SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(A) of the
Securities and Exchange Act of 1934
Check the appropriate box:
[ ]Preliminary proxy statement
[ ]Confidential, for use of the Commission only
[X]Definitive proxy statement
[ ]Definitive additional materials
[ ]Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
MISSION WEST PROPERTIES, INC.
(Name of Registrant as Specified in its Charter)
-------------------------------------------------------
(Name of Person (s) Filing Proxy Statement, if other than Registrant)
Payment of filing fee (Check the appropriate box):
[X]No fee required
[ ]Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ]Fee paid previously with preliminary materials
[ ]Check box if any part of the fee is offset as provide by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration number, of the
Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
First mailed to stockholders on or about April 25, 2001.
MISSION WEST PROPERTIES, INC.
10050 Bandley Drive
Cupertino, California 95014
Dear Stockholder,
You are cordially invited to attend the 2001 Annual Meeting of Stockholders
of Mission West Properties, Inc. (the "Company") to be held at 10:00 a.m.,
Pacific Daylight Time ("PDT"), on May 17, 2001 at the Company's offices at 10050
Bandley Drive, Cupertino, California 95014.
The matters expected to be acted upon at the meeting are described in
detail in the following Notice of the 2001 Annual Meeting of Shareholders and
Proxy Statement. Also included is a Proxy Card and postage paid envelope.
Whether you plan to attend the Annual Meeting or not, it is important that
you promptly complete, sign, date and return the enclosed proxy card, or vote in
accordance with the instruction set forth on the proxy card. This will ensure
your proper representation at the Annual Meeting.
Sincerely,
Carl E. Berg
-------------------------------------------------
Chairman of the Board and Chief Executive Officer
YOUR VOTE IS IMPORTANT.
PLEASE REMEMBER TO PROMPTLY RETURN YOUR PROXY
MISSION WEST PROPERTIES, INC.
NOTICE OF 2001 ANNUAL MEETING OF STOCKHOLDERS
To be held on May 17, 2001
To the Stockholders of Mission West Properties, Inc.:
NOTICE IS HEREBY GIVEN that the 2001 Annual Meeting of Stockholders of
Mission West Properties, Inc., a Maryland corporation (the "Company"), will be
held on May 17, 2001 at the Company's offices at 10050 Bandley Drive, Cupertino,
California 95014 at 10:00 a.m., PDT, for the following purposes:
1. To elect four members of the Board of Directors to hold office until
the next Annual Meeting of Stockholders or until their respective
successors have been elected and qualify. The nominees are Carl E.
Berg, John C. Bolger, William A. Hasler, and Lawrence B. Helzel.
2. To ratify the appointment of the accounting firm of
PricewaterhouseCoopers LLP as independent auditors for the Company for
the year ending December 31, 2001.
3. To transact such other business as may properly come before the Annual
Meeting or any adjournment or postponement thereof.
The Board of Directors has fixed the close of business on April 20, 2001 as
the record date for the determination of stockholders entitled to notice of and
to vote at the Annual Meeting and at any adjournments thereof. A list of such
stockholders will be available for inspection at the principal office of the
Company.
All stockholders are cordially invited to attend the Annual Meeting.
However, to ensure your representation, you are requested to complete, sign,
date and return the enclosed proxy as soon as possible in accordance with the
instructions on the proxy card. A return addressed envelope is enclosed for your
convenience. Any stockholder attending the Annual Meeting may vote in person
even though the stockholder has returned a proxy previously. Your proxy is
revocable in accordance with the procedures set forth in the Proxy Statement.
BY ORDER OF THE BOARD OF DIRECTORS
Michael L. Knapp
------------------------------------
Secretary
Cupertino, California
April 25, 2001
MISSION WEST PROPERTIES, INC.
10050 Bandley Drive
Cupertino, California 95014
---------------------
PROXY STATEMENT
---------------------
GENERAL INFORMATION
This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors of Mission West Properties, Inc., a Maryland corporation
(the "Company"), of proxies, in the accompanying form, to be used at the Annual
Meeting of Stockholders to be held at 10:00 a.m., PDT, on May 17, 2001 at 10050
Bandley Drive, Cupertino, California 95014 and any postponement or adjournments
thereof (the "Meeting").
This Proxy Statement and the accompanying proxy are being mailed on or
about April 25, 2001 to all stockholders entitled to notice of and to vote at
the Meeting.
SOLICITATION AND VOTING PROCEDURES
Shares represented by valid proxies in the form enclosed, received in time
for use at the Meeting and not revoked at or before the Meeting, will be voted
at the Meeting. The presence, in person or by proxy, of the holders of a
majority of the outstanding shares of the Company's common stock, par value
$.001 per share ("Common Stock"), is necessary to constitute a quorum at the
Meeting. Holders of Common Stock are entitled to one vote on all matters. The
Company will tabulate stockholder votes, and an officer of the Company will
tabulate votes cast in person at the Meeting. With respect to the tabulation of
proxies for purposes of constituting a quorum, abstentions are treated as
present, but will not be counted as votes cast at the Meeting with respect to
any proposal and will have no effect on the result of the vote.
Assuming the presence of a quorum, the affirmative vote of a plurality of
the votes cast at the Meeting and entitled to vote is required for Proposal No.
1 regarding the election of directors. An affirmative vote of the holders of a
majority of the votes cast affirmatively or negatively at the Meeting is
necessary for approval of Proposal No. 2 to ratify the appointment of
independent auditors. All proxies will be voted as specified on the proxy cards
submitted by stockholders, if the proxy is properly executed and is received by
the Company before the close of voting at the Meeting or any adjournment or
postponement thereof. If no choice has been specified, a properly executed and
timely proxy will be voted for Proposals Nos. 1 and 2, which are described in
detail elsewhere in this Proxy Statement.
