Exhibit 10.82
MANAGEMENT FEE SUBORDINATION AGREEMENT (NAVY II)
Dated as of May 28, 1999
between
NEW CTC COMPANY, LLC,
a Delaware limited liability company,
CAITHNESS NAVY II GROUP, LLC,
a Delaware limited liability company,
and
U.S. BANK TRUST NATIONAL ASSOCIATION,
as Collateral Agent
MANAGEMENT FEE SUBORDINATION AGREEMENT (NAVY II)
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This MANAGEMENT FEE SUBORDINATION AGREEMENT (this "Agreement") dated
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as of May 28, 1999, is entered into by and between NEW CTC COMPANY, LLC, a
Delaware limited liability company ("New CTC"), CAITHNESS NAVY II GROUP, LLC, a
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Delaware limited liability company ("CNG") (New CTC and CNG together the "Junior
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Claimant"), and U.S. BANK TRUST NATIONAL ASSOCIATION in its capacity as
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collateral agent ("Collateral Agent") for U.S. Bank Trust National Association
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as trustee ("Trustee") for the holders (the "Holders") of the senior secured
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notes (the "Senior Secured Notes") issued pursuant to that certain Indenture
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dated as of May 28, 1999 (the "Indenture"), among Trustee, Caithness Coso
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Funding Corp., a Delaware corporation (the "Issuer"), Coso Finance Partners, a
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California general partnership ("Navy I"), Coso Energy Developers, a California
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General partnership ("BLM"), Coso Power Developers, a California general
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partnership ("Navy II," and together with Navy I and BLM, the "Coso
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Partnerships") and all other Permitted Additional Senior Lenders.
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PREFACE
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A. Pursuant to a Guarantee dated as of the date of this Agreement
(the "Guarantee") the Coso Partnerships have guaranteed to the Trustee and the
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Holders of the Senior Secured Notes (the Trustee and the Holders being
collectively referred to herein as the "Senior Claimants") the payment and
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performance of Issuer's obligations under the Senior Secured Notes and the
Indenture.
B. The Issuer, the Coso Partnerships, the Collateral Agent and U.S.
Bank Trust National Association, in its capacity as Depositary (the
"Depositary"), have entered into that certain Deposit and Disbursement
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Agreement, dated as of May 28, 1999 (the "Depositary Agreement").
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C. Navy II has agreed to pay Junior Claimant or their
representative, pursuant to the Third Amended and Restated Partnership Agreement
of Navy II, dated as of May 28, 1999, from time to time as set forth by
resolution, document or instrument of Navy II (such resolution, document or
instrument, a "Management Fee Agreement"), certain management fees (the
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"Subordinated Management Fees").
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D. The Senior Claimants have agreed to enter into the Indenture and
to consummate the purchase of the Senior Secured Notes only if Junior Claimant
shall join in this Agreement and Junior Claimant shall subordinate, to the
extent and in the manner hereinafter set forth, all claims and rights in respect
of the Subordinated Management Fees to all Senior Claims (as defined below) to
the extent set forth in this Agreement.
AGREEMENT
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NOW THEREFORE, in consideration of the premises herein and other good
and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, Junior Claimant hereby agrees as follows:
1. Definitions. All capitalized terms used herein and not otherwise
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defined herein shall have their meanings given in the Indenture. As used in
this Agreement, the following terms shall have the following respective
meanings:
"Proceeding" means any (a) insolvency, bankruptcy, receivership,
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liquidation, reorganization, readjustment, composition or other similar
proceeding relating to Navy II, its property or its creditors as such, (b)
proceeding for any liquidation, dissolution or other winding-up of Navy II,
voluntary or involuntary, whether or not involving insolvency or bankruptcy
proceedings, (c) assignment of all or substantially all of the assets of Navy II
for the benefit of creditors of Navy II or (d) other marshaling of the assets of
Navy II.
"Senior Claims" means (a) the principal of, and premium, if any, and
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interest on the Senior Secured Notes issued pursuant to the Indenture
(including, without limitation, any interest accruing thereon at the legal rate
after the commencement of any Proceeding and any additional interest that would
have accrued thereon but for the commencement of such Proceeding); and (b) all
other Obligations of Navy II to any Senior Claimants, whether now existing or
hereafter incurred or created, under or with respect to the Indenture, the other
Financing Documents and any related documents.
2. Certain Subordination Terms. Until all Senior Claims shall have
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been paid in full, notwithstanding anything in a Management Agreement to the
contrary:
2.1. Junior Claimant acknowledges that, notwithstanding anything
in any Management Fee Agreement to the contrary, Navy II may pay to Junior
Claimant Subordinated Management Fee 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 (vii) of
Section 3.1(c) of the Deposit and Disbursement Agreement.
