COTENANCY AGREEMENT Exhibit 10.83
THIS COTENANCY AGREEMENT (this "Agreement"), dated as of May 28, 1999 (the
"Effective Date"), is made and entered into by and among COSO ENERGY DEVELOPERS,
a California general partnership ("CED"), COSO POWER DEVELOPERS, a California
general partnership ("CPD") and COSO FINANCE PARTNERS, a California general
partnership ("CFP"; CED, CPD and CFP are occasionally referred to herein
individually as a "Project Partnership" and collectively as the "Project
Partnerships").
Recitals
A. The Project Partnerships and Coso Land Company, a California general
partnership ("Assignor"), are parties to that certain Acquisition Agreement
dated as of May 28, 1999 (the "Acquisition Agreement"), pursuant to which
Assignor has agreed to assign, transfer and convey to each of the Project
Partnerships an undivided one-third interest as a tenant in common in and to
those certain Geothermal Resources Leases described in Exhibit "A" attached
hereto (collectively, the "Leases"), issued by the United States of America
acting through the Bureau of Land Management of the Department of the Interior
(the "BLM"), relating to geothermal rights in real property located in the
County of Inyo, State of California, which real property is also described in
Exhibit "A" attached hereto (collectively, the "Leasehold Premises").
B. To implement the assignment, transfer and conveyance of the Leases to
the Project Partnerships, Assignor and the Project Partnerships have executed
and delivered to the BLM Assignments of Record Title Interest in a Lease for Oil
and Gas or Geothermal Resources for each of the Leases, and, upon the BLM's
approval thereof, Assignor has agreed to execute, deliver and cause to be
recorded an Assignment and Assumption Agreement memorializing such assignment,
transfer and conveyance in the Official Records of Inyo County, California.
Such Assignment and Assumption Agreement, together with such Assignments of
Record Title Interest in a Lease for Oil and Gas or Geothermal Resources, are
collectively referred to herein as the "Lease Assignment".
C. MidAmerican Energy Holdings Company, successor-in-interest to
CalEnergy Company Inc. ("MidAmerican") was the original holder of those certain
Right of Way Grants described in Exhibit "B" attached hereto (together, the
"Right of Way Grants"), issued by the BLM, relating to certain rights in real
property located in the County of Inyo, State of California, which real property
is also described in Exhibit "B" attached hereto (together, the "Right of Way
Property"). MidAmerican has assigned an undivided one-third interest in the
Right of Way Grants to each of the Project Partnerships by (i) executing (along
with the Project Partnerships) and delivering to the BLM Applications for
Transportation and Utility Systems and Facilities on Federal Lands and
associated documentation, which Applications have been approved by the BLM, and
(ii) executing and delivering to the Project Partnerships an Assignment and
Assumption Agreement memorializing such assignment, which the Project
Partnerships will cause to be recorded in the Official Records of Inyo County,
California. Such Assignment and Assumption Agreement, together with such
Applications for Transportation and Utility Systems and Facilities on Federal
Lands (with associated documentation), are collectively referred to herein as
the "Right of Way Assignment".
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D. Pursuant to the Acquisition Agreement, upon the BLM's approval of the
above-described assignment of the Leases, CLC has agreed to assign, transfer and
convey, to each of the Project Partnerships, an undivided one-third interest in
those certain xxxxx, equipment and other property and assets described on
Exhibit "C" attached hereto, which are located on the Leasehold Premises (the
"CLC Pre-Existing Assets"). Further, MidAmerican has agreed to transfer to Coso
Operating Company LLC, a Delaware limited liability company ("Operator") that
certain building and other property and assets described on Exhibit "D" attached
hereto, which are located on the Right of Way Property (the "MidAmerican Pre-
Existing Assets"), and Operator has agreed to transfer an undivided one-third
interest in the MidAmerican Pre-Existing Assets to each of the Project
Partnerships (such transfers from MidAmerican and from Operator, collectively,
the "Operator Assignment"). The CLC Pre-Existing Assets and the MidAmerican
Pre-Existing Assets are collectively referred to herein as the "Pre-Existing
Assets". The documents and instruments by which the Pre-Existing Assets are
being or will be transferred to Operator and/or the Project Partnerships are
referred to herein as the "Asset Transfer Documents".
E. The Project Partnerships own the following geothermal electrical
generating projects (which include, without limitation, power generation
facilities, related geothermal steam fields, drilling pads, exploratory,
production and injection xxxxx, pipelines, separators and other equipment (each,
a "Project")), and intend to utilize the Leases, the Jointly-Owned Assets (as
that term is defined below) and the Right of Way Grants (collectively, the
"Cotenancy Assets") in connection with the Projects. More specifically:
(1) CED owns the Project commonly known as the "BLM Project" (which
consists of the "BLM East" and "BLM West" facilities), which is located on
land in the vicinity of the Leasehold Premises, which land is leased from
the BLM and is included in the Coso Known Geothermal Resource Area in the
China Lake area of California (the "KGRA").
(2) CPD owns the Project commonly known as the "Navy II Project",
which is located on land in the vicinity of the Leasehold Premises, which
land is utilized with the consent of the China Lake Naval Air Weapons
Station, acting on behalf of the Department of the Navy (the "Navy"), and
is included in the KGRA.
(3) CFP owns the Project commonly known as the "Navy I Project", which
is located on land in the vicinity of the Leasehold Premises, which land is
utilized with the consent of the China Lake Naval Air Weapons Station,
acting on behalf of the Navy, and is included in the KGRA.
F. The Projects are in part operated and managed by Operator, pursuant to
various contracts (the "O&M Agreements" ) with the Project Partnerships.
G. To govern their respective rights and obligations as tenants in common
in and with respect to the Cotenancy Assets and the Property (as that term is
defined below), the Project Partnerships are entering into this Agreement, which
shall be the Project Partnerships' expression of their intention to establish
and impose mutually beneficial limitations, restrictions, covenants and
conditions as equitable servitudes to provide for the proper and orderly
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ownership, operation and management of the Cotenancy Assets and of their
respective Interests (as that term is defined below) therein.
AGREEMENT
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NOW THEREFORE, in consideration of the foregoing and of the mutual
covenants and agreements contained herein, and for other good and valuable
consideration, the receipt of which is hereby acknowledged, the Project
Partnerships, and each of them, hereby agree as follows:
1. DECLARATION OF INTENTION. The Project Partnerships hereby declare that
their relationship in and to the Cotenancy Assets is and will be that of tenants
in common, expressly subject, however, to the terms, conditions, limitations and
requirements set forth in this Agreement. Nothing contained in this Agreement
shall be deemed to constitute the Project Partnerships as partners or joint
venturers. The Project Partnerships do not intend by this Agreement to create a
"subdivision" under any Law (as that term is defined below).
2. UNDIVIDED INTERESTS. Pursuant to the Lease Assignment, the Right of
Way Assignment, the Operator Assignment and the Asset Transfer Documents
(collectively, the "Conveyance Documents"), the Project Partnerships' fractional
undivided interests (each an "Interest") in the Right of Way Grants as of the
Effective Date, and in the Leases and the Pre-Existing Assets as of the date the
assignment, transfer and conveyance of the same to the Project Partnerships is
completed (the "Transfer Completion Date"), is and/or will be as follows:
Project
Partnership: Interest:
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CED 33-1/3;
CPD 33-1/3; and
CFP 33-1/3.
Each Project Partnership's Interest shall remain as set forth above regardless
of any Additional Assets (as that term is defined below) placed on the Leasehold
Premises or the Right of Way Property (collectively, the "Property").
3. TERM. The term of this Agreement shall commence on the Effective Date,
and, unless sooner terminated by the consolidation of ownership of the Cotenancy
Assets in a single Project Partnership, by the mutual agreement of the Project
Partnerships, by expiration of the Leases or the Right of Way Grants or
otherwise as provided herein, shall expire on the date which is forty (40) years
thereafter. In the event that one or more of the Leases or Right of Way Grants
should expire or otherwise terminate, this Agreement shall apply with respect to
the remaining Leases and Right of Way Grants.
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4. EFFECT OF ASSIGNMENT.
4.1. Assignment AS IS. In accepting its Interest pursuant to the
Conveyance Documents, each Project Partnership accepts the Right of Way Grants
and the Right of Way Property in their condition existing as of the Effective
Date, and accepts the Leases and the Pre-Existing Assets in their condition
existing as of the Transfer Completion Date, subject to (a) all applicable laws,
statutes, ordinances, rules, regulations, decrees, policies, orders, permits,
requirements, judgments, decisions, injunctions and findings of or issued by any
governmental authority (collectively, "Laws") governing or regulating the use of
the Cotenancy Assets, the Property or any thereof and (b) all covenants,
conditions, reservations, restrictions, easements, liens, encumbrances and other
matters affecting the Cotenancy Assets, the Property or any thereof.
