Exhibit 10.15
AMENDMENT NO. 4 TO LEASE AGREEMENT
     This Amendment No. 4 to Lease Agreement, dated as of December 31, 2008
(this “Amendment”), is entered into by and between CATALYST PAPER
(SNOWFLAKE) INC., a Delaware corporation (“Landlord” or “Facility Operator”) an
indirect wholly-owned subsidiary of Catalyst Paper Corporation, a Canadian
corporation, and SNOWFLAKE WHITE MOUNTAIN POWER, LLC, an Arizona limited
liability company (“Tenant” or “Facility Owner”).
RECITALS
     A. Landlord and Tenant have entered into that certain Lease Agreement,
dated as of September 14, 2005 (as amended, amended and restated, supplemented
or otherwise modified from time to time in accordance with the terms thereof and
hereof, the “Lease”). Capitalized terms used herein but not defined herein have
the meaning given in the Lease.
     B. Landlord, CoBank, ACB and Tenant have entered into that certain Consent
and Agreement, dated as of September 1, 2006 (the “Consent”), pursuant to which
the Lease was amended as described in the Consent.
     C. Landlord and Tenant have entered into that certain Amendment No. 2 to
Lease Agreement, dated as of August 2, 2007 (“Amendment No. 2”), pursuant to
which the Lease was amended as described in Amendment No. 2.
     D. Landlord and Tenant have entered into that certain Amendment No. 3 to
Lease Agreement, dated as of August 23, 2007 (“Amendment No. 3”), pursuant to
which the Lease was amended as described in Amendment No. 3.
     E. Landlord and Tenant wish to further amend the Lease as set forth herein.
     F. Renegy Holdings, Inc., the sole member of Tenant (“Renegy”), and AZ
Biomass LLC, a Delaware limited liability company (“State Street”), contemplate
entering into that certain Membership Interest Purchase Agreement to be dated as
of January 1, 2009 (the “MIPA”) pursuant to which State Street will acquire from
Renegy all the Class A membership interests in Tenant (the “Class A Interest”)
for the consideration and on the terms as set forth in the MIPA.
     G. Pursuant to Section 22 of the Lease, Tenant has agreed not to assign,
sublease, or otherwise transfer all or any portion of its interest under the
Lease without the prior written consent of Landlord.
     H. The sale of the Class A Interest to State Street pursuant to the MIPA
may be considered to be a “Transfer” of Tenant’s interest in the Lease, as such
term is defined in paragraphs 3 and 4 of Section 22 thereof, and therefore
Tenant has requested that Landlord consent to such Transfer of Tenant’s interest
in the Lease.

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     NOW THEREFORE, for good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereto agree as follows:
AGREEMENT
     1. 2009 Annual Budget. Facility Owner and Facility Operator agree that the
Annual Budget (as defined in the Operations Provisions) for the Lease Year
commencing January 1, 2009 and ending December 31, 2009 (the “2009 Lease Year”)
shall be the budget attached to this Amendment as Exhibit A (the “2009 Annual
Budget”).
     2. Amendment of Lease. Landlord and Tenant agree that the Lease shall be
amended as follows (with capitalized terms not otherwise defined herein having
the meaning given in the Lease and section references referring to sections of
the Lease):
          (a) Section 4.3 is hereby deleted in its entirety and replaced with
the following:
     4.3 Paper Sludge Supply and Removal. Landlord currently operates the Paper
Mill on property that is adjacent to the Real Property. For so long as the Paper
Mill remains open and operating, Landlord shall allow Tenant to obtain without
cost or charge as much of the paper sludge produced by the Paper Mill as Tenant
can use at the Power Facility. Tenant will use commercially reasonable efforts
to utilize the paper sludge as a fuel source for the Power Facility, but Tenant
does not guarantee that the paper sludge will be a viable fuel source for the
Power Facility. At no cost to Tenant, Landlord shall process the sludge to
reduce the moisture content of such sludge to the lowest practical moisture
content (in no event greater than approximately 50% moisture content) and shall
be responsible for all waste water treatment in connection with the production
and processing of such sludge. At no cost to Landlord, Tenant shall install
equipment to transport the paper sludge from the wastewater treatment plant to
the Power Facility, and shall add screw presses or other equipment necessary to
allow Landlord to reduce the moisture content of the sludge. Tenant shall
reimburse Landlord as an “Operational Cost” under the “Operations Provisions”
the cost of transporting all such processed sludge to the Power Facility. In the
event Tenant wishes to terminate its use of any or all of the paper sludge at
the Power Facility, Tenant shall provide Landlord at least 30 days advance
written notice of such termination. Any portion of paper sludge produced at the
Paper Mill that is not taken by Tenant, including any sludge that Tenant
discontinues using, may be sold or otherwise conveyed by Landlord to any third
party; provided, however, that if Landlord desires to sell, transfer or convey
any paper sludge to a third party (other than a transporter for purposes of
disposal of the paper sludge in a landfill), Landlord shall first provide Tenant
with 60 days’ notice of such desire and Tenant shall have the right to take
possession and ownership of all the paper sludge produced by the Paper Mill. In
the event Tenant fails to utilize at least 75% of the paper sludge (at current
levels) produced at the Paper Mill within two (2) years after the Commencement
Date, or thereafter fails to maintain such minimum usage, Tenant shall pay an
annual rent of $400,000 in equal monthly installments. Any rent being paid under
this Section 4.3 shall be suspended if the Paper Mill’s production of paper
sludge falls below 25% of current levels, and shall resume when the production
rises above 25% of current levels. Landlord

