Common use of Building Operating Costs Clause in Contracts

Building Operating Costs. 3.2.2.1 During the Initial Term and Renewal Term, Tenant will pay to Landlord, as Additional Rent, the amounts provided in subparagraph 3.2.2 based on Tenant’s pro rata share (adjusted in accordance with 3.2.2.2 below) of the amount by which the Building Operating Costs for each 12-month period (or part thereof, pro-rated) beginning April 1, 2003, exceed the Building Operating Costs for the Operating Base Year. The “Operating Base Year” is the 12-month period ending March 31, 2003. (Tenant will pay no share of Building Operating Costs for the Operating Base Year.) Those Building Operating Costs which vary with occupancy (i.e., janitorial services, HVAC costs) will be adjusted to reflect the Building Operating Costs for such expenses Landlord would have incurred if the Building is not fully occupied. Building Operating Costs which do not vary with occupancy, such as insurance and lobby maintenance, will continue to be allocated on a pro rata basis (adjusted in accordance with 3.2.2.2 below) over the space in the Building whether or not occupied. 3.2.2.2 Tenant’s share of the increases in Building Operating Costs over Building Operating Costs for the Operating Base Year will be computed by multiplying such increases in Building Operating Costs by a fraction, the numerator of which is the rentable square footage in the Demised Premises and the denominator of which is the rentable square feet in the Building (currently 81,286). If the rentable square footage for the Demised Premises using the aforesaid computation is not adequate to account for all of the rentable square footage in the Building, when combined with the rentable square footage reflected in leases for space in the Building executed prior to the date of execution of this Lease, an adjustment will be made to Tenant’s share of the increase in such Building Operating Costs such that Landlord will not absorb any portion of the total increase which might otherwise be allocated to it as a result of any discrepancy in the shares as reflected in the individual leases. “Building Operating Costs” means and includes all costs, expenses, taxes (other than ad valorem taxes) and disbursements which Landlord pays in connection with the management, operation, maintenance, and repair of the Building and of all building systems, components and appurtenances, including the Common Area. Such costs include, but are not limited to, the costs of all utilities (not separately metered to a particular tenant), fuel, building supplies, door locks and keys, light bulbs, plumbing and electrical repairs, garbage removal, drainage, lighting, facilities, parking lot and drive repair and maintenance, security services, pest control, alterations required by government authorities (unless such constitute capital expenditures), janitorial services, window cleaning, maintenance and repairs, elevator service, wages of employees who work customarily in and about the building and whose duties are connected with its operation, maintenance or repair (including social security taxes, unemployment insurance costs, cost of providing disability benefits, and cost of pension, hospitalization or retirement plan), costs of general commercial replacement and liability insurance, water and sewer rents (to the extent not included in taxes in Section 3.2.1 hereof), professional and consulting fees consistent with those reasonably incurred in the management or operation of office buildings in the Winston-Salem area, management fees (charges for which shall clearly reflect Landlord’s actual management efforts and expenses with respect to the Building), charges or fees for governmental permits, and other expenses, dissimilar or similar, incurred in the operation, repair, and maintenance of the Building, its systems and components, and the Land on which it stands.

