2014-08-26 SECOND AMENDMENT -TI LEASE L7367 - FINAL.DOC

SECOND AMENDMENT TO LEASE
Lease No. L-7367
C-44-05-014-0-01
THIS SECOND AMENDMENT TO LEASE (the “Second Amendment”), dated for
reference purposes as of _______________________, 2014, is by and between 501 NORTH 44TH
STREET, LLC, an Arizona limited liability company as successor in interest to NORTH 44TH
STREET TRUST, (“Landlord”) and MARICOPA COUNTY, a political subdivision of the state of
Arizona (“Tenant”).
R E C I T A L S
WHEREAS, Landlord and Tenant entered into that certain Office Building Lease L-7367
dated as of February 14, 2005, and as amended under the First Amendment to Lease dated March
17, 2010, (together the “Lease”); and
WHEREAS, the parties desire to execute this Second Amendment in order to, among other
things, memorialize the reduction in square footage occupied in the Premises, identify Landlord
provided tenant improvements, modify parking rights, reset the Base Year, extend the Term of the
Lease, and establish a new Fixed Rent schedule.
NOW, THEREFORE, in consideration of the mutual covenants hereinafter set forth,
Landlord and Tenant agree as follows:
1. Incorporation of Recitals/Capitalized Terms. The Recitals set forth above are
deemed to be true and accurate in all respects and are hereby incorporated into this Second
Amendment by this reference. Capitalized terms used in this Second Amendment shall have the
same meanings as ascribed to them as in the Lease unless otherwise expressly defined in this
Second Amendment. In the event of any conflict between the terms of the Lease and the terms of
this Second Amendment, the terms of this Second Amendment shall govern and control.
2. Effective Date. Unless otherwise specifically set forth in this Second Amendment,
the changes to the Lease set forth herein will be effective as of October 15, 2014 (the “Effective
Date”). Tenant shall vacate a portion of the premises located on the first floor of the Office
Building currently known as the ‘Suite 100’ representing 6,295 rentable square feet no later than
October 15, 2014.
3. Premises. As of the Effective Date, Article 1.14 of the Lease is deemed deleted and
replaced by the following: “Premises” means that certain office space located on the land identified
on Exhibit “A” attached hereto, consisting of approximately 28,902 Rentable Square Feet within a
portion of first floor space at the Office Building and including Suite 200 on the second floor of the
Office Building.
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4. Term. The term of the Lease is hereby extended through September 30, 2020,
unless sooner terminated as otherwise provided in the Lease (the “Extended Term”). This Second
Amendment and the Lease are subject to the provisions of ARS §38-511.
5. Fixed Rent. The Fixed Rent due from Tenant shall be as follows:
ANNUAL FIXED MONTHLY FIXED
PERIOD
RENT/RSF/Year* RENT*
October 15, 2014 – September 30, 2015 $19.00 $45,761.50
October 1, 2015 – September 30, 2016 $19.75 $47,567.88
October 1, 2015 – September 30, 2017 $20.50 $49,374.25
October 1, 2017 – September 30, 2018 $21.25 $51,180.63
October 1, 2018 – September 30, 2019 $22.00 $52,987.00
October 1, 2019 – September 30, 2020 $22.75 $54,793.38
*plus applicable sales and transaction privilege taxes, payable by Tenant.
6. Base Year. As of the Effective Date, the Base Year (as defined in Section 4.1 of the
Lease) shall be 2014.
7. Tenant’s Share. As of the Effective Date, Tenant’s Share (as defined in Section
1.21 of the Lease) will be adjusted to reflect the reduced Rentable Area of the Premises, as
compared to the Rentable Area of the Office Building.
8. Operating Expenses. Notwithstanding anything to the contrary set forth in the
Lease, Tenant’s Share of “Controllable Operating Expenses” (as said term is defined below) for
each calendar year during the Extended Term shall not increase by more than three percent (3%)
over Tenant's Share of Controllable Operating Expenses for the previous calendar year. For 2015,
Tenant’s Share Controllable Operating Expenses shall be compared to what Tenant’s Share of
Controllable Operating Expenses would have been for 2014. Therefore, Tenant’s Share of
Controllable Operating Expenses for any calendar year after 2014 shall not equal more than one
hundred three percent (103%) of the amount due from Tenant for Controllable Operating Expenses
for the prior calendar year. “Controllable Operating Expenses” are defined as all Operating
Expenses except Real Estate Taxes, utility charges and costs related to insurance. “Non-
Controllable Operating Expenses” are all Operating Expenses other than Controllable Operating
Expenses. There is no cap on the rent adjustment due from Tenant for Non-Controllable Operating
Expenses.
9. Operating Expenses Credit. Landlord will provide Tenant with a monthly One
Hundred Fifty Dollar ($150.00) credit (the “HVAC Allowance”) towards the costs associated with
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providing HVAC services to the Tenant’s server room. The HVAC Allowance will not carry-
forward from month to month, nor will Tenant be entitled to any reimbursement or credit against
other charges due under the Lease should the HVAC Allowance not be used in any particular
month(s). The after-hours charge to Tenant for the services described in Section 4.8(e) of the Lease
will be at Landlord’s actual cost plus reasonable management fees, not to exceed Eight Dollars
($8.00) per zone, per hour.
