BELLINGHAM WATERFRONT DISTRICT ENERGY INFRASTRUCTURE AGREEMENT
THIS AGREEMENT dated for reference the 7th day of December, 2020,
BETWEEN:
PORT OF BELUNGHAEVI, a special purpose municipal district under the laws of the State of Washington, having an address at 1801 Roeder Avenue, Bellingham WA 98225
("Port") AND:
CORIX UTILITY SYSTEMS (WASHINGTON) INC., a Deiaware private corporation, having an address at 500 West Monroe Street, Suite 3600, Chicago, !L 60661
("Corix")
WHEREAS:
A. Port owns the former Georgia-Padfic West industrial site south of Roeder Avenue and east of the Whatcom Waterway that is on the Washington State Department of Ecology ("Ecology") Site Register as a Contaminated Site, Cleanup Site ID number 2279 and which includes approximately 44 acres of property designated for mixed-use development (the "Downtown Waterfront District"), as depicted in Exhibit A, Development Area Map;
B. Port and the City of Beilingham have approved a Waterfront District Sub-Area Plan 2019 (as may be amended) regarding the development of the Downtown Waterfront District;
C. The City of Bellingham's Municipal Code provides that all new development within the Downtown Waterfront District shall connect to and utilize district specific utilities, such as district energy;
D. Port and Harcourt Beliingham LLC entered into a Master Development Agreement dated May 19, 2015 which provides Harcourt Beiiingham LLC the exclusive right to purchase and develop lots within the Development Area in the Downtown Waterfront District;
E. Consistent with the City of Beliingham's Municipal Code, Port wouid like to support Corix's development of a district energy system that will provide district energy services to residential and commercial customers located in the Downtown Waterfront District;
F. Port has installed a district energy piping system along Laurel Street ("Port's DPS") consisting of heating and cooling pipes and future expansion connections at key locations;
G. Corix responded to Port's Request for Qualifications issued on April 6, 2018 in respect of the development of a district energy system in the Downtown Waterfront District and Port and Corix subsequently entered into a Memorandum of Understanding dated December 4, 2018, pursuant to which Corix undertook technical and economic feasibility assessments and due diligence relating to the development of a district energy utility; H. !n support of the development of the district energy utility for the Downtown Waterfront District and the Port has selected Corix as the exclusive provider of district energy services for the Development Area though such a utility;
I. Port and Corix desire Corix to design, construct, finance, own, operate and maintain the required infrastructure for the district energy utility that will serve residential and commercial customers in the Development Area, all on the terms and conditions set out in this Agreement;
J. Corix and Developers will enter into district energy service agreements for the provision of district energy services to buildings buiit in the Downtown Waterfront District;
K. Corix requires Port's support and cooperation to ensure the Developers are aware of the requirement to connect to the district energy system and their related obligations.
L The Port's intent En the Downtown Waterfront District has been to acquire, remediate, and transfer the property in the District to other parties as development occurs in order to create economic opportunities pursuant to its statutory mission.
NOW THEREFORE THIS AGREEMENT WITNESSES THAT in consideration of the mutual agreements set out below and for other good and valuable consideration (the receipt and sufficiency of which are acknowledged by each Party), the Parties covenant and agree with each other as follows.
1. INTERPRETATION
1.1 Definitions
In this Agreement, the following terms have the meanings set out beiow:
(a) "Affiliate" means with respect to a specified entity any entity or Person directiy or indirectly, through one or more intermediaries, controlling, controlied by, or under common contro! with that specified entity;
(b) "Assumption Event" has the meaning ascribed to it in Section 19.9;
(c) "Building" means each permanent structure present or to be constructed by a Developer on a Current Phase Lot;
(d) "Building System" means:
(i) in the case of a Building, the system of water pipes, space heating and cooling, and hot water delivery and storage equipment to be installed by the Developer and used for distributing and storing Thermal Energy within the Building, connected to but downstream of and excluding the Service Connection and Energy Transfer Station for that Building; and
(ii) in the case of an Existing Building, the system of water pipes and space heating and cooling and hot water delivery and storage equipment located inside the exterior face of such Existing Building;
Page 2 of 35 (e) "Business Day" means any day except Saturday or Sunday; a statutory hoiiday in the state of Washington, the Province of British Columbia, or the United States of America; and any other day on which banks are generally not open for business in Bellingham, Washington;
(f) "Central Energy Plant" or "CEP" means the permanent, physical, central thermal energy plant for the Current Phases, including all associated mechanicai and electrical equipment, interconnections and control systems;
(g) "CEP Lot" means the lot comprising part of the Deveiopment Area on which the CEP is to be located or constructed;
(h) "Changes of Law" means any enactment of or amendment to Laws affecting (i) the performance, regulation, operation, maintenance or routine repair of the infrastructure; (ii) the provision of Energy Services; and/or (iii) the creation and provision of Thermal Energy;
(i) "City" means the City of Beilingham;
(j) "City Lands" means lands owned or controlled by the City;
(k) "Commencement Date" means the date on which Energy Services are first provided to a Customer;
(I) "Connection Fee" means the monetary contribution paid by a Developer in respect of a Building, calculated as a doliar amount per square foot of the Building's total size, adjusted annually for increases in the Consumer Price Index for Whatcom County (or King County if data for Whatcom County is not available);
(m) "Connection Schedule" means the then-current timetable according to which the infrastructure will be constructed and connected to each of the Buildings;
(n) "Contaminant" means any radioactive materials; asbestos or asbestos containing materials; urea formaldehyde; underground or above ground tanks; pollutants, contaminants, deleterious substances, dangerous substances, goods, or waste; solid, liquid, gaseous or thermal imtants (not including Thermal Energy produced as part of this Agreement); hazardous, corrosive, or toxic substances; hazardous waste; waste; pesticides; defoliants; soot; acids; alkalis; toxic chemicats; or any other solid, liquid, gas, vapor, odor, heat, sound, vibration, radiation, or combination of any of them; the storage, manufacture, handling, disposal, treatment, generation, use, transport, remediation, or Release into the Environment of which is now or hereafter defined by, or prohibited, controlled, or regulated under Environmental Laws;
(o) "Contaminated Materials Management Plan" or "CMMP" means the procedures, restrictions, and requirements for handling and management of potentialiy contaminated material (soil, debris, groundwater) on a Contaminated Site within the Development Area. A CMMP has been prepared for the Puip/Tissue Mili Remedial Action Unit (RAU) and is attached as Exhibit B. A CMMP is expected to be prepared for the Chlor-Aikali RAU and will be incorporated herein as Exhibit J upon entry of a corresponding Consent Decree;
(p) "Contaminated Site" means any "Facility" under the Model Toxics Control Act (MTCA), Chapter 70.105D of the Revised Code of Washington, and the MTCA Cleanup Regulation, Chapter 1 73- 340 of the Washington Administrative Code (WAC). The Development Area includes Contaminated Sites;
Page 3 of 35 (q) "Corix Group" means Corix and its Affiliates and their respective officers, directors, shareholders, empioyees, contractors, agents, successors and permitted assigns;
(r) "Current Phase" means the development of the Development Area as contemplated in the Master Development Agreement;
(s) "Current Phase Lot" means any lot or iand parcel in the Development Area on which a Building is or will be located and which will be or has been transferred or soid to a Developer;
(t) "Customers" means means any Persons who receive Energy Services pursuant to a Customer Agreement;
(u) "Customer Service Agreement" means the agreement between Corix and a Customer for the provision of Energy Services, substantially in the form attached as Exhibit G;
(v) "DEU" means the district energy utility as contemplated by this Agreement;
(w) "District Energy Services Agreement" means an agreement between a Developer and Corix, substantially in the form attached as Exhibit C;
(x) "Developer" means Harcourt Bellingham LLC or any other Person or entity to whom Port transfers land or land rights within the Development Area for the purpose of commercial, residential, civic or multi-purpose development;
(y) "Development Amendment" has the meaning ascribed to it in Section 2.2;
(z) "Development Area" means the Downtown Waterfront District lands and any other lands owned by Port which are subject to the Master Development Agreement, more specifically identified in the map attached as Exhibit A;
(aa) "Distribution System" means, collectively, the system of water pipes, fittings and ancillary components connecting the CEP to and including the Energy Transfer Stations and the Service Connections, and which distributes heated or chilled water to the Buildings;
(bb) "Effective Date" means the date first written above;
(ec) "Encumbrance" means any mortgage, iien, pledge, judgement, execution, charge, security interest, restriction, claim or encumbrance of a financial nature whatsoever, including, without limitation, builders liens and claims of the Occupational Safety and Health Administration, Internal Revenue Service and any other Governmental Authority;
(dd) "Energy Services" means the provision of Thermal Energy via the Infrastructure;
(ee) "Energy Transfer Station" means the separate heat exchangers for space heating and domestic hot water (excluding domestic hot water storage tanks) and cooling where applicable; energy calculator including temperature sensors and flow meter, control panel and ali pipes,
Page 4 of 35 fittings and other associated equipment which control the transfer, and measure hydronic heat energy from the Distribution System to each Buiiding System;
(ff) "Environment" includes the air (Enduding ali layers of the atmosphere), land (including soil, sediment deposited on land, fill, iands submerged underwater, buildings, and improvements), water (including oceans, lakes, rivers, streams, groundwater, and surface water), and aii other external conditions and influences under which humans, animals, and plants live or are developed and "Environmental" will have a corresponding meaning;
(gg) "Environmental Covenant" means the restrictive covenants required pursuant to the Puip/ Tissue Mill RAU Consent Decree, as amended, and which may be required in the future Chlor- Alkali RAU Consent Decree;
(hh) "Environmental Credits" means any income, credit, right, benefit or advantage, whether in the form of greenhouse gas (GHG), monetary value or some other form or character, relating to Environmental matters including type and levei of Environmental emissions, input sources and compliance with Environmental Laws, and any market instrument, including without limitation any Environmental emission allowances and Environmenta! emission reduction credits that accrue to businesses that perform better than certain government, industry, trade organization or Environmental international emission reduction guidelines, net of any costs incurred by Corix associated with obtaining the Environmental Credit;
(ii) "Environmental Laws" means any and all Laws relating to or in respect of the Environment or its protection, environmental assessment, health, occupational health and safety, protection of any form of plant or animal life, or transportation of dangerous goods, including the principles of common law and equity;
(jj) "Environmental Standards" means any (i) Environmental Covenant; (ii) CMMP; (ii) appiicabie Environmental Laws; (iii) requirements of the MDA regarding the Environment; and (iv) consent decree(s), as may be amended, applicable to Contaminated Sites;
(kk) "Existing Building" means the Granary Buiiding;
(II) "Force Majeure" has the meaning ascribed to it in Article 18;
(mm) "Future Expansion Area" has the meaning ascribed to it in Section 2.6;
(nn) "Governmental Authority" means any federal, state, regional, municipai, local or other government, governmental or public department, court, tribunal, arbitrai body, commission, board, bureau or agency and any subdivision, agent, commission, board or authority thereof;
(oo) "Ground Lease" means a lease of iands by the Port to Corix related to the CEP Lot which will be attached hereto as Exhibit F;
(pp) "Infrastructure" means, collectively, the CEP, Distribution System, Energy Transfer Stations and Service Connections;
(qq) "Infrastructure Work" means the design, construction, installation, maintenance and repair, and operation by Corixofthe infrastructure in the Development Area or other lands;
Page 5 of 35 (rr) "Interim Energy Plant" or "IEP" means any temporary centralized thermal energy solution (for example and without limitation boilers fueled by natural gas or biomass), including ail associated mechanical and electrical equipment, interconnections and control systems;
(ss) "Laws" means any law, statute, rules, regulation, ordinance, Permit, order or legal requirement of or issued by or under the direction or authority of any Governmental Authority having jurisdiction, now or hereafter in force;
(tt) "Master Development Agreement" or "MDA" means the Master Development Agreement between Port and Harcourt Beliingham LLC dated May 19, 2015 (and any amendments);
(uu) "Master Plan" means the Waterfront District Sub-Area Plan 2019 (and any amendments) as approved by Port and the City;
(vv) "IVIaterial Assumption" has the meaning ascribed to it in Section 19.8;
(ww) "Municipal Code" means the Beilingham Municipal Code as may be amended;
(xx) "Party" means either Port or Corix and "Parties" means both of them;
(yy) "Permits" means ail permits, licenses, certificates, approvals, authorizations, consents and the iike issued by any Governmental Authority in respect of the Infrastructure;
(zz) "Person" means an individual or his or her legal persona! representative, an unincorporated organization or association, or a corporation, partnership, trust, trustee, syndicate, joint venture, iimited liability company, union, Governmental Authority or other entity or organization;
(aaa) "Port's DPS" means the distribution piping system infrastructure consisting of heating and cooling pipes and future expansion connections at key locations instaiied along Laurei Street;
(bbb) "Purchase Price" means the greater of fair market value of the Infrastructure as determined by a third-party valuation according to generally accepted accounting principles or the net book value of the Infrastructure on the relevant date;
(eec) "Release" includes any spill, leak, pumping, pouring, emission, emptying or discharge, injection, escape, leaching, migration, entry, abandonment, disposal, or dumping;
(ddd) "Service Connection" means the system of water pipes and ail ancillaries and fittings necessary to connect a Building to the Distribution System via the Energy Transfer Station;
(eee) "Thermal Energy" means thermal energy in the form of steam, heated or chilled water for space heating, domestic hot water and cooling (where applicable).
Page 6 of 35 1.2 Interpretation
Unless otherwise expressiy provided, in this Agreement:
(a) "this Agreement" means this Agreement as it may from time to time be supplemented or amended by the Parties pursuant to the terms contained herein, and includes the attached Exhibits;
(b) all references in this Agreement to a designated "Articie", "Section", "subsection" or "Exhibit" is to the designated Article, Section or subsection of or Exhibit to this Agreement;
(c) the words "herein", "hereof and "hereunder" and other words of similar import refer to this Agreement as a whole and not to any particular portion hereof;
(d) the headings are for convenience oniy, do not form a part of this Agreement and are not intended to interpret, define or limit the scope, extent or intent of this Agreement or any provision hereof;
(e) the singular of any term includes the plural, and vice versa; the use of any term is equally applicabie to any gender and, where appiicabie, a body corporate;
(f) "shall and "will" should be construed as expressing an imperative;
(g) the word "including" is not limiting whether or not non-limiting language (such as "without limitation" or "but not limited to" or words of similar import) is used with reference thereto;
(h) references to time of day or date mean the local time or date in the City of BeilEngham, Washington; and
(i) all references to amounts of money mean lawful currency of the United States of America.
1.3 Governing Law
This Agreement and each of the documents contemplated by or delivered under or in connection with this Agreement are governed exclusively by, and are to be enforced, construed and interpreted exciusively in accordance with, the laws of the State of Washington, without giving effect to conflicts of laws princEp!es or provisions.
1.4 Severability
Each provision of this Agreement is severabie. If any provision of this Agreement is or becomes illegal, invalid or unenforceable in any Jurisdiction, the illegality, invalidity or unenforceability of that provision will not affect:
(a) the legality, validity or enforceability of the remaining provisions of this Agreement, or
(b) the legality, validity or enforceability of that provision in any other jurisdiction, except that if:
(c) on the reasonable construction of this Agreement as a whole, the applicability of the other provision presumes the validity and enforceability of the particular provision, the other provision will be deemed also to be invalid or unenforceable, and
Page 7 of 35 (d) as a result of the determination by a court of competent Jurisdiction that any part of this Agreement is unenforceable or invalid and, as a result of this section, the basic intentions of the Parties in this Agreement are entirely frustrated, the Parties will use ail reasonable efforts to amend, supplement or otherwise vary this Agreement to confirm their mutual intention En entering into this Agreement.
1.5 Time of Essence
Time is of the essence of this Agreement.
1.6 Statutory References
Unless otherwise specified, each reference to a statute or Law is deemed to be a reference to that statute and to the regulations made under that statute as amended or re-enacted from time to time.
1.7 Exhibits
The following are the Exhibits to this Agreement:
Exhibit A Development Area Map Exhibit B Contaminated Materials Management Plan Exhibit C District Energy Services Agreement Exhibit D RESERVED Exhibit E Connection Schedule Exhibit F Ground Lease for CEP Lot (to be added post-execution) Exhibit G Customer Service Agreement Exhibit H Regulatory Framework for District Energy Utility Exhibit I Disclosures Exhibit J CMMP for Chlor-Aikali RAU (to be added post-execution)
The foregoing Exhibits are incorporated herein by this reference.
2. DEVELOPMENT OBLIGATIONS OF THE PORT
2.1 Development Plans
Port will take all reasonable steps to ensure that Developers develop all projects in the Deveiopment Area, including without limitation the designing and constructing of Buildings, En accordance with the Master Pian, the Master Deveiopment Agreement, and this Agreement, in each case as amended from time to time.
2.2 Amendments to Master Plan
Port will not, without the prior written consent of Corix, not to be unreasonably withheld, seek or consent to the amendment of, apply to amend, or amend the Master Plan or any other plan, document, contract or Law (a "Development Amendment") relevant to this Agreement if such amendment could affect the rights granted to Corix pursuant to section 2.3 or its financial modelling in respect of the DEU. in aii cases Port wiil provide to Corix advance or prompt written notice of all actions with respect to any Development Amendment.
Page 8 of 35 !n connection with any Development Amendment, the Parties will review and agree on any amendments to this Agreement that may be necessary to:
(a) reflect necessary or desired, consequential alterations to any part of the Infrastructure;
(b) adjust the timing of any of the Infrastructure Work;
(c) address compensation owing to Corix for any excess costs incurred by it in connection with such Development Amendment and not ultimately recoverabie from Customers in accordance with the terms of this Agreement; and
(d) address any other material effect of the Development Amendment on the DEU or Corix's rights and obligations under this Agreement.
2.3 No Alternate System or Service Provider
The powers and rights granted to Corix under this Agreement are exclusive to Corix and Port will not itself perform, or allow any other Person (except subcontractors and agents of Corix) to perform any Infrastructure Work or any other obligation related to the DEU or to realize any other right or privilege herein granted to Corix. Without limiting the generality of the foregoing, Port will not permit any Person other than Corix and its subcontractors and agents to:
(a) install the Infrastructure; or (b) operate the DEU, without the prior written consent of Corix.
2.4 Incorporating Other Sources of Energy
If either Party identifies options for incorporating other sources of energy or other energy supply systems into the DEU, that Party will first raise such option with the other Party, to determine whether such source or system can be incorporated on mutually acceptable terms, subject to applicable approval by any Governmental Authority and input by Developers and Customers, if appropriate.
2.5 District Energy Services Agreement
Without limiting the foregoing provisions of this Article 2, Port agrees that if a Developer is instaiiing or proposes to install Building Systems, including internal systems that are compatible with the Infrastructure, Corix may enter into a District Energy Services Agreement with such Developer, and Port will take all reasonable steps to require the Deveioper to enter into a District Energy Services Agreement and to otherwise facilitate the associated negotiations between Corix and such Developer. Such reasonable steps may include, without limitation, making the execution and delivery of a District Energy Services Agreement a condition of the sale or transfer of any Current Phase Lots to a Developer.
2.6 Future Expansion
In the event Port proposes to develop any lands surrounding the Development Area (the "Future Expansion Area") following the Current Phases, it will grant Corix a right of first offer with respect to, firstly, the extension of the Infrastructure into the Future Expansion Area and, secondly, providing Energy Services in the Future Expansion Area.
Page 9 of 35 3. BUILDING SYSTEMS
3.1 Design, Engineering and Construction of Building Systems
Port acknowledges and agrees that Corixwili not in any way be responsible for any aspect of the design, engineering, construction, installation of any Building System; each Building System has or will be designed, constructed and installed by the Developer. Port will take all reasonable steps on its part to ensure that the Building Systems meet all applicable design requirements imposed by the City in respect of the Development Area or generally.
3.2 Approval of Specifications by CorEx and Professional Engineer
To achieve compatibiiity between the Building Systems and the Infrastructure, the specifications for each Building System in the Current Phases, inciuding all design and engineering components, must be approved in advance by Corix based upon the determination of a professional engineer acceptable to Corix and the relevant Developer that the Building Systems and Infrastructure are compatible. Corix will advise Port of any special design or construction standards that Corix may have, and, in addition to any steps Corix may take, Port will take all reasonable steps to ensure that the Developer is aware of such standards and the requirements referred to in this Section 3.2.
4. INFRASTRUCTURE
4.1 Design, Engineering and Construction of Infrastructure
Subject to Section 4.2, Corix will be soiely responsible, at its own cost and expense, to engineer, design, construct and install the infrastructure in a good, skillful, diligent and professional manner, consistent with industry standards and in compiiance with all applicable Laws and this Article 4. Corix will, to the extent reasonably possible, work in a timely manner compatible with the construction schedule of the Developers.
Corix wili, to the extent possible and working with the City, Port and, if applicable, the Developer, install the Distribution System in utility corridors and other rights of way and Port will provide or will cause the Developer to provide access to and space in utility corridors for such purposes, subject to Section 7.1 below.
4.2 Interim Energy Plant
To the extent that the CEP is not operational when a Building is ready for occupancy, Corix will work with the Developer to suppiy energy to the Building on an interim basis through the installation of a centralized IEP until the CEP Es operational. In such a case, the provisions of Section 4.1 will apply to such temporary energy source, mutatis mutandis.
4.3 Building Specific Back-Up Solution
Where the CEP is not operational and where an IEP is not immediately available when a Building is ready for occupancy, Corix wiil use commercially reasonable efforts to work with the Developer to provide a Building-specific heating (but not cooling) solution.
4.4 Condition for CEP
Each of the Parties acknowledges and agrees that Corix will not be required to construct a CEP unless and until:
Page 10 of 35 (a) all Permits, rights of way, easements, licenses, ieases and other rights of access requisite for the CEP have been obtained and continue in effect on terms and conditions satisfactory to Corix in its sole discretion; and
(b) Corix determines, in its reasonable discretion, both the availability of appropriate low- carbon technology for use in the CEP and the commercially viability of such low-carbon technology, such determination of viability to include, among other things, consideration of the extent to and manner in which Corix's capital commitment and other costs will be recovered from Customers.
4.5 Approval of Specifications by Port and Engineer
The specifications for the Infrastructure wiil be reviewed and approved by a professional engineer acceptable to Corix and Port, each acting reasonably, before commencement of construction. The engineer will be retained by Corix, Port will advise Corix of any special design or construction standards (which may not be less stringent than industry standards) that Port may reasonably require and such standards will, where appropriate, be incorporated into the Infrastructure specifications. If there is any dispute between the Parties with respect to the terms of reference or the directions provided to the engineer or the specifications of the Infrastructure, such dispute will be resolved in accordance with Article 19 below. Port acknowiedges that Corix will recover the engineer's fees through the rates Corix charges Customers.
4.6 Ownership
Notwithstanding any degree of annexation or affixation, or rule of law or equity to the contrary, Port acknowledges and agrees that all components of the Infrastructure and all additions or extensions thereto will be and remain the property of and vest in Corix. Subject to the terms and conditions of this Agreement and the District Energy Services Agreements, Corix wiil repair, maintain and replace the Infrastructure from time to time at its own cost to keep the same in good working order. CorEx acknowledges and agrees that its ownership of the Infrastructure does not (1) provide it an independent ownership right in the underlying reai property or (2) a right of eminent domain.
4.7 Permits and Authorizations
Corix will obtain and maintain all requisite Permits for the construction and installation of the Infrastructure and for the operation of the Infrastructure, as applicable. Without limiting the generality of the foregoing, Corix acknowledges that it will assume sole responsibility and cost for applying to the City, or any relevant Governmentai Authority to obtain the approvals necessary to carry out the Infrastructure Work or to deliver Energy Services, including, by way of example and not limitation, any approval required under an applicable Restrictive Covenant.
4.8 Grants
Any grants from any Governmental Authority or non-Governmental Authority that may be secured En connection with the Infrastructure, including grants to reduce the costs for space heating, cooiing, and hot water for the Buildings, will belong to Corix to reduce the cost of designing, constructing, and installing the Infrastructure, and uitimately the cost to the Customer of the Energy Services, and will be applied by Corix to Corix's debt related to the Infrastructure.
4.9 Environmental Credits
Notwithstanding any other provision of this Agreement, all right, title and interest now or hereafter Page 11 of 35 existing to and in the potential or actual commercial value of any Environmental Credit that may arise or accrue by virtue of the construction or operation of the Infrastructure will belong to Corix for the sole benefit of existing and future Customers. For example, any credits may be used to directly reduce net costs to be recovered from Customers or to secure other customers, where this would indirectly benefit Customers through lower combined costs.
4,10 Connection Fee
Port acknowledges that each Developer will be charged a Connection Fee for both the heating and cooling components of the Energy Se^/ices, as applicable. The City MunicipQ! Code requires Developers to connect to the DES, if available. Port agrees itwiH undertake reasonable efforts to make sure Developers understand the City Municipal Code requirements and related City permitting procedures relating to the mandatory connection to the DES. Corix will use the Connection Fee for the benefit of Customers in a manner it deems reasonable, which may include (among other things) treating it as revenue to be applied to lower the Cost of Service or the balance of any Energy Cost Recovery or Rate Stabilization Account (as those terms are defined in Exhibit H).
5. COOPERATION AND COORDINATION
The Parties will cooperate and coordinate in good faith with each other and with any applicable Governmental Authority to permit each Party to perform its obSigations under this Agreement. Without limiting the generality of the foregoing, Port will work and cooperate with Corix as may be reasonably required to:
(a) Secure from the City and Developers all property access rights required pursuant to this Agreement; and (b) apply to the City for all exemptions, reductions and other relief from property taxes related to the Infrastructure as may be available from time to time.
6. DEU REGULATION
6.1 Customer Service Agreement
The provision of Energy Services to Customers will be pursuant to the Customer Service Agreement attached as Exhibit G and the Regulatory Framework for District Energy Systems attached as Exhibit H. The Parties endorse the Customer Service Agreement and the Regulatory Framework for District Energy UtiiEty as the definitive terms and conditions for the provision of Energy Services to Customers; the payment to Corix by Customers for Energy Services; the process for the setting of rates and fees for the provision of Energy Services and any changes to those rates and fees; and the process for dispute resolution associated with the provision of Energy Services to Customers whether related to rates and fees or otherwise.
6.2 Regulatory Jurisdiction
The Parties understand that the provision of Energy Services is neither generally subject to the statutes and law regarding utility operations in the State of Washington, including but not limited to RCW Title 80, nor specifically regulated by the Washington Utilities and Transportation Commission.
Page 12 of 35 7. ACCESS TO LANDS
7.1 Access Rights
To the extent authorized by law, Port will grant to Corix and its subcontractors, agents, employees and representatives by licenses, recorded rights of way, easements, or other agreements, and for a reasonable consideration that complies with the Port's constitutional and legal obligations as a municipai entity, non-exclusive access to, on, over and under the Development Area or other lands as reasonably required for the purpose of performing Corix's obligations under this Agreement, District Energy Agreements or Customer Service Agreements. In addition, Port will use reasonable efforts to encourage the City and the Developer to grant to Corix and its subcontractors, agents, employees and representatives, by licenses, recorded rights of way, easements or other agreements, and for reasonable or nominal consideration, depending on entity, and in recognition of the City's constitutional and legal obligations as a municipal entity, non-exclusive access to, on, over and under the Development Area, including Current Phase Lots, and City Lands as may be required for the purpose of performing CorEx's obligations under this Agreement, District Energy Services Agreements, and Customer Service Agreements.
7.2 Ground Lease
The Parties will negotiate a Ground Lease with Corix for lands to be used for the construction and operation of the CEP Lot, which will be attached as Exhibit F. The Parties acknowledge that the execution of a Ground Lease is a necessary and material component of the operation of the DEU.
7.3 Adequacy of Land Rights
The access rights and Ground Lease granted to Corix pursuant to Sections 7.1 and 7.2 wili, in the sole discretion of Corix, be adequate to ailow Corix, acting reasonably, to efficientiy and effectiveiy carry out its obiigations hereunder without undue disturbance or interference from Port, the City, Developers or any of their respective contractors, agents, employees or representatives or any other party and for such consideration as will allow Corix to provide Energy Services to Customers in a cost-competitive manner and otherwise subject to terms and conditions acceptable to Corix, Corix acknowledges and agrees that it is Corix's primary responsibility to obtain from Port, City, and the Developer permission to access the Development Area, City Lands and Current Phase Lots on acceptable terms for the purpose of performing Corix's obligations under this Agreement.
7.4 Right of Way
Port acknowledges and agrees that each right of way, lease or other registrable interest granted pursuant to this Article 7 may be recorded by Corix with the Whatcom County Auditor and any other relevant county auditor, together with any priority agreements as Corix may deem necessary or advisable.
7.5 Property Taxes
If property and / or municipal taxes, including any applicable Leasehold Excise Tax, are owing in respect of the infrastructure or Corix's ownership thereof, or any access rights granted by Port or the City in connection therewith, Corix wili, subject to Article 5, be required to pay same to the City or otherwise be responsibie therefor.
Page 13 of 35 8. PORT CAPITAL CONTRIBUTION AND REPAYMENT
8.1 Port's DPS
Port installed Port's DPS on or about November 28, 2018 at a cost of up to $1.4 million to Port. Corix will repay Port the cost of Port's DPS in annual installments (or as otherwise agreed to by the Parties) and will recover the cost of repayment from Customers as part of the rates and fees charged to Customers. Corix will target full repayment of the Port's DPS costs by the end of sixth calendar year following the first Customer connection or as otherwise mutuaily agreed by the Parties. Corix may reasonably adjust its repayment schedule shouid the number of Customers actually receiving Energy Services in a given calendar year be less or more than as planned for in the Connection Schedule attached as Exhibit E.
8.2 Port Contributions in Aid of Construction
Up until the Commencement Date or the day on which the CEP is substantially completed (whichever is later), Port may make additional payments to Corix, such payments, net of any applicable taxes, to be treated by Corix as "contributions En aid of construction" in accordance with Section 8.3. Port's additional payments in this section may be in any form mutually acceptable to the Parties, including without limitation En the form of (1) refundable or non-refundable contributions, and (2) grants Port secures in respect of the development of the Infrastructure. Any grants received in support of the implementation of alternative energy sources wiil be applied to the CEP capital costs.
8,3 Treatment of Contributions
Corix wiil treat all payments made by Port pursuant to Section 8.2 as "contributions in aid of construction" and use such payments to reduce the capita! cost of the Infrastructure facilities allocated to Customers for rate-making purposes. Any such payments made by Port to Corix prior to the Commencement Date will also be used by Corix to reduce the amount of the allowance for funds used during construction (AFUDC) that is capitalized by Corix and allocated to Customers for rate-making purposes having regard for the amount and timing of such payments. The treatment and use of such payments by Corix pursuant to this Section 8.3 will be in accordance with principles outlined in Exhibit H (Regulatory Framework for District Energy Systems).
9. REPRESENTATIONS AND WARRANTIES
9.1 Representations and Warranties of Port
Subject to disclosure in Exhibit!, Port represents and warrants to Corix the foiiowing, and acknowiedges that Corix is relying on such representations and warranties in entering into the transactions contemplated by this Agreement.
(a) Status of Port. Port is an entity duly organized special purpose municipal district and validiy existing under the laws of the State of Washington, with fui! power and authority to enter into and perform all of its obligations under the Agreement, The Port is acting on its own behalf and not acting as an agent for (A) any Affiliate organized under the laws of or domiciled in a foreign jurisdiction or (B) any other entity or person organized under the laws of or domiciled in a foreign jurisdiction,
(b) Liticiation. To the best of the Port's knowledge, the Port is not a party to any action, suit or legai proceeding, actuai or threatened, and there are no circumstances, matters or
Page 14 of 35 events known to Port which might give rise to any such action, suit or legal proceeding, and there are no actions, suits or proceedings pending or threatened against Port before or by any Governmental Authority, which could affect Port's ability to perform its obligations under this Agreement.
(c) No Breach of Agreement This Agreement and the performance of the obligations of Port under this Agreement does not and will not breach any provisions of any other agreement or Law that is binding on or applicable to Port as of the date of this Agreement,
(d) No Conffict with Organizational Documents. Neither the entering into of this Agreement nor the consummation of the transactions contemplated hereby will result in a breach of any of the terms or provisions oftheorganizationa! documents ofPortorofanyindenture or other agreement, written or oral, to which Port is a party, and all necessary organizational action on the part of Port has been or will be taken to authorize and approve the execution and delivery of this Agreement and the performance by Port of its obligations hereunder
(e) Master Development Agreement/Master Plan. The MDA and Master Plan are in full force and effect, and no event has occurred or condition exists that constitutes or, with the giving of notice or the passage of time or both, would constitute any (i) breach or default by the Port or the Developer under the MDA or Master Plan or (if) could affect the validity of or lead to eariy termination of the MDA or Master Pian.
9.2 Corix's Representations and Warranties
Subject to disclosure in Exhibit I, Corix represents and warrants to Port the following and acknowledges that Port is relying on such representations and warranties in entering into the transactions contemplated by this Agreement.
(a) Status of Corix. Corix is an entity duly organized and validly existing under the laws of the State of Delaware, with full power and authority to enter into and perform all of its obligations under the Agreement.
(b) Litiflation. To the best of Corix's knowledge, Corix is not a party to any action, suit or legal proceeding, actual or threatened, and there are no circumstances, matters or events known to Corix which might give rise to any such action, suit or legal proceeding, and there are no actions, suits or proceedings pending or threatened against Corix before or by any Governmental Authority, which couid affect Corix's ability to perform its obligations under this Agreement.
(c) No Breach of Agreement This Agreement and the performance of the obligations of Corix under this Agreement does not and will not breach any provisions of any other agreement or Law that is binding on or applicable to Corix as of the date of this Agreement.
(d) No Conflict with Organizationai Documents. Neither the entering into of this Agreement nor the consummation of the transactions contemplated hereby wi!l result in a breach of any of the terms or provisions of the organizational documents of Corix or of any indenture or other agreement, written or oral, to which CorEx is a party, and ail necessary organizational action on the part of Conx has been or will be taken to authorize and approve the execution and delivery of this Agreement and the performance by Corix of Page 15 of 35 its obligations hereunder.
10. ENVIRONMENTAL MATTERS
10.1 Port's Representations and Warranties
Port represents, warrants, and covenants to Corix that:
(a) the Port has disclosed to Corix all currently known information about Contaminated Sites within the Deveiopment Area necessary for Corix to perform under or otherwise implement this Agreement in compliance with Environmental Standards; this ob!igation continues in effect and applies to any such new or changed information obtained by the Port to be disclosed to Corix in a reasonably prompt manner;
(b) the Port will comply with Environmental Standards in its use and occupancy of the Development Area and will use reasonable efforts to cause tenants, subcontractors and other occupants and users of the Development Area to compiy with Environmental Standards in their use and occupancy of the Development Area; and
(c) Without limiting the generality of paragraph 10.1 (b), the Port will not install or use on, in, around or under the Development Area or any adjacent property any materials, equipment or apparatus, the installation, use or storage of which is likely to cause the generation, accumuiation or migration of any Contaminant that would interfere with Corix's compliance with Environmentai Standards,
10.2 Port Environmental Indemnity
To the extent authorized by law, Port will defend, release, indemnify and hold harmless the Corix Group from any and ai! liabilities, actions, damages, claims (including remediation cost recovery claims), losses, costs, orders, fines, penalties and expenses whatsoever (inciuding all consulting and attorneys' fees and expenses) and the costs of removal, treatment, storage and disposal of Contaminants and remediation of the Development Area and any other Contaminated Site) which may be paid by, incurred by or asserted against any member of the Corix Group arising from or in connection with:
(a) any breach of or non-compiiance with the provisions of Section 10.1 by the Port;
(b) any Release or alleged Release of any Contaminant at or from the Development Area related to or as a result of the presence of any Contaminant at, on, under, around or in the Development Area, including without limitation surface and ground water, present as of the date of this Agreement or as a result at any time of the operations of Port or Deveioper(s) or any act or omission of Port or Developer(s), its tenants or other occupants or any person for whom Port is in law responsible; or
(c) the presence of any pre-existing Contaminants on, in, around or under the Development Area except to the extent that such presence arises from any breach of or non- compliance with the provisions of Section 10.3 byCorix.
