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PARTICIPATION AGREEMENT
BETWEEN
NATWEST BANK N.A. AND REPUBLIC NATIONAL BANK OF NEW YORK
PARTICIPATION AGREEMENT, dated as of September __, 1995,
between NATWEST BANK N.A. ("the Bank" or "NatWest ") and REPUBLIC NATIONAL BANK
OF NEW YORK ("the Participant" or "RNB").
WHEREAS, concurrently with the execution hereof, RNB, NatWest,
Movie Star, Inc. ("Movie Star") and RNB, as Agent, are entering into the Credit
and Security Agreement (the "Credit Agreement") which agreement restructures the
obligations of Movie Star to RNB and NatWest previously incurred under separate
credit facilities extended to Movie Star by RNB and NatWest;
WHEREAS, the Credit Agreement contemplates that RNB shall
purchase a sixty percent (60%) participation in certain documentary letters of
credit issued by NatWest for the account of Movie Star under the credit
facility previously extended to Movie Star by NatWest , and indemnify NatWest
for sixty percent (60%) of any amounts NatWest may be liable for under any
outstanding steamship guaranties and airway releases made by NatWest in
connection with such documentary letters of credit to the extent not reimbursed
by the Applicant therefor;
NOW, THEREFORE, the parties hereby agree as follows:
Section 1. Definitions. When used in this Agreement, the
terms defined below shall have the meanings specified, such meanings being
equally applicable to the singular and plural forms of such terms.
Section 1.1 "Agent" shall mean RNB, in its capacity as Agent
under the Credit Agreement and related agreements and documents.
Section 1.2 "Airway Release" shall mean any airway release
issued or made by NatWest in connection with a Letter of Credit.
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Section 1.3 "Applicant" means, with respect to any Letter
of Credit, any party which has applied for such Letter of Credit, whether as
applicant or account party, and owes an Obligation with respect thereto.
Section 1.4 "Beneficiary" means, with respect to any Letter
of Credit, the person who is entitled by the terms of such Letter of Credit to
draw or demand payment thereunder.
Section 1.5 "Business Day" shall mean a day on which the
Agent, RNB and NatWest are each open for the regular transaction of business
in New York, New York.
Section 1.6 "Collateral" shall mean any property securing
the Obligations, and shall include the Collateral, as such term is defined in
the Credit Agreement.
Section 1.7 "Credit Agreement" shall have the meaning set
forth in the first "Whereas" clause hereof.
Section 1.8 "Credit Documents" shall mean each of the
following, as amended from time to time: each Letter of Credit, the application
therefor or similar agreement pursuant to which such Letter of Credit was
issued and/or which evidences the Obligations with respect to such Letter of
Credit, and any guarantee, security or similar agreement evidencing or
providing for any guarantee, collateral or other similar support for such
Obligations, each Steamship Guaranty and each Airway Release.
Section 1.9 "Effective Federal Funds Rate" shall mean, for
any day, a rate per annum equal to the weighted average of the rate on
overnight Federal funds transactions, with members of the Federal Reserve
System, arranged by Federal funds brokers, as published for such day by the
Federal Reserve Bank of New York.
Section 1.10 "Intercreditor Agreement" shall mean the
Intercreditor Agreement, dated the date hereof, by and among the Bank, the
Participant and the Agent, as such agreement may be amended from time to time.
Section 1.11 "Letter of Credit" shall mean those letters of
credit issued by the Bank listed on Exhibit A hereto.
Section 1.12 "Obligations" means, with respect to any Letter
of Credit, (i) the related Reimbursement Obligation; and (ii) if provided in
the related Credit Documents, the obligation of an Applicant to pay to the Bank
fees and any other amounts owing thereunder.
Section 1.13 "Participation" shall have the meaning set
forth in Section 2.1 hereof.
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Section 1.14 "Reimbursement Obligation" shall mean, with
respect to any Letter of Credit, the obligation of an Applicant to reimburse
the Bank in the amount of each payment to the Beneficiary by the Bank
thereunder, and with respect to such Letter of Credit, the obligation of an
Applicant to reimburse the Bank in the amount of any payments made in
connection with any Steamship Guaranty or Airway Release, together with
interest thereon to the extent provided in the related Credit Documents.
Section 1.15 "Steamship Guaranty" shall mean any steamship
guaranty issued or made by NatWest in connection with a Letter of Credit.
Section 1.16 Capitalized terms used herein but not defined
shall have the meanings ascribed to them in the Intercreditor Agreement.
Section 2. Purchase and Sale of Participation.
Section 2.1 Subject to the terms and conditions of this
Agreement, the Bank hereby sells and assigns to the Participant, without
recourse, and the Participant hereby purchases from the Bank an undivided sixty
percent (60%) participation interest in the Letters of Credit and the related
Reimbursement Obligations (the "Participation") .