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shall notify Tenant at least 90 days prior to permanently closing the Paper Mill
or permanently ceasing production or processing of paper sludge. For purposes of
this Section 4.3, current levels of paper sludge production shall refer to
sludge production of 250 bone dry tons per day of Paper Mill operation. So long
as the Operations Provisions remain in effect, any rent being paid under this
Section 4.3 shall be suspended for any period during which Landlord, as Facility
Operator, fails to use commercially reasonable efforts to utilize paper sludge
taken by Tenant, consistent with Prudent Operating and Maintenance Practices.
          (c) Section 4.6 is hereby deleted in its entirety and replaced with
the following:
     4.6 Utilities; Disposal of Facility Waste Other Than Fly Ash. Landlord
shall provide utilities necessary to operate the Power Facility as described in
this Section 4.6 so long as the Paper Mill is operating. The scope of such
utilities shall be the same as those provided as of November 2008. Electricity
shall be provided as described in Section 4.5 above. Natural gas will be
provided as available at the metered cost. Water, boiler feedwater, compressed
air, sewage and waste water treatment, and removal and disposal of Facility
Waste will be provided to Tenant for a fixed rate of $375,000 per year. Landlord
shall arrange for the transportation and disposal of all Hazardous Waste
generated at the Power Facility in accordance with applicable law, and all costs
associated therewith shall be considered an “Operational Cost” to be paid by
Tenant. Landlord shall take possession of, transport and dispose of all Facility
Waste in a location other than on the Real Property in accordance with
applicable law, including, without limitation, all “Environmental Laws”. Tenant
shall not have any financial responsibility with respect to the Facility Waste
except as otherwise provided herein. Except as they relate to Tenant’s
obligations under this Section 4.6, any and all claims, demands, notices,
damages, costs, fees, judgments, suits, causes of action, losses, liabilities
and expenses, including attorneys’ fees and court costs, that result from or
relate to the Facility Waste shall be considered Excluded Claims and shall be
covered under Landlord’s indemnification obligations set forth in Section 12.3.
The rate charged Tenant for the foregoing services shall be adjusted on
January 1, 2010, and on January 1 of each year thereafter, by the same
percentage change as occurs during the prior calendar year in the cost to
Landlord of providing utilities at the usage rates listed in Exhibit B attached
hereto. The parties understand and agree that if the Paper Mill or any portion
thereof is not operating for some temporary or indefinite period (but excluding
a permanent closure) such that Landlord is not able to provide all of the
utilities described herein during such period, Landlord and Tenant shall consult
with one another in good faith to determine an acceptable means to supply the
interrupted utilities. To the extent the interrupted utilities are provided by
Landlord, the added costs incurred by Landlord shall be considered an
“Operational Cost” to be paid by Tenant. The parties further understand and
agree that the rate for the utilities described herein is based on the
operations and efficiencies of the Power Facility as existing during
November 2008. Should physical changes or changes in the method of operation of
the Power Facility result in an increase in the demand for any of the utilities
provided hereunder in

