paragraph 3; and LCLOC XS (Rev. 02103) #4370 ® Harland Financial Solutions, Inc. 2001,2003. All rights reserved. To reorder, call Harland Financial solutions at 1-877-505-8278. _F s City of Kalispell Public Works Department Post Office Box 1997, Kalispell, Montana 59903-1997 - Telephone (406)758-7720, Fax (406)758-7831 MEMORANDUM July 1, 2004 To: Carol Kostman, Assistant Finance Director From: Frank Castles, P.E., Assistant City Engineer RE: Stratford Village, Phase 3; Reception No. 200412510050 request for reduction in subdivision improvement amount from $408,712.50 to $187,895.00 Attached is a copy of the request by the developer to reduce the amount of the subdivision improvement financial security to $187,895.00. A cursory examination of the referenced project was performed recently. We concur that the items remaining to be constructed are as they appear in EXHIBIT A (dated 6/21/04). The developer should provide a revised Letter of Credit, Cashier's Check, or suitable financial security prior to releasing the current security for the referenced project. Cc w/o attachments: Norm Sanderson, Apex 1, LLC Via fax: 206-860-8514 David Hofstad Theresa White — City Clerk Narda Wilson — Tri-City Planning Office Thor Jackola, Jackola Engineering F g, City of Kalispell Public Works Department Post Office Box 1997, Kalispell, Montana 59903-1997 - Telephone (406)758-7720, Fax (406)758-7831 MEMORANDUM July 1, 2004 To: Carol Kostman, Assistant Finance Director From: Frank Castles, P.E., Assistant City Engineer RE: Stratford Village, Phase 3; Reception No. 200412510050 request for reduction in subdivision improvement amount from $408,712.50 to $187,895.00 Attached is a copy of the request by the developer to reduce the amount of the subdivision improvement financial security to $187,895.00. A cursory examination of the referenced project was performed recently. We concur that the items remaining to be constructed are as they appear in EXHIBIT A (dated 6121/04). The developer should provide a revised Letter of Credit, Cashier's Check, or suitable financial security prior to releasing the current security for the referenced project. Cc w/o attachments: Norm Sanderson, Apex 1, LLC Via fax: 206-860-8514 David Hofstad Theresa White — City Clerk Narda Wilson — Tri-City Planning Office Thor Jackola, Jackola Engineering 6 C �• o Q�n J c c s A�'r�nuR� Survq^�4•� J June 22, 2004 City of Kalispell Department of Public Works P.O. Box 1997 Kalispell, Montana 59903 ATTN: Mr. Frank Castles, Assistant City Engineer RE: Stratford Village, Phase 3; Reception No. 200412510050 request for reduction in subdivision improvement amount from $408,712.50 to $187,895.00 Dear Mr. Castles: This letter is a request by the developer, Norman Sanderson of Apex 1, LLC through this office, to reduce the amount of the subdivision improvement agreement from the $408,712.50 to a reduced amount of $187,895.00. The basis for the request is that the project is 84.68% complete at this point with work continuing as weather permits. The $187,895.00 amount includes the 125% multiplier on the remaining work. We respectfully request the City of Kalispell to allow this request and process the reduction of the agreement to the currently requested amount of $187,895.00. A revised engineers estimate of completion is attached. Sincerely, Jackola Engineering and Architecture, P.C. or A. Jackol Enclosures: Revised engineer's estimate of completion - Dated 6/21/04. Copy — Original subdivision improvement agreement Stratford Village, Phase III. CC: Norman Sanderson, Apex 1, LLC David Hofstad Theresa White — City Clerk Narda Wilson — Try -City Planning Office (P)406.755.3208 (F)406.755.3218 PO Box1134 -1830 3`d Ave E Suite 302, Kalispell,MT.59901 EXHIBIT A 4/ 15/04 ENGINEERS ESTIMATE OF CONSTRUCTION PROGRESS PHASE 1 (16 Lots), PHASE H (27 Lots), & Phase III (58 Lots) STRATFORD VILLAGE SUBDIVISION, KALISPELL, MONTANA Completion adjustment as of 6/21/04 PHASE I PHASE II PHASE III ITEM EST. TOTAL COST PERCENT COMP REMAIN EST. TOTAL COST PERCENT COMP REMAIN EST. TOTAL COST PERCENT COMP REMAIN I. Roads a. Exc and Grade to Su base 68,000.00 100% -0- b. Base, Crush Rock 22,568.00 100% -0- 43,509.00 100% -0- 54,900.00 100% -0- c.. Paving 34,020.00 100% -0- 65,589.00 100% -0- 80,500.00 96% 3,220.00 d. Sidewalks 19,809.00 100% -0- 61,245.06 100% -0- 74,000.00 29% 52,540.00 e. Site Concrete / Lights and Bases 6,000.00 100% -0- 14,534.00 100% -0- 