This Port Environmental Indemnity does not appiy to any Release of Contaminants to the extent it is caused or contributed to by Corix or caused by Corix's failure to comply with the CMMP and applicable environmental covenants related to the Waterfront District.
Page 16 of 35 10.3 Corix's Representations and Warranties
Corix represents and warrants to the Port that:
(a) Corix will comply with Environmental Standards in its use and occupation of the Development Area;
(b) Without limiting the generality of paragraph 10.3(a), Corix will not install or use in the infrastructure or on, in, around or under the Development Area or any adjacent property any materials, equipment or apparatus, the instaliation, use or storage of which is likely to cause the generation, accumulation, Release or migration of any Contaminant;
(c) Without limiting the generaiity of paragraph 10.3(a), Corix will not use the Development Area to dispose of, handle or treat any Contaminant in a manner that violates Environmental Standards.
10.4 Corix Environmental Indemnity
Corix wili defend, release, indemnify and hold harmless Port from any and all liabilities, actions, damages, claims (including remediation cost recovery claims), losses, costs, orders, fines, penalties and expenses whatsoever (including all consulting and attorney's fees and expenses and the costs of removal, treatment, storage and disposal of Contaminants and remediation of the Development Area and any other Contaminated Site) which may be paid by, incurred by or asserted against any member of the Port Group to the extent the same arises directly from any breach of or non-compliance with the provisions of Section 10.3 by Corix.
10.5 Survival
Notwithstanding any other provision in this Agreement, the indemnities granted in this Article 10 wiil survive the expiry or termination of this Agreement
11. ENCUIVIBRANCES
11.1 No Encumbrances.
Neither Party will create, incur, assume or permit to exist any Encumbrance on or in respect of the Development Area or any part thereof without the prior written consent of the other Party, such consent not to be unreasonably withheld or delayed. Notwithstanding the foregoing, Corix acknowledges and agrees that the Port will convey land or land rights within the Development Area to Developers and, further, that such Developers will grant to their lenders security in respect of their interests En the Future Phase Lots, and that the granting and recording of such instruments will be carried out without the consent of or notice to Corix. To the extent feasible in each transaction, Port will ensure that the conveyance documents or leases with Developers include provisions that require Developers, in respect of any rights of way or other recorded interests to be recorded by Corix, to transfer such interests in a manner that runs with the land and not ownership on the relevant lands pursuant to this Agreement or the District Energy Services Agreement The Parties intend that any easements or other similar recorded interests under the provision in favor of Corix are not subject to lender priority or other similar covenant that would interfere with Corix's ability to operate the DES.
Page 17 of 35 11.2 Removal of Encumbrances
If the Development Area or any part thereof becomes subject to any Encumbrance (other than an Encumbrance that is described En or has been consented to by the other Party under Section 11.1), arising from an act or omission of either Party (the "Encumbering Party"), then the Encumbering Party will immediately take all necessary steps to remove or to assist the other Party in the removal of the Encumbrance, if the Encumbering Party fails to remove such Encumbrance within ten Business Days of notice from the other Party to remove the Encumbrance, the other Party may take whatever steps it deems necessary to remove the Encumbrance at the reasonable cost of the Encumbering Party.
12. FURTHER COVENANTS
12,1 Port's Covenants
!n addition to the other obligations set out in this Agreement, Port covenants and agrees with Corix at all times and from time to time as follows.
(a) Governing Documents. Port will provide notice of any changes or proposed changes to the Master Development Agreement, the Master Plan, the portion of the City's Municipal Code relating to the use of district energy in the Downtown Waterfront District, or the Port's policies or Commission actions as they reiate to this Agreement or the Downtown Waterfront District.
(b) Assist in Recovery of Third-Partv Damage. Port will report to Corix any malicious damage or damage to the Infrastructure of which it becomes aware and will cooperate with Corix to recover from and against third parties (including the Developer to the extent reasonably feasible) in respect of such damage to the Infrastructure.
(c) Compiiance with Laws. Port will, at its sole cost and expense, abide by and comply with all applicable Laws (including Environmental Laws) in discharging its obligations hereunder.
12.2 Corix's Covenants
In addition to the other obiigations set out in this Agreement, Corix covenants and agrees with Port at all times and from time to time as follows.
(a) Continued Existence. Corix will maintain its foreign entity registration with the Washington Secretary of State at all times while this Agreement remains in effect.
(b) Compliance with Laws. Corix will, at its sole cost and expense, abide by and comply with all applicable Laws (including Environmental Laws in its use and occupation of the Development Area) in discharging its obligations hereunder.
13. INSURANCE
13.1 Port Insurance
Port will obtain and maintain at its own expense throughout the term of this Agreement the following insurance coverage and/or applicable umbrella coverage:
Page 18 of 35 (a) Comprehensive General Liability Insurance against claims for personal injury, death or property damage arising out of its operations, in amounts it deems adequate but in any event, not less than $5 miliion per occurrence;
(b) Property Insurance insuring the property of Port or owned by others but for which Port is legally responsible against perils normally included in a standard "all risk" policy, in an amount equa! to 100% of the current replacement cost of such property, and adjusted at ieast annually to reflect changes in repiacement value due to inflation or other factors; and
(c) a standard automobiie policy induding standard contractual liability endorsement against claims for bodily injury, death and damage to property, in an amount of not less than $1 million per occurrence with the Port carrying excess liability insurance for claims under this subsection.
13.2 Responsibility
Port will be responsibie for the full amount of ai! premiums and deductibies required under Section 13.1. All policies required must be effective within 30 days of the Effective Date and must, to the extent obtainable, provide that the insurance will not be cancelled without the insurer giving at [east 30 days written notice to Corix. insurance will be purchased from reputable insurers registered and licensed to underwrite insurance in Washington. Where Port fails to comply with requirements of Section 13.1 or Section 13.2, Corix may take all necessary steps to effect and maintain the required insurance coverage at Port's expense.
13.3 Evidence of Insurance
Port will deliver or cause to be delivered to Corix evidence of all insurance policies required to be obtained and maintained by Port under Section 13.1 and any amendments, moditications or replacements thereof.
13.4 Corix Insurance
CorEx wil! obtain and maintain at its own expense throughout the term of this Agreement the following insurance coverage and/or applicable umbrella coverage:
(a) Comprehensive General Liability Insurance against claims for personal injury, death or property damage, covering its operations, in an amount not less than $5 million per occurrence;
(b) Property Insurance insuring the Infrastructure against perils normally included in a standard "all risk" policy, in an amount equal to 100% of the current replacement cost of the Infrastructure, and adjusted at least annually to reflect changes in replacement value due to inflation or other factors;
(c) All Risks Builder's Risk policy covering the infrastructure against fire and other perils from time to time included in such policies affecting similar properties in Washington with extended or additional perils supplemental coverage as would be insured against by a prudent owner in an amount not less than 100% of the replacement cost;
(d) a standard automobile policy including standard contractual liability endorsement against claims for bodiiy injury, death and damage to property, in an amount of not less than $2 miilion per occurrence; and Page 19 of 35 (e) Corix and/or its prime engineering consultant will provide errors and omissions liability insurance for a value of not less than $2 miilion in the aggregate.
13.5 Responsibility
Corix will be responsible for the full amount of ai! premiums and deductibles required under Section 13.4. All policies required must be effective within 30 days of the Effective Date and must, to the extent obtainabie, provide that the insurance will not be cancelled without the insurer giving a least 30 days written notice to Port. Insurance will be purchased from reputable insurers registered and licensed to underwrite insurance in Washington. Where Corix fails to comply with requirements of Section 13.4 or Section 13.5, Port may take a!! necessary steps to effect and maintain the required insurance coverage at Corix's expense.
13.6 Evidence of Insurance
Corix wiil deliver or cause to be delivered to Port evidence of ail insurance policies required to be obtained and maintained by Corix under Section 13.4 and any amendments, modifications or replacements thereof. The insurance shall not be materially changed, modified, amended, or canceled except upon forty-five (45) days prior written notice to the Port from the insurer.
13.7 Additional Insured
Each Party wi!i ensure that the other Party are additional insureds under the insurance to be obtained and maintained pursuant to Section 13.1 and Section 13,5 and in the event of a claim the insurance carried by the Party responsible for actions which give rise to such claim will be the primary insurance with respect to such claim. The Parties agree that their respective policies wiii contain a separation of insureds provision such that the policy wiil apply separately to each Ensured and shall not contain a cross-claim, cross-suit, or other exclusion that eliminates coverage by one insured against the other.
14. CONDITIONS PRECEDENT
14.1 Conditions Precedent of CorEx
Corix's obligation to carry out the obligations contemplated by this Agreement is subject to fulfillment of each of the following conditions, En the case of (a), (b) and (c) on or before the day which is 6 months prior to the targeted Commencement Date (the "Condition Date"), which conditions are for the sole benefit of Corix and which may be waived by Corix in accordance with Section 14.3:
(a) Corix's board of directors will have approved the terms and conditions of this Agreement;
(b) Corix being satisfied, in its sole and absolute discretion with the results of its technical, financial and lega! due diligence;
(c) Corix and Harcourt Bellingham LLC having entered into a developer master agreement in a form reasonably satisfactory to Corix; and
(d) all consents and approvals from regulatory or other applicable Governmental Authorities (including Port Commission) required to complete the transactions contemplated herein will have been obtained on terms and conditions satisfactory to Corix.
Page 20 of 35 14.2 Conditions Precedent of Port
Port's obligation to carry out the obligations contemplated by this Agreement is subject to fulfillment of each of the following conditions on or before the Condition Date, which conditions are for the sole benefit of Port and which may be waived by Port in accordance with Section 14.3:
(a) Port Commission will have approved the terms and conditions of this Agreement; and
(b) Port being satisfied, in its sole and absolute discretion with the results of its technical, financial and legal due diligence.
14.3 Satisfaction or Waiver
If a condition set out in Section 14.1 or Section 14.2 has not been satisfied or waived in writing by the applicable Party by the Condition Date or another date agreed by the Parties acting reasonably, this Agreement wil! be nuli and void and thereafter neither Party will have any further obligation to the other Party with respect to the subject matter of this Agreement.
15. INDEMNITY
15.1 Corix Indemnity
Without iimiting any other obligation, representation or warranty, of Corix provided herein, Corix will indemnify, defend, and save harmless Port, its commissioners, officer, officers, employees and agents from any and all liabilities, actions, damages, claims, losses, costs, orders, fines, penalties, and expenses whatsoever (including the full amount of all legal fees and expenses on a solicitor-client basis) which may be paid by, incurred by, or asserted against Port or any one of them arising from or in connection with any negligence, including contributory negligence to the extent of Corix's liability, or willful misconduct perpetrated by Corix or those for whom it is in law responsible.
15.2 Port Indemnity
Without limiting any other obligation, representation or warranty of Port provided herein and to the extent authorized by law, Port will indemnify, defend, and save harmless the Corix Group from any and all liabilities, actions, damages, claims, losses, costs, orders, fines, penalties, and expenses whatsoever (including the full amount of all legal fees and expenses on a soiicitor-client basis) which may be paid or incurred by, or asserted against the Corix Group, arising from or in connection with any negligence, inciuding contributory negligence to the extent of the Port's liability, or willful or willful misconduct perpetrated by Port or anyone for whom it is in law responsible.
15.3 Consequential Loss
Notwithstanding any other provision of this Agreement, in no event will either Party be liable to the other Party for any indirect or consequentiai loss, cost or expense whatsoever, including any loss of profits, revenues or other economic loss, suffered by the other Party or its Affiliates or their respective officers, directors, shareholders, employees, contractors, agents, successors or permitted assigns.
15.4 Survival
Notwithstanding any other provision in this Agreement, the indemnities set out in this Article 15 will survive the termination or expiry of this Agreement.
Page 21 of 35 15.5 Title 51, Revised Code of Washington Waiver
For purposes of the indemnity provided pursuant to this Section 15, each Party hereto 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 InsuranceAA/orker'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 Workers' Compensation Acts, Disability Benefits Acts, or other Employee Benefit Acts; provided,thiswaiverof immunity under this Article extends only to claims against one by the other Party hereto, and does not include, 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 Article was mutually negotiated.
Corix: C^l J^^&s^-, Port: /.^ ~T
16. TERMINATION
16.1 Automatic Termination
Subject to the provisions of Article 17, this Agreement and the obligations of the Parties hereunder will terminate when the Parties have carried out their respective obligations under this Agreement (except to the extent that such obligations survive termination) and upon:
(a) the expiration of the Ground Lease (or any mutually agreed-to replacement for the Ground Lease) for the CEP;
(b) the later of Infrastructure build-out in accordance with Exhibit E, Connection Schedule (as updated from time to time) and the DEL) becoming regulated by a Governmental Authority;
(c) the last of the available Current Phase Lots in the Development Area have been sold to the Developer or end users, each development is ready to connect to the DEU, and each Developer has acknowledged in writing that, pursuant to Section 20.37.440(6) of the City's Municipal Code, their development is required to be connected to the DEL); or
(c) the Infrastructure being materially non-operational or having been decommissioned or abandoned, as evidenced by a statutory declaration of a senior officer of Corix or Port.
17. TERMINATION FOR DEFAULT
17.1 Default by Corix
Corix will be in default under this Agreement (a "Corix Default") if:
(a) it passes a resolution for its winding-up or dissolution, is adjudged bankrupt or insolvent by a court of competent jurisdiction, commences or consents to the institution of bankruptcy proceedings, proposes a compromise or an arrangement, files any petition seeking re-organization, arrangement, composition, liquidation or similar relief for itself, has a receiver or a receiver-manager appointed with respect to its affairs, or makes a
Page 22 of 35 general assignment for the benefit of its creditors under any Law relating to bankruptcy, insolvency or other relief for or against debtors generaiiy; or
(b) it is in breach of a material term, covenant, agreement, condition or obligation under this Agreement, or is En breach of multiple terms, covenants, agreements, conditions or obligations under this Agreement which in the aggregate are material, and fails to cure such default within 30 days after receipt of written notice thereof from Port or, if such default is not capable of being cured within such 30 day notice period, fails to commence in good faith the curing of such default forthwith upon receipt of written notice thereof from Port or, having so commenced, fails to diligently pursue the curing of such default until cured.
In the event of a Corix Default, Port may, at its option and without liabiiity therefor or prejudice to any other right or remedy it may have, terminate this Agreement by further written notice to Corix.
17.2 Default by Port
Port wil! be in defauit under this Agreement ("Port Default") if:
(a) the Port takes action to materially interrupt or delay the development of the Downtown Waterfront District, or fails to act resulting in a material interruption or delay in the deveiopment of the Downtown Waterfront District. The Parties acknowledge that the Port's intent has been to acquire, remediate, and transfer the property in the Downtown Waterfront District as development occurs to create economic opportunities;
(b) it is in breach of a material term, covenant, agreement, condition or obligation under this Agreement, or is in breach of multiple terms, covenants, agreements, conditions or obligations under this Agreement which in the aggregate are material, and fails to cure such default within 30 days after receipt of written notice thereof from Corix or, if such default is not capable of being cured within such 30 day notice period, faiis to commence in good faith the curing of such default forthwith upon receipt of written notice thereof from Corix, or, having so commenced, fails to diligentiy pursue the curing of such default unti! cured.
in the event of a Port Defauit, Corix may, at its option and without liability therefor or prejudice to any other right or remedy it may have:
(c) suspend its work hereunder until the default has been fuliy remedied, and no such suspension or refusal will relieve Port from any of its obligations under this Agreement, provided that Corix wili not suspend or interrupt Energy Services to Customers; or
(d) terminate this Agreement by further written notice to Port.
17.3 Amounts Owing
Upon termination of this Agreement under Article 16 or Article 17, the Parties will forthwith pay to each other all sums due and owing to the date of termination or expiry.
17.4 Transfer of Ownership on Termination for Default
!n the event of termination of this Agreement pursuant to Section 16.1, Section 17.1 or Section 17.2, Port and Corix wiii, no later than 30 days from the date of the notice of termination, discuss winding down this Agreement, including the potential sale of the Infrastructure to the Port or another entity that possesses the necessary financial, technica! and legal qualifications to operate and maintain the DEU.
Page 23 of 35 The purchase price will be the greater of book value and fair market value, if the Parties cannot agree on how to wind down this Agreement, including, by way of example, a qualified purchaser, or the assessment of book value or fair market value as a fair purchase price, they may refer the question to arbitration pursuant to Article 19.
17.5 Infrastructure Documentation
If ownership of the Infrastructure is transferred to Port or its designate pursuant to Section 17.4 or other written agreement between the Parties, Corix will, in connection with such transfer and free of charge, provide or make available to Port or its designate or grant to Port or its designate access to true and compiete copies of:
(a) all plans, drawings and specifications of the infrastructure, including site pians, mechanical, electrical and engineering drawings;
(b) inspection certificates, licenses and Permits, third party studies, tests, surveys, investigations, work product, reports (Enduding engineering, geotechnical and environmental reports) and applications;
(c) ali agreements and correspondence with the Port Commission, the City and other Governmental Authorities and servicing agreements; and
(d) other relevant documentation and agreements,
in each case to the extent the document, agreement or material is relevant to the ongoing ownership and operation of the Infrastructure and is in the possession or control ofCorix.
17.6 Abandonment
Upon termination of this Agreement, notwithstanding Section 4.6 (Ownership), Corix may, in its sole discretion, abandon and leave all or part of the Infrastructure, provided that the Infrastructure to be abandoned is safely decommissioned in compliance with Laws, including Environmental Laws and Standards, and does not pose or constitute any environmental or heaith hazard or unreasonably interferes with any other property right, and release the rights granted to Corix under this Agreement in relation thereto. Upon the release of the rights granted to Corix by this Agreement, any abandoned Infrastructure shall belong to the owners of the iands on which the Infrastructure is located.
17.7 Survival
Upon the expiry or termination of this Agreement for any reason, all claims, causes of action or other outstanding obligations remaining or being unfulfiiled as of the expiry or termination date and all of the provisions in this Agreement relating to the obligation of either Party to account to or indemnify the other and to pay to the other any amount owing as at the date of expiry or termination in connection with this Agreement will survive such expiry or termination
18. FORCE MAJEURE
18.1 Suspension
Subject to the other provisions of this Article 18, if either Party is unable or fails by reason of Force Majeure to materiaiiy perform in whole or in part any of its obligations or covenants set forth in this Agreement (except an obligation or covenant to pay), such inability or failure will be deemed not to be
Page 24 of 35 a breach of such obligation or covenant and the obligations of both Parties under this Agreement wili be suspended to the extent necessary during the continuation of any inability or failure so caused by such Force Majeure. If one Party claims Force Majeure they shall provide such reasonable notice to the other Party of the claim, the specific reason and basis therefor, and agree to meet with the other Party to discuss potential solutions.
18.2 Definition of Force Majeure
For purposes of this Agreement, "Force Majeure" means any event or occurrence not within the control of the Party claiming Force Majeure, and which by the exercise of reasonable diligence such Party is unable to prevent or overcome, including any acts of nature, including any plague, epidemic, pandemic, outbreak of infectious disease or other public health emergency as declared by a Governmental Authority; lightning, earthquakes, storms, washouts, landslides, avalanches, fires, and floods; strikes, lookouts or other industrial disturbances; acts of public enemies, sabotage, wars, blockades, insurrections, riots or civil disturbances; fires, expiosions, breakages of or accidents to machinery or lines of pipe; any delay by or action of any Governmental Authority; and any Changes of Law. For the purposes of this Article 18, a Party is deemed to have control over the actions or omissions of those persons to which it, its agents, contractors or employees, have delegated, assigned or subcontracted its obligations and responsibilities.
18.3 Exceptions
Neither Party will be entitied to the benefit of Section 18.1 under any of the following circumstances:
(a) to the extent that the inability or failure was caused by the negligence or contributory negligence of the Party claiming Force Majeure;
(b) to the extent that the jnabiiity or failure was caused by the Party claiming Force Majeure having failed to diligently attempt to remedy the condition and/or to resume the performance of such covenants and obligations with reasonable dispatch;
(c) if the inability or failure was caused by lack of funds or is in respect of any amount due hereunder; or
(d) unless, as soon as possible after the happening of the occurrence relied upon or as soon as possibie after determining that the occurrence was in the nature of Force Majeure and would affect the claiming Party's ability to observe or perform any of its covenants or obligations under this Agreement, the claiming Party will have given to the other Party notice to the effect that the claiming Party is unable by reason of Force Majeure (the nature whereof will be therein specified) to perform the particular covenants or obligations.
18.4 Resumption of Obligations
As soon as possible after the Force Majeure condition is remedied or discontinued, the Party claiming Force Majeure will give notice to the other Party of such remedy, and that such Party has resumed, or is then in a position to resume, the performance of its suspended covenants and obligations hereunder either in whole or in part.
18.5 Settlement of Labor Disputes
Notwithstanding any of the provisions of this Article 18, but subject to Section 18.3, the settlement of labor disputes or industrial disturbances in which a Party is involved is entirely within the discretion of Page 25 of 35 that Party, which Party may make settlement of it at the time and on terms and conditions as it may deem to be advisable and no delay in making settlement will deprive the Party of the benefit of Section 18.1.
18.6 No Exemption for Payments
Force Majeure wili not in any event relieve or release either Party from its obiigations to make payments to the other Party under this Agreement.
19. DISPUTE RESOLUTION
19.1 Exclusive Procedure. The Parties agree that every controversy, claim, dispute or disagreement arising with respect to the formation, interpretation, performance, or breach of this Agreement, or any amendment hereto (any "Dispute"), will be resolved in accordance with this Article 19, which sets forth the sole and exclusive procedure for the resolution of any Dispute.
19.2 Informal Dispute Resolution
A Party seeking resolution of a Dispute must request, in writing, that a good faith negotiation ("Negotiation") be carried on amongst designated representatives of each Party ("Designated Representatives"), By the appointment of such Designated Representative, each Party agrees and acknowledges that such Designated Representative is fuily authorized to negotiate the Dispute on behalf of its appointing Party pursuant to the terms hereof, Corix recognizes and acknowledges that the Port is a public municipai entity bound by the Open Public Meetings Act and, therefore, final resolution may require approval of the Port's elected Commission in a public meeting. Following any such request, the Designated Representatives shall negotiate in good faith for a period of thirty (30) days (the "Negotiation Period"). Negotiation may be conducted in person, virtually, by telephone, or by such other means as the Designated Representatives agree will tend to lead toward an amicable resolution of the Dispute. Should a Negotiation fai! to produce a resolution within the Negotiation Period, the Designated Representatives may agree to extend the Negotiation Period for a fixed time if each agrees that such an extension could reasonably lead to an amicabie resolution.
19.3 Mediation
Should a Negotiation fail to produce a resolution within the Negotiation Period and any extension thereof, then any Party wishing to further pursue resolution of the Dispute must initiate mediation by providing to JAMS, or its successor, in Seattle, Washington and to the other Designated Representatives a written request for mediation pursuant to this Section, setting forth the subject of the Dispute, the basis therefore, and the relief requested within fifteen (15) days of the end of the Negotiation Period and any extension thereof. The Designated Representatives shall cooperate with JAMS and with one another in selecting a mediator from JAMS' panel of neutrals, but if the Designated Representatives cannot agree on a mediator within seven (7) days from the date of the request for mediation then the Designated Representatives shall each select a designee from among the JAMS panel of neutrals, and those designees shall in turn select, from among the JAMS panel of neutrals, the single mediator who shall conduct the mediation (the "Mediator"). Such mediation will be conducted within forty-five (45) days of the expiration of the Negotiation period and any extension thereof unless otherwise agreed by a!i of the Designated Representatives or required by the Mediator (the "Mediation Period"). The mediation shall be conducted pursuant to the customary procedures used and/or requested by the selected Mediator. The Mediator may conduct meetings or hearings in Seattle or Bellingham, Washington, or by telephone or teleconference, and request information from the Parties, as he or she deems necessary. Each Party shall bear its own costs in such mediation, and the
Page 26 of 35 Mediator's fee shall be divided evenly among the Parties. The Parties agree that Federal and State Evidence Rule 408 and/or RCW 7.07.030 shali apply to aii statements, information and documents exchanged or discussed as part of the negotiation or mediation processes herein, provided that evidence that is otherwise admissible or discoverable will not be rendered inadmissible or non- discoverabSe as a result of its use in negotiation or mediation under this Section.
19.4 Binding Arbitration
(a) If after the mediation procedures called for under Subsection 19.3 above the Dispute remains unresolved, any Party wishing to further pursue a resolution of the Dispute must initiate binding arbitration, before a single arbitrator, by providing to JAMS, or its successor, in Seattle, Washington and to the other Designated Representatives a written request for binding arbitration pursuant to this Section. The written request for binding arbitration must set forth the subject of the Dispute and the relief requested, and such request must be provided within thirty (30) days of mediation.
(b) The Designated Representatives shail then cooperate with JAMS and with one another in selecting an arbitrator from JAMS' panel of neutrals, but if the Designated Representatives cannot agree on an arbitrator within seven (7) days, then each Designated Representative shall select a designee from among the JAMS panel of neutrals, and those designees shall in turn select, from among the JAMS panel of neutrals, the single arbitrator who shall hear the matter in arbitration (the "Arbitrator"). Notwithstanding the above, no one will be nominated to act as an Arbitrator who is in any way financially interested in the business affairs of any of the Port or Corix.
(c) The arbitration shall be conducted in Seattle, Washington under the arbitration rules contained in the then published Commercial Arbitration Rules and Mediation Procedures of the AAA, except as such are inconsistent with the explicit provisions herein.
(d) The Federal Rules of Civil Procedure shall govern discovery during arbitration; however, the Arbitrator shall have full discretion to regulate discovery so as to provide for prompt, efficient, and fair resolution of the claims, disputes and matters in question. During the conduct of the arbitration proceedings, the Arbitrator shall have full discretion concerning the admissibility and relevance of evidence, being guided in exercising such discretion by the principles set out in the Federal Rules of Evidence.
(e) The Arbitrator shall, within thirty (30) days of the conclusion of the arbitration, issue an award that shall be binding upon the Parties and judgment on the award may be entered in any court of appropriate jurisdiction. The arbitration award must be in writing and must explain the reasons for the decision. The Arbitrator may, but will not be bound to, make findings of fact or conciusions of law. The arbitration award shall include an award to the substantially prevailing party of reasonable attorneys' fees and costs, including the costs of retaining experts, En connection with the arbitration proceeding; however, the Arbitrator may not award such attorney's fees and costs if the Arbitrator does not find there is a substantially prevailing party.
19.5 Confidentiality
Subject to applicable law, he negotiation, mediation and arbitration proceedings will be private and confidentia!. The Parties shall not disclose the pleading, discovery materials, transcripts, testimony, documents or other information created, produced or presented in the negotiation, mediation or arbitration to the press, the public or to any third person, except to legal counsel and their employees, experts and others who need to know such information in order to assist in the presentation of or Page 27 of 35 participation in negotiation, mediation or arbitration, without written consent of the other Party or order of the Arbitrator. Nothing En this provision shall be deemed to restrict a Party's use or disclosure of documents (i) which are its own, (ii) which are or have been lawfully obtained independent of discovery in the negotiations, mediation, or arbitration, (iii) which are or become generally available to the pubiic through no act of the receiving Party, (iv) which have been lawfully obtained from a source other than another Party, (v) which are reasonably necessary to be disclosed in connection with a proceeding or lawsuit contempiated by this Artide 19 or (vi) which are required to be disclosed by law, court order or subpoena. The Arbitrator may impose such sanctions as are deemed by the Arbitrator to be appropriate for violation of this provision.
19.6 Continuation of Services
Each of the Parties will perform all of its respective obligations under this Agreement notwithstanding the existence of any Dispute that arises from time to time between the Parties in respect of any matter related to this Agreement or during the resolution of any Dispute in accordance with this Article 19 except where to do so would threaten public health and safety or the environment.
19.7 Injunctive Relief
Notwithstanding anything herein to the contrary, any Party may, prior to invoking the procedure called for in this Article 19, seek a temporary restraining order or a preliminary injunction (an "Injunctive Action") pursuant to this Section 19.7. The Parties agree that the Superior Court of the State of Washington in Whatcom County shall be the exclusive venue and have exclusive jurisdiction for all such Injunctive Actions, and stipulate and agree for the purposes of any Injunctive Action that all real and personal property of the Parties relevant to such Injunctive Action will be deemed to be within the jurisdiction of the Superior Court of the State of Washington in Whatcom County. Other than 'the foregoing stipulation regarding matters and property subject to Injunctive Action, any Party bringing an Injunctive Action must make a showing of the requisites for such Injunctive Action in such court. This provision for [njunctive Actions is the sole and exclusive process by which any Party shall maintain any Injunctive Action, and shali be limited to those cases in which emergency access to the court is necessary to prevent immediate and irreparable harm in the interim period until the agreed upon dispute resolution provisions of this Article 19 can be carried out.
19.8 Material Assumptions Events
The Parties recognize there are assumptions that are material to this Agreement's development, the Parties* accession to this Agreement, and that underlie the business mode! to successfully create, develop, operate, and maintain the DEU ("Material Assumptions"), These Material Assumptions are: (a) the Master Plan and Master Development Agreement wiii remain substantively unchanged as of the Effective Date of this Agreement (for reference, Articles 2 and 17); (b) Corix and the Port will execute a Ground Lease (for reference Section 7.2) (c) there is no alternate service provider or DEU operator apart from Corix to the Downtown Waterfront District (for reference, Article 2); (d) the DEU is unregulated under Washington law (for reference, Section 6.2); (e) all necessary regulatory or other Governmentai Authority approvals to complete the transactions contemplated herein wii! be received in a timely manner and in a form reasonably agreeable to Corix (for reference, Article 14); and, (f) the City will maintain the Municipal Code connection requirement (for reference, Article
Page 28 of 35 17).
19.9 Commitment to Renegotiate
Notwithstanding anything in this Agreement to the contrary, if any of the Material Assumptions in Section 19.8 become untrue, inaccurate or, as applicable, do not occur (an "Assumption Event"), the Parties will work together in good faith and in a reasonable and timely fashion to transition or amend this Agreement, as necessary, after following the procedure contained in Section 19.10. During this process, the Parties will take ail reasonable steps to give continued effect to this Agreement's terms and conditions, including the provision of service under the Customer Service Agreement without Customer interruption. Furthermore, any transition or change implemented as a result of this Article shall be limited in scope so as to only modify that portion of this Agreement or the relationship between the Parties that is affected by the relevant Assumption Event(s).
19.10 Procedure
(a) Upon the occurrence of an Assumption Events, either Party may notify the other Party that they believe a Material Assumption has been materially altered thereby materially changing the foundation of this Agreement justifying reopening the Agreement to account for the changed circumstances ("Reopening Notification"). Such Reopening Notification shali be in writing and provide a description of the Assumption Event(s), the rationale for why the notifying Party believes the changed circumstances materially effect this Agreement such that the Agreement should be reopened, and any provisions herein that would need to be renegotiated.
(b) Within twenty (20) calendar days of such Reopening Notification, the Parties shall meet and confer to work together in good faith to transition or amend this Agreement to accommodate for the changed drcumstance(s). The Parties agree that their representatives attending these meetings shall be of such position or authority to negotiate a resoiution, recognizing the Port is subject to Open Public Meetings Act laws to approve any final resolution.
(c) After meeting and conferring on at least two occasions, if the Parties cannot mutually agree on a resolution, either Party may proceed under the Dispute Resolution procedures set out in Sections 19.1 to 19.7 of this Article after giving written notice to the other Party.
19.11 No limitation on business
Nothing in this Article prevents Corix from undertaking additional measures on its own otherwise beyond the scope of this Agreement to ensure the reasonable commercial viability or profitability of the Infrastructure (such as, without limitation seeking rate changes) as a result of an Assumption Event or for any other reason.
20. GENERAL
20.1 Notices
Any notice or other communication required or permitted to be given under this Agreement wii! be effective only if in writing and when it is actually delivered (which delivery may be by telecopy or other telecommunications device) to the party for whom it is intended at the following address or such other
Page 29 of 35 address in British Columbia as such Party may designate to the other Party by notice in writing delivered in accordance with this Section 20.1:
(a) iftoCorix; Corix Utility Systems (Washington) inc. 500 West Monroe Street, Suite 3600 Chicago, il_ 60661 Attention: Travis Hickford-Kuiak, President of Energy Services Canada Email: travis.kuiak^corix.com Fax: 604-697-6703
With a copy to Attention: Corix Legal Team Email: leaal.files(5)corix.com
(b) if to Port: Port of Beilingham 1801 Roeder Avenue Beliingham, Washington 98225 Attention: Rob Fix, Executive Director Email: robf(a)portofbellinciham.cQm Fax: [_] Attention: Brian Gouran, Director of Environmental and Planning Services Emai!: briana(a)Dortofbellinaham.com Fax: [_] With a copy to Attention: Jon Sitkin, Port General Counsel, Chmelik Sitkin & Davis P.S. Email: isitkin(a)chmelik.com Fax: 360-671-3781
Notwithstanding the foregoing, notices with respect to Force Majeure will be given in writing by email or facsimile, or orally in person or by telephone (to be confirmed by email or facsimile), to the person or persons designated from time to time by the Parties as the person or persons authorized to receive such notices.
20.2 Confidentiality
Each Party (the "Receiving Party") will treat as confidential the terms of this Agreement and all Confidential Information (as defined below) of the other Party (the "Disclosing Party") and will at all times during the term of this Agreement and for a period of two years thereafter hold the same in confidence and will not, without the prior written consent of the Disclosing Party, disclose or divulge to any person the terms of this Agreement or any Confidential information of the Disclosing Party, provided that nothing in this Section 20.2 will restrict or prevent any Party from making any disclosure of such terms or any Confidential Information:
(a) that is reasonably necessary or desirable for the Receiving Party to carry out and give full effect to the terms, conditions and intent of this Agreement;
Page 30 of 35 (b) that is required by any Law or Governmental Authority;
(c) to an Affiliate of the Receiving Party or to the directors, officers or employees of such Party or its Affiliates;
(d) to the professional advisors of the Receiving Party;
(e) that the Receiving Party, in its sole discretion determines is required, prudent or necessary to be disclosed by that Party in connection with any prospectus filing, public securities offering or other applicable securities matters or laws; and
(f) that is already in the public domain, that was in the possession of the Receiving Party prior to its receipt of the information from the Disclosing Party or that was disclosed to the Receiving Party by a third party free of any obligation of confidentiaiity;
Corix acknowledges and understands that the Port, as municipal entity, is bound by the Washington Public Records Act (Chapter 42.56, Revised Code of Washington) and that Law takes precedence over this Agreement. If the Port receives a Pub!ic Records Act request for information relating to Corix and this Agreement, the Port wiil notify Corix in writing within five (5) Business days of receiving the request and provide Corix a reasonable opportunity (not exceeding ten (10) Business Days from Corix's receipt of written notice from the Port) to establish that the Port should withhold disclosure based upon any applicable exemption or to seek a court order regarding the requested records at Corix's sole cost. If the Parties agree than an exemption applies, the Port shail wifhhoid the record from disclosure.
