As filed with the Securities and Exchange Commission on June 9, 1999.
File No. 333-__________
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
MISSION WEST PROPERTIES, INC.
(Exact Name of Registrant as Specified in Its Charter)
Maryland 95-2635431
(State or Other Jurisdiction (I.R.S. Employee Identification No.)
of Incorporation or Organization)
10050 Bandley Drive, Cupertino, CA 95014
(408)725-0700
(Address, including ZIP Code and Telephone Number, of Principal Executive
Offices)
MISSION WEST PROPERTIES, INC.
1997 STOCK OPTION PLAN
(Full Title of the Plan)
Mr. Carl E. Berg
10050 Bandley Drive, Cupertino, California 95014
(Name and Address of Agent For Service)
(408) 725-0700
(Telephone Number, Including Area Code, of Agent For Service)
Copies to:
Alan B. Kalin
Daniel D. Meyers
McCutchen, Doyle, Brown & Enersen, LLP
3150 Porter Drive, Palo Alto, California 94304-1212
Tel: (650)840-4400, Fax: (650)849-4800
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CALCULATION OF REGISTRATION FEE
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Title of
Each Class Proposed Proposed
of Maximum Maximum
Securities Amount To Offering Aggregate Amount of
To Be Be Price Per Offering Registration
Registered Registered(1) Unit* Price* Fee
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<S> <C> <C> <C> <C>
Outstanding shares and 392,917 $4.50(2) $ 1,768,127 $ 492
options to purchase
Common Stock, $.001
par value
Common Stock, $.001 5,092,083 $8 3/8(4) $42,646,196 $11,856
par value, reserved
for future option
grants(3)
--------- -------- ----------- -------
TOTAL 5,485,000 - $44,414,323 $12,348
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(1) This Registration Statement shall also cover any additional shares of
common stock which become issuable by reason of any stock dividend, stock
split, recapitalization or other similar transaction effected without the
reciept of consideration which results in an increase in the number of the
outstanding shares of stock.
(2) Fee calculated pursuant to Rule 457(h)(i) based upon the weighted average
exercise price of options granted and outstanding as of May 28, 1999 which
equals the maximum aggregate offering price for all outstanding options
divided by the number of shares of common stock subject to the outstanding
options.
(3) Shares of common stock issuable on exercise of options which may be granted
in the future under the option plan.
(4) Estimated solely for the purpose of calculating the amount of the
registration fee based on the average of the high and low prices reported
for the common stock on the American Stock Exchange on June 9, 1999,
pursuant to Rule 457(h)(1) and 457(c).
* Estimated solely for the purpose of calculating the amount of the
registration fee based on the average of the high and low prices reported
for the Common Stock on the American Stock Exchange on June 9, 1999,
pursuant to Rule 457(h)(i).
The Registration Statement shall become effective upon filing in accordance
with Rule 462 under the Securities Act of 1933.
<PAGE>
450,000 SHARES
MISSION WEST PROPERTIES, INC.
COMMON STOCK
----------------
This prospectus relates to the reoffer and resale of 450,000 shares of our
common stock, $.001 par value, which have been or may be acquired under our 1997
Stock Option Plan, or Option Plan, or other employee benefit plans. The shares
of Common Stock acquired under the Option Plan may be offered from time to time
by the selling stockholders named or described in this prospectus. The shares
may be offered through brokers and dealers to be selected by the selling
stockholders, and may be offered for sale through the American Stock Exchange,
or "AMEX", or the Pacific Exchange Incorporated, or "PSE", pursuant to this
registration statement, pursuant to Rule 144, in negotiated transactions, at
fixed prices, at market prices prevailing at the time of sale, at prices related
to prevailing market prices or at negotiated prices.
See "Selling Stockholders" and "Plan of Distribution."
We will receive none of the proceeds from the sale of the shares by the
selling stockholders. We have agreed to bear certain expenses, including the
fees and costs of preparing, filing and keeping effective this registration
statement (other than selling commissions and fees and expenses of counsel and
other advisors to the selling stockholders) in connection with the registration
of the shares.
Our common stock is listed on the AMEX and the PSE under the symbol "MSW".
On June 9, 1999, the closing price of the common stock, as quoted on the AMEX,
was $8 3/8.
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INVESTING IN OUR COMMON STOCK INVOLVES RISKS.
SEE "RISK FACTORS" BEGINNING ON PAGE 5.
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The selling stockholders and any broker-dealers, agents or underwriters
that participate with the selling stockholders in the distribution of the shares
may be deemed to be "underwriters" within the meaning of Section 2(11) of the
Securities Act of 1933, and any commissions received by them and any profit on
the resale of the shares purchased by them may be deemed underwriting
commissions or discounts under the Securities Act.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
The date of this prospectus is June 10, 1998.
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TABLE OF CONTENTS
<S> <C>
Available Information .................................................3
Information Incorporated by Reference..................................3
Risk Factors ..........................................................4
Use of Proceeds ......................................................11
The Selling Stockholders .............................................11
Plan of Distribution .................................................12
Legal Matters ........................................................12
Experts ..............................................................12
Disclosure of Commission Position on Indemnification
for Securities Act Liabilities ....................................12
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AVAILABLE INFORMATION
We are subject to the informational requirements of the Securities
Exchange Act of 1934, as amended, or the "Exchange Act". In accordance with the
Exchange Act, we file all required reports, proxy statements and other
information with the Securities and Exchange Commission, or the "Commission".
Reports, proxy statements and other information filed by us may be inspected and
copied at the public reference facilities maintained by the Commission at 450
Fifth Street, N.W., Room 1024, Washington, D.C. 20549, and at the Commission's
regional offices located at 7 World Trade Center, 13th Floor, New York, New York
10048, and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661; and copies of such material may be obtained from the Public
Reference Section of the Commission, Washington, D.C. 20549, at prescribed
rates. In addition, the Commission maintains a web site that contains reports,
proxy and information statements and other information regarding registrants
that file electronically with the Commission ("http://www.sec.gov"). Such
reports, proxy statements and other information may also be inspected at the
offices of the American Stock Exchange, 86 Trinity Place, New York, New York,
and the Pacific Exchange Incorporated, 115 Sansome Street, 8th Floor, San
Francisco, California.
INFORMATION INCORPORATED BY REFERENCE
The following documents filed by us with the Commission are incorporated
by reference in this prospectus:
1. Our Annual Report on Form 10-K for the fiscal year ended December 31,
1998.
2. All other reports filed pursuant to Section 13(a) or 15(d) of the
Exchange Act since December 31, 1998.
3. The description of our common stock contained in our registration
statement on Form S-4 filed on May 15, 1998 and declared effective on November
23, 1998 (Registration #333-52835-99) and the prospectus dated November 23, 1998
filed pursuant to Rule 424(b).
