FIRST SUPPLEMENTAL TRUST INDENTURE
This FIRST SUPPLEMENTAL TRUST INDENTURE, dated as of
February __, 1997 (the "First Supplemental Indenture"), by and
between COSO FUNDING CORP., a corporation organized under the
laws of the state of Delaware ("Coso Funding"), and FIRST BANK
NATIONAL ASSOCIATION, as trustee (the "Trustee"), a national
banking association duly existing under the laws of the United
States of America.
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 Trust Indenture, dated as
of December 16, 1992 (the "Original Indenture"), between Coso
Funding and the Trustee (as successor to Bank of America National
Trust and Savings Association), as trustee; 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 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"), (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, pursuant to the Original Indenture, the
Partnerships have funded and maintained moneys in the Debt
Service Reserve Fund; and
WHEREAS, Coso Funding and the Partnerships propose to amend
and supplement the Original Indenture, the Original Credit
Agreements and other Financing Documents 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 10.02 of the Original Indenture permits
Coso Funding and the Trustee to amend the Original Indenture in
the manner contemplated by this First Supplemental Indenture upon
approval by the holders of not less than 66-2/3% in aggregate
principal amount of the Notes then Outstanding, by a supplemental
indenture filed with, and in a form satisfactory to the Trustee,
and such consent has been obtained.
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:
A G R E E M E N T:
ARTICLE I
Definitions
Capitalized terms used in this First Supplemental Indenture
and not otherwise defined in this First Supplemental Indenture
shall have the meanings assigned to such terms in the Original
Indenture.
ARTICLE II
Amendment
Section 2.01 Revenue Fund. Section 4.05(b)(9) of the
Indenture is hereby amended by deleting the current Section
4.05(b)(9) (but not deleting the last paragraph of Section
4.05(b)) and replacing such deleted provision with the following:
(9) from each Partnership's Revenue Account
(unless on such Note Payment Date funds have been
transferred on behalf of such Partnership pursuant to
clause (3) or Section 4.06(b), in which event no
transfers shall be made pursuant to this clause (9)) in
the following order of priority:
(i) first, to each of the other
Partnerships' Revenue Accounts, an amount equal to
the amount due under the applicable Support Loan
Agreement;
(ii) second, to the Debt Service Reserve LOC
Provider, for interest then due and payable on any
Debt Service Reserve LOC Loans made in respect of
such Partnership's account of the Debt Service
Reserve Fund and for any fees and expenses then
due and payable to the Debt Service Reserve LOC
Provider by such Partnership under the Debt
Service Reserve LOC Reimbursement Agreement;
(iii) third, subject to the limitations
set forth in Section 4.06(f)(ix), to the extent
that funds are not available from a Partnership's
Revenue Account for the transfer described in
clause (ii) immediately above, (A) if such
Partnership is CED or CPD, (1) from the other of
CED or CPD's Revenue Account to the deficient
Partnership's Revenue Account in an aggregate
among equal to such deficiency, and (2) from CFP's
Revenue Account to the deficient Partnership's
Revenue Account, to the extent of any remaining
deficiency after the application of clause (1)
above; (B) if such Partnership is CFP, (1) from
each of CED and CPD's Revenue Accounts to CFP's
Revenue Account, an amount equal to one-half of
such deficiency, and (2) to the extent of any
remaining deficiency should one of CED or CPD be
unable to pay its share of CFP's deficiency, from
the other of CED or CPD's Revenue Account to CFP's
Revenue Account; (C) if any two Partnerships
experience such deficiency, and one of such
Partnerships is CFP, from the third Partnership's
Revenue Account (x) first to the Revenue Account
of the Partnership that is not CFP to the extent
of any deficiency therein, and (y) second, to
CFP's Revenue Account; and (D) if CED and CPD
experience such deficiency, from CFP's Revenue
Account in accordance with the directions of the
managing partner of CFP, which shall allocate
amounts in its sole discretion;
in each case as set forth in the Revenue Transfer
Certificate.
Section 2.02 Debt Service Reserve Letter of Credit.