For the purposes of this Section 20.2, "Confidential Information" means proprietary information of the Disclosing Party such as data, plans, drawings, manuals, or specifications which have been provided by the Disclosing Party or its employees, contractors, agents, subcontractors or Affiliates to the Receiving Party pursuant to this Agreement, or proprietary information conceived or developed by or for the Disclosing Party concerning construction practices, operation and maintenance practices, agreements, marketing plans and strategies, profits, costs, pricing and systems of procedure, but excluding information developed or conceived by the Receiving Party without using the Confidential Information of the Disclosing Party.
20.3 No Waiver
No waiver by either Party of any default by the other in the performance of any of the provisions of this Agreement will operate or be construed as a waiver of any other or future default or defauits hereunder, whether of a like or different character.
20.4 Inurement
This Agreement will inure to the benefit of and be binding upon the Parties and their respective successors and permitted assigns. This Section 20.4 does not address, directly or indirectly, whether a Party may assign its rights or delegate its performance under this Agreement, which Section 20.8 separately addresses.
20.5 Entire Agreement
This Agreement contains the whoie agreement between the Parties in respect of the subject matter hereof and supersedes any pre-existing written or oral agreement or understanding, express or implied, between the Parties.
Page 31 of 35 20.6 Further Assurances
Each Party wi!i execute and deliver all such further documents and do all such further things as may be reasonably requested by the other Party to give full effect to the intent and meaning of this Agreement.
20.7 Counterparts and Facsimile
This Agreement may be executed in counterparts with the same effect as if the Parties had signed the same original document Delivery of an executed counterpart's signature page of this Agreement, by facsimile, electronic mail in portable document format (.pdf) or by any other electronic means intended to preserve the original graphic and pictorial appearance of a document, has the same effect as delivery of an executed original of this Agreement. All counterparts will be construed together and will constitute one and the same agreement and, if signed by facsimile, e-mail or any other eiectronic means, each Party will promptly dispatch an original to the other Party.
20.8 Subcontracting and Assignment
Neither Party may assign this Agreement or any of its rights or obligations hereunder without the prior written consent of the other Party, such consent not to be unreasonably withheld. Notwithstanding the foregoing, Corix may assign this Agreement or any of its rights or ob!igations hereunder to, or sell the majority of its shares or business or its material assets to, or combine or merge with, any of its Affiliates without the consent of Port, provided Corix has reasonably determined in good faith that such Affiliate is legally, financially and technically qualified to carry out this Agreement and agrees in writing prior to the Assignment to be bound by the terms and conditions of this Agreement.
Corix may subcontract to any party any of its rights or obligations hereunder in respect of the Infrastructure, provided that each subcontractor and its subcontractors will be subject to the prior approval of Port, which approval shall not be unreasonably withheld or delayed.
20.9 Relationship
Nothing in this Agreement wiil create a partnership or joint venture, or a relationship of landlord and tenant between Port and Corix.
[the remainder of this page intentionaliy ieft biank]
Page 32 of 35 IN WITNESS WHEREOF the Parties hereto have executed this Agreement as of the day and year first above written.
PORT OF BELLINGHAM CORIX UTILITY SYSTEMS (WASHINGTON) INC.
Per: ^^ -^^^^ _ Per: C^i J^U^^ Nanriie^^o t^? fty^^ Name: Don Sudduth Title; ^.^^_j_^A\^ ^ Ty^c+or Tit!e:. .^Y?. & chief °Peratin9 officer (Contract Utilities)
[Signature Page to Infrastructure Agreement] 0 m < m 0 -0 m mi ^ ^ z -i co 1> m > > -D Exhibit A: Development Area
^^ Development Area
l'-'-':.':;'i Planned Arterials
pl Bay Street Connector
Planned Parks
Existing Structures
Aerated Stabilization Basin (ASB)
0 250 500 Feet
L. EXHIBIT B CONTAMINATED MATERIALS MANAGEMENT PLAN CONTAMINATED MATERIALS MANAGEMENT PLAN Pulp/Tissue Mill Remedial Action Unit/ G-P West Site
Prepared for: Port of BeNingham
Project No. 070188-001-22 • June 19, 2014 Final
SU LTING Aspect >CON-SU LTING
CONTAMINATED MATERIALS MANAGEMENT PLAN Pulp/Tissue Mill Remedial Action Unit/ G"P West Site
Prepared for: Port of Bellingham
Project No. 070188-001-22 * June 19, 2014 Final
Aspect Consulting, LLC
Steve J. Germiat
Matthew von der Ahe, LG Steve Germiat, LHG Sr. Staff Geologist Sr. Associate Hydrogeologist [email protected] [email protected]
V;\070188PortBeliineham\Dei)verable5\Pulp & Tissue Mill RAU\Contaminated Matera!s Management Plan\Final\Contam Matis Mgl Plan for PTM RAU - flnai.cfocx ASPECT CONSULTING
Contents
1 Introduction ...... 1
1.1 Purpose of this Document...... ,...... 1
1.2 Description of PTMRAU...... 2
1.3 Summary of Ecology's Selected Cleanup Action...... 3
1.4 Residual Contaminants of Potential Concern ...... 5
1.4.1 Subsurface Debris and Structures...... 6
2 Worker Health and Safety Requirements ...... 6
3 Requirements for Management of Contaminated Materials...... 7
3.1 Notification...... ,....^
3.2 Management of Contaminated Materials...... 8
3.2.1 Erosion, Sedimentation, and Dust Control ...... 9
3.2.2 Materials Handling On Site...... 9
3.2.3 Off-Site Disposal of Excavated Materials...... 10 3.2.4 Chemical Testing Protocols and Criteria for On Site Material Reuse ..10
3.3 Water Management...... 11
3.4 Preventing Groundwater Contaminant Migration...... 11
3.5 Subsurface Drilling and Weil Decommissioning...... 12
3.6 Restoration of CAP-Required Cleanup Elements...... 13 3.7 Management of Material with Previously Unknown Hazardous Substances13
4 References...... 15
List of Tables 1 Soil Screening Levels for Reuse of Material
List of Figures 1 Areas Exceeding Cleanup Levels
2 Selected Cleanup Action
3 Decision Flowchart for Management of Excavated Materials
PROJECT NO. 070188-001-22-JUNE 19,2014 FINAL ASPECT CONSULTING
1 Introduction
This Contaminated Materials Management Plan (CMMP) presents general procedures for handling and management of potentially contaminated materials (soil, debris, groundwater) generated by construction-related activities during redevelopment of the Pulp/Tissue Mill Remedial Action Unit (PTM RAU) within the Georgia-Pacific West Site (Site) in Bellingham, Washington (Figure 1).
The Site Is being cleaned up under the authority of the Model Toxics Control Act (MTCA), Chapter 70.105D of the Revised Code of Washington, and the MTCA Cleanup Regulation, Chapter 173-340 of the Washington Administrative Code (WAC). Cleanup of the PTM RAU in accordance with MTCA is legally required under a Consent Decree between the Port ofBellingham (Port) and Washington Department of Ecology (Ecology). Ecology's selected cleanup action is defined in their Cleanup Action Plan (CAP) for the PTM RAU (Ecology, 2014), which is an exhibit to the Consent Decree (CD). The cleanup action includes an environmental covenant(s) which requires that future activities within the RAU not compromise the protectiveness of the cleanup action defined in the CAP.
The PTM RAU is located within the Bellmgham Waterfront District master-planned redevelopment area. It is anticipated that the Port will sell and/or lease property within the PTM RAU to entitles for redevelopment, subject to the Waterfront District Subarea Plan (Port ofBelIingham and City ofBellingham, 2013) and its development regulations. The environmental covenant(s) required by the CAP is legally applicable to the future Owners of properties within the PTM RAU including the Port.
A property owner or tenant (hereafter collectively termed Proponent") conducting redevelopment-related activities on property within the PTM RAU will be required to comply with this CMMP and all other provisions of the CD and environmental covenant(s) so as to not interfere with the effectiveness of Ecology's selected cleanup action. Therefore, Proponents must integrate the provisions of this CMMP into their design specifications and implementation for future redevelopment-related projects anywhere within the PTM RAU. Proponents will also be responsible for securing any and all permits required for their redevelopment projects. 1.1 Purpose of this Document This CMMP describes the procedures for managing contaminated materials (soil, debris, and water) encountered during all post-cleanup redevelopment-related activities (construction, maintenance, etc.) within the PTM RAIL Proper management of contaminated materials is necessary to ensure that future redevelopment-related activities are consistent with Ecology's CAP. Additional requirements may also be imposed on future redevelopment to comply with other regulatory programs or contract requirements.
PROJECT NO. 070188-001-22 • JUNE 19,2014 FINAL ASPECT CONSULTING
Specific objectives of this CMMP specific to the PTM RAU are to:
• Provide a brief overview of environmental conditions and the selected cleanup action, with reference to documents providing additional detail;
• Define regulatory requirements for health and safety when workers are conducting activities that will encounter contaminated subsurface materials; and
• Provide protocols for managing contaminated materials generated during redevelopment-related activities to meet requirements of the CAP and applicable laws, regulations, ordinances, and permits.
By incorporating this CMMP into the CD for cleanup of the PTM RAU, future redevelopment-related activities covered under the CMMP and conducted consistent with the requirements of the environmental covenant(s) will be considered pre-approved by Ecology. However, prior notification to Ecology and the Port is required for all redevelopment activities that will breach the CAP-required surface cap and disturb potentially contaminated materials beneath it (Section 3.1 defines notification requirements).
An assumption inherent to this CMMP, consistent with the CAP, is that all subsurface materials within the entire PTM RAU are potentially contaminated, thus requiring an environmental surface cap across the entire RAU (RAU-wide cap) as a component of the cleanup action (described in Section 1.3). However, for a given redevelopment-related project, if supplemental environmental sampling and analysis performed by a Proponent demonstrates to Ecology's satisfaction that materials to be disturbed during the project are not contaminated relative to applicable cleanup standards, this CMMP's requirements for management of contaminated materials may not apply. However, any cleanup-related elements, including but not limited to the RAU-wide cap, that are disturbed by the Proponent's activities must be restored as needed to fully meet the remediation performance standards of the CAP (refer to Section 3.6). In addition, if an area is documented by a Proponent to be uncontaminated, contaminated materials from other areas cannot be placed there. 1.2 Description of PTM RAU The Remedial Investigation (RI; Aspect, 2013) and Feasibility Study (FS; Aspect, 2014) for the Site identify low-level contamination throughout the entire PTM RAU, as well as the following localized contaminant areas (subareas) within the PTM RAU which are shown on Figure 1:
« Bunker C subarea;
• D ioxin-Contaminate d Debris subarea (within the Bunker C subarea footprint);
• Acid Plant subarea; and
• LP-MW01 subarea.
FINAL PROJECT NO. 070188-001-22 • JUNE 19,2014 ASPECT CONSULTING
Soils in the Bunker C subarea are impacted by carcinogenic polycyclic aromatic hydrocarbons (cPAHs) and total petroleum hydrocarbon (TPH) in the Bunker C oil range, including non-aqueous-phase liquid (NAPL). In addition, dioxins/farans are a contaminant of concern in soils within a small portion of this area, which is designated the Dioxin-Contaminated Debris subarea. In late 2011, the Port conducted an interim action in the Bunker C subarea, which involved the excavation and off-site disposal of greater than 5,000 tons ofTPH-impacted soil and debris from beneath the former Bunker C oil tank (excavation area denoted on Figure 1).
Soils in the Acid Plant subarea contain acidic pH and metals (including arsenic, cadmium, copper, mercury, and lead) at concentrations exceeding cleanup levels. Shallow groundwater in the immediate vicinity and downgradient of these soils is acidic and impacted by dissolved metals at concentrations of concern based on marine protection (Site groundwater is non-potable). The R] data indicate that the dissolved metals are mobile due to the low groundwater pH, and that metals concentrations and low pH attenuate naturally before the groundwater reaches the shoreline.
In the LP-MW01 subarea, vinyl chloride and tetrachloroethene (aka perch loroethene or PCE) were detected in shallow groundwater from a single monitoring well at concentrations of concern based on vapor intrusion (VI) and marine protection. Soil contamination above cleanup levels was not detected in this subarea, and the extent of contaminant migration in groundwater is extremely limited due to natural attenuation.
The RI also identifies metals at concentrations of concern based on marine protection in shallow groundwater in the general vicinity of the LP-MW01 subarea. The estimated extent of these elevated concentrations is labeled Miscellaneous Dissolved Metals Exceedances on Figure 1.
In addition, soil at scattered locations throughout the PTM RAU was found to contain contaminant concentrations (e.g., cPAHs, heavy metals) exceeding soil cleanup levels for unrestricted land use. Although it is possible that not all subsurface materials within the PTM RAU are contaminated, it is assumed for purposes of the CAP and this CMMP that they are contaminated (unless demonstrated otherwise by chemical testing), thus requiring proper management if disturbed.
The depth to groundwater within the PTM RAU ranges from 1 to 10 feet below ground surface and it varies with season and, near the Waterway, with the tides.
Detailed information regarding subsurface conditions and contaminant distribution is presented in the Site RI (Aspect, 2013). Specifically, Section 7 of the RI presents the conceptual site model for each subarea, which discusses contaminants of concern and their historical source(s), nature and extent of contamination, contaminant fate and transport, and environmental exposure pathways and receptors. In addition, the Bunker C Tank Interim Action Report (Aspect, 2012) describes the methods and results from that interim action cleanup. 1.3 Summary of Ecology's Selected Cleanup Action Ecology's selected cleanup action for the PTM RAU consists of the following elements, as illustrated on Figure 2:
PROJECT NO. 070188-001-22 * JUNE 19, 2014 FENAL ASPECT CONSULTING
Soil Removal from the Bunker C Subarea. In addition to soils that were removed from beneath the former Bunker C Tank during the completed interim action, the cleanup action includes removal of all remaining soils with TPH concentrations exceeding 10,000 mg/kg (subarea-specific remediation level) from the Bunker C subarea.
RAU-wide Capping. Capping to control soil direct-contact exposure and soil erosion pathways will consist of a combination of existing pavement and building foundations, new buildings and pavement, and new soil caps. Much of the PTM RAU is currently capped with pavement and building foundations that, subject to long-term, ongoing inspection and maintenance, should provide the required isolation of underlying contaminated soil to achieve environmental protection. Integration of the existing RAU surfaces - with repair, replacement, and installation of new cap materials and erosion controls as needed to achieve protectiveness - will constitute the RAU-wide cap. When redevelopment-related activities modify these conditions such that cap protectiveness is compromised, new capping would need to be implemented.
Specific capping design will be presented in an Engineering Design Report as required by the CD; however, it is anticipated that new hard caps will be composed of a minimum 3 inches of concrete, asphalt, paving blocks, or building foundations. New soil caps will be composed of a minimum 24 inches ofuncontaminated soil cover over a geotextile separation layer to distinguish the capping material from the underlying soil. Soil in the cap may include RAU soil confirmed to meet applicable soil cleanup levels as well as imported, uncontaminated soil.
Beyond the CAP requirements, the redevelopment plans for the PTM RAU include increasing grade elevation to mitigate the impact of potential sea level rise and to reduce the grade separation with the downtown Bellingham Central Business District. PTM RAU grading will be designed to maintain the required remediation performance standards, and will be integrated with redevelopment aesthetics and site drainage. Impacted soil from development projects may be temporarily stockpiled for a time period of up to 2 years, with subsequent reuse beneath new capping constructed within the project area or as part of other projects within the Site, subject to the provisions of this CMMP. All soil to be stockpiled temporarily for reuse will be managed to ensure protectiveness,
Ecology must approve reuse of any material that Is placed on Site outside of the project area from which it is generated, based on chemical testing data for that material. In addition, material removed from the source area of the Acid Plant subarea (low-pH, metals-contaminated soil; Figure 1), requires chemical testing and Ecology approval prior to on Site reuse of that material.
Monitored Natural Attenuation (MNA) of Groundwater. MNA will be applied to address residual contamination in groundwater that exceeds applicable groundwater cleanup levels. Based on the RI data, cleanup level exceedances include selected metals and acidic pH in the Acid Plant subarea, PCE and vinyl chloride in the LP-MW01 subarea, and selected metals in the Miscellaneous Dissolved Metals Exceedances area. Contaminants are expected to continue to naturally attenuate through a combination of sorption, bioattenuation, volatilization, dispersion, and tidal mixing. The RI data indicate
FINAL PROJECT NO. 070188-001-22 • JUNE 19, 2014 ASPECT CONSULTING
that natural attenuation is effectively reducing concentrations ofgroundwater contaminants in each of these areas.
Contingent actions will be considered for implementation ifMNA falls to restore groundwater at a reasonable rate and Is determined by Ecology to not be protective of human health and the environment.
Institutional Controls. Following completion of the CAP-required cleanup construction, the Port and Ecology will develop an Institutional Controls Plan for the PTM RAU that includes environmental covenants in accordance with WAC 173-340-440 and RCW 64.70. It is anticipated that institutional controls will:
• Notify Proponents of the presence of residual contaminated materials, and regulate the disturbance and management of those materials and the cleanup action components;
• Require project specific design to reduce risk of creating preferential pathways for contaminant migration or run-offand sediment impacts to Whatcom Waterway (e.g., utility excavations or site grading);
• Prohibit extraction ofgroundwater for drinking or any other use. Groundwater extraction for construction dewatering is allowed, but that is not a beneficial use of water;
• Provide for long-term monitoring and stewardship of the cleanup action; and
• Require that VI potential be evaluated and/or VI controls constructed beneath future buildings in the LP-MW01 subarea ifgroundwater compliance monitoring indicates that vinyl chloride and PCE concentrations have not naturally attenuated to below cleanup levels in that subarea. 1.4 Residual Contaminants of Potential Concern Data collected within the PTM RAU indicate that, following completion of the active cleanup measures, contaminants of potential concern (COPC) that will remain in soil at concentrations exceeding MTCA unrestricted cleanup levels include (Figure I):
• An estimated 4,600 cubic yards (CY) ofTPH-contaminated soil will remain in the Bunker C subarea;
• An estimated 100 CY ofdioxin-contaminated soil will remain in the Dioxin- Contaminated Debris subarea; and
• An estimated 3,700 CY of soil with acidic pH and metals contamination will remain in the Acid Plant subarea.
In addition, soils in areas scattered throughout the 31-acre PTM RAU contain COPC concentrations exceeding soil cleanup levels for unrestricted land use. These soils occur from the existing ground surface down to an estimated average depth of 12 feet. This equates to an RAU-wide impacted soil volume of approximately 600,000 CY. Contaminants are assumed to be present beneath the RAU-wlde cap in subsurface materials anywhere outside of soil excavation areas (Bunker C subarea) within the PTM RAU.
PROJECT NO. 070188-001-22 • JUNE 19, 2014 FINAL ASPECT CONSULTING
Groundwater contamination exceeding cleanup levels at the beginning of cleanup implementation includes (Figure I):
• Acidic pH and dissolved metals covering an estimated 2.1 acres in the Acid Plant subarea;
• Dissolved vinyl chloride and PCE covering an area estimated at less than 0.1 acre in the LP-MWOl subarea; and
• Dissolved metals covering an area estimated at 2.5 acres in the Miscellaneous Dissolved Metals Exceedances area. 1.4.1 Subsurface Debris and Structures Excavation or grading below the RAU-wide cap may encounter subsurface debris and structures associated with the former pulp and tissue mill. Such material may include foundation elements (footings, slabs, grade beams, pile caps, piles, etc.), utilities (stormwater catch basins and pipelines, water supply pipelines, sewer pipelines, etc.), and/or process components (pipelines, utility corridors, etc.). Subsurface debris and structures should be presumed to be impacted by the same contaminants as the immediately surrounding soil, and must be handled and managed consistent with the procedures prescribed In this CMMP. Structures that appear to be process components should be handled with greater care, as they may contain higher concentrations of contaminants.
Section 3.7 addresses procedures to be followed ifredevelopment-related excavation activities encounter a previously unknown occurrence of hazardous substances.
2 Worker Health and Safety Requirements
Contractors conducting subsurface work within the PTM RAU are solely responsible for all matters relating to the health and safety of their employees and subcontractors while working within the RAU.
It is known that residual contamination exists in subsurface materials (soil, debris, and groundwater) throughout the PTM RAU, beneath the RAU-wide cap, at concentrations that may pose a risk to worker safety. Therefore, any contractor(s) conducting work that will disturb subsurface materials within the PTM RAU must prepare a Site Health and Safety Plan in accordance with OSHA 29 CFR 1910.120 and other applicable federal, state, or local laws or regulations.
Contractors' workers that engage in activities which could expose them to potentially hazardous substances, dangerous conditions, or other health hazards, must comply with 29 CFR 1910.120 and applicable federal, state, and local laws and regulations; this includes but is not limited to having the necessary health and safety training and performing work in accordance with their Site Health and Safety Plan and applicable regulations.
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3 Requirements for Management of Contaminated Materials
This section describes the requirements that apply to any post-cleanup activities which breach the PTM RAU-wide cap and disturb underlying potentially contaminated materials. As stated in Section 1.1, if a Proponent demonstrates to the satisfaction of Ecology that materials to be disturbed during a project are not contaminated relative to applicable cleanup standards, this section's requirements for management of contaminated materials may not apply. This may include projects that disturb only future imported fill (assumed not contaminated) that is placed above the existing Site soil for redevelopment-related purposes, after completion of the cleanup action. If an area is documented by a Proponent to be uncontaminated, contaminated materials from other areas cannot be placed there. Any cleanup-related elements that are disturbed by the Proponent's activities must be restored as needed to fully meet the remediation performance standards of the CAP (refer to Section 3.6). In addition, construction best management practices (BMPs) - as required by applicable federal, state, and local laws, regulations, ordinances, and permits - will be required for any redevelopment-related activity on the PTM RAU, irrespective of whether they involve handling of contaminated materials.
Figure 3 presents a decision flowchart for management of materials generated by future redevelopment-related activities, which corresponds to the requirements of this section. 3.1 Notification
The Proponents will notify Ecology and the Port within 45 days before the beginning of any activity that will disturb the RAU-wide cap or underlying materials within the PTM RAU, or potentially create pathways for the migration of contaminated groundwater as described in Section 3.4. If Ecology determines the activity is not appropriate to be managed under this Plan, Ecology will notify the Proponents and Port and require approval prior to commencing the activity or construction of the project. The notification will include a written document submitted for Ecology review that describes the planned scope of the project, including but not limited to: how material excavated or graded from the project area will be managed including whether such materials are intended to be reused on Site; how water generated will be managed; whether subsurface drilling will be conducted; and whether existing monitoring wells will be disturbed. The notification document will also include any chemical testing data proposed to characterize material for reuse on Site, in accordance with Section 3.2.4 of this CMMP.
At the time of this document, contact information for Ecology and Port representatives is as follows:
Department of Ecology Northwest Regional Office Cleanup Site Manager Brian Sato 425-649-7000 bsat461 @ecy.wa.gov
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PortofBeIlingham Environmental Site Project Manager Brian Gouran 360-676-2500 [email protected] 3.2 Management of Contaminated Materials As described in Section 1 .3, Ecology's selected cleanup action for the PTM RAU involves permanent removal of contaminant sources that pose a risk to human health or the environment via contaminant migration, plus an RAU-wide surface cap that provides protection from direct contact with and erosion of contaminated materials.
Proponents have options for managing potentially contaminated materials generated during their project-specific activities. Any material generated during redevelopment activities may be disposed of at a licensed and approved off-site disposal facility. Alternatively, the material may be beneficially reused within two years, as backfilVregrade material within the Site, as long as that material would not pose a risk to groundwater quality and it is capped in accordance with the CAP'S remediation performance standards (reiterated in Section 1.3). Stockpiled soils must be disposed of at a licensed and approved off-site disposal facility after two years. Reuse assumes that the physical (e.g., geotechnical) characteristics of the material generated are suitable to meet the Proponent's project-specific requirements. Suitable barricades, fencing, signing and other warning and safety devices will be provided to limit access and protect the public and site workers from contaminated materials.
Soil generated from a defined project area may be subsequently reused within two years, beneath a new capping system within the same project area without additional chemical testing. Conversely, Ecology must approve reuse of any material that is placed on Site outside of the project area from which It is generated, based on chemical testing data for that material as described in Section 3.2.4 or as agreed to with Ecology during the project notification process (Section 3.1). In addition, material removed fi-om the source area of the Acid Plant subarea (low-pH, metals-contaminated soil; Figure 1), requires chemical testing and Ecology approval prior to any reuse of that material on Site. The chemical testing requirements for that material are outlined in Section 3.2.4.
The on-site relocation of excavated contaminated material within the PTM RAU does not constitute generation of waste.
When construction, maintenance, or other redevelopment-related activities will disturb the RAU-wide cap and potentially contaminated materials under the cap, then the procedures outlined in the following subsections must be followed.
Section 3.7 addresses procedures to be followed ifredevelopment-related excavation activities encounter a previously unknown occurrence of hazardous substances.
Note that procedures in this section apply to the material comprising the PTM's RAU- wide cap (e.g., pavement) as well as materials underlying the cap. For purposes of this CMMP, it is reasonably assumed that the material comprising the cap is not contaminated. As such, removed cap materials can be reused on site consistent with
FINAL PROJECT NO. 070188-001-22 * JUNE 19, 2014 ASPECT CONSULTING
provisions of this CMMP, or can be disposed of at a facility permitted to accept inert debris (construction and demolition landfill). Concrete or other cementitious material may not be reused in the subsurface on Site below the depth of the seasonally high groundwater table.
3.2.1 Erosion, Sedimentation, and Dust Control When contaminated material is excavated, stockpiled, and handled, temporary erosion and sedimentation control (TESC) practices compliant with applicable state and local laws, regulations, ordinances, and permits must be followed.
In addition, construction BMPs must be implemented to minimize generation of dust throughout all handling of contaminated materials, in accordance with applicable state and local laws, regulations, ordinances, and permits.
3.2.2 Materials Handling On Site Excavated materials to be managed on site temporarily must be stockpiled or placed into appropriate containers (e.g., covered roll-off boxes) while on site to avoid dispersal of potentially contaminated material via water (erosion) or wind. If material will be disposed ofoffsite, it may be directly loaded for transport to a permitted disposal facility. As required by the CAP, material generated by excavation or grading within the PTM RAU must either be placed beneath the RAU-wide cap or properly disposed ofoffsite within 2 years of its excavation/grading.
Stockpile Management Stockpiles of potentially contaminated material must be constructed and maintained to prevent erosion, contact with stormwater runoff, dust generation, and worker contact. The water content of material to be stockpiled must be minimized to the extent practical prior to stockpiling to minimize drainage offi-ee liquids from the stockpile.
Each stockpile must be underlain by a low-perme ability liner with a minimum thickness of 10 millimeters (mil), and adjacent sheets of liner must be continuously overlapped by a minimum of 3 feet. The ground surface on which the liner will be placed must be free of any objects that could damage the liner. Alternatively, a layer ofgeotextile or plywood may be placed beneath the liner to protect it in locations containing rocks or debris on the ground surface, or in areas through which vehicular traffic will travel. A berm must be constructed around each stockpile or stockpile area. The berm must contain sufficient area and volume to allow for ponding and control of liquids within it.
Stockpiles must be covered when not in use. Stockpile covers must have a minimum thickness of 10 mils, and must be anchored as needed (e.g., sandbags) to prevent being removed by wind or other disturbance. Tears or dlscontinuitles in the stockpile cover must be fixed immediately. Stockpiles must be inspected at least once per week to ensure they remain properly covered.
Water or other liquids accumulating within the stockpile area must be collected and disposed of in accordance with applicable federal, state, and local laws, regulations, ordinances, and permits (see Section 3.3).
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3.2.3 Off'Site Disposal of Excavated Materials Materials excavated from the PTM RAU may be disposed of at a permitted off-site facility. The disposal facility will have specific permit requirements for profiling the waste materials (through sampling and chemical analysis) that must be complied with before off-site transport and disposal is allowed. Note that, based on extensive characterization conducted during the RI, no environmental media within the PTM RAU have been identified as hazardous waste/dangerous waste under the state Dangerous Waste Regulations (Chapter 173-303 WAC).
Transport and off-site disposal of all waste materials generated from the PTM RAU must be conducted in accordance with Chapter 173-303 WAC and other applicable federal, state, and local laws, regulations, ordinances, and permits.
The property owner will be the generator for all waste materials generated on their property, in accordance with Chapter 173-303 WAC.
3.2.4 Chemical Testing Protocols and Criteria for On Site Material Reuse As stated above, soil generated from a defined project area may be subsequently reused within two years, beneath a new capping system within the same project area without additional chemical testing. Conversely, chemical testing is required prior to on Site reuse of material generated from the source area of the Acid Plant subarea (Figure 1) or material that will be placed outside of the project area from which it is generated, based on chemical testing data. Chemical data used to characterize such material can include existing (RI/FS) data if representative of the location and material and/or new representative sampling and chemical analysis as described in this section.
To generate new chemical testing data, one representative 5-point composite sample must be collected for each 100 cubic yards of material, using industry-standard sampling practices for the material being sampled and the contaminants being analyzed for (listed below). The material may be sampled m sitn (before excavation/grading) or sampled from a stockpile after excavation/grading. Each sample must have a unique identification number and, for each sample, the correlation between the Identification number and the location from which it was collected must be recorded. The characterization soil samples must be submitted under chain-of-custody protocol to an analytical laboratory accredited by Ecology for the chemical analyses to be conducted.
New soil samples will be analyzed for contaminants of concern based on groundwater protection for the PTM RAU (addressing vapor intrusion and marine protection). Since all soil must be reused beneath a new cap, it is not necessaiy to test for contaminants that pose a risk only via soil direct contact (e.g., cPAHs). If new chemical testing is required as described above, the new soil samples must be analyzed for following groundwater contaminants of concern defined in the RI/FS:
• Metals (arsenic, cadmium, chromium, copper, lead, mercury, nickel, zinc);
• Soil pH; and
• Chlorinated solvent volatile organic compounds (VOCs).
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Table 1 presents soil screening levels to assess suitability for on-Site reuse of material that requires additional chemical testing (described above). In accordance with MTCA, the groundwater-protection-based soil reuse screening levels for some contaminants are different for material located above the water table (unsaturated) versus below the water table (saturated) (Table 1).
Based on the chemical testing data, material with measured concentrations less than the soil reuse screening levels in Table 1 will be acceptable for reuse beneath a cap on Site.
Based on the chemical testing data, materials with detected concentrations greater than the soil reuse screening levels will be disposed ofoffsite in accordance with Section 3.2.3. However, if concentrations detected in the material are greater than the soil reuse screening levels, the Proponent may determine and present for Ecology approval alternative area-specific soil concentrations protective of groundwater by applying the other MTCA methods presented in WAC 173-340-747 (e.g., use of leaching tests, calculation of a dilution/attenuatlon factor to apply in the 3-phase leaching model, and use of empirical groundwater data). Materials determined to be protective ofgroundwater by these methods are acceptable for reuse beneath the RAU-wide cap.
The chemical testing information must be submitted to Ecology for their review and written opinion regarding suitability of the tested material for its intended reuse purpose (e.g., above or below the water table etc.). No excavated material for which chemical testing is required may be placed on Site without Ecology written approval regarding its reuse suitability. 3.3 Water Management
Redevelopment-related activities generating water include but are not limited to construction dewatering (groundwater withdrawal), stormwater runofffrom work areas including soil stockpile areas, drainage from stockpiles, and water from cleaning equipment. All water generated by redevelopment-related activities must be characterized, handled (captured, pumped, stored, treated, conveyed, etc.), and discharged in compliance with federal, state, and local laws, regulations, ordinances, and permits. Water generated during redevelopment-related activities may not be discharged or allowed to flow onto the ground surface, to the Whatcom Waterway, or off the site, except as allowed by permit. 3.4 Preventing Groundwater Contaminant Migration
The Proponent's redevelopment-related activity must not create or facilitate migration of contaminated groundwater within or from the areas depicted on Figure 1 (Acid Plant subarea, LP-MW01 subarea. Miscellaneous Dissolved Metals area). Specific redevelopment-related activities that would require additional design considerations if planned within those areas include but are not limited to:
Soil reuse screening levels are soil concentrations based on leaching to groundwater applying MTCA-defauIt assumptions and adjusted for background metals concentrations and analytical practical quantitation limits (PQL); refer to Section 5 ofRI for details regarding screening level derivation.
PROJECT NO. 070188-001-22-JUNE 19, 2014 FINAL 11 ASPECT CONSULTING
• Construction ofsubsurface utilities extending beneath the water table. Any such utility corridors would need to backfilled in a manner so as to not serve as a preferred pathway for groundwater migration (e.g., backfill with low- permeability material such as controlled density fill [CDF]); and
• Construction ofstormwater infiltration facilities that create focused groundwater recharge and thus change the local groundwater flow directions or velocity. Diffuse infiltration that would not substantively change groundwater flow directions or velocity in those areas is acceptable and would not require specialized design measures.
The required prior notification to the Port and Ecology (Section 3.1) must describe any such redevelopment-related features activities considered within the defined areas of groundwater contamination, along with the design measures to be implemented to prevent migration of contaminated groundwater. 3.5 Subsurface Drilling and Well Decommissioning Drilling into materials beneath the RAU-wide cap may be necessary for geotechmcal or environmental characterization ofsubsurface conditions in support of future redevelopment projects within the PTM RAU. All drilling within the PTM RAU is subject to applicable state and local laws, regulations, ordinances, and permits. Drinking water supply wells are not allowed to be Installed or operated within the PTM RAU under the CAP-required environmental covenant.
The Port and Ecology contacts identified in Section 3.1 must be notified If redevelopment-related activities will disturb any monitoring wells within the PTM RAU.
Any monitoring well rendered inoperable by redevelopment-related activities must be properly decommissioned in accordance with the state's Minimum Standards for Construction and Maintenance Wells (Chapter 173-160 WAC). Any monitoring well that needs to be disturbed for redevelopment-related activities but is required to remain operable to meet CAP requirements as determined by Ecology, must be repaired or replaced to restore its pre-existing function and meet requirements of Chapter 173-160 WAC.
Any CAP-required cleanup element, including but not limited to the RAU-wide cap, that is disturbed by drilling or well decommissioning activities must be restored in accordance with Section 3.6. In no case may the portion of a decommissioned boring or monitoring well that penetrates the RAU-wide cap be of a quality inferior to that of the cap prior to disturbance. In addition, the surface finish for any subsurface exploration (whether an operable monitoring well or decommissioned boring/well) must match the surrounding finish grade unless otherwise approved by Ecology.
Drill cuttings, water, or other materials produced from subsurface drilling or monitoring well decommissioning within the RAU are subject to the same requirements as other potentially contaminated materials and water produced in the RAU as specified in this CMMP and subject to applicable regulations.
