Common use of Calculation Methods and Adjustments Clause in Contracts

Calculation Methods and Adjustments. 4.3.1 The variable components of Operating Expenses ("Variable Expenses") for all or any portion of any Expense Year (including the Base Year) during which actual occupancy of the Project is less than ninety-five percent (95%) of the Rentable Area of the Project shall be adjusted by Landlord, as determined in good faith by Landlord applying sound accounting and property management principles (and the provisions of this Lease) to reflect ninety-five percent (95%) occupancy of the Rentable Area of the Project during such period. If during all or any part of any Expense Year, including the Base Year, Landlord does not provide any particular item of benefit, work or service (the cost of which is a Variable Expense) to portions of the Project due to the fact that such item of benefit, work or service is not required or desired by the tenant of such space, or such tenant is itself obtaining and providing such item of benefit, work or service, or for any other reason, then for purposes of computing Variable Expenses for such Expense Year (including the Base Year), Operating Expenses shall be increased by an amount equal to the additional Variable Expenses which would have been paid or incurred by Landlord during such period if it had furnished such item of benefit, work or service to such portions of the Project. Other than the Management Fee, Landlord shall not collect or be entitled to collect Operating Expenses from all tenants in an amount which is in excess of one hundred percent (100%) of the Operating Expenses actually incurred by Landlord in connection with the Project. 4.3.2 Landlord shall have the right, from time to time, to add or remove buildings to (i) the Project and/or (ii) the calculation of Operating Expenses and then equitably allocate some or all of the Operating Expenses and/or Property Taxes for the buildings comprising the Project among the Building and some or all of the other buildings (including any additional buildings) of the Project. In such event, Landlord shall reasonably determine a method of allocating such Operating Expenses and/or Project Taxes attributable to the Building and/or such other building(s) of the Project to the Building and/or such other building(s) and Tenant shall be responsible for paying its proportionate share of such expense(s) which are allocated to the Building. 4.3.3 Subject to the provisions of this Section 4.3.3, all calculations, determinations, allocations and decisions to be made hereunder with respect to Operating Expenses or Property Taxes shall be made in accordance with the good faith determination of Landlord applying sound accounting and property management principles consistently applied which are consistent with the practices of the majority of the institutional owners of institutional grade first-class office projects in Orange County, California ("Institutional Owner Practices"). Landlord shall have the right to equitably and consistently allocate some or all of Operating Expenses among particular classes or groups of tenants in the Project (for example, retail tenants) to reflect Landlord's good faith determination that measurably different amounts or types of services, work or benefits associated with Operating Expenses are being provided to or conferred upon such classes or groups; provided, however, so long as Tenant is operating the Premises for the Permitted Use, Tenant shall at all times be classified or grouped as general office space. Subject to the provisions of this Section 4.3.3, from time to time Landlord shall have the right to expand or contract the amount, scope, level or types of services, work, items or benefits, the cost of which is included within Operating Expenses, so long as Landlord's treatment of the same for purposes of the calculation of Operating Expenses is consistently applied generally consistent with Institutional Owner Practices. Whenever services, benefits or work are provided to the Project and to additional buildings or projects (where allocation of the cost thereof among such buildings or projects is required for calculation of Operating Expenses hereunder), in allocating the overall cost thereof (for all such buildings or projects, as applicable) to Operating Expenses hereunder, there shall be excluded from Operating Expenses Landlord's good faith determination of the additional overall cost comparison allocable to the provision of such services, benefits or work to the additional buildings or projects, as applicable. All discounts, reimbursements, rebates, refunds, or credits (collectively, "Reimbursements") attributable to Operating Expenses