FORM OPERATING EXPENSE PASS THROUGH PROVISION FOR MULTI-TENANT
BUILDING USING BASE YEAR CONCEPT
For the calendar year commencing on January 1, 201__ and for each calendar year
thereafter during the Term and during any applicable Option Term, Tenant shall pay to Landlord,
as Additional Rent, Tenant's Proportionate Share of any increase in Operating Expenses (as
hereinafter defined) incurred by Landlord in connection with the operation or maintenance of the
Building above the Operating Expenses Landlord incurred during the Base Year (as hereinafter
defined).
Tenant's Proportionate Share shall be calculated by dividing the __________ rentable
square feet of the Premises by the ________ net rentable square feet of the Building, which
equals ____ %. If during the Base Year the occupancy of the rentable area of the Building is less
than ____% full, then Operating Expenses will be adjusted for the Base Year at a rate of ____%
occupancy.
For the calendar year commencing on January 1, 201___ and for each calendar year
thereafter during the Term and any applicable Option Term, Landlord shall estimate the amount
the Operating Expenses shall increase for such calendar year above the Operating Expenses
incurred during the Base Year. Landlord shall send to Tenant a written statement of the amount
of Tenant's Proportionate Share of any estimated increase in Operating Expenses and Tenant
shall pay to Landlord, on a monthly basis, Tenant's Proportionate Share of such annual increase
in Operating Expenses. Within one hundred eighty days after the end of each calendar year or as
soon as possible thereafter, Landlord shall send to Tenant a copy of the statement of actual
Operating Expenses for the preceding calendar year (the “Annual Statement”). Pursuant to the
Annual Statement, Tenant shall pay to Landlord Additional Rent as owed or Landlord shall
adjust Tenant's future Rent payments if Landlord owes Tenant a credit. After the Expiration
Date, Landlord shall send Tenant the final Annual Statement for the Term, and Tenant shall pay
to Landlord Additional Rent as owed or if Landlord owes Tenant a credit, then Landlord shall
pay Tenant a refund. If there is a decrease in Operating Expenses in any subsequent year below
Operating Expenses for the Base Year then no Additional Rent shall be due on account of
Operating Expenses, but Tenant shall not be entitled to any credit, refund or other payment that
would reduce the amount of other additional rent or Base Rent owed. If this Lease expires or
terminates on a day other than December 31, then Additional Rent shall be prorated on a 365-day
calendar year (or 366 if a leap year). All payments or adjustments for Additional Rent shall be
made within thirty days after the applicable Annual Statement is sent to Tenant.
The term “Base Year” shall mean the twelve-month period beginning on January 1,
201__, and ending on December 31, 201__. To the extent construction of any of the Tenant
Improvements occurs during the Base Year, Landlord and Tenant shall mutually agree upon any
adjustment that may be required in the Operating Expenses for the Base Year to account for any
increases in the Operating Expenses during the Base Year which are attributable solely to
construction of the Tenant Improvements and which are not otherwise paid out of the Allowance.
The term "Operating Expenses" shall mean all direct and indirect costs incurred by
Landlord in the provision of services to tenants and in the operation, repair and maintenance of
the Building and Common Areas as determined by generally accepted accounting principles,
including, but not limited to ad valorem real and personal property taxes, hazard and liability
insurance premiums, utilities not paid by Tenant directly, heat, air conditioning, janitorial
service, labor, materials, supplies, equipment and tools, inspection fees, management fees not to
exceed [5%] of gross rents, and common area expenses; provided, however, the term "Operating
Expenses" shall not include the following: (i) legal fees, space planners' fees, real estate brokers'
leasing commissions and advertising expenses incurred in connection with the original or future
leasing of space within the Building; (ii) costs and expenses of alterations or improvements to
the leasehold premises of other tenants; (iii) costs associated with capital improvements made to
the Building, except to the extent such capital improvements are made for the sole purpose of
reducing Operating Expenses, in which case the costs of such capital improvements made be
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Exh. A to Rooftop License Agt.
