EXHIBIT 10.9
GRANT PURSUANT TO
1997 STOCK OPTION PLAN
MICHAEL J. ANDERSON, OPTIONEE:
Mission West Properties, a California corporation (the "Company"), hereby grants
to Optionee, an option ("Option") to purchase a total of two hundred thousand
(200,000) 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.
THE DETAILS OF YOUR OPTION ARE AS FOLLOWS:
1. NATURE OF THE OPTION
The Option is intended to be an incentive stock option within the meaning of
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"). To
the extent that the Option, or any portion thereof, does not qualify as an
incentive stock option under the Code because the aggregate fair market value
(determined at the grant date) of the Shares for which the Option or portion
thereof first becomes exercisable hereunder will, when added to the aggregate
fair market value (determined as of the respective date or dates of grant) of
the Shares or other securities for which the Option or one or more other
incentive stock options granted to the Optionee prior to the grant date (whether
under the Plan or any other option plan of the Corporation or any Parent or
Subsidiary) first becomes exercisable during the calendar year, exceed $100,000
in the aggregate, the Option or portion thereof shall constitute an incentive
stock option under the Plan in such calendar year only to the extent of such
$100,000 limitation. To the extent that the fair market value of the Shares for
which the Option first becomes exercisable in any calendar year exceeds such
$100,000 limitation, the Option may nevertheless be exercised for those excess
Shares in such calendar year as a "Nonstatutory Stock Option", as defined in
Section 2.o of the Plan.
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 in accordance with
the provisions of Section 9 of the Plan as follows:
a. VESTING AND RIGHT TO EXERCISE
i. The Option shall vest as follows, subject to the Optionee's
Continuous Employment with the Company:
DATE OF EARLIEST EXERCISE NUMBER OF SHARES
(VESTING) (INSTALLMENT)
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Six months from date of grant 12,500
One year from date of grant 25,000
Each month thereafter for 35 months 4,514
48th month from date of grant 4,510
Subject to the provisions of subparagraphs ii and iii below, the
Optionee can exercise any portion of the Option until the expiration
of the Option term. 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 attached hereto ("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. In the event
of the Optionee's death, disability or other termination of
employment, the exercisability of the Option shall be governed by
Sections 9.d, e and f of the Plan. iii. 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
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. b.
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, subject to the provisions of Sections 9.f and 10 of the Plan, may
not be transferred in any manner other than by will or by the laws of descent
and distribution. 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;
b. certified or bank cashier's check;
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, 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 ("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. The number of Shares
covered by this Option shall be adjusted in accordance with the provisions of
Section 11 of the Plan in the event of changes in the capitalization or
organization of the Company, or if the Company is a party to a merger or other
corporate reorganization.
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 Plan and 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 Agreement or in the Plan 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
subparagraph a, the Optionee may elect prior to the date the amount of such
withholding tax is determined 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 in accordance with the provisions of Section 9.g of
the Plan. 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 Clara 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.
Dated the 1st day of January 1998
MISSION WEST PROPERTIES
By
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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.
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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.
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Spouse