Document:

Filed by Bowne Pure Compliance

 

Exhibit 10.1

LEASE AGREEMENT

This Lease (“Lease”) is made and entered into on January 31, 2008 (the “Effective Date”),
between SIERRA PACIFIC INDUSTRIES, a California corporation (“Lessor”), and RENEGY SUSANVILLE, LLC,
an Arizona limited liability company (“Lessee”).

RECITALS

A. Lessee has acquired from Lessor certain assets located on the Premises (defined below),
consisting of a biomass power plant and desires to lease from Lessor the Premises for the purpose
of operating such biomass power plant (the “Plant”).

B. Lessor desires to lease Lessee and Lessee desires to lease from Lessor that certain real
property, including any improvements not included in the assets comprising the Plant, located at
Sunkist Drive, Susanville, California (the “Premises”), and more particularly described in the
schedule attached to and made a part of this Lease as Exhibit A.

C. Contemporaneously with the Effective Date, Lessor and Lessee entered into a certain “Option
Agreement” wherein Lessor sold to Lessee an option to purchase the Premises pursuant to that Option
Agreement.

In consideration of the mutual covenants contained herein, the parties agree as follows:

SECTION ONE

SUBJECT AND PURPOSE

Lessor leases the Premises to Lessee for Lessee’s use only for operation of the Plant and
related activities. Lessee shall conduct no business activity on the Premises other than as
specifically provided for herein.

SECTION TWO

TERM

Lessor hereby leases the above Premises for a term of five (5) years (the “Term”), commencing
on January 31, 2008, and terminating on January 30, 2013, or sooner as provided herein. In the
event Lessee elects to exercise its option pursuant to the Option Agreement, this Lease shall
terminate and be of no further force and effect as of the closing date of Lessee’s purchase of the
Premises.

 

 

 

SECTION THREE

RENT

The total acreage of the Premises is forty (40) acres, and the monthly rental amount shall be
the sum of $750/acre. The rent shall be payable in advance on the first day of each month during
the Term with no right of claim, offset or any other deduction. The first rent payment
pursuant to this Section shall be due January 31, 2008, and all rental payments shall be made to
Lessor at the address specified above. Lessee shall pay the rent as specified herein and in
Section Four hereof. One hundred percent (100%) of the first twenty four (24) months of rental
payments made by Lessee hereunder shall apply to the “Purchase Price” defined under the Option
Agreement; provided, however, that on and after the first day following the 24th month
of the Term, only fifty percent (50%) of all rental payments made within the first twenty four (24)
months and thereafter of the Term shall apply to the Purchase Price. For avoidance of doubt the
option price specified in the Option Agreement shall not be similarly reduced.

SECTION FOUR

ADDITIONAL RENT

All taxes, charges, costs and expenses that Lessee assumes or agrees to pay hereunder,
together with all interest and penalties that may accrue thereon in the event of the failure of
Lessee to pay those items, and all other damages, costs, expenses and sums that Lessor may suffer
or incur, or that may become due, by reason of any default of Lessee or failure by Lessee to comply
with the terms and conditions of this Lease shall be deemed to be additional rent, and, in the
event of nonpayment after expiration of any applicable cure period, Lessor shall have all the
rights and remedies as herein provided for failure to pay rent.

SECTION FIVE

ALTERATIONS, ADDITIONS AND IMPROVEMENTS

A. Lessee shall not make or permit to be made any alterations to the Premises without prior
written consent of Lessor, which consent will not be unreasonably withheld; provided, however, that
Lessee shall not be required to obtain Lessor’s consent for any alterations to the Premises which
do not exceed $25,000 individually or $100,000 in the aggregate. If Lessee makes any alterations
to the Premises in excess of the amounts set forth herein, the alterations shall not be commenced
until five (5) days after Lessee has received written consent to such alterations from the Lessor
so that Lessor may post and record any appropriate notice of non-responsibility; provided, however,
that if Lessor fails to provide written notice to Lessee of its consent to, or rejection of, such
alterations within fifteen (15) days after receiving Lessee’s request, Lessor shall be deemed to
have approved the alterations. Alterations shall be performed in a workmanlike manner and shall
not weaken or impair the structural strength, or lessen the value, of any improvement on the
Premises, or change the purposes for which the improvement, or any part thereof, may be used.

B. Conditions with respect to alterations, additions or improvements are as follows:

(1) Before commencement of any work, all plans and specifications shall be filed with and
approved by all governmental departments or authorities having jurisdiction and any public utility
company having an interest therein, and all work shall be done in accordance with requirements of
all governmental regulations.

(2) Prior to commencement of any work, Lessee shall obtain appropriate additional insurance
coverage and pay the amount of any increase in premiums on insurance
policies provided for herein because of endorsements to be made covering the risk, and the
alterations, additions and improvements, both during and after the course of work.

 

2

 

C. All alterations, additions and improvements on or in the Premises at the commencement of
the Term, and that may be erected or installed during the Term, shall become part of the Premises
and the sole property of Lessor, except that all moveable trade fixtures installed by Lessee shall
be and remain the property of Lessee.

D. Except as otherwise provided herein, Lessor shall not be required or obligated to make any
changes, alterations, additions, or improvements in, on, or about the Premises, or any part
thereof.

SECTION SIX

REPAIRS

Lessee shall, at all times during the lease and at its own cost and expense, repair, replace
and maintain in a good, safe and substantial condition, the Plant, as well as any leased
improvements, additions and alterations thereto on the Premises, and shall use all reasonable
precaution to prevent waste, damage or injury to the Premises. Lessee hereby waives the provisions
of California Civil Code Sections 1941 and 1942 that allow a tenant to make repairs at landlord’s
expense.

SECTION SEVEN

TAXES

Lessee shall reimburse Lessor, within thirty (30) days of presentation by Lessor of a
statement therefor, for all taxes, assessments or other governmental charges that shall or may
during the Term be imposed on, or arise in connection with the use of, the Premises or any part
thereof. Lessee shall reimburse Lessor for all taxes assessed in lieu of or in addition to the
foregoing under all present or future laws of all governmental authorities whatsoever. Lessee
shall have the right to request that Lessor apply for the conversion of any special assessment for
local improvements in order to cause the same to be payable in installments and, upon conversion,
Lessee shall be obligated to reimburse Lessor only for those installments that may become due
during the Term. It is the intention of the parties that the rent herein is net rental, and Lessor
shall receive the same free from all taxes reimbursable from Lessee to Lessor.

