EXHIBIT 10.07
STOCK PLEDGE AGREEMENT
(Panda Interfunding Corporation Stock)
Between
and
BANKERS TRUST COMPANY,
as Collateral Agent
Dated as of July 31, 1996
________________________________________________________________
STOCK PLEDGE AGREEMENT
(Panda Interfunding Corporation Stock)
THIS STOCK PLEDGE AGREEMENT (this "Agreement") is made as of
July 31, 1996, by PANDA ENERGY CORPORATION, a Texas 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
Panda Interfunding Corporation, a Delaware corporation
(hereinafter called "PIC"), 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 PIC (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 PIC (the "PIC
Loan Agreement") and evidenced by a promissory note (the "Initial
PIC Note") of PIC 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 PIC, which Additional Loans will be made under the PIC Loan
Agreement and evidenced by promissory notes of PIC payable to
Panda Funding (the "Additional PIC Notes").
D. PIC, 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 PIC and PIC is a wholly owned, special purpose
subsidiary of Pledgor.
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 PIC or Pledgor 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 the parent corporation of PIC who
will receive 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 PIC or Pledgor'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 the Collateral Agent for the benefit of the Secured
Parties 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: 100% of the issued and
outstanding capital stock of Panda Interfunding Corporation, a
Delaware corporation; and (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 (as
defined in Section 2.02) 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 6.05. 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 or in the Indenture. 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 PIC, 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 PIC (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 PIC or Pledgor 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 Panda Funding and PIC and 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, comaker, 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 PIC
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 on behalf of the Secured Parties, 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
Texas. 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 the capital stock of
the issuer thereof.
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 Financial Statements; Collateral.
(a) All financial statements of Pledgor provided by Pledgor
to the Collateral Agent or any Secured Party in connection with this
Agreement or the Obligations fairly present, in conformity with
generally accepted accounting principles, Pledgor's financial
position and results of operations as of the dates and for the
periods stated therein (on a consolidated basis where so
indicated). Except such changes that have been disclosed in
writing to the Collateral Agent and the Secured Parties, there
has been no material adverse change from the financial position
or results of operations reflected by the most recent of such
financial statements, or any action, suit or proceeding pending
against Pledgor before any court or arbitrator or any
governmental body, agency or official in which there is a
reasonable possibility of an adverse decision that could have any
such material adverse effect, or that could draw into question
the validity of this Agreement or the attachment, perfection or
priority of the security interests or liens created hereunder.
(b) 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
and the Secured Parties 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 theCollateral (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.
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 Payment of Taxes and Liens. Pledgor will pay
prior to delinquency all taxes, charges, liens and assessments
against the Collateral.
Section 4.04 Records and Information. Pledgor shall keep
accurate and complete records of the Collateral (including
proceeds, payments, distributions, income and profits). The
Collateral Agent may, but shall not be required to, 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 the
Secured Parties' rights or remedies with respect thereto. Any
balance sheets or financial statements requested by the
Collateral Agent pursuant to this Section 4.04 shall conform to
generally accepted accounting principles.
Section 4.05 Performance of Obligations. Pledgor will
promptly and properly perform all of its obligations under this
Agreement and any other agreement or contract of any kind now or
hereafter existing as security for or in connection with the
payment of the Obligations.
Section 4.06 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 4.06 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 4.07 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 4.08 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 4.09 Voting and Other Consensual Rights. Except to
the extent otherwise provided in subsection 6.05(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 4.10 Pledged Securities Percentage. The Pledged
Securities will at all times constitute 100% of the issued and
outstanding shares of the capital stock of the issuer thereof,
including all stock issued by such issuer subsequent to the date
of this Agreement.
Section 4.11 PEC Contributions. Pledgor shall cause PIC to
loan $6,400,000 to a PIC International Entity to be evidenced by
an Other International Note, on or prior to the earlier of (i)
the first date on which Commercial Operations have been achieved
by any Non-U.S. Project in the Project Portfolio and (ii) the
date of transfer to the Project Portfolio of any Non U.S. Project
that has already achieved Commercial Operations. If PIC does not
possess sufficient funds to make such loan, Pledgor shall
contribute to PIC an amount up to $6,400,000 to enable PIC to
make the loan required by this Section 4.11.
