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EXHIBIT 10.63
TENANT IMPROVEMENT AGREEMENT
This TENANT IMPROVEMENT AGREEMENT (this "Agreement") is being entered
into as of August 12, 1999 by and between 0000 XXXXXX XXXXXX INVESTORS, LLC, a
California limited liability company ("Landlord"), and XXXXXXXX-SONOMA, INC., a
California corporation ("Tenant"), in connection with the execution of the
Industrial Lease between Landlord and Tenant dated of even date herewith (the
"Lease"), who hereby agree as follows:
1. GENERAL.
A. The purpose of this Agreement is to set forth the terms and
conditions relating to the construction of the interior improvements in the
Lease Premises (the "Tenant Improvements"), in particular to specify who will be
responsible for the construction of the Tenant Improvements, who will pay for
the construction of the Tenant Improvements, and the time schedule for
completion of the construction of the Tenant Improvements.
B. Any terms not otherwise defined in this Agreement shall have the same
meaning given to them in the Lease.
C. In the event of any conflicts between the provisions of the Lease and
of this Agreement, the provisions of this Agreement shall control.
2. TENANT IMPROVEMENTS.
Landlord shall select and engage a contractor ("Contractor") to construct
the Tenant Improvements in accordance with approved Plans (as described below).
Landlord shall exercise commercially reasonable efforts to construct the Tenant
Improvements within the Premises by January 17, 2000, as may be extended by any
Tenant Delays (as defined below); provided, however, that Landlord shall not be
liable to Tenant for any delay in completion of the Tenant Improvements. The
Tenant Improvements (including the payment of all permits and other fees
associated therewith) shall be performed at Tenant's cost, subject to the
Landlord's contribution of the Tenant Improvement Allowance (as defined below).
Landlord represents and warrants to Tenant that the Base Building
Improvements will be done in a good and workmanlike manner using materials of
good quality.
3. PLANS AND BUDGET.
A. No later than September 15, 1999, Tenant shall provide Landlord with
the program document and schematic design for the Tenant Improvements. On the
basis of this information, Landlord shall engage MBH Architects ("Architect") to
prepare plans and specifications for the Tenant Improvements (the "Plans"). The
Plans shall be prepared in compliance with all applicable local, state and
federal laws and regulations. Within five (5) days of receipt of the program
document and schematic design from Tenant, Landlord shall furnish
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the initial draft of the Plans for the Tenant Improvements to Tenant for
Tenant's review and approval, which Tenant shall not unreasonably withhold or
delay, Tenant shall review and approve (or provide written comment regarding)
such Plans within three (3) business days after receipt thereof. Tenant's
failure to deliver the program document and schematic design, or detailed
written comments on the draft Plans, within the time periods specified herein
shall be deemed to be a "Tenant Delay" for purposes of this Agreement. In
addition, any changes or modifications to the Plans requested by Tenant which
delay the completion of the Tenant improvements shall be deemed to be a "Tenant
Delay" for purposes of this Agreement, unless Tenant can demonstrate that the
Plans prepared by Landlord were materially inconsistent with the program
document and schematic design provided to Landlord by Tenant. Landlord shall
construct the Tenant Improvements in compliance with all applicable local, state
and federal laws and regulations.
B. The Architect shall prepare working drawings on the basis of the
Plans, which shall be provided to the Contractor for preparation of a
construction budget (the "Budget"). The Architect shall be paid on a base
contract of $210,000 plus reimbursable expenses at cost plus fifteen percent
(15%). The Budget shall include five percent (5%) for "overhead and profit" and
seven percent (7%) for "general conditions," which amounts shall constitute the
entire Contractor's fee to be charged against the Budget. The Contractor shall
solicit bids from three (3) subcontractors whenever possible for each trade or
item in connection with construction of the Tenant Improvements, shall select
the lowest bidder (provided that such bidder shall be able to perform the work
on schedule) and shall provide such bids to Landlord when submitting invoices
for payment.
4. TENANT IMPROVEMENT ALLOWANCE.
Landlord shall contribute an amount up to Twenty Dollars ($20) per
rentable square foot of the Premises ("Tenant Improvement Allowance") toward the
costs of the Tenant Improvements. Landlord shall have no obligation to pay for
costs of the Tenant Improvements in excess of the Tenant Improvement Allowance.
Upon completion of the Budget, Landlord shall submit the Budget to Tenant for
Tenant's review and approval. Tenant shall review and approve (or provide
written comment regarding) the Budget within three (3) business days after
receipt of the Budget. Tenant's failure to approve or provide detailed written
comments on the Budget within the time period specified shall be deemed to be a
"Tenant Delay" for purposes of this Agreement. Tenant shall pay the difference
between (x) the total amount shown on the Budget (the "Total Budget Amount") and
(y) the Tenant Improvement Allowance, which difference is referred to herein as
the "Over-Allowance Amount," plus any additional costs incurred as a result of
any Change Orders, as defined below.