12 FINAL PROJECT NO. 070188-001-22 • JUNE 19, 2014 ASPECT CONSULTING
3.6 Restoration of CAP-Required Cleanup Elements Any cleanup element required by the PTM RAU CAP, including but not limited to the RAU-wide cap, which is disturbed by future investigation, construction, maintenance, or other activities must be restored to fully meet the remediation performance standards of the CAP (reiterated in Section 1.3) as soon as possible after the disturbance. Written documentation of disturbance and restoration of CAP-required cleanup elements must be provided to Ecology for review and approval that the CAP requirements are met. 3.7 Management of Material with Previously Unknown Hazardous Substances
If the Proponent encounters a previously unknown occurrence of hazardous substances at concentrations greater than applicable cleanup levels and those materials possess field- screening indications of gross contamination (e.g., odor or presence of visible non" aqueous phase liquid (NAPL)), then the Proponent must notify Ecology and the Port contacts in Section 3.1 ofthe occurrence within 3 business days. Hazardous substances known to exceed cleanup levels within soil or groundwater of the PTM RAU Include petroleum hydrocarbon, metals^ VOCs, PAHs, dioxins/furans, and acidic pH. Aspect (2013) and Aspect (2014) provide additional details regarding hazardous substances within the PTM RAU, and are incorporated here by reference.
After notifying the Port and Ecology, such materials excavated for project purposes must be segregated and managed separately from materials without indications of gross contamination. Excavated materials with indications of gross contamination must be either: (1) properly profiled and disposed of off site in accordance with procedures identified in Section 3.2.3; or (2) sampled to characterize the contamination as described below, and the information presented to Ecology for their determination on its suitability for on-site reuse beneath the RAU-wide cap.
To chemically characterize material containing gross contamination for potential on-site reuse, one representative 5-point composite sample will be collected for each 20 cubic yards of material with indications of gross contamination, using industry-standard sampling practices for the material being sampled and the contaminants being analyzed for (listed below). The material may be sampled m sitn (that is, before excavation/grading) or sampled from a stockpile after excavation/grading. Each sample must have a unique identification number and, for each sample, the correlation between the identification number and the stockpile or in sitif location from which it was collected must be recorded. Characterization soil samples must be submitted under chain of custody to an Ecology-accredited analytical laboratory for the following chemical analyses:
• Diesel-range and oil-range petroleum hydrocarbons (by NWTPH-Dx method with silica gel pretreatment); • VOCs by EPA Method 8260;and
• The metals arsenic, cadmium, chromium, copper, lead, mercury, nickel, and zinc (by EPA Methods 6000 and 7000).
PROJECT NO. 070188-001-22 * JUNE 19,2014 FINAL 13 ASPECT CONSULTING
The list of analyses may be revised based on field screening or other information.
Based on the chemical testing data, excavated material with measured concentrations less than the soil reuse screening levels In Table 1 will be acceptable for reuse beneath a cap on Site.
Based on the chemical testing data, excavated materials with detected concentrations greater than the soil reuse screening levels will be disposed ofoffsite in accordance with Section 3.2.3. However, if concentrations detected m the material are greater than the soil reuse screening levels, the Proponent may determine and present for Ecology approval alternative area-specific soil concentrations protective of groundwater by applying the other MTCA methods presented in WAG 173-340-747 (e.g., use of leaching tests, calculation of a dilution/attenuation factor to apply in the 3-phase leaching model, and use of empirical groundwater data). Materials determined to be protective ofgroundwater by these methods are acceptable for reuse beneath the RAU-wide cap.
The chemical testing information must be submitted to Ecology for their review and written opinion regarding suitability of the tested material for its intended reuse purpose (e.g., above or below the water table etc.). No excavated material for which chemical testing is required may be placed on Site without Ecology written approval regarding its reuse suitability.
14 FiNAL PROJECT NO. 070188-001-22 • JUNE 19, 2014 ASPECT CONSULTING
4 References
Aspect, 2012, Bunker C Tank Interim Action Report, Georgia-Pacific West Site, Bellingham, Washington, February 24, 2012.
Aspect, 2013, Remedial Investigation, Georgia-Pacific West Site, Bellingham, Volume 1 ofRI/FS,August5,2013.
Aspect, 2014, Feasibility Study, Pulp/Tissue Mill Remedial Action Unit, Vol. 2a of RI/FS, Georgia-Pacific West Site, Bellingham, Washington, May 2, 2014.
Ecology, 2014, Cleanup Action Plan, Pulp/Tissue Mill Remedial Action Unit, Georgia- Pacific Site, Bellingham, Washington, June 2014.
Port ofBellingham and City ofBeIHngham, 2013, The Waterfi-ont District Draft Sub- Area Plan, 2013.
PROJECT NO. 070188-001-22 • JUNE 19,2014 FINAL 15 ? 03 m Table 1 - Soil Screening Levels for Reuse of Material Contaminated Materials Management Pian, Pulp/Tissue Mill RAU, GP West Site
Soil Reuse Screening Level Based on Groundwater Protection (mg/kg)
Unsatu rated Soil Saturated Soil Contaminant of Concern (above water tabie) (below water table) Metals Arsenic 20 20 Cadmium 1.2 1 Chromium (Total) 5,200 260 Copper 36 36 Lead 250 81 Mercury 2 0.1 Nickel 48 48 Zinc 100 85 VolatHe Organic Compounds (Chlorinated Solvents) cis-1,2-Dichloroethene (DCE) 2.5 0.14 Tetrachloroethene (PCE) 0.3 0.015 Trichloroethene (TCE) 0,056 0.005 Vinyl chioride 0.006 0.005 Conventionals pH (in Standard pH Units) <2.5or>11.0 <2.5or>11.0
Notes: mg/kg: milligrams per kilogram. These screening levels apply to material that Is either (1) generated from the source area of the Acid Plant subarea and intended for reuse anywhere on Site, or (2) intended for reuse on Site outside of the project area from which it is generated.
If detected concentrations in material intended for reuse exceed these screening levels, alternative methods for determining concentrations protective ofgroundwater(perWAC 173- 340-747) may be applied for reuse suitabiiity assessment (see Section 3.2,4).
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Soil Miscellaneous Contaminants > Unrestricted C!eanup Levels C ') BunKer C Tank Interim Action Excavation vf Property Boundaries from ALTA Sun/ey MAY-2014 I, SJS/HHL (David Eva ns and Assoc., 2004) ^As^ect / ^^^K*^^^?"'- ?' "(W'ha'it:omWate!iwayCleanu^tt' Interim action removed Bunker C contaminated .£^-::'^%^: •''.'.•;"'• ^-':>^ . i^^./^?$^^^^ !i'?- ••'. ' \^ : r"""^" — —---^-. / .u*jf%&&>. ^^^^^^^. •S^-^*;-''L54;,- ^^ ;' .^/^ '• -f^-.^';-. > ^v- ^^^ ^^^B^^^--T^^^ •':^ '• ' ;". .-^\' ^^ " .^ ^^ [ ^^SIS!-^ ;1^%' ^:-. '^-^ ; -• ^s: '^^^^^ - - ^^^s^^/r^^<:^~&^''^:'\-&.:.'.. "•'i'y^:"yf'" •' ^ v^'^S^H.'-.^.A?'.^-^^^' '^.:^.''^%^>':'~'';^\-:-':'"/ s>i:^IISi<'";:.;<'• ^.? C'^<^;V^\S.<^' '* v??'^ ^< v -'< •^^\^\^' : • -'-'?^^^fc1&^^fr -^-'"-•^•^ ^&^_ ^i.,^^:^^ iy rr:r- •• \:'^^;;--:^S?k--:K ^ T>ci; l—_.^._^_J "•'^^SySV:"x'" "A; : ..'•"^'^ '^SiK!,"''. .'^ys-s^' >< '..' ''- ,:/ .;.^^^. "m: / C_^> RAU-Wide Cap ".:>.•• Bunker CTanK Interim Action Excavation (no further action) ^^'\&sv€X^'~ ^ - l..;.C;l»i..s-&»-.Ai. . . "'^ • Suspected Soil with "". ,..ffi^;l^^?fe>.i;^- Bunker C > Residual Saturation Limit .^'/•.yt- .^' ' ^%1 5 Y iA^'"' /" ' .•;:"•'" •- ..^. C__^i Acid Plant Subarea Soil »•/"• ^t^ • '."'" ^•i: ' "~ty" Selected Cleanup Action t. .t Acid Plant Subarea Groundwater Pulp/Tissue Mil; RAU Contaminated Materials Management Plan C ^ LP-MW01 Subarea Groundwater GP West Site, Bellingham. WA "~^^S^^&^iii^^"-"/.^.-, ;^S>s'^3tX'^^^^^^:S®;i?y^ ^^.fhf^ -:- ^ _^ Misce!aneous Dissolved Metals Exceedances Property Boundaries from ALTA Survey .'•'•.-. .•'l'?^-«^?;!^?s..->: (David Evans and Assoe., 2004} sped Pianning for project within RAU that will disturb the RAU-wide cap. Proponent must notiff Port and Ecoiogy of project scope ete. (Section 3.1). Wi!! material be generated for reuse outside the project area Obtain chemical data for from which it is generated? OR material intended far on- Will material be generated from Site reuse the Acid Plant subarea aoyrc^ (Section 3.2.4). area far reuse? (Figure 1) Design and construclion facilities so as to not create groundwater contaminant migration with in or from areas of groundwater conlaminatton (Section 3.4) Based on chemical data, is material acceptable Will the project involve T Reuse the material on site with Is-the material to be for reuse - i.e. meets disturbance and handling placement beneath the RAU-wde generated physically Table 1 screening levels of material frnm beneath cap, in accordance with Eeoiogy (e.g., geotechnically) or alternative soi (he RAU-wide cap? approvai. suitable for reuse as concentrations * Handle the material on site in backfill/g rading materia protective of accordance with Section 3.2.2. beneath the RAU-wide grouridwater? (Section 3.2.4) * CMMP require me rsts for contaminaled cap? materials management are not applicable. * If the project disturbs the RAU-wide cap, restore it to meet Cleanup Action Plan (CAP) remediation p6rfomanee standards (Section 3.6). * If the project disturbs existing monitoring wells, restore them to pre-existing function * If the project disturbs the RAU-wide cap, * Profile and transport (Section 3.5). restore/re place It to meet CAP remediation contaminated material off sile for performance standards (Section 3.6). proper disposal (Section 3,2.3). * If the project disturbs existing monitoring * Handle the material on site in Has Proponent wells, restore them 1o pre-existing function demonstrated to Ecology's (Section 3.5). accordance with Section 3.2.2. satisfaction (through chemical testing) 1hat materials to be disturbed by project are not contaminated? (Section •1,1) Afote: During the course of a pruject, if a pwviwsly unkncsvm cicci/rTCMe of hazardws substances at concenfrationa grsafsr thsn applicable cleanup levels is encountered, and those materials possess field-screemng indications of grvss wntarrv'nation, then notify the Eaologyand Port I wWn 3 business days and manage excavsted matenal in accordance with Section 3.7 * Prepare project-specific Heaith and Safety Plan that addresses potential chemical hazards (Section 2}, Implement erosion and dust conlrol measures during construction (Section 3,2.1). * Manage water produced in accordance with Section 3.3. Figure 3 Aspect Consulting Decision Flowchart for Management 5/2S/14 VW018S Port Bellingh3m\Delivsrables\Pulp & Tissue Mill RAU\Contaminat6Ci Miite.raSs Management Plsn'iFinaKTable and FigwesVig 3 Matls Handling Ftowchart-e.i 1 .xts of Excavated Materials 0 v> -I ?3 Q -1 m z m ^ 0 m -< x co 3: m § ^00 0 0 m 0> > 0 ^ m m m Contract No. XXXX-XXX DISTRICT ENERGY SERVICES AGREEMENT THIS DISTRICT ENERGY SERVICES AGREEMENT ("Agreement") dated for reference the _ day of „, 20_, BETWEEN: HARCOURT BELL1NGHAM LLC, a company existing under the laws of the State of Washington, with an address at [ADDRESS] (the "Developer") AND: [CORIX ENTITY], a company existing under the laws of the State of Washington, with an address at [INSERT ADDRESS] ("Corix") WHEREAS: A. The Port of Bellingham and the City of Beilingham have approved a Waterfront District Sub- Area Plan 2019 (as may be amended) regarding the development of the City of BelHngham's downtown waterfront (the "Master Plan"); B. The Developer and the Port of Bellingham entered into a Master Development Agreement dated May 19, 2015 (the "MDA"), which provides for the Developer's acquisition and development of a portion of the CityofBellingham's downtown waterfront consistent with the Master Pian; C. The City of Bellingham's Municipal Code provides that ali new development within the City of BellEngham's downtown waterfront area shall connect to and utilize district specific utilities, such as district energy; D. Pursuant to an infrastructure Agreement between Corix and the Port of Bellingham dated [INSERT DATE] (the "Infrastructure Agreement"), Corix has been engaged by the Port to be the exclusive provider of district energy for the downtown waterfront district and to design, construct, own, operate and maintain the infrastructure required for a district energy utility; and E. The Parties wish to enter into this Agreement to record the terms and conditions on which the Infrastructure wiii connect to Buildings constructed on the Developer Lands. NOW THEREFORE THIS AGREEMENT WITNESSES THAT in consideration of the mutuai agreements set out below and for other good and valuable consideration (the receipt and sufficiency of which are acknowledged by each Party), the Parties covenant and agree with each other as follows: 1. INTERPRETATION 1.1 Definitions. In this Agreement, the following capitalized terms have the meanings set out below: Page 1 of 35 (a) "Affiliate" means with respect to a specified entity any entity, person, or company directly or indirectly, through one or more intermediaries, controlling, controlled by, or under common control with that specified entity; (b) "Building" means each permanent structure present on or to be constructed on the Developer Lands and which will receive Energy Services; (c) "Building System" means the complete HVAC system and domestic hot water system and / or storage equipment to be instaiied and used for distributing and storing Thermal Energy in a Building, connected to but downstream of and excluding the Service Connection and Energy Transfer Station for that Building; (d) "Building System Commissioning" means, En relation to a Building System, the process by which the Building System is tested by the Developer (including operational and performance testing) to verify and confirm that it performs in accordance with the final Building System specifications agreed and approved pursuant to Section 3.1 ; (e) "Business Day" means any day except Saturday, Sunday, a statutory holiday in either the Province of British Columbia, the State of Washington, or the United States of America, or any other day on which banks are generaiiy not open for business in Beilingham, Washington; (f) "CEP" means the physical, central Thermal Energy production plant for certain phases of the Community (including the Developer Lands) and other areas, inciuding any or all of the following: natural gas boilers, chiilers, cooiing towers and other energy equipment as may be applicable, and all associated mechanical and electrical interconnections and controi systems; (g) "Changes of Law" means any enactment of or amendment to Laws affecting (i) the performance, operation, maintenance or routine repair of the Infrastructure; (Ei) the provision of Energy Services; and/or (iii) the creation and provision of Thermal Energy; (h) "City" means the City of Beliingham; (i) "Community" means the portion of the mixed-use neighbourhood being developed as part of the Master Pian and the MDA to which Corix has the exclusive right to provide Energy Services; G) "Contaminants" means any radioactive materials, asbestos or asbestos containing materials, urea formaldehyde, underground or above ground tanks, pollutants, contaminants, deleterious substances, dangerous substances or goods, hazardous, corrosive, or toxic substances, hazardous waste, waste, pesticides, defoliants, or any other solid, liquid, gas, vapor, odor, heat, sound, vibration, radiation, or combination of any of them, the storage, manufacture, handling, disposal, treatment, generation, use, transport, remediation, or Release into the Environment of which is now or hereafter prohibited, controlled, or regulated under Environmental Laws; (k) "Contaminated Materials Management Plan" or "CMMP" means the procedures and requirements for handling and management of potentially contaminated material (soil, debris, groundwater) on a Contaminated Site within the Development Area. A CMMP has been prepared for the Pulp/Tissue Mi!i Remedial Action Unit (RAU) and is attached Page 2 of 35 as Exhibit B. A CMMP is expected to be prepared for the Chlor-Alkali RAU and will be incorporated herein as Schedule ? upon entry of a corresponding Consent Decree. (I) "Contaminated Site" means any "Facility" under the Model Toxics Control Act (MTCA), Chapter 70.105D of the Revised Code of Washington, and the MTCA Cleanup Regulation, Chapter 173-340 of the Washington Administrative Code (WAC). The Development Area inciudes Contaminated Sites; (m) "Corix Group" means Corix and its Affiliates and their respective officers, directors, shareholders, employees, contractors, agents successors and permitted assigns; (n) "Customers" means any Persons who receive Energy Services pursuant to a Customer Agreement; (o) "Customer Agreement" means the agreement between a Customer and Corix that sets out the terms and conditions on which Energy Services will be provided to a Building or Buildings (a current copy of the standard form of this agreement is attached as Schedule A), as amended in accordance with the terms thereof; (p) "Deadiine" the meaning ascribed to it in Section 3.6; (q) "Design Guide" means the Design Compatibility Guidelines for Connection to District Energy, as administered and issued by Corix, and as amended from time to time, a current version of which is attached to this Agreement as Schedule E; (r) "DEU" means the district energy utility providing Energy Services to the Community (including the Developer Lands); (s) "Developer's Engineer" means a professional engineer engaged by the Developer at the Developer's sole cost and expense, which engineer must be acceptable to Corix, acting reasonably; (t) "Developer Group" means the Developer and its shareholders, directors, officers, employees, agents, successors, and permitted assigns; (u) "Developer Lands" means those lands legally described as: [INSERT LEGAL DESCRIPTION] [NTD: This will refer to each individual parcel or sub- divided portion to be developed.] (v) "Distribution System" means, collectively, the system of hot and chilled water pipes, fittings and ancillary components connecting the CEP to the Service Connections; (w) "Encumbrance" means any mortgage, iien, pledge, judgement, execution, charge, security interest, restriction, claim or encumbrance of a financial nature whatsoever, including, without limitation, builders' liens and claims of any other Governmental Authority; (x) "Energy Services" means the provision by Corix of Thermal Energy via the Infrastructure; (y) "Energy Services Commencement" the meaning ascribed to it in Section 7.1; Page 3 of 35 (z) "Energy Transfer Station" means the separate heat exchanger(s) for space heating and cooling where applicable, and domestic hot water (excluding domestic hot water storage tanks), energy metering equipment including temperature sensors, fiow meter, energy calculator, contro! pane! and all pipes, fittings and other associated equipment that control the transfer, and measure Thermal Energy from the Service Connection to a Buiiding System; (aa) "Environment" includes the air (including all layers of the atmosphere), iand (including soil, sediment deposited on land, fili, lands submerged under water, buildings, and improvements), water (including oceans, lakes, rivers, streams, groundwater, and surface water), and all other external conditions and influences under which humans, animals, and plants five or are developed and "Environmental" has a corresponding meaning; (bb) "Environmental Credits" means any income, credit, right, benefit or advantage, whether in the form of greenhouse gas (GHG), monetary value or some other form or character, relating to Environmental matters including type and level of Environmental emissions, input sources and compliance with Environmental Laws, and any market instrument, including without limitation any Environmental emission allowances and Environmental emission reduction credits that accrue to businesses that perform better than certain government, industry, trade organization or Environmental international emission reduction guidelines, net of any costs incurred by Corix associated with obtaining the Environmental Credit; (ec) "Environmental Laws" means any and all Laws relating to or in respect of the Environment or its protection, environmental assessment, health, occupational health and safety, protection of any form of plant or animal life, or transportation of dangerous goods, including the principles of common law and equity; (dd) "Environmental Standards" means any (i) Environmental Covenant; (ii) CMMP; (ii) applicable Environmental Laws; and (iii) requirements of the MDA regarding the Environment; (ee) "Fees" means the fees to be charged by Corix and paid by Customers for Energy Services; (ft) "Final Thermal Energy Delivery Parameters" means the parameters and specifications outlined in Schedule B to this Agreement; (39) "Force Majeure" has the meaning ascribed to it in Article 16; (hh) "Functional" means, in relation to a Building System, when that Building System fully complies with Article 3, has satisfied Building System Commissioning and is performing the function for which it was designed; (ii) "Governmental Authority" means any federal, state, regional, municipal, local or other government, governmental or public department, court, tribunal, arbitral body, commission, board, bureau or agency and any subdivision, agent, commission, board or authority thereof, including without [imitation the City; (Jj) "Owners' Association" means a homeowners' association formed pursuant to the Washington Homeowners1 Association Act, chapter 64.38 Revised Code of Washington Page 4 of 35 (RCW), or a common interest community formed pursuant to the Washington Uniform Common Interest Ownership Act, chapter 64.90 RCW. (kk) "Infrastructure" means, collectiveiy, the CEP, Distribution System, Service Connections and Energy Transfer Stations; (II) "Infrastructure Agreement" has the meaning set forth in Recital D; (mm) "Laws" means any law, statute, regulation, code, Permit, order or legal requirement of or issued by or under the direction or authority of any Governmental Authority having jurisdiction, now or hereafter in force; (nn) "Master Development Agreement" or "MDA" has the meaning set forth in Recital B; (oo) "Master Plan" has the meaning set forth in Recital A; (pp) "Party" means either the Developer or Corix and "Parties" means both of them; (qq) "Permits" means all permits, licences, certificates, approvals, authorizations, consents and the like issued by any Governmental Authority in respect of the infrastructure or the provision of Energy Services; (rr) "Person" means an individual or his or her legal personal representative, an unincorporated organization or association, or a corporation, partnership, trust, trustee, syndicate, joint venture, limited liability company, union, Governmental Authority or other entity or organization; (ss) "Port" means the Port of BelIEngham; (tt) "Project" means the development of the Developer Lands, including the permitting, design, and construction of any Buildings or Building Systems; (uu) "Project Infrastructure" means those portions of the infrastructure iocated on the Deveioper Lands; (vv) "Project Infrastructure Work" means the design, engineering, installation and verification by Corix of Project Infrastructure on the Developer Lands; (ww) "Release" includes any release, spiil, leak, pumping, pouring, emission, emptying or discharge, injection, escape, leaching, migration, disposal, or dumping; (xx) "Service Connection" means the system of hot and chilled (where applicable) water pipes, all ancillaries and ail fittings necessary to connect the Energy Transfer Station to the Distribution System; (yy) "Rights of Way" means right of way agreements, substantially in the form attached as Schedule C, which permits Corix access to the Developer Lands for the purpose of performing its obligations under this Agreement and Customer Agreements; (zz) "Target Date" the meaning ascribed to it in Section 3.2; Page 5 of 35 (aaa) "Thermal Energy" means thermal energy for space heating, cooling (where applicable) and domestic hot water; and (bbb) "Zoning Regulation" means all iand use control ordinances adopted by the City, as amended or replaced from time to time. 1.2 Interpretation. Unless otherwise expressly provided, in this Agreement: (a) "this Agreement" means this Agreement as it may from time to time be supplemented or amended by the Parties, and includes the attached Schedules; (b) ali references in this Agreement to a designated "Article", "Section", "subsection" or "Schedule" is to the designated Article, Section or subsection of or Schedule to this Agreement; (c) the words "herein", "hereof and "hereunder" and other words of similar import refer to this Agreement as a whole and not to any particular portion hereof; (d) the headings are for convenience only, do not form a part of this Agreement and are not intended to interpret, define or limit the scope, extent or intent of this Agreement or any provision hereof; (e) the singular of any term includes the plurai, and vice versa; the use of any term is equally applicable to any gender and, where applicable, a body corporate; (f) the word "including" is not limiting whether or not non-limiting language (such as "without limitation" or "but not limited to" or words of similar import) is used with reference thereto; (g) references to time of day or date mean the local time or date in the Bellingham Washington; and (h) ail references to amounts of money mean lawful currency of the United States. 1.3 Governing Law. This Agreement and each of the documents contemplated by or delivered under or En connection with this Agreement are governed exclusively by, and are to be enforced, construed and interpreted exclusiveiy in accordance with, the laws of the State of Washington, without giving effect to conflicts of laws principies or provisions. 1.4 Severability. Each provision of this Agreement is severable. If any provision of this Agreement is or becomes illegal, invalid or unenforceable in any jurisdiction, the illegaiity, invalidity or unenforceability of that provision will not affect: (a) the legality, validity or enforceabiiity of the remaining provisions of this Agreement, or (b) the legality, validity or enforceability of that provision in any other jurisdiction, except that if: (i) on the reasonable construction of this Agreement as a whole, the applicability of the other provision presumes the validity and enforceability of the particular provision, the other provision will be deemed aiso to be invalid or unenforceable, and Page 6 of 35 (ii) as a resuit of the determination by a court of competent jurisdiction that any part of this Agreement is unenforceable or invalid and, as a result of this section, the basic intentions of the Parties in this Agreement are entirely frustrated, the Parties will use aii reasonable efforts to amend, supplement or otherwise vary this Agreement to confirm their mutual intention in entering into this Agreement. 1.5 Time of Essence. Time is of the essence of this Agreement. 1.6 Statutory References. Uniess otherwise specified, each reference to a statute is deemed to be a reference to that statute and to the regulations made under that statute as amended or re- enacted from time to time. 1.7 Schedules. The following are the Schedules to this Agreement: Schedule A Form of Customer Agreement Schedule B Form of Final Thermal Energy Delivery Parameters Schedule C Form of Rights of Way Schedule D Developer-Provided Energy Transfer Station Requirements Schedule E Design Compatibility Guidelines for Connection to District Energy 2. DEVELOPMENT OBLIGATIONS OF DEVELOPER 2.1 Development of Project. The Developer wiil, at its own cost and expense, develop the Project in accordance with the Master Development Agreement, the Master Pian, applicable Laws (including without limitation the Zoning Regulations) and this Agreement. The Developer will, forthwith upon Corix's request, provide Corix with a copy of documents demonstrating Developer's ownership interest in the Developer Lands, applications for permits or permits obtained by the Developer, and other relevant information, that pertain to the design, construction or operation of the Building System or the provision of Energy Services, provided that the Developer shall be entitled to redact financial information contained therein. 2.2 No Alternate System or Service Provider. The powers and rights granted to Corix under this Agreement are exclusive to Corix and, except as expressly provided hereunder, the Developer will not itself perform, provide, install or realize, nor allow any other Person to perform, provide, install or realize any other system to provide hot water, space heating and cooling to any Building, nor use or allow or consent to any other Person supplying or distributing Thermal Energy or Energy Services to the Developer Lands. Corix acknowledges and agrees that fireplaces located in individual residential units are not prohibited by this Section 2.2, nor are other suppiementai heating system(s) in any areas of a Building where Thermal Energy is either: prohibited by applicable Laws, or is not feasible, as mutually agreed by the Parties, each acting reasonably. 2.3 Sources of Energy. The Developer acknowledges and agrees that Corix and the Port may, without the need to obtain any approval from the Developer and without any recourse by the Developer, from time to time incorporate other sources of energy or other energy supply systems into the DEU, provided Corix is still able to meet its obligations to the Developer under this Agreement. Page 7 of 35 3. BUILDING SYSTEMS 3.1 Review and Approval of Specifications. To achieve compatibility between each Building System and the Infrastructure and to achieve appropriate energy loads, the Developer will: (a) prior to installation of a Building System, review the Design Guide attached hereto as Schedule E and submit the specifications for each Building System, including all design and engineering components and the Developer's proposed energy loads, temperatures and any connection requirements, for review by Corix. The Developer will allow Corix a reasonable opportunity to discuss and comment on such specifications and where Corix, acting reasonably, determines that any change(s) to any specifications are necessary to achieve compatibility with the infrastructure, such additions, repairs or alterations will be promptiy made by the Developer at its sole expense. The final energy loads (at peak design conditions) and the maximum supply and return temperatures (at such peak design conditions) for the Building System wili be mutually agreed between the Deveioper and Corix and approved by the Developer's Engineer, in each case as evidenced by their respective signature on a completed final Thermal Energy delivery parameters document in the form attached as Schedule B; (b) provide Corix, at Corix's request from time to time. with prompt access to and copies of specifications, drawings and other information as Corix may reasonably require to confirm that the Building Systems conform to the final Thermal Energy delivery parameters as agreed and approved pursuant to subsection (a) above. Where, acting reasonably, Corix determines additions, repairs or alterations to any portion of a Buiiding System are necessary to achieve compatibility with the Infrastructure, such additions, repairs or alterations wiil be promptly made by the Developer at its sole expense; and (c) unless pursuant to subsection (b) above in relation to additions, repairs or alterations identified by Corix, not amend the final Thermal Energy delivery parameters agreed and approved pursuant to subsection (a) above in any manner that does or may affect CorEx under this Agreement without the prior written consent of Corix, not to be unreasonably withheld. In all cases, the Developer will provide to Corix written notice of any proposed or contemplated amendment to such agreed and approved final Thermal Energy delivery parameters. In connection with any proposed or contemplated amendment to such agreed and approved final Thermal Energy delivery parameters that Corix determines wili or may affect its rights hereunder, the Parties will review and agree on any amendments to the finai Thermal Energy delivery parameters and this Agreement that may be necessary to: (i) reflect necessary or desired, consequential alterations to any part of the Building System or the Project Infrastructure and the manner in which such alterations are executed; (ii) adjust the timing of any of the Project Infrastructure Work; and/or (iii) address compensation owing to Corix for any costs incurred or to be incurred by it in connection with such amendments. The Developer acknowledges and agrees that it will be responsible to pay or reimburse (as applicable) Corix for any additional costs reasonably incurred by Corix in connection with, or as a consequence of, such amendments. Page 8 of 35 3.2 Construction and Installation. The Developer wi!l construct and install each Building System in accordance with the final Thermal Energy delivery parameters agreed and approved pursuant to Section 3.1. The Deveioper will keep Corix reasonably informed regarding the progress of construction and installation of each Building System. Without iimiting the generality of the foregoing, the Developer wili provide at least 90 days' written notice to Corix of the Developer's scheduled target date (the "Target Date") as part of the Final Thermal Energy Delivery Parameters agreed to by the Parties, by which date: (a) the Developer will have completed the construction and installation of each Building System in accordance with this Section 3.2; (b) the Developer will have each Building System ready for connection to the Energy Transfer Station in accordance with Section 3.3; and (c) each Building will be ready to receive Energy Services from Corix. 3.3 Connection to Energy Transfer Station. Upon compietion of construction and installation of each Building System, the Developer will provide to Corix documentation from the Developer's Engineer (in a form that is satisfactory to Corix, acting reasonably) verifying that the Building System: (a) has been designed, constructed and installed in full compliance with the Final Thermal Energy Delivery Parameters agreed and approved pursuant to Section 3.1; (b)has been flushed and cleaned, and (c) is capable of performing the function for which it was designed. Each Building System will be connected to the Energy Transfer Station by the Developer, in the presence of a Corix representative, as and when such full compliance of such Building System has been verified by the Developer's Engineer. Notwithstanding anything to the contrary in this Agreement, the Parties acknowledge and agree that a Buiiding System wiii not be connected to the Infrastructure prior to the Target Date, unless the Parties mutually agree otherwise in writing. 3.4 Building System Commissioning. Upon connection of each Building System to the Energy Transfer Station pursuant to Section 3.3, the Developer will perform Building System Commissioning. During Building System Commissioning, the Developer wiil take all required steps to remedy any defects in the design, engineering, construction or installation of the Building System identified by the Developer's Engineer within such period of time as may be reasonably required to remedy such defects and will thereafter promptly provide to Corix documentation from the Developer's Engineer (in a form that is satisfactory to Corix, acting reasonably) verifying that the Building System is Functional. 3.5 The Developer's Responsibility. Notwithstanding anything to the contrary in this Article 3, the Developer acknowledges and agrees that Corix will not in any way be responsible for any aspect of the design, engineering, permitting, construction or instailation of any Building System; each Building System has or will be engineered, designed, constructed and installed by the Developer solely at its own expense and in a good and workmanlike manner consistent with industry standards and in compliance with al! applicable Laws and this Agreement. The Developer wiil ensure that each Building includes a Building System that compiles with this Article 3, 3.6 Delays. The Developer agrees that if Energy Services Commencement (defined in Section 7.1) has not occurred within 60 days from the Target Date or such other date that is mutually agreed by the Parties in writing (the "Deadline") such that a Building has not commenced receiving Energy Services in accordance with Section 7.1 by the Deadline, the Developer will commence paying Corix the Basic Charge (as specified in the Rate Schedule in the standard form of the Customer Agreement attached as Schedule A) with effect as of the Deadline as if Corix had commenced providing Energy Services to the Building as of the Deadline. The Developer acknowledges and agrees that its obiigation to pay such Basic Charge as aforesaid shall apply whether or not it has signed a Customer Agreement by the Target Date or the Deadline. Notwithstanding the foregoing, the Developer shall not be required to pay such Basic Charge Page 9 of 35 as aforesaid if Corix is the direct cause of the delay (in which case Corix will use commerda!!y reasonable efforts to commence providing Energy Services as soon as possible, and En any event no later than 30 days from the Deadline). 4. PROJECT INFRASTRUCTURE 4.1 Project Infrastructure Work. Subject to Sections 3.2, 3.6 and 4.2, Corixwill: (a) at its own cost and expense, perform the Project Infrastructure Work in a good and workmanlike manner, consistent with industry standards and in compliance with all applicabie Laws and this Article 4 and wil! use reasonable efforts to obtain all requisite Permits associated therewith, in all cases based on the final Thermal Energy delivery parameters agreed and approved pursuant to Section 3.1 and in advance of the commencement of any Project Infrastructure Work; and (b) to the extent reasonably possible in light of other obligations of Corix under the Infrastructure Agreement and Corix's servicing, customer and other agreements with other developers and customers receiving Energy Services, in performing the work set out in subsection (a) above: (i) work in a timely manner compatible with the Developer's construction/installation schedule; (ii) keep the Developer reasonably informed regarding the progress of the Project infrastructure Work; and (iii) install the Project Infrastructure in utility corridors and other rights of way, and the Developer wil! for nominal consideration provide access to and space in utility corridors for such purposes. 4.2 Installation Costs Borne by the Developer. The Developer will, at its sole cost and expense, provide the items and fulfil the requirements described in Schedule D in order to facilitate the Project infrastructure Work. Additionally, to the extent the Parties are able to coordinate their construction and installation activities on the Deveioper Lands, the Developer will pay all costs relating to excavation, bedding material and backfilling of trenches where such items and activities are related to both the construction activities of the Developer and installation of the Project Infrastructure. 4.3 Ownership, Notwithstanding any degree of annexation or affixation, or rule of law or equity to the contrary, the Developer acknowledges and agrees that ail components of the Project Infrastructure and all additions or extensions thereto will be and remain the property of and vest in Corix. The Developer acknowledges and agrees that, pursuant to the Infrastructure Agreement, Corix may sell the Infrastructure to the Port upon termination of that agreement or other specified occurrences. 4.4 Permits. Corix wil! apply for and use commercially reasonable efforts to obtain and maintain a!l requisite Permits for the Project infrastructure Work and for the operation of the Project Infrastructure. !f requested to do so by Corix, the Deveioper will use reasonable efforts to assist Corix obtain such Permits. Page 10 of 35 4.5 Grants and Environmental Credits. Any grants from any Governmental Authority or non- Governmental Authority that may be derived from a reduction in costs for consumption of Thermal Energy by the Buildings and a!l right, titie and interest now or hereafter existing in the potential or actual commerciai value of any Environmental Credit that may arise or accrue by virtue of the instaiiation or operation of the infrastructure (or any portion thereof) or the DEU will belong to Corix for sole benefit of its Customers. 5. COOPERATION AND COORDINATION The Parties will cooperate and coordinate with each other and with any applicable Governmenta! Authority to permit each Party to perform its obligations under this Agreement Without limiting the generality of the foregoing, the Developer wiii work and cooperate with Corix as may be reasonably required to: (a) make all applications to and filings with, and otherwise correspond and work together with Governmental Authorities in respect of the Energy Services; and (b) apply to the Governmental Authorities for all exemptions, reductions and other relief from taxes related to the Infrastructure as may be available from time to time. Each Party agrees to not unduly interfere with or interrupt the activities of the other Party or any applicable Governmental Authority on the Developer Lands. 6. ACCESS TO DEVELOPER LANDS The Developer hereby grants and covenants to secure for Corix and its subcontractors, agents, employees and representatives, licenses, rights of way, easements, leases or other agreements, and for nominal consideration, non-exdusive access to, on, over and under the Developer Lands for the purposes of performing its obiigations under this Agreement and Customer Agreements (collectively, "Rights of Way"). Without fimiting the generality of the foregoing, the Developer will, forthwith upon Corix's request, grant or cause to be granted to Corix and duly record in the relevant Auditor's Office the Rights of Way encumbering each lot comprising a part of the Developer Lands and otherwise as required to allow Corix to perform its obligations under this Agreement and Customer Agreements. Each Right of Way granted pursuant to this Section 6 wil! have priority over any Encumbrance. For greater certainty, the access granted pursuant to this Section 6 will be adequate, in the sole discretion and determination of Corix, to allow Corix to efficiently and effectively carry out its obligations hereunder and pursuant to the Customer Agreements without undue disturbance or interference from the Developer or any of its contractors, agents, employees or representatives. The Developer acknowledges and agrees that each Right of Way or other recordable interest granted pursuant to this Section 6 may be recorded by Corix (at Corix's sole cost) in the relevant Auditor's Office, together with any priority agreements as Corix may deem necessary or advisable. 