LEASE AGREEMENT

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EXHIBIT 10.42

LEASE AGREEMENT

between

ABITIBI CONSOLIDATED SALES CORP.,

a Delaware corporation,

Landlord,

and

SNOWFLAKE WHITE MOUNTAIN POWER,

an Arizona limited liability company,

Tenant

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GROUND LEASE AGREEMENT

THIS GROUND LEASE AGREEMENT (this "Lease") is made to be effective as

of September 14,2005 (the "Effective Date"), between

ABITIBI-CONSOLIDATED SALES CORP., a Delaware corporation ("Landlord"), and

SNOWFLAKE WHITE MOUNTAIN POWER, LLC, an Arizona limited liability company

"Tenant").

RECITALS:

A. Landlord is the fee owner of certain real property located in

Navajo, County Arizona, on which is located a paper mill commonly know as the

Snowflake Mill (the "Paper Mill"). Within the property on which the Paper Mill

is located is an approximately 6.82-acre parcel which is legally described in

Exhibit A attached hereto as "Parcel 1". Landlord is also the fee owner of an

approximately 100.8-acre parcel which is legally described in Exhibit A attached

hereto as "Parcel 2" and an approximately 11.43-acre parcel which is legally

described in Exhibit A attached hereto as "Parcel 3". Parcel 1, Parcel 2 and

Parcel 3 are collectively referred to as the "Real Property".

B. Landlord desires to lease the Real Property to Tenant, and Tenant

desires to lease the Real Property from Landlord subject to the terms and

conditions of this Lease.

THEREFORE, for good and valuable consideration, the receipt and

sufficiency of which are hereby acknowledged, and intending to be legally bound,

Landlord and Tenant agree as follows:

AGREEMENTS:

1. Lease of Real Property. Landlord hereby leases to Tenant, and

Tenant hereby leases from Landlord, the Real Property and all easements,

appurtenances and rights related thereto as specifically set forth in this

Lease. Such lease is upon, and subject to, the terms, covenants and conditions

set forth below and each party covenants, as a material part of the

consideration for this Lease, to keep and perform their respective obligations

under this Lease.

2. Lease Term.

2.1 Primary Term. This Lease shall be for a term (the "Lease

Term") equal to the shorter of: (a) 25 years; or (b) the useful life of the

"Power Facility" as determined by Tenant. The Lease Term shall commence on the

date that is the earlier of: (i) January 1, 2007; or (ii) the date upon which

all necessary approvals, authorizations, permits and licenses including,

without limitation, a building permit (the "Permits"), have been issued to

Tenant to construct the Power Facility (the "Commencement Date"), and ending at

11:59 p.m., M.S.T., on the last day of the Lease Term, unless sooner

terminated as provided in this Lease; provided, however, that if the

Commencement Date is a day other than the first day of a calendar month, the

Lease Term shall be extended by the number of days remaining in such calendar

month. Tenant shall send written notice to Landlord specifying the date on which

the Permits have been received. If Tenant has not received the Permits by

January 1, 2007, then Tenant shall have the right to extend the Commencement

Date in 30 day increments upon notice to Landlord and the payment of $10,000 for

each such 30 day extension.

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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; and (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).

2.3 Lease Year. As used in this Lease, "Lease Year" shall mean a

period of 12 consecutive calendar months during the Lease Term commencing on the

Commencement Date, except that: (a) if the Commencement Date is other than the

first day of a calendar month, the first Lease Year shall be extended to end on

and include the last day of the twelfth full calendar month following the

Commencement Date; and (b) the last Lease Year shall terminate on the date of

expiration or earlier termination of the Lease Term, as applicable.

2.4 Extended Term. Tenant has the right to extend the Primary

Term for one additional 25 year term (the "Extended Term") following expiration

of the Primary Term. If Tenant desires an extension, Tenant shall exercise such

right by: (a) giving notice to Landlord at least 6 months immediately prior to

the expiration of the Primary Term; and (b) paying $1,000,000 (as adjusted from

the Effective Date based on the CPI as defined in this Section 2.4) as an

extension fee on or before the first day of the Extended Term. During the

Extended Term, all terms and provisions of this Lease shall remain in full force

and effect, except that any ongoing monetary obligations that Tenant has under

this Lease shall be adjusted based on the Consumer Price Index ("CPI"), which

shall be the United States Department of Labor, Bureau of Labor Statistics

Consumer Price Index for all items (CPI-U), West Region (1982 - 1984 = 100), or

such other CPI as the parties agree is more suitable, unless the Lease already

specifies a different basis for adjustment. As used in this Lease, "Lease Term"

shall mean the Primary Term and the Extended Term, if applicable.

3. Use; Compliance with Laws.

3.1 Use. Tenant shall use Parcel 1 of Real Property only for the

construction and operation of the Power Facility, Parcel 2 of the Real Property

only for the construction and operation of the Sawmill Facility and Parcel 3 of

the Real Property only for the construction and operation of the Storage

Facility. Tenant shall observe and comply with all applicable laws, rules,

regulations, codes, judgments, orders, permits, licenses and approvals, and the

applicable requirements of all governmental agencies having jurisdiction, and

shall obtain all licenses, permits and approvals necessary for Tenant's use of

the Real Property.