Within ten (10) days after the end of each month during which
construction on the Tenant Improvements occurs, Landlord shall provide to Tenant
the following: (1) a statement of the costs incurred during the preceding month
for the construction of the Tenant Improvements, dividing those costs into two
categories: costs included in the original Budget ("Monthly Budget Amount") and
costs incurred as a result of any Change Orders ("Change Order Amounts"), (2) a
certification by the Architect that the work covered by such statement has been
completed, and (3) mechanics' lien releases from the Contractor and
subcontractors for the work covered by
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such statement. Within ten (10) days of its receipt of each such statement,
Tenant shall pay to Landlord: (x) Tenant's Pro Rata Share (as defined below) of
the Monthly Budget Amount shown on each such statement, plus (y) any Change
Order Amounts. "Tenant's Pro Rata Share" shall be the following ratio:
Over-Allowance Amount
Total Budget Amount
For purposes of determining this ratio during the course of construction, the
Tenant Improvement Allowance shall be calculated assuming that the area of the
Premises is the number of rentable square feet shown on the Plans. If, upon
completion of the Tenant Improvements, the final number of rentable square feet
is a different amount, the parties shall recalculate the Tenant Improvement
Allowance based on the actual number of rentable square feet in the Premises,
recalculate the Tenant's Pro Rata Share accordingly, and Tenant shall be
entitled to a credit against Base Rent for any excess Over-Allowance Amount
previously paid to Landlord and Tenant shall be obligated to pay to Landlord any
underpayment of the Over-Allowance Amount within ten (10) days of receipt of
Landlord's statement therefor.
If, upon completion of the Tenant Improvements, the cost of the Tenant
Improvements is, less than the Budget, the Tenant's Pro Rata Share shall be
recomputed based on the actual total cost of the Tenant Improvements and Tenant
shall be entitled to a credit against Base Rent for any excess Over-Allowance
Amount previously paid to Landlord.
5. CHANGE ORDERS
If, after Tenant's approval of the Plans, Tenant requires any revisions,
changes, or substitutions to the Plans or the Tenant Improvements (individually
or collectively, "Change Orders"), Tenant shall deliver plans and specifications
for such Change Orders to Landlord for approval. If Landlord does not approve of
the plans for Change Orders, Landlord shall notify Tenant of the revisions
required. Tenant shall deliver the revised plans and specifications to Landlord
within five (5) business days of Landlord's notice or Tenant shall be deemed to
have abandoned its request for such Change Orders. Any additional costs which
arise in connection with such Change Orders (including all costs associated with
the review, preparation and revision of plans and specifications, and the
construction of all Change Orders) shall be paid by Tenant to Landlord as an
addition to the Over-Allowance Amount.
6. SUBSTANTIAL COMPLETION.
As used herein and in the Lease, the term "Substantial Completion of the
Tenant Improvements" shall mean the date on which the Tenant Improvements are
sufficiently complete in accordance with the approved Plans so that (i) the San
Francisco Department of Building Inspection permits occupancy of the Premises,
and (ii) Tenant may reasonably commence using the Premises for the uses
permitted under the Lease. Tenant agrees and acknowledges that the Substantial
Completion of the Tenant Improvements does not require (i) the completion of the
freight elevator work or (ii) completion of all punch list items noted by Tenant
so long as such punch list items do not materially interfere with Tenant's use
and occupancy of the Premises.
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Tenant shall notify Landlord of all punch list items within thirty (30) days of
Substantial Completion of the Tenant Improvements. Landlord shall complete the
repair of any punch list items within thirty (30) days of the Commencement Date,
provided that if the nature of such repairs is such that more than thirty (30)
days are required to complete such repairs, then Landlord shall commence such
repairs within the thirty (30) day period and thereafter diligently prosecute
such repairs to completion.
7. TENANT DELAYS.
For purposes of this Agreement and the Lease, the following events shall
constitute delays caused by Tenant (a "Tenant Delay"):
A. Tenant's request for Change Orders whether or not any such Change
Orders are actually performed; or
B. Tenant's requirements for materials, components, finishes or
improvements which are not available in a commercially reasonable time given the
anticipated date of Substantial Completion of the Tenant Improvements; or
C. Tenant's delay in reviewing, revising or approving plans and
specifications beyond the periods set forth in this Agreement; or
D. Tenant's delay in providing information critical to the normal
progression of the Tenant Improvements. Tenant shall provide such information as
soon as reasonably possible, but in no event longer than the time period
specified herein, or if no time period is specified, three (3) business days
after receipt of such request for information from the Landlord; or
E. Tenant's delay in making Over-Allowance or Change Order payments to
Landlord; or
F. Tenant's interference with construction activities during Tenant's
early occupancy of the Premises.
If any of the foregoing Tenant Delays occur, then Landlord shall cause
Landlord's Architect to certify the date on which the Tenant Improvements would
have been Substantially Completed but for such Tenant Delay. A Tenant Delay, in
and of itself, is not to be construed as default under this Agreement or a
breach of the Lease; provided, however, that Tenant's delay in making a payment
within the time period specified in paragraph 4 of this Agreement will
constitute a breach of the Lease which, after notice by Landlord with Tenant's
rights to cure under Article 16 of the Lease, shall entitle Landlord to exercise
all remedies set forth in the Lease.
8. DEFAULT.
Any default by either Landlord or Tenant under the terms of this
Agreement shall constitute a default under the Lease to which this Agreement is
attached, and shall entitle
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Landlord and Tenant to exercise all remedies set forth in the Lease. Landlord
and Tenant shall each have any and all rights to cure their defaults pursuant
to the provisions of the Lease.
IN WITNESS WHEREOF, the parties have executed this Tenant Improvement
Agreement as of the date first written above.
LANDLORD: TENANT:
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0000 XXXXXX XXXXXX INVESTORS, LLC, XXXXXXXX-SONOMA, INC.,
a California limited liability company a California corporation
By: Mariposa Management Company, Inc.,
a California corporation, its manager
By: [SIG] By: [SIG]
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Its: Chief Executive Officer Its:
and Vice President
