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Common use of Certain Subordination Terms Clause in Contracts

Certain Subordination Terms. Until all Senior Claims shall have --------------------------- been paid in full, notwithstanding anything in the Plant O&M Agreement to the contrary: 2.1 Junior Claimant acknowledges that, notwithstanding anything in the Plant O&M Agreement to the contrary, Navy II may pay to Junior Claimant Subordinated O&M Fees due and payable to Junior Claimant, solely to the extent funds are available for such payment from amounts transferred to the Operating and Maintenance Fees Account pursuant to subsection (vi) of Section 3.1(c) of the Deposit and Disbursement Agreement; provided that no Subordinated O&M Fees -------- exceeding, in the aggregate with (a) all Subordinated O&M Fees due and payable to Junior Claimant by Navy II or any other Coso Partnership with which Junior Claimant has entered into an agreement to provide operating and maintenance services, (b) all Operating and Maintenance Fees (as defined in the Indenture), exclusive of any reimbursement of costs, payable to Coso Operating Company, a Delaware limited liability company, by Navy II or any other Coso Partnership, and (c) all other operating and/or maintenance fees payable to any other present or future provider of operating and maintenance services to any Coso Partnership (other than any such fees constituting reimbursement of expenses), in each case within the twelve month period immediately preceding any date of payment, the Base O&M Fee Amount, may be paid unless (x) on the date of payment each of the conditions set forth under Section 3.8 of the Deposit and Disbursement Agreement are satisfied, and (y) the Trustee has received a certificate of a Responsible Officer of Navy II certifying to that effect. Except as and to the extent expressly provided in this Section 2.1, Navy II shall not, directly or indirectly, make any payment on or in respect of the Subordinated O&M Fees, and Navy II shall not in any event transfer any collateral for any part of, the Subordinated O&M Fees. 2.2 Except for the right to demand and accept payments set forth in Section 2.1 hereof, Junior Claimant shall not demand, xxx for, or accept from Navy II any such payment or collateral, nor take any other action to enforce or collect upon any such payment or to enforce its rights, in either case in respect of the Subordinated O&M Fees, nor set off against obligations owed to Navy II under the Plant O&M Agreement or otherwise against any part of the Subordinated O&M Fees. Notwithstanding anything in the Plant O&M Agreement to the contrary, the failure by Navy II to pay any Subordinated O&M Fees shall not under any circumstances, except when the funds are available therefor and payment is permitted under Section 2.1 hereof, constitute a breach or default under either of the Plant O&M Agreement. 2.3 Neither Navy II nor Junior Claimant shall otherwise take any action prejudicial to or inconsistent with the Senior Claimants' priority position over Junior Claimant created by this Agreement. 2.4 Each negotiable instrument or promissory note, if any, evidencing Subordinated O&M Fees or a lien, if any, in respect thereof shall bear a legend (or otherwise include provisions satisfactory to Collateral Agent) providing that payment of the Subordinated O&M Fees thereunder and the priority of any such lien have been subordinated to prior payment of the Senior Claims and the liens in respect thereof in the manner and to the extent set forth in this Agreement. 2.5 Junior Claimant shall not commence or join with any other creditor or creditors of Navy II in commencing any Proceeding against Navy II; provided that Junior Claimant shall not be so restricted with respect to claims -------- arising directly out of Navy II's failure to perform its obligations or make any payments of amounts due to Junior Claimant under the Plant O&M Agreement other than the Subordinated O&M Fees. At any general meeting of creditors of Navy II or in the event of any Proceeding, if all Senior Claims have not been paid in full at such time, Collateral Agent on behalf of the Senior Claimants is hereby irrevocably authorized at any such meeting or in any such Proceeding: 2.5.1 to enforce claims comprising the Subordinated O&M Fees in the name of Junior Claimant, by proof of debt, proof of claim, suit or otherwise; 2.5.2 to collect any assets of Navy II distributed, divided or applied by way of dividend or payment as a result of a Proceeding, or such securities issued, on account of the Subordinated O&M Fees as a result thereof and apply the same, or the proceeds of any realization upon the same that the Senior Claimants in their discretion elect to effect, to Senior Claims until all Senior Claims shall have been paid in full (the Senior Claimants hereby agreeing to render any surplus as a court of competent jurisdiction may direct); 2.5.3 other than voting claims comprising the Subordinated O&M Fees, to take generally any action in connection with any such meeting or proceeding which Junior Claimant might otherwise take in respect of the Subordinated O&M Fees and claims relating thereto. After the commencement of any such Proceeding, Junior Claimant may inquire of Collateral Agent in writing whether Collateral Agent intends to exercise the foregoing rights with respect to the Subordinated O&M Fees. Should Collateral Agent fail, within a reasonable time after receipt of such inquiry, either to file a proof of claim with respect to the Subordinated O&M Fees and to furnish a copy thereof to Junior Claimant, or to inform Junior Claimant in writing that the Senior Claimants intend to exercise their rights to assert the Subordinated O&M Fees in the manner hereinabove provided, Junior Claimant may, but shall not be required to, proceed to file a proof of claim with respect to the Subordinated O&M Fees and take such further steps with respect thereto, not inconsistent with this Agreement, as Junior Claimant may deem proper. 2.6 If (a) the Senior Claimants foreclose on any or all of their liens on all or a substantial portion of the assets constituting the Navy II Project (or succeed to such assets by way of a transfer in lieu of foreclosure), and (b) Collateral Agent or any designee thereof assumes the Plant O&M Agreement in accordance with the terms of that Consent to Collateral Assignment dated as of May 28, 1999 among Junior Claimant, Collateral Agent and Navy II (the "Collateral Assignment") (or enter into a new agreement pursuant to Section 1(d) --------------------- of the Collateral Assignment), then notwithstanding anything in the Plant O&M Agreement to the contrary, (i) Navy II (or any successor or assign) shall not be obligated to pay the Subordinated O&M Fees, if any, then due, except as set forth in Section 2.6.1 or 2.6.2, as applicable, (ii) the Plant O&M Agreement shall remain in full force and effect notwithstanding any such foreclosure (but subject to the terms and conditions thereof), and (iii) the following shall apply: 2.6.1 If the Senior Claimants (including, for purposes of this Section 2.6.1, their Affiliates) or any of them become the owners of the Navy II Project, the Senior Claimants shall apply to the outstanding balance, if any, of the Subordinated O&M Fees on (or promptly after) the last day of each June and December (each such date, a "Semi-Annual Payment Date") all amounts ------------------------ then on deposit or deposited in the Operating and Maintenance Fees Account pursuant to Section 3.6 of the Deposit and Disbursement Agreement. Amounts shall be deposited in the Operating and Maintenance Fees Account on Semi-Annual Payment Dates after application of all revenues and other proceeds of Navy II to the payment of all costs in the nature of those specified in subsections (i) through (v) of Section 3.1(c) of the Depositary Agreement during such period (including the funding of reserves pursuant to the Depositary Agreement as in effect immediately prior to the time that the Senior Claimants became owners of the Navy II Project), with provision for a return of and on the investment of the Senior Claimants, whether such investment is in the form of equity or debt (and whether or not the Senior Claimants have foreclosed on their liens by way of a partial or full credit bid or otherwise), which payments shall not be greater than the periodic payments which would have been payable under the priorities specified in subsections (ii) through (v) of Section 3.1(c) of the Depositary Agreement as in effect immediately prior to such foreclosure, as reasonably determined by the Senior Claimants. For purposes of calculating such payment (i) any Senior Subordinated Notes not then paid in full, together with all interest and premium, if any, thereon, will be deemed to be outstanding ("Deemed Notes") (i) such Deemed Notes will be deemed not to have been ------------ repaid upon foreclosure, and (iii) such Deemed Notes will be deemed amortized in accordance with the scheduled amortization of the Senior Subordinated Notes under the Indenture. Upon such foreclosure by the Senior Claimants, the Plant O&M Agreement shall be deemed to be amended to reflect such arrangement. 2.6.2 If the Senior Claimants sell the Navy II Project to a third party ("New Owner"), the New Owner shall apply to the outstanding balance, if --------- any, of the Subordinated O&M Fees on (or promptly after) each Semi-Annual Payment Date all revenues and other proceeds of Navy II received in excess of amounts applied during the preceding six-month period to (a) the payment of all costs for the operation and maintenance of the Navy II Project in the nature of those costs defined as "Operating and Maintenance Costs" and "Capital Expenditures" under the Depositary Agreement, (b) the periodic payment of fees, interest and principal as required by the lenders to the New Owner, which payments shall not be materially greater on an annual basis than such amounts payable by Navy II to the Senior Claimants pursuant to the Senior Secured Notes outstanding immediately prior to foreclosure by the Senior Claimants, as reasonably determined by the lenders to the New Owner; provided that greater -------- payments shall be permitted so long as the payment of such excess amounts is subordinated to the Subordinated O&M Fees, and (c) the funding of reserves not materially in excess of the amounts which would have been available for the benefit of the Senior Claimants under the Depositary Agreement as in effect immediately prior to such foreclosure. The lenders to such New Owner shall be deemed to be Senior Claimants hereunder, and the payments specified in clause (b) and (c) of this Section 2.6.2 shall be deemed to be Senior Claims under this Agreement. Junior Claimant agrees that it will execute and deliver to New Owner's lenders such new subordination agreement, such amendments to each of the Plant O&M Agreement, and such other instruments, in each case consistent with the terms of this Agreement, and Junior Claimant shall take such further action, as the lenders to the New Owner reasonably request in furtherance of this Section 2.6.2.