4.2. Tax Attributes. By entering into the Lease Assignment, the
Project Partnerships intend that each Project Partnership shall have and obtain
an economic interest in the geothermal resources in and under the Leasehold
Premises to the extent of such Project Partnership's Plant Resource and Use
Requirement (as that term is defined below), sufficient for such Project
Partnership to claim, for federal and corresponding state income tax purposes,
(a) a deduction for intangible drilling and development costs incurred in the
development of the Leasehold Premises and (b) depletion deductions with respect
to the geothermal resources extracted by such Project Partnership. This
Agreement shall be construed to effectuate, and to result in the full
realization of, such intent of the Project Partnerships to the maximum degree
possible.
5. USE OF THE LEASES, THE RIGHT OF WAY GRANTS AND THE PROPERTY.
5.1. Use Rights. Subject to the terms and provisions of this
Agreement, the Project Partnerships shall have the right to jointly use the
Leases, the Right of Way Grants and the Property for any purposes permitted
under the Leases, the Right of Way Grants and/or under the Exchange Agreement
(as that term is defined below), so long as (a) such use is conducted in a
manner that does not unreasonably hinder the exercise of or encroach upon the
rights of any other Project Partnership, except to the extent permitted by such
other Project Partnership, and (b) such use is subject to and shall be conducted
in accordance with this Agreement and that certain (i) Service Contract N62474-
79-C5382 dated October 19, 1983 between China Lake Joint Venture and the Navy,
as heretofore and hereafter amended (the "Navy Agreement"), (ii) Agreement For
the Calculations of Mineral Royalties/Revenues - Coso Known Geothermal Resource
Area dated December 16, 1994, among the BLM, the Minerals Management Service
(the "MMS") and the predecessor in interest to Operator, as heretofore and
hereafter amended (the "MMS Agreement"), (iii) 1988 Plan of Utilization (P00-
060-87-11), Development (P00-060-87-14) and Disposal for Lease CA-11402, CA-
11383, CA-11384 and CA-11385, as amended (the "Plan of Operations") and (iv)
Coso Geothermal Project Exchange Agreement dated January 11, 1994, among CFP,
CPD, CED and the predecessor in interest to Operator, as heretofore and
hereafter amended (the "Exchange Agreement", and, collectively with the Leases,
the Right of Way Grants, the Navy Agreement, the Plan of Operations and the MMS
Agreement, the "Governing Documents").
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5.2. Plant Resource and Use Requirement. Notwithstanding any other
provision of this Agreement, each Project Partnership shall be entitled to enter
upon and use the Leasehold Premises for geothermal resource production and
injection purposes if such Project Partnership determines, in its exercise of
reasonable business judgement, that it has insufficient steam economically
available to it from other sources. If such a determination is made, then such
Project Partnership may utilize the geothermal resources on the Leasehold
Premises to the extent of the geothermal resources reasonably required to be
produced, or spent geothermal effluent reasonably required to be injected, in
order to maximize the operation and profitability of its Project (the "Plant
Resource and Use Requirement").
6. OWNERSHIP OF XXXXX, IMPROVEMENTS AND PERSONAL PROPERTY.
6.1 The Leasehold Premises. Except as otherwise provided in this
Agreement, the Project Partnerships intend that any buildings, structures,
facilities, improvements, fixtures, xxxxx, sumps, ponds, machinery, tools,
equipment or other real or personal property constructed, installed or placed
upon the Leasehold Premises shall belong exclusively to the Project Partnership
that paid for or funded the same. In that regard:
6.1.1 The CED Existing Xxxxx. The Project Partnerships
acknowledge that the prior operator, on behalf of CED, drilled on the Leasehold
Premises those certain production xxxxx designated as Well 58A-18 and Well 58B-
18, and installed on the Leasehold Premises certain wellhead valves, piping,
pipe supports and other equipment required to transport geothermal resources
from such xxxxx to the BLM Project (collectively, the "CED Existing Xxxxx"), all
of which were paid for by CED. Except as otherwise provided in this Agreement
or the Exchange Agreement, the CED Existing Xxxxx shall belong exclusively to
CED, and no other Project Partnership shall have any right, title or interest
therein.
6.1.2 Additional Assets. Except as otherwise provided in this
Agreement or the Exchange Agreement, in the event that a Project Partnership
pays for or funds the development, drilling, installation or construction of any
additional buildings, structures, facilities, improvements, fixtures, xxxxx
(whether production, injection or exploratory), sumps, ponds, machinery, tools,
equipment or any other real or personal property on the Leasehold Premises
(each, an "Additional Asset"), then such Additional Asset shall belong
exclusively to such Project Partnership, and no other Project Partnership shall
have any right, title or interest therein. The CED Existing Xxxxx and all the
Additional Assets are individually and collectively referred to herein as the
"Individually-Owned Assets").
6.2 The Right of Way Property. The Project Partnerships intend that
any buildings, structures, facilities, improvements, fixtures, xxxxx, sumps,
ponds, machinery, tools, equipment or other real or personal property
constructed, installed or placed upon the Right of Way Property (collectively,
the "Additional Right of Way Assets") shall be paid for and owned jointly by the
Project Partnerships and shall be deemed to be Jointly-Owned Assets (as defined
below).
6.3 The Jointly-Owned Assets. The Pre-Existing Assets, the
Additional Right of Way Assets and any other assets that are specifically
designated as jointly owned, or which are deemed jointly owned by virtue of
payment by all of the Project Partnerships for such assets
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pursuant to the Exchange Agreement or any other applicable document, shall be
designated the "Jointly-Owned Assets", shall be jointly owned by the Project
Partnerships as tenants in common, and shall be jointly used pursuant to and in
accordance with this Agreement and the Governing Documents.
7. ACTIVITIES WITH RESPECT TO THE LEASES AND THE RIGHT OF WAY GRANTS.
7.1. Compliance With Law and Governing Documents. Each Project
Partnership shall, at its own expense, conduct its activities and operations on
the Property in a safe manner, in accordance with good operating practice, and
in compliance with all Laws, and in compliance with all applicable
authorizations, consents, approvals, permissions, permits, franchises, licenses,
waivers, exceptions or variances of, and any filings, applications and
declarations submitted in order to obtain any of the same from, any governmental
authority.
7.2. Environmental Compliance.
7.2.1. Without limiting the generality of Section 7.1 hereof,
each Project Partnership shall, at its own expense, promptly comply in all
material respects with all applicable environmental Laws now in effect or which
may hereafter come into effect.
7.2.2. Each Project Partnership (the "Indemnifying Project
Partnership") shall indemnify, defend and hold harmless each other Project
Partnership (the "Indemnified Project Partnership") from and against any and all
losses, damages, liabilities, claims, judgments, liens, penalties, costs and
expenses, including, without limitation, reasonable attorneys' and consultants'
fees, which may be imposed upon or incurred by such Indemnified Project
Partnership or asserted against such Indemnified Project Partnership by any
third person or entity in connection with any violation of the provisions of
Section 7.2.1 hereof arising out of or attributable to the assets, business,
operations or activities of the Indemnifying Project Partnership on or with
respect to the Leases, the Right of Way Grants or the Property at any time after
the Effective Date.
7.2.3. Without in any way limiting the scope of each Project
Partnerships's obligations under Section 7.2.2 hereof, each Project Partnership
shall (to the extent such Project Partnership is otherwise obligated under
Sections 7.2.1 or 7.2.2 hereof) be responsible for all investigations, studies,
clean up, corrective action or response or remedial action required by any
governmental authority now or hereafter authorized to regulate environmental or
other matters or by any consent decree or court or administrative order now or
hereafter applicable to such Project Partnership's use, operation or ownership
of its Interest, its Plant Resource and Use Requirement or its Individually-
Owned Assets, and/or such Project Partnership's use of or operations or
activities on or with respect to the Leases, the Right of Way Grants or the
Property or by any Law now or hereafter in effect.
7.2.4. Each Project Partnership shall have the right (but not the
obligation, unless otherwise required above) to participate in the management
and control of all investigations and any environmental clean up, remediation or
related activities relating to the Leases, the Right of Way Grants or the
Property, as well as in any and all meetings, negotiations
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or decisions relevant to the investigation or remediation of any violation of
the foregoing provisions of this Section 7.2.
7.2.5. The Project Partnerships shall share equal responsibility
for any environmental clean up, remediation or related activities relating to
the waste disposal site located on BLM Lease CA-11385 and referred to in that
certain Affidavit Concerning Closure of Waste Disposal Site executed on October
30, 1979 by Captain Xxx X. Xxxx, USN and recorded on November 15, 1979 in Book
243, Page 783, Official Records of Inyo County.
7.3. No Waste or Nuisance; Maintenance. No Project Partnership shall
use or permit the use of the Leases, the Right of Way Grants or the Property in
any manner that would create waste or nuisance, or that would increase the rate,
or jeopardize the issuance or maintenance, of any insurance policy relating
thereto. Each Project Partnership shall keep and maintain the Property and the
Jointly-Owned Assets in good condition and repair and shall cause all other acts
to be done which may be necessary to assure the preservation and maintenance of
the Leases, the Right of Way Grants, the Property and the Jointly-Owned Assets
in a manner that complies with the Governing Documents and the requirements of
the BLM; provided, however, that the maintenance and repair of each Project
Partnership's Individually-Owned Assets in good condition shall be that Project
Partnership's sole responsibility.
