Operating Expense Adjustment. The Basic Annual Rental payable under paragraph 1(f) hereof is based, in part, on operating expenses existing during the calendar year in which the lease commences ("Base Year"). For the purposes of rental escalations under the terms of this Lease. said operating expenses are defined as and limited to: (i) ad valorem taxes, for which Landlord is liable, assessed against the land, Building and Improvements and in and upon which the Premises are located together with any special assessments and other real estate costs in the nature of taxes or assessments for which Landlord is responsible; (ii) expenses of operation, maintenance and repair of the land, Building, sidewalks and curbs adjacent thereto in a manner deemed reasonable and appropriate and for the best interest of the occupants; (iii) actual expenses incurred for employees, such as wages, fringe benefits, taxes, unemployment and disability insurance, workmen's compensation insurance, social security benefits and any other expenses incurred in connection with such employees. The term "employees" includes employees such as superintendents, engineers, electricians, clerks, mechanics, helpers, security officers, porters, cleaners, and window washers, as well as contract laborers performing services for the Building and other persons, firms or corporations providing contract services for the benefit of the Building; (iv) actual cost of materials and supplies used and consumed for the benefit of the Building and the occupants; (v) full contract cost of third-party contractors for all of the foregoing, including rubbish removal, elevator maintenance, maintenance of air conditioning, heating and ventilation equipment, management services, uniform supply, past control and security service; (vi) all utility services; and (vii) actual cost of insurance, including fire and extended coverage and general liability insurance, but no change for insurance is included that reflects premiums due to any act or omission of any tenant of the Building for which Landlord would be entitled to reimbursement from such tenant. Said operating expenses shall not include administrative salaries and wages of persons not involved in the day-to-day operations of the Building, state or federal income taxes or periodic alterations of improvements to the construction of the Building, and in no case shall Tenant be charged additional rent for any operating expense such as painting, repainting, redecorating, special cleaning service of special security service which can be directly related to the sole advantage of Landlord or any other particular occupant of the Building other than Tenant. Operating expenses shall not include cost of any repair or replacement which is or should be capitalized on Landlord's books under generally accepted accounting principles. In the event that during the lease term said operating expenses for 1995 or any succeeding calendar year exceed the 1994 expenses per square foot per year ("base expense rate") for the total Rentable Area of the Building (as defined in Paragraph 1(d) hereof), Tenant, within thirty (30) days after written notification of the foregoing by Landlord, shall: (a) Pay to the Landlord Tenant's proportionate share (4.23 %) of such increase for the year in question, said proportionate share being defined to mean a fraction, the numerator of which is the square footage of the Premises set out in Paragraph 1(d), and the denominator of which is the total rentable area of the Building set out in Paragraph 1(d). The product resulting from the application of such fraction to the increases shall constitute the amount of additional rent Tenant shall pay. (See Rider) (b) Additionally, Tenant shall pay to Landlord with the payment of Monthly Rental installments for the months following the month during which a notice of escalated rents is given, a monthly escalation reserve on the first day of each month for the remainder of the calendar year. The monthly escalation reserve shall be equal to the total of Tenant's proportionate share of such operating expense increase for the previous calendar year divided by the number of months remaining in the then current calendar year subsequent to the month in which the notice of escalated rent is given. Landlord shall apply the total of the monthly escalation reserves paid by the Tenant to any increase over the base expense rate for the calendar year in which the monthly escalation reserves are paid. After the end of every calendar year Landlord will deliver to Tenant a statement which sets forth (i) the previous year's operating expenses (ii) Tenant's proportionate share of any increases, (iii) the adjustment, if any, reflecting the monthly escalation reserves paid, and (iv) the net amount due Landlord or due to be reimbursed to Tenant, provided, however, in no event shall the basic rent or the monthly rental installments ever be less than the amounts specified in Paragraphs 1(f) and 1(g), respectively. Notwithstanding any expiration or termination of this Lease prior to the lease expiration date (except in the case of a cancellation by mutual agreement) Tenant's obligation to pay any and all additional rent under this Lease shall continue and shall cover all periods up to the lease expiration date. Tenant's obligation to pay any and all additional rent under this Lease and Landlord's and Tenant's obligation to make the adjustments referred to in this Lease shall survive any expiration or termination of this Lease. If any amounts which become due by reason of escalation of rent are not paid by the fifth day following the day on which they are due a service charge of 10% of such rental escalation amount shall become due and payable in addition to such rental escalation. Said service charge is for the purpose of reimbursing Landlord for the extra costs and expenses incurred in connection with the handling and processing of late rental escalation payments.
