Option to Lease

VIEWS: 1,650 PAGES: 13

More Info
									An Option to Lease is an agreement between a tenant and a landlord for a tenant to
occupy a rental premises with an option to purchase the premises at the end of the term
of the lease. This document in its draft form contains numerous of the standard clauses
commonly used in this type of option; however, additional language may be added
allowing for customization to ensure the specific language of the parties is addressed.
A rental property with an option to lease is useful for the tenant who wishes to purchase
the property in the future but does not have the money immediately available.
                           OPTION TO LEASE AGREEMENT
This Agreement is made as of ________________, 2_____ (the "Effective Date"), by and
between_____ ________________________________(“Optionor”) and
________________________________________ (“Optionee”).
                                                       Recitals:
A.       The Optionor is the owner with a good and marketable title in fee simple to the Optioned
         Premises (as defined herein), free and clear of encumbrances, except as provided for
         herein.

B.       The Optionor has agreed to grant options to lease the Optioned Premises in favor of the
         Optionee, upon the terms and conditions set out herein.

        NOW THEREFORE in consideration of the mutual covenants contained herein, other
good and valuable consideration, and the sum of ________ ($_____) now paid by the Optionee
to the Optionor, the receipt and sufficiency of which is hereby acknowledged, the parties agree
as follows:
1.       Truth of Recital A

The Optionor hereby represents and warrants to the Optionee that Recital A is true in substance
and in fact.
2.       Description of Optioned Premises

The lands and premises (the “Optioned Premises”) are more particularly described on
Schedule “A” annexed hereto.
3.       Grants of Option Relating to Optioned Premises

The Optionor hereby grants to the Optionee an exclusive, irrevocable option to lease the
Optioned Premises (or a portion thereof, as provided herein) on the terms set out in this
Agreement (the "Option to Lease").
4.       Term of Option to Lease and Grant and Term of Subsequent Option to Lease

         (a)      The Optionee may exercise the Option to Lease by written notice (the “Exercise
                  Notice”) to the Optionor at any time until the ___ day of ________, 2____ (the
                  "Option to Lease Period"). The Optionee shall be entitled in the Exercise Notice
                  to stipulate all or a portion of the Optioned Premises as being the lands subject to
                  the exercise of the option (the “Initial Exercise Premises”), by sketch or map
                  attached to the Exercise Notice delineating such Initial Exercise Premises.

         (b)      In the event that pursuant to the Exercise Notice the Initial Exercise Premises are
                  less than the Optioned Premises, then with respect to the remainder of the
                  Optioned Premises (the “Excluded Premises”), the Optionor hereby grants to the
                  Optionee a continuing exclusive, irrevocable option to lease the Excluded
                  Premises (or a portion thereof as provided herein) on the terms set out in this


© Copyright 2011 Docstoc Inc. registered document proprietary, copy not                   2
                  Agreement (the “Subsequent Option to Lease”). The Optionee may exercise the
                  Subsequent Option to Lease by written notice (the “Subsequent Exercise Notice”)
                  to the Optionor at any time until the ____ day of ________, 2_____ (the
                  “Subsequent Option to Lease Period”). In the event the Optionee delivers the
                  Subsequent Exercise Notice, the Optionee shall be entitled to exercise its option
                  in respect of a portion of the Excluded Premises, provided that the remainder of
                  the Excluded Premises are not subject to the exercise of such option (the
                  “Subsequently Excluded Premises”).

         (c)      Provided that the Optionor shall be permitted to continue to market and offer the
                  Excluded Premises or any part thereof for lease and/or sale to a third party or third
                  parties and if a satisfactory offer to lease or sell the Excluded Premises or any part
                  thereof is received by the Optionor (the “Acceptable Offer”), the Optionor may
                  notify the Optionee in writing thereof and the Optionee shall be required within
                  ninety (90) days from _____ p.m. on the date of receipt of the said notice to
                  provide a Subsequent Exercise Notice of its intention to exercise the Subsequent
                  Option to Lease, failing which, the Optionor may terminate the Subsequent
                  Option to Lease with respect to any of the Excluded Premises affected by the
                  Acceptable Offer and shall be free to lease and/or sell Excluded Premises or any
                  part thereof pursuant to the Acceptable Offer.

5.       Option Premium in respect of Option to Lease and Subsequent Option to Lease

         (a)      The Optionee shall pay to the Optionor monthly, in advance, commencing on the
                  _____ day of ________, 2____, and on the ____ day of _____, 2_____ and the
                  ____ day of________, 2____, prior to exercise by the Optionee of the Option to
                  Lease, the option premium payment of __________ ($_______) Dollars plus any
                  applicable taxes and on the ____ day of ______, 2_____ and the first day of each
                  following month during the Option to Lease Period, prior to exercise by the
                  Optionee of the Option to Lease, the option premium payment of ___________
                  ($_______) Dollars plus any applicable taxes (collectively the “Option Premium
                  Monthly Payments”). The Optionor acknowledges timely receipt of the Option
                  Premium Monthly Payments due __________, ___________ and ___________.