7.4. Minimization of Interference. At all times while conducting its
respective operations and activities on the Property, each Project Partnership
shall make reasonable efforts to minimize the impact of such operations and
activities upon the other Project Partnership's use of the Leases, the Right of
Way Grants and the Property.
7.5. Liens. No Project Partnership shall cause or permit any lien or
encumbrance to be levied against or attached to the Cotenancy Assets, the
Property or any part thereof, whether voluntarily or involuntarily, unless
agreed to by all of the Project Partnerships. Each Project Partnership shall
pay, when due, all claims for labor or materials furnished to or for said
Project Partnership at or for said Project Partnership's use on or in the
Property, which claims are or may be secured by any mechanic's or materialmen's
lien against the Cotenancy Assets, the Property, any Individually-Owned Assets,
any Interest or any portion of any thereof.
7.6. Restoration.
7.6.1 Upon the earlier to occur of (a) the date which is ninety
(90) days after a Project Partnership permanently ceases to utilize a Lease or a
Right of Way Grant and the portion of the Property affected thereby, (b) the
expiration or earlier termination of this Agreement, or (c) the expiration or
earlier termination of a Lease or a Right of Way Grant, each Project Partnership
shall, at its sole cost and expense, in accordance with good operating practice
and in compliance with Law, and in accordance with any restoration obligations
set forth in the Leases, the Right of Way Grants or otherwise imposed by the
BLM, (i) remove from such Lease or Right of Way Grant (or from all of the Leases
and Right of Way Grants in the case of the expiration or earlier termination of
this Agreement) and the portion(s) of the Property affected thereby, all such
Project Partnership's Individually-Owned Assets (except xxxxx and casings), (ii)
level and fill all sump holes and mud pits and cap or plug all xxxxx associated
with such Individually-Owned Assets and (iii) demolish and remove all
foundations and fix all excavations
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associated with such Individually-Owned Assets, return the applicable land
surface to grade, leave such land surface safe and free from debris, and
restore/revegetate such land surface to the standards imposed by the BLM.
7.6.2 Upon the expiration or earlier termination of a Lease or
Right of Way Grant, the Project Partnerships shall collectively perform all land
restoration activities required on the portion of the Property to which such
Lease or Right of Way Grant applies and that are associated with the Jointly-
Owned Assets, and shall bear the cost thereof as provided hereinbelow.
7.7. Insurance. From and at all times after the Effective Date, each
Project Partnership shall procure and maintain in place comprehensive public
liability insurance sufficient to fully protect the other Project Partnerships
from and against any and all liability incident to such Project Partnership's
ownership of (or of an interest in), use of and activities in connection with
the Cotenancy Assets, the Property or such Project Partnership's Individually-
Owned Assets, but in any event not less than one million dollars or such amount
as may be required by any Lender (as that term is defined below). Each such
policy of liability insurance shall name as additional insureds all of the other
Project Partnerships and the Lender as their respective interests may appear,
and shall include, if obtainable, a cross-liability or severability of interest
endorsement insuring each insured Project Partnership against liability to each
other insured Project Partnership.
7.8. Taxes. Each Project Partnership shall pay all real and personal
property taxes and assessments, general or special, levied against (a) its
Interest, (b) its Individually-Owned Assets or (c) the geothermal resources used
or extracted by such Project Partnership. All such taxes and assessments shall
be paid before delinquency and before any fine, interest or penalty shall become
due or be imposed for their non-payment.
7.9. Communications With the BLM. Except for emergency situations,
all requests, notices, correspondence and other communications from the Project
Partnerships to or with the BLM relating to the Cotenancy Assets, the Property
or any Individually-Owned Assets shall be directed to the BLM through the
Operator.
8. OPERATION AND MANAGEMENT. Operation and management of the Leases and
the Right of Way Grants and all activities of the Project Partnerships on the
Property shall be performed by the Operator in accordance with the terms of the
O&M Agreements.
9. COSTS AND EXPENSES
9.1. Determination and Allocation By Operator. All costs, expenses
and charges associated with the Cotenancy Assets and the Property shall be
allocated by the Operator to the Project Partnerships.
9.2. Separate Expenses. Each Project Partnership shall be solely
responsible for paying in a timely manner and when due all costs, expenses and
charges that directly relate to its or its Project's use of or activities with
respect to the Cotenancy Assets, the Property or its Individually-Owned Assets,
including, without limitation, all (a) costs and expenses of extracting,
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injecting and transporting geothermal resources or spent geothermal effluent
for, to or from its Project or disposing of scale and other waste products
resulting from its operations (except as otherwise provided in the Exchange
Agreement), (b) charges for electricity, water and other utilities and services,
(c) costs, expenses and charges associated with the development, construction,
installation, erection, drilling, use, operation, maintenance, repair,
alteration, reconstruction, dismantling, removal and replacement in, on or of
any Individually-Owned Property (except as otherwise provided in the Exchange
Agreement) and (d) royalties and other charges (except minimum royalties and
Right of Way rentals payable to the BLM or the MMS, which shall be paid pursuant
to Section 9.3 hereof) payable to or assessed by the BLM, the MMS, the Navy or
any other entity and that are attributable to such Project Partnership's use of,
activities with respect to or production of geothermal resources from the Leases
or the Leasehold Premises. Notwithstanding anything to the contrary contained
herein, any and all costs, expenses and charges associated with the Jointly-
Owned Assets (regardless whether such costs, expenses and charges are directly
related to a particular Project Partnership's use of or activities with respect
to the Cotenancy Assets or the Property) shall, unless otherwise agreed upon by
all of the Project Partnerships or otherwise provided for in the Exchange
Agreement, be payable by each Project Partnership in proportion to its Interest.
9.3. Common Expenses. Any and all costs, expenses and charges
associated with the Cotenancy Assets or the Property that are not directly
related to a particular Project Partnership's use of or activities with respect
to the Cotenancy Assets or the Property as described in Section 9.2 hereof,
shall, unless otherwise agreed upon by all of the Project Partnerships or
otherwise provided for in the Exchange Agreement, be payable by each Project
Partnership in proportion to its Interest, including, without limitation, (a)
except as otherwise provided in Section 7.7 hereof, all casualty, liability and
other insurance premiums and charges relating to the Cotenancy Assets or the
Property, (b) except as otherwise provided in Section 7.8 hereof, all real and
personal property taxes, assessments and other charges assessed against the
Cotenancy Assets or the Property, (c) all costs of dealing with the BLM and (d)
any minimum royalties and Right of Way rentals payable to or assessed by the BLM
or the MMS that are attributable to the Cotenancy Assets or the Property. Each
Project Partnership shall pay its share of such common costs, expenses and
charges within thirty (30) days after its receipt of an invoice from the
Operator therefor. The Operator may establish, maintain and assess the Project
Partnerships for reserves, in such amounts as it shall determine, to cover any
common expenses relating to the Cotenancy Assets or the Property.
9.4. Payment. Notwithstanding the foregoing, each Project Partnership
shall in any event pay all costs, expenses and charges, for which it is
responsible under this Agreement (whether separate expenses under Section 9.2
hereof or common expenses under Section 9.3 hereof), (a) before any penalty for
non-payment shall be assessed and (b) in a timely enough manner so that neither
the Cotenancy Assets nor the Interests of the other Project Partnerships will be
jeopardized or made subject to any lien or encumbrance.
9.5. Invoices and Accounting. The Operator shall prepare invoices to
the Project Partnerships and shall maintain an accounting of all costs payable
and paid by each Project Partnership under Sections 9.2 and 9.3 hereof.
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10. DAMAGE OR DESTRUCTION; CONDEMNATION
10.1. Damage or Destruction. The Project Partnerships shall
collectively bear the risk of damage to the Property, the Jointly-Owned Assets
or any part thereof, each in proportion to its Interest; except that each
Project Partnership shall bear the risk of damage to or destruction of its
Individually-Owned Assets. The Operator shall coordinate, manage and implement
all repairs and other matters associated with any such damage or destruction.
10.2. Condemnation. The Project Partnerships shall collectively
bear the risk of a taking of the Property, the Jointly-Owned Assets or any part
thereof by eminent domain, each in proportion to its Interest; except that each
Project Partnership shall bear the risk of a taking of its Individually-Owned
Assets. The Operator shall coordinate, manage and implement all matters
associated with any such taking.
11. SALE OR OTHER TRANSFER OF INTERESTS; WAIVER OF PARTITION
11.1. In General. In the circumstances set forth in this Section 11,
a Project Partnership may be compelled to offer to sell, and to then sell, its
Interest to one or more of the other Project Partnerships. In all such
circumstances, the offeror-Project Partnership is referred to herein as the
"Selling Project Partnership" and the offeree-Project Partnership or Project
Partnerships are collectively referred to herein as the "Remaining Project
Partnerships".
