COMMERCIAL LEASE AGREEMENT

(Tennessee – Draft Template)

TABLE OF CONTENTS

1. Document Header
2. Definitions
3. Operative Provisions
   3.1 Lease of Premises
   3.2 Term; Commencement & Expiration
   3.3 Rent; Additional Rent; Late Charges
   3.4 Security Deposit
   3.5 Use of Premises
   3.6 Operating Expenses & Utilities
   3.7 Maintenance, Repairs & Alterations
4. Representations & Warranties
5. Covenants & Restrictions
6. Default & Remedies
7. Risk Allocation
8. Dispute Resolution
9. General Provisions
10. Execution Block

[// GUIDANCE: Update page numbers if converting to final, paginated format]

1. DOCUMENT HEADER

COMMERCIAL LEASE AGREEMENT (this “Agreement”) is made and entered into as of [EFFECTIVE DATE] (the “Effective Date”), by and between [LANDLORD LEGAL NAME], a [STATE & ENTITY TYPE] (“Landlord”), and [TENANT LEGAL NAME], a [STATE & ENTITY TYPE] (“Tenant”). Landlord and Tenant are sometimes referred to individually as a “Party” and collectively as the “Parties.”

Recitals
A. Landlord is the fee simple owner of certain real property located at [STREET ADDRESS, CITY, COUNTY, TENNESSEE], together with the building(s), improvements, parking areas, and appurtenances thereon (collectively, the “Property”).
B. Tenant desires to lease from Landlord, and Landlord desires to lease to Tenant, a portion of the Property described herein, upon the terms and conditions set forth in this Agreement.
C. The consideration for this Agreement includes the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are acknowledged.

2. DEFINITIONS

For ease of reference, the following capitalized terms shall have the meanings set forth below. Terms defined elsewhere (e.g., in headers) have that meaning throughout.

“Additional Rent” – Any and all sums (other than Base Rent) payable by Tenant under this Agreement.

“Applicable Environmental Laws” – All federal, state, and local statutes, regulations, ordinances, and common-law duties relating to health, safety, or the environment, including but not limited to the Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C. § 9601 et seq., and the Resource Conservation and Recovery Act, 42 U.S.C. § 6901 et seq.

“Base Rent” – The fixed rental payments set forth in Section 3.3.

“Commencement Date” – The earlier of (i) [DATE CERTAIN], or (ii) the date Tenant first opens for business in the Premises.

“Event of Default” – Any of the occurrences enumerated in Section 6.1.

“Force Majeure” – Any cause beyond the reasonable control of the Party affected, as further described in Section 7.4.

“Premises” – Approximately [NRSF] rentable square feet located in the building commonly known as [BUILDING NAME/NUMBER], outlined on the floor plan attached hereto as Exhibit A.

“Rent” – Collectively, Base Rent and Additional Rent.

“Term” – The period beginning on the Commencement Date and ending on the Expiration Date, subject to extension or earlier termination as provided herein.

[// GUIDANCE: Add or delete defined terms to align with deal specifics.]

3. OPERATIVE PROVISIONS

3.1 Lease of Premises

Landlord hereby leases the Premises to Tenant, and Tenant hereby leases the Premises from Landlord, together with the non-exclusive right to use, in common with others, the driveways, sidewalks, and other common areas of the Property, subject to the terms of this Agreement.

3.2 Term; Commencement & Expiration

(a) Initial Term. The Term shall commence on the Commencement Date and shall continue for [NUMBER] ([#]) years, ending at 11:59 p.m. local time on [EXPIRATION DATE] (“Expiration Date”), unless sooner terminated as herein provided.
(b) Renewal Options. Tenant shall have [NUMBER] ([#]) options to renew the Term for [LENGTH] each, exercisable per Section 9.2.

3.3 Rent; Additional Rent; Late Charges

(a) Base Rent. Tenant shall pay Base Rent to Landlord in advance on the first (1st) day of each calendar month, without offset or deduction, as follows:

(b) Additional Rent. Tenant shall pay, as Additional Rent, (i) Operating Expenses per Section 3.6, (ii) late charges, and (iii) any other monetary obligations hereunder.
(c) Late Payment. Any sum not received within [5] days after due shall bear a late charge equal to [5]% of the delinquent amount plus interest at the lesser of [12]% per annum or the maximum lawful rate.

