Commercial Lease Agreement with Option to Renew

Commercial Lease Agreement with Option to Renew and Right to Make Alterations

Agreement made on the day of , 20 , between

, a corporation organized and existing under the laws of the state of , with its principal office located at , , referred to herein as Lessor, and , a corporation organized and existing under the laws of the state of , with its principal office located at , referred to herein as Lessee.

Whereas, is the sole owner of the premises described in Exhibit A attached hereto and made a part hereof; and

Whereas, said premises are hereinafter call the Premises; and

Whereas, Lessor desires to lease the Premises to a suitable Lessee for business purposes; and

Whereas, Lessee desires to lease the Premises for the purpose of conducting a business of ; and

Whereas, the parties desire to enter a Lease Agreement defining their rights, duties, and liabilities relating to the Premises;

Now, therefore, for and in consideration of the matters described above and of the mutual benefits and obligations set forth in this agreement, the parties agree as follows:

I. Subject Matter and Purpose. Lessor hereby leases the building and land located at , and described in Exhibit A to Lessee for Lessee's use as follows: .

II. Term and Rent.

A. Lessor leases the Premises for a term of years, commencing on , and terminating on , at , or sooner as provided in this Lease Agreement, at the annual rental of $ , payable in equal installments in advance on the first day of each month for that month's rental, during the term of this Lease Agreement.

B. All rental payments shall be made to Lessor at the address specified above.

III. Additional Rent. All taxes, charges, costs, and expenses that Lessee assumes or agrees to pay under this Lease Agreement, together with all interest and penalties that may accrue in the event of the failure of Lessee to pay those items, and all other damages, costs, expenses, and sums that Lessor may suffer or incur or that may become due by reason of any default of Lessee or failure by Lessee to comply with the terms and conditions of this Lease Agreement shall be deemed to be additional rent, and, in the event of nonpayment, Lessor shall have all the rights and remedies as provided in this Lease Agreement for failure to pay rent.

IV. Alterations, Additions, and Improvements.

A. Subject to the limitation that no substantial portion of the building on the Premises shall be demolished or removed by Lessee without the prior, express, and written consent of Lessor, and, if necessary, of any mortgagee, Lessee may at any time during the Lease term, subject to the conditions set forth below and at its own expense, make any alterations, additions, or improvements in and to the Premises. Alterations shall be performed in a satisfactory manner and shall not weaken or impair the structural strength or lessen the value of the building on the Premises or change the purposes for which the building, or any part of the building, may be used.

B. Conditions with respect to alterations, additions, or improvements are as follows:

1. Before commencement of any work, all plans and specifications shall be filed with and approved by all governmental departments or authorities having jurisdiction and any public utility company having an interest in such matters, and all work shall be done in accordance with the requirements of local regulations. The plans and specifications for any alterations estimated to cost $ or more shall be submitted to Lessor for written approval prior to commencing work.

2. Prior to commencement of any work, Lessee shall pay the amount of any increase in premiums on insurance policies provided for in this Lease agreement because of endorsements to be made covering the risk during the course of work. In addition, if the estimated cost of work shall exceed $ , Lessee shall, without cost to Lessor, furnish Lessor with a performance bond written by a surety acceptable to Lessor in an amount equal to the estimated cost of the work, guaranteeing the completion of work, free and clear of liens, encumbrances, and security interests, according to the approved plans and specifications.

C. All alterations, additions, and improvements on or in the Premises at the commencement of the term and that may be erected or installed during the term shall become part of the Premises and the sole property of Lessor, except that all moveable trade fixtures installed by Lessee shall be and remain the property of Lessee.

V. Repairs. Lessee shall, at all times during the term of this Lease Agreement and at its own cost and expense, repair, replace, and maintain in a good, safe, and substantial condition all buildings and any improvements, additions, and alterations to such buildings, on the Premises and shall use all reasonable precaution to prevent waste, damage, or injury to the Premises.

VI. Taxes.

A. Lessee shall pay, on or before the last day on which payment may be made without penalty or interest, all taxes, assessments, or other governmental charges that shall or may during the Lease term be imposed on, or arise in connection with the use of, the Premises or any part of the Premises.

