[MISSION WEST PROPERTIES LOGO] NON-EMPLOYEE DIRECTOR GRANT PURSUANT TO
1997 STOCK OPTION PLAN
________________________, OPTIONEE:
Mission West Properties, a California corporation (the "Company"), hereby grants
to Optionee, an option ("Option") to purchase a total of __________________
(_______) shares of Common Stock ("Shares") of the Company, at the price set
forth herein, and in all respects subject to the terms, definitions and
provisions of the Company's 1997 Stock Option Plan ("Plan"), which is
incorporated herein by this reference.
1. NATURE OF THE OPTION
This Option is intended to be a nonstatutory option and is NOT an incentive
stock option within the meaning of Section 422 of the Internal Revenue Code of
1986 ("Code").
2. OPTION PRICE
The Option Price is _______________ ($________) for each share of Common Stock,
which is one hundred percent (100%) of the fair market value of the Common Stock
as determined on the date of grant of this Option.
3. VESTING AND EXERCISE OF OPTION
This Option shall be exercisable during its term in accordance with the
provisions of Section 5 and Section 9 of the Plan as follows:
a. VESTING AND RIGHT TO EXERCISE
i. Any Option granted to a Non-Employee Director shall vest and become
exercisable in installments cumulatively with respect to 1/48 of the
Optioned Shares on the first day of each month following the date of grant
only while the Non-Employee Director remains a director.
ii. Any Option granted hereunder to any person other than an Outside
Director shall vest and become exercisable, cumulatively, as to 20% of the
Optioned Shares on each anniversary of the date of the grant of the Option
until all of the Optioned Shares have vested, subject to the Optionee's
Continuous Employment.
iii. This Option may not be exercised for a fraction of a share or for
fewer than ten (10) shares.
iv. In the event of the Optionee's death, disability or other
termination of service as a Director, the exercisability of the Option
shall be governed by Section 9(b) of the Plan.
b. METHOD OF EXERCISE
This Option shall be exercisable by notifying the Company in writing of the
election to exercise the Option, the number of Shares in respect of which
the Option is being exercised, and such other representations and
agreements as to the holder's investment intent with respect to such Shares
as may be required by the Company pursuant to the provisions of the Plan.
Such written notice shall be signed by the Optionee and shall be delivered
in person or by certified mail to the Secretary of the Company. The
written notice shall be accompanied by payment in full of the aggregate
purchase price of the shares purchased. The certificate or certificates
for shares of stock as to which the Option is exercised shall be registered
in the name of the Optionee.
c. RESTRICTIONS ON EXERCISE
This Option may not be exercised if the issuance of such 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
any 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 the 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.
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4. NON-TRANSFERABILITY OF OPTION
This Option may not be transferred in any manner otherwise than by will or by
the laws of descent and distribution and may be exercised during the lifetime of
the Optionee only by him, except that to the extent permitted by the Committee,
an Optionee may transfer Nonstatutory Stock Options 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:
i. cash;
ii. check;
iii. wire transfer;
iv. promissory note;
v. authorization to retain from the total number of shares as to which
the Option is exercised that number of shares having a fair market value on
the date of exercise equal to the exercise price for the total number of
shares as to which the Option is exercised;
vi. in lieu of delivery of a cash payment for the purchase price of the
Shares for which the Option is exercised, by delivery of a sell order to a
broker for the shares being purchased and an agreement to pay the purchase
price for the share being purchased (or irrevocable instructions to the
Optionee's broker to deliver to the Company the amount of sale proceeds
required to pay the exercise price) on or before the settlement date for
the sale of such shares; or
vii. by surrender of other shares of the Company's Common Stock that:
1/ either have been owned by the Optionee for more than six (6)
months on the date of surrender or were not acquired, directly or
indirectly, from the Company; and
2/ have a fair market value (within the meaning of Section 8(a)
of the Plan) on the date of surrender equal to the aggregate Option
Price of the Shares as to which the Option is being exercised.
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 by Rule 16b-3 under 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. TERM OF OPTION
The term of each Option granted under the Plan shall be 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 Plan and the terms of this Option.
7. NO RIGHT TO SERVE AS A DIRECTOR
Nothing in this Agreement or in the Plan shall confer upon the Optionee any
right with respect to continuation of service as a Director or nomination to
serve as a Director with the Company or shall interfere with or restrict in any
way the rights of the Company, which are hereby expressly reserved, to terminate
the Optionee's directorship at any time. This is not an employment contract.
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8. TAXATION UPON EXERCISE OF OPTION
Optionee understands that, upon exercise of this Option, he will recognize
income for tax purposes in an amount equal to the excess of the then fair market
value of the Shares purchased over the exercise price paid for such Shares.
(Since the Optionee is subject to Section 16(b) of the Exchange Act, the
measurement and timing of such income may be deferred under certain
circumstances, and the Optionee is advised to contact a tax advisor concerning
the desirability of filing an 83(b) election in connection with the exercise of
the Option.) Upon a resale of such Shares by the Optionee, any difference
between the sale price and the fair market value of the Shares on the date of
exercise of the Option to the extent not included in income as described above,
will be treated as capital gain or loss.
Dated the _____ day of ________________________.
MISSION WEST PROPERTIES
By ____________________________________________________
Duly authorized on behalf of the Board of Directors
The Optionee acknowledges receipt of copies of the Plan, 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. The Optionee
hereby agrees to accept as binding, conclusive and final all decisions or
interpretations of the Committee upon any questions arising under the Plan.
_____________________________________________
Optionee
CONSENT OF SPOUSE
I, _________________________, spouse of the Optionee who executed the foregoing
Agreement, hereby agree that my spouse's interest in the shares of Common Stock
subject to said Agreement shall be irrevocably bound by the Agreement's terms.
I further agree that my community property interest in such shares, if any,
shall similarly be bound by said Agreement and that such consent is binding upon
my executors, administrators, heirs and assigns. I agree to execute and deliver
such documents as may be necessary to carry out the intent of said Agreement and
this consent.
_____________________________________________
Spouse
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