Building Operating Costs. 3.2.2.1 During the Initial Term and Renewal Term, Tenant will pay to Landlord, as Additional Rentadditional rental hereunder, in the amounts provided in subparagraph 3.2.2 based on manner set forth below, an amount ("Tenant’s pro rata share (adjusted in accordance with 3.2.2.2 below's Pro Rata Share") equal to the Premises' Pro Rata Share of the amount by which Building Operating Costs for each calendar year of the Term exceeds Landlord's Share of Building Operating Costs. For purposes hereof, the term "Building Operating Costs" means all costs, charges, and expenses incurred by Landlord in connection with owning, operating, maintaining, repairing, insuring and managing the Building and Common Areas except those costs, charges, and expenses included within the definition of Energy Costs. Building Operating Costs include, without limitation, the items enumerated on Exhibit "C" to this Lease. If the Building Operating Costs for each 12-month period (or part thereof, pro-rated) beginning April 1, 2003, exceed the any calendar year is less than Landlord's Share of Building Operating Costs for Costs, the Operating Base Year. The “Operating Base Year” is the 12-month period ending March 31, 2003. (Tenant will pay no share Premises' Pro Rata Share of Building Operating Costs for will be deemed to be equal to Landlord's Share of Building Operating Costs. Notwithstanding the foregoing, Tenant’s Pro Rata Share of Controllable Operating Costs (defined below) shall not increase by more than 5% over Tenant’s Pro Rata Share of Controllable Operating Costs in the previous calendar year, including the Base Year.) Those Building Operating Costs which vary with occupancy (i.e., janitorial services, HVAC costs) will be adjusted to reflect the Building Operating Costs for such expenses Landlord would have incurred if the Building is not fully occupied. Building Operating Costs which do not vary with occupancy, such as insurance and lobby maintenance, will continue to be allocated on a pro rata basis (adjusted in accordance with 3.2.2.2 below) over the space in the Building whether or not occupied. 3.2.2.2 Tenant’s share of the cumulative, compounded basis. However, any increases in Building Operating Costs over Building not recovered by Landlord due to the foregoing limitation shall be carried forward into succeeding calendar years during the Term (subject to the foregoing limitation) until fully recouped by Landlord. For example, if Controllable Operating Costs for were $100.00 in 2017, then the total Controllable Operating Base Year will Costs that could be computed by multiplying such increases included in Building Operating Costs by a fractionin 2018 would be $105.00, for 2019 the numerator of which is amount would be $110.25, for 2020 the rentable square footage amount would be $115.76, and so on. In the preceding example, if Controllable Operating Costs in the Demised Premises both 2018 and the denominator of which is the rentable square feet 2019 were $107.00, then Landlord could include only $105.00 in the Building (currently 81,286). If the rentable square footage for the Demised Premises using the aforesaid computation is not adequate to account for all of the rentable square footage in the Building, when combined with the rentable square footage reflected in leases for space in the Building executed prior to the date of execution of this Lease, an adjustment will be made to Tenant’s share of the increase in such Building Operating Costs such that Landlord will not absorb any portion of in 2018, but $109.00 (the total increase which might otherwise be allocated to it as a result of any discrepancy Controllable Operating Costs plus the carry-forward from 2018) in the shares as reflected in the individual leases2019. The term “Building Controllable Operating Costs” means and includes all costsBuilding Operating Costs excluding expenses relating to the cost of utilities, security expenses, insurance, real estate taxes (other than ad valorem taxes) and disbursements which Landlord pays in connection with the management, operation, maintenanceassessments, and repair other expenses arising from legal requirements. Any category of the Building and of all building systems, components and appurtenances, including the Common Area. Such costs include, but are not limited to, the costs of all utilities (not separately metered to a particular tenant), fuel, building supplies, door locks and keys, light bulbs, plumbing and electrical repairs, garbage removal, drainage, lighting, facilities, parking lot and drive repair and maintenance, security services, pest control, alterations required by government authorities (unless such constitute capital expenditures), janitorial services, window cleaning, maintenance and repairs, elevator service, wages of employees who work customarily in and about the building and whose duties are connected with its operation, maintenance or repair (including social security taxes, unemployment insurance costs, cost of providing disability benefits, and cost of pension, hospitalization or retirement plan), costs of general commercial replacement and liability insurance, water and sewer rents (to the extent expenses which was not included in taxes in Section 3.2.1 hereof), professional and consulting fees consistent with those reasonably incurred in the management or operation of office buildings in the Winston-Salem area, management fees (charges for which shall clearly reflect Landlord’s actual management efforts and expenses with respect Share of Building Operating Costs shall not be included in Building Operating Costs unless the cost of such new category is added to the Building), charges or fees for governmental permits, and other expenses, dissimilar or similar, incurred in the operation, repair, and maintenance Landlord’s Share of the Building, its systems and components, and the Land on which it standsBuilding Operating Costs.