B. Lessee shall pay all taxes assessed in lieu of or in addition to the above under all present or future laws of all governmental authorities.

C. Lessee shall have the right to apply for the conversion of any special assessment for local improvements in order to cause them to be payable in installments. On the conversion, Lessee shall be obligated to pay only those installments that may become due during the term of this Lease Agreement.

D. Lessee shall within days after the time provided for the payment of any tax or other governmental charge by Lessee produce and exhibit to Lessor satisfactory evidence of the payment.

E. It is the intention of the parties that the rent specified in this Lease Agreement is net rental, and Lessor shall receive such rent free from all taxes that are made payable by Lessee.

VII. Utilities. All applications and connections for necessary utility services on the Premises shall be made in the name of Lessee only. Lessee shall be solely liable for utility charges as they become due, including but not limited to those for sewer, water, gas, electricity, and telephone services.

VIII. Security Deposit.

A. Lessee shall deposit $ with Lessor, which amount shall be held by Lessor as security for the full and timely performance by Lessee of the terms and conditions of this Lease Agreement and for the payment of any final judgment that may be rendered against Lessee for a breach of those terms and conditions. No interest shall be paid on the deposit.

B. The rights of Lessor against Lessee for a breach of this Lease shall in no way be limited or restricted by the security deposit. Lessor shall have the absolute right to pursue any available remedy to protect its interests, as if this security deposit had not been made.

C. The security deposit shall be returned to Lessee at the expiration of this Agreement provided that all the terms and conditions contained in this Lease Agreement have been fully performed by Lessee.

D. Should the Premises be sold, Lessor may transfer or deliver the security deposit to the purchaser of the interest, and Lessor shall then be discharged from any further liability with respect to the security deposit.

IX. Insurance.

A. During the term of this Lease Agreement and for any further time that Lessee shall hold the Premises, Lessee shall obtain and maintain at its expense the following types and amounts of insurance:

1. Fire Insurance. Lessee shall keep all buildings, improvements, and equipment on the Premises, including all alterations, additions, and improvements, insured against loss or damage by fire, with all standard extended coverage that may be required by any first mortgagee, and against loss or damage due to war, if that insurance is available and required by any first mortgagee. The insurance shall be in an amount sufficient to prevent Lessor and Lessee from becoming coinsurers under provisions of applicable policies of insurance, but in any event, in an amount not less than % of the full insurable value of the Premises, excluding the cost of excavation and of foundations.

2. Personal Injury and Property Damage Insurance. Insurance against liability for bodily injury and property damage and machinery insurance, all to be in amounts and in forms of insurance policies as may from time to time be required by Lessor, shall be provided by Lessee. This requirement shall specifically include plate glass insurance, covering the glass on the Premises.

3. Rent Insurance. Rent insurance in an amount not less than the annual net rent plus the estimated annual taxes, utilities, and assessments, together with annual premiums for insurance required in this Section, shall be obtained by Lessee.

4. Other Insurance. Lessee shall provide and keep in force other insurance in amounts that may from time to time be required by Lessor against other insurable hazards as are commonly insured against for the type of business activity that Lessee will conduct.

B. All insurance provided by Lessee as required by this Section shall be carried in favor of Lessor and Lessee as their respective interests may appear. In the case of insurance against damage to the Premises by fire or other casualty, the policy shall provide that loss, if any, shall be adjusted with and be payable to Lessor.

If requested by Lessor, any insurance against fire or other casualty shall provide that loss shall be payable to the holder under a standard mortgage clause. Rent insurance and use and occupancy insurance may be carried in favor of Lessee, but Lessee, by executing this Lease, assigns the proceeds to Lessor to be held by Lessor as security for the payment of the rent and any additional rent under this Lease Agreement until restoration of the Premises.

All insurance shall be written with responsible companies that Lessor shall approve, and the policies shall be held by Lessor or, when appropriate, by the holder of any mortgage, in which case copies of the policies or certificates of insurance shall be delivered by Lessee to Lessor. All policies shall require days' notice by registered mail to Lessor of any cancellation or change affecting any interest of Lessor.

