XXXX LAND HOLDINGS OPTION AGREEMENT
OPTIONEE: Mission West Properties, a California corporation, Mission West
Properties, L.P., a Delaware limited partnership, Mission West
Properties, L.P.I, a Delaware limited partnership, Mission West
Properties, X.X.XX, a Delaware limited partnership, Mission West
Properties, L.P.III, a Delaware limited partnership
OPTIONOR: BB&K, a California general partnership, Baccarat Fremont
Developers, LLC, a California limited liability company
PROPERTY: King Ranch Business Park, San Jose, CA
Xxxxxxx and Xxxxxx, San Jose, CA
Fremont and Xxxxxxx, Fremont, CA
Dated: December 29, 1998
XXXX LAND HOLDINGS
OPTION AGREEMENT
This Xxxx Land Holdings Option Agreement ("Agreement") is entered into as
of December 29, 1998 by and between Mission West Properties, a California
corporation (the "Company"), Mission West Properties, L.P., a Delaware limited
partnership ("MWP"), Mission West Properties, L.P. I, a Delaware limited
partnership ("MWP I"), Mission West Properties, X.X. XX, a Delaware limited
partnership ("MWP II") and Mission West Properties, L.P. III, a Delaware limited
partnership ("MWP III"; MWP, MWP I, MWP II and MWP III are referred to as the
"Operating Partnership"; the Company and the Operating Partnership are referred
to collectively as the "Optionee"), on the one hand, and the individuals and
entities listed on Appendix I who own or have the right to acquire the
properties set forth opposite such individuals' and entities' names thereon (the
"Optionors") on the other hand.
RECITALS
A. The Optionors are the owners of, or have the right to acquire, three
(3) tracts of real property located in Santa Xxxxx County and Alameda County,
California, commonly known as King Ranch Business Park, Xxxxxxx and Xxxxxx, and
Fremont and Xxxxxxx, and described in attached Exhibit A, together with all
rights, privileges, easements, and appurtenances (collectively, the "Xxxx Land
Holdings"); and all personal property, entitlements, licenses, permits,
development rights, air rights, authorizations, certificates, surveys, plans,
specifications, reports, studies, test results and all unexpired warranties and
guaranties given by unaffiliated third parties owned by the Optionors and
pertaining to or used exclusively in connection with the Xxxx Land Holdings (the
"Personal Property"); (the Xxxx Land Holdings and Personal Property shall be
collectively referred to herein as the "Xxxx Land Holdings").
B. In connection with the Acquisition Agreement dated as of May 14, 1998
(the "Acquisition Agreement"), to which the Optionee and the Optionors all are
parties, the Operating Partnership has agreed to issue L.P. Units to all of the
limited partners therein, the Company has agreed to become the general partner
of the Operating Partnership, and the Company has agreed to permit holders of
L.P. Units to exchange them for shares of the Company's common stock ("Common
Stock") under certain circumstances.
C. The Operating Partnership is governed by the Operating Partnership
Agreement and the Acquisition Agreement.
D. The Optionee desires to have an option to acquire the Xxxx Land
Holdings and the Optionors desire to grant such an option to Optionee on the
terms and conditions of this Agreement, and pursuant to the Acquisition
Agreement have agreed that the Company or the Operating Partnership shall have
the option to acquire each of the buildings comprising the Xxxx Land Holdings as
soon as such building (each an "acquired property" herein) has been completed
and fully leased by issuing either additional L.P. Units to the Optionors based
upon the Acquisition Value (as defined below), or at the Optionors' option, they
may receive cash or a combination of cash and L.P.
Units equal to the Acquisition Value.
E. This Agreement shall become effective December 29, 1998 (the "Option
Effective Date").
AGREEMENT
NOW THEREFORE, in consideration of the mutual covenants and promises of
the parties, the parties hereto agree as follows:
1. Option. Optionor grants Optionee an exclusive option ("Option") to
purchase each of the acquired properties comprising the Xxxx Land Holdings. The
Option shall be "rolling" and shall apply to each acquired property. The fact
that Optionee does not exercise the Option with respect to a given acquired
property shall not impact Optionee's right to exercise the Option with respect
to a subsequent acquired property. The Optionors' shall appoint one
representative to act as their agent in connection with the acquisition and
conveyance of each acquired property (the "Optionors' Representative"). The
Optionors' Representative is authorized to receive written notices from the
Optionee on behalf of all of the Optionors of such property. This Option does
not create any right to acquire any portion of the Xxxx Land Holdings prior to
the development of a completed building thereon, fully leased.
