EXHIBIT 10.04
SECURITY AGREEMENT
Between
PANDA INTERFUNDING CORPORATION
and
BANKERS TRUST COMPANY, as Collateral Agent
Dated as of July 31, 1996
SECURITY AGREEMENT
THIS SECURITY AGREEMENT (this "Agreement") is made as of
July 31, 1996, by Panda Interfunding Corporation, a Delaware
corporation with principal offices at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ ("Debtor"); 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, Debtor and Panda Funding
Corporation, a Delaware corporation (hereinafter called "Panda
Funding"), 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 Debtor (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 Debtor (the "PIC
Loan Agreement") and evidenced by a promissory note (the "Initial
PIC Note") of Debtor 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 Debtor,
which Additional Loans will be made under the PIC Loan Agreement
and evidenced by promissory notes of Debtor payable to Panda
Funding (the "Additional PIC Notes").
D. Debtor, 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
finance subsidiary of Debtor and Debtor is a wholly owned,
special purpose finance 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 PIC or PIC'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 Debtor acknowledges is of substantial
benefit to it (as the 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 the PIC Guaranty and to induce the issuance of any
Letters of Credit by a Letter of Credit Provider and to secure
PIC's or PIC's controlling affiliate's obligations to such Letter
of Credit Provider under a Reimbursement Agreement (to the extent
entered into), Debtor 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 Debtor 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, Debtor hereby agrees with the Collateral Agent for
the benefit of the Secured Parties as follows:
ARTICLE 1
SECURITY INTEREST
Section 1.01 Grant of Security Interest. Debtor 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
Debtor of this Agreement.
Section 1.02 Collateral. The Collateral consists of the
following types or items of property:
(a) All of Debtor's rights and interests in the
following Accounts and Funds established under the
Indenture: the U.S. Project Account; the Debt Service Fund;
the Capitalized Interest Fund; the Debt Service Reserve
Fund; the PIC Expense Fund; the U.S. Distribution Suspense
Fund; the U.S. Mandatory Redemption Account; and the U.S.
Extraordinary Distribution Account (all as defined in the
Indenture);
(b) (i) All deposit accounts, passbooks, certificates
of deposit, commercial paper and other instruments relating
to the Accounts and Funds referred to in this Section 1.02;
(ii) all sums now or at any time hereafter on deposit in
such Accounts or Funds or evidenced by such passbooks,
certificates of deposit or other instruments; (iii) any and
all renewals, rearrangements or reissues thereof, whether
in respect of the value thereof, interest paid thereon,
dividends declared thereon or otherwise together with all
shares, deposits and interests of every kind of Debtor
therein and all investments made therefrom; and (iv) all
interest, dividends, income and profits from any of the
property referred to in Section 1.02(a) and other sums due
or to become due on account of any of the property referred
to in Section 1.02(a);
(c) All of Debtor's rights and interest in and to (i)
all distributions and other amounts received by Debtor or
any PIC U.S. Entity or any other Person on behalf of Debtor
or any PIC U.S. Entity from, or in connection with, the
U.S. Projects that may be legally distributed or paid to
Debtor or any PIC U.S. Entity without contravention of any
Project Agreement, including (A) all distributions, either
directly or indirectly, from U.S. Project Entities to
Debtor or any PIC U.S. Entity and (B) all amounts received
by Debtor or any PIC U.S. Entity or any other Person on
behalf of Debtor or any PIC U.S. Entity in respect of
Debtor's or any such PIC U.S. Entity's investments in or
loans to U.S. Project Entities, in each case other than
Extraordinary Financial Distributions and distributions
received by or on behalf of Debtor or any PIC U.S. Entity
that are required to be deposited in the U.S. Mandatory
Redemption Account pursuant to Section 4.8(a) of the
Indenture and (ii) all interest earned on the amounts on
deposit in the U.S. Accounts and Funds, but only to the
extent such interest has been received (all capitalized
terms used in this paragraph not otherwise defined in this
Agreement have the meanings given such terms in the
Indenture);
(d) All of Debtor's rights and interests in and under
the Additional Projects Contract dated as of even date
herewith by and between Debtor, PEC and Panda Energy
International, Inc., a Texas corporation, relating to the
Projects (as defined in the Indenture);
(e) All of the Debtor's general intangibles relating
to the Debtor's personal property described in Sections
1.02(c) and (d) above, including, without limitation, any
of the foregoing which may be more specifically indicated
in the remainder of this Section 1.02;
(f) (i) Any related or additional property from time
to time delivered to or deposited with the Collateral Agent
by or for the account of Debtor; (ii) all property used or
usable in connection with any property referred to in this
Section 1.02; (iii) all proceeds, replacements, additions
to and substitutions for any of the property referred to in
this Section 1.02 and claims against third parties; and
(iv) all books and records related to any of the property
referred to in this Section 1.02; and
(g) All general intangibles related to any property
referred to in this Section 1.02, including, without
limitation, all (i) letters of credit, bonds, guaranties,
purchase or sales agreements and other contractual rights,
rights to performance, and claims for damages, refunds
(including tax refunds) or other monies due or to become
due; (ii) orders, franchises, permits, certificates,
licenses, consents, exemptions, variances, authorizations
or other approvals by any governmental agency or court;
(iii) business records, computer tapes and computer
software; (iv) goodwill; and (v) other intangible personal
property, whether similar or dissimilar to 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 passbooks,
certificates of deposit and instruments representing or
evidencing the Collateral 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 or, in the
case of 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.
