Document:

exv10w20

 

Exhibit 10.20

AGREEMENT

     THIS AGREEMENT, made and entered into as of the    day of    ,
2004 (“Agreement”), by and between MOBILE MINI, INC. a Delaware corporation
(the “Company”), and (“Indemnitee”):

RECITALS

     WHEREAS, highly competent persons are becoming more reluctant to serve
publicly-held corporations as directors or in other capacities unless they are
provided with adequate protection through insurance and adequate
indemnification against inordinate risks of claims and actions against them
arising out of their service to and activities on behalf of the corporation;

     WHEREAS, current uncertainties associated with obtaining adequate
insurance and the uncertainties relating to indemnification have increased the
difficulty of attracting and retaining such persons;

     WHEREAS, the Board of Directors of the Company (the “Board”) has
determined that the difficulties of attracting and retaining such persons is
detrimental to the best interests of the Company and the Company’s
stockholders, and that the Company should act to assure such persons that there
will be increased certainty of such protection in the future;

     WHEREAS, it is reasonable, prudent and necessary for the Company
contractually to obligate itself to indemnify such persons to the fullest
extent permitted by applicable law so that they will serve or continue to serve
the Company free from undue concern that they will not be so indemnified; and

     WHEREAS, Indemnitee is willing to serve and to take on additional service
for or on behalf of the Company on the condition that he or she be so
indemnified. Use of the masculine pronoun hereinafter shall be deemed to
include use of the feminine pronoun where appropriate. All capitalized terms
shall have the meaning ascribed to them in Section 17 herein.

     NOW, THEREFORE, in consideration of the premises and the covenants
contained herein, the Company and Indemnitee do hereby covenant and agree as
follows:

     Section 1. Services By Indemnitee. Indemnitee agrees to serve or continue
to serve the Company in his Corporate Status. Indemnitee may at any time and
for any reason resign from such position (subject to any other contractual
obligation or any obligation imposed by operation of law), in which event the
Company shall have no obligation under this Agreement to continue Indemnitee in
any such position.

     Section 2. Indemnification — General. The Company shall indemnify, and
advance Expenses to Indemnitee as provided in this Agreement and to the fullest
extent permitted by applicable law in effect on the date hereof and to such
greater extent as applicable law may thereafter from time to time permit. The
rights of Indemnitee

 

 

provided under the preceding sentence shall include, but shall not be
limited to, the rights set forth in the other Sections of this Agreement.

     Section 3. Proceedings Other Than Proceedings by or in the Right of the
Company. Indemnitee shall be entitled to the rights of indemnification
provided in this Section 3 if, by reason of his Corporate Status, he is, or is
threatened to be made, a party to any threatened, pending, or completed
Proceeding, other than a Proceeding by or in the right of the Company.
Pursuant to this Section 3, Indemnitee shall be indemnified against Expenses,
judgments, penalties, fines and amounts paid in settlement actually and
reasonably incurred by him or on his behalf in connection with such Proceeding
or any claim, issue or matter therein, if he acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best interests of
the Company, and, with respect to any criminal Proceeding, had no reasonable
cause to believe his conduct was unlawful.

     Section 4. Proceedings by or in the Right of the Company. Indemnitee
shall be entitled to the rights of indemnification provided in this Section 4
if, by reason of his Corporate Status, he is, or is threatened to be made, a
party to any threatened, pending or completed Proceeding brought by or in the
right of the Company to procure a judgment in its favor. Pursuant to this
Section, Indemnitee shall be indemnified against Expenses actually and
reasonably incurred by him or on his behalf in connection with such Proceeding
if he acted in good faith and in a manner he reasonably believed to be in or
not opposed to the best interests of the Company. Notwithstanding the
foregoing, no indemnification against such Expenses shall be made in respect of
any claim, issue or matter in such Proceeding as to which Indemnitee shall have
been adjudged to be liable to the Company if applicable law prohibits such
indemnification; provided, however, that, if applicable law so permits,
indemnification against Expenses shall nevertheless be made by the Company in
such event if and only to the extent that the Court of Chancery of the State of
Delaware, or the Court in which such Proceeding shall have been brought or is
pending, shall determine.

     Section 5. Indemnification for Expenses of a Party Who is Wholly or Partly
Successful. Notwithstanding any other provision of this Agreement, to the
extent that Indemnitee is, by reason of his Corporate Status, a party to and is
successful, on the merits or otherwise, in any Proceeding, he shall be
indemnified against all Expenses actually and reasonably incurred by him or on
his behalf in connection therewith. If Indemnitee is not wholly successful in
such Proceeding but is successful, on the merits or otherwise, as to one or
more but less than all claims, issues or matters in such Proceeding, the
Company shall indemnify Indemnitee against all Expenses actually and reasonably
incurred by him or on his behalf in connection with each successfully resolved
claim, issue or matter. For purposes of this Section and without limitation,
the termination of any claim, issue or matter in such a Proceeding by
dismissal, with or without prejudice, shall be deemed to be a successful result
as to such claim, issue or matter.

     Section 6. Indemnification for Expenses of a Witness. Notwithstanding any
other provision of this Agreement, to the extent that Indemnitee is, by reason
of his Corporate Status, a witness in any Proceeding, he shall be indemnified
against all

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Expenses actually and reasonably incurred by him or on his behalf in
connection therewith.

     Section 7. Advancement of Expenses. The Company shall advance all
reasonable Expenses incurred by or on behalf of Indemnitee in connection with
any Proceeding within 20 days after the receipt by the Company of a statement
or statements from Indemnitee requesting such advance or advances from time to
time, whether prior to or after final disposition of such Proceeding. Such
statement or statements shall reasonably evidence the Expenses incurred by
Indemnitee and shall include or be preceded or accompanied by an undertaking by
or on behalf of Indemnitee to repay any Expenses advanced if it shall
ultimately be determined that Indemnitee is not entitled to be indemnified
against such Expenses.

     Section 8. Procedure for Determination of Entitlement to Indemnification.

     (a) To obtain indemnification under this Agreement, Indemnitee shall
submit to the Company a written request, including therein or therewith
such documentation and information as is reasonably available to
Indemnitee and is reasonably necessary to determine whether and to what
extent Indemnitee is entitled to indemnification. The Secretary of the
Company shall, promptly upon receipt of such a request for
indemnification, advise the Board of Directors in writing that Indemnitee
has requested indemnification.

     (b) Upon written request by Indemnitee for indemnification pursuant
to the first sentence of Section 8(a) hereof, a determination, if
required by applicable law, with respect to Indemnitee’s entitlement
thereto shall be made in the specific case: (i) if a Change in Control
shall have occurred, by Independent Counsel (unless Indemnitee shall
request that such determination be made by the Board of Directors or the
stockholders, in which case by the person or persons or in the manner
provided for in clauses (ii) or (iii) of this Section 8(b)) in a written
opinion to the Board of Directors, a copy of which shall be delivered to
Indemnitee; (ii) if a Change of Control shall not have occurred, (A) by
the Board of Directors by a majority vote of a quorum consisting of
Disinterested Directors (as hereinafter defined), or (B) if a quorum of
the Board of Directors consisting of Disinterested Directors is not
obtainable or, even if obtainable, such quorum of Disinterested Directors
so directs, by Independent Counsel in a written opinion to the Board of
Directors, a copy of which shall be delivered to Indemnitee or (C) by the
stockholders of the Company; or (iii) as provided in Section 9(b) of this
Agreement; and, if it is so determined that Indemnitee is entitled to
indemnification, payment to Indemnitee shall be made within 10 days after
such determination. Indemnitee shall cooperate with the person, persons
or entity making such determination with respect to Indemnitee’s
entitlement to indemnification, including providing to such person,
persons or entity upon reasonable advance request any documentation or
information which is not privileged or otherwise protected from
disclosure and which is reasonably available to Indemnitee and reasonably
necessary to such determination. Any costs or expenses (including
attorneys’ fees and disbursements) incurred by

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     Indemnitee in so cooperating with the person, persons or entity
making such determination shall be borne by the Company (irrespective of
the determination as to Indemnitee’s entitlement to indemnification) and
the Company hereby indemnifies and agrees to hold Indemnitee harmless
therefrom.

