Contract analysis

Section 1.1 — Defined Terms. As used in this Agreement, the following terms shall have the meanings set forth below. Capitalized terms used but not otherwise defined in this Agreement shall have the meanings ascribed to them in the Recitals, which are incorporated into and made a part of this Agreement. (a) "Agreement" means this Permanent Easement Agreement, including all exhibits and attachments hereto, as the same

Section 2.1 — Easement Grant. For and in consideration of the sum of Three Hundred Fifteen Thousand Dollars ($315,000), payable as set forth in Article 5, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Grantor hereby grants, conveys, and warrants to Grantee a permanent, non-exclusive easement in, on, over, under, across, and through the Easement Area for the p

Section 2.2 — Legal Description. The Easement Area is more particularly described in the metes-and-bounds legal description attached hereto as Exhibit B and depicted on the Easement Plat attached hereto as Exhibit A, both of which were prepared by Ironclad Surveying & Land Services LLC, under the supervision of Karen Whitfield, PLS. Exhibits A and B are incorporated into this Agreement by this reference. In the event

Section 2.3 — Title Insurance. Grantee shall, at Grantee's sole cost and expense, obtain an owner's easement title insurance policy from Cascade Basin Title Company (title officer: Diane Ashworth), located at 119 East Magnolia Street, Bellingham, WA 98225, insuring Grantee's easement interest in the Easement Area. The title insurance policy shall be in an amount not less than the easement compensation of Three Hundre

ARTICLE 3 — PERMITTED USES AND PURPOSE

Section 3.1 — Pump Station Construction. Grantee shall have the right to design, construct, install, and commission PS-3 and all related Improvements within the Easement Area, including without limitation the construction of foundations, wet wells, dry wells, mechanical and electrical buildings, emergency generators, control panels and supervisory control and data acquisition ("SCADA") equipment, perimeter fencing, p

Section 3.2 — Operation and Maintenance. Grantee shall have the right, at all times and in perpetuity, to operate, maintain, monitor, inspect, repair, replace, upgrade, modify, and reconstruct all Improvements within the Easement Area. Without limiting the generality of the foregoing, Grantee shall have the right to install, operate, and maintain utility connections within the Easement Area, including electrical serv

Section 3.3 — Access. (a) General Access. Grantee shall have the right of ingress and egress to and from the Easement Area over and across Grantor's Property via the most direct practicable route to the nearest public road, which is Hannegan Road, including the right to construct and maintain a gravel or paved access road within the Easement Area. Grantee shall use reasonable efforts to minimize disruption to Grantor

Section 3.4 — Pipeline Interconnection. Grantee shall have the right to connect PS-3 to the force-main pipeline network, consisting of twenty-four-inch (24-inch) and thirty-six-inch (36-inch) HDPE force-main pipelines, at the boundary of the Easement Area. The pipeline corridor easement rights and obligations beyond the boundaries of the Easement Area are addressed in a separate Pipeline Corridor Easement Agreement b

Section 3.5 — Ancillary Rights. In addition to the rights specifically enumerated in Sections 3.1 through 3.4, Grantee shall have the right to install and maintain within the Easement Area all ancillary features necessary or appropriate in connection with the construction, operation, and maintenance of PS-3, including without limitation stormwater management features (including detention basins, swales, and outfall s

ARTICLE 4 — RESERVATION OF GRANTOR'S RIGHTS

Section 4.1 — Retained Use of Grantor's Property. Grantor retains full right to use and enjoy all portions of Grantor's Property that are located outside the Easement Area for all lawful purposes, including without limitation the continuation of Grantor's dairy farming operations, grazing, cultivation, and all other agricultural uses. Nothing in this Agreement shall be construed to restrict Grantor's use of those por

Section 4.2 — Agricultural Use Within Easement Area. Following completion of initial construction of PS-3, Grantor may graze livestock or conduct agricultural activities, including mowing and forage harvest, within those portions of the Easement Area that are not occupied by Improvements, provided that such use does not interfere with, obstruct, or impair Grantee's operations, access, maintenance activities, or Impro