3.2 Environmental Matters. Tenant represents and warrants that it

will at all times during and after the Lease Term comply with Environmental Laws

on and with respect to the Real Property and the Power Facility. Without

limiting the generality of the foregoing, neither Tenant nor any Tenant Party

shall use, handle, store or dispose of any Regulated Substances in, on, under,

at or about the Real Property, except in the ordinary cause of operating,

maintaining or repairing the Power Facility in the event a new operator is

engaged by Tenant pursuant to the Operations Provisions. Tenant shall promptly

notify Landlord of any inquiry, test, investigation or enforcement proceeding by

or against Tenant or Landlord or the Real Property concerning any Environmental

Law. Tenant shall be solely responsible for and shall indemnify, defend and hold

Landlord harmless from and against any and all claims, judgments, suits, causes

of action, damages, penalties, fines, liabilities, losses and expenses

(including, without limitation, investigation and clean-up costs, attorneys'

fees, consultant fees and court costs) that arise during or after the

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Lease Term as a result of the breach of any of the obligations and covenants set

forth in this Section 3.2 and/or any presence, spill, discharge, release,

threatened release, clean-up or contamination of or by any Regulated Substance

in, on, at, under, about or from the Real Property directly or indirectly

arising from the activities of Tenant or any Tenant Party during the Lease Term

that violate any Environmental Laws.

4. Rent, Reimbursements and Other Consideration.

4.1. Rent. Except as provided in Sections 4.3 and 9 below, no

monetary rent of any kind shall be payable under this Lease including, without

limitation, annual rent, percentage rent or additional rent.

4.2 Substation Reimbursement. Within 30 days following the

completion of construction of the Power Facility and the 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". So long as Landlord

operates the Paper Mill, Landlord (i) hereby grants Tenant the right to access

and utilize the electric lines and equipment at the Substation to the extent

necessary to support operation of the Power Facility and (ii) shall make

commercially reasonable efforts to keep the Substation available to Tenant. If

Landlord needs the Substation capacity for its own purposes, Landlord shall

notify Tenant at least 180 days prior to the date upon which Tenant will no

longer be entitled to use the Substation. If Landlord's requirement for use of

the Substation is permanent and such notice is given during the first 10 years

of the Lease Term, Landlord shall return to 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.) 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.

4.3 Paper Sludge Supply and Removal. Landlord currently operates

the Paper Mill on property that is adjacent to the Real Property. For so long as

the Paper Mill remains open and operating, Landlord shall allow Tenant to obtain

without cost or charge as much of the paper sludge produced by the Paper Mill as

Tenant can use at the Power Facility. Landlord shall supply paper sludge for at

least 10 years from the date the Power Facility begins producing power (the

"Sludge Non-Competition Period"). Tenant will use commercially reasonably

efforts to utilize the paper sludge as a fuel source for the Power Facility, but

Tenant does not guarantee that the paper sludge will be a viable fuel source for

the Power Facility. At no cost to Tenant, Landlord shall process the sludge to

reduce the moisture content of such sludge to the lowest practical moisture

content (in no event greater than approximately 50% moisture content) and shall

be responsible for all waste water treatment in connection with the production

and processing of such sludge. At no cost to Landlord, Tenant shall install

equipment to transport the paper sludge from the wastewater treatment plant to

the Power Facility, and shall add screw presses or other equipment necessary to

allow Landlord to reduce the moisture content of the sludge. Tenant shall

reimburse Landlord as an "Operational Cost" under the "Operations Provisions"

the cost of transporting all such processed sludge to the Power Facility. In the

event Tenant wishes to terminate its use of any or all of the paper sludge at

the Power Facility, Tenant shall provide Landlord at least 30 days advance

written notice of such termination. Any portion of paper sludge produced at the

Paper Mill that is not taken by Tenant after the Sludge Non-Competition Period,

including any sludge that Tenant discontinues using, may be sold or otherwise

conveyed by Landlord to any third party; provided, however, that if Landlord

desires to sell, transfer or convey any paper sludge to a third party (other

than a transporter for purposes of disposal of the paper sludge in a landfill)

after the Sludge Non-Competition Period, Landlord shall first provide Tenant

with 60 days' notice of such desire and Tenant shall have the right to take

possession and ownership of all the paper sludge produced by the Paper Mill. In

the event Tenant fails to utilize at least 75% of the paper sludge (at current

levels as of the Effective Date) produced at the Paper Mill within two (2) years

after the Commencement Date, or thereafter fails to maintain

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such minimum usage, Tenant shall pay an annual rent of $400,000 in equal monthly

installments. Any rent being paid under this Section 4.3 shall cease on the date

that the Paper Mill's production of paper sludge falls below 25% of current

levels (as of the Effective Date). Landlord shall notify Tenant at least 90 days

prior to closing the Paper Mill or ceasing production or processing of paper

sludge. For purposes of this Section 4.3. current levels of paper sludge

production shall refer to sludge production for the six-month period immediately

preceding the Effective Date.

4.4 Storage Facility and Sawmill Facility. Use of the Storage

Facility and Sawmill Facility shall be limited to purposes supporting operation

of the Power Facility. Upon termination of the Lease, Tenant shall clear the

areas of debris and materials. Tenant shall abide by fire protection standards

imposed by the insurance carrier used by Landlord in its use of the Sawmill

Facility and Storage Facility.