Section 4.06 of the Indenture is hereby amended by adding a new
Section 4.06(f) which shall read as follows:
(f) (i) A Debt Service Reserve Letter of
Credit may be issued to the Trustee by one or more
commercial banks or other financial institutions
to fulfill, to the extent of each Available Amount
of such Debt Service Reserve Letter of Credit, the
obligations of this Indenture to maintain amounts
in the Debt Service Reserve Fund if the long-term
senior unsecured debt obligations of the Debt
Service Reserve LOC Provider are rated at least
"A" by S&P and "A2" by Moody's. The Debt Service
Reserve Letter of Credit shall expire not earlier
than December 31, 2001. Any Debt Service Reserve
Letter of Credit shall provide for a revolving
feature under which the Available Amount in
respect of a Partnership will be reinstated to the
extent of any repayment of principal on the Debt
Service Reserve LOC Loans to such Partnership in
accordance with clause (A) of the first sentence
of Section 4.06(f)(v) hereof. In the event that a
Debt Service Reserve Letter of Credit is delivered
to the Trustee, the Available Amount thereof in
respect of each Partnership will be deemed to be
deposited in such Partnership's account of the
Debt Service Reserve Fund for purposes of
determining if the obligations of such Partnership
to fund or maintain amounts in such account have
been satisfied.
(ii) One Business Day prior to each date
on which the Trustee is required to withdraw or
transfer moneys from a Partnership's account of
the Debt Service Reserve Fund under this
Indenture, to the extent that moneys then held in
such Partnership's account of the Debt Service
Reserve Fund are insufficient to fund such
withdrawal and transfer, the Trustee shall deliver
to the Debt Service Reserve LOC Provider (i) a
draft on the Debt Service Reserve Letter of Credit
in an amount equal to the lesser of (A) the
Available Amount of the Debt Service Reserve
Letter of Credit in respect of such Partnership or
(B) the amount of such deficiency and (ii) an
appropriate certificate with respect thereto if
required under the Debt Service Reserve Letter of
Credit. Prior to making the other transfers
contemplated by this Section 4.05(b), the Trustee
shall deposit the moneys received from such draw
on the Debt Service Reserve Letter of Credit in
such Partnership's account of the Debt Service
Reserve Fund for use in accordance with this
Indenture.
(iii) Forty-five (45) days after
written notice to the Trustee from the Debt
Service Reserve LOC Provider, Coso Funding or any
Noteholder that the long-term senior unsecured
debt securities of such Debt Service LOC Provider
is less than "A" as determined by S&P or "A2" as
determined by Moody's (whether or not such day is
a Note Payment Date), or if such day is not a
Business Day, the next succeeding Business Day,
provided that the Debt Service Reserve Letter of
Credit has not been replaced with cash, permitted
investments and/or another Debt Service Reserve
Letter of Credit issued by a new Debt Service
Reserve LOC Provider meeting the requirements of
this Indenture, the Trustee shall deliver to the
Debt Service Reserve LOC Provider on such date (i)
a draft on the Debt Service Reserve Letter of
Credit in an amount equal to the Total Available
Amount under the Debt Service Reserve Letter of
Credit and (ii) an appropriate certificate with
respect thereto if required by the Debt Service
Reserve Letter of Credit. The Trustee shall
deposit the moneys received from the Debt Service
Reserve LOC Provider in respect of each
Partnership in payment of such draft in such
Partnership's account of the Debt Service Reserve
Fund to be applied in accordance with this
Indenture and the Loan Instruments.
(iv) No more than five (5) Business Days
prior to December 31, 2001, prior to the transfers
described in Section 4.06(d), the Trustee shall
draw the lesser of (A) the Total Available Amount
of any Debt Service Reserve Letter of Credit and
(B) the amount sufficient to discharge on December
31, 2001 all the obligations of Coso Funding and
the Borrowers under the Indenture including
without limitation all obligations for the
principal of and interest on the Notes and the
compensation of the Trustee, for deposit in the
respective Partnership's account of the Debt
Service Reserve Fund.
(v) Repayment of principal on any Debt
Service Reserve LOC Loans shall be permitted only
from moneys that (A) are transferred to the Debt
Service Reserve Fund pursuant to Sections
4.05(b)(6) or 4.05(b)(7) of this Indenture and
then only to the extent that such repayment causes
a reinstatement in the Available Amount in respect
of a Partnership under the applicable Debt Service
Reserve Letter of Credit in an amount equal to the
amount of principal so repaid, (B) are otherwise
available for distribution to a Partnership
pursuant to Section 4.05(b) of the Indenture or
(C) are not a part of the Trust Estate. Repayment
of interest, fees or expenses to the Debt Service
Reserve LOC Provider shall be permitted only from
moneys that (A) are paid to the Debt Service
Reserve LOC Provider pursuant to Sections
4.05(b)(9)(ii) or 4.05(b)(9)(iii) of this
Indenture, (B) are otherwise available for
distribution to a Partnership pursuant to Section
4.08 of the Indenture or the last paragraph of
Section 4.05(b) of the Indenture or (C) are not a
part of the Trust Estate.
