Form 25-2

Retail Lease

Basic Information

Date:

Landlord:

Landlord’s Address:

Tenant:

Tenant’s Address:

Tenant’s Trade Name:

[Include if applicable: Guarantors: [see guaranty agreement at form 25-22 in this chapter]]

[Include if applicable: Guarantors’ Addresses:]

Premises

Approximate square feet:

Name of Shopping Center:

Street address/suite:

City, state, zip:

Term (months):

Commencement Date:

Termination Date:

Base Rent (monthly):

Percentage Rent:      The excess of [percent] percent ([percent]%) of monthly Gross Sales over Base Rent

Tenant’s Pro Rata Share: [percent] percent ([percent]%)

Initial Monthly CAM Charge:

Initial Monthly Tax and Insurance Charge:

Security Deposit:

Permitted Use:

Operating Hours

Weekdays: ______ to ______

Saturdays: ______ to ______

Sundays: ______ to ______

Tenant’s Insurance: As required by Insurance Addendum

Landlord’s Insurance: As required by Insurance Addendum

Tenant’s Rebuilding Obligations: If the Premises are damaged by fire or other elements, Tenant will be responsible for repairing or rebuilding the following leasehold improve­ments: [see section 25.1:4]

A.Definitions

A.1.“Agent” means agents, employees, officers, directors, members and partners of the principal, and, to the extent under the control of the principal, invitees.

A.2.“CAM Charge” means the reasonable cost of ownership, operation, and mainte­nance of the Common Areas.

A.3.“Common Areas” means all facilities and areas of the Shopping Center that are intended and designated by Landlord from time to time for the common, general, and nonex­clusive use of all tenants of the Shopping Center, including parking lots. Landlord has the exclusive control over and right to manage the Common Areas.

A.4.“Essential Services” means utility connections reasonably necessary for occu­pancy of the Premises for the Permitted Use.

A.5.“Gross Sales” means the entire amount of the sales price, whether for cash or otherwise, of all sales of merchandise (including [Internet sales and] gift and merchandise cer­tificates), services, and all other receipts of all business conducted in or from the Premises. Each sale on installment or credit will be treated as a sale for the full price in the month during which the sale was made, irrespective of when Tenant receives payment from its customer. Gross Sales, however, will not include any sums collected and paid out for any sales or excise tax.

A.6.“Injury” means (a) harm to or impairment or loss of property or its use, (b) harm to or death of a person, or (c) “personal and advertising injury” as defined in the form of liabil­ity insurance Tenant is required to maintain.

A.7.“Lienholder” means the holder of a deed of trust encumbering the Premises.

A.8.“Rent” means Base Rent plus any other amounts of money payable by Tenant to Landlord.

A.9.“Taxes and Insurance” means all ad valorem taxes and all insurance costs incurred by Landlord with respect to the Shopping Center.

B.Tenant’s Obligations

B.1.Tenant agrees to—

B.1.a.Lease the Premises for the entire Term beginning on the Commencement Date and ending on the Termination Date.

B.1.b.Accept the Premises in their present condition “AS IS,” the Premises being cur­rently suitable for the Permitted Use.

B.1.c.Obey (i) all laws relating to Tenant’s use, maintenance of the condition, and occupancy of the Premises and Tenant’s use of any Common Areas in the Shopping Center; (ii) any requirements imposed by utility companies serving or insurance companies covering the Premises or Shopping Center; and (iii) any rules and regulations of the Shopping Center adopted by Landlord.

B.1.d.Pay monthly, in advance, without demand, on the first day of the month, the Base Rent to Landlord at Landlord’s Address.

B.1.e.Pay the Percentage Rent applicable to the previous month on or before the tenth day of each month. With each payment of Percentage Rent, Tenant will deliver a written state­ment substantiating the amount of the payment. Tenant will keep a permanent, accurate set of books and records of all sales available for Landlord’s inspection.

