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ABSOLUTE NET LEASE

Lease Agreement

ABSOLUTE NET LEASE | Document Parties: HN PROPERTY OWNER LLC | NORTHEAST, INC | Real Estate Holdings, Inc | Vice President Real Estate Management You are currently viewing:
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HN PROPERTY OWNER LLC | NORTHEAST, INC | Real Estate Holdings, Inc | Vice President Real Estate Management

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Title: ABSOLUTE NET LEASE
Governing Law: Connecticut     Date: 5/9/2007
Law Firm: Meister Seelig & Fein LLP    

ABSOLUTE NET LEASE, Parties: hn property owner llc , northeast  inc , real estate holdings  inc , vice president real estate management
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Exhibit 10.1

ABSOLUTE NET LEASE

(One Far Mill Crossing, Shelton, Connecticut)

THIS ABSOLUTE NET LEASE ( “Lease ), dated solely for reference purposes as of the 29 th day of March 2007, is entered into by and between HN PROPERTY OWNER LLC , a Delaware limited liability company (the “Landlord” ) and HEALTH NET OF THE NORTHEAST, INC., a Delaware corporation (the “Tenant” ).

Recitals:

A. DACOURT GROUP, INC. , a North Carolina corporation ( “Buyer” ) is the buyer under that certain Purchase and Sale Agreement, dated as the 21st day of February, 2007, under which Health Net of California Real Estate Holdings, Inc., a California corporation (the “Seller” ), is the Seller (the “Sale Contract” );

B. Pursuant to the Sale Contract, Buyer assigned its rights thereunder to Landlord, and Landlord has purchased the following property from Seller:

(i) that certain real property located in the City of Shelton, County of Fairfield, State of Connecticut, commonly known as One Far Mill Crossing, and more particularly described in Exhibit A attached hereto and made part hereof (the “Land” );

(ii) the building comprised of approximately three hundred twenty-seven thousand three hundred twenty-seven (327,327) square feet of gross leasable area (the “Building” ), plus the structures, improvements and fixtures erected now or hereafter located on the Land (collectively, the “Improvements,” ) and together with the Land, collectively, the “Property” ;

(iii) all of Seller’s right, title and interest, if any, in and to any rights and appurtenances pertaining to the Land, including minerals, oil and gas rights, air, water and development rights, roads, alleys, hereditaments, benefits, privileges, tenements easements, streets and ways adjacent to the Land, rights of ingress and egress thereto, any strips, gaps and gores within or bounding the Land and in profits or rights or appurtenances pertaining to the Land, and any insurance proceeds owing to Seller for the loss of such rights or appurtenances;

(iv) all of Seller’s right, title and interest, if any, in the land laying in the bed of any street, highway, road or avenue, opened or proposed, public or private, in front of or adjoining the Land, to the center line thereof; and

(v) all of Seller’s right, title and interest, if any, in any award or payment made or to be made in lieu of any of the foregoing or any portion thereof and any unpaid award for damage to the Land or any of the Improvements by reason of change of grade or closing of any street, road or avenue (the property described in this clause (v), together with the property described in clauses (iii) and (iv) above, are collectively referred to in this Lease as the “ Appurtenant Rights ”).

(The Property and the Appurtenant Rights so acquired by Landlord from Seller are hereinafter collectively referred to as the “Premises” .)

C. Landlord and Tenant desire to set forth their understanding with respect to the use and operation of the Premises, and their respective rights, duties and obligations pertaining thereto, all upon the terms and subject to the conditions hereinafter set forth.

NOW, THEREFORE, in consideration of the foregoing, and other good and valuable consideration paid by each of the parties hereto to the other, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, do hereby covenant and agree as follows:

Landlord hereby leases to Tenant, and Tenant hereby leases from Landlord, the Premises in accordance with the provisions of this Lease; and


SUBJECT ONLY TO all those certain conditions and other matters affecting the title of the Premises as set forth in Exhibit B attached hereto and made part hereof (the “Permitted Encumbrances” ) (provided, however, that nothing in this paragraph shall (i) be deemed to constitute a covenant or representation by Landlord with respect to the condition of title, or (ii) modify the terms of Section 7.3 below or (iii) affect Tenant’s or Landlord’s rights and obligations hereunder).

IT IS MUTUALLY COVENANTED AND AGREED between Landlord and Tenant as follows:

ARTICLE 1

Term

1.1 Primary Term . The term of this Lease (the “Primary Term”) shall commence on March 29, 2007 (the “ Commencement Date ”), and shall expire at 11:59 PM on the date (the “ Expiration Date ”) which is the day immediately preceding the date that is ten (10) years after the termination of the Stub Period (defined below), unless extended or earlier terminated pursuant to the terms of this Lease. The date that is the eleventh (11th) day of a calendar month first occurring after the Commencement Date is hereinafter referred to as the “Start Date,” and the period of time commencing on the Commencement Date and ending at 11:59 PM on the day immediately preceding the Start Date is hereinafter referred to as the “ Stub Period .” (By way of example only, if the Commencement Date were to occur on March 25, 2007, as contemplated by the Sale Contract, the Start Date would be April 11, 2007, the Stub Period would be March 25, 2007 through April 10, 2007 (inclusive of both dates), and the Expiration Date would be April 10, 2017.) Tenant acknowledges that except as specifically set forth in this Lease, no work was or is required to be performed by Landlord, no contributions were or are required to be made by Landlord to Tenant and all conditions precedant to Tenant’s obligations hereunder have been satisfied.

