City Auditor - City Recorder - Council Ordinance - 177168 FY 2002-03 Water commodity rate for wellfield service lease

ULTRAVIOLET REACTOR VALIDATION TEMPORARY FACILITY SITE LEASE

LESSOR: BUREAU OF WATER WORKS of the CITY OF PORTLAND,

a municipal corporation of the State of Oregon

LESSEE: CAROLLO ENGINEERS, a Professional Corporation

SITE NAME: Bureau of Water Works’ “Columbia South Shore Wellfield, Groundwater Pump Station, (Lessee’s SITE I.D. “ Groundwater Pumping Station ”)”

ADDRESS: 16400 NE Airport Way, Portland, Oregon

LOCATION: Taxlot 1N3E19B 1300; being Taxlot 1300 in the SW ¼ of the NW ¼ of Section 19, Township 1 North, Range 3 East, Willamette Meridian, in the City of Portland, Multnomah County, Oregon

TRUE AND ACTUAL

CONSIDERATION: Based on water usage by the facility at a rate of $0.35 per hundred cubic feet (CCF) per billing cycle for the term of the agreement, or as adjusted per the terms and conditions hereinafter.

AFTER RECORDING

RETURN TO: City of Portland, Bureau of Water Works

Engineering and Construction Services, Real Estate Section

1120 S.W. Fifth Avenue

Portland, OR 97204-1926

MAIL TAX

STATEMENTS TO: N/A (NO CHANGE)

SPACE BELOW THIS LINE FOR USE OF COUNTY RECORDER’S OFFICE

ULTRAVIOLET REACTOR VALIDATION TEMPORARY FACILITY SITE LEASE

TABLE OF CONTENTS

LEASE SECTION PAGE

1. Lease Description 3

2. Term 3

3. Payment Provisions 3

4. Licenses and Governmental Approvals 3

5. Conditions of Site Use 3

5(a) Use of Site 3

5(b) Maintenance 4

5(c) Indemnification 5

5(d) Utility Services 5

5(e) Access and Security 5

5(f) Services to the Premises/Liens 6

5(g) Property Maintenance 6

5(h) Interference 6

5(i) Pump Station Appurtenance Removal 6

6. Termination by Lessor 7

7. Termination by Lessee 7

8. Effect of Termination 7

9. Real Property Taxes 8

10. Insurance 8

11. Casualty 9

12. Sublet/Sublease 9

13. Notices 9

14. Proration 9

15. Succession 10

16. Payment Location 10

17. Quiet Enjoyment, Title and Authority 10

18. Environmental Laws 10

19. Conflict Resolution 10

20. Miscellaneous 11

Lessee's Approval and Execution 12

Lessor's Approval and Execution 13

Exhibit "A" - Leased Property - Legal Description 14

Exhibit "B" - Site Plan 16

Exhibit "C" - Lessee's Construction Drawings 19

Exhibit "D" - Lessee's Certificate of Insurance 24

Exhibit "E" – Lessee’s Letter of Credit 26

Exhibit "F" - Environmental Laws/Hazardous Substances 27

THIS ULTRAVIOLET REACTOR VALIDATION TEMPORARY FACILITY SITE LEASE ("Lease") is entered into and effective as of the _____ day of _________________, 2002 between the BUREAU OF WATER WORKS of the CITY OF PORTLAND, a municipal corporation of the State of Oregon (“Lessor”) and CAROLLO ENGINEERS, a Professional Corporation ("Lessee").

1. Lease Description. Lessor owns the property commonly known as the “Columbia South Shore Wellfield, Groundwater Pump Station, (GWPS)” located on the real property described on Exhibit A, attached hereto (the “Property”). Lessor hereby leases to Lessee certain space on the GWPS for placement of Lessee’s “Ultraviolet (UV) Reactor Validation Facility” and related equipment as shown on the Site Plan attached hereto as Exhibit B. Lessor also agrees to allow Lessee’s use of a portion of the Property, as indicated on Exhibit B , for Lessee’s equipment shelter and related equipment. Lessor also agrees to allow Lessee’s use of a portion of the Property for: (a) interconnecting piping between Lessor’s groundwater collection main and discharge outfall and Lessee’s UV reactor related equipment and shelter on the GWPS site; (b) access over, under and/or through the Property for utility services as contemplated by Section 5(d) below; and (c) ingress and egress over and across the Property to the Premises (as defined below). The space for Lessee's equipment shelter and for piping, utilities and ingress and egress are collectively referred to herein as the “Premises”.

2. Term. Subject to Section 6 and/or 7, this Lease shall be for an initial period of one (1) year (the "Initial Term"). The Initial Term shall commence 90 calendar days following the issuance of a building permit from the City of Portland for the construction of the UV Reactor Validation Temporary Facility (as defined below) or within 90 calendar days of the effective date set forth above, whichever occurs first (the "Commencement Date"). Lessor grants Lessee the right to renew this Lease for one additional 1-year term (the "Renewal Term"). Lessee shall be deemed to have exercised the Renewal Term unless Lessee shall have notified Lessor in writing of Lessee's intention to not renew this Lease for the Renewal Term at least 60 days prior to the expiration of the Initial Term.