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any Lease Year by more than 10% above the levels reflected in Exhibit B, the
added cost to Landlord for providing utilities above the Exhibit B levels shall
be considered an “Operational Cost” to be paid by Tenant. Should such changes
result in a decrease in the demand for any of such utilities in any Lease Year
by more than 10% below the levels reflected in Exhibit B, the decrease in the
cost to Landlord for providing utilities below the Exhibit B levels shall be
refunded to Tenant.
          (d) Section 4.7 is hereby deleted in its entirety and replaced with
the following:
     4.7 Fly Ash Disposal.
     4.7.1 During the Lease Term, Landlord shall take possession of, transport
and dispose of all Fly Ash in a location other than on the Real Property in
accordance with applicable law, including, without limitation, all
“Environmental Laws”. Tenant shall (i) reimburse Landlord, as an Operational
Cost under the Operations Provisions, for all transportation costs incurred in
removing and disposing of any Fly Ash, whether disposed of onsite or offsite of
the Paper Mill, (ii) reimburse Landlord, as an Operational Cost under the
Operations Provisions, for all disposal costs for Fly Ash disposed of offsite of
the Paper Mill, and (iii) pay to Landlord an amount equal to $4.50 per ton of
Fly Ash, having a moisture content of no more than 20%, disposed of onsite of
the Paper Mill, provided that in no event shall Tenant be obligated to make any
payments hereunder for any fees under this subsection (iii) that exceed $490 on
any given day during the Lease Year. The foregoing rates charged to Tenant shall
be adjusted effective January 1 of each year by the same percentage change as
occurs in Landlord’s actual landfill costs during the prior calendar year. In
the event the costs referenced in subsection “(i)” above are increased as the
result of changes in the costs for services being provided to Landlord by a
third party, Tenant shall have the option (exercisable no later than 30 days
after receiving notice from Landlord of the adjustment) to assume the obligation
to perform such services directly, subject to compliance with termination
provisions in Landlord’s agreement with the third party, and subject to Tenant
being able to perform such services at or exceeding the standards being met by
such third party. To the maximum extent permitted by applicable law, (a) Tenant,
and not Landlord, shall be considered the generator of the Fly Ash, and (b) the
Power Facility, and not the Paper Mill, shall be considered the source of the
Fly Ash.
     4.7.2 Notwithstanding anything to the contrary herein, in the event the
Operations Provisions terminate prior to the termination of the Lease: (A) the
cost for disposal of Fly Ash disposed of onsite of the Paper Mill shall increase
to $7.50 per ton of Fly Ash having a moisture content of no more than 20%
subject to a daily fee limitation of $818 (instead of $490); (B) Landlord shall
continue to be obligated to take possession of, transport and dispose of the Fly
Ash having a moisture content of no more than 20% as described above in
Section 4.7.1 and any reimbursements required to be made by Tenant to Landlord
described under subsections “i” and “ii” thereof shall continue to be required
and shall be paid in

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a manner consistent with Section 7.1.3 of the Operations Provisions
(notwithstanding the termination thereof); (C) Tenant may elect upon 30 days
notice to Landlord to assume all of Landlord’s obligations to take possession
of, transport and dispose of the Fly Ash, in which case Tenant shall pay to
Landlord the disposal costs listed in subsection “(A)” above, Landlord shall be
relieved of its obligations under the foregoing subsection “(B)”; and the Fly
Ash may continue to be disposed of on Landlord’s property (unless subsection
“(D)” applies); (D) in the event (i) Tenant makes the election described in the
foregoing subsection “(C)”, and (ii) the disposal of the Fly Ash on Landlord’s
property is not commercially reasonable for Landlord, Tenant shall make
arrangements to dispose of the Fly Ash offsite of Landlord’s property, and the
disposal costs listed in subsection “A” would not apply. The foregoing rates
charged to Tenant for disposal on Landlord’s property shall be adjusted
effective January 1 of each year by the same percentage change as occurs in
Landlord’s actual landfill costs during the prior calendar year. In the event
the costs referenced in subsection “(i)” of Section 4.7.1 above are increased as
the result of changes in the costs for services being provided to Landlord by a
third party, Tenant shall have the option (exercisable no later than 30 days
after receiving notice from Landlord of the adjustment) to assume the obligation
to perform such services directly, subject to compliance with termination
provisions in Landlord’s agreement with the third party, and subject to Tenant
being able to perform such services at or exceeding the standards being met by
such third party. Landlord may reject any Fly Ash having a moisture content of
greater than 20%, in which case Tenant shall be responsible for disposing of the
Fly Ash offsite of Landlord’s property in accordance with applicable law. If
Tenant makes the election to assume Landlord’s obligations as described in this
Section 4.7.2, any and all claims, demands, notices, damages, costs, fees,
judgments, suits, causes of action, losses, liabilities and expenses, including
attorneys’ fees and court costs, that result from or relate to the Fly Ash shall
be covered under Tenant’s indemnification obligations set forth in Section 12.1;
     4.7.3 Tenant shall not have any financial responsibility with respect to
the Fly Ash except as otherwise provided herein. Except as they relate to
Tenant’s obligations under this Section 4.7, any and all claims, demands,
notices, damages, costs, fees, judgments, suits, causes of action, losses,
liabilities and expenses, including attorneys’ fees and court costs, that result
from or relate to the Fly Ash shall be considered Excluded Claims and shall be
covered under Landlord’s indemnification obligations set forth in Section 12.3.
     4.7.4 Tenant shall be responsible for any and all improvements, including,
without limitation, pollution control equipment and structural changes,
reasonably necessary to ensure that the handling and loading of the Fly Ash at
the Power Facility can be and is accomplished in accordance with applicable law.
     4.7.5 Landlord acknowledges that, to the extent Landlord is required to
dispose of Fly Ash pursuant to the Lease, it will dispose of Fly Ash on
Landlord’s