10. Option to Extend. Section 34.26 of the Lease is hereby deleted and replaced by the
following: “Provided the Lease is in full force and effect and Tenant is not in default under any of
the other terms and conditions of the Lease at the time of notification or commencement, Tenant
has two (2) successive options to extend the Term of this Lease for a term of five (5) years each, for
the portion of the Premises being leased by Tenant as of the date the extended Term is to
commence, on the same terms and conditions set forth in the Lease, except as modified by the
terms, covenants and conditions as set forth below:
10.1 Exercise of Option. If Tenant elects to exercise said option, then Tenant
shall provide Landlord with written notice no earlier than the date which is three hundred sixty
(360) days prior to the expiration of the then current Lease Term but no later than the date which is
two hundred seventy (270) days prior to the expiration of the then current Lease Term. If Tenant
fails to provide such notice, Tenant shall have no further or additional right to extend the Lease
Term.
10.2 Fixed Rent. The Fixed Rent in effect at the expiration of the then current
Lease Term shall be increased to reflect ninety-five percent (95%) of the current fair market rental
for comparable space in the Office Building and in other similar buildings in the same rental market
as of the date the extended Lease Term is to commence, taking into account the specific provisions
of the Lease which will remain constant. However, in no event will the Fixed Rent for any
extension period be less than the Fixed Rent in the immediately preceding period unless the parties
otherwise agree in writing. Landlord shall advise Tenant of the new Fixed Rent for the Premises no
later than twenty (20) days after receipt of Tenant's written request therefor. Said request shall be
made no earlier than thirty (30) days prior to the first date on which Tenant may exercise its option
under this Paragraph.
10.3 Non-Transferability of Option. The options granted Tenant herein are not
transferable; the parties hereto acknowledge and agree that they intend that the aforesaid options to
extend the Lease Term to be “personal” to Tenant as set forth above and that in no event will any
assignee or sublessee have any rights to exercise the aforesaid options to extend.
10.4 Use of Options. As each extension option provided for above is exercised,
the number of extension options remaining to be exercised is reduced by one and upon exercise of
the last remaining extension option Tenant shall have no further right to extend the Lease Term.
11. Right of First Refusal. As of the Effective Date, Section 34.19 of the Lease is
hereby deleted and replaced by the following: “Provided Tenant is not then in default under the
terms, covenants and conditions of the Lease, Tenant shall have the right to lease any space in the
Office Building that shares a common wall (but not floor or ceiling) with the Premises at such time
as Landlord receives a bona-fide offer from a third party to lease the Expansion Premises which
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Landlord is prepared to accept (the "Offer"), although said Offer does not have to be in the form of
a signed letter of intent. In such a case, Landlord shall give written notice to Tenant of the Offer,
and Tenant shall have a period of 5 (5) business days from the date of the letter in which to exercise
Tenant's right to lease the Expansion Premises, failing which Landlord may lease the Expansion
Premises to the third party on terms that are substantially as set forth in the Offer. In the event such
third party does not lease the Expansion Premises on terms substantially as per the Offer, Landlord
shall be obligated to follow the foregoing procedure for any subsequent Offer which it receives. If
Tenant exercises its option to include the Expansion Premises as part of the Premises, then effective
on the delivery date specified in the Offer, the Expansion Space shall automatically be included in
the Premises and shall be subject to all the terms and conditions of the Lease, except as set forth in
the Offer and as follows:
11.1. Tenant’s Share. Tenant's Share shall be recalculated, using the total square
footage of the Premises, as increased by the Expansion Premises.
11.2 Condition of Expansion Premises. Except as set forth in the Offer, the
Expansion Premises shall be leased on an "as is" basis and Landlord shall have no obligation to
improve the Expansion Premises or grant Tenant any improvement allowance thereon.
11.3 Lease Amendment. If requested by Landlord, Tenant shall, prior to the
beginning of the term for the Expansion Premises, execute an amendment to the Lease confirming
the inclusion of the Expansion Premises, the Fixed Rent for the Expansion Premises, and such other
terms as Landlord may reasonably require.
Notwithstanding anything to the contrary set forth hereinabove, should Tenant exercise its
right to lease all or part of the Expansion Premises prior to September 1, 2014, then the terms of
this Second Amendment (rather than the terms of the Offer) will govern the inclusion of the
Expansion Premises as a part of the Premises, except that Tenant will take the Expansion Premises
in its then current condition, subject to Landlord’s obligation to clean the carpets and paint.
12. (This section intentional deleted.)
13 Notices. Section 34.1 of the Lease is hereby modified to provide that Notices shall
be addressed as follows:
Notice to Landlord: 501 N. 44 Street, LLC
c/o ACM
2122 E Highland, Suite 450
Phoenix, AZ 85016
Attn: Property Manager
Notices to Tenant: Maricopa County Finance Department
Attn: Real Estate Manager
301 W. Jefferson, Suite 960
Phoenix, AZ 85003
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Invoices to Tenant: Maricopa County Planning and Development Department
Attn: Account Payable
501 N. 44th Street, Suite 200
Phoenix, AZ 85008
14. Condition of Premises. Tenant accepts the Premises in its current “AS IS”
condition, except that Landlord will, at Landlord’s sole cost and expense, create a corridor for
access to the Tenant’s first floor conference rooms as such corridor is depicted in on Exhibit “B”.
