Common use of Operating Cost Clause in Contracts

Operating Cost. (i) Prior to the Commencement Date and prior to each calendar year thereafter Landlord shall compute and deliver to Tenant a good faith estimate of the Operating Cost for such calendar year and the monthly payments as would fully recover the estimated Operating Cost in such calendar year. If at any time in such calendar year there is a material change in Landlord's estimate of the Operating Cost, Landlord may compute and deliver to Tenant an updated statement. The estimated Operating Cost shall be paid by Tenant to Landlord in advance and without further notice on or before the Commencement Date and on or before the first day of each calendar month thereafter during the Term in monthly installments, each based on Landlord's most current statement. If the Commencement Date falls on other than the first day of a month, the payment of the estimated Operating Cost for the first month of the Initial Term shall be pro-rated. (ii) Within a reasonable period after the end of each calendar year, Landlord shall give written notice to Tenant of the actual Operating Cost for that calendar year. If the actual Operating Cost for any calendar year during the Term exceeds the estimated Operating Cost paid by Tenant for the calendar year, Tenant shall pay to Landlord a sum equal to the difference between the actual Operating Cost for the year and the estimated Operating Cost paid by Tenant for the year. If the estimated Operating Cost paid by Tenant for any calendar year during the Term exceeds the actual Operating Cost for the calendar year, Landlord shall pay to Tenant a sum equal to the difference between the estimated Operating Cost paid by Tenant for the year and the actual Operating Cost for the year. Tenant shall pay to Landlord any amount due under this Section within 30 days after delivery of the annual notice, but failure to so notify Tenant within a reasonable period after any calendar year for which any amount is due shall not release Tenant from paying nor diminish Tenant's obligation to pay such amount. At Tenant's option, Landlord shall pay Tenant any amount due under this Article within 30 days after delivery of the annual notice or credit such amount against the next payments coming due under this Lease. If this Lease does not begin or end at the first day of a calendar year, the amount payable for any such Operating Cost adjustment will be adjusted accordingly. (iii) Tenant may at Tenant's cost examine Landlord's books relating to the Operating Cost if requested within 100 days of receipt of Landlord's notice of the actual Operating Cost for any year. Such examination shall be made during normal business hours upon reasonable prior written notice to Landlord. The actual Operating Cost and any Operating Cost adjustment set out in Landlord's notice of the actual Operating Cost for any year shall be considered as final and binding on Tenant except to the extent of any written exception delivered to Landlord within 180 days of Tenant's request to examine Landlord's books. The written exception shall specify the items of Operating Cost or calculation of the Operating Cost adjustment to which exception is made and the reason for such exception. No examination of Landlord's books or written exception made by Tenant shall extend the due date of any Operating Cost adjustment or any other amount due under this Lease. (iv) If Tenant's examination reveals that the actual Operating Cost for any period has been overstated, Tenant shall provide Landlord with a copy of the results of its examination and Landlord shall promptly reimburse Tenant the difference between the amount paid by Tenant and the amount actually due. In addition, if such examination reveals that actual Operating Cost for any year has been overstated by 4% or more, Landlord shall promptly reimburse Tenant the reasonable cost of such examination. If Tenant's examination reveals that the actual Operating Cost for any year has been understated, Tenant shall promptly pay Landlord the difference between the amount due and the amount paid by Tenant. (v) If Landlord disputes the results of Tenant's examination, Landlord and Tenant shall negotiate in good faith in an attempt to resolve the dispute. If Landlord and Tenant do not resolve the dispute within 60 days of Landlord's receipt of the results of Tenant's examination, the dispute will be resolved by a mutually acceptable nationally-recognized accounting firm. Landlord and Tenant shall bear equally the cost of the services of such accounting firm. If Landlord disputes the results of Tenant's examination, then notwithstanding Section 5(b)(iv) Landlord shall not be required to reimburse Tenant for any overstated amount or cost of examination until