or Property Taxes received by Landlord in a particular year shall be deducted from Operating Expenses or Property Taxes in the year the same are received; provided, however, if such practice is consistent with Institutional Owner Practices, Landlord may treat Reimbursements generally (or under particular circumstances) on a different basis. Landlord shall have the right to exclude from Base Year Operating Expenses the cost of items of service, work or benefits (i) not provided following the Base Year, (ii) incurred due to circumstances not applicable following the Base Year or due to market-wide labor-rate increases in Operating Expenses due to extraordinary circumstances, including, without limitation, boycotts, embargoes and strikes, and utility rate increases due to extraordinary circumstances, and (iii) amortized costs relating to capital improvements. All assessments and premiums of Operating Expenses or Property Taxes which can be paid by Landlord in periodic installments shall be paid by Landlord in the maximum number of periodic installments permitted by Law; provided, however, that if the then prevailing Institutional Owner Practice is to pay such assessments or premiums on a different basis, Landlord may utilize such different basis of payment. If in any one or more Expense Years following the Base Year (a "Comparison Year"), Property Taxes decrease below the amount of Property Taxes for the Base Year as a result of any reassessment or any similar governmental act or Law, including, without limitation, as the result of a Proposition 8 reduction (collectively, a "Tax Reduction"), for purposes of calculation of excess Property Taxes for such Comparison Year and all subsequent Comparison Years, Property Taxes allocable to the Base Year shall be reduced to the amount of Property Taxes allocable to such Comparison Year (a "Base Year Tax Reduction"); provided, however, that if in any subsequent Comparison Year the amount of such Tax Reduction is decreased (other than to the extent by virtue of the application of the annual percentage increase in Property Taxes currently provided by statute (or any substitute therefor hereafter adopted)), for purposes of calculation of excess Property Taxes for such subsequent Comparison Year, the Base Year Tax Reduction shall be correspondingly decreased. Property Taxes allocable to the Base Year shall not include any Property Taxes or any taxes, assessments, costs charges or fees not applicable following the Base Year. 4.3.4 If in any Expense Year, Landlord elects or is required by Law to ▇▇▇▇ separately from Operating Expenses, one or more utility services provided to tenants in the Building, (i) Tenant shall pay to Landlord, within thirty (30) days of delivery of Landlord's invoice therefor, Landlord's charges for such utility services provided to Tenant (which charges shall be calculated by Landlord in good faith on a basis consistent with Institutional Owner Practices) and (ii) if the cost of such utility services are included in the Base Year, for purposes of calculation of Operating Expenses for such Expense Year, Base Year Operating Expenses allocable to the utility service so directly billed to tenants shall be deducted from Base Year Operating Expenses. Subject to applicable Laws, Landlord shall solely determine all decisions with respect to the method and manner by which all utility services shall be billed and provided in the Project, which determinations shall be made by Landlord in good faith and on a basis consistent with Institutional Owner Practices. 4.3.5 Notwithstanding anything to the contrary contained in this Article 4, the aggregate Controllable Operating Expenses (as hereinafter defined) included in Operating Expenses in any Expense Year after the Base Year, shall not increase by more than five percent (5%) on an annual, cumulative and compounded basis, over the maximum amount of Controllable Operating Expenses chargeable for the immediately preceding calendar year, but with no such limit on the amount of Controllable Operating Expenses which may be included in Operating Expenses incurred during the Base Year. For purposes of this Section 4.3.5, "Controllable Operating Expenses" shall mean all Operating Expenses except: (i) insurance carried by Landlord with respect to the Project and/or the operation thereof; (ii) utilities (including, without limitation, electricity, fuel, water and sewer); (iii) payments under CC&Rs or to an owners' association; (iv) costs for refuse and trash removal; and (v) costs associated with repairs due to casualty, vandalism or other source outside of Landlord's reasonable control. The foregoing cap on Controllable Expenses shall not apply to Property Taxes.