The above-listed documents are on file with the Commission and are
incorporated in this prospectus by reference and made a part hereof. All
documents we subsequently filed pursuant to Section 13(a), 13(c), 14 or 15(d) of
the Exchange Act, prior to the termination of the offering of the common stock
under this prospectus shall be deemed to be incorporated by reference into this
prospectus registration statement. Any statement contained in this prospectus,
any prospectus supplement or in a document incorporated by reference shall be
deemed modified or superseded to the extent that a statement contained in any
prospectus supplement or in any other subsequently filed document which also is
or is deemed to be incorporated by reference herein or therein modifies or
supersedes such statement. Any statement so modified or superseded shall not be
deemed to constitute a part hereof, except as so modified or superseded.
We will cause to be furnished without charge to each person to whom this
prospectus is delivered, upon the written or oral request of such person, a
complete copy of the above referenced Form 10-K or Form 10-Q or other documents
filed under the Exchange Act. Requests should be addressed to: Mission West
Properties, 10050 Bandley Drive, Cupertino, CA 95014; telephone:
(408) 725-0700.
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RISK FACTORS
You should carefully consider the following risks, together with the other
information contained and incorporated by reference in this prospectus before
deciding to invest in shares of our common stock. The following risks relate
principally to our business and the industry in which we operate. The risks and
uncertainties classified below are not the only ones we face.
WE ARE DEPENDENT ON CARL E. BERG, AND IF WE LOSE HIS SERVICES OUR BUSINESS MAY
BE HARMED AND OUR STOCK PRICE COULD FALL.
We are substantially dependent upon the leadership of Carl E. Berg, our
Chairman, President and Chief Executive Officer. Losing Mr. Berg's knowledge and
abilities could have a material adverse effect on our business and the value of
our common stock. He manages our day-to-day operations and devotes a significant
portion of his time to our affairs, but he has a number of other business
interests as well. These other activities reduce Mr. Berg's attention to our
business.
MR. BERG AND HIS AFFLILIATES EFFECTIVELY CONTROL OUR CORPORATION AND THE
OPERATING PARTNERSHIPS AND MAY ACT IN WAYS THAT ARE DISADVANTAGEOUS TO OTHER
STOCKHOLDERS.
SPECIAL BOARD VOTING PROVISIONS. Our governing corporate documents, which
are our articles of amendment and restatement, or charter, and our bylaws,
provide substantial control rights for the Berg Group. The Berg Group's control
of our corporation means that the value and returns from your investment in us
are subject to the Berg Group's exercise of its rights. These rights include a
requirement that Mr. Berg or his designee as director approve certain
fundamental corporate actions, including amendments to our charter and bylaws
and any merger, consolidation or sale of all or substantially all of our assets.
In addition, our bylaws provide that a quorum necessary to hold a valid meeting
of the board of directors must include Mr. Berg or his designee. The rights
described in the two preceding sentences apply only as long as the Berg Group
members and their affiliates, other than us and the operating partnerships,
beneficially own, in the aggregate, at least 15% of the outstanding shares of
common stock on a fully diluted basis, which is calculated based on all
outstanding shares of common stock and all shares of common stock that could be
acquired upon the exercise of all outstanding options to acquire our voting
stock, as well as all shares of common stock issuable upon exchange of all O.P.
Units. Also, directors representing more than 75% of the entire board of
directors must approve other significant transactions, such as incurring debt
above certain amounts and conducting business other than through the operating
partnerships. Without the approval of Mr. Berg or his designee, board of
directors approval that we may need for actions that might result in a sale of
your stock at a premium or raising additional capital when needed may be
difficult or impossible to obtain.
BOARD OF DIRECTORS REPRESENTATION. The Berg Group members have the right to
designate two of the director nominees submitted by our board of directors to
stockholders for election, as long as the Berg Group members and their
affiliates, other than us and the operating partnerships, beneficially own, in
the aggregate, at least 15% of the outstanding shares of common stock on a fully
diluted basis, which is calculated based on all outstanding shares of common
stock and all shares of common stock that could be acquired upon the exercise of
all outstanding options to acquire our voting stock, as well as all shares of
common stock issuable upon exchange of all O.P. Units. If the fully diluted
ownership of the Berg Group members and their affiliates, other than us and the
operating partnerships, is less than 15% but is at least 10% of the common
stock, the Berg Group members have the right to designate one of the director
nominees submitted by our board of directors to stockholders for election. Its
right to designate director nominees affords the Berg Group substantial control
and influence over the management and direction of our corporation. The Berg
Group's interests could conflict with the interests of our stockholders, and
could adversely affect the price of our common stock.
SUBSTANTIAL OWNERSHIP INTEREST. The Berg Group currently owns O.P. Units
representing approximately 84.7% of the equity interests in the operating
partnerships and approximately 84.5% of our equity interests on a fully diluted
basis, which is calculated based on all outstanding shares of common stock and
all shares of common stock that
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could be acquired upon the exercise of all outstanding options to acquire our
voting stock, as well as all shares of common stock issuable upon exchange of
all O.P. Units. The O.P. Units may be converted into shares of common stock,
subject to limitations set forth in our charter and other agreements with the
Berg Group, and upon conversion would represent voting control of our
corporation. The Berg Group's ability to exchange its O.P. Units for common
stock permits it to exert substantial influence over the management and
direction of our corporation. This influence increases our dependence on the
Berg Group.
LIMITED PARTNER APPROVAL RIGHTS. Mr. Berg and other limited partners,
including other members of the Berg Group, may restrict our operations and
activities through rights provided under the terms of the amended and restated
agreement of limited partnership which governs each of the operating
partnerships and our legal relationship to each operating partnership as its
general partner. Matters requiring approval of the holders of a majority of the
O.P. Units, which necessarily would include the Berg Group, include the
following:
- the amendment, modification or termination of any of the operating
partnership agreements;
- the transfer of any general partnership interest in the operating
partnerships, including with certain exceptions, transfers attendant
to any merger, consolidation or liquidation of our corporation;
- the admission of any additional or substitute general partners in the
operating partnerships;
- any other change of control of the operating partnerships;
- a general assignment for the benefit of creditors or the appointment
of a custodian, receiver or trustee for any of the assets of the
operating partnerships; and
- the institution of any bankruptcy proceeding for any operating
partnership.
In addition, as long as the Berg Group members and their affiliates, other
than us and the operating partnerships, beneficially own, in the aggregate, at
least 15% of the outstanding shares of common stock on a fully diluted basis,
which is calculated based on all outstanding shares of common stock and all
shares of common stock that could be acquired upon the exercise of all
outstanding options to acquire our voting stock, as well as all shares of common
stock issuable upon exchange of all O.P. Units, the consent of the limited
partners holding the right to vote a majority of the total number of O.P. Units
outstanding is also required with respect to:
- the sale or other transfer of all or substantially all of the assets
of the operating partnerships and certain mergers and business
combinations resulting in the complete disposition of all O.P. Units;
- the issuance of limited partnership interests senior to the O.P. Units
as to distributions, assets and voting; and
- the liquidation of the operating partnerships.
The liquidity of your investment in our common stock, including our ability
to respond to acquisition offers, will be subject to the exercise of these
rights.
