A CPI adjustment clause is a provision in a contract that allows for the modification of agreed-upon prices based on changes in the Consumer Price Index (CPI). This ensures that payments remain fair and reflect the current economic conditions, shielding parties from inflationary impacts.
The “CPI Adjustment” shall mean, for each year of the Term beginning April 1, 2011, an increase in the Base Rent for Adjustment Purposes by the percentage increase in the Comparison Index over the Base Index, applicable to such year.
Salary. As compensation for the performance of Executive’s services hereunder for the 12-month period ending December 31, 2020, the Company shall pay to Executive a salary (the “Salary”) of One-Hundred Forty-Five Thousand, Six-Hundred and Fifty Nine Dollars ($145,659). For the 12-month period ending December 31, 2021, Executive’s salary shall be increased by Seventeen Thousand, Five-Hundred Dollars ($17,500) over his 2020 Salary, plus a cost of living adjustment as approved by the Nominating, Corporate Governance and Compensation Committee (the “Committee”) of the Company’s Board of Directors, which in no event will be less than a percentage equal to the annual inflation rate for the prior full calendar year as measured by the Consumer Price Index for All Urban Consumers published by the U.S. Department of Labor, Bureau of Labor Statistics (the “CPI Adjustment”). For the 12-month period ending December 31, 2022, the Company shall pay to Executive an annualized salary of Two-Hundred Thirty-Three Thousand Dollars ($233,000). For the subsequent two years under the term of this Agreement, the Committee shall review Executive’s Salary annually in conjunction with its regular review of employee salaries and may increase his Salary as in effect from time to time as the Committee shall deem appropriate, it being understood and agreed that the intent of the parties that Executive’s salary increases are subject to the satisfactory performance of Executive; provided, however, that Executive’s Salary shall be increased annually to account for the CPI Adjustment. The Salary shall be payable in arrears in approximately equal semi-monthly installments (except that the first and last such semi-monthly installments may be prorated if necessary) on the Company’s regularly scheduled payroll dates, minus such deductions as may be required by law or reasonably requested by Executive.
Subject to annual CPI increase - All Urban Consumers - U.S. City Average" index, provided that the CPI adjustment will not decrease the base fees (even if the cumulative CPI rate at any point in time is negative).
Consumer Price Index Adjustment 3.18 The Base Rent from and including each CPI Adjustment Date until the next Review Date (or if there is no further Review Date, the Expiry Date) is the greater of: (a) the Base Rent payable immediately before that CPI Adjustment Date multiplied by the Current CPI and divided by the Previous CPI; and (b) the Base Rent payable immediately before that CPI Adjustment Date.
On the first day of the month after the information is available to make the calculation in clause 3.18, the Tenant must pay the difference between what the Tenant has paid on account of Base Rent and the Base Rent as adjusted pursuant to clause 3.18 for the period from and including the relevant CPI Adjustment Date to but excluding the first day of that month.
Inclusive of cumulative CPI adjustments under the Mairs & Power Funds Trust’s Amended and Restated Agreements dated March 5, 2020 (Fund Accounting and Fund Administration agreements)
The Lease provides for an estimated initial rent of €1,323,780 per annum and will be due beginning on the Completion Date. The rent amount is subject to adjustment based on the consumer price index (the “CPI”) beginning on January 1, 2019 through the Completion Date and then annually thereafter, subject to certain limitations if the CPI is greater than 3.0%. The final initial rent amount is contingent upon, among other things, the parameters of the final constructed Premises and the CPI adjustment described above, and will be determined upon the Completion Date. The Company is also responsible for certain fit-out costs and service fees related to the Premises.
The initial term of the Agreement will run for five (5) years from the Effective Date, with an option to renew for additional two (2) year terms thereafter, subject to certain conditions described in the Agreement. The agreement does not transfer any title in the Facility to POINT. The access fee for the Facility is expected to be approximately $4.0 million for the first two (2) years of the term, after which the access fee is subject to a CPI adjustment. POINT will also bear variable costs for services such as radiation safety, equipment service, IT, engineering and other services.
In consideration for the lease arrangement, the JV will provide the Company an annual rental payment equal to $500 per acre of leased property, subject to periodic CPI adjustment. The Company will be required to provide the JV with infrastructure reasonably necessary for the cultivation of hemp on the leased property, and will provide a water supply at cost.