Calculation Methods and Adjustments. 4.3.1 The variable components of Operating Expenses ("“Variable Expenses"”) for all or any portion of any Expense Year (including the Base Year) during which actual occupancy of the Building and/or the Project is less than ninety-five one hundred percent (95100%) of the Rentable Area of the Building and/or the Project with all tenants paying full rent as contrasted with free rent, half rent and the like shall be adjusted by Landlord, as determined in good faith by Landlord applying sound accounting and property management principles (and the provisions of this Lease) to reflect ninety-five one hundred percent (95100%) occupancy of the Rentable Area of the Building and/or the Project during such periodperiod with all tenants paying full rent as contrasted with free rent, half rent and the like. If during all or any part of any Expense Year, including the Base Year, Landlord does not provide any particular item Item of benefit, work or service (the cost of which is a Variable Expense) to portions of the Building and/or the Project due to the fact that such item Item of benefit, work or service is not required or desired by the tenant of such space, or such tenant is itself obtaining and providing such item Item of benefit, work or service, or for any other reason, then for purposes of computing Variable Expenses for such Expense Year (including the Base Year), Operating Expenses shall be increased by an amount equal to the additional Variable Expenses which would have been paid or incurred by Landlord during such period if it had furnished such item Item of benefit, work or service to such portions of the Project. Other than the Management Fee, Landlord shall not collect or be entitled to collect Operating Expenses from all tenants in an amount which is in excess of one hundred percent (100%) of the Operating Expenses actually incurred by Landlord in connection with Building and/or the Project. 4.3.2 Landlord shall have the right, from time to time, to add or remove buildings to (i) the Project and/or (ii) the calculation of Operating Expenses and then equitably allocate some or all of the Operating Expenses and/or Property Taxes for the buildings comprising the Project among the Building and some or all of the other buildings (including any additional buildings) of the Project. In such event, Landlord shall reasonably determine a method of allocating such Operating Expenses and/or Project Taxes attributable to the Building and/or such other building(s) of the Project to the Building and/or such other building(s) and Tenant shall be responsible for paying its proportionate share of such expense(s) which are allocated to the Building. 4.3.3 Subject to the provisions of this Section 4.3.34.3, all calculations, determinations, allocations and decisions to be made hereunder with respect to Operating Expenses or Property Taxes shall be made in accordance with the good faith determination of Landlord applying sound accounting and property management principles consistently applied which are consistent with the practices of the majority of the institutional owners of institutional grade first-class office projects in Orange Los Angeles County, California ("“Institutional Owner Practices"”). Landlord shall have the right to equitably and consistently allocate some or all of Operating Expenses among particular classes or groups of tenants in the Building and/or the Project (for example, retail tenants) to reflect Landlord's ’s good faith determination that measurably different amounts or types of services, work or benefits associated with Operating Expenses are being provided to or conferred upon such classes or groups; provided, however, so long as Tenant is operating the Premises for the Permitted Use, Tenant shall at all times be classified or grouped as general office space. Subject to the provisions of this Section 4.3.34.3, from time to time Landlord shall have the right to expand or contract the amount, scope, level or types of services, work, items or benefits, the cost of which is included within Operating Expenses, so long as Landlord's ’s treatment of the same for purposes of the calculation of Operating Expenses is consistently applied generally consistent with Institutional Owner Practices. Whenever services, benefits or work are provided to the Building and/or the Project and to additional buildings or projects (where allocation of the cost thereof among such buildings or projects is required for calculation of Operating Expenses hereunder), in allocating the overall cost thereof (for all such buildings or projects, as applicable) to Operating Expenses hereunder, there shall be excluded from Operating Expenses Landlord's ’s good faith determination of the additional overall cost comparison allocable to the provision of such services, benefits or work to the additional buildings or projects, as applicable. All discounts, reimbursements, rebates, refunds, or credits (collectively, "“Reimbursements"”) attributable to Operating Expenses or Property Taxes received by Landlord in a particular year shall be deducted from Operating Expenses or Property Taxes in the year the same are received; provided, however, if