OUR CONTRACTUAL BUSINESS RELATIONSHIP WITH THE BERG GROUP PRESENTS ADDITIONAL
CONFLICTS OF INTERESTS WHICH MAY RESULT IN THE REALIZATION OF ECONOMIC BENEFITS
OR THE DEFERAL OF TAX LIABILITIES BY THE BERG GROUP WITHOUT EQUIVALENT BENEFITS
TO OUR STOCKHOLDERS
Our contracts with the Berg Group provide it with interests that could
conflict with the interests of our other stockholders, including the following:
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- our headquarters are leased from an entity owned by the Berg Group, to
whom we pay rent of approximately $6,700 per month;
- the Berg Group is permitted to conduct real estate and business
activities other than our business;
- if we decline an opportunity that has been offered to us, the Berg
Group may pursue it, which would reduce the amount of time that Mr.
Berg could devote to our affairs and could result in the Berg Group's
development of properties that compete with our properties for
tenants;
- in general, we have agreed to limit the liability of the Berg Group to
our corporation and our stockholders arising from the Berg Group's
pursuit of these other opportunities;
- we acquired most of our properties from the Berg Group on terms that
were not negotiated at arm's length and without many customary
representations and warranties that we would have sought in an
acquisition from an unrelated party; and
- we have assumed liability for debt to the Berg Group and debt for
which the Berg Group was liable.
The Berg Group has agreed that the independent directors committee of our
board of directors must approve all new transactions between us and any of them,
or between us and any entity in which it directly or indirectly owns 5% or more
of the equity interests, including the operating partnerships for this purpose.
This committee currently consists of three directors who are independent of the
Berg Group.
EXCLUDED PROPERTIES. With our prior knowledge, the Berg Group retained two
R&D properties in Scotts Valley, California, in Santa Cruz County, in which we
and the operating partnerships have no ownership interest. Efforts of the Berg
Group to lease these other properties may interfere with similar efforts on our
behalf.
PENDING DEVELOPMENT PROJECTS. We and the operating partnerships have agreed
under the terms of a pending projects acquisition agreement to acquire from the
Berg Group each of five R&D properties potentially aggregating approximately
395,000 rentable square feet as it is completed and leased. The purchase price
for each property will be calculated based on a fixed capitalization rate
applied to actual average rental rates on the property over the lease term. We
currently estimate that the aggregate purchase price of these five properties,
assuming payment in cash and/or assumption of debt, will be approximately $41.9
million. The Berg Group may elect to receive cash or O.P. Units, valued at $4.50
per unit, which value was set when we entered into the acquisition agreement
with the Berg Group in May 1998. Our stock was not trading at that time. As the
market price of a share of common stock was $8 3/8 at June 9, 1999, this
valuation represents a substantial discount from the current market value of the
common stock that may be issued in exchange for these O.P. Units. Our issuance
of O.P. Units to acquire any of these properties, instead of paying cash, may
result in a higher acquisition cost and additional depreciation expenses that
reduce our net income per share. Acquisitions of additional O.P. Units will
increase the Berg Group's ownership interest in our business and could reduce
the amount of cash available for distribution per share to our other
stockholders which could cause our stock price to fall.
The Berg Group's election to receive cash in place of O.P. Units for these
properties and to place debt on the properties that we would be required to
assume would reduce our liquidity and could increase our debt to total market
capitalization ratio. These factors could harm our business and cause our stock
price to fall, while the Berg Group receives substantial benefits.
BERG LAND HOLDINGS. The Berg Group owns or has an option to purchase
several parcels of unimproved land in the Silicon Valley that we and the
operating partnerships have the right to acquire under the terms of the Berg
land holdings option agreement. The Berg Group is not obligated to exercise the
option that it holds to acquire one of the properties that is subject to the
agreement, however. If the Berg Group fails to exercise that option, we will
lose the ability to purchase that property. In addition, we have agreed to pay a
fixed amount plus additional charges for any of the properties that we do
acquire. We must pay the acquisition price in cash unless the Berg Group elects,
in its discretion, to receive O.P. Units valued at the average
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market price of a share of common stock during the 30-day period preceding the
acquisition date. At the time of acquisition, which is subject to the approval
of the independent directors committee of our board of directors, these
properties may be encumbered by debt that we or the operating partnerships will
be required to assume or repay. The use of our cash or an increase in our
indebtedness to acquire these properties could have a material adverse effect on
our financial condition, results of operations and ability to make cash
distributions to our stockholders.
TAX CONSEQUENCES OF SALE OF PROPERTIES. Because many of our properties have
unrealized taxable gain, a sale of these properties could create adverse income
tax consequences for limited partners of the operating partnerships. We have
agreed with Carl E. Berg, Clyde J. Berg and John Kontrabecki that each can
prevent us and the operating partnerships from selling or transferring
properties, that were directly or indirectly acquired from him in July, 1998, in
any taxable transaction prior to December 29, 2008. As a result, our
opportunities to sell these properties may be limited. If we need to sell any of
these properties to raise cash to service our debt, acquire new properties, pay
cash distributions to stockholders or for other working capital purposes, we may
be unable to do so. These restrictions could harm our business and cause our
stock price to fall.
TERMS OF TRANSFER; ENFORCEMENT OF AGREEMENT OF LIMITED PARTNERSHIP. The
terms of the pending projects acquisition agreement, the Berg land holdings
option agreement, the partnership agreement of each operating partnership, and
other material agreements through which we have acquired our interests in the
operating partnerships and the properties formerly controlled by the Berg Group
were not determined through arm's-length negotiations, and could be less
favorable to us than those obtained from an unrelated party. In addition, Mr.
Berg and representatives of the Berg Group sitting on our board of directors may
be subject to conflicts of interests with respect to their obligations as our
directors to enforce the terms of the partnership agreement of each operating
partnership when such terms conflict with their personal interests. The terms of
our charter and bylaws also were not determined through arm's-length
negotiations. Some of these terms, including representations and warranties
applicable to acquired properties, are not as favorable as those that we would
have sought through arm's-length negotiations with unrelated parties. As a
result, an investment in our common stock may involve risks not found in
businesses in which the terms of material agreements have been negotiated at
arm's length.
RELATED PARTY DEBT. As of March 31, 1999, we were liable for loans
aggregating approximately $24.1 million payable to the Berg Group. These loans
are secured by three of our properties and were initially scheduled to mature on
March 31, 1999. The maturity date has been extended to December 31, 1999 by
agreement with the Berg Group. Effective September 30, 1998, we assumed a $100
million line of credit with Wells Fargo Bank N.A. previously provided to and
guaranteed by the Berg Group, which is secured by 14 of our properties. We have
the right to draw on the line of credit and are liable for repayment of all
amounts owing under the line of credit, which totaled approximately $18.5
million at March 31, 1999. The Berg Group continues to be liable as guarantor
under the line of credit, which expires on October 1, 1999. All of these loans
bear interest at an annual rate equal to that under the Wells Fargo Bank line of
credit. If we are unable to repay our debts to the Berg Group or Wells Fargo
Bank when due, however, the Berg Group, in addition to the lenders, could take
action to enforce our payment obligations. Loan defaults of this type could
materially adversely affect our business, financial condition and our results of
operations and cause our stock price to fall. They also could result in a
substantial reduction in the amount of cash distributions to our stockholders.