     (c) In the event the determination of entitlement to indemnification
is to be made by Independent Counsel pursuant to Section 8(b) hereof, the
Independent Counsel shall be selected as provided in this Section 8(c).
If a Change of Control shall not have occurred, the Independent Counsel
shall be selected by the Board of Directors, and the Company shall give
written notice to Indemnitee advising him of the identity of the
Independent Counsel so selected. If a Change of Control shall have
occurred, the Independent Counsel shall be selected by Indemnitee (unless
Indemnitee shall request that such selection be made by the Board of
Directors, in which event the preceding sentence shall apply), and
Indemnitee shall give written notice to the Company advising it of the
identity of the Independent Counsel so selected. In either event,
Indemnitee or the Company, as the case may be, may, within 7 days after
such written notice of selection shall have been given, deliver to the
Company or to Indemnitee, as the case may be, a written objection to such
selection. Such objection may be asserted only on the ground that the
Independent Counsel so selected does not meet the requirements of
“Independent Counsel” as defined in Section 17 of this Agreement, and the
objection shall set forth with particularity the factual basis of such
assertion. If such written objection is made, the Independent Counsel so
selected may not serve as Independent Counsel unless and until a court
has determined that such objection is without merit. If, within 20 days
after submission by Indemnitee of a written request for indemnification
pursuant to Section 8(a) hereof, no Independent Counsel shall have been
selected and not objected to, either the Company or Indemnitee may
petition the Court of Chancery of the State of Delaware or other court of
competent jurisdiction for resolution of any objection which shall have
been made by the Company or Indemnitee to the other’s selection of
Independent Counsel and/or for the appointment as Independent Counsel of
a person selected by the Court or by such other person as the Court shall
designate, and the person with respect to whom an objection is so
resolved or the person so appointed shall act as Independent Counsel
under Section 8(b) hereof. The Company shall pay any and all reasonable
fees and expenses of Independent Counsel incurred by such Independent
Counsel in connection with acting pursuant to Section 8(b) hereof, and
the Company shall pay all reasonable fees and expenses incident to the
procedures of this Section 8(c), regardless of the manner in which such
Independent Counsel was selected or appointed. Upon the due commencement
of any judicial proceeding or arbitration pursuant to Section 10(a)(iii)
of this Agreement, Independent Counsel shall be discharged and relieved
of any further responsibility in such capacity (subject to the applicable
standards of professional conduct then prevailing).

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     Section 9. Presumptions and Effect of Certain Proceedings.

     (a) If a Change of Control shall have occurred, in making a
determination with respect to entitlement to indemnification hereunder,
the person or persons or entity making such determination shall presume
that Indemnitee is entitled to indemnification under this Agreement if
Indemnitee has submitted a request for indemnification in accordance with
Section 8(a) of this Agreement, and the Company shall have the burden of
proof to overcome that presumption in connection with the making by any
person, persons or entity of any determination contrary to that
presumption.

     (b) If the person, persons or entity empowered or selected under
Section 8 of this Agreement to determine whether Indemnitee is entitled
to indemnification shall not have made a determination within 60 days
after receipt by the Company of the request therefor, the requisite
determination of entitlement to indemnification shall be deemed to have
been made and Indemnitee shall be entitled to such indemnification,
absent (i) a misstatement by Indemnitee of a material fact, or an
omission of a material fact necessary to make Indemnitee’s statement not
materially misleading, in connection with the request for
indemnification, or (ii) a prohibition of such indemnification under
applicable law; provided, however, that such 60-day period may be
extended for a reasonable time, not to exceed an additional 30 days, if
the person, persons or entity making the determination with respect to
entitlement to indemnification in good faith requires such additional
time for the obtaining or evaluating of documentation and/or information
relating thereto; and provided, further, that the foregoing provisions of
this Section 9(b) shall not apply (i) if the determination of entitlement
to indemnification is to be made by the stockholders pursuant to Section
8(b) of this Agreement and if (A) within 15 days after receipt by the
Company of the request for such determination the Board of Directors has
resolved to submit such determination to the stockholders for their
consideration at an annual meeting thereof to beheld within 75 days after
such receipt and such determination is made thereat, or (B) a special
meeting of stockholders is called within 15 days after such receipt for
the purpose of making such determination, such meeting is held for such
purpose within 60 days after having been so called and such determination
is made thereat, or (ii) if the determination of entitlement to
indemnification is to be made by Independent Counsel pursuant to Section
8(b) of this Agreement.

     (c) The termination of any Proceeding or of any claim, issue or
matter therein, by judgment, order, settlement or conviction, or upon a
plea of nolo contendere or its equivalent, shall not (except as otherwise
expressly provided in this Agreement) of itself adversely affect the
right of Indemnitee to indemnification or create a presumption that
Indemnitee did not act in good faith and in a manner which he reasonably
believed to be in or not opposed to the best

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interests of the Company or, with respect to any criminal
Proceeding, that Indemnitee had reasonable cause to believe that his
conduct was unlawful.

     Section 10. Remedies of Indemnitee.

     (a) In the event that (i) a determination is made pursuant to
Section 8 of this Agreement that Indemnitee is not entitled to
indemnification under this Agreement, (ii) advancement of Expenses is not
timely made pursuant to Section 7 of this Agreement, (iii) the
determination of entitlement to indemnification is to be made by
Independent Counsel pursuant to Section 8(b) of this Agreement and such
determination shall not have been made and delivered in a written opinion
within 90 days after receipt by the Company of the request for
indemnification, or (iv) payment of indemnification is not made pursuant
to Section 6 of this Agreement within 10 days after receipt by the
Company of a written request therefor, or (v) payment of indemnification
is not made within 10 days after a determination has been made that
Indemnitee is entitled to indemnification or such determination is deemed
to have been made pursuant to Section 8 or 9 of this Agreement,
Indemnitee shall be entitled to an adjudication in an appropriate court
of the State of Delaware, or in any other court of competent
jurisdiction, of his entitlement to such indemnification or advancement
of Expenses. Alternatively, Indemnitee, at his option, may seek an award
in arbitration to be conducted by a single arbitrator pursuant to the
rules of the American Arbitration Association. Indemnitee shall commence
such proceeding seeking an adjudication or an award in arbitration within
180 days following the date on which Indemnitee first has the right to
commence such proceeding pursuant to this Section 10(a). The Company
shall not oppose Indemnitee’s right to seek any such adjudication or
award in arbitration.

     (b) In the event that a determination shall have been made pursuant
to Section 8 of this Agreement that Indemnitee is not entitled to
indemnification, any judicial proceeding or arbitration commenced
pursuant to this Section 10 shall be conducted in all respects as a de
novo trial, or arbitration, on the merits and Indemnitee shall not be
prejudiced by reason of that adverse determination. If a Change of
Control shall have occurred, in any judicial proceeding or arbitration
commenced pursuant to this Section 10 the Company shall have the burden
of proving that Indemnitee is not entitled to indemnification or
advancement of Expenses, as the case may be.

     (c) If a determination shall have been made or deemed to have been
made pursuant to Section 8 or 9 of this Agreement that Indemnitee is
entitled to indemnification, the Company shall be bound by such
determination in any judicial proceeding or arbitration commenced
pursuant to this Section 10, absent (i) a misstatement by Indemnitee of a
material fact, or an omission of a material fact necessary to make
Indemnitee’s statement not materially misleading, in

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connection with the request for indemnification, or(ii) a
prohibition of such indemnification under applicable law.

     (d) The Company shall be precluded from asserting in any judicial
proceeding or arbitration commenced pursuant to this Section 10 that the
procedures and presumptions of this Agreement are not valid, binding and
enforceable and shall stipulate in any such court or before any such
arbitrator that the Company is bound by all the provisions of this
Agreement.

     (e) In the event that Indemnitee, pursuant to this Section 10, seeks
a judicial adjudication of or an award in arbitration to enforce his
rights under, or to recover damages for breach of, this Agreement,
Indemnitee shall be entitled to recover from the Company, and shall be
indemnified by the Company against, any and all expenses (of the types
described in the definition of Expenses in Section 17 of this Agreement)
actually and reasonably incurred by him in such judicial adjudication or
arbitration, but only if he prevails therein. If it shall be determined
in said judicial adjudication or arbitration that Indemnitee is entitled
to receive part but not all of the indemnification or advancement or
expenses sought, the expenses incurred by Indemnitee in connection with
such judicial adjudication or arbitration shall be appropriately
prorated.

     Section 11. Non-Exclusivity; Survival of Rights; Insurance; Subrogation.

     (a) The rights of indemnification and to receive advancement of
Expenses as provided by this Agreement shall not be deemed exclusive of
any other rights to which Indemnitee may at any time be entitled under
applicable law, the Certificate of Incorporation, the By-Laws, any
agreement, a vote of stockholders or a resolution of directors, or
otherwise. No amendment, alteration or termination of this Agreement or
any provision hereof shall be effective as to any Indemnitee with respect
to any action taken or omitted by such Indemnitee in his Corporate Status
prior to such amendment, alteration or termination.

     (b) To the extent that the Company maintains an insurance policy or
policies providing liability insurance for directors, officers,
employees, agents or fiduciaries of the Company or of any other
corporation, partnership, joint venture, trust, employee benefit plan or
other enterprise which such person serves at the request of the Company,
Indemnitee shall be covered by such policy or policies in accordance with
its or their terms to the maximum extent of the coverage available for
any such director, officer, employee or agent under such policy or
policies.