4.5 Parasitic Power Load. Landlord agrees to make available power

produced at the Paper Mill to Tenant for the internal operating needs of the

Power Facility pursuant to this Section 4.5. Such power shall be made available

for five cents ($0.05) per kilowatt hour to the extent power produced by

Landlord is not needed for operation of the Paper Mill, as determined in

Landlord's sole discretion. Landlord does not guarantee that electricity will be

available to Tenant under this Section. The rate charged Tenant for such power

shall be adjusted on each anniversary of the Commencement Date by the same

percentage change, if any, as Landlord pays for power purchased from the public

utility supplying power to the Paper Mill (as measured in (cent)/kwhr). Tenant

anticipates that the Power Facility will require between 1.0 and 1.5 megawatts

("MW") of electricity to operate. Landlord shall provide this power at 2300

volts and 480 volts based on the needs and requirements of the machinery and

equipment utilized at the Power Facility.

4.6 Utilities. Landlord shall provide all utilities necessary to

operate the Power Facility so long as the Paper Mill is operating. Electricity

shall be provided as described in Section 4.5 above. Natural gas will be

provided as available at the metered cost. Water, boiler feedwater, compressed

air, sewage and waste water treatment, solid waste removal and disposal, and

removal of the "Facility Waste" will be provided to Tenant for a fixed rate of

$25,000 per year. The rate charged Tenant for such services shall be adjusted on

each anniversary of the Commencement Date by the same percentage change as

occurs in the CPL

4.7 Ash and Waste Disposal. Landlord shall take possession of and

dispose of all Facility Waste in a location other than on the Real Property in

accordance with applicable law, including, without limitation, all

"Environmental Laws". Tenant shall reimburse Landlord, as an Operational Cost

under the Operation Provisions, all transportation costs incurred in removing

and disposing of the Facility Waste and all disposal costs for Facility Waste

disposed of offsite of the Paper Mill, but shall not otherwise have any

financial responsibility with respect to the Facility Waste. Except as they

relate to Tenant's obligations under this Section 4.7, any and all claims,

demands, notices, damages, costs, fees, judgments, suits, causes of action,

losses, liabilities and expenses, including attorneys' fees and court costs,

that result from or relate to the Facility Waste shall be considered Excluded

Claims and shall be covered under Landlord's indemnification obligations set

forth in Section 12.3.

4.8 Tenant's Ability to Purchase the Real Property. If Landlord

ceases operations at the Paper Mill, Tenant is hereby granted an option to

purchase the Real Property at fair market value with escrow and purchase terms

that are customary for vacant land sales in Navajo county at the time of such

purchase (such terms to be drawn from the then-current form of vacant land sale

purchase contract promulgated by the Arizona Realtors Association).

5. Representations and Warranties. Landlord represents and warrants to

Tenant and covenants that:

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5.1 Existence and Authority. Landlord is a Delaware corporation,

duly organized and validly existing, and is in good standing in the State of

Arizona. The individual signing this Lease on behalf of landlord is fully

authorized and empowered to sign this Lease on Landlord's behalf and, upon

execution thereof, said Lease shall be fully binding upon Landlord. The

execution by Landlord of this Lease and the consummation by Landlord of the

transaction hereby contemplated does not, and as of Commencement Date will not,

(a) result in a breach of or default under any indenture, agreement, instrument

or obligation to which Landlord is a party and which affects all or any portion

of the Real Property, or (b) to Landlord's knowledge, constitute a violation of

any governmental requirement;

5.2 Binding Agreement. The execution and delivery of this Lease

by Landlord and the consummation by Landlord of the transaction contemplated by

this Lease are within Landlord's capacity and all requisite action has been

taken to make this Lease valid and binding on and enforceable against Landlord

in accordance with its terms. Upon Landlord's execution of additional documents

contemplated by this Lease, such documents shall be binding and enforceable

against Landlord in accordance with their terms;

5.3 Ownership. Landlord owns fee title to the Real Property and

shall deliver possession of the Real Property to Tenant free and clear of all

liens (except current property taxes and assessments). To Landlord's knowledge,

there are no unrecorded or undisclosed leases, easements, purchase options,

right of first refusal, liens (including, without limitation, mechanic's,

laborer's or materialmen's liens) or encumbrances that may affect title to the

Real Property. There are no other parties in possession of any portion of the

Real Property, including, without limitation, lessees, tenants at sufferance or

trespassers. As long as this Lease is in effect and except as expressly

authorized by this Lease, Landlord shall not record, consent to or grant any

lien, encumbrance or other matter against the Real Property that would have

priority over this Lease;

5.4 Compliance. To Landlord's knowledge, the Real Property is in

compliance with all applicable laws, statutes, regulations, ordinances,

requirements, covenants, conditions and restrictions relating to the present use

or occupancy of the Real Property;

5.5 Public Improvements. To Landlord's knowledge, there are no

intended public improvements that will or could result in any charges being

assessed against the Real Property that will result in a lien upon the Real

Property;

5.6 Condemnation. There is no impending or, to Landlord's

knowledge, contemplated condemnation or taking by inverse condemnation of the

Real Property, or any portion thereof, by any governmental authorities. Landlord

has not entered into any agreement to transfer the Real Property, or any portion

thereof, in lieu of a condemnation;

5.7 No Suits. There are no suits or claims pending or, to

Landlord's knowledge, threatened with respect to the Real Property or Landlord's

ability to enter into this Lease, nor are there, to Landlord's knowledge, any

circumstances that could reasonably form the basis for any such suits or claims;

