EXHIBIT 10.44
AMENDMENT NO. 2 TO LEASE AGREEMENT
This Amendment No. 2 to Lease Agreement, dated as of August 2, 2007, is entered
into by ABITIBI CONSOLIDATED SALES CORPORATION, a Delaware Corporation
("Landlord") and SNOWFLAKE WHITE MOUNTAIN POWER, LLC, an Arizona limited
liability company ("Tenant").
RECITALS
A. Landlord and Tenant have entered into that certain Ground Lease Agreement,
dated as of September 14, 2005 (as amended, amended and restated, supplemented
or otherwise modified from time to time in accordance with the terms thereof and
hereof, the "Lease"). Capitalized terms used herein but not defined herein have
the meaning given in the Lease.
B. Landlord, COBANK, ACB ("Lender") and Tenant have entered into that certain
Consent and Agreement, dated as of September 1, 2006 (the "Consent"), pursuant
to which the Lease was amended as described in the Consent.
C. Landlord and Tenant have entered into that certain Large Generator
Interconnection Agreement with ARIZONA PUBLIC SERVICE COMPANY ("APS"), an
Arizona corporation, effective as of November 1, 2006 (the "Interconnection
Agreement"), which, among other purposes, enables Landlord and Tenant to
interconnect the Power Facility to the transmission system of APS. The
Interconnection Agreement was filed with the Federal Energy Regulatory
Commission ("FERC") on December 1, 2006 and accepted by FERC by letter order
dated January 9, 2007.
D. In support of Landlord's and Tenant's "exempt wholesale generator" status
under the regulations and policies of FERC, the Parties wish to establish and
confirm that Tenant shall possess, as hereinafter set forth, an ownership
interest in the facilities to be used to deliver electricity generated by the
Power Facility to the point of interconnection with the transmission facilities
of APS. For purposes of the Lease, such facilities shall mean the 13.8/69 KV
Substation at the Paper Mill and the 69 KV transmission line emanating from the
Substation to the interset pole owned by APS.
E. Pursuant to Section 27 of the Lease, Landlord has granted to Tenant easements
on, over, across or under the Abitibi Land to the extent described in said
Section 27.
F. The Interconnection Agreement provides that it shall terminate should the
Lease or its attached Operations Provisions be terminated or otherwise cease to
be effective during the term of the Interconnection Agreement. The Parties
desire to avoid a situation whereby a termination of the Lease or Operations
Provisions would result in the Paper Mill not having access to the offsite
transmission grid. Accordingly, the Parties desire to amend the Lease and
Operations Provisions to provide that termination of the Lease or Operations
Provisions shall not be effective until a replacement interconnection agreement
is in place and effective.
NOW THEREFORE, for good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereto agree as follows:
AGREEMENT
1. Amendment of Lease. Landlord and Tenant agree that the Lease shall be
amended as follows (with capitalized terms not otherwise defined herein having
the meaning given in the Lease and section references referring to sections of
the Lease):
(a) Section 2.2 of the Lease is amended to read as follows:
2.2 Early Termination. Tenant shall have the right to terminate
this Lease by notice to Landlord if the Power Facility is no longer able to
produce electricity for reasons outside Tenant's control (e.g., inability to
obtain biomass fuel at commercially reasonable prices and changes in applicable
laws). A termination by Tenant of this Lease under this Section 2.2 shall only
be effective upon: (a) Tenant giving Landlord at least 90 days' prior written
notice of such termination; (b) Tenant providing Landlord with evidence
satisfactory to Landlord that all the Improvements (as defined in Section 8
below) and the Real Property are free and clear of all liens (except current
property taxes and assessments), including, without limitation, any Leasehold
Lien and any Mortgage (as both terms are defined in Section 28.3 below); and (c)
Landlord providing notice to Tenant that a Replacement Interconnection Agreement
is in place and effective, provided that once the time period specified in the
notice under (a) has passed, and the requirements under (b) are met, Tenant's
obligations to Landlord shall be limited to those that survive the termination
of the Lease and the payment to Landlord of $1.00 per month.