Upon execution of this Lease, Lessor shall present to Lessee a statement setting forth the
amount of such taxes, assessments or other governmental charges which have been prepaid by Lessor
for 2008 and 2009 and which are attributable to any time period covered by this Lease, and Lessee
shall pay such sum to Lessor with ten (10) days of the beginning of the Term.

 

3

 

SECTION EIGHT

UTILITIES

All applications and connections for necessary utility services on the Premises shall be made
in the name of Lessee only, and Lessee shall be solely liable for utility charges as they become
due, including those for sewer, water, gas, electricity and telephone services.

SECTION NINE

INSURANCE

A. At all times during the term of this Lease, Lessee shall procure and maintain, at its own
expense, all of the following coverage and in the amounts described below:

(1) Regardless of the minimum statutory requirements of the State of California, employer
liability coverage under Workers’ Compensation Insurance will have minimum limits of no less than
$1,000,000;

(2) Commercial General Liability (CGL) insurance shall be maintained with minimum limits of
$2,000,000 each occurrence; $2,000,000 General Aggregate; and $2,000,000 Products/Completed
Operations Aggregate. CGL insurance shall be written on ISO occurrence form CG 00 01 or equivalent
and shall cover liability arising from premises, operations, independent contractors,
products-completed operations, personal injury and advertising injury, and liability assumed under
an insured contract (including the tort liability of another assumed in a business contract). Such
CGL insurance shall name and include Lessor and Sierra Pacific Holding Company, and all
subsidiaries and affiliates of both, as Additional Insureds using ISO additional insured
endorsement CG 20 10 11 85 or its equivalent; and

(3) A fire insurance policy in an amount of not less than One Million Five Hundred Thousand
Dollars ($1,500,000) including an ordinance or law endorsement, debris removal (with pollutant
clean-up) endorsement, and a lost rent endorsement for the benefit of Lessor. Such insurance shall
insure against loss or damage by fire of all buildings, improvements, and equipment on the
Premises, including alterations, additions, and improvements with Lessor named as loss payee.

B. All policies and coverage procured by Lessee as required herein (collectively, “Policies”)
shall include a separation of insureds clause. The Policies shall not include a deductible in
excess of $10,000.00 per loss without Lessor’s written approval. The Policies shall include a
waiver of subrogation and a provision that specifies the Policies are primary to and
non-contributory with any insurance held by Lessor and shall be endorsed such that the waiver of
subrogation shall not affect its right, or any named additional insured’s right, to recover under
such insurance policy.

 

4

 

C. All Policies described shall be procured to the satisfaction of Lessor and shall be
underwritten by an insurer acceptable to Lessor (must be rated A-: VII or better in the A.M. Best’s
Key Rating Guide and licensed to do business in the State of California or issued as a surplus line
by a surplus line broker in the State of California). Prior to taking possession of the
Premises, Lessee shall provide Lessor with a certificate of insurance, with Additional Insured
Endorsement attached if applicable, evidencing the Policies required herein. If Lessor has other
insurance that is applicable to any loss on an excess or contingent basis, the amount of Lessee’s
liability under the Policies cannot be reduced by the existence of such other insurance. Such
certificate of insurance shall provide that the coverage required herein shall not be cancelled or
reduced except by written notice to Lessor, giving at least thirty (30) days prior to the effective
date of such cancellation or reduction. In the event the coverage evidenced by any such
certificate is cancelled or reduced, Lessee shall procure and furnish to Lessor, before the
effective date of such cancellation or reduction, a new certificate conforming to the above
requirements. If Lessee has failed for any reason to secure the Policies to the satisfaction of
Lessor within thirty (30) days from the Effective Date, or if Lessor has not been furnished a
certificate of insurance as aforesaid within thirty (30) days from the Effective Date, then Lessor
shall have the right, in addition to any other remedy available to it, to (i) immediately terminate
this Lease on oral notice to Lessee or (ii) secure any or all of said Policies and Lessee shall
immediately reimburse Lessor for the cost of such Policies upon request by Lessor.

D. All insurance certificates or other evidence of coverage required to be submitted to Lessor
pursuant to this Section Nine shall be sent to:

Sierra Pacific Industries

PO Box 496014

Redding, CA 96049

ATTN: Susan Witherspoon

SECTION TEN

SURVEY

A. The parties agree that the Premises shall be surveyed as soon as reasonably practical by a
mutually acceptable surveyor, the cost of which shall be paid by Lessor; provided, however, that if
Lessee elects not to exercise its option to purchase the Premises during the lease term pursuant to
the Option Agreement, Lessee shall pay to Lessor an amount equal to the costs of such survey. The
surveyor shall provide Lessor and Lessee with legal descriptions of the Premises, including the two
5-acre option parcels, the 0.5 acre water tower parcel, and the access easement (the “Additional
Parcels”) (all as depicted on the aerial photograph set forth in Exhibit B attached hereto and
incorporated herein by reference).

B. The parties shall agree on the final form of the survey, which shall delineate the Premises
and Additional Parcels, and Lessee shall have the right to object to any matter depicted in the
survey, and any update to the survey, which objection shall be made by written notice to Lessor no
later than fifteen (15) days after receipt of the survey from surveyor. If Lessee has not objected
to the survey within such fifteen (15) day period, Lessee will be deemed to have consented to the
survey and all matters set forth therein.

C. All matters in dispute pertaining to the survey 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 set forth in Section Thirty-Seven herein. Lessee shall have the burden in
any arbitration proceeding to demonstrate the inaccuracy of the survey.

 

5

 

D. The parties agree that the Lease will be executed prior to a final survey being obtained,
and that upon receipt of a final survey from surveyor, which survey shall be agreed to by the
parties as set forth herein, Lessor and Lessee shall enter into an amendment to this Lease to
provide the final property boundaries, exhibits, and any other modifications, amendments or
supplements required as a result of such survey as needed. The final property lines of the
Premises shall be adjusted upon receipt of the final survey to reflect Lessee’s lease of exactly 40
acres from Lessor.

