HomeMy WebLinkAbout4335 Resolution - Burnham Wastewater Treatment Agreement RESOLUTION NO.4335
A RESOLUTION OF THE CITY OF PASCO, WASHINGTON,
ENTERING WRITTEN FINDINGS AND AUTHORIZING THE INTERIM CITY
MANAGER TO ENTER INTO THE WASTEWATER TREATMENT
AGREEMENT WITH BURNHAM FOR THE PWRF PRETREATMENT
IMPROVEMENTS PHASE 3 PROJECT.
WHEREAS, the City of Pasco (City) operates a Process Water Reuse Facility(PWRF) to
treat industrial wastewater from Food Processors(Processors)located in the vicinity of the City of
Pasco; and
WHEREAS, the City's current PWRF system has reached its design life and capacity,
such that upgrades and expansion are necessary to accommodate new agricultural food processor
wastewater; and
WHEREAS, Burnham SEV, a renewable natural gas (RNG) Project Developer, was
selected, through processes outlined in Chapter 70A.140 RCW, to privately develop a new
industrial wastewater treatment plant,utilizing a low-rate anaerobic digester and nitrogen removal
system (System) along with a renewable natural gas plant at the PWRF; and
WAEREAS, City and Burnham SEV entered an agreement on November 24, 2021,
wherein the City(and Processors) agreed to support the cost of initial engineering for the System;
and
WHEREAS, Chapter 70A.140 RCW, Water Quality Joint Development Act, provides a
mechanism for the City to provide service from water pollution control facilities by means of
services agreements with public or private parties; and
WHEREAS, pursuant to RCW 70A.140.040(9), prior to execution of the Wastewater
Treatment Agreement with Burnham, Burnham and the City understand the necessity of
submitting the "proposed service agreement" to the Department of Ecology to review for
consistency with RCW 90.46 and RCW 90.48, as a condition precedent to the City's authority to
execute the Wastewater Treatment Agreement with Burnham; and
WHEREAS, this Agreement was submitted to the Department of Ecology on September
15, 2022, satisfying the condition precedent to the City's execution of this Agreement and is in
substantially the same form as was reviewed by the Department of Ecology; and
NOW,THEREFORE,BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY
OF PASCO, WASHINGTON:
Resolution—Burnham SEV Pasco,LLC Wastewater Treatment Agr.- 1
Section 1. Findin�s.
After a public hearing on February 6,2023 was held,the below findings are hereby adopted
by the City Council:
A. The City of Pasco has determined that it is in the public interest to enter into the
service agreement with Burnham SEV Pasco, LLC;
B. The service agreement includes project performance bonds or other security by the
service provider which in the judgment of the public body are sufficient to secure
adequate performance by the service provider;
C. That the service agreement includes a provision for an option by which a public
body may acquire at fair market value facilities dedicated to such services;
D. That the service agreement is financially sound and advantageous compared to
other methods.
Section 2. DeleQation of Authoritv.
That the Interim City Manager is hereby authorized to execute the Wastewater Treatment
Ageement with Burnham SEV Pasco, LLC for the PWRF Pretreatment Improvements Phase 3
Project, a copy of which is attached hereto and incorporated herein by reference as Exhibit A; in
substantially the same form and to make substantive changes as necessary to execute the
Agreement consistent with the intent of the City Council.
Be It Further Resolved, that this Resolution shall take effect and be in full force
immediately upon passage by the City Council.
t�SE �+-t�City Council of the City of Pasco,Washington,this 3�day of April,2023.
...
,
Blan arajas � -
Mayor
ATTEST: APPROVED AS TO FORM:
�� ���� r
Debra Barham, CMC Kerr Fer , PLLC
City Clerk Cit orneys
Resolution—Burnham SEV Pasco,LLC Wastewater Treatment Agr. -2
WASTEWATER TREATMENT AGREEMENT
Betrveen
Burnham SEV Pasco LLC
And
The City of Pasco, Washington
Effective April 10, 2023
506528698.4
TABLE OF CONTENTS
Page
1. Recitals............................................................................................................................... 1
2. Term...................................................................................................................................3
3. Burnham Obligations.........................................................................................................3
4. City Obligations.................................................................................................................6
5. Payment for System and Services; Change Orders............................................................8
6. Non-Material and Material Breaches of this Agreement................................................. 13
7. Remedies; Cross-Defaults................................................................................................ 14
8. Title, Ownership, and Risk of Loss; Transfer of Environmental Attributes.................... 19
9. Representations and Warranties.......................................................................................20
10. Indemnification................................................................................................................20
11. Limitation of Liability......................................................................................................24
12. Insurance..........................................................................................................................24
13. Force Majeure..................................................................................................................25
14. Confidentiality.................................................................................................................25
15. Governing Law and Disputes..........................................................................
.................
16. Miscellaneous ..................................................................................................................27
ExhibitA......................................................................................................................................31
ExhibitB......................................................................................................................................33
ExhibitC......................................................................................................................................38
ExhibitD......................................................................:...............................................................40
ExhibitE......................................................................................................................................41
ExhibitF.......................................................................................................................................47
ExhibitG......................................................................................................................................50
ExhibitH......................................................................................................................................51
-i-
506528698.4
WASTEWATER TREATMENT AGREEMENT
This Wastewater Treatment Agreement ("Agreement") is entered into � � (the
"Effective Date") by and between Burnham SEV Pasco LLC, a Washington limited liability
company("Burnham"),with offices at 1201 Wilson Blvd—27�'Floor,Arlington VA,22209, and
the City of Pasco, Washington (the"City"), a municipality with offices at 525 N 3rd Ave., Pasco,
WA 99301 (each a"Party" and together, the "Parties").
1. Recitals
1.1 The City owns and operates a wastewater utility, including a process wastewater
reuse facility ("PWRF") that operates for the benefit of the City and large
agricultural food processors to pretreat, treat, and dispose of approximately one
billion gallons of agricultural industrial wastewater by land application on
approximatively 1,854 acres of City-owned farmland. See Washington State
Discharge Permit No. ST0005369. The existing PWRF consists of a primary
treatment process (including two rotary drum screens, one modified clarifier,
twelve (12) septic tanks for solids collection from the clarifier, one screw press for
solids removal from the rotary drum screens system), one approximately five
million gallon ("MG") pond previously used as solids storage, one approximately
eight MG pond used as an equalization pond, one approximately 35 MG pond for
winter storage, and one 115 MG pond for winter storage, and an irrigation
pumps/pipes system for land application of agricultural industrial wastewater; and
1.2 The City's current PWRF system has reached its design life and capacity, such that
upgrades and expansion are necessary to accommodate existing and new
agricultural food and dairy processor wastewater. To meet the Washington
Department of Ecology's ("Ecology") permit requirements to expand the PWRF's
capacity, the City sought a contractor capable of treating agricultural and milk
processing industrial wastewater and using the biogas produced from such
treatment to generate Renewable Natural Gas ("RNG"). Following a competitive
selection process, the City selected Burnham SEV Pasco LLC ("Burnham") to
develop, design, construct, and operate a wastewater treatment and nitrogen
reduction system (the "System," as more particularly described in Exhibit A) that
integrates Burnham's RNG production process. Burnham is to finance, design,
construct, own, operate, and maintain the System on City-owned property leased
by Burnham; and
1.3 The City is in the process of preparing and submitting a new Washington State
Waste Discharge Permit ("Discharge Permit") application to Ecology, to include
the System and all other components of the agricultural industrial wastewater
treatment and disposal process. The City will develop, operate and maintain other
facilities, including its storage ponds (equalization and winter storage), irrigation
system, land application area, and all related assets (e.g., conveyance water pipes,
pump stations, wells and appurtenances) (collectively, "City Facilities") and the
City intends to be a joint permittee with Burnham under the Discharge Permit with
roles and responsibilities for its implementation as defined in this Agreement; and
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1.4 The City has sought to utilize the provisions of RCW 70A.140, the Water Quality
Joint Development Act, for the purpose of providing an additional means by which
to provide financing, development, and operation of water pollution control
facilities needed for achievement of state and federal water pollution control
requirements for the protection of the state's waters; and
1.5 The System and City Facilities will be supported from rates and fees paid to the
City by agricultural and dairy waste processors (provided, however, that the waste
processor payments to City are not a condition of any obligation between City and
Burnham in this Agreement); and
1.6 Pursuant to RCW 70A.140.040(9),prior to execution of this Agreement,the Parties
were required to submit this "proposed service agreemenY' to Ecology to review
for consistency with RCW 90.46 and RCW 90.48, as a condition precedent to the
City's authority to execute this Agreement; and
1.7 A draft of this Agreement was submitted to Ecology on October 7,2022, satisfying
the condition precedent to the City's execution of this Agreement, and Ecology
approved the draft Agreement on November 7, 2022; and
1.8 Pursuant to RCW 70A.140.040 (10), the City held a public hearing on February 6,
2023, and made written findingsl that it is in the public interest to enter into this
Agreement and that this Agreement is financially sound and advantageous
compared to other methods; and
1.9 The Parties entered into the Anaerobic Digestion and Renewable Natural Gas
Project Work Acceleration Agreement on September 7, 2022, the Wastewater
Treatment,Anaerobic Digestion and Renewable Natural Gas Project Second Wark
Acceleration Agreement on December 8, 2022, and the Wastewater Treahnent,
Anaerobic Digestion and Renewable Natural Gas Project Third Work Acceleration
Agreement on February 9, 2023 (collectively, the "Work Acceleration
Agreements") allowing Burnham to undertake certain engineering, legal,
permitting, regulatory, financing, design, and other activities to advance the
System, including without limitation payments to Swinerton Builders, Inc.
("Swinerton"), and which obligated City to reimburse Burnham up to $7,500,000
for such activities; and
1.10 All capitalized terms in this Agreement shall have the meanings given to them in
Exhibit E (Definitions).
1.11 In consideration of the foregoing and for mutual and valuable consideration, the
sufficiency of which are acknowledged, the Parties agree as follows:
1 [NTD: Need to update this date]
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2. Term
2.1 This Agreement shall become effective upon the Effective Date and terminate thirty
(30) years after COD (the "Initial Term"), unless terminated in accordance with
this Agreement or extended as provided in Section 2.2.
2.2 Upon expiration of the Initial Term, this Agreement shall automatically extend for
two additional five(5)-year periods(each a"Renewal Term"and together with the
Initial Term, the "Term"), unless terminated by either Party by sending written
notice of termination to the other Party no later than one hundred and eighty (180)
days before the end of the Initial Term or any Renewal Term, as applicable.
2.3 At the end of the Term, unless as specified elsewhere in this Agreement, City has
the option to purchase all right, title, and interest in and to the System, on an"AS-
IS" "WHERE IS" basis, without any warranty or further liability to Burnham. In
the event the City elects to exercise this purchase option,(a)the procedures set forth
in Section 5.5(a) shall be applied and (b) the purchase price shall be equal to the
appraised fair market value determined by considering(i)Sections 5.5(b)and 5.5(e)
and (ii) the cost approach for appraisals, which shall account for, among other
things, the decline in economic value of the System due to the passage of time.
Each Party agrees to cooperate with the other Party to take the necessary actions
and execute the necessary documents to effectuate such purchase and sale.
Following such purchase and sale,unless as specified elsewhere in this Agreement,
neither Party shall owe any further liability or obligation to the other Party.
3. Burnham Obligations
3.1 In addition to any other obligations explicitly set forth herein, Burnham (or its
agents, contractors, and subcontractors,which for the purposes of this section shall
be referred to as "Burnham") shall perform or comply with the following
obligations (each a "Surnham Obligation" and together the "Burnham
Obligations"):
(a) Construction A�reement. Burnham shall maintain in full force and effect
the Progressive Design Build Agreement and/or shall enter into any other
agreements with service providers necessary to design, develop and
construct the System. Burnham shall use commercially reasonable efforts
to have City named as a loss payee under(i)the Property Insurance required
under this Agreement, and (ii) performance or surety bonds under the
Progressive Design Build Agreement or any such similar agreements;
(b) Notice to Proceed.Commencing on the Effective Date,Burnham shall make
commercially reasonable efforts to conduct all required diligence, obtain
the Burnham Permits in accordance with Exhibit G, and issue a Notice to
Proceed ("NTP") for construction of the System by May 29, 2023. ("NTP
Date"). In all cases, Burnham shall issue its NTP within ninety (90)
calendar days of the NTP Date ("NTP Longstop Date"); provided,
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however, that the NTP Date and NTP Longstop Date will be extended on a
day-for-day basis upon the occurrence of any Force Majeure or due to any
City Caused Delay or Ecology Delay;
(i) If Burnham fails to issue the NTP on or before the NTP Longstop
Date each Party has the right, but not the obligation, to terminate
this Agreement upon ten(10)business days advance notice, with no
further liability owed or owing to the other Party; provided,
however, that if City seeks to terminate the Agreement under this
section:
(1) City must have obtained the City Permits at least sixty (60)
calendar days before the NTP Longstop Date and made the
rights and obligations of such City Permits reasonably
available to Burnham; and
(2) City has complied, or if compliance is not yet possible City
stands ready to comply, with all applicable City Obligations
as set forth in Section 4.1.
(c) Commercial Operation. Commencing on NTP, Burnham shall make
commercially reasonable efforts to cause the System to reach Commercial
Operation by December 31, 2024 ("COD"). In all cases, Burnham shall
cause the System to reach Commercial Operation by June 30, 2025 ("COD
Longstop Date"); provided, however, that the COD and COD Longstop
Date dates will be(x) extended on a day-for-day basis upon the occurrence
of any Force Majeure or due to any City Caused Delay or Ecology Delay,
(y) and extended per the conditions of Section 7.1(b)(iii). In no
circumstances shall any monies accrued but outstanding between the Parties
delay Commercial Operation or COD. Burnham shall notify City within ten
(10) business days subsequent to the System reaching COD, as confirmed
by an independent third-party engineer. At the end of the Term, the System
shall remain in Commercial Operation, but subject to City control, unless
the Parties agree otherwise;
(d) Services. Commencing on COD and throughout the Term, Burnham shall
own and operate the System and provide the City with the Services listed in
Exhibit B in a manner consistent with Prudent Industry Practices;
(e) Effluent Water. Commencing on COD and during the Term,Burnham shall
own and operate the System to discharge Effluent Water to City in
accordance with the specifications, terms, and conditions in Exhibit D and
consistent with Prudent Industry Practice;
(fl Burnham Permits. Commencing as of the Effective Date, Burnham shall
apply for, procure, and maintain throughout the Term, at its sole cost and
expense, all Permits reasonably required for the design, construction,
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operation, or maintenance of the System, including without limitation the
Burnham Permits set forth in Exhibit G, except for any City Permits
identified specifically on Exhibit G; and
(g) Cooperation. Commencing on the Effective Date, Burnham will cooperate
with the City in connection with (1) promptly obtaining any System
Pertnits; (2)promptly providing information necessary for the design,
construction, operation, or maintenance of the System as reasonably
requested by the City; and(3) any other information or effort as reasonably
requested from time to time by City to fulfill each Party's responsibilities
under this Agreement.
(h) Pass-Throu�h Costs. Burnham will make commercially reasonable efforts
throughout the Term of this Agreement to obtain prudent pricing for the
Pass-Through Costs at set forth in Exhibit F.
(i) Gross Wen Nitro�en Reduction Process Performance Guarantees.Burnham
will obtain performance guarantees for the Gross Wen Process (the"Gross
Wen Process Performance Guarantees"). To the extent circumstances
arise that entitle Burnham to pursue its rights, including without limitation
compensation, from the Gross Wen Process Performance Guarantees,
Burnham will use commercially reasonable efforts to first pursue the repair,
replacement, or modification of the Gross Wen Process under the Gross
Wen Process Performance Guarantees to meet the performance criteria. If
such repair, replacement, or modification is not possible, Burnham shall
pass through all liquidated damages received due to a breach of the Gross
Wen Process Performance Guarantee,net of collection costs, directly to the
City. In addition, Burnham shall match any liquidated damages paid to the
City under this clause on a dollar-for-dollar basis,up to a maximum of$1.67
million...
(j) Prevailin��. Burnham will satisfy the prevailing wage requirements in
RCW 39.12.020 for construction and operation of the System.
(k) Optional Performance Bond.2 At any time after the first anniversary of the
Effective Date, City may submit to Burnham a written notice for Burnham
to run a competitive bid process for the purposes of obtaining a Service
Contract Performance Bond. City and Burnham shall provide reasonable
cooperation in determining the key terms and conditions that such Service
Contract Performance Bond will include. Burnham shall have up to one
hundred eighty (180) days to solicit competitive bids from one or more
vendors and provide them to City. Burnham and City shall cooperate in
good faith to determine whether a Service Contract Performance Bond is
necessary and available, and if so, which vendor to select to provide such
2 [NTD: This was removed in last turn by S. Worley. Seems perhaps it was important to Eric or
some of the processors?]
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Service Contract Performance Bond. Should City require that Burnham
procure a Service Contract Performance Bond, all costs and fees associated
with obtaining and maintaining such Service Contract Performance Bond
shall be passed through to City consistent with Exhibit F.
3.2 Burnham's parent company, Burnham Pasco HoldCo LLC, a Delaware limited
liability company with offices at 1201 Wilson Blvd — 27th Floor, Arlington VA,
22209 ("Parent"), shall use best efforts to obtain and receive, directly ar indirectly
through one or more owners of equity issued by Parent in consideration for or
otherwise in respect of any U.S. federal income tax credit pursuant to section 48 of
the Internal Revenue Code of 1986, as amended and restated, that is available in
respect of that portion of the System that constitutes energy property as such term
is used in such section. Within one hundred eighty(180) days of receiving the cash
proceeds from the sale of any tax credit Parent ar assignee,as applicable,shall agree
with City on a payment schedule where City will receive credit over the length of
the Initial Term equal to, at City's option, either (i) 90% of such cash received for
the sale of federal tax credits, or(ii) $7,200 per month for each$1,000,000 of such
cash received for the sale of federal tax credits (rounded to the nearest million).
For the purposes of this Section 3.2 only, Parent shall be a third-party beneficiary under
this agreement and City shall have the right to enforce this Section 3.2 against Parent
directly. Except as set forth in this Section 3.2, Parent has no rights, obligations, or
liabilities and has made no representations and warranties under this Agreement.
Section 3.2 AGREED AND ACCEPTED TO:
BURNHAM SEV PASCO LLC CITY OF PASCO,WASHINGTON BURNHAM PASCO HOLDCO
LLC
By: By: By:
Name: Chris Tynan Name: Adam Lincoln Name: Chris Tynan
Title: CEO Title: City Manager Title: CEO
Date: Date: Date:
4. City Obligations
4.1 In addition to any other obligations set forth herein, including any obligations in
Exhibit C, City shall comply with the following obligations (each a "City
Obligation"and together the"City Obligations"):
(a) Site. No later than five (5) business days after the Effective Date (the"Site
Delivery Date"}, the City shall execute a lease with Burnham in the form
attached as Exhibit H granting Burnham a sufficient leasehold and all
appurtenant rights and privileges necessary for Burnham to construct,
operate, and maintain the System and perform the Services more
particularly described in Exhibit C (the"Site");
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(b) Facilitv Plan A�proval;Citv Permits No later than Apri115,2023,City shall
receive approval on the Facility Plan associated with the Project.Any delay
in receiving approval on the Facility Plan beyond April 15, 2023 will be an
"Ecology Delay;" provided, however, that Burnham in its reasonable
discretion may waive this City Obligation upon sufficient proof that
Ecology intends to approve the Facility Plan by May 5, 2023. City shall
maintain throughout the Term, at its sole cost and expense, all City Permits
as set forth in Exhibit G;
(c) Cooperation. Commencing on the Effective Date, the City will cooperate
with Burnham in connection with (1) financing the System, including
executing any additional approvals,estoppels,consents,or other documents
as reasonably requested with respect to this Agreement and obtaining title
insurance for the site lease contemplated in Exhibit H; (2) promptly
obtaining any System Permits; (3) promptly providing information
necessary for the design, construction, operation, or maintenance of the
System; and (4) any other information or effort as reasonably requested by
Burnham from time to time to fulfill each Party's responsibilities under the
Agreement;
(d) Influent Water. Commencing on COD and continuing throughout the Term,
at City's sole cost and expense City shall provide Burnham with Influent
Water from food and dairy processors in accordance with the specifications
in Exhibit C. If at any time Burnham becomes aware that Influent Water
delivered by the City or processors is Non-Conforming Influent Water,
Burnham may, in its sole discretion,bypass such Non-Conforming Influent
Water to the City-owned Storage Pond (as described in Exhibit A) and
promptly provide City with notice of such bypass and the reason for same;
provided, however, that Burnham's acceptance of Non-Conforming
Influent Water shall not relieve City of any responsibility or any costs,
damages,or liabilities associated with Non-Conforming Influent Water,and
by acceptance Burnham does not waive any other rights or remedies
associated with City's or processor's delivery of Non-Conforming Influent
Water.