18,800.00 43% 10,716.00 e. Curbs 11,600.00 100% -0- 39,832.00 100% -0- 54,000.00 100% -0- S. Alleys a. Base, Crush 4,346.00 100% -0- 9,596.00 100% -0- 7,900.00 28% 5,688.00 b. Paving 3,370.00 0% -0- 7,370.00 100% -0- 8,300.00 -0- 8,300.00 {. Sewer a. Manholes 12,000.00 100% -0- Sewer total: 100% Sewer total: 20,000.00 100% -0- b. 10" Sewer Mains 16,290.00 100% -0- 45,115.00 100% -0- 6,300.00 100% -0- c. 8 " Sewer Mains 6,440.00 100% -0- 100% 28,300.00 100% -0- d. Services 10,800.00 100% -0- 100% 49,200.00 100% -0- e. Lift Station 78,000.00 84% 12,480.00 '•. Water a. 8" Water Mains 18,176.00 100% -0- Water total: 100% Water total: 43,900.00 100% -0- b. 8" Valves 5,600.00 100% -0- 64,274.00 100% -0- 5,600.00 100% -0- c. 6" Hydrants with valves 9,000.00 100% -0- 100% 20,500.00 100% -0- d. Services 12,000.00 100% -0- 100% 55,000.00 100% -0- . Storm Water a. 12" Main 6,630.00 100% -0- Storm total: 100% Storm total: 1,600.00 100% -0- b. 10" Main 5,612.00 100% -0- 17,792.00 100% -0- 7,200.00 100% -0- c. 8" Main 10,304.00 100% -0- 100% 17,300.00 100% -0- d. Catch Basins 8,500.00 100% -0- 100% 12,800.00 100% -0- e. Manholes and Tankage 16,800.00 100% -0- 100% 18,000.00 100% -0- f. Retention Basin 58,646.00 100% -0- . Postal Service a. Mailboxes and 4ountin 2,500.00 100% -0- . Si na e a. Street Signs 1,200.00 100% -0- 3,200.00 100% -0- 4,700.00 -0- 4,700.00 b. Traffic signs 1,800.00 100% -0- 4,800.00 100% -0- 6,000.00 -0- 6,000.00 . Landscape a. Trees 10,800.00 100% -0- 11,300.00 100% -0- 18,200.00 -0- 18,200.00 b. Seeds and Repair 2,100.00 100% -0- 2,100.00 100% -0- 24,600.00 -0- 24,600.00 . Utilities a. Electric 22,000.00 100% -0- 37,537.00 100% -0- 50,287.00 100% -0- b. Gas 11,000.00 100% -0- 18,538.00 100% -0- 16,211.25 100% -0- c. Telephone 14,000.00 100% -0- 13,912.00 100% -0- 18,299.95 100% -0- d. Cable 3,000.00 100% -0- 4,000.00 100% -0- 6,000.00 100% -0- e. Trench,Conduit.,Vaults 40,289.00 100% -0- 48,400.00 92% 3,872.00 ubtotal 310,365.00 100% -0- 506,632.00 100% -0- 981,444.20 150,316.00 HASE I: Security Amount Required -0- HASE II: Security Amount Required -0- HASE III: Security Amount Required(1.25) I26,970.00 a.. 187,895.00 :R IK January 3, 2003 10125 Main Street AMENDMENT TO IRREVOCABLE LETTER OF CREDIT P.O. Box 2105 Bothell, WA 98041-2105 425-398-0559 Fax: 425-398-8549 Beneficiary: City of Kalispell www.bonrbank.com P.O. Box 1997 Kalispell, Montana 59903-1997 Applicant: Apex 1, LLC 10 E. Roanoke Street, #8 Seattle, Wa 98102 Letter of Credit # 490202 Please be advised that the Letter of Credit #490202 dated November 21, 2002 in the amount of $18,675.00 issued to City of Kalispell with an original expiry date of November 18, 2003 has been amended as follows: Expiry date has been extended to December 31, 2004. All other terms and conditions as set forth in the original credit agreement remain unchanged. 1/we hereby agree to the terms and conditions as set forth. APEX lam. - Z'.-c Norman Sanderson BANNER BANK f . )e- �4- �r Tte Mason, Vice President Member FDIC :R !K IRREVOCABLE LETTER OF CREDIT DATE: 11-21-02 CREDIT NUMBER: 490202 BENEFICIARY: APPLICANT: City of Kalispell Apex 1, LLC P.O. Box 1997 10 E. Roanoke, Street #8 Kalispell, Montana 59903-1997 Seattle, WA 98102 PHONE: PHONE: 206-322-5977 FAX: i Fran. DATE OF EXPIRY: 11-18-03 EXPIRY PLACE: Counters of Banner Bank We hereby authorize CITY OF KALISPELL to draw on Banner Bank for the account of APEX 1, LLC up to an aggregate amount of Eighteen Thousand Six Hundred Seventy Five and 00/100, US (US$18,675.00) available by draft(s) drawn AT SIGHT when accompanied by the following documents: 1. The original of this letter of credit and any subsequent amendments. 2. A signed statement by an authorized official of the City of Kalispell stating as follows: "Claims have been submitted to Apex 1, LLC for payment and which remain unpaid by same, and the funds represented by the attached drafts are required in full by City of Kalispell" Each draft under this letter of credit must bear upon its face the words "Drawn under letter of credit No. 490202". Mail draft to: Banner Bank, 18911 N. Creek Pkwy, Ste. 101, Bothell, WA 98011 This letter of credit shall expire on the 18th day of November, 2003 and all drafts must be presented and negotiated on or before the date of expiration. This letter of credit is subject to the Uniform Customs and Practices for documentary credits (1993 Revision), International Chamber of Commerce Publication No. 500. Your acceptance of this credit will constitute your agreement to repay Banner Bank, within three (3) weeks after your receipt of the funds paid to you hereunder, any funds which exceed the total amount of funds due you. Banner Bank will honor all drafts drawn under and in compliance with terms of this credit, if duly presented (together with all documents specified) at our counters on or before the close of business on the expiration date shown above. 