1.2 Extended Terms. Tenant shall have the right to extend this Lease for two (2) consecutive extended terms of ten (10) years each (collectively, the “Extended Terms” and individually, an “Extended Term” , and together with the Primary Term, called the “Term” ) upon the expiration of the Primary Term or the preceding Extended Term, as the case may be, unless this Lease shall be sooner terminated pursuant to the terms of this Lease. If no Event of Default shall exist on such commencement date, each Extended Term shall commence on the day immediately succeeding the expiration date of the Primary Term or the preceding Extended Term, as the case may be, and shall end at midnight Eastern Time on the day immediately preceding the tenth (10th) anniversary of the first day of such Extended Term. Provided there is no Event of Default at the time of exercise of such option, Tenant may exercise each said option to extend this Lease for an Extended Term by giving written notice to that effect at least eighteen (18) months prior to the expiration of the then-existing Term. If Tenant does not exercise any such option in a timely manner, then all rights to extend the Lease automatically shall terminate, Landlord shall have the right during the remainder of the Term of this Lease to advertise the availability of the Premises for sale or reletting and to erect upon the Premises signs appropriate for the purpose of indicating such availability. The phrase “Term of this Lease” or term hereof” means the Primary Term, plus any Extended Term with respect to which the right has been exercised. Except as otherwise expressly provided herein, all of the provisions of this Lease shall be applicable during each Extended Term.

1.3 Base Rent During Extended Terms .

(a) If Tenant’s option to extend the term of this Lease is exercised, the Base Rent for each Extended Term shall be equal to the ninety-five percent (95%) of the Fair Market Rent for the Premises, as determined pursuant to this Section 1.3.

(b) Within thirty (30) days after Tenant exercises its option to extend, Landlord will advise Tenant of its determination of Fair Market Rent for the Extended Term in question. If Landlord and Tenant agree on the Fair Market Value for the Extended Term, they shall execute a written confirmation of such extension reflecting thereon the agreed upon Base Rent. If Landlord and Tenant cannot agree on the Base Rent for the Extended Term within thirty (30) days of the date that Landlord provides Tenant with Landlord’s determination of the new rent, then within thirty (30) days after such failure to reach agreement, Landlord shall furnish to


Tenant a notice in writing (the “Landlord’s Notice” ) stating what Landlord perceives to be the Fair Market Rent projected to the commencement date of the Extended Term. Landlord’s Notice shall be accompanied by a statement from a qualified real estate appraiser stating the appraiser’s opinion of Fair Market and that it has been determined in accordance with this Section 1.3. If Tenant disagrees with the estimate of Fair Market Rent submitted by Landlord with Landlord’s Notice, then within thirty (30) days after receipt of Landlord’s Notice, Tenant shall have the right to submit to Landlord an appraisal by a qualified real estate appraiser of Fair Market Rent effective as of the commencement date of the Extended Term. If the higher estimate is not more than one hundred five percent (105%) of the lower estimate, the new Base Rent shall be established as the average of the two appraisals. If not, the two appraisers acting on behalf of Landlord and Tenant, shall, within fifteen (15) days after Tenant’s appraisal has been submitted, jointly appoint a third qualified real estate appraiser (the “Referee” ). If the two appraisers are unable to agree upon the selection of a Referee, then the Referee shall be selected within fifteen (15) days thereafter by an arbitrator pursuant to the rules of the American Arbitration Association. The Referee shall, within thirty (30) days after appointment, render his or her decision which decision shall be strictly limited to choosing one of the two determinations made by the two appraisers chosen by Landlord and Tenant with respect to Fair Market Rent. The decision of the Referee shall be binding upon Landlord and Tenant and shall constitute the Base Rent for the applicable Extended Term. Landlord and Tenant shall each pay for their own appraisal, and the cost of the Referee shall be shared equally by Landlord and Tenant.

(c) In determining the “Fair Market Rent,” the highest and best use for the Premises, the Improvements, or the Land, will not be considered, but rather only the then-prevailing rent for premises comparable in size and use to the Premises, leased for a period equal to the Extended Term by a major creditworthy tenant occupying more than 100,000 rentable square feet of comparable space in similar commercial buildings located within five (5) miles of the Premises, taking into consideration the lease term, age of the Premises, all allowances for tenant improvements (including architectural and engineering fees), moving allowances, landlord expenses, operating expense pass throughs, rent abatement, brokerage expenses, tenant benefits or any other market concessions which may be commonly available at the commencement of such Extended Term. Under no circumstances shall this determination take into account any value attributable to the rental value of the Parking Structure, the use of which shall be free to Tenant during any Extended Term hereunder. All such relevant inducements available in the market shall be credited against Fair Market Rent to the extent not received by Tenant. In no event shall Tenant, or its employees or visitors, be charged for parking. Notwithstanding any contrary provision of this Section 1.3 :

(i) in no event shall the Base Rent, for the first twelve months of the first Extended Term, be less than $8,114,436.00 per year, nor shall it be more than $8,510,502.00 per year;

(ii) in no event shall the Base Rent, for the first twelve months of the second Extended Term, be less than the Base Rent in effect as of the last day of the first Extended Term, nor shall it be more than an amount that is equal to one hundred and four and 88/100ths percent (104.88%) of the Base Rent in effect as of the last day of the first Extended Term; and

(iii) as of the first anniversary of the beginning of each Extended Term, and each anniversary thereafter during such Extended Term, the Base Rent shall be increased by three percent (3%).