The close of business on April 20, 2001 has been fixed as the record date
for determining the stockholders entitled to notice of and to vote at the
Meeting. As of that date, the Company had 17,049,953 shares of Common Stock
outstanding and entitled to vote.
The cost of soliciting proxies, including expenses in connection with
preparing and mailing this Proxy Statement, will be borne by the Company. In
addition, the Company will reimburse brokerage firms and other persons
representing beneficial owners of Common Stock for their expenses in forwarding
proxy material to such beneficial owners. Solicitation of proxies by mail may be
supplemented by telephone, telegram, telex and other electronic means, and
personal solicitation by the directors, officers or employees of the Company. No
additional compensation will be paid to directors, officers or employees for
such solicitation. The Company's Annual Report on Form 10-K for the year ended
December 31, 2000 is being mailed to the stockholders with this Proxy Statement.
Only one
- 1 -
Annual Report and Proxy Statement is being delivered to multiple stockholders
sharing an address unless the Company has received contrary instructions from
one or more of the stockholders. The Company will deliver promptly a separate
copy of the Annual Report and Proxy Statement to any stockholder at the shared
address who requests them by contacting the Company at the address or telephone
number set forth below.
VOTING ELECTRONICALLY OR BY TELEPHONE
A number of brokerage firms and banks are participating in a program
provided through ADP Investor Communication Services that offers telephone and
Internet voting options. If your shares are held in an account at a brokerage
firm or bank participating in the ADP program, you may vote those shares by
calling the telephone number which appears on your voting form or though the
Internet in accordance with instructions set forth on the voting form. Votes
submitted through the Internet or by telephone through the ADP program must be
received by midnight on May 16, 2001.
The Internet and telephone voting procedures are designed to authenticate
stockholders' identities, to allow stockholders to communicate their
authorization of a proxy to vote their shares and to confirm that their
instructions have been properly recorded. The Company has been advised by its
counsel that the procedures that have been put in place are consistent with the
requirements of applicable law. Stockholders communicating voting authorization
via the Internet through ADP Investor Communication Services should understand
that there may be costs associated with electronic access, such as usage charges
from Internet access providers and telephone companies, that would be borne by
the stockholder.
REVOCABILITY OF PROXIES
You can revoke your proxy at any time before the voting at the Meeting by
sending a properly signed written notice of your revocation to the Secretary of
the Company, by submitting another proxy that is properly signed and bears a
later date or by attending the Meeting and voting in person. Attendance at the
Meeting will not itself revoke an earlier submitted proxy. Requests for
additional copies of the Annual Report and Proxy Statement to be delivered to
stockholders with a shared address may be made by calling the Company at (408)
725-0700. You should direct any written notices of revocation, requests for
additional copies of the Annual Report and Proxy Statement, and related
correspondence to: Mission West Properties, Inc., 10050 Bandley Drive,
Cupertino, California 95014, Attention: Secretary.
- 2-
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The directors and executive officers of Mission West Properties, Inc. as of
March 31, 2001 are as follows:
Name Age Positions with the Company
- -------------------------- --- -----------------------------------------------------------
Carl E. Berg 63 Chairman of the Board, Chief Executive Officer, & President
Wayne N. Pham 31 Vice President of Finance and Controller
John C. Bolger (1) 54 Director
William A. Hasler (1) 58 Director
Lawrence B. Helzel (1) 53 Director
(1) Member of the Audit Committee, the Compensation Committee, and the
Independent Directors Committee.
The following is a biographical summary of the experience of our executive
officers and directors:
Mr. Berg has served as Chief Executive Officer, President and Director of
the Company since September 1997. Since 1979, Mr. Berg has been a general
partner of Berg & Berg Developers and has been a director and officer of Berg &
Berg Enterprises, Inc. since its inception. Mr. Berg is also a director of Focus
Enhancements, Inc., Valence Technology, Inc. and System Integrated Research,
Ltd.
Mr. Pham joined the Company on March 14, 2000 as Controller and was
promoted to Vice President of Finance in October 2000. He was the Corporate
Accountant and Accounting Manager at AvalonBay Communities, Inc., a multi-family
apartment REIT, from 1995 to 1999. Prior to that he worked at Lau CPA Services.
Mr. Bolger became a director of the Company on March 30, 1998. Mr. Bolger
is a private investor. He was Vice President of Finance and Administration of
Cisco Systems, Inc. and is currently retired. Mr. Bolger is also a director of
Integrated Device Technology, Inc., JNI Corporation, Sanmina Corporation, TCSI
Corporation and Wind River Systems, Inc.
Mr. Hasler became a director of the Company on December 4, 1998. For seven
years, Mr. Hasler was Dean of Haas School of Business, University of California,
Berkeley. He retired as Dean Emeritus and assumed the position of Co-CEO of
Aphton Corporation, a public pharmaceutical company. Mr. Hasler is also a
director of Aphton, Solectron, Walker Interactive, and TCSI Corporation. He is a
public governor of the Pacific Stock and Options Exchange and a trustee of the
Schwab Funds.
Mr. Helzel became a director of the Company on December 4, 1998. Mr. Helzel
is a general partner of Helzel Kirshman, L.P., a private investment partnership.
- 3 -
NUMBER TERMS AND ELECTION OF DIRECTORS
The Company's Bylaws currently provide for a Board of Directors consisting
of four directors. Each director will serve for a term of one year or until the
next annual meeting at which directors are elected and until the director's
successor is elected and qualifies. In the election of directors, each
stockholder is entitled to one vote for each share of Common Stock held by such
shareholder.
