OMNIBUS ACKNOWLEDGMENT AND AGREEMENT
This OMNIBUS ACKNOWLEDGMENT AND AGREEMENT, dated as of
February 1, 1997 (this "Agreement") is made by and between COSO
FUNDING CORP., a Delaware corporation, for itself and as agent
for the Trustee ("Coso Funding"), COSO FINANCE PARTNERS, a
California general partnership ("CFP"), COSO ENERGY DEVELOPERS, a
California general partnership ("CED"), and COSO POWER
DEVELOPERS, a California general partnership ("CPD"), CALENERGY
COMPANY, INC., a Delaware corporation ("CECI"), CHINA LAKE
OPERATING COMPANY, a Delaware corporation ("CLOC"), COSO FINANCE
PARTNERS II, a California general partnership ("CFPII"), COSO
LAND COMPANY, a joint venture ("CLC"), COSO HOTSPRINGS
INTERMOUNTAIN POWER, INC., a Delaware corporation ("CHIP"), CHINA
LAKE JOINT VENTURE, a California general partnership ("CLJV"),
COSO TECHNOLOGY CORPORATION, a Delaware corporation, ESCA LIMITED
PARTNERSHIP, a California limited partnership ("ESCA"), ESI
ENERGY, INC., a Florida corporation ("ESI"), CAITHNESS COSO
HOLDINGS, L.P., a California limited partnership ("CCH"),
CAITHNESS NAVY II GROUP, L.P., a New Jersey limited partnership
("CNII" and, FIRST BANK NATIONAL ASSOCIATION, a national banking
organization duly existing under the laws of the United States of
America, as Lender (together with Coso Funding, CFP, CED, CECI,
CPD, CLOC, CFPII, CLC, CHIP, CLJV, CTC, ESCA, ESI, CCH and CNII,
the "Acknowledging Parties") in favor of FIRST BANK NATIONAL
ASSOCIATION, a national banking organization duly existing under
the laws of the United States of America, as trustee ("Trustee")
under the Trust Indenture, dated as of December 16, 1992 (the
"Original Indenture"), by and between Coso Funding and the
Trustee, as amended, modified or supplemented pursuant to the
First Supplemental Indenture, dated as of the date hereof. The
Original Indenture, as amended, modified or supplemented
including pursuant to the First Supplemental Indenture, is
hereafter referred to as the "Indenture". Capitalized terms used
and not otherwise defined herein shall have the meanings set
forth in Exhibit A of the Indenture.
W I T N E S S E T H
WHEREAS, Coso Funding is a corporation established for the
purpose of issuing notes (the "Notes"), as principal and as agent
for the Partnerships, pursuant to the Indenture; and
WHEREAS, on December 16, 1992, Coso Funding issued and sold
the Initial Notes in the aggregate principal amount of
$560,245,000; and
WHEREAS, the proceeds of the Initial Notes were used (i) to
finance the purchase by Coso Funding of outstanding secured
indebtedness of each of CFP, CED and CPD, (ii) to finance capital
expenditures relating to each of such Partnership's Projects,
(iii) to fund certain reserves under the Indenture and (iv) to
pay Transaction Costs; and
WHEREAS, the principal and interest payments on the Initial
Notes will be serviced by repayment of loans made by Coso Funding
to the Partnerships, pursuant to separate Amended and Restated
Credit Agreements, each dated as of December 16, 1992 (the
"Original Credit Agreements"), with each of CFP, CED and CPD and
guaranteed by the Partnerships; and
WHEREAS, Coso Funding has simultaneously with the execution
and delivery of this Agreement entered into (i) the First
Supplemental Indenture and (ii) agreements with each of the
Partnerships amending such Partnership's respective Original
Credit Agreement, to permit the use of a Debt Service Reserve
Letter of Credit to satisfy the obligation to maintain moneys in
the Debt Service Reserve Fund; and
WHEREAS, Section 10.03 of the Original Indenture permits
Coso Funding and the Trustee to amend the Security Documents and
Partnership Documents in the manner contemplated by this
Agreement upon notice to and the written approval or consent of
the owners of not less than 66-2/3% in aggregate principal amount
of the Notes then Outstanding, which consent has been obtained,
and upon the consent and agreement of the Trustee.
WHEREAS, the parties wish to enter into this Agreement in
order to amend the Support Loan Agreements and to acknowledge
that the obligations of the Acknowledging Parties under the
Security Documents and Agency Agreements include the obligations
of the Acknowledging Parties as amended, modified or supplemented
by this Agreement, the amendments as of the date hereof to the
Credit Agreements and the First Supplemental Indenture.