Appears in 1 contract

Samples: Operating Fee Subordination Agreement (Coso Power Developers)

Certain Subordination Terms. Until all Senior Claims shall have --------------------------- been paid in full, notwithstanding anything in the Plant O&M Agreement to the contrary: 2.1 2.1. Junior Claimant acknowledges that, notwithstanding anything in the Plant O&M Agreement to the contrary, Navy II BLM may pay to Junior Claimant Subordinated O&M Fees due and payable to Junior Claimant, solely to the extent funds are available for such payment from amounts transferred to the Operating and Maintenance Fees Account pursuant to subsection (vi) of Section 3.1(c) of the Deposit and Disbursement Agreement; provided that no Subordinated O&M Fees -------- exceeding, in the aggregate with (a) all Subordinated O&M Fees due and payable to Junior Claimant by Navy II BLM or any other Coso Partnership with which Junior Claimant has entered into an agreement to provide operating and maintenance services, (b) all Operating and Maintenance Fees (as defined in the Indenture), exclusive of any reimbursement of costs, payable to Coso Operating Company, a Delaware limited liability company, by Navy II BLM or any other Coso Partnership, and (c) all other operating and/or maintenance fees payable to any other present or future provider of operating and maintenance services to any Coso Partnership (other than any such fees constituting reimbursement of expenses), in each case within the twelve month period immediately preceding any date of payment, the Base O&M Fee Amount, may be paid unless (x) on the date of payment each of the conditions set forth under Section 3.8 of the Deposit and Disbursement Agreement are satisfied, and (y) the Trustee has received a certificate of a Responsible Officer of Navy II BLM certifying to that effect. Except as and to the extent expressly provided in this Section 2.1, Navy II BLM shall not, directly or indirectly, make any payment on or in respect of the Subordinated O&M Fees, and Navy II BLM shall not in any event transfer any collateral for any part of, the Subordinated O&M Fees. 2.2 2.2. Except for the right to demand and accept payments set forth in Section 2.1 hereof, Junior Claimant shall not demand, xxx for, or accept from Navy II BLM any such payment or collateral, nor take any other action to enforce or collect upon any such payment or to enforce its rights, in either case in respect of the Subordinated O&M Fees, nor set off against obligations owed to Navy II BLM under the Plant O&M Agreement or otherwise against any part of the Subordinated O&M Fees. Notwithstanding anything in the Plant O&M Agreement to the contrary, the failure by Navy II BLM to pay any Subordinated O&M Fees shall not under any circumstances, except when the funds are available therefor and payment is permitted under Section 2.1 hereof, constitute a breach or default under either of the Plant O&M Agreement. 2.3 2.3. Neither Navy II BLM nor Junior Claimant shall otherwise take any action prejudicial to or inconsistent with the Senior Claimants' priority position over Junior Claimant created by this Agreement. 2.4 2.4. Each negotiable instrument or promissory note, if any, evidencing Subordinated O&M Fees or a lien, if any, in respect thereof shall bear a legend (or otherwise include provisions satisfactory to Collateral Agent) providing that payment of the Subordinated O&M Fees thereunder and the priority of any such lien have been subordinated to prior payment of the Senior Claims and the liens in respect thereof in the manner and to the extent set forth in this Agreement. 2.5 2.5. Junior Claimant shall not commence or join with any other creditor or creditors of Navy II BLM in commencing any Proceeding against Navy IIBLM; provided -------- that Junior Claimant shall not be so restricted with respect to claims -------- arising directly out of Navy IIBLM's failure to perform its obligations or make any payments of amounts due to Junior Claimant under the Plant O&M Agreement other than the Subordinated O&M Fees. At any general meeting of creditors of Navy II BLM or in the event of any Proceeding, if all Senior Claims have not been paid in full at such time, Collateral Agent on behalf of the Senior Claimants is hereby irrevocably authorized at any such meeting or in any such Proceeding: 2.5.1 2.5.1. to enforce claims comprising the Subordinated O&M Fees in the name of Junior Claimant, by proof of debt, proof of claim, suit or otherwise; 2.5.2 2.5.2. to collect any assets of Navy II BLM distributed, divided or applied by way of dividend or payment as a result of a Proceeding, or such securities issued, on account of the Subordinated O&M Fees as a result thereof and apply the same, or the proceeds of any realization upon the same that the Senior Claimants in their discretion elect to effect, to Senior Claims until all Senior Claims shall have been paid in full (the Senior Claimants hereby agreeing to render any surplus as a court of competent jurisdiction may direct); 2.5.3 2.5.3. other than voting claims comprising the Subordinated O&M Fees, to take generally any action in connection with any such meeting or proceeding which Junior Claimant might otherwise take in respect of the Subordinated O&M Fees and claims relating thereto. After the commencement of any such Proceeding, Junior Claimant may inquire of Collateral Agent in writing whether Collateral Agent intends to exercise the foregoing rights with respect to the Subordinated O&M Fees. Should Collateral Agent fail, within a reasonable time after receipt of such inquiry, either to file a proof of claim with respect to the Subordinated O&M Fees and to furnish a copy thereof to Junior Claimant, or to inform Junior Claimant in writing that the Senior Claimants intend to exercise their rights to assert the Subordinated O&M Fees in the manner hereinabove provided, Junior Claimant may, but shall not be required to, proceed to file a proof of claim with respect to the Subordinated O&M Fees and take such further steps with respect thereto, not inconsistent with this Agreement, as Junior Claimant may deem proper. 