MEETINGS OF DIRECTORS
Until such time as Carl E. Berg, Clyde J. Berg, the members of their
respective immediate families and certain entities controlled by Carl E. Berg
and/or Clyde J. Berg, which are Berg & Berg Enterprises, Inc., Baccarat Cambrian
Partnership, Baccarat Fremont Developers LLC, and DeAnza Office Partners
(collectively, the "Berg Group") and their affiliates (other than the Company
and Mission West Properties, L.P., Mission West Properties, L.P. I, Mission West
Properties, L.P. II or Mission West Properties, L.P. III (collectively, the
"Operating Partnership")), in the aggregate, own less than 15% of the voting
stock of the Company (including without limitation upon the exercise of all
outstanding warrants, options, convertible securities and other rights to
acquire voting stock of the Company, and all O.P. units exchangeable or
redeemable for Common Stock or other voting stock of the Company without regard
to any ownership limit set forth in the Charter, the Bylaws or by agreement), a
majority of the directors, including Carl E. Berg or an individual whom he
designates to replace him as a director on the Board of Directors (the "Berg
Designee"), shall be required to (i) hold a meeting of the Board of Directors
which is not attended by Carl E. Berg or the Berg Designee (unless Mr. Berg or
the Berg Designee consents in writing to the holding of such meeting), (ii)
approve any amendment to the Company's Charter or Bylaws, or (iii) approve any
merger, consolidation or sale of all or substantially all of the assets of the
Company or the Operating Partnerships.
Until the date on which the Berg Group and their affiliates (other than the
Company and the Operating Partnership) own less than 15% of the fully-diluted
number of shares, all meetings of the Board of Directors require the presence of
Carl E. Berg or in the event of his death, disability or other event which
results in Mr. Berg no longer being a director, the presence of the Berg
Designee. Mr. Berg shall submit a written statement identifying the Berg
Designee to the Company from time to time to permit identification of the Berg
Designee in the event that death, disability or other event results in a vacancy
on the Board of Directors due to Mr. Berg's inability to serve as a director.
Mr. Berg may amend the statement at his sole discretion.
COMPENSATION OF DIRECTORS
The Company pays its directors, who are not officers, fees for their
services as directors. They receive annual compensation of $15,000 plus a fee of
$1,000 for attendance (in person or by telephone) at each meeting of the Board
of Directors, but not for committee meetings. Officers of the Company who are
also directors will not be paid any directors' fees.
Each non-employee member of the Board of Directors who became or becomes a
member of the Board of Directors after November 10, 1997, the date on which the
1997 Stock Option Plan (the "Option Plan") was approved by the stockholders of
the Company, automatically receives a grant of an option to purchase 50,000
shares of Common Stock at an exercise price equal to 100% of the fair market
value of the Common Stock at the date of grant of such option upon joining the
Board of Directors. Such options become exercisable cumulatively with respect to
1/48th of the underlying shares on the first day of each month following the
date of grant. In October 2000, an additional 32,000 options were granted to
each director and become exercisable with respect to 1/16th of the underlying
shares on the first day of each
- 4 -
quarter following the date of grant. Generally, the options must be exercised
while the optionee remains a director.
COMMITTEES OF THE BOARD OF DIRECTORS AND MEETINGS
The Company's Board of Directors has standing Audit and Compensation
Committees. The Audit Committee currently has three members: John C. Bolger,
William A. Hasler and Lawrence B. Helzel, who became a member of the Audit
Committee in April 2000. The Compensation Committee currently has the same three
members.
The Board of Directors has an Independent Directors Committee comprised of
Messrs. Bolger, Hasler and Helzel. This committee is responsible for acting upon
proposed transactions between the Company and members of the Berg Group under
the terms of certain agreements between the Company and such Berg Group members.
See "Certain Relationships and Related Transactions."
During the fiscal year ended December 31, 2000, there were four meetings of
the Board of Directors, three meetings of the Audit Committee and one meeting of
the Compensation Committee of the Board of Directors. In addition, the members
of the Board of Directors, the Compensation Committee and the Independent
Directors Committee acted at various times by unanimous written consent pursuant
to Maryland law.
- 5 -
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following Summary Compensation Table sets forth-summary information as
to compensation received by the Company's Chief Executive Officer and each of
the other most highly compensated persons who were serving as executive officers
or directors of the Company as of December 31, 2000.
Long-Term
Compensation
Annual Compensation Awards
------------------------------------------- ------------
Securities
Other Annual Underlying All Other
Name and Principal Position Year Salary Bonus Compensation (1) Options Compensation
- ------------------------------ ------ -------- ------- ------------------ ------------ --------------
Carl E. Berg 2000 $100,000 $ -- $22,500 -- --
Chief Executive Officer and 1999 100,000 -- 15,000 -- --
President 1998 100,000 -- -- -- --
Wayne N. Pham 2000 94,000 -- -- 152,000 --
Vice President and Controller 1999 -- -- -- -- --
1998 -- -- -- -- --
- --------------------------
(1) Employer contribution to 401(k) plan.
- 6-
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END VALUES
The following table provides information regarding the aggregate exercises
of options by each of the named executive officers. In addition, this table
includes the number of shares covered by both exercisable and unexercisable
stock options as of December 31, 2000, and the values of "in-the-money" options,
which values represent the positive spread between the exercise price of any
such options and the fiscal year-end value of the Company's Common Stock.
Number of Securities Value of the Unexercised
Underlying Unexercised In-The-Money Options at
Shares Options at December 31, 2000 December 31, 2000 (2)
Acquired on Value ------------------------------ ------------------------------
Exercise Realized (1) Exercisable Unexercisable Exercisable Unexercisable
------------- -------------- ------------- --------------- ------------- ---------------
Carl E. Berg.............. -- N/A N/A N/A N/A N/A
Wayne N. Pham............. -- N/A N/A 152,000 N/A $513,760
- -------------------
(1) The value realized represents the aggregate market value of the shares
covered by the option on the date of exercise less the aggregate exercise
price paid by the executive officer.