7. PROVISION OF ENERGY SERVICES BY CORIX 7.1 Provision of Enemy Services. Corix wilt provide Energy Services to a Building, subject to and provided that the following conditions have been satisfied: (a) that the Building System for such Building has been connected to the Infrastructure En accordance with Article 3; and Page 11 of 35 (b) that the relevant Customer Agreement has been completed, executed and delivered in accordance with Section 7.2. Such conditions are for the sole benefit of Corix and may be waived only by Corix. The date and time when Thermai Energy is first transferred between the Infrastructure and the Building System shall be the "Energy Services Commencement". 7.2 Customer Agreements. The provision of Energy Services to Customers wiil be pursuant to the Customer Agreement attached as Schedule A. The Parties endorse the Customer Service Agreement as the definitive terms and conditions for the provision of Energy Services to Customers; the payment of rates and fees by Customers to Corix in exchange for Energy Services; the process for the setting of rates and fees for the provision of Energy Services and any changes to those rates and fees; and the process for dispute resolution associated with the provision of Energy Services to Customers whether related to rates and fees or otherwise. The Developer will: (a) prior to Building System Commissioning in accordance with Section 3.4: (i) complete, execute and deliver to Corix a Customer Agreement covering Building; and (ii) cause any Person identified in Section 7.2(b), and, if applicable, an Owners' Association formed in relation to the applicable Building, to complete, execute and deliver to Corix a Customer Agreement covering such Buiiding; provided, however, that there shall be only one Energy Transfer Station per Building; (b) prior to the formation of an Owners' Association in respect of the Building, forthwith upon Corix's request, cause any Person to whom the Developer transfers or otherwise disposes, whether directly or indirectly, all or any portion of its interest in the Project to complete, execute and deliver to Corix a Customer Agreement covering such Building; and (c) if any such Owners' Association or Person referred to in subsections (a)(ii) or (b) above refuses to execute a Customer Agreement in respect of a Building as required by this Section 7.2, forthwith pay to Corix the sum equai to the full cost (including without limitation, the capital investment) of all Infrastructure associated with the provision of Energy Services to such Building (including the applicable Energy Transfer Station and Service Connection) in order to ensure other existing and potential Customers of the DEU are not adversely impacted. 7.3 Permits. Corix will use reasonable efforts to obtain from ail Government Authorities all Permits related to the provision of Energy Services. If requested to do so by Corix, the Developer wil! use reasonable efforts to assist Corix in obtaining such Permits, 8. ENERGY CHARGES 8.1 DEU Energy Charges. Subject to Section 3.6, Corix will charge each Customer the applicable Fees, commencing on Energy Services Commencement. Pagel2of35 8.2 Adjustment to Fees. The Developer acknowledges and agrees that Corix may reasonably adjust the Fees at any time and from time to time in accordance with the applicable Customer Agreements) to ensure that it earns a fair market return. 8.3 Recovery of Costs and Expenses through Fees, The Developer acknowledges and agrees that Corix wi!!, to the extent possible, recover all costs and expenses incurred by it in connection with the Infrastructure or Energy Services, including without limitation design, inspection, construction and operation costs, Permit fees, and all federal, provincial, regional and municipal taxes (inciuding property taxes), ievies and fees, through Fees. The Developer further acknowledges and agrees that Corix will seek to obtain an appropriate rate of return for its provision of the Energy Services, as determined En light of risks assumed by Corix, the number of Customers and other relevant factors. 9. REPRESENTATIONS AND WARRANTIES 9.1 Representations and Warranties of the Developer. The Developer represents and warrants to Corix the foliowing, and acknowledges that Corix is relying on such representations and warranties in entering into the transactions contemplated by this Agreement. (a) Status of the Developer. The Developer is an entity duly organized and validly existing under the !aws of the Washington, with full power and authority to enter into and perform al! of its obligations under this Agreement. For United States federal income tax purposes, (i) the Developer is taxed as a partnership, and (ii) no election has been or will be made to tax the Developer as a corporation. The Developer is acting on its own behalf and not acting as an agent for (A) any Affiliate organized under the laws of or domiciled in any jurisdiction other than the United States, any state, local, or municipal jurisdiction within the United States, or any political subdivision thereof, or (B) any other entity or person organized under the laws of or domiciled in any jurisdiction other than the United States, any state, local, or municipal jurisdiction within the United States, or any political subdivision thereof. (b) Litigation. The Developer is not a party to any action, suit or legal proceeding, actual or threatened, and there are no circumstances, matters or events known to the Developer that might give rise to any such action, suit or legal proceeding, and there are no actions, suits or proceedings pending or threatened against the Developer before or by any Governmental Authority, that could affect the Developer's ability to perform its obligations under this Agreement. (c) No Breach of Agreement. This Agreement and the performance by the Developer of its obligations hereunder does not and wi!i not breach any provisions of any other agreement or Law that is binding on or applicable to the Developer. (d) No Conflict with Orcianizational Documents. Neither the entering info of this Agreement nor the consummation of the transactions contemplated hereby wili result in a breach of any of the terms or provisions of the organizationa! documents of the Developer or of any indenture or other agreement, written or oral, to which the Developer is a party, and ail necessary organizational action on the part of the Developer has been or will be taken to authorize and approve the execution and delivery of this Agreement and the performance by the Developer of its obligations hereunder. (e) Master Development Agreement. The MDA is in fuii force and effect, and no event has Page 13 of 35 occurred or condition exists that constitutes or, with the giving of notice or the passage of time or both, would constitute any (i) breach or default by the Developer or the Port of Beilingham under the MDA or (ii) could affect the validity of or lead to early termination of the M DA. (f) Ownership. The Developer is the sole and lawful owner of, and has good and Endefeasible title to, the Developer Lands. 9.2 Corix's Representations and Warranties, Corix represents and warrants to the Developer the following, and acknowledges that the Developer is relying on such representations and warranties in entering into the transactions contemplated by this Agreement. (a) Status of Corix. Corix is an entity duly organized and validly existing under the iaws of the State of Washington, with ful! power and authority to enter into and perform al! of its obligations under the Agreement. (b) Litigation. To Corix's knowledge, Corix is not a party to any action, suit or legal proceeding, actuai or threatened, and there are no circumstances, matters or events known to Corix that might give rise to any such action, suit or legal proceeding, and, to Corix's knowledge, there are no actions, suits or proceedings pending or threatened against Corix before or by any Governmental Authority, that could affect Corix's ability to perform its obligations under this Agreement (c) No Breach of Agreement. To Corix's knowledge, this Agreement and the performance of the obligations of Corix under this Agreement does not and will not breach any provisions of any other agreement or Law that is binding on or applicable to Corix as of the date of this Agreement. (d) No Conflict with Organizational Documents. Neither the entering into of this Agreement nor the consummation of the transactions contemplated hereby will result in a breach of any of the terms or provisions of the organizational documents of Corix or of any indenture or other agreement, written or oral, to which Corix is a party, and all necessary organizational action on the part of Corix has been or will be taken to authorize and approve the execution and delivery of this Agreement and the performance by Corix of its obligations hereunder. (e) Infrastructure Agreement. Corix is the lawful owner of the Infrastructure. 10. ENVIRONMENTAL MATTERS. 10.1 Control and Management of Site, For the purposes of applicable Environmental Laws, the Developer and the Port wiil be deemed to have control and management of the Developer Lands with respect to their environmental condition except as otherwise expressly provided in this Agreement. 10.2 Developer's Environmental Representations, Warranties, and Covenants. The Developer represents, warrants, and covenants to the Corix as of the date of this Agreement that: (a) the Developer has disclosed to Corix all documentation of site investigations, assessments, audits and reports relating to the Developer Lands conducted by or on behalf of the Developer or of which the Developer has a copy, and will promptly disclose Page 14 of 35 to Corix any such documents newly generated or amended during the term of this Agreement; and (b) there are no actions, proceedings, investigations, claims (including remediatEon cost recovery claims) pending, or to the best of the Developer's knowledge, threatened, that relate to the presence or Release of Contaminants on the Developer Lands, and wili promptiy notify Corix of any of these that arise or occur during the term of this Agreement; and (c) The Developer wii! not use or permit the Developer Lands to be used for the sale, storage, manufacture, disposal, handling, treatment, use or any other dealing with any Contaminants, except in compliance with Environmental Standards; and (d) The Developer will comply with and continue to comply with, at its own cost, Environmental Standards and use its best efforts to cause any tenants, subcontractors or other occupants or users of the Deveioper Lands to comply with Environmentai Standards in their use and occupancy of the Developer Lands. 10.3 Developer's Environmental indemnity. The Developer will defend, release, indemnify and hold harmless the Corix Group from any and all iiabiiities, actions, damages, claims (including remediation cost recovery claims), losses, costs, orders, fines, penalties and expenses whatsoever (including all consulting and attorney's fees and expenses ) and the costs of remova!, treatment, storage and disposai of Contaminants and remediation of the Developer Lands and any other Contaminated Site which may be paid by, incurred by or asserted against any member of the Corix Group arising from or in connection with: (a) any breach of or non-compliance by the Developer with the provisions of this Article 10 that pertain to it; and (b) any Release or alleged Release of any Contaminants at or from the Developer Lands related to or as a resuit of the presence of any Contaminants at, on, under, around or in the Developer Lands, including without limitation surface and ground water, present as of the date of this Agreement or as a result at any time of the operations of the Developer or any act or omission of the Developer or its tenants or other occupants or any person for whom it is in law responsible; and (c) the presence of any Contaminants at, on, under, around or in the Developer Lands except to the extent that such presence arises from any breach or non-compliance by Corix with the provisions of this Article 10 that pertain to it. 10.4 Corix Environmental Representatipns and Warranties. (a) Corix will not install or use in the Project infrastructure, or at, on, under, around or in the Developer Lands any materials, equipment or apparatus the installation, use or storage of which is likely to cause the generation, accumulation or migration of any Contaminants in contravention of the terms of this Agreement and Environmental Standards; and (b) Without limiting the generality of paragraph 10.4(a), Corix will in no event use the Developer Lands to dispose of, handle or treat any Contaminants in a manner in whole or in part that would violate Environmentai Standards and/or cause the Developer Lands, Pagel5of35 or any adjacent property to become a Contaminated Site under applicabie Environmental Laws. 10.5 Corix Environmentai Indemnity. Corix wiil defend, release, indemnify and hold harmless the Developer Group from any and all liabilities, actions, damages, claims (including remediation cost recovery claims), losses, costs, orders, fines, penalties and expenses whatsoever (including ail consulting and attorney's fees and expenses) and the costs of removai, treatment, storage and disposal of Contaminants and remediation of the Developer Lands and any affected adjacent property which may be paid by, incurred by or asserted against the Developer Group arising directly and exclusively from any breach of or non-compliance by Corix with the provisions of this Article 1 0 that pertain to it, 10.6 Survival. Notwithstanding any other provision in this Agreement, the indemnities granted in this Article 10 will survive the expiry or termination of this Agreement. 11. COVENANTS OF DEVELOPER in addition to the other obligations set out in this Agreement, the Developer covenants and agrees with Corix at all times and from time to time as follows: (a) Continued Existence. The Developer will maintain its status in good standing with the Registrar of Companies at all times while this Agreement remains in effect. (b) Assist in Recovery of Third Party Damage. The Developer will report to Corix any malicious damage or damage to the Infrastructure of which it becomes aware and wiii assist Corix to recover from and against third parties in respect of such damage to the Infrastructure, to the extent Corix is not able, as if the Developer owned the Infrastructure. (c) Compliance with Laws. The Developer will, at its sole cost and expense, abide by and comply with all applicable Laws (including Environmental Laws) in discharging its obligations hereunder. (d) Compliance with Master Development Agreement: The Developer will at all times abide by and comply with ail provisions of the MDA and wili immediately give Corix notice of any breach by the Developer with any of the terms thereof and of any change to the terms thereof that is material to the interests of Corix hereunder. (e) Disclosure Statement. To the extent that the Project will be comprised of units or lots which are intended to be soid by the Developer, the Developer will ensure that the disclosure statement provided to the Developer's purchasers includes information regarding the DEU and discloses this Agreement, the Customer Agreement and the Rights of Way. 12. INSURANCE 12.1 Developer Insurance. The Developer will obtain and maintain at its own expense throughout the term of this Agreement the following insurance coverage: (a) Comprehensive General Liability Insurance against claims for personal injury, death or property damage arising out of its operations, in amounts it deems adequate but in any event, not less than $5 million per occurrence; Page 16 of 35 (b) Property Insurance insuring the property of the Developer and property owned by others but for which the Developer is legally responsible, against perils normally included in a standard "all risk" policy, in an amount equal to 100% of the current replacement cost thereof, and adjusted at ieast annually to reflect changes in repiacement value due to inflation or other factors; (c) Al! Risks Builder's Risk policy covering the Project against fire and other perils with extended or additional perils supplemental coverage as would be insured against by a prudent owner in an amount not less than 100% of the replacement cost; (d) boiler and machinery insurance covering relevant equipment owned by the Developer from time to time, written on a comprehensive form, including repair and replacement coverage, in an amount equal to 100% of the repiacement cost thereof, and adjusted annually to reflect changes in the repiacement value due to inflation or other factors; (e) a standard automobile policy for all owned, non-owned and leased vehicles including standard contractual liability endorsement against ciaims for bodily injury, death and damage to property, in an amount of not less than $2 million per occurrence; and (f) the Developer and/or the Developer's Engineer wi!i provide errors and omissions iiabiiity insurance for a value of not less than $2 miliion in the aggregate. 12.2 Responsibility. The Developer will be responsible for the fui! amount of ail premiums and deductibles required under Section 12.1. Ail policies required must be effective as at the date the Developer commences any construction and/or instailation activities on the Developer Lands and must, to the extent obtainable, provide that the insurance will not be cancelled without the insurer giving at least 30 days written notice to Corix. Insurance will be purchased from reputable insurers registered and licensed to underwrite insurance in the State of Washington. Where the Developer fails to comply with requirements of this Article 12, Corix may take al! necessary steps to effect and maintain the required insurance coverage at the Developer's expense. 12.3 Evidence of Insurance. The Developer will deliver or cause to be delivered to Corix evidence of all insurance policies required to be obtained and maintained by the Developer under this Article 12 and any amendments, modifications or replacements thereof. 12.4 Corix Insurance. Corix will obtain and maintain at its own expense throughout the term of this Agreement the following insurance coverage: (a) Comprehensive General Liability Insurance against claims for personal injury, death or property damage, covering its operations, in an amount not less than $5 million per occurrence; (b) Property Insurance insuring the Project Infrastructure against perils normally included in a standard "all risk" policy, in an amount equai to 100% of the current replacement cost of the Project infrastructure, and adjusted at ieast annually to reflect changes in replacement value due to inflation or other factors; (c) Ali Risks Builder's Risk policy covering the Project Infrastructure against fire and other perils with extended or additional perils supplemental coverage as would be insured against by a prudent owner in an amount not less than 100% of the replacement cost; Page 17 of 35 (d) boiler and machinery insurance covering relevant equipment owned by Developer from time to time, written on a comprehensive form, including repair and replacement coverage, in an amount equai to 100% of the replacement cost thereof, and adjusted annually to reflect changes in the replacement value due to inflation or other factors; (e) a standard automobile policy including standard contractuai liability endorsement against claims for bodily injury, death and damage to property, in an amount of not less than $2 million per occurrence; and (f) Corix and/or its prime engineering consuitant will provide errors and omissions liability insurance for a value of not less than $2 million in the aggregate. 12.5 ResDonsibiiitv. Corix will be responsible for the full amount of aii premiums and decfuctibles required under Section 12.4. A!i policies required must be effective as at the date that Corix commences the Project infrastructure Work and must, to the extent obtainabie, provide that the insurance will not be cancelled without the insurer giving a [east 30 days written notice to the Developer. Insurance will be purchased from reputable insurers registered and licensed to underwrite insurance in the State of Washington. Where Corix fails to comply with requirements of this Section 12.5, the Developer may take all necessary steps to effect and maintain the required insurance coverage at Corix's expense. 12.6 Evidence of Insurance. Corix wiil deliver or cause to be delivered to the Developer evidence of ail insurance policies required to be obtained and maintained by Corix under this Article 12 and any amendments, modifications or replacements thereof. 12.7 Additional Insured. Where applicable, each Party will ensure that the other Party is an additional insured under the insurance to be obtained and maintained pursuant to Section 12.1 and Section 12.4 (except under the errors and emissions liability poiicy) and in the event of a claim the insurance carried by the Party responsible for actions which give rise to such claim will be the primary insurance with respect to such claim. 13. INDEMNITY 13.1 Corix Indemnity. Without iimiting any other obiigation of Corix provided herein, Corix will indemnify, defend, and save harmless the Developer from any and all liabilities, actions, damages, claims, losses, costs, orders, fines, penalties, and expenses whatsoever (inciuding the full amount of all reasonable iega! fees and expenses on a solicitor-dient basis) which may be paid by, incurred by, or asserted against the Developer or any one of them arising from or in connection with any negligence or wilful misconduct perpetrated by Corix or those for whom it Es in law responsible. 13.2 Developer indemnity, Without limiting any other obligation of the Developer provided herein, the Developer will indemnify, defend, and save harmless Corix from any and ail liabilities, actions, damages, claims, losses, costs, orders, fines, penalties, and expenses whatsoever (including the full amount of ail reasonable legal fees and expenses on a solicitor-client basis) which may be paid or incurred by, or asserted against Corix, arising from or in connection with any negligence or wilful misconduct perpetrated by the Developer or anyone for whom it is in law responsible. Page 18 of 35 13.3 Damages Limitation. Notwithstanding any other provision of this Agreement, in no event wi!! either Party be liable to the other Party for any indirect or consequential loss, cost or expense whatsoever, including any indirect or consequential loss of profits, revenues or other indirect or consequential economic loss and punitive damages, suffered by the other Party or its Affiliates or their respective officers, directors, shareholders, employees, contractors, agents, successors or permitted assigns. 13.4 Survival. Notwithstanding any other provision in this Agreement, the indemnities set out in this Article 0 will survive the termination or expiry of this Agreement. 14. TERMINATION 14.1 Subject to the provisions of Section 14.2 and Article 15, this Agreement and the obligations of the Parties hereunder will terminate on the date by which: (a) the Project, including the instaliation of all Building Systems has been completed in accordance with this Agreement; (b) each Building System has been connected to the Infrastructure in accordance with Section 3.3; (c) ali required Customer Agreements have been executed and delivered by the appropriate parties in respect of each Building in the Project in accordance with Section 7.2; and (d) the Parties have otherwise carried out their respective obligations under this Agreement, except to the extent such obligations are expressly stated to survive termination of this Agreement. 14.2 it is understood and agreed by the Developer that notwithstanding anything else herein contained to the contrary, this Agreement and the obligations of the Parties hereunder will automaticaily terminate if the Infrastructure Agreement terminates, if this Agreement terminates pursuant to this Section 14.2, then neither Party will have any further obligation to, or recourse against, the other Party with respect to the subject matter of this Agreement. 15. TERMINATION FOR DEFAULT 15.1 Default. A Party (the "Defaulting Party") will be in default under this Agreement (a "Default") if; (a) it passes a resolution for its winding-up or dissolution, is adjudged bankrupt or insolvent by a court of competent jurisdiction, commences or consents to the institution of bankruptcy proceedings, proposes a compromise or an arrangement, files any petition seeking re-organization, arrangement, composition, liquidation or similar relief for itseif, has a receiver or a receiver-manager appointed with respect to its affairs, or makes a general assignment for the benefit of its creditors under any Law relating to bankruptcy, insolvency or other relief for or against debtors generally; (b) it is in breach of a material term, covenant, agreement, condition or obligation under this Agreement, or is in breach of multiple terms, covenants, agreements, conditions or obligations under this Agreement which in the aggregate are material, and fails to cure such default within 30 days after receipt from the non-Defaulting Party of written notice Page 19 of35 thereof or, if such default is not capable of being cured within such 30 day notice period, fails to commence in good faith the curing of such default forthwith upon receipt from the non-DefauIting Party of written notice thereof and to continue to diligently pursue the curing of such default until cured; or (c) in the case of the Developer, it: (i) faiis or refuses to make to Corix any payment due under this Agreement on the date that such payment is due;or (ii) is in default of any term or condition of any Permit, In the event of a Default, the non-Defauiting Party may, at its option and without liability therefor or prejudice to any other right or remedy it may have, terminate this Agreement by (further, where appiicable) written notice to the Defaulting Party. In addition, in the event of a Developer Default, Corix may, at its option and without liability therefor or prejudice to any other right or remedy it may have, suspend its work hereunder until the default has been fully remedied, and no such suspension or refusal will relieve the Developer from any of its obligations under this Agreement. 15.2 Amounts Owinn. Upon termination of this Agreement under Section 14.1 or Section 15.1, the Parties will forthwith pay to each other all sums due and owing to the date of termination. 15.3 Reimbursement of Corix's Costs. Without limiting the generality of Section 15.2, if this Agreement is terminated by Corix pursuant to Section 15.1, the Developer will, upon request by and receipt of invoices from Corix, reimburse Corix for all of its costs and expenses (including aii third party costs and expenses) incurred in connection with the Project Infrastructure Work to the date thereof. 15.4 Abandonment. Upon termination of this Agreement, notwithstanding Section 4.3, Corix may, in its sole discretion, abandon and leave all or part of the Project Infrastructure, provided that the Project Infrastructure to be abandoned is safeiy decommissioned and does not pose or constitute any environmental hazard, and release the rights granted to Corix under this Agreement in relation thereto. Upon the release of the rights granted to Corix by this Agreement, any abandoned Project infrastructure shall beiong to the owners of the lands on which the Project Infrastructure is located (except to the extent otherwise expressly agreed with an interested party under the relevant Rights of Way). 15.5 Survival. Upon the expiry or termination of this Agreement for any reason, all claims, causes of action or other outstanding obligations remaining or being unfulfilled as of the expiry or termination date and aii of the provisions in this Agreement relating to the obligation of either Party to account to or indemnify the other and to pay to the other any amount owing as at the date of expiry or termination in connection with this Agreement will survive such expiry or termination 16. FORCE MAJEURE 16.1 Suspension. Subject to the other provisions of this Article 16, if either Party is unable or fails by reason of Force Majeure to perform in whole or in part any of its obligations or covenants set forth in this Agreement (except an obligation or covenant to pay), such inability or failure will be Page 20 of 35 deemed not to be a breach of such obligation or covenant and the obligations of both Parties under this Agreement will be suspended to the extent necessary during the continuation of any inability or failure so caused by such Force Majeure. 16.2 Definition of Force IVIaieure. For purposes of this Agreement, "Force Majeure" means any event or occurrence not within the control of the Party claiming Force Majeure, and which by the exercise of reasonable diligence such Party is unable to prevent or overcome, including any acts of nature, including any plague, epidemic, pandemic, outbreak of infectious disease or other pubiic health emergency as declared by a Governmental Authority; lightning, earthquakes storms, washouts, landslides, avalanches, fires, and floods; strikes, lockouts or other industrial disturbances; acts of public enemies, sabotage, wars, blockades, insurrections, riots or civil disturbances; fires, explosions, breakages of or accidents to machinery or lines of pipe; any deiay by or action of any Governmental Authority; and any Changes of Law. For the purposes of this Article 16, a party is deemed to have control over the actions or omissions of those Persons to which it, its agents, contractors or empioyees, have delegated, assigned or subcontracted its obligations and responsibilities. 16.3 Exceptions. Neither party will be entitled to the benefit of Section 16.1 under any of the following circumstances: (a) to the extent that the inability or faiiure was caused by the negligence or contributory negligence of the Party claiming Force Majeure; (b) to the extent that the inability or failure was caused by the Party ciaiming Force Majeure having failed to diligently attempt to remedy the condition and/or to resume the performance of such covenants and obligations with reasonable dispatch; (c) if the inability or failure was caused by lack of funds or is in respect of any amount due hereunder; or (d) unless, as soon as possible after the happening of the occurrence relied upon or as soon as possible after determining that the occurrence was in the nature of Force Majeure and would affect the claiming Party's ability to observe or perform any of its covenants or obligations under this Agreement, the claiming Party will have given to the other Party notice to the effect that the claiming Party is unable by reason of Force Majeure (the nature whereof will be therein specified) to perform the particular covenants or obligations. 16.4 Resumption of Obligations. As soon as possible after the Force Majeure condition is remedied or discontinued, the Party claiming Force Majeure will give notice to the other Party of such remedy, and that such Party has resumed, or is then in a position to resume, the performance of its suspended covenants and obligations hereunder either in whole or in part. 16.5 Settlement of Labour Disputes. Notwithstanding any of the provisions of this Article 16, but subject to Section 16.3, the settlement of labour disputes or industriai disturbances in which a Party is involved is entirely within the discretion of that Party, which Party may make settlement of it at the time and on terms and conditions as it may deem to be advisable and no delay in making settlement will deprive the Party of the benefit of Section 16.1. 16.6 No Exemption for Payments. Force Majeurewiil not in any event relieve or release either Party from its obligations to make payments to the other Party under this Agreement. Page 21 of 35 17. DISPUTE RESOLUTION. 17.1 Exclusive Procedure. The Parties agree that every controversy, claim, dispute or disagreement arising with respect to the formation, interpretation, performance, or breach of this Agreement, or any amendment hereto (any "Dispute"), will be resolved in accordance with this Article 17, which sets forth the sole and exclusive procedure for the resolution of any Dispute. Notwithstanding the preceding, "Dispute" shal! not include any controversy, claim, dispute or disagreement under the Customer Agreement, which shali be resolved in accordance with the terms and conditions of such Customer Agreement and not this Article 17. 17.2 Informal Dispute Resolution. A Party seeking resolution of a Dispute must request, in writing, that a good faith negotiation ("Negotiation") be carried on amongst designated representatives of each Party ("Designated Representatives"). By the appointment of such Designated Representative, each Party agrees and acknowledges that such Designated Representative is fully authorized to resolve the Dispute on behalf of its appointing Party pursuant to the terms hereof. Following any such request, the Designated Representatives shall negotiate in good faith for a period of thirty (30) days (the "Negotiation Period"). Negotiation may be conducted in person, by telephone, or by such other means as the Designated Representatives agree wiil tend to lead toward an amicabie resolution of the Dispute. Should a Negotiation fail to produce a resolution within the Negotiation Period, the Designated Representatives may agree to extend the Negotiation Period for a fixed time if each agrees that such an extension could reasonably lead to an amicable resolution. 17.3 Mediation. Should a Negotiation fail to produce a resolution within the Negotiation Period and any extension thereof, then any Party wishing to further pursue resolution of the Dispute must initiate mediation by providing to JAMS, or its successor, in [Seattle, Washington] and to the other Designated Representatives a written request for mediation pursuant to this Section, setting forth the subject of the Dispute and the relief requested within fifteen (15) days of the end of the Negotiation Period and any extension thereof. The Designated Representatives shall cooperate with JAMS and with one another En selecting a mediator from JAMS' pane! of neutrals, but if the Designated Representatives cannot agree on a mediator within seven (7) days from the date of the request for mediation then the Designated Representatives shall each select a designee from among the JAMS panel of neutrals, and those designees shall in turn select, from among the JAMS pane! of neutrais, the single mediator who shall conduct the mediation (the "Mediator"). Such mediation will be conducted within forty-five (45) days of the expiration of the Negotiation period and any extension thereof unless otherwise agreed by all of the Designated Representatives or required by the Mediator (the "Mediation Period"). The mediation shall be conducted pursuant to the customary procedures used and/or requested by the selected Mediator. The Mediator may conduct meetings or hearings in Seattle, Washington, or by telephone or teleconference, and request information from the Parties, as he or she deems necessary. Each Party shal! bear its own costs in such mediation, and the Mediator's fee shall be divided evenly among the Parties. The Parties agree that Federal and State Evidence Rule 408 and/or RCW 7.07.030 shall apply to all statements, information and documents exchanged or discussed as part of the negotiation or mediation processes herein, provided that evidence that is otherwise admissible or discoverable will not be rendered inadmissible or non- discoverable as a result of its use in negotiation or mediation under this Section. 17.4 Binding Arbitration. (a) if after the mediation procedures called for under Subsection 17,3 above the Dispute remains unresolved, any Party wishing to further pursue a resolution of the Dispute must Page 22 of 35 initiate binding arbitration, before a single arbitrator, by providing to JAMS, or its successor, in [Seattle, Washington] and to the other Designated Representatives a written request for binding arbitration pursuant to this Section. The written request for binding arbitration must set forth the subject of the Dispute and the relief requested, and such request must be provided within thirty (30) days of mediation. (b) The Designated Representatives shall then cooperate with JAMS and with one another in selecting an arbitrator from JAMS' panel of neutrals, but if the Designated Representatives cannot agree on an arbitrator within seven (7) days, then each Designated Representative shall select a designee from among the JAMS pane! of neutrals, and those designees shall in turn select, from among the JAMS panel of neutrals, the single arbitrator who shall hear the matter in arbitration (the "Arbitrator"). Notwithstanding the above, no one will be nominated to act as an Arbitrator who is in any way financially interested in the business affairs of any of the Deveioper or Corix. (c) The arbitration shall be conducted in Seattle, Washington under the arbitration rules contained in the then published Commercial Arbitration Rules and Mediation Procedures of the AAA, except as such are inconsistent with the expiicit provisions herein, (d) The Federal Rules ofCivii Procedure shall govern discovery during arbitration; however, the Arbitrator shall have full discretion to regulate discovery so as to provide for prompt, efficient, and fair resolution of the claims, disputes and matters in question. During the conduct of the arbitration proceedings, the Arbitrator shall have full discretion concerning the admissibiiity and relevance of evidence, being guided in exercising such discretion by the principles set out in the Federal Rules of Evidence. (e) The Arbitrator shall, within thirty (30) days of the conclusion of the arbitration, issue an award that shali be binding upon the parties and Judgment on the award may be entered in any court of appropriate jurisdiction. The arbitration award must be En writing and must explain the reasons for the decision. The Arbitrator may, but will not be bound to, make findings of fact or conclusions of law. The arbitration award shall include an award to the prevailing party of reasonable attorneys' fees and costs, including the costs of retaining experts, in connection with for the arbitration proceeding. 17.5 Confidentiality. The negotiation, mediation and arbitration proceedings will be private and confidential. The Parties shall not disclose the pleading, discovery materials, transcripts, testimony, documents or other information created, produced or presented in the negotiation, mediation or arbitration to the press, the public or to any third person, except to legai counsel and their empioyees, experts and others who need to know such information En order to assist in the presentation of or participation in negotiation, mediation or arbitration, without written consent of the other parties or order of the Arbitrator. Nothing in this provision shal! be deemed to restrict a Party's use or disciosure of documents (i) which are its own, (ii) which are or have been lawfully obtained independent of discovery in the negotiations, mediation, or arbitration, (iii) which are or become generally availabie to the public through no act of the receiving Party, (iv) which have been lawfully obtained from a source other than another Party, (v) which are reasonably necessary to be disclosed in connection with a proceeding or lawsuit contemplated by this Article 17 or (vi) which are required to be disclosed by iaw, court order or subpoena. The Arbitrator may impose such sanctions as are deemed by the Arbitrator to be appropriate for violation of this provision. Page 23 of 35 17.6 Continuation of Services. Except as otherwise expressly provided herein, each of the Parties will perform ail of its respective obligations under this Agreement notwithstanding the existence of any Dispute that arises from time to time between the Parties in respect of any matter related to this Agreement or during the resolution of any Dispute in accordance with this Articie 17 except where to do so would threaten public health and safety or the environment. 17.7 Injunctive Relief. Notwithstanding anything herein to the contrary, any Party may, prior to invoking the procedure called for in this Articie 17, seek a temporary restraining order or a preliminary injunction (an "Injunctive Action") pursuant to this Section 17.7. The Parties agree that the [Superior Court of the State of Washington in King County] shall be the exclusive venue and have exclusive jurisdiction for all such Injunctive Actions, and stipulate and agree for the purposes of any Injunctive Action that all real and personal property of the Parties relevant to such Injunctive Action will be deemed to be within the jurisdiction of the Superior Court of the State of Washington in King County. Other than the foregoing stipulation regarding matters and property subject to injunctive Action, any Party bringing an Injunctive Action must make a showing of the requisites for such Injunctive Action in such court. This provision for Injunctive Actions is the sole and exclusive process by which any Party shall maintain any Injunctive Action, and shall be limited to those cases in which emergency access to the court is necessary to prevent immediate and irreparabie harm in the interim period until the agreed upon dispute resolution provisions of this Artide 17 can be carried out. 18. GENERAL 18.1 Notices. Any notice or other communication required or permitted to be given under this Agreement will be effective oniy if in writing and when it is actually delivered (which delivery may be by e-mail) to the party for whom it is intended at the following address or such other address in State of Washington as such Party may designate to the other Party by notice in writing delivered in accordance with this Section 18.1: (a) iftoCorix: [INSERT COMPANY NAME AND ADDRESS] Attention: [insert] E-mail: [insert], with a copy to [email protected] (b) if to the Developer: [INSERT COMPANY NAME AND ADDRESS] Attention: [insert] Facsimile: [insert] Notwithstanding the foregoing, notices with respect to Force Majeure will be given in writing by e-mail, or oraily in person or by telephone (to be confirmed by in writing), to the person or persons designated from time to time by the Parties as the person or persons authorized to receive such notices, 18.2 Confidentiality. Each Party (the "Receiving Party") will treat as confidential the terms of this Agreement and ai! Confidential information (as defined beiow) of the other Party (the "Disclosing Party") and will at all times during the term of this Agreement and for a period of two years thereafter hold the same in confidence and will not, without the prior written consent of the Disclosing Party, disciose or divulge to any Person the terms of this Agreement or any Confidential Information of the Disclosing Party, provided that nothing in this Section 18.2 will Page 24 of 35 restrict or prevent any Party from making any disclosure of such terms or any Confidential Information: (a) that is reasonably necessary or desirable for the Receiving Party to carry out and give full effect to the terms, conditions and intent of this Agreement; (b) that is required by any Law or Governmental Authority; (c) to an Affiliate of the Receiving Party or to the directors, officers or employees of such Party or its Affiiiates; (d) to the professional advisors of the Receiving Party; (e) that the Receiving Party, in its sole discretion determines is required, prudent or necessary to be disclosed by that Party in connection with any prospectus filing, public securities offering or other applicable securities matters or laws; and (f) that is already in the public domain, that was in the possession of the Receiving Party prior to its receipt of the information from the Disclosing Party or that was disclosed to the Receiving Party by a third party free of any obligation of confidentiality. For the purposes of this Section 18.2, "Confidential Information" means proprietary information of the Disclosing Party such as data, plans, drawings, manuals, or specifications which have been provided by the Disclosing Party or its empioyees, contractors, agents, subcontractors or Affiliates to the Receiving Party pursuant to this Agreement, or proprietary information conceived or developed by or for the Disclosing Party concerning construction practices, operation and maintenance practices, agreements, marketing plans and strategies, profits, costs, pricing and systems of procedure, but excluding information developed or conceived by the Receiving Party without using the Confidential Information of the Disclosing Party. 