EXHIBIT 10.08
STOCK PLEDGE AGREEMENT
(Panda Funding Corporation and PIC Entity Stock)
Between
PANDA INTERFUNDING CORPORATION
and
BANKERS TRUST COMPANY, as Collateral Agent
Dated as of July 31, 1996
________________________
STOCK PLEDGE AGREEMENT
Panda Funding Corporation and PIC Entity Stock
THIS STOCK PLEDGE AGREEMENT (this "Agreement") is made as
of July 31, 1996, by Panda Interfunding Corporation, a Delaware
corporation with principal offices at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ ("Pledgor"); for Bankers Trust
Company, a New York banking corporation, with offices at ▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇▇▇, as collateral agent (the
"Collateral Agent") for the benefit of itself, the Trustee,
individually (as hereinafter defined), the Trustee on behalf of
the Bondholders (as hereinafter defined) and for the Letter of
Credit Provider (as hereinafter defined), if any, (collectively,
the "Secured Parties").
RECITALS
A. On even date herewith, Panda Funding Corporation, a
Delaware corporation (hereinafter called "Panda Funding") and
Pledgor, and Bankers Trust Company, as trustee (hereinafter
called the "Trustee"), are executing a Trust Indenture (such
agreement, as may from time to time be amended, supplemented or
otherwise modified, being hereinafter called the "Indenture")
providing, subject to the terms and conditions stated therein,
for the issuance by Panda Funding from time to time of certain
Pooled Project Bonds (the "Bonds"), including without limitation,
$105,525,000 in initial aggregate principal amount of 11-5/8%
Pooled Project Bonds, Series A due 2012 (the "Series A Bonds").
B. Panda Funding will loan the entire proceeds of the
issuance of the Series A Bonds to Pledgor (the "Loan"), which
Loan will be made under a Loan Agreement dated as of even date
with this Agreement by and between Panda Funding and Pledgor (the
"PIC Loan Agreement") and evidenced by a promissory note (the
"Initial PIC Note") of Pledgor dated July 31, 1996, and payable
to Panda Funding.
C. Panda Funding may from time to time loan the proceeds
of subsequent series of Bonds (the "Additional Loans") to
Pledgor, which Additional Loans will be made under the PIC Loan
Agreement and evidenced by promissory notes of Pledgor payable to
Panda Funding (the "Additional PIC Notes").
D. Pledgor, pursuant to the terms of the Indenture, has
guaranteed the obligations of Panda Funding (the "PIC Guaranty")
to the purchasers from time to time of the Bonds, including the
Series A Bonds (collectively, the "Bondholders") and the Trustee
under the Indenture.
E. Panda Funding is a wholly owned, special purpose
subsidiary of Pledgor and Pledgor is a wholly owned, special
purpose subsidiary of Panda Energy Corporation, a Texas
corporation ("PEC").
F. One or more Letters of Credit (as defined in the
Indenture) may be substituted for cash funds in the Debt Service
Reserve Fund (as defined in the Indenture) pursuant to Section
4.5(c) of the Indenture under a reimbursement agreement to be
entered into between Pledgor or Pledgor's controlling affiliate
and a financial institution (the "Letter of Credit Provider") (to
the extent so entered into and as amended, supplemented or
otherwise modified from time to time, together with any
substitution or replacement thereof, the "Reimbursement
Agreement").
G. To induce the purchase from time to time of the Bonds
by the Bondholders, which Pledgor acknowledges is of substantial
benefit to it (as ultimate recipient of the proceeds of the Bonds
in the form of the Loan and the Additional Loans) and to secure
Panda Funding's obligations to the Bondholders and the Trustee
and to secure the PIC Guaranty, and to induce the issuance of any
Letters of Credit by a Letter of Credit Provider and to secure
Pledgor's or Pledgor's controlling affiliate's obligations to
such Letter of Credit Provider under a Reimbursement Agreement
(to the extent entered into), Pledgor desires to enter into this
Agreement with the Collateral Agent for the benefit of the
Secured Parties.
H. It is a condition precedent to the issuance and
purchase of the Series A Bonds that Pledgor shall have pledged
the Collateral as defined in this Agreement to the Collateral
Agent for the benefit of the Secured Parties.
I. Therefore, in order to comply with the terms and
conditions of the Indenture and for other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, Pledgor hereby agrees with the Collateral Agent for
the benefit of the Secured Parties as follows:
ARTICLE 1
SECURITY INTEREST
Section 1.01 Pledge. Pledgor hereby pledges, assigns and
grants to Secured Party a security interest in and right of
set-off against the assets referred to in Section 1.02 (the
"Collateral") to secure the prompt payment and performance of the
"Obligations" (as defined in Section 2.02) and the performance by
Pledgor of this Agreement.
Section 1.02 Collateral. The Collateral consists of the
following types or items of property:
(a) The following securities: (i) 100% of the issued
and outstanding capital stock of Panda Funding Corporation,
a Delaware corporation, and of each and every PIC U.S.
Entity that is or shall in the future be organized as a
direct subsidiary of Pledgor, including, without limitation
Panda Interholding Corporation, a Delaware corporation; and
(ii) 60% of the issued and outstanding capital stock of
each and every PIC International Entity that is or shall in
the future be organized as a direct subsidiary of Pledgor,
including, without limitation, Panda Cayman Interfunding
Company, a Cayman Islands exempted company.
