Exhibit 10.5(c)
---------------
AMENDMENT TO PURCHASE NOTE AND
SECURITY AGREEMENT (SERIES B)
This Amendment to Purchase Note and Security Agreement (Series
B), dated as of August 30, 1990 ("Amendment") is made by and between, ZOND
CONSTRUCTION CORPORATION III, a California corporation ("ZCC III") and ZOND
WINDSYSTEM PARTNERS, LTD. SERIES 85-B, a California limited partnership
("Debtor").
RECITALS
A. ZCC III and Debtor entered into a Purchase Note and
Security Agreement (Series B), dated as of November 7, 1985, as amended by (i)
that certain Modification Agreement dated as of February 19, 1986, and (ii) that
certain Amendment to Purchase Note and Security Agreement (Series B), dated as
of March 26, 1986 (said Purchase Note and Security Agreement, as so amended
being referred to herein as the "Series B Purchase Agreement"), pursuant to
which, among other things, the Debtor issued to ZCC III three (3) promissory
notes, dated November 13, 1985, November 27, 1985, and December 16, 1985,
respectively, in the aggregate original principal amount of $20,563,000
(collectively, the Series B Purchase Notes");
B. ZCC III and First Interstate Bank of California, as
Trustee under that certain Indenture and Security Agreement dated as of
December 1, 1985 ("Indenture"), have entered into a Supplemental Indenture
dated as of August 30, 1990 ("Supplemental Indenture"), amending certain
provisions of the Indenture;
C. ZCC III and the Debtor deem it to be in their respective
best interests to amend certain of the provisions of the Series B Purchase
Agreement as set forth below to conform to amendments made in the Supplemental
Indenture;
NOW THEREFORE, for good and valuable consideration, the receipt
of which is hereby acknowledged, ZCC III and the Debtor hereby agree as follows:
Section 1. Defined Terms. All capitalized terms used and not
defined herein shall have the meanings ascribed to them in the Series B Purchase
Agreement, as amended hereby.
Section 2. Representations of Debtor
2.1 The representations and warranties of the Debtor contained
in Section 3 of the Series B Purchase Agreement are true and correct in all
material respects, as if made on and as of the date hereof (except as to those
representations and warranties which are made as of a specific date, which shall
be materially true and correct as of such specific date), after giving effect to
the transactions contemplated herein.
2.2 The Debtor has full power and authority to enter into this
Amendment and this Amendment has been duly authorized, executed and delivered by
it.
1
Section 3. Amendment of Section 6. Section 6 of the
Series B Purchase Agreement is hereby amended to read in its entirety as
follows:
"6. Insurance.
6.1 Existing Coverages. The Debtor presently maintains or is
a named insured under the insurance coverages (individually an "Existing
Coverage," and collectively, the "Existing Coverages") described on the attached
Exhibit D-1 attached hereto, in the coverage amounts and with the insured risks,
excluded risks, deductible amounts, and for the term specified therein.
"6.2 Obligation to Maintain Insurance. The Debtor shall, at a
minimum, maintain or remain as a named insured under the insurance coverages
described in Exhibit D-2 attached hereto, in the coverage amounts and with the
insured risks, excluded risks and deductible amounts specified therein
(individually a "Minimum Coverage" and collectively, the "Minimum Coverages"),
provided, however that the Debtor shall maintain or remain as a named insured
under such additional insurance coverages (individually, an "Enhanced Coverage"
and collectively the "Enhanced Coverages") as and to the extent that ZCC III and
the Debtor determine that, in their reasonable business judgment, such
additional coverage is commercially available to similarly situated companies
engaged in comparable business activities as that of the Debtor, and upon
reasonable and economic terms, including without limitation insured risks,
coverage amounts, excluded risks and deductible amounts, and as are issued by
insurance companies reasonably acceptable to ZCC III ( the Existing Coverages,
the Minimum Coverages and the Enhanced Coverages collectively, the "Insurance
Coverages"). ZCC III shall be a named insured under each of the Insurance
Coverages, and the Insurance Coverages shall not be cancellable for nonpayment
of premiums other than as provided therein. Upon demand by ZCC III at any time,
the Debtor shall furnish proof of compliance with the requirements of this
Section 6.