(2) The value of unexercised in-the-money options at fiscal year end assumes a
fair market value for the Company's Common Stock of $13.88, the closing
market price per share of the Company's Common Stock as reported on the
American Stock Exchange on December 29, 2000, the last trading day for the
year.
- 7 -
SHARE OWNERSHIP
The following table sets forth certain information as of March 15, 2001,
concerning the ownership of Common Stock by (i) each stockholder of the Company
known by the Company to be the beneficial owner of more than 5% of the
outstanding shares of Common Stock, (ii) each current member of the Board of
Directors of the Company, (iii) each executive officer and director of the
Company named in the Summary Compensation Table appearing under "Executive
Compensation" below and (iv) all current directors and executive officers of the
Company as a group.
The Company has relied on information supplied by its officers, directors
and certain shareholders and on information contained in filings with the SEC.
Percent of
all Shares
of Common
Stock Percent of
Number of Percent of (Assuming All Shares
Shares All Shares Exchange of of Common
Beneficially of Common Number of O.P. Holder's Stock/O.P.
Name Owned (1) Stock Units O.P. Units)(2) Units (1)(2)
- -------------------------------------------------------------------------------------------------------------------------------
Executive Officers and Directors:
Carl E. Berg 50,000(4)(10) * 55,537,158(5)(10) 76.58% 55.24%
President, Chief Executive Officer
and Director
Wayne N. Pham 16,500(12) * -- * *
Vice President and Controller
John C. Bolger, Director 66,776(6) * -- * *
96 Sutherland Drive
Atherton, CA 94027
William A. Hasler, Director 36,218(7) * -- * *
c/o Aphton Corporation
1 Market Street, Spear Tower, Ste. 1850
San Francisco, CA 94105
Lawrence B. Helzel, Director 196,218(3) 1.15% -- 1.15% *
c/o Helzel Kirshman, LP
5550 Redwood Road, Suite 4
Oakland, CA 94619
5% Stockholders:
J.P. Morgan Chase & Company 1,812,000(11) 10.63% -- 10.63% 1.80%
270 Park Avenue
New York, NY 10017
Clyde J. Berg 0 * 36,637,696(8)(9) 68.24% 36.41%
c/o Berg & Berg Developers
10050 Bandley Drive
Cupertino, CA 95014
Berg & Berg Enterprises, Inc. (9) 0 * 10,789,383 38.76% 10.72%
10050 Bandley Drive
Cupertino, CA 95014
All Directors and Officers as a group 365,712(10) 2.14% 55,537,158(10) 77.01% 55.56%
(5 persons)
* Less than 1%.
- 8 -
(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission which generally attribute beneficial
ownership of securities to persons who possess sole or shared voting power
and/or investment power with respect to those securities and includes
securities which such person has the right to acquire beneficial ownership
within 60 days of March 15, 2001. Unless otherwise indicated, the persons
or entities identified in this table have sole voting and investment power
with respect to all shares shown as beneficially owned by them. Percent of
all shares of common stock calculations are based on 17,049,953 shares
outstanding as of March 15, 2001. Percent of all shares of common
stock/O.P. Units calculations are based on 100,625,980 shares of common
stock and O.P. Units exchangeable for common stock as of March 15, 2001.
(2) Assumes O.P. Units are exchanged for shares of common stock without regard
to (i) whether such O.P. Units may be exchanged for shares of common stock
within 60 days of March 15, 2001, and (ii) certain ownership limit
provisions set forth in the Company's Articles of Amendment and
Restatement.
(3) Includes 36,218 shares of common stock issued/to be issued on exercise of
options. Does not include 45,782 shares of common stock issuable on
exercise of the "Non-Employee Director Grant Pursuant to 1997 Stock Option
Plan."
(4) Mr. Berg disclaims beneficial ownership of 49,738 shares of Common Stock
held by him as a trustee under various pension and profit sharing plans.
Such shares are not included herein. Mr. Berg has no investment control
over such shares.
(5) Includes O.P. Units in which Mr. Berg has a pecuniary interest because of
his status as a limited partner in the operating partnerships. Also
includes an additional 14,028,585 shares of Common Stock held by or
issuable on exchange of O.P. Units beneficially owned by Berg & Berg
Enterprises, Inc. and King Ranch Partnership, and 11,425,293 shares of
common stock issuable on exchange of O.P. Units held by West Coast Venture
Capital, Limited, L.P., because Mr. Berg is an executive officer and
director of the sole general partner, West Coast Venture Capital, Inc. Mr.
Berg disclaims beneficial interest in any shares or O.P. Units deemed
beneficially owned by Kara Ann Berg, his daughter, Carl Berg Child's Trust
UTA dated June 2, 1978 and the 1981 Kara Ann Berg Trust.
(6) Includes 44,554 shares of common stock issued/to be issued on exercise of
options. Does not include 37,446 shares of common stock issuable on
exercise of the "Non-Employee Director Grant Pursuant to 1997 Stock Option
Plan."
(7) Includes 36,218 shares of common stock issued/to be issued on exercise of
options. Does not include 45,782 shares of common stock issuable on
exercise of the "Non-Employee Director Grant Pursuant to 1997 Stock Option
Plan."
(8) Includes O.P. Units in which Mr. Berg has a pecuniary interest because of
his status as a limited partner in the operating partnerships. Also
includes L.P. Units held by Mr. Berg as trustee of the Carl Berg Child's
Trust UTA dated June 2, 1978 and the 1981 Kara Ann Berg Trust, and an
additional 14,028,585 shares of Common Stock held by or issuable on
exchange of O.P. Units beneficially owned by Berg & Berg Enterprises, Inc.
and King Ranch Partnership. This does not include any share deemed
beneficially owned by Sonya L. Berg and Sherri L. Berg, his daughters, as
to which he disclaims beneficial ownership.