(d) Notwithstanding anything in this Section 1.3 to the contrary, if the Referee selects Landlord’s appraisal, Tenant may rescind the exercise of its option to extend by so notifying Landlord within ten (10) days after Tenant’s receipt of the Referee’s determination (the notice so given is hereinafter referred to as a “Rescission Notice” ); in such event, (i) Tenant shall promptly reimburse Landlord for the cost of Landlord’s appraisal and shall pay for the full cost of the Referee, and (ii) the Term of the Lease shall, at Landlord’s option (which option must be exercised by a notice given to Tenant within ten (10) days after receipt of the Rescission Notice), be extended for six (6) months past the Expiration Date, on all the same terms and conditions as the Term then in effect, except Tenant shall have no further option to extend the Term.


(e) The Premises shall be leased during the Extended Terms “AS-IS” in their then-current condition, and in no event shall Landlord have any obligation to pay to Tenant any refurbishing or tenant improvement allowance, or any obligation to pay any leasing commissions to any broker representing Tenant in connection therewith.

ARTICLE 2

Rent

2.1 Base Rent; No Offset. Tenant covenants and agrees to pay to Landlord, promptly when due, without notice or demand and without deduction or set-off of any amount for any reason whatsoever, annual rent base rent (the “Base Rent” ) for the Premises during the Term according to the following schedule:

 

 

 

 

 

 

 

 

Period*

  

Annual Base Rent*

  

Monthly Base Rent*

Stub Period

  

$

18,639.21 per day

  

 

N/A

Start Date through Month 12 thereafter

  

$

6,803,313.00

  

$

566,942.75

Months 13-24

  

$

6,989,889.00

  

$

582,490.75

Months 25-36

  

$

7,809,839.00

  

$

650,819.92

Months 37-48

  

$

8,007,778.00

  

$

667,314.83

Months 49-60

  

$

8,211,655.00

  

$

684,304.58

Months 61-72

  

$

8,421,648.00

  

$

701,804.00

Months 73-84

  

$

8,637,942.00

  

$

719,828.50

Months 85-96

  

$

8,860,724.00

  

$

738,393.67

Months 97-108

  

$

9,090,189.00

  

$

757,515.75

Months 109-120

  

$

9,326,538.00

  

$

777,211.50


*

The periods (other than the Stub Period) refer to the time commencing on and after the Start Date. The parties acknowledge that any statement of gross leasable area of the Building, or of the square footage of the Land, set forth in this Lease or in any materials provided by any representative of Tenant or Tenant’s affiliated companies, or by any brokers or other parties, is merely an approximation, and if it is ultimately determined that the actual gross leasable area of the Building, or the actual area of the Land, is more or less than as stated in this Lease or in other materials, such discrepancy shall not result in any modification in the monthly and annual Base Rent amounts to be paid under this Lease.

2.2 Partial Months; Due Date. Notwithstanding the foregoing, i) the Base Rent payable for Stub Period shall be payable in advance on the Commencement Date, and ii) once the Commencement Date has occurred, the parties shall enter into a written amendment to this Lease that memorializes the parties’ agreement on the Start Date, the Stub Period, the Expiration Date, and the calendar dates for each increase in Base Rent pursuant to Section 2.1 above. Base Rent shall be payable in installments, in advance, on the tenth (10th) day of each month during the Term (“ Due Dates ”).

2.3 Good Funds. The Base Rent shall be paid monthly, in advance, in good United States funds on the Due Dates. The Base Rent must be paid by wire transfer of funds, per instructions to be provided by Landlord prior to the Commencement Date.

2.4 Full Net Lease . It is intended that the Base Rent shall be an absolutely net return to Landlord throughout the Term of this Lease, free of any expense, charge, or other deduction whatsoever with respect to the Premises or Landlord’s interest therein, or the ownership, leasing, operation, management, maintenance, repair, use or occupation thereof. This Lease is an “absolute lease” and Tenant’s obligations arising or accruing during the Term to pay


all Base Rent, additional rent and all other payments hereunder required to be made by Tenant shall be absolute and unconditional and Tenant shall pay all such amounts without notice, demand, counterclaim, set-off, deduction or defense and without abatement, suspension, deferment, diminution or reduction (except as otherwise expressly provided in this Lease), free from any charges, assessments, impositions, expenses or deductions of any and every kind or nature whatsoever. All costs, expenses and obligations of every kind and nature whatsoever relating to the Property and the appurtenances thereto and the use, maintenance and occupancy thereof which may arise or become due and payable with respect to the Term (whether or not the same shall become payable during such Term or thereafter) or for any period prior to the expiration of the Term shall be paid by Tenant (except as otherwise expressly provided in this Lease). Tenant assumes the sole responsibility for the condition, use, operation, maintenance, underletting and management of the Premises, and Landlord shall have no responsibility in respect thereof and shall have no liability for damage to Tenant’s personality or any subtenant of Tenant on any account or for any reason whatsoever. Except as otherwise expressly provided in Article 10 or Article 11, this Lease shall not terminate, nor shall Tenant have any right to terminate, rescind or void this Lease or to be released or discharged from any obligations or liabilities hereunder for any reason, including, without limitation: (i) any damage to or destruction of the Premises; (ii) any restriction, deprivation (including eviction) or prevention of, or any interference with, any use or the occupancy of the Premises; (iii) any condemnation, requisition or other taking or sale of the use, occupancy or title of or to the Premises; (iv) any action, omission or breach on the part of Landlord under this Lease or under any other agreement between Landlord and Tenant; or (v) the inadequacy or failure of the description of the Premises to demise and let to Tenant the property intended to be leased hereby. Tenant will remain obligated under this Lease in accordance with its terms, and will not take any action to terminate, rescind or void this Lease as a result of any bankruptcy, insolvency, reorganization, liquidation, dissolution or other proceeding affecting Landlord or any assignee of Landlord, or any action with respect to this Lease which may be taken by any receiver, trustee or liquidator or by any court.