For the fifth (5th) Lease Year and continuing thereafter on the first (1st) day of each Lease Year (each an “Adjustment Date”), Supplemental Rent shall be adjusted to an amount equal to the sum of (i) two percent (2%) of the Base Rent for the immediately preceding applicable Lease Year, plus (ii) one hundred two percent (102%) of the Supplemental Rent for the immediately preceding applicable Lease Year; provided, however, that in the event that Base Rent is increased on the Adjustment Date at the beginning of a new CPI Adjustment Period pursuant to Section 2.01(b)(3) below, Supplemental Rent shall not be adjusted for such Lease Year under this Section 2.01(b)(2) and Supplemental Rent shall next be adjusted under this Section 2.01(b)(2) on the next Adjustment Date. For the avoidance of doubt, Supplemental Rent may be further adjusted on each Adjustment Date at the beginning of each CPI Adjustment Period pursuant to Section 2.01(b)(3). All Supplemental Rent shall be due and payable quarterly in four (4) equal installments in advance on the same day as Base Rent under this Lease.
Upon the commencement of the sixth (6th) Lease Year and continuing thereafter every five (5) years (each such 5-year period, including the first five (5) Lease Years, a “CPI Adjustment Period”) through the last day of the Term, pursuant to this Section 2.01(b)(5), Supplemental Rent shall be increased on the first (1st) day of each CPI Adjustment Period by the percentage change in the CPI figure from (i) the Commencement Date for the first (1st) CPI Adjustment Period or the first (1st) day of the immediately preceding CPI Adjustment Period for all subsequent CPI Adjustment Periods to (ii) the last day of the fifth (5th) Lease Year for the first CPI Adjustment Period or the last day of the immediately preceding CPI Adjustment Period for all subsequent CPI Adjustment Periods, if and only if, the percentage increase in the CPI figure during such CPI Adjustment Period is greater than the percentage increase in Supplemental Rent during the same CPI Adjustment Period. For purposes of this Lease, “CPI” means The Consumer Price Index for All Urban Consumers (CPI-U) for the U.S. City Average for All Items, as published by the Bureau of Labor Statistics of the U.S. Department of Labor (or if the publication of such Consumer Price Index is discontinued, a comparable index similar in nature to the discontinued index which clearly reflects that diminution (or increase) in the real value of the purchasing power of the U.S. dollar reported for the calendar year in question).
Notwithstanding the provisions of this Third Amendment, if DMC exercises the option provided to it in the Third Amendment to License Agreement to terminate early the License Agreement effective March 31, 2027, this Third Amendment will also terminate as of that date conditioned upon payment to SMI by DMC of 50% of the amount, including the CPI adjustment, paid by DMC to SMI for the fiscal year ending March 31, 2027.
CPI Adjustment, or Consumer Price Index (CPI) Adjustment, refers to the process of modifying the value of a financial obligation, benefit, or contract term in line with changes in the Consumer Price Index. The CPI is a measure that examines the average change over time in the prices paid by consumers for a market basket of goods and services. The goal of CPI adjustments is to maintain the real value of money over time, combating the effects of inflation.
CPI Adjustments are typically used when:
When drafting a CPI Adjustment clause, it’s important to clearly specify the method and timing of adjustments. Here’s a basic structure you could use:
CPI Adjustment Clause Example:
The [Payment/Salary/Rent] shall be subject to adjustment on an annual basis in accordance with changes in the Consumer Price Index (CPI) as published by [relevant authority, e.g., United States Bureau of Labor Statistics]. This adjustment shall be calculated using the CPI for [specify month or period] as the base reference. If the CPI for the preceding 12 months shows an increase, the [Payment/Salary/Rent] shall be increased by the percentage change in the CPI rounded to the nearest [insert rounding method, e.g., nearest whole number].
Modify the terms within the brackets to reflect the specifics of the agreement in question.
CPI Adjustment clauses are commonly found in:
Dive deeper into the world of clauses and learn more about these other clauses that are used in real contracts.
A CPI (Consumer Price Index) escalation clause allows for the adjustment of payments or costs in a contract based on changes in the Consumer Price Index, reflecting inflation or deflation trends. It ensures that the purchasing power of the agreed payments remains stable over the term of the contract by aligning them with current economic conditions.
A cross default clause is a provision in a loan or credit agreement that triggers a default if the borrower defaults on another obligation, such as a different loan or financial agreement. This clause aims to protect lenders by ensuring they can take action if the borrower is experiencing broader financial difficulties.
A cross indemnity clause is a contractual agreement where each party agrees to indemnify, or compensate, the other for specified types of losses or damages arising from their own actions or negligence. This mutual arrangement ensures that each party bears responsibility for risks or liabilities that stem from their conduct, rather than shifting the burden onto the other party.
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