Hazardous materials—Representations and remedies for breach.
Hazardous Materials. Landlord and Tenant agree as follows with respect to the existence of use of "Hazardous Material" (as defined in section G) on the Property:
A. Landlord here makes the following representations to Tenant, each of which is made only to the best of Landlord's knowledge as of the Effective Date and is based on no inquiry other than (i) information received from _________, from whom Landlord acquired the Property in _________, and (ii) the making and examination of that study of the Property undertaken by _________, the results of which are summarized in that letter dated as of _________ and that study dated _________ entitled "Subsurface Soil and Ground Water Investigation Performed at the _________(the "Study")":
(1). Any handling, transportation, storage, treatment, or use of Hazardous Material that has occurred on the Property before the Effective Date has been in compliance with all laws regulating Hazardous Material.
(2). The Property is, as of the Effective Date, in compliance with all Laws regulating the handling, transportation, storage, treatment, use, and disposition of Hazardous Material.
(3). The soil and ground water on or under the Property is free of Hazardous Material other than those materials identified as being present on the Property by (i) the Study, or (ii) that study dated _________ prepared by _________ and entitled "Assessment of Contamination From Leaks of Hazardous Materials in the _________ Ground Water Basin—205 J Report."
B. The provisions of this section B shall apply only if (i) it is determined at any time that the representations of Landlord contained in section A are not correct and that Landlord had actual knowledge of that incorrectness as of the Effective Date; or (ii) Landlord, its agents, employees, or contractors (but not tenants of Landlord or their agents, employees, or contractors) violate any Law regulating the handling, transportation, storage, treatment, use, or disposition of Hazardous Material with respect to the Property. If this section B applies because of an occurrence described in the immediately preceding sentence, then the following shall apply:
(1) Landlord shall be responsible for all costs incurred in complying with all Laws that relate to Hazardous Material and the occurrence in question; and
(2) Landlord shall indemnify, defend, and hold Tenant harmless from and against any and all claims, judgments, damages, penalties, fines, costs, liabilities, or losses (including, without limitation, sums paid in settlement of claims, attorneys' fees, consultant fees, and expert fees) that arise during or after the Lease Term from or in connection with the Hazardous Material and the occurrence in question except for Tenant's lost profits or damages or loss to Tenant's business.
C. Tenant shall (i) not cause or permit any Hazardous Material to be brought upon, or kept or used in or about the Property by Tenant, its agents, employees, contractors, or invitees, without the prior written consent of Landlord (which consent Landlord shall not unreasonably withhold as long as Tenant demonstrates to Landlord's reasonable satisfaction that such Hazardous Material is necessary or useful to Tenant's business and will be used, kept, and stored in a manner that complies with all Laws regulating any such Hazardous Material so brought upon, used or kept in or about the Property). If Tenant breaches the obligations stated in the preceding sentence, or if the presence of Hazardous Material on the Property caused or permitted by Tenant results in contamination of the Property, or if contamination of the Property by Hazardous Material otherwise occurs for which Tenant is legally liable to Landlord for resulting damage, then Tenant shall indemnify, defend, and hold Landlord harmless from any and all claims, judgments, damages, penalties, fines, costs, liabilities, or losses (including, without limitation, diminution in value of the Property, damages for the loss or restriction on use of rentable or usable space or of any amenity of the Property, damages arising from any adverse impact on marketing of space in the Building, and sums paid in settlement of claims, attorneys' fees, consultant fees, and expert fees) that arise during or after the Lease Term as a result of that contamination. This indemnification of Landlord by Tenant includes, without limitation, costs incurred in connection with any investigation of site conditions or any cleanup, remedial, removal, or restoration work required by any federal, state, or local governmental agency or political subdivision because of Hazardous Material present in the soil or ground water on or under the Property. Without limiting the above, if the presence of any Hazardous Material on the Property caused or permitted by Tenant results in any contamination of the Property, Tenant shall promptly take all actions at its sole expense as are necessary to return the Property to the condition existing before the introduction of any such Hazardous Material to the Property; provided that Landlord's approval of those actions shall first be obtained, which approval shall not be unreasonably withheld so long as those actions would not potentially have any material adverse long-term or short-term effect on the Property. [Consider adding additional clauses regarding the approval of contractors; causing least inconvenience to other tenants; and the like.]
D. Landlord and Tenant acknowledge that Landlord may become legally liable for the costs of complying with Laws relating to Hazardous Material that are not the responsibility of Landlord pursuant to section B or the responsibility of Tenant pursuant to section C, including the following: (i) Hazardous Material present in the soil or ground water on the Property of which Landlord has no knowledge as of the Effective Date; (ii) a change in Laws that relate to Hazardous Material which make that Hazardous Material which is present on the Property as of the Effective Date, whether known or unknown to Landlord, a violation of those new Laws; (iii) Hazardous Material that migrates, flows, percolates, diffuses, or in any way moves onto or under the Property after the Effective Date; (iv) Hazardous Material present on, or dumping or spilling (whether accidental or otherwise) on, the Property by other lessees of the Property or their agents, employees, contractors, or invitees, or by others. Accordingly, Landlord and Tenant agree that the cost of complying with Laws relating to Hazardous Material on the Property for which Landlord is legally liable and which are paid or incurred by Landlord shall be an Operating Expense (and Tenant shall pay Tenant's Allocated Share of that Operating Expense in accordance with Section _________) unless (i) the cost of that compliance, as between Landlord and Tenant, is made the responsibility of Landlord pursuant to section B; or (ii) the cost of that compliance, as between Landlord and Tenant, is made the responsibility of Tenant pursuant to section C. To the extent any such Operating Expense relating to Hazardous Material is subsequently recovered or reimbursed through insurance, or recovery from responsible third parties, or other action, Tenant shall be entitled to a proportionate reimbursement to the extent it has paid its share of the Operating Expense to which that recovery or reimbursement relates.