7erank HORIZED SI N R APEX 1, g 4rZ CLF-102 Letter of Credit Rev. 05/00 NNER BANK cation and MAIL TO: Banner Bank P.O. BOX 907 WALLA WALLA, WA 99362 Ireement For Irrevocable Standby Letter of Credit PLEASE ISSUE YOUR IRREVOCABLE LETTER OF CREDIT AND NOTIFY THE BENEFICIARY BY ❑ MAIL ❑SWIFT/TELEX ❑COURIER AS FOLLOWS: BENEFICIARY (.SHOW FULL NAME & COMPLETE STREET ADDRESS) City of Kalispell P.O. Box 1997 Kalispell, Montana 59903-1997 EXPIRATION DATE: 11/18/03 ❑ AUTOMATIC EXTENSION CLAUSE DAYS NOTICE ❑ ULTIMATE EXPIRATION DATE FOR BANK USE ONLY LETTER OF CREDIT NUMBER APPLICANT (SHOW FULL NAME & COMPLETE STREET ADDRESS) Apex 1, LLC 10 E. Roanoke St. #8 Seattle, WA 98102 AMOUNT: $18,675.00 US$18,675.00 Dollars (AMOUNT IN WORDS) Eighteen thousand six hundred seventy five and 00/100 Available by Drafts At Sight Drawn On You and Accompanied By The Following Documents: ® 1).Beneficiary's statement purportedly signed by an authorized individual of (BENEFICIARY) certifying "The Principal, (APPLICANT), has not performed or fulfilled all the undertakings, covenants and conditions in accordance with the terms of the agreement dated between (APPLICANT) and (BENEFICIARY)". 1).Beneficiary's statement purportedly signed by an authorized individual of (BENEFICIARY) certifying "We hereby certify that invoices under sales agreement between (APPLICANT) and (BENEFICIARY) have been submitted for payment and said invoices are past due and payable". 1).Beneficiary's statement purportedly signed by an authorized individual of (BENEFICIARY) certifying "We hereby certify that (APPLICANT) has failed to honor their contractual agreement dated between (APPLICANT) and (BENEFICIARY) and that payment has not been made and is days past due". 1).Beneficiary's statement purportedly signed by one of its authorized individuals certifying that was the successful bidder under the Tender No. _dated for supply of and that has withdrawn their bid or failed to enter into contract. wd-1 1).Beneficiary's statement, purportedly signed by an authorized individual reading: (Please indicate below the wording which is to appear in the statement to be presented.) ❑ NO STATEMENT OR DOCUMENT BY THE BENEFICIARY OTHER THAN A DRAFT IS REQUIRED TO BE PRESENTED UNDER THIS L/C. PARTIAL DRAWINGS ® PERMITTED ❑ NOT PERMITTED CHARGES FOR ❑ BENEFICIARY ❑ APPLICANT SPECIAL INSTRUCTIONS OR CONDITIONS: THE OPENING OF THIS CREDIT IS GOVERNED BY THE TERMS AND CONDITIONS AS SET FORTH IN THE CREDIT AGREEMENT APPEARING ON THE REVERSE HEREOF TO WHICH WE AGREE. FURTHERMORE, THIS APPLICATION SHALL INCLUDE REVISIONS OF THE TERi,/0NOLOGY SET F ORTH ABOVE AS YOU DEEM NECESSARY. I/WE HEREBY AGREE TO THE TERMS AND CONDITIONS COVENANTS AND AGREEMENTS ABOVE AND ON THE REVERSE HEREOF, THIS APPLICATION AND IN E SUBJECT TO THE CURRENT UNIFORM CUSTOMS AND PRACTICE FOR DOCUMENTARY CREDITS FIXED BY THE 'CE AND TO THE TER D CONDITIONS PRINTED ON THE REVERSE SIDE. Customer's Bank Sign Here Data (if other than Banner Bank) CLF-101 LC Application & Agreement LETTER OF CREDIT REIMBURSEMENT AND SECURITY AGREEMENT IN CONSIDERATION OF THE ISSUANCE AT OUR REQUEST OF A LETTER OF CREDIT IN ACCORDANCE WITH THE TERMS OF THE APPLICATION STATED ON THE REVERSE SIDE OF THIS FORM, WE HEREBY REPRESENT, WARRANT AND AGREE AS FOLLOWS: 1. DEFINITIONS: THE FOLLOWING DEFINITIONS SHALLAPPLY HEREIN: 'ACCOUNT PARTIES' IS DEFINED IN PARAGRAPH 17 BELOW. 'RANK LIABILITIES" IS DEFINED IN PARAGRAPH 10 BELOW. 'CREDIT" MEANS THE LETTER OF CREDIT DESCRIBED IN OUR APPLICATION ON THE REVERSE SIDE HEREOF (OR ATTACHED HERETO) TO BE ISSUED BY THE ISSUER IN ACCORDANCE WITH THE INSTRUCTIONS RECEIVED BY THE BANNER BANK AFFILIATE NAMED ON THE REVERSE SIDE HEREOF, THE TERMS OF WHICH ARE MADE APART HEREOF AND APPROVED BY US, AS AMENDED FROM TIME TO TIME. 'CUSTOMER'S BANK' MEANS THE FINANCIAL INSTITUTION, IF ANY, (OTHER THAN THE ISSUER) THAT SIGNS THIS AGREEMENT AND THE APPLICATION FOR THE CREDIT IN ITS CAPACITYAS AN ACCOUNT PARTY WITH US. 