(9) Carl E. Berg is an executive officer and director and Clyde J. Berg is a
director of Berg & Berg Enterprises, Inc. With members of their immediate
families, the Messrs. Berg beneficially owns, directly and indirectly, all
of the O.P. Units of Berg & Berg Enterprises, Inc.
(10) Current officers and directors include Carl E. Berg, Wayne N. Pham, John C.
Bolger, William A. Hasler, and Lawrence B. Helzel. See Notes 3 through 8.
(11) J.P. Morgan Chase & Co. is the beneficial owner on behalf of other persons.
No such person is known to have an interest in more than 5% of the common
stock reported.
(12) Includes 16,500 shares of common stock to be issued on exercise of options.
Does not include 135,500 shares of common stock issuable on exercise of the
"Employee Grant Pursuant to 1997 Stock Option Plan."
- 9 -
CONTRACTUAL AND OTHER CONTROL ARRANGEMENTS
SPECIAL BOARD VOTING PROVISIONS. The Charter and Bylaws provide substantial
control rights for the Berg Group. These rights include a requirement that Mr.
Berg or his designee as director approve certain fundamental corporate actions,
including amendments to the Charter and Bylaws and any merger, consolidation or
sale of all or substantially all of our assets. In addition, the 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 the Company 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 the Company's stock, as well as all shares of
Common Stock issuable upon exchange of all O.P. Units. In addition, directors
representing more than 75% of the entire board of directors must approve other
significant transactions, such as incurring debt above certain amounts,
acquiring assets and conducting business other than through the Operating
Partnerships.
BOARD OF DIRECTORS REPRESENTATION. The Berg Group members have the right to
designate two of the director nominees submitted by the Board of Directors to
stockholders for election, as long as the Berg Group members and their
affiliates, other than the Company and the Operating Partnerships, beneficially
own, in the aggregate, at least 15% of our outstanding shares of common stock on
a fully diluted basis. If the fully diluted ownership of the Berg Group members
and their affiliates 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 the 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.
SUBSTANTIAL OWNERSHIP INTEREST. The Berg Group currently owns O.P. Units
representing approximately 78.8% of the equity interests in the operating
partnerships. The O.P. Units may be converted into shares of Common Stock,
subject to limitations set forth in the Charter (including an overall 20%
ownership limitation), and other agreements with the Berg Group. Upon conversion
these shares would represent voting control of the Company. 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 the Company.
LIMITED PARTNER APPROVAL RIGHTS. Mr. Berg and other limited partners,
including other members of the Berg Group, may restrict the Company's 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 the Company's 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 (i)
the amendment, modification or termination of any of the Operating Partnership
Agreements; (ii) 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; (iii) the
admission of any additional or substitute general partners in the Operating
Partnerships; (iv) any other change of control of the Operating Partnerships;
(v) a general assignment for the benefit of creditors or the appointment of a
custodian, receiver or trustee of any of the assets of the Operating
Partnerships; and (vi) the institution of any bankruptcy proceeding for any
Operating Partnership.
- 10 -
In addition, as long as the Berg Group members and their affiliates,
beneficially own, in the aggregate, at least 15% of the outstanding shares of
common stock on a fully diluted basis, 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 (i) 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; (ii) the issuance of limited partnership interests senior to the
O.P. Units as to distributions, assets and voting; and (iii) the liquidation of
the Operating Partnerships.
- 11 -
COMPARISON OF SHAREHOLDER RETURN ON INVESTMENT
The following line graph compares the change in the Company's cumulative
stockholder return on its shares of Common Stock to the cumulative total return
of the NAREIT Equity REIT Total Return Index ("NAREIT Equity Index") and the
Standard & Poor's 500 Stock Index ("S & P 500 Index") from December 31, 1998 to
December 31, 2000. The line graph starts December 31, 1998; however, the Company
started trading under the Berg Group ownership on December 8, 1998. The graph
assumes that the value of the investment in the Company's common stock was $100
at December 31, 1998 and that all dividends were reinvested. The common stock's
price on December 31, 1998 was $6.75. The Company obtained the information about
the NAREIT Equity Index and S & P 500 INDEX from each entity respectively, and
has assumed that the information is reliable, but cannot assume its accuracy.
[GRAPH OMITTED]
Mission West
Properties, Inc. S & P 500 NAREIT EQUITY INDEX
---------------- --------- -------------------
1998 $100.00 $100.00 $100.00
1999 $123.23 $119.53 $ 95.38
2000 $233.98 $ 86.86 $126.37
(1) Due to the reorganization of the Company by the Berg Group and the
effective liquidation of the Company's assets during this same period, the
Company has not included stock price performance for the years ended 1996
and 1997 in the above chart. For the year ended 1996, the Company's stock
price performance was $255.21. For the same time period, the Russell 2000
and peer group were $176.14 and $233.23, respectively. For the year ended
1997, the Company's stock price performance was $364.33. For the same time
period, the Russell 2000 and a peer group were $215.52 and $320.39,
respectively.
(2) The stock price performance shown in the graph is not necessarily
indicative of future performance of the Company's common stock.
Notwithstanding anything to the contrary set forth in any of the Company's
previous or future filings under the Securities Act of 1933, as amended, or
the Securities Exchange Act of 1934, as amended, that might incorporate
this Proxy Statement on future filings made by the Company under those
statutes, the Compensation Committee report and Stock Performance Graph are
not deemed filed with the Securities Exchange Commission and shall not be
deemed incorporated by reference into any such filings.
- 12 -
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Set forth below is a summary of certain material transactions since July 1,
1998 between the Company and any of its directors, executive officers or holders
of more than 5% of the Company's Common Stock, or between the Company and
persons in which directors, executive officers or such stockholders have direct
or indirect material interests.