5.8 Agreements. Landlord has not entered into and there is not

existing any other agreement, written or oral, under which Landlord is or could

become obligated to transfer or lease the Real Property, or any portion thereof,

to a third party;

5.9 Environmental Matters.

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5.9.1 To Landlord's knowledge, the Real Property is in

compliance with all applicable Environmental Laws, except as has otherwise been

reported under Environmental Laws;

5.9.2 To Landlord's knowledge, neither Landlord nor the Real

Property is subject to any pending judicial or administrative proceeding of any

kind alleging the violation or potential violation of any Environmental Law with

respect to the Real Property; and

5.9.3 To Landlord's knowledge, there is no federal, state or

local investigation, or threatened investigation, including an investigation

conducted by a non-governmental authority, evaluating the nature and extent of

any contamination or whether any remedial or removal action is needed to respond

to a Release or threatened Release of any Regulated Substance in, on or at the

Real Property.

5.9.4 To Landlord's knowledge, no notice has been filed

under any Environmental Law indicating past or present generation,

transportation, use, treatment, storage or disposal of a Regulated Substance in,

on or at the Real Property;

5.9.5 To Landlord's knowledge, there are no underground

storage tanks on or under the Real Property.

5.10 No Bankruptcy. Landlord is not involved as a debtor in any

state or federal bankruptcy, reorganization, arrangement, insolvency

proceedings, receivership or any other debtor-creditor proceeding. Landlord has

not made any assignment for the benefit of creditors generally;

5.11 Parties in Possession. There are no parties other than

Landlord in possession of any portion of the Real Property as lessees, tenants

or trespassers;

5.12 Site Conditions. Landlord has disclosed all matters such as

sink holes, 100-year flood plain or floodway designation, regulated wetlands,

underground water sources, wells or mine shafts that would be material to

Tenant's decision to lease the Real Property or interfere with Tenant's intended

use of the Real Property to the extent of Seller's knowledge;

5.13 Natural Gas Availability. Natural gas is available to the

Real Property;

5.14 Landlord Resources and Facilities. The Paper Mill has or

will have dedicated and trained personnel capable of operating the Power

Facility as required under the Operations Provisions. The Paper Mill has a

control room and monitoring equipment that will allow the accurate and

continuous monitoring of power production and quality at the Paper Mill.

Landlord has water rights and water resources adequate to supply all of the

water needs of the Power Facility. Landlord owns and has access to all

equipment, tools and machinery necessary to perform its operations and

management responsibilities for the Power Facility and to comply with this

Lease.

5. 15 Power Facility Operation Guaranty. Landlord has the ability

and capacity to operate the Power Facility 24 hours per day, 7 days per week and

will use commercially reasonable efforts to maintain the highest operating rates

practical.

All of the representations and warranties in this Section 5 are true and correct

as of the Effective Date. For purposes of this Lease, "Landlord's knowledge" or

words of similar import shall mean the actual knowledge without investigation of

John McKee.

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6. Taxes and Assessments. Tenant shall pay when due all personal

property taxes and assessments levied or assessed by any governmental authority

against any personal property or fixtures located on the Real Property during

the Lease Term. Tenant shall pay when due all real property taxes and

assessments levied or assessed against or attributable to the Real Property.

Landlord shall provide Tenant promptly with notices of the tax levies and

assessment and all tax valuations and bills received by Landlord, and Tenant

shall pay to Landlord the amount owed by Tenant not later than three Business

Days before the due date. All taxes and assessments becoming due and payable in

the first and last years of the Lease Term, or any year in which this Lease is

terminated, shall be apportioned between Landlord and Tenant based upon the

number of months the Lease Term during such years bears to the calendar year.

Landlord shall use commercially reasonable efforts to cause the Real Property to

be taxed and assessed as a separate tax parcel independent of any other property

owned by Landlord. Tenant, at its expenses and provided that Tenant in not in

default hereunder, may contest in good faith and with due diligence the validity

or amount of any personal or, if a separate tax parcel has been created for the

Real Property, real property tax affecting the Real Property, provided that: (a)

Tenant first makes all contested payments, under protest if it desires, unless

Tenant's action suspends the collection of such payments; (b) neither the Real

Property nor any part thereof or interest therein could realistically under the

then existing circumstances be deemed to be in danger of being sold, forfeited,

or lost by reason of such contest; and (c) Tenant furnishes such security, if

any, required by the governmental authority. Tenant shall pay or reimburse

Landlord, as applicable, any sales, excise, rent, transaction or similar tax, if

any, based on the existence of this Lease or Tenant's occupancy of the Real

Property. Such payment or reimbursement shall be made when due.

7. Engagement of Landlord. Tenant hereby engages Landlord, and

Landlord hereby accepts Tenant's engagement, to operate the Power Facility under

the terms and conditions set forth in the Operations Provisions attached hereto

as Addendum 1.

8. Tenant Improvements. Tenant, at its sole expense and after

consultation with Landlord, shall construct, furnish and make such leasehold

improvements to the Real Property as are necessary for Tenant's use of the Real

Property including, without limitation, the Power Facility (collectively, the

"Improvements"). Title to all Improvements shall be vested in the Tenant during

the Lease Term. After the Power Facility has been placed in operation, Tenant

may construct additional Improvements only after receiving written approval from

Landlord. No approval is needed from Landlord for modifications, repairs,

changes, renovation, restoration and minor construction in the ordinary course

of business at the Power Facility. Tenant shall construct the Improvements in

compliance with all applicable laws, codes, rules and ordinances and shall

obtain all necessary permits and approvals for such construction, and shall

maintain the Improvements in good condition, normal wear and tear excepted.