B.1.f.Pay Tenant’s Pro Rata Share of the monthly CAM Charge and monthly Taxes and Insurance on or before the first day of each month. The initial charges are based on Land­lord’s estimates and are set forth in the Basic Terms. Landlord may adjust the monthly pay­ment from time to time by notice to Tenant. If the actual amount of Tenant’s Pro Rata Share of actual costs for any period exceeds the amount paid by Tenant, Tenant will pay to Landlord the deficiency within fifteen days following notice from Landlord; if the amount paid by Tenant exceeds Tenant’s Pro Rata Share of the actual cost, then the surplus will be credited to the next payment due by Tenant, or Landlord may refund the net surplus.

B.1.g.Pay a late charge of 5 percent of any Rent not received by Landlord by the tenth day after it is due.

B.1.h.Obtain and pay for all utility services used by Tenant and not provided by Land­lord.

B.1.i.Pay Tenant’s Pro Rata Share of any utility services provided by Landlord.

B.1.j.Allow Landlord to enter the Premises to perform Landlord’s obligations, inspect the Premises, and show the Premises to prospective purchasers or tenants.

B.1.k.Repair, replace, and maintain any part of the Premises that Landlord is not obli­gated to repair, replace, or maintain, normal wear excepted.

B.1.l.Keep the sidewalks, service ways, and loading areas adjacent to the Premises clean and unobstructed.

B.1.m.Submit in writing to Landlord any request for repairs, replacement, and mainte­nance that are the obligations of Landlord.

B.1.n.(i) Continuously and in good faith conduct on the entire Premises the type of business for which the Premises are leased in an efficient and reputable manner and (ii) except during reasonable periods for repairing, cleaning, and decorating, keep the Premises open to the public for business during Operating Hours so as to produce the maximum amount of Gross Sales.

B.1.o.Vacate the Premises on the last day of the Term.

B.1.p.On request, execute an estoppel certificate that states the Commencement Date and Termination Date of the lease, identifies any amendments to the lease, describes any rights to extend the Term or purchase rights, lists defaults by Landlord, and provides any other information reasonably requested.

B.1.q.Indemnify, defend, and hold Landlord, Lienholder, and their respective Agents, successors, and assigns harmless from any Injury (and any resulting or related claim, action, loss, liability, or reasonable expense, including attorney’s fees and other fees and court and other costs) occurring, either before or after the end of the Term, in any por­tion of the Premises if caused, in whole or in part, by the acts or omissions of Tenant, its Agents, successors, and assigns, or those acting on Tenant’s behalf, including in whole or in part by their negligent acts or omissions. The indemnity contained in this paragraph (i) is independent of Tenant’s Insurance, (ii) will not be limited by comparative negligence statutes or damages paid under the Workers’ Compensation Act or similar employee ben­efit acts, (iii) will survive the end of the Term, and (iv) will apply even if an Injury is caused in part by the ordinary negligence or strict liability of Landlord, Lienholder, or their respective Agents, successors, and assigns but will not apply to the extent an Injury is caused, in whole or in part, by the gross negligence or willful misconduct of Landlord, Lienholder, or their respective Agents, successors, and assigns.

B.2.Tenant agrees not to—

B.2.a.Use the Premises for any purpose other than the Permitted Use.

B.2.b.Create a nuisance.

B.2.c.Interfere with any other tenant’s normal business operations or Landlord’s man­agement of the Shopping Center.

B.2.d.Permit any waste.

B.2.e.Use the Premises in any way that would increase insurance premiums or void insurance on the Shopping Center.

B.2.f.Change Landlord’s lock system.

B.2.g.Alter the Premises.

B.2.h.Allow a lien to be placed on the Premises.

B.2.i.Assign this lease or sublease any portion of the Premises without Landlord’s written consent.

B.2.j.Use the roof of the Shopping Center.

B.2.k.Place any signs on the Premises without Landlord’s written consent.

C.Landlord’s Obligations

C.1.Landlord agrees to—

C.1.a.Lease to Tenant the Premises for the entire Term beginning on the Commence­ment Date and ending on the Termination Date.