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property so long as commercially reasonable. This provision shall not obligate
Landlord to expand Landlord’s existing landfill to accommodate the disposal of
Fly Ash.
          (e) Section 13 “Tenant’s Insurance” is hereby revised as follows:
     (i) The lead-in paragraph shall be deleted in its entirety and replaced by
the following:
“13. Tenant’s Insurance. Tenant shall obtain and maintain the following
insurance during the Term:”.
     ii) The policy limits in subsection 13.1.2 shall be revised to read:
“...general aggregate-not less than $5,000,000.00, and per occurrence-not less
than $5,000,000.00.”
          (f) Section 14(b) is hereby revised to read:
“(b) name Tenant as named insured and Landlord as additional insured...”
     (g) The amendment to Section 4.6 with respect to the fixed fee for
Utilities and the amendment to Section 4.7 with respect to the payment for the
disposal of Fly Ash onsite of the Paper Mill at the rate of $4.50 per ton shall
be effective as of October 1, 2008. The parties hereto agree to make any
necessary payments or adjustments to invoices as soon as reasonably practicable
to effect the intent of the foregoing amendments as of the effective date
thereof.
     (h) New definitions are hereby added to Section 35 as follows:
     “Fly Ash” — shall mean all “fly” ash captured by the air pollution control
equipment at the Power Facility that is generated by normal operations of the
Power Facility (and shall specifically exclude “bottom” ash). For purposes of
this definition, “normal operations” of the Power Facility shall include the
burning of paper sludge and wood waste, but not plastics, tires or other
non-biomass materials
     “Hazardous Waste” shall have the meaning given in the federal Resource
Conservation and Recovery Act, 42 U.S.C. §§ 6901 et seq., and regulations of the
U.S. Environmental Protection Agency at 40 C.F.R. Part 261 and the Arizona
Department of Environmental Quality at A.A.C. R18-8-261.
     (i) The definition of “Facility Waste” in Section 35 is hereby deleted in
its entirety and replaced with the following:
     “Facility Waste” — shall mean all ash, byproducts, trash and other solid
waste generated by normal operations of the Power Facility, but shall not
include Hazardous Waste or Fly Ash.