E. In spite of the provisions of section D, Tenant is here granted an option to terminate this Lease on the following terms and conditions:
(1). Tenant shall have the option to terminate this Lease if during any calendar year during the Lease Term, the share of Operating Expenses relating to Hazardous Material that Landlord requests in writing that Tenant pay exceeds an amount equal to 50 percent of the Base Monthly Rent due for that calendar year (which amount is referred to in this Agreement as the "50 Percent Limit"). For purposes of this section E(a), the Base Monthly Rent that is accrued for the first year of the Lease Term pursuant to section _________ shall be deemed to be due for that period.
(2). Tenant may only exercise that option to terminate by delivering to Landlord written notice of Tenant's election to exercise that option to terminate within 30 days after receipt from Landlord of an invoice demanding that Tenant pay its share of Operating Expenses relating to Hazardous Material which, if paid by Tenant, would result in Tenant having paid Operating Expenses relating to Hazardous Material in excess of the 50 Percent Limit for the calendar year in question.
(3). If Tenant properly exercises that option to terminate this Lease, (i) Tenant shall have no obligation to pay its share of the Operating Expense relating to Hazardous Material that gave rise to the option to terminate to the extent it exceeds the 50 Percent Limit; and (ii) the Lease shall terminate 180 days after Landlord receives notice of that exercise by Tenant.
(4). In spite of the above, if Tenant properly exercises that option to terminate, that exercise shall be ineffective and this Lease shall continue in full force and effect if Landlord agrees to pay the amount by which Tenant's share of the Operating Expense relating to Hazardous Material which gave rise to the option to terminate exceeds the 50 Percent Limit. If Landlord so agrees, Tenant shall pay its share of that Operating Expense relating to Hazardous Material up to the 50 Percent Limit, Landlord shall pay Tenant's share of that Operating Expense to the extent it exceeds the 50 Percent Limit, and this Lease shall continue in full force and effect.
F. Landlord shall cause at least three permanent testing wells to be installed on the Property in locations reasonably approved by Tenant, and shall cause the ground water to be tested to detect the presence of Hazardous Material at least once every 12 months during the Lease Term by the use of such tests as are then customarily used for those purposes. If Tenant so requests, Landlord shall supply Tenant with copies of those test results. The cost of those tests and of the maintenance, repair, and replacement of those wells shall be Operating Expenses. Tenant shall have the right at any time during the Lease Term to conduct its own test of the ground water underlying the Property by using those wells as long as each of the following conditions is satisfied: (i) those tests are conducted by Tenant at its own expense; (ii) it repairs any damage to those wells caused by those tests; and (iii) it delivers copies of the results of those tests to Landlord.
G. It shall not be unreasonable for Landlord to withhold its consent to any proposed Transfer if (i) the proposed Transferee's anticipated use of the Premises involves the generation, storage, use, treatment, or disposal of Hazardous Material; (ii) the proposed Transferee has been required by any prior landlord, lender, or governmental authority to take remedial action in connection with Hazardous Material contaminating a property if the contamination resulted from that Transferee's actions or use of the property in question; or (iii) the proposed Transferee is subject to an enforcement order issued by any governmental authority in connection with the use, disposal, or storage of a Hazardous Material.
H. As used in this Agreement, the term "Hazardous Material" means any hazardous or toxic substance, material, or waste which is or becomes regulated by any local governmental authority, the state of _________, or the United States government. The term "Hazardous Material" includes, without limitation, any material or substance which is (i) defined as a "hazardous waste," "extremely hazardous waste" or "restricted hazardous waste" under _________[state code citation], or listed pursuant to _________[state code citation regarding Hazardous Waste Control Law], (ii) defined as a "hazardous substance" under _________[state code citation regarding Hazardous Substance Account Act], (iii) defined as a "hazardous material," "hazardous substance," or "hazardous waste" under _________[state code citation regarding Hazardous Materials Release Response Plans and Inventory], (iv) defined as a "hazardous substance" under _________[state code citation regarding Underground Storage of Hazardous Substances], (v) petroleum, (vi) asbestos, (vii) listed or defined as hazardous or extremely hazardous pursuant to _________[state administrative code citation], (viii) designated as a "hazardous substance" pursuant to section 311 of the Federal Water Pollution Control Act, 33 USCA §1321, (ix) defined as a "hazardous waste" pursuant to section 1004 of the Federal Resource Conservation and Recovery Act, 42 USCA §§ 6901 et seq. (42 USCA §6903), or (x) defined as a "hazardous substance" pursuant to section 101 of the Comprehensive Environmental Response, Compensation and Liability Act, 42 USCA §§ 9601 et seq.
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