Contract analysis

I. Introduction and Purpose We write on behalf of our client, the Cascadia State Infrastructure Authority ("CSIA"), a Washington state governmental authority created under Chapter 43.155A RCW, in its capacity as the fifty-five percent (55%) member of Columbia Basin Water Treatment Partners, LLC ("CBWTP"), a Washington limited liability company (EIN: 88-3421076; WA UBI: 604-892-315). This letter is in response to matt

II. Factual Background A. The JV Agreement and Capital Structure CSIA and Pinnacle formed CBWTP on November 2, 2021, as a public-private joint venture for the purpose of designing, constructing, and operating the Thurston County Advanced Water Treatment Facility (the "Facility"). The Facility is a twelve (12) million gallon-per-day advanced water treatment plant to be located at 2480 Capitol Boulevard SE, Tumwater, T

III. Pinnacle's Force Majeure Claim Is Without Merit CSIA has carefully reviewed the WAG Letter and the arguments asserted therein. For the reasons set forth below, Pinnacle's force majeure claim fails under the express terms of the JV Agreement, under the relevant factual circumstances, and under controlling principles of Washington law. A. The Contractual Text of §11.4 Expressly Excludes Governmental Permitting Del

Section 4.3 of the JV Agreement allocates responsibility for obtaining all governmental permits, approvals, and authorizations necessary for the design, construction, and operation of the Facility to CBWTP as the JV Entity. The JV Agreement further provides that Pinnacle was designated as the Manager of CBWTP, vested with day-to-day operational authority over the joint venture and responsible for executing the JV Ent

IV. CSIA's Default Notice Remains in Full Force and Effect In light of the foregoing, CSIA reaffirms that the formal default notice issued by this firm on April 14, 2023, pursuant to Section 8.2 of the JV Agreement, remains in full force and effect. Nothing in the WAG Letter, nor any argument advanced therein, alters or diminishes the validity or operative effect of the default notice. The sixty (60) day cure period

V. Additional Consequences of Continued Default We draw Pinnacle's attention to several additional consequences of its continued default that underscore the urgency of this matter. First, the Pacific Cascade Bank, N.A. Twenty-Seven Million Dollar ($27,000,000) project finance credit facility commitment letter (reference PCB-PF-2022-0417) has an expiration date of August 15, 2023. As you are aware, the commitment lett

VI. Reservation of Rights CSIA expressly reserves all of its rights and remedies under the JV Agreement, under Washington law (including, without limitation, the Washington Limited Liability Company Act, Chapter 25.15 RCW), and under all other applicable law. Without limiting the generality of the foregoing, CSIA specifically reserves its right to pursue: (a) the default remedies set forth in Section 8.2 of the JV Ag

VII. Demand for Immediate Cure CSIA hereby demands that Pinnacle immediately cure its default by funding the Four Million Fifty Thousand Dollar ($4,050,000) Second Tranche capital contribution to CBWTP's operating account at Pacific Cascade Bank, N.A. (600 University Street, Suite 800, Seattle, WA 98101), in accordance with the wire instructions previously provided in the March 1, 2023 capital call notice. Time is of