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A retail lease agreement is a contract between the landlord and tenant that outlines the terms of renting space in a building. For example, the retail lease agreement describes what will be done to maintain the property, who is responsible for repairs, how much rent is owed each month, when it's due, etc.
A retail lease agreement also specifies what can and cannot be done on the premises (no pets allowed, for example). Since this document contains so many details about renting commercial real estate, it's vital to have an attorney review the retail lease agreement before signing anything.
Below is a list of common sections included in Retail Lease Agreements. These sections are linked to the below sample agreement for you to explore.
THIS LEASE AGREEMENT (this “ Lease ”) is made to be effective as of the date described in Section 19.10 hereof (the “ Effective Date ”) by and between Fertitta Hospitality, LLC, (“ Landlord ”), and Rainforest Cafe, Inc. (“ Tenant ”).
W I T N E S S E T H:
BASIC LEASE PROVISIONS
1.1 Basic Lease Provisions . The following basic provisions of this Lease (“ Basic Lease Provisions ”) constitute an integral part of this Lease and are set forth in this Section 1.1 for the convenience of the parties. Each reference in this Lease to a Basic Lease Provision shall be construed to incorporate all of the terms provided for under such provisions.
Fertitta Hospitality, LLC
5222 Seawall Blvd.
Rainforest Cafe, Inc.
c/o Landry’s Restaurants, Inc.
1510 West Loop South
Houston, Texas 77027
| (h) | Lease Year: | A “Lease Year” shall mean each period of twelve (12) consecutive calendar months, beginning on January 1 st of the first calendar year following the Commencement Date. To the extent any computation or other provision of this Lease is based upon, or provides for an action to be taken on, an entire Lease Year basis, an appropriate proration or other adjustment shall be made in respect of any Lease Year that consists of periods which are less than the full twelve (12) calendar months (such proration or adjustment being based upon the actual number of days in such partial Lease Year and in the entire Lease Year). |
2.1 Leased Premises . Landlord, in consideration of the rent to be paid and the covenants to be performed by Tenant, does hereby demise and lease unto Tenant, and Tenant hereby takes and leases from Landlord, that certain 2.257 acre tract, or parcel of land situated in Galveston County, Texas, as depicted on Exhibit A attached hereto and made a part hereof, together with any and all improvements situated thereon, and all rights, tenements, hereditaments, easements, appendages, privileges and appurtenances pertaining thereto, if any, (collectively, the “ Leased Premises ”). Tenant’s rights under the Lease are subject to and Tenant agrees to comply with all matters of public record, including, without limitation, easements, covenants, conditions, and reciprocal easements (the “Restrictions”).
Landlord shall grant to Tenant, as set forth in Exhibit B , the non-exclusive right to use other property owned by Landlord for parking and ingress and egress to and from the Leased Premises for Tenant, its employees, customers and invitees.
In addition to the foregoing, Tenant shall have the express right to construct and install on the Leased Premises, a sign or signs advertising Tenant’s business at the Leased Premises, subject to the requirements, conditions and limitations of the City of Galveston, Texas and prior approval by Landlord.
2.2 Commencement Date and Expiration Date of Term . The “ Term ” of this Lease shall commence on the first day of the first month after the Commencement Date, as hereinafter defined, and shall end on the expiration of the number of Lease Years set forth in Section 1.1 (b) hereof, unless sooner terminated as hereafter provided, or unless extended as otherwise hereafter provided. For the purpose of this Lease the Commencement Date shall mean December 1,2001.
2.3 Extension Options . Provided no Event of Default (hereinafter defined) exists at the time of the exercise of the option to extend the Term hereof, Tenant may renew this Lease and extend the Term hereof for three (3) additional periods of five (5) years each (each such five (5) year period being hereinafter referred to as an “ Extended Term ”) on the same terms and provisions as provided in this Lease (except for payment of Rent, which, for such Extended Terms, shall be as provided in Section 3.7 below), by delivering written notice of the exercise of such option to extend to Landlord not later than 180 days before the expiration of the then current Term of this Lease. During any Extended Term, any reference in this Lease to the Term shall mean the Term as extended for such Extended Term. If Tenant fails or omits to give Landlord notice in the manner and within the time required, or if Tenant having given the required notice thereafter defaults under this Lease which is not cured as herein provided, then this Lease shall terminate as of the end of the Term or the Extended Term, as the case may be.
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3.2 Percentage Rent .