"6.3 Insurance Certificate. Within 90 days after the close of
each fiscal year of the Debtor, the Debtor shall furnish to ZCC III a letter
from an officer of Zond describing the Insurance Coverage as then in effect and
certifying that such coverage is in compliance with the requirements of Section
6.2.
"6.4 Notices and Claims. The Debtor shall promptly furnish to
ZCC III copies of any notice relating to any of the Insurance Coverages and
received by the Debtor from any of the Insurance Coverages. The Debtor shall
promptly file all necessary claims under the Insurance Coverages after
consultation with ZCC III and in accordance with all of the applicable terms and
conditions of such Insurance Coverages. The Debtor and ZCC III agree to
cooperate to the extent reasonably necessary in the preparation and verification
of such claims.
"6.5 Use of Insurance Proceeds. All insurance proceeds in
excess of $150,000 per loss occurrence paid to the Debtor in respect of a loss
claimed or for which a claim can be made under any property damage policy or
policies or policies maintained
2
by or for the benefit of Debtor (an "Insured Property Loss") shall be used by
the Debtor in accordance with the following:
(a) Upon the occurrence of an Insured Property Loss
in respect of which insurance proceeds are received by the Debtor in excess of
$150,000, the Debtor may elect to replace or repair any property with respect to
which such proceeds were paid by so notifying ZCC III within 60 days after
receipt of such payment, and upon making such election shall have 320 days to
complete the replacement or repair of such property.
(b) If the Debtor does not elect to replace or
repair all or any Turbines included in such property within such 60 day period,
the Debtor shall prepay the Series B Purchase Notes in an amount which bears the
same proportion to the then outstanding principal balance of the Series B
Purchase Notes plus accrued interest thereon as the rated capacity of all
Turbines damaged by such Insured Property Loss and which the Debtor does not so
elect to repair or replace, bears to the total rated capacity of all Turbines
(including such damaged Turbines) then owned by the Debtor. The amount of any
such prepayment shall be allocated among the Series B Purchase Notes in
proportion to their respective unpaid balances of principal and accrued
interest. Any such prepayment shall be applied pro rata or as otherwise required
by applicable tax law or regulation to each outstanding installment so as to
maintain the level payment character of the Series B Purchase Notes.
(c) In the event that the Debtor makes an election
to replace or repair as provided for in paragraph (a) of this Section 6.5, such
proceeds shall be applied to the costs of replacement or repair as such costs
are incurred by the Debtor, with the remaining balance, if any, applied to
prepay the Series B Purchase Notes."
Section 4. Amendment of Section 2.3.
(a) Section 2.3 of the Series B Purchase Agreement
is hereby amended to delete from said Section in their entirety the existing
provisions of Clauses (d), (e) and (f) thereof and to renumber existing Clauses
(g) through (n), thereof, inclusive, as new Clauses (d) through (e), inclusive.
(b) From the Effective Date of this Amendment, any
reference to "Intangible Collateral" or "Assigned Contracts" under or in
reference to this Series B Purchase Agreement shall not include or refer to any
of the agreements described in the Clauses (d), (e) or (f) deleted hereunder.
Section 5. Miscellaneous.
5.1 Except as specifically provided herein, the Series B
Purchase Agreement is in all, respects ratified and confirmed, and all the
terms, conditions and provisions thereof shall be and remain in full force and
effect. For any and all purposes, from and after the effective date, any and all
references hereafter to the Series B Purchase Agreement, and all references to
"this Agreement" in the Series B Purchase Agreement, shall refer to the Series B
Purchase Agreement as hereby amended.
3
5.2 This Amendment embodies the entire agreement and
understanding of the parties hereto and supersedes all prior agreements and
understandings relating to the subject matter of this Amendment. In case any one
or more of the provisions contained in this Amendment, in the Series B Purchase
Agreement as amended hereby, or any application thereof, shall be invalid,
illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein and therein, and any
other applications thereof, shall not in any way be affected or impaired
thereby.
5.3 Except as otherwise expressly provided herein, nothing
contained in this Amendment shall, or shall be construed to, modify, invalidate
or otherwise affect any provision of the Series B Purchase Agreement or any
right of ZCC III arising thereunder.
