Exhibit 10.2
OPTION AGREEMENT
This Option Agreement (the “Agreement”) is made as of January 31, 2008
(“Effective Date”), by and between the Sierra Pacific Industries, a California
corporation (the “Optionor”) and Renegy Susanville, LLC, an Arizona limited
liability company (“Optionee”).
RECITALS
A. Optionor is the owner of that certain real property located in Lassen County,
California, more particularly described in the attached Exhibit A which is
hereby incorporated by reference (the “Property”).
B. Optionee desires to acquire the exclusive right to purchase the Property at
an agreed price and under the specific terms in this Agreement.
C. Contemporaneously with the Effective Date, Optionor and Optionee entered into
a “Lease Agreement” wherein Optionor agreed to lease the Property to Optionee
pursuant to that Lease Agreement.
For good and valuable consideration, the receipt and adequacy of which are
acknowledged, the parties agree as follows:
Section 1. Option to Purchase. Optionor grants to Optionee an exclusive option
to purchase and acquire fee simple title to the Property (the “Option”) on the
terms and conditions of this Agreement. In the event Optionee elects to exercise
the Option as set forth herein, the parties shall enter into a Real Property
Purchase Agreement (the “Purchase Agreement”), which Purchase Agreement must be
in the form attached hereto as Exhibit B and incorporated by reference, with
only such changes and modifications as the parties mutually agree to in writing.
The purchase price for the Property shall be Eighty Thousand Dollars ($80,000)
per acre, which purchase price, upon exercise of the Option granted by this
Agreement by Optionee, shall, beginning on February 1, 2009, be increased by an
amount equal to one and one-half percent (1.5%) of such amount per annum,
compounded annually (as so increased, the “Purchase Price”); provided, however,
that such increase shall be prorated for any partial year of the Option Term.
Certain rental payments due under the Lease Agreement shall be credited against
the Purchase Price, if Optionee exercises the Option, as specifically set forth
in the Lease Agreement.
Section 2. Consideration for Option. Optionee shall pay Optionor, as
consideration for the Option granted by this Agreement, the amount of $100,000
(the “Option Price”). The Option Price shall be paid in accordance with written
instructions provided by Optionor to Optionee promptly following the execution
and delivery of this Option. The Option Price shall be credited against the
Purchase Price at the closing of the purchase of the Property pursuant to the
Purchase Agreement. If Optionee does not exercise the Option as set forth
herein, Optionor shall have the right to retain the Option Price as
consideration, not a penalty, for the grant of the Option to Optionee.

 

 

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Section 3. Term. This Agreement shall expire five (5) years after the Effective
Date (the “Option Term”).
Section 4. Exercise. This Option may be exercised by Optionee’s delivering to
Optionor, before the expiration of the Option Term, a written notice of the
exercise (the “Exercise Notice”). The Exercise Notice must be accompanied by two
(2) copies of the Purchase Agreement executed by Optionee, with the introductory
paragraph of the Purchase Agreement completed by insertion of the date on which
the Exercise Notice is given. In the event that a Pre-Closing Environmental
Condition (as defined in the Agreement for Environmental Conditions) arises
after Optionee has exercised its Option but prior to Closing, Optionee shall
have the right to terminate this Agreement and the Lease Agreement pursuant to
the terms therein, and Optionor shall promptly remit the Option Price to
Optionee. If Optionee elects not to terminate as set forth above, Optionor shall
have the right to four (4) one-year extensions of the Lease Term and the Option
Term in order to remediate the Pre-Closing Environmental Condition. In the event
of any extension to the Lease Term and Option Term pursuant to the terms hereof,
the rent payable by Optionee to Optionor pursuant to the Lease Agreement shall
not be increased and all payments of rent during such extension period shall be
credited against the Purchase Price under the Purchase Agreement.
Section 5. Execution of Purchase Agreement. On receipt by Optionor of the
Exercise Notice and two (2) copies of the Purchase Agreement executed by
Optionee, Optionor shall promptly execute the Purchase Agreement and deliver an
executed copy to Optionee.
Section 6. Representations and Warranties. Optionor warrants that Optionor is,
and during the Option Term will be, the owner of the Property and has, and will
during the Option Term continue to have, marketable and insurable fee simple
title to the Property free and clear of restrictions, leases, liens, and other
encumbrances, except as permitted in the Purchase Agreement, and Optionor will
not encumber the Property in any way nor grant any property or contract right
relating to the Property without the prior written consent of Optionee.
Section 7. Legal/Tax Parcel. Optionor shall use commercially reasonable efforts
to cause the Property to be recognized as a separate legal/tax parcel as soon as
possible after Optionee elects to exercise its Option as set forth herein, but
in no event later than the Closing Date as set forth in the Purchase Agreement.
It shall be a condition to Closing that the Property be recognized as a separate
legal/tax parcel.
Section 8. Time of Essence. Time is of the essence for this Option Agreement. If
the Option is not exercised in the manner provided in Section 4 before the
expiration of the Option Term, the Option may not be revived by any subsequent
payment or further action by Optionee.
Section 9. Quitclaim Deed. If this Agreement expires or is otherwise terminated,
Optionee agrees, if requested by Optionor, to execute, acknowledge, and deliver
a quitclaim deed to Optionor within ten (10) days after termination and to
execute, acknowledge, and deliver any other documents required by any title
company to remove the exception of this Option from the Property.

 

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Section 10. Notices. All notices, consents, waivers and other communications
required or permitted by this Lease shall be in writing and shall be deemed
given to a party when (a) delivered to the appropriate address by hand or by
nationally recognized overnight courier service (costs prepaid) with
acknowledgment of delivery; (b) sent by facsimile or e-mail with confirmation of
transmission by the transmitting equipment; or (c) received or rejected by the
addressee, if sent by certified mail, return receipt requested, in each case to
the following addresses, facsimile numbers or e-mail addresses and marked to the
attention of the person (by name or title) designated below (or to such other
address, facsimile number, e-mail address or person as a party may designate by
such notice to the other Parties):

     
If to Optionor
  Sierra Pacific Industries
19794 Riverside Avenue
Anderson, CA 96007
Attention: A.A. Emmerson
Fax No: (530) 378-8265
 
   
With a copy to:
  David H. Dun
Dun & Martinek LLP
2313 I Street
Eureka, CA 95501
Fax No.: (707) 442-9251
 
   
If to Optionee:
  Renegy Susanville, LLC
301 West Warner Road, Suite 132
Tempe, AZ 85284
Fax No: (480) 361-8341
 
   
With a copy to:
  Justin Steltenpohl
Squire, Sanders & Dempsey LLP
40 North Central Avenue, Suite 2700
Phoenix, AZ 85004
Fax No: (602) 253-8129

Section 11. Transfer. Optionee may not assign or transfer this Agreement and the
rights under it without Optionor’s prior written consent.
Section 12. Venue; Litigation Costs. Venue for any legal action initiated by a
party shall be Shasta County Superior Court, California. If any legal action or
any other proceeding, including arbitration or action for declaratory relief, is
brought for the enforcement of this Agreement or because of an alleged dispute,
breach, default, or misrepresentation in connection with this Agreement, the
prevailing party shall be entitled to recover reasonable attorney fees and other
costs, in addition to any other relief to which the party may be entitled. Any
such attorney fees and costs incurred by the prevailing party in enforcing a
judgment in its favor under this Agreement shall be recoverable separately from
and in addition to any other amount included in such judgment, and such
obligation to pay attorney fees and costs is intended to be severable from the
other provisions of this Agreement and to survive and not be merged into any
such judgment. Prevailing party shall include, without limitation:

 

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(a) the party who receives performance from the other party of an alleged breach
of covenant or a desired remedy where that is substantially equal to the relief
sought in an action; or
(b) the party determined to be the prevailing party by a court of law.
Section 13. Memorandum of Option. Immediately following the execution of this
Agreement by Optionor, the Memorandum of Option Agreement attached to this
Agreement as Exhibit C shall be recorded by Optionor with the official records
of Lassen County, California.
Section 14. Survival. The terms of this Agreement shall survive the close of
escrow of the Property unless there is a contradiction between the Purchase
Agreement and this Agreement, in which event the Purchase Agreement shall
control.
Section 15. Successors. Subject to the restrictions on assignment, this
Agreement shall bind and inure to the benefit of the respective heirs, personal
representatives, successors, and assigns of the parties to this Agreement.
Section 16. Waivers. No waiver of any breach of any covenant or provision in
this Agreement shall be deemed a waiver of any other covenant or provision in
this Agreement, and no waiver shall be valid unless in writing and executed by
the waiving party.
Section 17. Construction. Section headings are solely for the convenience of the
parties and are not a part of and shall not be used to interpret this Agreement.
The singular form shall include the plural and vice versa. This Agreement shall
not be construed as if it had been prepared by one of the parties, but rather as
if both parties have prepared it. Unless otherwise indicated, all references to
sections are to this Agreement.
Section 18. Further Assurances. Whenever requested by the other party, each
party shall execute, acknowledge, and deliver all further conveyances,
agreements, confirmations, satisfactions, releases, powers of attorney,
instruments of further assurance, approvals, consents, and all further
instruments and documents as may be necessary, expedient, or proper to complete
any conveyances, transfers, sales, and agreements covered by this Agreement, and
to do all other acts and to execute, acknowledge, and deliver all requested
documents to carry out the intent and purpose of this Agreement.
Section 19. Third-Party Rights. Nothing in this Agreement, express or implied,
is intended to confer on any person, other than the parties to this Agreement
and their respective successors and assigns (subject to the restrictions on
assignment), any rights or remedies under or by reason of this Agreement.

 

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Section 20. Integration. This Agreement contains the entire agreement between
the parties, and expressly supersedes all previous or contemporaneous
agreements, understandings, representations, or statements between the parties
respecting the Option for the Property.
Section 21. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original and all of which taken
together shall constitute one and the same instrument.
Section 22. Amendment. This Agreement may not be amended or altered except by a
written instrument executed by Optionor and Optionee.
Section 23. Partial Invalidity. Any provision of this Agreement that is
unenforceable or invalid or the inclusion of which would adversely affect the
validity, legality, or enforceability of this Agreement shall be of no effect,
but all the remaining provisions of this Agreement shall remain in full force.
Section 24. Exhibits. All attached exhibits are incorporated in this Agreement
by this reference.
Section 25. Authority of Parties. All persons executing this Agreement on behalf
of any party to this Agreement warrant that they have the authority to execute
this Agreement on behalf of that party.
Section 26. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of California without reference to the
choice of law principles thereof.
Section 27. Specific Performance. The parties acknowledge that money damages
would not be a sufficient remedy for Optionor’s breach of its obligations under
this Agreement and that irreparable harm would result in the event of Optionor’s
obligations under this Agreement were not specifically enforced. Therefore,
except as otherwise expressly provided in Section 4 this Agreement, the
obligations of Optionor under this Agreement shall be enforceable by a decree of
specific performance issued by any court of competent jurisdiction, and
appropriate injunctive relief may be applied for and granted in connection
therewith. Except for limitations on remedies otherwise expressly provided
herein, Optionee’s right to specific performance shall be in addition to all
other legal or equitable remedies available to Optionee.

 

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IN WITNESS WHEREOF, this Lease Agreement is executed effective as of the date
first above-written.

                      OPTIONEE:       OPTIONOR:    
 
                    RENEGY SUSANVILLE, LLC       SIERRA PACIFIC INDUSTRIES    
 
                   
By:
  /s/ Robert W. Zack
 
Name: Robert W. Zack       By:   /s/ George R. Emmerson
 
Name: George R. Emmerson    
 
  Title: Co-Manager           Title: COO    

 

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EXHIBIT A
LEGAL DESCRIPTION OF REAL PROPERTY

 

 

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EXHIBIT B
FORM OF PURCHASE AGREEMENT
[Attached]

 

 

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PURCHASE AND SALE AGREEMENT
THIS PURCHASE AND SALE AGREEMENT (the “Agreement”), dated as of the  _____  day
of                      , 20  _____  (the “Effective Date”), is made and entered
into by and between SIERRA PACIFIC INDUSTRIES, a California corporation
(“Seller”), and RENEGY SUSANVILLE, LLC, an Arizona limited liability company
(“Buyer”)
Recitals:
A. Seller is the owner of certain real property located on Sunkist Drive,
Susanville, County of Lassen, State of California, as more particularly
described in Exhibit A attached hereto, including any improvements located
thereon, together with related water rights, petroleum, gas, minerals and
mineral interests of Seller, if any, and all rights, privileges and easements
appurtenant thereto, but excepting the Permitted Exceptions, as defined below in
Section 3.3 (collectively, the “Property”).
B. Seller wishes to sell to Buyer and Buyer wishes to purchase from Seller the
Property, subject to the Permitted Exceptions, for the price and on the terms
and conditions set forth in this Agreement.
C. On January 31, 2008, Buyer and Seller entered into a “Lease Agreement”
wherein Seller agreed to lease the Property to Seller pursuant to that Lease
Agreement.
D. On January 31, 2008, Buyer and Seller entered into an “Option Agreement”
wherein Seller sold to Buyer an option to purchase the Property pursuant to that
Option Agreement.
E. On November 21, 2007, Buyer and Seller entered into an “Agreement for
Environmental Conditions” wherein Buyer and Seller agreed upon apportionment of
liability for environmental issues.
F. On November 21, 2007, Buyer and Seller entered into a “Confidentiality
Agreement” wherein Buyer agreed to keep all information and documents relevant
to the nature, state and condition of the Property confidential.
G. Buyer and Seller agree that in the event there is any conflict between this
Agreement and either the Agreement for Environmental Conditions or the
Confidentiality Agreement, then the latter two agreements shall apply.
NOW, THEREFORE, in consideration of the foregoing, the mutual covenants of
Seller and Buyer (individually, a “Party,” and collectively, the “Parties”) set
forth in this Agreement, and other good and valuable consideration, the receipt
and adequacy of which are both hereby acknowledged, the Parties, intending to be
legally bound, agree as follows:
1. Purchase and Sale. Seller agrees to sell to Buyer and Buyer agrees to
purchase from Seller, the Property for the price and on the terms and conditions
set forth in this Agreement.