the dispute is resolved, and the amount of the overstatement or understatement as determined by such resolution shall govern the amount to be reimbursed by Landlord or paid by Tenant. (vi) For purposes of this Section, the "Operating Cost" for any calendar year will be all reasonable costs of Landlord (net of rebates and discounts actually received) attributable to the ownership, maintenance, operation and repair of the Premises pursuant to this Lease attributable to such year as determined by standard accounting practices, including but not limited to (A) all taxes, installments of special assessments (and interest thereon), fees, levies, and other governmental charges, general and special, ordinary and extraordinary, payable during such calendar year which are assessed, levied, charged or imposed upon or on account of all of any part of the Premises, (B) the cost of maintenance, operation, repair and replacement of the parking areas, roads, sidewalks, landscaping, drainage and exterior lighting facilities on or about the Premises, (C) the cost of maintenance, operation, repair and replacement of equipment and facilities providing heating, cooling, ventilation, electrical and plumbing services in the Building, (D) the cost of maintenance, operation, repair and replacement of any elevator equipment in the Building, (E) the cost of maintenance, repair and replacement of exterior glass and exterior doors, including cleaning the exterior surface of exterior window glass, (F) the cost for any additional services provided by Landlord under the terms of this Lease, (G) the cost of such insurance as may be provided by Landlord under the terms of this Lease, and (H) the amount of any management fees and expenses payable by Landlord for management of the Premises not to exceed the competitive cost or rate for such service. Operating Cost shall include any employment costs (including pension and benefits) for persons employed by Landlord or its manager in performing any of the foregoing maintenance, operation, repair or replacement work (or pro rata portion thereof if the employee is assigned to other properties in addition to the Premises), the cost of transportation of such employees in connection with such work, the cost of all supplies and materials used in performing such work, the cost of any utilities or services provided to or in the Premises which are not paid by Tenant, the cost of maintenance and service agreements for equipment serving the Premises such as exterior window cleaning and elevator maintenance, and the cost of any equipment leased or rented in connection with such work. Capital expenditures for any repairs, modifications, alterations, changes and replacements which cost less than $25,000 for the project (whether under one contract or several trade contracts) will be included in Operating Cost for the year in which such expenditures are incurred. Capital expenditures for any work which exceed such amount will be drawn from the Capital Reserve maintained under Section 35 to the extent of funds available, and any amounts in excess thereof will amortized over the useful life or pay-back period (whichever is shorter) at an interest rate equal to Landlord's cost of funds and the amortized amount for each year will be included in the Operating Cost for such year. Operating Cost excludes, however, (A) depreciation, (B) principal and interest on debt, (C) finders' fees and real estate brokers' commissions, (D) financing and refinancing costs, (E) cost of repairs due to casualty or condemnation which are reimbursed by third parties, (F) any cost due to Landlord's breach of this Lease, (G) any income, estate, inheritance, or other transfer tax and any excess profit, franchise, or similar taxes on Landlord's business, (H) any amount for any item or service paid to Landlord or an affiliate of Landlord to the extent it exceeds the competitive cost or rate for such item or service, (I) costs of operation of the business of the entity which constitutes Landlord or preservation of Landlord's interest in the Premises, such as by way of illustration and not limitation the cost of internal accounting and legal matters, the sale or mortgaging of the Premises, any legal disputes with any employee relating to his or her employment, or any legal disputes with any holder of a mortgage on the Premises relating to its mortgage, as distinguished from costs of management, operation, maintenance and repair of the Premises, (J) amounts otherwise included in Operating Cost to the extent they are reimbursed (after deduction of the out-of-pocket cost of collection of such reimbursement) by insurance or otherwise, or (K) interest and penalties resulting from failure to pay any item included in Operating Cost when due and payable.