In turn, if we fail to meet the minimum distributions test because of a loan
default or another reason, we could lose our REIT classification for federal
income tax purposes.
In December 1998 and April 1999, in our capacity as the general partner of
each of the operating partnerships, we declared cash distributions to all
partners. The total distributions of approximately $16.5 million in the
aggregate to the Berg Group were loaned back to the operating partnerships in
lieu of having them draw additional funds under the line of credit. As of March
31, 1999, the amount owed was $9.6 million, which represents the portion of the
loan related to the December 1998 distribution. The Berg Group may request
repayment of these funds at any time. Such requests might be made when we or the
operating partnerships do not have sufficient funds available to repay the
loans. In that case, the Berg Group would have the right to take legal action to
enforce our obligation to repay the requested amounts, which could harm our
business and financial condition and could cause our stock price to fall. In
addition, we do not anticipate that the Berg Group will always allow us to
retain distributions payable to the Berg Group as a source of additional
financing of our operations.
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WE MAY CHANGE OUR INVESTMENT AND FINANCING POLICIES AND INCREASE YOUR INVESTMENT
RISK WITHOUT STOCKHOLDER APPROVAL.
Our board of directors determines the investment and financing policies of
the operating partnerships and our policies with respect to certain other
activities, including our business growth, debt capitalization, distribution and
operating policies. Our board of directors may amend these policies at any time
without a vote of the stockholders. Changes in these policies could materially
adversely affect our financial condition, results of operations and ability to
make cash distributions to our stockholders, which could harm our business and
cause our stock price to fall.
ANTI-TAKEOVER PROVISIONS IN OUR CHARTER COULD PREVENT ACQUISITIONS OF OUR STOCK
AT A SUBSTANTIAL PREMIUM.
Provisions of our charter and our bylaws could delay, defer or prevent a
transaction or a change in control of our corporation, or a similar transaction,
that might involve a premium price for our shares of common stock or otherwise
be in the best interests of our stockholders. Provisions of the Maryland general
corporation law, which would apply to potential business combinations with
acquirers other than the Berg Group or stockholders who invested in us in
December 1998, also could prevent the acquisition of our stock for a premium.
AN INVESTMENT IN OUR STOCK INVOLVES RISKS RELATED TO REAL ESTATE INVESTMENTS
THAT COULD HARM OUR BUSINESS AND CAUSE OUR STOCK PRICE TO FALL.
RENTAL INCOME VARIES. Real property investments are subject to varying
degrees of risk. Investment returns available from equity investments in real
estate depend in large part on the amount of income earned and capital
appreciation which our properties generate, as well as our related expenses
incurred. If our properties do not generate revenues sufficient to meet
operating expenses, debt service and capital expenditures, our income and
ability to make distributions to our stockholders will be adversely affected.
Income from our properties may also be adversely affected by general economic
conditions, local economic conditions such as oversupply of commercial real
estate, the attractiveness of our properties to tenants and prospective tenants,
competition from other available rental property, our ability to provide
adequate maintenance and insurance, the cost of tenant improvements, leasing
commissions and tenant inducements and the potential of increased operating
costs, including real estate taxes.
EXPENDITURES FOR PROPERTY OWNERSHIP ARE FIXED. Income from properties and
real estate values are also affected by a variety of other factors, such as
governmental regulations and applicable laws, including real estate, zoning and
tax laws, interest rate levels and the availability of financing. Various
significant expenditures associated with an investment in real estate, such as
mortgage payments, real estate taxes and maintenance expenses, generally are not
reduced when circumstances cause a reduction in revenue from the investment.
Thus, our operating results and our cash flow may decline materially if our
rental income is reduced.
ILLIQUIDITY. Real estate investments are relatively illiquid, which limits
our ability to restructure our portfolio in response to changes in economic or
other conditions.
GEOGRAPHIC CONCENTRATION. All of our properties are located in the southern
portion of the San Francisco Bay Area commonly referred to as the "Silicon
Valley." The Silicon Valley economy has been strong for the past several years,
but future increases in values and rents for our properties depend to a
significant extent on the health of this region's economy. Recent trends suggest
that the supply of R&D office space available for rent has increased and that
the demand for such space in the Silicon Valley has declined. According to "BT
Commercial Real Estate Silicon Valley R & D Report, Q1 1999", vacancy rates rose
from approximately 5.1% in early 1998 to 11.9% in early 1999.
LOSS OF KEY TENANTS. Most of our properties are occupied by single tenants,
many of whom are large, publicly traded information technology companies. Losing
a key tenant could adversely affect our operating results and our ability to
make distributions to stockholders if we are unable to obtain replacement
tenants promptly.
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TENANT BANKRUPTCIES. Key tenants could seek the protection of the
bankruptcy laws, which could result in the rejection and termination of their
leases, thereby causing a reduction in our income.
OUR SUBSTANTIAL INDEBTEDNESS. Our properties are subject to substantial
indebtedness. If we are unable to make required mortgage payments, a loss could
be sustained as a result of foreclosure on our properties by the mortgagee.
Failure to renew or replace our Wells Fargo line of credit when it expires in
October 1999 would materially affect our business and our ability to pay
dividends to stockholders. We cannot assure you that we will be able to obtain a
replacement line of credit with terms similar to the Wells Fargo line of credit,
or at all. Our cost of borrowing funds could increase substantially after the
Wells Fargo line of credit expires. We have adopted a policy of maintaining a
consolidated ratio of debt to total market capitalization, which includes for
this purpose the market value of all shares of common stock for which
outstanding O.P. Units are exchangeable, of less than 50%. This ratio may not be
exceeded without the approval of more than 75% of our entire board of directors.
Our board of directors may vote to change this policy, however, and we could
become more highly leveraged, resulting in an increased risk of default on our
obligations and an increase in debt service requirements that could adversely
affect our financial condition, our operating results and our ability to make
distributions to our stockholders.
ENVIRONMENTAL CLEAN-UP LIABILITIES. Our properties and properties formerly
held by our subsidiaries may expose us to liabilities under applicable
environmental and health and safety laws. If these liabilities are material, our
financial condition and ability to pay cash distributions may be affected
adversely, which would cause our stock price to fall.
UNINSURED LOSSES. We may sustain uninsured losses with respect to some of
our properties. If these losses are material, our financial condition, our
operating results and our ability to make distributions to our stockholders may
be affected adversely.
EARTHQUAKE DAMAGES ARE UNINSURED. All of our properties are located in
areas that are subject to earthquake activity. Our insurance policies do not
cover damage caused by seismic activity, although they do cover losses from
fires after an earthquake. We generally do not consider such insurance coverage
to be economical. If an earthquake occurs and results in substantial damage to
our properties, we could lose our investment in those properties, which loss
would have a material adverse effect on our financial condition, our operating
results and our ability to make distributions to our stockholders.
FAILURE TO SATISFY FEDERAL INCOME TAX REQUIREMENTS FOR REITS COULD REDUCE OUR
DISTRIBUTIONS, REDUCE OUR INCOME AND CAUSE OUR STOCK PRICE TO FALL.