2.5 Interest on Delinquent Rent. Any Base Rent or other sums due to Landlord under this Lease and not paid on or before the due date therefor shall bear interest at the Interest Rate from the due date until paid. The “Interest Rate” shall equal the lesser of (i) the highest rate allowable by law, or (ii) the greater of (a) the rate publicly announced from time to time, by Citibank N.A. or its successor as its Prime Rate or its Reference Rate or other similar benchmark, plus five percent (5%), and (b) thirteen percent (13%) per annum, or (iii) the default rate charged by the Mortgagee (as defined below) on delinquent loan payments (and taking into account any grace or cure periods permitted by such Mortgagee). Payment of such interest shall not excuse or cure any default by Tenant under this Lease. As used in this Lease, the term “Mortgagee” shall mean any lender whose loan constitutes a first lien on the Premises and mezzanine debt lender which acquired a lien on the membership interests in Landlord in connection with Landlord’s acquisition of the Premises and the foregoing entities’ successors and assigns.

2.6 Late Charge. Tenant hereby acknowledges that late payment by Tenant of Base Rent, and other sums due hereunder will cause Landlord to incur costs not contemplated by this Lease, the exact amount of which will be extremely difficult to ascertain. Such costs include, but are not limited to, processing and accounting charges and late charges which may be imposed on Landlord by the terms of any mortgage or trust deed covering the Premises. Accordingly, if any installment of Base Rent or any other sum due from Tenant shall not be received by Landlord on or before the due date thereof, Tenant shall pay to Landlord a late charge equal to five percent (5%) of such overdue amount or such lesser amount charged by the Mortgagee on delinquent loan payments (taking into account any grace or cure periods permitted by such Mortgagee). It is agreed that such late charge represents a fair and reasonable estimate of the costs Landlord will incur by reason of late payment by Tenant. Acceptance of such late charge by Landlord shall in no event constitute a waiver of any Tenant default with respect to such overdue amount, nor prevent Landlord from exercising any of the other rights and remedies granted hereunder, including but not limited to the collection of interest on such late payment.

ARTICLE 3

Expenses, Taxes

3.1 Tenant to Pay All Expenses and Taxes. Tenant shall pay and discharge, punctually as and when the same shall become due and payable, each and every item of expense,


of every kind and nature whatsoever relating to the ownership, use, maintenance, operation, or occupancy of the Property, or for the payment of which Landlord is, or shall or may be or become, liable by reason of any rights or interest of Landlord in or under this Lease, including all real estate taxes, personal property taxes, privilege taxes, excise taxes, business and occupation taxes, gross sales taxes, including any sales tax imposed on the rental payments hereunder or under a sublease, occupational license taxes, water charges, sewer charges, assessments of any nature and all other governmental impositions and charges of every kind and nature whatsoever (collectively, the “Taxes,” and individually, a “Tax” ), when the same shall be due and payable without penalty or interest. It is the intention of the parties hereto that, insofar as the same may lawfully be done, Landlord shall be, except as specifically provided for herein, free from all expenses in any way related to the Premises and the use, maintenance, or occupancy thereof.

3.2 Proration. Any Tax relating to a fiscal period of any taxing authority falling partially within and partially outside the Term of this Lease, shall be apportioned and adjusted between Landlord and Tenant.

3.3 Proof of Payment. Tenant shall furnish to Landlord, not later than fifteen (15) days prior to the last date when any Tax must be paid by Tenant as provided in this Article without premium, interest or penalty, official receipts of the appropriate taxing authority or if not available, a copy of Tenant’s cancelled check for payment with receipts to follow evidencing the payment thereof.

3.4 Right to Contest. Provided that an Event of Default has not occurred and is then continuing, Tenant may defer payment of a Tax so long as the validity or the amount thereof is contested by Tenant with diligence and in good faith, provided, however, that (a) Landlord determines that such contest suspends the obligation to pay the tax or assessment and such nonpayment will not permit or result in the sale, loss or forfeiture of any part of the Property and (b) Tenant shall furnish to Landlord cash or a bond in an amount and on terms satisfactory to Landlord and shall pay the Tax and a reasonable additional sum to cover possible interest, costs and penalties in sufficient time to such that nonpayment will not subject the Premises or any part thereof to sale, loss, forfeiture or other liability by reason of such nonpayment nor subject any party to any potential criminal liability. Such contest shall be at Tenant’s sole cost and expense. Tenant covenants to indemnify and save harmless Landlord from any costs or expenses incurred by Landlord as a result of such contest and, in all events pay such taxes and other amount prior to the issuance of an order under which the Property may be sold.