Building Operating Costs. 3.2.2.1 During (a) Tenant hereby agrees that for each Operating Year during the Initial Term and Renewal Term, Tenant will pay to Landlord, as Additional Rent, the amounts provided in subparagraph 3.2.2 based on Tenant’s pro rata share (adjusted in accordance with 3.2.2.2 below) term of the amount by this Lease for which the total Building Operating Costs for each 12-month period (or part thereof, pro-rated) beginning April 1, 2003, shall exceed the Building Operating Costs for the First Operating Base Year, Tenant shall pay to Landlord, as additional rent, an amount equal to the Tenant’s Occupancy Percentage of such excess within thirty (30) days after receipt of Landlord’s statement (the “Operating Statement”) therefor. The Operating Statement shall indicate (i) the initial additional amount required to be paid by Tenant as additional rent; (ii) the Tenant’s new Adjusted Minimum Rent; and (iii) the manner in which such adjustment is computed. Landlord shall present its Operating Statement within ninety (90) days after the commencement of each such Operating Year (“Billing Date”). Tenant shall thereafter, for the balance of that Operating Year and for that portion of the next Operating Year until the Billing Date during such year, make monthly payments at the time that Tenant pays minimum Monthly Rent of l/12th of such increase to reflect the change as of the Billing Date, which amounts shall be credited for the account of Tenant against the annual payment due on the succeeding Billing Date. Notwithstanding anything to the contrary contained in this Lease, if Landlord (i) has not delivered the Operating Statement for any Operating Year during the Term (except for the Operating Statement applicable to the calendar year during which the Term expired or was terminated) by the date that is twelve (12) months after the end of the Operating Year in question, or (ii) has not delivered an Operating Statement for the Operating Year during which the Term expired or was terminated by the date that is six (6) months after the end of such Operating Year, then Tenant shall not be obligated to make any payments that exceed the estimated Building Operating Costs already paid by Tenant for such Operating Year. The “Operating Base Year” is Notwithstanding the 12-month period ending March 31foregoing, 2003. (Tenant will pay no remains obligated for its full share of Building Operating Costs for the Operating Base Year.) Those Building Operating Costs which vary with occupancy (i.e., janitorial services, HVAC costs) will be adjusted to reflect the Building Operating Costs payable for such expenses Landlord would have incurred year if the Building is not fully occupied. Building delivery of said Operating Costs which do not vary with occupancy, such as insurance and lobby maintenance, will continue to be allocated on a pro rata basis (adjusted in accordance with 3.2.2.2 below) over the space in the Building whether or not occupiedStatement was delayed through no fault of Landlord. 3.2.2.2 Tenant’s share of the increases in Building Operating Costs over Building Operating Costs for the Operating Base Year will be computed by multiplying such increases in Building Operating Costs by a fraction, the numerator of which is the rentable square footage in the Demised Premises and the denominator of which is the rentable square feet in the Building (currently 81,286). If the rentable square footage for the Demised Premises using the aforesaid computation is not adequate to account for all of the rentable square footage in the Building, when combined with the rentable square footage reflected in leases for space in the Building executed prior to the date of execution of this Lease, an adjustment will be made to Tenant’s share of the increase in such Building Operating Costs such that Landlord will not absorb any portion of the total increase which might otherwise be allocated to it as a result of any discrepancy in the shares as reflected in the individual leases. “Building Operating Costs” means and includes all costs, expenses, taxes (other than ad valorem taxes) and disbursements which Landlord pays in connection with the management, operation, maintenance, and repair of the Building and of all building systems, components and appurtenances, including the Common Area. Such costs include, but are not limited to, the costs of all utilities (not separately metered to a particular tenant), fuel, building supplies, door locks and keys, light bulbs, plumbing and electrical repairs, garbage removal, drainage, lighting, facilities, parking lot and drive repair and maintenance, security services, pest control, alterations required by government authorities (unless such constitute capital expenditures), janitorial services, window cleaning, maintenance and repairs, elevator service, wages of employees who work customarily in and about the building and whose duties are connected with its operation, maintenance or repair (including social security taxes, unemployment insurance costs, cost of providing disability benefits, and cost of pension, hospitalization or retirement plan), costs of general commercial replacement and liability insurance, water and sewer rents (to the extent not included in taxes in Section 3.2.1 hereof), professional and consulting fees consistent with those reasonably incurred in the management or operation of office buildings in the Winston-Salem area, management fees (charges for which shall clearly reflect Landlord’s actual management efforts and expenses with respect to the Building), charges or fees for governmental permits, and other expenses, dissimilar or similar, incurred in the operation, repair, and maintenance of the Building, its systems and components, and the Land on which it stands.