(b) Section 4.2 of the Lease is amended to read as follows:
4.2 Substation Reimbursement. Within 30 days following the
completion of construction of the Power Facility and issuance of the certificate
of occupancy for the Power Facility by the appropriate governmental authorities
if such certificate is required, but in any event no later than January 1, 2008,
Tenant shall make a one-time payment of $500,000 to Landlord as Tenant's share
of the cost of constructing the "Substation". At the time such payment is made,
Landlord shall deliver to Tenant a Xxxx of Sale conveying to Tenant an undivided
20% ownership interest in the Substation and the 69 KV transmission line
emanating from the Substation to the point of interconnection with APS, which
shall be the interset pole owned by APS and located at the terminus of the 69 KV
line (collectively, the "Interconnection Facilities"). So long as Landlord
operates the Paper Mill, Landlord (i) hereby grants Tenant the right to access
and utilize the Interconnection Facilities to the extent necessary to support
operation of the Power Facility and (ii) shall make commercially reasonable
efforts to keep the Interconnection Facilities available to Tenant. If Landlord
needs the Substation capacity for its own purposes, Landlord shall notify Tenant
at least 365 days prior to the date upon which Tenant will no longer be entitled
to use the Interconnection Facilities. If Landlord's requirement for use of the
Interconnection Facilities is permanent and such notice is given during the
first 10 years of the Lease Term, Landlord shall return to
-2-
Tenant with such notice a prorated share of the $500,000 payment referred to
above in this Section. Such share shall be equal to $50,000 for each full year
remaining in the 10-year period. (For example, if Landlord gives Tenant such
notice 4 1/2 years after the beginning of the Lease Term, Landlord shall return
to Tenant the sum of $250,000.) The Xxxx of Sale from Landlord to Tenant shall
recite that upon the date that Tenant is no longer entitled to use the
Interconnection Facilities on a permanent basis, or if no such notice is given,
then upon the expiration of the Lease Term, Landlord shall thereupon own 100% of
the Interconnection Facilities, without the need for the delivery of any
conveyance document from Tenant to Landlord. Landlord shall permit Tenant, if
Tenant desires, to upgrade the Substation to handle Tenant's requirements, at
Tenant's cost and expense. Landlord shall continue to be responsible for the
maintenance, repair and operation of the Substation.
(c) The form of the Xxxx of Sale referenced in paragraph (b) above is
attached hereto as Exhibit A.
(d) Section 19 of the Lease is amended to read as follows:
19. Landlord's Default. Subject to the Operations Provisions,
Landlord shall not be in default in the performance of any obligation required
to be performed by Landlord under this Lease unless Landlord has failed to
perform such obligation within 30 days after the receipt of written notice from
Tenant specifying in detail Landlord's failure to perform; provided however,
that if the nature of Landlord's obligation is such that more than 30 days are
required for its performance, then Landlord shall not be deemed in default if it
commences such performance within such 30-day period and thereafter diligently
pursues the same to completion. Upon any such uncured default by Landlord,
Tenant may exercise any of its rights provided in law or at equity, provided
that any termination of this Lease by Tenant shall be subject to the Lease
termination requirements of Section 2.2.
(e) Section 35 of the Lease is amended to include the following
definitions:
"APS" - shall mean Arizona Public Service Company, its successors and
assigns.
"Interconnection Facilities" - shall have the meaning set forth in
Section 4.2.
"Replacement Interconnection Agreement" - shall mean an agreement
between Landlord and APS providing for continued access by Landlord to
the offsite transmission grid of APS after either the Lease or
Operations Provisions cease to be effective.