SECTION ELEVEN

COMPLIANCE WITH LAWS

Lessee shall, at Lessee’s own cost and expense, comply with all statutes, ordinances,
regulations and requirements of all governmental entities, both federal (including the Americans
with Disabilities Act) and state and county or municipal, including those requiring capital
improvements to the Premises or existing improvements, relating to any use or occupancy of the
Premises (and specifically not limited to any particular use and occupancy by Lessee), whether
those statutes, ordinances, regulations, and requirements are now in force or are subsequently
enacted and regardless of the Term; provided, however, that any such statute, ordinance, regulation
or requirement that requires capital improvements to the Premises or existing improvements not
based upon Lessee’s use of the Premises shall be the responsibility of Lessor and such improvements
shall be diligently completed at Lessor’s sole cost and expense. If any license, permit, or other
governmental authorization is required for the lawful use or occupancy of the Premises or any
portion of the Premises, then Lessee shall procure and maintain it throughout the Term. The
judgment of any court of competent jurisdiction, or the admission by Lessee in a proceeding brought
against Lessee by any government entity, that Lessee has violated such statute, ordinance,
regulation or requirement shall be conclusive as between Lessor and Lessee and shall constitute
grounds for termination of this Lease by Lessor.

SECTION TWELVE

UNLAWFUL OR DANGEROUS ACTIVITY

Lessee shall neither use nor occupy the Premises or any part thereof for any unlawful,
disreputable, or ultrahazardous business purpose nor operate or conduct its business in a manner
constituting a nuisance of any kind. Lessee shall immediately, on discovery of any unlawful,
disreputable or ultrahazardous use, take action to halt such activity.

SECTION THIRTEEN

HAZARDOUS MATERIALS

Lessor and Lessee are bound by the terms of the Agreement for Environmental Conditions, dated
November 21, 2007, by and between Lessor and Lessee (“Agreement for Environmental Conditions”),
attached hereto as Exhibit C and incorporated herein by reference, with regard to the use and
presence of hazardous materials in, on, over or about the Premises or any improvements thereon,
compliance with hazardous materials laws, and liability for, and indemnification of, cleanup costs
and other penalties.

 

6

 

SECTION FOURTEEN

INDEMNITY

Except as otherwise provided in the Agreement for Environmental Conditions, Lessee shall
indemnify, defend and hold harmless the Lessor Indemnitees (as defined below) from and against all
claims, liabilities, losses, damages or expenses arising out of or relating to the gross negligence
or willful misconduct of Lessee (or Lessee’s employees, agents, representatives, independent
contractors, material and equipment suppliers and any other entity or individual for whom Lessee is
responsible). This indemnity provision is not intended to and shall not in any way limit the
extent of any insurance coverage available to any of the Lessor Indemnitees under any insurance
policy purchased and maintained by Lessee (even coverage for any one or any combination of the
Lessor Indemnitees’ sole active negligence). “Lessor Indemnitees” shall mean Lessor and Sierra
Pacific Holding Company, including their successors and assigns, and each of their respective
officers, directors, employees, agents, representatives, subsidiaries and affiliates.

Except as otherwise provided in the Agreement for Environmental Conditions, Lessor shall
indemnify, defend and hold harmless Lessee from and against claims, liabilities, losses, damages or
expenses arising out of or relating to the gross negligence or willful misconduct of Lessor (or
Lessor’s employees, agents, representatives, independent contractors, material and equipment
suppliers and any other entity or individual for whom Lessor is responsible).

The indemnity provided herein shall survive the termination of this Lease.

SECTION FIFTEEN

DEFAULT OR BREACH/TERMINATION

Each of the following events shall constitute a default or breach of this Lease by Lessee:

A. If Lessee, or any successor or assignee of Lessee while in possession, shall file a
petition in bankruptcy or insolvency or for reorganization under any bankruptcy act, or shall
voluntarily take advantage of any such act by answer or otherwise, or shall make an assignment for
the benefit of creditors.

B. If involuntary proceedings under any bankruptcy law or insolvency act shall be instituted
against Lessee, or if a receiver or trustee shall be appointed of all or substantially all of the
property of Lessee, and such proceedings shall not be dismissed or the receivership or trusteeship
vacated within thirty (30) days after the institution or appointment.

C. If Lessee shall fail to pay Lessor any rent or additional rent when the rent shall become
due and shall not make the payment within fifteen (15) days after written notice thereof by Lessor
to Lessee.

 

7

 

D. Except as specifically provided in this Section Fifteen, if Lessee shall fail to perform or
comply with any of the conditions of this Lease and if the nonperformance shall
continue for a period of thirty (30) days after written notice thereof by Lessor to Lessee or, if
the performance cannot be reasonably had within the thirty (30) day period, Lessee shall not in
good faith have commenced performance within the thirty (30) day period and shall not diligently
proceed to completion of performance.

E. If Lessee shall vacate or abandon the Premises.

F. If this Lease or the estate of Lessee hereunder shall be transferred to or shall pass to or
devolve on any other person or party, except in the manner herein permitted.

G. If Lessee fails to take possession of the Premises on the Term commencement date, or within
ten (10) days after written notice that the Premises are available for occupancy, if the Term
commencement date is not fixed herein or shall be deferred as herein provided.

H. If Lessee fails to obtain and maintain the specified insurance.

Nothwithstanding all of the foregoing and as long as Lessee is not in breach or default of
this Lease, Lessee shall have the right to terminate this Lease, without cause, upon thirty (30)
days prior written notice to Lessor as along as Lessee has not yet begun to sell power
commercially. If Lessee has begun to sell power commercially and as long as Lessee is not in
breach or default of this Lease, then Lessee shall have the right to terminate this Lease, without
cause, upon thirty (30) days prior written notice to Lessor but in that case Lessee shall have to
pay to Lessor, before the end of such 30 day period, a cancellation fee in the amount of six
months’ rental payments hereunder.

