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Operating Expense Exclusions

Consider Adding These Exclusions

The lease you receive from the landlord may or may not have exclusions from operating expenses. Consider having your attorney add any of the following exclusions not already in your lease.

i. Any cost at any time of any installation and decoration incurred in connection with preparing space for any tenant (including Tenant) of the Building;

ii. Rentals for equipment ordinarily considered to be of a capital nature (such as elevators and HVAC systems) except if such equipment is reasonably and customarily leased in the operation of first-class Manhattan office buildings;

iii. Costs incurred by Landlord which result from Landlord's breach of a lease in the Building or of any law;

iv. The cost of installing, operating and maintaining any commercial concessions operated by Landlord in the Building or of installing, operating and maintaining any specialty services, such as a Building cafeteria or dining facility, or an athletic, luncheon or recreational club, costs in connection with any theater or garage;

v. All additions to Building reserves including bad debts and rent loss reserves;

vi. Dues paid to trade associations and similar expenses if there is no resulting benefit to the Building;

vii. The cost of repairing any latent defects in the original construction of the Building;

viii. The cost of removing hazardous substances in order to comply with Legal Requirements;

ix. The cost of gas, steam, electric or other utilities charged directly to individual tenants (including tenants) and costs of other services charged to tenants (including Tenant);

x. Owner's general corporate overhead and general administrative expenses not related to the operation of the Real Property (such as fees and costs in connection with the sale or refinancing of the Real Property);

xi. The cost of any political or charitable donations;

xii. Cost of purchasing, installing and replacing art work in the Building;

xiii. The overhead and profit increments paid to Owner, or to any subsidiary or affiliate of Owner, for goods and/or services in the Building, to the extent such overhead and profit increments exceed the costs of comparable goods and/or services delivered or rendered by unaffiliated third parties or comparable reputation, stature, experience and quality to Owner, on a competitive basis;

xiv. Increases in premiums for insurance carried by Owner pursuant to this Lease, which increase is caused by use of the Building by Owner or any other tenant of Owner which is hazardous on account of fire or otherwise or premiums for any insurance carried by Owner which is not customarily carried by other reasonably prudent landlords in comparable first-class office buildings in the midtown Manhattan area;

xv. Repair costs resulting from the negligence of Owner or others;

xvi. To the extent any costs includable in operating expenses are incurred with respect to both the Building and other properties (including, without limitation, salaries, fringe benefits and other compensation of Landlord's personnel who provide such services to both the Building and other properties), there shall be excluded from operating expenses a fair and reasonable percentage thereof which is properly allocable to such other properties;

xvii. The cost of providing any service customarily provided by a managing agent and the cost of which is customarily included in management fees (e. g., bookkeeping and accounting costs) except as otherwise provided in this Lease; (xviii) the cost of any separate electrical meter Landlord may provide to any of the tenants in the Building;

xviii. Costs relating to withdrawal liability or unfunded pension liability under the Multi-Employer Pension Plan act or similar law;

xix. expenses allocable directly and solely to the retail space of the Building, if any, and to any garage or theatre in the Building;

xx. Costs incurred in connection with making any additions to, or building additional stories on, the Building or its plazas, or adding buildings or other structures adjoining the Building (which increase the square footage of the Building), or connecting the Building to other structures adjoining the Building.

Any cost or expense of the nature described above shall be included in Operating Expenses for and Operating Year no more than once, notwithstanding that such cost or expense may fall under more than one of the categories listed above. Operating Expenses shall be calculated on the accrual basis of accounting.

If during the Base Year the tenant of any space in the Building undertook to perform work or services therein in lieu of having Landlord perform same and the cost thereof would have been included in Operating Expenses if done by Landlord, then Operating Expenses for such Base Year shall include the amount that would have been incurred if Landlord had performed such work services.

Landlord may use related or affiliated persons to provide services or furnish materials for the Property if the rates or fees charged by such persons are competitive with those charged by unrelated or unaffiliated persons with respect to first class office buildings in the Borough of Manhattan for the same services or materials.


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