11.2. Voluntary Sales. (a) no partial sales or other partial
transfers of Interests shall be permitted except to other Project Partnerships;
(b) no Project Partnership shall be permitted to sell or otherwise transfer its
Interest separately from its Individually-Owned Assets; and (c) no Project
Partnership shall have the right to sell or otherwise transfer its entire
Interest to any other person or entity that is not a Project Partnership, or
surrender its interest in the Cotenancy Assets or any part thereof to the BLM,
unless it first offers to sell such Interest to the other Project Partnerships.
11.2.1. The Interest which the Selling Project Partnership
intends to sell, transfer or surrender shall first be offered in writing (such
written offer being hereafter referred to as the "Offering Notice") to all the
Remaining Project Partnerships at the stated price at which the Interest is
proposed to be sold or otherwise transferred to such third person or entity and
on the proposed terms thereof. The Remaining Project Partnerships, collectively
and individually, shall have a period of thirty (30) days after the giving of
the Offering Notice (as determined in accordance with Section 15.3 hereof) in
which to accept or reject said offer (the "Offer Period").
11.2.2. If the Remaining Project Partnerships, or any of them,
accepts the offer within the Offer Period, then the purchase and sale shall be
completed as soon as reasonably possible, and all costs and expenses associated
with such purchase and sale shall be borne by the Selling Project Partnership.
If no Remaining Project Partnership elects, within the Offer Period, to purchase
the Selling Project Partnership's Interest, then the Selling Project Partnership
may (a) surrender its interest in the Cotenancy Assets or any thereof to the BLM
or (b) sell or otherwise transfer its Interest to any third person or entity
during the three (3) month period immediately following the expiration of the
Offer Period, but not at a price lower than the
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proposed price or on terms more favorable to the purchaser than the proposed
terms set out in the Offering Notice. After the expiration of said three (3)
month period, the Selling Project Partnership's interest may not be sold,
transferred or surrendered without that Interest again first being re-offered to
the Remaining Project Partnerships in accordance with Section 11.2.1 hereof.
11.3. Other Events Constituting Offers to Sell.
11.3.1. Upon the occurrence of any of the following events
(each, an "Offer To Sell Event"), such event shall be deemed to constitute an
offer by the affected Project Partnership, or its principals or successors-in-
interest, or the trustee of its estate, as the case may be (the appropriate one
of which shall be deemed to be the Selling Project Partnership for purposes of
this Section), to sell its entire Interest to the other Project Partnerships, or
any of them, for the price determined under Section 11.3.2 hereof:
a. The dissolution of such Project Partnership;
b. The voluntary or involuntary filing of a petition in
bankruptcy or for protection under similar insolvency Laws, or any general
assignment of assets for the benefit of creditors; or
c. Any Default under (and as that term is defined in)
Section 13.1 hereof.
11.3.2. Upon an Offer To Sell Event, the Remaining Project
Partnerships, collectively or individually, shall have the right to purchase the
Selling Project Partnership's Interest for an amount equal to the sum of the
then-current fair market value of (a) such Interest and (b) any Individually-
Owned Assets owned by the Selling Project Partnership, by giving written notice
to the Selling Project Partnership within thirty (30) days after the occurrence
of the Offer To Sell Event. If the Selling Project Partnership and the
Remaining Project Partnerships cannot agree on such fair market value, then,
within fifteen (15) days after a written demand by the Selling Project
Partnership or the Remaining Partnerships, the parties shall either (i) jointly
appoint an M.A.I. appraiser for the purpose of determining said fair market
value or (ii) failing such joint action, each separately designate an M.A.I.
appraiser. In the latter case, within five (5) days after their appointment,
the designated appraisers shall jointly designate a third M.A.I. appraiser,
whose determination of such Interest's and Individually-Owned Assets' fair
market value shall be binding and conclusive. The failure of the Selling
Project Partnership or the Remaining Partnerships to timely appoint an appraiser
shall be deemed an express approval of the other party's appraiser, and such
appraiser's appraisal shall determine and be the fair market value. The fees of
the appraiser(s) shall be paid in equal shares by said parties.
11.4. Notwithstanding anything contained in this Agreement, the
Governing Documents or any rule of law or equity which would otherwise allow the
Project Partnerships to partition or to seek or obtain a partitioning of the
Cotenancy Assets, the Project Partnerships shall not have and hereby waive the
right to partition all or any portion of the Cotenancy Assets, or to make
application to any court or authority or to commence or prosecute any action or
proceeding for partition of the Cotenancy Assets. Each Project Partnership and
the Lender shall
11
be entitled to a decree or order restraining or enjoining such partition,
application, action or proceeding upon any breach of the provisions of this
Section 11.4. The Project Partnerships acknowledge and agree that they have
been paid full consideration for the waiver herein provided. The Lender is
hereby made a third-party beneficiary of the waiver and covenants herein
provided; and the Project Partnerships agree that they will not participate in
or permit any revocation, termination or amendment of such waiver or covenants
without the prior written consent of the Lender.
12. TRANSFER, TERMINATION AND AMENDMENT OF THE LEASES AND THE RIGHT OF WAY
GRANTS. Except as expressly provided herein, the Cotenancy Assets or any
portion thereof may be sold or otherwise transferred, or may be amended or
terminated, only upon (a) the written agreement of all of the Project
Partnerships and (b) approval of the Lender if such approval is required under
Section 14 hereof. Subject to Section 14 hereof, each of the Project
Partnerships hereby covenants and agrees to execute all documents as may be
required to effect any such approved sale, other transfer, amendment or
termination. Subject to the terms and conditions of the Financing Documents (as
that term is defined in the Indenture), the proceeds from any sale of the
Cotenancy Assets or any specific portion thereof shall be divided among the
Project Partnerships in proportion to their respective Interests; provided,
however, that such division shall be equitably adjusted to take into account the
fair market value (which shall be determined in a manner consistent with Section
11.3.2 hereof) of any Individually-Owned Assets existing on the Property on the
date of such sale. All costs and expenses directly resulting from the sale or
other transfer of the Cotenancy Assets, including, without limitation, escrow
costs, title insurance premiums and documentary transfer taxes, shall be divided
among the Project Partnerships in proportion to their respective Interests.
13. DEFAULT AND REMEDIES
13.1. Events of Default; Default. If a Project Partnership shall fail
to perform its obligations hereunder in any material respect (an "Event of
Default"), then such Project Partnership shall not be in Default hereunder
unless such Project Partnership shall have failed to cure such Event of Default
within thirty (30) days after such Project Partnership has received written
notice of such Event of Default ("Notice of Default") from a non-defaulting
Project Partnership or the Operator; provided, however, that if the nature of
such obligation or obligations is such that more than thirty (30) days are
required, in the exercise of commercially reasonable diligence, for performance
of such obligation(s), then such Project Partnership shall not be in Default if
it commences such performance within such thirty (30) day period and thereafter
pursues the same to completion with commercially reasonable diligence. A
Project Partnership shall be in "Default" hereunder if its Event of Default is
not cured within the time set forth above in this Section.
13.2. Remedies. In addition to all other remedies permitted by Law
or under this Agreement (all of which shall be cumulative), the Project
Partnership or Project Partnerships, as the case may be, that is/are not in
Default hereunder, shall have the right to purchase the Interest of the Project
Partnership that is in Default hereunder, as provided in Section 11.3 hereof.
12
13.3. Performance By Non-Defaulting Project Partnership(s). In the
event that any Project Partnership fails to make any payment or perform any
obligation required to be made or performed by such Project Partnership
hereunder, under the Leases or under the Right of Way Grants (regardless whether
the same constitutes a Default hereunder), then any other Project Partnership or
the Operator shall be entitled (but not obligated) to make the required payment
or perform the required obligation in fulfillment of such Project Partnership's
obligations, whereupon the defaulting Project Partnership shall, upon demand,
reimburse the paying or performing Project Partnership(s) or the Operator, as
the case may be, for the amount of such payment and the cost of such
performance.
13.4. Specific Performance. The Project Partnerships agree that
damages may be an inadequate remedy for a Default under this Agreement, the
Leases or the Right of Way Grants and that each Project Partnership shall be
entitled to seek injunctive and other equitable relief against any other Project
Partnership to prevent or eliminate such Default.
14. LENDER PROTECTIONS
14.1. The following provisions are for the benefit of the Lender, and
shall be in effect while there exists any outstanding amount payable, or any
performance required, under the Indenture (as that term is defined below),
including, without limitation, any amount payable under the Senior Secured Notes
(as that term is defined in the Indenture). Once all of the outstanding amounts
payable and all performance required under the Indenture have been fully paid
and performed, all references in this Agreement to the Lender shall be deemed
null and void and all such provisions shall, without any further actions, have
no further force and effect.
14.2. The Lender shall have the right, but not the obligation, upon
the occurrence of an Event of Default, to (a) make any payments due under this
Agreement or the Governing Documents, and (b) do any other act or thing that may
be necessary or appropriate to be done in the performance and observance of the
terms hereof. All payments so made and all things so done and performed by the
Lender shall be as effective to prevent or cure any Event of Default under this
Agreement and the Governing Documents as they would have been if made, done and
performed by the Project Partnerships, and each Project Partnership agrees to
accept such performance, payment and cure. Each Project Partnership agrees to
make all payments (if any) to be made by it to a defaulting Project Partnership
directly to the Lender upon receipt of the Lender's written instructions to that
effect.