3.4 Security Deposit

Tenant shall deposit with Landlord on or before the Commencement Date the sum of $[AMOUNT] (the “Security Deposit”). Landlord may, without prejudice to other remedies, apply the Security Deposit to cure any Event of Default. Within [30] days after expiration or earlier termination of this Agreement, the unapplied balance shall be returned to Tenant.

3.5 Use of Premises

(a) Permitted Use. Tenant shall use the Premises solely for [DESCRIBE PERMITTED USE] and for no other purpose without Landlord’s prior written consent.
(b) Prohibited Acts. Tenant shall not generate, treat, store, or dispose of Hazardous Materials in, on, or about the Property except in compliance with Applicable Environmental Laws.
(c) Legal Compliance. Tenant shall comply with all Applicable Law, including without limitation all zoning, building, fire, life-safety, and environmental regulations.

3.6 Operating Expenses & Utilities

(a) Tenant’s Share. Tenant shall pay [PERCENTAGE]% of Operating Expenses, defined as all reasonable costs of operating, maintaining, and repairing the Property, excluding capital expenditures except as expressly provided.
(b) Utilities. Tenant shall contract and pay directly for all electric, gas, water, sewer, telecommunication, and other utilities serving the Premises.

3.7 Maintenance, Repairs & Alterations

(a) Landlord Obligations. Landlord shall maintain the structural elements, foundation, roof, and building systems (excluding those exclusively serving the Premises).
(b) Tenant Obligations. Tenant, at its sole cost, shall keep the Premises in good order and repair, including all interior, non-structural components, and any specialized tenant-installed equipment.
(c) Alterations. Tenant shall not make any Alterations without Landlord’s prior written consent, which consent shall not be unreasonably withheld, conditioned, or delayed; provided, cosmetic Alterations not exceeding $[AMOUNT] in the aggregate during any Lease Year shall be exempt with prior notice.
(d) Restoration. Upon lease termination, Tenant shall restore the Premises to its original condition, reasonable wear excepted, unless Landlord elects in writing to accept all or part of the Alterations.

4. REPRESENTATIONS & WARRANTIES

4.1 Mutual Representations. Each Party represents and warrants that:
(a) It is duly organized, validly existing, and in good standing under the laws of its state of formation.
(b) Execution, delivery, and performance of this Agreement have been duly authorized and do not violate any governing documents or agreements.
(c) This Agreement constitutes a legal, valid, and binding obligation, enforceable against such Party in accordance with its terms.

4.2 Landlord Additional Representations. Landlord further represents that, to its actual knowledge and without duty of inquiry:
(a) It holds fee simple title to the Property, free and clear of monetary liens except as disclosed on Exhibit D;
(b) The Premises may lawfully be used for the Permitted Use under existing zoning.

4.3 Tenant Additional Representations. Tenant further represents that:
(a) Tenant will obtain, prior to occupancy, all licenses and permits required for the Permitted Use;
(b) Tenant is not a party to any voluntary or involuntary bankruptcy or insolvency proceeding.

4.4 Survival. The representations and warranties set forth in this Section 4 shall survive the earlier of expiration or termination of this Agreement for a period of [12] months.

5. COVENANTS & RESTRICTIONS

5.1 Affirmative Covenants of Tenant. Tenant shall:
(a) Pay Rent when due;
(b) Keep the Premises in a neat, clean, and safe condition;
(c) Maintain all insurance required by Section 7.3;
(d) Provide Landlord with access to the Premises upon [24] hours’ notice (except in emergencies).

5.2 Negative Covenants of Tenant. Without Landlord’s prior written consent, Tenant shall not:
(a) Assign this Agreement or sublet all or any portion of the Premises, except as permitted under Section 5.4;
(b) Do or permit any act that creates a lien upon the Property;
(c) Cause or permit any Hazardous Materials to be present in violation of Applicable Environmental Laws.

5.3 Landlord Covenants. Landlord shall (a) maintain common areas and building systems as required under Section 3.7(a), and (b) observe and comply with all Applicable Law pertaining to the Property.