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     (j) A new Exhibit B is added as attached to this Amendment. The parties
shall have until January 31, 2009 to determine whether any changes should be
made to Exhibit B based on good faith discussions. If, by January 31, 2009, the
parties are unable to reach agreement concerning any changes to Exhibit B, the
form attached to this Amendment shall become effective.
     (k) Continued Sludge Supply and Removal. Landlord and Tenant agree and
acknowledge that, in the event the Operations Provisions terminate prior to the
termination of the Lease, Landlord shall continue to provide paper sludge
pursuant to Section 4.3 of the Lease, including without limitation, processing
and transporting such sludge to the Power Facility consistent with the
provisions of Section 4.3. In such case, Tenant shall continue to reimburse
Landlord for the cost of transporting processed sludge to the Power Facility in
a manner consistent with Section 7.1.3 of the Operations Provisions
(notwithstanding the termination thereof). However, upon 30 days notice by
Tenant to Landlord, Tenant may elect to assume Landlord’s obligations to
transport the paper sludge to the Power Facility, in which case Landlord shall
be relieved of its obligations with respect to the same. In such event, Landlord
shall continue to operate and maintain Tenant’s equipment and property at the
Paper Mill’s wastewater treatment plant, and to process as much of the paper
sludge produced at the Paper Mill as Tenant can use. Landlord’s maintenance
costs associated with Tenant’s property at the wastewater treatment plant shall
be the responsibility of Tenant. Except as otherwise provided in the preceding
sentence, should the Operations Provisions be terminated, Tenant shall not be
subject to additional costs relating to the acquisition, processing or transport
of the sludge, access to Tenant’s screw presses and other equipment and property
at the Paper Mill’s wastewater treatment plant (including, without limitation,
the sludge press building, conveyors and loading bins), storage of such
equipment at the Paper Mill’s wastewater treatment plant as conducted as of
November, 2008, use or access to Landlord’s property for the purposes of
transporting sludge pursuant to Section 4.3 as conducted as of November, 2008,
and waste water treatment in connection with the production and processing of
sludge.
     (l) Continued Access and Easement Rights of Tenant. Landlord and Tenant
agree and acknowledge that, in the event the Operations Provisions terminate
prior to the termination of the Lease, Tenant shall have the right under the
Lease to access and use its equipment and other property located on the Real
Property and on Landlord’s real property consistent with this section and
Section 2(k) of this Amendment, and otherwise use Landlord’s real property for
the purposes of operating and maintaining the Power Facility consistent with
(i) this section, (ii) Section 27 of the Lease, and (iii) the operation and
maintenance of the Power Facility by Landlord and Tenant prior to the
termination of the Operations Provisions without the imposition of any new or
additional costs payable by Tenant to Landlord under the Lease. Such rights
include use, access and similar rights relating, but not limited, to the
following:
          (A) equipment and property (including, without limitation, the sludge
press building, conveyors and loading bins, but excluding the right to operate
screw presses and other equipment and property located at the Paper Mill’s
wastewater treatment plant) used in the performance of Section 4.3 of the Lease
with respect to paper sludge;

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          (B) pumps, pipes and other equipment, whether on Tenant’s or
Landlord’s real property, relating to utilities necessary to operate the Power
Facility as described in Section 4.6 of the Lease (as identified and agreed to
by Landlord and Tenant as the result of good faith discussions), including
without limitation such equipment relating to the provision of electricity,
natural gas, water, boiler feedwater, compressed air, sewage and waste water
treatment, and Facility Waste removal and disposal;
          (C) the walkway or “catwalk” connecting the Power Facility and the
Paper Mill;
          (D) the transport of materials in connection with the operation and
maintenance of the Power Facility, including without limitation the transport of
Fly Ash to Landlord’s onsite landfill or to an offsite location and the delivery
of materials to and from the Power Facility (e.g., fuel, parts and other
materials); and
          (E) the Interconnection Facilities and any interconnection equipment,
transmission lines and other facilities related to Tenant’s Interconnection
Agreement with APS (including as may be amended to provide for the APS-Zeniff
substation), any Replacement Interconnection Agreement or any other
interconnection or similar agreement related to the Zeniff substation.
Tenant shall conduct its operations on the Real Property and Landlord’s real
property in a manner that (i) does not interfere with Landlord’s operations of
the Paper Mill, and (ii) to the extent such operations are conducted on
Landlord’s real property, complies with the Paper Mill’s policies and
procedures, including without limitation, its safety procedures.
     (m) Zeniff Substation Interconnection Agreement. Landlord and Tenant agree
that the parties shall be responsible for 50% each of the fees charged by APS in
connection with Tenant’s submission to APS of a Request for Interconnection on
November 25, 2008 (including any additional fees that may be incurred in
connection with such Request), and each party shall promptly reimburse the other
party with respect to the payment of such fees, as applicable.
     (n) Utilities Services for Tenant Office. Landlord agrees and acknowledges
that the utilities services provided by Landlord under Section 4.6 of the Lease
shall include services to Tenant’s office facility located on or to be located
on the Real Property without any additional cost than as provided under
Section 4.6, whether or not the Operations Provisions terminate prior to the
termination of the Lease, provided that such services shall be comparable to
what was provided to Tenant’s existing facility as of November, 2008.
     (o) Emergency Services. In the event the Operations Provisions terminate
prior to termination of the Lease: (i) Landlord shall continue to maintain the
Paper Mill’s fire protection system, including such portion as installed at the
Power Facility, and shall have the right to access and use such equipment in the
event of a fire whenever deemed necessary by Landlord; (ii) Tenant shall
reimburse Landlord for all reasonable fire protection system maintenance, repair
and replacement costs associated with protection