14.3. As used herein, the term (a) "Lender" means U.S. Bank Trust
National Association, not in its individual capacity but solely as trustee and
collateral agent pursuant to the Indenture of even date herewith (the
"Indenture") among it, Caithness Coso Funding Corp., as issuer, and the Project
Partnerships as borrowers and guarantors, and its agents, representatives,
successors and assigns, (b) "Lender's Lien" means the hypothecation, mortgage or
pledge of all or any portion of the Project Partnership Assets (as that term is
defined below) to the Lender as security for the repayment of the indebtedness
and performance of the obligations under the Indenture, the Guarantees or any
other Financing Document (as those terms are defined in the Indenture) and (c)
"Project Partnership Assets" means, collectively, a Project Partnership's right,
title and interest in and under this Agreement and the Governing
13
Documents and in and to the Property, the Cotenancy Assets and any Individually-
Owned Assets.
14.4. Each Project Partnership agrees for the benefit of the Lender
that it will not, without the prior written consent of the Lender (which consent
shall be given or withheld on the basis of the documents governing the
relationship between the Lender and such Project Partnership): (a) amend or
modify, or take any action causing, consenting to or accepting the amendment or
modification of this Agreement or the Governing Documents, if such amendment or
modification would reduce the rights or remedies of the Lender hereunder or
impair or reduce the security for the Lender's Lien, or (b) cancel, terminate or
suspend, or take any action causing, consenting to or accepting the
cancellation, termination or suspension of, this Agreement or the Governing
Documents.
14.5. Each Project Partnership shall deliver to the Lender a
duplicate copy of any and all Notices of Default that it may from time to time
deliver to a defaulting Project Partnership hereunder or under the Governing
Documents, and such copies shall be delivered to the Lender at the same time
such Notices of Default are delivered to such defaulting Project Partnership.
No such Notice of Default shall be deemed to have been given to a defaulting
Project Partnership hereunder unless and until a copy thereof shall have been
given to the Lender.
14.6. Upon a defaulting Project Partnership's failure to cure any
Event of Default hereunder or under any Governing Document within the time
provided in Section 13.1 hereof, then the Lender shall have an additional sixty
(60) days thereafter to cure such Event of Default; provided, however, that if
such Event of Default cannot reasonably be cured within such additional sixty
(60) day period, then the Lender shall have such additional time to cure such
Event of Default as may be reasonably necessary. Any Event of Default that
cannot be cured by the Lender shall nevertheless be deemed to have been cured
and remedied if (a) on or before sixty (60) days after receiving such Notice of
Default, the Lender shall have acquired the defaulting Project Partnership's
then-remaining Project Partnership Assets, or shall have commenced foreclosure
or other appropriate proceedings for such purposes and shall be prosecuting such
proceedings to completion with commercially reasonable diligence, (b) the Lender
shall have fully cured within such sixty (60) day period any failure on the part
of the defaulting Project Partnership to perform its monetary obligations
hereunder and shall thereafter continue to perform such monetary obligations and
(c) after obtaining the defaulting Project Partnership's then-remaining Project
Partnership Assets, the Lender commences performance of the obligations of the
defaulting Project Partnership hereunder. All rights of the Project
Partnerships to terminate this Agreement as a result of the occurrence of an
Event of Default hereunder shall be expressly conditioned upon (i) the Lender
having first received a copy of the Notice of Default as and when provided in
Section 14.5 hereof and (ii) the Lender having failed to cure the Event of
Default or acquire possession of the defaulting Project Partnership's Project
Partnership Assets or commence foreclosure or other appropriate proceedings as
set forth, and within the time specified, in this Section 14.6.
14.7. If the Lender is prohibited by any process or injunction issued
by, or by reason of any action of, any court having jurisdiction over any
bankruptcy, reorganization, insolvency or other debtor-relief proceeding from
commencing or prosecuting foreclosure or other appropriate proceedings, then the
times specified in Section 14.6 hereof for commencing or
14
prosecuting such foreclosure or other proceedings shall be extended for the
period of such prohibition; provided, however, that the Lender shall have fully
cured, within the time specified in Section 14.6 hereof, any failure on the part
of the defaulting Project Partnership to perform its monetary obligations
hereunder, and shall thereafter continue to perform such monetary obligations
when and as due hereunder.
14.8. The transfer of a defaulting Project Partnership's Project
Partnership Assets or any part thereof to the Lender and/or to one or more
purchasers or grantees (a) at a foreclosure sale by judicial or nonjudicial
foreclosure and sale, (b) by a conveyance in lieu of foreclosure or (c) by any
other assignment or conveyance, including, without limitation, by the Lender or
such other purchaser(s) or grantee(s) following foreclosure and sale, or as a
result of any other legal proceeding, shall not require the consent of the other
Project Partnerships, and such other Project Partnerships agree that upon such
foreclosure, sale, conveyance, assignment or other proceeding, they shall
recognize the Lender or such other purchaser(s) or grantee(s) as the successor
to the defaulting Project Partnership under this Agreement and the Governing
Documents; provided, however, that, subject to Section 14.10 hereof, the Lender
or such purchaser(s) or grantee(s) assumes the obligations of the defaulting
Project Partnership under this Agreement, the Leases and/or the Exchange
Agreement and pays all amounts in arrears due from the defaulting Project
Partnership to the other Project Partnerships hereunder.
14.9. In the event that this Agreement or the Exchange Agreement is
rejected by a trustee or debtor-in-possession in any bankruptcy or insolvency
proceeding, or if this Agreement or the Exchange Agreement is terminated for any
reason other than an Event of Default which could have been but was not cured by
a Lender as provided in this Section 14, and if, within sixty (60) days after
receiving notice of such rejection or termination, the Lender shall so request,
then, so long as the Lender has cured any monetary default by the defaulting
Project Partnership and is making commercially reasonable efforts to cure any
non-monetary default by the defaulting Project Partnership as provided herein,
the other Project Partnerships shall execute and deliver to the Lender or its
designee one or more new agreements, which new agreement(s) shall be on the same
terms and conditions as this Agreement and/or the Exchange Agreement (as the
case may be), for the remaining term of this Agreement and/or the Exchange
Agreement (as the case may be) before giving effect to such rejection or
termination.
14.10. The Lender or any such purchaser(s) or grantee(s) shall not
have any duty, obligation or liability under this Agreement or the Governing
Documents prior to the time of its entry into physical possession of a Project
or its commencement of performance of a defaulting Project Partnership's
obligations under this Agreement or the Governing Documents or under a new
agreement entered into as provided in Section 14.9 hereof, and shall not
otherwise be required to perform (or be subject to any defenses or offsets by
reason of) any defaulting Project Partnership's other obligations under this
Agreement or the Governing Documents that were unperformed at such time. In the
event that the Lender elects to perform a defaulting Project Partnership's
obligations under this Agreement and/or the Governing Documents, or to enter
into a new agreement as provided in Section 14.9 hereof, then the Lender shall
not have any personal liability to any Project Partnership for the performance
of such obligations, and the sole recourse of such Project Partnerships in
seeking the enforcement of such obligations shall be to the Lender's interest in
the defaulting Project Partnership's Project Partnership Assets. In the event
that the Lender assigns its interest in this Agreement, the Governing Documents
or a new
15
agreement entered into pursuant to Section 14.9 hereof to any person or entity,
then the Lender shall be released from any further liability hereunder.
14.11. The Project Partnerships shall cooperate in including herein,
by suitable amendment from time to time, any provision which the Lender
reasonably requests for the purpose of implementing or amending the provisions
of this Section 14 or affording the Lender reasonable protection of its Lender's
Lien in the event of a default by a Project Partnership; provided, however, that
the Project Partnerships shall not be required to include herein any additional
term or provision which materially impairs the rights of the non-defaulting
Project Partnerships under this Agreement. Each of the Project Partnerships
agrees to execute and deliver (and to acknowledge, if necessary for recording
purposes) any document or instrument reasonably necessary to give effect to any
such provision.
14.12. Each of the Project Partnerships and the Operator shall, upon
not less than ten (10) days prior written notice from a requesting Project
Partnership or from the Lender, execute an estoppel certificate (a) certifying
that this Agreement and the Governing Documents are in full force and effect and
have not been modified, (b) certifying that to the best of such Project
Partnership's knowledge there are no uncured events of default under this
Agreement or the Governing Documents (or, if any such uncured events of default
exist, stating with particularity the nature thereof) and (c) containing any
other certifications as may reasonably be requested. Any such statements may be
conclusively relied upon by the requesting Project Partnership or the Lender.
The failure of a Project Partnership or the Operator to deliver such statement
within such time shall be conclusive upon such Project Partnership and the
Operator that (i) this Agreement and the Governing Documents are in full force
and effect and have not been modified and (ii) there are no uncured events of
default by any Project Partnership under this Agreement or the Governing
Documents.
