(iii) Letter of Credit Sublimit. Subject to the availability
under the Committed Revolving Line, and in reliance on the representations and
warranties of Borrowers set forth herein, at any time and from time to time from
the date hereof through the Business Day immediately prior to the Revolving
Maturity Date, Bank shall issue for the account of Borrowers such Letters of
Credit as Borrowers may request by delivering to Bank a duly executed letter of
credit application on Bank's standard form; provided, however, that the
outstanding and undrawn amounts under all such Letters of Credit (i) shall not
at any time exceed the Letter of Credit Sublimit, and (ii) shall be deemed to
constitute Advances for the purpose of calculating availability under the
Committed Revolving Line. Any drawn but unreimbursed amounts under any Letters
of Credit shall be charged as Advances against the Committed Revolving Line. All
Letters of Credit shall be in form and substance acceptable to Bank in its sole
discretion and shall be subject to the terms and conditions of Bank's form
application and letter of credit agreement. Borrowers will pay any standard
issuance and other fees that Bank notifies Borrowers will be charged for issuing
and processing Letters of Credit. Unless Borrowers shall have deposited with
Bank cash collateral in an amount sufficient to cover all undrawn amounts under
each such Letter of Credit and Bank shall have agreed in writing, no Letter of
Credit shall have an expiration date that is later than the Revolving Maturity
Date. If Borrowers have not secured to Bank's satisfaction its obligations with
respect to any Letters of Credit by the Revolving Maturity Date, then, effective
as of such date, the balance in any deposit accounts held by Bank and the
certificates of deposit issued by Bank in either Borrower's name (and any
interest paid thereon or proceeds thereof, including any amounts payable upon
the maturity or liquidation of such certificates), shall automatically secure
such obligations to the extent of the then outstanding and undrawn Letters of
Credit. Borrowers authorize Bank to hold such balances in pledge and to decline
to honor any drafts thereon or any requests by Borrowers or any other Person to
pay or otherwise transfer any part of such balances for so long as the Letters
of Credit are outstanding.
2.2 Overadvances. If the aggregate amount of the outstanding Advances
exceeds the lesser of the Committed Revolving Line or the Borrowing Base at any
time, Borrowers shall immediately pay to Bank, in cash, the amount of such
excess.
2.3 Interest Rates, Payments, and Calculations.
(a) Interest Rates. Except as set forth in Section 2.3(b), the
Advances shall bear interest, on the outstanding daily balance thereof, at a
variable rate equal to 1% above the Prime Rate.
(b) Late Fee; Default Rate. If any payment is not made within 10
days after the date such payment is due, Borrower shall pay Bank a late fee
equal to the lesser of (i) 5% of the amount of such unpaid amount or (ii) the
maximum amount permitted to be charged under applicable law. All Obligations
shall bear interest, from and after the occurrence and during the continuance of
an Event of Default, at a rate equal to 5 percentage points above the interest
rate applicable immediately prior to the occurrence of the Event of Default.
(c) Payments. Interest hereunder shall be due and payable on the
15th calendar day of each month during the term hereof. Bank shall, at its
option, charge such interest, all Bank Expenses, and all Periodic Payments
against any of Borrower's deposit accounts or against the Committed Revolving
Line, in which case those amounts shall thereafter accrue interest at the rate
then applicable hereunder. Any interest not paid when due shall be compounded by
becoming a part of the Obligations, and such interest shall thereafter accrue
interest at the rate then applicable hereunder.
(d) Computation. In the event the Prime Rate is changed from time
to time hereafter, the applicable rate of interest hereunder shall be increased
or decreased, effective as of the day the Prime Rate is changed, by an amount
equal to such change in the Prime Rate. All interest chargeable under the Loan
Documents shall be computed on the basis of a 360 day year for the actual number
of days elapsed.
(e) Limitation on Interest. Borrowers and Bank intend to contract
in strict compliance with applicable usury law from time to time in effect. In
furtherance thereof such persons stipulate and agree that none of the terms and
provisions contained in the Loan Documents shall ever be construed to provide
for interest in excess of the maximum amount of interest permitted to be charged
by applicable usury law from time to time in
Comerica Bank-California - Loan and Security Agreement Page 2