X. Unlawful or Dangerous Activity. Lessee shall neither use nor occupy the Premises or any part of the Premises for any unlawful, disreputable, or ultrahazardous business purpose nor operate or conduct its business in a manner constituting a nuisance of any kind. Lessee shall immediately, on discovery of any unlawful, disreputable, or ultrahazardous use, take action to halt such activity.

XI. Indemnity. Lessee shall indemnify Lessor against any and all expenses, liabilities, and claims of every kind, including reasonable counsel fees, by or on behalf of any person or entity arising out of either:

A. A failure by Lessee to perform any of the terms or conditions of this Lease Agreement;

B. Any injury or damage happening on or about the demised premises;

C. Failure to comply with any law of any governmental authority; or

D. Any mechanic's lien or security interest filed against the Premises or equipment, materials, or alterations of buildings or improvements on the Premises.

XII. Default or Breach. Each of the following events shall constitute a default or breach of this Lease Agreement by Lessee:

A. If Lessee, or any successor or assignee of Lessee while in possession, shall file a petition in bankruptcy or insolvency or for reorganization under any bankruptcy act, or shall voluntarily take advantage of any such act by answer or otherwise, or shall make an assignment for the benefit of creditors.

B. If involuntary proceedings under any bankruptcy law or insolvency act shall be instituted against Lessee or if a receiver or trustee shall be appointed of all or substantially all of the property of Lessee, and such proceedings shall not be dismissed or the receivership or trusteeship vacated within days after the institution or appointment.

C. If Lessee shall fail to pay Lessor any rent or additional rent when the rent shall become due and shall not make the payment within days after notice by Lessor to Lessee.

D. If Lessee shall fail to perform or comply with any of the conditions of this Lease Agreement and if the nonperformance shall continue for a period of days after notice of nonperformance given by Lessor to Lessee or if the performance cannot be reasonably had within the -day period, Lessee shall not in good faith have commenced performance within the -day period and shall not diligently proceed to completion of performance.

E. If Lessee shall vacate or abandon the demised premises.

F. If this Lease Agreement or the estate of Lessee under this Lease Agreement shall be transferred to or shall pass to or devolve on any other person or party, except in the manner permitted in this Lease Agreement.

G. If Lessee fails to take possession of the Premises on the term commencement date, or within days after notice that the Premises are available for occupancy, if the term commencement date is not fixed in this Lease Agreement or shall be deferred as provided in this Lease Agreement.

XIII. Effect of Default. In the event of any default under this Lease Agreement, as set forth in Section XII, the rights of Lessor shall be as follows:

A. Lessor shall have the right to cancel and terminate this Lease Agreement, as well as all of the right, title, and interest of Lessee under this Lease Agreement, by giving to Lessee not less than days' notice of the cancellation and termination.

B. Lessor may elect, but shall not be obligated, to make any payment required of Lessee in this Lease Agreement or comply with any Agreement, term, or condition required by this Lease Agreement to be performed by Lessee. Lessor shall have the right to enter the Premises for the purpose of correcting or remedying any such default and to remain until the default has been corrected or remedied, but any expenditure for the correction by Lessor shall not be deemed to waive or release the default of Lessee or the right of Lessor to take any action as may be otherwise permissible under this Lease Agreement in the case of any default.

C. Lessor may re-enter the Premises immediately and remove the property and personnel of Lessee, and store the property in a public warehouse or at a place selected by Lessor, at the expense of Lessee. After re-entry, Lessor may terminate the Lease on giving days' written notice of termination to Lessee.

D. After re-entry, Lessor may re-let the Premises or any part of the Premises for any term without terminating this Lease Agreement, at the rent and on the terms as Lessor may choose. Lessor may make alterations and repairs to the demised premises.

1. In addition to Lessee's liability to Lessor for breach of the Lease, Lessee shall be liable for all expenses of the re-letting, for the alterations and repairs made, and for the difference between the rent received by Lessor under the new Lease Agreement and the rent installments that are due for the same period under this Lease Agreement.

2. Lessor shall have the right, but shall not be required, to apply the rent received from re-letting the Premises to:

a. Reduce the indebtedness of Lessee to Lessor under this Lease Agreement, not including indebtedness for rent;

b. Expenses of the re-letting and alterations and repairs made;

c. Rent due under this Lease Agreement; or

d. Payment of future rent under this Lease Agreement as it becomes due.