18.3 No Waiver. No waiver by either Party of any default by the other in the performance of any of the provisions of this Agreement will operate or be construed as a waiver of any other or future default or defaults hereunder, whether of a like or different character. 18.4 Enurement. This Agreement will enure to the benefit of and be binding upon the Parties and their respective successors and permitted assigns. 18.5 Entire Agreement. This Agreement contains the whole agreement between the Parties in respect of the subject matter hereof and supersedes any pre-existing written or orai agreement or understanding, express or implied, between the Parties. 18.6 Further Assurances. Each Party will execute and deliver all such further documents and do al! such further things as may be reasonably requested by the other Party to give fuli effect to the intent and meaning of this Agreement. 18.7 Counterparts and Facsimile. This Agreement may be executed in counterparts and by facsimile with the same effect as if the Parties had signed the same original document. All counterparts will be construed together and will constitute one and the same agreement and, if signed by facsimile, each Party will promptly dispatch an original to the other Party. Page 25 of 35 18.8 Assignment. The Developer may not assign this Agreement or any of its rights or obligations hereunder without the prior written consent of Corix, such consent not to be unreasonably withheld. Corix may assign this Agreement or any of its rights or obiigations hereunder (including, without limitation, by way of the sale of the majority of its shares or business or its material assets or by way of an amalgamation, merger or other corporate reorganization) to any of its Affiliates or to any other Person without the consent of the Developer, provided such Affiliate or Person is duly qualified to carry out this Agreement and agrees to be bound by the terms and conditions of this Agreement. Forthwith upon such assignment, Corix shall be released from its obligations and responsibilities hereunder. 18.9 Relationship. Nothing in this Agreement will create a partnership or joint venture, or a relationship of landlord and tenant between the Developer and Corix. IN WITNESS WHEREOF the Parties hereto have executed this Agreement as of the day and year first above written. [DEVELOPER] Per: Name: Title: [CQRIX] Per: Name; Title: Page 26 of 35 Contract No. XXXX-XXX SCHEDULE A FORM OF CUSTOMER AGREEMENT [Attach Service Application and Thermal Energy Service Terms and Conditions] Page 27 of 35 SCHEDULE B FORM OF FINAL THERMAL ENERGY DELIVERY PARAMETERS !n accordance with Sections 3.1 and 3.2 of the DE Servicing Agreement (the "Agreement") dated the [INSERT] between COR1X [INSERT ENTITY] INC. ("Corix") and [NAME OF DEVELOPER] (the "Developer"), Corix and the Developer wish to record their mutuai agreement that: (a) the design, construction and operation parameters for the Building System wiil be as provided in the tabie below; (b) the location of the Energy Transfer Station in the Building and the location of the Corix-owned Service Connection routing on the Developer Lands will each be as shown on the attached drawing [INSERT REFERENCE]; and (c) the Target Date as defined in the Agreement is [INSERT]. Page 28 of 35 Design Parameters Space Heating Domestic Hot Wate CoolEnfl Buiiding System required energy [INSERT] [INSERT] [INSERT] loads (at peak design conditions) (kW) Building System to be designed [INSERT] [INSERT] [iNSERT] to deliver maximum return temperatures on the Building System side of the heat exchanger(s) at peak design conditions above (°C) Infrastructure servicing the [INSERT] [INSERT] [INSERT] Developer Lands to be designed to deliver maximum supply temperatures on the Building System side of the heat exchanger(s) at peak design conditions above (°C) Building System side space [INSERT]°C at N/A heating Energy Transfer Station [INSERTj°C temperature reset schedule outdoor air temperature (OAT) and [INSERT]°C at [INSERT] °C OAT Building System side space [INSERT]°C at cooling Energy Transfer Station [1NSERT]°C temperature reset schedule outdoor air temperature (OAT) and [INSERT]°C at [INSERT] °C OAT Any capitalized terms used herein which are not otherwise defined shaii have the meanings given to them in the Agreement, [CORIX] [DEVELOPER] Per: Per; Name: Name: Title: Title: Date: Date: Page 29 of 35 Approved by [DEVELOPER'S ENGINEER] Per: Name: Title: Date: Page 30 of 35 Contract No. XXXX-XXX SCHEDULE C FORM OF RIGHTS OF WAY Page 31 of 35 Contract No. XXXX-XXX SCHEDULE D DEVELOPER-PROVIDED ENERGY TRANSFER STATION REQUIREMENTS (DES Owner's Requirements) Page 32 of 35 MEMORANDUM 'IC-VB_ ENERGY !NC Attention: Charlene Rowan, Char!ene.Rowan@>corix,com Project No.; 319214 Company: Corix Utilities Project Name: Bellingham Owner's Engineer Sender: David Trigg, [email protected] Date/T'me: October 16, 2019 Distribution: Ivana Safar, [email protected] Pages: 2 Paul Holt, [email protected] Travis HEckford-Kulak, [email protected] RE: BELLINGHAM DES PRELIMINARY OWNERS REQUIREMENTS Foliowing is a preliminary summary of Corix's design requirements for the planned Beliingham Waterfront District Energy System, All vaiues should be reviewed during the next stage of project development. System design conditions District energy piping and equipment shall have the following design conditions; Hot water district heating: « Design temperature: 212°F « Design pressure: 160 psig A lower design temperature may be considered to accommodate alternative pipe materials (i.e. PEX). This will affect peak District Heating Supply and deita-T listed in the table below. Chilied water district cooling: • Design temperature: 38°F ~ 68°F • Design pressure: 160 psig Svstem,working fluid: treated and softened clean water. Codes & Standards: System sha!! be designed to ASME B31.1 Power Piping Code, and meet all required code's and regulations in the jurisdiction. Reset Schedule: Both district heating and district cooiing systems wili employ outdoor air temperature reset schedules to reset temperature setpoints, and shall be designed to operate with variable flow and temperature throughout the year. This design principie shall be reflected on the HVAC systems of all buildings served by the DES, Preiiminary estimates of typica! and maximum operating temperatures are listed below. Typical (Low Load) 150°F Peak Load 20C^F Suite 350,13220 St. Albert Trail NW j Edmonton, Alberta T5L4W1 | Phone780.4S3.3410 | Suite 300, 3901 Highway ti7 | Vaughan, Ontario L4L 8L5 Phone 905.265.9777 | Suite 210, 4180 Lougheed Hwy ] Bumaby, British Coiumbia V5C 6A7 i Phone 604.689.3410 Page 1 of 2 Note that these estimates are preliminary based on conceptual design and subject to revision, Distribution Piping System District heating piping to be prefabricated, pre-insulated steel piping system meeting EN253 or prefabricated, pre- insulated flexible piping system meeting EN15632, District cooling piping to be welded standard schedule steel with epoxy coating or HDPE, with no insulation. Piping shall meet system design temperature and pressure. District heating and cooling piping to be designed to ASME B31.1 Power Piping Code and meet piping manufacturer design and instailation requirements. Energy Transfer Stations Energy transfer stations shall use a single brazed plate or plate and frame heat exchanger to isolate the district energy system from each buiiding system, i.e. one for space heating, one for domestic hot water (DHW), and one for space cooling. DHW heat exchangers shall be double-wall gasketed plate and frame. Direct connection of district coo!ing system may be considered. Each energy transfer station shall include a commercial grade contra! system consisting of thermal energy metering systems meeting EN1434, two-way control valves to modulate flow through each heat exchanges and temperature and pressure sensors. The control system will control the building supply temperature based on an agreed reset schedule. Central Energy Plant The central heating energy plant will employ sewer heat recovery as the base load energy source, consisting of heat pumps to provide the temperature lift and a sewage treatment and filtration system to meet heat pump requirements. Natural gas boilers will be used in series to the sewer heat recovery system to provide peaking and backup capability. The central heating plant will be sized to meet peak demand, with the sewer heat recovery system being sized to meet the base load, and natural gas boilers sized for fu!l plant capacity with "N-l redundancy" (i.e. can serve approximately 75% of peak demand with largest single production unit unavailable). The central cooiing p!ant will employ chillers and cooling towers to serve the cooling load, with high efficiency chiliers to serve the base load and standard efficiency chiilers to provide peaking capability. The central cooling plant will be sized to meet the peak demand, with no redundancy or backup. ChiiEed water storage utEiizing an existing tank on site may be employed. Regards, David Trigg, P.Eng. FVB Energy Inc. END FVB ENERGY INC Page 2 of 2 SCHEDULE E DESIGN COMPATIBILITY GUIDELINES FOR CONNECTION TO DISTRICT ENERGY Page 33 of 35 District Energy Utility Design Compatibility Guidelines for Connection to District Energy Revision Date: August 1, 2018 Disclaimer: This document is provided for general informational purposes only and the reader/user assumes ai! responsibility. The information contained within is genera! in nature and does not substitute for the execution of detailed engineering relative to specific projects or problems. Neither Corix nor any of its contractors or employees gives any representation or warranty, whether expressed or implied, or assumes any legal Hability or responsibility for the accuracy, completeness, or usefulness of any information, product application, or process disclosed within this document, at! of which is specifically disclaimed, nor shall any of them be liable for any toss. damage or harm, including without limitation any consequential damage whatever (including, without limitation, damages for loss of business profits, business interruption, loss of business information, or other losses) arising from any reliance on, use or inability to use, this document Table of Contents 1 Document Purpose...... 3 2 Burnaby Mountain District Energy Utility ...... 3 3 Responsibilities of the Customer and BMDEU...... 6 4 Requirements for Building HVAC and DHW Systems ...... 12 Definitions BAS Building Automation System CEP Central Energy Plant DE District Energy Delta T; AT Temperature Difference DHW Domestic Hot Water DHWR Domestic Hot Water Return DHWS Domestic Hot Water Supply DPS Distribution Piping System EC Energy Centre ETS Energy Transfer Station GHG Greenhouse Gas HVAC Heating, Ventilation & Air-ConditEoning MAU Makeup Air Unit OAT Outside Air Temperature Page 2 of 17 1 Document Purpose This document provides preliminary technical information to developers, building owners, engineers and architects to tailor their designs to integrate with a District Energy Utility (DEU). Corix will work closely with developers of new buildings and their mechanical engineers to ensure good design integration between buildings and the DEU. The information in this document applies to all building types and uses, including residential and commerciaL 2 District Energy Utility The DEU consist of three main components: 1. Central Energy Plant (CEP) - the energy generation 2. Distribution Piping System (DPS) ~ the network 3. Energy Transfer Stations (ETS) - the interface between the building and DPS Each of these components has its specific function and design requirements as described below. The DEU provides its customers with thermal energy via hot water generated in the CEP and distributed underground through the DPS. The energy is then transferred indirectly to the buildings' space heating and domestic hot water (DHW) systems using an assembly of heat exchangers commonly referred to as an ETS. The DEU provides all the energy for space heating, DHW, cooling and make-up air requirements. No other heat sources are required or permitted. 2.1 Central Energy Plant The CEP is a key component of the DE system where thermal energy is generated. The thermal energy can be produced by way of traditional energy sources (natural gas) using boilers, or by utilizing alternative energy sources, solar, such as biomass or waste heat recovery. As with many other recent DE systems, the DEU is being implemented in phases. The initial load is being served by a temporary natural gas based CEP. Alternative energy sources for the .permanent CEP will be continuaily evaluated in light of new advancements in technologies and evolving opportunities. 2.2 Distribution Piping System Thermal energy is delivered to customers with a closed loop four-pipe hot water distribution network. The same water is heated in the CEP, distributed to the buildings, transferred at the ETS and returned back to the CEP to be reheated and distributed again. No water is drained or lost in the system, and no additional water is required during normal operation. The DPS is composed of an all-welded, pre-insulated direct bury piping system in public streets and/or private corridors. The DPS is designed based on the size and location of customer buildings and CEPs. Distribution network modelling is completed to optimize system performance and efficiency, and to ensure that all customers will always receive sufficient thermal energy. Page 3 of 17 Variable speed pumps located at the CEP control flow through the DPS to maintain sufficient pressure and flow at every ETS. The DE supply temperature is automatically adjusted based on the outside air temperature (OAT), but is never less than 65°C, such that it can always serve all domestic hot water (DHW) loads directly1. Achieving a large temperature difference (delta T; AT) between the DEU supply and return water is critical for efficient system operation. Low DE return water temperature is essential for high system efficiency and the optimal use of renewable and natural gas heat sources. DE return temperature is a function of the HVAC and DHW system performance in customer buildings; hence, it is essential for the utility to ensure that buildings connected to the system meet specific design and performance requirements. 2.3 Energy Transfer Stations Each customer building houses an ETS that is owned and operated by the DEU. The key components of an ETS include: • DE supply and return piping, connecting to the DPS through interior piping • Heat exchangers to transfer heat to the building's hydronic heating and DHW systems * Control systems to regulate and monitor the flow and temperatures required to meet the building's energy demand and regulate DEU return temperatures • Energy meters to monitor the energy used by each customer for billing and system optimization purposes in most instances, the ETS will be prefabricatecf offsite, and delivered to site and instaiied by Corix. As shown in Figure 1, flow through the primary (DE) side of the ETS is controlled to achieve the building's supply temperature set point. ETS's generally have two heat exchangers: one for space heating, and a second for DHW. This is typical of most hot water DE systems around the world. There is a vast amount of experience and data regarding DE performance and reliability with this configuration, and it is also the most efficient for space and cost Heat exchangers are very reliable (with no moving parts) and it is not necessary to have redundant units in an ETS since it is very unlikely to have a fault or complete failure with a heat exchanger. Corix is abie to repair or replace any damaged equipment quickly and on short notice if any issues arise. It is important to note that a leaking or faulty heat exchanger can often continue to suppiy heat, and the repair/replacement can be scheduled for a convenient, low demand period. Ultimately, Corixwili be responsible for the cost, maintenance and reliable operation of the ETS, including the heat exchangers. 1 i.e. without requiring other heat sources to supplement or elevate the temperature to meet the building's requirements. Page 4 of 17 FIGURE 1: TYPICAL ETS FLOW SCHEMATIC v Page 5 of 17 3 Responsibilities of the Developer and DEU The following section outlines the responsibilities of the developer and Corix to ensure efficient and seamless integration of DEU service. 3.1 Developer's Responsibility 3.1.1 HVAC System The building developer is responsible for designing and installing the building HVAC systems. There are some differences and similarities with conventional systems, as explained beiow. The following conventional building elements are not required for HVAC systems using DE: • Boilers, furnaces, fireplaces, heat pumps, domestic hot water heaters, eiectric baseboards, or any other heat production equipment • Auxiliaries to heating systems such as stacks and breeching • Natural gas service2 The building will require internal thermal distribution systems, inciuding: • Internal distribution pumps and piping (i.e. a hydronic space heating distribution loop) • Heating elements such as fan-coil units, air handling units, and/or perimeter (baseboard) or in-floor radiant heating systems The following are some design conditions that are specific to DE: * The DEU branch lines from the DPS enter the building, similar to other underground utilities, and connect to the ETS via interior piping. There are two DE pipes (supply and return) and a 2" communications conduit that will connect from the DPS to the ETS. • The building owner and Corix shall agree on a suitable location for the ETS. The ETS invariably requires less space than comparable heat production equipment (e.g, boilers) that it replaces. To reduce the amount of DEU piping inside the building, the ETS should be iocated as close as possible to the DEU branch pipeline entering the building generally on an exterior wall in the basement or ground floor of the buiiding, nearest to the main street that houses the DPS main line. < No housekeeping pad is required for the ETS » The DEU operates most effectively and efficiently with the use of !ow temperatures in the building heating systems. • The DEU will provide thermal energy for space heating and domestic hot water, and cooling for all commercial buildings and only designated residential buildings. » Section 4 on page 12 discusses specific requirements of the hydronic space heating and DHW systems for compatibi!ity with hot water district energy system 2 Natural gas sen/ice may stilt be required for range use in individual customer suites. Page 6 of 17 • Corix reviews the HVAC and plumbing design of each building, but is not responsible for the design of the building system (which is executed by the developer). Corix may make suggestions as necessary to ensure appropriate integration with the DEU. 3.1.2 Installation and Operation Contract Boundary The customer is responsible for all piping and other components necessary to connect the hydronic heating and DHW systems to the ETS at the agreed demarcation point for the service boundary on the secondary side of the heat exchangers. This demarcation point will be clearly marked on the DEU engineering drawings for the ETS, A typical example is shown in Figure 1. The customer is responsible for pressure testing, flushing and chemically cleaning ail building piping connected to the ETS prior to opening the valves to the ETS at the service boundary. The customer typically installs normally closed bypasses just before the ETS connection to accommodate the flushing and cleaning. 3.1.3 Sub-Metering Customers may install energy meters on individual units, suites or sub-systems within the heating and/or DHW systems En their building. These sub-meters are the sole responsibility of the customer, and will not affect the obligation of the customer to pay the DEU bill based on Corix's thermai energy meter (part of the ETS) for the whole building. If a customer decides to use sub- meters, it is recommended that they be used for allocation of total building thermal energy oniy. 3.1.4 Preparation of Building for DE Service All customers will provide suitable space for the instaiiation of the ETS, including space for service lines and interconnecting piping in a mechanical room in an agreed-upon location. The ETS should generally be located at an exterior wall facing the street, in the basement or ground level. The following items must be provided by the customer for the installation of the ETS: • The ETS room shail beventilated and maintained at a temperature between 10°C and 35°C. • The ETS room will require a double wide door to allow for installation of a prefabricated ETS (typical maximum dimensions are 4.11m Lx 1.83m Wx 2.13m H), and access to the room to accommodate these dimensions. A housekeeping pad is not required. • A floor drain connected to the sanitary sewer system shall be provided in the ETS room within 1 .Om of (not underneath) the ETS. » One dedicated 25mm domestic water source with hose bib connection shall be made available inside the ETS room. • A dedicated 15A, 120V 60 Hz single-phase electrical service, with a lockabie breaker (iockable En the "on" position), is required to power the ETS control pane! and shall be provided by the customer. • A minimum 1 .Om of clearance is required on the front and control panel side of the ETS and 300mm on the other two sides when it is placed in its final location. Page 7 of 17 • Outside air temperature (OAT) sensor: one dedicated 20mm (3/4") EMT conduit (c/w pull string and #18 AWG TP Stranded 600V cable) from mechanical room to a serviceable location (to be approved by Corix) on the north facing outside wall for the OAT sensor. Architect and/or Mechanical consultant to determine the appropriate routing of the conduit, and to inciude in drawings for building contractors. The conduit provided must be sufficient, by Code to overcome resistance by distance for wire pulls. Sensor will be supplied and installed by Corix, associated conduit and wiring to be done by building contractor. (See attached Eiectnca! Field Wiring Scope of Work and CorEx Outside Air Temperature Sensor installation Requirements). Building contractor to work with Corix to ensure the exterior detail is not compromised and meets Architectural detail requirements. A transition mounting box will be supplied and instalied by Corix. • Current transducers (CTs) to provide on/off pump status for each pump that delivers flow through the ETS for space heating and/or domestic hot water. Building contractor to provide all associated dedicated conduit, wiring and CTs between pump motors and the ETS control panel. See attached Electrical Field Wiring Scope of Work. • Certification under seal from the building engineer in letter format confirming the building system has been designed, constructed and installed in full compliance with the specifications approved and agreed to in the Final Thermal Energy Deliver Parameters schedule. The flushing and cleaning reports must accompany the letter. The footprint of an ETS depends on a number of factors, including customer load, number of heat exchangers, pipe size, configuration of the hydronic heating and DHW systems, and specific restrictions within the customer building. Generally, a typical ETS will not be iarger than 4.11m L x 1.83m W x 2.13m H, and will have only one heat exchanger for space heating, one for DHW and a single energy meter for the entire ETS. Prefabricated skids are typically designed to fit through double doors into the mechanical room. The exact size and location of the prefabricated ETS wiil be established by the customer and Corix during the design process. Figure 2 below shows a typical ETS located near the DPS underground piping in the street Page 8 of 17 FIGURE 2: F^PfCAL ETS INSTALLATION IN BUILDING BASEMENT ^-CORIX FIBRE OPTIC SYSTEM BUILDING DOMESTIC HOT BUILDING POWER CONNECTION WATER CONNECTION ^' EMT & WIRING FOR W/ LOCKABLE DISCONNECT. rPUMP CURRENT SWFTCHES 120 V, 15 A BY BUILDING -CONTROL PANEL CORING, GROUTING, & WATERPROOFING •-. ,^< EMT & O.A.T. SENSOR BY BUILDrNG /WIRING BY BUILDING DISTfUOT HEAT "RETURN FLOOR DRAIN '' DOUBLE DOOR / MIN 1830 W X 2130 H The customer is responsible for the DE service line building or foundation penetration, which meets Corix's requirements (size of opening, etc.), in a mutually agreeable location. Corix will mark the location for the penetration during construction, but relies on the building contractor to provide the core holes and compfete ail sealing and waterproofing around the piping once the piping is brought through the core holes. Corix is not responsible for maintaining such waterproofing. Penetrations may be core drilled (after foundation construction) orsleeved (during foundation construction). Since the alignment of the underground piping may need to change siightiy during construction it is recommended to core hoies instead of using knockouts or sieeves. Corix wiH also instaii one or more (typicaily two,) 50mm plastic (PVC or HOPE) conduits into the customer building to facilitate communications with the ETS through a fiber-optic network. Communication allows for remote monitoring of the ETS, as well as remote reading of the energy meter. The customer is also responsible for providing and maintaining the penetration for communication conduit(s). A single conduit run will be required to follow any interior piping run to the ETS location form the buiiding penetration location. Corix will require uninterrupted access to the ETS and service line within a customer's buiiding for installation, regular maintenance and repairs. This is defined by a DEU service agreement with Corix and Statutory Rights of Way document. Page 9 of 17 3.1.5 Hydronic Heating Water Quality & Expansion Building owners are responsible for filling and managing their own building hot water heating system. The DEU requires that water treatment for the building system meet the minimum criteria set forth below: Chloride: < 30 ppm Nitrate: < 5% Hardness: < 2 ppm pH Level: 9.5-10 iron < 1 ppm The customer shall employ the services of a water treatment subcontractor to provide the necessary chemicals, materials and supervision for a complete cleaning and flushing of ail piping to the ETS demarcation point. ETS start-up and commissioning wii! only occur after acceptable water quality analysis results have been obtained. Certification from the water treatment contractor verifying that the water quality is adequate Es required before the customer can flow water through the ETS. Building owners will manage the expansion of water in their respective hydronic hot water system(s). 3.1.6 Changes to the Building System The Customer shall not materially change the design or substitute any pertinent equipment during instaiiation without Corix's approval. After commissioning, any changes to the building's hydronic or DHW system that may impact the DEU performance shall be reported to Corix. The ETS is owned and maintained by Corix. Under no circumstances is the customer or any of its contractors permitted to adjust, modify or otherwise tamper with any ETS equipment. This includes adjusting or changing the position of any valves, gauges or instruments and altering the controls and control pane!. 3.2 DEU Responsibility 3.2.1 DEU Equipment within Customer Buildings Corix designs, installs, operates and maintains the ETS at the agreed-upon location, as well as the primary (DE) distribution pipes to the ETS. Branch pre-insulated pipelines are generally direct buried from the mainline to the building penetration. From that point, DE piping runs inside the building to the ETS. Corix provides strainers on the DE and building side at each heat exchanger in the ETS, which are routinely inspected. Corix services the energy metering equipment and verifies accuracy at regular intervals per manufacturer recommendations. Page 10 of 17 Corix provides temperature transmitters, pressure gauges, temperature gauges, thermowells, control valves, energy meters, and a control panel for the ETS. Temperature transmitters for the secondary side of the heat exchangers are also provided to facilitate monitoring and control of building side heating and DHW systems. 3.2.2 District Energy Side Water The DEU provides all make-up water requirements for the DE system side. All necessary water treatment is accomplished at the CEP. Thermal expansion of water in the DE system is accommodated at the CEP, 3.2.3 ETS Commissioning Corix, together with the developer or building operator, wil! start and commission the ETS. Commissioning includes verifying measurement points and testing the controls under various operating modes. The building operator is required for this process as the building internal hot water system must be ready to accept heat from the DEU. Corixis responsible for commissioning aii components up to the DE service demarcation point. Page 11 of 17 4 Requirements for Building HVAC and DHW Systems This section summarizes technical requirements for hydronic heating and domestic hot water systems for new developments. The information provided in this document should be regarded as a general guideline only, and the developer's Engineer shail be responsible for the final buiiding-specific design. Corix will provide technical assistance to developers to improve integration of the customer building with the DEU. Heating system schematics, layouts, equipment schedules and sequence of operation or control strategies are required to assist in the DEU review process. 4.1 Design Strategies The following table identifies the key elements or strategies that should be followed when designing the building heating system. Strategy: Rationale: Centralized hydronic system • Water has four times the specific heating capacity of air • Benefits from system load diversification • Reduces utility interconnect costs • Minimizes noise from mechanical systems Low3 suppiy • Improves DE efficiency temperatures • Allows use of lower grade energy sources Large temperature differentials • Reduce piping capital cost • Reduce pumping capital & operating costs Variable flow with • Reduces pumping operating costs variable frequency drives • Improves system control Two-way control valves • Necessary to achieve variable flow and a large temperature differential Seasonal reset of supply • improves energy efficiency temperatures • Improves system control 3 "Low" relative to traditional building HVAC design, which is typically 80°C or more on the building side of the ETS. The DEU is referred to as a "medium" temperature water system since it supplies water from 65°C up to 95°C and needs to be higher than the building side temperature. Page 12 of 17 Return temperature • Improves energy efficiency iimiting Direct Digital Contro! • Allows more accurate control and greater control System flexibility • Potential opportunities for energy savings Night setback settings & • Minimize equipment sizes by allowing reasonable recovery times recovery times • Maximize recovery times from unoccupied to occupied mode 4.2 Pumping and Control Strategy The building hydronic heating system shall be designed to maximize AT and minimize hot water return temperatures over all conditions. The buiiding heating system should be designed for variable hydronic flow (preferably with variable speed pumps to minimize pumping energy), using 2-way modulating (or on/off) control valves at terminal units (radiators, fan coil units, etc.). Alternatively, 3-way mixing valves at terminal units may be used. Bypass valves (e.g. 3-way bypass valves) are not permitted. See Figure 3 below for typica! hydronic heating system configurations. Page 13 of 17 FIGURE 3: TYPICAL BUILDING HEATING SYSTEMS i*. fl.OOM Ht':ATslt; i-c:i- Oi'Ahyo^ r.i,y? TA*.i< (/,-r'm-iAs.) i—to. HI yi'T^^L ?";': < ;,L'f(. ?<,..rrEK IAMK iCf'no'^L) H£AT E>i.HA\vE^ CLVf.f;t U'^s (0'JT>;WA1.,1 a'.) 01 ;}:',!';£ w. KH,J Ai;. 4.3 Hydronic Heating and DHW System (Minimum) Requirements Optimization of the hydronic heating system temperature difference or AT is critical to the successful operation of the DEU. The ETS controls the supply water temperature to the hydronic circuit (i.e. the temperature of the water leaving the space heating heat exchanger) based on an outside air temperature reset schedule. This is the maximum temperature available to the building hydronic circuit. A sample hydronic heating circuit supply and return temperature reset curve is shown in Figure 4 below. Page 14 of 17 FIGURE 4: TYPICAL TEMPERATURE RESET CURVE FOR VANCOUVER 70 '\ \ ^s '-. •^ \ BUILDING SEATING SECO DARY SUPPLY" AO S 30 BUILDING HEA' NQ SECONDAR RETURN* -10 -S 0 5 10 15 20 Outside Ambient Temperature (°C) - Space heating only, direct primary DHW heating with Max. 60°C DHWS 4.3.1 Hydronic Space Heating The hydronic heating system shall be designed to provide all space heating and ventilation air heating requirements for the whoie building, supplied from a central ETS. Gas-fired or electric resistance heating or ventilation equipment (roof top units, air handling units, electric coils, electric baseboards, etc.) are not permitted, unless approved by Corix when hydronic heating is not deemed feasible, or is prohibited by a building code. Hot water generated by the ETS is distributed via a 2-pipe system to the various heating elements (terminal units) throughout the building. The building (secondary) heating system must be designed for temperatures no greater than those specified be!ow. Hydronic Space Heating System Temperatures (Building Side) Peak Winter Summer Supply Temperature, Max. 70°C(158°F) 45°C(H3°F) Return Temperature, Max. 50°C(122°F) 40°C(104°F) Min. Difference (AT) 20°C (36°F) 5°C (9°F) Design Pressure ^1600kPa ^1600kPa Page 15 of 17 Domestic Hot Water Heating System Temperatures (Building Side) Winter Summer Supply Temperature (with storage), Max. 60°C(140°F) 600C(1400F) Supply Temperature (no storage), Max. 55°C(131QF) 55°C(131°F) The specified temperatures shall be regarded as maximum requirements; iower temperatures are desirabie. The building return temperatures shouid be minimized to aiiow the DEU to take advantage of alternate energy technologies. Specific types of heating systems (i.e. terminal units) can operate at lower temperatures. The terminal units must be selected based on temperatures as low as can be reasonably expected. The table beiow outlines maximum hot water supply (HWS) and hot water return (HWR) temperatures for which terminal units should be designed and selected. Type of Terminal Unit Maximum HWS IVlaximum HWR Radiant in-floor heating 50°C(122°F) 38°C(100°F) Perimeter radiation system 70°C(158°F) 50°C(122°F) Fan coil units & reheat coiis4 70°C(158°F) 50°C(122°F) Air handling pre-heat coiis5 65°C(149°F) 45°C(H3°F) 4.3.2 Domestic Hot Water The Domestic Hot Water (DHW) system shall be designed to provide aii DHW requirements for the buiiding, supplied from a dedicated DHW heat exchanger from the ETS. It is understood that DHW systems require supply temperatures as high as 60°C (140°F); the DEU is able to supply this temperature to all buildings at all times. DHW systems should be designed in a semi-instantaneous configuration, in a semi- instantaneous system, the storage capacity is small. !n such a system, storage tanks act as "buffer tanks" only; there is no recirculation from DHW storage tanks directly back to the heat exchanger. For smaller DHW loads, the instantaneous configuration without storage tanks can be discussed and agreed upon between the developers engineer and Corix. This configuration allows for lower 4 Unit heaters and forced flow heaters should foilow the fan coi! design criteria. 5 Make-up Air Units (MAU) should follow the air handling pre-heat coil design criteria. Page 16 of 17 DHW supply temperature (^ 55°C /130°F) and would result in the greatest capital, maintenance cost and space allocation savings. ^!1 domestic cold water (DCW) should enter the DHW system immediately before the ETS heat exchanger. Reducing storage capacity and recirculation requirements results En space and cost savings. Capita! costs for the system are lower, maintenance requirements are reduced, and replacement costs when equipment reaches end of life are lower. With less storage capacity, the DHW has shorter residence time in the building, reducing the chance of bacteria growth such as Legionella. - END OF DOCUMENT Page 17 of 17 ^ m m co x m I ;0: DO < m ^ a a 0 0 z z m Q m ^ x 0 S z ro 0) -1 § m m 0 m EXHIBIT E BELLINGHAM WATERFRONT DEU CONNECTION SCHEDULE Residential 4,645 49,998 Condo 3 2021 2021 Commercial 805 8,667 MillworRs 2021 2021 Commerciai 3,716 39,999 Development Residential 5,252 56,536 Condo 2 2022 2022 Commercial 805 8,667 Residential 5,252 56,536 Condo 1 2022 2022 Commercial 805 8,667 BoardmEN Hotel 2022 2022 Commercial 18,580 199,993 AScoho! Piant 2022 2022 Commercial 1,110 11,950 Residential A 2024 2024 Residential 9,475 101,988 Residential B 2024 2024 Residential 9,017 97,060 Commercial A 2024 2024 Commercial 7,931 85,364 Residential C 2025 2025 Residential 8,220 88,475 Residential D 2026 2026 Residential 8,812 94,847 Commercial B 2027 2027 Commercial 7,198 77,475 Phase 1 Total 91,623 986,223 Commercial D 2028 2028 Commercial 15,520 167,059 Commercial E 2029 2029 Commercial 15,018 161,654 Residential E 2030 2030 Residential 11,587 124,718 Gateway Office 2031 2031 Commerciai 13,935 149,995 Phase 2 Total 56,060 603,425 Phase 1&2 Total 147,683 1,589,648 EXHIBIT F GROUND LEASE (to be added post-execution) EXHIBIT G CUSTOMER SERVICE AGREEMENT EXHIBIT G FORM OF CUSTOMER SERVICE AGREEMENT Corix Utility Systems (Washington) Inc. THERMAL ENERGY SERVICE TERMS & CONDITIONS OF CUSTOMER SERVICE CONTAINING DEFINITIONS, TERMS AND CONDITIONS OF SERVICE, SCHEDULES AND SERVICE APPLICATION Effective: SECTION A - DEFINITIONS Unless the context otherwise requires, in these Terms and Conditions the following terms have the following meanings: Affiliate: means with respect to a specified entity any entity or Person directly or indirectly, through one or more intermediaries, controlling, controlled by, or under common control with that specified entity Applicant: means a Person applying to become a Customer in accordance with these Terms and Conditions. Application for Service: means the application referred to in Section 1. Basic Charge: means a fixed charge attributable to non-fuel and non-consumable costs required to be paid by a Customer for Energy Services during a prescribed period as specified in the Rate Schedule. Building: means a residential or other building or facility which is subject to a Customer Agreement. Building System: means the system of water pipes and heating, cooling and domestic hot water delivery and / or storage equipment to be installed and used for distributing and storing Thermal Energy in a Building, connected to but downstream of and excluding the Service Connection and Energy Transfer Station for that Building. Contaminants: means any radioactive materials, asbestos materials, urea formaldehyde, underground or above ground tanks, pollutants, contaminants, deleterious substances, dangerous substances or goods, hazardous, corrosive, or toxic substances, hazardous waste, waste, pesticides, defoliants, or any other solid, liquid, gas, vapour, odour, heat, sound, vibration, radiation, or combination of any of them, the storage, manufacture, handling, disposal, treatment, generation, use, transport, remediation, or Release into the environment of which is now or hereafter prohibited, controlled, or regulated under Environmental Laws. Customer: means a Person receiving Energy Services pursuant to a Customer Agreement. Customer Agreement: means an agreement between the Utility and a Customer for the provision of Energy Services to a Building or Buildings, which Agreement is comprised of an Application for Service and these Terms and Conditions. Customer Class: means either a residential, commercial or industrial Customer. Development Areas: means the Downtown Waterfront District lands located in Bellingham, Washington and any other lands owned, sold, assigned, or otherwise transferred by Port which are subject to the Master Development Agreement Distribution Extension: means an extension or upgrade of the Distribution System, not including the installation of a Service Connection or an Energy Transfer Station, for the provision of Energy Services to Customer(s). Distribution System: means, collectively, the system of water pipes, fittings and ancillary components connecting the central thermal energy plant to the Service Connections. Energy Charge: means the portion of Customer Service Charges that is attributable to fuel and the cost of other consumables used in the operation of the DEU, and required to be paid by a Customer for Energy Services during a prescribed period as specified in the Rate Schedule. Energy Services: means the provision by the Utility of Thermal Energy via the Thermal Energy System. Energy Transfer Station: means the separate heat exchanger for space heating, cooling and domestic hot water (excluding domestic hot water storage tanks) where applicable, energy meter including temperature sensors and flow meter, control panel and all pipes, fittings and other associated equipment that control the transfer, and measure Thermal Energy from the Distribution System to a Building System. Environment: includes the air (including all layers of the atmosphere), land (including soil, sediment deposited on land, fill, lands submerged under water, buildings, and improvements), water (including oceans, lakes, rivers, streams, groundwater, and surface water), and all other external conditions and influences under which humans, animals, and plants live or are developed and "Environmental" has a corresponding meaning. Environmental Laws: means any and all applicable statutes, laws, regulations, orders, bylaws, standards, guidelines, protocols, permits, and other lawful requirements of any Governmental Authority now or hereafter in force relating to or for the Environment or its protection, environmental assessment, health, occupational health and safety, protection of any form of plant or animal life, or transportation of dangerous goods, including the principles of common law and equity. Governmental Authority: means any federal, state, county, regional, municipal, local or other government, governmental or public department, court, tribunal, arbttml body, commission, board, bureau or agency and any subdivision, agent, commission, board or authority. Panel: means the Rate Review Panel, as defined in the Regulatory Framework. Person: means an individual or his or her legal personal representative, an unincorporated organization or association, or a corporation, partnership, trust, trustee, syndicate Joint venture, limited liability company, union, government agency or other entity or organization. Rate Application: means a package of documents and other collected information submitted by Corix in support of a proposed change to the Customer Service Charges as defined in and in accordance with the Regulatory Framework. Rate Schedule: means that schedule attached to and forming part of these Terms and Conditions, which sets out the rates for Energy Services and certain related terms and conditions, as amended from time to time by the Utility with the approval of, and as filed with, the Panel. Regulatory Framework: means the Bellingham Downtown Waterfront District Regulatory Framework For District Energy Utility, attached hereto as Schedule A, as amended from time to time, and forming part of these Terms and Conditions. Release: means any release, spill, leak, pumping, pouring, emission, emptying or discharge, injection, escape, leaching, migration, disposal, or dumping. Service Connection: means the system of water pipes and all ancillaries and fittings necessary to connect a Building System to the Distribution System via the Energy Transfer Station. Standard Fees and Charges Schedule: means that schedule attached to and forming part of these Terms and Conditions which sets out certain standard fees and charges which may be charged to the Customer in accordance with these Terms and Conditions. Terms and Conditions: means these Thermal Energy Service Terms & Conditions, including the definitions and schedules hereto, all as amended from time to time by the Utility with the approval of, and as filed with, the Panel. Thermal Energy: means thermal energy for space heating, cooling and domestic hot water. Thermal Energy System: means the district energy system by which the Utility delivers Thermal Energy to Customers, including the central thermal energy plant, the Distribution System, the Service Connections and the Energy Transfer Stations. Utility: means Corix Utility Systems (Washington) Inc. carrying on the business of a Thermal Energy distribution utility. Utility's Representatives: means any Person who is an officer, director, employee, agent, contractor, subcontractor,consultantoradvisor of either the Utility or any Affiliate of the Utility. SECTION B - TERMS AND CONDITIONS 1. Application for Energy Services The Utility will provide Energy Services to Customers solely in accordance with these Terms and Conditions. Persons seeking to become Customers must apply for Energy Services in accordance with this Section. Application for Energy Services can be made in person or in writing. Applicants will be required by the Utility to complete and sign an Application for Service form which, together with these Terms and Conditions, constitutes a Customer Agreement. The Customer Agreement will become binding on the parties thereto only and forthwith upon commencement by the Utility of Energy Services at the relevant Building(s). Applicants may be required to provide reference information and identification acceptable to the Utility in connection with an Application for Service. If an Applicant is requesting Energy Services at more than one Building, the Utility will determine in its sole discretion whether to consider the Applicant the same Customer for all Buildings or to consider the Applicant a separate Customer for each of the Buildings. If an Applicant is requesting Energy Services for more than one unit, area or premises within the same Building, the Applicant will be considered the same Customer for all such unit(s), area(s) or premises. The Utility intends that there will be no more than one Customer of the same Customer Class per Building. The Utility may refuse to provide Energy Services to an Applicant if there is an unpaid account for Energy Services in respect of such Applicant or the relevant Building(s). 