TO WATER, ELECTRICITY AND JANITORIAL SERVICE TO
THEIR PREMISES (AND EXPENSES FOR SUCH SERVICES TO THEIR PREMISES ARE EXCLUDED
FROM OPERATING EXPENSES), BUT IS INCLUDED IN THE DENOMINATOR WITH RESPECT TO
COMMON AREA WATER, ELECTRICITY, JANITORIAL, AND ALL OTHER CATEGORIES OF EXPENSES
INCLUDED IN OPERATING EXPENSES.
TENANT'S PROPORTIONATE SHARE SHALL INCREASE OR
DECREASE IN THE EVENT TENANT EXPANDS OR CONTRACTS THE PREMISES DURING THE LEASE
TERM.
THE OPERATING EXPENSES SHALL BE CONSISTENT WITH THOSE INCURRED IN
COMPARABLE FIRST-CLASS OFFICE BUILDINGS LOCATED IN THE MARKET AREA (AS DEFINED
IN SECTION 8.3) AND SHALL BE DETERMINED IN ACCORDANCE WITH GENERALLY ACCEPTED
ACCOUNTING PRINCIPLES CONSISTENTLY APPLIED FROM YEAR TO YEAR AS SUCH PRINCIPLES
ARE GENERALLY APPLIED IN THE REAL ESTATE INDUSTRY, AND SHALL INCLUDE THE COSTS
AND EXPENSES DESCRIBED IN SUBSECTION (1) BELOW, BUT SHALL NOT INCLUDE THE COSTS
AND EXPENSES DESCRIBED IN SUBSECTION (2) BELOW.
INCLUDED COSTS AND EXPENSES (WHICH SHALL IN ALL CASES BE NET OF ANY
DISCOUNTS, CREDITS, REIMBURSEMENTS (OTHER THAN FOR OPERATING EXPENSES) AND
REBATES RECEIVED BY LANDLORD):
GAS, WATER, SEWER, ELECTRICITY AND OTHER UTILITY CHARGES (INCLUDING SURCHARGES)
OF EVERY TYPE AND NATURE.
INSURANCE PREMIUMS PAID BY LANDLORD FOR INSURANCE RELATING TO THE BUILDING.
PERSONNEL COSTS OF THE BUILDING, INCLUDING, BUT NOT LIMITED TO, SALARIES, WAGES,
FRINGE BENEFITS AND OTHER DIRECT AND INDIRECT COSTS OF ENGINEERS,
SUPERINTENDENTS, WATCHMEN, PORTERS AND ANY OTHER PERSONNEL RELATED TO THE
MANAGEMENT, MAINTENANCE, REPAIR AND OPERATION OF THE BUILDING BUT EXCLUDING THE
COSTS OF ANY COMPENSATION PAID TO PARTNERS OF LANDLORD OR OFFICERS AND DIRECTORS
OF THE MANAGING AGENT ABOVE THE GRADE OF SUPERINTENDENT OR BUILDING MANAGER;
PROVIDED, HOWEVER, THAT IF DURING THE LEASE TERM SUCH PERSONNEL OR ENTITIES ARE
WORKING ON PROJECTS OTHER THAN THE BUILDING, THEN THEIR WAGES, SALARIES, FEES,
AND RELATED EXPENSES SHALL BE APPROPRIATELY ALLOCATED AMONG ALL OF SUCH PROJECTS
AND ONLY THAT PORTION OF SUCH EXPENSES REASONABLY ALLOCABLE TO THE BUILDING
SHALL BE INCLUDED AS AN OPERATING EXPENSE.
COSTS OF SERVICE AND MAINTENANCE CONTRACTS, INCLUDING, BUT NOT LIMITED TO,
CHILLERS, BOILERS, CONTROLS, ELEVATORS, MAIL CHUTE, WINDOWS,
SECURITY SERVICE,
LANDSCAPING, SNOW AND ICE REMOVAL AND MANAGEMENT FEES (SUBJECT TO THE
LIMITATIONS SET FORTH IN SECTION 4.1(B)(2)).
EXCEPT TO THE EXTENT SPECIFICALLY EXCLUDED BY SUBSECTION (2) BELOW, ALL OTHER
MAINTENANCE AND REPAIR EXPENSES AND SUPPLIES WHICH ARE DEDUCTED BY LANDLORD IN
COMPUTING ITS FEDERAL INCOME TAX LIABILITY.
SUBJECT TO THE EXCLUSIONS SET FORTH IN SECTION 4.1(B)(2)(XI), AMORTIZATION OVER
THE APPROVED PERIOD, WITH INTEREST AT LANDLORD'S COST OF FINANCING OR, IF THE
IMPROVEMENT IS NOT FINANCED, AT THE PRIME RATE REPORTED IN THE WALL STREET
JOURNAL ON THE DATE OF SUCH EXPENDITURE) FOR CAPITAL EXPENDITURES MADE BY
LANDLORD (A) TO REDUCE OPERATING EXPENSES IF AND TO THE EXTENT THAT THE ANNUAL
REDUCTION IN OPERATING EXPENSES WILL BE EQUAL TO OR EXCEED THE ANNUAL
AMORTIZATION AND FINANCING COSTS THEREFOR OR (B) TO COMPLY WITH APPLICABLE LAWS,
RULES, REGULATIONS, REQUIREMENTS, STATUTES, ORDINANCES, CODES, BY-LAWS AND COURT
DECISIONS OF THE JURISDICTION IN WHICH THE BUILDING IS LOCATED OR THE FEDERAL
GOVERNMENT ("LEGAL REQUIREMENTS") WHICH ARE