AMENDED AND RESTATED
STOCK OPTION AGREEMENT
Mission West Properties, a California corporation (the "Company"), hereby
grants to Xxxxxxx X. Xxxxxxxx (the "Optionee"), an option (the "Option") to
purchase a total of Two Hundred Thousand (200,000) shares of Common Stock (the
"Shares") of the Company, at the price set forth herein.
1. NATURE OF THE OPTION. The Option is intended to be a nonstatutory
stock option and not an incentive stock option within the meaning of Section 422
of the Internal Revenue Code of 1986, as amended (the "Code").
2. OPTION PRICE. The Option Price is Four Dollars and Fifty Cents
($4.50) for each Share.
3. VESTING AND EXERCISE OF OPTION. The Option shall vest and become
exercisable during its term, subject to the Optionee's continuous employment
with the Company, as follows:
(a) Vesting and Right to Exercise.
(i) The Option shall vest in accordance with the
following vesting schedule:
(A) as of July 1, 1998, Twelve Thousand Five
Hundred (12,500) shares subject to the Option shall become exercisable;
(B) as of January 1, 1999, an additional
Twenty-Five Thousand (25,000) shares subject to the Option shall become
exercisable;
(C) Beginning on February 1,1999 and on the first
day of each consecutive month an additional Four Thousand Five Hundred Fourteen
(4,514) shares subject to the Option shall become exercisable until all shares
subject to the option have vested and become exercisable.
Notwithstanding the foregoing, but subject to the
provisions of subparagraph (ii) below, at the election of the Optionee, the
Option can be exercised in whole or in part at any time as to the Shares which
have not vested, provided that the Optionee shall, as a condition of such
exercise, execute and deliver the Restricted Stock Purchase Agreement in the
form of Exhibit A hereto (the "Restricted Stock Purchase Agreement"), pursuant
to which the Company shall be granted a Repurchase Option as to all Unvested
Shares (as such term is defined in the Restricted Stock Purchase Agreement).
(ii) TERMINATION OF STATUS AS EMPLOYEE. If Optionee
ceases to be an employee of the Company for any reason other than permanent and
total disability or death, he may, but only within 30 days after the date he
ceases to be an employee, exercise his Option to the extent that he was entitled
to exercise it at the date of such termination, subject to the condition that no
Option shall be exercisable after the expiration of the term of the Option.
(iii)DISABILITY OF OPTIONEE. If Optionee ceases to be an
employee due to permanent and total disability, and Optionee is, or was within
the 90-day period prior to such termination, an employee and who was in
continuous employment as such from the date of the grant of the Option until the
date of disability or termination, the Option may be exercised at any time
within six months following the date of termination, but only to the extent of
the accrued right to exercise at the time of termination, subject to the
condition that no option shall be exercised after the expiration of the Option
period.
(iv) DEATH OF OPTIONEE. In the event of the death during
the Option period of an Optionee who is at the time of his or her death, or was
within the 90-day period immediately prior thereto, an employee, non-employee
director or consultant and was such from the date of the grant of the Option
until the date of death or termination, the Option may be exercised, at any time
within six months following the date of death, by the Optionee's estate or by a
person who acquired the right to exercise the Option by bequest, inheritance or
otherwise as a result of the Optionee's death, but only to the extent of the
accrued right to exercise at the time of the termination or death, whichever
comes first, subject to the condition that no option shall be exercised after
the expiration of the Option period.
(v) The Option may not be exercised for fractional
shares or for less than ten (10) Shares.
(b) METHOD OF EXERCISE. In order to exercise any portion of this
Option, the Optionee shall notify the Company in writing of the election to
exercise the Option, the number of shares in respect of which the Option is
being exercised by executing and delivering the Notice of Exercise of Stock
Option in the form attached as Exhibit B hereto, and shall execute and deliver
to the Chief Financial Officer of the Company the Restricted Stock Purchase
Agreement, together with the Stock Assignments, Escrow Agreement and, if
applicable, the Consent of Spouse, Promissory Note, and Security Agreement,
forms of which are attached as exhibits to the Restricted Stock Purchase
Agreement. The Restricted Stock Purchase Agreement must be accompanied by
payment in full of the aggregate purchase price for the Shares to be purchased.