(e) Pa ment. The City shall pay Burnham in accordance with Section 5; and
(fl Financin 7�, Cooperation. Commencing on the Effective Date, the City shall
cooperate with, and provide Burnham with information concerning, City's
water and sewer utility, including without limitation operational and
financial data consistent with and substantially similar to City disclosures
provided in connection with City's issuance of municipal bonds associated
with such utility. The City shall execute a continuing disclosure agreement
or certificate in connection with the Outstanding Debt that complies with
Rule 15c2-12(b)(5) adopted by the Securities and Exchange Commission
under the Securities Exchange Act of 1934, as the same may be amended
from time to time,related to its water and sewer utility, substantially similar
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to the disclosures the City provides in connection with its issuance of
municipal bonds in connection with such utility.
(g) Nitro�en Mana e� ment. To the extent the Discharge Permit's nitrogen or
associated constituent (e.g., nitrates) limits are exceeded resulting in any
Notices of Violations from Ecology or Claims from other third-parties and
all remedies of the Gross Wen Performance Guarantees have been provided,
City shall submit a request to Burnham under Section 5.4 for Modifications
to the System reasonably sufficient to bring nitrogen and associated
constituent levels within Discharge Permit limits, including without
limitation installing a moving bed biofilm reactor and any related
infrastructure.
4.2 If there are any changes in City's ability to comply with the City Obligations in
Exhibit C, any material change in circumstances at the Site, or a Change of Law
that necessitates a change to the System or the services to be provided by Burnham
in connection herewith(individually or collectively, "Changed Circumstances"),
and not as a result of any actions taken by Burnham that interfere with City's ability
to comply with the City Obligations, City shall be solely responsible for any
increased costs incurred by Burnham to operate the System due to such Changed
Circumstances. The Parties agree to negotiate any necessary Modifications in
accordance with Section 5.4 to accommodate any Changed Circumstances.
5. Payment for System and Services; Change Orders
5.1 Commencing on COD and continuing throughout the Term, City shall pay
Burnham the Adjusted Treatment Fee (as modified, if applicable), Pass-Through
Costs and any applicable adjustments as calculated and invoiced by Burnham on a
monthly basis in accordance with Exhibit F.
(a) Except in the case of Material Breach by Burnham, a Force Majeure lasting
more than six (6) months, or as explicitly specified in this Agreement,
commencing on Commercial Operation City shall pay to Burnham the
Adjusted Treatment Fee each month and through the end of the Term
notwithstanding any failure by City to deliver Influent Water or failure or
inability of Burnham to accept Influent Water or deliver Effluent Water.
(b) If the System is able to accommodate Darigold Operations at any time
before the COD Longstop, City shall pay to Burnham 30% of the Adjusted
Treatment Fee each month until the System reaches Commercial Operation,
after which City shall pay Burnham in accordance with Section 5.1(a).
(c) The City acknowledges, covenants, represents, and warrants that all
payments made by the City to Burnham shall be deemed operations and
maintenance costs of the water/sewer utility pursuant to the Pasco
Municipal Code, Section 13.10.010.
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5.2 Within ten(10)business days after the end of each month after COD,Burnham will
issue to City an invoice in accordance with Exhibit F for the Adjusted Treatment
Fee (as modified, if applicable), Pass-Through Costs, and any applicable
adjustments billed in the immediately preceding month along with any
documentation reasonably necessary to support amounts due by the City. The City
shall pay each Burnham invoice within thirty (30) calendar days after receipt;
provided, however, that City may, in good faith, dispute the correctness of any
invoice, Adjusted Treatment Fee, Pass-Through Costs, and any applicable
adjustments or adjust any invoice for any arithmetic or computational error upon
written notice to Burnham, stating the basis for the dispute or adjustment;provided
further, however, that City shall remain obligated to pay all amounts when due
except for those amounts disputed due to arithmetic or computational errors. To the
extent any disputed amounts are resolved in the City's favor, such previously
disputed amounts will be credited or invoiced to City on the following month's
invoice from Burnham. Payment will be made by check, cash or electronic funds
transfer, or by another mutually agreeable method(s),to the account determined by
Burnham.
5.3 If City fails to pay any amount due to Burnham under this Agreement within five
(5) business days subsequent to the date such amount was due, then such unpaid
amount shall bear interest from the due date until paid in full at the rate of twelve
percent (12%) per annum, or, if less, the highest rate permitted by law ("Late
Payment Rate"). If the due date of any payment falls on a Sunday or bank holiday,
the next business day following such date shall be the last day on which payment
can be made without assessment of interest and a late fee.
5.4 At any time during the Term, City may request additional services from Burnham
or request any alterations, additions, omissions, modifications, or changes in the
scope, schedule, sequence, methods, or performance of the System or Services
(collectively, "Modifications").Burnham agrees to reasonably cooperate with City
to evaluate and implement any reasonable Modifications proposed by City;
provided, however, that the Parties must agree to any such Modifications using the
following process:
(a) City shall submit a request for additional services in writing to Burnham;
(b) Burnham shall submit a written change order to City setting forth the
Modifications and expected costs of such Modifications;
(c) City shall confirm its agreement to such Modifications and to pay all costs
associated with such Modifications, if any, by executing such change order
and returning it to Burnham;
(d} Following receipt of the City's executed change order, Burnham shall
modify Exhibit F to reflect the costs of the agreed upon Modifications; and
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(e) Any change order evidencing any such Modifications and the modified
Exhibit F will become a part of this Agreement and incorporated by
reference.
(fl Any disputes over a change order or any associated Modification will be
handled in accordance with the dispute resolution procedures in Section 15.
5.5 Cit O tion to A uire S stem at Fair Market Value.At any time after the Effective
Date, the City shall have an option to purchase the System at Fair Market Value
consistent with the requirements of RCW 70A.140.040; provided, FMV shall be
determined according to this Agreement Section 5.5.
(a) The City shall exercise its option to purchase the System using the following
procedure:
(i) Following City Council authorization, the City shall send Burnham
notice of City's intention to acquire the System for FMV together
with an appraisal of FMV prepared by an independent valuation
consultant experienced in the valuation of public utility systems.
The consultant shall use the methodology as described in 5.5(b)
through Section 5.5(d).
(ii) Within ninety(90) days of the notice in Section 5.5(a)(i), City shall
finalize a plan with Lender(s) for City to either:
(1) assume all Outstanding Debt; or
(2) pay off of all Outstanding Debt,including without limitation
paying any associated breakage fees or costs associated with
such Outstanding Debt.
In either case, City shall share such plan with Burnham promptly after such plan is finalized.
(iii) In the event Burnham disagees with FMV as determined by the
City-engaged consultant, within ninety (90) days of the notice in
Section 5.5(a)(i), Burnham shall engage a nationally known and
experienced valuation consultant to calculate FMV for the System,
using the methodology as described in Section 5.5(a)(iv).
(iv) Within one hundred eighty (180) days of the notice in Section
5.5(a)(i), Burnham shall deliver to City a report from the valuation
consultant calculating FMV for the System. City shall have thirty
(30) days to review the valuation report and agree on the FMV. If
the FMV valuations are within ten percent(10%)of each other,then
the FMV shall be set at the average of the two valuation reports. If
the valuation reports are more than ten percent 10% apart, and the
Parties are unable to agree on a path forward, then the Parties shall
mutually select and share the costs of a third third-party valuation
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506528698.4
consultant. The third third-party valuation consultant shall be
provided both previous valuation reports. The third valuation
consultant shall then conduct a FMV valuation and issue an opinion
of FMV within thirty(30) days of being retained. That opinion shall
be binding and shall set the FMV.
(v) Within one hundred eighty(180)days of agreeing on or determining
FMV, City and Burnham shall execute all necessary and customary
documents to transfer the System to City in exchange for Burnham
receiving FMV.
(vi) The City may withdraw its notice of intention to purchase the
System for FMV at any time and for any reason. In that case, City
may not exercise its option to purchase the System for FMV for one
(1)year, starting on the date of withdrawal.
(b) Whether determined by Burnham, City, or any valuation consultant, FMV
shall be determined using the net present value method of valuation
considering all expected revenue and expenses over the life of the System,
including all revenue expected to be earned over the life of this Agreement:
(i) If the City chooses to assume the Outstanding Debt,the valuation of
Burnham's equity interest will account for all future equity
distributions (including without limitation all costs, expenses, and
debt service under the Outstanding Debt) and these equity
distributions will be discounted at the City's then-current cost of
capital.
(ii) If the City chooses to pay off the Outstanding Debt, the amount
necessary to pay off the Outstanding Debt (including, without
limitation, all associated breakage fees and costs) will be added to
the equity value calculation in Section 5.5(b)(i).
(c) Further, the FMV valuation should account for each of the following, in
addition to any special considerations in Section 5.5(d):
(i) The amount that a willing and able buyer would offer, and a willing
and able seller would accept,for the purchase and sale of Burnham's
interest in the System, in an arm's length transaction, assuming:
(1) Neither party is under economic compulsion or has special
bargaining power;
(2) the buyer possesses all information in the possession of City
relating to the System, its condition, and the revenues and
expenses of Burnham;
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(3) The event or circumstance that requires determination of fair
market value had not occurred and accordingly this
Agreement and Burnham's ownership of the System would
remain in effect and Burnham would remain a going concern
for the balance of the Initial Term;
(4) There exists no prior, known or reasonably foreseeable
unusual temporary event or circumstance specific to the
System (e.g., damage, operating performance disruptions or
destruction) or to market and economic conditions, positive
or negative. If such event or circumstance consists of
damage or destruction, FMV will exclude (A) the estimated
cost to repair and replace the damage or destruction and (B)
the loss of revenues during the estimated time to repair and
replace the damage or destruction, and Burnham will retain
the right to insurance coverage for loss occasioned thereby;
(5) There would occur no future unusual temporary event or
circumstance specific to the System (e.g., damage or
destruction) or to market and economic conditions, positive
or negative,not known or reasonably foreseeable at the time
of valuation;
(6) There would occur no future Change of Law not known or
reasonably foreseeable at the time of valuation;
(7) There exists no adverse effect from a City Material Breach
or Non-Material Breach, and both Parties would generally
continue to perform their respective obligations under this
Agreement for the remainder of the Initial Term absent early
termination; and
(8) Short-term impairments to the value of the System such as
temporary damage or operating performance shortfalls are
reasonably rectified if within Burnham's responsibility
under the Agreement.
(ii) Reimbursement to Burnham of any reasonable and documented
costs associated with demobilizing operations at the System.
(iii) Reimbursement to Burnham of any reasonable and documented
costs associated with demobilizing operations, terminating the site
lease contemplated in Section 4.1(a), or terminating contracts with
third-party contractors (including affiliates), including without
limitation any costs and liabilities associated with Burnham's non-
contractual liabilities and indemnity obligations.
12
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(iv) Any reimbursement to Burnham under Sections 5.5(c)(ii) and
5.5(c)(iii) shall be the full and agreed reimbursement available to
Burnham under Chapter 8.26 RCW for any relocation assistance.
(v) Reimbursement to Burnham of any incremental tax liabilities
incurred by Burnham as a result of the exercise of City's option.
(d) Timing of City's Exercise of Option and Calculation of FMV.
(i) If Burnham or City must determine FMV before COD, then it shall
be assumed that COD will occur on or before the COD Longstop
Date and that the System shall be operational through the Initial
Term.
(1) In that case, FMV shall account for the capital costs
previously expended and expected capital costs to achieve
substantial completion and COD under the then-current
construction schedule. If City and Burnham disagree on the
cost to complete estimates, Burnham may choose to
complete the System before selling the System to City, with
the City's cost of completion not contemplated in FMV
determination.
(ii) If Burnham or City must determine FMV before COD or within the
first three (3) years of the Initial Term, in addition to the
considerations in Section 5.5(b) through Section 5.5(d)(i), FMV
must assume the System will achieve full operational capacity as
contemplated by the Agreement.
(iii) If Burnham or the City must determine FMV before Burnham or
Parent receives any tax credit contemplated in Section 3.2,the FMV
valuation will include the expected value of any tax credit
reasonably expected to be received over the life of the Agreement.
(e) If the City exercises its right to purchase the System at FMV, City shall be
required to assume the terms of the RNG Offtake Agreement and RNG
Interconnection Agreement, or enter into replacement agreements on
materially similar terms and conditions and for the same duration.
6. Non-Material and Material Breaches of this Agreement
6.1 Any breach under this Agreement by either Party that is not a Material Breach shall
be a"Non-Material Breach."
b.2 The following circumstances shall constitute a "Material Breach" by the
applicable non-performing Party:
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506528698.4
(a) Burnham's failure to reach Commercial Operation within one hundred
eighty (180) calendar days of the COD Longstop Date;
(b) The City's failure to make any payment required under this Agreement and
invoiced by Burnham in accordance with Section 5 and Exhibit F;provided,
however, that Burnham shall provide written notice of such failure to the
City and the City shall have thirty (30) days to submit payment in full
following such notice;
(c) Burnham's failure to operate the System or perform the Services consistent
with Prudent Industry Practices that results in an Effluent Water Failure
lasting more than twelve (12) months;provided, however, that so long as
Burnham has provided the City with a written plan, consistent with Prudent
Industry Practices and approved by an independent engineer, for resolving
such Effluent Water Failure, such failure shall not be a Material Breach;
(d) Notwithstanding the provisions in Section 6.2(c) above, Burnham's failure
to operate the System or perform the Services consistent with Prudent
Industry Practices that results in an Effluent Water Failure lasting more than
twenty-four(24) consecutive months;
(e) In respect of either Party,the other Party's material misrepresentation,fraud
or intentional misconduct in connection with this Agreement;
(� In respect of either Party, an Insolvency Event for that Party;
7. Remedies; Cross-Defaults
7.1 Remedies for Non-Material Breaches of Certain Burnham Obligations.
(a) Burnham's failure or inability to meet the Effluent Water specifications
listed in Exhibit D ("Effluent Water Failure") shall be a Non-Material
Breach of this Agreement, with the liability, costs, and responsibility for
remedying an Effluent Water Failure to be determined as follows:
(i) Upon either Party's determination that an Effluent Water Failure has
occurred,such Party shall provide a reasonably detailed notice to the
other Party explaining the circumstances of such Effluent Water
Failure no later than ten(10)days of such determination.The Parties
will immediately cooperate and take steps to remedy such Effluent
Water Failure consistent with Section 7.6.
(ii) Burnham will be responsible and have sole discretion for
performing all work on the System reasonably required to remedy
the Effluent Water Failure and bear all liabilities associated with
such work. The City will bear all costs associated with remedying
the Effluent Water Failure except as noted in 7.1(c), with any costs
incurred separately by Burnham invoiced to City as Pass—Through
14
506528698.4
Costs or, if necessary, added to Exhibit F using the change order
process in Sections 5.4(a) through 5.4(�.
(iii) Notwithstanding the above, if Burnham's failure to operate the
System or perform the Services consistent with Prudent Industry
Practices was the primary cause of the Effluent Water Failure,
Burnham shall bear all costs and liabilities associated with
remedying the Effluent Water Failure. Notwithstanding the above,
if the Effluent Water Failure was caused by City's delivery of Non-
Conforming Influent Water, such remedy shall be determined by
Section 7.2(c).
(iv) If Burnham fails to deliver Effluent Water in accordance with
Exhibit D 3.1(e)or delivers Non-Conforming Effluent Water, City
shall promptly notify Burnham of such failure and Burnham shall
be solely responsible for any and all losses, damages to City
Facilities, or additional costs incurred by City that were caused by
Burnham's failure or delivery of Non-Conforming Effluent Water,
including without limitation any additional costs of treating,
handling, storing, and disposing of such Non-Conforming Effluent
Water or discharging Non-Conforming Effluent Water to the City-
Owned Storage Pond.
(b) Burnham's failure to reach Commercial Operation by COD shall be a Non-
Material Breach of this Agreement, with the liability, costs, and
responsibility for such failure to be determined as follows:
(i) if Burnham fails to reach Commercial Operation by the COD,
Burnham shall pay to City the COD Delay Damages for each day
following the COD until Commercial Operation is reached or the
COD Longstop Date is reached, whichever is earlier;
(ii) if Burnham fails to reach Commercial Operation by the COD
Longstop Date,Burnham shall pay to City the COD Longstop Delay
Damages for each day following the COD Longstop Date until
Commercial Operation is reached or this Agreement is otherwise
terminated in accordance with Section 6.2(a) and Section 7.4.
(iii) Notwithstanding anything else in this Agreement, if Darigold
Operations are achieved before COD, then COD shall be extended
to March 31, 2025 and the COD Longstop Date shall be extended to
September 30, 2025. If Darigold Operations are achieved between
COD and the COD Longstop Date, then the COD Longstop Date
shall be extended to September 30, 2025.
(c) In the event of any damage to the City's Facilities caused by Burnham's
acts or omissions or breach of this Agreement, Burnham shall remain
15
506528698.4
obligated to perform all of its obligations under this Agreement and
Burnham shall reimburse City for the repair and restoration of the City's
Facilities to the same condition as existed immediately before such damage
occurred. City shall promptly notify Burnham of any damage to the City's
Facilities caused by City's acts or omissions.157.3
7.2 Remedies for Non-Material Breaches of Certain City Obligations.
(a) If City fails to timely deliver the Site by the Site Delivery Date in
accordance with Section 4.1(a), unless excused by a Force Majeure, such
failure shall be a City Caused Delay.
(b) If City fails to timely procure the Facility Plan approval under Section
4.1(b), unless excused by a Force Majeure, such failure shall be a City
Caused Delay.
(c) If the City fails to timely comply with the City Obligations in Sections
4.1(c)through 4.1(�, and such failure results in a Proj ect delay, such failure
shall be a City Caused Delay.
(d) If City fails to deliver Influent Water in accordance with Exhibit C and
Section 4.1(d) or delivers Non-Conforming Influent Water, Burnham shall
promptly notify City of such failure and City shall be solely responsible for
any and all losses, damage to the System, or additional costs incurred by
Burnham that were caused by City's failure or delivery of Non-Conforming
Influent Water,including without limitation any additional costs of treating,
handling, storing,and disposing of such Non-Conforming Influent Water or
discharging Non-Conforming Influent Water to the City-Owned Storage
Pond.
(e) In the event of any damage to the System caused by City's acts or omissions
or breach of this Agreement, City shall remain obligated to perform all of
its obligations under this Agreement and City shall reimburse Burnham for
the repair and restoration of the System to the same condition as existed
immediately before such damage occurred. Burnham shall promptly notify
City of any damage to the System caused by City's acts or omissions.
7.3 Remedies for Other Non-Material Breach by Either Party. As promptly as may
be reasonably practicable,and unless specified elsewhere in this Agreement no later
than thirty (30) business days after becoming aware of a Non-Material Breach,
including without limitation Non-Material Breaches specified in Section 7.1 and
Section 7.2, the performing Party shall provide written notice of the Non-Material
Breach to the non-performing Party ("Claim Notice"}. The failure by the
performing Party to give such prompt notice shall not constitute a waiver except to
the extent, if any, that the non-performing Party is materially prejudiced by such
failure. Except as specified elsewhere in this Agreement, any Claim Notice sent by
16
506528698.4
the performing Party to the non-performing Party shall set forth in reasonable detail,
to the extent then known or available:
(a) the facts and circumstances giving rise to such Non-Material Breach,
including all relevant supporting documentation;
(b) the nature of the losses suffered or incurred or expected to be suffered or
incurred by the performing Party;
(c) a reference to the provisions of this Agreement in respect of which such
losses have been suffered or incurred or are expected to be suffered or
incurred;
(d) the actual amount of losses actually suffered or incurred and, to the extent
the losses have not yet been suffered or incurred, a good faith estimate (to
the extent reasonably possible, based on the information then known or
available) of the amount of losses that could be expected to be suffered or
incurred;
(e) a reasonably detailed demand for the non-performing Party to take such
actions or pay the performing Party any amounts due or reasonably expected
to be due to cure the Non-Material Breach (the"Remedy"); and
(fl such other information as may be necessary for the non-performing Party to
determine whether any limitations under this Agreement may apply.
(g) Upon receiving any Claim Notice, the non-performing Party shall perform
or pay the Remedy, as applicable, as soon as reasonably practicable,but in
any event no later than thirty (30) calendar days. If such Remedy is not
reasonably capable of being implemented within thirty (30) calendar days,
the Parties shall agree on a longer time to implement the Remedy. If the
non-performing Party refuses to comply with the Claim Notice, any
disagreements will be resolved by the dispute resolution procedures in
Section 15.
(h) The Parties agree that a Non-Material Breach will not result in a right for
either Party to terminate this Agreement
7.4 Remedies for Material Breach of Either Party
(a) Material Breach bv Burnham. If Burnham is in Material Breach of this
Agreement, the City may, but is not required to, terminate this Agreement
by providing Burnham sixty(60)days advance written notice of termination
due to the Material Breach, during which sixty (60) day period Burnham
shall have the opportunity to cure such Material Breach. If Burnham fails to
" cure and City exercises its termination right, prior to such termination, the
City shall elect one of the following:
17
506528698.4
(i) Assumption of Financin�. Subject to Lender(s)' consent, City shall
assume the Services under this Agreement and Burnham's
obligation to pay the Outstanding Debt pursuant to an agreement
between the City and the Lender(s); or
(ii) Ri�Pub of First Refusal. Before termination, Lender(s)may choose to
liquidate System assets, sell the System at fair market value, or
continue to operate the System pursuant to Section 16.5.If Lender(s)
choose to liquidate System assets or sell the System, the City shall
have a right of first refusal to purchase the System at Fair Market
Value as determined in Section 5.5(b)through 5.5(d).
