EX-10 16 was5267ex10-5c.txt EXHIBIT 10.5(C) Exhibit 10.5(c) --------------- AMENDMENT TO PURCHASE NOTE AND SECURITY AGREEMENT (SERIES A) This Amendment to Purchase Note and Security Agreement (Series A), 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-A, a California limited partnership ("Debtor"). RECITALS A. ZCC III and Debtor entered into a Purchase Note and Security Agreement (Series A), 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 A), dated as of March 26, 1986 (said Purchase Note and Security Agreement, as so amended being referred to herein as the "Series A Purchase Agreement"), pursuant to which, among other things, the Debtor issued to ZCC III three (3) promissory notes, dated November 22, 1985, November 29, 1985, and December 16, 1985, respectively, in the aggregate original principal amount of $13,708,800 (collectively, the Series A 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 A 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 A 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 A 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 A 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 A Purchase Notes in an amount which bears the same proportion to the then outstanding principal balance of the Series A 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 A 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 A 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 A Purchase Notes." Section 4. Amendment of Section 2.3. (a) Section 2.3 of the Series A 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 A Purchase Agreement shall not include or refer 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 A 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 A Purchase Agreement, and all references to "this Agreement" in the Series A Purchase Agreement, shall refer to the Series A 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 A 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 A 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 A Purchase Agreement or to any future transaction which would, absent consent of ZCC III, constitute a Default or Event of Default under the Series A Purchase Agreement or the Series A 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/Kenneth C. Karas ------------------------------------ President ------------------------------------ ZOND WINDSYSTEM PARTNERS, LTD. SERIES 85-A, a California limited partnership By its authorized General Partner: Zond Windsystems Management Corporation III, a California corporation /s/Kenneth C. Karas ------------------------------------ President ------------------------------------ 5 Page
EXHIBIT D-1: EXISTING COVERAGES Marsh/McLennan 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 Clara 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 Marsh/McLennan 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 Clara 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 Marsh/McLennan 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
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EXHIBIT D-1: EXISTING COVERAGES Marsh/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