'DOCUMENTS' MEAN ANY PAPER, WHETHER NEGOTIABLE OR NONNEGOTIABLE, INCLUDING, BUT NOT LIMITED TO, ALL SHIPPING DOCUMENTS, WAREHOUSE RECEIPTS, DOCUMENTS OF TITLE, (WHETHER OR NOT ASSIGNED TO YOU), POLICIES OR CERTIFICATES OF INSURANCE, AND OTHER DOCUMENTS,SECURITY, INVOICES AND CERTIFICATES ACCOMPANYING OR RELATING TO DRAFTS DRAWN UNDER THE CREDIT AND PROPERTY SHIPPED. STORED, OR OTHERWISE DISPOSED OF IN CONNECTION WITH THE CREDIT. 'DRAFTSMEANSANY DOCUMENTARY DRAFT DRAWN UNDER AND CONDITIONED UPON PRESENTATION OF DOCUMENTS REQUIRED BY THE CREDIT, INCLUDING BUT NOT LIMITED TO SUCH DRAFTS ACCEPTED BY THE ISSUER. 'ISSUER' MEANS YOU OR ANY BANNER BANK AFFILIATE AS THE ISSUER OF THE CREDIT. 'PROPERTY' INCLUDES GOODS, MERCHANDISE, SECURITIES, FUNDS, CHOSES INACTION. ANDANY ANDALL OTHER FORMS OF PROPERTY, WHETHER REAL, PERSONAL OR MIXED AND ANY RIGHT OR INTEREST THEREIN; PROPERTY IN ISSUER'S POSSESSION SHALL INCLUDE PROPERTY IN POSSESSION OF ANYONE FOR ISSUER IN ANY MANNER WHATSOEVER. 'REIMBURSEMENT OBLIGATIONS'MEANS OUR OBLIGATION TO REIMBURSE THE ISSUER FOR ALL PAYMENTS WITH RESPECT TO ANY DRAFT OF THE CREDIT AND TO PAY ALL OTHER LIABILITIES ARISING UNDER THIS AGREEMENT. 'REQUESTS' MEANS ANY W RITTEN OR ORAL INSTRUCTION THAT THE ISSUER HONOR OUR ORDER TO ISSUE, AMEND, OR PAY THE CREDIT FOR OUR ACCOUNTAND RISK UPON A REQUEST COMMUNICATED TO THE ISSUER BY TELEPHONE, TELEGRAPH, TELEX, FACBMILETRANSMISSION OR OTHER ELECTRONIC MEANS, 'UNIFORM CUSTOMS' MEANS THE UNIFORM CUSTOMS AND PRACTICE FOR COCUMENTARYCREDITS ADOPTED BY THE INTERNATIONAL CHAMBER OF COMMERCE IN FORCEAT THE TIME OF ISSUANCE OF THE CREDIT, AS THE SAME MAYBE THEREAFTER AMENDED OR REPLACED. 2. PAYMENT TERMS: THE ISSUER MAY ACCEPTOR PAYANY DRAFT PRESENTED TO ISSUER, REGARDLESS OF WHEN DRAWN AND WHETHER OR NOT NEGOTIATED, IF SUCH DRAFT. THE OTHER REQUIRED DOCUMENTS, AND ANY TRANSMITTAL ADVICE ARE DATED ON OR BEFORE THE EXPIRATION DATE OF THE CREDIT, WHICH EXPIRATION DATE SHALL BE EXPRESSLY STATED IN THE CREDITAND NOT EXTENDED IN REFERENCE TO ANY ACTION OR INACTION IN ANY OTHER AGREEMENT EXCEPT AS INSTRUCTIONS MAY BE GIVEN BY US IN WRITING EXPRESSLY TO THE CONTRARY WITH REGARD TO, AND PRIOR T0, THE ISSUANCE OF THE CREDIT, ISSUER MAY HONOR, AS COMPLYING WITH THE TERM OF THE CREDIT, ANY INSTRUMENT OR OTHER DOCUMENTS OTHERWISE IN ORDER SIGNED OR ISSUED $VAN ADMINISTRATOR, EXECUTOR, TRUSTEE IN BANKRUPTCY, DEBTOR IN POSSESSION ASSIGNEE FOR THE BENEFIT OF CREDITORS, LIQUIDATOR, RECEIVER, CONSERVATOR, OR OTHER LEGAL REPRESENTATIVE OF THE PARTYAUTHORIZED UNDER THE CREDIT TO DRAW OR ISSUE SUCH INSTRUMENTS OR OTHER DOCUMENTS, WE WILL REIMBURSE ISSUER AT ITS MAIN OFFICE ON DEMAND IN UNITED STATES DOLLARS; (A) AS TO DRAFT$ PAYABLE IN UNITED STATES DOLLARS DRAWN OR TO BE DRAWN UNDER THE CREDIT, THE AMOUNT PAID OR PAYABLE THEREON; OR IB) AS TO SUCH DRAFTS PAYABLE IN CURRENCY OTHER THAN UNITED STATES DOLLARS THE EQUIVALENTOF THE AMOUNT PAID IN UNITED STATES DOLLARS AT ISSUER'S SELLING RATE OF EXCHANGE IN THE CURRENCY IN WHICH SUCH DRAFT 15 DRAWN', (CI ANYAND ALL OTHER EXPENSES OR CHARGES INCURRED BY ISSUER IN ISSUING OR EFFECTING PAYMENT OF THE CREDIT, FOR PERFECTING OR MAINTAINING SECURITY FOR THE CREDIT, AND FOR PROTECTING, MAINTAINING, AND INSURING THE PROPERTY, AND FOR ENFORCING ISSUER'S RIGHTS AND REMEDIES UNDER THIS AGREEMENT, (D) INTEREST FROM THE DATE OF SUCH PAYMENT ATA RATE PER ANNUM EQUAL TO THE PRIME RATE OF WALL STREET JOURNAL IN EFFECT FROM TIME TO TIME PLUS THE RATE MARGIN CUSTOMARILY CHARGED BY ISSUER TO OTHER ACCOUNT PARTIES WITH SIMILAR CREDIT WORTHINESS AND IN LIKE CIRCUMSTANCES, UPON ALL OUR UNPAID DRAFTS AND OTHER OBLIGATIONS HEREUNDER UNTIL PAID IN FULL, BUT IN NO EVENT HIGHER THAN THE HIGHEST LAWFUL RATE PERMITTED BYLAW, AND (E) SUCH COMMISSION, ISSUANCEAND NEGOTIATION FEES AT SUCH RATE AS ISSUER MAY DETERMINE FROM TIME TO TIME. WITHOUT PRIOR NOTICE OR DEMAND ISSUER IS AUTHORIZED TO CHARGE ANY DEPOSIT ACCOUNT MAINTAINED BY ANYONE OF US WITH ISSUER OR ANY OTHER BANNER BANK AFFILIATE FOR THE AMOUNT OF SUCH DRAFT AND ALL OUR OTHER REIMBURSEMENT OBLIGATIONS HEREUNDER. 3. INCREASED COSTS: IF ANY LAW OR REGULATION, OR CHANGE THEREIN, OR INTERPRETATION, ADMINISTRATION OR ENFORCEMENT THEREOF. BY ANY PERSON, AGENCY OR COURT SHALL, (A) IMPOSE UPON OR MODIFY ANY RESERVE OR SPECIAL DE POSIT REQUIREMENT, INSURANCEASSESSMENTCR OTHER REC'JIREMENTAGAINSTOR EFFEC TiNG HE CREDIT: OP.