PROPERTY ACQUISITIONS AND FINANCIAL TRANSACTIONS BETWEEN THE COMPANY AND THE
BERG GROUP
Through a series of transactions in 1997 and 1998, the Company became the
vehicle for substantially all of the Silicon Valley R&D property activities of
the Berg Group, which includes Mr. Berg, his brother Clyde J. Berg, members of
their families and a number of entities in which they have controlling or
substantial ownership interests. The Company owns these former Berg Group
properties, as well as the rest of its properties, through the Operating
Partnerships, of which the Company is the sole general partner. Through various
property acquisition agreements with the Berg Group, the Company has the right
to purchase, on pre-negotiated terms, R&D and other types of office and light
industrial properties that the Berg Group develops in the future in California,
Oregon and Washington.
PENDING PROJECTS ACQUISITION AGREEMENT. In December 1998, the Company had
entered into the pending projects acquisition agreement with members of the Berg
Group, under which the Company agreed to acquire approximately 1.0 million
square feet upon the completion and leasing of identified pending development
projects upon the following material terms: (i) the acquisition price was
payable in cash or, at the option of the Berg Group, in O.P. Units valued at
$4.50 per O.P. Unit, which was the price per share of the Company's common stock
in May 1998, when the Company agreed to the terms of the pending projects
acquisition agreement; (ii) the Berg Group built and delivered each completed
and fully-leased R&D property in the pending development projects to the
operating partnerships at an acquisition price equaled to the average monthly
rental rate per square foot over the term of the lease divided by an agreed upon
capitalization rate, which ranged from 14.0% to 17.0%, minus the amount of debt
encumbering the property; (iii) the closing for the acquisition of an individual
R&D property within a project occurred only when the building was completed and
leased, unless otherwise agreed by the parties; (iv) leases were on commercially
reasonable terms and conditions; and (v) all actions taken by the Company under
the pending projects acquisition agreement were approved by a majority of the
members of the Independent Directors Committee. The pending projects acquisition
agreement was terminated in December 2000 when the last property contemplated
for development was completed, leased, and purchased by the Company.
BERG LAND HOLDINGS OPTION AGREEMENT. In December 1998, the Company entered
into the Berg land holdings option agreement under which the Company has the
option to acquire any fully leased future R&D, office and industrial property
developed by the Berg Group on land currently owned or optioned, or acquired for
these purposes in the future, directly or indirectly, by Carl E. Berg or Clyde
J. Berg. The principal terms of the agreement include the following:
- So long as the Berg Group members and their affiliates own or have the
right to acquire shares representing at least 65% of our common stock
on a fully diluted basis the Company will have the option to acquire
any building developed by any member of the Berg Group on the land
subject to the agreement at such time as the building has been leased.
Upon the exercise of the option, the option price will equal the sum
of:
- 13 -
(1) the full construction cost of the building; plus
(2) 10% of the full construction cost of the building; plus
(3) interest at LIBOR plus 1.65% on the amount of the full
construction cost of the building for the period from the date
funds were disbursed by the developer to the close of escrow;
plus
(4) the original acquisition cost of the parcel on which the
improvements will be constructed; plus
(5) 10% per annum of the amount of the original acquisition cost of
the parcel from the later of January 1, 1998 and the seller's
acquisition date, to the close of escrow; minus
(6) the aggregate principal amount of all debt encumbering the
acquired property.
- The acquisition cost, net of any debt, will be payable in cash, or
O.P. Units valued at the average closing price of the Common Stock
over the 30-trading-day period preceding the acquisition or in cash,
at the option of the Berg Group.
- The Company must assume all tax assessments.
- If the Company elects not to exercise the option with respect to any
property, the Berg Group may hold and lease the property for its own
account, or may sell it to a third party.
- All action taken by the Company under the Berg land holdings option
agreement must be approved by a majority of the members of the
Independent Directors Committee.
The following table presents certain information concerning projects
acquired under the pending projects acquisition agreement ("Pending") and the
Berg land holdings option agreement ("Berg Land"):
Approximate Actual O.P.
Rentable Area Acquisition Acquisition Cash/Debt Units
Property (square feet) Period Price Assumption Issued
- --------------------------- --------------- ------------- -------------- ------------- -------------
Pending: (1)
1650 Richard Avenue 52,800 Q3 1998 $ 4,198,000 $ 2,436,261 405,166
6810 Santa Teresa Blvd 54,996 Q1 1999 8,558,000 3,612,870 694,030
1065 - 1105 L'Avenida 515,700 Q2 1999 156,107,000 57,057,700 13,206,629
1750 Automation Pkwy 80,641 Q3 1999 15,963,000 3,500,000 1,455,578
1700 Richard Avenue 58,783 Q3 1999 5,756,000 1,058,000 548,637
1756 Automation Pkwy 80,640 Q1 2000 14,594,000 5,100,000 1,346,480
1762 Automation Pkwy 61,100 Q2 2000 17,029,000 8,458,260 1,001,213
1768 Automation Pkwy 110,592 Q4 2000 27,316,000 9,500,000 1,370,443
Berg Land:
5850 Hellyer Avenue 109,715 Q4 1998 9,494,000 7,880,445 266,898
5749 Fontanoso Way 77,700 Q4 1999 7,169,394 3,943,924 406,358
800 Branham Lane 239,000 Q1 2000 18,358,912 6,330,933 1,438,066
255 Caspian Drive 98,500 Q2 2000 11,637,164 7,000,000 550,079
5300-5350 Hellyer Ave 160,000 Q2 2000 17,183,541 12,565,936 659,223
5400 Hellyer Avenue 77,184 Q3 2000 8,598,072 4,136,384 466,377
45365 Northport Loop 64,218 Q4 2000 8,158,370 1,276,391 538,357
--------------- -------------- ------------- -------------
TOTAL 1,841,569 $330,120,453 $133,857,104 24,353,534
=============== ============== ============= =============
(1) The acquisition price under generally accepted accounting principles
("GAAP") is based on the closing price of the Company's common stock on the
closing date of the acquisition.