The City and Burnham shall execute any agreements or documents
necessary to effectuate the City's election of either of the above. If the
City assumes the Services under this Agreement, City covenants that it
will assume the terms of the RNG Offtake Agreement and RNG
Interconnection Agreement, or enter into replacement agreements on
materially similar terms and conditions and for the same duration.
(b) Material Breach by City. If City is in Material Breach of this Agreement,
Burnham may,but is not required to,terminate this Agreement by providing
City sixty (60) days advance written notice of termination due to the
Material Breach, during which sixty (60) day period City shall have the
opportunity to cure such Material Breach. If City fails to cure and Burnham
exercises its termination right, City shall owe to Burnham as direct
damages, and not as a penalty, the undiscounted value of the City's
payments to Burnham for the remainder of the Term (excluding Pass-
Through Costs), as reasonably calculated by the Parties using their
respective third-party consultants, in accordance with Exhibit F, and any
breakage or early termination fees arising from the termination of the RNG
Offtake Agreement and RNG Interconnection Agreement.
7.5 Termination of City Lease. If the site lease contemplated in Section 4.1(a) and
attached as Exhibit H terminates,this Agreement shall terminate concurrently with
the termination of the site lease. If the site lease terminates due to Burnham's
material default under the site lease, Burnham shall be considered in Material
Breach of this Agreement, with all applicable remedies available to the City under
Section 7.4(a). If the site lease terminates due to City's material default under the
site lease, City shall be considered ii� Material Breach of this Agreement, with all
applicable remedies available to Burnham under Section 7.4(b).
7.6 Liquidated Damages. The Parties acknowledge and agree that with respect to the
damages payable under Section 7.1(b), it would be impracticable to determine
accurately the extent of the loss the City would have in such case. Therefore, it is
in the Parties' interests to establish certainty as to the damages payable. Such
damages are in the nature of liquidated damages, do not constitute a penalty, and
18
506528698.4
are a genuine and reasonable pre-estimate of the damages likely to be sustained by
the City in such case.
7.7 Good Faith Efforts. In the case of any actual or anticipated breach of this
Agreement, each Party agrees to use good faith efforts to take such commercially
reasonable actions as necessary to expeditiously resolve the underlying
circumstances including without limitation cooperating with the other Party to
obtain any new or modified System Permits or other approvals necessary or
appropriate in connection with the ownership, occupation; possession or use of the
System;provided, however, that in all circumstances neither Party shall be required
or be deemed to have waived any defenses it may have under any applicable law or
contract.
8. Title, Ownership, and Risk of Loss; Transfer of Environmental Attributes
8.1 City acknowledges that the System at all times during the Term of this Agreement
shall be owned by Burnham and will at all times remain Burnham's personal
property (and not fixtures), notwithstanding that such System or any part of such
System may become attached to the Site or any real property. City shall take no
action that is inconsistent with Burnham's ownership of and title to the System and
no provision of this Agreement shall be interpreted as giving City any right to
operate the System. Burnham may mark or identify the System with labels, plates
or other markings showing ownership. All markings and identifications of the
System shall include "in partnership with the City of Pasco". Neither City nor
Burnham shall not remove any such identifying marks.
8.2 The Parties agree that the transfer of custody of Influent Water to Burnham as
contemplated hereunder shall constitute a bailment and that no sale of personal
property, waste, or transfer of title to the Influent Water has occurred. City •
understands and agrees that, during the period of bailment, the Influent Water will
be processed and thereafter will be delivered as Effluent Water in a different form
than which it was delivered to Burnham.
8.3 Commencing on COD and continuing until the conveyance of the System to City
that will occur at the Term of this Agreement, City assumes the sole risk of
condemnation of City's Site and any adverse effects arising from such
condemnation.
8.4 City agrees to transfer all title and interest to all carbon credits, greenhouse gas
offsets, green tags, renewable energy credits, production tax credits, allowances or
offsets for air emissions, "M-RETs," "RINs," "LCFS" credits, or any other local,
state, regional, federal, or international environmental programs providing
incentives or credits, or any other environmental attributes, however entitled,
associated with biogas, RNG, renewable transportation fuels, or other products
generated by the anaerobic digestion,processing of organic materials,or otherwise
from the Influent Water or operation of the System (collectively, "Environmental
Attributes"), including without limitation the ability of the Influent Water, or any
19
506528698.4
portion thereof, to produce RNG and any credits, grants, or incentive payments
derived therefrom, to Burnham. Such title and interest transferred from City to
Burnham shall include all rights to generate, manage, advertise, claim, promote,
and market for sale such Environmental Attributes and RNG. The City shall retain
the benefit of all environmental and commercial rights associated with sale of algae.
To the extent any emission or other environmental credits, certificates, or similar
benefits exist that are not necessary for the production and sale of RNG, and the
allocation of such benefits cannot be readily determined pursuant to this Section
8.4, the benefits shall be shared equally between City and Burnham.
8.5 The City agrees to reasonably assist and cooperate with Burnham in securing
Environmental Attributes, and otherwise as may be reasonably necessary to carry
out the purposes of this Agreement, including from time to time submitting
documentation or certifications regarding the Influent Water or the System.
9. Representations and Warranties
9.1 Each Party represents and warrants that it has full power and authority under the
laws of the State of Washington to enter into this Agreement.
9.2 DISCLAIMER OF REPRESENTATIONS AND WARRANTIES. EXCEPT AS
EXPRESSLY SET FORTH IN THIS AGREEMENT,EACH PARTY MAKES NO
WARRANTY OR REPRESENTATION OF ANY KIND WHATSOEVER,
EXPRESS OR IMPLIED. ALL IMPLIED WARRANTIES INCLUDING,
WITHOUT LIMITATION, WARRANTIES OF MERCHANTABILITY AND
FITNESS FOR A PARTICULAR PURPOSE ARE HEREBY DISCLAIMED.
10. Indemnification
10.1 Indemnification b Burnham. Burnham agrees that it will indemnify, defend, and
hold harmless the City, and its employees, directors, officers, managers, members,
and subcontractors (as applicable in the circumstances), (the "City Indemnified
Party") from, against, and in all respect of all liabilities,losses,lawsuits,penalties,
claims, settlement payments, costs and expenses, interest, awards, judgments,
damages,fines or demands(including the costs,expenses and reasonable attorneys'
fees on account thereo fl (collectively "Claims") incurred by the City Indemnified
Party to third parties arising out of or in connection with (or alleged to arise out of
or be in connection with):
(a) any personal injury to,or death of, any person,or loss or damage to property
arising out of or in connection with the negligence or willful misconduct of
Burnham or any of its officers, members, employees, agents,
representatives or subcontractors in connection with its obligations or rights
under this Agreement;
(b) any Burnham Material Breach or Burnham Non-Material Breach;
20
506528698.4
(c) Burnham's acts or omissions under this Agreement that result in an Effluent
Water Failure and are the primary cause of a violation of the effluent
limitations in the City's Waste Discharge Permit, through no fault or
contributory negligence of the City or any third party;
(d) any Burnham non-compliance with applicable law, including
Environmental Laws;
(e) any nuisance condition caused by Burnham's acts or omissions under this
Agreement; and
(fl any other matter identified as requiring indemnification by Burnham under
this Agreement.
(g) Burnham shall not, however, be required to reimburse or indemnify any
City Indemnified Party for any Claim to the extent any Claim arises from:
(i) any City Material Breach or City Non-Material Breach;
(ii) the negligence or willful misconduct of any City Indemnified Party;
(iii) the City's acts or omissions that cause a violation of the City's
Discharge Permit (including the City's supply of Non-Conforming
Influent Water or failure to otherwise supply Influent Water in
accordance with Exhibit C);
(iv) any Abnormal Substances;
(v) any Force Majeure event;
(vi) any act or omission of any City Indemnified Party responsible for or
contributing to the Claim; or
(vii) any matter for which the risk has been specifically allocated to the
City hereunder.
A City Indemnified Party shall promptly notify Burnham of the assertion of any claim against it
for which it is entitled to be indemnified hereunder, shall give Burnham the opportunity to defend
such claim, and shall not settle the claim without the approval of Burnham which approval shall
be in Burnham's sole discretion. These indemnification provisions are for the protection of the
City Indemnified Parties only and shall not establish, of themselves, any liability to third parties.
The provisions of this subsection 10.1 shall survive termination of this Agreement.
10.2 Indemnification b the Cit .
(a) The City agrees that to the extent permitted by law, it will indemnify,
defend, and hold harmless Burnham, and its employees, directors, officers,
managers, members, shareholders, subsidiaries, and subcontractors (as
21
506528698.4
applicable in the circumstances), (the "Burnham Indemnified Parties")
from, against, and in all respect of all Claims incurred by the Burnham
Indemnified Party to third parties arising out of or in connection with (or
alleged to arise out of or be in connection with):
(i) any personal injury to, or death of, any person, or loss or damage to
property arising out of the negligence or willful misconduct of City
or any of its officers, members, employees, agents, representatives
or subcontractors in connection with its obligations or rights under
this Agreement,
(ii) any City Material Breach or City Non-Material Breach;
(iii) the City's acts or omissions that cause a violation of the City's
Discharge Permit (including the City's supply of Non-Conforming
Influent Water or failure to otherwise supply Influent Water in
accordance with Exhibit C or any other failure attributable to City
Facilities), through no fault or contributory negligence of Burnham
or any third party;
(iv) any violation of the fixed dissolved solids effluent limit in the
Discharge Permit;
(v) any violation of the nitrogen and associated constituent (e.g.,
nitrates) effluent limits in the Discharge Permit;
(vi) any Abnormal Substances;
(vii) any soil or groundwater contamination caused by the City's
application of Effluent Water to the designated land treatment site
via spray irrigation, tl�rough no fault or contributory negligence of
Burnham or any third party;
(viii) any environmental defect on, under or in the Site on or before the
Effective Date of this Agreement or that otherwise arise out of or
relate to the City's activities prior to the Effective Date of this
Agreement;
(ix) any City non-compliance with applicable law, including
Environmental Laws;
(x) any nuisance condition caused by the City's acts or omissions under
this Ageement; and
(xi) any other matter identified as requiring indemnification by City
under this Agreement.
22
506528698.4
(b) The City shall not, however, be required to reimburse or indemnify any
Burnham Indemnified Party for any Claim to the extent any such Claim is
due to
(i) any Burnham Material Breach or Burnham Non-Material Breach;
(ii) the negligence or willful misconduct of any Burnham Indemnified
Party;
(iii) Burnham's acts or omissions under this Agreement that result in an
Effluent Water Failure and are the primary cause of a violation of
the effluent limitations in the City's Waste Discharge Permit;
provided, however, that the City shall continue to indemnify
Burnham for any and all violations of effluent limitations of fixed
dissolved solids and nitrogen and associated constituent {e.g.,
nitrates);
(iv) any Force Majeure event;
(v) any act or omission of any Burnham Indemnified Party responsible
for or contributing to the Claim; or
(vi) any matter for which the risk has been specifically allocated to
Burnham hereunder.
A Burnham Indemnified Party shall promptly notify the City of the assertion of any claim
against it for which it is entitled to be indemnified hereunder, shall give the City the
opportunity to defend such claim, and shall not settle the claim without the approval of the
City which approval shall be in the City's sole discretion.These indemnification provisions
are for the protection of the Burnham Indemnified Parties only and shall not establish, of
themselves, any liability to third parties. The provisions of this subsection 10.2 shall
survive termination of this Agreement.
10.3 Title 51, Revised Code of Washington Waiver. For the purposes of RCW
4.24.115, any Claims by either Indemnified Party where there exists concurrent
negligence of(i) the indemnitee or the indemnitee's agents or employees, and (ii)
the indemnitor or the indemnitor's agents or employees, such Claims are valid and
enforceable only to the extent of the indemnitor's negligence, except as specifically
identified elsewhere in this Agreement. For purposes of the indemnities provided
pursuant to this Section 10, each Party specifically and expressly waives any
immunity that may be granted it under the Washington State Industrial Insurance
Act, Title 51 RCW, and all other applicable Industrial Insurance/Worker's
Compensation Acts or their equivalent. Further, the indemnification obligations
under this Agreement shall not be limited in any way by any limitations on the
amount or type of damages, compensation, or benefits payable to or for any third
party under Worker's Compensation Acts, Disability Benefits Acts, or other
Employee Benefit Acts; provided, this waiver of immunity under this Article
extends only to claims against one by the other Party hereto, and does not include,
23
506528698.4
or extend to, any claims by either Party's employees directly against that Party. By
initialing below, each Party certifies that the waiver of immunity contained in this
Section 10.3 was mutually negotiated.
BURNHAM SEV PASCO LLC CITY OF PASCO,WASHINGTON
By: By:
11. Limitation of Liability
IN NO EVENT SHALL EITHER PARTY HAVE ANY LIABILITY UNDER THIS
AGREEMENT OR ANY INDEMNITY OFFERED THEREUNDER FOR ANY SPECIAL,
PUNITIVE, EXEMPLARY, SPECULATIVE, INDIRECT, REMOTE OR CONSEQUENTIAL
DAMAGES,DAMAGES FOR LOST PROFITS OR DAMAGES BASED ON A MULTIPLE OF
EARNINGS OR DIMINUTION IN VALUE OR ANY SIMILAR DAMAGES.
12. Insurance
12.1 Burnham shall maintain, and require each of its subcontractors to maintain, during
the construction period before COD, and after COD, in full force and effect for the
duration of the Term, insurance with the following coverages and limits:
Covera�;e Policv Limits
(a) Warker's Compensation Statutory requirements
(b) Employer's Liability $2,000,000 each occurrence
(c) Comprehensive General Liability, $2,000,000 each occurrence
including bodily injury and property
damage
(d) Auto Liability including bodily injury $1,000,000 each occurrence
and property damage
(e) Property Insurance(inclusive of Replacement Cost
Builders Risk during the construction
period before COD, and Physical
Damage Coverage after COD)
12.2 Burnham shall provide certificates of insurance evidencing such coverage at such
times as City may reasonably from time-to-time request.
24
506528698.4
12.3 City shall maintain in full force and effect at all times during the term of this
Agreement insurance with the coverages and limits set forth below:
Covera�e Policv Limits
(a) Worker's Compensation Statutory requirements
(b) Employer's Liability $1,000,000 each occurrence
(c) Comprehensive General Liability, $1,000,000 each occurrence
including bodily injury and property
damage
(d) Auto Liability, including bodily injury $1,000,000 each occurrence
and property damage
12.4 City shall provide certificates of insurance evidencing such coverage at such times
as Burnham may from time to time request. All coverage required by this
Agreement shall include a waiver of subrogation.
12.5 The Parties shall meet within sixty(60)days of the fifth(Sth),tenth(l Oth),fifteenth
(15th), twentieth(20th), and twenty-fifth(25th) anniversaries of the Effective Date
to review the insurance requirements to ensure sufficient coverage under this
Agreement. To the extent a Party believes that any insurance coverage is
insufficient, the Parties agree to negotiate in good faith to determines appropriate
insurance coverage and, if necessary, will modify this Agreement accordingly.
13. Force Majeure
13.1 In the event either Party is rendered unable, wholly or in part, to carry out its
respective obligations under this Agreement, except for any obligation to make
payment, due to circumstances beyond its reasonable control, including, without
limitation, strike,riot,lockouts or other disturbances, flood,natural disaster, acts of
God, war or civil insurrection, an epidemic, pandemic, quarantine, national
emergency or other unforeseeable circumstances beyond its reasonable control (a
"Force Majeure"), then written notice setting out the reason for non-performance
shall be given to the other Party by the Party claiming Force Majeure promptly
following discovery thereof. Upon receipt of such notice, the obligations of the
affected Party shall be suspended during the period of the Force Majeure and any
deadline or date certain for performance shall be extended by a period equal to the
period of the Force Majeure. Every reasonable effort shall be made by the Parties
to avoid delay and limit any period during which performance under this
Agreement might be suspended.
14. Confidentiality
14.1 Except as set forth herein, (i) neither Party will disclose Confidential Information
of the other Party to any third party, and (ii) each Party will use the other Party's
Confidential Information only for purposes of the transactions contemplated by this
25
506528698.4
Agreement; provided, however, that a Party in possession of the other Party's
Confidential Information may disclose Confidential Information as required to
comply with orders of governmental entities that have jurisdiction over it or as
otherwise required by law.
14.2 Each Party agrees to (i) take reasonable steps to protect the other Party's
Confidential Information (which steps will be required to be at least as protective
as those that the receiving Party takes to protect its own Confidential Information),
(ii) notify the other Party promptly upon discovery of any unauthorized use or
disclosure of Confidential Information; and (iii) cooperate with the other Party to
help regain control of any Confidential Information that is the subject of any such
unauthorized use or disclosure and prevent further unauthorized use or disclosure
of such Confidential Information.
14.3 Each Party may disclose the other Party's Confidential Information to its
subcontractors,agents,legal counsel,accountants,consultants,financing parties,or
representatives to the extent necessary in furtherance of this Agreement, and then
only on a "need to know" basis in connection with the transactions contemplated
hereby and on a confidential basis.
14.4 This Agreement shall be considered a public document and will be available for
inspection and copying in accordance with the Public Records Act, chapter 42.56
of the Revised Code of Washington(the"Act"). If Burnham considers any record,
in whole or in part, provided to City under this Agreement, whether in electronic
or hard copy form, to be protected from disclosure under the Act, Burnham shall
make reasonable efforts to clearly identify each such record with words such as
"CONFIDENTIAL,""PROPRIETARY"or`BUSINESS SECRET."If a request is
made for disclosure of any Burnham Confidential Information, the City shall
promptly notify and provide Burnham with a copy of such request. In all cases, the
City will ultimately determine whether the requested material should be made
available under the Act. If City determines that the material is subject to disclosure,
City will notify Burnham of its decision and allow Burnham ten(10)business days
to take whatever action it deems necessary to protect its interests. If Burnham fails
or neglects to take such action within said period, City will release the record(s) or
portions thereof reasonably deemed by City to be subject to disclosure. City shall
not be liable to Burnham for inadvertently releasing records pursuant to a disclosure
request not clearly identified by Burnham as "CONFIDENTIAL,"
"PROPRIETARY"or`BUSINESS SECRET."
15. Governing Law and Disputes
15.1 This Agreement shall be interpreted in accordance with the laws of the State of
Washington without giving effect to its choice of law principles.
15.2 Any disagreement between Burnham and City which cannot be resolved in
accordance with this Agreement shall be referred to the senior management of each
Party who shall attempt to resolve the dispute in good faith. To aid resolution by
26
506528698.4
the Parties' senior management, Burnham's and City's representatives shall
promptly prepare and exchange memoranda stating the issues in dispute and their
positions, summarizing the negotiations which have taken place and attaching
relevant documents. If the Parties' senior management resolves the dispute, such
resolution shall be reported in writing to and shall be binding upon the Parties.
15.3 If, despite the good faith efforts described in Section 15.2,the Parties are unable to
resolve a dispute or claim arising out of or relating to this Agreement or its breach,
termination, enforcement, interpretation or validity, the Parties may seek to agree
on a forum for mediation to be held at a mutually agreeable site.
15.4 If, despite good faith efforts described in Section 15.2 and 15.3, the Parties are
unable to resolve a dispute or claim arising out of or relating to this Agreement or
its breach, termination, enfarcement, interpretation or validity, (including the
determination of the scope or applicability of this Agreement to arbitrate), shall be
determined by arbitration in Seattle, Washington before a single arbitrator who is
an experienced attorney in the discipline that is the subject of the dispute and whom
shall be jointly selected by Burnham and the City. The arbitration shall be
administered by JAMS pursuant to its Comprehensive Arbitration Rules and
Procedures. The arbitrator shall issue a reasoned, written decision which will be
binding on the Parties. Judgment may be entered upon the arbitrator's decision in
any court of competent jurisdiction, and each Party agrees to submit to the personal
jurisdiction of any such court for the purposes of any such actions or proceedings
to enter or enforce such judgment.
15.5 Should either party employ an attorney to enforce any of the provisions of this
Agreement, the non-prevailing Party in any final judgment agrees to pay the other
Party's reasonable expenses, including reasonable attorneys' fees and expenses in
or out of litigation and, if in litigation, trial, appellate, bankruptcy or other
proceedings, expended or incurred in connection therewith, as determined by a
court of competent jurisdiction.
15.6 The venue for any judicial proceedings relating to this Agreement shall be the
Superior Court for the State of Washington in Franklin County.
16. Miscellaneous
16.1 Amendment and Waiver. No amendment or waiver of any provision of this
Agreement shall be valid unless contained within a writing executed by City and
Burnham and which references the specific section to be amended or waived. No
other amendment or waiver shall have any effect, regardless of its formality,
consideration, detrimental reliance or conduct of one or more Parties. Any waiver
of any term or condition hereof shall not be construed as a waiver of any subsequent
breach or as a subsequent waiver of the same term or condition, or a waiver of any
other term or condition of this Agreement.