9. Disposition of Tenant's Property upon Termination. Upon the

expiration of the Lease Term or its sooner termination, Landlord shall have the

option to purchase the Improvements and all other trade fixtures and personal

property of Tenant required to run the Power Facility and located at the Power

Facility (collectively, "Tenant's Property") at fair market value, or if

Tenant's Lender (as defined in Section 28.3 below) has assumed the Lease and

taken title to the Improvements, then at the payoff amount of the Mortgage (as

defined in Section 28.3 below). Not later than 30 days after the expiration of

the Lease Term or the earlier termination of the Lease, Landlord may notify

Tenant that Landlord elects to purchase Tenant's Property. If Landlord's notice

is not given during this 30-day period, then Landlord's option to purchase

Tenant's Property shall lapse. If Landlord does not elect to purchase Tenant's

Property, Tenant shall have three years to remove Tenant's Property. During this

three-year period, rent shall be paid in the amount of $25,000 per 12-month

period starting on the date of termination of the Lease and ending on the date

on which all of Tenant's Property has been removed. Landlord understands and

agrees that Tenant's Property is not readily marketable and requires Tenant to

locate a suitable buyer, which process could take up to three years. If Landlord

elects to purchase Tenant's Property and Landlord and Tenant cannot agree on the

fair market value, such

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value shall be determined by a Person with at least five years experience in

appraising similar property ("Equipment Appraiser"). If Landlord and Tenant

cannot agree on a single Equipment Appraiser, the following method shall be used

to determine the fair market value of Tenant's Property. Each party, within 15

days after request by any party, shall appoint one Equipment Appraiser to

represent it and if the two appraisers so appointed are unable to agree between

themselves upon the fair market value within 15 days after being appointed, they

in turn shall appoint a third Equipment Appraiser. The mutual agreement of two

of the three Equipment Appraisers shall determine the fair market value. If two

of the three Equipment Appraisers cannot agree on the fair market value, it

shall be the average of the fair market values as determined by each of the

three Equipment Appraisers. If either Landlord or Tenant fails to appoint an

Equipment Appraiser, the duly appointed Equipment Appraiser shall determine the

fair market value. If a third Equipment Appraiser is required but the original

two appraisers fail to agree upon a third appraiser, the two appraisers shall

each propose a list of three Equipment Appraisers and send such list to the

other appraiser. The party receiving such proposed list of appraisers shall have

five business days from the receipt of the list to strike two names from the

list proposed by the other party's appraiser and to notify the other party of

the names stricken. If a party fails to timely strike its allowable number of

names, then that party will be deemed to have only stricken the number of names

it has timely stricken. If more than two names are stricken or if a party fails

to timely strike any names, then that party will be deemed to have not stricken

any names. If, after striking such names, only one unstricken name appears on

the list(s), such unstricken appraiser shall be the additional Equipment

Appraiser. If more than one unstricken name appears on the list(s), the

previously appointed appraiser(s) shall randomly select the additional appraiser

from such unstricken appraisers.

10. Maintenance and Repair. Landlord shall maintain and repair

Tenant's Property located on Parcel 1 in a good state of repair and in a

reasonable sanitary condition. Tenant shall reimburse Landlord for such costs as

an Operational Cost under the Operations Provisions.

11. Liens. Except as allowed under Section 28.2 below, Tenant shall

not permit any mechanic's, materialmen's or other liens to be filed against all

or any part of the Real Property, nor against Tenant's leasehold interest in the

Real Property, for any reason, including in connection with any repairs,

alterations, improvements or other work contracted for or undertaken by Tenant.

If any such lien is filed, Tenant shall discharge or bond over the lien within

twenty (20) days of such filing, and Tenant shall indemnify and hold Landlord

harmless from all costs, expenses, claims or liability (including reasonable

attorney's fees) arising from such lien.

12. Indemnification and Exculpation.

12.1 Tenant's Indemnification of Landlord. Tenant shall be liable

for, and shall indemnify, defend and hold harmless Landlord and Landlord's

partners, employees, agents, successors and assigns (collectively, "Landlord

Indemnified Parties") from and against, any and all claims, damages, judgments,

suits, causes of action, losses, liabilities and expenses, including attorneys'

fees and court costs, for injury or death of persons or physical loss of or

damage to property claimed or asserted by a Person not a party to this Lease

("Third Person") (collectively, "Tenant Indemnified Claims"), arising or

resulting from: (a) the use of the Real Property by Tenant or any of Tenant's

agents, employees or contractors (individually, "Tenant Party"; collectively,

"Tenant Parties"); or (b) any other activity, work or thing done, permitted or

suffered by Tenant or any Tenant Parties, in, on or about the Real Property;

and/or (c) any default by Tenant of any obligations on Tenant's part to be

performed under the terms of this Lease. Tenant Indemnified Claims shall not

include any claims, demands, notices, damages, costs, fees, judgments, suits,

causes of action, losses, liabilities and expenses, including attorneys' fees

and court costs that result from or relate to Landlord's operation of the Power

Facility under the Operations Provisions or any matters covered by the

indemnification provisions contained therein (collectively, "Excluded Claims").