- 14 -
In January and February 2001, the Company acquired two newly constructed
R&D properties leased to Celestica Asia, Inc. and ACT Manufacturing on Hellyer
Avenue in San Jose, California consisting 131,500 and 117,740 square feet of
rentable space, respectively, under the Berg land holdings option agreement. The
total estimated acquisition cost is $16.5 million and $14.4 million,
respectively.
OTHER COVENANTS. The acquisition agreement, Berg land holdings option
agreement and supplemental agreement to which the Company and the Berg Group, or
Carl E. Berg and Clyde J. Berg, individually are parties includes the
undertaking of Carl E. Berg not to directly or indirectly acquire or develop, or
acquire any equity ownership interest in any entity that has an ownership
interest in, any real estate zoned or intended for use as R&D, office or
industrial properties, with the exception of investments in securities of
publicly traded companies, which securities do not represent more than 10% of
the outstanding voting securities of such companies, in California, Oregon or
Washington without first disclosing such investment opportunity to the Company
and making such opportunity available to the Company, subject to the approval of
the Independent Directors Committee. This restriction does not apply to any
acquisition of the projects subject to the pending projects acquisition
agreement or completed buildings acquired pursuant to the Berg land holdings
option agreement or the supplemental agreement. This restriction remains in
effect until the date on which both of the following conditions are satisfied:
(i) no nominee of the Berg Group is a member of the Board of Directors; and (ii)
the Berg Group and its affiliates, other than the Company and the Operating
Partnerships, beneficially own less than 25% of the outstanding Common Stock,
including for these purposes all shares issuable upon exercise of the rights to
exchange O.P. Units for Common Stock.
In addition, transactions between the Company and any member of the Berg
Group, or an entity in which a member of the Berg Group holds at least 5% of the
equity interests, including the Company's election to issue Common Stock or pay
cash in exchange for O.P. Units tendered by the Berg Group are subject to review
and approval by the Independent Directors Committee. Aside from these
restrictions, the Berg Group is generally free to conduct its business
activities and will not be required to seek the approval of such activities or
refer business opportunities to the Company, nor will it have any liability to
the Company for its failure to do so.
ISSUANCE AND ASSUMPTION OF DEBT. As of March 15, 2001, the Company was
liable for loans aggregating approximately $43,820,000 and $11,599,000 payable
to the Berg Group under the line of credit and mortgage loan, respectively, not
accounting for the two acquisitions that occurred in the first quarter of 2001.
The Berg Group line of credit is secured by seven properties, bears interest at
LIBOR plus 1.30 percent, and the maturity date has recently been extended to
March 2002. The mortgage loan is secured by two properties, bears interest at
7.65 percent, and matures in June 2010.
In September 1998, the Company assumed a $100 million line of credit with
the Wells Fargo Bank N.A. previously provided to and guaranteed by the Berg
Group, which was reduced to $50 million subsequently. The Wells Fargo line of
credit expired on February 29, 2000 and was repaid with proceeds from and
replaced by a $50 million line of credit from the Berg Group. On April 1, 2000,
the $50 million credit line with the Berg Group was increased to $75 million
with all other terms remaining the same. The Wells Fargo line of credit was
collateralized by 14 of the Company's properties and was guaranteed by Mr. Berg
and certain other members of the Berg Group.
LEASE FROM BERG GROUP. The Company leases its executive offices from Berg &
Berg Enterprises, Inc. For the year ended December 31, 2000, the Company paid
$80,640 to Berg & Berg Enterprises, Inc. under the terms of the lease agreement
for its executive offices. Effective April 1, 2001, rent was increased to $7,520
per month.
- 15 -
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's directors and officers, and persons who own more than 10% of a
registered class of the Company's equity securities, to file with the Securities
and Exchange Commission (the "SEC") initial reports of ownership and reports of
changes in ownership of Common Stock and other equity securities of the Company.
Directors, officers and greater than ten percent holders are required by SEC
regulation to furnish the Company with copies of all Section 16(a) reports they
file.
To the Company's knowledge, based solely on review of the copies of the
above-mentioned reports furnished to the Company and written representations
regarding all reportable transactions, during the fiscal year ended December 31,
2000, all Section 16(a) filing requirements applicable to its directors,
officers and greater than ten percent holders were complied with on time, except
that Carl E. Berg and certain members of the Berg Group did not timely file one
or more reports on Form 4 that may have been due with respect to acquired O.P.
Units issued pursuant to the Pending Projects Acquisition Agreement and Berg
Land Holdings Option Agreement. The acquisitions of these units were otherwise
disclosed in reports filed by the Company on a group Form 4 filing made in April
2001.
REPORT ON EXECUTIVE COMPENSATION BY THE
COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
The Compensation Committee (the "Committee") comprises three independent
members of the Board of Directors. The Company's Board of Directors has
delegated to the Committee responsibility for reviewing, recommending and
approving the Company's compensation policies and benefits programs. The
Committee also has the principal responsibility for the administration of the
company's stock plans, including approving stock option grants to executive
officers.
COMPENSATION PHILOSOPHY
The Company's executive compensation policy is designed to attract and
retain qualified executive personnel by providing executives with a competitive
total compensation package based in large part on their contribution to the
financial and operational success of the Company, the executive's personal
performance and increases in stockholder value as measured by the Company's
stock price.
COMPENSATION PROGRAM
The compensation package for the Company's executive officers consists of
the following three components:
BASE SALARY. The Committee determines the base salary of each executive
based on the executive's scope of responsibility, past accomplishments and
experience and personal performance, internal comparability considerations and
data regarding the prevailing compensation levels for comparable positions in
relevant competing executive labor markets. The Committee may give different
weight to each of these factors for each executive, as it deems appropriate. In
selecting comparable companies for the purpose of setting competitive
compensation for the Company's executives, the Committee considers many factors
not directly associated with stock price performance, such as geographic
location, annual revenue and profitability, organizational structure,
development stage and market capitalization.