NOW, THEREFORE, for and in consideration of the premises and
the covenants herein contained, it is mutually covenanted and
agreed, for the benefit of the parties hereto and the equal and
proportionate benefit of all Holders of the Notes, as follows:
AGREEMENT
Section 1. Security Documents. Each Acknowledging Party
hereby acknowledges and agrees for the benefit of the Trustee
acting for and on behalf of the Noteholders that the obligations
secured by each Security Document to which such Acknowledging
Party is a party shall and are hereby expressly made to include
(to the extent they do not now so include) all obligations of
such Acknowledging Party (and of any other Acknowledging Party
whose obligations are secured by the terms of such Security
Document), if any, under (a) each of the Credit Agreements, as
amended as of the date hereof and (b) any other Financing
Document entered into in connection with the First Supplemental
Indenture to which such Acknowledging Party is a party.
Section 2. References to Indenture and Credit
Agreements. From and after the date of this Agreement, all
references in the Security Documents and the Agency Agreements to
the Indenture or any Credit Agreement (including for the purpose
of defining capitalized terms) shall, unless the context
otherwise requires, mean the Original Indenture as amended,
modified or supplemented by the First Supplemental Indenture, or
such Credit Agreement, as amended, modified and supplemented as
of the date hereof.
Section 3. Amendments to Support Loan Agreements. Each
of the Support Loan Agreements is hereby amended as follows:
(i) in Paragraph 1(f) thereof, by inserting the phrase
", except as provided in Section 4.06(f)(vii) of the
Indenture," in the third line of such Paragraph immediately
after the words ":it shall".
(ii) in Paragraph 1(i) thereof, by deleting the word
"second" in the third line of such Paragraph and replacing
such word with the word "junior".
Section 4. Amendments to Subordinated Deeds of Trust.
Section 4.10 of each of the Subordinated Deeds of Trust,
Assignment of Rents, Security Agreement and Fixture Filings (as
defined in clause (i) of the definition of Subordinated Security
Documents of each of the Support Loan Agreements) is hereby
amended by inserting the following sentence at the end of such
Section:
In addition, from and after the release of the Indenture and
the Credit Agreements as contemplated by Section 11.01(a) of the
Indenture, this Deed of Trust shall be subordinate in all
respects to any security interest granted to the collateral agent
for the Debt Service LOC Provider in connection with any Debt
Service Reserve LOC Loans or other obligations of Debtor under
the Debt Service LOC Reimbursement Agreement.
Section 5. Acknowledgment of Assignment. Each of the
Acknowledging Parties hereby acknowledges and agrees for the
benefit of the Trustee acting for and on behalf of the
Noteholders that (i) Coso Funding has assigned to the Trustee,
inter alia, (A) the Credit Agreement and the Security Documents
and all rights attendant thereto and (B) all of Coso Funding's
rights, title and interest in, to and under the Credit Agreements
and the Security Documents; (ii) such assignments are hereby
expressly made to include (to the extent they do not now so
include) such Credit Agreements, Security Documents, all rights
attendant thereto and all of Coso Funding's right, title and
interest therein, in each case as amended, modified or
supplemented as of the date hereof; and (iii) all references in
the Acknowledgment of Assignment and Power of Attorney, dated as
of December 16, 1992, by and among Coso Funding, CFP, CED, CPD
and the Trustee, to the Indenture, the Credit Agreements and the
Security Documents (including for the purpose of defining
capitalized terms) shall mean, unless the context otherwise
requires, the Original Indenture as amended, modified or
supplemented by the First Supplemental Indenture, the Credit
Agreements, as amended, modified and supplemented as of the date
hereof, or the Security Documents, as amended, modified and
supplemented hereby, as the case may be.
Section 6. Effect of Agreement. From and after the date
hereof, all references in the Security Documents and the Agency
Agreements to any Security Documents or Agency Agreements shall
mean the applicable Security Documents or Agency Agreements as
amended, modified or supplemented hereby. Except as specifically
amended, modified or supplemented above, the Initial Security
Documents and Agency Agreements shall remain in full force and
effect and are hereby ratified and confirmed. The execution,
delivery and effectiveness of this Agreement shall not, except as
expressly provided herein, operate as a waiver of any right,
power or remedy of the Trustee or any of the Noteholders and
shall not constitute a waiver of any provisions of the Security
Documents or Agency Agreements.
Section 7. Headings for Convenience Only. The
descriptive headings in this Agreement are inserted for
convenience only and shall not control or affect the meaning or
construction of any of the provisions hereof.
Section 8. Counterparts. This Agreement may be executed
in any number of counterparts, each of which when so executed and
delivered shall be an original; but such counterparts shall
together constitute but one and the same instrument.
Section 9. Applicable Law. THIS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF CALIFORNIA.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered by the respective
officers thereunto duly authorized as of the date first written
above.
