The "Option to Renew" clause in a contract grants one or both parties the right to extend the agreement's term under specified conditions before it expires. This clause typically outlines the notice period for exercising the option and any changes to terms, such as pricing, for the renewal period.
OPTION TO EXTEND TERM: Provided Lessee is not in an uncured breach or default of any of its obligations under the Lease on the date of Lessee’s delivery to Lessor of Lessee’s intent to exercise its renewal option. Lessee shall have one option to renew the Lease for a term of five (5) years at the-then-current market rent; however, in no event will the Base Rent during the first month of the renewal term be less than the monthly Base Rent for the last month of the initial lease term, or any extensions. The Base Rent during the renewal term shall be increased by three percent (3%) each year, adjusting on the anniversary of the renewal term commencement date. Lessee shall provide Lessor not less than nine (9) months prior written notice of its intent to exercise its renewal option.
ADDENDUM TO OPTION TO RENEW RENT ESCALATIONS FIXED INCREASE 994 Innovators Way, Simi Valley, CA. 93065, formerly 994 Flower Glen Street, Simi Valley, CA 93065 THIS ADDENDUM is attached to and integrated as part of that certain Option to Renew and that certain Lease Agreement dated June 1, 2021, by and between Hillside Associates II, LLC, Lessor, and AeroVironment Inc., a Delaware Corporation, Lessee, and constitutes additional Agreements and Conditions contained herein, which Addendum shall prevail in the event of any conflict between the Agreements and Conditions contained herein and those in said Option to Renew.
OPTION TO RENEW. Provided Lessee has never been in default in any of the agreements, covenants, terms or conditions of this Lease, Lessee shall have the Option to Renew the term of this Lease for ONE (1) FIVE (5)YEAR TERM following the expiration of the initial term (herein called "renewal term") provided written notice is delivered to Lessor at least NINE (9) months before the expiration of the initial term of this Lease (or, as to any successive renewals, written notice to Lessor at least three months (3) prior to the expiration of the immediately preceding term).
The monthly rent shall be equal to the rent charged for comparable space in the geographical area ("market rate"). However, in no event will the monthly rent during the renewal term be less than the monthly rent for the last month of the initial Lease term or any extensions thereto. If the renewal term is greater than one (1) year, the rent for the first year of the renewal term shall be at market rate; thereafter, on each yearly anniversary of the renewal term, the rent shall be increased as set forth in the Addendum to Option to Renew. If successive options are granted, this Option to Renew shall apply to each renewal term.
The parties hereto have executed this Option to Renew on the date set forth below: LESSOR: LESSEE: Hillside Associates II, LLC AeroVironment, Inc. By Mid Valley Properties, A Delaware CORPORATION Managing Agent By /s/ Margaret Kestly By /s/ Ken Karklin Margaret M. Kestly, Authorized Agent Kenneth Karklin, Sr. Vice President & COO DATE: 6/15/2021
Option to Renew. Tenant shall have one (1) right and option to extend the term of this Lease for a period of three (3) to five (5) years if Landlord receives written notice of exercise of such option (which notice must include the period (not less than three (3) years nor more than five (5) years) in which this Lease is being extended, the “Renewal Notice”) on or before December 15th, 2017. TIME IS OF THE ESSENCE. If Tenant timely delivers a Renewal Notice, all of the terms and conditions of the Lease shall apply to the extended lease, including the amount of minimum rent as set forth in Section 3.A.
The Landlord hereby grants to the Tenant an option to renew the Term of the Lease for a further period of five (5) years upon the terms and conditions contained below. This Option to Renew is intended to be applicable for the Existing Premises and the Expansion Premises collectively and shall be incorporated mutatis mutandis with the intent of this Agreement. The parties agree to insert the following as Clause 1.2 to the Lease and the references to “Premises” shall be deemed to include the Expansion Premises and the Existing Premises:
Option to Renew If the Tenant pays the Rent as and when due and performs and observes each and every of the covenants and conditions to be observed or performed by the Tenant under this Lease, and provided the Tenant is still Nanotech Security Corp. and is itself in possession of substantially the whole of the Premises, the Tenant will have the option to renew this Lease for a further term of five (5) years (the “Renewal Term”), upon giving the Landlord written notice of its intention to do so no less than six (6) clear calendar months prior to the expiry of the then current Term.
If the Tenant fails to exercise this option to renew the Term in accordance with the foregoing, or if the foregoing conditions are not satisfied, this option to renew shall be null and void.”
Option to Renew. Tenant shall have a single option to renew the Lease on the terms set forth in Section 1.3.2 of the Lease. However, the option to renew will be for a single Renewal Term of one hundred twenty (120) months rather than for two (2) terms of sixty (60) months. Such option to renew applies to, and may be exercised only with respect to, the entire Premises.
OPTION TO RENEW. Tenant now has an Option to Renew for an additional three (3) years with annual base rent increases of 2.5%. Tenant must exercise this Option to Renew by giving Landlord written notice on or before .