SECTION SIXTEEN

EFFECT OF DEFAULT

In the event of any default hereunder, as set forth in Section Fifteen, the rights of Lessor
shall be as follows:

A. Lessor shall have the right to cancel and terminate this Lease, as well as all of the
right, title and interest of Lessee hereunder. On expiration of the time fixed in the notice to
terminate the Lease, this Lease and the right, title and interest of Lessee hereunder, shall
terminate in the same manner and with the same force and effect, except as to Lessee’s liability,
as if the date fixed in the notice of cancellation and termination were the end of the Term.
Lessor shall thereupon be entitled to receive from Lessee all damages incurred by Lessor including,
without limitation, (1) the worth at the time of award of the unpaid rent which had been earned at
the time of termination; (2) the worth at the time of award of the amount by which the unpaid rent
which would have been earned after termination until the time of award exceeds the amount of such
rental loss that Lessee proves could have been reasonably avoided; (3) the worth at the time of
award of the amount by which the unpaid rent for the balance of the Term after the time of award
exceeds the amount of such rental loss that the Lessee proves could be reasonably avoided; and (4)
any other amount reasonably necessary to compensate Lessor for all the detriment proximately caused
by the Lessee’s failure to perform its obligations under this Lease or which in the ordinary course
of things would be likely to result therefrom. As used in
subclause (1) and (2) above, the “worth at the time of award” shall be computed by allowing
interest at the maximum rate then permitted by law. As used in subclause (3) above, the “worth at
the time of award” shall be computed by discounting such amount at the discount rate of the Federal
Reserve Board of San Francisco at the time of the award plus one percent (1%).

 

8

 

B. Lessor may elect, but shall not be obligated, to make any payment required of Lessee herein
or comply with any agreement, term or condition required hereby to be performed by Lessee, and
Lessor shall have the right to enter the Premises for the purpose of correcting or remediating any
such default and to remain until the default has been corrected or remedied, but any expenditure
for the correction by Lessor shall not be deemed to waive or release the default of Lessee or the
right of Lessor to take any action as may be otherwise permissible hereunder in the case of any
default.

C. Lessor may reenter the Premises immediately and remove the property and personnel of
Lessee, and store the property in a public warehouse or at a place selected by Lessor, at the
expense of Lessee. After reentry, Lessor may terminate the lease upon written notice of
termination to Lessee. Without the notice, reentry will not terminate the lease. On termination,
Lessor may recover from Lessee all damages proximately resulting from the breach, including the
cost of recovering the Premises.

D. After reentry, Lessor may relet the Premises or any part thereof for any term without
terminating this Lease, at such rent and on such terms as Lessor may choose. Lessor may make
alterations and repairs to the Premises. The duties and liabilities of the parties if the Premises
are relet as provided herein shall be as follows:

(1) In addition to Lessee’s liability to Lessor for breach of this Lease, Lessee shall be
liable for all reasonable expenses of the reletting, for the alterations and repairs made, and for
the difference between the rent received by Lessor under the new lease agreement and the rent
installments that are due for the same period under this Lease.

(2) Lessor shall have the right, but shall not be required, to apply the rent received from
reletting the Premises: (a) to reduce the indebtedness of Lessee to Lessor under this Lease, not
including indebtedness for rent; (b) to expenses of the reletting and alterations and repairs made;
(c) to rent due under this Lease; or (d) to payment of future rent under this Lease as it becomes
due.

If the new lessee does not pay a rent installment promptly to Lessor, and the rent installment
has been credited in advance of payment to the indebtedness of Lessee other than rent, or if
rentals from the new lessee have been otherwise applied by Lessor as provided for herein and during
any rent installment period are less than the rent payable for the corresponding installment period
under this Lease, Lessee shall pay Lessor the deficiency, separately for each rent installment
deficiency period, and before the end of that period. Lessor may at any time after a reletting
terminate this Lease for the breach on which Lessor had based the reentry and subsequently relet
the Premises.

 

9

 

E. After reentry, Lessor may procure the appointment of a receiver to take possession and
collect rents and profits of the business of Lessee, and, if necessary to collect the rents and
profits. The receiver may carry on the business of Lessee and take possession of the personal
property used in the business of Lessee, including inventory, trade fixtures and furnishings, and
use them in the business without compensating Lessee. Proceedings for appointment of a receiver by
Lessor, or the appointment of a receiver and the conduct of the business of Lessee by the receiver,
shall not terminate and forfeit this Lease unless Lessor has given written notice of termination to
Lessee as provided herein.

F. Continue this Lease in effect without terminating Lessee’s right to possession even though
Lessee has breached this Lease and abandoned the Premises and to enforce all of Lessor’s rights and
remedies under this Lease, including the right to recover the rent as it becomes due under this
Lease; provided, however, that Lessor may at any time thereafter elect to terminate this Lease for
such previous breach by notifying Lessee in writing that Lessee’s right to possession of the
Premises has been terminated; or

G. Pursue any other remedy now or hereafter available to Lessor under the laws or judicial
decisions of the State of California.

Lessor’s failure to take advantage of any default or breach of covenant on the part of Lessee
shall not be or be construed to be a waiver thereof, nor shall any custom or practice which may
grow up between the parties in the course of administering this Lease be construed to waive or to
lessen the right of Lessor to insist upon the performance by Lessee of any term, covenant or
condition hereof, or to exercise any rights given Lessor on account of any such default. A waiver
of a particular breach or default shall not be deemed to be a waiver of the same or any subsequent
breach or default. Lessor’s acceptance of rent or other performance hereunder shall not be, or be
construed to be, a waiver of any term, covenant or condition of this Lease or breach or default
thereof by Lessee, whether or not such breach or default is then known to Lessor.

SECTION SEVENTEEN

DESTRUCTION OF PREMISES

If at any time during this Lease the Premises is totally or partially destroyed or damaged, by
fire or any peril fully covered by the insurance provided for herein, rendering the Premises
totally or partially inaccessible or unusable, Lessor shall promptly commence repair of the same
and prosecute said work diligently to completion. Lessor shall have no obligation to repair,
restore, or replace Lessee’s trade fixtures or personal property and Lessee shall be solely
responsible therefore. Notwithstanding the above, if (a) during the last year of the Term if
Lessee has not exercised or does not then exercise its Option pursuant to the Option Agreement,
attached hereto as Exhibit D and incorporated herein by reference, the Premises is damaged as a
result of fire or any other insured casualty, or (b) the Premises are damaged to the extent of
twenty-five percent (25%) or more of the replacement value of the Premises, or (c) the Premises is
damaged or destroyed as a result of a casualty not insured against, then Lessor shall have the
right, to be exercised by notice in writing to Lessee given within ninety (90) days after said
occurrence, to terminate this Lease. The provisions of this Section shall supersede the
obligations of Lessor to make repairs under Section Six of the
Lease.