         (b)      Notwithstanding the foregoing the Optionee may, by not less than thirty (30) days
                  prior written notice from the first day of the month following the date upon which
                  such notice is given to the Optionor, terminate this Option to Lease Agreement,
                  setting out the effective termination date (the “Effective Termination Date”), and
                  no further Option Premium Monthly Payments shall be payable by the Optionee
                  to the Optionor that are due on or after the Effective Termination Date.

         (c)      In the event that the Exercise Notice results in the creation of the Excluded
                  Premises to which the continuing option in section 4(b) applies, the Optionee
                  shall pay to the Optionor monthly, in advance, commencing on the first day of the
                  month immediately following the Exercise Notice, and on the first day of each
                  following month during the Subsequent Option to Lease Period, prior to exercise
                  by the Optionee of the Subsequent Option to Lease, the option premium payment


© Copyright 2011 Docstoc Inc. registered document proprietary, copy not                     3
                  of ______________ ($_______) Dollars, plus any applicable taxes multiplied by
                  the fraction, the numerator of which is the acreage of the Excluded Premises, and
                  the denominator of which is the acreage of the Optioned Premises (collectively
                  the “Subsequent Option Premium Monthly Payments”). In the event the Optionee
                  terminates this Option to Lease Agreement in accordance with section 5(b) herein,
                  no further Subsequent Option Premium Monthly Payments shall be payable by
                  the Optionee to the Optionor that are due on or after the Effective Termination
                  Date.

         (d)      In the event the Optionee terminates this Option to Lease Agreement the Optionee
                  shall register a discharge or release in respect of any registration the Optionee has
                  made with respect to this Option to Lease Agreement.

6.       Form of Lease

In the event the Optionee exercises the Option to Lease, the Optionee, as tenant, and the
Optionor, as landlord, shall enter into the form of lease attached as Schedule B hereto
(the "Lease Form") with the additional terms inserted into the Lease Form to create the lease as
contained herein (the "Lease"). Within five (5) business days from the date of exercise by the
Optionee of the Option to Lease, the Optionor and Optionee shall execute and deliver to each
other _____ (___) fully executed copies of the Lease. In the event the Optionee exercises the
Subsequent Option to Lease, the Optionee, as tenant, and the Optionor, as landlord, shall enter
into a Lease amendment to amend the Lease accordingly and shall within five (5) business days
from the date of exercise by the Optionee of the Subsequent Option to Lease, execute and deliver
to each other ____ (__) fully executed copies of such Lease Amendment.




© Copyright 2011 Docstoc Inc. registered document proprietary, copy not                    4
7.       Principal Terms Respecting Lease

         (a)      Leased Premises, Tenant and Landlord – The premises subject to the Lease from
                  time to time by virtue of exercise by the Optionee of the Exercise Notice or the
                  Subsequent Exercise Notice shall be referred to as the “Leased Premises”. With
                  respect to the Lease, the Optionor is sometimes referred to as the “Landlord” and
                  the Optionee is sometimes referred to as the “Tenant”.

         (b)      Commencement Date – The commencement date of the Lease shall be the date
                  the Exercise Notice is delivered (the “Commencement Date”).

         (c)      Term – The initial term of the Lease shall be for the Construction Period (as
                  defined in the Lease Form) plus _______ (__) years (the “Term”).

         (d)      Renewals – The Optionee shall have ____ (__) _____ (__) year options to renew.

         (e)      Basic Rent –

                  (i)       Basic Rent shall be payable in respect of the Term on the basis of a
                            monthly dollar figure per acre of the then acreage of the Leased Premises
                            from time to time.

                  (ii)      From the Commencement Date to the end of the ______ (__) year after
                            the Commercial Operation Date (the “First Step-Up Date”) the Tenant
                            shall pay Basic Rent of ___________ ($______) Dollars per acre, per
                            month;

                  (iii)     From the first day after the First Step-Up Date to the end of the _____
                            (___) year thereafter (the “Second Step-Up Date”), the Tenant shall pay
                            Basic Rent of __________ ($_____) Dollars per acre, per month;

                  (iv)      From the first day after the Second Step-Up Date to the end of the Term,
                            the Tenant shall pay Basic Rent of ________ ($_____) Dollars per acre,
                            per month.

                  (v)       In addition to the amounts of Basic Rent otherwise payable, the Tenant
                            shall pay a one-time Basic Rent amount of ___________ ($_____) Dollars
                            on the first day of the month following the “Commencement of
                            Construction”. “Commencement of Construction” means that the Tenant
                            has obtained all necessary approvals and permits to construct its intended
                            improvements for its intended uses, including without limitation, an
                            electric power generation facility, and has commenced excavation for
                            foundations relating thereto.