Building Operating Costs. 3.2.2.1 During the Initial Term and Renewal Term, It is further agreed that Tenant will pay to Landlordshall pay, as Additional Rentadditional rent, the amounts provided in subparagraph 3.2.2 based on Tenant’s its pro rata share of any increase in monthly operating costs, within thirty (adjusted in accordance with 3.2.2.2 below30) days of the amount by which the Building Operating Costs for each 12-month period (or part thereof, pro-rated) beginning April 1, 2003, exceed the Building Operating Costs for the Operating Base Year. The “Operating Base Year” is the 12-month period ending March 31, 2003. (Tenant will pay no share of Building Operating Costs for the Operating Base Year.) Those Building Operating Costs which vary with occupancy (i.e., janitorial services, HVAC costs) will be adjusted to reflect the Building Operating Costs for such expenses Landlord would have incurred if the Building is not fully occupiedbilling. Building Operating Costs which do not vary with occupancywill be determined by actual operating costs for the calendar year January 1, such as insurance and lobby maintenancethrough December 31, will continue to be allocated on a pro rata basis (adjusted in accordance with 3.2.2.2 below) over the space in the Building whether or not occupied2000. 3.2.2.2 Tenant’s share of (a) Operating costs are defined as any and all expenditures incurred by the increases in Building Operating Costs over Building Operating Costs for the Operating Base Year will be computed by multiplying such increases in Building Operating Costs by a fraction, the numerator of which is the rentable square footage in the Demised Premises and the denominator of which is the rentable square feet in the Building (currently 81,286). If the rentable square footage for the Demised Premises using the aforesaid computation is not adequate to account for all of the rentable square footage in the Building, when combined with the rentable square footage reflected in leases for space in the Building executed prior to the date of execution of this Lease, an adjustment will be made to Tenant’s share of the increase in such Building Operating Costs such that Landlord will not absorb any portion of the total increase which might otherwise be allocated to it as a result of any discrepancy in the shares as reflected in the individual leases. “Building Operating Costs” means and includes all costs, expenses, taxes (other than ad valorem taxes) and disbursements which Landlord pays in connection with the management, operation, maintenance, maintenance and repair operation of the Building and building of all building systems, components and appurtenances, including which the Common Areapremises are a part. Such These costs may include, but are not limited to, equipment, landscaping, adjacent walks, parking areas, as well as any charges for electricity, gas, sewer and water or other utilities furnished to the costs of all utilities (not separately metered to a particular tenant)building, fuel, building including any taxes thereon. Other charges may include janitorial services and supplies, door locks and keys, light bulbs, plumbing and electrical repairs, garbage removal, drainage, lighting, facilities, parking lot and drive repair and maintenance, security management services, pest controland any additional expenditures which may be required from time to time in maintaining the operation of a first-class office building. (b) Operating costs will be reviewed annually to determine the Tenant's pro rata share of any accrued obligation for increases, alterations required by government authorities in monthly operating costs. Landlord will furnish to Tenant a written statement showing, in reasonable detail, Landlord's operating costs for the months that are being billed. Tenants having three (unless such constitute capital expenditures)3) month's history, janitorial servicesor longer, window cleaningin any six (6) month billing period, maintenance and repairswill be billed for that period. Tenants with less than three (3) month's history, elevator service, wages of employees who work customarily in and about the building and whose duties are connected with its operation, maintenance or repair (including social security taxes, unemployment insurance costs, cost of providing disability benefits, and cost of pension, hospitalization or retirement plan), costs of general commercial replacement and liability insurance, water and sewer rents (will be carried forward to the extent not included in taxes in Section 3.2.1 hereof)next billing period. In the event that Building Operating Costs decrease, professional and consulting fees consistent with those reasonably incurred the base costs as heretofore defined, shall