(a) Tenant shall pay to Landlord monthly Percentage Rent in excess of the monthly Base Rent for each calendar month during which Tenant occupies the Leased Premises. Each monthly installment of Percentage Rent throughout the term shall be equal to a certain percentage of Gross Sales, as that term is hereinafter defined, during the month immediately prior to the month in which such installment becomes due, less the monthly Base Rent. Tenant shall provide Landlord with a report of Gross Sales on a monthly basis in a manner to be designated by Landlord. If at any time, Tenant shall pay an amount in excess of any required amount under this paragraph, then the same shall be applied as a credit toward future Percentage Rent payments. Landlord shall not be obligated to report any excess received by Landlord under this paragraph. The percentage attributable to Schedule 3.2 to the level of Gross Sales made in, upon, or from the Leased Premises during a calendar month shall be the percentage for calculating monthly installments of Percentage Rent during the initial full Lease Year in which Gross Sales are generated from the Leased Premises (“First Full Lease Year”). During each Lease Year thereafter, the percentage for calculating monthly installments of Percentage Rent shall be equal to the percentage attributable to the following table to the level of Gross Sales for the immediately prior Lease Year.
| * | If Gross Sales fall in this level, Percentage Rent shall be paid at 5% or 6%, as the case may be, from dollar one on all Gross Sales for the Lease Year. |
Percentage Rent for the period from the opening of the restaurant until the end of the Lease Year in which the restaurant opens for business, if less than one full calendar year, shall be in accordance with the percentage attributable to Schedule 3.2 to the level of Gross Sales made in, upon or from the Leased Premises during a calendar month. If the restaurant opens on a day other than the first of the month, the breakpoints set forth in Schedule 3.2 shall be reduced in proportion to the number of days in the month in which the restaurant is open.
(b) Within ten (10) days after the end of each calendar month of the Term and Renewal Term, if applicable, Tenant shall furnish to Landlord a statement in writing certified by an executive officer of Tenant to be correct, showing the total Gross Sales made in, upon, or from the Leased Premises during the preceding calendar month, and shall accompany each such statement with a payment to Landlord equal to the Percentage Rent, if any, due with respect to said month.
(c) Within thirty (30) days after the end of each Lease Year, Tenant shall furnish to Landlord a statement in writing, certified by an executive officer of Tenant, showing the total Gross Sales by month during the preceding Lease Year, at which time an adjustment shall be made between Landlord and Tenant so that the total Percentage Rent paid for each Lease Year shall equal the percentage attributable to the above table on all Gross Sales for the preceding Lease Year less the Base Rent. (The Gross Sales for any partial Lease Year shall be prorated as provided in 1.1(h) for purposes of calculating Percentage Rent.) Any amount owing to Landlord pursuant to said adjustment shall be due and payable within thirty (30) days after the end of each Lease Year. Any amount owing to Tenant pursuant to said adjustment shall be applied as a credit toward future Percentage Rent payments. If Tenant shall fail to deliver the certified statement of Gross Sales or the adjustment to Landlord within said thirty (30) day period, Tenant shall be in default under this Lease. In addition, Landlord shall have the right to employ an accounting representative of Landlord’s choice to examine such books and records as may be necessary to certify the amount of Tenant’s Gross Sales for such Lease Year, and Tenant shall promptly pay to Landlord the cost of such audit. Tenant recognizes that Landlord is looking to Percentage Rent as a substantial part of the rent for the Leased Premises and the Tenant has a duty to Landlord to maximize Tenant’s Gross Sales.
3.3 Definition of Gross Sales . “ Gross Sales ” shall mean the entire amount of the sales prices of all goods and merchandise sold (including gift and merchandise certificates when redeemed), and the charges for all services and all other receipts in, on or from any part of the Leased Premises, whether for cash or credit, and shall include telephone orders received or filled at the Leased Premises, orders taken from the Leased Premises, although the orders may be filled elsewhere, and all monies or other things of value which Tenant is entitled to receive from food and
beverage sales from the Leased Premises. The following shall be deducted or excluded, as the case may be, from Gross Sales: (a) refunds to customers; (b) sales, use, excise, retailer’s, occupation, alcoholic beverage or similar taxes imposed in a specific amount, or percentage upon, or determined by, the amount of sales if actually paid to the taxing authority; (c) returns to shippers and manufacturers; (d) sales not in the ordinary course of Tenant’s business, or machinery, furnishings or equipment which Tenant removes from the Leased Premises; and (e) the value of any exchange or transfer of merchandise between stores of Tenant if it is made solely for the convenient operation of Tenant’s business and not for consummating a sale made at the Leased Premises.