14.13. Each Project Partnership agrees to have its successor under
this Agreement and the Governing Documents assume in writing its obligations
under this Agreement and the Governing Documents; provided, however, that
nothing contained herein shall be deemed a consent by the Lender to any
assignment that is prohibited, or to which the Lender may withhold its consent,
under the Financing Documents (as that term is defined in the Indenture).
14.14. At the Lender's option, this Agreement, the Governing
Documents or any thereof shall be subordinated to the Lender's Lien and/or to
any encumbrance now of record or recorded after the date of this Agreement.
Further, at the Lender's option, the lien of any mortgage, deed of trust or
security interest hereafter encumbering all or any portion of a Project
Partnership's Project Partnership Assets shall be subordinated to this
Agreement, the Governing Documents or any thereof, and/or to the Lender's Lien.
14.15. All insurance and condemnation proceeds payable to the Project
Partnerships under this Agreement or any of the Governing Documents as a result
of damage, destruction or condemnation of any portion of the Property shall be
paid to the Lender for handling in accordance with the terms of the Financing
Documents. The Project Partnerships shall not enter into any settlement or
adjustment relating to such proceeds without the prior written consent of the
Lender.
16
14.16. The Project Partnerships agree that, upon the occurrence of an
event of default hereunder, under a Governing Document or under any of the
Financing Documents, the Lender or a receiver shall have the right to enter,
possess and use the Project Partnership Assets at such reasonable times and
manner as are necessary or desirable to effectuate the remedies and enforce the
rights of the Lender under the Financing Documents.
14.17. This Agreement and the Conveyance Documents shall be binding
upon the successors and assigns of the Project Partnerships and shall inure,
together with the rights and remedies of the Lender hereunder, to the benefit of
the Project Partnerships and the Lender and their respective successors,
transferees and assigns. Each Project Partnership agrees to confirm such
continuing obligation in writing upon the reasonable request of any other
Project Partnership, the Lender or their respective successors, transferees or
assigns.
15 GENERAL PROVISIONS
15.1 Effect of This Agreement. This Agreement shall automatically
attach and apply (a) to the Leases and the CLC Pre-Existing Assets at such time
as the Lease Assignment is completed and (b) to the MidAmerican Pre-Existing
Assets at such time as the Operator Assignment is completed, in each case
without the need for any other documentation or consent by or from any party
hereto; and, at such time, each Project Partnership's rights in and to all of
the Cotenancy Assets, the Property and Individually-Owned Assets shall be
governed by this Agreement.
15.2 Indemnities.
15.2.1 In addition to any other indemnities set forth herein,
each Project Partnership (the "Indemnifying Project Partnership") shall
indemnify, defend and hold harmless the other Project Partnerships (each, an
"Indemnified Project Partnership") from and against any and all losses, damages,
liabilities, claims, judgments, liens, penalties, costs and expenses, including,
without limitation, reasonable attorneys' and consultants' fees, which may be
imposed upon or incurred by such the Indemnified Project Partnership or asserted
against such Indemnified Project Partnership by any third person or entity in
connection with (a) any acts, omissions, operations or activities of the
Indemnifying Project Partnership on or in connection with (i) the Cotenancy
Assets or the Property or (ii) such Indemnifying Project Partnership's
Individually-Owned Assets and (b) any Event of Default or Default by the
Indemnifying Project Partnership in the performance of its obligations under
this Agreement.
15.2.2 The Project Partnerships acknowledge that when CLC
acquired the Leases from the Los Angeles Department of Water and Power
("LADWP"), it made certain covenants and gave certain indemnities to LADWP.
Without limiting the generality of the Lease Assignment, the Project
Partnerships hereby agree to abide by such covenants and to assume such
indemnities in proportion to their respective Interests.
15.3 Notices. Any notices, statements, demands, correspondence or
other communications required or permitted to be given hereunder shall be in
writing and shall be given (a) personally, (b) by certified or registered mail,
postage prepaid, return receipt requested, or (c) by overnight or other courier
or delivery service, freight prepaid, (i) to the recipient Project
17
Partnership or Project Partnerships x/x Xxxxxxxxx Xxxxxx, X.X.X., 0000 Avenue of
the Xxxxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, or to such other address as
a Project Partnership may from time to time designate in writing to the other
Project Partnerships and the Lender and (ii) to the Lender at Xxx Xxxxxxxxxx
Xxxxxx, Xxxxx 000, Xxx Xxxxxxxxx, Xxxxxxxxxx 00000, Attention: Trust Officer,
or to such other address as the Lender may from time to time designate in
writing to the Project Partnerships. Notices delivered by hand shall be deemed
received when delivered, and notices sent by certified or registered mail or by
overnight or other courier or delivery service shall be deemed received on the
first to occur of: (A) two (2) days after deposit in the United States mail or
with such overnight or other courier or delivery service, addressed to such
address or addresses, (B) written acceptance of delivery by the recipient or (C)
written rejection of delivery by the recipient.
15.4 Third Party Beneficiaries. Except with respect to the rights
of the Operator as provided herein (which Operator shall be an express third
party beneficiary of the covenants contained in this Agreement, with rights and
benefits under, and the ability to enforce, this Agreement), the covenants
contained herein are made solely for the benefit of the parties hereto, the
Lender, and their respective successors and assigns as permitted herein, and
shall not be construed as having been intended to benefit any person or entity
who is not a party to this Agreement.
15.5 Attorney's Fees and Costs. If any Project Partnership institutes
any legal action or other proceeding for the enforcement, termination,
cancellation or rescission hereof, or for damages for the breach hereof, the
prevailing Project Partnership or Project Partnerships in such action or
proceeding shall be entitled to recover its/their reasonable attorney's fees and
all its/their court and other costs.
15.6 Amendment. Subject to Section 14 hereof, no amendment or
modification of this Agreement or any provision hereof shall be effective unless
in writing and signed by all of the Project Partnerships at the time of the
amendment.
15.7 Integration. This Agreement, the Conveyance Documents, the
Acquisition Agreement and the Governing Documents collectively contain all
agreements of the Project Partnerships with respect to the subject matter
hereof, and all other prior or contemporaneous agreements, understandings,
correspondence and negotiations among the Project Partnership, whether oral or
written, pertaining to the subject matter of this Agreement, shall be of no
further force or effect, and are superseded hereby.
15.8 Severability. The invalidity or unenforceability of any
provision hereof as determined by a court of competent jurisdiction shall in no
way affect the validity and enforceability of any other provision hereof; and in
the event that any part or provision of this Agreement shall be determined by a
court of competent jurisdiction to be invalid or unenforceable, then the
remaining portions of this Agreement which can be separated from the invalid,
unenforceable provisions shall, nevertheless, continue in full force and effect.
15.9 Successors and Assigns. The Cotenancy Assets, the Individually-
Owned Assets and the Interests shall be held, conveyed, assigned, hypothecated,
encumbered and leased, and the Property shall be used and occupied, subject to
the covenants, terms and
18
provisions set forth in this Agreement, which covenants, terms and provisions
shall run with the land, and shall be binding upon and inure to the benefit of
each Project Partnership and each other person and entity having any interest
therein during their ownership thereof, and their respective permitted grantees,
heirs, successors and assigns, and shall create privity of contract and estate
among the Project Partnerships and their respective grantees, heirs, successors
and assigns.
15.10 Further Assurances; Cooperation. Each Project Partnership
shall, from time to time, execute, cause to be acknowledged and deliver such
documents or instruments, and provide such certificates, as any other Project
Partnership may reasonably request to carry out and fulfill the transactions,
and permit the exercise and performance of the rights and obligations, as are
contemplated hereunder. Each Project Partnership shall cooperate with each
other Project Partnership to fully effectuate the purposes and intent of this
Agreement.
15.11 Construction. This Agreement shall be subject to, governed by,
and construed in accordance with the Laws of the State of California and
applicable federal Law. This Agreement shall be construed equally as between
the parties hereto, and shall not be construed against the party responsible for
its drafting. Captions in this Agreement are inserted for convenience of
reference only, and do not define, describe or limit the scope or intent of this
Agreement or any of the terms hereof. No remedy or election of or by any
Project Partnership hereunder shall be deemed exclusive, but shall, wherever
possible, be cumulative with all other remedies available hereunder, at law or
in equity. As used herein, the neuter gender includes the masculine and the
feminine, the singular number includes the plural, and vice versa. Time is of
the essence with respect to the obligations to be performed under this
Agreement. All exhibits attached hereto are hereby incorporated herein by this
reference. The waiver, by any party hereto, of any covenant contained herein,
shall not be deemed a continuing waiver of such covenant or of any other
covenant contained herein, or of any subsequent breach by any other party
hereto. No party's acceptance of a payment or performance by any other party
hereto shall be deemed a waiver of any preceding breach by such other party of
any provisions hereof. Any obligations referred to herein to be performed at
any time after the expiration or termination of this Agreement, and all
indemnities and hold harmless agreements provided herein, shall survive the
expiration or earlier termination of this Agreement.