Section 2.2 If at any time the Bank shall make a payment to
the Beneficiary in respect of a drawing or demand under a Letter of Credit made
in substantial compliance with the terms and conditions thereof, or shall make
a payment in respect of any Airway Release or Steamship Guaranty, the Bank
shall give written notice (which may be by telecopier) of such payment to the
Participant. The Participant shall pay to the Bank, not later than the
Business Day following the Business Day on which the Participant receives such
written notice, in immediately available funds by wire transfer to the account
of the Bank set forth on Exhibit B hereto, sixty percent (60%) of the amount of
such drawing. The payment of such amount shall constitute payment of the
purchase price for the Participation of the Participant in the related Letter
of Credit and Reimbursement Obligation, or, in the event there remain
outstanding undrawn amounts under such Letter of Credit, such payment shall
constitute partial payment of such purchase price. In the event that the
Participant does not make such payment in such manner on such Business Day, the
Bank shall be entitled to recover from the Participant interest on the amount
of such payment at the Effective Federal Funds Rate for the period commencing
on (and including) such Business Day and ending on (and excluding) the Business
Day on which such payment, together with interest as provided herein, shall be
made by the Participant to the Bank in such immediately available funds;
provided, however, that notwithstanding any provision hereof to the contrary,
during any period in which the Participant is legally prohibited or enjoined
from making to the Bank hereunder any payment on which interest is accruing,
such interest shall accrue at the Effective Federal Funds Rate. In the event
that the Applicant shall have paid, prior to a
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drawing under a Letter of Credit, any portion of such drawing, the Bank shall
reduce the amount payable to the Bank by the Participant hereunder by the
Participant's pro rata share of the amount so paid by the Applicant.
Section 3. The Participation purchased by the Participant
hereunder shall be without recourse to the Bank and for the Participant's own
account and risk, and the Bank makes no representation or warranty as to, and
shall have no responsibility for: the due authorization, execution or delivery
by the Applicant of any Credit Documents or any drafts or other documents
presented in connection with drawings under any Letter of Credit or payments
made in connection with any Airway Release or Steamship Guaranty; the legality,
validity, sufficiency, enforceability or collectibility of any Credit Documents
or such drafts or other documents; the title to, the value of, or the validity,
perfection or priority of any security interest in, any collateral or other
support for any Obligations; any representation or warranty made by, or any
information provided by the Applicant; the performance or observance by the
Applicant of any of the provisions of any Credit Documents; the financial
condition of the Applicant; or (except as other expressly provided herein) any
other matter relating to the Applicant, any Letter of Credit or the related
Credit Documents, and any Obligations or any collateral or other support for
such Obligations.
Section 4. Payments and Remittances.
Section 4.1 (a) So long as the Participant has made all
payments required to be made by it under the terms of this Agreement, and
subject to the remaining terms of Section 4 hereof, the Bank shall, within one
Business Day following receipt thereof, remit to the Participant in immediately
available funds to the account of the Participant identified on Exhibit B
hereto the Participant's share (determined in accordance with clauses (ii) and
(iii) of Section 4.1(e) hereof) of any payment made to the Bank in respect of
the Letters of Credit and the Obligations. The Participant shall not be
entitled to receive any interest in respect of any Reimbursement Obligation
which accrued prior to the date that the Participant paid, in accordance with
Section 2.2 hereof, the purchase price for its Participation in such
Reimbursement Obligation and the related Letter of Credit.
(b) The Bank shall maintain for and in the name of the
Participant one or more accounts established by the Bank in respect of the
Participation which shall reflect the interest of the Participant from time to
time in the Letters of Credit and the Obligations. The Bank shall render to
the Participant not less frequently than once per month a statement as to
receipts of payments and accruals of interest during the preceding month in
respect of the Letters of Credit and the Obligations.
(c) This Agreement and the Bank's books and records marked to
indicate the Participation will serve to document the Participant's
Participation in the Letters of Credit and the Obligations. The failure of the
Bank to xxxx any such
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records shall not affect or impair any of any Participant's rights or
obligations hereunder.
(d) In the event that the Bank incurs costs and expenses
relating to the enforcement of its rights under the Credit Documents and the
collection of amounts owing thereunder, then all amounts paid to or realized by
the Bank in respect of the Obligations, or from the Collateral securing the
same, or otherwise in respect of the Credit Documents, shall be applied,
subject to any contrary provision of the Intercreditor Agreement, (i) first, to
the costs and expenses of the Bank including, without limitation, reasonable
attorney's fees and expenses, incurred in obtaining such payment or realization
and otherwise incurred by the Bank in connection with the Obligations or in
protecting, preserving, selling or otherwise disposing of such Collateral
(other than ordinary and customary loan administration costs), (ii) second, to
accrued and unpaid interest in respect of the Obligations, to be shared between
the Bank and the Participant in accordance with their respective interests in
accrued and unpaid interest thereon, and (iii) third, to the outstanding
principal of the Obligations, pro rata between the Bank and the Participant.