3. If the new Lessee does not pay a rent installment promptly to Lessor and the rent installment has been credited in advance of payment to the indebtedness of Lessee other than rent, or if rentals from the new Lessee have been otherwise applied by Lessor as provided for in this section and during any rent installment period are less than the rent payable for the corresponding installment period under this Lease Agreement, Lessee shall pay Lessor the deficiency separately for each rent installment deficiency period and before the end of that period.

E. After re-entry, Lessor may procure the appointment of a receiver to take possession and collect rents and profits of the business of Lessee. The receiver may carry on the business of Lessee and take possession of the personal property used in the business of Lessee, including inventory, trade fixtures, and furnishings, and use them in the business without compensating Lessee.

XIV. Destruction of Premises.

A. In the event of a partial destruction of the Premises during the term of this Lease Agreement from any cause, Lessor shall promptly repair such damage, provided the repairs can be made within days under the laws and regulations of applicable governmental authorities.

B. Should the building in which the Premises are situated be destroyed to the extent of not less than % of the replacement cost, this Lease Agreement shall be terminated.

C. Any dispute between Lessor and Lessee relative to the provisions of this Section shall be subject to Arbitration as provided in Section below.

XV. Condemnation. Rights and duties in the event of condemnation are as follows:

A. If the whole of the Premises shall be taken or condemned by any competent authority for any public or quasi-public use or purpose, this Lease Agreement shall cease and terminate as of the date on which title shall vest in that authority, and the rent reserved under this Lease Agreement shall be apportioned and paid up to that date.

B. If only a portion of the Premises shall be taken or condemned, this Lease Agreement shall not cease or terminate, but the rent payable after the date on which Lessee shall be required to surrender possession of such portion shall be reduced in proportion to the decreased use suffered by Lessee as the parties may agree or as shall be determined by arbitration.

C. In the event of any taking or condemnation in whole or in part, the entire resulting award of consequential damages shall belong to Lessor without any deduction from such award for the value of the unexpired term of this Lease Agreement or for any other estate or interest in the Premises now or later vested in Lessee. Lessee assigns to Lessor all its right, title, and interest in any and all such awards.

D. In the event of a partial taking, Lessee shall promptly proceed to restore the remainder of the building on the Premises to a self-contained architectural unit. Lessor shall pay to Lessee the cost of restoration, but in no event shall such cost exceed a sum equal to the amount of the separate award made to and received by Lessor for consequential damages. If there is no separate award for consequential damage, the value shall be fixed and settled by arbitration as provided in this Lease Agreement. The balance of any separate award or allocated amount not so used shall belong to and be retained by Lessor as its sole property.

E. In case of any governmental action not resulting in the taking or condemnation of any portion of the Premises but creating a right to compensation for such action or if less than a fee title to all or any portion of the Premises shall be taken or condemned by any governmental authority for temporary use or occupancy, this Lease Agreement shall continue in full force and effect without reduction or abatement of rent, and the rights of the parties shall be unaffected by the other provisions of this Section but shall be governed by applicable law.

XVI. Subordination. This Lease Agreement and all rights of Lessee under this Lease Agreement shall be subject and subordinate to the lien of any and all mortgages that may now or in the future affect the Premises, or any part of the Premises, and to any and all renewals, modifications, or extensions of any such mortgages. Lessee shall on demand execute, acknowledge, and deliver to Lessor, without expense to Lessor, any and all instruments that may be necessary or proper to subordinate this Lease Agreement and all rights in this Lease Agreement to the lien of any such mortgage or mortgages. If Lessee shall fail at any time to execute, acknowledge, and deliver any such subordination instrument, Lessor, in addition to any other remedies available in consequence of such failure, may execute, acknowledge, and deliver the subordination instrument as Lessee's attorney-in-fact and in Lessee's name. Lessee irrevocably makes, constitutes, and appoints Lessor, its successors and assigns, its attorney-in-fact for that purpose.