2.2. Except for the right to demand and accept payments set
forth in Section 2.1 hereof, Junior Claimant shall not demand, sue 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 Management Fees, nor set off against
obligations owed to Navy II under a Management Fee Agreement or otherwise
against any part of the Subordinated Management Fees. Notwithstanding anything
in a Management Fee Agreement to the contrary, the failure by Navy II to pay any
Subordinated Management 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 a Management Fee Agreement.
2.3. Neither Navy II nor Junior Claimant shall otherwise take
any action
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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 Management 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 Management 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 voluntarily permit
Navy II to commence or join with any other creditor or creditors of Navy II in
commencing any Proceeding against Navy II; provided that Junior Claimant shall
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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 a Management Fee Agreement other than the Subordinated Management
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
Management 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 Management 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 Management 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 Management 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 Management 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
Management 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 Management 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 Management Fees and take such
further steps with respect thereto, not inconsistent with this Agreement, as
Junior Claimant may deem proper.
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3. Deposit and Disbursement Agreement. Junior Claimant acknowledges
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that it has been provided with a copy of the Depositary Agreement and has read
and is familiar with the provisions of the Depositary Agreement, including
without limitation Section 3.1(c) thereof. Junior Claimant hereby consents to
the application of revenues and other proceeds (including proceeds of
investments) of Navy II in the order of priority set forth in the Depositary
Agreement, including without limitation Section 3.1(c) thereof, notwithstanding
anything in a Management Fee Agreement to the contrary.
4. Time of Filing. Notwithstanding the time of filing, attachment or
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recording of any document or other instrument, it is agreed by Junior Claimant
that any liens arising under or pursuant to the Financing Documents shall be
senior to any liens arising in favor of Junior Claimant as part of or relating
to the Subordinated Management Fees.
5. Wrongful Collections. Should any payment on account of, or any
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collateral for any part of, the Subordinated Management Fees be received by
Junior Claimant in violation of this Agreement, such payment or collateral shall
be delivered forthwith to Collateral Agent on behalf of the Senior Claimants by
the recipient for application to Senior Claims, in the form received.
Collateral Agent is irrevocably authorized to supply any required endorsement or
assignment which may have been omitted. Until so delivered, any such payment or
collateral shall be held by the recipient in trust for the Senior Claimants and
shall not be commingled with other funds or property of the recipient.
6. Ownership of Subordinated Management Fees.
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6.1. Junior Claimant represents and warrants that it is the
lawful owner of the right to receive the Subordinated Management Fees and no
part thereof has been assigned to or subordinated or subjected to any other
security interest in favor of anyone other than the Senior Claimants. Junior
Claimant shall not assign all or any portion of the Subordinated Management
Fees, its commitment under, or any of its rights or remedies under, a Management
Fee Agreement without the prior written consent of Collateral Agent, which may
be granted or withheld in its sole discretion, and in any event only upon the
execution and delivery to Collateral Agent of an agreement by any such assignee
to be bound by the terms of this Agreement (including provisions relating to
assignment), in form and substance the same as this Agreement, or otherwise as
may be reasonably satisfactory to Collateral Agent.
7. Waivers. Collateral Agent and the Senior Claimants are hereby
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authorized to demand specific performance of this Agreement, whether or not Navy
II shall have complied with the provisions hereof applicable to it, at any time
when Junior Claimant shall have failed to comply with any provision hereof
applicable to it. Junior Claimant hereby irrevocably waives any defense based
on the adequacy of a remedy at law which might be asserted as a bar to the
remedy of specific performance hereof in any action brought therefor by the
Senior Claimants. Junior Claimant further waives presentment, notice and
protest in connection with all negotiable instruments evidencing Senior Claims
or Subordinated Management Fees to which Junior Claimant may be a party, notice
of the acceptance of this Agreement by the Senior Claimants, notice of any loan
made, extension granted or other action taken in reliance hereon, and all
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demands and notices of every kind in connection with this Agreement, Senior
Claims or time of payment of Senior Claims or Subordinated Management Fees.
Junior Claimant hereby assents to any renewal, extension or postponement of the
time of payment of Senior Claims or any other indulgence with respect thereto,
to any increase in the amount of Senior Claims, to any substitution, exchange or
release of collateral therefor and to the addition or release of any person
primarily or secondarily liable thereon and assents to the provisions of any
instrument, security or other writing evidencing Senior Claims.