such practice is consistent with Institutional Owner Practices, Landlord may treat Reimbursements generally (or under particular circumstances) on a different basis. Landlord shall have the right to exclude from Base Year Operating Expenses the cost of items of service, work or benefits (i) not provided following the Base Year, (ii) incurred due to circumstances not applicable following the Base Year or due to market-wide labor-rate increases in Operating Expenses due to extraordinary circumstances, including, without limitation, boycotts, embargoes and strikes, and utility rate increases due to extraordinary circumstances, and (iii) amortized costs relating to capital improvements. All assessments and premiums of Operating Expenses or Property Taxes which can be paid by Landlord in periodic installments shall be paid by Landlord in the maximum number of periodic installments permitted by Law; provided, however, that if the then prevailing Institutional Owner Practice is to pay such assessments or premiums on a different basis, Landlord may utilize such different basis of payment. If in any one or more Expense Years following The parties acknowledge that the Base Year (a "Comparison Year"), Property Taxes decrease below Building and the amount of Property Taxes for the Base Year as a result of any reassessment or any similar governmental act or Law, including, without limitation, as the result of a Proposition 8 reduction (collectively, a "Tax Reduction"), for purposes of calculation of excess Property Taxes for such Comparison Year and all subsequent Comparison Years, Property Taxes allocable to the Base Year shall be reduced to the amount of Property Taxes allocable to such Comparison Year (a "Base Year Tax Reduction"); provided, however, that if in any subsequent Comparison Year the amount of such Tax Reduction is decreased (other than to the extent by virtue of the application of the annual percentage increase in Property Taxes currently provided by statute (or any substitute therefor hereafter adopted)), for purposes of calculation of excess Property Taxes for such subsequent Comparison Year, the Base Year Tax Reduction shall be correspondingly decreased. Property Taxes allocable to the Base Year shall not include any Property Taxes or any taxes, assessments, costs charges or fees not applicable following the Base Year. 4.3.4 If in any Expense Year, Landlord elects or is required by Law to 42‑story office tower located at ▇▇▇ ▇▇▇▇▇ separately from Operating Expenses▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ (“725 Building”) are a part of a multi-building project (the “7th & Fig Project”) and that certain costs and expenses are shared between the tenants of the Building and the tenants of the 725 Building. Accordingly, one or more utility services provided such shared expenses shall be determined annually for the 7th & Fig Project as a whole, and a portion of the shared expenses, which portion shall be equitably and reasonably agreed to tenants in by Landlord and the landlord of the 725 Building, (i) Tenant shall pay to Landlord, within thirty (30) days of delivery of Landlord's invoice therefor, Landlord's charges for such utility services provided to Tenant (which charges shall be calculated by Landlord in good faith on a basis consistent with Institutional Owner Practices) and (ii) if the cost of such utility services are included in the Base Year, for purposes of calculation of Operating Expenses for such Expense Year, Base Year Operating Expenses allocable allocated to the utility service so directly billed to tenants shall be deducted from Base Year Operating ExpensesBuilding and the 725 Building. Subject to applicable Laws, Landlord shall solely determine all decisions with respect Such portion of the shared expenses allocated to the method and manner by which all utility services Building shall be billed and provided in the Project, which determinations shall be made by Landlord in good faith and on a basis consistent with Institutional Owner Practices. 4.3.5 Notwithstanding anything to the contrary contained in this Article 4, the aggregate Controllable Operating Expenses (as hereinafter defined) included in Operating Expenses in any Expense Year after the Base Year, shall not increase by more than five percent (5%) on an annual, cumulative and compounded basis, over the maximum amount of Controllable Operating Expenses chargeable for the immediately preceding calendar year, but with no such limit on the amount of Controllable Operating Expenses which may be included in Operating Expenses incurred during the Base Year. For for purposes of this Section 4.3.5, "Controllable Operating Expenses" shall mean all Operating Expenses except: (i) insurance carried by Landlord with respect to the Project and/or the operation thereof; (ii) utilities (including, without limitation, electricity, fuel, water and sewer); (iii) payments under CC&Rs or to an owners' association; (iv) costs for refuse and trash removal; and (v) costs associated with repairs due to casualty, vandalism or other source outside of Landlord's reasonable control. The foregoing cap on Controllable Expenses shall not apply to Property TaxesLease.