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of the Power Facility; and (iii) Tenant shall be responsible for emergency
response at the Power Facility, including, without limitation, medical care of
personnel, consistent with the rights reserved herein by Landlord.
     (p) Site Personnel Costs Following Termination of Operations Provisions.
Except as otherwise provided in the Lease or this Amendment, Landlord
acknowledges and agrees that in the event the Operations Provisions terminate,
Tenant shall have no liability for Payroll Related Costs for any Site Personnel
(including, for the avoidance of doubt, any Shared Personnel, Specific Site
Personnel or Home Office Personnel) or other employees or independent
contractors of Landlord for any Services provided by such persons following the
termination of the Operating Provisions, including, without limitation, any
costs relating to providing security or performing safety or environmental
services for Landlord’s property, the Real Property or the Power Facility.
     3. Amendment of Operations Provisions. Facility Owner and Facility Operator
agree that the Operations Provisions attached to the Lease shall be amended as
follows (with capitalized terms not otherwise defined herein having the meaning
given in the Operations Provisions and section references referring to sections
of the Operations Provisions):
          (a) Section 7.2 “Power Facility Full Capacity Bonus” is hereby deleted
in its entirety and replaced with the following:
     7.2 Power Facility Bonus. Facility Owner shall pay Facility Operator an
incentive bonus for any Lease Year during which Facility Operator is operating
the Power Facility in an amount equal to the sum of (i) 25% of the amount by
which actual “Adjusted O&M Costs” for the Lease Year are less than projected
“Adjusted O&M Costs” for the Lease Year up to a maximum incentive bonus amount
of $200,000, provided, however, that solely with respect to the Lease Year
commencing January 1, 2009 and ending December 31, 2009 (the “2009 Lease Year”),
such incentive bonus shall be equal to 50% of the amount by which actual
“Adjusted O&M Costs” for the last six months of the 2009 Lease Year are less
than projected “Adjusted O&M Costs” for the last six months of the 2009 Lease
Year up to a maximum incentive bonus amount of $100,000, plus (ii) $100,000 if
the capacity factor for the Power Facility in the Lease Year is between 94% and
96%, or $200,000 if the capacity factor for the Power Facility in the Lease Year
is 96% or greater. For purposes of this Section 7.2, the gross electric capacity
of the Power Facility shall be 24.5 megawatts.
          (b) The number “90” in subsection “(ii)” of Section 9.2 is hereby
deleted and replaced with the number “180”.
          (c) A new Section 10.2 is hereby added to read as follows:
10.2. Indemnification by Facility Owner. During the time these Operations
Provisions are in effect, should Facility Owner at any time undertake to perform
any of the Services, either with or without Facility Operator’s consent,
Facility Owner shall indemnify, defend and hold