(b) (i) the certificates or instruments, if any,
representing, and any interest of Pledgor in the entries on
the books of any financial intermediary pertaining to, such
securities, (ii) all dividends (cash, stock or otherwise),
cash, instruments, rights to subscribe, purchase or sell
and all other rights and property from time to time
received, receivable or otherwise distributed in respect of
or in exchange for any or all of such securities, (iii) all
replacements, additions to and substitutions for any of the
property referred to in this Section 1.02, including,
without limitation, claims against third parties, (iv) the
proceeds, interest, profits and other income of or on any
of the property referred to in this Section 1.02 and
(v) all books and records relating to any of the property
referred to in this Section 1.02.
It is expressly contemplated that additional securities or other
property may from time to time be pledged, assigned or granted to
the Collateral Agent for the benefit of the Secured Parties as
additional security for the Obligations, and the term
"Collateral" as used herein shall be deemed for all purposes
hereof to include all such additional securities and property,
together with all other property of the types described above
related thereto.
Section 1.03 Transfer of Collateral. All certificates or
instruments representing or evidencing the Pledged Securities
shall be delivered to and held pursuant hereto by the Collateral
Agent for the benefit of the Secured Parties or a Person
designated by the Collateral Agent and shall be in suitable form
for transfer by delivery, or shall be accompanied by duly
executed instruments of transfer or assignment in blank, or (in
the case of either certificated or uncertificated securities) the
Collateral Agent shall have been provided with an Opinion of
Counsel that, in the opinion of such Counsel, such action has
been taken with respect to the recording, registering, filing and
all other actions necessary to make effective the lien intended
by this Agreement and to perfect the security interest granted
herein with respect to such certificated or uncertificated
securities and that there is a valid and perfected security
interest in such Collateral, enforceable against Debtor and all
third parties and securing payment of the Obligations. The
Collateral Agent shall have the right, at any time in its
discretion and without notice to Pledgor, to transfer to or to
register in the name of the Collateral Agent, the Trustee, or any
of the Collateral Agent's nominees any or all of the Pledged
Securities, subject only to the revocable rights specified in
Section 6.06. In addition, the Collateral Agent shall have the
right at any time to exchange certificates or instruments
representing or evidencing Pledged Securities for certificates or
instruments of smaller or larger denominations.
ARTICLE 2
DEFINITIONS
Section 2.01 Terms Defined Above. As used in this
Agreement, the terms defined above shall have the meanings
respectively assigned to them. Other capitalized terms that are
defined in the Indenture but that are not defined herein shall
have the same meanings as defined in the Indenture.
Section 2.02 Certain Definitions. As used in this
Agreement, the following terms shall have the following meanings,
unless the context otherwise requires:
"Agreement" means this Stock Pledge Agreement, as the
same may from time to time be amended or supplemented.
"Code" means the Uniform Commercial Code as presently
in effect in the State of New York. Unless otherwise
indicated by the context herein, all uncapitalized terms
that are defined in the Code shall have their respective
meanings as used in Articles 8 and 9 of the Code.
"Collateral Agent Claims" means, at any time, all
obligations of Panda Funding and Pledgor, now or hereafter
existing, to pay fees, costs, expenses, indemnities and
other amounts to the Collateral Agent pursuant to Sections
6(f), 8 or 16 of the Collateral Agency Agreement or
pursuant to any Security Document or Transaction Document.
"Event of Default" means any event specified in
Section 6.01.
"Highest Lawful Rate" means the lesser of 15% per
annum and the maximum rate of nonusurious interest allowed
from time to time by applicable law.
"Obligations" means all indebtedness, liabilities and
other obligations of Panda Funding and Pledgor (including,
but not limited to, all such obligations in respect of
principal, premiums, interest, fees, Collateral Agent
Claims, Trustee Claims, penalties, indemnities, costs and
other expenses, whether due after acceleration or
otherwise) to the Collateral Agent, the Trustee or the
Bondholders (of whatsoever nature and howsoever evidenced)
under and pursuant to the Bonds, the Indenture, this
Agreement, the Collateral Agency Agreement, the other
Security Documents and the obligations of Debtor or its
controlling affiliate to a Letter of Credit Provider under
and pursuant to a Reimbursement Agreement (if entered
into), in each case, direct or indirect, primary or
secondary, fixed or contingent, now or hereafter arising
therefrom or relating thereto.
"Obligor" means any Person, other than Pledgor, liable
(whether directly or indirectly, primarily or secondarily)
for the payment or performance of any of the Obligations
whether as maker, co-maker, endorser, guarantor,
accommodation party, general partner or otherwise.
"Pledged Securities" means all of the securities and
other property (whether or not the same constitutes a
"security" under the Code) referred to in Section 1.02 and
all additional securities (as that term is defined in the
Code), if any, constituting Collateral under this
Agreement.
"Trustee Claims" means, at any time, all obligations
of Pledgor and Panda Funding, now or hereafter existing, to
pay fees, costs, expenses, indemnities or other amounts to
the Trustee pursuant to the Indenture.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
In order to induce the Collateral Agent to accept this
Agreement, Pledgor represents and warrants to the Collateral
Agent for the benefit of the Secured Parties (which
representations and warranties will survive the creation and
payment of the Obligations) that:
Section 3.01 Ownership of Collateral; Encumbrances.