Tenant acknowledges that neither Landlord nor any of its agents, employees or representatives has
made any warranty or representation as to the condition of the Premises or its continued suitability
for Tenant’s purposes.
15. Parking. As of the Effective Date, the unreserved parking spaces as allocated under
Section 5.1 of the Lease is reduced by 25 parking spaces based upon the reduced area of the
Premises. The Tenant shall continue to have the right to twenty (20) designated reserved parking
spaces as those Tenant reserved parking spaces have historically been designated on the second
floor of the parking garage.
16. Subordination, Non-Disturbance and Attornment. The parties agree to execute a
Subordination, Non-Disturbance and Attornment Agreement (the “SNDA”) in a form reasonably
satisfactory to both. Landlord will use reasonable efforts to cause its lender to also execute the
SNDA.
17. Surrender Obligations. Notwithstanding any language to the contrary in Article 19
of the Lease, Tenant has no restoration responsibilities upon the expiration or earlier termination of
the Lease. All other responsibilities of Tenant regarding the condition of the Premises upon the
expiration or earlier termination of the Lease remain in full force and effect.
18. Brokers. The parties recognize as the brokers who procured this Second
Amendment the following firms: Colliers International (Keith Lambeth) as Landlord’s broker.
Landlord is solely responsible for the payment of any brokerage commissions to said broker. If
Tenant has dealt with any other person or real estate salesperson or broker in regard to this
transaction, Tenant shall be solely responsible for the payment of any fee or commission due to
said person or entity and Tenant agrees to indemnify, defend and hold the Landlord harmless for,
from and against all liabilities, including attorneys’ fees, incurred in connection therewith.
19. Existing Claims. Tenant acknowledges that there are no existing claims or causes
of action against Landlord arising out of the Lease, either currently or which would exist with the
giving of notice or with the passage of time, nor are there any existing defenses which Tenant has
against the enforcement of the Lease by Landlord.
20. Incorporation of Prior Agreements. This Second Amendment contains the entire
understanding of the parties hereto with respect to the subject matter hereof, and no prior or other
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written or oral agreement or undertaking pertaining to any such matter shall be effective for any
purpose.
21. Modification of Amendment. This Second Amendment may not be amended or
modified, nor may any right or obligation hereunder be waived orally, and no such amendment or
modification shall be effective for any purpose unless it is in writing and signed by the party
against whom enforcement thereof is sought.
22. Interpretation. This Second Amendment shall be construed reasonably to carry out
its intent without presumption against or in favor of either party. The parties acknowledge that
both parties have caused this Second Amendment to be reviewed by legal counsel of their choice.
No negotiations concerning or modifications made to prior drafts of this Second Amendment shall
be construed in any manner to limit, reduce or impair the rights, remedies or obligations of the
parties under this Second Amendment or to restrict or expand the meaning of any provisions of this
Second Amendment. If any provision hereof shall be declared invalid by any court or in any
administrative proceedings, then the provisions of this Second Amendment shall be construed in
such manner so as to preserve the validity hereof and the substance of the transactions herein
contemplated to the extent possible. The Section headings are provided for purposes of
convenience of reference only and are not intended to limit, define the scope of or aid in
interpretation of any of the provisions hereof.
23. Full Force and Effect; Counterparts. The Lease shall remain in full force and
effect in accordance with its original terms and provisions, except as expressly modified by the
terms of this Second Amendment. This Second Amendment shall be governed by Arizona law and
shall be binding on the parties hereto and their respective successors and assigns. This Second
Amendment may be executed by the parties hereto in one or more counterparts. All counterparts
shall be valid and binding on the party or parties executing them and all counterparts shall
constitute one and the same document for all purposes. Each signatory to this Second Amendment
represents and warrants to the other party that this Second Amendment has been duly authorized,
executed and delivered by or on behalf of the party for which he/she is signing.
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SIGNATURES APPEAR ON THE FOLLOWING PAGE
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Lease L-7367
C-44-05-014-0-01
IN WITNESS WHEREOF, the parties have executed this Second Amendment to the
Lease to be effective as of the date set forth above.
LANDLORD: TENANT:
501 NORTH 44TH ST., LLC, an Arizona MARICOPA COUNTY BOARD OF
limited liability company SUPERVISORS
By: ___________________________________ By: ___________________________________
Printed Name: __________________________ Printed Name: __________________________
Title: __________________________________ Title: Chairman of the Board
Date: __________________________________ Date: __________________________________
ATTEST:
By: ___________________________________
Printed Name: __________________________
Title: Clerk of the Board of Supervisors
APPROVED AS TO FORM:
By: ___________________________________
Printed Name: __________________________
Title: Deputy County Attorney
Date: _________________
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EXHIBIT “A”
LEGAL DESCRIPTION
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