2.6 2.6. If (a) the Senior Claimants foreclose on any or all of their liens on all or a substantial portion of the assets constituting the Navy II BLM Project (or succeed to such assets by way of a transfer in lieu of foreclosure), and (b) Collateral Agent or any designee thereof assumes the Plant O&M Agreement in accordance with the terms of that Consent to Collateral Assignment dated as of May 28, 1999 among Junior Claimant, Collateral Agent and Navy II BLM (the "Collateral ---------- Assignment") (or enter into a new agreement pursuant to Section 1(d) --------------------- of the ---------- Collateral Assignment), then notwithstanding anything in the Plant O&M Agreement to the contrary, (i) Navy II BLM (or any successor or assign) shall not be obligated to pay the Subordinated O&M Fees, if any, then due, except as set forth in Section 2.6.1 or 2.6.2, as applicable, (ii) the Plant O&M Agreement shall remain in full force and effect notwithstanding any such foreclosure (but subject to the terms and conditions thereof), and (iii) the following shall apply: 2.6.1 2.6.1. If the Senior Claimants (including, for purposes of this Section 2.6.1, their Affiliates) or any of them become the owners of the Navy II BLM Project, the Senior Claimants shall apply to the outstanding balance, if any, of the Subordinated O&M Fees on (or promptly after) the last day of each June and December (each such date, a "Semi-Annual Payment Date") all amounts ------------------------ then on deposit or deposited in the Operating and Maintenance Fees Account pursuant to Section 3.6 of the Deposit and Disbursement Agreement. Amounts shall be deposited in the Operating and Maintenance Fees Account on Semi-Annual Payment Dates after application of all revenues and other proceeds of Navy II BLM to the payment of all costs in the nature of those specified in subsections (i) through (v) of Section 3.1(c) of the Depositary Agreement during such period (including the funding of reserves pursuant to the Depositary Agreement as in effect immediately prior to the time that the Senior Claimants became owners of the Navy II BLM Project), with provision for a return of and on the investment of the Senior Claimants, whether such investment is in the form of equity or debt (and whether or not the Senior Claimants have foreclosed on their liens by way of a partial or full credit bid or otherwise), which payments shall not be greater than the periodic payments which would have been payable under the priorities specified in subsections (ii) through (v) of Section 3.1(c) of the Depositary Agreement as in effect immediately prior to such foreclosure, as reasonably determined by the Senior Claimants. For purposes of calculating such payment (i) any Senior Subordinated Notes not then paid in full, together with all interest and premium, if any, thereon, will be deemed to be outstanding ("Deemed Notes") (i) such Deemed Notes will be deemed not to have been repaid ------------ repaid upon foreclosure, and (iii) such Deemed Notes will be deemed amortized in accordance with the scheduled amortization of the Senior Subordinated Notes under the Indenture. Upon such foreclosure by the Senior Claimants, the Plant O&M Agreement shall be deemed to be amended to reflect such arrangement. 2.6.2 2.6.2. If the Senior Claimants sell the Navy II BLM Project to a third party ("New Owner"), the New Owner shall apply to the outstanding balance, --------- if --------- any, of the Subordinated O&M Fees on (or promptly after) each Semi-Annual Payment Date all revenues and other proceeds of Navy II BLM received in excess of amounts applied during the preceding six-month period to (a) the payment of all costs for the operation and maintenance of the Navy II BLM Project in the nature of those costs defined as "Operating and Maintenance Costs" and "Capital Expenditures" under the Depositary Agreement, (b) the periodic payment of fees, interest and principal as required by the lenders to the New Owner, which payments shall not be materially greater on an annual basis than such amounts payable by Navy II BLM to the Senior Claimants pursuant to the Senior Secured Notes outstanding immediately prior to foreclosure by the Senior Claimants, as reasonably determined by the lenders to the New Owner; provided that greater -------- payments shall be permitted so long as the payment of such excess amounts is subordinated to the Subordinated O&M Fees, and (c) the funding of reserves not materially in excess of the amounts which would have been available for the benefit of the Senior Claimants under the Depositary Agreement as in effect immediately prior to such foreclosure. The lenders to such New Owner shall be deemed to be Senior Claimants hereunder, and the payments specified in clause (b) and (c) of this Section 2.6.2 shall be deemed to be Senior Claims under this Agreement. Junior Claimant agrees that it will execute and deliver to New Owner's lenders such new subordination agreement, such amendments to each of the Plant O&M Agreement, and such other instruments, in each case consistent with the terms of this Agreement, and Junior Claimant shall take such further action, as the lenders to the New Owner reasonably request in furtherance of this Section 2.6.2.

