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3 <br />remove the PSO 2 Work schedule from the Port's Everett Shipyard project. In the event of such <br />termination, the City will pay 100% of the costs incurred under Section 2 of this Agreement up <br />to the date of termination and any other reasonable costs associated with the removing the PSO 2 <br />Work from the Everett Shipyard project (e.g., engineering redesign services to accommodate the <br />change, etc.). <br />(b) Port Off -Ramp. If the Port determines, in the exercise of its sole <br />discretion, to not proceed with the Everett Shipyard project, then this Section 2 terminates. In <br />the event of such termination, the Port will pay 100% of the costs incurred under Section 2 of <br />this Agreement up to the date of termination. <br />D. Construction. The Port shall complete all PSO 2 Work in accordance with the <br />PSO 2 Approved Plans and Specifications. The Port will coordinate with the City so that the <br />City takes a lead role in the oversight and inspection of PSO 2 Work The City may attend <br />construction meetings. The Port without City approval may execute change orders to the PSO 2 <br />Work that in total increase the cost of the PSO 2 Work by up to 10% above the amount of the <br />original PSO 2Work construction contract. The Port will not execute change orders above such <br />10% without the prior approval of the City, which will not be unreasonably withheld. <br />E. Completion of PSO 2 Work. Upon completion of the PSO 2 Work, the City will <br />promptly notify the Port that the PSO 2 Work is ready for acceptance. Upon such notice, (1) the <br />Port will accept the PSO 2 Work from the contractor, (2) the PSO 2 Work is the property of the <br />City, and (3) the City has responsibility for the maintenance and operation of the PSO 2 Work. <br />The costs of such maintenance and operation will be allocated between the Parties by mutual <br />agreement. The City and Port will cooperate to execute any documents (such as bills of sale) <br />necessary to document the City's ownership interest in the PSO 2 Work and will cooperate to <br />transfer to the City any contractor or manufacturer's warranties for the PSO 2 Work. <br />F. Permanent Easement. Upon completion of the PSO 2 Work, the City and Port <br />will promptly execute a 30 foot wide permanent non-exclusive easement at no cost to the <br />City for the PSO 2 Work in the form approved under Section 2.A.2 above. Except for a <br />provision substantively the same as Section 3 of this Agreement, the permanent easement will <br />not contain any indemnity or defense obligations relating to enviromnental matters. <br />G. Cost Sharing. <br />1. City Pays for PSO 2 Work. Except in the case of an off -ramp termination <br />by the Port, the City will pay all expenses related to the PSO 2 Work, including for example all <br />surveying, designing, permitting, and construction costs. This includes all costs arising from or <br />relating to any claims asserted against the Port by. construction contractors relating to the PSO 2 <br />Work. In the event of such a claim, the Parties will meet and confer, and the Port will not settle <br />such a claim without the prior approval of the City, which will not be unreasonably withheld. <br />2. <br />Staff Costs. Each party will bear the costs of its own PSO 2 staff work. <br />3. Billing Procedure. The Port will invoice the City for the PSO 2 Work. <br />The Parties anticipate that the Port will invoice the City as the Port makes payments to PSO 2 <br />Work consultants and contractors. An invoice will document in reasonable detail the amounts <br />7 <br />SOM\03221\0081\00762427.V1 <br />12 <br />