Section 4.3 — No Encumbrance. Grantor shall not grant any easement, license, right-of-way, lien, mortgage, deed of trust, or other encumbrance upon the Easement Area that would interfere with or be inconsistent with Grantee's rights under this Agreement without Grantee's prior written consent. Any encumbrance granted by Grantor upon the Easement Area in violation of this Section shall be subordinate to the easement g

ARTICLE 5 — COMPENSATION AND PAYMENT

Section 5.1 — Easement Compensation. The total compensation payable by Grantee to Grantor for the permanent easement interest granted herein is Three Hundred Fifteen Thousand Dollars ($315,000). This amount represents the full appraised fair market value of the permanent easement interest as determined by Northwind Valuation Group LLC (Jocelyn Trueblood, MAI) in an appraisal report dated March 14, 2025, prepared in a

Section 5.2 — Payment Terms. Payment of the easement compensation shall be made by wire transfer of immediately available funds or by cashier's check payable to Grantor, or as otherwise directed by Grantor in a written payment instruction delivered to Grantee not less than five (5) business days prior to the anticipated recording date. Payment shall be made upon the recording of this Agreement with the Whatcom County

Section 5.3 — Tax Responsibility. Grantor shall be solely responsible for any federal, state, or local income tax consequences arising from or related to the compensation received by Grantor under this Agreement. Grantor's federal Employer Identification Number (EIN) is 91-2198403. Grantee's federal Employer Identification Number (EIN) is 91-2034781. Grantee shall issue IRS Form 1099-S or such other tax reporting for

Section 5.4 — No Additional Compensation. The compensation set forth in this Article constitutes full, complete, and final payment for the permanent easement interest granted herein, including compensation for the value of the easement interest, any diminution in value of the remainder of Grantor's Property resulting from the easement, and all other elements of just compensation. Notwithstanding the foregoing, nothin

ARTICLE 6 — TERM AND TERMINATION

Section 6.1 — Term. The easement granted herein is permanent and shall run with the land in perpetuity. This Agreement shall be binding upon and shall inure to the benefit of the parties and their respective successors, heirs, assigns, and legal representatives. The easement shall continue in full force and effect regardless of any change in ownership of Grantor's Property or any reorganization, merger, or change in

Section 6.2 — Abandonment. If Grantee permanently ceases to use the Easement Area for pump station purposes and determines, in its sole discretion, that the Easement Area is no longer needed for the Project or for any other governmental purpose, Grantee shall provide written notice of abandonment to Grantor. Upon the provision of such written notice, the easement granted herein shall terminate. Upon termination of th

ARTICLE 7 — CONSTRUCTION REQUIREMENTS

Section 7.1 — Construction Standards. All design and construction activities within the Easement Area shall be performed in a good and workmanlike manner, in compliance with all applicable federal, state, and local laws, regulations, codes, and standards, including without limitation all permits and approvals obtained for the Project. Such permits and approvals include, but are not limited to, the following: (a) Stat

Section 7.2 — Environmental Compliance. Grantee shall comply with all environmental mitigation requirements applicable to the Project and the Easement Area. Without limiting the generality of the foregoing: (a) Wetland Mitigation. Grantee shall satisfy all wetland mitigation obligations associated with the Project, including mitigation for approximately 0.38 acres of permanent wetland fill across the Project at a rat

Section 7.3 — Coordination with Grantor. Grantee shall provide Grantor with not less than thirty (30) days' prior written notice before the commencement of construction activities within the Easement Area. Such notice shall include a general description of the anticipated scope and duration of construction activities and the approximate location of construction staging and access areas. Grantee shall coordinate the s

Section 7.4 — Utilities. Grantee shall be solely responsible for all utility connections and costs associated with PS-3, including the installation of electrical service, telecommunications, and water and sewer connections (if any) necessary for the construction, operation, and maintenance of PS-3 and the Improvements. Grantee shall coordinate with applicable utility providers and shall obtain all necessary utility e