Appears in 1 contract

Samples: Operating Fee Subordination Agreement (Coso Power Developers)

Certain Subordination Terms. Until all Senior Claims shall have --------------------------- been paid in full, notwithstanding anything in the Plant Field O&M Agreement to the contrary: 2.1 2.1. Junior Claimant acknowledges that, notwithstanding anything in the Plant Field O&M Agreement to the contrary, Navy II BLM may pay to Junior Claimant Subordinated O&M Fees due and payable to Junior Claimant, solely to the extent funds are available for such payment from amounts transferred to the Operating and Maintenance Fees Account pursuant to subsection (vi) of Section 3.1(c) of the Deposit and Disbursement Agreement; provided that no Subordinated O&M Fees -------- exceeding, in the aggregate with (a) all Subordinated O&M Fees due and payable to Junior Claimant by Navy II BLM or any other Coso Partnership with which Junior Claimant has entered into an agreement to provide operating and maintenance services, (b) all Operating and Maintenance Fees (as defined in the Indenture), exclusive of any reimbursement of costs, payable to Coso FPL Energy Operating CompanyServices, Inc., a Delaware limited liability companyFlorida corporation, by Navy II BLM or any other Coso Partnership, and (c) all other operating and/or maintenance fees payable to any other present or future provider of operating and maintenance services to any Coso Partnership (other than any such fees constituting reimbursement of expenses), in each case within the twelve month period immediately preceding any date of payment, the Base O&M Fee Amount, may be paid unless (x) on the date of payment each of the conditions set forth under Section 3.8 of the Deposit and Disbursement Agreement are satisfied, and (y) the Trustee has received a certificate of a Responsible Officer of Navy II BLM certifying to that effect. Except as and to the extent expressly provided in this Section 2.1, Navy II BLM shall not, directly or indirectly, make any payment on or in respect of the Subordinated O&M Fees, and Navy II BLM shall not in any event transfer any collateral for any part of, the Subordinated O&M Fees. 2.2 2.2. Except for the right to demand and accept payments set forth in Section 2.1 hereof, Junior Claimant shall not demand, xxx for, or accept from Navy II BLM any such payment or collateral, nor take any other action to enforce or collect upon any such payment or to enforce its rights, in either case in respect of the Subordinated O&M Fees, nor set off against obligations owed to Navy II BLM under the Plant Field O&M Agreement or otherwise in respect of the Subordinated O&M Fees against any part of the Subordinated O&M Fees. Notwithstanding anything in the Plant Field O&M Agreement to the contrary, the failure by Navy II BLM to pay any Subordinated O&M Fees shall not under any circumstances, except when the funds are available therefor and payment is permitted under Section 2.1 hereof, constitute a breach or default under either of the Plant Field O&M Agreement. 2.3 2.3. Neither Navy II BLM nor Junior Claimant shall otherwise take any action prejudicial to or inconsistent with the Senior Claimants' priority position over Junior Claimant created by this Agreement. 2.4 2.4. Each negotiable instrument or promissory note, if any, evidencing Subordinated O&M Fees or a lien, if any, in respect thereof shall bear a legend (or otherwise include provisions satisfactory to Collateral Agent) providing that payment of the Subordinated O&M Fees thereunder and the priority of any such lien have been subordinated to prior payment of the Senior Claims and the liens in respect thereof in the manner and to the extent set forth in this Agreement. 2.5 2.5. Junior Claimant shall not commence or join with any other creditor or creditors of Navy II BLM in commencing any Proceeding against Navy IIBLM; provided -------- that Junior Claimant shall not be so restricted with respect to claims -------- arising directly out of Navy IIBLM's failure to perform its obligations or make any payments of amounts due to Junior Claimant under the Plant Field O&M Agreement other than the Subordinated O&M Fees. At any general meeting of creditors of Navy II BLM or in the event of any Proceeding, if all Senior Claims have not been paid in full at such time, Collateral Agent on behalf of the Senior Claimants is hereby irrevocably authorized at any such meeting or in any such Proceeding: 2.5.1 2.5.1. to enforce claims comprising the Subordinated O&M Fees in the name of Junior Claimant, by proof of debt, proof of claim, suit or otherwise; 2.5.2 2.5.2. to collect any assets of Navy II BLM distributed, divided or applied by way of dividend or payment as a result of a Proceeding, or such securities issued, on account of the Subordinated O&M Fees as a result thereof and apply the same, or the proceeds of any realization upon the same that the Senior Claimants in their discretion elect to effect, to Senior Claims until all Senior Claims shall have been paid in full (the Senior Claimants hereby agreeing to render any surplus as a court of competent jurisdiction may direct); 2.5.3 2.5.3. other than voting claims comprising the Subordinated O&M Fees, to take generally any action in connection with any such meeting or proceeding which Junior Claimant might otherwise take in respect of the Subordinated O&M Fees and claims relating thereto. After the commencement of any such Proceeding, Junior Claimant may inquire of Collateral Agent in writing whether Collateral Agent intends to exercise the foregoing rights with respect to the Subordinated O&M Fees. Should Collateral Agent fail, within a reasonable time after receipt of such inquiry, either to file a proof of claim with respect to the Subordinated O&M Fees and to furnish a copy thereof to Junior Claimant, or to inform Junior Claimant in writing that the Senior Claimants intend to exercise their rights to assert the Subordinated O&M Fees in the manner hereinabove provided, Junior Claimant may, but shall not be required to, proceed to file a proof of claim with respect to the Subordinated O&M Fees and take such further steps with respect thereto, not inconsistent with this Agreement, as Junior Claimant may deem proper. 