Section 1.04 Institutions Holding Deposits. If the
Collateral consists of any deposit accounts, passbooks,
certificates of deposit or other instruments issued by one or
more depository institutions other than the Collateral Agent
("Institutions"), then the remaining provisions contained in this
Section 1.04 shall apply. Debtor hereby irrevocably authorizes
and directs each Institution to hold such Collateral as bailee
and custodian for the benefit of the Collateral Agent for the
benefit of the Secured Parties, to indicate on such Institution's
records this assignment of the Collateral in favor of the
Collateral Agent, to provide the Collateral Agent, at the
Collateral Agent's request, with information concerning the
amount on deposit in the accounts, passbooks, certificates of
deposit and other instruments constituting such Collateral, and
at the request of the Collateral Agent (without notice to or
further consent from Debtor) to deliver to the Collateral Agent
any or all funds representing such Collateral. The Institutions
shall have no duty to make any inquiry as to the status of or the
amount owing in respect of the Obligations. Debtor hereby agrees
to indemnify each Institution and hold it harmless from all
expenses and losses it incurs or suffers as a result of any
delivery to the Collateral Agent of funds in respect of such
Collateral. The Collateral Agent is authorized to notify the
Institutions of the Collateral Agent's interest in such
Collateral under this Agreement.
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 Security 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 Debtor, 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 Debtor (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 Debtor, 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.
"Trustee Claims" means, at any time, all obligations
of Panda Funding and Debtor, 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, Debtor represents and warrants to the Collateral Agent
(which representations and warranties will survive the creation
and payment of the Obligations) that:
Section 3.01 Ownership of Collateral; Encumbrances. Debtor
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 Debtor. Debtor is a corporation duly
organized and validly existing under the laws of the State of
Delaware. Debtor 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 Debtor and this
Agreement has been duly authorized, executed and delivered by
Debtor and constitutes the legal, valid and binding obligation of
Debtor enforceable against Debtor 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 Debtor of this Agreement, (ii) the grant by
Debtor 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 Debtor that has not been obtained;
(ii) violate the provisions of Debtor'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 Debtor 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 Debtor or any of its subsidiaries, or
any indenture or loan or credit agreement or any other material
agreement, lease or instrument to which Debtor is a party or by
which Debtor 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 Debtor or any of its subsidiaries or any of their
properties.
Section 3.04 Genuineness of Collateral; Descriptions.
Each deposit account, passbook, certificate of deposit,
commercial paper or other instrument constituting Collateral
hereunder is genuine in all respects and what it purports to be,
and any representation made by Debtor to the Collateral Agent
concerning the principal balance of and interest, dividends or
other income accrued or payable on the deposit accounts,
passbooks, certificates of deposit, commercial paper or other
instruments representing the Collateral are true and correct.
Section 3.05 First Priority Security Interest. The grant
of the security interest in the Collateral pursuant to this
Agreement creates a valid and perfected first priority security
interest in the Collateral, enforceable against Debtor and all
third parties and securing payment of the Obligations subject to
no Liens other than those Liens created by this Agreement.
Section 3.06 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 Debtor 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).
Section 3.07 No Name Changes. Debtor has not, during the
preceding five years, entered into any contract, agreement,
security instrument or other document using a name other than, or
been known by or otherwise used any name other than, the name
used by Debtor herein.
Section 3.08 Location of Debtor. Debtor's chief executive
office and Debtor's records concerning the Collateral are located
at the address or location set forth in the opening paragraph
hereof.
Section 3.09 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 Debtor, threatened against Debtor 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 Debtor.
Section 3.10 Regulatory Status. Debtor 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 3.11 Benefits. Debtor has derived and will
continue to derive direct and indirect benefits from the
incurrence of its obligations under this Agreement.
Section 3.12 Collateral. All statements or other
information provided by Debtor 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 Debtor to the Collateral Agent of
additional Collateral or of additional descriptions of Collateral
shall constitute a representation and warranty by Debtor 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 3.13 Delivery of Letters of Credit. With respect
to any Collateral supported by letters of credit, each of such
letters of credit has been delivered to the Collateral Agent
(provided that all letters of credit referred to in Section 1.02
shall be subject to the security interest created by this
Agreement irrespective of whether or not such delivery shall have
been made).
ARTICLE 4
COVENANTS AND AGREEMENTS
Debtor 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 Change in Location of Debtor. Debtor will
give the Collateral Agent 30 days' prior written notice of
(i) the opening or closing of any place of Debtor's business or
(ii) any change in the location of Debtor's chief executive
office or address.