Calculation Methods and Adjustments. 4.3.1 The variable components 6.2.1. For purposes of calculating the Operating Expenses ("Variable Expenses") for all or any portion of any Expense Year year (including the Base Year) during which actual occupancy of the Project is less than ninety-five percent (95%) of the Rentable Area Square Feet of the Project Project, the variable components of Operating Expenses (“Variable Expenses”) shall be adjusted by Landlord, as determined in good faith by Landlord applying sound accounting and property management principles (and the provisions of this Lease) to reflect ninety-five percent (95%) occupancy of the Rentable Area Square Feet of the Project during such period. If In addition, if during all or any part of any Expense Year, including the Base Year, year Landlord does not provide any particular item of benefit, work or service (the cost of which is a Variable Expense) to portions of the Project due to the fact that such item of benefit, work or service is not required or desired by the tenant of such space, or such tenant is itself obtaining and providing such item of benefit, work or service, or for any other reason, then for purposes of computing Variable Expenses for such Expense Year (including the Base Year)year, Operating Expenses Expenses, as applicable, shall be increased by an amount equal to the additional Variable Expenses which would have been paid or incurred by Landlord during such period if it Landlord had furnished such item of benefit, work or service to such portions of the Project. Other than For purposes of calculating the Management Fee, Landlord shall Real Property Taxes for any year during which the Project is not collect or be entitled to collect Operating Expenses from all tenants in an amount which is in excess of one hundred percent (100%) constructed, the Real Property Taxes shall be equitably adjusted by Landlord to reflect the Real Property Taxes that would have been incurred for such year if the Project had been one hundred percent (100%) constructed. 6.2.2. If in any one or more years following the Base Year, Real Property Taxes are reduced as a result of any reassessment or any similar governmental act or Law, including, without limitation, as the result of a Proposition 8 reduction (a “Real Property Tax Reduction”), for purposes of calculation of excess Real Property Taxes for such year and all subsequent years, Real Property Taxes allocable to the Base Year shall be reduced to the amount of the Operating Expenses actually Real Property Tax Reduction less the amount of all reasonable costs and expenses incurred by Landlord in connection with obtaining the Project. 4.3.2 Landlord shall have Real Property Tax Reduction (the right“Base Year Tax Reduction”); provided, from time however, that if in any subsequent year the amount of such Real Property Tax Reduction is decreased (other than to timethe extent by virtue of the application of the annual percentage increase (presently 2.0%) in Real Property Taxes currently provided by statute (or any substitute therefor hereafter adopted)), to add or remove buildings to (i) the Project and/or (ii) for purposes of the calculation of Operating Expenses and then equitably allocate some or all of the Operating Expenses and/or excess Real Property Taxes for such subsequent year, the buildings comprising the Project among the Building and some or all of the other buildings (including any additional buildings) of the Project. In such event, Landlord shall reasonably determine a method of allocating such Operating Expenses and/or Project Taxes attributable to the Building and/or such other building(s) of the Project to the Building and/or such other building(s) and Tenant Base Year Tax Reduction shall be responsible for paying its proportionate share of such expense(s) which are allocated to the Buildingcorrespondingly decreased. 4.3.3 6.2.3. Subject to the provisions of this Section 4.3.36.2, all calculations, determinations, allocations and decisions to be made hereunder with respect to Operating Expenses or and Real Property Taxes shall be made in accordance with the good faith determination of Landlord applying sound accounting and property management principles consistently applied which are consistent with the practices of the majority of the institutional owners of institutional grade first-class office projects in Orange County, California ("Institutional Owner Practices"). Landlord shall have the right to equitably and consistently allocate some or all of Operating Expenses among particular classes or groups of tenants in the Project or Building (for example, retail tenants) to reflect Landlord's ’s good faith determination that measurably different amounts or types of services, work or benefits associated with Operating Expenses Expenses, as applicable, are being provided to or conferred upon such classes or groups; provided, however, so long as Tenant is operating the Premises for the Permitted Use, Tenant shall at all times be classified or grouped as general office space. Subject to the provisions of this Section 4.3.3, from time to time Landlord shall have the right to expand or contract the amount, scope, level or types of services, work, items or benefits, the cost of which is included within Operating Expenses, so long as Landlord's treatment of the same for purposes of the calculation of Operating Expenses is consistently applied generally consistent with Institutional Owner Practices. Whenever services, benefits or work are provided to the Project and to additional buildings or projects (where allocation of the cost thereof among such buildings or projects is required for calculation of Operating Expenses hereunder), in allocating the overall cost thereof (for all such buildings or projects, as applicable) to Operating Expenses hereunder, there shall be excluded from Operating Expenses Landlord's good faith determination of the additional