2.6 2.6. If (a) the Senior Claimants foreclose on any or all of their liens on all or a substantial portion of the assets constituting the Navy II BLM Project (or succeed to such assets by way of a transfer in lieu of foreclosure), and (b) Collateral Agent or any designee thereof assumes the Plant Field O&M Agreement in accordance with the terms of that Consent to Collateral Assignment dated as of May 28, 1999 among Junior Claimant, Collateral Agent and Navy II BLM (the "Collateral ---------- Assignment") (or enter into a new agreement pursuant to Section 1(d) --------------------- of the ---------- Collateral Assignment), then notwithstanding anything in the Plant Field O&M Agreement to the contrary, (i) Navy II BLM (or any successor or assign) shall not be obligated to pay the Subordinated O&M Fees, if any, then due, except as set forth in Section 2.6.1 or 2.6.2, as applicable, (ii) the Plant Field O&M Agreement shall remain in full force and effect notwithstanding any such foreclosure (but subject to the terms and conditions thereof), and (iii) the following shall apply: 2.6.1 2.6.1. If the Senior Claimants (including, for purposes of this Section 2.6.1, their Affiliates) or any of them become the owners of the Navy II BLM Project, the Senior Claimants shall apply to the outstanding balance, if any, of the Subordinated O&M Fees on (or promptly after) the last day of each June and December (each such date, a "Semi-Annual Payment Date") all amounts ------------------------ then on ------------------------ deposit or deposited in the Operating and Maintenance Fees Account pursuant to Section 3.6 of the Deposit and Disbursement Agreement. Amounts shall be deposited in the Operating and Maintenance Fees Account on Semi-Annual Payment Dates after application of all revenues and other proceeds of Navy II BLM to the payment of all costs in the nature of those specified in subsections (i) through (v) of Section 3.1(c) of the Depositary Agreement during such period (including the funding of reserves pursuant to the Depositary Agreement as in effect immediately prior to the time that the Senior Claimants became owners of the Navy II BLM Project), with provision for a return of and on the investment of the Senior Claimants, whether such investment is in the form of equity or debt (and whether or not the Senior Claimants have foreclosed on their liens by way of a partial or full credit bid or otherwise), which payments shall not be greater than the periodic payments which would have been payable under the priorities specified in subsections (ii) through (v) of Section 3.1(c) of the Depositary Agreement as in effect immediately prior to such foreclosure, as reasonably determined by the Senior Claimants. For purposes of calculating such payment (i) any Senior Subordinated Notes not then paid in full, together with all interest and premium, if any, thereon, will be deemed to be outstanding ("Deemed Notes") ------------ (i) such Deemed Notes will be deemed not to have been ------------ repaid upon foreclosure, and (iii) such Deemed Notes will be deemed amortized in accordance with the scheduled amortization of the Senior Subordinated Notes under the Indenture. Upon such foreclosure by the Senior Claimants, the Plant Field O&M Agreement shall be deemed to be amended to reflect such arrangement. 2.6.2 2.6.2. If the Senior Claimants sell the Navy II BLM Project to a third party ("New Owner"), the New Owner shall apply to the outstanding balance, if --------- any, of --------- the Subordinated O&M Fees on (or promptly after) each Semi-Annual Payment Date all revenues and other proceeds of Navy II BLM received in excess of amounts applied during the preceding six-month period to (a) the payment of all costs for the operation and maintenance of the Navy II BLM Project in the nature of those costs defined as "Operating and Maintenance Costs" and "Capital Expenditures" under the Depositary Agreement, (b) the periodic payment of fees, interest and principal as required by the lenders to the New Owner, which payments shall not be materially greater on an annual basis than such amounts payable by Navy II BLM to the Senior Claimants pursuant to the Senior Secured Notes outstanding immediately prior to foreclosure by the Senior Claimants, as reasonably determined by the lenders to the New Owner; provided that greater -------- payments shall be permitted so -------- long as the payment of such excess amounts is subordinated to the Subordinated O&M Fees, and (c) the funding of reserves not materially in excess of the amounts which would have been available for the benefit of the Senior Claimants under the Depositary Agreement as in effect immediately prior to such foreclosure. The lenders to such New Owner shall be deemed to be Senior Claimants hereunder, and the payments specified in clause (b) and (c) of this Section 2.6.2 shall be deemed to be Senior Claims under this Agreement. Junior Claimant agrees that it will execute and deliver to New Owner's lenders such new subordination agreement, such amendments to each of the Plant Field O&M Agreement, and such other instruments, in each case consistent with the terms of this Agreement, and Junior Claimant shall take such further action, as the lenders to the New Owner reasonably request in furtherance of this Section 2.6.2.

