BORROWERS FURTHER AGREE TO BE BOUND BY THE
REGULATIONS AND INTERPRETATIONS OF THE ISSUER OF ANY LETTERS OF CREDIT
GUARANTIED BY BANK AND OPENED FOR ANY BORROWER'S ACCOUNT OR BY BANK'S
INTERPRETATIONS OF ANY LETTER OF CREDIT ISSUED BY BANK FOR ANY BORROWER'S
ACCOUNT, AND BORROWERS UNDERSTAND AND AGREE THAT BANK SHALL NOT BE LIABLE FOR
ANY ERROR, NEGLIGENCE, OR MISTAKE, WHETHER OF OMISSION OR COMMISSION, IN
FOLLOWING ANY BORROWER'S INSTRUCTIONS OR THOSE CONTAINED IN THE LETTERS OF
CREDIT OR ANY MODIFICATIONS, AMENDMENTS, OR SUPPLEMENTS THERETO.
(B)
THE OBLIGATION OF BORROWERS TO IMMEDIATELY
REIMBURSE BANK FOR DRAWINGS MADE UNDER LETTERS OF CREDIT SHALL BE ABSOLUTE,
UNCONDITIONAL, AND IRREVOCABLE, AND SHALL BE PERFORMED STRICTLY IN ACCORDANCE
WITH THE TERMS OF THIS AGREEMENT, SUCH LETTERS OF CREDIT, AND THE LETTER OF
CREDIT APPLICATION.
(C)
BORROWERS MAY REQUEST THAT BANK ISSUE A
LETTER OF CREDIT PAYABLE IN A FOREIGN CURRENCY. IF A DEMAND FOR PAYMENT IS MADE
UNDER ANY SUCH LETTER OF CREDIT, BANK SHALL TREAT SUCH DEMAND AS AN ADVANCE TO
BORROWERS OF THE EQUIVALENT OF THE AMOUNT THEREOF (PLUS FEES AND CHARGES IN
CONNECTION THEREWITH SUCH AS WIRE, CABLE, SWIFT OR SIMILAR CHARGES) IN DOLLARS
AT THE THEN-PREVAILING RATE OF EXCHANGE IN SAN FRANCISCO, CALIFORNIA, FOR SALES
OF THE FOREIGN CURRENCY FOR TRANSFER TO THE COUNTRY ISSUING SUCH FOREIGN
CURRENCY.
(D)
TO GUARD AGAINST FLUCTUATIONS IN CURRENCY
EXCHANGE RATES, UPON THE ISSUANCE OF ANY LETTER OF CREDIT PAYABLE IN A FOREIGN
CURRENCY, BANK SHALL CREATE A RESERVE (THE "LETTER OF CREDIT RESERVE") UNDER THE
REVOLVING LINE IN AN AMOUNT EQUAL TO TEN PERCENT (10%) OF THE FACE AMOUNT OF
SUCH LETTER OF CREDIT. THE AMOUNT OF THE LETTER OF CREDIT RESERVE MAY BE
ADJUSTED BY BANK FROM TIME TO TIME TO ACCOUNT FOR FLUCTUATIONS IN THE EXCHANGE
RATE. THE AVAILABILITY OF FUNDS UNDER THE REVOLVING LINE SHALL BE REDUCED BY THE
AMOUNT OF SUCH LETTER OF CREDIT RESERVE FOR AS LONG AS SUCH LETTER OF CREDIT
REMAINS OUTSTANDING.
2.1.3
FOREIGN EXCHANGE SUBLIMIT. AS PART OF THE REVOLVING
LINE, BORROWERS MAY ENTER INTO FOREIGN EXCHANGE CONTRACTS WITH BANK UNDER WHICH
BORROWERS COMMIT TO PURCHASE FROM OR SELL TO BANK A SPECIFIC AMOUNT OF FOREIGN
CURRENCY (EACH, A "FX FORWARD CONTRACT") ON A SPECIFIED DATE (THE "SETTLEMENT
DATE"). FX FORWARD CONTRACTS SHALL HAVE A SETTLEMENT DATE OF AT LEAST ONE (1) FX
BUSINESS DAY AFTER THE CONTRACT DATE AND SHALL BE SUBJECT TO A RESERVE OF TEN
PERCENT (10%) OF EACH OUTSTANDING FX FORWARD CONTRACT IN A MAXIMUM AGGREGATE
AMOUNT EQUAL TO $7,000,000 (THE "FX RESERVE"). SUBJECT TO THE OVERALL ANCILLARY
SUBLIMIT SET FORTH IN SECTION 2.1.6, THE AGGREGATE AMOUNT OF FX FORWARD
CONTRACTS AT ANY ONE TIME MAY NOT EXCEED TEN (10) TIMES THE AMOUNT OF THE FX
RESERVE.
2.1.4
CASH MANAGEMENT SERVICES SUBLIMIT. SUBJECT TO THE
OVERALL ANCILLARY SUBLIMIT SET FORTH IN SECTION 2.1.6, BORROWERS MAY USE UP TO
THE AVAILABILITY AMOUNT OF THE REVOLVING LINE FOR BANK'S CASH MANAGEMENT
SERVICES WHICH MAY INCLUDE MERCHANT SERVICES, DIRECT DEPOSIT OF PAYROLL,