2. Amendment of Operations Provisions. Facility Owner and Facility Operator
agree that the Operations Provisions attached to the Lease shall be amended as
follows (with capitalized terms not otherwise defined herein having the meaning
given in
-3-
the Operations Provisions and section references referring to sections of the
Operations Provisions):
9.2 Duties upon Termination.
9.2.1 Upon termination of these Operations Provisions, at
the request of Facility Owner, Facility Operator shall exercise good faith and
due diligence to train, at Facility Owner's expense, a new operator engaged by
Facility Owner. If Facility Owner makes such request prior to the date that
would otherwise be the termination date, these Operations Provisions shall
remain in full force and effect until the requirement of Section 9.2.2 is met
(if applicable), and until the first to occur of: (i) the date upon which a new
operator agreeable to Facility Owner shall have been engaged and trained to the
satisfaction of Facility Owner; or (ii) 90 days after the date which would
otherwise have been the date of termination. Facility Operator shall continue to
be reimbursed for expenses incurred by it and appropriately compensated so long
as it continues to perform Services under these Operations Provisions. The
selection of a new operator by Facility Owner shall be subject to the prior
written approval of Facility Operator, which approval shall not be unreasonably
withheld.
9.2.2 In the event of termination of these Operations
Provisions, at the request of Facility Operator, these Operations Provisions
shall remain in full force and effect until a Replacement Interconnection
Agreement is in place and effective.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment No. 2
as of the date first written above.
ABITIBI CONSOLIDATED SALES SNOWFLAKE WHITE MOUNTAIN POWER, LLC
CORPORATION
By: /s/ Xxxx XxXxx By: /s/ Xxxxxx X. Xxxxxxx
--------------------------------- ------------------------------------
Name Name
Its: General Manager Its: CEO
Title Title
-4-
EXHIBIT A
XXXX OF SALE
For Ten Dollars ($10.00) and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, ABITIBI CONSOLIDATED
SALES CORPORATION ("Landlord"), hereby transfers to SNOWFLAKE WHITE MOUNTAIN
POWER, LLC ("Tenant"), an undivided 20% ownership interest in the Substation, as
defined in that certain Ground Lease Agreement between Landlord and Tenant,
dated as of September 14, 2005 as amended ("Lease") and in the 69 KV
transmission line emanating from the Substation to the interset pole owned by
Arizona Public Service Company and located at the terminus of the 69 KV line.
The property transferred hereunder is transferred "AS IS" and subject to such
prior encumbrances, if any, that may exist, and Landlord disclaims any and all
warranties pertaining thereto, including but not limited to any implied warranty
of condition, merchantability or fitness for a particular purpose.
Tenant hereby acknowledges that in the event Landlord gives notice to
Tenant that Landlord needs the Substation and 69 KV line capacity for its own
purposes, then on the date specified in the notice, which shall be no less than
365 days after the giving of the notice, or in the event no such notice is
given, then at the end of the Lease Term, as defined in the Lease, the ownership
interest transferred hereunder shall revert to Landlord without the requirement
of any written document of transfer to Landlord or acceptance by Landlord.
DATED this ______ day of __________________, 200__.
ABITIBI CONSOLIDATED SALES CORPORATION
By:
------------------------------------
Its:
-----------------------------------
"Landlord"
SNOWFLAKE WHITE MOUNTAIN POWER, LLC
By:
------------------------------------
Its:
-----------------------------------
"Tenant"
STATE OF ARIZONA )
) ss.
County of Navajo )
Before me this 2nd day of August, 2007, personally appeared Xxxx Xxxxx, who
acknowledged himself/herself to be the General Manager of ABITIBI CONSOLIDATED
SALES CORPORATION, a Delaware corporation, and who executed the foregoing on its
behalf.
/s/ Xxxx X. Xxxxxx
Notary Public
My Commission Expires:
March 27, 2009
STATE OF ARIZONA )
) ss.
County of Maricopa )
Before me this 2nd day of August, 2007, personally appeared Xxxxxx X.
Xxxxxxx, who acknowledged himself/herself to be the CEO of SNOWFLAKE WHITE
MOUNTAIN POWER COMPANY, LLC, an Arizona limited liability company, and who
executed the foregoing on its behalf.
/s/ Xxxxx X. Xxxxxxx
Notary Public
My Commission Expires:
Arch 27, 2010