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harmless Facility Operator Parties for, from and against any and all claims,
damages, judgments, suits, causes of action, losses, liabilities and expenses,
including attorneys’ fees and court costs, for injury or death of persons or
physical loss of or damage to property claimed or asserted by a Third Person and
arising or resulting from: (a) any willful misconduct or negligence of Facility
Owner or any Facility Owner Party in conjunction with the use of Parcel 1 or
operation of the Power Facility by Facility Owner or any Facility Owner Party;
(b) any failure by Facility Owner to perform any obligation which would
otherwise be performed by Facility Operator under these Operations Provisions
with respect to the Services undertaken by Facility Owner; or (c) any violation
by Facility Owner or the Power Facility of any law, regulation, code, judgment,
order, Permit, license or government approval, including without limitation, any
Environmental Law.
          (d) Section 11.1 is hereby deleted in its entirety and replaced with
the following:
11.1 Termination by Facility Owner. Facility Owner shall be permitted to
terminate these Operations Provisions upon written notice if any of the
following events occur: (a) bankruptcy or insolvency of the Facility Operator;
(b) payment default by Facility Operator that is not cured within sixty
(60) Business Days of notice from Facility Owner that such payment is due;
(c) failure by Facility Operator to perform any of its duties, responsibilities
and obligations under these Operations Provisions after notice by Facility
Owner, provided Facility Operator shall have up to 30 days after such notice was
given to cure such default or make substantial progress towards curing such
default, and provided further that this subsection (c) shall not apply in the
case of a termination by Facility Owner under subsections (d) or (e) hereof;
(d) for the period commencing January 1, 2009 and ending June 30, 2009,
(i) actual Adjusted O&M Costs exceed the budgeted Adjusted O&M Costs for such
period as set forth in the 2009 Annual Budget or (ii) the actual output of the
Power Facility (measured in megawatt hours) is less than the projected output of
the Power Facility provided for such period in the 2009 Annual Budget, in which
case, unless the occurrence of either subsection “i” or “ii” hereof is
attributable to an event or cause beyond the reasonable control of Facility
Operator, Facility Owner may terminate the Operations Provisions effective
August 31, 2009, provided that Facility Owner shall provide notice to Facility
Operator of its intent to terminate the Operations Provisions under this
subsection (d) not later than July 31, 2009; and (e) with respect to any Lease
Year, (i) actual Adjusted O&M Costs exceeds the projected Adjusted O&M Costs as
set forth in the Annual Budget for such Lease Year or (ii) the actual output of
the Power Facility (measured in megawatt hours)

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is less than the projected output of the Power Facility provided for such Lease
Year in the Annual Budget for such Lease Year, in which case, unless the
occurrence of either subsection “i” or “ii” hereof is attributable to an event
or cause beyond the reasonable control of Facility Operator, Facility Owner may
terminate the Operations Provisions effective February 28 of the following Lease
Year, provided that Facility Owner shall provide notice to Facility Operator of
its intent to terminate the Operations Provisions under this subsection (e) not
later than January 31 of the following Lease Year. A termination of these
Operations Provisions under this Section 11.1 for any reason shall not terminate
the Lease, which shall continue in full force and effect unless otherwise
terminated pursuant to the terms thereof. For the avoidance of doubt, the
obligations of the parties upon termination of the Operations Provisions as set
forth therein, including without limitation, the parties’ obligations under
Section 9 of the Operations Provisions, shall continue to apply irrespective of
the reason for termination under this Section 11.1. A default by Landlord under
the Lease is governed by Section 19 of the Lease.
          (e) Section 11.2 is hereby deleted in its entirety and replaced with
the following:
11.2 Termination by Facility Operator. Facility Operator shall be permitted to
terminate these Operations Provisions upon written notice for any reason or for
no reason. A termination of these Operations Provisions under this Section 11.2
shall not terminate the Lease, which shall continue in full force and effect
unless other wise terminated pursuant to the terms thereof. For the avoidance of
doubt, the obligations of the parties upon termination of the Operations
Provisions as set forth therein, including with limitation, the parties’
obligations under Section 9 of the Operations Provisions, shall continue to
apply irrespective of the reason for termination under this Section 11.2. A
default by Tenant under the Lease is governed by Section 18 of the Lease.
          (f) New definitions are hereby added to Section 13 as follows:
     “2009 Annual Budget” — shall mean the Annual Budget for the 2009 Lease Year
as agreed to by Facility Owner and Facility Operator.
     “2009 Lease Year” — shall have the meaning set forth in Section 7.2.
     “Adjusted O&M Costs” — shall mean the line items listed in the Annual
Budget under “Cost of Sales,” less fuel, natural gas, wheeling, insurance and
property tax (each of which line items are listed in the Annual Budget), and
excluding costs for repairs and modifications to the Power Facility that result