 

10

 

Lessor
and Lessee agree that any and all
applicable insurance proceeds for damage to or destruction of the Premises shall
be made available to Lessor and used for the sole purpose of repairing, rebuilding, and/or
restoring the Premises, unless this Lease is terminated as the result of such damage or
destruction. In the event of repair, reconstruction, and restoration as provided for in this
Section, the rent shall be abated proportionately with the degree to which Lessee’s use of the
Premises are impaired, for a reasonable time period from the occurrence of the damage until
completion of such repair, reconstruction, and restoration, including any alterations, additions,
or improvements made by Lessee. Lessee shall continue operation of its business upon the Premises
during any such period to the extent reasonably practicable and, except as hereinabove specified,
shall pay to Lessor all additional rent and other charges accruing under the Lease. Lessee shall
not be entitled to any compensation or damages for loss in the use of the whole or any part of the
Premises and/or any inconvenience or annoyance occasioned by any such damage, repair,
reconstruction, or restoration, except to the extent Lessee has separately insured such risks.

SECTION EIGHTEEN

CONDEMNATION

A. In the event of any Material Taking (as defined below) in whole or in part prior to
Lessee’s election to exercise its option pursuant to the Option Agreement, this Lease shall
automatically cease and terminate as of the date on which title shall vest thereby in the
condemning authority, and all sums awarded, including without limitation, compensation for damages
and interest (i) for the taking of the real property located within the Premises or Lessor’s fee
simple interest in the real property located within the Premises shall be the property of Lessor,
and (ii) for the taking of the leasehold interest; trade fixtures, equipment and any improvements
made by Lessee; and relocation costs shall be the property of Lessee.

B. In the event of any Material Taking in whole or in part following Lessee’s election to
exercise its option pursuant to the Option Agreement, Lessee shall have the right to terminate this
Lease, provided Lessee concurrently terminates the Purchase Agreement in accordance with the terms
and conditions therein. If Lessee terminates this Lease, all sums awarded, including without
limitation, compensation for damages and interest (i) for the taking of the real property located
within the Premises or Lessor’s fee simple interest in the real property located within the
Premises shall be the property of Lessor, and (ii) for the taking of the leasehold interest; trade
fixtures, equipment and any improvements made by Lessee; and relocation costs shall be the property
of Lessee. If Lessee does not terminate this Lease, all sums awarded, including without
limitation, compensation for damages and interest for the taking shall be the property of Lessee;
and Rent payments made by Lessee after title vests in the condemning authority but prior to closing
under the Purchase Agreement shall be reduced proportionately by the percentage of the taking.

C. In the event of any taking, in whole or in part, which is not a Material Taking prior to
Lessee’s election to exercise its option pursuant to the Option Agreement, Lessee shall not have
the right to terminate this Lease; all sums awarded, including without limitation, compensation for
damages and interest (i) for the taking of the real property located within the Premises or
Lessor’s fee simple interest in the real property located within the Premises shall be the property
of Lessor, and (ii) for the taking of the leasehold interest; trade fixtures, equipment
and any improvements made by Lessee; and relocation costs shall be the property of Lessee; and Rent
payments made by Lessee after title vests in the condemning authority but prior to closing under
the Purchase Agreement shall be reduced proportionately by the percentage of the taking.

 

11

 

D. In the event of any taking, in whole or in part, which is not a Material Taking following
Lessee’s election to exercise its option pursuant to the Option Agreement, Lessee shall not have
the right to terminate this Lease; all sums awarded, including without limitation, compensation for
damages and interest for the taking shall be the property of Lessee; and Rent payments made by
Lessee after title vests in the condemning authority but prior to closing under the Purchase
Agreement shall be reduced proportionately by the percentage of the taking.

E. Lessor shall promptly provide Lessee with written notice of any condemnation or taking set
forth herein (including any pending or contemplated condemnation which has not been consummated).
Upon notice of any such condemnation or taking, Lessee may elect to exercise its option pursuant to
the Option Agreement and, for purposes of this Section Eighteen, such option shall be deemed to
have been exercised prior to such condemnation or taking.

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 Premises that would,
in Lessee’s commercially reasonable business judgment, materially and adversely affect Lessee’s
intended use of the Premises in any material respect or would adversely affect access to the
Premises in any material respect.

SECTION NINETEEN

ACCESS TO PREMISES; SIGNS POSTED BY LESSOR

Lessee shall permit Lessor or its agents to enter the Premises at all reasonable hours to
inspect the Premises or make repairs that Lessee may neglect or refuse to make in accordance with
the provisions of this Lease, and also to show the Premises to any prospective buyers. At any time
within sixty (60) days prior to the expiration of the Term, Lessor may show the Premises to persons
wishing to rent the Premises. Lessee shall, within sixty (60) days prior to expiration of the
Term, permit the usual notices of “For Rent” and “For Sale” to be placed on the Premises and to
remain thereon without hindrance or molestation.

SECTION TWENTY

EASEMENTS AND LICENSES

A. Upon receipt of legal descriptions of the Premises and Additional Parcels from the surveyor
as set forth in Section Ten herein, Lessor shall grant Lessee a non-exclusive easement for
pedestrian and vehicular ingress, egress and access to and from the Premises on the existing
roadway and within ten (10) feet of either side of such roadway in the location generally
identified on Exhibit B (the “Access Easement Property”). Lessee shall be responsible for
cleaning, maintaining and repairing the Access Easement Property, and all costs incurred in
connection therewith shall be shared equally between Lessor and Lessee. Lessee shall not make any
material modifications or changes to the Access Easement Property or place or install any
improvements on the Access Easement Property other than surface paving, or expand or change
the use of the Access Easement Property without the prior written consent of Lessor, which consent
shall not be unreasonably withheld, conditioned or delayed.