     (c) In the event of any payment under this Agreement, the Company
shall be subrogated to the extent of such payment to all of the rights of
recovery of Indemnitee, who shall execute all papers required and take
all action necessary to secure such rights, including execution of such
documents as are necessary to enable the Company to bring suit to enforce
such rights.

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     (d) The Company shall not be liable under this Agreement to make any
payment of amounts otherwise indemnifiable hereunder if and to the extent
that Indemnitee has otherwise actually received such payment under any
insurance policy, contract, agreement or otherwise.

     Section 12. Duration of Agreement. This Agreement shall continue until
and terminate upon the later of: (a) 10 years after the date that Indemnitee
shall have ceased to serve as a director, or (b) the final termination of all
pending Proceedings in respect of which Indemnitee is granted rights of
indemnification or advancement of Expenses hereunder and of any proceeding
commenced by Indemnitee pursuant to Section 10 of this Agreement relating
thereto. This Agreement shall be binding upon the Company and its successors
and assigns and shall inure to the benefit of Indemnitee and his heirs,
executors and administrators.

     Section 13. Severability. If any provision or provisions of this
Agreement shall be held to be invalid, illegal or unenforceable for any reason
whatsoever: (a) the validity, legality and enforceability of the remaining
provisions of this Agreement (including without limitation, each portion of any
Section of this Agreement containing any such provision held to be invalid,
illegal or unenforceable, that is not itself invalid, illegal or unenforceable)
shall not in any way be affected or impaired thereby; and (b) to the fullest
extent possible, the provisions of this Agreement (including, without
limitation, each portion of any Section of this Agreement containing any such
provision held to be invalid, illegal or unenforceable, that is not itself
invalid, illegal or unenforceable) shall be construed so as to give effect to
the intent manifested by the provision held invalid, illegal or unenforceable.

     Section 14. Exception to Right of Indemnification or Advancement of
Expenses. Notwithstanding any other provision of this Agreement, Indemnitee
shall not be entitled to indemnification or advancement of Expenses under this
Agreement with respect to any Proceeding, or any claim therein, brought or made
by him against the Company.

     Section 15. Identical Counterparts. This Agreement may be executed in one
or more counterparts, each of which shall for all purposes be deemed to be an
original but all of which together shall constitute one and the same Agreement.
Only one such counterpart signed by the party against whom enforceability is
sought needs to be produced to evidence the existence of this Agreement.

     Section 16. Headings. The headings of the paragraphs of this Agreement
are inserted for convenience only and shall not be deemed to constitute part of
this Agreement or to affect the construction thereof.

     Section 17. Definitions. For purposes of this Agreement:

     (a) “Change in Control” means a change in control of the Company
occurring after the Effective Date of a nature that would be required to
be reported under the Securities Exchange Act of 1934 (the “Act”),
whether or not

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the Company is then subject to such reporting requirement; provided,
however, that, without limitation, such a Change in Control shall be
deemed to have occurred if after the Effective Date (i) any “person” (as
such term is used in Sections 13(d) and 14(d) of the Act) is or becomes
the “beneficial owner” (as defined in Rule 13d-3 under the Act), directly
or indirectly, of securities of the Company representing 25% or more of
the combined voting power of the Company’s then outstanding securities
without the prior approval of at least two-thirds of the members of the
Board of Directors in office immediately prior to such person attaining
such percentage interest; (ii) the Company is a party to a merger,
consolidation, sale of assets or other reorganization, or a proxy
contest, as a consequence of which members of the Board of Directors in
office immediately prior to such transaction or event constitute less
than a majority of the Board thereafter; or (iii) during any period of
two consecutive years, individuals who at the beginning of such period
constituted the Board of Directors (including for this purpose any new
director whose election or nomination for election by the Company’s
stockholders was approved by a vote of at least two-thirds of the
directors then still in office who were directors at the beginning of
such period) cease for any reason to constitute at least a majority of
the Board of Directors.

     (b) “Corporate Status” describes the status of a person who is or
was a director, officer, employee, agent or fiduciary of the Company or
of any other corporation, partnership, joint venture, trust, employee
benefit plan or other enterprise which such person is or was serving at
the request of the Company.

     (c) “Disinterested Director” means a director of the Company who is
not and was not a party to the Proceeding in respect of which
indemnification is sought by Indemnitee.

     (d) “Effective Date” means    , 2004.

     (e) “Expenses” shall include all reasonable attorneys’ fees,
retainers, court costs, transcript costs, fees of experts, witness fees,
travel expenses, duplicating costs, printing and binding costs, telephone
charges, postage, delivery service fees, and all other disbursements or
expenses of the types customarily incurred in connection with
prosecuting, defending, preparing to prosecute or defend, investigating,
or being or preparing to be a witness in a Proceeding.

     (f) “Independent Counsel” means a law firm, or a member of a law
firm, that is experienced in matters of corporation law and neither
presently is, nor in the past five years has been, retained to represent:
(i) the Company or Indemnitee in any matter material to either such
party, or (ii) any other party to the Proceeding giving rise to a claim
for indemnification hereunder. Notwithstanding the foregoing, the term
“Independent Counsel” shall not include any person who, under the
applicable standards of professional conduct then prevailing, would have
a conflict of interest in representing either the Company or Indemnitee
in an action to determine Indemnitee’s rights under this Agreement.

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     (g) “Proceeding” includes any action, suit, arbitration, alternate
dispute resolution mechanism, investigation, administrative hearing or
any other proceeding whether civil, criminal, administrative or
investigative, except one initiated by an Indemnitee pursuant to Section
10 of this Agreement to enforce his rights under this Agreement.

     Section 18. Modification and Waiver. No supplement, modification or
amendment of this Agreement shall be binding unless executed in writing by both
of the parties hereto. No waiver of any of the provisions of this Agreement
shall be deemed or shall constitute a waiver of any other provisions hereof
(whether or not similar) nor shall such waiver constitute a continuing waiver.

     Section 19. Notice by Indemnitee. Indemnitee agrees promptly to notify
the Company in writing upon being served with any summons, citation, subpoena,
complaint, indictment, information or other document relating to any Proceeding
or matter which may be subject to indemnification or advancement of Expenses
covered hereunder.

     Section 20. Notices. All notices, requests, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given if (i) delivered by hand and receipted for by the party to whom said
notice or other communication shall have been directed, or (ii) mailed by
certified or registered mail with postage prepaid, on the third business day
after the date on which it is so mailed:

	 	 	 	 	 
	

	 	(a)
	 	If to Indemnitee, to:
	 
	 	 	 	 
	

	 	 	 	[Insert Name of Indemnitee]
	

	 	 	 	Mobile Mini, Inc.
	

	 	 	 	7420 S. Kyrene Road, Suite 101
	

	 	 	 	Tempe, Arizona 85283
	 
	 	 	 	 
	

	 	(b)
	 	If to the Company to:
	 
	 	 	 	 
	

	 	 	 	Mobile Mini, Inc.
	

	 	 	 	7420 S. Kyrene Road, Suite 101
	

	 	 	 	Tempe, Arizona 85283
	

	 	 	 	Attention: Corporate Secretary

or such other address as may have been furnished to Indemnitee by the Company
or to the Company by Indemnitee, as the case may be.

     Section 21. Governing Law. The parties agree that this Agreement shall be
governed by, and construed and enforced in accordance with, the laws of the
State of Delaware.

[Intentionally Left Blank]

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     IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.

	 	 	 
	ATTEST:

	 	MOBILE MINI INC.
	 
	 	 
	By: _________________________

	 	By: _________________________
	

	 	Name:
	

	 	Title:
	

	 	Address: Mobile Mini, Inc.
	

	 	      7420 S. Kyrene Road, Suite 101
	

	 	      Tempe, Arizona 85283
	 
	 	 
	

	 	[INSERT NAME OF INDEMNITEE]
	 
	 	 
	

	 	By: _________________________
	

	 	Name:
	

	 	Title:
	

	 	Address:

11exv10w21

 

EXHIBIT 10.21

FIRST AMENDED AND RESTATED

REAL PROPERTY SUBLEASE AGREEMENT

BY AND BETWEEN

THREE-FIVE SYSTEMS, INC.