2. Assignment A Customer may not assign a Customer Agreement or any of its rights or obligations thereunder without the prior written consent of the Utility, such consent not to be unreasonably withheld. The Utility may assign a Customer Agreement or any of its rights or obligations thereunder (including, without limitation, by way of the sale of the majority of its shares or business or its material assets or by way of an amalgamation, merger or other corporate reorganization) to any of its Affiliates or to any other Person without the consent of the Customer, provided such Affiliate or Person is duly qualified to carry out the Customer Agreement and agrees to be bound by the terms and conditions of the Customer Agreement. Forthwith upon such assignment, the Utility shall be released from its obligations and responsibilities under the Customer Agreement. 3. Use of Thermal Energy A Customer will use Thermal Energy only for space heating and domestic hot water and cooling, where applicable, within the Building(s). Unless authorized by the Utility in writing and in advance, a Customer will not sell or supply to any other Person Thermal Energy provided by the Utility, nor use Thermal Energy supplied by the Utility for any purpose other than as specified In this Section. 4. Applicable Rate Schedule A Customer must not significantly change its connected load, and in case of Commercial Customer the use of a commercial space, without the prior written approval of the Utility. The Utility may conduct periodic reviews of the quantity of Thermal Energy delivered and the rate of delivery of Thermal Energy to a Customer for the purpose of, among other things, determining whether to substitute a Rate Schedule if applicable. 5. Ownership and Care of Thermal Energy System Notwithstanding any degree of annexation or affixation, or rule of law or equity to the contrary, the Utility owns all components of the Thermal Energy System and all additions or extensions thereto will be and remain the property of and vest in the Utility, whether located inside or outside of Building(s). No component of the Thermal Energy System shall be moved or removed from a Customer's lands (whether located inside or outside ofBuilding(s)) without the advance written permission of the UtHity. The Utility will not, under any circumstances whatsoever (including, without limitation, if the Utility is not providing Energy Services for any reason or if the Customer Agreement is terminated for any reason), be required to remove any component of the Thermal Energy System from the Customer's lands (whether located inside or outside ofBuilding(s)). The Customer will take reasonable care of and protect all components of the Thermal Energy System in, on or under the Customer's lands (whether located inside or outside of Building(s)) against damage and must advise the Utility promptly of any damage to or disappearance of the whole or part of any such component. Further, the Customer will pay to the Utility promptly upon request the cost of any broken, missing or damaged component of the Thermal Energy System (or part thereof), except to the extent that the Customer demonstrates that such component (or part thereof) was broken, missing or damaged due to a defect therein or to any act or omission of the Utility or any of the Utility's Representatives. 6. Meter Reading The meter will typically be read at monthly intervals. The interval between consecutive meter readings will be at the sole discretion of the Utility. The amount of Thermal Energy registered by the Energy Transfer Station during each billing period will be converted to British Thermal Units (Btu). 7. Meter Testing Corix, at its own expense, may test meters from time to time based on applicable standards and regulation. Any Customer who doubts the accuracy of a meter comprising part of an Knergy Transfer Station may request to have the meter tested by the original equipment manufacturer. If the testing indicates that the meter is recording correctly, the Customer must pay the Utility for the cost of removing, replacing and/or testing the meter as set out in the Standard Fees and Charges Schedule and the reconnection charge as set out in Section 10. If the meter is found to be inaccurate by the manufacturer, the Utility will incur the cost of removing, replacing and/or testing the meter or (if applicable) refund such costs to the Customer. 8. Maintenance The Utility will repair, maintain and replace all components of the Thermal Energy System in, on or under the Customer's lands (whether located inside or outside ofBuilding(s)), from time to time at its own cost to keep the same in good working order. For greater certainty, except for the Utility's obligation to repair, maintain and replace such components of the Thermal Energy System as aforesaid, the Utility is not, and will not be, responsible for repairing, maintaining or replacing any other facility or equipment in, on or under a Customer's lands (whether located inside or outside of Building(s)), including without limitation any Building System(s). The Customer will repair, maintain and replace the Building System in all Building(s) from time to time at its own cost to keep the same in good working order. 9. Connections and Disconnections No connection, disconnection, reconnection, extension, installation, replacement or any other change is to be made to any component of the Thermal Energy System by anyone except by the Utility's Representatives authorized by the Utility. 10. Energy Services Reconnections If; (a) Energy Services are discontinued to a Customer for any of the reasons specified in Section 16; or (b) a Building System is disconnected from the Thermal Energy System or Energy Services are discontinued to a Customer: (i) at the request of the Customer with the approval of the Utility; or (ii) to permit a test of a meter at the request of the Customer, which meter is subsequently determined by the Utility to be accurate; and such Customer or the employee, agent or other representative of such Customer re-applies for Energy Services for the same Building within 12 months of such discontinuance or disconnection (as applicable), then if the Building's Building System is reconnected to the Thermal Energy System or if Energy Services are restored to such Customer, such Customer will pay, as part of fees owing for the first month of Energy Services, a reconnection charge equal to the sum of: (c) the costs that the Utility estimates it will incur in reconnecting the Building's Building System to the Thermal Energy System or restoring Energy Services to such Customer; and (d) the Basic Charge that such Customer would have paid had Energy Services continued during the period between the date ofdiscontinuance or disconnection (as applicable) and the date of such re-application. If a Building System is disconnected from the Thermal Energy System or Energy Services are discontinued to a Customer for public safety or Utility service requirement reasons, there will be no reconnection charge to reconnect the Building's Building System to the Thermal Energy System or to restore Energy Services to such Customer. 11. Distribution Extensions Subject to the Regulatory Framework, the Customer acknowledges the following terms and conditions which may apply to the determination of whether or not to complete a Distribution Extension in order to assess the economic impact of such Distribution Extension on existing Customers. (a) System Expansion. The Utility will complete Distribution Extensions as necessary in accordance with Thermal Energy System development requirements. (b) Ownership. All components of Distribution Extensions will be and remain the property of the Utility. (c) Economic Test. Applications to extend Energy Services to one or more new Customers will be subject to an economic test, which is evaluated by the Panel as a part of the Rate Application. The economic test will be a discounted cash flow analysis of the projected revenue and costs associated with the Distribution Extension. The Distribution Extension will be deemed to be economic and constructed if the results of the economic test indicate a zero or positive net present value. (d) Revenue. The projected revenue used in the economic test will be established by the Utility by: (i) estimating the number of Customers to be served by the Distribution Extension; (ii) establishing consumption estimates for each Customer; (iii) projecting when the new Customers will be connected to the Distribution Extension; and (iv) applying appropriate revenue margins for each Customer's consumption. The revenue projection will also take into consideration the estimated number and type of Thermal Energy appliances used and the effect of variations in weather conditions on consumption. (e) Costs. The costs used in the economic test will include, without limitation: (i) the full projected labour, material, and other costs necessary to serve the new Customers including such costs applicable to new mains (subject to the provisions of this paragraph (e)), Service Connection(s), Energy Transfer Station(s) and related facilities; (ii) the appropriate allocation of Utility overhead associated with construction of the Distribution Extension; and (iii) projected incremental operating and maintenance expenses necessary to serve the new Customers. In addition to these costs, the economic test will incorporate applicable taxes and the appropriate return on investment as approved by the Panel. In cases where a larger Thermal Energy distribution main is installed to satisfy anticipated future demand requirements, the difference in cost between the instaHed, larger main and a smaller main that would be adequate to serve only those Customers supporting the particular application may be eliminated from the economic test. (f) Contributions JnAjd of ConstructiQn. If the economic test results indicate a negative net present value, the Distribution Extension may proceed provided that the shortfall in revenue is eliminated by contributions in aid of construction by or on behalf of Customers to be served by the Distribution Extension, or if there are non-flnancial factors offsetting the revenue shortfall that are deemed to be acceptable by the Panel, the Utility may finance the contributions in aid of construction for Customers. (g) Security. In those situations where the financial viability of a Distribution Extension is uncertain, the Utility may require a security deposit in cash or an equivalent form acceptable to the Utility. Bills will be rendered to the Customer in accordance with the Customer's Customer Agreement, including the Rate Schedule. (b) Subjectto paragraph (d) below, if meter readings cannot be obtained for any reason, consumption may be estimated by the Utility for billing purposes and the next bill that is based on actual meter readings will be adjusted for the difference between estimated and actual use over the interval between meter readings. (c) If any meter fails to register or registers incorrectly, the consumption may be estimated by the Utility for billing purposes, subject to Section 13. In such case, Corix will make every reasonable effort to rectify the issue promptly. (d) If the Customer terminates a Customer Agreement, the final bill rendered to the Customer will be based on an actual meter reading. (e) Bills will be rendered as often as deemed necessary by the Utility, but generally on a monthly basis. The due date for payment of bills shown on the face of the bill will be the first business day after: (i) the 21 calendar day following the billing date; or (it) such other period as may be specified in the Application for Service or otherwise agreed in writing by the Customer and the Utility. (f) Bills will be paid in the manner specified therein, which may include payment by check via regular mail, payment at a designated office of the Utility and/or payment by on-line banking or electronic funds transfer. (g) Customers requesting historic bHling information not included on the present bill may be charged the cost of processing and providing this information. Cost for such service will depend on the extend of requested historical review and will be presented to the customers prior to completing such service. 13. Back-biIlinR Minor adjustments to a Customer's bill, such as an estimated bill or an equal payment plan billing, do not require back-billing treatment. (a) Back-billing means the re-billing by the Utility for Energy Services rendered to a Customer because the original billings were discovered to be either too high (over-billed) or too low (under- billed). The discovery may be made by either the Customer or the Utility. The cause of the billing error may include any of the following non-exhaustive reasons or combination thereof: (i) stopped meter; (ii) metering equipment failure; (iii) inaccurate meter, as determined pursuant to Section 7; (iv) switched meters; (v) double metering; (vi) incorrect meter connections; (vii) incorrect use of any prescribed apparatus respecting the registration of a meter; (viii) incorrect meter multiplier; (ix) the application of an incorrect rate; (x) incorrect reading of meters or data processing; or (xi) tampering, fraud, theft or any other criminal act. (b) Where the Customer requests that the meter be tested, the provisions of Section 7 will apply in addition to those set forth in this Section. (c) Where metering or billing errors occur and the Customer does not request that the meter be tested, the consumption and demand will be based on the records of the Utility for the Customer or on the Customer's own records to the extent they are available and accurate or, if not available, on reasonable and fair estimates made by the Utility. Such estimates will be on a consistent basis according to a contract with the Customer, or consistent within each Customer Class, if applicable. (d) If there are reasonable grounds to believe that the Customer has tampered with or otherwise used the Thermal Energy or any component of the Thermal Energy System in an unauthorized way, or there is evidence of fraud, theft or another criminal act, back-billing will be applied for the duration of the unauthorized use, subject to the applicable limitation period provided by law, and the provisions of paragraphs (g), (h), (i) and (]) below will not apply. In addition, the Customer is liable for the direct (unburdened) administrative costs incurred by the Utility in the investigation of any incident of tampering, including the direct costs of repair, or replacement of equipment. Under-billing resulting from circumstances described in this paragraph (d) will bear interest at the rate specified in the Application for Service on unpaid accounts from the date of the original under-billed invoice until the amount under-billed is paid in full. (e) In every case of under-billmg or over-bHHng, the cause of the error will be remedied without delay, and the Customer will be promptly notified of the error and of the effect on the Customer's ongoing bill. (f) In every case of over-billing, the Utility will refund to the Customer all money incorrectly collected for the duration of the error, subject to the applicable limitation period provided by law. Simple interest, computed at the short-term bank loan rate applicable to the Utility on a monthly basis, will be paid to the Customer. (g) Subject to paragraph (d) above, in every case of under-billing, the Utility will back-bill the Customer for the shorter of: (i) the duration of the error; or (it) one year, or as otherwise agreed by the Customer and the Utility in writing. (h) Subject to paragraph (d) above, in every case ofunder-billing, the Utility will offer the Customer reasonable terms of repayment. If requested by the Customer, the repayment term will be equivalent in length to the back-billing period. The repayment will be interest free and in equal instalments corresponding to the normal billing cycle. Delinquency in payment of such instalments will be subject to the usual late payment charges. (i) Subject to paragraph (d) above, if a Customer disputes a portion of a back-billing due to under- billing based upon either consumption, demand or duration of the error, the Utility will not threaten or cause the disconti nuance of Energy Services for the Customer's failure to pay that portion of the back-billing, unless there is no reasonable ground for the Customer to dispute that portion of the back-billing. The undisputed portion of the bill will be paid by the Customer and the Utility may threaten or cause the discontinuance of Energy Services if such undisputed portion of the bill is not paid. (j) Subject to paragraph (d) above, in all instances ofback-biiling where changes of occupancy have occurred, the Utility will make a reasonable attempt to locate the former Customer. If, after a period of one year after the change of occupancy, such Customer cannot be located, the over- billing or under-bUUng applicable to them will be cancelled. 14. Late Payment Charge and Collection Charge If the amount due on any bill has not been paid in full on or before the due date shown on such bill, a further bill will be rendered to include the overdue amount plus a late payment charge as set out in the Standard Fees and Charges Schedule. Notwithstanding the due date shown, to allow time for payments made to reach the Utility and to co-ordinate the billing of late payment charges with scheduled billing cycles, the Utility may, in its discretion, waive late payment charges on payments not processed until a number of days after the due date. If the Customer's account is overdue more than one month form the due date shown on the bill, and requires additional effort to collect, the Utility may charge the Customer a collection charge as set out in the Standard Fees and Charges Schedule. Under special circumstances and at tis sole discretion, the Utility may waive the late payment charge and collection charge. 15. Dishonoured Payments Charge If a cheque received by the Utility from a Customer in payment of any account is returned by the Customer's bank, trust company or financial institution because of insufficient funds (NSF), or any reason other than clerical error, a returned cheque charge as set out In the Standard Fees and Charges Schedule will be added to the amount due and payable by the Customer whether or not the applicable Building System has been disconnected from the Thermal Energy System or Energy Services have been discontinued to the Customer. 16. Refusal to Provide Energy Services and Discontinuance of Energy Services The Utility may refuse to provide Energy Services to any Applicant, or the Utility may, after having given 48 hours prior written notice, discontinue providing Energy Services to any Customer, who: (a) fails to fully pay for any Energy Services provided to any Building(s) on or before the due date for such payment; or (b) fails to provide or pay by the applicable date required any security deposit, equivalent form of security or guarantee or any requisite increase thereof. The Utility may refuse to provide Energy Services to any Applicant, or the Utility may, without having to give any notice, discontinue providing Energy Services to any Customer, who: (a) refuses to provide reference information and identification acceptable to the Utility when applying for Energy Services or at any subsequent time on request by the Utility; (b) breaches the terms and conditions of the applicable Customer Agreement (including, without limitation, these Terms and Conditions); (c) has defective pipes, appliances, or Thermal Energy fittings in any part or parts of Building(s); (d) uses the provided Thermal Energy in a manner that, in the opinion of the Utility, may: (i) lead to a dangerous situation; or (ii) cause undue or abnormal fluctuations in the temperature of any component of the Thermal Energy System; (e) fails to make modifications or additions to the Customer's equipment as required by the Utility to prevent the danger or control the fluctuations described in paragraph (d) above; (f) negligently or fraudulently misrepresents to the Utility its use of Thermal Energy or the Thermal Energy load requirements of, or Thermal Energy volume consumed within and by, any Building(s); (g) terminates the applicable Customer Agreement pursuant to Section 20 or causes the termination of the applicable Customer Agreement for any reason; or (h) stops consuming Thermal Energy in the Building(s). The Utility will not be liable for any loss, injury or damage suffered by any Customer by reason of the discontinuation of or refusal to provide Energy Services as set out in this Section. 17. Security for Payment of Bills (a) A Customer who has not established or maintained credit to the satisfaction of the Utility may be required to provide a security deposit or equivalent form of security, the amount of which may not exceed the estimated total bill for the two highest consecutive months' consumption of Thermal Energy by the Customer. (b) A security deposit or equivalent form of security is not an advance payment. (c) The Utility will pay interest on a security deposit at the rate and at the times specified in the Standard Fees and Charges Schedule. If a security deposit is returned to a Customer for any reason, the Utility will credit any accrued interest to the Customer's account at that time. No interest is payable on any unclaimed deposit left with the Utility after the account for which it is security is closed, or on a deposit held by the Utility in a form other than cash. (d) A security deposit (plus any accrued interest) will be returned to the Customer after one year of good payment history, or when the Customer's Customer Agreement is terminated pursuant to Section 20, whichever occurs first. (e) If a Customer's bill Is not paid when due, the Utility may apply all or any part of the Customer s security deposit or equivalent form of security and any accrued interest towards payment of the bill. Under these circumstances, the Utility may still elect to discontinue Energy Services to the Customer for failure to pay for Energy Services. (f) If a Customer's security deposit or equivalent form of security is appropriated by the Utility for payment of an unpaid bill, the Customer must re-establish the security deposit or equivalent form of security before the Utility will reconnect or continue Energy Services to the Customer. 18. Account Charge When a change of Customer occurs, an account charge, as set out in the Standard Fees and Charges Schedule, will be paid by the new Customer with respect to each account in that Customer's name for which a separate bill is rendered by the Utility. 19. Term of Customer Agreement The initial term of a Customer Agreement will be as follows: (a) where a new Service Connection is required to provide Energy Services, five years; or (b) where a Distribution Extension is required to provide Energy Services, for a period of time fixed by the Utility but not exceeding the number of years used to calculate the revenue in the Distribution Extension economic test. The Customer Agreement will thereafter automatically be renewed from year to year unless: (a) specified otherwise in a special contract or supplement referred to in Section 28; or (b) the Customer Agreement is terminated pursuant to Section 20 below. 20. Termination of Customer Agreement A Customer may, following the initial term specified in Section 19, terminate the applicable Customer Agreement by giving at least 30 days written notice to the Utility at the address or by email specified in the most recent bill rendered to the Customer. If the written notice is not received, the term will automatically be renewed. The Customer is not released from any previously existing obligations to the Utility by terminating the Customer Agreement. The Customer acknowledges and agrees that if it terminates the Customer Agreement pursuant to this Section, the Utility may charge the Customer the full cost associated with the provision of Energy Services to the Customer, which includes but is not limited to the net book value of associated infrastructure if the Utility determines that such charge is necessary to ensure other Customers on the Themial Energy System are not adversely impacted by such termination. Notwithstanding any termination by the Customer pursuant to this Section, and without derogating from the generality of Section 5, all components of the Thermal Energy System will remain the property of and vest in the Utility. 21. Liability (a) The Utility will endeavour to provide a regular and uninterrupted supply of Thermal Energy, but it does not guarantee a constant supply of Thermal Energy or the maintenance of unvaried temperatures. Neither the Utility, nor any of the Utility's Representatives is responsible or iiable for any loss, injury (including death), damage or expense incurred by any Customer or any Person claiming by or through a Customer, that is caused by or results from, directly or indirectly, any discontinuance, suspension, or interruption of, or failure or defect in the supply, delivery or transportation of, or any refusal to supply, deliver, or transport Thermal Energy, or provide Energy Services, unless the loss, injury (including death), damage or expense is directly and solely attributable to the gross negligence or wilful misconduct of the Utility or any of the Utility's Representatives, provided however that neither the Utility nor any of the Utility's Representatives is responsible for any loss of profit, loss of revenue or other economic loss, even if the loss is directly attributable to the gross negligence or wilful misconduct of the Utility or any of the Utility's Representatives. (b) Energy Services may be temporarily suspended to make repairs or improvements to the Thermal Energy System or in the event of fire, flood or other sudden emergency. The Utility will, whenever reasonably practicable, give notice of such suspension to the Customer and will restore Energy Services as soon as possible. Internet, telephone, newspaper, Hyer, radio or other acceptable announcement method may be used for notice purposes. The Utility will not be liable for any loss, injury or damage caused by or arising out of any such suspension of Energy Services. (c) The Customer shall bear and retain the risk of, and hereby indemnifies and holds harmless the Utility and all of the Utility's Representatives from, all loss and damage to all components of the Thermal Energy System in, on or under the Customer's lands (whether located inside or outside of Building(s)) except to the extent any loss or damage is directly attributable to the negligence of the Utility or any of the Utility's Representatives, or is caused by or results from a defect in the Thermal Energy System. The Customer must prove such negligence or defect. (d) The Customer agrees to indemnify and hold harmless the Utility and all of the Utility's Representatives from all claims, losses, damages, liabilities, costs, expenses and injury (including death) suffered by the Customer or any person claiming by or through the Customer or any third party and caused by or resulting from the use of the Customer's lands by the Utility as contemplated herein or the use of Thermal Energy by the Customer or the presence of Thermal Energy on or in any part of the Bui!ding(s) or from the Customer or the Customer's employees, contractors or agents damaging any component of the Thermal Energy System. This paragraph will survive any termination of the Customer Agreement. (e) The Customer acknowledges and agrees that the Utility will not in any way be responsible for any aspect of the design, engineering, permitting, construction or installation of any Building System. (f) The Customer will release, indemnify and hold harmless the Utility and all of the Utility's Representatives from any and all liabilities, actions, damages, claims (including remediation cost recovery claims), losses, costs, orders, fines, penalties and expenses whatsoever (including all consulting and legal fees and expenses on a solicitor-client basis) and the costs of removal, treatment, storage and disposal of Contaminants and remediatlon of the Customer's lands and any affected adjacent property which may be paid by, incurred by or asserted against the Utility or any of the Utility's Representatives arising fi'om or in connection with the presence of Contaminants on, in or under the Customer's lands or any Release or alleged Release of any Contaminants at or from the Customer's lands related to or as a result of the presence of any pre- existing Contaminants at, on, under or in the Customer's iands, including without limitation surface and ground water at the date of the Customer Agreement or as a result at any time of the operations of the Customer or any act or omission of the Customer or its tenants or other occupants or any person for whom it is in law responsible. (g) The Customer will obtain and maintain at its own expense appropriate insurance coverage (including property and liability) throughout the term of the Customer Agreement and will provide the Utility with evidence of same upon request. 22. Access to Buildings and Egylpment The Utility's Representatives will have, at all reasonable times, free access to all components of the Thermal Energy System in, on or under the Customer's lands (whether located inside or outside ofBuiIding(s)) to ascertain the quantity or method of use of Energy Services, as well as for the purpose of reading, testing, repairing or removing the whole or any such component (or part thereof), turning Thermal Energy on or off, conducting system leakage surveys, stopping leaks, and examining pipes, fittings, connections and appliances. In furtherance of the above, the Customer hereby grants and covenants to secure for the Utility and its subcontractors, agents, employees and representatives, by licenses, statutory rights of way, easements, leases or other agreements, and for nominal consideration, non-excluslve access to, on, over and under the Customer's lands for the purposes of performing its obligations under the Customer Agreement. Without limiting the generality of the foregoing, the Customer will, forthwith upon the Utility's request, grant or cause to be granted to the Utility and duly register in the relevant Land Title Office a statutory right of way in the Utility's standard form in respect of each lot comprising a part of the Customer's lands and otherwise as required to allow the Utility to perform its obligations under the Customer Agreement. Each statutory right of way granted pursuant to this Section will have priority over any financial encumbrance registered against title. For greater certainty, the access granted pursuant to this Section will be adequate, in the sole discretion and determination of the Utility, to allow the Utility to efficiently and effectively carry out its obligations pursuant to the Customer Agreement without undue disturbance or interference from the Customer or any of its contractors, agents, employees or representatives. The Customer acknowledges and agrees that each statutory right of way, lease or other reglstrable interest granted pursuant to this Section may be registered by the Utility in the relevant Land Title Office, together with any priority agreements as the Utility may deem necessary or advisable. To the extent there is a statutory right of way in favour of the Utility registered against the Customer's lands, the Customer hereby covenants and agrees to be bound by, and to comply with, such registered statutory right of way. If there is any inconsistency between the terms and conditions of the Customer Agreement and the terms and conditions of any such statutory right of way, the terms and conditions provided in the Customer Agreement will prevail. 23. Curtailment of Energy Services In the event of a breakdown or failure of any component of the Thermal Energy System, or at any time to comply with the requirements of any law, the Utility will have the right to require any Customer or class or classes of Customers or all its Customers, until notice of termination of the requirement is given, or between specified hours, to discontinue use of Thermal Energy for any purpose or purposes or to reduce in any specified degree or quantity such Customers)' consumption of Thermal Energy for any purpose or purposes. Any such requirement may be communicated to any Customer or Customers or to all Customers by either or both of public notices in the press and announcements over the radio, and may be communicated to any individual Customer by either or both of notice in writing (via e-mail, regular mail or personal delivery, or left at the relevant Building) and oral communication (including by telephone). Any notice of the termination of any such requirement may be communicated similarly. If in the opinion of any official of the Utility any Customer has failed to comply with any requirement of the Utility communicated in accordance with this Section, the Utility will be at liberty, after notice to the Customer is communicated in accordance with this Section, to discontinue Energy Service to such Customer. The Utility will not be liable for any loss, injury, damage or expense occasioned to or suffered by any Customer for or by reason of any discontinuance of Energy Services as contemplated by this Section. 24. Disturbing.Use All equipment for which Thermal Energy is supplied will be subject to the reasonable approval of the Utility and the Customer will take and use the Thermal Energy so as not to endanger apparatus or cause any undue or abnormal fluctuations on the Thermal Energy System. The Utility may require the Customer, at the Customer's expense, to provide equipment which will reasonably limit such fluctuations or disturbances and may refuse to supply Thennal Energy or suspend the supply thereof until such equipment is provided. 25. Sources of Energy The Customer acknowledges and agrees that the Utility may, without the need to obtain any approval from the Customer and without any recourse by the Customer, from time to time incorporate other sources of energy or other energy supply systems into the Thermal Energy System, provided the Utility is still able to meet its obligations to the Customer hereunder. 26. Taxes The rates and charges set out in these Terms and Conditions do not include applicable state, county, local, regional and municipal sales and use taxes, or any other taxes fees, charges or levies that the Utility may be lawfully authorized or required to add to its normal rates and charges now or in future. 27. Rate Schedule The rates to be charged by, and paid to, the Utility for Energy Services will be set out in the Rate Schedule (Section C) and amended from time to time. 28. Special Contracts and Supplements In unique circumstances, special contracts and supplements to these Terms and Conditions may be negotiated between the Utility and the Customer and submitted for approval by the Panel where: (a) a minimum rate or revenue stream is required by the Utility to ensure that the provision of Energy Services to the Customer is economic; or (b) factors such as system by-pass opportunities exist or alternative fuel costs are such that a reduced rate is justified to keep or to attach the Customer on the Distribution System. 29. Conflicting Terms and Conditions Whenever anything in these Terms and Conditions is in conflict with any special terms or conditions provided in any Rate Schedule, if applicable, the terms or conditions provided in the Rate Schedule will prevail and whenever anything in these Terms and Conditions or in any Rate Schedule is in conflict with the terms of any special contract the terms of such special contract will prevail. 30. Authority of Agents of the Utility None of the Utility's Representatives has authority to make any promise, agreement or representation not incorporated in a Customer Agreement, and any such unauthorized promise, agreement or.representation is not binding on the Utility. 31. Regulatory Framework The terms and conditions of the "Bellingham Downtown Waterfront District Regulatory Framework For District Energy Utility" (the "Regulatory Framework"), attached hereto as Schedule A, are incorporated by reference into this Customer Agreement and are binding on the parties hereto. Whenever any wording in this Customer Agreement is in conflict with any wording provided in the Regulatory Framework, the wording provided in the Regulatory Framework will prevail. SECTION C - RATE SCHEDULE See attached. SECTION D - STANDARD FEES AND CHARGES SCHEDULE Account Charge: The Account Charge is a single initial set up charge payable by each Applicant for Energy Services, ADMINISTRATIVE CHARGES Collection Charge: x Dishonoured Payments Charge: Equivalent to the Utility's lead bank's Non" Sufficient Funds (NSF) charge effective 1 April of each year: currently $ X Late Payment Charge: Interest on outstanding balance equal to the lesser of 1.5% per month (19.6% compounded annually) and the maximum legal interest rate allowable. Disputed Meter Testing Fees: Actual costs of removal, replacement and/or testing. Interest on Cash Security Deposit: The Utility will pay interest on any cash security deposit at the Utility's prime interest rate minus 2%. The Utility's prime interest rate is defined as the floating annual rate of interest which is equal to the rate of interest declared from time to time by the Utility's lead bank as Its "prime rate" for loans in U.S. dollars. Payment of interest will be credited to the Customer's account in January of each year. Corix Utility Customer Application for Service Systems (Washington) Inc Corix Customer Care re: Bellingham Waterfront DEU Account Office use Name: Number: _only : Mailing Business Telephone: Address: Other Telephone: City: Zip Code: Email: Billing Start Date: Start Meter Reading: Meter Serial #: Install Date: Total Floor Area (metre2) Reason for Termination Date to Terminate On: QNew Application Received QNew Application Received OTermi nation Requested 1/WE AFFIRM THAT THE INFORMATION CONTAiNED IN THIS APPLICATION IS CORRECT AND 1/WE UNDERSTAND THAT THE TERMS OF SERVICE REQUIRE PAYMENT !N FULL OF ALL ACCOUNTS WITHIN 21 DAYS (UNLESS OTHERWISE STATED !N WRITING) OF INVOICE DATE AND 1/WE UNDERSTAND THAT INTEREST ON OVERDUE ACCOUNTS SHALL BE AT THE RATE STIPULATED ON THE INVOICE OR IF NO RATE IS STIPULATED AT A RATE EQUAL TO THE LESSOR OF 1.5% PER MONTH (19.6% COMPOUNDED ANNUALLY) AND THE MAXIMUM LEGAL INTEREST RATE ALLOWABLE. THE APPLICANT(S) CONSENT(S) TO CORIX (1) USING THE APPLICANT'S PERSONAL INFORMATION (INCLUDING F1NANCIALLY-RELATED INFORMATION) WHEN IT IS NECESSARY IN ORDER TO SERVE THE APPLICANT AS A CUSTOMER. TO MEET LEGAL AND REGULATORY REQUIREMENTS, AND FOR INTERNAL AUDIT, STATISTICAL AND RECORD-KEEPiNG PURPOSES; AND (2) OBTAINING ANY REPORTS, INCLUDING ANY CREDIT, BACKGROUND AND OTHER PERSONAL INFORMATION ABOUT APPLICANT THAT CORIX DEEMS NECESSARY FROM ANY TH!RD PARTIES INCLUDING CREDIT BUREAUS AND REPORTING AGENCIES OR OTHER CREDIT GRANTORS, AND CONSENTS TO THE DISCLOSURE AND EXCHANGE OF SUCH INFORMATION BY AND AMONG CORIX AND SUCH THIRD PARTIES (INCLUDING CREDiT AGENCIES AND BUREAUS AND OTHER CREDIT GRANTORS) FOR THE PURPOSES OF EVALUATING THE APPLICANT'S ELIGIBILITY FOR SERVICES THAT ARE REQUESTED BY APPLICANT, THE UNDERSIGNED, BY APPLYING FOR SERVICE AND SIGNING THIS APPLICATION, ACKNOWLEDGES AN OBLIGATION TO PAY FOR SERVICES PROVIDED BY CORIX EN ACCORDANCE WITH THIS APPLICATION AND ALL APPLICABLE TERMS AND CONDITIONS AND RATES AND CHARGES AND TO BE BOUND BY AND COMPLY WETH ALL APPLICABLE TERMS AND CONDITIONS AND RATES AND CHARGES AS AMENDED OR REPEALED FROM TIME TO TIME. Date: Signature: _ Printed: Schedule A Regulatory Framework See attached. EXHIBIT H REGULATORY FRAMEWORK FOR DISTRICT ENERGY SYSTEMS BELLINGHAM DOWNTOWN WATERFRONT DISTRICT REGULATORY FRAMEWORK FOR DISTRICT ENERGY UTILITY WHEREAS: The provision of thermal energy is not regulated in Washington State per RCW 80.04.550, the Parties endorsing this Regulatory Framework ("Endorsing Parties") are left to create a framework for a fair and equitable rate system, To that end, the Endorsing Parties intend for this document to set forth the guiding principles and establish a framework for setting and administering a fair and equitable rate structure. The Endorsing Parties intend for this framework to set the foundation to create, operate, maintain and sustain a successful and reliable District Energy Utility ("DEU") in the Waterfront District for customers that provides an environmentally sustainable energy system and a fair rate of return to the DES operator so that the system can be operated and maintained in a sustainable manner commensurate with the Endorsing Parties' goals as detailed herein and in the Master Plan. The Endorsing Parties intend this Regulatory Framework to be a temporary solution until such time as Washington State codifies a system for regulating thermal energy rates. In summary, this Regulatory Framework sets forth an independent review of the rate system on a periodic basis. In essence, the DEU will study and submit rate reiated matters to an independent review panel for review, validation for fairness in line with this Framework, and approval. This Panel will be selected initiaiiy after a competitive selection process by a selection committee formed by the Endorsing Parties. The independent review will be conducted by a neutral and independent Rate Review Pane! with the experience and technical ability to review and rule on the rate structure and resolve any disputes on rate setting in a manner that will give confidence to the DEU's stakeholders, including the rate payers, the DEU operator and the Endorsing Parties. 