FAILURE TO QUALIFY AS A REIT. We intend to elect to be a REIT and to be
taxed as such under the federal income tax laws for the year ending December 31,
1999. Although we currently intend to operate in a manner designed to enable us
to qualify and maintain our REIT status, it is possible that economic, market,
legal, tax or other considerations may cause us to fail to qualify as a REIT or
may cause our board of directors either to refrain from making the REIT election
or to revoke that election once made. To maintain REIT status, we must meet
certain tests for income, assets, distributions to stockholders, ownership
interests and other significant conditions. If we fail to qualify as a REIT in
any taxable year, we will not be allowed a deduction for distributions to our
stockholders in computing our taxable income and would be subject to federal
income tax, including any applicable alternative minimum tax, on our taxable
income at regular corporate rates. Moreover, unless we were entitled to relief
under certain provisions of the tax laws, we would be disqualified from
treatment as a REIT for the four taxable years following the year in which our
qualification was lost. As a result, funds available for distribution to our
stockholders would be reduced for each of the years involved and, in addition,
we would no longer be required to make distributions to our stockholders.
REIT DISTRIBUTION REQUIREMENTS. To maintain REIT status, we must distribute
as a dividend to our stockholders at least 95% of our otherwise taxable income,
after certain adjustments, with respect to each tax year. We may also be subject
to a 4% non-deductible excise tax in the event our distributions to stockholders
fail to meet certain other requirements. Failure to comply with these
requirements could result in our income being subject to tax at regular
corporate rates and could cause us to be liable for the excise tax.
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<PAGE>
OWNERSHIP LIMIT NECESSARY TO MAINTAIN REIT QUALIFICATION. As a REIT, the
federal tax laws restrict the percentage of the total value of our stock that
may be owned by five or fewer individuals to 50% or less. Our charter generally
prohibits the direct or indirect ownership of more than 9% of our common stock
by any stockholder. This limit excludes the Berg Group, which has an aggregate
ownership limit of 20%. In addition, as permitted by our charter, our board of
directors recently provided an exception to two other stockholders that permits
them to collectively own, directly or indirectly, up to 18.5% of our common
stock on an aggregate basis, subject to the terms of an ownership limit
exemption agreement. In general, our charter prohibits the transfer of shares
which result in a loss of our REIT qualification and provides that any such
transfer or any other transfer which causes a stockholder to exceed the
ownership limit will result in the shares being automatically transferred to a
trust for the benefit of a charitable beneficiary.
STOCKHOLDERS ARE NOT ASSURED OF RECIEVING CASH DISTRIBUTIONS FROM US.
Our income will consist primarily of our share of the income of the
operating partnerships, and our cash flow will consist primarily of our share of
distributions from the operating partnerships. Differences in timing between the
receipt of income and the payment of expenses in arriving at our taxable income
or the taxable income of the operating partnerships and the effect of required
debt amortization payments could require us to borrow funds, directly or through
the operating partnerships, on a short-term basis to meet our intended
distribution policy.
Our board of directors will determine the amount and timing of
distributions by the operating partnerships and of distributions to our
stockholders. Our board of directors will consider many factors prior to making
any distributions, including the following:
- the amount of cash available for distribution;
- the operating partnerships' financial condition;
- whether to reinvest funds rather than to distribute such funds;
- the operating partnerships' capital expenditures;
- the effects of new property acquisitions, including acquisitions under
our existing agreements with the Berg Group;
- the annual distribution requirements under the REIT provisions of the
federal income tax laws; and
- such other factors as our board of directors deems relevant.
We cannot assure you that we will be able to meet or maintain our cash
distribution objectives.
OUR PROPERTIES COULD BE SUBJECT TO PROPERTY TAX REASSESSMENTS.
We do not believe that our acquisition of interests in the operating
partnerships in July 1998 resulted in any statutory changes in ownership that
could give rise to a reassessment of any of the properties for California
property tax purposes. We cannot assure you, however, that county assessors or
other tax administrative agencies in California will not attempt to assert that
such a change occurred as a result of this transaction. Although we believe that
such a challenge would not be successful ultimately, we cannot assure you
regarding the outcome of any related dispute or proceeding. A reassessment could
result in increased real estate taxes on our properties that, as a practical
matter, we may be unable to pass through to our tenants in full. This could
reduce our net income and our funds available for distribution and cause our
stock price to fall.
OUR OBLIGATION TO PURCHASE TENDERED O.P. UNITS COULD REDUCE OUR CASH
DISTRIBUTIONS
Each of the limited partners of the operating partnerships, other than Mr.
Berg and his brother, Clyde J. Berg, has the annual right to cause the operating
partnerships to purchase a portion of the limited partner's O.P. Units at a
purchase price based on the average market value of the common stock for the
ten-trading-day period immediately preceding the date of tender. Upon a limited
partner's exercise of any such right, we will have the option to purchase the
tendered O.P. Units with available cash, borrowed funds or the proceeds of an
offering of newly issued shares of common stock. These put rights become
exercisable on December 29, 1999, and are available once a year for a maximum of
one-third of the eligible limited partners' total O.P. Units annually. If the
total purchase price of the O.P. Units tendered by all of the eligible limited
partners in one year exceeds $1 million, we or the operating partnerships will
be entitled to reduce proportionately the number of O.P. Units to be acquired
from each tendering limited partner so that the total purchase price does not
exceed $1 million. The exercise of these put rights may reduce the amount of
cash that we have available to distribute to our stockholders and could cause
our stock price to fall.
In addition, after December 1999, all O.P. Unit holders may tender their
O.P. Units to us for shares of common stock at market value or cash, at our
election. If we elect to pay cash for the O.P. Units, our liquidity may be
reduced and we may lack sufficient funds to continue paying the amount of our
anticipated or historical cash
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<PAGE>
distributions. This could cause our stock price to fall. The decision to pay
cash for tendered O.P. Units is not subject to prior determination by the
independent directors committee.
SHARES ELIGIBLE FOR FUTURE SALE COULD NOT AFFECT THE MARKET PRICE OF OUR COMMON
STOCK.
We cannot predict the effect, if any, that future sales of shares of common
stock, or the availability of shares for future sale, could have on the market
price of the common stock. Sales of substantial amounts of common stock,
including shares issued in connection with the exercise of the exchange rights
held by the limited partners of the operating partnerships, or the perception
that such sales could occur, could adversely affect prevailing market prices for
the common stock. Additional shares of common stock may be issued to limited
partners, subject to the applicable REIT qualification ownership limit, if they
exchange their O.P. Units for shares of common stock pursuant to their exchange
rights, or may be sold by us to raise funds required to purchase such O.P. Units
if the limited partners elect to tender O.P. Units to us using their put rights.