AND

BRILLIAN CORPORATION

EFFECTIVE AS OF

JUNE 1, 2004

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 
	 	 	 	 	Page
	1.
	 	SUBLET PREMISES; USE	 	 	1	 
	2.
	 	TERM	 	 	2	 
	3.
	 	RENT	 	 	2	 
	4.
	 	FIXTURES AND EQUIPMENT	 	 	3	 
	5.
	 	CONSTRUCTION; ACCEPTANCE	 	 	3	 
	6.
	 	REPRESENTATIONS	 	 	3	 
	7.
	 	MASTER LEASE	 	 	4	 
	8.
	 	EVENTS OF DEFAULT	 	 	5	 
	9.
	 	REMEDIES OF TFS	 	 	5	 
	10.
	 	ACCESS TO SUBLET PREMISES	 	 	6	 
	11.
	 	WAIVERS BY BRILLIAN; HOLDOVER	 	 	6	 
	12.
	 	LATE PAYMENT	 	 	6	 
	13.
	 	INDEMNITY	 	 	6	 
	14.
	 	MASTER LEASE DEFAULTS	 	 	7	 
	15.
	 	RESTORATION	 	 	7	 
	16.
	 	NOTICES	 	 	7	 
	17.
	 	BRILLIAN'S INSURANCE	 	 	7	 
	18.
	 	ALTERATIONS	 	 	8	 
	19.
	 	CONDEMNATION	 	 	9	 
	20.
	 	ASSIGNMENT	 	 	9	 
	21.
	 	NO BROKER	 	 	10	 
	22.
	 	LIABILITY OF TFS	 	 	10	 
	23.
	 	EFFECT	 	 	11	 
	24.
	 	DAMAGE OR DESTRUCTION	 	 	11	 
	25.
	 	NOTICE	 	 	11	 
	26.
	 	RELATIONSHIP	 	 	11	 
	27.
	 	WAIVERS	 	 	11	 
	28.
	 	FORUM	 	 	11	 
	29.
	 	JOINT AND SEVERAL LIABILITY; AUTHORITY	 	 	11	 
	30.
	 	NO OPTION; CONSENT OF MASTER LANDLORD	 	 	12	 
	31.
	 	FORCE MAJEURE	 	 	12	 

i

 

TABLE OF CONTENTS

(continued)

	 	 	 	 	 	 	 
	 	 	 	 	Page
	32.
	 	WAIVER OF TRIAL BY JURY	 	 	12	 
	33.
	 	TFS’S PURCHASE OF BUILDING	 	 	12	 
	34.
	 	GROUND SUBLEASE	 	 	12	 

ii

 

EXHIBIT INDEX

	 	 	 	 	 
	Exhibit A – Copy of Master Lease 
	 	 	A-1	 
	Exhibit B – Copy of Ground Sublease 
	 	 	B-1	 
	Exhibit C – Sublet Premises and Common Areas 
	 	 	C-1	 
	Exhibit D – Building Services 
	 	 	D-1	 
	Exhibit E – MIS Services 
	 	 	E-1	 
	Exhibit F – Variable Services 
	 	 	F-1	 
	Exhibit G – Form of Master Landlord’s Consent 
	 	 	G-1	 
	Exhibit H – Form of Ground Lessor’s Consent 
	 	 	H-1	 

iii

 

FIRST AMENDED AND RESTATED

REAL PROPERTY SUBLEASE AGREEMENT

     This First Amended and Restated Real Property Sublease Agreement (this
“Sublease”) is entered into as of June 1, 2004, by and between Three-Five
Systems, Inc., a Delaware corporation, with offices at 1600 North Desert Drive,
Tempe, Arizona 85281, Tempe, Arizona (“TFS”), and Brillian Corporation, having
an address at 1600 North Desert Drive, Tempe, Arizona 85281 (“Brillian”).

RECITALS

     WHEREAS, pursuant to that certain Lease Agreement dated July 31, 1995 (as
amended from time to time, collectively, the “Master Lease”), by and between
The City of Tempe (“Master Landlord”), and TFS, as tenant, TFS leases that
certain building located at 1600 North Desert Drive, Tempe, Arizona 85281
(herein the “Premises or the “Building”), which is more particularly described
in the Master Lease;

     WHEREAS, a true and correct copy of the Master Lease is attached hereto as
Exhibit A and made a part hereof. All capitalized terms not herein defined
shall have the meanings given to them in the Master Lease;

     WHEREAS, pursuant to the Ground Sublease TFS subleases the Land from
Papago Park Center, Inc., an Arizona corporation (“Ground Lessor”); the Ground
Sublease is attached hereto as Exhibit B and made a part hereof; and

     WHEREAS, TFS desires to sublet to Brillian and Brillian desires to sublet
from TFS approximately 42,524 square feet of rentable floor area (the “Sublet
Premises”) of the Building, which Sublet Premises are indicated on Exhibit C
attached hereto and made a part hereof; and

     WHEREAS, TFS and Brillian entered into that certain Real Property Sublease
Agreement, dated September 1, 2003 (the “Real Property Sublease Agreement”).
This Sublease amends, restates, and supersedes the Real Property Sublease
Agreement as of the date hereof.

AGREEMENT

     NOW, THEREFORE, in consideration of the mutual promises, covenants, and
conditions hereinafter set forth, and intending to be legally bound hereby, it
is mutually agreed as follows:

     1. SUBLET PREMISES; USE.

          (a) TFS hereby subleases the Sublet Premises to Brillian and Brillian
hereby subleases the Sublet Premises from TFS, subject to the terms and
conditions hereof and the Master Lease. Brillian shall not use the Sublet
Premises for any illegal or improper purpose which shall constitute a nuisance
nor do or suffer anything to be done in or about the Sublet Premises which will
violate any term of the Master Lease, this Sublease, or any laws, rules,
regulations, or ordinances or increase the rate of fire or other insurance or
jeopardize the coverage of the same.
Brillian agrees to comply with all of Master Landlord’s rules and
regulations relating to the Sublet Premises or the building in which the Sublet
Premises is located.

 

 

          (b) In the event TFS fails to deliver to Brillian possession of the Sublet
Premises or obtain the consent of the Master Landlord, TFS shall not be liable
for any damages caused thereby, whether or not such failure is caused by the
negligence of TFS or otherwise. In addition, this Sublease shall not be void or
voidable if possession is tendered to Brillian within forty-five (45) days
after the Commencement Date (as hereinafter defined) and the consent of the
Master Landlord is obtained within such forty-five (45) day period. In such
event, the Commencement Date shall be the later of (i) the date such possession
of the Sublet Premises is so tendered, and (ii) the date TFS obtains the
consent of Master Landlord. In the event that such period elapses and TFS shall
not have tendered possession to Brillian and obtained the consent of the Master
Landlord, this Sublease shall be voidable at Brillian’s option upon written
notice to TFS, in which event TFS shall return the Security Deposit, if any,
and Brillian shall have no further rights or remedies hereunder. For purposes
of this Sublease, possession of the Sublet Premises shall be deemed tendered
upon TFS’s providing access to Brillian. Brillian’s failure to take possession
of the Sublet Premises for any reason when delivered by TFS shall not delay the
Commencement Date (as hereinafter defined).

          (c) Brillian shall also have the right to use in common with TFS (and such
other subtenants as from time to time may occupy the Building) the facilities
yard, parking areas, improvements (other than the Building) located from time
to time on the Land, and the common areas described on Exhibit C attached
hereto and made a part hereof (all of the foregoing in this Paragraph 1(c), the
“Common Areas”).

     2. TERM.

          (a) Subject to the terms of Paragraph l(b) above, the initial term of this
Sublease shall be for a period of two (2) years (the “Initial Sublease Term”)
and shall commence on the date of execution hereof by TFS (the “Commencement
Date”) and terminate on August 31, 2005. The Initial Sublease Term may be
extended for additional one year terms (each, a “Renewal Term”) pursuant to the
terms and provisions of Paragraph 2(b) below. The Initial Sublease Term,
together with any and all Renewal Terms, is hereinafter collectively referred
to as the “Sublease Term”.

          (b) Except as set forth in Paragraph 2(c) below, the Sublease Term shall
be automatically extended for successive Renewal Terms unless Brillian shall
give to TFS written notice of its election to terminate this Sublease at least
180 days prior to the beginning of the first Renewal Term or any then
applicable succeeding Renewal Term.

          (c) In the event that TFS desires to terminate this Sublease as of the
expiration of the Sublease Term, or during the Sublease Term, TFS shall give to
Brillian written notice of its election to terminate this Sublease at least 180
days prior to the date of such termination.

     3. RENT.

          (a) Base Rent. During the term of this Sublease, Brillian covenants and
agrees to pay to TFS, without deduction or setoff of any kind, minimum annual
base rent in an amount equal to $202,884.00 (such minimum annual rent
hereinafter called the “Base Sublease Rent”), payable in equal monthly
installments of $16,907.00. The aforesaid monthly Base Sublease Rent has been
calculated as the depreciation amount of the building space leased by Brillian.
The Base

2

 

Sublease Rent shall be paid in advance on the first day of each month
during the term of this Sublease.