(vi) The Available Amount in respect of
a Partnership may be reduced to the amount that
results when the amount of cash and/or permitted
investments on deposit in such Partnership's
account of the Debt Service Reserve Fund is
subtracted from the Debt Service Reserve Fund
Requirement of such Partnership. Any cash on
deposit in the Debt Service Reserve Fund shall be
used (or investments purchased with such cash
shall be liquidated and the proceeds applied as
required) prior to any drawing on any Debt Service
Reserve Letter of Credit. Upon delivery of moneys
by or on behalf of a Partnership to the Trustee
for deposit in such Partnership's account of the
Debt Service Reserve Fund, the Trustee shall so
deposit such moneys, provided that such moneys (i)
have been distributed, or are available for
distribution, to a Partnership pursuant to Section
4.08 of the Indenture or the last paragraph of
Section 4.05(b) of the Indenture or (ii) are not
part of the Trust Estate, as certified to Trustee
by an Authorized Representative of such Borrower.
If more than one Debt Service Reserve Letter of
Credit is delivered to the Trustee, drawings
thereunder shall be allocated among such letters
of credit as specified in a certificate by the
Partnerships, or, in the absence of such a
certificate, on a pro rata basis calculated by
reference to the Total Available Amounts under
such letters of credit.
(vii) On any Revenue Transfer Date
(after making the transfers and payments
contemplated by section 4.05(b) hereof), upon
receipt at least one day prior to such date of a
Debt Service Reserve Transfer Certificate in the
form of Exhibit J to this Indenture, the Trustee
shall pay to the Debt Service LOC Provider from
amounts available in the Debt Service Reserve Fund
an amount as set forth in the Debt Service Reserve
Transfer Certificate for repayment of outstanding
principal of Debt Service Reserve LOC Loans.
(viii) Upon issuance of a Debt
Service Reserve Letter of Credit to the Trustee in
accordance with this Indenture, the Trustee, upon
receipt of a certificate in the form of Exhibit K
hereto, shall promptly distribute to the
applicable Partnership moneys in such
Partnership's account of the Debt Service Reserve
Fund to the extent that such sum of all moneys in
such account plus the Available Amount in respect
of such Partnership of the Debt Service Reserve
Letter of Credit exceeds the Debt Service Reserve
Fund Requirement for such Partnership,
notwithstanding the fact that the date of such
distribution is not a Distribution Date, provided,
however, the Trustee shall only distribute such
moneys to the extent that the aggregate of all
moneys in the Debt Service Reserve Fund plus the
Total Available Amount of the Debt Service Reserve
Letter of Credit exceeds the aggregate of the Debt
Service Reserve Fund Requirements for all the
Partnerships.
(ix) Upon receipt by the Trustee of a
certificate of Coso Funding or a Partnership
obligated to make payments under Section
4.05(b)(9)(iii) of this Indenture to the effect
that such obligation to make such payments has
been terminated in accordance with the provisions
of the applicable LOC Support Loan Agreement,
transfers shall no longer be made pursuant to
Section 4.05(b)(9)(iii) from the Revenue Account
of such Partnership.
Section 2.03 Debt Incurred by Partnership. Section 6.04 of
the Indenture is hereby amended by adding the following sentence
at the end of such Section:
Any Debt of any Partnership incurred or existing pursuant to
clause (x) of Section 4.10(a) of such Partnership's Credit
Agreement shall (i) be subordinated as provided in, and
shall include, the Terms of Subordination attached to such
Credit Agreement as Exhibit G, and (ii) shall state that it
complies with the applicable Credit Agreement.
Section 2.04 Amendments to Definitions. Exhibit A of the
Indenture is hereby amended by:
(i) in the definition of "Credit Agreement", inserting
the phrase ", as amended or supplemented" immediately after
"1992" in each place where "1992" appears.
(ii) in the definition of "Mortgage", inserting the
phrase ", in each case as amended or supplemented," in the
first line of such definition after the phrase "as the
context requires,".
(iii) in the definition of "Subordinated Permitted
Indebtedness", deleting the phrase "(v) and (vi)" and
replacing it with "(v), (vi) and (x)".
(iv) in the definition of "Partnership Documents",
inserting the phrase ", in each case as amended or
supplemented" at the end of such definition immediately
prior to the period.
(v) in the definition of "Pledge Agreements",
inserting the phrase ", in each case as amended or
supplemented," in the second line of such definition after
the phrase "as the context requires,".
(vi) in the definition of "Security Agreement",
inserting the phrase ", in each case as amended or
supplemented," in the second line of such definition after
the phrase "as the context requires,".