27
506528698.4
16.2 Assi mment. Either Party, or its assigns as applicable, may assign its rights under
this Agreement with the prior consent of the other Party, not to be unreasonably
withheld, conditioned or delayed; provided that consent will not be required if
Burnham is the assignor and assignment is made to (i) an affiliate of the assigning
Party, provided that such affiliate assumes in writing all of the obligations of such
assigning Party hereunder; (ii) any person or entity that acquires, directly or
indirectly, all or substantially all of the assets of the ultimate parent of such Party
(including as a result of a change of control transaction, whether by sale of stock,
sale of assets, merger, consolidation or otherwise); and (iii) if Burnham or
Burnham's lender is the assignor, the assignee appoints an O&M operator with at
least five (5) years of experience operating wastewater treatment plants and
demonstrating proficiency operating RNG equipment, or who has a service plan to
remotely monitor RNG equipment with experienced RNG technicians.
16.3 Collateral Assi n�nt. Burnham may directly or indirectly collaterally assign,
mortgage, or pledge its interests in this Agreement for the purpose of financing the
System without City's consent and the City agrees that it shall enter into agreements
with the Lender(s} or bond trustee for the Outstanding Debt or any other financing
instruments for purposes of any such assignment.
16.4 Counterparts; E-Si natures. This Agreement may be executed by the Parties in any
number of counterparts, each of which shall be deemed an original instrument, but
all of which together shall constitute but one and the same agreement. A signature
of a Party transmitted to the other Party by facsimile,PDF or other electronic means
shall constitute the original signature of such Party for all purposes ("Electronic
Signature").
16.5 Lender Right to Cure. If Burnham incurs a Material Breach under this Agreement,
the City agrees and acknowledges that Lender(s) may, but do(es) not have the
obligation to, (i) acquire title to the System, (ii) cure all defaults and breaches that
are capable of cure, and (iii) assume any Burnham Obligation under this
Agreement, in which case the City shall recognize such Lender(s} as if such
Lender(s)had been the original party to this Agreement. City further agrees to make
commercially reasonable efforts to negotiate amendments to this Agreement or
otherwise cooperate with the Lender(s) if Lender(s) assume any Burnham
Obligations. Nothing in this Section 16.4 will operate to infringe the City's option
to purchase the System for FMV under Section 5.5.
16.6 Merger. This Agreement, including any Exhibits, contains the total agreement of
the Parties, and all agreements oral or written entered into prior to or
contemporaneously with the execution of this Agreement are excluded. This
Agreement shall be binding upon the Parties, their successors and assigns.
16.7 Notice.Any notices or other communications required or permitted hereunder shall
be in writing and sent to the appropriate addresses designated below (or to such
other address or addresses as may hereafter be furnished by one Party to the other
Party in compliance with the terms hereo�, by hand delivery, by electronic email
28
506528698.4
(if listed below), by UPS, FedEx, or DHL next-day service, or by registered or
certified mail, return receipt requested, postage prepaid.
If to City: If to Burnham:
City of Pasco Attn: General Counsel
Adam Lincoln Burnham SEV Pasco LLC
City Manager c/o Burnham RNG LLC
525 N 3rd Avenue 1201 Wilson Blvd—27th Floor
Pasco, WA 99301 Arlington VA 22209
With a copy to: With a copy to:
Eric Ferguson legal@burnhamdev.com
eferguson@kerrlawgroup.net
16.8 No Third-Partv Beneficiaries except Lender �. This Agreement is solely for the
benefit of the Parties and their respective successors, Lender(s), and permitted
assigns, and nothing herein, express or implied, is intended to or shall confer upon
any other person any legal or equitable right, benefit or remedy of any nature
whatsoever under or by reason of this Agreement; provided, however, that
Burnham's Lender(s) shall have only such third-party beneficiary rights arising
from Section 16.4 or as otherwise explicitly granted in the Agreement,and City and
Parent shall have such rights and obligations specifically enumerated in Section
3.2.
16.9 Severabilitv. In the event that any clause in this Agreement is deemed
unenforceable or invalid, the balance of the Agreement shall remain enforceable.
16.10 No Presumption. The Parties agree that (i) this Agreement was negotiated fairly
between them at arm's length and that the final terms of this Agreement are the
product of the Parties' negotiations, (ii) this Agreement shall be deemed to have
been jointly and equally drafted by them, and(iii)the provisions of this Agreement
therefore are not to be construed against either Party on the grounds that such Party
drafted or was more responsible for drafting the provisions.
16.11 Eminent Domain.Nothing in this Agreement shall impact City's ability to exercise
its eminent domain rights under Chapter 8.12 RWC; provided, however, that any
damages or fair market value determined under Chapter 8.12 RWC shall be
calculated pursuant to Section 5.5(b) through Section 5.5(e) of this Agreement.
[signature page follows]
29
506528698.4
IN WITNESS WHEREOF,the Parties hereto have caused this Agreement to be executed by their
duly authorized representatives as of the Effective Date.
BURNHAM SEV PASCO LLC CITY OF PASCO,WASHINGTON
By: By:
Name: Chris Tynan Name: Adam Lincoln
Title CEO Title: City Manager
Date: Date:
506528698.4
Exhibit A
BURNHAM-SUPPLIED SYSTEM
The System is composed of the following primary components. Modifications may be made in
accordance with Section 5.4 or revisions may be made to accommodate final design:
1. Headworks Svstem: [more detailed description needed—similar to later sections]
2. Anaerobic Di ester S stem and B ass Stations:
a. Anaerobic Digester System: a system that holds multiple days of Influent Water at
conditions (i.e.,temperature,limited oxygen)that produce biogas (mainly methane
and carbon dioxide, other trace gases). The reacted water is then routed to the next
process or bypass station. The biogas generated is routed to the gas processing
system.
b. Bypass -Headworks System to Nitrogen Reduction System: a bypass system where
Influent Water is routed from the Headworks System directly to the Nitrogen
Reduction System. This system would be used during upset conditions (Anaerobic
Digester System/ supporting equipment), or during occurrences when the Influent
Water volume exceeds the specification.
c. Bypass - Headworks System to City-owned Storage Pond: a bypass system where
Influent Water is routed from the Headworks System directly to a City-owned
Storage Pond. This system would be used during upset conditions (Anaerobic
Digester System /Nitrogen Reduction System / supporting equipment), or during
occurrences when the Influent Water exceeds the specification or treatment
capacities.
3. Nitro,�en Reduction Svstem and Bypass Station
a. Nitrogen Reduction System: a system that is designed to improve levels of the
Influent Water characteristics to levels within the effluent specification limits. The
reacted water is then routed to the next process. Biosolids and sludge are created
during this process.
b. Bypass—Nitrogen Reduction System to City-owned Storage Pond: a bypass system
where Effluent Water from the Anaerobic Digester System is routed from the
discharge of the Anaerobic Digester System around the Nitrogen Reduction System
directly to the City-owned Storage Pond. This system would be used during upset
conditions (Nitrogen Reduction System / supporting equipment), or during
occurrences when the Influent Water volume and/or characteristics are higher than
the specification.
4. Gas Processin�: a system that processes the biogas generated from the anaerobic reactors
and upgades it to RNG (separating practically all of the methane from the biogas). RNG
is then sent to the compression, metering, and the interconnect to gas utility. During upset
conditions the biogas is sent to the flare far destruction.
506528698.4 '
5. Multi-use Buildin�,: a building designed to contain some of the headworks and grit removal
system process as well as Motor Control Center, Restrooms, Office, and Maintenance
Shop.
6. Influent and Effluent Sampling:
a. Sampling of the Influent Water will be established at a location just prior to entering
the Headworks System.
b. Sampling of the Effluent Water will be established for each discharge source
(Anaerobic Digester System and the Nitrogen Reduction System)prior to entering
the City-owned Storage Pond or Irrigation Pump System.
506528698.4
Exhibit B
BURNHAM OBLIGATIONS
Burnham will supply the following wastewater treatment services to the City with respect to the
System described in Exhibit A.
1. Operation,Routine Maintenance, and Management of the System.
1.1 Burnham will be responsible for all operations and maintenance obligations
required to ensure operation of the System in accordance with the Agreement and Ecology
guidance, including without limitation Ecology's Information Manual for Treatment Plant
Operators. Burnham shall perform the following Services:
a) Day-to-day operations and monitoring for the System;
b) Staffing the System sufficient for the operation and maintenance of the
System, including with operators certified, as needed, at the appropriate
level;
c) Performing scheduled routine, preventative, and ongoing maintenance as
specified by the equipment manufacturer and consistent with Prudent
Industry Practices to ensure the long-term operation of System
infrastructure;
d) Performing routine maintenance, repairs, and replacements as needed on
System components;
e) Maintaining operations and routine maintenance records for the supplies
needed for System operation and routine maintenance; and
fl Ordering and payment for supplies and equipment for routine operations
and maintenance of the System. Burnham's payment for supplies and
equipment for routine operations and maintenance of the System shall be in
accordance with this Agreement and,where appropriate, considered a Pass-
Through Cost subject to the terms in Exhibit F.
1.2 Burnham will communicate with the City as is reasonable and necessary regarding
Burnham's operation,routine maintenance, and management of the System.
2. Capital Improvements; Major Maintenance; Modifications
2.1 Burnham will perform capital improvements, Major Maintenance and
Modifications.
2.2 Annual Major Maintenance Budget. Beginning on April 1 following the first
anniversary of COD, and occurring annually on or before April 1 throughout the Term,
Burnham will provide the City with a projected annual Major Maintenance budget through
506528698.4
April 1 of the following year, and for each of the next two (2) subsequent years, in
accordance with Prudent Industry Practices. The City may object to such budget solely for
the purpose of disputing that the projected Major Maintenance is not in accordance with
Prudent Industry Practice, within fifteen (15) business days. If the Parties are unable to
determine a resolution to any such objection, an independent third-party engineer shall be
consulted by the Parties to resolve such objection. If the Parties are unable to agree on a
resolution after such consultation,the Parties shall follow the dispute resolution process set
forth in Section 15.
2.3 Should Ecology or other applicable regulatory authority establish new or different
effluent limits under the Discharge Permit that potentially require Modification(s) to the
System,the Parties shall cooperate to evaluate any required Modification(s)to the System.
The City shall be responsible for paying for the costs of any such Modifications as provided
in Section 5.4 of the Agreement and Exhibit F.
3. State Waste Discharge Permit Compliance, Generally
3.1 The City is responsible for obtaining the Discharge Permit.Both City and Burnham
shall be responsible for Permit compliance.
3.2 Relative roles and responsibilities for the City and Burnham to implement and
comply with the Permit are defined in the Agreement and this Exhibit B. Burnham's
responsibilities for performance standards and regulatory, reporting, and recordkeeping
requirements under the Discharge Permit are limited to those set forth in Section 4 of this
E�ibit B.
3.3 Burnham's operations will be performed to comply with portions of the City's
Discharge Permit relevant to the System and to prevent nuisance conditions.
3.4 Burnham will provide commercially reasonable and necessary support to the City
for the Discharge Permit application and renewal processes.
4. Performance Standards and Regulatory, Reporting, and Recordkeeping
Requirements
4.1 Burnham's responsibilities for performance standards and regulatory, reporting,
and recordkeeping requirements are solely and exclusively for the operation of the System.
All aspects of City Facilities, including but not limited to implementation and enforcement
of the City's pretreatment program, are the sole and exclusive responsibility of the City
and such City Facilities are outside the scope of this Agreement and Burnham's obligation
to perform Services and operate the System in accordance with the Agreement.
4.2 Burnham's performance standard responsibilities are set forth in Section 3 of the
Agreement; specifically, Burnham shall provide Effluent Water to City in accordance with
Exhibit D; provided that Burnham's responsibility for supplying Effluent Water in
accordance with Exhibit D is conditioned upon City and processors supplying Influent
Water in accordance with Exhibit C.
506528698.4
4.3 Burnham will be responsible for Influent Water and Effluent Water
metering/monitoring as more fully described in Section 5 of this Exhibit B;
4.4 For any monitoring and sampling requirements for the System, including
monitoring Influent Water to the System and Effluent Water from the System, Burnham
will perform any laboratory analysis through an accredited laboratory approved by the City
or as otherwise required by the Discharge Permit.
4.5 The City will be responsible for all reporting to Ecology under the Discharge
Permit, including any reporting for non-compliance with the Permit. Burnham will be
responsible for the provision of any required monitoring and reporting data and information
regarding the System to the City, including identifying and reporting to the City any non-
compliance or bypasses within the boundaries of the System.
4.6 Burnham will retain a copy of all monitoring reports for the System for a period of
three years or for the period of time expressly provided for in the State Waste Discharge
Permit's records retention requirements.
4.7 Upon the publication of the draft Discharge Permit, the Parties agree to develop a
schedule with Burnham's additional responsibilities for regulatory compliance and
reporting and recordkeeping requirements under the Discharge Permit. The Parties agree
to amend this Exhibit B to incorporate the schedule prior to issuance of the final Discharge
Permit.
5. Metering; Water Quality
5.1 Burnham will install one or more meters as may be necessary to accurately measure
the amount and composition of Influent Water delivered by City to Burnham and the
amount and composition of Effluent Water delivered to City for purposes of billing City
and other monitoring requirements as established in the Discharge Permit.
5.2 Burnham will calibrate, and maintain Meter devices to ensure the accuracy of the
measurements is consistent with Prudent Industry Practices, the manufacturer's
recommendation, and approved operation and maintenance manual procedures for the
device and the waste stream. Burnham will establish the calibration frequency for the
Meter(s) in the operation and maintenance manual that conforms to the frequency
recommended by the manufacturer.
5.3 Subject to reasonable advance notice,Burnham will provide City with access to the
Meter(s) during regular business hours for the purpose of inspecting or monitoring the
quantity and quality of Influent Water or Effluent Water.
5.4 City may request periodic testing of any Meter by providing written notice of such
request to Burnham. Burnham will conduct such testing;provided that the City may, at its
sole cost and expense, hire an independent third-party to conduct such testing. If, during
any such testing, the Meter is found to be within a five percent (5%) accuracy range, then
the cost of such test shall be borne by the City. If the meter is inaccurate by more than five
percent (5%), Burnham shall at Burnham's sole expense, cause the inaccuracy to be
506528698.4
promptly corrected, and the Parties agree that any amounts due or paid for any Services
shall be adjusted by the same percentage as the inaccuracy of the Meter, from the date of
the City's written request through the date upon which the inaccuracy is corrected, as
verified by an independent third-party.
6. Sludge Removal and Disposal
6.1 Burnham will be responsible for removing anaerobic sludge and grit from the
System and disposal of such sludge and any associated sludge disposal permits.
6.2 All sludge and grit removal and disposal related to City Facilities will be the sole
and exclusive responsibility of the City.
7. System Access and Inspections
7.1 Burnham shall provide Ecology access to conduct inspections of the System during
regular business hours to determine compliance with the Discharge Permit.
7.2 Burnham shall provide the City access and the right to conduct inspections of the
System and its records during all hours at the City's sole expense and risk following
reasonable notice to ensure that the System is being properly maintained in accordance
with the Agreement and this Exhibit B.
8. Payment of Permit Fees and Fines
S.1 The City is responsible for all Discharge Permit fees.
8.2 If Ecology assesses any fines or penalties under the Discharge Permit as a result of
an Effluent Water Failure caused primarily by Burnham, or Burnham's failure to provide
the City with required reporting information regarding the performance of the System,
Burnham shall indemnify City under Section 10.1 of the Agreement.
9. System Maintenance
9.1 City acknowledges that each and all of Burnham's Obligations under Section 3 of
the Agreement and this Exhibit B are subject to and conditioned upon Burnham's right and
obligation to perform on the System routine and periodic maintenance, emergency
maintenance, and any maintenance necessary to correct anomalies or unanticipated
conditions as reasonably required from time to time. In such circumstances, Burnham may
direct Influent Water to City-Owned Storage Pond and the volume of Influent Water shall
be metered and have the ability to be sampled for laboratory testing.
9.2 Burnham shall provide City with advance notice of any routine and periodic
maintenance activities that require the system to be offline within ten(10)calendar days of
the commencement of such routine and periodic maintenance activities.
506528698.4
9.3 Burnham may perform emergency maintenance activities as reasonably required
under the circumstances. In the case of emergency maintenance activities, Burnham shall
provide notice to City as soon as practicable.
10. Indemnification
Burnham's sole and exclusive responsibility for wastewater treatment services to the City with
respect to the System is limited to the services in this Exhibit B. Consistent with the
indemnification provisions in Section 10 of the Agreement, the City will indemnify, defend, and
hold harmless Burnham against any Claims unrelated to Burnham's services set forth in this
Exhibit B.
506528698.4
Exhibit C
CITY OBLIGATIONS
City shall supply the Site for the System, as more particularly described below:
Site Description:
That parcel of land being a portion of The South Half of the Northwest Quarter of Section 4,
Township 9 North, Range 30 East, W.M., records of Franklin County, Washington, described as
follows:
Beginning at the Southwest corner of said South Half;
thence North 03°06'31" East along the West line of said South Half, 119.99 feet to the True Point
of Beginning;
thence continuing North 03°06'31" East along said West line 1256.65 feet to the Northwest corner
of said South Half;
thence North 88°53'S7" East along the North line of said South Half, 1305.39 feet;
thence South 00°02'45" West, 1131.07 feet;
thence South 88°53'39" West,413.99 feet;
thence South 00°00'00" East, 120.00 feet;
thence South 88°45'20" West, 958.71 feet to the True Point of Beginning.
Also Known as Lot 1 of Record Survey recorded under Auditor's File No. 1969537.
Parcel No. 113090085
Access:
Burnham, including Burnham visitors, contractors, and service providers, shall have
unencumbered access to the Site and all associated easements and rights-of-way. Access to the site
is exclusive, subject to certain easements and other access rights granted in favor of City as
identified in the site lease.
Utilities:
1. Power:
a. City to provide adequately sized underground raceway/conduit to Site
boundary.
b. Burnham responsible to coordinate with utility provider to provide power
through City raceway to facility.
2. Communications:
a. City to provide adequately sized underground raceway/conduit to Site
boundary.
b. Burnham responsible to coordinate with communications provider to provide
communications through City raceway to facility.
506528698.4
3. Potable Water: City to provide adequate water source (for use: domestic, fire, and
process w/in facility) at Site boundary. Burnham responsible to coordinate with the
City to provide potable water through City waterline to Project.
4. Effluent Water Disposal: City to provide disposal with connection piping at Site
boundary.
5. Influent Water Supply: City to provide supply with connection piping at Site
boundary.
City shall supply Influent Water with flows, constituent concentrations, and loads that are within
ten percent (10%) of the following values:
Influent Characteristics to Wastewater Treatment System
Parameter Influent
Avg.Annual Daily Flow(MGD) 4.38
Max.28-Day Flow(MGD) 8.56
Max.Instantaneous Flow(GPM) 9,200
BOD,Annual Avg. (mg/L) 3,590
BOD,Annual Avg.Daily Load(lb/d) 131,035
BOD,Load Max.28-Day(lb/d) 300,000
TSS,Annual Avg. (mg/L) 2,140
TSS,Annual Avg.Daily Load(lb/d) 78,170
TSS,Load MaJc.28-Day(lb/d) 227,885
TN,Annual Avg. (mg/L) 114
TN,Annual Avg.Daily Load(lb/d) 4,170
TN,Load Max.28-Day(lb/d) 8,140
Temperature Range(°F) 50-95
Ph 4-10
506528698.4
Exhibit D
BURNHAM-SUPPLIED EFFLUENT WATER
Burnham shall supply Effluent Water in accordance with the following specifications,which in all
cases shall be conditioned upon City providing Burnham with Influent Water in accordance with
the City's Obligations in Exhibit C and the conditions in this Exhibit D.
Anaerobic Digester System Effluent Discharge Quality Requirements
Parameter Design Value3
BOD. Avg. (mg/L) <350
The System is designed and intended to bypass Influent Water around portions of the process based
on the System capacities and Influent Water characteristics as described below:
a) Influent Water flows above the Max. 28-Day Flow (MGD) and Max. Instantaneous Flow
(GPM), as stated in Exhibit C, will typically bypass the Anaerobic Digester System. When
Influent Water flows are below this threshold, Burnham will typically send materially all
Influent Water through the Anaerobic Digester System.
b) The Nitrogen Reduction System will typically be bypassed when Influent Water flows are
above 4 MGD. When flows are below 4 MGD, Burnham will typically send materially all
Effluent Water from the Anaerobic Digester System to the Nitrogen Reduction System. When
flows are above 4 MGD, a portion of the Effluent Water from the Anaerobic Digester System
will bypass the Nitrogen Reduction System and be directed to the City-owned Storage Pond.
3 Based on 28-day average, as measured on BVF reactor system effluent.
506528698.4
Exhibit E
DEFINITIONS
"Abnormal Substances" means substances or materials (including viscous, toxic or hazardous
substances) that, based on the basis of design provided by City, (i) could not be reasonably
anticipated by Burnham as being in the Influent Water, (ii) are present in the Influent Water in a
type, concentration or loading that could not be reasonably anticipated by Burnham;or(iii)exceed
the design capacity of the System to adequately treat when operated in accordance with Prudent
Industry Practices.
"Adjusted Treatment Fee"has the meaning given in Exhibit F.
"Base Treatment Fee"has the meaning given in Exhibit F.
