LA 771 Tenant Right Of First Offer (ROFO) Addendum For Expansion Office Space
Rights of First Offer are pro-tenant expansion rights which obligate the landlord to notify the tenant possessing such rights (i.e., the ROFO tenant) that it desires to lease space subject to the ROFO. Although the landlord may or may not have a specific tenant in mind for the space, a ROFO usually requires the landlord to makes a proposal covering the business terms of a proposed lease for the applicable space. With a ROFO, usually no third party deal provides the business terms for the landlord's proposal, which is normally the case with a right of first refusal.
If the ROFO tenant doesn't elect to lease the space on the terms offered by the landlord in its notice, the landlord is normally free to try to lease such space to any third party, provided it does so based upon the terms in its notice (or, in some cases, on terms no more favorable than those contained in the landlord's ROFO proposal). In many cases, the landlord must make a deal for the space involved within a certain period of time, or the ROFO will "revive," requiring the landlord to offer the space to the ROFO tenant anew before making a third party deal.
This addendum gives the tenant a ROFO for certain additional space for the entire term of the initial lease, and is comprehensive in its approach to tenant improvements, manner of exercise, construction, and other ROFO details. It also contains explicit language concerning rent and adjustment of the tenant's proportionate share of operating costs and taxes following expansion.
Number of Double Spaced Pages: 8
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