In addition, as of May 10, 1999, current stockholders may resell approximately
6.5 million shares of common stock under a currently effective resale
prospectus. Resale of these shares may adversely affect the market price of the
common stock. Subject to certain rights that we possess to halt offers and sales
of shares of common stock under that prospectus, we intend to maintain the
effectiveness with the Securities and Exchange Commission, or the Commission, of
the registration statement under which these shares are offered for sale until
the end of December 1999. In addition, the holders of 1,250,000 shares of common
stock that can be sold subject to Rule 144, including the volume limitation, can
resell those shares free of that limitation under another currently effective
resale prospectus.
MARKET INTEREST RATES MAY REDUCE THE VALUE OF THE COMMON STOCK.
One of the factors that investors consider important in deciding whether to
buy or sell shares of a REIT is the distribution rate on such shares, as a
percentage of the price of such shares, relative to market interest rates. If
market interest rates go up, prospective purchasers of REIT shares may expect a
higher distribution rate. Higher interest rates would not, however, increase the
funds available for us to distribute, and, in fact, would likely increase our
borrowing costs and potentially decrease funds available for distribution. Thus,
higher market interest rates could cause the price of our common stock to
fall.
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<PAGE>
USE OF PROCEEDS
The Company will not receive any of the proceeds from the sale of the
shares by the selling stockholders.
THE SELLING STOCKHOLDERS
The selling stockholders include all executive officers and directors, as
defined in Rule 405 under the Securities Act of 1933, as amended, who exercise
options to purchase shares of our common stock under this registration
statement.
The selling stockholders also include Michael J. Anderson, who served as
our Chief Operating Officer and Vice President and as a director from January 1,
1998 until his resignation on April 30, 1999. On June 1, 1999, Mr. Anderson
beneficially owned 167,917 shares of our common stock. Mr. Anderson is offering
167,917 shares of our common stock under this prospectus. If all of the shares
of common stock offered by Mr. Anderson are sold as described in this
prospectus, Mr. Anderson would own no shares of our common stock.
PLAN OF DISTRIBUTION
The selling stockholders may offer their shares at various times in one or
more of the following transactions:
- on any of the United States securities exchanges where the common
stock is listed and traded, including the AMEX and the PSE;
- in the over-the-counter market;
- in transactions other than on such exchanges or in the
over-the-counter market;
- in connection with short sales of the shares;
- by pledge to secure debts and other obligations;
- in connection with the writing of non-traded and exchange-traded call
options, in hedge transactions and in settlement of other transactions
in standardized or over-the-counter options; or
- in a combination of any of the above transactions.
The selling stockholders may sell their shares at market prices prevailing
at the time of sale, at prices related to such prevailing market prices, at
negotiated prices or at fixed prices.
The selling stockholders may use broker-dealers to sell the shares. If
this happens, broker-dealers will either receive discounts or commissions from
the selling stockholders, or they will receive commissions from purchasers of
shares for whom they acted as agents.
LEGAL MATTERS
The validity of the shares of common stock offered by this prospectus will
be passed upon for us by McCutchen, Doyle, Brown & Enersen LLP. A partner of
McCutchen, Doyle, Brown & Enersen LLP, who is rendering services to us with
respect to the offering, owns 12,333 shares of our common stock. McCutchen,
Doyle,
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<PAGE>
Brown & Enersen LLP will rely on the opinion of Ballard Spahr Andrews &
Ingersoll, LLP, Baltimore, Maryland, as to certain matters of Maryland law.
EXPERTS
The consolidated financial statements as of December 31, 1998 incorporated
in this prospectus by reference to the Mission West Properties' Annual Report on
Form 10-K for the year ended December 31, 1998 have been so incorporated in
reliance on the report of PriceWaterhouseCoopers LLP, independent accountants,
given on the authority of said firm as experts in auditing and accounting.
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES ACT
LIABILITIES
The Maryland general corporation law, or MGCL, permits a Maryland
corporation to include in its charter a provision limiting the liability of its
directors and officers to the corporation and its stockholders for money damages
except for liability resulting from (a) actual receipt of an improper benefit or
profit in money, property or services; or (b) active and deliberate dishonesty
established by a final judgment as being material to the cause of action. Our
charter contains such a provision which eliminates such liability to the maximum
extent permitted by the MGCL.
Our charter also authorizes us to the maximum extent permitted by Maryland
law to obligate itself to indemnify and to pay or reimburse reasonable expenses
in advance of final disposition of a proceeding to any present or former
director or officer, or any individual who, while a director of our corporation
and at our request, serves or has served another corporation, real estate
investment trust, partnership, joint venture, trust, employee benefit plan or
any other enterprise as a director, officer, partner or trustee of such
corporation, real estate investment trust, partnership, joint venture, trust,
employee benefit plan or other enterprise from and against any claim or
liability to which such person may become subject or which such person may incur
by reason of his status as a present or former director or officer of our
corporation. The bylaws obligate us, to the maximum extent permitted by Maryland
law, to indemnify and to pay or reimburse reasonable expenses in advance of
final disposition of a proceeding to (i) any present or former director or
officer who is made a party to the proceeding by reason of his service in that
capacity or (ii) any individual who, while a director of our corporation and at
our request, serves or has served another corporation, real estate investment
trust, partnership, joint venture, trust, employee benefit plan or any other
enterprise as a director, officer, partner or trustee of such corporation, real
estate investment trust, partnership, joint venture, trust, employee benefit
plan or other enterprise and who is made a party to the proceeding by reason of
his service in that capacity. Our charter and bylaws also permit us to indemnify
and advance expenses to any person who served a predecessor of our corporation
in any of the capacities described above and any employee or agent of our
corporation or a predecessor. The MGCL requires a corporation (unless its
charter provides otherwise, which our charter does not) to indemnify a director
or officer who has been successful, on the merits or otherwise, in the defense
of any proceeding to which he is made a party by reason of his service in that
capacity. The MGCL permits a corporation to indemnify its present and former
directors and officers, among others, against judgments, penalties, fines,
settlements and reasonable expenses actually incurred by them in connection with
any proceeding to which they may be made a party by reason of their service in
those or other capacities unless it is established that (a) the act or omission
of the director or officer was material to the matter giving rise to the
proceeding and (i) was committed in bad faith or (ii) was the result of active
and deliberate dishonesty, (b) the director or officer actually received an
improper personal benefit in money, property or services or (c) in the case of
any criminal proceeding, the director or officer had reasonable cause to believe
that the act or omission was unlawful. However, under the MGCL, a Maryland
corporation may not indemnify for an adverse judgment in a suit by or in the
right of the corporation or for a judgment of liability on the basis that
personal benefit was improperly received, unless in either case a court orders
indemnification and then only for expenses. In addition, the MGCL permits a
corporation to advance reasonable expenses to a director or officer upon the
corporation's receipt of (a) a written affirmation by the director or officer of
his good faith belief that he has met the
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<PAGE>
standard of conduct necessary for indemnification by the corporation and (b) a
written undertaking by him or on his behalf to repay the amount paid or
reimbursed by the corporation if it shall ultimately be determined that the
standard of conduct was not met.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers or persons controlling the
registrant pursuant to the foregoing provisions, we have been informed that in
the opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act and is therefore unenforceable.