act as minimum Building Operating Costs for the purposes of any account adjustments. Standard acceptable practices will be followed by the Landlord and, in the management or operation event of office buildings in any dispute as to any additional rental due hereunder, Tenant will have the Winston-Salem area, management fees right to inspect Landlord's accounting records at Landlord's accounting office. Any inspection must be made within thirty (charges for which shall clearly reflect Landlord’s actual management efforts and expenses with respect to the Building), charges or fees for governmental permits, and other expenses, dissimilar or similar, incurred in the operation, repair, and maintenance 30) days of the Building, its systems and components, and the Land on which it standsreceipt of billing.

Building Operating Costs. 3.2.2.1 During the Initial Term and Renewal Term, Tenant will pay to Landlord, as Additional Rentadditional rental hereunder, in the amounts provided in subparagraph 3.2.2 based on manner set forth below, an amount (“Tenant’s pro rata share (adjusted in accordance with 3.2.2.2 belowPro Rata Share”) equal to the Premises’ Pro Rata Share of the amount by which the Building Operating Costs for each 12-month period (or part thereof, pro-rated) beginning April 1, 2003, exceed calendar year of the Building Operating Costs for the Operating Base Year. The “Operating Base Year” is the 12-month period ending March 31, 2003. (Tenant will pay no share Term exceeds Landlord’s Share of Building Operating Costs for the Operating Base Year.) Those Building Operating Costs which vary with occupancy (i.e., janitorial services, HVAC costs) will be adjusted to reflect the Building Operating Costs for such expenses Landlord would have incurred if the Building is not fully occupiedCosts. Building Operating Costs which do not vary with occupancy, such as insurance and lobby maintenance, will continue to be allocated on a pro rata basis (adjusted in accordance with 3.2.2.2 below) over the space in the Building whether or not occupied. 3.2.2.2 Tenant’s share of the increases in Building Operating Costs over Building Operating Costs for the Operating Base Year will be computed by multiplying such increases in Building Operating Costs by a fractionFor purposes hereof, the numerator of which is the rentable square footage in the Demised Premises and the denominator of which is the rentable square feet in the Building (currently 81,286). If the rentable square footage for the Demised Premises using the aforesaid computation is not adequate to account for all of the rentable square footage in the Building, when combined with the rentable square footage reflected in leases for space in the Building executed prior to the date of execution of this Lease, an adjustment will be made to Tenant’s share of the increase in such Building Operating Costs such that Landlord will not absorb any portion of the total increase which might otherwise be allocated to it as a result of any discrepancy in the shares as reflected in the individual leases. term “Building Operating Costs” means and includes all costs, expensescharges, taxes (other than ad valorem taxes) and disbursements which expenses incurred by Landlord pays in connection with the managementowning, operationoperating, maintenancemaintaining, repairing, insuring and repair of managing the Building and Common Areas except those costs, charges, and expenses included within the definition of all building systemsEnergy Costs. Building Operating Costs include and exclude, components and appurtenancesrespectively, including the Common Area. Such costs include, but are not limited towithout limitation, the costs items enumerated on Exhibit ”C” to this Lease. If the Building Operating Costs for any calendar year is less than Landlord’s Share of Building Operating Costs, the Premises’ Pro Rata Share of Building Operating Costs will be deemed to be equal to Landlord’s Share of Building Operating Costs. Notwithstanding the foregoing provisions of this paragraph, it is agreed that for the purpose of determining such additional rental obligations of Tenant under this Lease pursuant to this paragraph, Building Operating Costs (exclusive of the Non-Capped Operating Costs, as hereinafter defined) for any calendar year following the Base Year shall not be increased by more than six percent (6%) over the amount of Building Operating Costs (exclusive of the Non-Capped Operating Costs) for the then immediately preceding calendar year, provided that such increase shall be determined from year to year on a cumulative and compounding basis; it being further agreed that, for purposes hereof, the term “Non-Capped Operating Costs” shall mean (a) expenditures of a capital