Appears in 1 contract

Samples: Operating Fee Subordination Agreement (Coso Power Developers)

Certain Subordination Terms. Until all Senior Claims shall have --------------------------- been paid in full, notwithstanding anything in the Plant Field O&M Agreement to the contrary: 2.1 2.1. Junior Claimant acknowledges that, notwithstanding anything in the Plant Field O&M Agreement to the contrary, Navy II I may pay to Junior Claimant Subordinated O&M Fees due and payable to Junior Claimant, solely to the extent funds are available for such payment from amounts transferred to the Operating and Maintenance Fees Account pursuant to subsection (vi) of Section 3.1(c) of the Deposit and Disbursement Agreement; provided that no Subordinated O&M Fees -------- exceeding, in the aggregate with (a) all Subordinated O&M Fees due and payable to Junior Claimant by Navy II I or any other Coso Partnership with which Junior Claimant has entered into an agreement to provide operating and maintenance services, (b) all Operating and Maintenance Fees (as defined in the Indenture), exclusive of any reimbursement of costs, payable to Coso FPL Energy Operating CompanyServices, Inc., a Delaware limited liability companyFlorida corporation, by Navy II I or any other Coso Partnership, and (c) all other operating and/or maintenance fees payable to any other present or future provider of operating and maintenance services to any Coso Partnership (other than any such fees constituting reimbursement of expenses), in each case within the twelve month period immediately preceding any date of payment, the Base O&M Fee Amount, may be paid unless (x) on the date of payment each of the conditions set forth under Section 3.8 of the Deposit and Disbursement Agreement are satisfied, and (y) the Trustee has received a certificate of a Responsible Officer of Navy II I certifying to that effect. Except as and to the extent expressly provided in this Section 2.1, Navy II I shall not, directly or indirectly, make any payment on or in respect of the Subordinated O&M Fees, and Navy II I shall not in any event transfer any collateral for any part of, the Subordinated O&M Fees. 2.2 2.2. Except for the right to demand and accept payments set forth in Section 2.1 hereof, Junior Claimant shall not demand, xxx for, or accept from Navy II I any such payment or collateral, nor take any other action to enforce or collect upon any such payment or to enforce its rights, in either case in respect of the Subordinated O&M Fees, nor set off against obligations owed to Navy II I under the Plant Field O&M Agreement or otherwise in respect of the Subordinated O&M Fees against any part of the Subordinated O&M Fees. Notwithstanding anything in the Plant Field O&M Agreement to the contrary, the failure by Navy II I to pay any Subordinated O&M Fees shall not under any circumstances, except when the funds are available therefor and payment is permitted under Section 2.1 hereof, constitute a breach or default under either of the Plant Field O&M Agreement. 2.3 2.3. Neither Navy II I nor Junior Claimant shall otherwise take any action prejudicial to or inconsistent with the Senior Claimants' priority position over Junior Claimant created by this Agreement. 2.4 2.4. Each negotiable instrument or promissory note, if any, evidencing Subordinated O&M Fees or a lien, if any, in respect thereof shall bear a legend (or otherwise include provisions satisfactory to Collateral Agent) providing that payment of the Subordinated O&M Fees thereunder and the priority of any such lien have been subordinated to prior payment of the Senior Claims and the liens in respect thereof in the manner and to the extent set forth in this Agreement. 2.5 2.5. Junior Claimant shall not commence or join with any other creditor or creditors of Navy II I in commencing any Proceeding against Navy III; provided that Junior Claimant shall not be so restricted with respect to claims -------- arising directly out of Navy III's failure to perform its obligations or make any payments of amounts due to Junior Claimant under the Plant Field O&M Agreement other than the Subordinated O&M Fees. At any general meeting of creditors of Navy II I or in the event of any Proceeding, if all Senior Claims have not been paid in full at such time, Collateral Agent on behalf of the Senior Claimants is hereby irrevocably authorized at any such meeting or in any such Proceeding: 2.5.1 2.5.1. to enforce claims comprising the Subordinated O&M Fees in the name of Junior Claimant, by proof of debt, proof of claim, suit or otherwise; 2.5.2 2.5.2. to collect any assets of Navy II I distributed, divided or applied by way of dividend or payment as a result of a Proceeding, or such securities issued, on account of the Subordinated O&M Fees as a result thereof and apply the same, or the proceeds of any realization upon the same that the Senior Claimants in their discretion elect to effect, to Senior Claims until all Senior Claims shall have been paid in full (the Senior Claimants hereby agreeing to render any surplus as a court of competent jurisdiction may direct); 2.5.3 2.5.3. other than voting claims comprising the Subordinated O&M Fees, to take generally any action in connection with any such meeting or proceeding which Junior Claimant might otherwise take in respect of the Subordinated O&M Fees and claims relating thereto. After the commencement of any such Proceeding, Junior Claimant may inquire of Collateral Agent in writing whether Collateral Agent intends to exercise the foregoing rights with respect to the Subordinated O&M Fees. Should Collateral Agent fail, within a reasonable time after receipt of such inquiry, either to file a proof of claim with respect to the Subordinated O&M Fees and to furnish a copy thereof to Junior Claimant, or to inform Junior Claimant in writing that the Senior Claimants intend to exercise their rights to assert the Subordinated O&M Fees in the manner hereinabove provided, Junior Claimant may, but shall not be required to, proceed to file a proof of claim with respect to the Subordinated O&M Fees and take such further steps with respect thereto, not inconsistent with this Agreement, as Junior Claimant may deem proper. 2.6 2.6. If (a) the Senior Claimants foreclose on any or all of their liens on all or a substantial portion of the assets constituting the Navy II I Project (or succeed to such assets by way of a transfer in lieu of foreclosure), and (b) Collateral Agent or any designee thereof assumes the Plant Field O&M Agreement in accordance with the terms of that Consent to Collateral Assignment dated as of May 28, 1999 among Junior Claimant, Collateral Agent and Navy II I (the "Collateral Assignment") (or enter into a new agreement pursuant to --------------------- Section 1(d) --------------------- of the Collateral Assignment), then notwithstanding anything in the Plant Field O&M Agreement to the contrary, (i) Navy II I (or any successor or assign) shall not be obligated to pay the Subordinated O&M Fees, if any, then due, except as set forth in Section 2.6.1 or 2.6.2, as applicable, (ii) the Plant Field O&M Agreement shall remain in full force and effect notwithstanding any such foreclosure (but subject to the terms and conditions thereof), and (iii) the following shall apply: 2.6.1 2.6.1. If the Senior Claimants (including, for purposes of this Section 2.6.1, their Affiliates) or any of them become the owners of the Navy II I Project, the Senior Claimants shall apply to the outstanding balance, if any, of the Subordinated O&M Fees on (or promptly after) the last day of each June and December (each such date, a "Semi-Annual Payment Date") all amounts ------------------------ then on deposit or deposited in the Operating and Maintenance Fees Account pursuant to Section 3.6 of the Deposit and Disbursement Agreement. Amounts shall be deposited in the Operating and Maintenance Fees Account on Semi-Annual Payment Dates after application of all revenues and other proceeds of Navy II I to the payment of all costs in the nature of those specified in subsections (i) through (v) of Section 3.1(c) of the Depositary Agreement during such period (including the funding of reserves pursuant to the Depositary Agreement as in effect immediately prior to the time that the Senior Claimants became owners of the Navy II I Project), with provision for a return of and on the investment of the Senior Claimants, whether such investment is in the form of equity or debt (and whether or not the Senior Claimants have foreclosed on their liens by way of a partial or full credit bid or otherwise), which payments shall not be greater than the periodic payments which would have been payable under the priorities specified in subsections (ii) through (v) of Section 3.1(c) of the Depositary Agreement as in effect immediately prior to such foreclosure, as reasonably determined by the Senior Claimants. For purposes of calculating such payment (i) any Senior Subordinated Notes not then paid in full, together with all interest and premium, if any, thereon, will be deemed to be outstanding ("Deemed Notes") (i) such Deemed Notes will be deemed not to have been repaid ------------ repaid upon foreclosure, and (iii) such Deemed Notes will be deemed amortized in accordance with the scheduled amortization of the Senior Subordinated Notes under the Indenture. Upon such foreclosure by the Senior Claimants, the Plant Field O&M Agreement shall be deemed to be amended to reflect such arrangement. 2.6.2 2.6.2. If the Senior Claimants sell the Navy II I Project to a third party ("New Owner"), the New Owner shall apply to the outstanding balance, --------- if --------- any, of the Subordinated O&M Fees on (or promptly after) each Semi-Annual Payment Date all revenues and other proceeds of Navy II I received in excess of amounts applied during the preceding six-month period to (a) the payment of all costs for the operation and maintenance of the Navy II I Project in the nature of those costs defined as "Operating and Maintenance Costs" and "Capital Expenditures" under the Depositary Agreement, (b) the periodic payment of fees, interest and principal as required by the lenders to the New Owner, which payments shall not be materially greater on an annual basis than such amounts payable by Navy II I to the Senior Claimants pursuant to the Senior Secured Notes outstanding immediately prior to foreclosure by the Senior Claimants, as reasonably determined by the lenders to the New Owner; provided that greater -------- payments shall be permitted so long as the payment of such excess amounts is subordinated to the Subordinated O&M Fees, and (c) the funding of reserves not materially in excess of the amounts which would have been available for the benefit of the Senior Claimants under the Depositary Agreement as in effect immediately prior to such foreclosure. The lenders to such New Owner shall be deemed to be Senior Claimants hereunder, and the payments specified in clause (b) and (c) of this Section 2.6.2 shall be deemed to be Senior Claims under this Agreement. Junior Claimant agrees that it will execute and deliver to New Owner's lenders such new subordination agreement, such amendments to each of the Plant Field O&M Agreement, and such other instruments, in each case consistent with the terms of this Agreement, and Junior Claimant shall take such further action, as the lenders to the New Owner reasonably request in furtherance of this Section 2.6.2.