XVII. Access to Premises and Signs Posted by Lessor. Lessee shall permit Lessor or its agents to enter the Premises at all reasonable hours to inspect the Premises or make repairs that Lessee may neglect or refuse to make in accordance with the provisions of this Lease Agreement and also to show the Premises to prospective buyers. At any time within months prior to the expiration of the term of this Lease Agreement, Lessor may show the Premises to persons wishing to rent them. Lessee shall, within months prior to expiration of the term of this Lease Agreement, permit the usual notices of "For Rent" and "For Sale" to be placed on the Premises and to remain on the Premises without hindrance and molestation.

XVIII. Easements, Agreements, or Encumbrances. The parties shall be bound by all existing easements, agreements, and encumbrances of record relating to the Premises, and Lessor shall not be liable to Lessee for any damages resulting from any action taken by a holder of an interest pursuant to the rights of that holder.

XIX. Quiet Enjoyment. Lessor warrants that Lessee shall be granted peaceable and quiet enjoyment of the Premises free from any eviction or interference by Lessor if Lessee pays the rent and other charges provided in this Lease Agreement and otherwise fully and punctually performs the terms and conditions imposed on Lessee.

XX. Liability of Lessor. Lessee shall be in exclusive control and possession of the demised Premises, and Lessor shall not be liable for any injury or damages to any property or to any person on or about the Premises or for any injury or damage to any property of Lessee. The provisions of this Lease Agreement permitting Lessor to enter and inspect the Premises are made to insure that Lessee is in compliance with the terms and conditions of this Lease Agreement and to insure that Lessee makes repairs which Lessee has failed to make. Lessor shall not be liable to Lessee for any entry on the Premises for inspection purposes.

XXI. Rent Abatement. No abatement, diminution, or reduction of rent shall be claimed or allowed to Lessee or any person claiming under it under any circumstances, whether for inconvenience, discomfort, interruption of business, or otherwise, arising from the making of alterations, improvements, or repairs to the Premises, because of any governmental laws, or arising from and during the restoration of the Premises after their destruction or damage by fire or other cause, or the taking or condemnation of a portion only of the Premises, except as provided in Section XV.

XXII. Representations by Lessor. At the commencement of the term, Lessee shall accept the buildings and improvements and any equipment in their existing condition and state of repair, and Lessee agrees that no representations, statements, or warranties, express or implied, have been made by or on behalf of Lessor in respect to the buildings, improvements, and equipment, except as contained in the provisions of this Lease Agreement. Lessor shall in no event be liable for any latent defects.

XXIII. Assignment, Mortgage, or Sublease. Neither Lessee nor its successors or assigns shall assign, mortgage, pledge, or encumber this Lease Agreement or sublet the Premises, in whole or in part, or permit the Premises to be used or occupied by others, nor shall this Lease Agreement be assigned or transferred by operation of law without the prior, express, and written consent in writing of Lessor in each instance. If this Lease is assigned or transferred or if all or any part of the Premises is sublet or occupied by anybody other than Lessee, Lessor may, after default by Lessee, collect rent from the assignee, transferee, subtenant, or occupant and apply the net amount collected to the rent reserved in this Lease Agreement. However, any such assignment, subletting, occupancy, or collection shall not be deemed a waiver of any Agreement or condition of this Lease Agreement or the acceptance of the assignee, transferee, subtenant, or occupant as Lessee. Lessee shall continue to be liable under this Lease Agreement in accordance with its terms and conditions and shall not be released from the performance of the terms and conditions of this Lease Agreement. The consent by Lessor to an assignment, mortgage, pledge, or transfer shall not be construed to relieve Lessee from obtaining the express written consent of Lessor to any future transfer of interest.

XXIV. Option to Renew. Lessor hereby grants to Lessee an option to renew this Lease Agreement for a period of years after expiration of the term of this Lease Agreement/for another term equal to the term of this Lease Agreement at a rental of $ per month, with all other terms and conditions of the renewal Lease to be the same as those in this Lease Agreement. To exercise this option, Lessee must give Lessor written notice of the intention to do so at least days before this Lease Agreement expires.