5.4 The execution of this Amendment by ZCC III shall not in
any way constitute an agreement or obligation of ZCC III to give its consent to
any future amendment of the Series B Purchase Agreement or to any future
transaction which would, absent consent of ZCC III, constitute a Default or
Event of Default under the Series B Purchase Agreement or the Series B Purchase
Notes.
5.5 This Amendment is intended to be governed by the laws of
the State of California, and shall be construed and enforced in accordance with,
and the rights of the parties shall be governed by, the laws of such state.
5.6 This Amendment may be executed in as many counterparts,
as may be deemed necessary or convenient by the parties, and each of which, when
so executed, shall be deemed to be an original, but all such counterparts shall
constitute but one and the same agreement.
5.7 This Amendment shall, upon the execution by ZCC III and
the Debtor, be deemed effective as of date first set forth above.
4
IN WITNESS WHEREOF, ZCC III and the Debtor have caused this
Amendment to be executed by their respective officer or officers thereto duly
authorized.
ZOND CONSTRUCTION CORPORATION III
/s/Xxxxxxx X. Xxxxx
------------------------------------
President
------------------------------------
ZOND WINDSYSTEM PARTNERS, LTD.
SERIES 85-B, a California limited
partnership
By its authorized General Partner:
Zond Windsystems Management
Corporation IV, a California
corporation
/s/Xxxxxxx X. Xxxxx
------------------------------------
President
------------------------------------
5
Page
EXHIBIT D-1: EXISTING COVERAGES
Xxxxx/XxXxxxxx INSURED: ZOND CONSTRUCTION CORPORATION III
INSFOR56 PROJECT: ZOND CONSTRUCTION CORPORATION III
Coverage as of 8/7/90 Limits Company Policy # Policy Period Premium
---------------------------------------------------- -------------------- -------------------- ------------- --------------
Property $10,000,000 Continental 9/01/88 (Unknown)
Primary: "All-Risk" to real or personal Insurance 9/01/91 Annual Note(1)
property, including business Company
interruption, contingent business #SFP2982435
interruption, transit, flood and (50% Participation)
earthquake
Commonwealth
*V-17's CWMP 2703
*Substations (50% Participation)
*MVA Transformer
*Miscellaneous equipment
*Infrastructure
Earthquake and flood $10,000,000
annual aggregates
separately
Deductibles: Best's
$10,000 all perils except transit Carrier Rating
which is $5,000, Earthquake which is ------- ------
5% of the loss or $500,000, whichever Continental A 13
is greater, per occurrence and Flood
which is $50,000 per occurrence
Commonwealth See Note
Note (1): This policy and premium covers
all Vestas V-17 WTG's and
infrastructure at Santa Xxxxx in
addition to the 400 Vestas
WTG's and infrastructure known as
33E or Series 85A & B.
Note Commonwealth is a Canadian Company and therefore it isn't rated by Best.
However, we do have a pass thru endorsement to their parent, The Home
Insurance Company, which is rated A-XI.
Page 2
EXHIBIT D-1: EXISTING COVERAGES
Xxxxx/XxXxxxxx PROJECT: ZOND CONSTRUCTION CORPORATION III
INSFOR56 INSURED: ZOND CONSTRUCTION CORPORATION III
Coverage as of 8/7/90 Limits Company Policy # Policy Period Premium
---------------------------------------------------- -------------------- -------------------- ------------- --------------
Excess: "All-Risk" Property Policy $18,000,000 Insurance Company 9/01/88 (Unknown)
Except Earthquake excess of of North America 9/01/91 Note (1)
(Following Form over Primary) deductible #EUT-F0925055-4
and (66.66%)
$10,000,000
primary layer General Accident* 9/01/90
per Insurance Company 9/01/91
occurrence # (Unknown)
(16.67%)
Employers of 9/01/90
Wausau 9/01/91
# (Unknown)
(16.67%)
Earthquake $15,000,000
annual
aggregate
excess of
deductible
and
$10,000,000
primary layer
per
occurrence
Best's
Note (1): This policy and premium covers all Carrier Rating
Vestas V-17 WTG's and infrastructure ------- ------
at Santa Xxxxx in addition to the 400 INA A 14
Vestas WTG's and infrastructure known
as 33 East or Series 85A & B. General Accident A+14
Employers A+15
*Insurance Carrier as of 9/1/90 replacing Marine Indemnity Insurance
Company which has an AM Best's rating of A-IV.