nature permitted hereunder to be included in Building Operating Costs, (b) all utilities utility expenses, (not separately metered c) real estate taxes and assessments permitted hereunder to a particular tenant), fuel, building supplies, door locks and keys, light bulbs, plumbing and electrical repairs, garbage removal, drainage, lighting, facilities, parking lot and drive repair and maintenance, security services, pest control, alterations required by government authorities (unless such constitute capital expenditures), janitorial services, window cleaning, maintenance and repairs, elevator service, wages of employees who work customarily be included in and about the building and whose duties are connected with its operation, maintenance or repair (including social security taxes, unemployment insurance costs, cost of providing disability benefitsBuilding Operating Costs, and cost of pension, hospitalization or retirement plan), costs of general commercial replacement and liability insurance, water and sewer rents (to the extent not included in taxes in Section 3.2.1 hereof), professional and consulting fees consistent with those reasonably incurred in the management or operation of office buildings in the Winston-Salem area, management fees (charges for which shall clearly reflect Landlord’s actual management efforts and expenses with respect to the Building), charges or fees for governmental permits, and other expenses, dissimilar or similar, incurred in the operation, repair, and maintenance of the Building, its systems and components, and the Land on which it standsd) insurance premiums.

Building Operating Costs. 3.2.2.1 During the Initial Term Operating Costs shall not include expenses for legal services, real estate brokerage and Renewal Termleasing commissions, Tenant will pay Landlord's federal and state income taxes, income tax accounting, interest, depreciation, general corporate overhead, or capital improvements to Landlord, as Additional Rent, the amounts provided in subparagraph 3.2.2 based on Tenant’s pro rata share (adjusted in accordance with 3.2.2.2 below) of the amount by which the Building or the Project except (a) for capital improvements (i) installed for the purpose of reducing or controlling expenses, or (ii) required by any governmental or other authority having or asserting jurisdiction over the Building or the Project and (b) as otherwise provided herein. If any expense which would otherwise constitute an Operating Cost for the calendar year during which such expense is paid relates to one or more calendar years other than or in addition to the calendar year during which such expense is paid, such expense will be proportionately allocated to the Operating Costs for each 12-month period (or part thereofcalendar year to which such expense is related. Similarly, pro-rated) beginning April 1, 2003, exceed with respect to capital expenditures to replace existing equipment and machinery necessary to the day to day operation of the Building or the Project or common usage Building or Project components and systems, such capital expenditures shall be amortized on a monthly basis over the useful life thereof (not to exceed 120 months) at an interest rate of twelve percent (12%) per annum, and the amount recoverable by Landlord as Operating Costs for in the Operating Base Yearyear during which any such expenditure is made and each year of the Lease Term thereafter occurring shall equal the sum of all such amortization payments payable during each such year. The “Operating Base Year” is In the 12-month period ending March 31, 2003. (Tenant will pay no share of Building Operating Costs for the Operating Base Year.) Those Building Operating Costs which vary with occupancy (i.e., janitorial services, HVAC costs) will be adjusted to reflect the Building Operating Costs for such expenses Landlord would have incurred if event that the Building is not fully occupied. Building Operating Costs which do not vary with occupancyleased during any calendar year, such as insurance and lobby maintenance, will continue to be allocated on a pro rata basis (adjusted in accordance with 3.2.2.2 below) over the space in the Building whether or not occupied. 