          (b) Building Services Rent. During the term of this Sublease, Brillian
covenants and agrees to pay to TFS, without deduction or setoff of any kind,
annual building services rent in an amount equal to $278,964 (“Building
Services Rent”) payable in equal monthly installments of $23,247. The
particular services that are provided by TFS to Brillian and that are covered
under Building Services Rent are enumerated and described in Exhibit D to this
Sublease. For purposes of this Sublease, Building Services Rent shall include
all Rent other than Base Rent, MIS Services Rent, and Variable Rent. Brillian
shall pay to TFS this amount on the first day of each month during the term of
this Sublease.

          (c) MIS Services Rent. During the term of this Sublease, Brillian
covenants and agrees to pay to TFS, without deduction or setoff of any kind,
annual MIS services rent in the amounts set forth in Exhibit E to this Sublease
(“MIS Services Rent”). The particular services that are provided by TFS to
Brillian and that are covered under MIS Services Rent are enumerated and
described in Exhibit E to this Sublease. Brillian shall pay to TFS the MIS
Services Rent in accordance with Exhibit E to this Sublease.

          (d) Variable Rent. During the term of this Sublease, Brillian covenants
and agrees to pay to TFS, without deduction or setoff of any kind, the monthly
costs actually incurred for the items enumerated in Exhibit F to this Sublease
(“Variable Services Rent”). Brillian shall pay to TFS this amount within
fifteen (15) days from the receipt of an invoice from TFS.

     4. FIXTURES AND EQUIPMENT. In the event that, during the term of this
Sublease, a building fixture or piece of maintenance or operating equipment
breaks or fails to work properly, and that fixture or piece of maintenance or
operating equipment is solely used by Brillian under the terms of this
Sublease, then (i) TFS reserves the right to not repair or replace the said
fixture or piece of maintenance or operating equipment, or (ii) in the event
that TFS chooses to repair or replace such fixture or piece of maintenance or
operating equipment, Brillian shall be solely liable for any costs associated
with such action.

     5. CONSTRUCTION; ACCEPTANCE. Brillian agrees that TFS has no construction, repair, or replacement
obligations hereunder and that Brillian will accept the Sublet Premises in
“as-is” condition; provided, however, TFS shall deliver the Sublet Premises in
the same arrangement and condition as on the date or the execution of this
Sublease. Brillian’s taking possession of the Sublet Premises shall be a
conclusive acknowledgement on Brillian’s part that the Sublet Premises are in
good and tenantable condition and that Brillian has accepted the Sublet
Premises in “as is” condition as of such date.

     6. REPRESENTATIONS. TFS hereby warrants and represents that (i) the
Master Lease is presently in full force and effect; (ii) that TFS has the power
and authority to enter into this Sublease; (iii) the copy of the Master Lease
attached hereto as Exhibit A is true, complete, and correct; (iv) the Master
Lease has not been modified or amended and constitutes the full and complete
agreement of the parties thereto relative to the subject matter thereof; (v)
(a) to the best of TFS’ knowledge, TFS is not in default under any of the
provisions of the Master Lease, and to the best of TFS’ knowledge, no event or
condition exists which with notice or the passage of time or

3

 

both, would
constitute a default by TFS under the Master Lease, and (b) TFS has received no
notice of any such default, event, or condition from Master Landlord which
remains uncured; (vi) TFS has received no written notice from any applicable
governmental authority of, or alleging any, violation of any applicable law or
regulation, including any environmental laws, with respect to the Sublet
Premises which remains uncured; (vii) TFS has given no written notices alleging
any default which remains uncured by the Master Landlord under the Master
Lease, or that any event has occurred which, with the passage of time, or the
giving of notice, or both, would constitute an uncured default by the Master
Landlord under the Master Lease, nor to the best of TFS’s knowledge, has any
event occurred which, with the passage of time, or the giving of notice, or
both, would constitute an uncured default by Master Landlord under the Master
Lease. TFS makes no other representations or warranties and hereby disclaims
same.

     7. MASTER LEASE.

          (a) All the rights and obligations of TFS contained in the Master Lease as
they relate to the Sublet Premises are hereby conferred and imposed upon
Brillian, except as expressly modified and amended by this Sublease. The
rights of TFS in Sections 9, 15, 16, 17, 24(g), and 24(l) of the Master Lease
are expressly not conferred upon Brillian and Brillian expressly acknowledges
that it shall not be entitled to any of the rights of TFS in Sections 9, 15,
16, 17, 24(g), and 24(l) of the Master Lease. Brillian covenants and agrees
fully and faithfully to perform the terms and conditions of the Master Lease as
they relate to the Sublet Premises and this Sublease on its part to be
performed, including, but not limited to, all maintenance and repair
obligations and all compliance with law obligations. Brillian shall not do or
cause to be done or suffer or permit any act to be done that would or might
cause the Master Lease, or the rights of TFS as tenant under the Master Lease,
to be endangered, canceled, terminated, forfeited, or surrendered, or that
would or might cause TFS to be in default thereunder or liable for any damage,
claim, or penalty. Brillian agrees, as an express inducement for TFS’s
executing this Sublease, that if there is any conflict between the provisions
of this Sublease and the provisions of the Master Lease that would permit
Brillian to do or cause to be done or suffer or permit any act or thing to be
done that is prohibited
by the Master Lease, then the provisions of the Master Lease shall
prevail. All rights, remedies, and indemnifications given to the Master
Landlord in the Master Lease are hereby given to TFS under this Sublease.

          (b) If any event occurs that would permit TFS to terminate the Master
Lease as it relates to the Sublet Premises, Brillian shall notify TFS of such
occurrence and of its recommendations immediately with regard to such
termination rights. TFS shall decide in its reasonable discretion whether or
not to terminate the Master Lease and shall give Brillian written notice of
such decision. If TFS elects to terminate the Master Lease as it relates to the
Sublet Premises, this Sublease shall terminate on the earlier of the date of
termination of the Master Lease or the date which is (30) days after Brillian’s
receipt of such written notice from TFS. In the event that TFS elects to
terminate the Master Lease prior to providing notice to the Master Landlord,
TFS must provide prior written notice to Brillian of its intent to terminate
this Sublease, and within five (5) days after the receipt of such notice from
TFS, Brillian may notify TFS in writing that it intends to continue possession
of the Sublet Premises under the terms and conditions of this Sublease, in
which case, TFS shall not exercise its right of termination under the Master
Lease as it relates to the Sublet Premises. In addition, TFS agrees that it
shall not exercise its one-time cancellation

4

 

option granted under the Second
Amendment to Lease as it relates to the Sublet Premises without the prior
written consent of Brillian.

          (c) TFS shall have no duty to perform any obligations of or provide any
services to be provided by the Master Landlord and shall under no circumstances
be responsible or liable to Brillian for any default, failure, or delay on the
part of the Master Landlord in the performance of any obligations under the
Master Lease, nor shall such default of the Master Landlord affect Brillian’s
obligations hereunder; provided, that in the event of any such default or
failure of performance by Master Landlord, TFS agrees, upon notice from
Brillian, to make demand upon Master Landlord to perform its obligations under
the Master Lease and to otherwise cooperate reasonably with Brillian as
Brillian may reasonably request, in enforcing the remedies provided in the
Master Lease.

     8. EVENTS OF DEFAULT. The occurrence of any one of the following events
shall constitute an event of default (“Event of Default”) under this Sublease:

          (a) Brillian fails to pay Base Sublease Rent, Building Services Rent, MIS
Services Rent, Variable Services Rent, or any other sum of money when due under
this Sublease within three (3) business days after receipt by Brillian of
written notice from TFS that such amount is due; provided, however, that TFS
shall not be required to give more than two written notices in any twelve month
period;

          (b) Brillian assigns this Sublease or sublets all or a portion of the
Sublet Premises, or attempts to do the aforementioned, in violation of
Paragraph 20 hereof;

          (c) Brillian fails to perform any of its other obligations under this
Sublease or the Master Lease and such failure continues for ten (10) days after
the receipt by Brillian of written notice of default with respect to such
failure. Notwithstanding the foregoing, Brillian shall not be in
default under this Sublease with respect to any non-monetary breach (other
than those listed in subparagraph b above) that may be cured by the performance
of affirmative acts if Brillian promptly commences the performance of said
affirmative acts and diligently prosecutes the same to completion as soon as
possible, and in any event, within not more than the time period prescribed for
TFS to cure such default under the Master Lease. Notwithstanding anything to
the contrary contained in the foregoing, if Brillian fails to maintain the
insurance required in Paragraph 17 hereof, TFS may, in addition to any other
remedies herein contained, immediately upon such failure (but TFS shall not be
so obligated), at Brillian’s sole cost and expense, procure the insurance
coverage required herein, and if Brillian shall fail to reimburse TFS for the
costs and expenses it incurred in procuring such coverage, within fifteen (15)
days of notice from TFS, an Event of Default shall have occurred hereunder.