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<PAGE>
PART I
INFORMATION REQUIRED IN THE SECTION 10(A) PROSPECTUS
ITEM 1. PLAN INFORMATION*
ITEM 2. REGISTRANT INFORMATION AND EMPLOYEE PLAN ANNUAL INFORMATION*
* Information required by Part I to be contained in the section 10(a)
prospectus is omitted from this Registration Statement in accordance with
Rule 428 under the Securities Act of 1933, as amended (the "1933 Act"), and
the Note to Part I of Form S-8. PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The following documents filed with the Securities and Exchange Commission
by Mission West Properties, Inc., a Maryland corporation, or its predecessor
Mission West Properties, a California corporation (the "Company") are
incorporated by reference in this registration statement:
1. Our Annual Report on Form 10-K for the fiscal year ended December
31,1998
2. The Form S-4 Registration Statement filed on May 15, 1998 and declared
effective on November 23, 1998 (Registration No. 333-52835-99)(the "Registration
Statement") and the prospectus dated November 23, 1998 filed pursuant to Rule
424(b).
3. All reports filed pursuant to Section 13(a) or 15(d) of the Exchange Act
since December 31, 1998.
4. The description of capital stock contained in the Registration
Statement.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14
or 15(d) of the Securities Exchange Act of 1934 after the date of this
registration statement and prior to the filing of a post-effective amendment
which indicates that all securities offered have been sold or which deregisters
all securities then remaining unsold, are deemed to be incorporated by reference
into this registration statement and to be a part hereof from the respective
dates of filing of such documents. Any statement contained in this registration
statement or in a document incorporated by reference shall be deemed modified or
superseded to the extent that a statement contained in any subsequently filed
document which also is or is deemed to be incorporated by reference herein or
therein modifies or supersedes such statement. Any statement so modified or
superseded shall not be deemed to constitute a part hereof, except as so
modified or superseded.
ITEM 4. DESCRIPTION OF SECURITIES.
Not Applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
A partner of McCutchen, Doyle, Brown & Enersen, LLP, counsel to the Company
in connection with this registration statement, owns 12,333 shares of the
Company's Common Stock.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
See "Disclosure of Commission Position on Indemnification for Securities
Act Liabilities" in the Prospectus.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
The restricted securities to be reoffered or resold pursuant to this
registration statement consist of stock options and shares of common stock
purchased on exercise of stock options granted to executive officers and
non-employee directors of the Company under the 1997 Stock Option Plan. The
securities were issued pursuant to the exemption from registration provided
under Section 4(2) of the Securities Act following board of director approval of
the option grant and the commencement of employment in the case of executive
officers, and, in the case of the directors, automatically upon the election or
appointment to the position
ITEM 8. EXHIBITS.
See Exhibit Index which is incorporated herein by reference.
ITEM 9. UNDERTAKINGS.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than a 20 percent change in the maximum aggregate
offering price set forth in the "Calculation of Registration Fee" table in
the effective registration statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement,
provided, however, that subparagraphs (i) and (ii) do not apply if the
registration statement is on Form S-3, Form S-8 or Form F-3, and the information
required to be included in a post-effective amendment by those paragraphs is
contained in periodic reports filed with or furnished to the Commission by the
registrant pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934 that are incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial BONA
FIDE offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial BONA FIDE offering thereof.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-8 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Cupertino, State of California on June 2, 1999.
MISSION WEST PROPERTIES, INC.
BY: /s/ Carl E. Berg
Carl E. Berg
Chairman of the Board, Chief Executive
Officer and President
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Carl E. Berg with the power of
substitution, his or her attorney-in-fact, to sign any amendments to this
Registration Statement and to file the same, with exhibits thereto and other
documents in connection therewith, with the Securities and Exchange Commission,
hereby ratifying and confirming all that each of said attorney-in-fact, or his
or her substitute, may do or choose to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this registration
statement has been signed below by the following persons in the capacities
indicated, effective June 8, 1999.
SIGNATURE TITLE
- --------- -----
/s/ Carl E. Berg
________________________ Chairman of the Board, Chief Executive
Carl E. Berg Officer, President, and Chief Financial
Officer and Director
/s/ Marianne K. Aguiar
________________________ Vice President of Finance and Controller
Marianne K. Aguiar
/s/ William A. Hasler
________________________ Director
William A. Hasler
/s/ Lawrence B. Helzel
________________________ Director
Lawrence B. Helzel
<PAGE>
EXHIBIT INDEX
EXHIBIT NUMBER EXHIBIT DESCRIPTION
4.1* Articles of Amendment and Restatement
4.2* Bylaws
4.3** Mission West Properties 1997 Stock Option Plan
5.1 Opinion of McCutchen, Doyle, Brown & Enersen, LLP
5.2 Opinion of Ballard, Spahr, Andrews & Ingersoll, LLP
23.1 Consent of McCutchen, Doyle, Brown & Enersen, LLP (included in
Exhibit 5.1)
23.2 Consent of Ballard, Spahr, Andrews & Ingersoll, LLP (included
in Exhibit 5.2)
23.3 Consent of PricewaterhouseCoopers LLP
23.4 Consent of PricewaterhouseCoopers LLP
24.1 Powers of Attorney (included on the signature page
hereto)
*Incorporated by reference to Amendment No. 4 to the Company's Form S-4
Registration Statement filed with the Securities and Exchange Commission on
November 20, 1998.
**Incorporated by reference to the Company's Schedule 14A Proxy Statement filed
with the Securities and Exchange Commission on October 21, 1997.
May 28, 1999
Mission West Properties, Inc.
10050 Bandley Drive
Cupertino, California 95014
Registration on Form S-8
Dear Ladies and Gentlemen:
We have acted as counsel to Mission West Properties, Inc., a Maryland
corporation (the "Company"), in connection with its Registration Statement on
Form S-8 of up to 5,485,000 shares of common stock, par value $0.001 per share
(the "Common Stock") issuable under the Company's Amended and Restated 1997
Stock Option Plan (the "Plan").
In this regard, we have examined such documents, records and matters of
law as we have considered relevant to this opinion. As to certain factual
matters we deem relevant to this opinion, we have relied upon a certificate of
officers of the Company and have not sought to independently verify the matters
stated therein. As to matters of Maryland law, we have relied on the opinion of
Ballard, Spahr, Andrews & Ingersoll, LLP.
Based upon the foregoing, it is our opinion that the 5,485,000 shares
of Common Stock when issued under the Plan will be validly issued, fully paid
and non-assessable, and no personal liability will attach to the holders of such
shares by reason of the ownership thereof.
This opinion is rendered solely to you in connection with the
registration of the shares of Common Stock under the Registration Statement.
We consent to being named as counsel to the Company in the registration
statement and to the inclusion of a copy of this opinion letter as an exhibit to
the registration statement. In giving this consent, however, we do not thereby
admit that we are an "expert" within the meaning of the Securities Act of 1933,
as amended.
<PAGE>
Mission West Properties, Inc.
May 28, 1999
Page 2
Very truly yours,
McCUTCHEN, DOYLE, BROWN & ENERSEN, LLP
By:
__________________________________
Alan B. Kalin
A Member of the Firm
May 28, 1999
Mission West Properties, Inc.
