Common use of Compensating Balances Clause in Contracts

Compensating Balances. The Company shall (i) maintain with each Bank during each calendar year during which such Bank has any Commitment hereunder a compensating balance of demand deposits equal to one percent (1%) of the amount of such Bank's Commitment in effect from time to time without regard to usage or (ii) pay a fee in lieu thereof as follows. On February 15 of each year the Company shall pay to each Bank a fee (if such fee is payable pursuant to the preceding sentence), calculated with respect to the calendar year ending the preceding December 31 in an amount equal to the average Federal Funds Rate during such year times the excess, if any, of the average compensating balance required with respect to such Bank pursuant to this Section 2.07 during such calendar year over the Company's average balances of demand deposits maintained with such Bank during such calendar year. The amount of compensating balance and fees required during a calendar year shall be prorated for any calendar year during which this Agreement is not in effect for the entire year.