5-Year Extension Terms Clause Samples
The 5-Year Extension Terms clause defines the conditions under which an agreement may be extended for additional five-year periods beyond its original term. Typically, this clause outlines the process for initiating an extension, such as requiring written notice from one or both parties within a specified timeframe before the current term expires. By providing a clear mechanism for prolonging the contractual relationship, this clause ensures continuity and predictability for both parties, reducing the need for renegotiation and minimizing disruptions to ongoing business arrangements.
5-Year Extension Terms. If Tenant exercises all of the 6-Month Extension Terms, then Original Tenant and any other Qualifying Party subsequently shall have the right to further extend the Term for each of the 5-Year Extension Terms (as defined in the Basic Lease Information) upon the Expiration Date as extended by any previous Extension Term by giving the Exercise Notice to Landlord not more than fifteen (15) and not less than twelve (12) months prior to the then Expiration Date, provided that, as of the date of delivery of the Exercise Notice, Tenant is not in Default under this Lease after expiration of any applicable notice and cure period. The Monthly Base Rent during each 5-Year Extension Term shall be the “Fair Market Rental Value” as that term is defined in Exhibit E, attached hereto, as such Fair Market Rental Value is determined pursuant to Exhibit E, attached hereto. The calculation of the “Fair Market Rental Value” for the 5-Year Extension Terms shall be derived from a review of, and comparison to, the “Net Equivalent Lease Rates” of the “Comparable Transactions,” as provided for in Exhibit E, and thereafter, the Fair Market Rental Value shall be stated as a “Net Equivalent Lease Rate” for each year of the subject 5-Year Extension Term.
(A) The Fair Market Rental Value shall be determined as follows:
(1) Within fifteen (15) days after receipt of Tenant’s Exercise Notice, and at least ninety (90) days prior to the commencement of the applicable Extension Term, Landlord shall deliver to Tenant a good faith written proposal of the Fair Market Rental Value. Within twenty-one (21) days after receipt of Landlord’s proposal, Tenant shall notify Landlord in writing (a) that Tenant accepts Landlord’s proposal or (b) that Tenant elects to submit the determination of Fair Market Rental Value to arbitration in accordance with this Section 2(b)(ii)(A). If Tenant does not give Landlord a timely notice in response to Landlord’s proposal, Landlord’s proposal of Fair Market Rental Value shall be binding upon Tenant.
(2) If Tenant timely elects to submit the determination of Fair Market Rental Value to arbitration, Landlord and Tenant shall first negotiate in good faith in an attempt to determine the Fair Market Rental Value. If Landlord and Tenant are able to agree within thirty (30) days following the delivery of Tenant’s notice to Landlord electing arbitration (or if Tenant accepts Landlord’s initial proposal), then such agreement shall constitute a determination of Fair Market Renta...