ARTICLE 8 — RESTORATION AND SITE MAINTENANCE

Section 8.1 — Construction Restoration. Upon completion of initial construction of PS-3 and any subsequent repair, replacement, reconstruction, or upgrade activities within the Easement Area, Grantee shall, within a reasonable period of time following completion of such activities (not to exceed one hundred twenty (120) days, weather permitting), restore all portions of the Easement Area not occupied by permanent Imp

Section 8.2 — Crop and Property Damage. Grantee shall compensate Grantor for any damage to crops, fencing, drainage tiles or ditches, irrigation equipment, or other property of Grantor located within or adjacent to the Easement Area that is caused by Grantee's construction, operation, maintenance, repair, or reconstruction activities, to the extent such damage is not already compensated by the easement consideration

Section 8.3 — Ongoing Maintenance. Grantee shall maintain the Improvements and the Easement Area in good condition and repair throughout the term of this Agreement. Grantee's ongoing maintenance obligations include, without limitation, weed control in compliance with the Whatcom County Noxious Weed Control Board requirements, management of stormwater runoff from the Improvements, maintenance of fencing and access roa

Section 8.4 — Abandonment Restoration. Upon abandonment of the easement as described in Section 6.2, Grantee shall remove all Improvements from the Easement Area, including foundations, equipment, fencing, paving, utilities, and all other structures and materials, and shall restore the Easement Area to a condition suitable for agricultural use. Restoration shall include regrading to original or improved agricultural

Section 9.1 — Grantee's Indemnification of Grantor. Subject to Section 9.4, Grantee shall indemnify, defend, and hold harmless Grantor and Grantor's officers, directors, shareholders, members, employees, agents, and representatives (collectively, the "Grantor Indemnitees") from and against any and all claims, demands, actions, causes of action, damages, losses, liabilities, judgments, costs, and expenses (including r

Section 9.2 — Grantor's Indemnification of Grantee. Grantor shall indemnify, defend, and hold harmless Grantee and Grantee's officers, directors, employees, agents, and representatives (collectively, the "Grantee Indemnitees") from and against any and all claims, demands, actions, causes of action, damages, losses, liabilities, judgments, costs, and expenses (including reasonable attorneys' fees and court costs) aris

Section 9.3 — Survival. The indemnification obligations set forth in this Article 9 shall survive the termination, expiration, or abandonment of this Agreement and shall remain in full force and effect with respect to any claims arising from events occurring during the term of this Agreement, regardless of when such claims are asserted.

Section 9.4 — Sovereign Immunity Reservation. Nothing in this Agreement shall be construed as a waiver of CSIA's sovereign immunity, governmental immunity, or any immunities or defenses available to CSIA as a governmental instrumentality under applicable state or federal law, except as may be expressly provided herein. Grantee's indemnification obligations under Section 9.1 shall be subject to and limited by applicab

Section 10.1 — Grantee's Insurance. Grantee shall maintain, or shall cause its contractors and subcontractors to maintain, the following insurance coverages during construction of PS-3, and Grantee shall maintain the following insurance coverages (or self-insurance programs providing equivalent coverage) during the ongoing operation and maintenance of PS-3: (a) Commercial General Liability Insurance. Commercial gener

Section 10.2 — Grantor's Insurance. Grantor shall maintain its existing liability insurance covering Grantor's Property in such amounts and coverages as Grantor deems appropriate for its agricultural operations. Grantor shall not be required to obtain any additional insurance policies or increase any existing coverage limits solely on account of this Agreement or the easement granted herein.

Section 10.3 — Evidence of Insurance. Upon written request by Grantor, Grantee shall, within fifteen (15) business days of such request, provide Grantor with certificates of insurance or other evidence reasonably satisfactory to Grantor demonstrating that the insurance coverages required by Section 10.1 are in full force and effect and that Grantor has been named as an additional insured as required herein.