Lessor and Lessee now desire to, among other things, extend the lease term, amend the option to renew the Suite 300 Lease.
Option to Renew. Section 61 of the Lease (as modified by Section 9 of the First Amendment) is hereby deleted in its entirety and the following shall be inserted in lieu thereof: “61. Option. Provided that no Default or Breach exists at the time of delivery of Lessee’s written notice or commencement of the renewal term described herein, Lessee has not assigned this Lease or subleased all or any portion of the Premises, and Lessee has not vacated and abandoned the Premises, Lessee shall have one (1) Option to renew this Lease for a term of sixty (60) months for the portion of the Premises being leased by Lessee as of the date the renewal term is to commence, on the same terms and conditions set forth in the Lease, except as modified by the terms, covenants and conditions as set forth below: (a)If Lessee elects to exercise said Option, then Lessee shall provide Lessor with written notice no earlier than fifteen (15) months prior to the expiration of the then current term of this Lease, but no later than twelve (12) months prior to the expiration of the then current term of this Lease. If Lessee fails to provide such notice, Lessee shall have no right to extend or renew the term of the Lease. (b)The Base Rent in effect at the expiration of the then current term of the Lease shall be increased to reflect the current fair market rental for comparable space in the Building and in other similar buildings in the same rental market as of the date the renewal term is to commence as reasonably determined by Lessor, taking into account the specific provisions of the Lease which will remain constant. Lessor shall advise Lessee of the new Base Rent for the Premises no later than sixty (60) days after receipt of Lessee’s written request therefor. Said request shall be made no earlier than thirty (30) days prior to the first date on which Lessee may exercise its option under this paragraph. Said notification of the new Base Rent may include a provision for its escalation to provide for a change in fair market rental between the time of notification and the commencement of the applicable renewal term. In no event shall the Base Rent for the renewal period be less than the Base Rent in the preceding period. Within thirty (30) days after Lessee’s receipt of Lessor’s determination of the Base Rent for the renewal term, Lessee may dispute Lessor’s determination or otherwise shall be deemed to have accepted such determination. If Lessee elects to dispute Lessor’s determination by delivering written notice to Lessor within the time frame required above (“Lessee’s Estimate Notice”), Lessee shall specify Lessee’s determination of the fair market rental for the renewal term of this Lease. If Lessee disputes Lessor’s determination, Lessor and Lessee shall then negotiate in good faith to resolve the fair market rent, but in the event Lessor and Lessee fail to reach agreement as to the fair market rent for the renewal term within twenty (20) days after Lessor’s receipt of Lessee’s Estimate Notice, such dispute shall be resolved in accordance with the provisions of Section 61(c) Error! Reference source not found.below. (c)If Lessor and Lessee are unable to reach an agreement as to the fair market rental, then the fair market rental shall be determined by an arbitrator using “baseball arbitration” as follows: Lessor and Lessee shall, within ten (10) days after the end of the aforementioned twenty (20) day period, each designate an independent and disinterested real estate broker with at least ten (10) years of industrial leasing experience in the Newark, California market. The two (2) such appointees shall within five (5) business days thereafter, designate a third real estate broker having substantially similar qualifications. If the two (2) appointees fail to agree upon the appointment of the third real estate broker within five (5) business days after their appointment by Lessor and Lessee, then either of Lessor or Lessee, upon notice to the other party and Lessor’s and Lessee’s appointees, may request that such appointment be made by the San Francisco office of the American Arbitration Association (the “AAA”), or in the event of the refusal, failure or inability by the AAA to appoint an arbitrator within twenty (20) days after such request, may request that such appointment be made by a court of competent jurisdiction in the State of California. After a third real estate broker has been designated in accordance with the foregoing provision, then within twenty (20) days after the appointment of the third broker, the first two brokers shall present their determination of fair market rental to the third broker. The third broker shall within ten (10) days thereafter select the determination of either the first representative or the second representative as the final determination of fair market rental. Lessor and Lessee shall each pay the expense of the broker such party engaged and shall each pay fifty (50%) percent of the cost of any third appointed broker; provided, however, in the event that the percentage difference between Lessor’s estimate of the fair market rent and the fair market rent determined by the arbitration process is fifteen (15%) percent or less, then Lessee shall bear the full cost of the arbitration process, including the cost of the broker appointed by Lessor. The parties shall promptly enter into an amendment to this Lease which shall evidence Lessee’s exercise of this Option to renew and the Base Rent for the renewal term.
This Option is not transferable; the parties hereto acknowledge and agree that they intend that the aforesaid Option to renew this Lease shall be “personal” to Lessee as set forth above and that in no event will any assignee or sublessee have any rights to exercise the aforesaid option to renew.”