2. Term of Option. The term of the Option ("Term") shall commence on the
Option Effective Date and, unless Optionee has timely exercised the Option in
accordance with the provisions hereof, shall terminate on the sooner of (i) the
"Percentage Interest Date" (as defined below), or (ii) 11:59 p.m. on December
31, 2010. The Percentage Interest Date shall be the date on which the "Xxxx
Group" as defined in the Acquisition Agreement no longer owns or has the right
to acquire 65% of the Company's Common Stock, determined as though all L.P.
Units owned in the aggregate by the Xxxx Group were exchanged for shares of
Common Stock at the Exchange Factor.
3. Consideration. As consideration for the Option, Optionee has paid to
Optionor the sum of Ten and No/100 Dollars ($10. 00) ("Option Consideration"),
the receipt and sufficiency of which are hereby acknowledged.
4. Development of Xxxx Land Holdings. Optionor intends to develop the Xxxx
Land Holdings and construct thereon various industrial buildings, subject to
obtaining the necessary governmental permits and approvals. This development
will occur over several years and shall be accomplished in a manner that
Optionor determines, in its sole discretion, is prudent based upon market
conditions. The properties commonly known as Xxxxxxx and Xxxxxx and Fremont and
Xxxxxxx are not yet owned by Optionors, but are subject to acquisition
agreements wherein the Optionors have the right to acquire such properties. If
the Optionors decide not to exercise their rights to acquire such properties,
then such properties shall no longer be deemed to be part of the Xxxx Land
Holdings and shall no longer be subject to the terms of this Option.
5. Exercise. The exercise of the Option with respect to a given acquired
property must occur within thirty (30) days of receipt of the "Completion
Notice" from Optionor's Representative to Optionee. The Completion Notice shall
be delivered by Optionor's Representative to Optionee with respect to each
acquired property in the Xxxx Land Holdings once the following has occurred (i)
the completion of the building and receipt of required occupancy permits; (ii)
the execution of written leases with respect to one hundred percent (100%) of
the rentable square footage in such building, and (iii) the Optionors' election
as to the form of consideration they intend to receive for the acquired
property. Optionee may exercise the Option at any time during such thirty
(30)-day period by written notice ("Notice") to Optionor, stating the date upon
which Optionee desires to close escrow (provided that escrow shall not close
later than the sixtieth (60th) day following receipt of the Completion Notice).
6. Acquisition Value. In the event that Optionee exercises the Option, the
Acquisition Value for the subject acquired property shall be equal to (i) the
full construction cost of all improvements on or servicing the acquired
property, plus (ii) 10% of the amount set forth in subsection (i), plus (iii)
interest at LIBOR plus 1.65% per annum on the amounts set forth in subsection
(i) from the date paid by Optionor and ending at the close of escrow, plus (iv)
the acquisition value of the parcel on which the improvements were constructed
as set forth in the schedule below and carrying costs of 10% per annum thereon
from January 1, 1998 until the close of escrow, minus (v) the sum of the
principal amount of all debt (other than assessment liens) encumbering the
subject acquired property as of the closing. Optionee shall assume all
assessments that are a lien against the subject acquired property. The
acquisition value of each parcel of the Xxxx Land Holdings shall be as follows:
Location: Acquisition Value per Acquisition Value per
square foot of acre of Acquired
Acquired Property: Property:
--------------------- ---------------------
King Ranch Business Park $10.00 per square foot $435,600
Xxxxxxx and Xxxxxx $8.50 per square foot $370,260
Fremont and Xxxxxxx $20.00 per square foot $871,200
7. Payment of Acquisition Value. The Acquisition Value shall be paid in
cash or L.P. Units, at the election of the Optionor's Representative. To the
extent the Optionor's Representative elects to receive L.P. Units, the number of
L.P. Units (N) paid to Optionor shall be determined as follows:
(A-B)/C=N; where:
A = Acquisition Value
B = Any cash portion of the Acquisition Value paid to Optionor
C = The average market value of the Common Stock over the 30 trading-day
period preceding the exercise of the Option.