The certificate or certificates representing Shares as to which this Option has
been exercised shall be registered in the name of the Optionee.
(c) RESTRICTIONS ON EXERCISE. This Option may not be exercised
if the issuance of the Shares upon such exercise or the method of payment of
consideration for such shares would constitute a violation of any applicable
Federal or state securities law or other law or regulation. Furthermore, the
method and manner of payment of the Option Price will be subject to the rules
under Part 207 of Title 12 of the Code of Federal Regulations ("Regulation G")
as promulgated by the Federal Reserve Board if such rules apply to the Company
at the date of exercise. As a condition to the exercise of this Option, the
Company may require the Optionee to make any representation or warranty to the
Company at the time of exercise of this Option as in the opinion of legal
counsel for the Company may be required by any applicable law or regulation,
including the execution and delivery of an appropriate representation statement.
Accordingly, the stock certificates for the Shares issued upon exercise of this
Option may bear appropriate legends restricting transfer.
4. NON-TRANSFERABILITY OF OPTION. This Option may be exercised during
the lifetime of the Optionee only by the Optionee and may not be transferred in
any manner other than by will or by the laws of descent and distribution, except
that Optionee may transfer this Option solely by gift to members of the
Optionee's immediate family. The terms of this Option shall be binding upon the
executors, administrators, heirs and successors of the Optionee.
5. METHOD OF PAYMENT. Payment of the exercise price shall be by
any of the following, or a combination thereof, at the election of the
Optionee:
(a) cash; or
(b) certified or bank cashier's check; or
(c) full recourse promissory note secured by the Shares or
equivalent collateral; or
(d) in the event there exists a public market for the Company's
Common Stock on the date of exercise, by delivery of a sell order to a broker
for the shares being purchased and an agreement to pay (or have the broker remit
payment for) the purchase price of the shares being purchased on or before the
settlement date for the sale of such shares to the broker; or
(e) in the event there exists a public market for the Company's
Common Stock on the date of exercise, by surrender of shares of the Company's
Common Stock, provided that if such shares were acquired upon exercise of an
incentive stock option, the Optionee must have first satisfied the holding
period requirements under Section 422(a)(1) of the Code. In this case payment
shall be made as follows:
(i) In addition to the execution and delivery of the
Restricted Stock Purchase Agreement, Optionee shall deliver to the Secretary of
the Company a written notice which shall set forth the portion of the purchase
price the Optionee wishes to pay with Common Stock, and the number of shares of
such Common Stock the Optionee intends to surrender pursuant to the exercise of
this Option, which shall be determined by dividing the aforementioned portion of
the purchase price by the average of the last reported bid and asked prices per
share of Common Stock of the Company, as reported in THE WALL STREET JOURNAL
(or, if not so reported, as otherwise reported by Nasdaq or, in the event the
Common Stock is listed on a national securities exchange, or on the Nasdaq
National Market System (or any successor national market system), the closing
price of Common Stock of the Company on such exchange as reported in THE WALL
STREET JOURNAL), for the day on which the notice of exercise is sent or
delivered;
(ii) Fractional shares shall be disregarded and the
Optionee shall pay in cash an amount equal to such fraction multiplied by the
price determined under subparagraph (i) above;
(iii)The written notice shall be accompanied by a duly
endorsed blank stock power with respect to the number of Shares set forth in the
notice, and the certificate(s) representing said Shares shall be delivered to
the Company at its principal offices within three (3) working days from the date
of the notice of exercise;
(iv) The Optionee hereby authorizes and directs the
Secretary of the Company to transfer so many of the Shares represented by such
certificate(s) as are necessary to pay the purchase price in accordance with the
provisions herein;
(v) If any such transfer of Shares requires the consent
of the California Commissioner of Corporations or of some other agency under the
securities laws of any other state, or an opinion of counsel for the Company or
Optionee that such transfer may be effected under applicable Federal and state
securities laws, the time periods specified herein shall be extended for such
periods as the necessary request for consent to transfer is pending before said
Commissioner or other agency, or until counsel renders such an opinion, as the
case may be. All parties agree to cooperate in making such request for transfer,
or in obtaining such opinion of counsel, and no transfer shall be effected
without such consent or opinion if required by law; and
(vi) Notwithstanding any other provision herein, the
Optionee shall only be permitted to pay the purchase price with Shares of the
Company's Common Stock owned by him as of the exercise date in the manner and
within the time periods allowed under 17 CFR ss.240.16b-3 promulgated under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), as such
regulation is presently constituted, as it is amended from time to time, and as
it is interpreted now or hereafter by the Securities and Exchange Commission.
6. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION OR MERGER. Subject to
any required action by the shareholders of the Company, the number of Shares
covered by this Option, and the per share exercise price of such Option, shall
be proportionately adjusted for any increase or decrease in the number of issued
shares of Common Stock resulting from a stock split, reverse stock split,
recapitalization, combination, reclassification, the payment of a stock dividend
on the Common Stock or any other increase or decrease in the number of such
shares of Common Stock effected without receipt of consideration by the Company;
provided, however, that conversion of any convertible securities of the Company
shall not be deemed to have been "effected without receipt of consideration".
Such adjustment shall be made by the board of directors or a committee of the
board of cirectors, whose determination in that respect shall be final, binding
and conclusive. Except as expressly provided herein, no issue by the Company of
shares of stock of any class, or securities convertible into shares of stock of
any class, shall affect, and no adjustment by reason thereof shall be made with
respect to, the number or price of shares of Common Stock subject to an Option.
7. TERM OF OPTION. This Option may not be exercised more than six (6)
years from the date of grant of this Option, as set forth below, and may be
exercised during such term only in accordance with the terms of this Option.
8. REPURCHASE RIGHTS. The Optionee hereby agrees that any Shares
acquired upon the exercise of this Option shall be subject to the rights of the
Company to repurchase such Shares to the extent such Shares have not yet vested
and to certain restrictions on transfer specified in the Restricted Stock
Purchase Agreement.
9. NOT EMPLOYMENT CONTRACT. Nothing in this shall confer upon the
Optionee any right to continue in the employ of the Company or shall interfere
with or restrict in any way the rights of the Company, which are hereby
expressly reserved, to discharge the Optionee at any time for any reason
whatsoever, with or without cause, subject to the provisions of applicable law.
This is not an employment contract.
10. INCOME TAX WITHHOLDING.
(a) The Optionee authorizes the Company to withhold in
accordance with applicable law from any compensation payable to him or her any
taxes required to be withheld by Federal, state or local laws as a result of the
exercise of this Option. The Optionee agrees to notify the Company immediately
in the event of any disqualifying disposition (within the meaning of Section
421(b) of the Code) of the shares acquired upon exercise of an incentive stock
option. Furthermore, in the event of any determination that the Company has
failed to withhold a sum sufficient to pay all withholding taxes due in
connection with the exercise of this Option, or a disqualifying disposition of
the shares acquired upon exercise of an incentive stock option, the Optionee
agrees to pay the Company the amount of such deficiency in cash within five (5)
days after receiving a written demand from the Company to do so, whether or not
Optionee is an employee of the Company at that time.