3.5 Exclusions. Notwithstanding anything to the contrary in this Article 3 , “Taxes” shall not include, and in no event shall Tenant be required to pay i) any inheritance, estate, succession, partnership, corporate, capital stock, gift, income or profits tax imposed upon Landlord, provided that such exclusion shall not apply to any such tax based on Landlord’s gross receipts or does not provide an expense for Landlord’s interest costs or a depreciation allowance, or ii) any penalties resulting from Landlord’s failure to timely file any tax or informational returns when due (unless Tenant, and not Landlord, is expressly required by law to pay such tax), or iii) any cost directly attributable to Landlord’s transfer of its interest in the Premises or any portion thereof (including, without limitation, any transfer or conveyance taxes).

3.6 Impounds. In the event that (i) Lease Guarantor is not liable under the Guaranty of Lease, (ii) insurance premiums have not been paid when due or Taxes have not been paid at least 15 days prior to the due date therefore, (iii) Tenant failed to provide proof to Landlord and Mortgagee of such payment as required by the terms of Section 3.3 above, or (iv) Lease Guarantor is downgraded to a rating below BB- (by S&P) or below Ba3 (by Moody’s) or (v) there has been an Event of Default under this Lease or the Guaranty of Lease, then upon demand therefore, in addition to monthly Base Rent payments, as such payments are due, Landlord shall have the right to require Tenant to thereafter make monthly payments to Landlord (or at Landlord’s direction) in amounts sufficient to pay, in advance, one-twelfth (1/12th) of the amount reasonably estimated by Landlord to equal annual Taxes and insurance premiums (the “Impound Funds” ) each as reasonably determined by Landlord. So long as no Event of Default hereunder has occurred and is continuing, all Impound Funds shall be held by Landlord’s Mortgagee in an account (the “ Impound Account ”) to pay said taxes, assessments and insurance premiums in one installment before the same become delinquent. Tenant shall be responsible for ensuring the receipt by Landlord and Mortgagee, at least thirty (30) days prior to the respective due date for payment thereof, of all bills, invoices and statements for all taxes, assessments and insurance premiums to be paid from the Impound Account, and so long as no Event of Default


hereunder or under this Lease has occurred and is continuing, Landlord shall cause Mortgagee to pay the governmental authority or other party entitled thereto directly to the extent funds are available for such purpose in the Impound Account. In making any payment from the Impound Account, Landlord and its Mortgagee shall be entitled to rely on any bill, statement or estimate procured from the appropriate public office or insurance company or agent without any inquiry into the accuracy of such bill, statement or estimate and without any inquiry into the accuracy, validity, enforceability or contestability of any tax, assessment, valuation, sale, forfeiture, tax lien or title or claim thereof. No interest on funds contained in the Impound Account shall be paid. If the total funds in the Impound Account shall exceed the amount of payments actually applied by Landlord for the purposes of the Impound Account, such excess may be credited by Landlord on subsequent payments to be made hereunder or, at the option of Landlord, refunded to Tenant. If however, the Impound Account shall not contain sufficient funds to pay the sums required when the same shall become due and payable, Tenant shall, within five (5) days after receipt of written notice thereof, deposit the full amount of any such deficiency.

ARTICLE 4

Use and Compliance with Laws, Etc.; Tenant’s Environmental Covenants

4.1 Use. Tenant agrees that, unless and to the extent that it shall obtain Landlord’s prior approval (which may be withheld in Landlord’s absolute discretion), it will not use the Premises, nor will it suffer or permit the same to be used, for any purpose that (i) is not permitted under applicable zoning regulations, or (ii) would void insurance policies required to be carried by Tenant pursuant to the terms of this Lease, or (iii) would cause material, permanent damage to the structural components of the Building, or (iv) would violate the Permitted Encumbrances, or (v) would violate Tenant’s obligations regarding the storage of Hazardous Materials pursuant to Section 4.3 below, or (vi) would involve the storage or sale of gasoline (in no event, however, shall the terms of this Section 4.1 or any other provision of this Lease prohibit Tenant from installing, maintaining, or operating one or more stand-by emergency generators or gas-operated maintenance equipment on the Property, provided that such activities are conducted in compliance with all applicable Legal Requirements, as defined below, Hazardous Materials Laws (as defined in Section 4.2 below) and only reasonably necessary amounts of fuel are stored at the Property). Tenant shall not seek, make, consent to or acquiesce in any change in the zoning of the Property.

4.2 Compliance with Laws. Tenant shall, throughout the Term hereof, promptly comply or cause compliance with all laws and ordinances and the orders, rules, regulations, and requirements (“ Legal Requirements ”) of all federal, state, county and municipal governments which may be applicable to the Premises, foreseen or unforeseen, ordinary as well as extraordinary, even if the same shall require structural or extraordinary repairs, alterations or additions. Tenant accepts the Premises in the actual condition in which the same are as of the Commencement Date. If the use of the Property becomes a non-conforming use, Tenant shall not permit such use to be discontinued or abandoned. Tenant shall comply and have sole responsibility for complying with the provisions of the Americans with Disabilities Act as now promulgated or as amended after the date hereof and any similar type of legislation, federal, state or local or other legislation hereinafter promulgated or hereinafter amended by any governmental authority applicable to the Premises. Tenant and Guarantor each is (i) not currently identified on the Specially Designated Nationals and Blocked Persons List maintained by the Office of Foreign Assets Control, Department of the Treasury (“OFAC”) and/or on any other similar list and is in compliance with OFAC, (ii) not an entity with whom a citizen of the United States is prohibited to engage in transactions by any trade embargo, economic sanction, or other prohibition of United States law, regulation, or Executive Order of the President of the United States, (iii) not an “Embargoed Person”, (iv) in compliance with the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 and the rules and regulations promulgated thereunder. None of the funds or assets of Tenant or Guarantor constitute property of, or are beneficially owned, directly or indirectly, by any person, entity or government that is an Embargoed Person and no Embargoed Person has any interest in Tenant.