ARTICLE 11 — HAZARDOUS MATERIALS AND ENVIRONMENTAL

Section 11.1 — No Known Environmental Conditions. Based on the Phase I Environmental Site Assessment completed by Pinnacle Geotechnical & Environmental Consulting Inc. on January 22, 2025, in accordance with ASTM E1527-21, no recognized environmental conditions ("RECs"), controlled recognized environmental conditions ("CRECs"), or historical recognized environmental conditions ("HRECs") have been identified on Granto

Section 11.2 — Grantee's Environmental Responsibility. Grantee shall not introduce, use, generate, store, treat, or dispose of hazardous substances, hazardous wastes, or other regulated materials (collectively, "Hazardous Materials") within the Easement Area, except in quantities and in the manner necessary for the construction, operation, and maintenance of PS-3 (including fuels, lubricants, paints, solvents, and cl

Section 11.3 — Grantor's Environmental Responsibility. Grantor represents and warrants that, to the best of Grantor's actual knowledge as of the Effective Date, no Hazardous Materials have been released, discharged, or disposed of on, in, or under the Easement Area in violation of applicable environmental laws. Grantor shall be solely responsible for the investigation and remediation of any contamination originating

ARTICLE 12 — REPRESENTATIONS AND WARRANTIES

Section 12.1 — Grantor's Representations and Warranties. Grantor represents and warrants to Grantee as of the Effective Date as follows: (a) Grantor is a corporation duly organized, validly existing, and in good standing under the laws of the State of Washington, and has elected S-corporation status under the Internal Revenue Code. (b) Garrett Dunlap, as President and Sole Director of Grantor, has full power and auth

Section 12.2 — Grantee's Representations and Warranties. Grantee represents and warrants to Grantor as of the Effective Date as follows: (a) Grantee is a governmental instrumentality duly created and existing pursuant to Chapter 43.99N of the Revised Code of Washington and has full authority under applicable law to acquire real property interests, including easements, for the purposes of the Project. (b) Grantee has

ARTICLE 13 — DEFAULT AND REMEDIES

Section 13.1 — Default. A party shall be in default under this Agreement if such party materially breaches any provision, term, covenant, representation, or warranty of this Agreement and fails to cure such breach within thirty (30) days after receipt of written notice from the non-defaulting party specifying the nature of the breach and the actions required to cure it. If the breach is of a nature that cannot be rea

Section 13.2 — Remedies. Upon the occurrence of a default that has not been cured within the applicable cure period, the non-defaulting party shall be entitled to pursue any and all remedies available at law or in equity, including without limitation specific performance, injunctive relief, declaratory relief, and monetary damages. All remedies under this Agreement are cumulative and not exclusive; the exercise of on

Section 13.3 — Attorneys' Fees. In any action, suit, or proceeding to enforce or interpret this Agreement or any provision hereof, the prevailing party shall be entitled to recover from the non-prevailing party its reasonable attorneys' fees, expert witness fees, and costs incurred in connection therewith, including fees and costs incurred on appeal. For purposes of this Section, "prevailing party" means the party th

ARTICLE 14 — DISPUTE RESOLUTION

Section 14.1 — Good Faith Negotiation. In the event of any dispute, controversy, or claim arising out of or relating to this Agreement, including any question regarding its existence, validity, interpretation, performance, breach, or termination, the parties shall first attempt in good faith to resolve such dispute through direct negotiation between authorized representatives of the parties. The period for such negot

Section 14.2 — Mediation. If the parties are unable to resolve the dispute through good faith negotiation within the thirty (30) day period provided in Section 14.1, the parties agree to participate in non-binding mediation before a mutually agreed-upon mediator in Whatcom County, Washington, before initiating litigation. The parties shall share the costs of the mediator equally. If the parties are unable to agree up

Section 14.3 — Jurisdiction and Venue. If the dispute is not resolved through negotiation or mediation, either party may initiate litigation. Any such litigation shall be brought exclusively in the Superior Court of Whatcom County, Washington, or, if federal subject matter jurisdiction exists, in the United States District Court for the Western District of Washington, sitting in Seattle, Washington. Each party hereby

ARTICLE 15 — GENERAL PROVISIONS

Section 15.1 — Governing Law. This Agreement shall be governed by, construed, and enforced in accordance with the laws of the State of Washington, without regard to its conflict-of-laws principles.