(b) At such time as the Optionee is required to pay to the
Company an amount with respect to tax withholding obligations as set forth in
paragraph (a), the Optionee may elect prior to the date the amount of such
withholding tax is determined (the "Tax Date") to make such payment, or such
increased payment as the Optionee elects to make up to the maximum federal,
state and local marginal tax rates (including any related FICA obligation)
applicable to the Optionee and the particular transaction by: (i) delivering
cash; (ii) delivering part or all of the payment in previously owned shares of
Common Stock (whether or not acquired through the prior exercise of an Option);
and/or (iii) irrevocably directing the Company to withhold from the Shares that
would otherwise be issued upon exercise of the Option that number of whole
Shares having a fair market value equal to the amount of tax required or elected
to be withheld (a "Withholding Election"). If an Optionee's Tax Date is deferred
beyond the date of exercise and the Optionee makes a Withholding Election, the
Optionee will initially receive the full amount of Optioned Shares otherwise
issuable upon exercise of the Option, but will be unconditionally obligated to
surrender to the Company on the Tax Date the number of Shares necessary to
satisfy his or her minimum withholding requirements, or such higher payment as
he or she may have elected to make, with adjustments to be made in cash after
the Tax Date.
(c) Any adverse consequences incurred by an Optionee with
respect to the use of shares of Common Stock to pay any part of the Option Price
or of any tax in connection with the exercise of an Option, including, without
limitation, any adverse tax consequences arising as a result of a disqualifying
disposition within the meaning of Section 422 of the Code, shall be the sole
responsibility of the Optionee.
11. TERMINATION.
(a) Should optionee voluntarily terminate for Good Cause (as
defined below) or be involuntarily terminated for other than Bad Cause (as
defined below) more than twelve (12) months from Optionee's date of employment
with the Company, then any portion of this option that would have vested in the
six (6) months following Optionee's termination date, shall vest on Optionee's
termination date.
(b) GOOD CAUSE shall be defined as any of the following
condition, which condition(s) remain(s) in effect ten (10) days after written
notice to the Board of Directors of the Company from Optionee of such
condition(s):
(i) a decrease in Optionee's base salary and/or a
material decrease in Optionee's standard management bonus plan or employee
benefits;
(ii) a material reduction in Optionee's title, authority,
responsibilities or duties, as measured against Optionee's title, authority
or responsibility or duties immediately prior to such reduction;
(iii)Optionee is not promoted to President of the Company
within eighteen (18) months following his date of employment;
(iv) the relocation of the Optionee's work place for the
Company to a location outside Santa Xxxxx County, California; or
(v) the Company is in breach of the employment agreement
(attached) with Optionee.
(b) BAD CAUSE shall be defined as:
(i) theft, dishonesty, or intentional falsification of
any employment or Company records;
(ii) intentional and improper disclosure of the Company's
confidential or proprietary information; or
(iii)Optionee's conviction for any criminal act which
materially impairs Optionee's ability to perform his duties.
DATE OF GRANT: January 1, 1998
MISSION WEST PROPERTIES
By: /S/ XXXX X. XXXX
---------------------
Title: PRESIDENT
The Optionee acknowledges receipt of copies of the Restricted Stock
Purchase Agreement and the exhibits referred to therein, and represents that he
or she is familiar with the terms and provisions thereof, and hereby accepts
this Option subject to all of the terms and provisions thereof.
Dated: January 1, 1998
/s/ Xxxxxxx X. Xxxxxxxx
-----------------------------
Xxxxxxx X. Xxxxxxxx
EXHIBIT B
NOTICE OF EXERCISE OF STOCK OPTION
TO: Mission West Properties
00000 Xxxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxxxx 00000
ATTN: President
SUBJECT: Notice of Exercise of Stock Option
(Payment in cash or check)
In respect to the stock option granted to the undersigned on
____________, 19__, to purchase an aggregate of _________ shares of the Common
Stock of Mission West Properties, a California corporation (the "Company"), this
is official notice that the undersigned hereby elects to exercise such option to
purchase shares as follows:
Number of Shares:
Date of Purchase: ___________________, 19
Mode of Payment:
(Certified Check, Cash, Other Consideration as
permitted by the terms of the Option Agreement)
The shares should be issued as follows:
Name:
Address:
Signed:
Date:
Please send this notice of exercise to:
Mission West Properties
00000 Xxxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: President