(e) If the Bank determines at any time that any amount
received or collected by the Bank in respect of any Letter of Credit or
Reimbursement Obligation must be returned to the Applicant or paid to any other
person or entity pursuant to any insolvency law or otherwise, then,
notwithstanding any other provision of this Agreement, the Bank shall not be
required to distribute any portion thereof to the Participant, and the
Participant shall promptly on demand by the Bank repay any portion thereof that
the Bank shall have distributed to the Participant, together with interest
thereon at the Effective Federal Funds Rate for the period beginning on the
earlier to occur of the date that the Bank makes any such payment to the
Applicant or other person or entity or the date that the Bank becomes obligated
to pay interest (on the amount to be paid) to the Applicant or other person or
entity, and ending on the date that the Participant makes payment in full to
the Bank under this Section 4.1(e).
Section 4.2 The Participant shall be entitled to receive
from the Bank a sixty percent (60%) share of the amount of all fees payable in
respect of any Letter of Credit and any drawings thereunder which are (x)
calculated based on a percentage of the face amount of such Letter of Credit or
the amount of any drawing thereunder, and (y) become due and are actually paid
to the Bank after the date hereof. The Participant shall not be entitled to
receive from the Bank any fixed fees payable in respect of any Letter of
Credit, which fees may be kept by the Bank for its own account.
Section 4.3 Each payment by the Bank under Sections 4.1 or
4.2 hereof shall be made by the Bank within one Business Day following receipt
by the Bank of the funds, amounts or proceeds from which any such payment is to
be made, and the Bank shall pay to the Participant interest on any such payment
for the period
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beginning on (and including) the second Business Day following the Business Day
on which such funds, amounts or proceeds were received by the Bank and ending on
(but excluding) the date on which the Bank makes payment in accordance with
Sections 4.1 or 4.2 hereof, as the case may be, to the Participant, at the
Effective Federal Funds Rate; provided, however, that notwithstanding any
provision hereof to the contrary, during any period in which the Bank is legally
prohibited or enjoined from making any such payment, such interest shall accrue
at the Effective Federal Funds Rate.
Section 5. Bank's Discretion; Amendments to Letters of Credit.
Section 5.1 The Bank:
(i) shall not be deemed to be a trustee or agent for the
Participant in connection with the Letters of Credit, the Obligations, the
Credit Documents, the Collateral or the Participation;
(ii) may, except as otherwise provided in Section 5.2, use
its sole discretion with respect to exercising or refraining from exercising
any rights, or taking or refraining from taking any action, which the Bank may
be entitled to exercise or take under or in respect of the Letters of Credit,
the Obligations, the Credit Documents or the Collateral, including, without
limitation, rights and actions relating to any waiver or amendment of any term
thereof and rights, powers and remedies upon a default or event of default;
(iii) may reasonably rely upon the advice of legal counsel,
accountants and other experts and upon any written communication or any
telephone conversation which the Bank believes to be genuine and correct or to
have been signed, sent or made by the proper person or entity; and
(iv) shall have no obligation to make any claim against,
or assert any lien upon, any property (not constituting Collateral) held by the
Bank or assert any offset thereagainst.
Section 5.2 Without the prior written consent of the
Participant, the Bank will not agree to any waiver or amendment of the terms of
any Letter of Credit, or any Credit Document that would:
(i) increase the amount of any Letter of Credit;
(ii) extend the expiration date of any Letter of Credit or
change the demand nature of any Obligation;
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(iii) reduce the rate of interest payable on any Obligation
or release or compromise the obligation of the Applicant with respect to the
payment of any principal of or interest on any Obligation; or
(iv) release any Collateral (except as may be expressly
provided in the Credit Documents relating to such Collateral);
provided, however, that the restrictions contained in this Section 5.2 shall
not apply in respect of any such waiver or amendment required or imposed
pursuant to or in connection with any bankruptcy, insolvency, moratorium or
other similar law or event affecting the Applicant, or if required by any other
applicable law, rule, regulation, order or decree of any governmental
authority.
Section 6. Credit Analysis.
Section 6.1 The Participant hereby acknowledges that the
Bank has made available to the Participant copies of the Letters of Credit and
the Credit Documents relating thereto. The Participant represents and warrants
to the Bank that it has made, independently and without reliance on the Bank,
its own credit analysis of the Applicant, and its own investigation of the
risks involved in the transactions contemplated by this Agreement, and that it
is not relying on any statement or representation with respect thereto made by
the Bank.
Section 7. Indemnification.