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 Non-judicial Enforcement. The Collateral Agent
may enforce its rights hereunder held on behalf of the Secured
Parties 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.
Section 5.02 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 5.03 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, 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 5.04 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 held on behalf of the Secured Parties 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 5.05 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 setoff. 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 5.06 Disclaimer of Certain Duties.
(a) The powers conferred upon the Collateral Agent by
this Agreement are to protect its interest in the Collateral held
on behalf of the Secured Parties 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 5.07 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 5.08 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 5.09 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. Any of the following events shall
constitute an Event of Default under this Agreement:
(a) Termination, Insolvency, etc.
(i) Pledgor shall (A) apply for or consent to the
appointment of, or the taking of possession by, a receiver,
custodian, trustee or liquidator of itself or of all or a
substantial part of its property, (B) admit in writing its
inability, or be generally unable, to pay its debts as such debts
become due, (C) make a general assignment for the benefit of its
creditors, (D) commence a voluntary case under the Federal
Bankruptcy Code, (E) file a petition seeking to take advantage of
any other law relating to bankruptcy, insolvency, reorganization,
dissolution (other than a dissolution which is cured within
fifteen (15) days and which does not result in a Material Adverse
Change and which, prior to such cure, would not reasonably be
expected to result in a Material Adverse Change), windingup, or
composition or readjustment of debts, (F) fail to controvert in a
timely and appropriate manner, or acquiesce in writing to, any
petition filed against such Person in an involuntary case under
the Federal Bankruptcy Code, or (G) take any corporate or other
action for the purpose of effecting any of the foregoing; and
(ii) a proceeding or case shall be commenced
without the application or consent of Pledgor in any court of
competent jurisdiction, seeking (A) its liquidation,
reorganization, dissolution (other than a dissolution which is
cured within fifteen (15) days and which does not result in a
Material Adverse Change and which, prior to such cure, would not
reasonably be expected to result in a Material Adverse Change),
winding up, or the composition or readjustment of debts, or (B)
the appointment of a trustee, receiver, custodian, liquidator or
the like of such Person under any law relating to bankruptcy,
insolvency, reorganization, winding-up, or composition or
adjustment of debts, and such proceeding or case shall continue
undismissed, or any order, judgment or decree approving or
ordering any of the foregoing shall be entered and continue
unstayed and in effect, for a period of ninety (90) or more
consecutive days, or any order for relief against such Person
shall be entered in an involuntary case under the Federal
Bankruptcy Code; (b) Defaults on Other Obligations failure by
Pledgor to make any payment when due (subject to any applicable
grace period) in respect of any Debt, which Debt is in an amount
exceeding $2,000,000 (other than the Debt (i) which is
Subordinated Debt, and (ii) the Debt specified in clause (a) of
this Section), which failure shall continue unwaived beyond any
applicable grace period; or (c) Indenture 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 or, in
the case of subsection (e), the Collateral Agent or any Secured
Party may take any or all of the following actions without notice
(except where expressly required below) 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 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) Apply and set-off (i) any deposits of Pledgor now
or hereafter held by the Collateral Agent or any Secured Party;
(ii) all claims of Pledgor against the Collateral Agent or any
Secured Party, now or hereafter existing; (iii) any other
property, rights or interests of Pledgor which come into the
possession or custody or under the control of the Collateral
Agent or any Secured Party; and (iv) the proceeds of any of the
foregoing as if the same were included in the Collateral. The
Collateral Agent agrees to notify Pledgor promptly after any such
set-off or application (or after learning thereof in the case of
such action by a Secured Party); provided, however, the failure
of the Collateral Agent to give any notice shall not affect the
validity of such setoff or application.
(f) Exercise all other rights and remedies permitted by
law or in equity.
Section 6.03 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 6.04 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 6.05 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
6.05 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 4.09 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.