5.4 Assignment & Subletting Rules (Tennessee-Specific).
(a) Consent Standard. Landlord’s consent shall not be unreasonably withheld, conditioned, or delayed, provided: (i) the proposed assignee/subtenant is of equal or greater financial strength than Tenant; (ii) the proposed use is the Permitted Use; and (iii) no Event of Default exists.
(b) Processing Fee. Tenant shall reimburse Landlord for its reasonable review costs (not to exceed $[AMOUNT]).
(c) Recapture. Within [15] days after receiving Tenant’s request, Landlord may elect to recapture the space proposed for transfer in lieu of consenting.
(d) Profit Sharing. [INSERT, if any, percentage of excess consideration payable to Landlord].

[// GUIDANCE: Tennessee has no statutory restriction on commercial subletting; these provisions are purely contractual and negotiable.]

6. DEFAULT & REMEDIES

6.1 Events of Default

The occurrence of any of the following shall constitute an “Event of Default”:
(a) Tenant fails to pay any Rent within [5] days after written notice;
(b) Tenant breaches any non-monetary obligation and fails to cure within [30] days after notice (or, if not reasonably susceptible of cure within 30 days, fails to commence and diligently pursue cure);
(c) Tenant’s insolvency, assignment for the benefit of creditors, or commencement of bankruptcy proceedings;
(d) Abandonment or vacation of the Premises for [30] consecutive days.

6.2 Remedies

Upon an Event of Default, Landlord may, subject to Applicable Law:
(a) Terminate this Agreement upon written notice, recover possession of the Premises, and accelerate all Rent due for the balance of the Term discounted to present value at [5]% per annum;
(b) File a detainer action pursuant to Tenn. Code Ann. § 29-18-101 et seq. for possession and past-due Rent;
(c) Re-enter and relet the Premises (Landlord shall use commercially reasonable efforts to mitigate damages);
(d) Recover all costs, including reasonable attorneys’ fees, court costs, and expenses incurred enforcing rights hereunder.

[// GUIDANCE: Tennessee law permits an expedited detainer warrant process in General Sessions Court for commercial evictions. Self-help is discouraged due to breach-of-peace concerns.]

6.3 Landlord Default & Tenant Remedies

If Landlord fails to perform any covenant within [30] days after written notice (subject to cure extension), Tenant may (a) perform the obligation and offset the reasonable cost against Rent (not to exceed [ONE] month’s Base Rent in any Lease Year), or (b) pursue specific performance or damages, excluding consequential damages.

7. RISK ALLOCATION

7.1 Indemnification (Tenant Use Indemnity)

Tenant shall indemnify, defend, and hold harmless Landlord and Landlord’s Indemnitees from and against any and all claims, liabilities, damages, and expenses (including reasonable attorneys’ fees) arising out of: (i) Tenant’s use or occupancy of the Premises; (ii) any act or omission of Tenant or Tenant’s Agents; and (iii) any breach of this Agreement by Tenant, except to the extent caused by the gross negligence or willful misconduct of Landlord.

7.2 Limitation of Liability

[SELECT OPTION]
Option A (No Cap): Neither Party limits its liability except as expressly provided herein.
Option B (Negotiated Cap): Landlord’s aggregate liability shall not exceed [CAP AMOUNT e.g., an amount equal to twelve (12) months’ Base Rent], and Tenant’s aggregate liability shall not exceed [CAP], provided such cap shall not apply to (i) unpaid Rent, (ii) indemnity obligations, or (iii) claims covered by insurance.

[// GUIDANCE: Remove Option not selected during finalization.]

7.3 Insurance

(a) Tenant Insurance. Tenant shall maintain:
(i) Commercial General Liability insurance, written on ISO CG 00 01 or equivalent, with limits of not less than $[1,000,000] per occurrence and $[2,000,000] aggregate;
(ii) All-Risk Property insurance on Tenant’s personal property and Alterations;
(iii) Workers’ Compensation per statutory limits;
(iv) Pollution Legal Liability insurance if Hazardous Materials are used, with limits of $[1,000,000].
(b) Landlord Insurance. Landlord shall maintain All-Risk Property insurance covering the Building at replacement cost, and Commercial General Liability insurance with limits of not less than $[2,000,000] per occurrence.
(c) Waiver of Subrogation. Each Party waives, and shall cause its insurers to waive, subrogation rights against the other Party to the extent of insurance proceeds.