 

 

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2. Purchase Price. The purchase price for the Property shall be the sum of
Eighty Thousand Dollars ($80,000) per acre of the Property (the “Purchase
Price”), and such Purchase Price shall, beginning on February 1, 2009, be
increased by an amount equal to one and one-half percent (1.5%) of such amount
per annum, compounded annually (as so increased, the “Purchase Price”);
provided, however, that such increase shall be prorated for any partial year of
the Option Term (as defined in the Option Agreement).
2.1 Payment. The Purchase Price shall be paid to Seller as follows:
(a) Option Price. If Buyer exercises the option (in accordance with the Option
Agreement) and proceeds through the Closing and purchases the Property, the
Option Price of $100,000, which Buyer paid to Seller pursuant to the Option
Agreement, shall be applied to and credited against the Purchase Price. If Buyer
does not elect to exercise the option, Seller shall have the right to retain the
Option Price as set forth in the Option Agreement.
(b) Rental Payments. Certain rental payments due under the Lease Agreement shall
be credited against the Purchase Price, as specifically set forth in that Lease
Agreement.
(c) Remaining Balance. The remaining balance of the Purchase Price shall be paid
in full at the Closing by Buyer in immediately available U.S. Dollars.
3. Title Examination.
3.1 Title. Within a reasonable time after the legal/tax parcel is created,
Seller shall cause Title Company to deliver to Buyer or Buyer’s counsel (as
applicable) a preliminary title report covering the Property issued by Title
Company, including copies of all underlying documents relating to conditions and
exceptions contained therein (collectively, the “Title Report”). Buyer will have
two (2) weeks after the date that Buyer receives all items comprising the Title
Report (the “Title Examination Period”) within which to notify Seller in writing
(“Buyer’s Title Objection”) of any conditions, defects, encroachments or other
objections to title which are not acceptable to Buyer in Buyer’s reasonable
business judgment (each, a “Title Issue,” and collectively, the “Title Issues”);
provided, however, that Buyer shall be deemed to have accepted all conditions
and exceptions to title not specified in Buyer’s written notice. To the extent
listed as Title Issues in Buyer’s Title Objection, any and all mortgages, deeds
of trust, unfulfilled real estate contract vendor interests or other consensual
or non-consensual liens securing any monetary claim or indebtedness with respect
to the Property, existing immediately prior to Closing and not created by Buyer
(any such exception, a “Monetary Exception”), shall be deemed to not be
Permitted Exceptions, and Seller shall convey fee title to the Property to Buyer
at Closing free and clear of any and all such Monetary Exceptions. If Buyer does
not provide Buyer’s Title Objection to Seller prior to the expiration of the
Title Examination Period, Buyer shall be deemed to have determined that the
Title Report and all matters referenced therein are satisfactory to Buyer. Buyer
acknowledges and agrees that the Title Report may contain as exceptions the
Pre-Approved Exceptions enumerated in Section 3.2 below. Seller shall have
twenty (20) calendar days after receiving Buyer’s Title Objection to (a) cure
the Title Issues identified by Buyer, (b) provide Buyer with reasonable
assurances of the manner in which the Title Issues will be cured before the
Closing, or (c) provide Buyer with written notice that Seller will not cure the
Title Issues prior to the Closing; provided, however, that if Seller does not
provide Buyer with such written notice prior to the expiration of such twenty
(20)-day period, Seller shall be deemed to have declined to cure the Title
Issues objected to by Buyer. If Seller declines or is deemed to have declined to
cure the title defect or title defects objected to by Buyer, then Buyer may
elect to either (y) terminate this Agreement pursuant to Section 4.2 hereof or
(z) close the transactions contemplated by this Agreement with no reduction in
the Purchase Price. For purposes of this Agreement, any and all applicable laws
affecting the Property and the use thereof, whether or not disclosed in the
Title Report, shall not be considered a title defect hereunder.

 

 

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3.2 Pre-Approved Exceptions. The following title encumbrances or other matters
(the “Pre-Approved Exceptions”) shall be deemed approved by Buyer and shall not
be deemed Title Issues hereunder; provided, however, that Buyer shall obtain any
and all endorsements over any of the Pre-Approved Exceptions from the Title
Company at Buyer’s sole cost:
(a) liens for ad valorem taxes, assessments and other governmental charges which
are not yet due and payable as of the Closing;
(b) all land use (including environmental and wetlands), building, and zoning
laws, rules, regulations, codes and ordinances affecting the Property or the use
thereof;
(c) any rights of the United States of America, the State of California or any
other parties whatsoever, in the use and continuous flow of any brooks, streams
or other natural water courses or water bodies within, crossing or abutting the
Property, including, without limitation, riparian rights and navigational
servitudes;
(e) all existing public streets;
(f) all (i) cemeteries and burial grounds and (ii) all electric power,
telephone, gas, sanitary sewer, storm sewer, water and other utility lines on,
over or under the Property, so long as such do not materially affect the
property’s present use;
(g) all mineral rights or reservations, oil, gas or mineral leases, water
districts, water rights, restrictions or reservations outstanding in third
parties;
(h) liens or encumbrances affecting the Property created by Buyer; and
(i) any matters expressly disclosed in this Agreement.
3.3 Permitted Exceptions. All title exceptions approved, accepted, or deemed
approved by Buyer pursuant to Sections 3.1 or Section 3.2 shall be deemed for
all purposes hereunder the “Permitted Exceptions.”
4. Due Diligence.
4.1 Buyer’s Inspections. Subject to the Agreement for Environmental Conditions,
Buyer acknowledges that Buyer has occupied the Property as a tenant of Seller
since January 31, 2008, and has had an adequate opportunity to inspect and
investigate all aspects of the Property, including, but not limited to,
environmental conditions and suitability for Buyer’s intended use.

 

 