(B) TA CSC ANY TAX OR WI THHOLDING OF ANY KIND: OR(C) IMPOSE OR MODIFY ANY CAPITAL REQUIREMENT, IMPOSE ANY CONDITION UPON, SUPPLEMENT TO OR INCREASE OF ANY KIND TO ISSUER S CAPITAL BASE, AND THE RESULT OF ANY SUCH EVENT INCREASES THE COST OR DECREASES THE BENEFIT TO ISSUER OF ISSUING OR MAINTAINING THE CREDIT, THEN WE SHALL PAY TO ISSUER ALL SUCH ADDITIONAL AMOUNTS UPON REQUEST IN AN AMOUNT NECESSARY TO COMPENSATE ISSUER FOR ALL SUCH INCREASED COSTS AND DECREASED BENEFITS, UPON OUR REQUEST, ISSUER WILL CERTIFY SUCH AMOUNTS. ISSUER'S CERTIFICATION SHALL BE CONCLUSIVE ABSENT MANIFEST ERROR, 4. REQUESTS: REQUESTS SHALL BE MADE BY THOSE PERSONS PURPORTEDLY AUTHORIZED BY US. ISSUER SHALL NOT BE OBLIGATED TO IDENTIFY OR CONFIRM SUCH PERSONS BEYOND THE USE OF THE AUTHORIZED NAME OR CODE IDENTIFICATION IF AN V IS ESTABLISHED BY ISSUER OR UNLESS WE PROVIDE ISSUER FROM TIME TO TIME A WRITTEN LIST OF ALL OUR AUTHORIZED REPRESENTATIVES. ALL REQUESTS WILL BE CONFIRMED BY ISSUER IN WRITING BY SENDING USA COPY OF THE DOCUMENTS AD HORIZEDORREQUESTEDBYUS. WE WILL PROMPTLY REPORT ALL DISCREPANCIES IN SUCH DOCUMENTS UPON OUR RECEIPT OF SUCH CONFIRMATION. ISSUER MAY, BUT SHALL NOT BE OBLIGATED TO, ASSIGN A UNIQUE CODE NUMBER OR WORD AND REQUIRE SUCH CODE TO BE USED BY US, AND THEREAFTER, ALL FURTHER REQUEST$ SHALL REFER TO SUCH CODE. ISSUER SHALL NOT BE LIABLE FOR ANY LOSS WHICH WE MAY INCUR AS ARESULT OF ISSUER'$ COMPLIANCE WHIHANY REQUEST IN ACCORDANCE WITH THIS AGREEMENT EVEN IF UNAUTHORIZED, PROVIDED THAT ISSUER ACTED IN GOOD FAITH AND EXERCISED REASONABLE CARE. 5. MODIFICATION OF THE CREDIT: ANY AMENDMENT TO THE TERMS OF THE CREDIT MAY RE AUTHORIZED BY ANYONE OF US WITHOUT NOTICE TO THE OTHER ACCOUNT PARTY, BUT ANY INCREASE IN THE AMOUNT OF THE CREDIT OR EXTENSION OF THE EXPIRATION DATE UNDER THE CREDIT FOR PRESENTATION OF DRAFTS OR DOCUMENTS SHALL BE ONLY APPROVED BY ALL OF US, INCLUDING THE CUSTOMER'S BANK. IN ANY SUCH EVENT THIS AGREEMENT SHALL BE BINDING UPON US WITH REGARD TO THE CREDIT SO INCREASED OR OTHERWISE AMENDED, TO DRAFTS, DOCUMENTS AND PROPERTY COVERED THEREBY, AND TO ANY ACTION TAKEN BY ISSUER AND ANY OF ISSUER'S CORRESPONDENTS IN ACCORDANCE WITH SUCH EXTENSION, INCREASE OR OTHER MODIFICATION. 6. UNIFORM CUSTOMS: EXCEPT AS OTHERWISE EXPRESSLY STATED IN THE CREDIT, WE AGREE; (A) THAT ISSUER AND ANY OF ISSUER'S CORRESPONDENTS MAY RECEIVE AND ACCEPTAS A' BILL OF LADING' UNDER THE CREDIT ANY DOCUMENT ISSUED OR PURPORTEDLY ISSUED BY OR ON BEHALF OF ANY CARRIER WHICH ACKNOWLEDGES RECEIPT OF PROPERTY, WHATEVER THE SPECIFIC PROVISIONS OF SUCH DOCUMENT', AND (B) THAT ISSUER AND ANY OF ISSUER'S CORRESPONDENTS MAY ACCEPT DOCUMENTS OF ANY CHARACTER WHICH PURPORTEDLY COMPLYWITH THE CURRENT UNIFORM CUSTOMS, OR WHICH COMPLY W ITH THE LAWS OR REGULATIONS IN FORCE IN THE CUSTOMS AND USAGES OF THE PLACE OF NEGOTIATION, 7. SHIPMENT OF PROPERTY: WITH RESPECT TO THE PROPERTY COVERED BY THE CREDIT, WE AGREE TO PROCURE PROMPTLY ALL NECESSARY IMPORT AND EXPORT LICENSES OR OTHER LICENSES, TO COMPLY WITH ALL FOREIGN AND DOMESTIC GOVERNMENTAL REGULATIONS, TO FURNISH SUCH CERTIFICATES IN THAT RESPECT THAT ISSUER MAY REQUIRE, TO KEEP THE PROPERTY ADEQUATELY COVERED BY INSURANCE SATISFACTORY TO ISSUER, AND TOASSIGN THE POLICIES OR CERTIFICATES OF INSURANCE TO ISSUER OR TO UWE THE LOSS OR ADJUSTMENT, IF ANY, PAYABLE TO ISSUER AT ISSUER'S OPTION. 8. LIMITED LIABILITY: NEITHER ISSUER NOR ISSUER'S CORRESPONDENT SHALL BE RESPONSIBLE; (A) FOR THE EXISTENCE, CHARACTER. QUALITY, QUANTITY, CONDITION, OR DELIVERY OF THE PROPERTY PURPORTING TO BE REPRESENTED BY DOCUMENTS', S) FOR ANY DIFFERENCE IN CHARACTER QUALITY, QUANnTY, OR CONDITION OF THE PROPERTY FROM THAT EXPRESSED IN DOCUMENTS(0)FOR THE VALIDITY, SUFFICIENCY, OR GENUINENESS OF DOCUMENTS, EVEN IF SUCHDOCUMENTS SHOULD IN FACT PROVE TO BE INVALID, INSUFFICIENT, FRAUDULENT OR FORGED; IC) FOR THE TIME, PLACE, MANNER OR ORDER IN WHICH SHIPMENT OF PROPERTY IS MADE: (E) FOR PARTIAL OR INCOMPLETE SHIPMENT OF PROPERTY OR FAILURE 01 OMISSION TO SHIP ANY PROPERTY REFERRED TO IN THE CREDIT; (F) FOR THE CHARACTER, ADEQUACY, VALIDITY, VALUE OP. GENUINENESS OF ANY INSURANCE; (G) FOR ANY DEVIATION FROM INSTRUCTIONS, DELAY, DEFAULT OR FRAUD EYTHE SHIPPER OR ANYONE ELBE IN CONNECTION WITH THE PROPERTY; (H) FOR THE SOLVENCY, RESPONSIBILITY OR RELATIONSHIP TO THE PROPERTY OFANY PARTY ISSUING ANY DOCUMENTS IN CONNECTION WITH THE PROPERTY; (1) FOR DELAY IN ARRIVAL OR FAILURE TO ARRIVE OF EITHER