 

12

 

B. If requested by Lessee, Lessor hereby agrees to grant to Lessee a temporary easement to use
the well located on Lessor’s property as generally depicted on Exhibit B; which easement may be
terminated by Lessor upon Lessor securing water or services for water to Lessee from another
source, provided such source is reasonably agreeable to Lessor and Lessee, and further provided
that Lessor delivers written notice of such termination to Lessee within a reasonable time after
securing such source.

C. Upon reasonable request by Lessee and subject to Lessor’s approval of the location(s),
Lessor hereby agrees to grant to Lessee additional easements on, over, under or through Lessor’s
property as necessary for utilities, access, water, sewage and other waste, or for any uses
reasonably required for the operation of the Plant; provided, however, that all such easements
shall be subject to future relocation by Lessor at Lessor’s sole cost and expense.

D. Until any easements described herein to be granted to Lessee by Lessor are recorded in the
Official Records in the Office of the County Recorder of Lassen County, in each case Lessor hereby
grants Lessee a non-exclusive license to the easement property, which license shall not be
terminated prior to recordation of the easement unless Lessee is in continuing default under this
Lease after notice and expiration of any applicable cure periods.

E. Lessee hereby grants Lessor a non-exclusive license to remove the existing cooling tower
from the Premises, as generally depicted on Exhibit B (the “Cooling Tower”), at Lessor’s sole cost
and expense, and as more particularly described in Section 3.10(a) of the Asset Purchase Agreement,
dated November 21, 2007, by and between Lessor, as Seller, and Lessee, as Buyer (the “Asset
Purchase Agreement”). If, following commencement of the removal of the Cooling Tower, Lessor
reasonably requires more than provided in the Asset Purchase Agreement to complete the removal of
the Cooling Tower and repair any damage to the Premises resulting therefrom, Lessor shall request
additional time in writing, and Lessee’s consent to such request shall not be unreasonably
withheld, conditioned or delayed. Lessor shall indemnify, defend, and hold harmless Lessee,
Lessee’s successors and assigns, and each of their respective officers, directors, employees,
agents, representatives, subsidiaries and affiliates, for, from and against any and all claims,
liabilities, losses, damages or expenses arising out of or relating to all acts, failures to act or
other conduct of Lessor (or Lessor’s employees, agents, representatives, independent contractors,
contractors, and any other entity or individual for whom Lessor is responsible) in connection with
the removal of the Cooling Tower; except to the extent such damage or liability results from the
gross negligence or willful misconduct of Lessee, Lessee’s agents or employees.

SECTION TWENTY-ONE

EXISTING EASEMENTS, AGREEMENTS OR ENCUMBRANCES

The parties shall be bound by all existing easements, agreements and encumbrances of record
relating to the Premises, and Lessor shall not be liable to Lessee for any damages
resulting from any action taken by a holder of an interest pursuant to the rights of the holder
thereunder.

 

13

 

SECTION TWENTY-TWO

QUIET ENJOYMENT

Lessor warrants that Lessee shall be granted peaceable and quiet enjoyment of the Premises
free from any eviction or interference by Lessor if Lessee pays the rent and other charges provided
herein, and otherwise fully and punctually performs the terms and conditions imposed on Lessee.

SECTION TWENTY-THREE

LIABILITY OF LESSOR

Lessee shall be in exclusive control and possession of the Premises, and Lessor shall not be
liable for any injury or damages to any property or to any person on or about the Premises nor for
any injury or damage to any property of Lessee, unless such injury or damage results from the gross
negligence or willful misconduct of Lessor or Lessor’s employees, agents or contractors. The
provisions herein permitting Lessor to enter and inspect the Premises are made to ensure that
Lessee is in compliance with the terms and conditions hereof and makes repairs that Lessee has
failed to make. Lessor shall not be liable to Lessee for any entry on the Premises for inspection
purposes, unless such entry results in damage caused by Lessor or Lessor’s employees, agents or
contractors.

SECTION TWENTY-FOUR

RENT ABATEMENT

Except as otherwise set forth herein, no abatement, diminution, or reduction of rent shall be
claimed or allowed to Lessee or any person claiming under it under any circumstances, whether for
inconvenience, discomfort, interruption of business or otherwise, arising from the making of
alterations, improvements, or repairs to the Premises, because of any governmental laws or arising
from and during the restoration of the Premises after the destruction or damage thereof by fire or
other cause or the taking or condemnation of a portion only of the Premises. Nothing in this
Section Twenty-Four shall be construed to require Lessee to remit Lessor’s share of any rents
payable by any sublessee to Lessor as provided in Section Twenty-Eight unless such rent is actually
received by Lessee.

SECTION TWENTY-FIVE

REPRESENTATIONS BY LESSOR

Lessor, in order to induce Lessee to enter into this Lease, hereby represents and warrants to
Lessee that:

A. The execution, delivery and performance of this Lease will not conflict with, be
inconsistent with, or result in any breach or default of any of the terms, covenants, conditions or
provisions of any indenture, mortgage, deed of trust, instrument, document, agreement or
contract of any kind or nature to which Lessor is a party or by which Lessor or the Premises may be
bound.

 

14

 

B. Lessor is not a party to any agreement or litigation which could adversely affect Lessee’s
rights or entitlements under this Lease, or which would otherwise adversely affect the ability of
Lessor to perform its obligations under this Lease.

C. Lessor has received no written notice of any change contemplated in any applicable laws, or
any action by adjacent landowners, or natural or artificial conditions on the Premises that would
prevent, limit, impede, or render more costly, the permitted use contemplated hereunder.

D. The Premises and all rights of Lessee hereunder are free and clear of all liens, claims,
security interests, encumbrances and restrictions (whether contained in deeds, leases or other
instruments or agreements), except for any matters of public record in the Office of the County
Recorder of Lassen County and matters to which Lessor reasonably has no knowledge, and this Lease
is and shall remain superior to any and all adverse matters and claims subject only to: any
mortgage to which this Lease may be subordinated in accordance with the terms hereof, to real
estate taxes and assessments not yet due and payable, those matters caused by Lessee, and all
applicable laws, rules, regulations and codes and other encumbrances that do not impact in any
appreciable way Lessee’s use and quiet enjoyment of the Premises.