3.4 Audit . Landlord shall have the right, from time to time, but not more frequently than once during each Lease Year, upon ten (10) days prior written notice to Tenant, to cause a complete audit of all statements of Gross Sales and in connection with such audit to examine Tenant’s books of account and records of Tenant’s Gross Sales from the Leased Premises; and Tenant shall make all such records available to Landlord for such examination. Any information obtained by Landlord as a result of such audit shall be treated strictly as confidential, except only in the event of litigation or legal or administrative proceedings relating to Gross Sales or collection of Percentage Rent. In the event the audit discloses that the Gross Sales amounts reports are inaccurate, Landlord and Tenant shall make the appropriate adjustments to the end that Landlord shall receive the full Percentage Rent to which it is entitled and only such amount. Landlord shall pay all costs and expenses of such audit, unless the audit shall disclose actual Gross Sales of more than two (2%) in excess of the Gross Sales reported by Tenant for that particular Lease Year, in which case Tenant shall reimburse landlord the reasonable cost and expenses paid by Landlord for said audit in addition to the deficiency in Percentage Rent.
3.5 Casualty . In the event of a casualty to the Leased Premises as a result of a hurricane, tropical storm, fire or other peril such that the restaurant business of the Tenant is unable to operate during any month, or portion thereof during any Lease Year, Tenant shall nevertheless continue to pay the Base Rent plus Percentage Rent based on the daily average of Gross Sales using the immediately preceding full six (6) months in which the restaurant was open to the general public for business prior to the casualty. Such daily average of Gross Sales shall be deemed the Gross Sales made in, upon or from the Leased Premises for each day the restaurant business is unable to operate as a result of the casualty.
3.6 Base Rent Increases . Base Rent increases during the Term shall be on the first (1 st ) day of the Sixth (6 th ) Lease Year, Eleventh (11 th ) Lease Year, Sixteenth (16 th ) Lease Year, Twenty- first (21 st ) Lease Year and during the Extended Term (in the event Tenant shall elect to exercise any of the options provided for in Section 2.3 above) shall be on the first day of the Twenty-sixth (26 th ) Lease Year and the Thirty-first (31 st ) Lease Year. The then prevailing Base Rent shall be increased (but not decreased) by the increase, if any, in the Consumer Price Index (hereinafter defined) for the month immediately prior to said day over the Consumer Price Index published for the same month in the calendar year five (5) years preceding, but in no event shall any increase in Base Rent exceed fifteen percent (15%) of the then-prevailing Base Rent. The term “ Consumer Price Index ” shall mean the Consumer Price Index, All Urban Consumers, All Items, U.S. City Average (1993-1995 = 100) published by the Bureau of Labor Statistics, U.S. Department of Labor. In the event the Consumer Price Index ceases to be based on 1993-1995 = 100, or if a substantial change is made in
the terms or number of items contained in the Consumer Price Index, then the Consumer Price Index for any particular period shall be adjusted appropriately. In the event the Consumer Price Index or a successor or substitute Index is no longer published, a reliable governmental or other non-partisan publication evaluating information used in determining the Consumer Price Index shall be the basis for adjusting the Base Rent. Landlord shall advise Tenant promptly of any increase in the Base Rent by reason of increases in the Consumer Price Index.
3.7 Renewal Options .
(a) Landlord hereby grants to Tenant three (3) options (the “Renewal Options”) to renew this Lease (the “Renewals”) for a period of five (5) years each from January 1,2022 through December 31, 2026, January 1, 2027 through December 31, 2031, and January 1, 2032 through December 31, 2036 (“the Renewal Term”) provided that Tenant must give Landlord at least twelve (12) months advance written notice of Tenant’s intent to exercise this option, and provided further that Tenant is not in default under this Lease at the time of the notice or the time of the effective renewal date. The Base Rent for each Renewal Term shall be at the then prevailing rent increased (but not decreased) by the increase, if any, in the Consumer Price Index for the month immediately prior to said day over the Consumer Price Index published for the same month in the calendar year five (5) years preceding, but in no event shall any increase in Base Rent exceed fifteen percent (15%) of the then-prevailing Base Rent. During the Renewal Term, the Percentage Rent shall be calculated in the manner as set forth in section 3.2