"Burnham Indemnified Parties"has the meaning given in Section 10.2(a).
`Burnham Obligation(s)"has the meaning given in Section 3.1.
"Claim Notice"has the meaning given in Section 7.3.
"Change of Law" means after the Effective Date (i) the enactment, adoption, promulgation,
modification or repeal of any law or regulation applicable to the System or the production or sale
of RNG;(ii)the imposition of any material conditions on the issuance or renewal of any applicable
Permit (notwithstanding the general requirements contained in any applicable Permit at the time
of application or issue to comply with future laws, ordinances, codes, rules, regulations or similar
legislation),or{iii)a change by any governmental authority that establishes requirements affecting
owning, supplying, constructing, installing, operating or maintaining the System, or other
performance of the obligations of either Party hereunder.
"Changed Circumstances"has the meaning given in Section 4.2.
"City Caused Delay"means any Project delay arising from the City's failure to comply with the
terms and conditions of this Agreement or any City act or failure to act that interferes with
Burnham's obligations under this Agreement and results in a Project delay, excluding any material
and clearly identified delays caused by any third-party that is not under the reasonable control of
City and excluding any City act or failure to act pursuant to its generally applicable municipal
responsibilities. Any City Caused Delay shall extend the COD Longstop Date on a day-for-day
basis until such City Caused Delay is resolved, and the City shall be responsible for any and all
reasonable, documented losses or additional costs attributable to such City Caused Delay as set
forth in Exhibit F.
"City Facilities"has the meaning given in the RECITALS.
"City Indemnified Parties"has the meaning given in Section 10.1.
"City Obligation(s)"has the meaning given in Section 4.1.
506528698.4
"City Permits" means the Permits that must be obtained and maintained by City as set forth in
Exhibit G.
"Claims"has the meaning given in Section 10.1.
"Commercial Operation"means the date that a Certificate of Substantial Completion or similar
certification is issued in accordance with the Progressive Design Build Agreement, as verified by
a third-party engineer.
"COD"means the actual date upon which the System reaches Commercial Operation.
"COD Longstop Date"has the meaning given in Section 3.1(c).
"COD Delay Damages"means $5,000 per day.
"COD Longstop Delay Damages"means $10,000 per day.
"Confidential Information"means any non-public information,know-how or trade secrets in any
form that is designated"confidential"or that a reasonable person should understand is confidential.
The following information does not constitute Confidential Information: (i) information that is or
becomes generally available to the public other than as a result of a disclosure by either Party in
violation of this Agreement, (ii) information that was already known by either Party on a non-
confidential basis prior to this Agreement, (iii) information that becomes available to either Party
on a non-confidential basis from a source other than the other Party if such source was not subject
to any prohibition against disclosing the information to such Party, (iv) information required to be
disclosed pursuant to a valid public records request under RCW 42.56; and(v) information that is
independently developed by a Party without violating its obligations under this Agreement.
"Consumer Price Index" means the United States Deparhnent of Labor's Bureau of Labor
Statistics Consumer Price Index, All Urban Consumers, All Items, West Region, (1982-84 equals
100), or the successor of such index.
"Darigold �perations"means that, to Burnham and City's reasonable satisfaction, the System is
able to accept and treat Influent Water from Darigold Inc.before reaching Commercial Operation.
"Discharge Permit"has the meaning given in the RECITALS.
"Ecology"has the meaning given in the RECITALS.
"Ecology Delay"has the meaning given in Section 4.1(b).
"Effective Date"has the meaning given in the introduction to the Agreement.
"Effluent Water"means wastewater, as measured at the Pond Discharge Station from which the
wastewater from the Burnham Supplied Processes enter and is returned to the City as more
particularly described in Exhibit A, that meets the specifications in Exhibit D.
"Effluent Water Failure"has the meaning given in Section 7.1.
506528698.4
"Environmental Attributes"has the meaning given in Section 8.4.
"Environmental Laws"means (a) the Comprehensive Environmental Response, Compensation,
and Liability Act,42 U.S.C. 9601 et seq. ("CERCLA");the Emergency Planning and Community
Right to Know Act, 42 U.S.C. 11001 et seq.; the Resource Conservation and Recovery Act, 42
U.S.C. 6901 et seq. ("RCRA"); the Safe Drinking Water Act, 42 U.S.C. 300f et seq.; the Toxic
Substances Control Act, 15 U.S.C. 2601 et seq.; the Federal Water Pollution Control Act, 33
U.S.C. Sections 1251 et seq.; the Oil Pollution Act of 1990, 33 U.S.C. 2701 et seq.; the Clean Air
Act, 42 U.S.C. 7401 et seq.; and the Occupational Safety and Health Act, 29 U.S.C. 651 et seq.;
and the regulations promulgated pursuant to the above-listed federal statutes, as amended from
time to time; and (b) counterpart state laws and regulations of each item listed in subsection (a)
above, as amended from time to time.
"Facility Plan" is the facility plan and process water reuse facility engineering report approved
by Ecology.
"Fair Market Value"or"FMV"has the meaning given in Section 5.5.
"Gross Wen Process Performance Guarantees"has the meaning given in Section 3.1(i).
"Gross Wen Process"means an algae-based nitrogen reduction process.
"Influent Water"means all agricultural and milk processing industrial wastewater that does not
contain industrial wastewater in excess of applicable federal and state industrial pre-treatment
standards, does not contain Abnormal Substances, and otherwise meets the specifications in
Exhibit C, as measured at the point at which the Influent Water is delivered to Burnham as more
particularly described in Exhibit A, whether owned or under the control Citv or processors.
"Initial Term"has the meaning given in Section 2.1.
"Insolvency Event"means with respect to any Party, when: (a)the Party commences a voluntary
case or other proceeding seeking liquidation,reorganization or other relief with respect to itself or
its debts under any bankruptcy, insolvency, reorganization or other similar law of any jurisdiction
now or hereafter in effect or seeking the appointment of a trustee, receiver, liquidator, custodian
or other similar official of such Party or any substantial part of its property, or consents or agrees
to any such relief or to the appointment of or taking possession by any such official in an
involuntary case or other proceeding commenced against it, or makes a general assignment for the
benefit of creditors, or becomes or is declared insolvent, or acknowledges, in writing, its inability
to pay its debts as they become due, or takes any corporate action in any jurisdiction to authorize
any of the foregoing; (b) an involuntary case or other proceeding is commenced against the Party
seeking liquidation, reorganization or other relief with respect to it or its debts under any
bankruptcy, insolvency,reorganization or other similar law of any jurisdiction now or hereafter in
effect or seeking the appointment of a trustee, receiver, liquidator, custodian or other similar
official of such person or any substantial part of its property, and such involuntary case or other
proceeding shall remain undismissed and unstayed for a period of ninety(90)days; or(c) an order
for relief has been entered against that Party under the United States federal, state or other
bankruptcy laws of any jurisdiction as now or hereafter in effect.
506528698.4
"Late Payment Rate"has the meaning given in Section 5.3.
"Lender(s)" means any third-party lender or financing party providing financing in connection
with this Agreement.
"Major Maintenance" means repairs and maintenance associated with maintaining System
performance consistent with the obligations of this Agreement and consistent with Prudent
Industry Practice, including without limitation maintenance, repair, renewal, capital expenditures,
reconstruction or replacement of any portion or component of the System, as applicable, of a type
that is not normally included as ordinary or routine maintenance and the total cost of such activities
exceeds$25,000, as adjusted annually for any change in the Consumer Price Index occurring from
January 1 through December 31 of the prior calendar year
"Major Maintenance Expenses" means all costs, fees, obligations and other liabilities incurred
by Burnham associated with Major Maintenance or replenishing the Major Maintenance Reserve.
"Major Maintenance Reserve"means amounts required by Lender(s)to be held in a reserve fund
to cover the System's major maintenance costs.
"Material Breach"has the meaning given in Section 6.2.
"MG"means million gallon(s), as defined in the RECITALS.
"Modifications"has the meaning given in Section 5.4.
"Net Capital Costs" means actual costs incurred or payable by Burnham or its affiliates in
connection with the development, construction and completion of the System, excluding (i)
working capital required for System start-up and financing costs, and (ii) costs attributable to any
City Caused Delay or Ecology Delay;. Net Capital Costs will be reduced by the amount of two
million dollars ($2,000,000.00). �
"Net RNG Revenue"means all revenue received from the sale of RNG less any operating costs
or other costs associated with the sale of RNG (compression, consumables, electricity, marketing
expenses, etc.).
"Non-Conforming Influent Water" means agricultural and milk processing industrial
wastewater delivered or directed by City to the System that fails to meet in any respect or for
whatever reason the specifications in Exhibit C.
"Non-Material Breach"has the meaning given in Section 6.1.
"Notice to Proceed"or"NTP"means the notice that Burnham has provided, in its sole discretion,
to the engineering and procurement contractor to begin procurement and commence construction
activity at the Site, a copy of which Burnham will promptly provide to the City.
"NTP Date"has the meaning given in Section 3.1(b).
"NTP Longstop Date"has the meaning given in Section 3.1(b).
506528698.4
"Outstanding DebY'means at the relevant time,the fully amortized aggregate of(without double-
counting): all outstanding principal, interest (including default interest to the extent that borrower
incurs default interest arising as a result of the City making any payment later than the date that
such payment is due under this Agreement, or incurred by borrower due to any other default by
the City under this Agreement), banking fees and premiums on financial insurance policies, agent
and trustee fees, costs and expenses and other amounts properly incurred owing or outstanding to
the Lender(s) by Burnham under or pursuant to its agreement with the Lender(s), including any
prepayment costs, make-whole amounts and breakage costs.
"Pass-Through Costs"has the meaning given in Exhibit F.
"Permits" means the permits, licenses, certificates, clearances, approvals, authorizations,
variances, or consents of any governmental authority, department, or agency, including all
amendments thereto and replacements thereof, that must be obtained and/or maintained for
construction and operation System.
"Prevailing Wage Costs"means the costs incurred by Burnham to comply with Section 3.1(j).
"Progressive Design Build Agreement"means the Progressive Design Build Agreement signed
between Burnham and Swinerton Builders, Inc. dated October 28, 2022 or any similar agreement
signed by Burnham to construct the System.
"Prudent Industry Practices" means any of the practices, methods and acts engaged in or
approved by a significant portion of the wastewater treatment industry for facilities of similar size
and characteristics to the System or any of the practices,methods or acts, which, in the exercise of
reasonable judgment in the light of the facts known or that should reasonably have been known at
the time a decision is made,could have been expected to accomplish the desired result at the lowest
reasonable cost consistent with law, regulation, permits, codes, standards, equipment
manufacturer's recommendations, reliability, safety, environmental protection, economy, and
expedition.
"PWRF"has the meaning given in the RECITALS.
"Remedy"has the meaning given in Section 7.3(e)
"Renewable Natural Gas" or "RNG" means biomethane produced by the System that meets
natural gas pipeline-quality standards such that the biomethane may blend with, or substitute for,
geologic natural gas.
"Renewal Term"has the meaning given in Section 2.2.
"RNG Credit"has the meaning given in Exhibit F.
"RNG Interconnection Agreement" means that certain RNG Facilities Interconnect Agreement
anticipated to be executed between Burnham and Cascade Natural Gas Corporation.
506528698.4
"RNG Offtake Agreement" means that certain North American Energy Standard Board master
agreement, Transaction Confirtnation, and Special Provisions, anticipated to be executed between
Burnham and Cascade Natural Gas Corporation.
"Services"means the services to be provided by Burnham, its subcontractors, agents, or assigns,
under this Agreement, as set forth in Exhibit B.
"Site"has the meaning given in Section 4.1(a).
"Site Delivery Date"has the meaning given in Section 4.1(a).
"System" means the Burnham-supplied wastewater treatment and RNG production facility and
ancillary components as set forth in Exhibit A.
"System Permits"means City Permits or Burnham Permits, as applicable.
"Term"has the meaning given in Section 2.2.
"Work Acceleration Agreements"has the meaning given in the Recitals.
506528698.4
Exhibit F
PRICING SCHEDULE
Base Treatment Fee: [$1,125,000]4 per month
Adjusted Treatment Fee:
1. Within thirty(30) calendar days of COD, Burnham shall provide the City with an invoice
for the first adjusted Base Treatment fee (the "Adjusted Treatment Fee"), which shall be
calculated by Burnham as follows, provided that the total amount of any increase in the
Adjusted Treatment Fee for items a, b, c, and d below (and excluding e) may not exceed
$170,000 per month(the"Adjusted Treatment Fee Cap"):
a. If the Net Capital Cost exceeds$132,000,000,the Base Treatment Fee will be increased
in increments of$9,000 per month for each $1,000,000 of increased costs (rounded to
the nearest million).
b. If the Net Capital Cost is less than $132,000,000, the Base Treatment Fee will be
decreased in increments of$9,000 per month for each $1,000,000 of decreased costs
(rounded to the nearest million).
c. The Base Treatment Fee assumes that the System is financed with senior debt at a total
weighted-average cost of debt at 6.5%. For clarity, all debt calculations include only
debt incurred by Burnham and do not include any debt at any Burnham affiliates,
including without limitation Burnham's parent company.
i. For every 10 basis points (bps) above a total weighted-average cost of debt of
6.5%, the Base Treatment Fee will be increased by $5,250.
ii. For every 10 bps below a total weighted-average cost of debt of 6.5%,the Base
Treatment Fee will be decreased by$5,250.
d. The Base Treatment Fee will be decreased by $9,000 per month for each $1,000,000
(rounded to the nearest million) for any payments City makes to Burnham under the
Work Acceleration Agreements.
e. The Base Treatment Fee will be increased by $9,000 per month for each $1,000,000
(rounded to the nearest million) of costs attributable to City Caused Delays or an
Ecology Delay.
4 NTD: Subject to fully executing agreement by April 10.
506528698.4
Annual Modifications to the Adjusted Treatment Fee
The Adjusted Treatment Fee will be subject to further modification as follows:
1. Commencing on COD, Burnham will modify the Adjusted Treatment Fee to reflect any
percentage adjustment in the Consumer Price Index measured from April 2022 to the
month and year immediately preceding the month and year in which COD occurs. This
first modification of the Adjusted Treatment Fee will be the Adjusted Treatment Fee
calculated and invoiced by Burnham through March 31 of the first calendar year occurring
after the calendar year in which COD occurs.
2. Commencing on April 1 of the first calendar year following the year in which COD occurs,
and occurring annually on April 1 of each calendar year through the Term, Burnham shall
modify the Adjusted Treatment Fee based on changes in the Consumer Price Index and/ar
increases in the amount of Influent Water or Non-Conforming Influent Water accepted by
the System that occurred during the immediately preceding calendar year(e.g., a modified
Adjusted Treatment Fee will be calculated and take effect on April 1, 2025 to reflect
circumstances occurring from January 1,2024 through December 31,2024). Burnham will
calculate such annual modifications to Adjusted Treatment Fee as follows:
a. The then-current Adjusted Treatment Fee will be adjusted for any change in the
Consumer Price Index occurring from January 1 through December 31 of the prior
calendar year;provided, however, that on April 1 of the first calendar year occurring
after COD, such Consumer Price Index adjustment shall be measured from the month
COD occurred through December 31 of the prior year(e.g.,if COD occurs Jun 1,2024,
the adjustment will be measured from June 1, 2024 through December 31, 2024); and
b. If the System accepted more than 1,600 MG of Influent Water or Non-Conforming
Influent Water during the prior calendar year, the Adjusted Treatment Fee will be
increased by .03% per MG for each MG accepted above 1,600 MG. There will be no
adjustment for volume of water if the total volume of Influent Water or Non-
Conforming Influent Water is less than 1,600 MG.
Such annually modified Adjusted Treatment Fee shall remain fixed for the next twelve (12)
months,through March 31 of the subsequent year.
Burnham shall document any annual modifications to the Adjusted Treatment Fee and provide
City a form summarizing the annual modification to the Adjusted Treatment Fee with the first
invoice issued after such modified Adjusted Treatment Fee goes into effect.
Pass-Through Costs:
The following costs incurred by Burnham will be passed through to City with a ten-percent(10%)
markup for administrative costs, and will be invoiced to the City on a monthly basis:
o Solid waste disposal (including anaerobic sludge; periodic digester scrapes and
clean-outs and any algae or biomass removed from the Gross Wen Process)
o Consumables (including replacement parts & associated rental equipment)
506528698.4
o Major Maintenance Expenses
The following costs incurred by Burnham will be passed through to City with no markup for
administrative costs, and will be invoiced to the City on a monthly basis:
o Electricity
o Purchased natural gas for system heating use
o All City, state, and local taxes with the exception of income taxes (e.g., sales tax,
B&O tax, property tax, as applicable)
o Rental payments made to City under the site lease
o Any costs and fees associated with securing and maintaining a Service Contract
Performance Bond
RNG Credit. Burnham includes in the Base Treatment Fee an RNG credit of$350,000 per month.
Burnham shall reduce or increase all invoiced amounts to City by the changed amount of any RNG
Credit, if any, available for the applicable invoiced month. The RNG Credit changed amount will
be the amount greater than or less than $350,000 (as adjusted for 50% of change in Consumer
Price Index from Apri12022) that Burnham earns in Net RNG Revenue in the previous month. If
Burnham's Net RNG Revenue is greater than $350,000, the City's invoiced amount will be
reduced by the amount that the Net RNG Revenue exceeds $350,000. If the Burnham's Net RNG
Revenue is less than $350,000, the City's invoiced amount will increase by the amount that the
Net RNG Revenue is below $350,000.
506528698.4
Exhibit G
SYSTEM PERMITS
Citv Permits
City will procure and maintain, as necessary, the following Permits far the System (the "City
Permits"):
Permit Name Permit Type Agency
State Wastewater Discharge water Ecology
Permit
Burnham Permits
Burnham will procure and maintain, as necessary, the following Permits for the System (the
`Burnham Permits"):
Permit Name Permit Type Agency
Notice of Construction Air Ecology
SEPA Review General Franklin Co.
Conditional Use(CUP) Use Franklin Co.
Industrial Storm Water Water Ecology
Solid Waste Permit (If waste Ecolo
Necessary) �
Dam Safety (If Necessary) Water Ecology
506528698.4
Exhibit H
FORM OF SITE LEASE
506528698.4
Basic Terms Summary of the Lease Agreement between
Burnham SEV Pasco LLC and the City of Pasco dated �]
The following table contains a summary of the basic terms of the Lease Agreement(`Basic Terms
Summary") for indicative purposes only and is not intended to be binding on the parties thereto.
The provisions and terms summarized in the Basic Terms Summary are more specifically
described and defined in the Lease Agreement. In the event of any conflict or inconsistency
between the Basic Terms Summary and the Lease Agreement, the terms of the Lease Agreement
will govern.
Lessor City of Pasco
Lessor's Address 525 N 3rd Avenue
Pasco, WA 99301
Lessee Burnham SEV Pasco LLC
Lessee's Address 1201 Wilson Blvd—27th Floor
Arlin ton, VA 22209
Lessor Property The 82.95 acres of land owned by Lessor,as described in E�iibit B to the
Lease A reement, which includes the land to be leased b Lessee.
Leased Property The 37.33 acres of land owned by Lessor,as described in Exhibit C to the
Lease A reement, to be leased b Lessee.
Opening Term Lessee will pay Lessor$25,200.00 annually during the Opening Term.
Pa ment
Initial Term Lessee will pay Lessor $25,200.00 annually during the Initial Term and
Payment an Renewal Term.
Opening Term The Opening Term will commence on the Agreement Date and continue
until the earlier to occur of(a) the COD and (b) the COD Longstop date,
unless terminated pursuant to the terms of this Lease Agreement. If COD
does not occur within one hundred eighty (180) days after the COD
Longstop date(i.e.,the COD does not occur),then this Lease Agreement
shall terminate at the end of the O enin Term.
Initial Term The Initial Term will commence on the COD and continue for thirty(30)
ears.
Renewal Terms Term will automatically renew for two (2) additional five-year Renewal
Terms.
506528698.4
LEASE AGREEMENT
THIS LEASE AGREEMENT (this "Agreement") is entered into by BURNHAM SEV PASCO
LLC, a Washington limited liability company ("Lessee") and the CITY OF PASCO, a municipal
corporation of the State of Washington("Lessor"and collectively with Lessee,the"Parties"or, as
the context requires, "Party") and is effective as of the date this Agreement has been last signed
by a Party (the"Agreement Date"). In consideration of the mutual promises contained l�erein,the
Parties, intending to be legally bound, agree as follows:
RECITALS
This Agreement is made with reference to the following facts:
A. Lessor and Lessee intend to enter, or have entered, into the Wastewater Treatment
Agreement (the"WTA") a copy of which is attached hereto as Exhibit E and incorporated herein
by this reference. Pursuant to the terms thereof, Lessor desires to contract with Lessee to develop,
design, construct, and operate, a wastewater treatment system (the "System"} in Pasco,
Washington, as more particularly described in the WTA; and
B. As a condition to Lessee's agreement to enter into the WTA with Lessor, Lessor
has agreed to enter into this Agreement and, among other things, grant to Lessee sufficient
leasehold and appurtenant rights and privileges necessary for Lessee to construct, operate, and
maintain the System, upon the terms and conditions set forth in this Agreement.