C.1.b.Obey all laws relating to Landlord’s operation of the Shopping Center.

C.1.c.Provide the Essential Services.

C.1.d.Repair, replace, and maintain the (i) roof, (ii) foundation, (iii) Common Areas, and (iv) structural soundness of the exterior walls, excluding windows, store fronts, and doors.

C.1.e.Return the Security Deposit to Tenant, less itemized deductions, if any, on or before the sixtieth day after the date Tenant surrenders the Premises.

C.1.f.Indemnify, defend, and hold and its Agents, successors, and assigns harmless from any Injury and any resulting or related claim, action, loss, lia­bility, or reasonable expense, including attorney’s fees and other fees and court and other costs, occurring, either before or after the end of the Term, in the Common Areas if caused, in whole or in part, by the acts or omissions of Landlord, its Agents, successors, and assigns, or those acting on Landlord’s behalf, including in whole or in part by their negligent acts or omissions. The indemnity contained in this paragraph (i) is independent of Landlord’s Insur­ance, (ii) will not be limited by comparative negligence statutes or damages paid under the Workers’ Compensation Act or similar employee benefit acts, (iii) will survive the end of the Term, and (iv) will apply even if an Injury is caused in part by the ordinary negligence or strict liability of Tenant or its Agents, successors, and assigns but will not apply to the extent an Injury is caused, in whole or in part, by the gross negligence or willful misconduct of Tenant or its Agents, successors, and assigns.

C.2.Landlord agrees not to—

C.2.a.Interfere with Tenant’s possession of the Premises as long as Tenant is not in default.

C.2.b.Unreasonably withhold consent to a proposed assignment or sublease.

D.General Provisions

Landlord and Tenant agree to the following:

D.1.Alterations.      Any physical additions or improvements to the Premises made by Tenant will become the property of Landlord. Landlord may require that Tenant, at the end of the Term and at Tenant’s expense, remove any physical additions and improvements, repair any alterations, and restore the Premises to the condition existing at the Commencement Date, normal wear excepted.

D.2.Abatement.      Tenant’s covenant to pay Rent and Landlord’s covenants are inde­pendent. Except as otherwise provided, Tenant may not abate Rent for any reason.

D.3.Insurance.      Tenant and Landlord will maintain the respective insurance cover­ages described in the attached Insurance Addendum.

D.4.Release of Claims/Subrogation.      Landlord and Tenant release each other, Lienholder, and their respective Agents, successors, and assigns from all claims or liabilities for damage to the Premises or Shopping Center, damage to or loss of personal property within the Shopping Center, and loss of business or revenues that are insured by the releasing party’s property insurance or that would have been insured by the required insurance if the party fails to maintain the property coverages required by this lease. The party incurring the damage or loss will be responsible for any deductible or self-insured retention under its property insurance. Landlord and Tenant will notify the issuing prop­erty insurance companies of the release set forth in this paragraph and will have the property insurance policies endorsed, if necessary, to prevent invalida­tion of coverage. This release will not apply if it invalidates the property insur­ance coverage of the releasing party. The release in this paragraph will apply even if the damage or loss is caused, in whole or in part, by the ordinary neg­ligence or strict liability of the released party or its Agents, successors, and assigns but will not apply to the extent the damage or loss is caused in whole or in part by the gross negligence or willful misconduct of the released party or its Agents, successors, and assigns.

D.5.Casualty/Total or Partial Destruction

D.5.a.If the Premises are damaged by casualty and can be restored within ninety days, Landlord will, at its expense, restore the roof, foundation, Common Areas, and structural soundness of the exterior walls of the Premises and any leasehold improvements within the Premises that are not within Tenant’s Rebuilding Obligations to substantially the same condi­tion that existed before the casualty and Tenant will, at its expense, be responsible for replac­ing any of its damaged furniture, fixtures, and personal property and performing Tenant’s Rebuilding Obligations. If Landlord fails to complete the portion of the restoration for which Landlord is responsible within ninety days from the date of written notification by Tenant to Landlord of the casualty, Tenant may terminate this lease by written notice delivered to Land­lord before Landlord completes Landlord’s restoration obligations.