1. INTRODUCTION 1.1 The Port of Beiiingham ("Port") and the City of Bellingham have approved a Waterfront District Sub-Area Plan 2019 (as may be amended) regarding the development of the Downtown Waterfront District. 1.2 The City of Bellingham's Municipal Code provides that ali new development within the Downtown Waterfront District shall connect to and utilize district specific utilities, such as district energy. 1.3 The Port and Harcourt Bellingham LLC entered into a Master Development Agreement dated May 19, 2015, which provides Harcourt BeHingham LLC the exclusive right to purchase and develop lots within the Downtown Waterfront District. 1.4 Consistent with the City of Beliingham's Municipal Code, the Port entered into an infrastructure Agreement with Corix that contempiates the development of the District Energy Utility (DEU) that will provide Energy Services to residential and commercial customers located in the Downtown Waterfront District. 1.5 Corix will be the exclusive provider of Energy Services to the Downtown Waterfront District. -1- 1.6 Corix has or will enter into District Energy Services Agreements, as weli as Customer Service Agreements, for the connection of buildings and customers to the DEU and for the provision of Energy Services. 1.7 As a "thermal energy system," the DEU is exempt from the regulatory oversight of the Washington Utilities and Transportation Commission pursuant to RCW 80.04.550. Accordingly, as the founders, Corix and the Port of Beilingham have endorsed this initial Framework as the exclusive means by which the Monthly Rates for Energy Services will be evaluated and administered. This Framework will be incorporated into and form part of the District Energy Service Agreements between Corix and Developers, as well as the Master Development Agreement between Corix and Harcourt Beilingham LLC. Corix and Port may, by mutual agreement, amend this Framework from time to time. Any amendments made by Corix and Port shall apply to Developers and Customers and shall be automatically incorporated into their respective agreements with Corix. 1.8 Should Laws change such that the provision Energy Services or systems like the DEU become subject to the authority of the Washington Utilities and Transportation Commission or other regulatory body, Corix and Port will work together in good faith and in a reasonable and timely fashion to transition or amend this Framework, as necessary, to the new regulatory regime, white taking al! reasonable steps to give continued effect to this Framework's terms and conditions, as we!! as those of the Customer Service Agreements and the District Energy Service Agreements, without Customer interruption. 2. THE FRAMEWORK 2.1 This Regulatory Framework will become a schedule or exhibit to each District Energy Service Agreement and Customer Service Agreement and its terms and conditions are incorporated by reference into those agreements making the Framework binding on the parties to those agreements. This Regulatory Framework provides for: (a) the definitions assigned to capitaiized terms throughout the Regulatory Framework (Section 3); (b) the selection and implementation of a Rate Review Pane!, its mandate, and the terms on which it sha!! execute its mandate (Sections 4 through 7); (c) the procedure by which Corix may apply to the Rate Review Panel for changes in Monthly Rates (Section 8); and (d) other principles and terms pursuant to which the Rate Review Panel is bound to administer this regulatory framework. 2.2 This Regulatory Framework shouid be read and interpreted in a way that balances the following objectives: (a) the open and transparent operation of the DEU; (b) the provision of long-term, sustainabie, and reliable Energy Services to each Customer in exchange for cost-of-service based rates; -2- (c) Corix's timely recovery of all reasonable and prudentiy-incurred costs related to the infrastructure development and expansion, the ongoing renewal of the DEU, and the maintenance, operation and administration of the DEU; (d) the opportunity for Corix to earn a fair and reasonable rate of return on its investment in the DEU during the period in which rates will be in effect; (e) the opportunity for Corix to implement strategies for the long-term profitable, sustainabie and efficient operation of the DEU; (f) the Port and City's goals relating to the application of alternative or renewable energy and the reduction of greenhouse gases as outlined in the Master Plan; (g) Some sections of this framework will identify prescribed timelines. Where no such timelines are provided, it should be assumed that time is of the essence. 2.3 To the extent that any of the processes, guidelines or procedures described in this Framework prove to be unworkable, unduly cumbersome or costly, or fai! to provide sufficient detail, information or transparency, the Rate Review Panel may, outside the context of a particular Rate Review, facilitate negotiations between Corix, and Customers to develop a mutually acceptable alternative that aligns with the objectives in Section 2.2 above. 3. DEFINITIONS 3.1 Capitalized terms in the Regulatory Framework shal! have the meanings set forth below. "Annual Report" means the report to be prepared and submitted by Corix in accordance with Section 7. "Annual Revenue Requirement" means, in respect of a given year, the amount of revenue required for Corix to recover its Cost of Service; to provide for the depreciation and amortization of the DEU assets, to cover all costs associated with financing the DEU, and to earn its Return on Equity, calcuiated in accordance with Section 17. "Asset Management Fee" has the meaning given to it in Section 22.2. "Basic Charges" means the portion of the Customer Service Charges that is attributable to non-fue! and non-consumable costs. "Benchmark Utility" means Puget Sound Energy in the State of Washington or, where the relevant data for Puget Sound Energy is not available, another comparable publicly- regulated major energy utility in the State of Washington. "City" means the City of BellJngham. "Connection Fee" means an amount payable by the Developer to Corix at an agreed upon time but, in any case, before the connection of a Building to the DEL). "Corix" means Corix Utility Systems (Washington) Inc. -3- "Corix Debt Component" means, in respect Corix's investment in the DEU in a given year, the lesser of 60 percent and the then-approved debt component of rate base for the Benchmark Utility. "Corix Equity Component" means, in respect of Corix's investment in the DEU in a given year, the greater of 40 percent and the then-approved equity component of rate base for the Benchmark Utility. "Cost of Service" means ail costs incurred by Corix in the provision of Energy Services to Customers, and includes without limitation all directly and indirectly incurred fuel and consumables costs, operating and maintenance costs including labor, generai, administrative, shared service and overhead costs, all non-income tax fees, levies and charges, and where applicable any Asset Management Fees. "Customer" means a party (other than Corix) to a Customer Service Agreement. "Customer Service Charges" means the fees payable by Customers in exchange for Energy Services which includes Monthly Rates, as well as any fixed or periodic charges chargeable by Corix to Customers now or in the future in accordance with this Framework, the Customer Service Agreement, or Law and which may include without limitation fate payment charges, periodic fees, and levies which are described in the Customer Service Agreement. The indicative Customer Service Charges for years 1-5 are attached in Exhibit 1, and in any case are subject to future Rate Applications in accordance with this Framework. "Customer Service Agreement" means the agreement between Corix and a Customer for the supply of Energy Services comprised of an appiication for service, the terms and conditions of service, and this Framework. "DEU" means the utility and associated infrastructure owned and operated by Corix that provides Energy Services to Customers located in the Downtown Waterfront District. "DEU Regulatory Framework" or "Framework" means this Reguiatory Framework for District Energy Services applicable to the provision of Energy Services in the Downtown Waterfront District pursuant to each District Energy Service Agreement and Customer Service Agreement. "Developer" means Harcourt Bellingham LLC or any other person or entity to whom the Port transfers or has transferred iand or land rights within the Downtown Waterfront District for the purpose of development or other use. "District Energy Service Agreement" means an agreement between Corix and a Developer in respect of the connection of a Buiiding to the Infrastructure for the purpose of enabling the suppiy of Energy Services to Customers. "Downtown Waterfront District" means the former Georgia-Pacific West industrial site south of Roeder Avenue and east of the Whatcom Waterway which includes approximately 18.8 acres of property designated for mixed-use development. "Energy Charges" means the portion of Customer Service Charges that is attributable to fue! and the cost of other consumables used in the operation of the DEU. -4- "Energy Cost Reconciliation Account(s)" means the mechanism for tracking any accumulated balance of unrecovered or over-recovered Energy Charges from prior years. "Energy Services" means the provision of thermal energy for space heating, domestic hot water, and cooling (where applicable) through the DEU. "Final Decision" means the written decision issued by the Panel En respect of a Rate Application. "Financing Cost" means, for a given year, the aggregate amount of interest expense (expressed as a dollar amount) Corix is deemed to incur on the Corix Debt Component, calculated in accordance with Section 19. "Monthly Rates" means an amount equal to the Annual Revenue Requirement, adjusted for any temporary deferral of a portion of the Annual Revenue Requirement then in place in accordance with Section 21, apportioned evenly on a monthly basis for that year charged to Customers En accordance with Section 17. "Municipal Code" means the Bellingham Municipal Code Section 20.37.440(6) as currently enacted or hereinafter modified. "Panel Member" means any one of the three individuals selected to form the Panel. "Pro Forma Forecast" is an indicative depiction of the cost of service forecast inciuding estimated Rate Base, Annual Revenue Requirement, and Customer Service Charges for the upcoming 20 years of DEU operations. "Prudent Utility Practice" means with respect to the engineering, design, construction, installation, operation, maintenance and repair of the Infrastructure and the provision of the DEU Services: (a) any of the practices, methods and acts, which, in the exercise of reasonable judgment in the light of the facts known, or facts which shouid reasonably have ought to be known, at the time the decision was made, including, but not limited to, the practices, methods and acts engaged En or approved by responsible and reputable owners and operators of district energy systems, having regard to size, age, location and intended use; and (b) exercising that degree of skill, care, diligence, prudence and foresight that wouid reasonably and ordinarily be expected from a skilled and experienced district energy utility operator engaged in a similar type of undertaking under similar circumstances. "Rate Application" means a package of documents and other collected information submitted by Corix in support of a proposed change to the Customer Service Charges in accordance with Section 8. "Rate Base" means (a) the capita! cost (inciuding the costs of all related materials, suppiies, equipment, faciiities and an allowance for funds used during construction, but excluding any -5- construction work in progress) necessary to design, construct and maintain the DEU, including all project management costs and capitalized administrative and overhead costs, (b) plus, any outstanding balance amounts in the Energy Cost Reconciiiation Account(s) and the Rate Stabilization Account(s), (c) minus, the accumulated depreciation and amortization that has been reflected in the Monthly Rates paid by Customers, (d) pius, a provision for current working capital of not less than 12.5 percent of the annual Operating and Maintenance Costs. "Rate Hearing" means the proceeding to be conducted by the Panel in response to Corix's Rate Application as described in Section 10.2(e). "Rate Review" means the processing of a Rate Application and the issuance of a Finai Decision (and may include a Rate Hearing) as outlined in Sections 5 through 15, "Rate Review Panel" or "Panel" means the group procured pursuant to Section 4. "Rate Stabilization Account(s)" means the mechanism for tracking any accumulated balance of unrecovered Annual Revenue Requirement from prior years (excluding any amounts tracked by Energy Cost Recovery Account(s)). "Respondent" means any Customer or the City when that party has filed a notice to participate in a Rate Review in accordance with Section 9, "Respondent Submission" means a Respondent's written submission outiining the Respondent's specific issues or concerns with Corix's Rate Application together with supporting information, narratives, schedules and exhibits. "Return on Equity Amount" or "ROE Amount" means, in a given year, the annual return on the Corix Equity Component, expressed as a dollar amount, supporting Corix's investment En the Rate Base and that is calculated in accordance with Section 18. "Review Schedule" means the schedule of events and deadlines issued by the Panel in respect of a Rate Review. "Terms and Conditions" means the Terms and Conditions of Energy Service forming part of the Customer Service Agreement. "Truncated Review Schedule" means the schedule of events and deadlines applicable to a Rate Review where no Respondents have registered. 4. DEU RATE REVIEW PANEL MEMBERS 4.1 The Port and Corix will establish a joint working group to select the Panel. The joint working group ("Selection Panel") will have two representatives from Corix, and two from the Port of Beilingham. Corix will engage the Panel. 4.2 The Rate Review Panel wil! consist of three Panel Members. -6- 4.3 Preference will be given to residents of the State of Washington. 4.4 The Rate Review Panel Members will be selected pursuant to a request for expressions of interest and statements of qualifications process administered by Corix with the Port's staff participation. The Selection Panel will seiect the three Panel Members and Corix wili contract with each Panei Member. !f the parties cannot agree on the Panel Members in a reasonable time, the Port and Corix Selection Panel members will defer the decision and any needed information to the Executive Director or other executive leader as selected by the Executive Director from the Port of Bellingham and the relevant Business Unit President or other executive leader from Corix for finai selection. 4.5 The selected Rate Review Panel Members may be appointed for a three-year term, renewable for a second term of up to three years. In order to benefit from consistency and historical knowledge, Corix and Port will endeavor to engage Rate Review Panei Members for terms of different lengths, so as to stagger the expiration of their respective terms and avoid having a completely novice panel. When engaging new Rate Review Panel Members, Corix and the Port wiil use this same process to seiect new Rate Review Panel Members. 4.6 The Panel Members should have either individually, or among them, expertise to ensure a balanced review process including substantial experience in one or more of the following areas: (a) utility regulation and ratemaking (with a preference for, but not limited to, energy utilities); (b) financial forecasting and modelling; (c) administrative or regulatory law/process and decision making; (d) public policy (particularly energy and utility policy); (e) district energy system design, implementation and operation; and (f) urban planning and development. 4.7 Each Panel Member should be able to carry out the work of the Panel objectively, have the demonstrated ability to make complex decisions that equitably balance the interests of various stakeholders, and be perceived as a credible, objective expert by stakeholders of the DEU. 4.8 !n the interest of avoiding any conflicts of interest, Panel Members should not be: (a) an empioyee of CorEx, the City, or the Port of Bellingham; (b) an elected official; (c) a customer of the DEU; (d) a resident or occupant of the Downtown Waterfront District, or an owner of real property there; -7- (e) an empioyee or major shareholder of a competitor utility; (f) in any position or role that would be perceived as being in a conflict of interest in relation to the responsibiiities described in this Chapter. 5. DEU RATE REVIEW PANEL MANDATE 5.1 The Panel will be responsible for: (a) reviewing Corix's Annual Report and ensuring the proposed Monthly Rates outlined in the Annual Report for the upcoming calendar year are consistent with those outlined in the then-current Pro Forma Forecast; (b) conducting a Rate Review where Corix's Monthly Rates exceed what is otherwise permitted by this Framework; (c) hearing, deciding or otherwise resoiving disputes that arise between CorEx and a Customer in respect of the Terms and Conditions; and (d) issuing a final determination on matters within its cognizance hereunder. 5.2 The Panel will be bound: (a) to fulfill its mandate in accordance with the Procedure described in Section 5; (b) to issue decisions that adhere to the principles and procedures set out in this Framework; and (c) to otherwise act in a manner that is consistent with the terms and spirit of this Framework. 5.3 The Panel has no authority to regulate or otherwise rule on disputes or matters arising from the Customer Service Agreements or District Energy Service Agreements. 5.4 Corix and the Port intend that the Rate Review Pane! is a private entity that is not a functionally equivalent government entity subject to open public meeting or public records laws. The Rate Review Panei is comprised of private individuals and it exists to provide a transparent and fair process for determining whether DEU Customers are being charged equitable rates while sti!! ensuring Corix is able to earn a fair and reasonable rate of return on its investment in the DEU. 6. PROCEDURE FOR RATE REVIEW: GENERAL 6.1 The Panel will conduct all Rate Reviews in accordance with the procedures and principles in this framework. Sections 6 through 14 establish the steps to administering Corix's Rate Application from the time it is filed until the Panel issues a Finai Decision. 6.2 In addition to the requirements of this Chapter and any applicable laws, the Panel (acting reasonably) may make rules for the length, format and content of submissions made in respect of a Rate Review, as well as the means by which materials will be circulated and shared among parties. 6.3 To the extent practical, the Pane! shall administer Rate Reviews paperless, relying on e- mail or other digital means of communication and record-sharing. 7. PROCEDURE FOR RATE REVIEW: ANNUAL REPORT 7.1 Corix will file its Annual Report with the Panel by May 15 of each calendar year. 7.2 At the same time as it files the Annual Report with the Panel, Corix will make available digitai copies of its report to the Customers. 7.3 The Annual Report, will provide at a minimum, the following information for the prior year ended December 31st: (a) aii actual expenses; (b) al! revenue requirements; (c) Energy Cost Reconciliation Account and Rate Stabilization Account balances; (d) the capital expenditure status; (e) the Rate Base amount, induding the in-service date and any addition or deduction of capital expenditures; (f) the Financing Cost and ROE Amount, calcuiated based on the balance of prior year-end Rate Base amount balance and prorated current year additions at the time of monthly reporting; and (g) a revised forward test year Pro Forma Forecast. 7.4 Within 25 calendar days of receipt of the Annual Report, subject to any other provisions in this Framework, the Panel may issue information requests to Corix to clarify information in its Annual Report or to provide reasonable supplementary information, Corix wili have 20 calendar days to respond to the Panel's information requests. 7.5 Once the Panel is satisfied that CorEx has reasonably satisfied the Panel's information requests, the Panel will accept the Annual Report, 7.6 The initial Pro Forma Forecast and each subsequent revision will be based on Corix's reasonable interpretation of the internal and external factors affecting DEU operation. The revised Pro Forma Forecast included with Corix's Annual Report will be deemed the then- current Pro Forma Forecast. 8. PROCEDURE FOR RATE REVIEW 8.1 If Corix is seeking a change to the Monthly Rate that exceeds four percent (4%) in any given year, Corix will file a Rate Application along with its Annual Report and notify Customers about the Rate Application filing. The Rate Application must contain the following information: (a) an executive summary of the approval requested in the Final Decision; (b) a statement of facts explaining the reasons for seeking changes to the Monthly Rate or related changes and a listing of the revisions to the Pro Forma Forecast; (c) narratives in support of the relief requested in the Final Decision, including how classes of customers are treated equitabiy; (d) all exhibits, graphs, schedules, or other information reasonably necessary to support the Rate Application; and (e) Such other reasonably related information as the Pane) may require. 8.2 The notice to Customers referenced in the prior section shall include procedural information (such as submission timelines and requirements) for the benefit of Customers wishing to participate. 8.3 Upon receipt of Corix's Rate Application, the Pane! must conduct a Rate Review. 8.4 Corix has the burden of proof in Rate Reviews, which shall be by a preponderance of the evidence standard, to prove that the proposais in its Rate Application are fair, just and reasonable in light of Prudent Utility Practice, the objectives in Section 2.2, the principles in Sections 17 through 23, and any other provision of this Framework. 9. PROCEDURE FOR RATE REVIEW: RESPONDENTS 9.1 No later than 20 calendar days after the date on which Corix files its RateAppUcation, any existing Customer may file with the Panel a written notice of its intention to participate as a Respondent in the Rate Review of Corix's Rate Application. Only existing Customers have standing to participate as a Respondent in a Rate Review, No other Person or entity may participate as a Respondent. 9.2 Respondents are expected to participate activeiy, responsibly and respectfuiiy for the duration of the Rate Review. 9.3 The Panel will not accept any submissions from any Customer if the party in question has not timely filed a written notice. 9.4 Where no Respondents have registered with the Panel by the end of the 20-day period, the 120-day timeline in Section 10.2 does not apply, instead, the Panel will establish a Truncated Review Schedule and will issue its Final Decision within 60 days of the date on which Corix filed its Rate Appiication. 10. RATE REVIEW SCHEDULE 10.1 The Panei shall issue to Corix and Respondents a Review Scheduie at the earliest opportunity. 10.2 Except in circumstances where Section 9.4 applies or as may be otherwise agreed to by Corix and Respondents, the Pane! must issue its Final Decision within 120 calendar days of the day on which Corix filed its Rate Application. During this 120-day period, the Panel wil! administer a process that includes or accommodates the following: -10- (a) Information Requests. The Panel and any Respondents shall have the opportunity to issue reasonable information requests related to the proposals of Corix's Rate Application. Unless there are extenuating circumstances, the Panel's Review Schedule should provide for no more than two rounds of information requests from the Panel and Respondents, information requests must seek to elicit information on the evidentiary record that is relevant to the issues to be considered by the Panel in the Rate Review and that is in the possession of Corix. (b) Respondent Submission. Following Corix's response to the information requests described En Section 10.2(a), the Respondents must file with the Pane! their respective Respondent Submissions. (c) Corix Submission. Corix shall have a reasonable opportunity to respond to the Respondent Submissions and to provide final clarification of any information in its Annual Report, Rate Application or its responses to Information Requests. (d) Amendments to Rate Appiication. Corix may amend its Rate Application at any time prior to the completion of the information requests provided, however, that if Corix makes a significant change to its Rate Application in the determination of the Panel, the Panel may elect to extend the 120-day period for issuing its Final Decision for a period not exceeding 10 calendar days to allow for additional information requests. (e) Rate Hearing. If the Panel believes it necessary for the fair, transparent and orderly determination of a Rate Application, the Panei may order a Rate Hearing. in such cases: (i) The Panel shall specify a time and date for the conduct of a Rate Hearing. (ii) The Panel shall accommodate in-person and virtual participation. (iii) The issues to be determined shall be those issues identified in the Respondents' Submission or raised by the Pane!. (iv) Each party shall present its position and supporting information on each of the outstanding issues before the Pane! in turn. (v) Each party shall have the opportunity to provide rebuttal information, in addition to providing optional brief opening and dosing statements. (vi) Employees and other representatives of Corix and, where the Panel deems it reasonable and beneficial to the Rate Hearing, the Respondents shall be made available for questions by the Panel and the other parties. Such witnesses may appear virtually. 11. PRESUMPTION OF REASONABLENESS TO UNCONTESTED MATTERS 11.1 The Panei shall extend a presumption of reasonableness to any uncontested Rate Application made by Corix. Should the Panel determine that any uncontested Rate AppSications are not reasonable and issue a Fina! Decision to the contrary, the Panel shali support its Final Decision with a detailed record of decision, indicating its rationale -11- including such items as the contractual terms and applicable principies relied upon to arrive at the alternative ruling. 12. CONFIDENTIAL MATTERS 12.1 If a party wishes to keep confidential any information in a document filed with the Panel, in addition to the document, at the time of filing, the party must file: (a) a request that all or any part of the document be held in confidence which must: (i) briefly describe the nature of the information in the document and the reasons for the request for confidentiaiity, including the specific harm that could reasonably be expected to result if the document was made publiciy available; and (ii) indicate whether all or only a part of the document is the subject of the request; and (b) a proposed redacted version of the document that the Pane! may make publicly available, where possibie. 12.2 The party requesting confidentiality bears the onus of establishing why the information shouicf be treated as confidential by the Panel. 12.3 The request for confidentiality will be a matter of public record, unless the Pane! directs otherwise, 12.4 The Panel may, with or without further process, grant a request for confidentiality on any terms it considers appropriate. 12.5 Where the Panel holds a hearing to consider the request for confidentiality, the Pane! may direct that the hearing be held in the absence of the public. 12.6 in determining whether the nature of the information or documents require a confidentiaiity direction, the Panel will have regard to matters that it considers relevant, including by way of example and not limitation: (a) whether the disclosure of the information could reasonably be expected to result in: (i) undue materiai financial loss or gain to a person; (ii) harm or prejudice to that person's competitive or negotiating position; or (iii) harm to individual or public safety or to the environment; (b) whether the information is personal, financial, commercial, scientific, labor relations or technical information that is confidential and consistently treated as confidential by the person; (c) whether the person's interest in confidentiality outweighs the public interest in the disclosure of the information or documents in the hearing; -12- (d) whether the person submitting the document has any legal obligation to maintain confidentiality; and (e) whether it is practicable to hold the hearing in a manner that is open to the public. 12.7 If accepted by the Panel as confidential, the documents or the portions thereof wiil not be made publicly available. 12.8 If the document is accepted as confidential, the Panel may make the proposed redacted version of the confidential document publicly available or may adjust or require the filing party to change the redaction in accordance with what it deems necessary for transparency and public interest. 12.9 A party may object to a request for confidentiality by filing an objection with reasons in a timeiy manner. The Panel wiii give the party daiming confidentiaiity, together with a person who may be affected by disclosure, an opportunity to reply to an objection. 12.10 If a document is filed confidentially and the request for confidentiality is denied, the Panel may allow the person that submitted the documents an opportunity to make submissions as to what should be done with the document, such as withdrawing the document. 13. RATE REVIEW COSTS 13.1 Each party shall bear their own costs of participating En the Rate Review. 13.2 Corix shall cover the prudently incurred administrative costs of the Rate Review and shall be entitled to recover such costs through its Annual Revenue Requirement calculation. Allowable administrative costs may be set out in more detail in Corix's engagement agreement with the Rate Review Panel Members. 14. FINAL DECISION 14.1 After due consideration and within the time provided for in Section 10.2, the Panel shall issue the Final Decision in writing. The Final Decision shall resolve all outstanding issues raised by the parties and, to the extent raised, shall approve new Customer Services Charges for the DEU. 14.2 The Panel's decision shall be based upon applicable provisions of the Customer Service Agreement and this Framework. Where, in the objective opinion of the Panel, a matter of principle has not been conclusively addressed by this Framework, the Panel may consult in its decision-making the rules, guidelines and regulatory principies adopted by or governing the Washington Utilities and Transportation Commission. 14.3 The Final Decision shall be final and binding on the parties untii the next permanent change to the Customer Service Charges. 15. EFFECTIVE DATE OF FINAL RATE DECISION 15.1 The Finai Decision shall determine, and include in the Final Decision, the effective date of any new Customer Service Charges based on the requests in the Rate Application as of the date the Pane! issues the Final Decision. -13- 16. EXPANSIONS 16.1 Any expansion of the DEL) Customer base beyond the current Downtown Waterfront District will be at Corix's discretion. Corix will review any such proposals with Developers, the Port and other interested parties. Notwithstanding the foregoing, Corix must submit a proposal to the Panel for approval that reasonably demonstrates to the Panel that (1 ) there is no negative financial impact to the rates of existing Customers; and (2) that the proposed expansion is consistent with the objectives in Section 2.2; the Port and the City's objectives in the Master Plan; the principles in Sections 17 through 23; and Prudent Utility Practice, in reviewing and issuing a decision in respect of the proposal, the Rate Review Panel wi!l follow a similar process as is required for its review of Annual Reports (as set out in Section 7). 17. ANNUAL REVENUE REQUIREMENT 17.1 Corix is entitled to recover from Customers its Annual Revenue Requirement. 17.2 Corix will recover the Annual Revenue Requirement by charging Customers Monthly Rates. 17.3 The Annual Revenue Requirement is calculated as the sum of: (a) the Cost of Service; (b) depreciation and amortization charges as described in Articie 4 of this Chapter; (c) the Financing Cost; (d) all applicable federal, state and iocal income and other taxes, fees and levies that are incremental to those already included in the Cost of Service; and (e) the ROE Amount. 17.4 The Cost of Service for a particuiaryearwili be reduced by the amount of any Connection Fee received by Corix from a Developer in that year. 17.5 Corix must appiy Prudent Utility Practice in operating and maintaining the DEL) including, without iimitation, when incurring operating costs and expenses in respect of the DEU. 17.6 Prior to calculating Monthly Rates, the Annual Revenue Requirement will be apportioned equitably between the following rate categories, which may be added to or subtracted from over time as required in consideration of unforeseen changes in the Customers and the Energy Services provided to them: (a) Residential Heating Energy Charge; (b) Commercial Heating Energy Charge; (c) Residentiai Cooling Energy Charge; (d) Commercial Cooling Energy Charge; -14- (e) Residential Heating Basic Charge; (f) Commercial Heating Basic Charge; (g) Residential Cooling Basic Charge; and (h) Commercial Cooling Basic Charge. 17.7 Energy Charges will be charged in accordance with each Customer's metered energy use and will be expressed as a dollar per kilowatt hour rate. 17.8 Basic charges wili be charged in accordance with each Customer's building floor space as noted in the Customer Service Agreement and will be expressed as a dollar per square foot. 18. CALCULATION OF RETURN ON EQUITY OR ROE AMOUNT 18.1 The ROE Amount for a given year shall be calculated by multiplying the Corix Equity Component by the greater of (a) 10 percent or (b) the sum of the approved return on equity amount then in place for the Benchmark Utility and 1 00 basis points. 18.2 The addition of the 100 basis points to the Benchmark Utility's ROE is understood to be a reasonable measure in recognition of the DEU's small size and customer base relative to the Benchmark Utility and of the fact the DEU is a greenfield system. 19. FINANCING COST 19.1 The Financing Cost for a given year shall be calculated by multiplying the Corix Debt Component by an interest rate that reflects a commerciaily appropriate weighted-average interest rate for a comparable thermal energy utility. 20. DEPRECIATION AND AMORTIZATION 20.1 Depreciation and amortization charges shall reflect standard depreciation and amortization rates for each major asset class in accordance with generally accepted accounting principles appiicable to regulated energy utilities of similar size in the State of Washington. 20.2 if a Developer makes capita! contributions toward the DEU, that portion of depreciation and amortization attributable to the value of such contribution will be excluded from the Annual Revenue Requirement. 21. ENERGY COST RECONCILIATION AND REVENUE STABILIZATION ACCOUNTS 21.1 It is understood that Corix has a right to earn a fair and reasonable return on its investment in the DEU. Notwithstanding the foregoing, it may be reasonable for Corix to defer the recovery of a limited portion of the Annual Revenue Requirement relating to one or more of the rate categories in Section 17.6 where doing so helps ensure Monthly Rates remain economical and affordable for the DEU's then current Customers. Where Corix defers recovery of a portion of Energy Charges for the upcoming year, it will recover those charges no later than the year immediately following the upcoming year. Where Corix -15- defers recovery of a portion of Basic Charges, St will recover those charges no later than the second year following the upcoming year. 21.2 The deferred portion(s) oftheAnnuai Revenue Requirement relating to one or more of the rate categories En Section 17.6 will be recorded in one or more Energy Cost Reconciliation Account(s) (ECRA(s)) in the case of Energy Charges and in one or more Revenue Stabilization Account(s) (RSA(s)) En the case of Basic Charges and will be recovered through Monthly Rates in a subsequent year as set out in Section 8. 21.3 No portion of the Annual Revenue Requirement related to Energy Charges that has been deferred in accordance with Section 21 may remain unrecovered for longer than six months from the end of the year in which it was first calcuiated for collection as part of Monthly Rates. 21.4 No portion of the Annual Revenue Requirement related to Basic Charges that has been deferred in accordance with Section 21 may remain unrecovered for longer than 18 months from the end of the year in which it was first calculated for collection as part of Monthly Rates. 21.5 The aggregate value allocated to ECRAs and RSAs, as measured at the end of each year, shall not exceed 10 percent of the net book value of the DEU as calculated at that same time. 21.6 Corix will set Monthly Rates for each upcoming year in a manner that is reasonably expected to maintain the aggregate ECRAs and RSAs within the parameters and limitations described in previous sections, notwithstanding that a Deveioper may request (at any time prior to the connection of the last Customer) to make a refundable or non- refundable contribution, as a lump sum, a rate rider, or a combination of these, to Corix in order to reduce any Monthly Rate increase described by Corix in its Annual Report for the upcoming year. Any such request by Developers shall not be unreasonably rejected by CorEx. 21.7 In no case shall a capita! contribution by a Developer, whether refundable or non- refundable, be used to reduce the upcoming year's Monthly Rate increase expressed as a percentage to below the appropriate Consumer Price Index percentage change expected for the upcoming year. 22. GRANTS AND CAPITAL CONTRIBUTIONS 22.1 CorEx, the Port or Developers may secure infrastructure grants from Governmental Authorities to finance part of the capital cost of the DEU. In addition: (a) a Developer may (either on its own or through the use of third party grants or financing or any combination thereof) contribute capita! to finance some or all of the cost of the DEU in accordance with the terms of the District Energy Services Agreement; and (b) the Port may contribute capita! to finance some or ail of the costs of the DEU in accordance with the terms of the Infrastructure Agreement. .16- 22.2 Where any party makes or secures a contribution described in Section 22.1, Corix will be entitled to receive from its Customers (through Monthly Rates) an annual asset management fee of 5 percent of the amount of the contribution ("Asset Management Fee") which shall be in addition to the Cost of Service for the portions of the DEL) that are financed by such contributions. 23. CONNECTION FEE 23.1 In accordance with the infrastructure Agreement, the Deveiopers shall paytoCorix, a one- time Connection Fee for connections to each of the heating and cooling components of the DEU. For ciarity, the connection Fee wi!! be calculated and charged twice: once in respect of heating and once in respect of cooiing, The Connection Fee will be calculated as a dollar amount per square foot of the Building and adjusted on an annual basis by the greater of 2% and the general Consumer Price Index applicable to Whatcom County (or King County if data for Whatcom County is unavailable), or as otherwise agreed upon between CorEx and the Developer. -17- p pS G^ o i cfl ro Iq m 0) EXHIBIT I DISCLOSURES Per Section 9.1(b), Representations and Warranties of Port regarding litigation, the Port discloses the following relevant litigation matters. These matters are related to Agreed Orders with the Washington State Department of Ecology for the environmental remediation of sites related to the Agreement. These matters have been disclosed to Corix during the Agreement's negotiations and full documents previously provided to Corix. The Contaminated Materials Management Plans for both are exhibits to this Agreement. a. Central Waterfront Site, Agreed Order No. DE 3441, as amended. b. Georgia Pacific West Site, Chlor Alkali Remedial Action Unit, Agreed Order No. DE 6834, as amended EXHIBIT J CMMP for Chlor-Alkali RAU (to be added post-execution)