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 in
writing and shall be mailed by first class or express mail,
postage prepaid, or sent by telex, telegram, telecopy or other
similar form of rapid written transmission or personally
delivered to the receiving party. All such communications shall
be mailed, sent or delivered at the address respectively
indicated in the opening paragraph hereof or at such other
address as either party may have furnished the other party in
writing. Any communication so addressed and mailed shall be
deemed to be given when so mailed, any notice so sent by rapid
written transmission shall be deemed to be given when receipt of
such transmission is acknowledged by the receiving operator or
equipment, and any communication so delivered in person shall be
deemed to be given when receipted for or actually received by
Pledgor or the Collateral Agent as the case may be.
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, 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 Interest. It is the intention of the parties
hereto to conform strictly to usury laws applicable to the
Collateral Agent and the Secured Parties. Accordingly, if the
transactions contemplated hereby would be usurious under
applicable state or federal law, then, notwithstanding anything
to the contrary in this Agreement or in any other agreement
entered into in connection with or as security for the
Obligations, it is agreed as follows: (i) the aggregate of all
consideration which constitutes interest under law applicable to
the Collateral Agent or any Secured Party that is contracted for,
taken, reserved, charged or received under the Obligations, this
Agreement or under any of such other agreements or otherwise in
connection with the Obligations shall under no circumstances
exceed the maximum amount allowed by such applicable law, (ii) if
the maturity of the Obligations is accelerated for any reason, or
in the event of any required or permitted prepayment, then such
consideration that constitutes interest under law applicable to
the Collateral Agent or any Secured Party may never include more
than such maximum amount, and (iii) excess interest, if any,
provided for in this Agreement or otherwise shall be cancelled
automatically and, if theretofore paid, shall be credited by the
Collateral Agent or such Secured Party on the principal amount of
the Obligations (or, to the extent that the principal amount of
the Obligations shall have been or would thereby be paid in full,
refunded by the Collateral Agent or such Secured Party to
Pledgor, Panda Funding or PIC, as the case may be). The right to
accelerate the maturity of the Obligations does not include the
right to accelerate any interest that has not otherwise accrued
on the date of such acceleration, and the Collateral Agent and
the Secured Parties do not intend to collect any unearned
interest in the event of acceleration. All sums paid or agreed to
be paid to the Collateral Agent or any Secured Party for the use,
forbearance or detention of sums included in the initial
Obligations shall, to the extent permitted by applicable law, be
amortized, prorated, allocated and spread throughout the full
term of the Obligations until payment in full so that the rate or
amount of interest on account of the initial Obligations does not
exceed the applicable usury ceiling, if any.
Section 7.07 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). Pledgor consents to and submits to in personam
jurisdiction and venue in the courts of the State of New York and
the United States District Court for the Southern District of New
York, and, by execution and delivery of this Agreement, Pledgor
hereby accepts for itself and in respect of its property,
generally and unconditionally, the jurisdiction of the aforesaid
courts. This submission to jurisdiction is nonexclusive and does
not preclude the Collateral Agent or any Secured Party from
obtaining jurisdiction over Pledgor or the Collateral in any
court otherwise having jurisdiction.
Section 7.08 Subrogation. Until all indebtedness in
connection with the Obligations shall have been paid in full,
Pledgor shall have no right to subrogation or to enforce any
remedy or participate in any Collateral or security whatsoever
now or hereafter held by the Collateral Agent.
Section 7.09 Continuing Security Agreement.
(a) This Agreement shall constitute a continuing
security agreement, and all representations and warranties,
covenants and agreements shall, as applicable, apply to all
future as well as existing transactions. Provisions of this
Agreement, unless by their terms exclusive, shall be in addition
to other agreements between the parties.
(b) 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 4.09 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 (c) below.
(c) 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 Parties, 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 7.10.
(d) If the Obligations are structured such that there
are times when no Indebtedness is owing thereunder, this
Agreement shall remain valid and in full force and effect as to
all subsequent indebtedness included in the Obligations, provided
the Collateral Agent has not in the interim period executed a
written release or termination statement or returned possession
of or reassigned the Collateral to Pledgor.
Section 7.10 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 4.06 and
the provisions of subsection 7.09(c) shall survive the
termination of this Agreement.
Section 7.11 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 ENERGY CORPORATION
By:________________________________
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chairman of the Board, President and Chief Executive Officer
SECURED PARTY:
BANKERS TRUST COMPANY, as
Collateral Agent
By:________________________________
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President