3. Payment Provisions. Lessee shall pay Lessor as compensation the sum of $0.35 per hundred cubic feet of water used by the UV Reactor Validation Temporary Facility per billing cycle beginning on the Commencement Date. On July 1st of each year, the rate of compensation shall be re-evaluated to reflect any change in Lessor’s cost of providing the water for use by the facility. Any annual adjustment would be in a positive amount only.

4. Licenses and Governmental Approvals.

4(a). Lessee shall be authorized to use the Premises for such purposes as more fully described in Section 5 below.

4(b). Governmental Approvals. Lessee shall obtain, at Lessee's expense, all licenses and permits required for Lessee's use of the Premises from all applicable government and/or regulatory entities (the "Governmental Approvals") and may (prior to or after the Commencement Date) perform surveys, tests and other engineering procedures on, under and over the Property, necessary to determine that Lessee's use of the Premises will be compatible with Lessee's engineering specifications, system design, operations and Governmental Approvals. Lessor agrees to reasonably cooperate with Lessee (at no cost to Lessor), where required, to allow Lessee to perform such procedures or obtain Governmental Approvals. Assistance by the Lessor shall be limited to that which can be provided without detriment to the City, in its sole determination.

5. Conditions of Site Use.

5(a)(i). Use of Site. Upon obtaining the Governmental Approvals, and any other approvals necessary from other parties, Lessee shall have the right to erect, operate and maintain on the Premises the "Ultraviolet Reactor Validation Temporary Facility" which shall consist of personal property and facilities necessary for Lessee to operate its UV reactor validation system, including without limitation, equipment cabinets or shelters, associated electronic equipment and related cables and utility lines (including, if Lessee elects, an emergency power source). The Ultraviolet Reactor Validation Temporary Facility and its location on the Premises are described and depicted on Exhibit C attached hereto. Subject to the Lessor’s prior written approval, Lessee shall have the reasonable right to upgrade and replace the Ultraviolet Reactor Validation Temporary Facility.

5(a)(ii). Water Supply. Lessor consents to the installation of the Ultraviolet Reactor Validation Temporary Facility as shown on Exhibit C. Lessor consents to supply the Ultraviolet Reactor Validation Temporary Facility with sufficient quantities of untreated well water for the purpose of validation activities. The supply of water will be contingent on surplus availability and may be curtailed or suspended on short notice, dependent on Lessor’s needs. Lessee will provide Lessor with proposed schedules for activities requiring a stable water supply. To its best ability, Lessor will accommodate Lessee’s schedule. However, if need be, Lessor’s rights to the water supply shall supercede those of the Lessee. Notice of suspension or curtailment of supply shall be provided by the Lessor to the Lessee no less than 24 hours prior to said suspension or curtailment.

5(a)(iii). Change of Facility Design. If there is to be a change in the nature of the Ultraviolet Reactor Validation Temporary Facility or its placement on the Premises, Lessee shall obtain the written consent of the Chief Engineer of the Lessor prior to installation or modification of the Ultraviolet Reactor Validation Temporary Facility, which consent shall not be unreasonably withheld or delayed. Prior to the Commencement Date, the final design of Lessee's Ultraviolet Reactor Validation Temporary Facility may be revised from that depicted on Exhibit C provided that all details of the Ultraviolet Reactor Validation Temporary Facility shall be approved by the Chief Engineer of the Lessor prior to installation.

5(a)(iv). Installation of Facility. Lessee shall notify Lessor in writing at least two weeks prior to the start of the installation of the Ultraviolet Reactor Validation Temporary Facility at the Premises. Lessee shall restore the Property to the same condition or better as existed at the start of the installation work as soon as all installation work is completed. The Ultraviolet Reactor Validation Temporary Facility shall remain the exclusive property of Lessee throughout the term of this Lease. 5(a)(v). Removal of Facility. Lessee shall remove the Ultraviolet Reactor Validation Temporary Facility from the Property at the termination of this Lease (excluding, if Lessee and Lessor mutually elect, any portion of Ultraviolet Reactor Validation Temporary Facility, which shall then become the property of the Lessor). Lessee, upon termination of the Lease and removal of the Ultraviolet Reactor Validation Temporary Facility from the Premises, shall restore the Property to the same condition or better as existed at the start of the installation of the Ultraviolet Reactor Validation Temporary Facility on the Premises.

5(a)(vi). Letter of Credit. Lessee shall post an irrevocable letter of credit, to act as a facility decommissioning bond, in a form approved by the Chief Engineer of the Lessor, as described in Exhibit E. The letter of credit shall remain in effect for the full term of this lease and any extension thereof, and shall not be terminated by the Lessee unless and until authorized in writing by the Lessor to do so. The letter of credit shall be payable at a local branch of an Oregon financial institution.