The term "Tenant Party" or "Tenant Parties" shall not include any Landlord

Indemnified Parties.

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12.2 No Release of Insurers. Tenant's covenants, agreements and

indemnification in Section 12.1 above are not intended to and shall not relieve

any insurance carrier of its obligations under policies required to be carried

by Landlord or Tenant, respectively, pursuant to the provisions of this Lease

for actions or events that occur during the Lease Term.

12.3 Landlord's Indemnification of Tenant. Landlord shall be

liable for, and shall indemnify, defend and hold harmless Tenant Parties from

and against any and all claims, damages, judgments, suits, causes of action,

losses, liabilities and expenses, including attorneys' fees and court costs, for

injury or death of persons or physical loss of or damage to property claimed or

asserted by a Third Person (collectively, "Landlord Indemnified Claims") arising

or resulting from: (a) the use of the Real Property by Landlord or any of

Landlord's agents, employees or contractors (collectively, "Landlord Parties");

(b) any other activity, work or thing done by Landlord or any Landlord Parties,

in, on or about the Real Property; and/or (c) any default by Landlord of any

obligations on Landlord's part to be performed under the terms of this Lease.

12.4 No Release of Insurers. Landlord's covenants, agreements and

indemnification in Section 12.3 above are not intended to and shall not relieve

any insurance carrier of its obligations under policies required to be carried

by Landlord or Tenant, respectively, pursuant to the provisions of this Lease

for actions or events that occur during the Lease Term.

12.5 Indemnification Procedure. Promptly after a party hereto

(hereinafter the "Indemnified Party") has received notice of or has knowledge of

any claim by a Third Person or the commencement of any action or proceeding by a

Third Person, the Indemnified Party shall, as a condition precedent to a claim

with respect thereto being made against any party obligated to provide

indemnification pursuant to this Lease (hereinafter the "Indemnifying Party"),

give the Indemnifying Party written notice of such claim or the commencement of

such action or proceeding. The notice shall state the nature and the basis of

such claim and a reasonable estimate of the amount thereof. The Indemnifying

Party, after receipt of the notice, shall defend and settle, at its own expense

and by its own counsel, each such matter so long as the Indemnifying Party

pursues the same diligently and in good faith. Notwithstanding the foregoing,

the Indemnified Party shall have the right to participate in any matter through

counsel of its own choosing at its own expense. Additionally, if the

Indemnifying Party fails diligently to defend any such matter to which the

Indemnified Party is entitled to indemnification hereunder, the Indemnified

Party may undertake such defense through counsel of its choice and at the

Indemnifying Party's expense. Under no circumstances shall the Indemnified Party

settle any Third Person claim without the written consent of the Indemnifying

Party, which consent shall not be unreasonably withheld or delayed.

13. Tenant's Insurance. Tenant shall obtain and maintain the following

insurance during the Term (while Landlord is operating the Power Facility under

the Operations Provisions, Landlord shall be responsible to procure all such

insurance on behalf of Tenant and at Tenant's expense):

13.1 Types of Insurance. On or before the earlier of the

Commencement Date or the date Tenant commences or causes to be commenced any

work on the Real Property, and continuing during the entire Lease Term, Tenant

shall obtain and keep in full force and effect, the following insurance:

13.1.1 All Risk insurance, including fire and extended

coverage and sprinkler leakage, on the improvements and all other property of

every description and kind located on the Real Property (whether owned by

Landlord or Tenant), or for which Tenant is legally liable or installed by or on

behalf of Tenant in an amount not less than the full replacement cost thereof as

determined by Tenant. Such insurance shall also apply to damage to the Paper

Mill resulting from or arising out of incidents occurring on the Real Property.

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13.1.2 Commercial general liability insurance coverage,

including personal injury, bodily injury (including wrongful death), broad form

property damage, operations hazard, owner's protective coverage, contractual

liability (including Tenant's indemnification obligations under this Lease,

including Section 12 above), products and completed operations liability, and

owned/non-owned auto liability, with initial limits as follows: general

aggregate-not less than $2,000,000.00, and per occurrence-not less than

$2,000,000.00.

Tenant shall provide current certificates of such insurance to Landlord

throughout the Term, and copies of policies within ten Business Days after

receipt of Landlord's written request.

14. Requirements. Each policy required to be obtained by Tenant under

this Lease shall: (a) be issued by insurers authorized to do business in the

State of Arizona and reasonably acceptable to Landlord; (b) name Tenant and

Landlord as named insureds (c) provide that the insurer shall notify Landlord in

writing not less than 30 days prior to any material change, reduction in

coverage, cancellation or other termination thereof; (c) have a deductible of

not more than $50,000.00, (d) be primary with respect to any similar insurance

carried by Landlord, (e) contain a waiver of subrogation or similar provision.

15. Landlord's Insurance. Landlord may, at its option, obtain such

liability and casualty insurance relating to the Real Property as Landlord deems

desirable.

16. Damage or Destruction. If the Real Property is damaged by fire or

other casualty, Tenant shall be responsible to commence and proceed diligently

with the work of repair, reconstruction and restoration, and this Lease shall

continue in full force and effect. Landlord and Tenant shall each have the right

to terminate this Lease if any damage to the Real Property occurs during the

last 12 months of the Lease Term. In the event of such termination, Tenant shall

be subject to the provisions of Section 9 relating to the removal of Tenant's

Property.