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4.2 Termination Rights. If Buyer has the right and elects to terminate this
Agreement as set forth herein, Buyer shall give written notice to Seller of such
election. Upon Seller’s receipt of such notice this Agreement shall
automatically terminate, and the Parties hereto shall be released from all
liability hereunder, except as specifically set forth otherwise herein.
5. Casualty Loss and Condemnation. Until Closing, Seller has the risk of loss or
damage to the Property. If any loss or damage occurs prior to Closing, Buyer
may, at its option, elect to either (i) terminate this Agreement pursuant to
Section 4.2 hereof, or (ii) accept the Property with the Purchase Price reduced
by the cost of replacement or repair, which costs shall be determined by an
independent third party and reasonably acceptable to Buyer. If, prior to the
Closing, all or any portion of the Property is taken by condemnation or eminent
domain (or is the subject of a pending or contemplated taking which has not been
consummated), Seller shall notify Buyer promptly upon Seller becoming aware of
such fact. In the event of a Material Taking (as hereinafter defined), Buyer
shall have the option to terminate this Agreement upon written notice to Seller
given not later than the earlier of (a) five (5) days after receipt of such
notice from Seller, or (b) the Closing. If Buyer does not timely elect, or has
no right, to terminate this Agreement, Seller shall assign and turn over to
Buyer, and Buyer shall be entitled to receive and keep, all awards for the
taking by condemnation, and Buyer shall be deemed to have accepted the Property
subject to the taking without reduction in the Purchase Price. As used herein,
the term “Material Taking” shall mean a taking or condemnation, or a pending
taking or condemnation of which the parties have received notice, of a portion
of the Property that would, in Buyer’s commercially reasonable business
judgment, materially and adversely affect Buyer’s intended use of the Property
in any material respect or would adversely affect access to the Property in any
material respect.
6. Condition of the Property; Ongoing Operations. This entire Section 6 shall be
subject to the Agreement for Environmental Conditions. Buyer acknowledges and
agrees for itself and its successors and assigns, except as otherwise expressly
provided in this Agreement, (a) that as of the Closing it will have inspected
and will be thoroughly familiar with the Property and its physical aspects and
that it is acquiring the Property in its “as is” condition, (b) that Buyer
assumes the responsibility and risks of all defects to and conditions in the
Property, including defects and conditions, if any, that cannot be observed by
inspection, (c) that Seller has not made and makes no representations or
warranties of any kind with respect to the condition of the Property or its
fitness, suitability or acceptability for any particular use or purpose, except
as may be otherwise set forth herein; (d) that Seller shall not be liable for
any latent or patent defects therein, and (e) that, other than continuing
obligations to be performed in the ordinary course of Seller’s business prior to
the Closing set forth in Section 6.2 below, Seller shall have no obligation to
repair or make any improvements to the condition of the Property prior to the
Closing. By purchasing the Property, Buyer acknowledges and agrees for itself
and its successors and assigns (i) that it has been given a reasonable
opportunity to inspect and to investigate the Property either independently or
through agents of Buyer’s choosing prior to and during Buyer’s occupancy of the
Property as a tenant of Seller and during the Title Review Period, (ii) that any
information, whether written or oral, or in the form of maps, surveys, inventory
information, plats, soil reports, engineering studies, environmental studies,
inspection reports, plans, specifications, or any other information whatsoever,

 

 

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without exception, pertaining to the Property, any and all other matters
concerning the condition, suitability, integrity, marketability, compliance with
law, or other attributes or aspects of the Property, is furnished to Buyer as a
courtesy without warranty by Seller, that neither Seller nor its
representatives, officers, members or employees have verified the accuracy of
any statements or other information therein contained nor the qualifications of
the persons preparing such information, (iii) that mineral rights will not be
included if not owned by Seller as of the Effective Date, (vi) that Buyer is
also responsible for evaluating whether the Property is suitable for Buyer’s
intended purpose and any and all environmental, land use, regulatory and other
constraints relating to the use of the Property, (v) that Buyer shall be solely
responsible for obtaining all permits and licenses, if any, required of or by
Buyer to carry out its intended operations or activities on the Property, and
(vi) that Buyer is responsible for determining whether the Property or any
portion thereof is within any flood plain, flood prone area, watershed or
“wetlands” area, and the availability of water, sewer, electrical, gas, or other
utility services.
6.1 Without limiting the generality of the foregoing, SELLER EXPRESSLY DISCLAIMS
THE EFFECT OF ALL PAST, PRESENT OR FUTURE LAWS UPON THE OPERATION OF THE
PROPERTY AS A BIOMASS POWER PLANT OR OTHERWISE, ALL WARRANTIES RELATING TO THE
PROPERTY, INCLUDING, WITHOUT LIMITATION ANY IMPLIED WARRANTY OF MERCHANTABILITY,
FITNESS FOR A PARTICULAR PURPOSE AND SUITABILITY FOR BUYER’S INTENDED USE. The
provisions of this Section 6.1 shall survive the Closing.
6.2 From the date hereof until the Closing, Seller (a) shall not enter into any
agreement that would have a material adverse effect on the use, value, operation
or enjoyment of the Property, and (b) except as otherwise set forth herein,
shall not enter into, amend, renew or otherwise modify any agreement for any
purpose disposing of, encumbering or otherwise affecting the Property or the
rights of Buyer hereunder, without the written consent of Buyer, which consent
shall not be unreasonably withheld, conditioned or delayed.
7. Conditions to Closing.
7.1 Buyer’s Conditions. Buyer’s obligation to close this transaction shall be
subject to and contingent upon the satisfaction or waiver of each of the
following conditions:
(a) At the Closing, Seller shall convey good and marketable title to (i) the
Property, subject only to the Permitted Exceptions.
(b) Each of the obligations and covenants of Seller to be performed prior to or
on the Closing Date pursuant to this Agreement shall have been performed in all
material respects and Seller’s representations and warranties set forth in this
Agreement shall be true and correct in all material respects as of the Closing
Date.
(c) No suit, action, arbitration or other proceeding shall be pending before any
court or governmental agency, which may result in the restraint or prohibition
of the purchase and sale of the Property.
(d) The Title Company shall be prepared to issue to Buyer the Title Policy to
which Buyer is entitled as contemplated under Section 8.7 below

 

 

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(e) The Property shall be recognized as a separate legal/tax parcel.
If the conditions set forth in Section 7.1 above are not satisfied prior to
Closing, Buyer can waive such conditions in writing or terminate this Agreement
in writing and upon Seller’s receipt of such written termination this Agreement
shall automatically terminate, and the Parties shall have no further liability
hereunder, except as otherwise set forth herein. Notwithstanding the foregoing
should Buyer choose to proceed to Closing, Buyer shall be deemed to have waived
all conditions to Closing.
7.2 Seller’s Conditions. Seller’s obligation to close this transaction shall be
subject to and contingent upon the satisfaction or waiver of each of the
following conditions:
(a) Each of obligations and covenants of Buyer to be performed prior to or on
the Closing Date pursuant to this Agreement shall have been performed in all
material respects and Buyer’s representations and warranties set forth in this
Agreement shall be true and correct in all material respects as of the Closing
Date.
(b) No suit, action, arbitration or other proceeding shall be pending before any
court or governmental agency, which may result in the restraint or prohibition
of the purchase and sale of the Property.
(c) The Title Company shall be prepared to issue to Seller the Title Policy to
which Seller is entitled under Section 8.7 below.
If the conditions set forth in Section 7.2 above are not satisfied prior to
Closing, Seller can waive such conditions in writing or terminate this Agreement
in writing, and upon Buyer’s receipt of such written termination this Agreement
shall automatically terminate, and the Parties shall have no further liability
hereunder, except as otherwise set forth herein. Notwithstanding the foregoing
should Seller choose to proceed to Closing, Seller shall waive all conditions to
Closing. However, representations and warranties of Buyer shall survive Closing
as set forth herein.
8. Closing.
8.1 Time and Place of Closing. This transaction shall be closed in escrow (the
“Closing”) at the office of the Title Company, or at such other location as the
Parties may mutually agree in writing. The Closing shall take place on  _____ 
(the “Closing Date”).
8.2 Buyer’s Closing Deliveries. At or before Closing, Buyer shall deliver to
Title Company, for delivery through escrow to Seller or as otherwise directed,
the following:
(a) the balance due on the Purchase Price, together with any other amounts
required by this Agreement to be paid by Buyer, all in immediately available
funds by wire transfer to the Title Company’s account;

 

 