overall cost comparison allocable to the provision of such services, benefits or work to the additional buildings or projects, as applicable. All discounts, reimbursements, rebates, refunds, or credits (collectively, "“Reimbursements"”) attributable to Operating Expenses or Real Property Taxes received by Landlord in a particular year shall be deducted from Operating Expenses or Real Property Taxes Taxes, as applicable, in the year the same are received; provided, however, if such practice is consistent with Institutional Owner Practices, Landlord may treat Reimbursements generally (or under particular circumstances) on a different basis. Landlord shall have the right to exclude from Base Year Operating Expenses the cost of items of service, work or benefits (i) not provided following the Base Year, (ii) incurred due to circumstances not applicable following the Base Year or due to market-wide labor-rate increases in Operating Expenses due to extraordinary circumstances, including, without limitation, boycotts, embargoes and strikes, and utility rate increases due to extraordinary circumstances, and (iii) amortized costs relating to capital improvementsimprovements not included in subsequent years. 6.2.4. All assessments and premiums As of the date of this Lease, Additional Rent under this Article 6 shall be based on the Operating Expenses or Property Taxes which can be paid by Landlord in periodic installments shall be paid by Landlord in the maximum number of periodic installments permitted by Law; provided, however, that if the then prevailing Institutional Owner Practice is to pay such assessments or premiums on a different basis, Landlord may utilize such different basis of payment. If in any one or more Expense Years following the Base Year (a "Comparison Year"), Property Taxes decrease below the amount of and Real Property Taxes for the Base Year as a result Project. If the Project at any time contains more than one building, Landlord shall have the right, from time to time, to equitably allocate some or all of any reassessment or any similar governmental act or Law, including, without limitation, as the result of a Proposition 8 reduction (collectively, a "Tax Reduction"), for purposes of calculation of excess Operating Expenses and/or Real Property Taxes for the buildings comprising the Project among the Building and some or all of the other buildings of the Project. In such Comparison Year and all subsequent Comparison Yearsevent, Landlord shall reasonably determine a method of allocating such Operating Expenses and/or Real Property Taxes allocable attributable to the Base Year Building and/or such other building(s) of the Project to the Building and/or such other building(s) and Tenant shall be reduced responsible for paying its proportionate share of such expense(s) which are allocated to the amount Building. Landlord shall also have the right, from time to time, to require Tenant to pay Tenant’s Percentage of Operating Expenses and Real Property Taxes allocable to such Comparison Year (a "Base Year Tax Reduction"); provided, however, that if in any subsequent Comparison Year based solely on the amount of such Tax Reduction is decreased (other than to the extent by virtue of the application of the annual percentage increase in Property Taxes currently provided by statute (or any substitute therefor hereafter adopted)), for purposes of calculation of excess Operating Expenses and Real Property Taxes for such subsequent Comparison Year, the Base Year Tax Reduction shall be correspondingly decreased. Property Taxes allocable to the Base Year shall not include any Property Taxes or any taxes, assessments, costs charges or fees not applicable following the Base Year. 4.3.4 If in any Expense Year, Landlord elects or is required by Law to ▇▇▇▇ separately from Operating Expenses, one or more utility services provided to tenants in the Building, (i) Tenant shall pay to Landlord, within thirty (30) days of delivery of Landlord's invoice therefor, Landlord's charges for such utility services provided to Tenant (which charges shall be calculated by Landlord in good faith on a basis consistent with Institutional Owner Practices) and (ii) if the cost of such utility services are included in the Base Year, for purposes of calculation of Operating Expenses for such Expense Year, Base Year Operating Expenses allocable to the utility service so directly billed to tenants shall be deducted from Base Year Operating Expenses. Subject to applicable Laws, Landlord shall solely determine all decisions with respect to the method and manner by which all utility services shall be billed and provided in the Project, which determinations shall be made by Landlord in good faith and on a basis consistent with Institutional Owner Practices. 4.3.5 Notwithstanding anything to the contrary contained in this Article 4, the aggregate Controllable Operating Expenses (as hereinafter defined) included in Operating Expenses in any Expense Year after the Base Year, shall not increase by more than five percent (5%) on an annual, cumulative and compounded basis, over the maximum amount of Controllable Operating Expenses chargeable for the immediately preceding calendar year, but with no such limit on the amount of Controllable Operating Expenses which may be included in Operating Expenses incurred during the Base Year. For purposes of this Section 4.3.5, "Controllable Operating Expenses" shall mean all Operating Expenses except: (i) insurance carried by Landlord with respect to the Project and/or the operation thereof; (ii) utilities (including, without limitation, electricity, fuel, water and sewer); (iii) payments under CC&Rs or to an owners' association; (iv) costs for refuse and trash removal; and (v) costs associated with repairs due to casualty, vandalism or other source outside of Landlord's reasonable control. The foregoing cap on Controllable Expenses shall not apply to Property Taxes.