3.8 Tenant’s Tax Obligations .
(a) Tenant agrees to pay all Real Estate Taxes (hereinafter defined) payable with respect to the Leased Premises and all improvements or any other structures or improvements from time to time located on the Leased Premises (collectively, the “ Improvements ”) for each calendar year during the Term. “ Real Estate Taxes ” shall be all taxes and existing and future assessments, general and special, and governmental charges of any kind or nature whatsoever, which may be payable during each calendar year of the Term for the Leased Premises, the Improvements and Tenant’s Property (hereinafter defined), including without limitation, all (i) ad valorem real property taxes and assessments (including installments of special assessments required to be paid during the calendar year). Real Estate Taxes due and payable for 2001 and the last year of the Term shall be prorated. Tenant’s obligation to pay Real Estate Taxes, or any other taxes or charges hereunder, shall in no event include Landlord’s general income taxes, inheritance, estate or gift taxes. Tenant shall have the right to contest any Real Estate Taxes, at Tenant’s cost (provided Landlord shall cooperate with Tenant at no cost to Landlord), provided that no such contest shall defer or suspend Tenant’s payment of Real Estate Taxes pending the contest, but if by law it is necessary that such payment be suspended to preserve or protect Tenant’s contest, then the contest shall not be undertaken unless either: (a) there is first deposited with Landlord a sum equal to the amount of the Real Estate Taxes, penalty, interest and any costs that are the subject of the contest to be held by Landlord as indemnity to pay such taxes; or (b) a bond or similar indemnity is posted with and accepted by the Governmental Authority assessing
such taxes which shall operate to release the Leased Premises (and Landlord’s interest therein) from the lien of the Real Estate Taxes.
(b) If the Leased Premises are not assessed as a separate parcel for tax purposes, Landlord shall cause the Leased Premises to be assessed as a separate parcel for tax purposes, separate and apart from any adjoining property owned by Landlord, and to have the statements therefor delivered to Tenant at its address herein set forth. If such tax statements are delivered to Landlord, Landlord, upon receipt of same but in any event prior to the due date for filing such returns, shall furnish Tenant with a true copy of the tax statements from the taxing authority. Tenant shall make timely payment of Real Estate Taxes prior to delinquency and shall furnish copies of paid receipts therefor (or other evidence of payment) to Landlord.
3.9 Additional . Except as expressly provided to be paid by Landlord, Tenant shall pay any and all sums of money or charges required to be paid by Tenant under this Lease promptly when the same are due. All such amounts or charges shall be payable to Landlord at the place where the Rent is payable.
3.10 The Rent as used herein shall mean the Base Rent as set forth in Article 3.1, the Percentage Rent as set forth in Article 3.2 and all other sums due or that may become due to the Landlord under the terms hereof or are required to be paid by Tenant hereunder.
3.11 Net Lease . This is a completely net lease. Except as may be otherwise specifically provided in this Lease to the contrary, Tenant shall pay any and all costs and expenses of any kind relating to the Leased Premises and/or the Improvements or arising from its or their use or operation, except for debt service on mortgages imposed by Landlord. Rent shall be payable in all events, without abatement, for any reason.
CONDITION; PLANS; CONSTRUCTION
4.1 Condition of Leased Premises . Subsequent to the Effective Date, Tenant shall neither commit or permit to be committed any waste nor cause or suffer to be caused any material adverse change to the Leased Premises.
4.2 Landlord’s Approval . Landlord acknowledges that it shall be furnished with the preliminary plans (the “ Plans ”) for Tenant’s intended restaurant bearing Tenant’s Trade Name, associated parking areas, signage and other related facilities (collectively, the “ Improvements ”). Landlord hereby agrees to approve or deny approval of the Plans within thirty (30) days from Tenant’s furnishing thereof (including Tenant’s architecture, trade dress and signage), which approval shall not be unreasonably withheld, delayed or conditioned and subject only to Tenant receiving approvals from the necessary governmental authorities having jurisdiction over the Leased Premises including, but not limited to, building permits for the Improvements. Any such denial of the plans by Landlord shall be accompanied by the written reasons for such denial. If Landlord shall fail to so provide its approval or denial of the Plans within said 30-day period, the Plans shall be deemed approved by Landlord in all respects.