Page 3
EXHIBIT D-1: EXISTING COVERAGES
Xxxxx/XxXxxxxx PROJECT: ZOND CONSTRUCTION CORPORATION III
INSFOR56 INSURED: ZOND CONSTRUCTION CORPORATION III
Coverage as of 8/7/90 Limits Company Policy # Policy Period Premium
---------------------------------------------------- -------------------- -------------------- ------------- --------------
Boiler & Comprehensive B&M Including $10,000,000 Travelers 9/01/89 (Unknown)
Machinery: service interruption, recipient Occurrence Insurance Company 9/01/92 Annual Note(1)
interruption and underground cable JBM-932G491-9-89 TIL
Miscellaneous
Transformers
500 KVA plus
Deductibles:
PD: $5,000 per accident
BI: 24 hours
Note (1): This policy and premium
covers infrastructure
valued over $7,082,714
Best's
Carrier Rating
------- ------
Travelers A 15
Page 4
EXHIBIT D-1: EXISTING COVERAGES
Xxxxx/McLennan PROJECT: ZOND CONSTRUCTION CORPORATION III
INSFOR56 INSURED: ZOND CONSTRUCTION CORPORATION III
Coverage as of 8/7/90 Limits Company Policy # Policy Period Premium
---------------------------------------------------- -------------------- -------------------- ------------- --------------
General Comprehensive General Liability Hartford Insurance 7/01/90 $49.912 per
Liability Insurance with Special Broad Form Company 7/01/91 WTG
Primary Comprehensive GL Endorsement #83UENNA7162-A Note (1)
Bodily Injury Liability and
Property Damage Liability $1,000,000
each
occurrence
and annual
aggregate
per site
Products Liability
$1,000,000
aggregate
Umbrella Excess Liability International
$10,000,000 Insurance Company 7/01/90 $47,500 Annual
SX Primary #524-2067055 7/01/91 Note (1)
and annual
aggregate
Note (1): This policy covers over
1,649 WTGs.
Best's
Carrier Rating
------- ------
Hartford A + 15
International A 13
EXHIBIT D-2
MINIMUM INSURANCE COVERAGES
LIABILITY
Insurance Company A-VIII*
General Liability $1,000,000 combined single limit primary
bodily injury/property damage
each occurrence and annual
aggregate
Business Automobile $1,000,000 combined single limit bodily
injury/property damage each
occurrence and annual
aggregate
Insurance Company A-VIII*
Excess Liability $5,000,000 annual aggregate and excess of
primary
PROPERTY
Insurance Company A-VIII*
Limits of Liability $10,000,000*** per occurrence
18% of covered values per occurrence and annual
but no less than $7.5 aggregate for the peril of
million** earthquake
$5,000,000*** combined Boiler & Machinery
Property Damage and Business
Interruption per occurrence
$2,000,000 Contingent Business
Interruption
$500,000 Transit
Deductibles $50,000 per occurrence all perils,
except
$10,000 Transit
$500,000 per occurrence or 5% of the
1
loss, whichever is greater,
for earthquake
$100,000 Flood per occurrence
$50,000 Boiler & Machinery Property
damage per object
120 hours waiting period Boiler &
Machinery Business
Interruption per object
120 hours waiting period Service
Interruption
Only USA domiciled companies receive AM Best Ratings. For non-USA admitted
companies, the maximum loss exposure acceptable will be no more than 5% of
the carrier's policy holder's surplus.
In addition to Series 85 A & B, valued at $40 million, this policy may
cover Series 85-C, valued at $21,170,000; Zond Pan-Aero Windsystem Partners
I, valued at $35 million, and Zond Pan-Aero Windsystem Partner II, valued
at $17.5 million.
*** This is a combined Boiler & Machinery Property Damage and Business
Interruption Policy covering other turbine projects in Tehachapi, Livermore
and Palm Springs.
2