NOW THEREFORE, in consideration of the foregoing and the WTA, the receipt and
sufficiency of which are hereby acknowledge, the parties hereby agree as follows:
ARTICLE 1 : Term
1.1 The initial term of this Agreement shall begin on the Agreement Date and shall
continue until the earlier to occur of(a) the COD and (b) the COD Longstop date, in each case
unless this Agreement is earlier terminated in accordance with its terms (such initial term is
hereinafter referred to as the"Opening Term").
1.2 During the Opening Term, Lessee may, in its sole discretion, terminate this
Agreement (a} effective upon thirty (30) days' notice to Lessor, (b) on the NTP Longstop Date in
the event Lessee does not issue NTP by the NTP Longstop Date, or(c) if the WTA is no longer in
full force and effect following the Effective Date of the WTA. If the COD does not occur within
one hundred eighty (180) days after the COD Longstop date (i.e., the COD does not occur), then
this Agreement shall terminate at the end of the Opening Term.
1.3 On the COD, an additional term of this Agreement shall commence and shall
continue, unless earlier terminated in accordance with the provisions of this Agreement, for a
period of thirty (30) years following the COD (the"Initial Term").
506528698.4
1.4 The Initial Term shall automatically renew for two (2)additional five(5)year terms
(each such additional term, a "Renewal Term") unless terminated by Lessee by written notice
delivered to Lessor at least one hundred and eighty(180) days prior to the expiration of the Initial
Term or the then-current Renewal Term, as applicable, consistent with the terms and conditions
hereof.
ARTICLE 2 : Lease; Easement
2.1 Lessor hereby grants to Lessee and Lessee hereby leases from Lessor, for the Term,
an exclusive and irrevocable right to access and use the Leased Property, together with the rights
and privileges appurtenant thereto, in accordance with this Agreement. '
(a) Lessor hereby grants to Lessee and Lessee's employees, members,
managers, affiliates, invitees, agents, contractors and subcontractors (collectively,
"Representatives"} and those of their affiliates(collectively, "Lessee Parties"), irrevocably for the
duration of the Term, an access easement and right of way over, across, under and through the
Lessor Property, and (subject to Lessor's approval, not to be unreasonably withheld) any
surrounding or nearby premises owned by Lessor, in order for Lessee Parties to access the Leased
Property and to build, maintain, and install any road, improvements, equipment, fences, gates,
signs, communication lines or facilities, pipelines, or anything else reasonably necessary for the
System Activities (as defined below) (collectively, "Lessee Improvements").
(b) Lessor shall provide the Lessee Parties with all access to the Leased
Property necessary to allow Lessee to perform all System Activities, including ingress and egress
rights through the Lessor Property, any third-party owned neighboring properties necessary to
access the Lessor Property, and within the Leased Property, for Lessee and the Lessee Parties to
access the System and Lessee Improvements. Without limiting the foregoing,to the extent Lessor
has any beneficial easement rights in favor of or necessary to access the Leased Property, Lessor
shall provide that Lessee has the right to utilize any such beneficial easements.
(c) Lessor shall use its commercially reasonable efforts to provide sufficient
space for: temporary storage and staging of equipment;parking of construction crew vehicles and
temporary construction trailers; rigging and material handling; and for all other facilities
reasonably necessary during the System Activities.
(d) Lessor and its authorized representatives shall at all times have access to
and the right to observe the installation work, subject to compliance with Lessee's safety rules and
Prudent Industry Practices,but shall not interfere with the System Activities or handle any Lessee
equipment or the System without written authorization from Lessee.
2.2 Without limitation to Lessee's other rights under this Agreement, Lessor agrees to
use its best efforts to cure any defect in, or objection Lessee provides in writing to Lessor
regarding, any Existing Lien or any other Lien encumbering or affecting the Leased Property or
Lessee's rights in relation thereto.
506528698.4
ARTICLE 3 : Payment
3.1 Openin� Term Pa.�. During the Opening Term, the rent payable by Lessee to
Lessor shall be $25,200.00 annually ("Term Payment"), subject to adjustments, if any, set forth
below. The Opening Term Payment shall be paid annually. The first payment of Opening Term
Payment shall be paid to Lessor within thirty (30) days after the Agreement Date. Each Opening
Term Payment thereafter shall be due annually within thirty (30) days of Lessor's written notice
to Lessee.
3.2 Initial Term Pa.vment. During the Initial Term and any Renewal Term, the rent
payable by Lessee to Lessor shall be$25,200.00 annually("Initial Term Payment"and collectively
with the Opening Term Payment, "Rent"). The Initial Term Payment shall be paid annually to
Lessor with the first such annual Initial Term Payment to be paid within thirty(30)days of Lessor's
written notice to Lessee, provided such notice occurs after the COD. Each subsequent payment
shall be due annually within thirty(30)days of Lessor's Written Notice to Lessee during the Initial
Term and any Renewal Term.
3.3 Additional Rent Terms. Lessor acknowledges and agrees that the Rent is the only
rent or fee Lessee shall be obligated to pay Lessor in connection with this Agreement. Rent shall
be offset against any amounts due and payable to Lessee pursuant to the WTA or otherwise paid
by another method agreed by the Parties in writing.
ARTICLE 4 : Taxes
4.1 Lessee shall pay all applicable personal property Taxes on the System and any
applicable leasehold excise Taxes in respect of the Leased Property. Lessee shall not be liable for
any real property Taxes during the Term levied against the Leased Property. Unless prohibited by
Applicable Law, Lessee shall not be responsible for any Taxes imposed on the income of the
Lessor derived from the Leased Property or otherwise.
4.2 If a Party fails to pay directly, or reimburse the other Party for, Taxes for which the
first Party is responsible under this Agreement, the other Party may in its sole discretion elect to
pay the same directly to the taxing authority and in such event shall be entitled to recover such
amount from the first Party with interest thereon at a rate equal to the lower of(a) one and a half
percent (1.5%) per month or (b) the highest rate permitted under Applicable Law. Lessee may
offset against any amounts owing to Lessor hereunder any Taxes paid by Lessee pursuant to this
Section 4.2 for which Lessor is responsible.
ARTICLE 5 : System
5.1 Svstem Activities. Lessor agrees to allow Lessee and the other Lessee Parties,
throughout the Term, to develop, engineer, design, construct, install, interconnect, operate,
maintain, monitor, clean, repair, replace, and remove the System in its entirety or any component
thereof and engage in such other activities as are for the benefit thereof or purpose incidental
thereto (such development, construction and other activities collectively, "System Activities") on
and from the Leased Property.Lessor acknowledges that the System Activities will or may require,
among other things, physical installation of the System on the Leased Property, delivery of
feedstock to the 5ystem, and transport of RNG from the Leased Property by pipeline or vehicle,
506528698.4
and Lessor consents to such physical installation,delivery,transport and any other lawful activities
relating to the System. Without limiting the foregoing, Lessee shall have the right to alter,modify,
relocate, or remove any structures as may exist on the Leased Property as of the Agreement Date.
5.2 Permits and Incentives. Each Party shall obtain and maintain certain Permits as
required under the WTA. In the event the WTA terminates,each Party shall maintain such Permits
as reasonably required by Applicable Law.
5.3 Utilities and Water. Lessee shall be responsible for payment for any upgrades to
existing utility systems that Lessee deems necessary for the System Activities that do not constitute
Major Maintenance Expenses. Lessor shall cooperate in good faith with Lessee in Lessee's efforts
to obtain utility services to and from the Leased Property including any necessary easements on
adjacent property. Lessor shall be responsible for Pass-Through Costs during the Term that are
needed or used by Lessee. Lessor shall permit Lessee to arrange for and install separate metering
service on the Leased Property to record and account for Lessee's utility use. Lessor shall make
available, at Lessor's cost, potable water and any other utilities as agreed to under the WTA to
Lessee in sufficient quantities for the construction and operation of the System.
5.4 Ownership of S sv tem.
(a) Lessor acknowledges and agrees that, at all times during the Term, the
System, including all constituent elements or components thereof, (i) is exclusively owned by
Lessee or Lessee's Affiliate, (ii) is and shall continue to be the personal property of Lessee and
not Lessor, and is not and shall not become or be deemed part of or fixtures to the Leased Property
or the Lessor Property, and(iii) shall be installed, operated, and maintained exclusively by Lessee
or its Representatives in Lessee's sole discretion and not Lessor unless otherwise agreed by the
Parties in writing. Unless otherwise agreed in writing, Lessor shall not engage in any System
Activities.
(b) Lessor consents to Lessee, in Lessee's sole discretion, filing, on behalf of
Lessor, a disclaimer of the System as a fixture of the Lessor Property or the Leased Property in the
office where real estate records are customarily filed in the jurisdiction of the Lessor Property.
(c) Lessor acknowledges that Lessee is the owner of all Environmental and Tax
Attributes attributable to the System, along with any other products or services of any kind
produced by the System.
(d) At the end of the Term or in the case of Lessor exercising its buyout right
under Section 5.5 of the WTA, unless as specified elsewhere in this Agreement, Lessor has the
option to purchase for fair market value,using the procedures in Section 5.5 of the WTA, all right,
title, and interest in and to the System, on an "AS-IS" "WHERE IS"basis, without any warranty
or further liability to Lessee. Each Party further agrees to cooperate with the other Party to take
the necessary actions and execute the necessary documents to effectuate such purchase and sale.
Following such transfer, unless specified elsewhere in this Agreement including, but not limited
to, in this Section 5.4(d), neither Party shall owe any further liability or obligation to the other
Party. The provisions of this Section 5.4(d) shall survive the expiration or earlier termination of
this Agreement.
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ARTICLE 6 : Representations and Warranties
6.1 Mutual Representations and Warranties. Each Party represents and warrants to the
other Party:
(a) Existence. Such Party is duly and validly formed, existing and in good
standing under the laws of the state of its formation or organization and has all requisite power and
authority to enter into and perform its obligations under this Agreement. Such Party is duly
qualified or licensed to do business in each jurisdiction where the failure to duly qualify or become
licensed would adversely affect such Party's ability to perform its obligations under this
Agreement.
(b) Authorization. The execution, delivery and performance by such Party of
this Agreement, and the consummation of the transactions contemplated by this Agreement, have
been duly and validly authorized by all necessary action on the part of such Party.
(c) Enforceabilitv. This Agreement constitutes the legal, valid and binding
obligations of such Party enforceable against such Party in accordance with its terms, except as
such enforceability may be limited by bankruptcy, insolvency, reorganization, arrangement,
moratorium or other similar laws, now or hereafter in effect,relating to creditors'rights generally.
(d) Consents and A�provals. No consent or approval by, filing with or notice
to any Person(including third parties or Governmental Authorities) is required on the part of such
Party or any of its Affiliates for the valid execution and delivery of this Agreement and the
performance of its obligations hereunder and thereunder, other than those that have been obtained
and are in full force and effect.
(e) No Violation. Such Party's execution and delivery of this Agreement and
performance of its obligations hereunder and thereunder do not and will not (i) violate or conflict
with the organizational documents of such Party; (ii) violate or conflict with any law or any order
of any court or other Governmental Authority which is binding on (A) such Party or any Affiliate
of such Party or (B) assets of such Party or any Affiliate of such Party; or(iii) violate, result in a
default under or result in the termination, acceleration or mandatory prepayment of (with or
without the giving of notice, the passage of time or both) any obligation under any contract or
indebtedness to which such Party or any Affiliate of such Party is party or by which any such Party
or any such Party's assets are bound.
6.2 Lessor represents and warrants to Lessee:
(a) Lessor is the fee simple owner of, and has good and marketable title to, the
Lessor Property (including the Leased Property). Lessor's ownership of the Lessor Property
(including the Leased Property) is subject to no Liens or exceptions to title other than Liens, if
any, expressly disclosed in writing by Lessor to Lessee prior to the Agreement Date. Lessor is the
sole owner of the Lessor Property (including the Leased Property) and has the unrestricted right
and authority to execute this Agreement and to grant to Lessee the rights granted hereunder.
(b} To the best of Lessor's knowledge, (i) no underground tanks are now
located or at any time have been located within the Leased Property or any portion thereof, and
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(ii) there is no and has never been any violation or alleged violation with respect to the Leased
Property, or the presence, generation, storage, disposal or release of Hazardous Substances in, on
or under the Leased Property or within two hundred (200) feet of the Leased Property, of any
Environmental Law, including laws,rules or regulations relating to Hazardous Substances.
(c) Lessor is not a party to any,and to Lessor's knowledge,there are no pending
or threatened, legal, administrative, arbitral or other proceedings, claims, actions or governmental
or regulatory investigations of any kind or nature whatsoever against Lessar (i) challenging the
validity or propriety of this Agreement, andlor transactions contemplated in this Agreement or(ii)
which could reasonably be expected to have a material adverse effect on the ownership or
operation of the Lessor Property or any part thereof or interest therein.
(d) To the best of Lessor's knowledge, there are no currently existing options,
rights of refusal, sales contracts, mineral rights requiring substantial use of the surface or other
rights in favor of any third parties relating to the Lessor Property or any interest therein, which
could interfere with the development, construction, installation, maintenance or operation by
Lessee of the System or that allow any party other than Lessee to develop a renewable energy
project or that could adversely affect Lessee's use of the Lessor Property or obtaining the benefits
intended under this Agreement.
(e) The Parties acknowledge that a Record of Survey has been filed to cause
the Leased Property to be a separate and independent legal lot of record. Lessor agrees to
indemnify, defend, and hold harmless Lessee and all Lessee Parties from any costs or claims that
may arise by reason of any non-compliance with respect to zoning laws applicable to the Leased
Property (including, without limitation, (i) legal fees and court costs, and (ii) consequential or
punitive damages).
ARTICLE 7 : Insurance
7.1 Insurance to be Maintained; Obligations with Respect Thereto
(a) Lessee shall maintain comprehensive general liability insurance with
respect to the Leased Property and the Lessor Property of which the Leased Property is a part, in
the amount of $1,000,000 per occurrence and $2,000,000 in the aggregate per annum with
responsible companies qualified to do business in the state in which the Lessor Property is located
and in good standing therein insuring both Lessee and Lessor as additional insured against injury
to persons or damage to property as provided.
(b) Lessor shall maintain insurance coverage of such types and amounts as may
be customary, prudent, and reasonable in light of Lessor's ownership of and activities conducted
on the Lessor Property, naming Lessee as additional insured.
(c) The Parties shall provide each other with certificates for such insurance at
or prior to the commencement of the Term, and thereafter within 30 (thirty) days prior to the
expiration of any such policies.All such insurance certificates shall provide that such policies shall
not be cancelled without at least 30 (thirty) days prior notice to each insured named therein.
506528698.4
7.2 Lessor and Lessee shall each maintain on their respective personal property on or
about the Lessor Property a policy of"all risk"property insurance, with vandalism and malicious
mischief endarsements, to the extent of at least 100 percent (100%) of full replacement value of
its personal property. Lessor and Lessee shall each maintain worker's compensation insurance to
the extent required by Applicable Law.
7.3 Lessee shall maintain workers' compensation insurance as required by law.
ARTICLE 8 : Covenants
8.1 Lessee Covenants. Lessee shall not directly or indirectly cause, create, incur,
assume or allow to exist any Lien on or against the Lessor Property; the foregoing does not
preclude the imposition of a Lien on the System by Lessee's Lender or as permitted under Article
14,provided that such Lien shall not create any Lien on the real property of Lessor.
8.2 Lessor Covenants.
(a) Lessor shall not directly or indirectly cause, create, incur, or assume any
Lien on, affecting or with respect to the System (including any constituent element or component
thereo fl or any interest therein.Lessor shall immediately notify Lessee of the existence of any such
Lien,shall promptly cause the same to be discharged and released of record without cost to Lessee,
and shall indemnify Lessee against all costs and expenses (including reasonable attorneys' fees)
incurred in discharging and releasing any such Lien or that otherwise arose as a result of such Lien.
(b) Lessor and its authorized representatives and invitees shall not conduct
activities on, in or about the Leased Property or the Lessor Property in a manner that has any
likelihood of causing damage to, impairment of, or otherwise adversely affecting the System, or
that are not in accordance with the WTA or Lessee's safety protocols with respect to the System,
and Lessor shall not permit any other lessee at the Lessor Property or any other person to do so.
Lessor's activities and any grant of rights Lessor makes to any Person, whether located on the
Lessor Property or elsewhere, shall not,currently or prospectively,interfere with:the construction,
installation, maintenance or operation of the System, whether located on the Lessor Property or
elsewhere; access over the Lessor Property to the Leased Property or the System; any System
Activities; or the undertaking of any other activities permitted under this Agreement.
(c) Lessor acknowledges that certain aspects inherent to the operation of the
System may result in some nuisance, such as visual impacts, possible increased noise levels,
possible odor, and other possible effects of renewable natural gas production and transportation.
Without limiting the grant of easements made in Article 2 of this Agreement, Lessor understands
and has been informed by Lessee that the System may result in some nuisance, and hereby accepts
such nuisance, waives its right to object to such nuisance, and agrees to indemnify and defend
Lessee from any third party claims concerning such nuisance, in each case provided that Lessee
complies with its obligations in this Agreement.
(d) Lessar shall not violate any Environmental Law in connection with or
related to Lessor's ownership or use of the Lessor Property, including without limitation any such
violation which may have occurred by Lessor, or Lessor's employees, members, managers,
affiliates, invitees, or agents (collectively, "Lessor Parties") or any other person prior to the
506528698.4
Agreement Date. In conformance with the requirements of Applicable Law, Lessor shall clean up,
remove, remedy and repair any soil or ground water contamination and damage caused by the
release or disposal of any Hazardous Substances by Lessor or any Lessor Party in, on, under, or
about the Leased Property or within two hundred (200) feet of the Leased Property.
(e) Lessor covenants that Lessee shall have quiet and peaceful possession of
the Leased Property and the rights granted by this Agreement for the entire Term without
hindrance, interruption, suit, trouble or interference of any kind by Lessor or any other Person
claiming (whether at law or in equity) by, through or under Lessor. Lessor covenants and agrees
to and with Lessee:
(i) not to allow any Liens against the Leased Property during the Term
other than Liens expressly consented to by Lessee in writing or a Lessor Mortgage with respect to
which a nondisturbance agreement in a form approved by Lessee has been executed pursuant to
Section 15.1 (collectively, "Permitted Liens"),
(ii) to promptly pay when due any and all obligations secured by Liens
against the Leased Property(including Permitted Liens),
(iii) not to allow any default to occur under oblig�tions secured by Liens
againsY the Leased Property (including Permitted Liens), and
(iv) in accordance with Section 15.1, to obtain a nondisturbance
agreement from the holders of all Lessor Mortgages. In lieu of paying amounts secured by Liens
that are not Permitted Liens, Lessor may provide a bond or other adequate security in accordance
with Applicable Law and the reasonable requirements of Lessee.
(� Lessor,in its ministerial role as a governmental agency, shall not enforce or
promulgate any law or other governmental regulation in a manner that unduly prejudices,
preferences,or burdens Lessee relative to other third parties subject to Lessor's jurisdiction. Lessor
shall not take any action as a governmental agency that would cause Lessee to be in breach of this
Agreement. For avoidance of doubt, Lessor shall not change zoning laws or permit requirements
in a manner that discriminates against Lessee's rights under this Agreement or the WTA.
ARTICLE 9 : Indemnification
9.1 Each Party (the "Indemnifying Party") shall defend, indemnify and hold harmless
the other Party and the directors, officers, shareholders, partners,members, agents and employees
of such other Party, and the respective Affiliates of each thereof(each, an "Indemnified Party"
and, collectively, the"Indemnified Parties"), from and against all Claims resulting from(a) injury
to or death of persons, and damage to or loss of property to the extent caused by or arising out of
the negligent acts or omissions of, or the willful misconduct of, the Indemnifying Party (or its
contractors, agents or employees), (b) violation of Applicable Law (including any Environmental
Law) by the Indemnifying Party (or its contractors, agents or employees), (c) a breach or default
in the performance of any obligation to be performed by the Indemnifying Party under the terms
of this Agreement, (d) any other matter identified as requiring indemnification, or(e) with respect
to Lessee as the Indemnifying Party, the release or threatened release of any Hazardous Substance
at,on,above or below the Leased Property that has been caused by Lessee or Lessee's contractors,
506528698.4
agents or employees following the Agreement Date,and with respect to Lessor as the Indemnifying
Party,the release,threatened release,removal,treatment, storage,disposal,disposition,mitigation,
or cleanup of any Hazardous Substance at, on, above or below the Leased Property prior to the
Agreement Date or, following the Agreement Date, the release or threatened release of any
Hazardous Substance at, on, above or below the Leased Property that has not been caused by
Lessee or Lessee's contractors, agents or employees. Without limiting the foregoing, the
indemnification obligations set forth herein include Claims brought against any Indemnified Party
by any third party. Nothing in the foregoing shall require the Indemnifying Party to indemnify the
Indemnified Party for any Claims to the extent caused by or arising out of the Indemnified Party's
Event of Default, the negligent acts or omissions of, or the willful misconduct of,the Indemnified
Party, any Force Majeure event, any act or omission of any Indemnified Party responsible for ar
contributing to the Claim, or any matter for which the risk has been specifically allocated to a
particular Party hereunder or under the WTA.