15.12 Counterparts. This Agreement may be executed in one or more
counterparts, each of which when so executed shall be deemed an original, and
all of which when taken together shall constitute one and the same instrument.
[SIGNATURES ON NEXT PAGE]
19
IN WITNESS WHEREOF, the Project Partnerships, and each of them, have
executed this Agreement as of the Effective Date.
CED: COSO ENERGY DEVELOPERS,
a California general partnership
By: New CHIP Company, LLC,
a Delaware limited liability company,
its Managing General Partner
By: /s/ Xxxxxxxxxxx X. XxXxxxxxx
----------------------------
Xxxxxxxxxxx X. XxXxxxxxx
Executive Vice President
By: Caithness Coso Holdings, LLC,
a Delaware limited liability company,
its General Partner
By: /s/ Xxxxxxxxxxx X. XxXxxxxxx
----------------------------
Xxxxxxxxxxx X. XxXxxxxxx
Executive Vice President
CPD: COSO POWER DEVELOPERS,
a California general partnership
By: New CTC Company, LLC,
a Delaware limited liability company,
its Managing General Partner
By: /s/ Xxxxxxxxxxx X. XxXxxxxxx
----------------------------
Xxxxxxxxxxx X. XxXxxxxxx
Executive Vice President
By: Caithness Navy II Group, LLC,
a Delaware limited liability company
its General Partner
By: /s/ Xxxxxxxxxxx X. XxXxxxxxx
----------------------------
Xxxxxxxxxxx X. XxXxxxxxx
Executive Vice President
SIGNATURES CONTINUED ON NEXT PAGE
20
CFP: COSO FINANCE PARTNERS,
a California general partnership
By: New CLOC Company, LLC,
a Delaware limited liability company,
its Managing General Partner
By: /s/ Xxxxxxxxxxx X. XxXxxxxxx
----------------------------
Xxxxxxxxxxx X. XxXxxxxxx
Executive Vice President
By: ESCA, LLC,
a Delaware limited liability company,
its General Partner
By: /s/ Xxxxxxxxxxx X. XxXxxxxxx
----------------------------
Xxxxxxxxxxx X. XxXxxxxxx
Executive Vice President
ACCEPTANCE BY THE OPERATOR:
Coso Operating Company LLC, a Delaware limited liability company, hereby
accepts the duties and obligations of the Operator under the foregoing Cotenancy
Agreement.
COSO OPERATING COMPANY LLC,
a Delaware limited liability company
By: /s/ Xxxxxxxxxxx X. XxXxxxxxx
----------------------------
Xxxxxxxxxxx X. XxXxxxxxx
Executive Vice President
21
EXHIBIT "A"
Description of the Leases and the Leasehold Premises
----------------------------------------------------
1. LEASE CACA-11383:
THAT CERTAIN GEOTHERMAL RESOURCES LEASE (SERIAL NO. CACA-11383) APPROVED ON
NOVEMBER 1, 1983 BY THE BLM AND ISSUED TO THE LOS ANGELES DEPARTMENT OF WATER
AND POWER, A CERTIFIED COPY OF WHICH WAS RECORDED ON OCTOBER 8, 1993 AS
INSTRUMENT NO. 93-4604 OF OFFICIAL RECORDS, INCLUDING ALL MODIFICATIONS,
AMENDMENTS AND ASSIGNMENTS THERETO AND THEREOF, WHICH LEASE AFFECTS THAT
CERTAIN REAL PROPERTY LOCATED IN AN UNINCORPORATED AREA OF THE COUNTY OF
INYO, STATE OF CALIFORNIA, DESCRIBED AS FOLLOWS:
PARCEL 1:
ALL OF SECTION 32; THE NORTH HALF OF SECTION 33; THE NORTH HALF OF THE
SOUTH HALF OF SECTION 33; THE SOUTH HALF OF THE SOUTHWEST QUARTER OF
SECTION 33; AND THE SOUTHWEST QUARTER OF THE SOUTHEAST QUARTER OF SECTION
33, ALL IN TOWNSHIP 21 SOUTH, RANGE 39 EAST, MOUNT DIABLO MERIDIAN, IN
THE COUNTY OF INYO, STATE OF CALIFORNIA, ACCORDING TO THE OFFICIAL PLAT
THEREOF.
EXCEPTING THEREFROM THE OIL, HYDROCARBON GAS, AND HELIUM IN SAID LAND AND
THE RIGHT OF THE UNITED STATES OF AMERICA TO EXTRACT SAID OIL,
HYDROCARBON GAS, AND HELIUM FROM GEOTHERMAL STEAM AND ASSOCIATED
GEOTHERMAL RESOURCES PRODUCED FROM SAID LAND (30 U.S.C.A. 1025).
PARCEL 2:
XXXX 0, 0 XXX 0 XX XXXXXXX 4; LOTS 1 TO 4 INCLUSIVE OF SECTION 5; THE
SOUTH HALF OF THE NORTH HALF OF SECTION 5; AND THE NORTH HALF OF THE
SOUTH HALF OF SECTION 5, ALL IN TOWNSHIP 22 SOUTH, RANGE 39 EAST, MOUNT
DIABLO MERIDIAN, IN THE COUNTY OF INYO, STATE OF CALIFORNIA.
EXCEPTING THEREFROM THE OIL, HYDROCARBON GAS, AND HELIUM IN SAID LAND AND
THE RIGHT OF THE UNITED STATES OF AMERICA TO EXTRACT SAID OIL,
HYDROCARBON GAS, AND HELIUM FROM GEOTHERMAL STEAM AND ASSOCIATED
GEOTHERMAL RESOURCES PRODUCED FROM SAID LAND (30 U.S.C.A. 1025).
Exhibit "A"
Page 1 of 4
2. LEASE CACA-11384:
THAT CERTAIN GEOTHERMAL RESOURCES LEASE (SERIAL NO. CACA-11384) APPROVED BY
THE BLM ON FEBRUARY 1, 1982 AND ISSUED TO THE LOS ANGELES DEPARTMENT OF WATER
AND POWER, WHICH LEASE WAS RECORDED ON OCTOBER 8, 1993 AS INSTRUMENT NO. 93-
4605 OF OFFICIAL RECORDS, INCLUDING ALL MODIFICATIONS, AMENDMENTS AND
ASSIGNMENTS THERETO AND THEREOF, WHICH LEASE AFFECTS THAT CERTAIN REAL
PROPERTY LOCATED IN AN UNINCORPORATED AREA OF THE COUNTY OF INYO, STATE OF
CALIFORNIA, DESCRIBED AS FOLLOWS:
PARCEL 1:
THE EAST HALF OF SECTION 11; ALL OF SECTIONS 12 AND 13; AND THE EAST HALF
OF SECTION 14, ALL IN TOWNSHIP 22 SOUTH, RANGE 38 EAST, MOUNT DIABLO
MERIDIAN, IN THE COUNTY OF INYO, STATE OF CALIFORNIA, ACCORDING TO THE
OFFICIAL PLAT THEREOF.
EXCEPTING THEREFROM THE OIL, HYDROCARBON GAS, AND HELIUM IN SAID LAND AND
THE RIGHT OF THE UNITED STATES OF AMERICA TO EXTRACT SAID OIL,
HYDROCARBON GAS, AND HELIUM FROM GEOTHERMAL STEAM AND ASSOCIATED
GEOTHERMAL RESOURCES PRODUCED FROM SAID LAND (30 U.S.C.A. 1025).
PARCEL 2:
XXXX 0 XX 0, XXXXXXXXX XX XXXXXXX 0; THE EAST HALF OF THE WEST HALF OF
SECTION 7; XXXX 0 XX 0, XXXXXXXXX XX XXXXXXX 00; AND THE EAST HALF OF THE
WEST HALF OF SECTION 18, ALL IN TOWNSHIP 22 SOUTH, RANGE 39 EAST, MOUNT
DIABLO MERIDIAN, IN THE COUNTY OF INYO, STATE OF CALIFORNIA, ACCORDING TO
THE OFFICIAL PLAT THEREOF.
EXCEPTING THEREFROM THE OIL, HYDROCARBON GAS, AND HELIUM IN SAID LAND AND
THE RIGHT OF THE UNITED STATES OF AMERICA TO EXTRACT SAID OIL,
HYDROCARBON GAS, AND HELIUM FROM GEOTHERMAL STEAM AND ASSOCIATED
GEOTHERMAL RESOURCES PRODUCED FROM SAID LAND (30 U.S.C.A. 1025).