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Operating Expense Adjustment. The Basic Annual Rental payable under paragraph 1(f) hereof is based, in part, on operating expenses existing during the calendar year in which the lease commences ("Base Year"). For the purposes purpose of rental escalations under the terms of this the Lease. said , operating expenses are defined as and limited to: (i) ad valorem taxes, for which Landlord is liable, assessed against the landLand, Building and Improvements improvements and in and upon which the Premises are located located, together with any special assessments and other real estate costs in the nature of taxes or assessments for which Landlord is responsible; (ii) expenses of operation, maintenance and repair of the landLand, Building, sidewalks and curbs courts adjacent thereto in a manner deemed reasonable and appropriate and for the best interest of the occupants; (iii) actual expenses incurred for employeesemployees (as hereinafter defined), such as wages, fringe benefits, taxes, unemployment and disability insurance, workmen's compensation insurance, social security benefits and any other expenses experience incurred in connection with such employees; (iv) actual cost of materials and supplies used and consumed for the benefit of the Building and the occupants; (v) full contract cost of third-party contractors for all of the foregoing, including rubbish removal, elevator maintenance, maintenances of air conditioning, heating and verification equipment, management services, uniform supply, pest control and security services; (vi) all utility services; and (vii) actual cost of insurance, including fire and extended coverage and general liability insurance, but no charge for insurance is included that reflects premiums due to an act or omission of any tenant of the Building for which Landlord would be entitled to reimbursement from such tenant. The term "employees" includes employees such as superintendents, engineers, electricians, clerks, mechanics, helpers, security officers, porters, cleaners, and window washers, as well as contract laborers performing services for the Building and other persons, firms or corporations providing contract services for the benefit of the Building; (iv) actual cost of materials and supplies used and consumed for the benefit of the Building and the occupants; (v) full contract cost of third-party contractors for all of the foregoing, including rubbish removal, elevator maintenance, maintenance of air conditioning, heating and ventilation equipment, management services, uniform supply, past control and security service; (vi) all utility services; and (vii) actual cost of insurance, including fire and extended coverage and general liability insurance, but no change for insurance is included that reflects premiums due to any act or omission of any tenant of the Building for which Landlord would be entitled to reimbursement from such tenant. Said operating expenses shall not include administrative salaries and wages of persons not involved in the day-to-day operations of the Building, state or federal income taxes or periodic alterations of improvements to the construction of the Building, and in no case shall Tenant be charged additional rent for any operating expense such as painting, repainting, redecorating, special cleaning service of or special security service which can be directly related to the sole advantage of Landlord or any other particular occupant of the Building other than Tenant. Operating expenses shall not include cost of any repair or replacement which is or should be capitalized on Landlord's books under generally accepted accounting principles. In the event that during the lease term said , or other expenses which are not customarily treated as operating expenses for 1995 or any succeeding calendar year exceed the 1994 expenses per square foot per year ("base expense rate") for the total Rentable Area of the Building (as defined in Paragraph 1(d) hereof), Tenant, within thirty (30) days after written notification of the foregoing by Landlord, shall:
(a) Pay to the Landlord Tenant's proportionate share (4.23 %) of such increase for the year in question, said proportionate share being defined to mean a fraction, the numerator of which is the square footage of the Premises set out in Paragraph 1(d), and the denominator of which is the total rentable area of the Building set out in Paragraph 1(d). The product resulting from the application of such fraction to the increases shall constitute the amount of additional rent Tenant shall pay. (See Rider)
(b) Additionally, Tenant shall pay to Landlord with the payment of Monthly Rental installments for the months following the month during which a notice of escalated rents is given, a monthly escalation reserve on the first day of each month for the remainder of the calendar year. The monthly escalation reserve shall be equal to the total of Tenant's proportionate share of such operating expense increase for the previous calendar year divided by the number owners of months remaining similar buildings in the then current calendar year subsequent to the month in which the notice of escalated rent is given. Landlord shall apply the total of the monthly escalation reserves paid by the Tenant to any increase over the base expense rate for the calendar year in which the monthly escalation reserves are paid. After the end of every calendar year Landlord will deliver to Tenant a statement which sets forth (i) the previous year's operating expenses (ii) Tenant's proportionate share of any increases, (iii) the adjustment, if any, reflecting the monthly escalation reserves paid, and (iv) the net amount due Landlord or due to be reimbursed to Tenant, provided, however, in no event shall the basic rent or the monthly rental installments ever be less than the amounts specified in Paragraphs 1(f) and 1(g), respectively. Notwithstanding any expiration or termination of this Lease prior to the lease expiration date (except in the case of a cancellation by mutual agreement) Tenant's obligation to pay any and all additional rent under this Lease shall continue and shall cover all periods up to the lease expiration date. Tenant's obligation to pay any and all additional rent under this Lease and Landlord's and Tenant's obligation to make the adjustments referred to in this Lease shall survive any expiration or termination of this Lease. If any amounts which become due by reason of escalation of rent are not paid by the fifth day following the day on which they are due a service charge of 10% of such rental escalation amount shall become due and payable in addition to such rental escalation. Said service charge is for the purpose of reimbursing Landlord for the extra costs and expenses incurred in connection with the handling and processing of late rental escalation paymentsgeneral area.
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