Appears in 1 contract

Samples: Operating Fee Subordination Agreement (Coso Power Developers)

Certain Subordination Terms. Until all Senior Claims shall have --------------------------- been paid in full, notwithstanding anything in the Plant O&M Agreement to the contrary: 2.1 2.1. Junior Claimant acknowledges that, notwithstanding anything in the Plant O&M Agreement to the contrary, Navy II I may pay to Junior Claimant Subordinated O&M Fees due and payable to Junior Claimant, solely to the extent funds are available for such payment from amounts transferred to the Operating and Maintenance Fees Account pursuant to subsection (vi) of Section 3.1(c) of the Deposit and Disbursement Agreement; provided that no Subordinated -------- O&M Fees -------- exceeding, in the aggregate with (a) all Subordinated O&M Fees due and payable to Junior Claimant by Navy II I or any other Coso Partnership with which Junior Claimant has entered into an agreement to provide operating and maintenance services, (b) all Operating and Maintenance Fees (as defined in the Indenture), exclusive of any reimbursement of costs, payable to Coso Operating Company, a Delaware limited liability company, by Navy II I or any other Coso Partnership, and (c) all other operating and/or maintenance fees payable to any other present or future provider of operating and maintenance services to any Coso Partnership (other than any such fees constituting reimbursement of expenses), in each case within the twelve month period immediately preceding any date of payment, the Base O&M Fee Amount, may be paid unless (x) on the date of payment each of the conditions set forth under Section 3.8 of the Deposit and Disbursement Agreement are satisfied, and (y) the Trustee has received a certificate of a Responsible Officer of Navy II I certifying to that effect. Except as and to the extent expressly provided in this Section 2.1, Navy II I shall not, directly or indirectly, make any payment on or in respect of the Subordinated O&M Fees, and Navy II I shall not in any event transfer any collateral for any part of, the Subordinated O&M Fees. 2.2 2.2. Except for the right to demand and accept payments set forth in Section 2.1 hereof, Junior Claimant shall not demand, xxx for, or accept from Navy II I any such payment or collateral, nor take any other action to enforce or collect upon any such payment or to enforce its rights, in either case in respect of the Subordinated O&M Fees, nor set off against obligations owed to Navy II I under the Plant O&M Agreement or otherwise against any part of the Subordinated O&M Fees. Notwithstanding anything in the Plant O&M Agreement to the contrary, the failure by Navy II I to pay any Subordinated O&M Fees shall not under any circumstances, except when the funds are available therefor and payment is permitted under Section 2.1 hereof, constitute a breach or default under either of the Plant O&M Agreement. 2.3 2.3. Neither Navy II I nor Junior Claimant shall otherwise take any action prejudicial to or inconsistent with the Senior Claimants' priority position over Junior Claimant created by this Agreement. 2.4 2.4. Each negotiable instrument or promissory note, if any, evidencing Subordinated O&M Fees or a lien, if any, in respect thereof shall bear a legend (or otherwise include provisions satisfactory to Collateral Agent) providing that payment of the Subordinated O&M Fees thereunder and the priority of any such lien have been subordinated to prior payment of the Senior Claims and the liens in respect thereof in the manner and to the extent set forth in this Agreement. 2.5 2.5. Junior Claimant shall not commence or join with any other creditor or creditors of Navy II I in commencing any Proceeding against Navy III; provided that Junior Claimant shall not be so restricted with respect to claims -------- arising directly out of Navy III's failure to perform its obligations or make any payments of amounts due to Junior Claimant under the Plant O&M Agreement other than the Subordinated O&M Fees. At any general meeting of creditors of Navy II I or in the event of any Proceeding, if all Senior Claims have not been paid in full at such time, Collateral Agent on behalf of the Senior Claimants is hereby irrevocably authorized at any such meeting or in any such Proceeding: 2.5.1 2.5.1. to enforce claims comprising the Subordinated O&M Fees in the name of Junior Claimant, by proof of debt, proof of claim, suit or otherwise; 2.5.2 2.5.2. to collect any assets of Navy II I distributed, divided or applied by way of dividend or payment as a result of a Proceeding, or such securities issued, on account of the Subordinated O&M Fees as a result thereof and apply the same, or the proceeds of any realization upon the same that the Senior Claimants in their discretion elect to effect, to Senior Claims until all Senior Claims shall have been paid in full (the Senior Claimants hereby agreeing to render any surplus as a court of competent jurisdiction may direct); 2.5.3 2.5.3. other than voting claims comprising the Subordinated O&M Fees, to take generally any action in connection with any such meeting or proceeding which Junior Claimant might otherwise take in respect of the Subordinated O&M Fees and claims relating thereto. After the commencement of any such Proceeding, Junior Claimant may inquire of Collateral Agent in writing whether Collateral Agent intends to exercise the foregoing rights with respect to the Subordinated O&M Fees. Should Collateral Agent fail, within a reasonable time after receipt of such inquiry, either to file a proof of claim with respect to the Subordinated O&M Fees and to furnish a copy thereof to Junior Claimant, or to inform Junior Claimant in writing that the Senior Claimants intend to exercise their rights to assert the Subordinated O&M Fees in the manner hereinabove provided, Junior Claimant may, but shall not be required to, proceed to file a proof of claim with respect to the Subordinated O&M Fees and take such further steps with respect thereto, not inconsistent with this Agreement, as Junior Claimant may deem proper. 2.6 2.6. If (a) the Senior Claimants foreclose on any or all of their liens on all or a substantial portion of the assets constituting the Navy II I Project (or succeed to such assets by way of a transfer in lieu of foreclosure), and (b) Collateral Agent or any designee thereof assumes the Plant O&M Agreement in accordance with the terms of that Consent to Collateral Assignment dated as of May 28, 1999 among Junior Claimant, Collateral Agent and Navy II I (the "Collateral Assignment") (or enter into a new agreement pursuant to --------------------- Section 1(d) --------------------- of the Collateral Assignment), then notwithstanding anything in the Plant O&M Agreement to the contrary, (i) Navy II I (or any successor or assign) shall not be obligated to pay the Subordinated O&M Fees, if any, then due, except as set forth in Section 2.6.1 or 2.6.2, as applicable, (ii) the Plant O&M Agreement shall remain in full force and effect notwithstanding any such foreclosure (but subject to the terms and conditions thereof), and (iii) the following shall apply: 2.6.1 2.6.1. If the Senior Claimants (including, for purposes of this Section 2.6.1, their Affiliates) or any of them become the owners of the Navy II I Project, the Senior Claimants shall apply to the outstanding balance, if any, of the Subordinated O&M Fees on (or promptly after) the last day of each June and December (each such date, a "Semi-Annual Payment ------------------- Date") all amounts ------------------------ then on deposit or deposited in the Operating and Maintenance ---- Fees Account pursuant to Section 3.6 of the Deposit and Disbursement Agreement. Amounts shall be deposited in the Operating and Maintenance Fees Account on Semi-Annual Payment Dates after application of all revenues and other proceeds of Navy II I to the payment of all costs in the nature of those specified in subsections (i) through (v) of Section 3.1(c) of the Depositary Agreement during such period (including the funding of reserves pursuant to the Depositary Agreement as in effect immediately prior to the time that the Senior Claimants became owners of the Navy II I Project), with provision for a return of and on the investment of the Senior Claimants, whether such investment is in the form of equity or debt (and whether or not the Senior Claimants have foreclosed on their liens by way of a partial or full credit bid or otherwise), which payments shall not be greater than the periodic payments which would have been payable under the priorities specified in subsections (ii) through (v) of Section 3.1(c) of the Depositary Agreement as in effect immediately prior to such foreclosure, as reasonably determined by the Senior Claimants. For purposes of calculating such payment (i) any Senior Subordinated Notes not then paid in full, together with all interest and premium, if any, thereon, will be deemed to be outstanding ("Deemed Notes") (i) such Deemed Notes will be deemed not to have been repaid ------------ repaid upon foreclosure, and (iii) such Deemed Notes will be deemed amortized in accordance with the scheduled amortization of the Senior Subordinated Notes under the Indenture. Upon such foreclosure by the Senior Claimants, the Plant O&M Agreement shall be deemed to be amended to reflect such arrangement. 2.6.2 2.6.2. If the Senior Claimants sell the Navy II I Project to a third party ("New Owner"), the New Owner shall apply to the outstanding --------- balance, if --------- any, of the Subordinated O&M Fees on (or promptly after) each Semi-Semi- Annual Payment Date all revenues and other proceeds of Navy II I received in excess of amounts applied during the preceding six-month period to (a) the payment of all costs for the operation and maintenance of the Navy II I Project in the nature of those costs defined as "Operating and Maintenance Costs" and "Capital Expenditures" under the Depositary Agreement, (b) the periodic payment of fees, interest and principal as required by the lenders to the New Owner, which payments shall not be materially greater on an annual basis than such amounts payable by Navy II I to the Senior Claimants pursuant to the Senior Secured Notes outstanding immediately prior to foreclosure by the Senior Claimants, as reasonably determined by the lenders to the New Owner; provided that greater -------- payments shall be permitted so long as the payment of such excess amounts is subordinated to the Subordinated O&M Fees, and (c) the funding of reserves not materially in excess of the amounts which would have been available for the benefit of the Senior Claimants under the Depositary Agreement as in effect immediately prior to such foreclosure. The lenders to such New Owner shall be deemed to be Senior Claimants hereunder, and the payments specified in clause (b) and (c) of this Section 2.6.2 shall be deemed to be Senior Claims under this Agreement. Junior Claimant agrees that it will execute and deliver to New Owner's lenders such new subordination agreement, such amendments to each of the Plant O&M Agreement, and such other instruments, in each case consistent with the terms of this Agreement, and Junior Claimant shall take such further action, as the lenders to the New Owner reasonably request in furtherance of this Section 2.6.2.

Appears in 1 contract

Samples: Operating Fee Subordination Agreement (Coso Power Developers)