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(b) certified resolutions, certificates of good standing and other evidence of
the authority of the persons executing this Agreement and the closing documents
on behalf of Buyer to execute such documents and close the transactions
contemplated hereby;
(c) all reports and forms (if any) required under the Section 1060 of the Code
and Department of Treasury regulations thereunder;
(d) any other documents required by this Agreement to be delivered by Buyer
including any necessary assumptions of interests and rights to be conveyed;
(e) such additional instructions, resolutions, and other documents as Title
Company may reasonably require or Buyer may desire to utilize that are not
inconsistent with or contrary to the provisions hereof. In the event of any
inconsistency or conflict between said instructions and the provisions of this
Agreement, this Agreement shall control.
8.3 Seller’s Closing Deliveries. At the Closing, Seller shall deliver through
escrow to Buyer or as otherwise directed, the following:
(a) a grant deed in form and substance substantially identical to the instrument
attached hereto as Exhibit B (the “Deed”), properly executed and in proper form
for recording in Lassen County so as to convey the Property to Buyer as required
by this Agreement;
(b) an executed certificate to the effect that Seller is not a foreign person as
defined in Section 1445 of the Code and Department of Treasury regulations
thereunder, in form and substance reasonably satisfactory to Seller (the
“FIRPTA”);
(c) all reports and forms (if any) required under Section 1060 of the Code and
Department of Treasury regulations thereunder;
(d) certified resolutions, certificates of good standing and other evidence of
the authority of the persons executing this Agreement and the closing documents
on behalf of Seller to execute such documents and close the transactions
contemplated hereby;
(e) any other documents required by this Agreement to be delivered by Seller
including any necessary assignments of interests and rights to be conveyed; and
(f) such additional instructions, resolutions, and other documents as Title
Company may reasonably require or Seller may desire to utilize that are not
inconsistent with or contrary to the provisions hereof. In the event of any
inconsistency or conflict between said instructions and the provisions of this
Agreement, this Agreement shall control.
8.4 Reasonable Actions. The Parties shall take such other actions as may be
reasonably necessary to complete the Closing in accordance with this Agreement.

 

 

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8.5 Prorations. Adjustments and prorations shall occur at Closing as follows:
(a) All real and personal property taxes and installments of special or general
assessments, if any, for the tax years prior to the present tax year shall be
paid by the Seller. All real and personal property taxes and special or general
assessments, if any, whether payable in installments or not, for the tax year
during which the Closing Date occurs will be prorated on a daily basis to the
Closing Date based upon the latest available tax rate and assessed valuation.
(b) All other items which are customarily prorated in transactions similar to
the transaction contemplated under this Agreement and which are not heretofore
identified in this Section 8.5 shall be prorated as of the Closing Date in
accordance with customary practices.
8.6 Closing Costs. The costs associated with the Closing shall be allocated as
follows:
(a) Seller shall pay (i) one half of the escrow fee of Title Company,
(ii) one-half of all the real estate transfer or excise taxes, (iii) one-half of
all the Title Expenses, as hereafter defined in this Section 8.6(a),
(iv) one-half of all the recordation fees for the Deed, and (v) all of Seller’s
fees (including without limitation, attorneys’ fees and costs). Seller shall
also be responsible for the recording fees resulting from the recordation of all
documents needed to clear any title exceptions required to be removed by Seller
hereunder. For purposes of this Section 8.6(a), the term “Title Expenses” shall
mean the premiums and other charges and examination fees for Title Report and
Title Policy (defined in Section 8.7 below) issued by the Title Company in
connection with the transaction contemplated under this Agreement.
(b) Buyer shall pay (i) one half of all the escrow fees of Title Company,
(ii) one-half of all the real estate transfer or excise taxes, (iii) one half of
all the Title Expenses, (iv) one-half of all the recordation fees for the Deed,
(v) all premiums and endorsements desired by Buyer in excess of those described
in Section 8.7 below and (vi) all of Buyer’s environmental or other consultants’
and attorneys’ fees and costs.
(c) Except as expressly provided in this Agreement, each Party shall bear and
pay at its sole cost and expense all costs and expenses incurred by such Party
in connection with this Agreement and the transaction contemplated hereby,
including (without limitation) all attorneys’ and accountants’ fees.
8.7 Title Insurance Policy. At the Closing, Seller shall cause the Title Company
to deliver to Buyer one or more CLTA standard coverage owner’s policy of title
insurance with respect to the Property, with coverage amounts in the aggregate
equal to the Purchase Price, insuring marketable fee simple title to the
Property in Buyer, subject only to the Permitted Exceptions, and any liens or
encumbrances suffered or created by Buyer. Seller may also obtain for itself, in
its sole discretion and at its sole cost and expense, a seller’s policy of title
insurance in similar form as each owner’s policy obtained by Seller for Buyer
(collectively, the “Title Policy”).

 

 

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9. Representations and Warranties.
9.1 Seller’s Representations and Warranties. Seller represents and warrants to
Buyer as follows:
(a) Seller is duly incorporated, validly existing, and in good standing under
the laws of the State of California and has full power and authority to execute,
deliver, and perform its obligations under this Agreement and all instruments
required to be delivered by Buyer hereunder. All requisite authorizing action
has been taken by Buyer in connection with the execution and delivery of this
Agreement and the consummation of this transaction.
(b) The execution, delivery and performance of this Agreement by Seller will not
(i) violate or conflict with Buyer’s corporate power or authority, (ii) to
Seller’s knowledge, constitute a violation of any law, regulation, order, writ,
judgment, injunction, or decree applicable to Seller, or (iii) to Seller’s
knowledge, conflict with, or result in the breach of the provisions of, or
constitute a default under, any material agreement, license, permit, or other
instrument to which Seller is a party or is bound.
(c) Except as disclosed herein, there is neither pending nor, to Seller’s
knowledge, threatened against Seller, the Property, or any part thereof any
legal action, arbitration, administrative proceeding before any governmental
authority, or investigation that could (i) have a material adverse effect on
Buyer or upon the use, value or operation of the Property following the Closing,
or (ii) enjoin or restrict the right or ability of Seller to perform its
obligations under this Agreement.
(d) Except as disclosed in the Agreement for Environmental Conditions and as
disclosed herein, to Seller’s knowledge, Seller has received no written
notification from any governmental authority (i) that the Property or any part
thereof is in violation of any applicable law, ordinance, rule, regulation, or
judicial or administrative order or ruling, or (ii) that the condemnation of the
Property is contemplated or being considered.
(e) Except as disclosed herein, to Seller’s knowledge, Seller has received no
notice during Seller’s period of ownership that there are parties that may claim
to adversely possess or have any possessory rights in any part of the Property
being sold to Buyer.
(f) Except as disclosed in the Agreement for Environmental Conditions and as
disclosed herein, (i) to Seller’s knowledge, there is no Environmental Condition
on the Property or facts or circumstances relating to the Property that would
reasonably be expected to form the basis for the assertion of any claim against
the Seller under any Environmental Laws (defined below), or (ii) Seller has not
entered into, agreed to or to Seller’s knowledge, been subjected to any consent,
decree, judgment or order under any Environmental Laws, relating to compliance
with, or cleanup of Hazardous Materials under any Environmental Laws (as those
terms are defined in the Agreement for Environmental Conditions).
(g) Seller is not a foreign person or entity, as described in the Foreign
Investments in Real Property Tax Act, Section 1445 of the Code.
(h) For purposes hereof, the term “to Seller’s knowledge,” means the present,
actual knowledge of A.A. Emmerson, President of Seller, with no duty of due
diligence or inquiry on the part of such officer. Seller has reviewed the
representations and warranties contained in this Section 9.1 with the individual
identified in this Section 9.1(j), who is named herein to define the scope of
Seller’s knowledge, but who shall not have any personal liability hereunder.