D.5.b.If Landlord cannot complete the portion of the restoration for which Landlord is responsible within ninety days, Landlord has an option to restore the Premises. If Landlord chooses not to restore, this lease will terminate. If Landlord chooses to restore, Landlord will notify Tenant in writing of the estimated time to restore and give Tenant an option to termi­nate this lease by notifying Landlord in writing within ten days from receipt of Landlord’s estimate. If Tenant does not notify Landlord timely of Tenant’s election to terminate this lease, the lease will continue and Landlord will restore the Premises as provided in D.5.a. above.

D.5.c.To the extent the Premises are untenantable after the casualty, the Rent will be adjusted as may be fair and reasonable.

D.6.Condemnation/Substantial or Partial Taking

D.6.a.If the Premises cannot be used for the purposes contemplated by this lease because of condemnation or purchase in lieu of condemnation, this lease will terminate.

D.6.b.Whether or not any portion of the Premises is taken by condemnation or pur­chase in lieu of condemnation, Landlord or Tenant may elect to terminate this lease if 50 per­cent or more of the Common Area is taken.

D.6.c.If there is a condemnation or purchase in lieu of condemnation and this lease is not terminated, Landlord will, at Landlord’s expense, restore the Premises, and the Rent pay­able during the unexpired portion of the Term will be adjusted as may be fair and reasonable.

D.6.d.Tenant will have no claim to the condemnation award or proceeds in lieu of condemnation, except for relocation or other benefits that are payable to Tenant by the con­demning authority but that do not reduce the award or proceeds payable to Landlord.

D.7.Uniform Commercial Code.      Tenant grants Landlord a security interest in Tenant’s personal property now or subsequently located on the Premises. This lease is a secu­rity agreement under the Uniform Commercial Code. Landlord may file financing statements or continuation statements to perfect or continue the perfection of its security interest.

D.8.Default by Landlord/Events.      Defaults by Landlord are failing to comply with any provision of this lease within thirty days after written notice and failing to provide Essen­tial Services to Tenant within ten days after written notice.

D.9.Default by Landlord/Tenant’s Remedies.      Tenant’s remedies for Landlord’s default are to sue for damages and, if Landlord does not provide an Essential Service for thirty days after default, terminate this lease. Tenant may not terminate under this paragraph while in arrears for Rent.

D.10.Default by Tenant/Events.      Defaults by Tenant are (a) failing to pay Rent timely, (b) abandoning the Premises or vacating a substantial portion of the Premises, and (c) failing to comply within ten days after written notice with any provision of this lease other than the defaults set forth in (a) and (b).

D.11.Default by Tenant/Landlord’s Remedies.      Landlord’s remedies for Tenant’s default are to (a) enter and take possession of the Premises and sue for Rent as it accrues; (b) enter and take possession of the Premises, after which Landlord may relet the Premises on behalf of Tenant and receive the Rent directly by reason of the reletting, and Tenant agrees to reimburse Landlord for any expenditures made in order to relet; (c) enter the Premises and perform Tenant’s obligations; and (d) terminate this lease by written notice and sue for dam­ages. Landlord may enter and take possession of the Premises by self-help, by picking or changing locks if necessary, and may lock out Tenant or any other person who may be occu­pying the Premises, until the default is cured, without being liable for damages.

D.12.Default/Waiver.      All waivers must be in writing and signed by the waiving party. Landlord’s failure to enforce any provisions of this lease or its acceptance of late installments of Rent will not be a waiver and will not estop Landlord from enforcing that pro­vision or any other provision of this lease in the future.