Pledgor is the owner of, and has good and marketable title to,
the Collateral free and clear of any Lien except for the pledge
and security interest granted to the Collateral Agent for the
benefit of the Secured Parties and Liens for Taxes not yet due or
that are subject to a Good Faith Contest. No financing statement
covering the Collateral is on file in any public office other
than terminated financing statements and the financing statements
filed pursuant to this Agreement or in connection with the
transactions contemplated by the Indenture. The Collateral is
not subject to any law (except as may be required in connection
with any disposition of the Collateral by laws affecting the
offering and sale of securities generally) or contractual
obligation that would be violated by or that would prohibit the
grant of the security interest in the Collateral granted pursuant
hereto or the disposition of the Collateral by or to the
Collateral Agent upon the occurrence and continuance of an Event
of Default.
Section 3.02 Pledgor. Pledgor is a corporation duly
organized and validly existing under the laws of the State of
Delaware. Pledgor has full power, authority and legal right to
enter into this Agreement and perform hereunder and to pledge and
deliver all of the Collateral pursuant to this Agreement. The
pledge of the Collateral and the granting of a security interest
in the Collateral has been duly authorized by Pledgor and this
Agreement has been duly authorized, executed and delivered by
Pledgor and constitutes the legal, valid and binding obligation
of Pledgor enforceable against Pledgor in accordance with its
terms except as enforceability may be limited by applicable
bankruptcy, insolvency, moratorium or other similar laws
affecting creditor's rights generally and except as
enforceability may be limited by general principles of equity
(whether considered in a suit at law or in equity).
Section 3.03 No Required Consent. No authorization,
consent, approval or other action by, and no notice to or filing
with, any governmental authority or regulatory body is required
that has not been obtained for (i) the due execution, delivery
and performance by Pledgor of this Agreement, (ii) the grant by
Pledgor of the security interest granted by this Agreement,
(iii) the perfection of such security interest or (iv) the
exercise by the Collateral Agent of its rights and remedies under
this Agreement (except as may be required (x) in connection with
such disposition by laws affecting the offering and sale of
securities generally, (y) under federal and state laws, rules and
regulations and applicable interpretations thereof providing for
the supervision or regulation of the banking and trust businesses
generally and applicable to the Collateral Agent or any Secured
Party and (z) with respect to the Collateral Agent or any Secured
Party as a result of any relationship which such Person may have
with Persons not parties to, or any activity or business such
Person may conduct other than pursuant to, any of the Financing
Documents).
The execution, delivery and performance of this Agreement
will not (i) require any consent or approval of the Board of
Directors or stockholders of Pledgor that has not been obtained;
(ii) violate the provisions of Pledgor's Certificate of
Incorporation or By-Laws; (iii) violate the provisions of any law
(including, without limitation, any usury law), regulation or
order of any governmental authority applicable to Pledgor or any
of its subsidiaries; (iv) conflict with, result in a breach or
constitute a default under any agreement relating to the
management or affairs of Pledgor or any of its subsidiaries, or
any indenture or loan or credit agreement or any other material
agreement, lease or instrument to which Pledgor is a party or by
which Pledgor or any of its subsidiaries or any of their material
properties may be bound; or (v) result in or create any Lien
(other than Permitted Liens) under, or require any consent under,
any indenture or loan or credit agreement or any other material
agreement, instrument or award of any governmental authority
binding upon Pledgor or any of its subsidiaries or any of their
properties.
Section 3.04 Pledged Securities. The Pledged Securities
have been duly authorized and validly issued, and are fully paid
and non-assessable. The Pledged Securities constitute 100% of
the issued and outstanding shares of capital stock of each and
every PIC U.S. Entity that is organized as a direct subsidiary of
Pledgor and 60% of the issued and outstanding shares of capital
stock of each and every PIC International Entity that is
organized as a direct subsidiary of Pledgor.
Section 3.05 First Priority Security Interest. The
pledge of the Collateral and the Pledged Securities delivered to
the Collateral Agent pursuant to this Agreement concurrently with
the execution and delivery of this Agreement and the filing of
UCC-1 financing statements with the Secretary of State of Texas
and the Secretary of State of the State of Delaware create a
valid and perfected first priority security interest in the
Collateral, enforceable against Pledgor and all third parties and
securing payment of the Obligations assuming continuous
possession thereof by the Collateral Agent subject to no Liens
other than those Liens created by this Agreement.
Section 3.06 No Suits. There is no action, suit or
proceeding at law or in equity or by or before any governmental
authority, arbitral tribunal or other body now pending or, to the
best knowledge of Pledgor, threatened against Pledgor or its
subsidiaries that question the validity or legality of or seeks
damages in connection with this Agreement or any action to be
taken pursuant to this Agreement that could reasonably be
expected to have a material adverse effect on Pledgor.
Section 3.07 Regulatory Status. Pledgor is not (i) an
"investment company" or a company "controlled" by an "investment
company" within the meaning of the Investment Company Act of
1940, as amended, or (ii) a "holding company" or a "subsidiary
company" of a "holding company" or an "affiliate" of a "holding
company" or a "subsidiary company" within the meaning of the
Public Utility Holding Company Act of 1935, as amended ("PUHCA")
or (iii) a "registered holding company" or a "subsidiary company"
of a "registered holding company" or an "affiliate" of a
"registered holding company" or a "subsidiary company" of a
"registered holding company" within the meaning of PUHCA.