E. Lessor holds good and indefeasible fee simple title to the Premises and has full legal
right and authority to enter into this Lease.

Except for the representations by Lessor set forth herein and in the Agreement for Environment
Conditions, Lessee shall accept the Premises in its existing condition and state of repair, and
Lessee agrees that no representations, statements or warranties, expressed or implied, have been
made by or on behalf of Lessor in respect thereto except as contained in the provisions of this
Lease and the Agreement for Environmental Conditions, and Lessor shall in no event be liable for
any latent defects except as otherwise provided therein.

SECTION TWENTY-SIX

WAIVERS

The failure of Lessor to insist on a strict performance of any of the terms and conditions
hereof shall be deemed a waiver of the rights or remedies that Lessor may have regarding that
specific instance only, and shall not be deemed a waiver of any subsequent breach or default in any
terms and conditions.

 

15

 

SECTION TWENTY-SEVEN

NOTICE

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 Lessor:

	 	Sierra Pacific Industries

PO Box 496014

Redding, CA 96049

Attention: Susan Witherspoon

Fax No: (530) 378-8139
	 
	 	 
	With a copy to:

	 	Dun & Martinek LLP

2313 I Street

Eureka, CA 95501

Attention: David H. Dun

Fax No.: (707) 442-9251
	 
	 	 
	If to Lessee:

	 	Renegy Susanville, LLC

301 West Warner Road, Suite 132

Tempe, AZ 85284

Attention: Robert Zack

Fax No: (480) 361-8341
	 
	 	 
	With a copy to:

	 	Squire, Sanders & Dempsey LLP

40 North Central Avenue, Suite 2700

Phoenix, AZ 85004

Attention: Justin Steltenpohl

Fax No: (602) 253-8129

SECTION TWENTY-EIGHT

ASSIGNMENT, MORTGAGE OR SUBLEASE

A. Neither Lessee nor its successors or assigns shall assign, mortgage, pledge or encumber
this Lease in whole or in part, or permit the Premises to be used or occupied by others (except
pursuant to a sublease as provided in Section Twenty-Eight (B)), nor shall this Lease be assigned
or transferred by operation of law, without the prior consent in writing of Lessor in each
instance. If this Lease is assigned or transferred, or if all or any part of the Premises is
occupied by anybody other than Lessee (except pursuant to a sublease as provided in Section
Twenty-Eight (B)), Lessor may, after default by Lessee, collect rent from the assignee, transferee,
or occupant, and apply the net amount collected to the rent reserved herein, but no such
assignment, occupancy or collection shall be deemed a waiver of any agreement or condition hereof,
or the acceptance of the assignee, transferee, or occupant as Lessee. Lessee shall continue to be
liable hereunder in accordance with the terms and conditions of this Lease and shall not be
released from the performance of the terms and conditions hereof. The consent by Lessor to an
assignment, mortgage, pledge or transfer shall not be construed to relieve Lessee from
obtaining the express written consent of Lessor to any future transfer of interest.

 

16

 

B. Lessee may sublease the Premises only upon the express written consent of Lessor, which
consent shall not be unreasonably withheld. Any rent payable pursuant to such sublease shall be
paid to Lessee, who shall remit to Lessor within ten (10) days of its receipt by Lessee fifty
percent (50%) of such rents actually received by Lessee that are in excess of the rents payable by
Lessee to Lessor under this Lease. If the Premises are sublet as provided in this section, Lessor
may, after continuing default by Lessee and expiration of any applicable cure period, retain the
full rent payable by the sublessee with no portion thereof being payable to Lessee; provided,
however, that any payments collected by Lessor from the sublessee shall be credited against any
amounts due and owing by Lessee pursuant to this Lease. No such collection by Lessor hereunder
shall be deemed a waiver of any agreement or condition hereof, or the acceptance of the sublessee
as Lessee. Lessee shall continue to be liable hereunder in accordance with the terms and
conditions of this Lease and shall not be released from the performance of the terms and conditions
hereof. The consent by Lessor to any sublease shall not be construed to relieve Lessee from
obtaining the express written consent of Lessor to any future sublease.

SECTION TWENTY-NINE

SURRENDER OF POSSESSION

Lessee shall, on the last day of the Term, or on earlier termination and forfeiture of this
Lease, peaceably and quietly surrender and deliver the Premises to Lessor free of subtenancies,
including all buildings, additions, and improvements constructed or placed thereon by Lessee,
except moveable trade fixtures, all in good condition and repair, ordinary wear and tear excepted.
Any trade fixtures or personal property not used in connection with the operation of the Premises
and belonging to Lessee, if not removed at the termination or default, and if Lessor shall so
elect, shall be deemed abandoned and become the property of Lessor without any payment or offset
therefor. Lessor may remove such fixtures or property from the Premises and store them at the risk
and expense of Lessee if Lessor shall not so elect. Lessee shall repair and restore all damage to
the Premises caused by the removal of equipment, trade fixtures and personal property.

SECTION THIRTY

REMEDIES OF LESSOR

A. The rights and remedies given to Lessor in this Lease are distinct, separate and
cumulative, and no one of them, whether or not exercised by Lessor, shall be deemed to be in
exclusion of any of the others available, at law or in equity, to Lessor.

B. In all cases hereunder, and in any suit, action or proceeding of any kind between the
parties, it shall be presumptive evidence of the fact of the existence of a charge being due if
Lessor shall produce a bill, notice or certificate of any public official entitled to give that
notice to the effect that such charge appears of record on the books in its office and has not been
paid.

 

17

 

C. No receipt of money by Lessor from Lessee after default or cancellation of this Lease in
any lawful manner shall: (1) reinstate, continue or extend the Term or affect any notice given to
Lessee; (2) operate as a waiver of the right of Lessor to enforce the payment of rent and
additional rent then due or falling due; or (3) operate as a waiver of the right of Lessor to
recover possession of the Premises by proper suit, action, proceeding or other remedy. After (1)
service of notice of termination and forfeiture as herein provided and the expiration of the time
specified therein; (2) the commencement of any suit, action, proceeding or other remedy; or (3)
final order or judgment for possession of the Premises, Lessor may demand, receive and collect any
monies due, without in any manner affecting such notice, order or judgment. Any and all such
monies so collected shall be deemed to be payment on account of the use and occupation of the
Premises or, at the election of Lessor, on account of the liability of Lessee hereunder.