3. LEASE CACA-11385:
THAT CERTAIN GEOTHERMAL RESOURCES LEASE (SERIAL NO. CACA-11385) APPROVED BY
THE BLM ON FEBRUARY 1, 1982 AND ISSUED TO THE LOS ANGELES DEPARTMENT OF WATER
AND POWER, WHICH LEASE WAS RECORDED ON OCTOBER 8, 1993 AS INSTRUMENT NO. 93-
4606 OF OFFICIAL RECORDS, INCLUDING ALL MODIFICATIONS, AMENDMENTS AND
ASSIGNMENTS THERETO AND THEREOF, WHICH LEASE AFFECTS THAT CERTAIN REAL
PROPERTY LOCATED IN AN
Exhibit "A"
Page 2 of 4
UNINCORPORATED AREA OF THE COUNTY OF INYO, STATE OF CALIFORNIA, DESCRIBED AS
FOLLOWS:
PARCEL 1:
ALL OF SECTION 36, TOWNSHIP 21 SOUTH, RANGE 38 EAST, MOUNT DIABLO
MERIDIAN, IN THE COUNTY OF INYO, STATE OF CALIFORNIA, ACCORDING TO THE
OFFICIAL PLAT THEREOF.
EXCEPTING THEREFROM THE OIL, HYDROCARBON GAS, AND HELIUM IN SAID LAND AND
THE RIGHT OF THE UNITED STATES OF AMERICA TO EXTRACT SAID OIL,
HYDROCARBON GAS, AND HELIUM FROM GEOTHERMAL STEAM AND ASSOCIATED
GEOTHERMAL RESOURCES PRODUCED FROM SAID LAND (30 U.S.C.A. 1025).
PARCEL 2:
LOTS 1 TO 4 INCLUSIVE, THE SOUTH HALF OF THE NORTH HALF, AND THE SOUTH
HALF OF SECTION 1, TOWNSHIP 22 SOUTH, RANGE 38 EAST, MOUNT DIABLO
MERIDIAN, IN THE COUNTY OF INYO, STATE OF CALIFORNIA, ACCORDING TO THE
OFFICIAL PLAT THEREOF.
EXCEPTING THEREFROM THE OIL, HYDROCARBON GAS, AND HELIUM IN SAID LAND AND
THE RIGHT OF THE UNITED STATES OF AMERICA TO EXTRACT SAID OIL,
HYDROCARBON GAS, AND HELIUM FROM GEOTHERMAL STEAM AND ASSOCIATED
GEOTHERMAL RESOURCES PRODUCED FROM SAID LAND (30 U.S.C.A. 1025).
PARCEL 3:
XXXX 0 XX 0 XXXXXXXXX, XXX XXXX XXXX, XXX THE EAST HALF OF THE WEST HALF
OF SECTION 31, TOWNSHIP 21 SOUTH, RANGE 39 EAST, MOUNT DIABLO MERIDIAN,
IN THE COUNTY OF INYO, STATE OF CALIFORNIA, ACCORDING TO THE OFFICIAL
PLAT THEREOF.
EXCEPTING THEREFROM THE OIL, HYDROCARBON GAS, AND HELIUM IN SAID LAND AND
THE RIGHT OF THE UNITED STATES OF AMERICA TO EXTRACT SAID OIL,
HYDROCARBON GAS, AND HELIUM FROM GEOTHERMAL STEAM AND ASSOCIATED
GEOTHERMAL RESOURCES PRODUCED FROM SAID LAND (30 U.S.C.A. 1025).
PARCEL 4:
LOTS 1 TO 7 INCLUSIVE, THE SOUTH HALF OF THE NORTHEAST QUARTER, THE
SOUTHEAST QUARTER OF THE NORTHWEST QUARTER, THE NORTHEAST QUARTER OF THE
SOUTHWEST QUARTER, AND THE NORTH HALF OF THE
Exhibit "A"
Page 3 of 4
SOUTHEAST QUARTER OF SECTION 6, TOWNSHIP 22 SOUTH, RANGE 39 EAST, MOUNT
DIABLO MERIDIAN, IN THE COUNTY OF INYO, STATE OF CALIFORNIA, ACCORDING TO
THE OFFICIAL PLAT THEREOF.
EXCEPTING THEREFROM THE OIL, HYDROCARBON GAS, AND HELIUM IN SAID LAND AND
THE RIGHT OF THE UNITED STATES OF AMERICA TO EXTRACT SAID OIL,
HYDROCARBON GAS, AND HELIUM FROM GEOTHERMAL STEAM AND ASSOCIATED
GEOTHERMAL RESOURCES PRODUCED FROM SAID LAND (30 U.S.C.A. 1025).
Exhibit "A"
Page 4 of 4
EXHIBIT "B"
Description of the Right-of-Way Grants and the Right-of-Way Property
--------------------------------------------------------------------
1. RIGHT-OF-WAY CACA-13510:
THAT CERTAIN UNRECORDED RIGHT-OF-WAY GRANT (SERIAL NO. CACA-13510) APPROVED
BY THE BLM ON APRIL 12, 1984 AND ISSUED TO CALIFORNIA ENERGY COMPANY, INC.,
INCLUDING ALL MODIFICATIONS, AMENDMENTS AND ASSIGNMENTS THERETO AND THEREOF,
WHICH RIGHT-OF-WAY GRANT AFFECTS THAT CERTAIN REAL PROPERTY LOCATED IN AN
UNINCORPORATED AREA OF THE COUNTY OF INYO, STATE OF CALIFORNIA, DESCRIBED AS
FOLLOWS:
TOWNSHIP 21 SOUTH, RANGE 37 EAST, MT. DIABLO MERIDIAN: SECTION 36, E1/2
OF THE SE1/4;
TOWNSHIP 22 SOUTH, RANGE 37 EAST, MT. DIABLO MERIDIAN: SECTION 1, NW1/4
OF THE SW1/4; LOTS 1 AND 2 OF THE NE1/4; AND XXX 0 XX XXX XX0/0; XXX
XXXXXXXX 00 XXXXX, XXXXX 38 EAST, MT. DIABLO MERIDIAN: SECTION 31, LOTS
9-12, 16; SECTION 32, XXXX 0-0,0,0 XXX 0; XXX XXXXXXX 00, X0/0 OF THE
S1/2.
2. RIGHT-OF-WAY CACA-18885:
THAT CERTAIN UNRECORDED RIGHT-OF-WAY GRANT (SERIAL NO. CACA-18885) APPROVED
BY THE BLM ON MAY 7, 1986 AND ISSUED TO CALIFORNIA ENERGY COMPANY, INC.,
INCLUDING ALL MODIFICATIONS, AMENDMENTS AND ASSIGNMENTS THERETO AND THEREOF,
WHICH RIGHT-OF-WAY GRANT AFFECTS THAT CERTAIN REAL PROPERTY LOCATED IN AN
UNINCORPORATED AREA OF THE COUNTY OF INYO, STATE OF CALIFORNIA, DESCRIBED AS
FOLLOWS:
TOWNSHIP 00 XXXXX, XXXXX 00 XXXX, XX. DIABLO MERIDIAN: SECTION 1, XXXX 0
& 0 XX XX0/0, XXX 0 XX XX0/0, AND NW1/4SW1/4;
TOWNSHIP 00 XXXXX, XXXXX 00 XXXX, XX. DIABLO MERIDIAN: SECTION 36,
SE1/4SE1/4;
TOWNSHIP 00 XXXXX, XXXXX 00 XXXX, XX. DIABLO MERIDIAN: SECTION 31, LOTS
13-16; SECTION 32, XXXX 0-0, 0; XXXXXXX 00, X0/0XX0/0, XX0/0XX0/0,
X0/0XX0/0, N1/2SE1/4; SECTION 34, N1/2SW1/4, SE1/4SW1/4 AND SW1/4SE1/4.
EXHIBIT "C"
Description of the CLC Pre-Existing Assets
------------------------------------------
1. Well 43-7 and all associated equipment (including, without limitation,
all wellhead equipment, valves, piping, pipe supports, meters, pumps and
separators) located on Geothermal Resources Xxxxx XX 00000 as of the Transfer
Completion Date.
2. Well 88-1 and all associated equipment (including, without limitation,
all wellhead equipment, valves, piping, pipe supports, meters, pumps and
separators) located on Geothermal Resources Xxxxx XX 00000 as of the Transfer
Completion Date.
3. Well 66-6 and all associated equipment (including, without limitation,
all wellhead equipment, valves, piping, pipe supports, meters, pumps and
separators) located on Geothermal Resources Xxxxx XX 00000 as of the Transfer
Completion Date.
4. All other wellhead equipment, valves, pipelines, pipe supports, meters,
pumps, separators, casings, vessels, fencing, gates, cattleguards, signs,
improvements, equipment, machinery and other real or personal property located
on the Leasehold Premises as of the Transfer Completion Date (except to the
extent the same constitute part of the CED Existing Xxxxx).
EXHIBIT "D"
Description of the MidAmerican Pre-Existing Assets
--------------------------------------------------
1. That certain administration building constructed on the Right of Way
Property, together with all equipment, machinery, fixtures, furniture, water
well, warehouse/shop, pipe yard, parking areas and other real or personal
property located therein or associated therewith.
2. That certain telephone cable and related improvements located on the
Right of Way Property, together with all equipment, machinery and other items
associated therewith.
3. All other wellhead equipment, valves, pipelines, pipe supports, meters,
pumps, separators, casings, vessels, fencing, gates, cattleguards, signs,
improvements, equipment, machinery and other real or personal property located
on the Right of Way Property.