Section 3.08 Benefits. Pledgor has derived and will
continue to derive direct and indirect benefits from the
incurrence of its obligations under this Agreement.
Section 3.09 Collateral. All statements or other
information provided by Pledgor to the Collateral Agent or any
Secured Party describing or with respect to the Collateral is or
(in the case of subsequently furnished information) will be when
provided correct and complete in all material respects. The
delivery at any time by Pledgor to the Collateral Agent of
additional Collateral or of additional descriptions of Collateral
shall constitute a representation and warranty by Pledgor to the
Collateral Agent hereunder that the representations and
warranties of this Article 3 are correct insofar as they would
pertain to such Collateral or the descriptions thereof.
Section 3.10 No Filings By Third Parties. No financing
statement or other public notice or recording covering the
Collateral is on file in any public office (other than any
financing statement or other public notice or recording naming
the Collateral Agent, as agent, as the secured party therein),
and Pledgor will not execute any such financing statement or
other public notice or recording so long as any of the
Obligations are outstanding (other than any financing statement
or other public notice or recording naming the Collateral Agent,
as agent, as the secured party therein).
ARTICLE 4
COVENANTS AND AGREEMENTS
Pledgor will at all times comply with the covenants and
agreements contained in this Article 4, from the date hereof and
for so long as any part of the Obligations are outstanding.
Section 4.01 Sale, Disposition or Encumbrance of
Collateral. Pledgor will not in any way encumber any of the
Collateral (or permit or suffer any of the Collateral to be
encumbered) or sell, pledge, assign, lend or otherwise dispose of
or transfer any of the Collateral to or in favor of any Person
other than the Collateral Agent for the benefit of the Secured
Parties. Pledgor will not subject the remaining 40% shares of
capital stock of Panda Cayman Interfunding Company and each other
PIC International Entity that is organized as a direct subsidiary
of Pledgor to any Lien except Permitted Liens as permitted under
the Indenture.
Section 4.02 Dividends or Distributions. So long as no
Event of Default shall have occurred and be continuing: Pledgor
shall be entitled to receive, retain and distribute any and all
dividends and interest paid in respect of the Collateral,
provided, however, that any and all
(a) dividends and interest paid or payable other than
in cash in respect of, and instruments and other property
received, receivable or otherwise distributed in respect
of, or in exchange for (including, without limitation, any
certificate or share purchased or exchanged in connection
with a tender offer or merger agreement), any Collateral,
(b) dividends and other distributions paid or payable
in cash in respect of any Collateral in connection with a
partial or total liquidation or dissolution or in
connection with a reduction of capital, capital surplus or
paid-in surplus, or reclassification, and
(c) cash paid, payable or otherwise distributed in
respect of principal of, or in redemption of, or in
exchange for, any Collateral,
shall be, and shall be forthwith delivered to the Collateral
Agent for the benefit of the Secured Parties to hold as,
Collateral and shall, if received by Pledgor, be received in
trust for the benefit of the Secured Parties, be segregated from
the other property or funds of Pledgor, and be forthwith
delivered to the Collateral Agent for the benefit of the Secured
Parties as Collateral in the same form as so received (with any
necessary endorsement).
Section 4.03 Records and Information. Pledgor shall keep
accurate and complete records of the Collateral (including
proceeds, payments, distributions, income and profits). The
Collateral Agent may at any time have access to, examine, audit,
make extracts from and inspect without hindrance or delay
Pledgor's records, files and the Collateral. Pledgor will
promptly provide written notice to the Collateral Agent of all
information that in any way relates to or affects the filing of
any financing statement or other public notices or recordings, or
the delivery and possession of items of Collateral for the
purpose of perfecting a security interest in the Collateral.
Pledgor will also promptly furnish such information as the
Collateral Agent may from time to time reasonably request
regarding (i) the business, affairs or financial condition of
Pledgor or (ii) the Collateral or Secured Parties' rights or
remedies with respect thereto.
Section 4.04 Reimbursement of Expenses. Pledgor will pay
to the Collateral Agent all reasonable advances, charges, costs
and expenses (including, without limitation, all reasonable costs
and expenses of holding, preparing for sale and selling,
collecting or otherwise realizing upon the Collateral if an Event
of Default occurs and all reasonable attorneys' fees, legal
expenses and court costs) incurred by the Collateral Agent in
connection with the exercise of the Collateral Agent's rights and
remedies hereunder on behalf of the Secured Parties. Pledgor
agrees to indemnify and hold the Collateral Agent and the Secured
Parties harmless from and against and covenants to defend the
Collateral Agent and the Secured Parties against any and all
losses, damages, claims, costs, penalties, liabilities and
expenses, including, without limitation, court costs and
reasonable attorneys' fees, incurred because of, incident to, or
with respect to this Agreement or the Collateral (including,
without limitation, any exercise of rights or remedies in
connection therewith). All amounts for which Pledgor is liable
pursuant to this Section 4.04 shall be due and payable by Pledgor
to the Collateral Agent upon demand. If Pledgor fails to make
such payment upon demand (or if demand is not made due to an
injunction or stay arising from bankruptcy or other proceedings)
and the Collateral Agent or any Secured Party pays such amount,
the same shall be due and payable by Pledgor to the Collateral
Agent, plus interest thereon from the date of the Collateral
Agent's or Secured Party's demand (or from the date of the
Collateral Agent's payment or such Secured Party's payment if
demand is not made due to such proceedings) at the Highest Lawful
Rate.