     9. REMEDIES OF TFS. Upon the occurrence of an Event of Default, TFS shall
have all of the rights and remedies available under the Master Lease and at law
or in equity. All remedies shall be cumulative and non-exclusive.

5

 

     10. ACCESS TO SUBLET PREMISES. Except in the event of an emergency in
which case no notice shall be required, TFS or Master Landlord or any of their
respective agents, contractors, or employees may enter the Sublet Premises
during normal business hours upon 24 hours advance notice (except in the event
of an emergency), to inspect the Sublet Premises, or during the last six (6)
months of the term of this Sublease to show said property to persons seeking to
rent or purchase the Sublet Premises, or to make repairs or improvements to the
Sublet Premises. This paragraph is not to be construed as obligating TFS to
make any repairs.

     11. WAIVERS BY BRILLIAN; HOLDOVER.

          (a) Except for any notice expressly provided for in this Sublease,
Brillian waives to TFS the benefit of all laws now or hereafter in force, in
this state or elsewhere, requiring notice to vacate the Sublet Premises at the
end of the term or any extensions or renewals thereof. Brillian covenants and
agrees to give up quiet and peaceful possession without further notice from TFS
or its agent at the end of the term of this Sublease. Brillian also waives to
TFS the benefit of all laws now or hereafter in force, in this state or
elsewhere, exempting property from liability for rent, or for debt.

          (b) If Brillian shall not immediately surrender the Sublet Premises on the
day after the termination or expiration of the term of this Sublease, then
Brillian shall, by virtue of this Sublease, become a sublessee at the
sufferance of TFS at twice the immediately preceding Base Sublease Rent agreed
by Brillian to be paid as aforesaid, and Brillian shall be subject to all of
the other conditions and covenants of this Sublease.

     12. LATE PAYMENT. If Brillian shall fail to pay when the same is due and payable, Base
Sublease Rent, Building Services Rent, MIS Services Rent, Variable Services
Rent, or any other sums due under this Sublease, interest shall be charged on
all unpaid amounts at the amount of the late charge provided for in the Master
Lease.

     13. INDEMNITY. In addition to the indemnity provided for in the Master
Lease, Brillian shall indemnify and hold TFS and Master Landlord harmless from
and defend TFS and Master Landlord with counsel reasonably satisfactory to TFS
and Master Landlord against any and all claims, liabilities, losses, damages,
costs, and expenses, for any injury or damage to any person or property
whatsoever, occurring in, on, or about the Sublet Premises or other portions of
the Building or when such injury or damage shall be caused in part or in whole
by the neglect, fault, or omission of Brillian, its employees, invitees,
contractors, subcontractors, licensees, subtenants, or agents.

     TFS shall indemnify and hold Brillian harmless from and defend Brillian
with counsel reasonably satisfactory to Brillian against any and all claims,
liabilities, losses, damages, costs, and expenses caused by any representation
or warranty made by TFS in Paragraph 6 hereof being false or misleading, by any
default by TFS under the Master Lease, or by TFS’s exercise of its cancellation
rights under the Second Amendment to Lease as it relates to the Sublet
Premises.

     Notwithstanding the foregoing, in no event shall either party be liable
for consequential, indirect, or special damages to the other party.

6

 

     14. MASTER LEASE DEFAULTS. TFS will not cause or knowingly allow to be
caused any default under the Master Lease which shall remain uncured at the
expiration of the applicable cure period set forth therein, unless such default
arises out of a failure by Brillian to perform its obligations under this
Sublease. TFS will deliver to Brillian a copy of any notice of default by TFS
under the Master Lease within five (5) days after receipt thereof by TFS. In
addition, in the event TFS is in default under the Master Lease and such
default continues beyond the expiration of the applicable grace period set
forth therein (a “Master Lease Continuing Default”), Brillian shall thereafter
have the right (but not the obligation) to cure such Master Lease Continuing
Default, if Brillian’s cure of such Master Lease Continuing Default is
acceptable to Master Landlord and provided that Brillian gives TFS prior
written notice of such undertaking.

     15. RESTORATION. Brillian shall immediately prior to the expiration or
sooner termination of this Sublease, surrender the Sublet Premises in the
condition required under the Master Lease and otherwise in broom clean and good
condition, normal wear and tear excepted. In the event of termination of this
Sublease in any manner whatsoever, Brillian shall forthwith remove Brillian’s
goods and effects and those of any other persons claiming under Brillian or
subtenancies assigned to it, and quit and deliver the Sublet Premises to TFS
peaceably and quietly. Goods and effects not removed by Brillian on or before
the date of termination of this Sublease (or within forty-eight (48) hours
after a termination by reason of Brillian’s default) shall be considered
abandoned. TFS shall give Brillian notice of right to reclaim abandoned
property pursuant to applicable local law and may thereafter
dispose of the same as it deems expedient, including storage in a public
warehouse or elsewhere at the cost and for the account of Brillian, but
Brillian shall promptly upon demand reimburse TFS for any expenses incurred by
TFS in connection therewith, which obligation shall survive the termination or
expiration of this Sublease.

     16. NOTICES. All notices hereunder shall be in writing and will be
effective upon receipt if delivered personally, or by nationally recognized
overnight courier service to a party’s address set forth below or to such other
address as either may give to the other in writing for such purpose:

	 	 	 	 	 
	

	 	TFS:
	 	Three-Five Systems, Inc.
	

	 	 	 	Attn: General Counsel
	

	 	 	 	1600 North Desert Drive
	

	 	 	 	Tempe, Arizona 85281
	 
	 	 	 	 
	

	 	Brillian:
	 	Brillian Corporation
	

	 	 	 	Attn: Chief Financial Officer
	

	 	 	 	1600 North Desert Drive
	

	 	 	 	Tempe, Arizona 85281

     17. BRILLIAN’S INSURANCE.

          (a) Brillian shall, at its sole cost and expense, maintain during the term
hereof all insurance coverages required to be maintained by the tenant under
the Master Lease. In addition to the above, Brillian shall also separately
maintain a $1 million insurance policy to cover catastrophic damage to the
building that results from Brillian’s use of the leasehold premises. This
policy will specifically name TFS as a beneficiary. Copies of all policies or
certificates evidencing

7

 

said insurance shall be delivered to TFS prior to the
Commencement Date and renewals thereof shall be delivered to TFS prior to the
expiration of any such policy. If Brillian fails to adhere to the requirements
of this Paragraph 16, TFS, in addition to any other remedies it may have, may
obtain such insurance and charge the cost thereof to Brillian, which amount
shall be payable by Brillian upon demand.

          (b) All insurance required to be carried by Brillian shall be issued in
the coverages and amounts required under the Master Lease by responsible
insurance companies, qualified to do business in the locality where the Sublet
Premises are located and reasonably acceptable to TFS and Master Landlord and
shall provide (i) that no change or cancellation of said policies shall be made
without thirty (30) days prior written notice to TFS and Brillian; (ii) that
any coverage of TFS or sum payable to TFS shall be unaffected by any act or
omission of Brillian or any other insured which might otherwise result in
forfeiture of said insurance; and (iii) that the insurance company issuing the
same shall not have any right of subrogation against TFS or TFS’s insurer. Each
policy and renewal shall name TFS, any mortgagee and Master Landlord as an
additional insured and, in the case of casualty insurance for other than
Brillian’s personal property, shall name TFS as loss payee. Copies of all
policies or certificates evidencing the existence and
amounts of said insurance shall be delivered to TFS by Brillian upon
request. Each policy shall also contain provisions required by any mortgagee of
the Sublet Premises or any portion thereof.

          (c) Copies of all policies or certificates evidencing said insurance shall
be delivered to TFS prior to the Commencement Date and renewals thereof shall
be delivered to TFS prior to the expiration of any such policy. If Brillian
fails to adhere to the requirements of this Paragraph 17, TFS, in addition to
any other remedies it may have, may order such insurance and charge the cost
thereof to Brillian, which amount shall be payable by Brillian upon demand.

          (d) Brillian hereby waives any and all rights of recovery against TFS and
its officers, employees, agents, and representatives for loss of or damage to
Brillian or its property or the property of others under its control, arising
from any cause insured or required to be insured against by Brillian,
irrespective of whether such loss or damage is caused by negligence of TFS or
any of its employees, invitees, contractors, subcontractors, licensees,
subtenants, or agents. Brillian shall obtain and furnish evidence to TFS of the
waiver by Brillian’s insurance carriers of any right of subrogation against
TFS.

