OWNERSHIP LIMIT EXEMPTION AGREEMENT
THIS OWNERSHIP LIMIT EXEMPTION AGREEMENT (the "Agreement"), dated as of
December 29, 1998, is entered into by and between Mission West Properties, Inc.,
a Maryland corporation (the "Company") and ▇▇▇ ▇▇▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇▇▇ (the
"McCarthys").
R E C I T A L S
A. Pursuant to Section 7.2.7 of the Company's Articles of Amendment and
Restatement (the "Articles"), a copy of which is attached to this Agreement as
Appendix I, the board of directors of the Company is authorized to exempt
certain persons from the ownership limitation set forth in the Articles (the
"Ownership Limitation"), which limits a person from owning, beneficially or
constructively, more than nine percent (9%) in value of the aggregate of the
outstanding shares of the Company's equity securities, including, without
limitation, common stock, preferred stock and any other equity security of the
Company convertible into or exchangeable for common stock or preferred stock
(the "Capital Stock"), upon satisfaction of certain conditions.
B. The McCarthys may be deemed to Beneficially Own or Constructively Own
(as those terms are defined in the Articles) more than nine percent (9%) of the
Capital Stock of the Company.
C. The board of directors of the Company has determined to permit the
McCarthys to be Excepted Holders (as that term is defined in the Articles) and
therefore, to be exempt from the Ownership Limitation, and to establish an
Excepted Holder Limit (as that term is defined in the Articles) for the
McCarthys.
A G R E E M E N T
NOW, THEREFORE, in consideration of the premises and the mutual covenants,
conditions and promises hereinafter set forth, the parties agree as follows:
1. REPRESENTATIONS OF THE MCCARTHYS. Each of the McCarthys represent and
undertake as follows:
1.1 BASIC RESTRICTIONS. He and they will not Beneficially Own or
Constructively Own shares of Capital Stock:
(a) in excess of the Excepted Holder Limit set forth in Section 2
hereof; or(b) to the extent that such Beneficial or Constructive Ownership of
Capital Stock would result in the Company being "closely held" within the
meaning of Section 856(h) of the Internal Revenue Code of 1986, as amended (the
"Code") (without regard to whether the ownership interest is held during the
last half of a taxable year), or otherwise failing to qualify as a Real Estate
Investment Trust ("REIT") for a reason related to his or their Beneficial or
Constructive Ownership of Capital Stock.
1.2 RESTRICTIONS RELATED TO TENANTS. They do not and will not own, actually
or Constructively, an interest in a tenant of the Company (or a tenant of any
entity owned or controlled by the Company) that would cause the Company to own,
actually or Constructively, more than 9.9% interest (as set forth in Section
856(d)(2)(B) of the Code) in such tenant (for this purpose, a tenant from whom
the Company, or an entity owned or controlled by the Company, derives and is
expected to continue to derive a sufficiently small amount of revenue such that,
in the opinion of the board of directors of the Company, rent from such tenant
would not adversely affect the Company's ability to qualify as a REIT, shall not
be treated as a tenant of the Company).
2. EXCEPTED HOLDER LIMIT. The aggregate Excepted Holder Limit for the McCarthys,
in combination with all persons who may be deemed to have Constructive Ownership
of their shares of Capital Stock and all persons whose shares of Capital Stock
may be deemed Constructively Owned by either ▇▇▇ ▇▇▇▇▇▇▇▇ or ▇▇▇▇ ▇▇▇▇▇▇▇▇,
shall be eighteen and one-half percent (18.50%), such that the Capital Stock
Constructively Owned by both of them and all such persons at one time may not
exceed eighteen and one-half percent (18.50%).
3. RESULTS OF VIOLATIONS. The McCarthys hereby acknowledge and agree that any
violation or attempted violation of the terms of this Agreement (or other action
which is contrary to the restrictions contained in Sections 7.2.1 through 7.2.6
of the Articles) will result in such shares of Capital Stock being automatically
transferred to a trust in accordance with Sections 7.2.1(b) and Section 7.3 of
the Articles.
4. MISCELLANEOUS.
4.1 NOTICES. All communications under this agreement shall be in writing
and shall be deemed to have been duly given when (a) delivered by hand, (b) sent
by facsimile transmission (with receipt confirmed), provided that a copy is
mailed by registered mail, return receipt requested, or (c) when received by the
addressee, if sent by Express Mail, Federal Express or other express delivery
service (receipt requested), in each case to the appropriate addresses, and
telecopier numbers set forth on the signature page hereto (or to such other
addresses, and fax numbers as a party may designate as to itself by notice to
the other parties).
4.2 GOVERNING LAW. This Agreement and (unless otherwise provided) all
amendments hereof and waivers and consents hereunder shall be governed by the
internal laws of the State of Maryland, without regard to the conflicts of laws
principles thereof.
4.3 CAPTIONS. The captions or headings of the Sections of this Agreement
are for convenience only, and shall not control or affect the meaning or
construction of any of the terms or provisions of this Agreement. References in
this Agreement to Sections are references to Sections of this Agreement, unless
expressly stated to the contrary.
4.4 NO WAIVER. The failure of a party to insist upon strict adherence to
any term of this Agreement on any occasion shall not be considered a waiver or
deprive that party of the right thereafter to insist upon strict adherence to
that term or any other term of this Agreement. Any waiver must be in writing.
4.5 SUCCESSORS AND ASSIGNS. This Agreement may be assigned by the Company,
but may not be assigned by the McCarthys without the prior written consent of
the Company. This Agreement shall bind, and to the extent assignable shall inure
to the benefit of, the parties hereto and their respective heirs, executors,
personal representatives, successors and permitted assigns.
4.6 ENTIRE AGREEMENT; AMENDMENT. This Agreement supersedes all prior
agreements among the parties with respect to its subject matter, and is intended
(with the documents referred to herein) as a complete and exclusive statement of
the terms of the agreement among the parties with respect thereto and cannot be
changed or terminated except by a written instrument executed by the Company and
the McCarthys.
4.7 SEVERABILITY. If one or more provisions of this Master Agreement are
held to be unenforceable under applicable law, such provision shall be excluded
from this Master Agreement and the balance of the Master Agreement shall be
interpreted as if such provision were so excluded and shall be enforceable in
accordance with its terms.
4.8 COUNTERPARTS. This Agreement may be executed in counterparts and
delivered by electronic facsimile transmission, and each signed counterpart
transmitted by electronic facsimile shall be considered an original, but all of
which together shall constitute the same instrument.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
MISSION WEST PROPERTIES, INC., ▇▇▇▇ ▇▇▇▇▇▇▇▇
a Maryland corporation
/S/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
By: /S/ ▇▇▇▇ ▇. ▇▇▇▇ ------------------
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▇▇▇▇ ▇. ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
Chairman, Chief Executive
Officer and President /S/ ▇▇▇ ▇▇▇▇▇▇▇▇
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