Calculation Methods and Adjustments. 4.3.1 1.3.1 The variable components of Operating Expenses ("“Variable Expenses"”) for all or any portion of any Expense Year (including the Base Year) during which actual occupancy of all of the Project Building is less than ninety-five percent (95%) of the Rentable Area Square Footage of the Project Building (as if all tenants are paying full rent, as contrasted with free rent, half rent and the like, such that those Variable Expense which are dependent on the amount of rent payable are fully grossed up) shall be adjusted by LandlordLandlord on a basis, as determined in good faith by Landlord consistent with Institutional Owner Practices applying sound accounting and property management principles (and the provisions of this Lease) to reflect ninety-five percent (95%) occupancy of the Rentable Area Square Footage of the Project Building during such periodperiod (as if all tenants are paying full rent, as contrasted with free rent, half rent and the like, such that those Variable Expenses which are dependent on the amount of rent payable are fully grossed up); provided, however, notwithstanding the foregoing, Landlord may “gross up” Variable Expenses under this Section 1.3 based upon 100% occupancy and level of service in the Building so long as such percentage is used consistently for each year of the term. If during all or any part of any Expense Year, including Year Including the Base Year), Landlord does not provide any particular item of benefit, work or service (the cost of which is a Variable Expense) to portions of the Project due to the fact that such item of benefit, work or service is not required or desired by the tenant of such space, or such tenant is itself obtaining and providing such item of benefit, work or service, or for any other reason, then for purposes of computing Variable Expenses for such Expense Year (including the Base Year), Operating Expenses shall be increased on a basis consistent with Institutional Owner Practices by an amount equal to the additional Variable Expenses which would have been paid or incurred by Landlord during such period if it had furnished such item of benefit, work or service to such portions of the Project. Other than the Management Fee, Landlord shall not collect or be entitled to collect Operating Expenses from all tenants in an amount which is in excess of one hundred percent (100%) of the Operating Expenses actually incurred by Landlord in connection with the ProjectProject throughout such period. 4.3.2 Landlord shall have the right, from time to time, to add or remove buildings to (i) the Project and/or (ii) the calculation of Operating Expenses and then equitably allocate some or all of the Operating Expenses and/or Property Taxes for the buildings comprising the Project among the Building and some or all of the other buildings (including any additional buildings) of the Project. In such event, Landlord shall reasonably determine a method of allocating such Operating Expenses and/or Project Taxes attributable to the Building and/or such other building(s) of the Project to the Building and/or such other building(s) and Tenant shall be responsible for paying its proportionate share of such expense(s) which are allocated to the Building. 4.3.3 1.3.2 Subject to the provisions of this Section 4.3.31.3, all calculations, determinations, allocations and decisions to be made hereunder with respect to Operating Expenses or Property Taxes shall be made in accordance with the good faith determination of Landlord applying sound accounting and property management principles consistently applied and on a basis which are is consistent with the practices of the majority of the institutional owners of institutional grade first-class office projects in Orange County, California ("Institutional Owner Practices"). Landlord shall have the right to equitably and consistently allocate some or all of Operating Expenses among particular classes or groups of tenants in or occupants of the Project (for example, retail tenants and office tenants) to reflect Landlord's ’s good faith determination that measurably different amounts or types of services, work or benefits associated with Operating Expenses are being provided to or conferred upon such classes or groups; provided, however, so long as Tenant is operating the Premises for the Permitted Use, Tenant shall at all times be classified or grouped as general office space. Subject to the provisions of this Section 4.3.31.3, from time to time Landlord shall have the right to expand or contract the amount, scope, level or types of services, work, items or benefits, the cost of which is included within Operating Expenses, so long as Landlord's ’s treatment of the same for purposes of the calculation of Operating Expenses is consistently applied generally consistent with Institutional Owner Practices. Whenever services, benefits or work are provided to the Project All assessments and to additional buildings or projects (where allocation premiums of the cost thereof among such buildings or projects is required for calculation of Operating Expenses hereunder), in allocating the overall cost thereof (for all such buildings or projects, as applicable) to Operating Expenses hereunder, there shall be excluded from Operating Expenses Landlord's good faith determination of the additional overall cost comparison allocable to the provision of such services, benefits or work to the additional buildings or projects, as applicable. All discounts, reimbursements, rebates, refunds, or