8. Subrogation; No Impairment of Navy II's Obligations. Subject to
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and from and after the indefeasible payment in full of all Senior Claims and the
irrevocable termination of Senior Claimants' commitments under the Financing
Documents, Junior Claimant shall be subrogated to the rights of the Senior
Claimants to receive payments or distributions of cash, property or securities
of Navy II applicable to the Senior Claims until all amounts owing on the
Subordinated Management Fees shall be paid in full, it being understood that the
provisions of this Agreement are and are intended solely for the purpose of
defining the relative rights of Junior Claimant and the Senior Claimants;
provided that such rights of subrogation shall be nonexclusive, and shall be
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shared with any other subordinated creditor of the Navy II which has entered
into an agreement with the Collateral Agent providing similar rights of
subrogation. Nothing contained in this Agreement is intended to or shall
impair, as between Navy II, its creditors other than the Senior Claimants and
Junior Claimant, the obligation of Navy II, which is absolute and unconditional,
to pay to Junior Claimant the principal of and the premium, if any, and the
interest on the Subordinated Management Fees as and when the same shall become
due and payable in accordance with the terms of this Agreement and a Management
Fee Agreement, or to affect the relative rights of Junior Claimant and creditors
of Navy II other than the Senior Claimants.
9. Reinstatement. The obligations of Junior Claimant under this
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Agreement shall continue to be effective, or be reinstated, as the case may be,
if at any time any payment in respect of any Senior Claim, or any other payment
to any holder of any Senior Claim in its capacity as such, is rescinded or must
otherwise be restored or returned by the holder of such Senior Claims upon the
occurrence of any Proceeding, or upon or as a result of the appointment of a
receiver, intervenor or conservator of, or trustee or similar officer for, Navy
II or any substantial part of its property, or otherwise, all as though such
payment had not been made.
10. Bankruptcy. This Agreement shall remain in full force and effect
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as between the Junior Claimant and Senior Claimant notwithstanding the
occurrence of any Proceeding affecting Navy II.
11. Further Assurances. Navy II and Junior Claimant shall execute and
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deliver to the Senior Claimants such further instruments and shall take such
further action as the Senior Claimants may at any time or times reasonably
request in order to carry out the provisions and intent of this Agreement.
12. Successors and Assigns. The rights granted to the Senior
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Claimants hereunder are solely for their protection and nothing herein contained
shall impose on the Senior Claimants any
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duties with respect to any property of Navy II or Junior Claimant received
hereunder. The Senior Claimants shall have no duty to preserve rights against
prior parties in any property of any kind received hereunder.
13. Counterparts. This Agreement may be executed in any number of
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counterparts, but all such counterparts shall together constitute but one
agreement. In making proof of this Agreement, it shall not be necessary to
produce or account for more than one counterpart signed by each of the parties
hereto.
13.1. Governing Law. This Agreement is intended to take effect
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as a sealed instrument, shall be binding upon the parties hereto and their
respective executors, administrators, other legal representatives, successors
and assigns, and shall inure to the benefit of the Senior Claimants, their
respective successors and assigns and shall be governed by the laws of the State
of New York without reference to principles of conflict of laws (other than
Section 5-1401 of the New York General Obligations Law). The parties hereto
intend and agree that this Agreement shall remain binding on such parties (other
than Navy II) notwithstanding the termination (except upon the payment in full
of Senior Claims) or unenforceability of this Agreement as against Navy II.
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IN WITNESS WHEREOF, the parties hereto have caused this Operating Fee
Subordination Agreement to be duly executed as of the date first above written.
NEW CTC COMPANY, LLC,
a Delaware limited liability company,
its Managing General Partner
By: /s/ Christopher T. McCallion
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Christopher T. McCallion
Executive Vice President
Caithness Navy II Group, LLC,
a Delaware limited liability company,
its General Partner
By: /s/ Christopher T. McCallion
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Christopher T. McCallion
Executive Vice President
U.S. BANK TRUST NATIONAL ASSOCIATION,
as Collateral Agent
By: /s/ Judy P. Manansala
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Name: Judy P. Manansala
Title: Trust Officer
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The undersigned acknowledges and agrees to the foregoing:
COSO POWER DEVELOPERS,
a California general partnership
By: NEW CTC COMPANY, LLC,
a Delaware limited liability company,
its Managing General Partner
By: /s/ Christopher T. McCallion
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Christopher T. McCallion
Executive Vice President
By: Caithness Navy II Group, LLC,
a Delaware limited liability company,
its General Partner
By: /s/ Christopher T. McCallion
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Christopher T. McCallion
Executive Vice President
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