D.13.Landlord’s Recovery of Rent and/or Damages for Tenant’s Default

D.13.a.      If Tenant is in arrears on the payment of Rent and Landlord has terminated Tenant’s possession, Landlord may sue Tenant for Rent as it accrues and periodically take judgments without prejudice to sue for Rent that may accrue in the future. Landlord has a duty to mitigate Rent as follows: within thirty days of Landlord taking possession, (i) place a “For Lease” sign at the Premises, (ii) place the leased Premises on Landlord’s inventory of avail­able space, (iii) make Landlord’s inventory available to area brokers on a monthly basis, (iv) advertise the Premises for lease in a suitable trade journal or newspaper in the county where the Premises are located at least once per month, and (v) show the Premises to prospec­tive tenants who request to see it. Landlord is only under a duty to show the Premises as built and for the remainder of the Term of the lease. If Landlord has made these mitigation efforts, Landlord and Tenant agree that Landlord has made objectively reasonable efforts to mitigate the loss of Rent as a result of the default of Tenant.

D.13.b.      If Tenant has anticipatorily breached the lease and Landlord has terminated the lease, Landlord may sue Tenant for damages for Rent that may accrue for the remainder of the Term of the lease. The measure of the damages is the difference between the Rent for the remainder of the Term and the fair market value of the Premises discounted to its present value. Nothing in this section shall prevent Landlord from suing for Rent as it accrues under D.13.a. above and suing for damages for rentals that will accrue through the end of the lease Term under this section.

D.14.Security Deposit.      If Tenant defaults, Landlord may use the Security Deposit to pay arrears of Rent, to repair any damage or Injury, or to pay any expense or liability incurred by Landlord as a result of the default.

D.15.Holdover.      If Tenant does not vacate the Premises following termination of this lease, Tenant will become a tenant at will and must vacate the Premises on receipt of notice from Landlord. No holding over by Tenant, whether with or without the consent of Landlord, will extend the Term.

D.16.Alternative Dispute Resolution.      Landlord and Tenant agree to mediate in good faith before filing a suit for damages.

D.17.Attorney’s Fees.      If either party retains an attorney to enforce this lease, the party prevailing in litigation is entitled to recover reasonable attorney’s fees and other fees and court and other costs.

D.18.Venue.      Exclusive venue is in the county in which the Premises are located.

D.19.Entire Agreement.      This lease and its exhibits, addenda, and riders are the entire agreement of the parties concerning the lease of the Premises by Landlord to Tenant. Landlord has not made and does not make any representations about the commercial suitability, physical condition, layout, footage, expenses, or operation of the Premises or any other matter affecting or relating to the Premises and this agreement, except as specifically set forth in this lease. As an inducement to Landlord to enter into this lease, Tenant expressly acknowledges and warrants that no such representations have been made and Tenant is not relying on any representations not contained in this lease and any exhibits, addenda, and riders.

D.20.Amendment of Lease.      This lease may be amended only by an instrument in writing signed by Landlord and Tenant.

D.21.Limitation of Warranties.      There are no implied warranties of suitabil­ity, of merchantability, of fitness for a particular purpose, or of any other kind arising out of this lease, and there are no warranties that extend beyond those expressly stated in this lease.

D.22.Notices.      Any notice required or permitted under this lease must be in writing. Any notice required by this lease will be deemed to be given (whether received or not) the ear­lier of receipt or three business days after being deposited with the United States Postal Ser­vice, postage prepaid, certified mail, return receipt requested, and addressed to the intended recipient at the address shown in this lease. Notice may also be given by regular mail, per­sonal delivery, courier delivery, or e-mail and will be effective when received. Any address for notice may be changed by written notice given as provided herein.

D.23.Use of Common Areas.      Tenant will have the nonexclusive right to use the Common Areas subject to such reasonable rules and regulations that Landlord may prescribe.

D.24.Merchants’ Association.      If Landlord organizes a merchants’ association, Tenant must join and maintain membership and comply with its rules.

D.25.Abandoned Property.      Landlord may retain, destroy, or dispose of any prop­erty left on the Premises at the end of the Term.

   
[Name of landlord]

   
[Name of tenant]