5(b). Maintenance. The Ultraviolet Reactor Validation Temporary Facility shall be erected and maintained at no expense to the Lessor. Lessee shall maintain the Ultraviolet Reactor Validation Temporary Facility in good condition and repair and in compliance with any of its regulatory obligations; provided, however, that when both parties agree that repair is required due to the acts of Lessor, its agents or employees, Lessor shall reimburse Lessee for the reasonable costs incurred by Lessee to restore the damaged areas to the condition which existed immediately prior thereto. If no such agreement is reached Lessee shall repair at its own cost. Lessor shall maintain all of Lessor’s improvements in and to the Property (including screening landscaping, other improvements and improvements related to security such as fencing and gates, but specifically excluding the Ultraviolet Reactor Validation Temporary Facility) in good condition and repair.

5(c)(i). Indemnification. Lessee shall defend, indemnify and hold harmless Lessor, its officers, agents and employees, from any liability, loss or damage Lessor, or any third party, may suffer (including any reasonable attorney’s fees and expenses) as a result of claims, demands, actions, suits, costs or damages against Lessor of any kind whatsoever in connection with or arising out of Lessee’s use of the Premises. This condition includes: (1) any violation of law, ordinance or covenant or condition of this Lease by Lessee, its agents, employees, invitees or visitors; or (2) any injury or damage occurring to any person or to property of any kind belonging to any person from any cause or causes whatsoever during the term of this Lease. . Lessee shall give Lessor prompt written notice in case of casualty or accidents on the Premises.

5(c)(ii). Lessee shall hold harmless Lessor; its officers, agents and employees, from any liability, loss or damage caused by said suspension or curtailment of the water supply on Lessee’s activities.

5(d). Utility Services. (i). When available and permitted by the serving utilities, Lessee shall install separate utility services and meters at the Premises, and Lessee shall be responsible directly to the serving utilities for all costs of utilities required for Lessee's use of the Premises.

(ii). In the event Lessor agrees to provide utilities to the Lessee, Lessee shall pay as additional compensation the cost of utility service provided to the Premises and attributable to Lessee's use (the "Utility Charge"). Lessee shall pay the estimated cost of the Utility Charge monthly in advance together with the compensation for the billing cycle. If separate utility services for the Lessee have not been installed prior to the Commencement Date, Lessee and Lessor shall estimate the Utility Charge to be paid monthly, beginning at the Commencement Date. At least annually during the Lease Term, Lessor (or at Lessor's election, Lessee) shall calculate the actual Utility Charge for the immediately preceding twelve (12) months based on readings from the utility meters at the Property and on the rates currently charged by the applicable utilities. Any excess paid will be credited to Lessee's next due rent or Utility Charge and any shortage shall be paid by Lessee to Lessor within ten (10) days of notice of such calculation. Upon the first anniversary of the Commencement Date and on each such anniversary thereafter, at Lessor's or Lessee's option, the estimated Utility Charge paid monthly by Lessee may be increased or decreased to equal the average actual Utility Charge paid per month for the preceding year. Calculation of the actual Utility Charge due shall be made by the Lessor .

(iii). Lessor, at its sole discretion, will cooperate with Lessee in Lessee’s efforts to obtain utilities from any location provided by Lessor or the servicing utility, including signing an easement or other instrument reasonably required by the utility company; provided, however, that Lessor shall not be responsible for any costs associated with Lessee’s efforts to obtain utility services, including costs associated with easements or other requirements.

5(e). Access and Security. Subject to the rights of other parties in and to the Property which are not under the control or responsibility of the Lessor, Lessee shall have access to the Property and to the Premises at all times during the Lease. Lessee shall provide Lessor with a key to any of Lessee’s locks on gate(s) in fences surrounding the Property and to the Ultraviolet Reactor Validation Temporary Facility for the purpose of emergency access. Should Lessor, in the course of providing Lessee access to the Premises, be required to issue Lessee key(s) to Lessor's lock(s) on the Property, Lessee agrees to pay a reasonable deposit fee to Lessor for each key provided by Lessor, and/or pay to Lessor reasonable costs for rekeying, replacing and/or modifying Lessor's lock(s) on the Property when solely required due to Lessee's use of the Premises and Property. For purposes of Property security, Lessee shall provide the Chief Engineer of the Lessor with written notification, as in Section 13 herein, of intended activities and personnel on site, either by providing a schedule of known activities and permanent employees, or, in the event of unscheduled activities or the presence of other than permanent employees, by verbal communication prior to said activity or presence. Lessee’s employees shall, at all times they are on the Property, carry valid identification and be prepared to provide this identification to Lessor’s agents or employees on request. Lessor may require Lessee to provide any necessary background information on Lessee’s employees or others on the Premises to satisfy Lessor’s Property security concerns. Lessee is responsible for providing security for Lessee’s Ultraviolet Reactor Validation Temporary Facility and the Premises. The Lessee’s security plan shall be provided to and approved by the Chief Engineer of the Lessor. The security plan shall include, but is not limited to, the necessary emergency response contact information.

5(f). Services to the Premises/Liens. With respect to any and all activities arising out of or related to Lessee’s use of the Premises , Lessee shall pay when due all claims for work done on, and for services rendered or material furnished to, the Premises, by or on behalf of the Lessee, and shall keep the Premises free from all liens

.5(g). Property Maintenance. Should Lessor elect to make modifications or repairs to, or repaint, reconstruct or replace any component of GWPS or perform any other work within the Property, Lessee shall pay any additional cost of said categories of work caused solely by the presence of the Ultraviolet Reactor Validation Temporary Facility on the Property (the "Additional Cost"). The Additional Cost shall be the difference between competitive bids obtained by Lessor from reputable contractors to perform said work where Lessee’s Ultraviolet Reactor Validation Temporary Facility affects the work, and bids to perform said work as though Lessee’s Ultraviolet Reactor Validation Temporary Facility was not within the Property. Should the work to be performed by Lessor require the temporary removal of any of Lessee’s Ultraviolet Reactor Validation Temporary Facility, all costs of such removal shall be borne by Lessee. If such removal would interrupt Lessee's use of the Ultraviolet Reactor Validation Temporary Facility, Lessee and Lessor agree to negotiate in good faith to determine if there are mutually agreeable alternatives to avoid or mitigate the effects of such interruption of use. Alternatively to the determination and payment of the Additional Cost as described herein, and with Lessor’s prior approval, Lessee may elect to temporarily remove any portion of the Ultraviolet Reactor Validation Temporary Facility from the Premises, at no cost to Lessor.

5(h). Interference. Should Lessor, or Lessor's lessees, tenants, licensees, employees, invitees or agents use any portion of the Property in any way which interferes with the operation of Lessee, the parties acknowledge that Lessee shall have the right to terminate this Lease immediately upon written notice. Termination shall require that Premises be restored as set out in Section 5(a) above and that there shall be no liability for the Lessor.

5(i). Pump Station Appurtenance Removal. Lessor shall have the right to remove any pump station site appurtenances and/or Lessor’s other structures or facilities on the Property upon Lessor's determination that such action is in the best interest of Lessor’s responsibility to its customers. Lessor shall immediately notify Lessee in writing of such determination. Upon Lessor's determination, Lessee shall have the right to: (1) relocate its Ultraviolet Reactor Validation Temporary Facility on the Property, but such right is subject to Lessor’s right to terminate the Lease under Section 6(b); or (2) terminate the Lease. Any relocation of the Ultraviolet Reactor Validation Temporary Facility, including the construction of any equipment shelter, building, or other structure(s), shall comply with all applicable land use, zoning and building permit procedures, and shall require the prior written approval of Lessor, which shall not be unreasonably withheld or delayed. Lessor shall provide Lessee written notice 6 months in advance of removal of the well site appurtenances, subject to Lessor’s right to terminate with less than 6 months notice under Section 6(b) of this Lease.

6. Termination By Lessor.

6(a). Lessor shall have the right to terminate this Lease, by written notice to Lessee, if an event of default by Lessee occurs and if Lessee has not corrected such default or begun correction within 30 days after written notice from Lessor. An event of default by Lessee shall occur if Lessee: (1) fails to pay any lease consideration or other payments as required before the date due; (2) fails to fulfill any obligation or term of this Lease; (3) is deemed insolvent, makes an assignment in bankruptcy, or fails to secure dismissal of an involuntary bankruptcy, or petition within a reasonable time; (4) fails to pay any subcontractor, or subconsultant, due compensation; or (5) any outstanding utility charges.

6(b). Lessor may terminate this Lease if, in the sole judgment of Lessor, Lessor needs the Premises as part of Lessor’s responsibility to provide water services, provided Lessor gives Lessee written notice 6 months in advance of Lessor’s determination to re-enter the Premises. Lessor may terminate this Lease by giving less than 6 months advance written notice to Lessee, for reasons of security, public health, safety or water supply reasons which in the sole judgment of the Lessor requires Lessee’s exclusion from the Premises prior to the expiration of the 6 months notice period. Should this condition exist, Lessor shall coordinate with the Lessee to remove the Ultraviolet Reactor Validation Temporary Facility and restore the property as per Section 5 (a)(v). In the event the Lessee fails to remove the facility within a reasonable time, the Lessor may elect to utilize the letter of credit, Section 5(a)(vi), to effect the removal and restoration.

7. Termination By Lessee. Lessee shall have the right to terminate this Lease, by written notice to Lessor, upon the occurrence of any of the following events:

7(a). If Lessor defaults in observing any covenant or term hereof and fails to correct such default or commence correction of such default within 30 days after written notice from Lessee.

7(b). If the approval of any agency, board, court or other governmental authority (or approval necessary from any other party or parties) necessary to construction and/or operation of the Ultraviolet Reactor Validation Temporary Facility, or any other Governmental Approval (or approval necessary from any other party or parties), cannot reasonably be obtained, or if Lessee reasonably determines the expense of obtaining such approval is not cost effective.

7(c). If the Premises or the Ultraviolet Reactor Validation Temporary Facility is or becomes unacceptable under Lessee's design or engineering specifications for its Ultraviolet Reactor Validation Temporary system.

7(d). If at any time any license, permit or Governmental Approval necessary for the operation and maintenance of the Ultraviolet Reactor Validation Temporary Facility is revoked, materially amended or suspended, or if Lessee is unable to obtain, maintain or otherwise forfeits or cancels any license, permit or Governmental Approval necessary for the operation and maintenance of the Ultraviolet Reactor Validation Temporary Facility.

7(e). Lessee has the right to immediately terminate this Lease if Lessee notifies Lessor of unacceptable results of any survey or test prior to Lessee's installation of the “UV Reactor Validation Temporary Facility” (as defined below) on the Premises.

8. Effect of Termination. Upon notice to terminate by Lessor or Lessee under Section 5, 6 or 7 above, the Lease shall terminate and be of no further force and effect, except for the requirements set out in Section 5(a) and Section 14.

9. Real Property Taxes. Beginning on the Commencement Date, real property, personal property and/or excise taxes for the Property payable by the Lessor as a result of Lessee’s Ultraviolet Reactor Validation Temporary Facility being located in the Property shall be the responsibility of Lessee. Lessee shall annually furnish proof to Lessor that any taxes have been paid. Lessor shall retain the option to pay any taxes and bill Lessee for the amount paid. Lessee shall reimburse Lessor for said amount billed within sixty (60) calendar days of the date of billing. Should the Lease be terminated by either Lessor or Lessee, Lessee shall be responsible only for a prorated amount based on the date of termination of the Lease. Should multiple lessees be collocated within the Property, Lessee agrees to pay a prorated amount of taxes, if said taxes are not itemized or otherwise identified for each co-located lessee by the taxing authority. Unless otherwise agreed by all lessees, proration will be determined by the Lessor. Upon request by Lessee, Lessor shall share with Lessee any official tax information it has received related to these taxes. Lessee shall pay for the provision of such documentation and Lessor shall not be obligated to create any documentation for the Lessee.

10. Insurance. Lessee shall maintain public liability and property damage insurance including automobile liability insurance and a fire legal liability endorsement, that protects Lessee and Lessor and its officers, agents and employees from any and all risks, claims, demands, actions and suits for damage to property including without limitation cracking or breaking of glass, or personal injury, including death, arising directly or indirectly from Lessee’s activities or any condition of the Premises. The insurance shall protect Lessee against the claims of Lessor on account of the obligations assumed by Lessee under this Lease and shall protect Lessor and Lessee against claims of third persons. The insurance shall provide coverage for not less than $200,000 for personal injury to each person, $500,000 for each occurrence, and $500,000 for each occurrence involving property damages; or a single limit policy of not less than $500,000 covering all claims per occurrence. The limits of the insurance shall be subject to statutory changes as to maximum limits of liability imposed on municipalities of the State of Oregon during the terms of this Lease. The insurance shall be without prejudice to coverage otherwise existing and shall name as additional insureds Lessor and its officers, agents and employees. Notwithstanding the naming of additional insureds, the insurance shall protect each insured in the same manner as though a separate policy had been issued to each, but nothing herein shall operate to increase the insurer’s liability as set forth elsewhere in the policy beyond the amount or amounts for which the insurer would have been liable if only one person or interest had been named as insured. The coverage must apply as to claims between insureds on the policy. The insurance shall provide that the insurance shall not terminate or be canceled without thirty (30) days written notice first being given to the Lessor. Lessee agrees to maintain continuous, uninterrupted coverage for the duration of the Lease. If the insurance is canceled or terminated prior to termination of the Lease, Lessee shall provide a new policy with the same terms. Lessee shall maintain on file with the Lessor a certificate of insurance certifying the coverage required by this section. The adequacy of the insurance shall be subject to the approval of the City Attorney. Failure to maintain liability insurance shall be cause for immediate termination of this Lease by Lessor. A copy of Lessee’s liability insurance certificate is attached hereto as Exhibit D. Lessor shall have the right to reasonably increase the limits of insurance required by this section from time to time. In the event Lessor reasonably determines that such limits should be increased, Lessor shall provide notice to Lessee of such determination and Lessee shall, within 45 calendar days, increase the coverage amounts to comply with the new limits and provide Lessor with an updated certificate. Under no circumstances shall Lessor be responsible for or provide insurance to cover loss or damage of Lessee’s equipment or personal property.

11. Casualty. If a material portion of the Premises or the Ultraviolet Reactor Validation Temporary Facility are destroyed or damaged by fire, windstorm or other catastrophic event, Lessee may elect to terminate the Lease effective as of the date of the damage or destruction by notice given to Lessor in writing not more than 45 days following such date. In such event, all rights and obligations of the parties shall cease as of the effective date of termination, except as set out in Section 5 and Section 14.

12. Sublet/Sublease. Lessee may assign its rights under this Agreement to any entity, which it controls, is controlled by, or is under common control with Lessee, or in connection with a sale, merger, acquisition of substantially all of the assets or ownership interests of Lessee with the understanding that Lessor may terminate this agreement, for any reason whatsoever, at any time before or after assignment, if the assignment is not, in the Lessor's sole discretion, acceptable. Lessee shall inform Lessor of the proposed assignment, in writing, immediately prior (if not sooner) to the assignment. Any costs to Lessee from the termination shall be at the risk of the Lessee. Lessee shall ensure that the Agreement with any party to whom this lease is assigned includes an obligation to abide by all the terms and conditions belonging to the Lessee under this Agreement.

13. Notices. Any notice required or permitted under this Lease shall be given when actually delivered, or 48 hours after deposited in the United States mail as certified mail, addressed to the addresses as specified below, or as from time to time changed by either of the parties in writing.

Lessor: CITY OF PORTLAND

Bureau of Water Works, Chief Engineer

Engineering & Construction Services (Real Estate Section)

1120 SW Fifth Avenue

Portland, Oregon 97204

Lessee: CAROLLO ENGINEERS

Attn: CAROLLO ENGINEERS

12592 West Explorer Drive

Suite 200

Boise, ID 83713

Attn: CAROLLO ENGINEERS

5100 SW Macadam Avenue

Suite 440

Portland, OR 97239

With copy to: CAROLLO ENGINEERS

Attn: CAROLLO ENGINEERS

5100 SW Macadam Avenue

Suite 440

Portland, OR 97239

14. Proration. If this Lease terminates at a time other than the end of one of the specified rental periods, then the rent shall be prorated as of the date of termination, and in the event of termination for reasons other than default of Lessee, all prepaid rent shall be refunded to Lessee or paid on its account. In the event of termination due to default of Lessee, any prepaid rent shall be retained as the property of the Lessor.

15. Succession. This Lease shall be binding upon and inure to the benefit of the parties and their respective successors, heirs and assigns.

16. Payment Location. Pursuant to Section 3 above, Lessor designates the following address for payment of rent and other charges due to Lessor under this Lease:

City of Portland, Bureau of Water Works

Engineering & Construction Services (Real Estate Section)

1120 SW Fifth Avenue

Portland, OR 97204

or such location as may be requested in writing by the Chief Engineer of Lessor. Payment shall be by a check made payable to “Bureau of Water Works” or by other mutually agreeable method.

17. Quiet Enjoyment, Title and Authority. Lessor covenants and warrants to Lessee that (i) Lessor has full right, power and authority to execute this Lease; (ii) Lessor has good and unencumbered title to all of Lessor’s improvements in and to the Property and to GWPS, free and clear of any liens or mortgages, except those disclosed to Lessee, if any; and (iii) execution and performance of this Lease will not violate any laws, ordinances, covenants, or the provisions of any mortgage, lease, easement or other agreement binding on Lessor. Lessor covenants (subject to the limits of Lessor’s rights and interests in and to the Property) that at all times during the term of this Lease, Lessee's quiet enjoyment of the Premises or any part thereof shall not be disturbed as long as Lessee is not in default beyond any applicable grace or cure period. Lessor further represents that Lessor’s property and all improvements located thereon are in substantial compliance with building, life/safety, disability and other laws, codes and regulations of applicable governmental authorities.

18. Environmental Laws. Lessee represents, warrants and agrees that it will conduct its activities on the Property in compliance with all applicable Environmental Laws (as defined in attached Exhibit F). Lessee agrees to defend, indemnify and hold harmless Lessor from and against any and all claims, causes of action, demands and liability, including, but not limited to, damages, costs, expenses, assessments, penalties, fines, losses, judgements and attorney fees that Lessor may suffer due to the existence or discovery of any Hazardous Substance (as defined in attached Exhibit F) on the Property or the migration of any Hazardous Substance to other properties or release into the environment, arising solely from Lessee's activities on the Property.

19. Conflict Resolution.

19(a). If the Lessee and the Lessor fail to reach an agreement, the final decision will be that of the Chief Engineer of the Lessor.

19(b). The prevailing party in any litigation arising hereunder shall be entitled to its reasonable attorney fees and court costs, including appeals, if any.

19(c). This Lease constitutes the entire agreement and understanding of the parties, and supersedes all offers, negotiations and other agreements. There are no representations or understandings of any kind not set forth herein. Any amendments to this Lease must be in writing and executed by both parties. The Chief Engineer of the Lessor shall have authority to execute amendments to this Lease on behalf of the Lessor.

19(d). Each party agrees to cooperate with the other in executing any documents (including a Memorandum of Lease) necessary to protect its rights or use of the Premises. The Memorandum of Lease may be recorded in place of this Lease, by either party.

19(e). This Lease shall be construed in accordance with the laws of the State of Oregon. Any litigation that may arise from the terms of this Lease will be filed in the circuit court of Multnomah County, Oregon.

20. Miscellaneous.

20(a). If any term of this Lease is found to be invalid, such invalidity shall not affect the remaining terms of this Lease, which shall continue in full force and effect. The parties intend that the provisions of this Lease be enforced to the fullest extent permitted by applicable law. Accordingly, the parties agree that if any provisions are deemed not enforceable, they shall be deemed modified to the extent necessary to make them enforceable.

20(b). This Lease may be executed in any number of counterparts, each of which shall be deemed an original, but all of which together shall constitute a single instrument.

20(c). Should the Lessee require or otherwise utilize the services of the Lessor’s agents or employees to facilitate the operation of the Ultraviolet Reactor Validation Temporary Facility, the Lessee agrees to compensate the Lessor for said services at the following direct labor rates times a multiplier of 2.25:

Functional Unit Direct Labor Rate

Principal Engineer $45.63

Supervising Engineer $38.49

Project Manager $31.04

Manager – Operating Engineers $45.63

Lead-Operating Engineer $25.27

Lead-Electrician/IT $28.79

Water Quality Inspector $26.53

Water Quality Technician $21.24

Requests for said services should be coordinated through the Chief Engineer of the Lessor. On July 1st of each year, the rate of compensation for the above services shall be re-evaluated to reflect any change in Lessor’s cost of providing labor or services. Any annual adjustment would be in a positive amount only.

IN WITNESS WHEREOF, the parties hereto have executed this instrument on the date(s) below.

LESSEE: CAROLLO ENGINEERS, A Professional Corporation

By: ____________________________ By: ______________________________

Name: Name:

Title: Title:

STATE OF )

) ss

COUNTY OF )

On this _____ day of ___________, 2002, before me, a Notary Public in and for said County and State, personally appeared ____________________________________, personally known to me (or proved to me on the basis of satisfactory evidence) to be the __________________________ of the (corporation) (partnership) that executed the within instrument, and personally known to me (or proved to me on the basis of satisfactory evidence) to be the person who executed the within instrument on behalf of said (corporation) (partnership) by authority of said (corporation's Board of Directors) (partnership).

IN WITNESS WHEREOF, I have hereto set my hand and affixed my official seal the day and year in this certificate first above written.

____________________________________

Notary Public in and for said State

My Commission Expires_______________

STATE OF )

) ss

COUNTY OF )

IN WITNESS WHEREOF, I have hereto set my hand and affixed my official seal the day and year in this certificate first above written.

____________________________________

Notary Public in and for said State

My Commission Expires______________

LESSOR: BUREAU OF WATER WORKS of the CITY OF PORTLAND,

a municipal corporation of the State of Oregon

By: By:

Name: Morteza Anoushiravani Name: Stan VandeBergh

Title: Administrator Title: Chief Engineer

STATE OF OREGON )

) ss

COUNTY OF MULTNOMAH )

On this day of , 2002 , before me personally appeared Morteza Anoushiravani, whose identity is personally known to me (or proved to me on the basis of satisfactory evidence) to be the person whose name is subscribed to this instrument, and acknowledged that he executed the same as Administrator of, and on behalf of the Bureau of Water Works of the City of Portland, a municipal corporation of the State of Oregon.

_______________________________

NOTARY PUBLIC FOR OREGON

My commission expires:____________

STATE OF OREGON )

) ss

COUNTY OF MULTNOMAH )

On this day of , 2002, before me personally appeared Stan VandeBergh, whose identity is personally known to me (or proved to me on the basis of satisfactory evidence) to be the person whose name is subscribed to this instrument, and acknowledged that he executed the same as Chief Engineer of, and on behalf of the Bureau of Water Works of the City of Portland, a municipal corporation of the State of Oregon, by and pursuant to authority granted to the Chief Engineer of said Bureau by Ordinance Numbers 172920 and 172921, both approved December 9, 1998 by the City Council of the City of Portland.

NOTARY PUBLIC FOR OREGON

My commission expires:____________

Approved as to form:

Jeffrey L. Rogers

City Attorney

ULTRAVIOLET REACTOR VALIDATION TEMPORARY FACILITY SITE LEASE

EXHIBIT “A” – PAGE 1 OF 2

LEASED PROPERTY - LEGAL DESCRIPTION & MAP

A site within a parcel of land located in the SW ¼ of the NW ¼ of Section 24, Township 1 North, Range 3 East, Willamette Meridian, Multnomah County, Oregon, said parcel described as:

Taxlot 1300 of the SW ¼ of the NW ¼ of Section 24, Township 1 North, Range 3 East, Willamette Meridian; in the City of Portland, Multnomah County, Oregon;

said parcel being referred to in the public records of Multnomah County, Oregon as: “Tax Lot 1N3E19B 1300”;

said parcel having a street address of: 16400 NE Airport Way, Portland, Oregon

Said parcel being as shown on the map attached hereto as Page 2 of Exhibit “A”.

ULTRAVIOLET REACTOR VALIDATION TEMPORARY FACILITY SITE LEASE

EXHIBIT “A” – PAGE 2 OF 2

LEASED PROPERTY - LEGAL DESCRIPTION & MAP

LESSEE’S SITE I.D. “ Groundwater Pumping Station ”

ULTRAVIOLET REACTOR VALIDATION TEMPORARY FACILITY SITE LEASE

EXHIBIT “B” – PAGE 1 OF 3

SITE PLAN - LESSEE’S SITE I.D. “ Groundwater Pumping Station ”

The location and description of Lessee’s “Premises” on Lessor’s “Property” are shown on the 2 pages attached hereto as Pages 2 through 3 of Exhibit “B”.

NOTE: Lessor agrees that Lessee's Easements for interconnecting utilities within the Premises described herein, have a width of 10 (ten) feet, unless otherwise specified.

ULTRAVIOLET REACTOR VALIDATION TEMPORARY FACILITY SITE LEASE

EXHIBIT “B” – PAGE 2 OF 3

SITE PLAN - LESSEE’S SITE I.D. “ Groundwater Pumping Station ” (Sheet No. “C1”)

ULTRAVIOLET REACTOR VALIDATION TEMPORARY FACILITY SITE LEASE

EXHIBIT “B” – PAGE 3 OF 3

SITE PLAN - LESSEE’S SITE I.D. “ Groundwater Pumping Station ”” (Sheet No. “C2”)

ULTRAVIOLET REACTOR VALIDATION TEMPORARY FACILITY SITE LEASE

EXHIBIT “C” – PAGE 1 OF 5

CONSTRUCTION DRAWINGS - LESSEE’S SITE I.D. “ Groundwater Pumping Station ”

The construction details of Lessee’s “Premises” on Lessor’s “Property” are shown on the 4 pages attached hereto as Pages 2 through 5 of Exhibit “C”.

ULTRAVIOLET REACTOR VALIDATION TEMPORARY FACILITY SITE LEASE

EXHIBIT “C” – PAGE 2 OF 5

CONSTRUCTION DRAWINGS - LESSEE’S SITE I.D. “ Groundwater Pumping Station ” (Sheet No. “C3”)

ULTRAVIOLET REACTOR VALIDATION TEMPORARY FACILITY SITE LEASE

EXHIBIT “C” – PAGE 3 OF 5

CONSTRUCTION DRAWINGS - LESSEE’S SITE I.D. “ Groundwater Pumping Station ” (Sheet No. “E1”)

ULTRAVIOLET REACTOR VALIDATION TEMPORARY FACILITY SITE LEASE

EXHIBIT “C” – PAGE 4 OF 5

CONSTRUCTION DRAWINGS - LESSEE’S SITE I.D. “ Groundwater Pumping Station ” (Sheet No. “E2”)

ULTRAVIOLET REACTOR VALIDATION TEMPORARY FACILITY SITE LEASE

EXHIBIT “C” – PAGE 5 OF 5

CONSTRUCTION DRAWINGS - LESSEE’S SITE I.D. “ Groundwater Pumping Station ” (Sheet No. “T1”)

ULTRAVIOLET REACTOR VALIDATION TEMPORARY FACILITY SITE LEASE

EXHIBIT “D” – PAGE 1 OF 2

LESSEE'S LIABILITY INSURANCE CERTIFICATE

Concurrent with execution of the Lease, Lessee will provide to Lessor a “Liability Insurance Certificate” substantially in accord with the sample attached hereto as Page 2 of Exhibit “D”, and in compliance with applicable sections of the Lease.

ULTRAVIOLET REACTOR VALIDATION TEMPORARY TFACILITY SITE LEASE

EXHIBIT “D” – PAGE 2 OF 2

LESSEE'S LIABILITY INSURANCE CERTIFICATE (SAMPLE)

ULTRAVIOLET REACTOR VALIDATION TEMPORARY FACILITY SITE LEASE

EXHIBIT “E” – PAGE 1 OF 1

LETTER OF CREDIT

ULTRAVIOLET REACTOR VALIDATION TEMPORARY FACILITY SITE LEASE

EXHIBIT “F” – PAGE 1 OF 1

"ENVIRONMENTAL LAWS" DEFINED

"HAZARDOUS SUBSTANCE" DEFINED

As used in this Lease, “Environmental Laws” means all federal, state and local environmental laws, rules, regulations and ordinances, including, but not limited to, the Resource Conservation and Recovery Act (42 U.S.C. §§ 6901 et seq.), the Clean Air Act (42 U.S.C.§§ 7401 et seq.), the Federal Water Pollution Control Act (33 U.S.C. §§ 1251 et seq.), the Emergency Planning and Community Right to Know Act (42 U.S.C. §§ 1101 et seq.), the Comprehensive Environmental Response, Compensation and Liability Act (42 U.S.C. §§ 9601 et seq.), the Toxic Substances Control Act (15 U.S.C. §§ 2601 et seq.), the Oil Pollution Control Act (33 U.S.C. §§ 2701 et seq.), the Hazardous Materials Transportation Act (49 U.S.C. §§ 1801 et seq.), and the Safe Drinking Water Act (42 U.S.C. §§ 300f through 300j).

As used in this Lease, “Hazardous Substance” means: (i) any hazardous substance as defined by the Comprehensive Environmental Response, Compensation and Liability Act, as amended from time to time; or (ii) any hazardous waste defined by the Resource Conservation and Recovery Act of 1976, as amended from time to time; or (iii) any and all material or substance defined as hazardous pursuant to any federal, state or local laws or regulations or order; or (iv) any and all material or substance which is or becomes regulated by any federal, state or local governmental authority; or (v) any and all material or substance which contains oil, gasoline, diesel fuel or other petroleum hydrocarbons and their by-products.