Section 4.05 Further Assurances. Upon the request of the
Collateral Agent, Pledgor shall (at Pledgor's expense) execute
and deliver all such assignments, certificates, instruments,
securities, financing statements, notifications to financial
intermediaries, clearing corporations, issuers of securities or
other third parties or other documents and give further
assurances and do all other acts and things as the Collateral
Agent may reasonably request to perfect the Collateral Agent's
interest in the Collateral or to protect, enforce or otherwise
effect the Collateral Agent's rights and remedies hereunder for
the benefit of the Secured Parties.
Section 4.06 Stock Powers. Pledgor shall furnish to the
Collateral Agent such stock powers and other instruments as may
be required by the Collateral Agent to assure the transferability
of the Collateral when and as often as may be requested by the
Collateral Agent.
Section 4.07 Voting and Other Consensual Rights. Except
to the extent otherwise provided in subsection 6.06(d), Pledgor
shall be entitled to exercise any and all voting and other
consensual rights pertaining to the Collateral or any part
thereof for any purpose not inconsistent with the terms of this
Agreement; provided however, that Pledgor shall not exercise or
refrain from exercising any such right if such action would have
a material adverse effect on the value of the Collateral or any
part thereof, and, provided, further, that upon request of the
Collateral Agent at any time or from time to time, Pledgor shall
give the Collateral Agent prompt written notice of the manner in
which Pledgor has exercised, or the reasons for refraining from
exercising, any such right.
Section 4.08 Pledged Securities Percentage. The Pledged
Securities will at all times constitute 100% of the issued and
outstanding shares of capital stock, including all stock issued
subsequent to the date hereof, of each and every PIC U.S. Entity
that is or shall in the future be organized as a direct
subsidiary of Pledgor and at least 60% of the issued and
outstanding capital stock of each and every PIC International
Entity that is or shall in the future be organized as a direct
subsidiary of Pledgor. Promptly upon the organization by Pledgor
of any PIC U. S. Entity or any PIC International Entity, Pledgor
shall execute and deliver to the Collateral Agent all Collateral,
together with certificates and other instruments evidencing such
Collateral in the percentages specified in this Section 4.08.
ARTICLE 5
RIGHTS, DUTIES AND POWERS OF COLLATERAL AGENT
The following rights, duties and powers of the Collateral
Agent are applicable irrespective of whether an Event of Default
occurs and is continuing:
Section 5.01 Discharge Encumbrances. The Collateral Agent
may, at its option, discharge any taxes, liens, security
interests or other encumbrances at any time levied or placed on
the Collateral. Pledgor agrees to reimburse the Collateral Agent
upon demand for any payment so made, plus interest thereon from
the date of the Collateral Agent's demand at the Highest Lawful
Rate.
Section 5.02 Transfer of Collateral. The Collateral Agent
may transfer any or all of the Obligations, and upon any such
transfer the Collateral Agent may transfer its interest in any or
all of the Collateral and shall be fully discharged thereafter
from all liability therefor. Any transferee of the Collateral
shall be vested with all rights, powers and remedies of the
Collateral Agent hereunder.
Section 5.03 Cumulative and Other Rights. The rights,
powers and remedies of the Collateral Agent for the benefit of
the Secured Parties hereunder are in addition to all rights,
powers and remedies given by law or in equity. The exercise by
the Collateral Agent of any one or more of the rights, powers and
remedies herein shall not be construed as a waiver of any other
rights, powers and remedies, including, without limitation, any
other rights of set-off. If any of the Obligations are given in
renewal, extension for any period or rearrangement, or applied
toward the payment of debt secured by any lien, the Collateral
Agent shall be, and is hereby, subrogated to all the rights,
titles, interests and liens securing the debt so renewed,
extended, rearranged or paid. The Collateral Agent shall also be
entitled to all of the rights, remedies and protections set forth
in the Collateral Agency Agreement, as if expressly set forth
herein.
Section 5.04 Disclaimer of Certain Duties.
(a) The powers conferred upon the Collateral Agent by this
Agreement are to protect its interest in the Collateral and shall
not impose any duty upon the Collateral Agent or any Secured
Party to exercise any such powers. Pledgor hereby agrees that
the Collateral Agent shall not be liable for, nor shall the
indebtedness evidenced by the Obligations be diminished by, the
Collateral Agent's delay or failure to collect upon, foreclose,
sell, take possession of or otherwise obtain value for the
Collateral.
(b) The Collateral Agent shall be under no duty whatsoever
to make or give any presentment, notice of dishonor, protest,
demand for performance, notice of non-performance, notice of
intent to accelerate, notice of acceleration, or other notice or
demand in connection with any Collateral or the Obligations, or
to take any steps necessary to preserve any rights against any
Obligor or other Person. Pledgor waives any right of marshalling
in respect of any and all Collateral, and waives any right to
require the Collateral Agent or any Secured Party to proceed
against any Obligor or other Person, exhaust any Collateral or
enforce any other remedy that the Collateral Agent or any Secured
Party now has or may hereafter have against any Obligor or other
Person.