THE PROPERTY OR ANY OF THE DOCUMENTS RELATING THERETO; (J) FOR ANY BREACH OF CONTRACT BETWEEN THE SHIPPERS OR VENDORS AND OURSELVES; IN) FOR FAILURE OF ANY DRAFT TO BEAR ANY REFERENCE OR ADEQUATE REFERENCE TO THE CREDIT, OR FAILURE OF DOCUMENTS TO ACCOMPANY ANY DRAFT AT NEGOTIATION, OR FAILURE OF ANY PERSON TO NOTE THE AMOUNT OF ANY DRAFT ON THE REVERSE SIDE OF THE CREDIT OR TO SURRENDER OR TAKE UP THE CREDITOR TO SEND FORWARD DOCUMENTS APART FROM DRAFTS AS REQUIRED BY THE CREDIT; (L) FOR ERRORS, OMISSIONS. INTERRUPTIONS OR DELAYS IN TRANSMISSION OR DELIVERY OF ANY MESSAGES OR DOCUMENTS BY MALL, CABLE, TELEGRAPH, WIRELESS OR OTHERWISE; FOR ANY ERRORS IN TRANSLATION OR INTERPRETATION OF TERMS; OR (M) FOR ANY OTHER CONSEQUENCES ARISING FROM CAUSES BEYOND YOUR CONTROL, INCLUDING, BUT NOT LIMITED TO, ANYACTION OR OMISSION BY, OR ANY LAW, REGULATION OR RESTRICTION OF, ANY DE FACTO OR DE LURE DOMESTIC OR FOREIGN GOVERNMENT OR AGENCY. 9. WARRANTIES: INDEMNITY: EACH OF US REPRESENTS, WARRANTS, COVENANTS AND CONFIRMS THAT WE UNDERSTAND THE GENERAL NATURE AND OPERATION OF A LETTER OF CREDIT AND OUR OBLIGATIONS, RIGHTS AND REMEDIES UNDER THE CREDIT, INCLUDING, WITHOUT LIMITATION; (A) OUR OBLIGATIONS TO REIMBURSE ISSUER FOR ALL PAYMENTS TO THE BENEFICIARY, ITS SUCCESSORS OR ASSIGNS; (8) CONDITIONS UNDER WHICH PAYMENT UNDER THE CREDIT MUST BE MADE BY ISSUER, (C) THAT ISSUER HAS NO RESPONSIBILITY OR LLABILITY IN CONNECTION WITH ANY UNDERLYING CONTRACT OR OTHER TRANSACTION BETWEEN US AND THE BENEFICIARY OF THE CREDIT AND: (D)THAT ISSUER IS NOT ACTINGAS AN AGENT OR IN ANY FIDUCIARY CAPACITY FOR OR ON BEHALF OF US OR THE BENEFICIARY, EXCEPT AS OTHERWISE STATED HEREIN. ALL OUR REPRESENTATIONS, WARRANTIES AND INDEMNITIES SET FORTH HEREIN SHALL SURVIVE ISSUER'S ISSUANCE OF THE CREDIT AND ANY PAYMENT THEREUNDER AND SHALL CONTINUE UNTIL ALL OUR OBLIGATIONS HEREUNDER ARE PAID IN FULL. WE HEREBY RELEASE ISSUER FROM AND AGREE TO INDEMNIFY AND HOLD HARMLESS THE ISSUER, AND ITS OFFICERS, AGENTS AND EMPLOYEES FOR ANY AND ALL COSTS, LIABILITIES AND EXPENSES (INCLUDING REASONABLE ATTORNEY FEES) INCURRED BY ISSUER AND ARISING OUT OF OR IN ANYWAY RELATING TO; LE)ANY UNDERLYING INVESTMENTS, TRANSACTIONS, AND/OR CONTRACTS BETWEEN ANY ONE OF US AND THE BENEFICIARY UNDER THE CREDIT OR ANY OF ITS AGENTS AND (F) ANY PROPER PAYMENT IN ACCORDANCE WITH THE TERMS OF THE CREDIT, ANY REFUSAL TO PAY OR HONOR THE CREDIT, OR ANY OTHER ACTION OR OMISSION BY ISSUER, OR ISSUER'S CORRESPONDENTS OR AGENTS INCLUDING, BUT NOT LIMITED TO, ISSUERS INDEMNITY (AS WELL AS ANY AND ALL COST EXPENSES AND LIABIUDES ASSOCIATED WITH SUCH INDEMNITY) IN FAVOR OF A THIRD PARTY CARRIER WHICH MAY BE NECESSARY TO CAUSE SUCH CARRIER TO RELEASE AND DELIVER MERCHANDISE (DESCRIBED AS PART OF THE CREDIT) WITHOUT THE PRESENTATION OF AN ORIGINAL BILL OF LADING OR OTHER ORIGINAL DOCUMENTS MISSING OR OTHERWISE PRESENTLY UNAVAILABLE. IT IS UNDERSTOOD THAT WE WILL NOT BE OBLIGATED TO INDEMNIFY ISSUER FOR GROSS NEGLIGENCE OR WILLFUL MISCONDUCT. 10. SECURITY: AS SECURITY FOR ALL OUR REIMBURSEMENT OBLIGATIONS AND OTHER LIABILITIES TO THE ISSUER UNDER THE CREDIT AND THIS AGREEMENT, WHETHER NOW EXISTING OR HEREAFTER ARISING, WHETHER JOINT, SEVERAL, INDEPENDENT OR OTHERWISE, AND WHETHER ABSOLUTE OR CONTINGENT OR DUE OR TO BECOME DUE (HEREIN COLLECTIVELY CALL THE 'BANK UABIUTIE$'), WE HEREBY ASSIGN, PLEDGE AND GRANT TO ISSUER AND THE CUSTOMER'S BANK, IF ANY, A SECURITY INTEREST IN, AND THE RIGHT OF POSSEMON AND DISPOSAL OF; IAj ALL DOCUMENT AND ALL PROPERTY SNIFFED, STORE.' OF OTHERWISE D,CPOSEO OF IN COU:ECTION WITH THE CREDIT,' WHETHER OR NOT RELEASED TO ANY OF US ON TRUST RECEIPTS OR OTHERWISE; (B) ALL OUR RIGHT 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, AND ALL GUARANTEES, AGREEMENTS OR OTHER UNDERTAKINGS (INCLUDING THOSE IN EFFECT BETWEEN US AND ANY ACCOUNT PARTY NAMED IN THE CREDIT), CREDITS, POLICIES OF INSURANCE OR OTHER ASSURANCES IN CONNECTION THEREWITH; (C) ALL ASSETS, RIGHTS, CHOSES IN ACTION, CLAIMS AND DEMANDS OF EVERY KIND NOW OR HEREAFTER BELONGING TO US AND WHICH MAY NOW OR HEREAFTER BE IN THE POSSESSION, CUSTODY OR CONTROL OF, OR IN TRANSIT TO OR SET APART FOR, ISSUER OR THE CUSTOMER'S BANK ISSUER'S RESPECTIVE AGENTS OR CORRESPONDENTS, FOR ANY PURPOSE, INCLUDING WITHOUT LIMITATION, CASH INSTRUMENTS, DEPOSIT BALANCES, CERTIFICATES OF DEPOSIT AND OTHER CASH EQUIVALENTS, REPURCHASE AGREEMENTS AND OTHER INVESTMENTS MAINTAINED