         (f)      Additional Rent – In addition to the Basic Rent, the Tenant shall pay Additional
                  Rent on the terms set out in the Lease Form.




© Copyright 2011 Docstoc Inc. registered document proprietary, copy not                   5
         (g)      Tenant's Uses, Improvements and Financing – The Landlord acknowledges that
                  the Lease shall be a ground lease, and the Tenant shall at its sole cost and expense
                  be entitled to develop, construct, operate and maintain the Tenant's improvements
                  from time to time on the Leased Premises, all without the consent of the Landlord,
                  and the financing thereof by way of leasehold charge or otherwise, without the
                  consent of the Landlord. Provided that should any such improvements adversely
                  impact the use of the Landlord’s retained lands in terms of servicing, grading or
                  drainage, the Tenant shall be fully responsible at its sole cost and expense to
                  minimize the impact and to carry out any works required to be carried out on such
                  lands and the Landlord shall have the right to comment upon and make reasonable
                  requests concerning such works having regard for the current and future uses of
                  the retained lands.

         (h)      Landlord Cooperation – The Landlord covenants and agrees that it will not object
                  or obstruct and will cooperate fully with the Tenant in obtaining any development
                  or other permits and approvals required by the Tenant with respect to the Tenant's
                  use of the Leased Premises, including consents to and execution of applications
                  and documents as owner of the Leased Premises, provided the Tenant shall
                  reimburse the Landlord for any reasonable professional or other fees or expenses
                  incurred in so cooperating.

         (i)      Landlord's Environmental Representations – To the best of the Landlord’s
                  knowledge without having made any inquiry, the Landlord represents and
                  warrants that there are no Environmental Hazards (as defined in the Lease Form)
                  and no breach of Environmental Laws (as defined in the Lease Form) as of the
                  date of execution of this Agreement with respect to the Leased Premises and the
                  Landlord acknowledges that the provisions in the Lease Form with respect to the
                  Leased Premises shall be applicable in accordance with their terms.

         (j)      Tenant’s Environmental Reports – The Tenant acknowledges that in the event that
                  the Tenant, as Optionee, has delivered the Exercise Notice, the Tenant shall
                  commission an environmental assessment report of the Leased Premises as of a
                  date within fifteen (15) days of the Commencement Date, addressed to the
                  Landlord and Tenant, respecting the environmental condition of the Leased
                  Premises, which environmental report the parties agree shall serve as evidence to
                  the extent of the scope of work conducted and the findings made by way of an
                  environmental benchmark with respect to the environmental status of the Leased
                  Premises at such time. The Tenant further acknowledges that in the event that the
                  Tenant as Optionee has delivered the Subsequent Exercise Notice, the Tenant
                  shall commission an environmental assessment report of the lands added to the
                  Leased Premises by virtue of the Subsequent Exercise Notice as of a date within
                  fifteen (15) days of the Subsequent Exercise Notice, addressed to the Landlord
                  and Tenant, respecting the environmental condition of such lands, which
                  environmental report the parties agree shall serve as evidence to the extent of the
                  scope conducted and the findings made by way of an environmental benchmark
                  with respect to the environmental status of such lands at such time. The Tenant
                  further acknowledges that within sixty (60) days prior to the termination or other


© Copyright 2011 Docstoc Inc. registered document proprietary, copy not                   6
                  determination of the Lease the Tenant shall commission and provide to the
                  Landlord an environmental assessment report of the then Leased Premises
                  addressed to the Landlord and Tenant, respecting the environmental condition of
                  the then Leased Premises, which environmental report the parties agree shall
                  serve as evidence to the extent of the scope of work conducted and the findings
                  made by way of an environmental bench mark with respect to the environmental
                  status of the then Leased Premises at such time.

8.       Optionor's Representations Respecting Optioned Premises

The Optionor represents and warrants to the Optionee that:
         (a)      There is no litigation or governmental or municipal proceedings commenced or
                  pending or threatened against the Optioned Premises or against the Optionor with
                  respect to the Optioned Premises.

         (b)      The Optionor has not granted any real property or contractual interest in the
                  Optioned Premises to any other person, and as far as the Optionor is aware, no
                  such interest exists in the Optioned Premises.

         (c)      There are no amounts in arrears in respect of the Optioned Premises, including
                  without limitation, payments in respect of realty taxes and charges affecting the
                  Optioned Premises, and there are no liens, charges or other financial
                  encumbrances affecting the Optioned Premises.