10050 Bandley Drive
Cupertino, California 95014
Re: Registration Statement on Form S-8
Registration No. 333-
Ladies and Gentlemen:
We have served as Maryland counsel to Mission West Properties, Inc., a
Maryland corporation (the "Company"), in connection with certain matters of
Maryland law arising out of the registration of up to 5,485,000 shares of the
Company's Common Stock, par value $.001 per share (the "Shares"), offered for
sale to participants who hold options granted or to be granted under the
Company's 1997 Stock Option Plan (the "Plan"), covered by the above-referenced
registration statement on Form S-8(the "Registration Statement"), under the
Securities Act of 1933, as amended (the "1933 Act"). Capitalized terms used but
not defined herein shall have the meanings given to them in the Registration
Statement.
In connection with our representation of the Company, and as a basis for
the opinion hereinafter set forth, we have examined originals, or copies
certified or otherwise identified to our satisfaction, of the following
documents (hereinafter collectively referred to as the "Documents"):
1. The Registration Statement, including all amendments thereto, with the
prospectus deemed included therein (the "Prospectus"), in the form in which it
was transmitted to the Securities and Exchange Commission (the "Commission")
under the 1933 Act;
<PAGE>
2. The charter of the Company (the "Charter"), certified as of a recent
date by the State Department of Assessments and Taxation of Maryland (the
"SDAT");
3. The Bylaws of the Company (the "Bylaws"), certified as of a recent date
by an officer of the Company;
4. Resolutions (the "Resolutions") adopted by the Board of Directors of the
Company, relating to (i) the adoption of the Plan and the issuance of the Shares
pursuant to the Plan and (ii) the registration of the Shares, certified as of a
recent date by an officer of the Company;
5. The Plan, certified as of a recent date by an officer of the Company;
6. A certificate of the SDAT as to the good standing of the Company, dated
as of a recent date; and
7 A certificate executed by an officer of the Company, dated as of the date
hereof; and
8. Such other documents and matters as we have deemed necessary or
appropriate to express the opinion set forth in this letter, subject to the
assumptions, limitations and qualifications stated herein.
In expressing the opinion set forth below, we have assumed, and so far as
is known to us there are no facts inconsistent with, the following:
1. Each individual executing any of the Documents, whether on behalf of
such individual or another person, is legally competent to do so.
2. Each individual executing any of the Documents on behalf of a party
(other than the Company) is duly authorized to do so.
3. Each of the parties (other than the Company) executing any of the
Documents has duly and validly executed and delivered each of the Documents to
which such party is a signatory, and such party's obligations set forth therein
are legal, valid and binding and are enforceable in accordance with all stated
terms.
<PAGE>
Mission West Properties, Inc.
May 28, 1999
Page 3
4. All Documents submitted to us as originals are authentic. The form and
content of the Documents submitted to us as unexecuted drafts do not differ in
any respect relevant to this opinion from the form and content of such Documents
as executed and delivered. All Documents submitted to us as certified or
photostatic copies conform to the original documents. All signatures on all such
Documents are genuine. All public records reviewed or relied upon by us or on
our behalf are true and complete. All statements and information contained in
the Documents are true and complete. There has been no oral or written
modification or amendment to any of the Documents, and there has been no waiver
of any provision of any of the Documents, by action or omission of the parties
or otherwise.
5. The Shares have not been and will not be issued in violation of any
restriction or limitation contained in the Charter.
The phrase "known to us" is limited to the actual knowledge, without
independent inquiry, of the lawyers at our firm who have performed legal
services in connection with the issuance of this opinion.
Based upon the foregoing, and subject to the assumptions, limitations and
qualifications stated herein, it is our opinion that:
1. The Company is a corporation duly incorporated and existing under and by
virtue of the laws of the State of Maryland and is in good standing with the
SDAT.
2. The issuance of the Shares has been duly authorized, and the Shares,
when sold and delivered against payment therefor in accordance with the
Resolutions, the Plan and the Prospectus (assuming that, upon issuance, the
total number of shares of Common Stock issued and outstanding will not exceed
the total number of shares of Common Stock that the Company is then authorized
to issue under the Charter), will be validly issued, fully paid and
nonassessable.
<PAGE>
Mission West Properties, Inc.
May 28, 1999
Page 4
The foregoing opinion is limited to the substantive laws of the State of
Maryland and we do not express any opinion herein concerning any other law. We
express no opinion as to the applicability or effect of any federal or state
securities laws, including the securities laws of the State of Maryland, or as
to federal or state laws regarding fraudulent transfers. To the extent that any
matter as to which our opinion is expressed herein would be governed by any
jurisdiction other than the State of Maryland, we do not express any opinion on
such matter.
We assume no obligation to supplement this opinion if any applicable law
changes after the date hereof or if we become aware of any fact that might
change the opinion expressed herein after the date hereof.
This opinion is being furnished to you for submission to the Commission as
an exhibit to the Registration Statement and, accordingly, may not be relied
upon by, quoted in any manner to, or delivered to any other person or entity
(other than McCutchen, Doyle, Brown & Enersen, LLP, counsel to the Company)
without, in each instance, our prior written consent.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the use of the name of our firm therein. In giving
this consent, we do not admit that we are within the category of persons whose
consent is required by Section 7 of the 1933 Act.
Very truly yours,
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use of this Registration Statement on Form S-8 of our
reports dated January 29, 1999, on our audits of the consolidated financial
statements and financial statement schedule of Mission West Properties, Inc. as
of December 31, 1998 and 1997, and for the years ended December 31, 1998,
November 30, 1997 and 1996 and the one month period ended December 31, 1997,
which appear in such Registration Statement. We also consent to the
incorporation by reference in the Post-Effective Amendment No. 1 to Form S-4 on
Form S-3 (File No. 333-52835-99) and Form S-3 (File No. 333-41203) of our
reports dated January 29, 1999, on our audits of the consolidated financial
statements and financial statement schedule of Mission West Properties, Inc. as
of December 31, 1998 and 1997, and for the years ended December 31, 1998,
November 30, 1997 and 1996 and the one month period ended December 31, 1997,
which appear in such Registration Statements.
San Francisco, California /s/ PricewaterhouseCoopers LLP
June 9, 1999
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in this Registration Statement on Form S-8 of our
reports dated January 29, 1999, on our audits of the combined financial
statements of the Berg Properties (Predecessor) as of June 30, 1998 and December
31, 1997, and for the six months ended June 30, 1998 and each of the two years
ended December 31, 1997, which appear in such Registration Statement. We also
consent to the incorporation by reference in the Post-Effective Amendment No. 1
to Form S-4 on Form S-3 (File No. 333-52835-99) and Form S-3 (File No.
333-41203) of our reports dated January 29, 1999, on our audits of the combined
financial statements of the Berg Properties (Predecessor) as of June 30,1998 and
December 31, 1997, and for the six months ended June 30, 1998 and each of the
two years ended December 31, 1997, which appear in such Registration Statements.
San Francisco, California /s/ PricewaterhouseCoopers LLP
June 9, 1999