BY US WITH ISSUER OR ANV OTHER BANNER BANK AFFILIATE, WHETHER MATURED OR UNMATURED, OR COLLECTED OR IN THE PROCESS OF COLLECTION (E.G.'CASH SECURITY')', AND IN ALL PROCEEDS OF THE FOREGOING. ON DEMAND BY ISSUER OR THE CUSTOMER'S BANK, WE WILL DELIVER, AS SECURITY FOR OUR BANK LIABILITIES, ADDITIONAL COLLATERAL SECURITY SATISFACTORY TO ISSUER OR THE CUSTOMER'S BANK OR WE WILL MAKE SUCH PAYMENT AS ISSUER OR THE CUSTOMER'S BANK MAY REQUIRE IN IMMEDIATELYAVAILABLE FUNDS. ALSO WE WILL EXECUTE, DELIVER, AND FILE ALL FURTHER INSTRUMENTS AS MAYBE REASONABLY REQUIRED TO CARRY OUT THE PURPOSES OF THIS AGREEMENT. ALL LIENS AND SECURITY INTEREST HEREIN GRANTED TO THE CUSTOMER'S BANK SHALL BE JUNIOR TO AND SUBORDINATED IN FAVOR OF ISSUER'S LIENS AND SECURITY INTEREST HEREUNDER. 11. TRUST RECEIPTS: WE ACKNOWLEDGE AND AGREE THAT WE WILL OR HAVE RECEIVED IN TRUST FROM ISSUER DOCUMENTS, INCLUDING BUT NOT LIMITED TO BILLS OF LADING, DOCK WARRANTS, DOCK RECEIPTS, OR WAREHOUSE RECEIPTS, FROM TIME TO TIME COVERING PROPERTY WHICH IS COLLATERAL SECURITY FOR THE BANK LIABILITIES. WE ACKNOWLEDGE THAT ISSUER ENTRUSTED OR WILL ENTRUST FROM TIME TO TIME TO US SUCH DOCUMENTS TO FACILITATE THEIR ULTIMATE SALE OR EXCHANGE OR FOR THE PURPOSE OF LOADING, UNLOADING, STORING, SHIPPING, TRANSSHIPPING, MANUFACTURING, PROCESSING OR OTHERWISE DEALING WITH THE PROPERTYCOVERED BY SUCH DOCUMENTS) IN A MANNER PRELIMINARYTO THEIR SALE OR EXCHANGE UPON ANY SALE OR EX -CHANGE OF ANY DOCUMENT, WE WILL, UPON ISSUER'S REQUEST, PROMPTLY REMIT TO ISSUER ALL CASH ANDOR NEW DOCUMENTS RECEIVED IN THE SALE OR EXCHANGE, UPON ANY SALE OR WITHDRAWAL OF ANY PROPERTY FROM WAREHOUSE STORAGE, INTO OUR INVENTORY FOR SALE AND DELIVERY IN THE ORDINARY COURSE OF OUR BUSINESS, WE WILL IMMEDIATELY DELIVER TO ISSUER UPON ITS REQUEST; (A) ALL CASH FROM EACH SUCH SALE FOR APPLICATION ON THE BANK LIABILITIES SECURED BY SUCH PROPERTY; IS) A SECURITY AGREEMENT ACCEPTABLE TO ISSUER, INCLUDING EXECUTION OF ALL APPROPRIATE FINANCING STATEMENTS, COVERING ALL INVENTORY ANDALL INVOICES OR OTHER EVIDENCE OF ACCOUNTS RECEIVABLE, AND THE PROCEEDS THEREOF, ARISING FROM SUCH WITHDRAWAL OR SALE OF PROPERTY. AS TO ANY PROPERTY CONTINUED IN PUBLIC WAREHOUSE STORAGE, INCLUDING THE TRANSFER OR RE -LOCATION OF ANY PROPERTY IN STORAGE, WE WILL RETURN TO ISSUER WITHIN TWENTY-0NE (21) DAYS OF THE DATE OF OUR RECEIPT OF APPLICABLE DOCUMENTS FOR SUCH PROPERTY THE WAREHOUSE RECEIPTS COVERING ANY REMAINING PROPERTY COVERED BY SUCH DOCUMENTS TOGETHER WITH NEW WAREHOUSE RECEIPTS COVERING ANY PROPERTY$0 RELOCATED OR TRANSFERRED TO WAREHOUSE(S). 12. DEFAULT: IN THE EVENT THAT WE OR ANY OF US; (A) FAILS TO PERFORM ANY OBLIGATION REQUIRED UNDER ANY AGREEMENT OR DOCUMENT RELATING TO OR EVIDENCING A SECURITY INTEREST IN ANY PROPERTYGRANTED TO ISSUER;(8) FAILS TO MAKE ANY PAYMENT OR PERFORM ANY OTHER OBUGATONS UNDER THIS AGREEMENT; (C) MAKES ANY ASSIGNMENT FOR THE BENEFIT OF CREDITORS', (D) PERMITS OR CONSENTS TO THE FILING OF ANY VOLUNTARY OR INVOLUNTARY PETITION IN BANKRUPTCY BY OR AGAINST ANYONE OF US; (E) APPLIES FOR THE APPOINTMENT OF A RECEIVER OF ANYOF OUR ASSETS; (F) BECOMES INSOLVENT, OR CEASES, BECOMES UNABLE OR ADMITS IN WRITING OUR OR ITS INABILITY TO PAY ITS DEBTSAS THEY MATURE; OR (G) FAILS TO PAY WHEN DUE, UPON ACCELERATION OR OTHERWISE, ANY OTHER OBLIGATION TO ISSUER, ISSUER MAY AT SUCH TIME OR ANY TIME THEREAFTER DECLARE, WITHOUT DEMAND OR NOTICE WHICH ARE HEREBY EXPRESSLY WAIVED, ALL OBLIGATIONS AND LIABILITIES HEREUNDER TO BE IMMEDIATELY DUE AND PAYABLE, AND ISSUER IS AUTHORIZED, AT ITS OPTION, TO APPLY (OR HOLD AVAILABLE IN ESCROW) THE PROCEEDS OF ANY PROPERTYOR OTHER COUATERALASSETS, AND ANY OTHER SUM$ DUE FROM ISSUER TO ANY ONE OF US, TO THE PAYMENT OF ANY AND ALL OUR OBLIGATIONS OR LIABILITIES ARISING UNDER THIS AGREEMENT. IN ANY SUCH EVENT ISSUER SHALL HAVE ALL OF THE REMEDIES OF A SECURED PARTY UNDER THE UNIFORM COMMERCIAL CODE IN EFFECT IN THE STATE IN WHICH THE PRINCIPAL OFFICE OF THE ISSUER IS LOCATED AND ISSUER IS HEREBY AUTHORIZED AND EMPOWERED AT ITS OPTION, AT ANYTIME OR TIMES THEREAFTER, TO SELLAND ASSIGN AND THE WHOLE OF THE PROPERTY, OR ANY PART THEREOF THEN CONSTITUTING SECURITY PURSUANT TO ANY OF THE TERMS HEREOF, ATANY PUBLIC OR PRIVATE SALE, AT SUCH TIME AND PLACE AND UPON SUCH TERMS AS ISSUER MAY DEEM PROPER AND WITH THE RIGHT IN ISSUER TO BE THE PURCHASER AT SUCH SALE AND, AFTER DEDUCTING ALL LEGAL AND OTHER COSTS AND EXPENSES