Certain Subordination Terms. Until all Senior Claims shall have --------------------------- been paid in full, notwithstanding anything in the Plant O&M Agreement to the contrary: 2.1 2.1. Junior Claimant acknowledges that, notwithstanding anything in the Plant O&M Agreement to the contrary, Navy II may pay to Junior Claimant Subordinated O&M Fees due and payable to Junior Claimant, solely to the extent funds are available for such payment from amounts transferred to the Operating and Maintenance Fees Account pursuant to subsection (vi) of Section 3.1(c) of the Deposit and Disbursement Agreement; provided that no Subordinated O&M Fees -------- exceeding, in the aggregate with (a) all Subordinated O&M Fees due and payable to Junior Claimant by Navy II or any other Coso Partnership with which Junior Claimant has entered into an agreement to provide operating and maintenance services, (b) all Operating and Maintenance Fees (as defined in the Indenture), exclusive of any reimbursement of costs, payable to Coso Operating Company, a Delaware limited liability company, by Navy II or any other Coso Partnership, and (c) all other operating and/or maintenance fees payable to any other present or future provider of operating and maintenance services to any Coso Partnership (other than any such fees constituting reimbursement of expenses), in each case within the twelve month period immediately preceding any date of payment, the Base O&M Fee Amount, may be paid unless (x) on the date of payment each of the conditions set forth under Section 3.8 of the Deposit and Disbursement Agreement are satisfied, and (y) the Trustee has received a certificate of a Responsible Officer of Navy II certifying to that effect. Except as and to the extent expressly provided in this Section 2.1, Navy II shall not, directly or indirectly, make any payment on or in respect of the Subordinated O&M Fees, and Navy II shall not in any event transfer any collateral for any part of, the Subordinated O&M Fees. 2.2 2.2. Except for the right to demand and accept payments set forth in Section 2.1 hereof, Junior Claimant shall not demand, xxx for, or accept from Navy II any such payment or collateral, nor take any other action to enforce or collect upon any such payment or to enforce its rights, in either case in respect of the Subordinated O&M Fees, nor set off against obligations owed to Navy II under the Plant O&M Agreement or otherwise against any part of the Subordinated O&M Fees. Notwithstanding anything in the Plant O&M Agreement to the contrary, the failure by Navy II to pay any Subordinated O&M Fees shall not under any circumstances, except when the funds are available therefor and payment is permitted under Section 2.1 hereof, constitute a breach or default under either of the Plant O&M Agreement. 2.3 2.3. Neither Navy II nor Junior Claimant shall otherwise take any action prejudicial to or inconsistent with the Senior Claimants' priority position over Junior Claimant created by this Agreement. 2.4 2.4. Each negotiable instrument or promissory note, if any, evidencing Subordinated O&M Fees or a lien, if any, in respect thereof shall bear a legend (or otherwise include provisions satisfactory to Collateral Agent) providing that payment of the Subordinated O&M Fees thereunder and the priority of any such lien have been subordinated to prior payment of the Senior Claims and the liens in respect thereof in the manner and to the extent set forth in this Agreement. 2.5 2.5. Junior Claimant shall not commence or join with any other creditor or creditors of Navy II in commencing any Proceeding against Navy II; provided that Junior Claimant shall not be so restricted with respect to claims -------- arising directly out of Navy II's failure to perform its obligations or make any payments of amounts due to Junior Claimant under the Plant O&M Agreement other than the Subordinated O&M Fees. At any general meeting of creditors of Navy II or in the event of any Proceeding, if all Senior Claims have not been paid in full at such time, Collateral Agent on behalf of the Senior Claimants is hereby irrevocably authorized at any such meeting or in any such Proceeding: 2.5.1 2.5.1. to enforce claims comprising the Subordinated O&M Fees in the name of Junior Claimant, by proof of debt, proof of claim, suit or otherwise; 2.5.2 2.5.2. to collect any assets of Navy II distributed, divided or applied by way of dividend or payment as a result of a Proceeding, or such securities issued, on account of the Subordinated O&M Fees as a result thereof and apply the same, or the proceeds of any realization upon the same that the Senior Claimants in their discretion elect to effect, to Senior Claims until all Senior Claims shall have been paid in full (the Senior Claimants hereby agreeing to render any surplus as a court of competent jurisdiction may direct); 2.5.3 2.5.3. other than voting claims comprising the Subordinated O&M Fees, to take generally any action in connection with any such meeting or proceeding which Junior Claimant might otherwise take in respect of the Subordinated O&M Fees and claims relating thereto. After the commencement of any such Proceeding, Junior Claimant may inquire of Collateral Agent in writing whether Collateral Agent intends to exercise the foregoing rights with respect to the Subordinated O&M Fees. Should Collateral Agent fail, within a reasonable time after receipt of such inquiry, either to file a proof of claim with respect to the Subordinated O&M Fees and to furnish a copy thereof to Junior Claimant, or to inform Junior Claimant in writing that the Senior Claimants intend to exercise their rights to assert the Subordinated O&M Fees in the manner hereinabove provided, Junior Claimant may, but shall not be required to, proceed to file a proof of claim with respect to the Subordinated O&M Fees and take such further steps with respect thereto, not inconsistent with this Agreement, as Junior Claimant may deem proper. 2.6 2.6. If (a) the Senior Claimants foreclose on any or all of their liens on all or a substantial portion of the assets constituting the Navy II Project (or succeed to such assets by way of a transfer in lieu of foreclosure), and (b) Collateral Agent or any designee thereof assumes the Plant O&M Agreement in accordance with the terms of that Consent to Collateral Assignment dated as of May 28, 1999 among Junior Claimant, Collateral Agent and Navy II (the "Collateral Assignment") (or enter into a new agreement pursuant to --------------------- Section 1(d) --------------------- of the Collateral Assignment), then notwithstanding anything in the Plant O&M Agreement to the contrary, (i) Navy II (or any successor or assign) shall not be obligated to pay the Subordinated O&M Fees, if any, then due, except as set forth in Section 2.6.1 or 2.6.2, as applicable, (ii) the Plant O&M Agreement shall remain in full force and effect notwithstanding any such foreclosure (but subject to the terms and conditions thereof), and (iii) the following shall apply: 2.6.1 2.6.1. If the Senior Claimants (including, for purposes of this Section 2.6.1, their Affiliates) or any of them become the owners of the Navy II Project, the Senior Claimants shall apply to the outstanding balance, if any, of the Subordinated O&M Fees on (or promptly after) the last day of each June and December (each such date, a "Semi-Annual Payment Date") all amounts ------------------------ then on deposit or deposited in the Operating and Maintenance Fees Account pursuant to Section 3.6 of the Deposit and Disbursement Agreement. Amounts shall be deposited in the Operating and Maintenance Fees Account on Semi-Annual Payment Dates after application of all revenues and other proceeds of Navy II to the payment of all costs in the nature of those specified in subsections (i) through (v) of Section 3.1(c) of the Depositary Agreement during such period (including the funding of reserves pursuant to the Depositary Agreement as in effect immediately prior to the time that the Senior Claimants became owners of the Navy II Project), with provision for a return of and on the investment of the Senior Claimants, whether such investment is in the form of equity or debt (and whether or not the Senior Claimants have foreclosed on their liens by way of a partial or full credit bid or otherwise), which payments shall not be greater than the periodic payments which would have been payable under the priorities specified in subsections (ii) through (v) of Section 3.1(c) of the Depositary Agreement as in effect immediately prior to such foreclosure, as reasonably determined by the Senior Claimants. For purposes of calculating such payment (i) any Senior Subordinated Notes not then paid in full, together with all interest and premium, if any, thereon, will be deemed to be outstanding ("Deemed Notes") (i) ------------ such Deemed Notes will be deemed not to have been ------------ repaid upon foreclosure, and (iii) such Deemed Notes will be deemed amortized in accordance with the scheduled amortization of the Senior Subordinated Notes under the Indenture. Upon such foreclosure by the Senior Claimants, the Plant O&M Agreement shall be deemed to be amended to reflect such arrangement. 2.6.2 2.6.2. If the Senior Claimants sell the Navy II Project to a third party ("New Owner"), the New Owner shall apply to the outstanding --------- balance, if --------- any, of the Subordinated O&M Fees on (or promptly after) each Semi-Semi- Annual Payment Date all revenues and other proceeds of Navy II received in excess of amounts applied during the preceding six-month period to (a) the payment of all costs for the operation and maintenance of the Navy II Project in the nature of those costs defined as "Operating and Maintenance Costs" and "Capital Expenditures" under the Depositary Agreement, (b) the periodic payment of fees, interest and principal as required by the lenders to the New Owner, which payments shall not be materially greater on an annual basis than such amounts payable by Navy II to the Senior Claimants pursuant to the Senior Secured Notes outstanding immediately prior to foreclosure by the Senior Claimants, as reasonably determined by the lenders to the New Owner; provided -------- that greater -------- payments shall be permitted so long as the payment of such excess amounts is subordinated to the Subordinated O&M Fees, and (c) the funding of reserves not materially in excess of the amounts which would have been available for the benefit of the Senior Claimants under the Depositary Agreement as in effect immediately prior to such foreclosure. The lenders to such New Owner shall be deemed to be Senior Claimants hereunder, and the payments specified in clause (b) and (c) of this Section 2.6.2 shall be deemed to be Senior Claims under this Agreement. Junior Claimant agrees that it will execute and deliver to New Owner's lenders such new subordination agreement, such amendments to each of the Plant O&M Agreement, and such other instruments, in each case consistent with the terms of this Agreement, and Junior Claimant shall take such further action, as the lenders to the New Owner reasonably request in furtherance of this Section 2.6.2.

Appears in 1 contract

Samples: Operating Fee Subordination Agreement (Coso Power Developers)