credits (collectively, "Reimbursements") attributable to Operating Expenses or Property Taxes received which can be paid by Landlord in a particular year periodic installments shall be deducted from Operating Expenses or Property Taxes paid by Landlord in the year the same are receivedmaximum number of periodic installments permitted by Law; provided, however, that if the then prevailing Institutional Owner Practice is to pay such practice is assessments or premiums on a different basis, Landlord may utilize such different basis of payment. Subject to applicable Laws, Landlord shall solely determine all decisions with respect to the method and manner by which all Utility Services shall be billed and provided in the Building, which determinations shall be made by Landlord in good faith and on a basis consistent with Institutional Owner Practices, Landlord may treat Reimbursements generally Practices (including the right to allocate utility expenses based upon studies which allocate utility usages among the tenants or under particular circumstances) on a different basisoccupants of the Building based upon the estimated use by the respective tenants). Landlord shall have the right to exclude from Base Year Operating Expenses the cost of items of service, work or benefits (i) not provided following the Base Year, (ii) incurred due to circumstances not applicable following the Base Year or due to market-wide labor-rate increases in Operating Expenses due to extraordinary circumstances, including, without limitation, boycotts, embargoes and strikes, and utility rate increases due to extraordinary circumstances, and (iii) amortized costs relating to capital improvements. All assessments and premiums of Operating Expenses or Property Taxes which can be paid by Landlord in periodic installments shall be paid by Landlord in the maximum number of periodic installments permitted by Law; provided, however, that if the then prevailing Institutional Owner Practice is to pay such assessments or premiums on a different basis, Landlord may utilize such different basis of payment. If in any one or more Expense Years following the Base Year (a "Comparison Year"), Property Taxes decrease below the amount of Property Taxes for the Base Year as a result of any reassessment or any similar governmental act or Law, including, without limitation, as the result of a Proposition 8 reduction (collectively, a "Tax Reduction"), for purposes of calculation of excess Property Taxes for such Comparison Year and all subsequent Comparison Years, Property Taxes allocable to the Base Year shall be reduced to the amount of Property Taxes allocable to such Comparison Year (a "Base Year Tax Reduction"); provided, however, that if in any subsequent Comparison Year the amount of such Tax Reduction is decreased (other than to the extent by virtue of the application of the annual percentage increase in Property Taxes currently provided by statute (or any substitute therefor hereafter adopted)), for purposes of calculation of excess Property Taxes for such subsequent Comparison Year, the Base Year Tax Reduction shall be correspondingly decreased. Property Taxes allocable to the Base Year shall not include any Property Taxes or any taxes, assessments, costs charges or fees not applicable following the Base Year. 4.3.4 If in any Expense Year, Landlord elects or is required by Law to ▇▇▇▇ separately from Operating Expenses, one or more utility services provided to tenants in the Building, (i) Tenant shall pay to Landlord, within thirty (30) days of delivery of Landlord's invoice therefor, Landlord's charges for such utility services provided to Tenant (which charges shall be calculated by Landlord in good faith on a basis consistent with Institutional Owner Practices) and (ii) if the cost of such utility services are included in the Base Year, for purposes of calculation of Operating Expenses for such Expense Year, Base Year Operating Expenses allocable to the utility service so directly billed to tenants shall be deducted from Base Year Operating Expenses. Subject to applicable Laws, Landlord shall solely determine all decisions with respect to the method and manner by which all utility services shall be billed and provided in the Project, which determinations shall be made by Landlord in good faith and on a basis consistent with Institutional Owner Practices. 4.3.5 Notwithstanding anything to the contrary contained in this Article 4, the aggregate Controllable Operating Expenses (as hereinafter defined) included in Operating Expenses in any Expense Year after the Base Year, shall not increase by more than five percent (5%) on an annual, cumulative and compounded basis, over the maximum amount of Controllable Operating Expenses chargeable for the immediately preceding calendar year, but with no such limit on the amount of Controllable Operating Expenses which may be included in Operating Expenses incurred during the Base Year. For purposes of this Section 4.3.5, "Controllable Operating Expenses" shall mean all Operating Expenses except: (i) insurance carried by Landlord with respect to the Project and/or the operation thereof; (ii) utilities (including, without limitation, electricity, fuel, water and sewer); (iii) payments under CC&Rs or to an owners' association; (iv) costs for refuse and trash removal; and (v) costs associated with repairs due to casualty, vandalism or other source outside of Landlord's reasonable control. The foregoing cap on Controllable Expenses shall not apply to Property Taxes.