7.4 Force Majeure

Neither Party shall be liable for delay or failure to perform due to Force Majeure, provided the affected Party gives notice within [10] days of commencement of the event and resumes performance promptly upon cessation. Monetary obligations are excepted.

8. DISPUTE RESOLUTION

8.1 Governing Law

This Agreement and any dispute arising hereunder shall be governed by and construed in accordance with the laws of the State of Tennessee, without regard to conflict-of-laws principles.

8.2 Forum Selection / Jurisdiction

The Parties irrevocably submit to the exclusive jurisdiction of the state courts located in the county where the Property is situated, and waive any objection based on forum non conveniens.

8.3 Arbitration (Optional)

[SELECT: INCLUDE OR DELETE ENTIRE SECTION]
If selected, any claim (other than eviction or injunctive relief) shall be resolved by binding arbitration administered by the American Arbitration Association under its Commercial Arbitration Rules. Judgment on the award may be entered in any court of competent jurisdiction. The arbitration locale shall be [CITY, TN].

8.4 Jury Trial Waiver (Optional)

[SELECT: INCLUDE OR DELETE]
EACH PARTY HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, TRIAL BY JURY IN ANY ACTION ARISING OUT OF OR RELATING TO THIS AGREEMENT.

8.5 Injunctive Relief / Eviction Preservation

Nothing herein shall limit Landlord’s right to seek injunctive relief, specific performance, or to commence a detainer action under Tenn. Code Ann. § 29-18-101 et seq. to recover possession of the Premises.

9. GENERAL PROVISIONS

9.1 Amendments & Waivers. No amendment or waiver shall be effective unless in a writing executed by both Parties.

9.2 Notices. All notices shall be in writing and deemed given upon (i) personal delivery, (ii) reputable overnight courier (next business day), or (iii) certified mail, return receipt requested, to the addresses below or such other address as either Party designates.

9.3 Successors & Assigns. This Agreement shall bind and inure to the benefit of the Parties and their respective successors and permitted assigns.

9.4 Severability. If any provision is held invalid, the remaining provisions shall remain in full force; the invalid provision shall be reformed to the minimum extent necessary to make it valid and enforceable.

9.5 Integration. This Agreement, together with all exhibits and schedules, constitutes the entire agreement between the Parties and supersedes all prior discussions and writings.

9.6 Counterparts; Electronic Signatures. This Agreement may be executed in counterparts, each of which is deemed an original. Signatures transmitted electronically or by facsimile shall be deemed originals.

9.7 Recording. At either Party’s option and expense, a short-form memorandum of this Agreement, in recordable form and acknowledged, may be recorded in the official real property records of the county where the Property is located.

9.8 Confidentiality. The terms of this Agreement are confidential and shall not be disclosed except to the Parties’ respective lenders, investors, advisors, or as required by law.

10. EXECUTION BLOCK

IN WITNESS WHEREOF, the Parties hereto have caused this Commercial Lease Agreement to be executed as of the Effective Date.

[IF NOTARIZATION IS DESIRED FOR RECORDING PURPOSES]

State of Tennessee )
County of [ ] )

On this ___ day of _, 20_, before me, the undersigned Notary Public, personally appeared ______, proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the foregoing instrument, and acknowledged that he/she/they executed the same.

Notary Public
My commission expires: ______

EXHIBITS

Exhibit A – Premises Floor Plan
Exhibit B – Rent Schedule & Escalations
Exhibit C – Rules & Regulations
Exhibit D – Landlord Title Exceptions / Encumbrances
Exhibit E – Environmental Questionnaire & Compliance Schedule
Exhibit F – Form of Guaranty (if applicable)

[// GUIDANCE: Attach or draft each exhibit as required. Review local recording requirements if a memorandum of lease will be recorded.]

Prepared for customization by counsel. Review all bracketed items and optional provisions prior to execution.