3.2.2.2 Tenant’s share of the increases in Building Operating Costs over Building Operating Costs for the Operating Base Year will be computed by multiplying such increases in Building Operating Costs by a fraction, the numerator of which is the rentable square footage in the Demised Premises and the denominator of which is the rentable square feet in the Building (currently 81,286). If the rentable square footage for the Demised Premises using the aforesaid computation is not adequate to account for all of the rentable square footage in the Building, when combined with the rentable square footage reflected in leases for space in the Building executed prior Landlord may make appropriate adjustments to the date of execution of this Lease, an adjustment will be made to Tenant’s share of the increase in such Building Operating Costs such that Landlord will not absorb any portion of the total increase which might otherwise be allocated to it as a result of any discrepancy in the shares as reflected in the individual leases. “Building Operating Costs” means , using reasonable projections, to adjust such costs to an amount that would normally be expected to be incurred if the Building were 95% leased, and includes such adjusted costs shall be used for purposes of this Paragraph 3.3. "Controllable Expenses" shall mean all costs, expenses, taxes (Operating Costs other than ad valorem taxes) any utilities fees and disbursements which Landlord pays in connection with the managementcharges, operation, maintenanceinsurance premiums, and repair of the Building and of all building systems, components and appurtenances, including the Common Area. Such costs include, but are not limited to, the costs of all utilities (not separately metered to a particular tenant), fuel, building supplies, door locks and keys, light bulbs, plumbing and electrical repairs, garbage removal, drainage, lighting, facilities, parking lot and drive repair and maintenance, security services, pest control, alterations required by government authorities (unless such constitute capital expenditures), janitorial services, window cleaning, maintenance and repairs, elevator service, wages of employees who work customarily in and about the building and whose duties are connected with its operation, maintenance or repair (including social security real estate taxes, unemployment insurance costs, cost of providing disability benefits, and cost of pension, hospitalization or retirement plan), costs of general commercial replacement and liability insurance, water and sewer rents (to the extent not included in taxes in Section 3.2.1 hereof), professional and consulting fees consistent with those reasonably incurred in the management or operation of office buildings in the Winston-Salem area, management fees (charges for which shall clearly reflect Landlord’s actual management efforts and expenses each case payable by Landlord with respect to the Building)Building or the Project, charges as well as any expenses incurred by Landlord in its compliance with any law, regulation, ordinance, or fees for the like enacted after the date hereof by any governmental permitsor other authority having or asserting jurisdiction over the Building or the Project. For purposes of calculating Operating Expenses and Tenant's Pro Rata Share of Expense Increases, and other expenses, dissimilar or similar, incurred increases in the operation, repair, and maintenance of the Building, its systems and components, and the Land on which it standsControllable Expenses shall be capped at ten percent (10.0%) per annum.

Building Operating Costs. 3.2.2.1 During a) Tenant hereby agrees that for each operating year during the Initial Term and Renewal Termterm of this lease in which the total Building Operating Costs (as hereinafter defined) shall exceed the Building Operating Costs for the First Operating Year, Tenant will shall pay to Landlord, as Additional Rent, an amount equal to the amounts provided in subparagraph 3.2.2 based on Tenant’s pro rata share Occupancy Percentage of such excess within thirty (adjusted in accordance with 3.2.2.2 below3) days after presentation of Landlord's statement (the "Operating Statement"), thereof, which shall be ninety (90) days after the commencement of such Operating Year (the "Billing Date"). Tenant shall thereafter, for the balance of that Operating Year, make monthly payments of one-twelfth (1/12th) of said increase, to reflect the change as of the Billing Date, which amounts shall be credited for the account of Tenant against the annual payment due on the succeeding Billing Sate. The Operating Statement shall indicate: (i) the initial additional amount required to be paid by Tenant as Additional Rent as in this Article provided; (ii) and the manner in which the such adjustment is completed. b) The Building Operating Costs for include each 12-month period (or part thereof, pro-rated) beginning April 1, 2003, exceed the Building Operating Costs for the Operating Base Year. The “Operating Base Year” is the 12-month period ending March 31, 2003. (Tenant will pay no share of Building Operating Costs for the Operating Base Year.) Those Building Operating Costs which vary with occupancy (i.e., janitorial services, HVAC costs) will be adjusted to reflect the Building Operating Costs for such expenses Landlord would have and every reasonable expense incurred if the Building is not fully occupied. Building Operating Costs which do not vary with occupancy, such as insurance and lobby maintenance, will continue to be allocated on a pro rata basis (adjusted in accordance with 3.2.2.2 below) over the space in the Building whether or not occupied. 