9.       Optionor Covenants

The Optionor covenants to pay when due all amounts that could form a lien or charge against the
Optioned Premises, including without limitation, all realty taxes and all payments due under
financial charges, if any. The Optionor covenants not to further encumber the Optioned
Premises prior to delivery by the Optionee of notice of this Option to Lease Agreement.
10.      Access/Remediation

As and from the date of execution, the Optionor shall permit the Optionee, its representatives and
contractors to have access to the Optioned Premises to, at the cost of the Optionee (i) conduct
such site and environmental investigations as the Optionee may require (including conducting
soil and ground water sampling, digging bore holes, installing monitoring stations and the like);
and (ii) commence remediation or attenuation activities on the Optioned Premises (including
removal, replacement and disposal of contaminated soils or ground water and/or constructing
structures to reduce or eliminate the migration of environmental contaminants) as the Optionee
may determine are appropriate. Provided however, the Optionee shall not commence
remediation or attenuation activities on the Optioned Premises prior to delivery of the Exercise
Notice without the prior written consent of the Optionor, such consent not to be unreasonably
withheld. In the event the Optionee terminates this Option to Lease Agreement prior to delivery
of the Exercise Notice, the Optionee shall return the Optioned Premises in respect of any
remediation or attenuation activities commenced on the Optioned Premises to their state
immediately prior to such remediation or attenuation activities as near as is possible.



© Copyright 2011 Docstoc Inc. registered document proprietary, copy not                7
11.      Binding Agreement/Time of the Essence

This Agreement, when executed by both parties, shall constitute a binding Agreement, and time
shall in all respects be of the essence hereof.
12.      Entire Agreement

It is agreed that there is no representation, warranty, collateral agreement or condition affecting
this Agreement or the Optioned Premises or supported thereby other than as expressed in this
Agreement.
13.      Tender

Any tender of documents under this Agreement may be made upon the attorney acting for the
party on whom tender is desired.
14.      Headings

The headings used in this Agreement are for convenience of reference only, and shall not affect
the interpretation of this Agreement.
15.      Severability

If any provision in this Agreement is found to be unenforceable, such provision shall be severed
from this Agreement, and the remainder of this Agreement shall continue to be in full force
and effect.
16.      Notices

All notices permitted or required to be delivered under this Agreement shall be delivered by
personal or courier delivery or by telefax to the following addresses (or such other addresses or
telefaxes maybe provided in accordance with this paragraph), and shall be considered received
when actually received:

         To Optionor:




         Fax: (___)

         To the Optionee:




         Fax: (___)




© Copyright 2011 Docstoc Inc. registered document proprietary, copy not                  8
17.      Real Estate Commissions

The Optionor acknowledges that the Optionor shall be solely responsible for payment of any real
estate commissions resulting from this Option to Lease Agreement or the Lease.
18.      Assignment

         (a)      Except as provided below, this Agreement shall not be assignable by the Optionee
                  without the consent of the Optionor, which consent shall not be unreasonably
                  withheld.

         (b)      The Optionee may assign its interest in this Agreement without the consent of the
                  Optionor to any of the following (each referred to herein as a “Permitted
                  Assignee”): (i) an Affiliate; (ii) a general partnership or limited partnership in
                  which one or more Affiliates hold at least 50% of the partnership interests; or (iii)
                  a limited partnership of which the general partner or general partners (if more
                  than one) are Affiliates. For purposes of this clause, “Affiliate” shall mean an
                  affiliate of the Optionee.

         (c)      No assignment of this Agreement shall release the Optionee from its obligations
                  under this Agreement.

19.      Successors and Assigns

This Agreement shall enure to the benefit of and be binding upon the parties to this Agreement
and their respective successors and assigns.
20.      Applicable Law

This Agreement shall be interpreted in accordance with the laws of the State of
______________.
21.      Registration

The Optionee shall be permitted to record notice of this Agreement on title to the Optioned
Premises, and the Optionor shall take such steps as Optionee may reasonably require to make
such recording possible.
22.      Further Assurances

Except as provided in this Agreement, each of the parties shall, at the cost and expense of the
other party, execute and deliver all such further documents and do such further acts and things
that the other party may reasonably request from time to time to give full effect to this
Agreement.




© Copyright 2011 Docstoc Inc. registered document proprietary, copy not                    9
IN WITNESS WHEREOF the parties have executed this Agreement as of the day and year first
written above.


                                                                          (OPTIONOR)
                                                                          Per:




                                                                          (OPTIONEE)
                                                                          Per:




© Copyright 2011 Docstoc Inc. registered document proprietary, copy not                10
                                                 SCHEDULE “A”

                              DESCRIPTION OF OPTIONED PREMISES




© Copyright 2011 Docstoc Inc. registered document proprietary, copy not   11
                                                 SCHEDULE “B”

                                     FORM OF LEASE AGREEMENT




© Copyright 2011 Docstoc Inc. registered document proprietary, copy not   12

								
To top