8. Agreement of Purchase and Sale. Within seven (7) days after exercise of
the Option by Optionee, Optionee and Optionors each shall execute an agreement
of purchase and sale for the purchase of the subject acquired property by
Optionee from Optionors. This purchase and sale agreement shall be consistent
with this Agreement and shall also reflect (a) the date of execution of the
purchase and sale agreement, (b) the method of payment and the amount of the
Acquisition Value, (c) the outside date of the close of escrow, and (d) the
legal description of the acquired property to be transferred.
9. Representations and Warranties. Optionors warrant that Optionors are the
owners of, or have a valid and binding agreement to acquire, the Xxxx Land
Holdings, and have (or will have prior to the close of escrow under the purchase
and sale agreement) insurable fee simple title to the acquired property clear of
restrictions, leases, liens, and other encumbrances, except as permitted in the
purchase and sale agreement. If this option is exercised by Optionee, Optionors
will convey (or cause the underlying owner to convey) title to the acquired
property by California statutory grant deed.
10. Assignment. Optionee shall have the right to assign the Option with the
prior consent of Optionors (whose consent shall be subject to their sole and
absolute discretion).
11. No Transfer of Parcel. From and after the Option Effective Date, unless
and until this Agreement is terminated, Optionors shall not sell or convey or
grant an option to sell or convey all or any portion of the Xxxx Land Holdings
if such sale, conveyance or grant might in any way impair Optionors' ability to
transfer the Xxxx Land Holdings to Optionee.
12. Miscellaneous.
(a) Successors and Assigns. The terms, covenants and conditions herein
contained shall be binding upon and inure to the benefit of the successors
and assigns of the parties hereto.
(b) Entire Agreement. This Agreement contains all of the covenants,
conditions and agreements between the parties and shall supersede all prior
correspondence, agreements and understandings, both oral and written.
(c) Governing Law. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of California.
(d) Notices. All notices required or permitted to be given hereunder
shall be in writing and mailed postage prepaid by certified or registered
mail, return receipt requested, or by personal delivery, to the appropriate
address indicated in this paragraph, or at such other place or places as
either Optionee or Optionors' Representative respectively may designate
from time to time in a written notice given to the other. Notices shall be
deemed sufficiently given upon receipt if by personal delivery, overnight
carrier or facsimile or three (3) days after the date of mailing thereof.
(i) Optionee's Address for Notice:
Mission West Properties
00000 Xxxxxxx Xxxxx
Xxxxxxxxx, XX 00000
Attention: Independent Directors Committee
Facsimile No.: (000) 000-0000
(ii) Optionors' Address for Notice:
Xxxx & Xxxx Enterprises, Inc.
00000 Xxxxxxx Xxxxx
Xxxxxxxxx, XX 00000
Attention: Xxxx X. Xxxx
Facsimile No.: (000) 000-0000
(e) Headings. The title and headings of the paragraphs hereof are
intended solely for means of reference and are not intended to modify,
explain or place any construction on any of the provisions of this
Agreement.
(f) Third-Party Rights. Nothing in this Agreement, express or implied,
is intended to confer on any person, other than the parties to this
Agreement and their respective successors and assigns, any rights or
remedies under or by reason of this Agreement.
(g) Authority of Parties. All persons executing this Agreement on
behalf of any party to this Agreement warrant that they have the authority
to execute this Agreement on behalf of that party.
(h) Partial Invalidity. Any provisions of this Agreement that is
unenforceable or invalid or the inclusion of which would adversely affect
the validity, or enforceability of this Agreement shall be of no effect,
but all the remaining provisions of this Agreement shall remain in full
force.
(i) Counterparts. This Agreement may be executed in one or more
counterparts.
(j) Amendment. This Agreement may not be modified, amended or
otherwise changed in any manner except by a writing executed by both
Optionee and Optionor.
(k) Time. Time is of the essence of every provision herein contained.