Section 5.05 Modification of Obligations; Other Security.
Pledgor waives (i) any and all notice of acceptance, creation,
modification, rearrangement, renewal or extension for any period
of any instrument executed by any Obligor in connection with the
Obligations and (ii) any defense of any Obligor by reason of
disability, lack of authorization, cessation of the liability of
any Obligor or for any other reason. Pledgor authorizes the
Collateral Agent, without notice or demand and without any
reservation of rights against Pledgor and without affecting
Pledgor's liability hereunder or on the Obligations, from time to
time to (x) take and hold other property, other than the
Collateral, as security for the Obligations, and exchange,
enforce, waive and release any or all of the Collateral,
(y) apply the Collateral in the manner permitted by this
Agreement, the Collateral Agency Agreement or the Indenture and
(z) renew, extend for any period, accelerate, amend or modify,
supplement, enforce, compromise, settle, waive or release the
obligations of any Obligor or any instrument or agreement of such
other Person with respect to any or all of the Obligations or
Collateral.
Section 5.06 Waiver of Notice; Demand and Presentment.
Pledgor hereby waives any demand, notice of default, notice of
acceleration of the maturity of the Obligations, notice of
intention to accelerate the maturity of the Obligations,
presentment, protest and notice of dishonor as to any action
taken by the Collateral Agent or any Secured Party in connection
with this Agreement, or any instrument or document.
Section 5.07 Custody and Preservation of the Collateral.
The Collateral Agent shall be deemed to have exercised reasonable
care in the custody and preservation of the Collateral in its
possession if the Collateral is accorded treatment substantially
equal to that which comparable secured parties accord comparable
collateral, it being understood and agreed, however, that neither
the Collateral Agent nor any Secured Party shall have
responsibility for (i) ascertaining or taking action with respect
to calls, conversions, exchanges, maturities, tenders or other
matters relative to any Collateral, whether or not the Collateral
Agent has or is deemed to have knowledge of such matters, or
(ii) taking any necessary steps to preserve rights against
Persons or entities with respect to any Collateral.
ARTICLE 6
EVENTS OF DEFAULT
Section 6.01 Events. It shall constitute an Event of
Default under this Agreement if an Event of Default occurs and is
continuing under the Indenture.
Section 6.02 Remedies. Upon the occurrence and during
the continuance of any Event of Default, the Collateral Agent may
take any or all of the following actions without notice (except
where expressly required below or in the Indenture) or demand to
Pledgor:
(a) Declare all or part of the indebtedness pursuant
to the Obligations immediately due and payable and enforce
payment of the same by Pledgor or any Obligor.
(b) Sell, in one or more sales and in one or more
parcels, or otherwise dispose of any or all of the
Collateral in any commercially reasonable manner as the
Collateral Agent may elect, in a public or private
transaction, at any location as deemed reasonable by the
Collateral Agent either for cash or credit or for future
delivery at such price as the Collateral Agent may deem
fair, and (unless prohibited by the Code, as adopted in any
applicable jurisdiction) the Collateral Agent or any
Secured Party may be the purchaser of any or all Collateral
so sold and may apply upon the purchase price therefor any
Obligations secured hereby. Any such sale or transfer by
the Collateral Agent either to itself or to any other
Person shall be absolutely free from any claim of right by
Pledgor, including any equity or right of redemption, stay
or appraisal which Pledgor has or may have under any rule
of law, regulation or statute now existing or hereafter
adopted. Upon any such sale or transfer, the Collateral
Agent shall have the right to deliver, assign and transfer
to the purchaser or transferee thereof the Collateral so
sold or transferred. If the Collateral Agent deems it
advisable to do so, it may restrict the bidders or
purchasers of any such sale or transfer to Persons or
entities who will represent and agree that they are
purchasing the Collateral for their own account and not
with the view to the distribution or resale of any of the
Collateral. The Collateral Agent may, at its discretion,
provide for a public sale, and any such public sale shall
be held at such time or times within ordinary business
hours and at such place or places as the Collateral Agent
may fix in the notice of such sale. The Collateral Agent
shall not be obligated to make any sale pursuant to any
such notice. The Collateral Agent may, without notice or
publication, adjourn any public or private sale by
announcement at any time and place fixed for such sale, and
such sale may be made at any time or place to which the
same may be so adjourned. If any sale or transfer
hereunder is not completed or is defective in the opinion
of the Collateral Agent, such sale or transfer shall not
exhaust the rights of the Collateral Agent hereunder, and
the Collateral Agent shall have the right to cause one or
more subsequent sales or transfers to be made hereunder.
If only part of the Collateral is sold or transferred such
that the Obligations remain outstanding (in whole or in
part), the Collateral Agent's rights and remedies hereunder
shall not be exhausted, waived or modified, and the
Collateral Agent is specifically empowered to make one or
more successive sales or transfers until all the Collateral
shall be sold or transferred and all the Obligations are
paid. If that the Collateral Agent elects not to sell the
Collateral, the Collateral Agent retains its rights to
dispose of or utilize the Collateral or any part or parts
thereof in any manner authorized or permitted by law or in
equity, and to apply the proceeds of the same towards
payment of the Obligations. Each and every method of
disposition of the Collateral described in this subsection
or in subsection (d) shall constitute disposition in a
commercially reasonable manner.