included within Operating Expenses only to the extent of the actual savings in Operating
Expenses realized as a result of such capital improvements; (iv) costs of correcting defects in, or
inadequacy of, the design or construction of the Building or the materials used in the
construction of the Building or the equipment or appurtenances thereto; (v) costs of any repairs
made to the Building or Common Areas to the extent covered by any insurance policy required
to be maintained hereunder; (vi) interest or penalties incurred by Landlord due to Landlord's
failure to pay Operating Expenses as and when the same become due; (vii) costs incurred as a
result of the negligence or willful misconduct of Landlord or its agents; (viii) costs associated
with the sale of the Building by Landlord; (ix) depreciation on the Building or the equipment
therein; (x) interest and principal payments on mortgages and other debt costs, if any; (xi)
executive salaries or the salaries of any employees of Landlord above the level of senior property
manager; (xii) to the extent Landlord or any entity controlled by or under common control with
Landlord provide services in connection with the operation and maintenance of the Building, the
costs of such services to the extent the costs exceed the costs that would have otherwise been
paid by Landlord had it obtained such services from third parties through a competitive selection
process; and (xiii) any other expenses that do not relate to the operation and maintenance of the
Building.
The annual statement of Operating Expenses shall be accounted for and reported in
accordance with generally accepted accounting principles (the "Annual Statement"). If Tenant
disputes the amount of Operating Expenses as set forth in the Annual Statement from the
Landlord, then Tenant may have Landlord's books and records relating to Operating Expenses
audited by a qualified professional selected by Tenant or by Tenant itself, provided (i) Tenant
gives written notice of the audit within forty-five (45) days of Tenant's receipt of the Annual
Statement, and (ii) Tenant is not in default under the Lease beyond any applicable notice and
cure period provided for therein. No subtenant shall have any right to conduct an audit and no
assigns shall conduct an audit for any period during which such assignee was not in possession
of the Premises. Books and records necessary to accomplish any audit permitted under this
Section shall be retained for twelve months after the end of each calendar year, and on receipt of
notice of Tenant's dispute of the Operating Expenses shall be made available to Tenant to
conduct the audit, which (at Landlord's option) may be either at the Premises, at the Landlord's
division office for the area in which the Premises are located, or at Landlord's home office in
Raleigh, North Carolina. If Tenant and Landlord dispute the amount of Operating Expenses after
Tenant's Audit, then Landlord's independent certified public accountant shall consult with
Tenant's professional to reconcile any discrepancies. In the event that the Tenant elects to have a
professional audit Landlord's Operating Expenses as provided in this Lease, such audit must be
conducted by an independent nationally or regionally recognized accounting firm that is not
being compensated by Tenant on a contingency fee basis. All information obtained through such
audit as well as any compromise, settlement or adjustment reached as a result of such audit shall
be held in strict confidence by Tenant and its officers, agents, and employees and as a condition
to such audit, the Tenant's auditor shall execute a written agreement agreeing that the auditor is
not being compensated on a contingency fee basis and that all information obtained through such
audit as well as any compromise, settlement or adjustment reached as a result of such audit, shall
be held in strict confidence and shall not be revealed in any manner to any person except upon
the prior written consent of the Landlord, which consent may be withheld in Landlord's sole
discretion, or if required pursuant to any litigation between Landlord and Tenant materially
related to the facts disclosed by such audit, or if required by law. If Operating Expenses were
overstated by [five percent (5%)] or more, then Landlord shall reimburse Tenant for its
reasonable audit costs; otherwise, Tenant shall pay its own audit costs. In the event the audit
process reveals that Tenant has overpaid its proportionate share of Operating Expenses, such
overpayment shall be credited against Tenant's future Rent payments or, if the Expiration Date
has occurred, Landlord shall reimburse Tenant for the full amount of such overpayment within
thirty (30) days after completion of the audit process.