9.2 Indemnification Procedures. A Lessee Indemnified Party shall promptly notify
Lessor of the assertion of any claim against it for which it is entitled to be indemnified hereunder,
shall give the Lessor the opportunity to defend such claim, and shall not settle the claim without
the approval of the Lessor which approval shall be in the Lessor's sole discretion. These
indemnification provisions are for the protection of the Lessee Indemnified Parties only and shall
not establish, of themselves, any liability to third parties.
9.3 Limitation of Liabilit . IN NO EVENT SHALL EITHER PARTY HAVE ANY
LIABILITY UNDER THIS AGREEMENT OR ANY INDEMNITY OFFERED THEREUNDER
FOR ANY SPECIAL,PUNITIVE,EXEMPLARY, SPECULATIVE,INDIRECT,REMOTE, OR
CONSEQUENTIAL DAMAGES, DAMAGES FOR LOST PROFITS OR DAMAGES BASED
ON A MULTIPLE OF EARNINGS OR DIMINUTION IN VALUE, OR ANY SIMILAR
DAMAGES. FOR THE AVOIDANCE OF DOUBT, THE INDEMNIFICATION
OBLIGATIONS OF THE PARTIES SHALL INCLUDE THOSE ARISING UNDER STRICT
LIABILITY.
9.4 Survival. The provisions of this Article 9 shall survive termination of this
Agreement.
ARTICLE 1Q : Condemnation
10.1 Contests. If, during the Term, any competent authority or entity for any public or
quasi-public purpose ("Condemnor") seeks to take or condemn all or any portion of the Leased
Property, Lessor and Lessee shall use all reasonable and diligent efforts, each at its own expense,
to contest such taking.
10.2 Termination Due To Condemnation. Except as otherwise set forth in the WTA, if
at any time during the Term, any Condemnor shall condemn all or any portion of the Leased
Property, or the System, so that the purposes of this Agreement are frustrated, then, at Lessee's
option, (a) this Agreement shall be modified to revise the definition of Leased Premises to reflect
such portion not condemned or(b) this Agreement shall cease and terminate, in either event,upon
the earlier of(i) the date that the Condemnor takes physical possession of the Leased Property or
the System, (ii) the date that Lessee is, in its sole judgment,no longer able or permitted to operate
506528698.4
the System on the Leased Property in a commercially viable manner, or(iii) the date title vests in
the Condemnor. In the event Lessee elects to terminate this Agreement, as provided in the
foregoing sentence, Lessee shall continue to pay all amounts payable hereunder to Lessor until the
earlier of such dates, at which time Lessor and Lessee shall be relieved of any and all further
obligations and conditions to each other under this Agreement, except (A) Lessor shall pay to
Lessee a sum representing the total value of the Outstanding Debt, minus the value of any
insurance proceeds received or owed to Lessee or Lender arising from a System casualty preceding
the effective date of termination (and Lessor shall make such payment to Lessee on the effective
date of termination), and(B)the Parties shall be responsible for any indemnity obligations or other
obligations which by their terms survive the expiration or termination of the Agreement.
10.3 Distribution of Award. For any taking covered by this Article 10, all sums,
including damages and interest, awarded shall be paid and distributed to Lessee and Lessor in
accordance with their respective interests under this Agreement.
10.4 Notwithstanding the provision in Section 17.6 of this Agreement, unless Lessor is
the Condemnor, this Article 10 shall control in the event of a conflict between the terms in this
Agreement and the WTA. This Article 10 shall survive the expiration or earlier termination of this
Agreement.
ARTICLE 11 : Events of Default, Remedies and Damages
11.1 Events of Default. Each of the following shall constitute an `Bvent of Default"by
a Party(the"Defaulting Party"):
(a) such Party's material misrepresentation in connection with this Agreement,
fraud, or intentional misconduct;
(b) failure of such Party to pay any amount due and payable under this
Agreement;
(c) failure of such Party to perform any material obligation (other than a
payment obligation)under this Agreement;
(d) an Insolvency Event occurs with respect to such Party;
(e) the occurrence of{i) a Material Breach of the WTA by a Defaulting Party,
or(ii) the WTA is terminated by reason of a breach by the Defaulting Party thereunder.
11.2 Remedies.
(a) Event of Default bv Lessee.
(i) If Lessee is the Defaulting Party, Lessor may,but is not required to,
terminate this Agreement by providing Lessee sixty(60)days advance written notice of the Event
of Default,during which sixty(60)day period Lessee shall have the opportunity to cure such Event
of Default.
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(ii) If Lessee fails to cure and Lessor exercises its termination right, such
termination shall be effective upon the date that Lessor and Lessee fully and finally execute any
agreements or documents necessary to effectuate the Lessor's remedy under Section 7.4(a) of the
WTA.
(iii) Subject to Section 11.5 of this Agreement, if Lessee is the
Defaulting Party,beyond any applicable notice and cure periods set forth in this Agreement,Lessor
may seek any and all additional available remedies at law or in equity;provided, however, that the
remedies provided under the WTA and this Agreement are not meant to provide Lessor with
double recovery.
(iv) Notwithstanding anything to the contrary set forth herein, Lessor
may not terminate this Agreement by reason of any Lessee default so long as the WTA is in effect.
(b) Event of Default by Lessor.
(i) If Lessor is the Defaulting Party for a non-monetary default, Lessee
may,but is not required to,terminate this Agreement by providing Lessee sixty(60)days advance
written notice of the Event of Default, during which sixty (60) day period Lessor shall have the
opportunity to cure the Event of Default (except for breaches predicated upon Lessor's
nonpayment, in which case a 30-day cure notice and cure period shall apply). If Lessor fails to
cure and Lessee exercises its termination right, Lessor shall owe to Lessee as direct damages, and
not as a penalty, the amounts identified in Section 7.4(b) of the WTA.
(ii) Subject to Section 11.5 of this Agreement, if Lessor is the
Defaulting Party, beyond any applicable notice and cure periods set forth in this Agreement,
Lessee may seek any and all additional remedies at law or in equity;provided, however, that the
remedies provided under the WTA and this Agreement are not meant to provide Lessee with
double recovery.
(c) Events under the WTA. Notwithstanding anything to the contrary in this
Article 11, if either Party is in default per Section 11.1(e), then the Defaulting Party shall get the
benefit of any notice and cure period under the WTA or this Agreement, whichever is longer, but
shall not get the benefit of both cure periods.
11.3 Event of Default or Anticipated Breach. In the case of any Event of Default under
or anticipated breach of this Agreement, each Party agrees to use good faith efforts to take such
commercially reasonable actions as necessary to expeditiously resolve the underlying
circumstance;provided, however, that in all circumstances neither Party shall be required or be
deemed to have waived any defenses it may have under Applicable Law or contract.
11.4 Lender Ri�ht to Cure. If Lessor is the Defaulting Party under this Agreement,
Lessor agrees and acknowledges that Lender(s) may, but do(es) not have the obligation to, (i}
acquire title to the System,(ii)cure all defaults and breaches that are capable of cure,or(iii)assume
any Lessee obligation under this Agreement, in which case Lessor shall recognize such Lender(s)
as if such Lender had been the original party to this Agreement.
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11.5 Dispute Procedures. Provided the WTA is in full force and effect, the Parties agree
that all disputes under this Agreement shall be governed by Section 6 and Section 7 of the WTA
as if such sections had been set forth herein.
ARTICLE 12 : Force Ma,jeure
Except as otherwise set forth herein,in the event either Party is rendered unable,wholly or in part,
to carry out its respective obligations under this Agreement, except for any obligation to make
payment, due to circumstances beyond its reasonable control,including,without limitation, strike,
riot, lockouts or other disturbances, flood, natural disaster, acts of God, war or civil insurrection,
an epidemic,pandemic or viral or communicable disease outbreak,quarantine,national emergency
or other unforeseeable circumstances beyond its reasonable control (a "Force Majeure"), then
written notice setting out the reason for non-performance shall be given to the other Party by the
Party claiming Force Majeure promptly following discovery thereof. Upon receipt of such notice,
the obligations of the affected Party shall be suspended during the period of the Force Majeure and
any deadline or date certain for performance shall be extended by a period equal to the period of
the Force Majeure. Every reasonable effort shall be made by the Parties to avoid delay and limit
any period during which performance under this Agreement might be suspended.
ARTICLE 13 : Dispute Resolution
13.1 This Agreement shall be interpreted in accordance with the laws of the State of
Washington without giving effect to its choice of law principles.
13.2 Any disagreement between Lessor and Lessee which cannot be resolved in
accordance with this Agreement shall be referred to the senior management of each Party who
shall attempt to resolve the dispute in good faith. To aid resolution by the Parties' senior
management, Lessor's and Lessee's representatives shall promptly prepare and exchange
memoranda stating the issues in dispute and their positions, summarizing the negotiations which
have taken place and attaching relevant documents. If the Parties' senior management resolves the
dispute, such resolution shall be reported in writing to and shall be binding upon the Parties.
133 If, despite the good faith efforts described in Section 13.2,the Parties are unable to
resolve a dispute or claim arising out of or relating to this Agreement or its breach, termination,
enforcement, interpretation or validity, the Parties may seek to agree on a forum for mediation to
be held at a mutually agreeable site.
13.4 If, despite good faith efforts described in Section 13.2 and 13.3, the Parties are
unable to resolve a dispute or claim arising out of or relating to this Agreement or its breach,
termination, enforcement, interpretation or validity, (including the determination of the scope or
applicability of this Agreement to arbitrate), shall be determined by arbitration in Seattle,
Washington before a single arbitrator who is an experienced attorney in the discipline that is the
subject of the dispute and whom shall be jointly selected by Lessor and Lessee. The arbitration
shall be administered by JAMS pursuant to its Comprehensive Arbitration Rules and Procedures.
The arbitrator shall issue a reasoned, written decision which will be binding on the Parties.
Judgment may be entered upon the arbitrator's decision in any court of competent jurisdiction,and
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each Party agrees to submit to the personal jurisdiction of any such court for the purposes of any
such actions or proceedings to enter or enforce such judgment.
13.5 Should either Party employ an attorney to enforce any of the provisions of this
Agreement, the non-prevailing Party in any final judgment agrees to pay the other Party's
reasonable expenses, including reasonable attorneys' fees and expenses in or out of litigation and,
if in litigation, trial, appellate, bankruptcy or other proceedings, expended or incurred in
connection therewith, as determined by a court of competent jurisdiction.
13.6 The venue for any judicial proceedings relating to this Agreement shall be the
Superior Court for the State of Washington in Franklin County.
ARTICLE 14 : Financing
14.1 Lender. Notwithstanding any other provision, Lessee shall have the right to
encumber its interest in this Agreement, the System and any of Lessee's other improvements
located on the Leased Property by mortgage, lease, deed of trust or similar instrument or
instruments and by security agreement, fixture filing and financing statements or similar
instrument or instruments in favor of Lender. Lessar represents and warrants as follows: (i) such
encumbrance by Lessee will not violate any term or condition of any covenant or restriction
affecting the Lessor Property or the Leased Property; (ii)there is no existing Lien upon the Lessor
Property or the Leased Property that could attach to the System an interest adverse to or senior to
Lessee's Lenders' security interest therein; and (iii) there exists no event or condition which
constitutes a default, or would,with the giving of notice or lapse of time, constitute a default under
the Agreement.
14.2 Rights of Lender.
(a) In the event of a foreclosure or seizure of Lessee's rights or property or the
exercise of any other right under any security agreement granted by Lessee to a Lender, Lessor
agrees to permit such Lender to exercise any and all rights of Lessee hereunder.
(b} Lessor agrees to execute any consent to assignment reasonably requested
by any Lender to evidence and give effect to the provisions of this Article 14. Lessor shall be
timely provided with current addresses for all Lenders and their assignees. At Lessee's request,
Lessor shall amend this Agreement to include any provision that may reasonably be requested by
an existing or proposed Lender, and shall execute such additional documents as may reasonably
be required to evidence such Lender's rights hereunder.
(c) Further, Lessor shall, within thirty(30) days after receipt of written request
from Lessee or any existing or proposed Lender, execute and deliver thereto a certificate to the
effect that Lessor (i} recognizes a particular entity as a Lender under this Agreement and (ii) will
accord to such entity all the rights and privileges of a Lender hereunder,in addition to any estoppel
or certificate required under Section 17.4.
(d) All Lenders shall be deemed third party beneficiaries of the rights granted
to Lessee under this Agreement.
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ARTICLE 15 : Subordination; Non-Disturbance
At Lessee's request, Lessor shall obtain from holders of any mortgage(s) now or
subsequently granted by Lessor and recorded against the Leased Property and to any renewals,
modifications, refinancings and extensions thereof("Lessor Mortgages"), execution and delivery
to Lessee of a nondisturbance agreement, in recordable form with terms and conditions acceptable
to Lessee, in its sole discretion, under the terms of which the holder of the Lessor Mortgage
covenants and agrees to and with Lessee (i) not to disturb Lessee in its possession of the Leased
Property or in the enjoyment of its rights hereunder, and (ii) to notify Lessee of any defaults by
Lessor in the performance of its obligations secured by the Lessor Mortgage, and (iii) to provide
Lessee a reasonable period of time after Lessee's receipt of notice of Lessor's default to cure said
default (which period shall be not less than forty-five (45) days in the event of payment defaults
and ninety (90) days in the event of non-payment defaults, and which period shall be extended if
default cannot reasonably be cured within such period,provided Lessee has promptly commenced
and is diligently performing actions to cure the default), before exercising any rights to foreclose
upon or otherwise take ownership of the Leased Property.
ARTICLE 16 : Recordation; Confidentiality
16.1 Memorandum of Lease and Easement. The Parties agree that this Agreement shall
not be recorded, but the Parties shall execute and record a memorandum of lease and easement
agreement ("Memorandum of Lease") in recordable form substantially in the form of Exhibit D
with the applicable registry of deeds in the jurisdiction in which tfie Lessor Property is located,
which Memorandum of Lease shall contain a reference to the easements and covenants granted by
Lessor to Lessee hereunder and shall otherwise be in form and content reasonably acceptable to
Lessee. Recordation of the Memorandum of Lease shall be at Lessee's expense.
16.2 Confidentialitv.
(a) Except as set forth herein, (i) neither Party will disclose Confidential
Information of the other Party to any third party, and (ii) each Party will use the other Party's
Confidential Information only for purposes of the transactions contemplated by this Agreement;
provided, however, that a Party in possession of the other Party's Confidential Information may
disclose Confidential Information as required to comply with orders of governmental entities that
have jurisdiction over it or as otherwise required by law.
(b) Each Party agrees to (i) take reasonable steps to protect the other Party's
Confidential Information (which steps will be required to be at least as protective as those that the
receiving Party takes to protect its own Confidential Information), (ii) notify the other Party
promptly upon discovery of any unauthorized use or disclosure of Confidential Information; and
(iii) cooperate with the other Party to help regain control of any Confidential Information that is
the subject of any such unauthorized use or disclosure and prevent further unauthorized use or
disclosure of such Confidential Information.
(c) Each Party may disclose the other Party's Confidential Information to its
subcontractors, agents, legal counsel, accountants, consultants, financing parties, or
representatives to the extent necessary in furtherance of this Agreement, and then only on a"need
506528698.4
to know" basis in connection with the transactions contemplated hereby and on a confidential
basis. Without negating the foregoing, Lessor agrees and acknowledges that Lessee may disclose
this Agreement and all matters relevant to Lessee's rights and obligations hereunder (including,
without limitation, correspondence with Lessor) to Lessee's Lender(s) for any financing related
purpose, and that such disclosure shall not be in violation of this Agreement.
(d) This Agreement shall be considered a public document and will be available
for inspection and copying in accordance with the Public Records Act, chapter 42.56 of the
Revised Code of Washington (the "Act"). If Lessee considers any record, in whole or in part,
provided to Lessor under this Agreement,whether in electronic or hard copy form, to be protected
from disclosure under the Act, Lessee shall make reasonable efforts to clearly identify each such
record with words such as"CONFIDENTIAL,""PROPRIETARY"or"BUSINESS SECRET."If
a request is made for disclosure of any Lessee Confidential Information, Lessor shall promptly
notify and provide Lessee with a copy of such request. In all cases, Lessor will ultimately
determine whether the requested material should be made available under the Act. If Lessor
determines that the material is subject to disclosure, Lessor will notify Lessee of its decision and
allow Lessee ten (10) business days to take whatever action it deems necessary to protect its
interests. If Lessee fails or neglects to take such action within said period, Lessor will release the
record(s)or portions thereof reasonably deemed by Lessor to be subject to disclosure. Lessor shall
not be liable to Lessee for inadvertently releasing records pursuant to a disclosure request not
clearly identified by Lessee as "CONFIDENTIAL," "PROPRIETARY" or `BUSINESS
SECRET."
ARTICLE 17 : Miscellaneous
17.1 Definitions. Capitalized terms used in this Agreement shall have the meaning set
forth in Exhibit A hereto or as otherwise defined herein.
17.2 Inte retation. Except where otherwise expressly provided or unless the context
otherwise necessarily requires, in this Agreement the following shall apply. Reference to a given
section, exhibit, annex or schedule is a reference to a section, exhibit, annex or schedule of this
Agreement, unless otherwise specified, and all schedules, exhibits and annexes hereto are hereby
made a part hereof and incorporated herein by such reference.The headings used in this Agreement
have been inserted for convenience of reference only and do not define or limit the provisions
hereof. The terms "this AgreemenY', "hereof', "herein", "hereto", "hereunder" and "herewith"
refer to this Agreement as a whole. If the time for performing an obligation under this Agreement
expires on a day that is not a business day, the time shall be extended until that time on the next
business day. With respect to the determination of any period of time, the word "from" means
"from and including" and the words "to" and "until" each means "to but excluding". The words
"shall" and "will" have the same meaning. The words "include," "includes" or "including" and
words of similar import shall be deemed to be followed by the phrase "without limitation" and
shall not be limited by any enumeration or otherwise; any pronoun or pronouns used herein shall
be deemed to include both the singular and the plural and to cover all genders; the use of the words
"or," "either" and "any" shall not be exclusive. The provisions of this Section 17.2 shall survive
any expiration or termination of this Agreement.
506528698.4
17.3 Governin Law• Remedies. This Agreement shall be governed by the laws of the
State of Washington, without regard to the conflicts of law rules of any jurisdiction.
17.4 Assi�runent.
(a) The burdens of the lease, easements and other covenants, rights and
obligations contained in this Agreement shall run with and against the Lessor Property and shall
be a charge and burden thereon for the duration of this Agreement. Lessor shall provide at least 30
days' prior written notice to Lessee of any sale, assignment or transfer ("Transfer") of any of
Lessor's interest in the Lessor Property(or any part thereo� or in this Agreement. In addition, any
such Transfer shall be expressly subject to this Agreement. Lessor shall notify Lessee of the closing
of such Transfer, and if applicable, the name and contact information of the successor to Lessor's
interest and payment instructions for Rent and other amounts due under this Agreement;provided,
that Lessor shall indemnify Lessee for losses arising from Lessee's payment of Rent or other
amounts as so directed. Until such notice of closing is received, Lessee shall have no duty to any
successor to Lessor's interest, and Lessee shall not be in default under this Agreement if it
continues to make all payments to the original Lessor before such notice is received. Under no
circumstances shall a Transfer by Lessor include the System.
(b) This Agreement shall be binding on and inure to the benefit of the Parties'
successors and permitted assignees.
(c) Lessee may assign,pledge as collateral (in accordance with Article 14,with
respect to a Lender), sell or transfer this Agreement or the System or any of Lessee's rights or
obligations under this Agreement or rights in and to the System (a) to any Affiliate of Lessee or
(b) to any Lender or as part of any transaction Lessee or any Affiliate of Lessee may enter into
with any Lender; Lessor hereby consents to any such assignment, pledge, sale or transfer. Lessor
acknowledges that Lessee or an Affiliate of Lessee may obtain financing (including, without
limitation, any form of debt, equity or lease financing) or credit support from one or more Lenders
in relation to the development, construction, ownership, transfer, operation or maintenance of the
System. Any Lender (or its wholly owned assignee or designee), or any person acquiring the
Lessee's leasehold estate pursuant to foreclosure of a mortgage or a deed or assignment in lieu of
such foreclosure,may,upon acquiring the leasehold estate,upon prior written approval of Lessor,
which shall not be unreasonably withheld, conditioned or delayed, sell and assign the leasehold
estate on such terms and conditions as it may determine and thereafter be relieved of all obligations
under this Lease accruing from and after the date of such sale and assignment.
(d) Both Parties agree in good faith to consider and to negotiate changes or
additions to this Agreement that may be requested by the Lenders. Lessor agrees to execute any
consent, estoppel or acknowledgement in form and substance requested by such Lenders
(including those consents and other documents pursuant to Article 14, in the case of a collateral
pledge to a Lender); any such Lender shall be deemed to be an intended third-party beneficiary of
the provisions of this Agreement.