4.3 Landlord’s Constructions Obligations . Landlord shall deliver the Leased Premises to Tenant in “As Is” condition and Tenant shall bear and all expenses in connection with the site work and construction.
4.4 Tenant’s Construction Obligations . Upon receipt of the necessary permits and licenses, Tenant covenants and agrees to promptly commence construction and diligently complete construction, subject to “Excusable Delays,” of Tenant’s restaurant in accordance with applicable building and zoning codes and ordinances and with all other laws, ordinances, regulations and requirements of all federal, state and local agencies, including compliance with the American’s with Disabilities Act (“ADA”). Tenant shall perform all work in a good and workmanlike manner. At all times when any work is in progress, Tenant shall obtain and maintain: (x) adequate worker’s compensation insurance covering all persons employed in connection with construction of Tenant’s restaurant, and (y) all builder’s risk insurance written on a completed value basis in an amount of not less than the total value of the restaurant. This requirement shall be in addition to the insurance requirements elsewhere in this Lease. “ Excusable Delays ” shall mean days on which Tenant or any contractor(s) or subcontractor(s) are unable to perform and/or complete construction at the Leased Premises or on the Improvements due to inclement weather, acts of God, casualty loss, unavailability of materials, strikes, delay by Landlord or Tenant, as the case may be, in performing its obligations under this Article IV and other reasons beyond the control of Tenant or Landlord, as the case may be.
CONDUCT OF BUSINESS BY TENANT
5.1 Use of Leased Premises . Subject to any force majeure, condemnation, closures for a period of time of no more than five (5) days during any Lease Year for remodeling or repairs, actions and causes beyond the control of Tenant, and except while the Leased Premises are untenable by reason of fire or other unavoidable casualty (hereinafter “Permitted Interruptions”), upon Tenant’s opening for business to the general public, Tenant shall use, occupy and operate the Leased Premises solely for Tenant’s Use and for no other purpose or purposes. If any governmental license or permit shall be required for the proper and lawful conduct of Tenant’s Use then Tenant, at Tenant’s expense, shall procure and thereafter maintain such license or permit. Tenant shall be open and operating for service of lunch and for service of dinner seven (7) days per week with a minimum of 10 hours per day, 360 days per year.
5.2 Compliance with Law . Tenant shall promptly comply with all federal, state and local laws and ordinances and lawful orders and regulations affecting the Leased Premises, and the health, cleanliness, safety, occupancy and use of same. Except in such minute quantities used in the ordinary course of business in compliance with applicable law, Tenant shall not cause or permit the use, generation, storage, or disposal in, on or about the Leased Premises of any substance, materials or wastes in violation of any federal, state or local laws from time to time in effect concerning hazardous, toxic or radioactive materials (“ Hazardous Substances ”). Tenant shall promptly and fully comply with all state and local laws in effect from time to time prohibiting discrimination or segregation by reason of race, color, religion, disability, sex or national origin or otherwise.
ALTERATIONS AND TENANT’S PROPERTY
6.1 Alterations by Tenant . Other than changes to the exterior elevation, Tenant shall have the right, at any time and from time to time, after completion of the initial Improvements, to make alterations, additions and improvements to the Leased Premises without the consent of Landlord as long as the aggregate cost of the improvements do not exceed $100,000.00 in any one year. After the completion of the initial improvements, any exterior elevation changes must be approved by Landlord. Notwithstanding anything contained herein to the contrary, Tenant shall have the right to make interior, non-structural alterations, additions and improvements to the Leased Premises without the consent of Landlord.
6.2 Removal by Tenant . Tenant shall remove, unless otherwise in default under the Lease, Tenant’s goods, wares, inventory, merchandise, trade fixtures, furniture, accessories, and signage located on or within the Lease Premises (“ Tenant’s Property ”) not later than the expiration of the Term or termination of this Lease. The Premises shall be delivered clean, with all equipment in working order and pest free. Title to any of Tenant’s Property remaining in or on the Leased Premises or the Improvements after such date shall be vested in Landlord without further act or instrument. While this Lease remains in force and effect, Tenant shall be deemed to be the owner of the Improvements and Tenant’s Property and Tenant alone shall be entitled to deduct all depreciation relating thereto on Tenant’s income tax return. At Landlord’s option, upon expiration of the Term or termination of this Lease, Tenant may be required to remove and level all Improvements on the Leased Premises.
MAINTENANCE OF AND REPAIRS TO THE LEASED PREMISES