Operating Cost. (i) During the Term of the Lease the Tenant shall pay to the Landlord in the manner set forth in this Section the Tenant's Share of the Operating Cost. Prior to the Commencement Date commencement of the Term of this Lease and prior to the commencement of each calendar year fiscal period selected by the Landlord thereafter which commences during the Term, the Landlord shall compute estimate the amount of Operating Cost for the ensuing fiscal period or, if applicable, a portion thereof, as the case may be, and deliver notify the Tenant in writing of such estimate and the Tenant's monthly Instalments on account thereof. The Landlord may from time to time alter the fiscal period selected, in which case, and in the case where only a portion of a fiscal period is included within the Term, the appropriate adjustment in monthly instalments shall be made. From time to time during a fiscal period the Landlord may re-estimate the amount of Operating Cost in which event the Landlord shall notify the Tenant a good faith in writing of such re-estimate and fix monthly instalments for the then remaining balance of such fiscal period or portion thereof such that, after giving credit for instalments paid by the Tenant on the basis of the previous estimate or estimates, the estimated portion of Operating Cost payable by the Tenant will be fully payable during such fiscal period or portion thereof. As soon as practicable after the expiration of each fiscal period, the Landlord shall make a final determination of Operating Cost for such calendar year fiscal period or, if applicable, the portion thereof and notify the Tenant, and the monthly payments as would fully recover parties shall make the estimated Operating Cost in such calendar year. If at appropriate readjustment and any time in such calendar year there is a material change in Landlord's estimate money owing by or to one party by the other upon final determination shall be paid to the other within thirty {30) days of the final determination. Notices by the Landlord stating the amount of any estimate, re-estimate or determination of Operating Cost, Landlord may compute and deliver to Tenant an updated statementor monthly instalments payable need not include particulars of Operating Cost. The estimated Operating Cost for a period of which the Term forms a part shall be reported by the Landlord's accountant and a copy of such report shall be furnished to the Tenant upon request. Any report of the accountant appointed by the Landlord as to the Operating Cost shall be paid by Tenant to Landlord in advance and without further notice on or before the Commencement Date and on or before the first day of each calendar month thereafter during the Term in monthly installments, each based on Landlord's most current statement. If the Commencement Date falls on other than the first day of a month, the payment of the estimated Operating Cost for the first month of the Initial Term shall be pro-rated. (ii) Within a reasonable period after the end of each calendar year, Landlord shall give written notice to Tenant of the actual Operating Cost for that calendar year. If the actual Operating Cost for any calendar year during the Term exceeds the estimated Operating Cost paid by Tenant for the calendar year, Tenant shall pay to Landlord a sum equal conclusive as to the difference between the actual Operating Cost for the year and the estimated Operating Cost paid by Tenant for the year. If the estimated Operating Cost paid by Tenant for any calendar year during the Term exceeds the actual Operating Cost for the calendar year, Landlord shall pay to Tenant a sum equal to the difference between the estimated Operating Cost paid by Tenant for the year and the actual Operating Cost for the year. Tenant shall pay to Landlord any amount due under this Section within 30 days after delivery of the annual notice, but failure to so notify Tenant within a reasonable period after any calendar year for which any amount is due shall not release Tenant from paying nor diminish Tenant's obligation to pay such amount. At Tenant's option, Landlord shall pay Tenant any amount due under this Article within 30 days after delivery of the annual notice or credit such amount against the next payments coming due under this Lease. If this Lease does not begin or end at the first day of a calendar year, the amount payable for any such Operating Cost adjustment will be adjusted accordingly. (iii) Tenant may at Tenant's cost examine Landlord's books relating to the Operating Cost if requested within 100 days of receipt of Landlord's notice of the actual Operating Cost for any year. Such examination shall be made during normal business hours upon reasonable prior written notice to Landlord. The actual Operating Cost and any Operating Cost adjustment set out in Landlord's notice of the actual Operating Cost for any year shall be considered as final and binding on Tenant except to the extent of any written exception delivered to Landlord within 180 days of Tenant's request to examine Landlord's books. The written exception shall specify the items of Operating Cost or calculation of the Operating Cost adjustment to which exception is made and the reason for such exception. No examination of Landlord's books or written exception made by Tenant shall extend the due date of any Operating Cost adjustment or any other amount due under this Lease. (iv) If Tenant's examination reveals that the actual Operating Cost thereof for any period has been overstated, Tenant shall provide Landlord with a copy of the results of its examination and Landlord shall promptly reimburse Tenant the difference between the amount paid by Tenant and the amount actually due. In addition, if such examination reveals that actual Operating