 

 

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9.2 Buyer’s Representations and Warranties. Buyer represents and warrants to
Seller as follows:
(a) Buyer is duly organized, validly existing, and in good standing under the
laws of the State of Arizona and has full power and authority to execute,
deliver, and perform its obligations under this Agreement and all instruments
required to be delivered by Buyer hereunder. All requisite authorizing action
has been taken by Buyer in connection with the execution and delivery of this
Agreement and the consummation of this transaction.
(b) The execution, delivery and performance of this Agreement by Buyer will not
(a) violate or conflict with Buyer’s limited liability company power or
authority, (b) to Buyer’s knowledge, constitute a violation of any law,
regulation, order, writ, judgment, injunction, or decree applicable to Buyer, or
(c) to Buyer’s knowledge, conflict with, or result in the breach of the
provisions of, or constitute a default under, any material agreement, license,
permit, or other instrument to which Buyer is a party or is bound.
(c) There is neither pending nor, to Buyer’s knowledge, threatened any legal
action, arbitration, administrative proceeding before any governmental
authority, or investigation that could enjoin or restrict Buyer’s right or
ability to perform its obligations under this Agreement.
(d) Buyer acknowledges that Buyer has inspected the Property, is relying solely
on such inspection and that, except with respect to the warranties and
representations expressly set forth in this Agreement and the Agreement for
Environmental Conditions, Seller makes no warranty, express or implied, whether
of suitability or fitness for a particular purpose, or quality as to the
Property, or any part thereof, or as to the condition or workmanship thereof, or
the absence of any defects therein, whether latent or patent, it being
understood that the Property is to be conveyed hereunder “AS-IS, WHERE-IS, WITH
ALL FAULTS.”
10. Indemnification. If the Closing occurs, then the parties shall have the
following respective indemnification obligations, subject to the Agreement for
Environmental Conditions:
(a) Indemnification by Seller. Seller shall protect, defend, indemnify and hold
Buyer and the Property harmless for, from and against: (i) any claim related to
the Property, or Seller’s activities thereon, that arise or accrue prior to
Closing Date; (ii) any claim that results from any breach or default by Seller
under this Agreement; and (iii) any claim that results from any document
executed by Seller pursuant to this Agreement.
(b) Indemnification by Buyer. Buyer shall protect, defend, indemnify and hold
Seller harmless for, from and against: (i) any claim related to the Property, or
Buyer’s activities thereon, that arise or accrue on or after the Closing Date;
(ii) any claim that results from any breach or default by Buyer under this
Agreement; and (iii) any claim that results from any document executed by Buyer
pursuant to this Agreement.

 

 

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11. Default.
(a) Buyer’s Remedies. If Seller fails to sell, assign, convey and transfer the
Property to Buyer as required by this Agreement for any reason that constitutes
a default by Seller, or if Seller otherwise breaches any of the representations
or warranties in this Agreement or other provisions hereof, Buyer may only
choose between (i) terminating this Agreement by written notice to Seller and
collecting actual, reasonable costs incurred as a result of Seller’s default;
provided, however, that Buyer shall not be entitled to recover consequential
damages, or (ii) waiving such default and consummating the transaction
contemplated hereby in accordance with the terms hereof without any reduction or
offset against the Purchase Price, or (iii) seeking specific performance of this
Agreement.
(b) Seller’s Remedies. If Buyer fails to close for any reason that constitutes a
breach by Buyer under this Agreement, then Seller, as Seller’s sole and
exclusive remedy, shall have the right to terminate this Agreement by giving
written notice of termination to Buyer. Upon such termination, Buyer shall have
no further liability to Seller hereunder, and Seller shall retain the Option
Price as liquidated damages by reason of Buyer’s breach. The parties acknowledge
that Seller’s actual damages would be difficult or impossible to determine and
that liquidated damages in the amount of the Option Price is a reasonable
estimate of the damages that Seller will sustain as a result of such breach.
12. Miscellaneous Provisions.
12.1 Binding Effect. The provisions of this Agreement shall be binding upon and
inure to the benefit of the Parties and, subject to the restrictions on
assignment set forth herein, their respective successors and assigns.
12.2 Assignment. Buyer shall not assign any of its rights or obligations under
this Agreement without the consent of Seller, which Seller may withhold,
condition or delay in its reasonable discretion.
12.3 Notices. All notices under this Agreement shall be in writing and signed by
a Party or its counsel. Notices may be (i) delivered personally,
(ii) transmitted by facsimile, (iii) delivered by a recognized national
overnight delivery service, or (iv) mailed by certified United States mail,
postage prepaid and return receipt requested. Notices to any Party shall be
directed to the address set forth below, or to such other or additional address
as any Party may specify from time to time by notice to the other Party. Any
notice delivered in accordance with this section shall be deemed given (a) in
the case of any notice transmitted by facsimile, on the date on which the
receiving Party receives receipt by facsimile transmission, telephone, or
otherwise, (b) in the case of any notice delivered by a recognized national
overnight delivery service, on the day of delivery to the service, or (c) in the
case of any notice mailed by certified U.S. mail, three (3) business days after
deposit therein.

 

 

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If to Seller:
  Sierra Pacific Industries
19794 Riverside Avenue
Anderson, CA 96007
Phone No.: (530) 378-8000
Fax No.: (530) 378-8266
Email: gblanc@spi-ind.com
Attn: Gary Blanc
 
   
With a copy to:
  Dun & Martinek, LLP
2313 I Street
P.O. Box 1266
Eureka, CA 95501
Phone No.: (707) 442-3791
Fax No.: (707) 442-9251
Email: DHD@Dunmartinek.com
Attn: David Dun
 
   
If to Buyer:
  Renegy Susanville, LLC
301 West Warner Road, Suite 132
Tempe, AZ 85284
Phone No.: (480) 556-5555
Fax No: (480) 361-8341
Email: rzack@renegy.com
Attn: Robert Zack
 
   
With a copy to:
  Squire, Sanders & Dempsey LLP
40 North Central Avenue, Suite 2700
Phoenix, AZ 85004
Phone No.: (602) 528-4192
Fax No: (602) 253-8129
Email: jsteltenpohl@ssd.com
Attn: Justin Steltenpohl

12.4 Waiver. Any Party’s failure to exercise any right or remedy under this
Agreement, delay in exercising any such right or remedy, or partial exercise of
any such right or remedy, shall not constitute a waiver of that or any other
right or remedy hereunder. A waiver of any breach of any provision of this
Agreement shall not constitute a waiver of any succeeding breach of such
provision or a waiver of such provision itself. No waiver of any provision of
this Agreement shall be binding on a Party unless it is set forth in writing and
signed by such Party.
12.5 Amendment. This Agreement may not be modified or amended except by the
written agreement of the Parties.
12.6 Costs. A Party who prevails in prosecuting or defending an arbitration or
other action with respect to this Agreement shall (in addition to any other
relief hereunder) be paid by the other Party all costs, fees and expenses,
including reasonable attorneys’ fees, expert witness (whether or not called to
testify at trial or other proceeding) and other professional fees and all other
fees, costs, and expenses actually incurred and reasonably necessary in
connection therewith, including but not limited to deposition transcript and
court reporter costs, as determined by the judge or arbitrator at trial or other
proceeding, and including such fees, costs and expenses incurred in any
appellate or review proceeding, or in collecting any judgment or award, or in
enforcing any decree rendered with respect thereto, in addition to all other
amounts provided for by law. This cost and attorneys fee provision shall apply
with respect to any litigation or other proceedings in bankruptcy court,
including litigation or proceedings related to issues unique to bankruptcy law.