17. Eminent Domain.

17.1 Substantial Taking. Subject to the provisions of Section

17.4 below, in case the whole of the Real Property, or such part thereof as

shall prevent the operation of the Power Facility as reasonably determined by

Tenant, shall be taken for any public or quasi-public purpose by any lawful

power or authority by exercise of the right of appropriation, condemnation or

eminent domain, or sold to prevent or in lieu of such taking, this Lease shall

terminate effective as of the date possession is required to be surrendered to

said authority.

17.2 Partial Taking. In the event of a taking of a portion of the

Real Property that does not prevent the operation of the Power Facility as

reasonably determined by Tenant, then, except as otherwise provided in the

immediately following sentence, neither party shall have the right to terminate

this Lease, and Tenant shall thereafter proceed to make a functional unit of the

remaining portion of the Real Property (and Landlord shall make available such

portion of the proceeds received by Landlord from the condemning authority as is

attributable to the taking of any portion of the Improvements). Proceeds

received by Landlord for the value of the Power Facility or Tenant's business

shall belong to Tenant.

17.3 Condemnation Award. Subject to the provisions of Section

17.4 below, in connection with any taking of the Real Property or any portion

thereof, Tenant shall not be entitled to receive any portion of any award that

may be made or given in such taking or condemnation or any payment made in lieu

or anticipation of any such taking or condemnation with respect to Real

Property. Tenant shall be entitled to recover: (a) any compensation as may be

separately awarded or recoverable by Tenant for Tenant's relocation expenses and

for any loss of goodwill; and (b) the value of the Improvements.

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17.4 Temporary Taking. In the event of a taking of the Real

Property or any part thereof for temporary use: (a) this Lease shall be and

remain unaffected thereby; and (b) Tenant shall be entitled to receive for

itself such portion or portions of any award made for such use with respect to

the period of the taking that is within the Lease Term. For purpose of this

Section 17.4. a temporary taking shall be defined as a taking for a period of

120 days or less.

18. Tenant's Default and Landlord's Remedies.

18.1 Tenant's Default. The occurrence of any one or more of the

following events shall constitute a default under this Lease by Tenant:

18.1.1 The failure by Tenant to observe or perform any of

the covenants or provisions of this Lease to be observed or performed by Tenant,

where such failure shall continue for a period of 30 days after written notice

thereof from Landlord to Tenant; provided, however, that, if the nature of

Tenant's default is such that more than 30 days are reasonably required for its

cure, then Tenant shall not be deemed to be in default if Tenant shall commence

such cure within such 30-day period and thereafter diligently prosecute such

cure to completion. Any failure by Tenant to observe or perform any of its

covenants or provisions of this Lease that are the responsibility or obligation

of the Landlord under the Operations Provisions shall not be the basis for a

default under this Section 18.1.2 so long as the Operations Provisions are in

effect; and

18.1.2 (i) The making by Tenant of any general assignment

for the benefit of creditors; (ii) the filing by or against Tenant of a petition

to have Tenant adjudged a bankrupt or a petition for reorganization or

arrangement under any law relating to bankruptcy (unless, in the case of a

petition filed against the Tenant, the same is dismissed within 60 days); (iii)

the appointment of a trustee or receiver to take possession of substantially all

of Tenant's assets located at the Real Property or of Tenant's interest in this

Lease, if possession is not restored to Tenant within 60 days; or (iv) the

attachment, execution or other judicial seizure of substantially all of Tenant's

assets located at the Real Property or of Tenant's interest in this Lease if

such seizure is not discharged within 60 days.

18.2 Landlord's Remedies; Termination. In the event of any such

default by Tenant, Landlord shall have the immediate right to terminate this

Lease and all rights of Tenant hereunder and recover any damages necessary to

compensate Landlord for all actual damages caused by Tenant's failure to perform

its obligations under this Lease.

18.3 Landlord's Remedies; Re-Entry Rights. In the event of any

such default by Tenant, Landlord shall also have the right, with or without

terminating this Lease, to re-enter the Real Property and remove all persons

from the Real Property and take possession of all property located thereon. No

re-entry or taking possession of the Real Property by Landlord pursuant to this

Section 18.3, and no acceptance of surrender of the Real Property or other

action on Landlord's part, shall be construed as an election to terminate this

Lease unless a written notice of such intention be given to Tenant or unless the

termination thereof be decreed by a court of competent jurisdiction.

18.4 Landlord's Remedies: Continuation of Lease. In the event of

any such default by Tenant, Landlord shall have the right to continue this

Lease in full force and effect, whether or not Tenant shall have abandoned the

Real Property. In the event Landlord elects to continue this Lease in full force

and effect pursuant to this Section 18.4, then Landlord shall be entitled to

enforce all of its rights and remedies under this Lease. Landlord's election not

to terminate this Lease pursuant to this Section 18.4 or pursuant to any other

provision of this Lease, at law or in equity, shall not preclude Landlord from

subsequently electing to terminate this Lease or pursuing any of its other

remedies. Landlord shall have the right to relet the Real Property or any

portion thereof for such term or terms (which

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may extend beyond the Lease Term) and at such rental and on such other terms and

conditions as Landlord, in its sole discretion, may deem advisable. Landlord

shall also have the right to make such alteration and repairs to the Real

Property as Landlord may deem advisable, in its sole discretion.