(l) Exhibits. The following exhibits are attached to, and made a part
of, this Agreement:
(m) Construction. The section headings and captions of this Agreement
are, and the arrangement of this instrument is, for the sole convenience of
the parties to this Agreement. The section headings, captions, and
arrangement of this instrument do not in any way affect, limit, amplify, or
modify the terms and provisions of this Agreement. The singular form shall
include plural, and vice versa. This Agreement shall not be construed as if
it had been prepared by one of the parties, but rather as if both parties
have prepared it. Unless otherwise indicated, all references to sections
are to this Agreement. All exhibits referred to in this Agreement are
attached to it and incorporated in it by this reference. As used herein all
capitalized terms shall have the meanings ascribed to them in the
Acquisition Agreement, unless otherwise expressed.
Exhibit A - Description of the Xxxx Land Holdings
IN WITNESS WHEREOF, the parties hereto have executed this Agreement in one
or more counterparts, on the date(s) set forth below, effective as of the day
and year first above written.
"Optionor"
BB&K, a California general partnership
By: /s/ Xxxx X. Xxxx
__________________________________
Its: General Partnership
_________________________________
BACCARAT FREMONT DEVELOPERS, LLC, a California Limited
Liability Company
By: /s/ Xxxxxxx Xxxxx
__________________________________
Its: Magager
_________________________________
"Optionee"
MISSION WEST PROPERTIES, a California Corporation
By: /s/ Xxxxxxx X. Xxxxxxxx
__________________________________
Its: Vice President
_________________________________
MISSION WEST PROPERTIES, L.P., a Delaware limited partnership
By: Mission West Properties, a California Corporation,
as General Partner
By: /s/ Xxxxxxx X. Xxxxxxxx
_____________________________
Its: Vice President
____________________________
MISSION WEST PROPERTIES, L.P.I, a Delaware Limited Partnership
By: Mission West Properties, a California Corporation,
as General Partner
By: /s/ Xxxxxxx X. Xxxxxxxx
_____________________________
Its: Vice President
____________________________
MISSION WEST PROPERTIES, X.X.XX, a Delaware Limited Partnership
By: Mission West Properties, a California Corporation,
as General Partner
By: /s/ Xxxxxxx X. Xxxxxxxx
_____________________________
Its: Vice President
____________________________
MISSION WEST PROPERTIES, L.P.III, a Delaware Limited Partnership
By: Mission West Properties, a California corporation,
as General Partner
By: /s/ Xxxxxxx X. Xxxxxxxx
_____________________________
Its: Vice President
____________________________
APPENDIX I
OPTIONORS OF THE XXXX LAND HOLDINGS
OPTIONOR PROPERTY
-------- --------
BB&K, a California General King Ranch Business Park, San
Partnership Xxxx, CA
Baccarat Fremont Developers, LLC, Xxxxxxx and Xxxxxx, San Jose, CA
a California Limited Liability
Company
Baccarat Fremont Developers, LLC, Fremont and Xxxxxxx, Fremont, CA
a California Limited Liability
Company
EXHIBIT A
Legal Description of the Xxxx Land Holdings
THE LAND REFERRED TO IN THIS REPORT IS SITUATED IN THE STATE OF CALIFORNIA, AND
IS DESCRIBED AS FOLLOWS:
King Ranch Business Park:
This land is located in south San Jose, California and consists of approximately
123 gross acres of unimproved land. The land is described by the following
Assessor's Parcel Numbers:
000-00-000, 000-00-000, 000-00-000, 000-00-000, 000-00-00, 000-00-000,
000-00-00, 000-00-000, 000-00-000, 000-00-000, portion of 000-00-000,
000-00-000, 000-00-000, and 000-00-000
Xxxxxxx and Xxxxxx:
This land is located in south San Jose, California and consists of approximately
7 gross acres of unimproved land. The land is described by the following
Assessor's Parcel Number:
000-00-000
Fremont and Xxxxxxx:
This land is located in Fremont, California and consists of approximately 32
gross acres of unimproved land. The land is described by the following
Assessor's Parcel Numbers:
519-0850-014-57, and 519-0850-014-54