(c) Apply proceeds of the disposition of the
Collateral to the Obligations in accordance with the
Collateral Agency Agreement and as permitted by the Code or
otherwise permitted by law or in equity. Such application
may include, without limitation, the reasonable attorneys'
fees and legal expenses incurred by the Collateral Agent
and the Secured Parties.
(d) Appoint any Person as agent to perform any act or
acts necessary or incident to any sale or transfer by the
Collateral Agent of the Collateral.
(e) Receive, change the address for delivery, open
and dispose of mail addressed to Pledgor, and to execute,
assign and endorse negotiable and other instruments for the
payment of money, documents of title or other evidences of
payment, shipment or storage for any form of Collateral on
behalf of and in the name of Pledgor.
(g) Exercise all other rights and remedies permitted
by law or in equity.
Section 6.03 Attorney-in-Fact. Pledgor hereby
irrevocably appoints the Collateral Agent as Pledgor's
attorney-in-fact, with full authority in the place and stead of
Pledgor and in the name of Pledgor or otherwise, from time to
time in the Collateral Agent's discretion upon the occurrence and
during the continuance of an Event of Default, but at Pledgor's
cost and expense and without notice to Pledgor, to take any
action and to execute any assignment, certificate, financing
statement, stock power, notification, document or instrument that
the Collateral Agent may deem necessary or advisable to
accomplish the purposes of this Agreement, including, without
limitation, to receive, endorse and collect all instruments made
payable to Pledgor representing any dividend, interest payment or
other distribution in respect of the Collateral or any part
thereof and to give full discharge for the same.
Section 6.04 Liability for Deficiency. If any sale or
other disposition of Collateral by the Collateral Agent or any
other action of the Collateral Agent or any Secured Party
hereunder results in reduction of the Obligations, such action
will not release Pledgor from its liability to the Collateral
Agent and the Secured Parties for any unpaid Obligations,
including costs, charges and expenses incurred in the liquidation
of Collateral, together with interest thereon, and the same shall
be immediately due and payable to the Collateral Agent at the
Collateral Agent's address set forth in the opening paragraph
hereof.
Section 6.05 Reasonable Notice. If any applicable
provision of any law requires the Collateral Agent or any Secured
Party to give reasonable notice of any sale or disposition or
other action, Pledgor hereby agrees that five days' prior written
notice shall constitute reasonable notice thereof. Such notice,
in the case of public sale, shall state the time and place fixed
for such sale and, in the case of private sale, the time after
which such sale is to be made.
Section 6.06 Pledged Securities. Upon the occurrence and
during the continuance of an Event of Default:
(a) All rights of Pledgor to receive the dividends
and interest payments that it would otherwise be authorized
to receive and retain pursuant to Section 4.02 shall cease,
and all such rights shall thereupon become vested in the
Collateral Agent who shall thereupon have the sole right to
receive and hold as Collateral such dividends and interest
payments, but the Collateral Agent shall have no duty to
receive and hold such dividends and interest payments and
shall not be responsible for any failure to do so or delay
in so doing.
(b) All dividends and interest payments that are
received by Pledgor contrary to the provisions of this
Section 6.06 shall be received in trust for the benefit of
the Collateral Agent on behalf of the Secured Parties,
shall be segregated from other funds of Pledgor and shall
be forthwith paid over to the Collateral Agent as
Collateral in the same form as so received (with any
necessary indorsement).
(c) The Collateral Agent may exercise any and all
rights of conversion, exchange, subscription or any other
rights, privileges or options pertaining to any of the
Pledged Securities as if it were the absolute owner
thereof, including without limitation, the right to
exchange at its discretion, any and all of the Pledged
Securities upon the merger, consolidation, reorganization,
recapitalization or other readjustment of any issuer of
such Pledged Securities or upon the exercise by any such
issuer or the Collateral Agent of any right, privilege or
option pertaining to any of the Pledged Securities, and in
connection therewith, to deposit and deliver any and all of
the Pledged Securities with any committee, depository,
transfer agent, registrar or other designated agency upon
such terms and conditions as it may determine, all without
liability except to account for property actually received
by it, but the Collateral Agent shall have no duty to
exercise any of the aforesaid rights, privileges or options
and shall not be responsible for any failure to do so or
delay in so doing.
(d) If the issuer of any Pledged Securities is the
subject of bankruptcy, insolvency, receivership,
custodianship or other proceedings under the supervision of
any court or governmental agency or instrumentality, then
all rights of Pledgor to exercise the voting and other
consensual rights that Pledgor would otherwise be entitled
to exercise pursuant to Section 4.07 with respect to the
Pledged Securities issued by such issuer shall cease, and
all such rights shall thereupon become vested in the
Collateral Agent who shall thereupon have the sole right to
exercise such voting and other consensual rights, but the
Collateral Agent shall have no duty to exercise any such
voting or other consensual rights and shall not be
responsible for any failure to do so or delay in so doing.
Section 6.07 Non-judicial Enforcement. The Collateral
Agent may enforce its rights hereunder without prior judicial
process or judicial hearing, and to the extent permitted by law
Pledgor expressly waives any and all legal rights which might
otherwise require the Collateral Agent to enforce its rights by
judicial process.
ARTICLE 7
MISCELLANEOUS PROVISIONS
Section 7.01 Notices. Any notice required or permitted
to be given under or in connection with this Agreement shall be
given in accordance with the notice provisions of the Indenture.