SECTION THIRTY-ONE

TOTAL AGREEMENT; APPLICABLE TO SUCCESSORS

This Lease contains the entire agreement between the parties and cannot be changed or
terminated except by a written instrument subsequently executed by the parties hereto. This Lease
and the terms and conditions hereof apply to and are binding on the heirs, legal representatives,
successors and assigns of both parties.

SECTION THIRTY-TWO

APPLICABLE LAW

This Lease shall be governed by and construed in accordance with the laws of the State of
California.

SECTION THIRTY-THREE

TIME OF THE ESSENCE

Time is of the essence in all provisions of this Lease.

SECTION THIRTY-FOUR

ATTORNEY FEES

If the services of an attorney are required by any party to secure the performance hereof or
otherwise upon the breach or default of another party; or otherwise upon the breach or default of
another party, or if any judicial remedy is necessary to enforce or interpret any provision of this
Lease or the rights and duties of any person in relation thereto, the prevailing party shall be
entitled to reasonable attorney fees and costs which shall consist of the fees and costs for
services rendered by counsel, the fees and costs for services of experts, and all other costs and
expenses incurred in connection with the action, including those costs and expenses recoverable as
allowable costs of suit under the applicable state or federal statute and those attorney fees and
costs incurred executing upon or appealing any judgment, as well as all other expenses incurred
during the course of the action. Any award of damages following judicial remedy as a result of the
breach of this Lease or any of its provisions shall include an award of prejudgment interest from
the date of the breach at the maximum amount of interest allowed by law.

 

18

 

SECTION THIRTY-FIVE

SUBORDINATION AND ESTOPPEL CERTIFICATE

Within ten (10) days after Lessee’s receipt of written request from Lessor, Lessee shall (i)
subordinate its interest in this Lease to any mortgage or deed of trust encumbering the Premises;
provided, however, the mortgagee or beneficiary of the deed of trust recognizes Lessee’s leasehold
interest in the Premises, only to the extent of the length of the Term, and (ii) provide Lessor or
any prospective buyer or lender a certificate certifying to the best of Lessee’s knowledge whether
this Lease is in full force and effect, whether there are any defenses, offsets or claims
outstanding by Lessee against Lessor, or the accuracy of any other statement of fact reasonably
requested by Lessor.

SECTION THIRTY-SIX

SALE BY LANDLORD

Upon any sale or transfer of the fee title interest of the Premises by Lessor, Lessor shall
not be liable for any breach, default or failure to perform any obligation of Lessor under this
Lease occurring or accruing on or after the date of such transfer, and Lessor is hereby released
from all such liability.

SECTION THIRTY-SEVEN

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 Lease, 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 Lessor and Lessee; 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 Lessor and Lessee, 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 Lease. 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 Lease will be kept confidential to the fullest extent permitted by applicable law.

 

19

 

(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 Lease 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 Thirty-Seven 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 Lease 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 Lease or otherwise.

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 except as otherwise provided
herein.

SECTION THIRTY-EIGHT

MISCELLANEOUS

A. If any term, condition, covenant, or provision of this Lease is held by a court of
competent jurisdiction to be invalid, void, or unenforceable, the remainder of the terms,
conditions, covenants, and provisions hereof shall remain in full force and effect and shall in no
way be affected, impaired, or invalidated.

 

20

 

B. The various headings and numbers herein and the grouping of the provisions of this Lease
into separate articles and sections are for the purpose of convenience only and are not to be
considered a part hereof.

C. This Lease sets forth all the terms, conditions, covenants, provisions, promises,
agreements, and undertakings, either oral or written, between the Lessor and Lessee. No subsequent
alteration, amendment, change, or addition to this Lease is binding upon Lessor or Lessee unless
reduced to writing and executed by both parties.

D. Every term, condition, covenant, and provision of this Lease, having been negotiated in
detail and at arm’s length by both parties, shall be construed simply according to its fair meaning
and not strictly for or against Lessor or Lessee.

E. If the time for the performance of any obligation under this Lease expires on a Saturday,
Sunday, or legal holiday, the time for performance shall be extended to the next succeeding day
which is not a Saturday, Sunday, or legal holiday.

F. This Lease may be executed in any number of counterparts, each of which shall be deemed an
original and all of which, taken together, shall constitute one and the same instrument.

 

21

 

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

	 	 	 	 	 	 	 	 	 	 	 
	LESSEE:	 	 	 	LESSOR:	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	RENEGY SUSANVILLE, LLC, an Arizona 

limited liability company	 	 	 	SIERRA PACIFIC INDUSTRIES, a

California corporation	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:

	 	/s/ Robert W. Zack
 

	 	 
	 	By:
	 	/s/ George Emmerson
 

	 	 
	 

	 	Name: Robert W. Zack
	 	 	 	 	 	Name: George Emmerson	 	 
	 

	 	Title: Co-Manager
	 	 	 	 	 	Title: COOFiled by Bowne Pure Compliance

 

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.

 

 

 

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.

 

2

 

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:

 

3

 

(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.

 

4

 

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.

 

5

 

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	 	 

 

6

 

EXHIBIT A

LEGAL DESCRIPTION OF REAL PROPERTY

 

 

 

EXHIBIT B

FORM OF PURCHASE AGREEMENT

[Attached]

 

 

 

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.

 

 

 

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.

 

 

 

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.

 

 

 

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,

 

 

 

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

 

 

 

(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;

 

 

 

(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.

 

 

 

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”).

 

 

 

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.

 

 

 

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.

 

 

 

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.

 

 

 

	 	 	 
	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.

 

 

 

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.

 

 

 

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.

 

 

 

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.

 

 

 

(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

 

 

 

EXHIBIT A

(Description of the Property)

 

 

 

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:                     

	 	                                                         
                       

 

 

 

EXHIBIT A

(Property)

 

 

 

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	 	 

 

 

 

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

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00136-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00136-of-00352.parquet"}]]