XXV. Surrender of Possession.

A. Lessee shall, on the last day of the term or on earlier termination and forfeiture of this Lease Agreement, peaceably and quietly surrender and deliver the Premises to Lessor free of sub-tenancies, including all buildings, additions, and improvements constructed or placed on the Premises by Lessee, except moveable trade fixtures, all in good condition and repair.

B. If Lessor so elects, any trade fixtures or personal property not used in connection with the operation of the Premises and belonging to Lessee, if not removed at the termination or forfeiture of this Lease Agreement, shall be deemed abandoned and become the property of Lessor without any payment or offset for such fixtures or property. At Lessor's election, Lessor may remove such fixtures or property from the Premises and store them at the risk and expense of Lessee.

C. Lessee shall repair and restore all damage to the Premises caused by the removal of equipment, trade fixtures, and personal property.

XXVI. Remedies of Lessor.

A. In the event of a breach or a threatened breach by Lessee of any of the terms or conditions of this Lease Agreement, Lessor shall have the right of injunction to restrain Lessee and the right to invoke any remedy allowed by law or in equity, as if the specific remedies of indemnity or reimbursement were not provided in this Lease Agreement.

B. The rights and remedies given to Lessor in this Lease Agreement are distinct, separate, and cumulative, and no one of them, whether or not exercised by Lessor, shall be deemed to be in exclusion of any of the others in this Lease Agreement, by law, or by equity provided.

C. In all instances under this Lease Agreement and in any suit, action, or proceeding of any kind between the parties, it shall be presumptive evidence of the fact of the existence of a charge being due if Lessor shall produce a bill, notice, or certificate of any public official entitled to give notice to the effect that such charge appears of record on the books in his or her office and has not been paid.

D. No receipt of money by Lessor from Lessee after default or cancellation of this Lease Agreement in any lawful manner shall:

1. Reinstate, continue, or extend the term or affect any notice given to Lessee;

2. Operate as a waiver of the right of Lessor to enforce the payment of rent and additional rent then due or falling due; or

3. Operate as a waiver of the right of Lessor to recover possession of the Premises by proper suit, action, proceeding, or other remedy.

XXVII. Severability. The invalidity of any portion of this Agreement will not and shall not be deemed to affect the validity of any other provision. If any provision of this Agreement is held to be invalid, the parties agree that the remaining provisions shall be deemed to be in full force and effect as if they had been executed by both parties subsequent to the expungement of the invalid provision.

XXVIII. No Waiver. The failure of either party to this Agreement to insist upon the performance of any of the terms and conditions of this Agreement, or the waiver of any breach of any of the terms and conditions of this Agreement, shall not be construed as subsequently waiving any such terms and conditions, but the same shall continue and remain in full force and effect as if no such forbearance or waiver had occurred.

XXIX. Governing Law. This Agreement shall be governed by, construed, and enforced in accordance with the laws of the State of .

XXX. Notices. Unless provided herein to the contrary, any notice provided for or concerning this Agreement shall be in writing and shall be deemed sufficiently given when sent by certified or registered mail if sent to the respective address of each party as set forth at the beginning of this Agreement.

XXXI. Attorney’s Fees. In the event that any lawsuit is filed in relation to this Agreement, the unsuccessful party in the action shall pay to the successful party, in addition to all the sums that either party may be called on to pay, a reasonable sum for the successful party's attorney fees.

XXXII. Mandatory Arbitration. Notwithstanding the foregoing, and anything herein to the contrary, any dispute under this Agreement shall be required to be resolved by binding arbitration of the parties hereto. If the parties cannot agree on an arbitrator, each party shall select one arbitrator and both arbitrators shall then select a third. The third arbitrator so selected shall arbitrate said dispute. The arbitration shall be governed by the rules of the American Arbitration Association then in force and effect.

XXXIII. Entire Agreement. This Agreement shall constitute the entire agreement between the parties and any prior understanding or representation of any kind preceding the date of this Agreement shall not be binding upon either party except to the extent incorporated in this Agreement.

XXXIV. Modification of Agreement. Any modification of this Agreement or additional obligation assumed by either party in connection with this Agreement shall be binding only if placed in writing and signed by each party or an authorized representative of each party.

Witness our signatures this the day of , 20 .