OF ANV SALE, TO APPLY THE NET PROCEEDS OF SUCH SALE(S) TO THE PAYMENT OF ALL OUR BANK LIABILITIES, THE RESIDUE. IF ANY, OF THE PROCEEDS OF SALE AND ANY OTHER PROPERTY CONSTITUTING SECURITY REMAINING AFTER SATISFACTION OF THE BANK LIABILITIES SHALL BE RETURNED TO US UNLESS OTHERWISE DISPOSED OF IN ACCORDANCE WITH WRITTEN INSTRUCTIONS FROM THE CUSTOMER'S BANK. WE AGREE THAT, WITH OR WITHOUT NOTIFICATION TO ANY OF US, ISSUER MAY EXCHANGE, RELEASE SURRENDER, REALIZE UPON, RELEASE ON TRUST RECEIPT TOANY OF US, OR OTHERWISE DEAL WITH ANY PROPERTY BY WHOMSOEVER PLEDGED, MORTGAGED OR SUBJECTED TO A SECURITY INTEREST TO SECURE DIRECTLY OR INDIRECTLY ANY OF OUR BANK LIABILITIES AND/OR ANY OFFSET THEREAGAINST, 13. NO WAIVER: ISSUER SHALL HAVE NO DUTY TO EXERCISE ANY RIGHT HEREUNDER OR WITH RESPECT TO ANY PROPERTY, AND ISSUER SHALL NOT BE LIABLE FOR ANY FAILURE TO 00 $0 OR DELAY IN DOING $0. NONE OF YOUR OPTIONS. POWERS OR RIGHTS IN CONNECTION WITH THE CREDITOR THIS AGREEMENT SHALL BE WAIVED UNLESS ISSUER OR ISSUER'S AUTHORIZED AGENT SHALL HAVE SIGNED SUCH WAIVER IN WRITING. NO SUCH WAIVER, UNLESS EXPRESSLY AS STATED 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. NO COURSE OF DEALING BETWEEN US AND ISSUER SHALL BE EFFECTIVE TO CHANGE, MODIFY OR DISCHARGE IN WHOLE OR IN PART THIS AGREEMENT OR OUR OBLIGATIONS HEREUNDER. 14. CUSTOMER'S BANK: WE AND THE CUSTOMER'S BANK SHALL BE JOINTLY AND SEVERALLY LIABLE TO ISSUER HEREUNDER FOR REPAYMENT OF ALL BANK LIABILITIES OWING TO THE ISSUER; PROVIDED HOWEVER, WE SHALL BE FULLY OBLIGATED TO IMMEDIATELY REIMBURSE THE CUSTOMER'S BANK FOR ALL ITS PAYMENTS HEREUNDER IN THE EVENT ANO TO THE EXTENT THAT CUSTOMER'S BANK PAYS ANY BANK LIABILITIES, OR, AT ANY TIME PRIOR TO ISSUER'S DEMAND FOR REIMBURSEMENT HEREUNDER, TO PAY TO THE CUSTOMER'S BANK ALL SUMS NECESSARY TO REPAY ISSUER, WHICH SUMS SHALL BE HELD BY THE CUSTOMER'S BANK IN ESCROW AND AT OUR RISK BY THE CUSTOMER'S BANK FOR ISSUER'S BENEFIT. ALL SECURITY INTEREST, LIEN5, PLEDGES AND MORTGAGE LIENS ON OUR ASSETS NOW OR HEREAFTER GRANTED IN FAVOR OF THE CUSTOMER'S BANK PURSUANT TO ANY OTHER AGREEMENT OR ARRANGEMENT WITH RESPECT TO COLLATERAL SECURITY FOR ANY OTHER LIABILITY OR OBLIGATION OF US TO THE CUSTOMER'S BANK SHALL ALSO SECURE OUR REIMBURSEMENT OBLIGATIONS TO THE CUSTOMER'S BANK IN CONNECTION WITH THIS AGREEMENT. HOWEVER, NO PAYMENT TO CUSTOMER'S BANK BY US SHALL RELIEVE US OF CUR OBLIGATION TO THE ISSUER HEREUNDER EXCEPT TO THE EXTENT THAT THE SUMS SO PAID BY US ARE ACTUALLY RECEIVED BY THE ISSUER. 15. GOVERNING LAW, SEVERABILITY; THIS AGREEMENT AND THE CREDIT WILL BE GOVERNED BY AND CONS T RUED IN ACCORDANCE WITH THE LAWS OF THE STATE IN WHICH THE PRINCIPAL OFFICE OF THE ISSUER IS LOCATED, AS MARKED ON , FiE REVERSE HEREOF AND ARE SUBJECT TO THE UNIFORM CUSTOMS THEN IN EFFECT, WHICH UNIFORM CUSTOMS WILL CONTROL IN THE EVENT OF ANY CONFLICT WITH STATE LAWS. IF ANY PROVISION HEREOF IS FOR ANY REASON HELD TO BE UNENFORCEABLE UNDER ANY LAW, SUCH ILLEGALITY CR INVALIDITY SHALL NOT AFFECT ANY OTHER PROVISIONS HEREOF, EACH OF WHICH SHALL BE CONSTRUED AND ENFORCED AS IF SUCH UNENFORCEABLE PROVISION WERE NOT CONTAINED HEREIN. 16. NOTICE AND WAIVERS: EXCEPT AS OTHERWISE PROVIDED IN PARAGRAPHS 4 AND 5 HEREIN, ANY NOTICE TO ISSUER SHALL BE DEEMED EFFECTIVE ONLY IF IN WRITING SENT TO AND RECEIVED AT ISSUER INTERNATIONAL DIVISION. ANY SUCH NOTICE TO OR DEMAND ON ANY OF US SHALL BE BINDING OF ALL OF US AND SHALL BE DEEMED EFFECTIVE WHEN MADE TO ANY PERSON WHOSE NAME APPEARS BELOW BY MAIL, TELECOPIER, TELEPHONE OR OTHERWISE TO THE LAST ADDRESS OR TELEPHONE NUMBER OF SUCH PERSON APPEARING ON YOUR RECCROS. 17. ACCOUNT PARTY: IF THIS AGREEMENT IS SIGNED BY ONE ACCOUNT P ONLYTHETERMS'WE",'OUR-AND-US' SHALLREFER THROUGHOUT TO THE ACCOUNT PARTY OR PARTIES EXECUTINGTHI5AGREEMENT', IF THIS AGREEMENT IS SIGNED BY ONE OR MORE PERSONS AS ACCOUNT PARTIES, THIS AGREEMENTS B THE JOINT AND SEVERAL OBLIGATION OF SUCH PARTIES, IF THE UNDERSIGNED ISA PARTNERSHIP, THE OBLIGATIONS HEREUNDER SHALL CONTINUE IN FORCE AND APPLY NOTWITHSTANDING ANY CHANGE INME RSHIP OF SUCH PARTNER . T AGREEMENT SHALL BE BINDING UPON EACH OF US AND OUR RESPECTIVE HEIRS, PERSONAL REPR ESENTATIVES, SUCCESSORS AND ASSIGNS AND SHALL INURE TO ISSUER'$ BENEFIT AND ISSUER'S SUCCESS ASSIGNS. YOU MAY. WIT T ICE TO US. ASSIGN THIS ASP EEMENT IN WHOLE OR IN PART. Customer's ignature I o, mer's Bank Sign Here Date // other than Banner Bank)