     18. ALTERATIONS.

          (a) Brillian shall not make any building or leasehold alterations or
additions, including remodeling or signage, without first obtaining Master
Landlord’s and TFS’s consent, which TFS’s and Master Landlord’s consent may be
withheld in their sole discretion. If any such alterations or additions are
made, Brillian agrees not to permit any mechanics’ liens to be placed on the
Sublet Premises or any portion thereof and to cause any contract for work to be
done at the Sublet Premises to contain a waiver of the contractor’s right to
file a mechanics’ lien. Any alterations of any kind to the Sublet Premises or
any part thereof, except Brillian’s trade fixtures which can be removed without
damage or defacement to the Sublet Premises or any other portion of the
Building, shall be surrendered with the Sublet Premises, as a part thereof, at
the end of the Sublease Term; provided, however, that TFS may require at the
time TFS and Master Landlord consent to such alteration or fixture Brillian to
remove any alterations or fixtures made by Brillian,

8

 

and to repair any damage
to the Sublet Premises caused by such removal, all at Brillian’s sole expense.
Any alterations installed by Brillian shall be deemed a part of the Sublet
Premises and shall be maintained and repaired by Brillian in the same manner as
that required for all other portions of the Sublet Premises.

          (b) Brillian shall have the right to place a sign or signs on the façade
of the Building, provided, however: (i) TFS (and the Master Landlord to the
extent that such consent from the Master Landlord is required under the Master
Lease) shall have the right to consent to the size, style, and location of any
such signs, which consent shall not be unreasonably withheld or delayed; (ii)
any such signs shall comply with all applicable laws, rules, regulations, and
covenants, conditions, and restrictions of record; and (iii) TFS may require
that Brillian remove any such signs at the expiration of the Term and repair
any damage to the Building caused by such removal, all at Brillian’s sole
expense.

     19. CONDEMNATION. All compensation awarded or paid upon a total or partial taking of the
Sublet Premises shall belong to and be the property of TFS without any
participation by Brillian; provided, however, that nothing contained herein
shall be construed to preclude Brillian from prosecuting any claim directly
against the condemning authority in such condemnation proceedings for loss of
business, and/or depreciation to, damage to, and/or cost of removal of, and/or
for the value of stock and/or trade fixtures, furniture, and other personal
property belonging to Brillian; provided, however, that no such claim shall
diminish or otherwise adversely affect TFS’s and/or Master Landlord’s award or
the award(s) of any and all ground and underlying lessor(s) and mortgagee(s).

     20. ASSIGNMENT.

          (a) Without the written consent of TFS, which consent may be withheld in
TFS’s sole discretion, and the consent of Master Landlord, Brillian shall not
by operation of law or otherwise, assign or mortgage this Sublease, or sublet
or license the whole or any part of the Sublet Premises or permit the Sublet
Premises or any part thereof to be used or occupied by others. Notwithstanding
the foregoing, Brillian may, upon fifteen (15) days prior written notice to TFS
but without TFS’s consent, assign or sublet all or any portion of the Sublet
Premises to (i) any entity controlled by or under common control with Brillian,
or (ii) any successor to Brillian by merger or acquisition of all or
substantially of Brillian’s assets or the transferee of more than fifty percent
(50%) of Brillian’s capital stock, provided that in each case (i) the proposed
assignee or Brillian has a net worth greater than or equal to the greater of
(a) Brillian’s net worth on the date of this Sublease, or (b) Brillian’s net
worth on the date of such assignment or sublease, and (ii) Brillian obtains the
prior written consent of the Master Landlord to such assignment or subletting.

          (b) Regardless of TFS’s consent, no subletting or assignment shall release
or alter Brillian’s primary liability to pay Base Sublease Rent, Building
Services Rent, MIS Services Rent, Variable Services Rent, and to perform all
other obligations to be performed by Brillian hereunder. Upon a default
hereunder by any assignee or sublessee of Brillian, TFS may proceed directly
against Brillian without the necessity of exhausting remedies against such
assignee or sublessee. TFS may consent to any subsequent assignment or
subletting of this Sublease and such action shall not relieve Brillian of
liability under this Sublease.

9

 

          (c) Each permitted assignee or transferee shall assume and be deemed to
have assumed this Sublease and shall be and remain liable jointly and severally
with Brillian for the payment of the Base Sublease Rent, Building Services
Rent, MIS Services Rent, Variable Services Rent, and for the due performance of
all of the provisions, covenants, conditions, and agreements herein contained
on Brillian’s part to be performed for the term of this Sublease. No otherwise
permitted assignment or transfer shall be binding on TFS unless such assignee
or transferee shall deliver to TFS a counterpart of such assignment and an
instrument in recordable form which contains a covenant of assumption by the
assignee or transferee, but the failure or refusal of the assignee or
transferee to execute such instrument of assumption shall not release or
discharge the assignee or transferee from its liability as set forth above.

          (d) Any consent by TFS or Master Landlord to any act of assignment or
subletting shall be held to apply only to the specific assignment or subletting
thereby authorized.
Such consent shall not be construed as a waiver of the duty of Brillian,
or the legal representatives or assigns of Brillian, to obtain from TFS or
Master Landlord consent to any other or subsequent assignment or subletting, or
as modifying or limiting the rights of TFS or Master Landlord under the
foregoing covenant by Brillian not to assign or sublet without consent.

          (e) If this Sublease is assigned or transferred, or if the Sublet Premises
or any part thereof be underlet or occupied by any person other than Brillian,
or if an Event of Default has occurred hereunder, TFS may collect rent from the
successor occupant and apply the net amount collected by it to the rent herein
reserved. No such collection shall be deemed a waiver of the prohibition
against assignment, sublets, and other transfers, or the acceptance of the
successor occupant as tenant, or a release of Brillian from the further
performance of the covenants herein contained on the part of Brillian.

          (f) TFS may freely assign this Sublease at any time without consent or
notice to Brillian provided that the assignee assumes all of the liabilities
and obligations of TFS under this Sublease.

     21. NO BROKER. Brillian covenants, warrants, and represents that there
was no broker involved in consummating this Sublease, and that no conversations
or prior negotiations were had with any broker concerning the renting of the
Sublet Premises. Brillian and TFS agree to defend, indemnify, and hold the
other party harmless against any claims for brokerage commission arising out of
any conversations or negotiations had by the indemnifying party with any
broker.

     22. LIABILITY OF TFS. TFS shall not be liable for any injury or damage to
any person or to any property at any time on the Sublet Premises from any cause
whatsoever that may at any time exist from the use or condition of said Sublet
Premises or Building, or from failure of water supply or electric current or
from steam, electricity, water, gas, or rain which leak or flow from or into
any part of the Sublet Premises, or from breakage, leakage, obstruction or from
difficulties to the pipes, lines, appliances, plumbing, or lighting fixtures,
awnings, or signs in or upon the Sublet Premises, or from any other cause,
during the term of this Sublease or any renewal or extension hereof except to
the extent solely caused by the gross negligence or intentional misconduct of
TFS or its agents.

10

 

     23. EFFECT. This Sublease shall be binding upon the parties hereto, their
successors and permitted assigns, and may not be altered, amended, terminated,
or modified except by written instrument executed by each of the parties
hereto.

     24. DAMAGE OR DESTRUCTION. If the Sublet Premises shall be partially
damaged by fire or other cause, repairs shall be in accordance with the terms
of the Master Lease which shall also determine to what extent, if any, the rent
shall be abated. If the Sublet Premises shall be totally destroyed by fire or
other cause at any time prior to the end of the term of this Sublease, Brillian
agrees to be bound by Master
Landlord’s decision made in accordance with the applicable terms of the
Master Lease, if any, as to whether or not the Sublet Premises is to be
restored and whether or not the Master Lease shall remain in effect. Brillian’s
obligation to pay rent under the Sublease shall be governed by the terms of the
Master Lease, if any, applicable to abatement of TFS’s rental under the Master
Lease as it relates to the Sublet Premises.

     25. NOTICE. Brillian shall notify TFS of any damage to the Sublet
Premises by fire or other casualty and also of any dangerous or defective
condition within the Sublet Premises immediately upon the occurrence of such
fire or other casualty or discovery of such condition. Except as affected by
the giving or failure to give such notice, nothing herein contained shall be
deemed to limit or enlarge the respective rights and liabilities of either
party arising from the negligent acts or conduct of the other.

     26. RELATIONSHIP. It is understood, covenanted, and agreed between the
parties hereto that nothing in this Sublease shall constitute TFS an employer,
employee, principal, agent, or partner of Brillian and the relationship hereby
created between the parties hereto shall be strictly and solely that of
sublessor and sublessee.

     27. WAIVERS. No waiver of any covenant or condition by TFS shall be
construed as a waiver of a subsequent breach of the same or any other covenant
or condition, and the consent or approval by TFS to or of any act by Brillian
requiring TFS’s consent or approval shall not be construed to waive or render
unnecessary TFS’s consent or approval to or of any subsequent similar act by
Brillian.