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from design deficiencies, including, without limitation, modifications
identified in 2008 for the baghouse and urea injection system.
          (g) The definition of “Shared Personnel” in Section 13 is hereby
deleted in its entirety and replaced with the following:
     “Shared Personnel” shall mean those Site Personnel who, as of the Effective
Date, are employed by Facility Operator and , as part of their job assignment,
support operation of the Power Facility, but shall exclude Facility Operator’s
mechanics and trade personnel directly involved in performance of the Services.
          (h) A new sentence is hereby inserted at the end of Section 7.1.1 as
follows:
     “Facility Operator shall use its best efforts in good faith to allocate
Shared Personnel between the Power Facility and the Paper Mill such that wage
rate of the Shared Personnel working at the Power Facility and Paper Mill is as
uniform as reasonably possible (i.e., an even allocation of Shared Personnel
working on overtime rather than ordinary wages).”
          (i) A new sentence is hereby inserted at the end of Section 7.1.2 as
follows:
     “Facility Operator shall use its best efforts in good faith to use Site
Personnel to the extent reasonably practicable in the performance of Services
prior to engaging consultants, subcontracts, and other outside services as
described in subsection (f) of this Section 7.1.2.
     4. Effect of Termination of Operations Provisions. A termination of the
Operations Provisions for any reason shall not terminate the Lease, which shall
continue in full force and effect unless otherwise terminated pursuant to the
terms thereof. Landlord and Tenant each acknowledge and agree that it is the
intent of the parties that in the event of the termination of the Operations
Provisions prior to the termination of the Lease, notwithstanding anything to
the contrary in the Lease (including the Operations Provisions), Landlord shall
continue to perform its obligations under the Lease without imposing new or
additional costs to Tenant as a result of the termination of the Operations
Provisions, including without limitation, Landlord’s obligations under Section 4
of the Lease, except as otherwise provided in this Amendment. Notwithstanding
anything in the Lease or Operations Provisions to the contrary, upon termination
of the Operations Provisions:
          (a) Landlord shall no longer be engaged to operate the Power Facility
pursuant to Section 7 of the Lease; and
          (b) Landlord shall have no obligation to maintain and repair Tenant’s
Property located on Parcel 1 pursuant to Section 10 of the Lease and Tenant
shall have no reimbursement obligation with respect thereto, provided, however,
Landlord shall retain the right to maintain the fire protection system located
at the Power Facility and to access and use such system in the event of a fire
whenever deemed necessary by Landlord.

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     5. Consent. Landlord hereby acknowledges receipt of notice of the transfer
of the Class A Interest to State Street pursuant to the MIPA and consents to the
transfer of Tenant’s interest in the Lease pursuant to Section 22 thereof.
Landlord further agrees that, following the consummation of the transfer of the
Class A Interest contemplated by the MIPA, the Lease shall remain in full force
and effect for the remainder of its stated term, unless otherwise terminated in
accordance with the terms and provisions set forth therein.
     6. Governing Law. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH, AND BE GOVERNED BY, THE
LAWS OF THE STATE OF ARIZONA (WITHOUT GIVING EFFECT TO THE PRINCIPLES THEREOF
RELATING TO CONFLICTS OF LAW).
     7. Counterparts. This Amendment may be executed in any number of
counterparts and by the different parties hereto on separate counterparts, each
of which when so executed and delivered shall be an original, but all of which
shall together constitute one and the same instrument.
     8. Headings Descriptive. The headings of the several sections and
subsections of this Amendment are inserted for convenience only and shall not in
any way affect the meaning or construction of any provision of this Amendment.
     9. Severability. In case any provision in or obligation under this
Amendment shall be invalid, illegal or unenforceable in any jurisdiction,
legality and enforceability of the remaining provisions or obligations, or of
such provision or obligation in any other jurisdiction, shall not in any way be
affected or impaired thereby.
     10. Amendment, Waiver. Neither this Amendment nor any of the terms hereof
may be terminated, amended, supplemented, waived or modified except by an
instrument in writing signed by Landlord and Tenant.
     11. Successors and Assigns. This Amendment shall bind and benefit Landlord
and Tenant, and their respective successors and assigns, including any of
Landlord’s successors and assigns to the Operations Provisions with respect
thereto.
     12. Entire Agreement. This Amendment and any agreement, document or
instrument attached hereto or referred to herein integrate all the terms and
conditions mentioned herein or incidental hereto and supersede all oral
negotiations and prior writings between the parties hereto in respect of the
subject matter hereof.
[Remainder of page intentionally left blank — signature page follows]

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     IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of
the date first written above.

                              CATALYST PAPER (SNOWFLAKE) INC.       SNOWFLAKE
WHITE MOUNTAIN POWER, LLC
 
                            By:   /s/ Tom Fawcett       By:   /s/ Robert M.
Worsley                          
 
  Name:   Tom Fawcett           Name:   Robert M. Worsley    
 
  Title:   Production Manager           Title:   Manager