Section 7.02 Amendments and Waivers. The Collateral
Agent's acceptance of partial or delinquent payments or any
forbearance, failure or delay by the Collateral Agent in
exercising any right, power or remedy hereunder shall not be
deemed a waiver of any obligation of Pledgor or any Obligor, or
of any right, power or remedy of the Collateral Agent; and no
partial exercise of any right, power or remedy shall preclude any
other or further exercise thereof. The Collateral Agent may
remedy any Event of Default hereunder or in connection with the
Obligations without waiving the Event of Default so remedied.
Pledgor hereby agrees that if the Collateral Agent agrees to a
waiver of any provision hereunder, or an exchange of or release
of the Collateral, or the addition or release of any Obligor or
other Person, any such action shall not constitute a waiver of
any of the Collateral Agent's other rights or of Pledgor's
obligations hereunder. This Agreement may be amended only by an
instrument in writing executed jointly by Pledgor and the
Collateral Agent and may be supplemented only by documents
delivered or to be delivered in accordance with the express terms
hereof.
Section 7.03 Copy as Financing Statement. A photocopy or
other reproduction of this Agreement may be delivered by Pledgor
or the Collateral Agent to any financial intermediary or other
third party for the purpose of transferring or perfecting any or
all of the Pledged Securities to the Collateral Agent or its
designee or assignee.
Section 7.04 Possession of Collateral. The Collateral
Agent shall be deemed to have possession of any Collateral in
transit to it or set apart for it (or, in either case, any of its
agents, affiliates or correspondents).
Section 7.05 Redelivery of Collateral. If any sale or
transfer of Collateral by the Collateral Agent results in full
satisfaction of the Obligations, and after such sale or transfer
and discharge there remains a surplus of proceeds, the Collateral
Agent will deliver to Pledgor such excess proceeds in a
commercially reasonable time; provided, however, that neither the
Collateral Agent nor any Secured Party shall have any liability
for any interest, cost or expense in connection with any delay in
delivering such proceeds to Pledgor.
Section 7.06 Governing Law; Jurisdiction. This Agreement
and the security interest granted hereby shall be construed in
accordance with and governed by the laws of the State of New York
(except to the extent that the laws of any other jurisdiction
govern the perfection and priority of the security interests
granted hereby).
Section 7.07 Continuing Security Agreement.
(a) Except as may be expressly applicable pursuant to
Section 9-505 of the Code, no action taken or omission to act by
the Collateral Agent or the Secured Parties hereunder, including,
without limitation, any exercise of voting or consensual rights
pursuant to Section 4.07 or any other action taken or inaction
pursuant to Section 6.02, shall be deemed to constitute a
retention of the Collateral in satisfaction of the Obligations or
otherwise to be in full satisfaction of the Obligations, and the
Obligations shall remain in full force and effect, until the
Collateral Agent and the Secured Parties shall have applied
payments (including, without limitation, collections from
Collateral) towards the Obligations in the full amount then
outstanding or until such subsequent time as is hereinafter
provided in subsection (b) below.
(b) To the extent that any payments on the Obligations or
proceeds of the Collateral are subsequently invalidated, declared
to be fraudulent or preferential, set aside or required to be
repaid to a trustee, debtor in possession, receiver or other
Person under any bankruptcy law, common law or equitable cause,
then to such extent the Obligations so satisfied shall be revived
and continue as if such payment or proceeds had not been received
by the Collateral Agent or the Secured Parities, and the
Collateral Agent's and the Secured Parties' security interests,
rights, powers and remedies hereunder shall continue in full
force and effect. In such event, this Agreement shall be
automatically reinstated if it shall theretofore have been
terminated pursuant to Section 7.08.
Section 7.08 Termination. The grant of a security
interest hereunder and all of the Collateral Agent's and the
Secured Parties' rights, powers and remedies in connection
therewith shall remain in full force and effect until the
Collateral Agent has (i) retransferred and delivered all
Collateral in its possession to Pledgor, (ii) executed a
registration of release with respect to all Pledged Securities,
if any, as to which the Collateral Agent held a registered
pledge; and (iii) executed a written release or termination
statement and reassigned to Pledgor without recourse or warranty
any remaining Collateral and all rights conveyed hereby. Upon
the complete payment of the Obligations and the compliance by
Pledgor with all covenants and agreements hereof, the Collateral
Agent, at the written request and expense of Pledgor, and upon
receipt of an Officer's Certificate of Pledgor stating that all
conditions precedent have been complied with, will release,
reassign and transfer the Collateral to Pledgor and declare this
Agreement to be of no further force or effect. Notwithstanding
the foregoing, the reimbursement and indemnification provisions
of Section 4.04 and the provisions of subsection 7.07(b) shall
survive the termination of this Agreement.
Section 7.09 Counterparts, Effectiveness. This Agreement
may be executed in two or more counterparts, and it shall not be
necessary that the signatures of all parties hereto be contained
on any one counterpart hereof. Each counterpart is deemed an
original, but all such counterparts taken together constitute one
and the same instrument.
PLEDGOR: PANDA INTERFUNDING CORPORATION
By:________________________________
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chairman of the Board, President
and General Counsel
SECURED PARTY: BANKERS TRUST COMPANY,
as Collateral Agent
By:________________________________
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President