3.2.2.2 Tenant’s share of the increases in Building Operating Costs over Building Operating Costs for the Operating Base Year will be computed by multiplying such increases in Building Operating Costs by a fraction, the numerator of which is the rentable square footage in the Demised Premises and the denominator of which is the rentable square feet in the Building (currently 81,286). If the rentable square footage for the Demised Premises using the aforesaid computation is not adequate to account for all of the rentable square footage in the Building, when combined with the rentable square footage reflected in leases for space in the Building executed prior to the date of execution of this Lease, an adjustment will be made to Tenant’s share of the increase in such Building Operating Costs such that Landlord will not absorb any portion of the total increase which might otherwise be allocated to it as a result of any discrepancy in the shares as reflected in the individual leases. “Building Operating Costs” means and includes all costs, expenses, taxes (other than ad valorem taxes) and disbursements which Landlord pays in connection with the ownership, administration, management, operation, maintenance, operation and repair maintenance of the Building and of all building systems, components and appurtenancesproperty, including the Common Area. Such costs include, but are not limited to, the allocable portion of wages, salaries and fees paid to persons either employed by Landlord to engaged as independent contractors in the operation of the real estate, and such other typical items of expense as indicated below. All such costs of all utilities shall be reflected on a comparative statement (not separately metered to a particular tenantthe "Statement"), fuelwhich shall be exhibited to the Tenant upon request. c) The expenses referred to in this Article shall be determined in accordance with generally accepted accounting principles and each Statement furnished shall be certified by Landlord as true and correct. Tenant or its representatives shall have the right, building suppliesat its own expense, door locks upon reasonable notice and keysduring reasonable hours, light bulbs, plumbing to inspect the books of the Landlord for the purposes of verifying the information contained in any Statement provided prior written request for such inspection shall be made by Tenant within six (6) months after receipt of such statement. d) Some of the typical items of expense comprising the Building Operating Costs and electrical repairs, garbage removal, drainage, lighting, facilities, parking lot and drive repair to be included in the Statement are: 1. General repairs and maintenance. 2. Utility Costs, security servicesincluding but not limited to, pest control, alterations required by government authorities cost of electricity to power HVAC units serving the entire Building (unless such constitute capital expendituresboth tenant and common areas), janitorial servicescost of oil or other fuel required to heat the entire Building, cost of electricity to light the common areas. 3. Cleaning costs, including but not limited to, window cleaning, maintenance and repairsgeneral interior office cleaning, cleaning of common areas. 4. Service contracts, including but not limited to, contracts for elevator service, wages HVAC service, rubbish removal, carting, janitorial and watchman services, snow removal. 5. Costs of employees who work customarily in and about the building and whose duties are connected with its operation, maintenance or repair (including social security taxes, unemployment insurance costs, cost of providing disability benefits, and cost of pension, hospitalization or retirement plan), costs of general commercial replacement and liability insurance, water and sewer rents (to the extent not included in taxes in Section 3.2.1 hereof), professional and consulting fees consistent with those reasonably incurred in the management or operation of office buildings in the Winston-Salem area, management fees (charges for which shall clearly reflect Landlord’s actual management efforts and expenses with respect to the Building), charges or fees for governmental permits, and other expenses, dissimilar or similar, incurred in the operation, repair, and maintenance of the Building, its systems and components, and the Land on which it standslandscaping.