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ARTICLE V <br />USE OF PROPERTY; DEMOLITION OF IMPROVEMENTS <br />5.1 Permitted Use; Demolition. Agency shall have the right to demolish all improvements <br />located on the Property at Agency's expense. Agency shall be permitted to use the Property as a <br />parking lot and for related purposes and uses. At all times during the Term of this Lease and at <br />Agency's sole cost, Agency shall maintain and keep the Property in good condition. All <br />expenses related to the improvement, operation and maintenance of the Property during the Term <br />shall be borne by Agency. <br />5.2 Agency Covenants. Agency shall not do or permit to be done on the Property, nor bring <br />or keep or permit to be brought or kept in the Property, anything (i) which is prohibited by or in <br />conflict with any law, ordinance, or governmental rule; (ii) which is prohibited by the standard <br />form of fire insurance policy; or (iii) which will increase the existing rate of or affect fire or other <br />insurance on the Property or its contents or cause a cancellation of any insurance policy covering <br />the Property or any part thereof. Agency shall not use or allow the Properly to be used for any <br />unlawful purpose, nor shall Agency cause, maintain, or permit any nuisance or waste on or about <br />the Property. Agency shall comply with all laws and governmental rules now or later in force <br />insofar as they relate to the use or occupancy of the Property. <br />ARTICLE VI <br />HAZARDOUS MATERIALS <br />6.1 Agency Covenants. Agency shall not permit any Hazardous Material, as defined in <br />Section 6.5, to be generated, used, stored or disposed of on the Property, except for substances <br />which are ordinarily and customarily used in connection with the operation of parking lots, <br />provided that such use is in compliance with applicable laws. <br />6.2 Lessor Representations. Lessor represents and warrants to Agency that as of the <br />Commencement Date (i) there are no Hazardous Materials in, on or under the Property; (ii) <br />Lessor has received no notice that the Property is in violation of any applicable environmental <br />laws; and (iii) the Property is in compliance with applicable environmental laws. <br />6.3 Environmental Reports. Agency has obtained the following environmental studies of the <br />Property: Phase I Environmental Site Assessment of 262 Davis Street, San Leandro, CA 945'17, <br />prepared by SOMA Environmental Engineering, Inc., dated August 7, 2006 ("Phase I Report"). <br />Agency intends to obtain an updated Phase I for the Property prior to the Commencement Date. <br />6.4 Indemnity. Lessor and Agency shall each indemnify, protect, defend and hold the other <br />harmless from (i) any breach of their respective representations or warranties set forth in this <br />Article VI, and (ii) all claims, damages, liabilities or expenses arising out of the release of <br />Hazardous Materials or the violation of any applicable environmental law by such party, or such <br />party's employees, agents, contractors or representatives. This indemnification includes all <br />penalties, fines, remedial or enforcement actions, environmental consultant fees and attorneys <br />fees resulting from such release or violation of law. <br />11372203 <br />