Cost for any year has been overstated by 4% or more, Landlord shall promptly reimburse Tenant the reasonable cost of such examination. If Tenant's examination reveals that the actual Operating Cost for any year has been understated, Tenant shall promptly pay Landlord the difference between the amount due and the amount paid by Tenant. (v) If Landlord disputes the results of Tenant's examination, Landlord and Tenant shall negotiate in good faith in an attempt to resolve the dispute. If Landlord and Tenant do not resolve the dispute within 60 days of Landlord's receipt of the results of Tenant's examination, the dispute will be resolved by a mutually acceptable nationally-recognized accounting firm. Landlord and Tenant shall bear equally the cost of the services of such accounting firm. If Landlord disputes the results of Tenant's examination, then notwithstanding Section 5(b)(iv) Landlord shall not be required to reimburse Tenant for any overstated amount or cost of examination until the dispute is resolved, and the amount of the overstatement or understatement as determined by such resolution shall govern the amount to be reimbursed by Landlord or paid by Tenant. (vi) For purposes of this Section, the "Operating Cost" for any calendar year will be all reasonable costs of Landlord (net of rebates and discounts actually received) attributable to the ownership, maintenance, operation and repair of the Premises pursuant to this Lease attributable to such year as determined by standard accounting practices, including but not limited to (A) all taxes, installments of special assessments (and interest thereon), fees, levies, and other governmental charges, general and special, ordinary and extraordinary, payable during such calendar year which are assessed, levied, charged or imposed upon or on account of all of any part of the Premises, (B) the cost of maintenance, operation, repair and replacement of the parking areas, roads, sidewalks, landscaping, drainage and exterior lighting facilities on or about the Premises, (C) the cost of maintenance, operation, repair and replacement of equipment and facilities providing heating, cooling, ventilation, electrical and plumbing services in the Building, (D) the cost of maintenance, operation, repair and replacement of any elevator equipment in the Building, (E) the cost of maintenance, repair and replacement of exterior glass and exterior doors, including cleaning the exterior surface of exterior window glass, (F) the cost for any additional services provided by Landlord under the terms of this Lease, (G) the cost of such insurance as may be provided by Landlord under the terms of this Lease, and (H) the amount of any management fees and expenses payable by Landlord for management of the Premises not to exceed the competitive cost or rate for such service. Operating Cost shall include any employment costs (including pension and benefits) for persons employed by Landlord or its manager in performing any of the foregoing maintenance, operation, repair or replacement work (or pro rata portion thereof if the employee is assigned to other properties in addition to the Premises), the cost of transportation of such employees in connection with such work, the cost of all supplies and materials used in performing such work, the cost of any utilities or services provided to or in the Premises which are not paid by Tenant, the cost of maintenance and service agreements for equipment serving the Premises such as exterior window cleaning and elevator maintenance, and the cost of any equipment leased or rented in connection with such work. Capital expenditures for any repairs, modifications, alterations, changes and replacements which cost less than $25,000 for the project (whether under one contract or several trade contracts) will be included in Operating Cost for the year in which such expenditures are incurred. Capital expenditures for any work which exceed such amount will be drawn from the Capital Reserve maintained under Section 35 to the extent of funds available, and any amounts in excess thereof will amortized over the useful life or pay-back period (whichever is shorter) at an interest rate equal to Landlord's cost of funds and the amortized amount for each year will be included in the Operating Cost for such year. Operating Cost excludes, however, (A) depreciation, (B) principal and interest on debt, (C) finders' fees and real estate brokers' commissions, (D) financing and refinancing costs, (E) cost of repairs due to casualty or condemnation which are reimbursed by third parties, (F) any cost due to Landlord's breach of this Lease, (G) any income, estate, inheritance, or other transfer tax and any excess profit, franchise, or similar taxes on Landlord's business, (H) any amount for any item or service paid to Landlord or an affiliate of Landlord to the extent it exceeds the competitive cost or rate for such item or service, (I) costs of operation of the business of the entity which constitutes Landlord or preservation of Landlord's interest in the Premises, such as by way of illustration and not limitation the cost of internal accounting and legal matters, the sale or mortgaging of the Premises, any legal disputes with any employee relating to his or her employment, or any legal disputes with any holder of a mortgage on the Premises relating to its mortgage, as distinguished from costs of management, operation, maintenance and repair of the Premises, (J) amounts otherwise included in Operating Cost to the extent they are reimbursed (after deduction of the out-of-pocket cost of collection of such reimbursement) by insurance or otherwise, or (K) interest and penalties resulting from failure to pay any item included in Operating Cost when due and payablereport relates.