Section 4.02 Change in Debtor's Name or Corporate
Structure. Debtor will not change its name, identity or
corporate structure (including, without limitation, any merger,
consolidation or sale of substantially all of its assets) without
notifying the Collateral Agent of such change in writing at least
30 days prior to the effective date of such change. Without the
express written consent of the Collateral Agent, however, Debtor
will not engage in any other business or transaction under any
name other than Debtor's name hereunder.
Section 4.03 Delivery of Letters of Credit and
Instruments. Debtor will deliver each letter of credit, if any,
included in the Collateral to Collateral Agent, in each case
forthwith upon receipt by or for the account of Debtor.
Section 4.04 Sale, Disposition or Encumbrance of
Collateral. Except as permitted under the Indenture, Debtor 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. Except with the
prior written consent of the Collateral Agent or as permitted
pursuant to the terms of the Indenture, Debtor will not execute
any check, instrument or other document relating to and will not
otherwise make or attempt to make any withdrawal from any
Account, Fund, deposit account, passbook, certificate of deposit
or other instrument evidencing the Collateral.
Section 4.05 Proceeds of Collateral. Debtor will deliver
to the Collateral Agent promptly upon receipt all proceeds
delivered to Debtor from the sale or disposition of any
Collateral. If chattel paper, documents or instruments are
received as proceeds, that are required to be delivered to the
Collateral Agent, they will be, immediately upon receipt,
properly endorsed or assigned and delivered to the Collateral
Agent as Collateral. This Section 4.05 shall not be construed to
permit sales or dispositions of Collateral except as may be
elsewhere expressly permitted by this Agreement.
Section 4.06 Records and Information. Debtor 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
Debtor's records, files and the Collateral. Debtor 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. Debtor 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 Debtor or (ii) the
Collateral or the Collateral Agent's rights or remedies with
respect thereto.
Section 4.07 Reimbursement of Expenses. Debtor 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. Debtor
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 Debtor is liable
pursuant to this Section 4.07 shall be due and payable by Debtor
to the Collateral Agent upon demand. If Debtor 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 Debtor 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 4.08 Further Assurances. Upon the request of the
Collateral Agent, Debtor shall (at Debtor'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.
Section 4.09 Investments. No investments will be made
from the Collateral except as permitted and directed by the
Indenture. All income, distributions, profits and proceeds of
such investments shall be part of the Collateral and may be
credited to any deposit account included in the Collateral.
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. Debtor 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 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. Debtor 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. Debtor 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 which 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.
Debtor 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. Debtor authorizes the
Collateral Agent, without notice or demand and without any
reservation of rights against Debtor and without affecting
Debtor'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.
Debtor 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
Debtor:
(a) Declare all or part of the indebtedness pursuant
to the Obligations immediately due and payable and enforce
payment of the same by Debtor 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 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
Debtor, including any equity or right of redemption, stay
or appraisal which Debtor 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) Take possession of all books and records of
Debtor pertaining to the Collateral. The Collateral Agent
shall have the authority to enter upon any real property or
improvements thereon in order to obtain any such books or
records, or any Collateral located thereon, and remove the
same therefrom without liability.
(d) 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.
(e) 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.
(f) Receive or withdraw any or all funds in any
Accounts or Funds or any deposit account, passbook,
certificate of deposit, commercial paper or other
instrument representing the Collateral and apply such funds
towards the Obligations.
(g) Receive, change the address for delivery, open
and dispose of mail addressed to Debtor, 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 Debtor.
(h) Exercise all other rights and remedies permitted
by law or in equity.
Section 6.03 Attorney-in-Fact. Debtor hereby irrevocably
appoints the Collateral Agent as Debtor's attorney-in-fact, with
full authority in the place and stead of Debtor and in the name
of Debtor 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 Debtor's cost and expense and
without notice to Debtor, 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 Debtor
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 Debtor 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, Debtor 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 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
Debtor 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
with respect to Debtor and in accordance with the notice
provisions of the Collateral Agency Agreement with respect to the
Collateral Agent.
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 Debtor 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.
Debtor 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 Debtor's
obligations hereunder. This Agreement may be amended only by an
instrument in writing executed jointly by Debtor 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 or any financing statement
covering the Collateral is sufficient as a financing statement,
and the same may be filed with the appropriate filing authority
for the purpose of perfecting the Collateral Agent's security
interest in the Collateral.
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 Debtor 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 Debtor.
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 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 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 7.08.
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 Debtor, and (ii) executed a
written release or termination statement and reassigned to Debtor
without recourse or warranty any remaining Collateral and all
rights conveyed hereby. Upon the complete payment of the
Obligations and the compliance by Debtor with all covenants and
agreements hereof, the Collateral Agent, at the written request
and expense of Debtor, and upon receipt of an Officer's
Certificate of Debtor stating that all conditions precedent have
been complied with, will release, reassign and transfer the
Collateral to Debtor and declare this Agreement to be of no
further force or effect. Notwithstanding the foregoing, the
reimbursement and indemnification provisions of Section 4.07 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.
DEBTOR: PANDA INTERFUNDING 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