4.3 Tenant’s Environmental Covenants .

(a) Tenant shall not use or permit the use of the Premises in any manner which would permit or cause any Hazardous Materials (as defined below) to be stored upon or used in connection with the Premises in violation of applicable Hazardous Material Laws (as


defined below). Tenant shall not permit any condition to exist in violation of applicable law which is or may be categorized by any federal, state or local government or agency having jurisdiction over the Premises as an actual or potential threat or danger to the environment.

(b) Landlord shall have no obligation whatsoever, and Tenant shall be obligated, to keep the Premises in compliance with the Hazardous Material Laws, it being agreed that such and, obligation (including the obligation to cure any violation of Hazardous Material Laws that occurred as a result of any act or omission arising prior to, after the Commencement Date or which violation occurred prior to, after or is ongoing as of, the Commencement Date) shall be entirely Tenant’s.

(c) Tenant shall protect, indemnify and hold harmless Landlord, Mortgagee, and all Landlord-Related Parties (as defined in Section 6.1 below) from and against any and all claim, loss, damage, cost, expense, liability, fines, penalties, charges, administrative and judicial proceedings and orders, judgments, remedial action requirements, enforcement actions of any kind (including, without limitation, reasonable attorneys’ fees and disbursements of any indemnified party) to the extent directly or indirectly arising out of or attributable to the breach of any of the covenants, representations and warranties of this Article 4 or the presence, use, generation, manufacture, production, handling, treatment, removal, storage, release, threatened release, discharge, disposal, decontamination, clean-up or transport of Hazardous Materials on, under, from or about the Premises, or any other activity carried on or undertaken on the Premises, whether prior to or during the Term (but in no event shall Tenant have any liability as to any of the foregoing events that arise solely as a result of an act or omission occurring after the later to occur of the expiration of the Term and Tenant’s vacation of the Property) and whether by Tenant or any predecessor in title or any employees, agents, contractors or subcontractors of Tenant or any predecessor in title, or any third persons at any time, whether occupying or present on the Premises or any other premises, whether contiguous, adjacent or located proximate to the Premises, including, without limitation: (a) the costs of any required or necessary repair, cleanup or detoxification of the Premises and the preparation and implementation of any closure, remedial or other required plans including, without limitation, (i) the costs of removal or remedial action incurred by the United States Government or the state in which the Premises is located, or response costs incurred by any other person, or damages from injury to, destruction of, or loss of natural resources, including the costs of assessing such injury, destruction on loss, incurred pursuant to any Hazardous Materials Laws; (ii) the clean-up costs, fines, damages or penalties incurred pursuant to the provisions of applicable state law; and (iii) the cost and expenses of abatement, correction or clean-up, fines, damages, response costs or penalties which arise from the provisions of any other statute, state or federal; and (b) liability for personal injury or premises damage, including damages assessed for the maintenance of the public or private nuisance, response costs or for the carrying on of an abnormally dangerous activity.

(d) As used herein, “Hazardous Materials” means any material, substance or waste designated as hazardous, toxic, radioactive, injurious or potentially injurious to human health or the environment, or as a pollutant or contaminant, or words of similar import, under any Hazardous Materials Law (as defined below), including, but not limited to, petroleum and petroleum products, asbestos, polychlorinated biphenyls, urea formaldehyde, radon gas, radioactive matter, medical waste, and chemicals which may cause cancer or reproductive toxicity. As used herein, “Hazardous Materials Law” means any federal, state or local law, statute, regulation or ordinance now or hereafter in force, as amended from time to time, pertaining to materials, substances or wastes which are injurious or potentially injurious to human health or the environment or the release, disposal or transportation of which is otherwise regulated by any agency of the federal, state or any local government with jurisdiction over the Premises or any such material, substance or waste removed therefrom, or in any way pertaining to pollution or contamination of the air, soil, surface water or groundwater, including, but not limited to, the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended (42 U.S.C. Section 9601 et seq.), the Resource Conservation and Recovery Act of 1976 (42 U.S.C. Section 6901 et seq.), the Clean Water Act (33 U.S.C. Section 1251 et seq.), the Safe Drinking Water Act (42 U.S.C. Section 300f et seq.), the Hazardous Materials Transportation Act (49 U.S.C. Section 1801 et seq.), the Toxic Substance Control Act (15 U.S.C. Section 2601 et seq.).