18.5 Rights and Remedies Cumulative. All rights, options and

remedies of Landlord contained in this Section 18 and elsewhere in this Lease

(including Section 22 below) shall be construed and held to be cumulative, and

no one of them shall be exclusive of the other. Landlord shall have the right to

pursue anyone or all of such remedies or any other remedy or relief that may be

provided by law or in equity, whether or not stated in this Lease. Nothing in

this Section 18 shall be deemed to limit or otherwise affect Tenant's

indemnification of Landlord pursuant to any provision of this Lease.

18.6 Performance by Landlord. If Tenant fails to make any payment

or perform any act required hereunder to be made or performed by Tenant, and

provided Landlord has given Tenant thirty (30) days written notice of its intent

to do so and Tenant has failed during said period to make such payment or

perform the act required to be performed by Tenant, then Landlord may, but shall

be under no obligation, to make such payment or perform such act with the same

effect as if made or performed by Tenant. Notwithstanding the immediately

preceding sentence, Landlord may proceed immediately in the event of an

emergency without any notice to Tenant other than bona fide attempts to contact

Tenant by telephone as soon as reasonably possible under the circumstances.

Entry by Landlord upon the Real Property for such purpose shall not waive or

release Tenant from any obligation or default hereunder. Tenant shall reimburse

Landlord for all sums so paid by Landlord and all costs and expenses incurred by

Landlord in connection with Landlord's payment or performance under this

Section, and no such payment or performance by Landlord pursuant hereto, shall

be deemed to suspend or delay the payment of any amount of money or charge at

the time the same becomes due or payable, nor limit any right of Landlord or

relieve Tenant from any default hereunder.

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.

20. Estoppel Certificate. Within 20 days following receipt of a

written request from the other party or its lender or mortgagee, a party shall

execute and deliver to the other party or its lender or mortgagee an estoppel

certificate certifying: (a) the Commencement Date of this Lease; (b) that this

Lease is unmodified and in full force and effect (or, if modified, that this

Lease is in full force and effect as modified, and stating the date and nature

of such modifications); (c) the date to which any sums payable under this Lease

have been paid; (d) that there are not, to the best of the certifying party's

knowledge, any defaults under this Lease by either Landlord or Tenant, except as

specified in such certificate; and (e) such other matters as are reasonably

requested. Any such estoppel certificate delivered pursuant to this Section 20

may be relied upon by any mortgagee, deed of trust beneficiary, purchaser or

prospective purchaser of the Real Property or the Power Facility, as well as

their assignees. The failure to deliver such estoppel certificate within such

time shall be conclusive upon the certifying party that: (a) this Lease is in

full force and effect without modification, except as may be represented by the

other party; and (b) there are no uncured defaults under the Lease.

21. Default Interest. If any amount payable under this Lease is not

paid by the date when due, it shall bear interest at the lesser of the "prime

rate" plus 4% or the maximum rate allowed by law in the State of Arizona

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(the "Default Rate") from the date due until paid. As used herein, "prime rate"

means the per annum rate of interest from time to time announced by Wells Fargo

Bank, or any successor bank, as its prime interest rate.

22. Assignment and Subletting. Except as set forth in the Operations

Provisions and except as permitted under a Mortgage as define in Section 28.3.1,

Tenant shall not, without the prior written consent of Landlord, which consent

shall not be unreasonably withheld, conditioned or delayed (and in no event

shall Landlord's response be given more than 60 days from the date of the

Tenant's written request for consent), assign this Lease or any interest herein,

sublet the Real Property or any part thereof, otherwise transfer Tenant's

interest in the Real Property or this Lease, or permit the use or occupancy of

the Real Property by any party other than Tenant (collectively, a "Transfer").

Landlord's failure to respond to Tenant's request for consent within such 60 day

period shall be deemed a disapproval of the Transfer. Notwithstanding the

foregoing, Tenant may consummate a Transfer without the consent of the Landlord

to a corporate affiliate of Tenant with at least $25,000,000 net worth and with

substantial experience in owning or operating power generation facilities

similar to the Power Facility; provided however, that Tenant may not transfer

its interest to a Person engaged in pulp and paper operations or to a public

service corporation. Any attempted transfer in violation of this Section 22

shall be voidable at Landlord's election. A Transfer approved by Landlord or

otherwise allowable hereunder shall release Tenant of Tenant's obligations under

this Lease. For purposes of this Section 22. a "Transfer" shall include, but

shall not be limited to, the following:

(1) If Tenant is a partnership, (i) a withdrawal or change, voluntary,

involuntary, or by operation of law, of any partner owning 49% or more

of the partnership, (ii) the dissolution of the partnership, (iii) the

sale or other transfer of 49% or more of the partnership interests, or

(iv) the sale or other transfer of 49% or more of the value of the

assets of the partnership.

(2) If Tenant is a corporation, (i) any dissolution, merger,

consolidation, or other reorganization of the corporation, (ii) the

sale or other transfer of 49% or more of the capital stock of the

corporation, or (iii) the sale of 49% or more of the value of the

assets of the corporation.

(3) If Tenant is a limited liability company, (i) a withdrawal or change,

voluntary, involuntary, or by operation of law, of any member owning

49% or more of the limited liability company, (ii) the dissolution of

the limited liability company, (iii) the sale or other transfer of 49%

or more of the membership interests, (iv) the sale or other transfer

of 49% or more of the value of assets of the limited liability

company, or the merger, consolidation of