Section 7.1 Except to the extent recovered by the Bank from
the Applicant promptly following demand therefore, the Participant will pay to
the Bank an amount equal to sixty percent (60%) of any and all costs, expenses,
claims, losses and liabilities (including reasonable attorneys' fees) incurred
by the Bank at any time after the date hereof, in connection with the Letters
of Credit, the Reimbursement Obligations, the Credit Documents or the
Collateral, except for those incurred by reason of the Bank's gross negligence
or willful misconduct.
Section 8. Assignments.
Section 8.1 The Participant shall not, without the prior
written consent of the Bank, sell, assign, subparticipate or otherwise transfer
its rights under this Agreement.
Section 8.2 The Bank shall not, without the prior written
consent of the Participant, sell, assign, or otherwise transfer its rights
under the Letters of Credit, the Obligations, the Credit Documents or the
Collateral.
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Section 8.3 Subject to the foregoing, all of the terms and
conditions of this Agreement shall inure to the benefit of, and be binding
upon, the successors and permitted assigns of the Bank and the Participant.
Section 9. Miscellaneous.
Section 9.1 Except as otherwise provided in the
Intercreditor Agreement, the Participant shall not have or assert or seek to
exercise, any right of legal redress against the Applicant or any Collateral in
respect of the Letters of Credit, the Obligations, or the Credit Documents.
The Participant agrees that, except as otherwise provided in the Intercreditor
Agreement, the Bank may take such legal action to enforce or protect the Bank,
the Participant and/or the interests of the Bank and the Participant in respect
of the Letters of Credit, the Obligations and the Credit Documents as the Bank
may determine necessary or appropriate in its sole discretion.
Section 9.2 This Agreement constitutes the entire agreement
of the Bank and the Participant with respect to the subject matter hereof and
may not be modified, amended or changed in any respect except by the written
agreement of the Bank and the Participant.
Section 9.3 The Bank and the Participant shall disclose to
the other promptly upon obtaining actual knowledge thereof any information
concerning the occurrence of any material adverse change in the financial
condition of the Applicant or of any material damage to or destruction of any
Collateral; provided, however, that neither the Bank nor the Participant shall
have any liability for its failure to make such disclosure unless such failure
was occasioned by its gross negligence or willful misconduct.
Section 9.4 Except as expressly otherwise provided herein,
all notices, requests and demands to or upon the respective parties hereto
shall be given or made only by hand, Federal Express, Express Mail or other
recognized overnight delivery service or by certified or registered mail, or by
telecopier to the fax numbers listed below, and shall be deemed to have been
duly given or made: if by hand, immediately upon delivery; if by Federal
Express, Express Mail or overnight delivery service, one (1) Business Day after
dispatch; if mailed by certified or registered mail, return receipt requested,
five (5) days after mailing; and if by telecopier, upon receipt by the sending
party of confirmation of transmission. All notices, requests and demands sent
by telecopier shall be followed by the original thereof, sent as otherwise
provided above, and all notices, requests and demands are to be given or made
to the respective parties at the address (or to such other addresses as either
party may designate by notice in accordance with the provisions of this
paragraph) set forth herein.
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Section 9.5 This Agreement shall be governed by and
construed in accordance with the laws of the State of New York.
Section 9.6 This Agreement shall inure solely to the benefit
of the Bank and the Participant, and their successors and permitted assigns,
and no third party (including, without limitation, the Applicant) shall have
any rights hereunder as a third-party beneficiary or otherwise.
Section 9.7 The Bank and the Participant each irrevocably
consents to the non-exclusive jurisdiction of the courts of the State of New
York and of the Federal Courts located in the City of New York in any action or
proceeding arising under or in connection with this Agreement, the Letters of
Credit, the Obligations, the Credit Documents, and the Collateral.
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IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed by its duly authorized officer as of the day and year
first set forth above.
BANK: NATWEST BANK N.A.
By:
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Name:
Title:
Address: 0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax No: (000) 000-0000
Attention:
PARTICIPANT: REPUBLIC NATIONAL BANK OF NEW YORK
By:
---------------------------------
Name: Xxxx Xxxxxxx
Title: Senior Vice President
Address: 000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax No: (000) 000-0000
Attention: Xx. Xxxx Xxxxxxx
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EXHIBIT A
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L/C Number Issuance Date Expiration Date $ Amount Remaining Undrawn
---------- ------------- --------------- --------------------------
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EXHIBIT B
Wire Transfer Instructions
NatWest Bank N.A.
All wires to be sent to:
NatWest Bank N.A.
1133 Avenue of the Americas
Xxx Xxxx, Xxx Xxxx 00000
ABA # ____________________
Attention: ____________________________________
Republic National Bank of New York
All wires to be sent to:
Republic National Bank of New York
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
ABA # 000000000
Attention: Xx. Xxxx Xxxxxxx
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