(e) Tenant shall not install or use any underground storage tanks and shall prohibit the use, generation, handling, storage and disposal of Hazardous Substance by all


parties, including invitees and trespasses, and without limiting the generality of the foregoing, during the term of this Lease, shall not install on the Property or permit to be installed in the Improvements asbestos or any substance containing asbestos. If required by Landlord (including if recommended in any third-party environmental report delivered to Landlord) or under any Environmental Law, Tenant shall maintain an Operations and Maintenance Program (“ O&M Program ”) for the management of asbestos, lead-based paint, radon or any other Hazardous Substances at the Property.

(f) Tenant shall promptly notify Landlord if Tenant shall become aware of (i) any Hazardous Substances at, on, under, affecting or threatening to affect the Property, (ii) any lien, action or notice affecting or threatening to affect the Property or Tenant resulting from any violation or alleged violation of Environmental Law, (iii) any investigation, inquiry or proceeding concerning Tenant or the Property pursuant to any Environmental Law or otherwise relating to Hazardous Substances, or (iv) any occurrence, condition or state of facts which would render any representation or warranty in this Section incorrect in any respect if mad at the time of such discovery. Further, immediately upon receipt of the same, Tenant shall deliver to Landlord copies of any and all orders, notices, permits, applications, reports, potential non-compliance with any Environmental Laws in connection with the Property or presence or existence of any Hazardous Substances at, on, about, under, within, near or in connection with the Property. Tenant shall, promptly and when and as required, at Tenant’s sole cost and expense, take all actions as shall be necessary or advisable for compliance with the terms of this Section or for the remediation of any and all portions of the Property or other affected property, including, without limitation, all investigative, monitoring, removal, containment, remedial and response actions in accordance with all applicable Environmental Laws (and in all events in a manner satisfactory to Landlord), and shall further pay or cause to be paid, at no expense to Landlord, all remediation, response, administrative and enforcement costs of applicable governmental agencies which may be asserted against the Property. In the event Tenant fails to do so (i) Landlord may, but shall not be obligated to undertake remediation at the Property or other affected property necessary to bring the Property into conformance with the terms of Environmental Laws and (ii) Tenant hereby grants to Landlord and its agents and employees access to the Property and a license to do all things Landlord shall deem necessary to bring the Property into conformance with Environmental Laws. Any and all out-of-pocket costs and reasonable expenses reasonably incurred by Landlord in connection therewith, together with interest thereon at the Interest Rate, shall be immediately paid on demand. Tenant covenants and agrees, at Tenant’s sole cost and expense, to indemnify, defend (at trial and appellate levels, and with attorneys, consultants and experts acceptable to Landlord and hold Landlord harmless from and against any and all liens, damages, losses, liabilities, obligations, settlement payments, penalties, assessments, citations, directives, claims, litigation, demands, defenses, judgments, suits, proceedings, costs, disbursements or expenses of any kind or of any nature whatsoever (including, without limitation, reasonable attorneys’ consultants’ and experts’ fees and disbursements actually incurred in investigation, defending, settling or prosecuting any action, litigation or proceeding) which may at any time be imposed upon, incurred by or asserted or awarded against Landlord or the Property, and arising directly or indirectly from or out of: (i) the presence, release or threat of release of any Hazardous Substances on, in, under, affecting or threatening to affect all or any portion of the Property or any surrounding areas, regardless of whether or not caused by or within the control of Tenant, (ii) the violation of any Environmental Laws related to, affecting or threatening to affect the Property, whether or not caused by or within the control of Tenant, (iii) the failure by Tenant to comply fully with the terms and conditions of this Section (iv) the breach of any representation or warranty contained in this Section or (v) the enforcement of this Section including, without limitation, the cost of assessment, containment and/or removal of any and all Hazardous Substances on and /or from all or any portion of the Property or any surrounding areas, the cost of any actions taken in response to the presence, release or threat of release of any Hazardous Substances on, in, under or affecting any portion of the Property or any surrounding areas to prevent or minimize such release or threat of release so that it does not migrate or otherwise cause or threaten danger to present or future public health, safety, welfare or the environment, and costs incurred to comply with the Environmental Laws in connection with all or any portion of the Property or any surrounding areas. This indemnity shall also include any of Landlord’s diminution in the value of the Property or any future Landlord’s reduction in the sales price of the Property by reason of any matter set forth in this Section. Landlord’s rights under this Section shall survive the Lease.


(g) Upon Landlord’s request, at any time after the occurrence and continuance of an Event of Default under the Lease or at such other time as Landlord has reasonable grounds to believe that Hazardous Substances are or have been handled, generated, stored, processed, transported to or from, or released or discharged from or disposed of on or around the Property, Tenant shall provide, at Tenant’s sole cost and expense, an inspection or audit of the Property prepared by a hydrogeologist or environmental engineer or other appropriate consultant approved by Landlord indicating the presence or absence of Hazardous Substances on the Property (including asbestos-containing material or lead-based paint). If Tenant fails to provide such inspection or audit within twenty (20) days after such request, Landlord may order the same, and Tenant hereby grants to Landlord and its employees and agents access to the Property and a license thereon to undertake such inspection or audit. The cost of such inspection or audit, together with interest thereon at the Interest Rate from the date paid by Landlord until actually paid by Tenant, shall be immediately paid by Tenant on demand and shall constitute additional rent hereunder.

(h) Without limiting the foregoing, Landlord, its Mortgagee and their authorized representatives may, during normal business hours and at their own expense, inspect the Property and Tenant’s records related thereto for the purpose of determining compliance with Environmental Laws and the terms and conditions of this Section.