Restriction to option to renew A new clause 11.5 is inserted as follows: ’11.5 Restriction to option to renew (a) Despite any other clause in this lease, the Tenant may take a new lease of the Premises or any part of the Premises as nominated by the Tenant for the Further Term if and only if: (i) the Premises (or that part of the Premises nominated by the Tenant) and the premises under the other 363 Leases that are simultaneously being renewed for the Further Term (Renewal Space) collectively satisfy the conditions set out in clause 11.5(c); (ii) the Tenant gives written notice to the Landlord of its intention to take a new lease of the Renewal Space in accordance with clause 11.1(a) (Renewal Notice); (iii) the Renewal Notice must also include the Tenant’s nomination of the Renewal Space which must be in accordance with the conditions set out in clause 11.5(c); and (iv) the other conditions in clause 11.1 are also satisfied. (b) Despite any other clause in this lease, the Tenant may take a new lease of part of the Premises under clause 11 provided the conditions in clause 11.5(c) are satisfied.
Option to Renew: Tenant is hereby granted an option to renew the Lease pursuant to the following terms and conditions: (a)Provided that at the time such option is exercised and at the expiration of the Term, (i) Tenant is not in default under the Lease, (ii) Tenant has not assigned this Lease or sublet the Premises, other than to permitted subleases or assignees as permitted in the Lease, (iii) Tenant continues to occupy the Premises, (iv) Tenant's use is consistent with the general quality of the tenants and uses in the Project, and (v) Tenant remains creditworthy. Tenant is granted one (I) option to renew the Lease for a period of three (3) years. (b) Base Rent for the option period shall be the of (i) ninety (90%) of market rate, with market rate incorporating an increase in Base Rent for each year of the option period or (b) the Periodic Rent for the last twelve (12) months of the Extension Term with three (3%) percent increases each year of the option period, Market rate shall be based upon comparable rates for similar space in the surrounding area. (c)Tenant shall exercise its option by providing written notice ("Option Notice") of its intent to exercise an option at least one hundred twenty (120) days prior to the then applicable expiration period. Failure to provide timely notice shall render the pending option and further option null and void. (d)Landlord shall have the right but not the obligation to withdraw and void the option if Tenant is in breach (after applicable notice and opportunity to cure) of this Lease at the time of (i) the Option Notice or (ii) at any between the Option Notice and the date the option period is to commence. Landlord shall provide the notice of its withdrawal of option within ten (10) days after the cure period has expired. (e)Each party shall provide the other with its opinion of market rate at least ninety (90) days prior to the then applicable expiration period. In the event the parties cannot agree as to market rate, the same shall be determined by binding arbitration with American Arbitration Association, with each party picking anarbitrator and the two (2) chosen arbitrators jointly picking a third arbitrator. Until arbitration is concluded, Base Rent for the time in dispute shall be paid as if Base Rent increased four (4%) percent ("Interim Payments"). Upon final determination of appropriate market rate, the parties shall adjust the Interim Payments accordingly. Additional Rent — Passthrough Expenses shall be paid pursuant to the terms of the Lease.
An option to renew is a contractual clause that grants a party the right to extend the term of an agreement for an additional period under specified conditions. This clause is commonly utilized in leases, allowing tenants to extend their lease term once the initial period expires, often under the same terms and conditions, unless otherwise specified.
An option to renew is particularly advantageous in situations where:
Long-term Planning: You have long-term plans that align with the location or terms of your current lease or agreement.
Investment in Property: You’ve invested in improvements or business developments at the leased property and want to ensure the ability to remain there to realize the return on those investments.
Market Conditions: You anticipate that market conditions will change unfavorably (e.g., rental prices increasing) and wish to lock in current terms or favorable conditions for future leases.
Stability: You desire stability and continuity for your operations or living arrangements.
When drafting an option to renew clause, it is crucial to be precise and clear. The clause should include:
Clear Terms: Specify the length of the renewal term and any conditions or changes in terms.
Notification Requirements: Outline how and when the party must notify the other party of their intention to renew the contract.
Conditions for Exercise: Detail any conditions that must be met to exercise the option, such as the state of the property, up-to-date rent payments, etc.
Procedure After Expiry: Describe what happens if the option is not exercised or if the parties negotiate modifications.
Example:
“The Tenant shall have the right to renew this Lease for an additional term of five (5) years by providing written notice to the Landlord at least ninety (90) days prior to the expiration of the initial lease term. The renewal shall be upon the same terms and conditions as contained in this Lease, except that the rent for the renewal term shall be as agreed upon based on market rates.”
An option to renew is most commonly found in:
Real Estate Leases: Both residential and commercial leases often include renewal options to allow tenants to extend their stay.
Equipment Leases: Contracts for leased equipment may incorporate this clause to allow lessees to continue using the equipment beyond the initial period.
Service Contracts: Long-term contracts for services, such as maintenance agreements or vendor services, might include renewal options.
Partnership Agreements: Business partnerships that need flexibility beyond the original term may feature an option to renew the partnership under agreed conditions.
These renewal clauses help create predictability and security for both parties involved.
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