(vii) in the definition of "Support Loan
Agreement", inserting the phrase ", in each case as amended
or supplemented," in the second line of such definition
after the phrase "as the context requires," and inserting
the phrase "(not including any LOC Support Loan Agreement)"
after the phrase "any similar agreement" in each case where
"any similar agreement" appears.
Section 2.05 New Definitions.. Exhibit A of the Indenture
is hereby amended by adding the following definitions in the
appropriate alphabetical order:
"Debt Service Reserve Letter of Credit" means one or
more irrevocable, direct pay letters of credit issued by the
Debt Service Reserve LOC Provider in favor of the Trustee in
support of any obligations to fund the Debt Service Reserve
Fund under the Financing Documents.
"Debt Service Reserve LOC Provider" means the
commercial bank(s) or other financial institution(s) issuing
the Debt Service Reserve Letter of Credit.
"Debt Service Reserve LOC Reimbursement Agreement"
means an agreement for the issuance of a Debt Service
Reserve Letter of Credit and reimbursement of any Debt
Service Reserve LOC Loans, fees and expenses between the
Debt Service Reserve LOC Provider and one ore more of the
Partnerships.
"Debt Service Reserve LOC Loan" means each loan made by
a Debt Service Reserve LOC Provider pursuant to the Debt
Service Reserve LOC Reimbursement Agreement in connection
with a draw on the Debt Service Reserve Letter of Credit.
"LOC Support Loan" means each loan obtained by one of
the Partnerships from another of the Partnerships for use to
pay principal of or interest on Debt Service Reserve LOC
Loans or to pay fees or expenses in connection with a Debt
Service Reserve LOC Reimbursement Agreement.
"LOC Support Loan Agreement" means an agreement for the
provision and repayment of LOC Support Loans in accordance
with the requirements of the Indenture and the applicable
Credit Agreement.
"Omnibus Agreement" means the Omnibus Acknowledgment
and Agreement, dated as of the date hereof, among Coso
Funding, CFP, CED, CPD, the Trustee and the other parties
thereto.
"Available Amount" means, in relation to each
Partnership, the maximum amount available to be drawn from
time to time under the Debt Service Reserve Letter of Credit
in respect of such Partnership.
"Total Available Amount" means the aggregate maximum
amount available to be drawn from time to time under the
Debt Service Reserve Letter of Credit in respect of all the
Partnerships.
Section 2.06 Amended Exhibits. The Indenture is hereby
amended by deleting the current Exhibit C and replacing it with
the Exhibit C to this First Supplemental Indenture.
Section 2.07 New Exhibits. The Indenture is hereby amended
by adding, as new exhibits to the Indenture, Exhibits J and K
attached to this First Supplemental Indenture.
ARTICLE III
Miscellaneous
Section 3.01 Effect of First Supplemental Indenture. Upon
the execution of this First Supplemental Indenture, the Indenture
shall be modified in accordance herewith, and this First
Supplemental Indenture shall form a part of the Indenture for all
purposes; and every Holder of Notes previously or thereafter
authenticated and delivered under the Indenture shall be bound by
the terms hereof. This First Supplemental Indenture shall be
construed as supplemental to the Indenture and shall form a part
thereof, and the Indenture is hereby incorporated by reference
herein and hereby ratified, approved and confirmed. From and
after the date hereof, whenever referred to in any Financing
Document, the Indenture shall mean the Indenture as modified,
amended and supplemented by this First Supplemental Indenture.
Section 3.02 Headings for Convenience Only. The
descriptive headings in this First Supplemental Indenture are
inserted for convenience only and shall not control or affect the
meaning or construction of any of the provisions hereof.
Section 3.03 Counterparts. This First Supplemental
Indenture 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 3.04 Applicable Law. THIS FIRST SUPPLEMENTAL
INDENTURE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF CALIFORNIA
IN WITNESS WHEREOF, COSO FUNDING CORP. has caused this First
Supplemental Indenture to be executed by its Senior Vice
President and its corporate seal to be hereunto affixed, attested
by its Secretary or Assistant Secretary and the Trustee has
caused this First Supplemental Trust Indenture to be executed by
one of its duly authorized officers and its seal to be hereunto
affixed, attested by one of its duly authorized officers, all as
of the day and year first above written.
[SEAL] COSO FUNDING CORP., as
principal and as agent for the
Partnerships
By:_________________________
Title:________________________
Attest:
____________________________
Title:
[SEAL] FIRST BANK NATIONAL
ASSOCIATION
____________________________
Trustee
By:_________________________
Title:________________________
Attest:
____________________________
Title: