Everett Public Facilities District 2/28/2002

ARTICLE 3 DEMOLITION, DESIGN AND CONSTRUCTION Section 3.1 Demolition and Remediation. Lessee shall demolish, remove and properly dispose of the Existing Improvements (including testing, remediation and proper disposal of all Hazardous Substances that are contained in, or are part of, the Existing Improvements) and shall cause the Premises to be made ready for commencement of site grading (the "Turnover Condition"). Lessor shall reimburse Lessee in an amount not to exceed Eight Hundred Thousand Dollars ($800,000) for such work and phone lines relocation and gas lines relocation, less any expenditures made directly by Lessor toward the demolition, removal and disposal of the Existing Improvements testing,remediation and proper disposal of all Hazardous Substances and phone lines relocation and gas lines relocations. Reimbursement shall be made following Lessor's receipt and approval of invoices for all such costs. Section 3.2 Construction of Regional Center; Commencement of Construction; Completion Date. Lessee intends to construct the Regional Center on the Premises which will consist of buildings containing approximately ( ) gross square feet of space, and related improvements (including sidewalks, curbs, gutters, parking areas, landscaping, irrigation and lighting), in accordance with plans and specifications to be submitted to and approved by Lessor. The Regional Center construction, not including offsite improvements shall be at Lessee's sole cost and expense. Lessee's improvements to be constructed at Lessee's sole cost and expense include but are not limited to: onsite utilities; Public Utility District lines relocation, including relocation of the 115 KV transmission system to the east side of Broadway and steel poles; Hewitt Avenue frontage improvements other than standard curbs, gutters, sidewalk and street lights; Wall Street frontage improvements, including curbs, gutter and sidewalk; and Oakes Avenue frontage improvements, including curbs, gutter and sidewalk, and special utility connection charges. Lessor shall provide, at its sole cost and expense: standard frontage improvements, including curbs, gutter, sidewalk, street lights and bus pullout for Hewitt Avenue within public right-of-way; Broadway frontage improvements, including curbs, gutter and sidewalk within public right-of way, sewer and water utilities to the property line, and a traffic signal at the intersection of Wall Street and Broadway. As used herein, the term "Commencement of Construction" shall mean the date upon which Lessor has delivered the Premises to Lessee. As used herein, the term"Completion Date"means the date upon which a certificate of occupancy has been issued by the City of Everett ("City") for the Regional Center permitting occupancy and use thereof by Lessee. Section 3.3 Progress Reports. From and after the Effective Date of this Lease and through the Completion Date (or any earlier termination of this Lease), Lessee shall provide to Lessor monthly progress reports consisting of, at a minimum: (a) the then current construction schedule prepared by the Contractor; (b) summary of progress payments; (c) summary of change orders; (d) percentage of completion; (e) schedule of values; and (f) such other information as may be requested by the Lessor. Section 3.4 As-Built Drawings. At a reasonable time following completion of the Regional Center, Lessee shall deliver to Lessor one (1) copy of complete as-built drawings of the 3 GROUND LEASE COE--EPFD