 

 

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12.7 Integration. This Agreement contains the entire agreement and understanding
of the Parties with respect to the subject matter hereof and supersedes all
prior and contemporaneous agreements with respect thereto. The Parties
acknowledge and agree that there are no agreements or representations relating
to the subject matter of this Agreement, either written or oral, express or
implied, that are not set forth in this Agreement or in the Schedules to this
Agreement.
12.8 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of California (without regard to the
principles thereof relating to conflicts of laws).
12.9 Construction and Interpretation. The headings or titles of the sections of
this Agreement are intended for ease of reference only and shall have no effect
whatsoever on the construction or interpretation of any provision of this
Agreement; references herein to sections are to sections of this Agreement
unless otherwise specified. Meanings of defined terms used in this Agreement are
equally applicable to singular and plural forms of the defined terms. As used
herein, (i) the terms “hereof,” “herein,” “hereunder,” and similar terms refer
to this Agreement as a whole and not to any particular provision of this
Agreement, (ii) the term “this transaction” refers to the transaction(s)
contemplated by this Agreement, and (iii) the term “including” is not limiting
and means “including without limitation.” In the event any period of time
specified in this Agreement ends on a day other than a business day, such period
shall be extended to the next following business day. Buyer and Seller each
agree and acknowledge that each has been advised and represented by legal
counsel in the negotiation, execution and delivery of this Agreement and that
all provisions of this Agreement have been negotiated at arm’s length. Each
Party accordingly agrees that if any ambiguity exists with respect to any
provision of this Agreement, such provision shall not be construed against any
Party solely because such Party or its representatives were the drafters of any
such provision.
12.10 Execution. This Agreement may be executed in any number of counterparts,
all of which together shall constitute one and the same agreement. Each Party
may rely upon the signature of each other Party on this Agreement that is
transmitted by facsimile as constituting a duly authorized, irrevocable, actual,
current delivery of this Agreement with the original ink signature of the
transmitting Party. This Agreement shall become effective and in full force only
when duly and properly executed, authorized, and delivered by the Parties
hereto.
12.11 Recitals and Schedules. The Recitals to this Agreement and any Schedules
attached to this Agreement are incorporated herein by this reference.
12.12 Further Assurances. Each Party agrees to execute and deliver such
additional documents and instruments as may reasonably be required to effect
this transaction fully, so long as the terms thereof are consistent with the
terms of this Agreement.

 

 

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12.13 No Third Party Beneficiaries. This Agreement is made and entered into for
the sole protection and legal benefit of Seller and Buyer and, subject to the
restrictions on assignment set forth herein, their respective successors and
assigns, and no other person or entity shall be a direct or indirect legal
beneficiary of, or have any direct or indirect cause of action or claim in
connection with, this Agreement.
12.14 Brokers. Seller and Buyer each represent and warrant to the other that
they have had no dealings, negotiations or consultations with any brokers or
finders in connection with this transaction. Each Party shall indemnify, defend
and hold harmless the other Party from all liability and damages resulting from
any claims that may be asserted against the other Party by any broker, finder,
or other person, with whom a Party has or purportedly has dealt.
12.15 1031 Exchange. Either Seller or Buyer or both may be structuring a
like-kind exchange or exchanges pursuant to Section 1031 of the Code. The
Parties shall reasonably cooperate with one another in creating or completing
like-kind exchanges pursuant to Section 1031 of the Code in connection with the
sale and purchase of the Property; provided however, that (a) such exchanges do
not directly or indirectly reduce the Purchase Price, (b) such exchanges will
not delay or otherwise adversely affect the Closing, and (c) there is no
additional unreimbursed loss, cost, damage, tax or expense incurred by the
cooperating Party resulting from, or in connection with, such exchanges. Buyer’s
rights and obligations hereunder shall be assignable, without the Seller’s
consent, to one or more qualified intermediaries, escrow agents or other
intermediaries, for the purpose of receiving replacement property in order to
accomplish any like kind exchange. Any such assignment shall provide for the
direct conveyancing of such replacement property to such intermediary or Buyer,
but not to Seller.
12.16 Time. If any date upon which some action, notice or response is required
of any Party hereunder occurs on a weekend or national holiday, such action,
notice or response shall not be required until the next succeeding business day.
12.17 Time is of the Essence. Time is of the essence with respect to all terms,
provisions, covenants and conditions contained in this Agreement.
12.18 Cooperation. Subject to the other provisions in this Agreement, the
Parties hereto shall use reasonable, good faith efforts to perform their
respective obligations herein and to take, or cause to be taken or do, or cause
to be done, all things necessary, proper or advisable under applicable law to
cause the transactions contemplated by this Agreement to be carried out promptly
in accordance with the terms hereof, and shall cooperate fully with each other
and their respective officers, directors, members, managers, employees, agents,
counsel, accountants and other designees in connection with any steps required
to be taken as part of their respective obligations under this Agreement.
12.19 Potential Invalidity. If any provision of this Agreement is found by an
arbitrator or court of competent jurisdiction to be invalid, illegal, or
unenforceable, then (a) such provision shall be enforceable to the fullest
extent permitted by applicable law, and (b) the validity and enforceability of
the other provisions of this Agreement shall not be affected and all such
provisions shall remain in full force and effect.

 

 