(i) As used herein, the term “release” shall include, without limitation, any intentional or unintentional placing, spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping, disposing, discarding or abandoning of any Hazardous Substance, other than in the normal course of business or activities or its tenants, and in compliance with all Environmental Laws.

(j) Tenant represents and warrants that, from and after the commencement of this Lease, Tenant covenants and agrees that it shall provide all legally required notices with respect to the discovery or release of any Hazardous Substances at the Property and shall perform each of the continuing obligations of a bona fide prospective purchase pursuant to 42U.S.C 9601(4). Tenant shall inform Landlord by notice given or action taken pursuant to this Section 4.3.

ARTICLE 5

Utility Charges

Tenant shall pay or cause to be paid, as and when the same are due and payable, all charges for gas, water, sewer, electricity, lights, heat, power, telephone or other communication service and all other utility services used, rendered or supplied to, upon or in connection with the Premises.

ARTICLE 6

Indemnification and Non-Liability of Landlord

6.1 Indemnification. Tenant covenants and agrees, at its sole cost and expense, to indemnify and save harmless the Landlord-Related Parties (as defined in this Section 6.1 below) and Mortgagee against and from any and all loss, cost, damage, or claims by or on behalf of any person, firm, or corporation (a) from the conduct or from management of or from any work or thing whatsoever done in or about the Premises during the Term hereof, (b) from the operation, management, maintenance, repair, use, or occupation of the Premises, and the condition of any building or other Improvements on the Premises, (c) from any breach or default on the part of Tenant in the performance of any covenant or agreement on the part of Tenant to be performed, pursuant to the terms of this Lease, and (d) from any act, whether or not negligent, by Tenant, or any of its agents, contractors, servants, employees or licensees, or arising from any accident, injury or damage whatsoever occurring during the Term hereof in or about the Premises. In case any action or proceeding be brought against the Landlord-Related Parties by reason of any such claim Tenant, upon notice from the Landlord-Related Parties, covenants to resist or defend such action or proceedings by counsel chosen by Tenant, but reasonably satisfactory to Landlord. As used in this Lease, the term “Landlord-Related Parties” shall mean, collectively, Landlord and the Landlord’s shareholders, directors, officers, partners, members, employees, representatives, agents, and their successors and assigns.

6.2 Attorneys’ Fees. In the event of any arbitration, administrative or judicial proceeding commenced by Landlord or Tenant against the other under this Lease, the reasonable costs and expenses (including reasonable attorneys’ fees at trial and on appeal) of the prevailing party shall be paid by the other party.


6.3 Waiver of Claims for Defects. Tenant further covenants and agrees that Landlord shall not be liable to Tenant, or any one claiming by, through or under Tenant, for any defect in the Premises, or any buildings, building components, fixtures, apparatuses and personal property located thereon latent or otherwise for any injury, loss or damage to any persons or to the Premises, or to any property of Tenant, or of any other person, contained in or upon the Premises, caused by or arising or resulting from such defect.

ARTICLE 7

Maintenance and Repairs, Covenant Against Waste and Right of Inspection

7.1 Maintenance and Repair. Tenant shall, throughout the Term hereof and at no expense whatsoever to Landlord, take good care of the Premises and the Building and other Improvements and structural components thereof now or hereafter erected thereon and shall not do or suffer any waste with respect thereto, and Tenant shall promptly make all repairs, interior and exterior, structural and non-structural, ordinary as well as extraordinary, foreseen as well as unforeseen, necessary to keep the Building and other Improvements (including, without limitation, the roof, mechanical, plumbing, electrical, and other Building systems) in good and lawful order and in at least as good condition as such premises are in on the Commencement Date but subject to reasonable wear and tear. When used in this Article, the term “repairs” shall include replacements, capital improvements or renewals when necessary. Tenant shall keep and maintain all portions of the Premises, in a clean and orderly condition, free of accumulation of water, dirt, rubbish, snow and ice, and Tenant shall not permit or suffer any overloading of the floors of the Building. Landlord shall not be responsible for the cost of any alterations of or repairs to the Premises of any nature whatsoever, structural or otherwise, whether or not now in the contemplation of the parties. To the extent not prohibited by law, Tenant hereby waives and releases all rights now or hereinafter conferred by statute or otherwise which would have the effect of limiting or modifying any of the provisions of this Section 7.1 . In addition, the provisions of this Section 7.1 are subject to the limitations imposed by Articles 8 and 9 below.

7.2 Landlord’s Inspection Rights. Tenant shall permit Landlord and the authorized representatives of Landlord, after reasonable written notice, to enter the Premises during Tenant’s usual business hours for the purpose of inspecting the same and of making any necessary repair to the Premises and performing any work therein that may be necessary to comply with any laws, ordinances, rules, regulations or requirements of any public authority, or that may be necessary to prevent waste or deterioration in connection with the Premises, which Tenant is obligated, but has failed, to make, perform, or prevent, as the case may be. Nothing in this Lease shall impose any duty upon the part of Landlord to do any such work or to make any alterations, repairs (including, but not limited to, repairs and other restoration work made necessary due to any fire or other casualty and irrespective of the sufficiency or availability of any fire or other insurance proceeds which may be payable in respect thereof), additions or improvements to the Premises, of any kind whatsoever. The performance thereof by Landlord shall not constitute a waiver of Tenant’s default in failing to perform the same and the reasonable cos


 
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