     28. FORUM. This Sublease shall be governed by the laws of the state of
Arizona.

     29. JOINT AND SEVERAL LIABILITY; AUTHORITY. If two or more individuals,
corporations, partnerships, or other business associations (or any combination
of two or more thereof) shall sign this Sublease as sublessor, the liability of
each such individual, corporation, partnership, or other business association
to pay rent and perform all other obligations hereunder shall be deemed to be
joint and several, and all notices, payments, and agreements given or made by,
with, or to any one of such individuals, corporations, partnerships, or other
business associations shall be deemed to have been given or made by, with, or
to all of them. In like manner, if sublessor shall be a partnership or other
business association, the members of which are, by virtue of statute or federal
law, subject to personal liability, the liability of each such member shall be
joint and several.

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     30. NO OPTION; CONSENT OF MASTER LANDLORD. This Sublease shall become
effective only upon execution and delivery thereof by both parties and upon
Master Landlord’s written consent to the terms of this Sublease in
substantially the form of consent attached hereto as Exhibit G and made a part
hereof. TFS shall use best efforts to obtain Master Landlord’s written
consent; provided that in no event shall TFS be obligated to commence any legal
proceeding to obtain or attempt to obtain Master Landlord’s consent.

     31. FORCE MAJEURE. Neither Brillian nor TFS shall be deemed in default
under this Sublease (excluding, however, monetary defaults) to the extent that
any such failure stems from a cause beyond the reasonable control of the
respective party, including, without limitation, any act of God, war,
insurrection, applicable governmental or judicial law or regulation, zoning
ordinance, labor strike, order, or decree.

     32. WAIVER OF TRIAL BY JURY. IT IS MUTUALLY AGREED BY AND BETWEEN TFS AND
BRILLIAN THAT THE RESPECTIVE PARTIES HERETO SHALL AND DO HEREBY WAIVE TRIAL BY
JURY IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM BROUGHT BY EITHER OF THE
PARTIES HERETO AGAINST THE OTHER (EXCEPT FOR PERSONAL INJURY OR PROPERTY
DAMAGE) ON ANY MATTERS WHATSOEVER ARISING OUT OF OR IN ANY WAY CONNECTED WITH
THIS SUBLEASE, THE RELATIONSHIP OF TFS AND BRILLIAN, AND BRILLIAN’S USE OR
OCCUPANCY OF SAID SUBLET PREMISES.

     33. TFS’S PURCHASE OF BUILDING. Brillian expressly acknowledges that TFS
has the right pursuant to Sections 15 and 16 of the Master Lease to purchase
the Building. In the event TFS purchases the Building, which event shall be
evidenced by a written notice of such purchase from TFS to Brillian, then in
such event this Sublease shall be deemed a prime lease by and between TFS, as
owner of the Building, and Brillian, as tenant of the Sublet Premises.

     34. GROUND SUBLEASE.

          (a) Brillian hereby expressly acknowledges that the Sublease of the Sublet
Premises is subject to the terms and conditions of the Ground Sublease.

          (b) All the obligations of TFS contained in the Ground Sublease as they
relate to the Sublet Premises are hereby conferred and imposed upon Brillian,
except as expressly modified and amended by this Sublease. Brillian covenants
and agrees fully and faithfully to perform the terms and conditions of the
Ground Sublease as they relate to the Sublet Premises and this Sublease on its
part to be performed, including, but not limited to, all maintenance and repair
obligations and all compliance with law obligations. Brillian shall not do or
cause to be done or suffer or permit
any act to be done that would or might cause the Ground Sublease, or the
rights of TFS as tenant under the Ground Sublease, to be endangered, canceled,
terminated, forfeited, or surrendered, or that would or might cause TFS to be
in default thereunder or liable for any damage, claim, or penalty. Brillian
agrees, as an express inducement for TFS’s executing this Sublease, that if
there is any conflict between the provisions of this Sublease and the
provisions of the Ground Sublease that would permit Brillian to do or cause to
be done or suffer or permit any act or thing to be done that is prohibited by
the Ground Sublease, then the provisions of the Ground Sublease shall prevail.
All

12

 

rights, remedies, and indemnifications given to the Ground Lessor in the
Ground Sublease are hereby given to TFS under this Sublease.

          (c) If any event occurs that would permit TFS to terminate the Ground
Sublease as it relates to the Sublet Premises, Brillian shall notify TFS of
such occurrence and of its recommendations immediately with regard to such
termination rights. TFS shall decide in its reasonable discretion whether or
not to terminate the Ground Sublease and shall give Brillian written notice of
such decision. If TFS elects to terminate the Ground Sublease as it relates to
the Sublet Premises, this Sublease shall terminate on the earlier of the date
of termination of the Ground Sublease or the date which is (30) days after
Brillian’s receipt of such written notice from TFS. In the event that TFS
elects to terminate the Ground Sublease prior to providing notice to the Ground
Lessor, TFS must provide prior written notice to Brillian of its intent to
terminate this Sublease, and within five (5) days after the receipt of such
notice from TFS, Brillian may notify TFS in writing that it intends to continue
possession of the Sublet Premises under the terms and conditions of this
Sublease, in which case, TFS shall not exercise its right of termination under
the Ground Sublease as it relates to the Sublet Premises.

          (d) TFS shall have no duty to perform any obligations of or provide any
services to be provided by the Ground Lessor and shall under no circumstances
be responsible or liable to Brillian for any default, failure, or delay on the
part of the Ground Lessor in the performance of any obligations under the
Ground Sublease, nor shall such default of the Ground Lessor affect Brillian’s
obligations hereunder; provided, that in the event of any such default or
failure of performance by Ground Lessor, TFS agrees, upon notice from Brillian,
to make demand upon Ground Lessor to perform its obligations under the Ground
Sublease and to otherwise cooperate reasonably with Brillian as Brillian may
reasonably request, in enforcing the remedies provided in the Ground Sublease.

          (e) TFS will not cause or knowingly allow to be caused any default under
the Ground Sublease which shall remain uncured at the expiration of the
applicable cure period set forth therein, unless such default arises out of a
failure by Brillian to perform its obligations under this Sublease. TFS will
deliver to Brillian a copy of any notice of default by TFS under the Ground
Sublease within five (5) days after receipt thereof by TFS. In addition, in the
event TFS is in default under the Ground Sublease and such default continues
beyond the expiration of the applicable grace period set forth therein (a
“Ground Sublease Continuing Default”), Brillian shall thereafter have the right
(but not the obligation) to cure such Ground Sublease Continuing Default, if
Brillian’s cure of such Ground Sublease Continuing Default is acceptable to
Ground Lessor and provided that Brillian gives TFS prior written notice of such
undertaking.

          (f) TFS shall use its best efforts to obtain Ground Lessor’s written
consent to this Sublease substantially in the form of Exhibit H attached hereto
in order that Brillian have the
protections of Article 16 of the Ground Sublease as a “Permitted Sublease”
(as such term is defined in Section 17.2 of the Ground Sublease); provided,
that in no event shall TFS be obligated to commence any legal proceeding to
obtain or attempt to obtain Ground Lessor’s consent. Furthermore, Brillian
expressly acknowledges that TFS has the right pursuant to Section 3.3 of the
Ground Sublease to purchase the Land, in which event the Master Ground Lease
(as such term is defined in the Ground Sublease) shall be amended to delete the
Land as of the closing of such purchase, as more fully set forth in Section
3.3(B)(3) of the Ground Sublease. In the event TFS

13

 

purchases the Land, which
event shall be evidenced by a written notice of such purchase from TFS to
Brillian, then in such event this Sublease shall be deemed a prime lease by and
between TFS, as owner of the Land, and Brillian, as tenant of the Sublet
Premises.

     35. EXHIBITS. Each of the exhibits attached hereto are made a part
hereof. The following is a list of exhibits attached to this Lease:

	 	 	 	 	 
	Exhibit A

	 	–
	 	Copy of Master Lease
	Exhibit B

	 	–
	 	Copy of Ground Sublease
	Exhibit C

	 	–
	 	Sublet Premises and Common Areas
	Exhibit D

	 	–
	 	Building Services
	Exhibit E

	 	–
	 	MIS Services
	Exhibit F

	 	–
	 	Variable Services
	Exhibit G

	 	–
	 	Form of Master Landlord’s Consent
	Exhibit H

	 	–
	 	Form of Ground Lessor’s Consent

[Signature Page Follows]

14

 

     IN WITNESS WHEREOF, the parties have executed this Sublease as of the day
and year first above written.

	 	 	 
	TFS:

	 	Brillian:
	 
	 	 
	THREE-FIVE SYSTEMS, INC.,
a Delaware corporation

	 	BRILLIAN CORPORATION, a Delaware corporation
	 
	 	 
	By: /s/ George A. Pisaruk

	 	By: /s/ Wayne A. Pratt
	
 

	 	
 
	Name: George A. Pisaruk

	 	Name: Wayne A. Pratt
	Title: General Counsel

	 	Title: Vice President and Chief Financial
Officer

15

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