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12.20 Arbitration; Dispute Resolution. All matters in dispute hereunder which
are not mutually resolved by the Parties after good faith negotiation shall be
resolved between the Parties pursuant to final and binding arbitration as
follows:
(a) The arbitration regarding any matter in dispute under this Agreement, shall
be: (i) in the event the amount in dispute is less than One Million Dollars
($1,000,000.00), by a single arbitrator, mutually selected by Buyer and Seller;
or (ii) in the event the amount in dispute equals or exceeds One Million Dollars
($1,000,000.00), by a panel of three arbitrators, one arbitrator selected by
each of Buyer and Seller, and the two arbitrators in turn selecting a third
arbitrator to act with them in a panel. Each arbitrator hereunder shall be a
neutral-party attorney with at least fifteen (15) years substantial experience
in the practice of commercial real estate transactions, chosen from the pool of
then available arbitrators working with the American Arbitration Association
(“AAA”). All arbitrations shall be held in Anderson, California, and shall be
conducted in accordance with the arbitration rules of the AAA, existing at the
date thereof, to the extent not inconsistent with this Agreement. The decision
of the arbitrator or majority of the panel (as applicable) with respect to any
matter in dispute hereunder shall be final and binding. The determination of
which Party (or combination of them) bears the costs and expenses incurred in
connection with any arbitration proceeding required hereunder shall be
determined by the arbitrator or panel. The Parties agree that the arbitrator or
panel shall have no jurisdiction to consider evidence with respect to or render
an award or judgment for punitive or consequential damages (or any other amount
awarded for the purpose of imposing a penalty). The Parties agree that all facts
and other information relating to any arbitration arising under this Agreement
will be kept confidential to the fullest extent permitted by applicable law.
(b) Any Party who fails to submit to binding arbitration following a lawful
demand by the other Party shall bear all costs and expenses, including
reasonable attorneys’ fees, (including those incurred in any trial, bankruptcy
proceeding, appeal or review) incurred by the other Party in obtaining a stay of
any pending judicial proceeding concerning a dispute which by the terms of this
Agreement has been properly submitted to mandatory arbitration, and or
compelling arbitration of any dispute.
(c) The award in such arbitration may be enforced on the application of either
Party by the order of judgment of a court of competent jurisdiction. The
arbitrator shall resolve all disputes in accordance with the substantive law of
the State of California. The arbitrator shall have no authority nor jurisdiction
to award any damages or any other remedies beyond those which could have been
awarded in a court of law if the Parties had litigated the claims instead of
arbitrating them. No provision of, nor the exercise of any rights under this
Section 12.20 shall limit the right of either Party to exercise self help
remedies or obtain provisional or ancillary remedies such as an injunction,
receivership, attachment or garnishment; provided, however, that any such action
or proceeding arising out of this Agreement that is litigated for any reason
will be litigated in courts located in Shasta County, California, and each Party
consents and submits to the jurisdiction of any state or federal court located
in Shasta County, California, for any such litigation. Additionally, each of the
Parties waives any right it may have to trial by jury in any proceeding between
or involving the Parties whether arising under this Agreement or otherwise.

 

 

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(d) The Parties shall use their best efforts to complete any arbitration within
sixty (60) days of the filing of the dispute unless the dispute is regarding the
refusal to grant a consent or approval in which case the time period shall be
thirty (30) days. The arbitrator shall be empowered to impose sanctions for any
Party’s failure to do so. The provisions of this arbitration provision shall
survive any termination, amendment, or expiration hereof unless the Parties
otherwise expressly agree in writing. Each Party agrees to keep all disputes and
arbitration proceedings strictly confidential, except for the disclosure of
information required in the ordinary course of business of the Parties or as
required by applicable law or regulation. Any time limitation (such as the
statute of limitations or laches) which would bar litigation of a claim shall
also bar arbitration of the claim. If any provision of this arbitration
procedure is declared invalid by any court, the remaining provisions shall not
be affected thereby and shall remain fully enforceable. The Parties understand
that they have decided that upon demand of either of them, their disputes as
described herein will be resolved by arbitration rather than in a court and once
so decided cannot later be brought, filed or pursued in court.
[Signatures appear on the following page]
The Parties have executed this Agreement in duplicate originals as of the
Effective Date.

                 
SELLER:
  SIERRA PACIFIC INDUSTRIES, a California corporation    
 
               
 
  By:                          
 
      Name:        
 
      Title:  
 
   
 
               
 
               
BUYER:
  RENEGY SUSANVILLE, LLC, an Arizona
limited liability company    
 
               
 
  By:                          
 
      Name:        
 
      Title:  
 
   
 
               

Exhibits:
A      - Description of the Property
B      - Deed Form

 

 

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EXHIBIT A
(Description of the Property)

 

 

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EXHIBIT B
(Deed Form)
RECORDING REQUESTED BY:
AND WHEN RECORDED MAIL TO:
Documentary transfer tax is $                     
                     computed on full value of property conveyed, or
                     computed on full value less value of liens and encumbrances
remaining at time of sale.

           
 
       
 
  Signature of Declarant or Agent Determining Tax    

GRANT DEED
FOR A VALUABLE CONSIDERATION, receipt of which is hereby acknowledged,
hereby GRANTS to
the following described real property in                      County, State of
California:
Assessor’s Parcel No.                     

     
Dated:                     
                                                           
                       

 

 

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EXHIBIT A
(Property)

 

 

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EXHIBIT C
FORM OF MEMORANDUM OF OPTION
RECORDING REQUESTED BY AND WHEN RECORDED, RETURN TO:
Dun & Martinek LLP
2313 I Street
P. O. Box 1266 (95502)
Eureka, CA 95501
ATTENTION: David H. Dun, Esq.
MEMORANDUM OF OPTION
This Memorandum of Agreement is made and entered into as of January 31, 2008 by
and between the Sierra Pacific Industries, a California corporation (the
“Optionor”) and Renegy Susanville, LLC, an Arizona limited liability company
(“Optionee”).
Optionor and Optionee have entered into that certain Option Agreement dated as
of January 31, 2008 (the “Agreement”), whereby Optionor and Optionee agreed to
the terms and conditions pursuant to which Optionee has purchased from Optionor
an option to purchase the real property described on Exhibit A hereto and any
improvements located thereon, together with all rights of Optionor to adjoining
streets, rights of way, easements and all other appurtenant rights belonging to
Optionor. The terms and conditions governing the option are more fully set forth
in the Agreement, which terms and conditions are made a part of this Memorandum
of Option as though fully set forth herein. The Option Agreement shall expire
January 13, 2013.
IN WITNESS WHEREOF, this Memorandum of Agreement is executed effective as of the
date first above-written.

                      LESSEE:       LESSOR:    
 
                    RENEGY SUSANVILLE, LLC       SIERRA PACIFIC INDUSTRIES    
 
                   
By:
  /s/ Robert W. Zack
 
      By:   /s/ George R. Emmerson
 
   
 
  Name: Robert W. Zack           Name: George R. Emmerson    
 
  Title: Co-Manager           Title: COO    

 

 

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NOTARY ACKNOWLEDGEMENTS

         
STATE OF ARIZONA
    )  
 
    ) ss.
COUNTY OF MARICOPA
    )  

On this 4TH day of February, 2008, before me, the undersigned, a Notary Public
in and for the State of Arizona, duly commissioned and sworn, personally
appeared Robert W. Zack, to me known to be the Co-Manager of Renegy Susanville,
LLC, the limited liability company that executed the foregoing instrument, and
acknowledged the said instrument to be the free and voluntary act and deed of
said limited liability company, for the uses and purposes therein mentioned, and
on oath stated that he is authorized to execute the said instrument on behalf of
said limited liability company.
WITNESS my hand and official seal hereto affixed the day and year first above
written.

             
[Notary Seal]
  Print Name:   Patti K. Carroll
 
        NOTARY PUBLIC for the State of Arizona    

         
STATE OF CALIFORNIA
    )  
 
    ) ss.
COUNTY OF SHASTA
    )  

On February 7, 2008, before me, Susan E. Witherspoon, Notary Public personally
appeared George R. Emmerson, who proved to me on the basis of satisfactory
evidence to be the person(s) whose name(s) is/are subscribed to the within
instrument and acknowledged to me that he/she/they executed the same in
his/her/their authorized capacity(ies), and that by his/her/their signature(s)
on the instrument the person(s), or the entity upon behalf of which the
person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California
that the foegoing paragraph is true and correct.

          Witness my hand and official seal.   [Notary Seal]
 
       
Signature
  /s/ Susan E. Witherspoon