(e) Either Party, without charge, at any time and from time to time, within five
(5) business days after receipt of a written request by the other Party, shall deliver a written
instrument, duly executed, certifying to such requesting Party, ar any other Person specified by
506528698.4
such requesting Party (including any Lender): (i) that this Agreement is unmodified and in full
force and effect, or if there has been any modification, that the same is in full force and effect as
so modified, and identifying any such modification; (ii) whether or not to the knowledge of any
such Party there are then existing any offsets or defenses in favor of such Party against enforcement
of any of the terms, covenants and conditions of this Ageement and, if so, specifying the same
and also whether or not to the knowledge of such party the other party has observed and performed
all of the terms, covenants and conditions on its part to be observed and performed, and if not,
specifying the same; and (iii) such other information as may be reasonably requested by the
requesting Party. Any written instrument given hereunder may be relied upon by the recipient of
such instrument, except to the extent the recipient has actual knowledge of facts contained in the
certificate.
17.5 Material Chan�e in Law. In the event of a Material Change in Law,the Parties shall,
to the extent necessary and possible, reform this Agreement to ensure compliance and conformity
with such Material Change in Law and to restore or retain the Parties' original benefits and burdens
under this Agreement. For purposes of this Agreement, a"Material Change in Law" shall mean:
(a) the adoption, promulgation, change, repeal or modification after the Agreement Date of any
laws, codes, regulations, statutes or orders, (b) an interpretation or application by a Governmental
Authority of a law which had not been made, or which if made, was different than a prior
interpretation of or application by such Governmental Authority or another Governmental
Authority,or(c)the imposition of any material condition in connection with the issuance,renewal,
extension,replacement or modification of any permits after the Agreement Date that in the case of
(a), (b) or(c): (i) establishes requirements for the construction, financing, ownership, operation or
maintenance of the System that are materially more restrictive than the most restrictive
requirements in effect as of the Agreement Date, and (ii) has a material and adverse effect on the
Lessee's quiet enjoyment of and/or value obtained from the Leased Property.
17.6 Entire A�,reement.This Agreement and the WTA,including any exhibits,schedules
or annexes attached hereto and thereto, constitute the entire agreement and understanding between
the Parties with respect to Lessee's leasehold interests and supersedes all prior written and oral
agreements, discussions, or representations between the Parties, including any non-disclosure
agreements;provided that in the case of any conflict or inconsistency between or among the terms
of this Agreement and the WTA, the terms of the WTA will govern provided that the WTA is in
full force and effect.
17.7 Severabilitv. If a court or other body of competent jurisdiction finds, or the Parties
mutually believe, any provision of this Agreement, or portion thereof, to be invalid or
unenforceable, such provision will be enforced to the maximum extent permissible so as to effect
the intent of the Parties, and the remainder of this Agreement will continue in full force and effect.
17.8 Modification, Waiver. No modification of or amendment to this Agreement, nor
any waiver of any rights under this Agreement, will be effective unless in a writing signed by the
Parties. Waiver by a Party of a breach of any provision of this Agreement will not operate as a
waiver of any other or subsequent breach.
17.9 Notices. Unless otherwise expressly provided in this Agreement, any notice,
request, demand, waiver, consent, approval or other communication that is required or permitted
506528698.4
under this Agreement shall be in writing and shall be sent by personal delivery, facsimile
transmission, electronic mail, overnight courier, or regular, certified, or registered mail, return
receipt requested, to the Lessee or the Lessor, as applicable, at the address below, or to such other
addresses as the Parties may specify from time to time in writing. Notices and other
communications shall be effective upon personal delivery, receipt of electronic transmission, the
promised delivery date after deposit with overnight courier, or five (5) days after deposit in the
mail.The Parties deem documents faxed, emailed or sent electronically as PDF files or comparable
electronic medium to the specified addresses to be original documents.
If to Lessee:
Burnham SEV Pasco LLC
1201 Wilson Blvd—27th Floor
Arlington, VA 22209
With a copy to: legal@burnahmdev.com
If to Lessor:
City of Pasco
Adam Lincoln
City Manager
525 N 3rd Avenue
Pasco, WA 99301
With a copy to:
Eric Ferguson
eferguson@kerrlawgroup.net
Third Partv Beneficiary. Except as otherwise provided in this Agreement, this Agreement does
not create or imply any rights of or obligations to Persons other than the Parties.
Survival. The provisions of this Agreement that should reasonably be considered to survive
termination of this Agreement shall survive any termination of this Ageement. For the
avoidance of doubt, surviving provisions shall include Article 1 (Term); Article 5 (System
transfer) Article 9 (Indemnification); Article 11 (Events of Default, Remedies and Damages);
Article 13 (Dispute Resolution); Article 17 (Miscellaneous); and Exhibit A(Definitions).
Si�natures. This Agreement may be signed in one or more counterparts, including by PDF or
comparable electronic medium, each of which shall be deemed an original, with the same force
and effectiveness as though executed in a single document.
[SIGNATURE PAGES FOLLOW]
506528698.4
The Parties, through their duly authorized representatives below, have executed this
Agreement as of the Agreement Date.
LESSEE
BURNHAM SEV PASCO LLC,
a Washington limited liability company
By:
Name: Chris Tynan
Title: CEO
Date
STATE OF
COUNTY OF
This record was acknowledged before me on by
as of BURNHAM SEV PASCO LLC.
(Signature of notary public)
(Title of o�ce)
My Commission
Expires:
(Date)
(Stamp)
506528698.4
LESSOR
CITY OF PASCO,
a Washington municipal corporation
By:
Name:
Title:
Date
STATE OF WASHINGTON
COUNTY FRANKLIN
OF
This record was acknowledged before me on _, 20_ by
as of the CITY OF PASCO.
(Signature of notary public)
(Title of o�ce)
My Commission
Expires:
(Date)
(Stamp)
506528698.4
EXHIBIT A
DEFINITIONS
Capitalized terms not defined herein are as defined in the WTA. The following words and phrases
shall have the meanings set forth herein:
"Affiliate" means, with respect to a Person, any Person that directly or indirectly controls, is
controlled by, or is under common control with such Person;
"Applicable Law" means any applicable law, statute, code, rule, regulation, ordinance, decree,
judgment, directive, permit, license, registration, guideline, approval, ruling, injunction, decision
or other requirement of a Governmental Authority;
"Initial Term"is defined in Section 1.3;
"Initial Term Payment"is defined in Section 3.2;
"Condemnor"is defined in Section 10.1;
"Confidential Information"means any non-public information, know-how or trade secrets in any
form that is designated"confidential"or that a reasonable person should understand is confidential.
The following information does not constitute Confidential Information: (a) information that is or
becomes generally available to the public other than as a result of a disclosure by either Party in
violation of this Agreement, (b) information that was already known by either Party on a non-
confidential basis prior to this Agreement, (c) information that becomes available to either Party
on a non-confidential basis from a source other than the other Party if such source was not subject
to any prohibition against disclosing the information to such Party, and (d) information that is
independently developed by a Party without violating its obligations under this Agreement;
"Defaulting Party"is defined in Section 11.1;
"Agreement Date"is defined in the preamble to this Agreement;
"Environmental and Tax Attributes" means any and all benefits, emissions reductions, offsets,
allowances, carbon credits, portfolio credits, environmental credits, renewable energy credits or
certificates, emissions reduction credits, emissions allowances, green tags, rebates, subsidies,
payments or other credits or incentives that are attributable to the System or the production or
processing of biogas or renewable natural gas from the System or its displacement of conventional
energy or fuel or avoidance of emissions,including investment Tax credits,production Tax credits,
depreciation benefits,deductions and other Tax credits,Tax benefits,Tax incentives or Tax-related
grants available under any Applicable Law relating to the construction, ownership or operation of,
or production of energy from, the System; for the avoidance of doubt, "Environmental and Tax
Attributes" includes credits generated for any state of Federal Low Carbon Fuel Standard and
Federal Renewable Identification Numbers ("RINs") generated in accordance with the Energy
Policy Act of 2005;
"Environment" means soil, land, surface or subsurface strata, surface waters, groundwaters,
drinking water supply, sediments, and ambient air.
506528698.4
"Environmental Law" means all Applicable Laws, including, without limitation, laws relating to
consumer leasing and protection,pertaining to the environment,human health or safety, or natural
resources, including, but not limited to, (a) releases of Hazardous Substances into the
Environment; (b} the presence, manufacture, generation, processing, distribution, use, sale,
treatment,recycling,receipt, storage, disposal,transport, arranging for transportation,treatment or
disposal, or handling of any Hazardous Substances; or(c) imposing liability with respect to any of
the foregoing. To the extent that it relates to the handling of and exposure to hazardous or toxic
materials or similar substances, the term "Environmental Law" includes: the Comprehensive
Environmental Response, Compensation and Liability Act of 1980(42 U.S.C. § 9601 et seq.),the
Superfund Amendments and Reauthorization Act of 1986, the Emergency Planning and
Community Right to Know Act (42 U.S.C. §§ 11001 et seq.), the Resource Conservation and
Recovery Act of 1976 (42 U.S.C. §§ 6901 et seq.), the Clean Air Act(42 U.S.C. §§ 7401 et seq.),
the Federal Water Pollution Control Act(also known as the Clean Water Act) (33 U.S.C. §§ 1251
et seq.), the Toxic Substances Control Act (15 U.S.C. §§ 2601 et seq.), the Safe Drinking Water
Act (42 U.S.C. §§ 300f et seq.), the Endangered Species Act (16 U.S.C. §§ 1531 et seq.), the
Migratory Bird Treaty Act (16 U.S.C. §§ 703 et seq.), the Bald and Golden Eagle Protection Act
(16 U.S.C. §§668 et seq.),the Oil Pollution Act of 1990(33 U.S.C. §§2701 et seq.},the Hazardous
Materials Transportation Act(49 U.S.C. §§ 5101 et seq.), and the Occupational Safety and Health
Act of 1970 (29 U.S.C. §§ 651 et seq.), the regulations promulgated pursuant to the above-listed
federal statutes, and any similar or analogous state and local statutes or regulations promulgated
thereunder, as each of the foregoing may be amended or supplemented from time to time in the
future, in each case to the extent applicable with respect to the property or operation to which
application of the term"Environmental Law"relates;
"Event of DefaulY'is defined in Section 11.1;
"Force Majeure"is defined in Article 12;
"Governmental Authority" means any national, state or local government (whether domestic or
foreign), any political subdivision thereof or any other governmental, quasi-governmental,
judicial, public or statutory instrumentality, authority, body, agency, bureau, commission, or
entity, or any arbitrator with authority to bind a party under Applicable Law;
"Hazardous Substance" means any (a) hazardous substance as defined by any Environmental
Laws; (b) any petroleum or petroleum product, oil or waste oil; (c) any hazardous material, toxic
substance, toxic pollutant, solid waste, municipal waste, industrial waste, hazardous waste,
flammable material, radioactive material, pollutant or contaminant or words of similar meaning
and regulatory effect under any applicable Environmental Laws; and (d) any other chemical,
material, or substance (whether solid, liquid or gaseous) exposure to which or whose discharge,
emission, disposal or release is prohibited, limited, or regulated under any applicable
Environmental Laws. "Hazardous Substance" includes any mixture or solution of the foregoing,
and all derivatives or synthetic substitutes of the foregoing;
"Indemnified Party"and"Indemnified Parties" are defined in Section 9.1;
"Indemnifying Party"is defined in Section 9.1;
506528698.4
"Opening Term"is defined in Section 1.1;
"Opening Term Payment"is defined in Section 3.1;
"Leased Property" means the portions of the Lessor Property identified in Exhibit C attached
hereto;
"Lessee" is defined in the preamble to this Agreement;
"Lessee Improvements"is defined in Section 2.1;
"Lessee Parties"is defined in Section 2.1;
"Lessor" is defined in the preamble to this Agreement;
"Lessor Mortgages"is defined in Article 15;
"Lessor Parties" is defined in Section 8.2;
"Lessor Property" means the real property, including all buildings and improvements, located in
Franklin County, Washington as more particularly described in Exhibit B hereto;
"Lien"means any lien, mortgage, security interest, charge,pledge or other encumbrance;
"Memorandum of Lease"is defined in Section 16.1;
"Party" and "Parties" are defined in the preamble to this Agreement;
"Permitted Liens"is defined in Section 8.2;
"Person" means any individual, corporation, partnership, limited partnership, proprietorship,
association, limited liability company, firm, trust, estate or other enterprise or entity;
"Renewal Term"is defined in Section 1.4;
"Rent" is defined in Section 3.2;
"System Activities"is defined in Section 5.1;
"Taxes" means any and all federal, state, local or foreign tax, fees, levies, assessments, duties,
imposts, tariffs or other charges of any kind imposed or authorized by a Governmental Authority;
"Term" means the term of this Agreement, including the Opening Term and the Initial Term, as
may be extended or renewed to the extent permitted under the provisions of this Agreement;
"Transfer"is defined in Section 17.4(a);
"Wastewater Treatment Agreement" or "WTA" means that certain Water Treatment Agreement
attached as Exhibit E to this Agreement.
506528698.4
"year"means a consecutive twelve-month period.
506528698.4
EXHIBIT B
LESSOR PROPERTY
Description of Lessor Property
The Lessor Property includes Lot 1 and Lot 2 as depicted in the Record of Survey included in this
Exhibit B. Lot 2 is described below. Lot 1 is described in Exhibit C.
Lot 2
That parcel of land being a portion of the South Half of the Northwest Quarter of the of Section 4,
Township 9 North, Range 30 East,Willamette Meridian, Franklin County,Washington,described
as follows:
Beginning at the Southwest corner of said South Half;
Thence North 88°45'19" East along the South line of said South Half, 2636.99 feet to the
Southeast corner thereof;
Thence North 03°16'11" East along the East line of said South Half, 1370.29 feet to the
Northeast corner thereof;
Thence South 88°53'S7"West along the North line of said South Half, 1334.97 feet;
Thence South 00°02'45"West, 1131.07 feet;
Thence South 88°53'39"West, 413.99 feet;
Thence South 00°00'00" East, 120.00 feet;
Thence South 88°45'20"West, 958.71 feet to the West line of said South Half;
Thence South 03°06'31" West along the West line of said South Half, 119.99 feet to the
POINT OF BEGINNING;
Containing 45.62 acres, more or less.
Together with and subject to easements, reservations, covenants and restrictions apparent or of
record.
506528698.4
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EXHIBIT C
LEASED PROPERTY
Description of Leased Property
Lot 1
That parcel of land being a portion of The South Half of the Northwest Quarter of Section 4,
Township 9 North, Range 30 East, W.M., records of Franklin County, Washington, described as
follows:
Beginning at the Southwest corner of said South Half;
thence North 03°06'31" East along the West line of said South Half, 119.99 feet to the True Point
of Beginning;
thence continuing North 03°06'31" East along said West line 1256.65 feet to the Northwest corner
of said South Half;
thence North 88°53'S7" East along the North line of said South Half, 1305.39 feet;
thence South 00°02'45" West, 1131.07 feet;
thence South 88°53'39" West,413.99 feet;
thence South 00°00'00" East, 120.00 feet;
thence South 88°45'20" West, 958.71 feet to the True Point of Beginning.
Also Known as Lot 1 of Record Survey recorded under Auditor's File No. 1969537.
Parcel No. 113090085
506528698.4
EXHIBIT D
Form of Memorandum of Lease
[Attachment]
506528698.4
RECORDING REQUESTED BY AND
AFTER RECORDING MAIL TO:
Burnham SEV Pasco LLC
1201 Wilson Blvd—27th Floor
Arlington, VA 22209
(Space Above for Recorder's Use Only)
MEMORANDUM OF LEASE AND EASEMENT AGREEMENT
, 20
THIS MEMORANDUM OF LEASE AND EASEMENT AGREEMENT (this "Memorandum")
is entered into as of[_], by and between Burnham SEV Pasco LLC ("Lessee") and the City of
Pasco ("Lessor") and refers to that certain Lease Agreement dated [_], entered into by and
between Lessor and Lessee(the"Agreement"). Capitalized terms used but not defined herein shall
have the meanings attributed to same in the Agreement.
1. Lessor has leased to Lessee the Leased Property described in Exhibit 1 attached hereto
upon the terms and conditions specified in the Agreement.
2. Lessor is the owner of that certain real property located in Franklin County, Washington,
legally described on Exhibit 2 attached hereto and incorporated herein by reference (the "Lessor
Property"). The Leased Property comprises a portion of the Lessor Property.
3. The Agreement grants Lessee a non-exclusive easement and right of way over, across,
under and through the Lessor Property, and any surrounding or nearby premises owned by Lessor,
for Lessee, its employees, invitees, agents, contractors and subcontractors to access the Leased
Property and to build, maintain, and install, among other things, any road, improvements,
equipment, fences, gates, signs, communication lines or facilities as more specifically set forth in
the Agreement.
4. The Opening Term of the Agreement commences on the Agreement Date and continues
until the earlier to occur of(a) the COD and (b) the COD Longstop date. If COD does not occur
within one hundred eighty(180)days after the COD Longstop date(i.e.,the COD does not occur},
then the Agreement shall terminate at the end of the Opening Term. The Initial Term commences
on the COD, and continues for a period of thirty (30) years thereafter. The Agreement term
automatically renews for two(2)additional five-year Renewal Terms unless terminated by Lessee.
The easement rights granted by Lessor to Lessee pursuant to the Agreement are for a term
coterminous with the Agreement.
5. The consideration given for the lease is indicated in the Agreement.
6. This Memorandum shall inure to the benefit of and be binding upon Lessor and Lessee and
their respective successors and permitted assigns; provided, however, that this Memorandum is
solely for public notice and recording purposes and shall not be construed to alter, modify, limit,
506528698.4
expand, diminish or supplement any of the terms or provisions of the Agreement or any of the
rights granted to or covenants made by Lessor or Lessee under the Agreement. In the event of any
conflict between the terms and provisions of this Memorandum and the terms and provisions of
the Agreement, the terms and provisions of the Agreement shall prevail. This Memorandum shall
continue to constitute notice of the Agreement, even if the Agreement is subsequently amended.
7. This Memorandum may be executed in any number of counterparts,each of which shall be
deemed an original, but all of which together shall constitute one and the same instrument. This
Memorandum may be transmitted via facsimile or other electronic means and a manual or
electronic signature of the undersigned transmitted via such means shall be deemed an original
signature for all purposes and have the same force and effect as a manually-signed original.
[SIGNATURE PAGES FOLLOW]
506528698.4
LESSEE
BURNHAM SEV PASCO LLC,
a Washington limited liability company
By:
Name:
Title:
Date
STATE OF
COUNTY
OF
This record was acknowledged before me on _, 20_ by
as of the BURNHAM SEV PASCO LLC.
(SignaZure of notary public)
(Title ofo�ce)
My Commission
Expires:
�Date�
(Stamp)
506528698.4
LESSOR
CITY OF PASCO,
a Washington municipal corporation
By:
Name:
Title:
Date
STATE OF
COUNTY OF
This record was acknowledged before me on _, 20_ by
as of the CITY OF PASCO.
(Signature ofnotary public)
(Title of off ce)
My Commission
Expires:
(Date)
(Stamp)
506528698.4
EXHIBIT 1
DESCRIPTION OF LEASED PROPERTY
That parcel of land being a portion of The South Half of the Northwest Quarter of Section 4,
Township 9 North, Range 30 East, W.M., records of Franklin County, Washington, described as
follows:
Beginning at the Southwest corner of said South Half;
thence North 03°06'31" East along the West line of said South Half, 119.99 feet to the True Point
of Beginning;
thence continuing North 03°06'31" East along said West line 1256.65 feet to the Northwest corner
of said South Half;
thence North 88°53'S7" East along the North line of said South Half, 1305.39 feet;
thence South 00°02'45" West, 1131.07 feet;
thence South 88°53'39" West,413.99 feet;
thence South 00°00'00" East, 120.00 feet;
thence South 88°45'20" West, 958.71 feet to the True Point of Beginning.
Also Known as Lot 1 of Record Survey recorded under Auditor's File No. 1969537.
Parcel No. 113090085
506528698.4
EXHIBIT 2
DESCRIPTION OF THE LESSOR PROPERTY
The Lessor Property includes Lot 1 and Lot 2 as depicted in the Record of Survey included in this
Exhibit B. Lot 2 is described below. Lot 1 is described in Exhibit C.
Lot 2
That parcel of land being a portion of the South Half of the Northwest Quarter of the of Section 4,
Township 9 North, Range 30 East,Willamette Meridian,Franklin County,Washington,described
as follows:
Beginning at the Southwest corner of said South Half;
Thence North 88°45'19" East along the South line of said South Half, 2636.99 feet to the
Southeast corner thereof;
Thence North 03°16'11" East along the East line of said South Half, 1370.29 feet to the
Northeast corner thereof;
Thence South 88°53'S7"West along the North line of said South Half, 1334.97 feet;
Thence South 00°02'45" West, 1131.07 feet;
Thence South 88°53'39" West, 413.99 feet;
Thence South 00°00'00" East, 120.00 feet;
Thence South 88°45'20" West, 958.71 feet to the West line of said South Half;
Thence South 03°06'31" West along the West line of said South Half, 119.99 feet to the
POINT OF BEGINNING;
Containing 45.62 acres, more or less.
Together with and subject to easements, reservations, covenants and restrictions apparent or of
record.
506528698.4
EXHIBIT E
Wastewater Treatment Agreement
[Attachment]
506528698.4