- 16 -
ANNUAL INCENTIVE COMPENSATION. At the present time, the Company does not
have an annual incentive compensation program in place. However, the
Compensation Committee may in the future at the Committee's discretion institute
an annual incentive program.
STOCK OPTIONS. The Committee believes that granting stock options to
executives and other key employees on an ongoing basis gives them a strong
incentive to maximize stockholder value and aligns their interests with those of
other stockholders. The Committee determines stock option grants to executives
and has authorized the Company's CEO to determine stock option grants for all
other employees, subject to the Committee's approval of total share allocations
from the Company's option plan. In determining the size of stock option grants,
the Committee considers the executive's current position with and
responsibilities to the Company, potential for increased responsibility and
promotion over the option term, tenure with the Company and performance in
recent periods, as well as the size of comparable awards made to executives in
similar positions in competing executive labor markets. Generally, each stock
option grant allows the executive to purchase shares of the Company's common
stock at a price per share equal to the market price on the date the option is
granted, but the Committee has the power to grant options at a lower price if
considered appropriate under the circumstances. Each stock option grant
generally becomes exercisable, or vests, in installments over time, contingent
upon the executive's continued employment with the Company.
COMPENSATION OF CHIEF EXECUTIVE OFFICER. The annual salary for Mr. Berg was
set in 1997 and first became payable in 1998. The Compensation Committee has no
plan to adjust his compensation.
COMPLIANCE WITH INTERNAL REVENUE CODE SECTION 162(M). Section 162(m) of the
Internal Revenue Code generally disallows a tax deduction to publicly-held
companies for compensation paid to certain executive officers, to the extent
that compensation paid to the officer exceeds $1 million during the Company's
taxable year. the compensation paid to the company's executive officers for the
year ended December 31, 2000 did not exceed the $1 million limit per officer. In
addition, the Company's 1997 Stock Option Plan and executive incentive option
grants have been structured so that any compensation deemed paid to an executive
officer in connection with the exercise of his or her outstanding options with
an exercise price per share equal to the fair market value per share of the
Common Stock on the grant date will qualify as performance-based compensation
that will not be subject to the $1 million limitation. It is very unlikely that
the cash compensation payable to any of the Company's executive officers in the
foreseeable future will approach the $1 million limit, and the Compensation
Committee does not expect to take any action at this time to modify cash
compensation payable to the Company's executive officers to avoid the
application of Section 162(m).
The Compensation Committee of the Board of Directors
John C. Bolger
William A. Hasler
Lawrence B. Helzel
- 17 -
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee of the company's Board of Directors was formed
in December 1998 and currently is comprised of Messrs. John C. Bolger, William
A. Hasler and Lawrence B. Helzel. None of these individuals were at any time
during 2000, or at any other time, an officer or employee of the Company. No
executive officer of the Company serves as a member of the Compensation
Committee of any other entity that has one or more executive officers serving as
a member of the Company's Board of Directors or Compensation Committee.
AUDIT COMMITTEE REPORT
The Audit Committee reviews, acts on and reports to the Board with respect
to various auditing and accounting matters, including the selection of the
Company's independent public accountants, the scope of the annual audits, fees
to be paid to the Company's accountants, the performance of the Company's
accountants, the audit report on the Company's consolidated financial statements
following completion of the audit and the accounting practices of the Company
with respect to internal accounting and financial controls. The Board of
Directors of the Company adopted an Audit Committee Charter on June 9, 2000, a
copy of which is attached to this proxy statement as Exhibit A. The Audit
Committee is currently comprised of Messrs. John C. Bolger, William A. Hasler,
and Lawrence B. Helzel, all of whom are independent. The Audit Committee met
three times during fiscal year 2000.
The Audit Committee has reviewed and discussed the audited financial
statements of the Company for fiscal year 2000 with management and the Company's
independent public accountants, PricewaterhouseCoopers LLP ("PWC"). The
Committee discussed with PWC matters required to be discussed by Statement on
Auditing Standards No. 61 (Communication with Audit Committees). The Audit
Committee was also provided by PWC the written disclosures required by
Independence Standards Board Standard No. 1 (Independence Discussions with Audit
Committees), and the Committee discussed with PWC that firm's independence.
Based on the discussions with PWC concerning the audit, the independence
discussions and the financial statement review, and such other matters deemed
relevant and appropriate by the Audit Committee, the Audit Committee recommended
to the Board that the Company's financial statements for the fiscal year ended
December 31, 2000 be included in its 2000 Annual Report on Form 10-K filed with
the Securities and Exchange Commission.
The Audit Committee of the Board of Directors
John C. Bolger
William A. Hasler
Lawrence B. Helzel
- 18 -
AUDIT FEES
The aggregate fees billed by PWC for professional services rendered for the
audit of the Company's annual financial statements for the fiscal year ended
December 31, 2000 and the reviews of the interim financial statements included
in the Company's Quarterly Reports on Form 10-Q for the fiscal year ended
December 31, 2000 were approximately $90,000.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES
None.
ALL OTHER FEES
The aggregate fees billed by PWC for tax services rendered to the Company,
other than the services described under "Audit Fees" and "Financial Information
Systems Design and Implementation Fees," for the fiscal year ended December 31,
2000 were approximately $29,000.
- 19 -
--------------------------------------------------
PROPOSAL NO. 1:
ELECTION OF DIRECTORS
--------------------------------------------------
At the Meeting, four directors (constituting the entire Board of Directors)
are to be elected to serve until the next annual meeting of Stockholders and
until a successor for such director is elected and qualified, or until the
death, resignation or removal of such director. There are four nominees, all of
whom are currently directors of the Company.
NOMINEES
Set forth below is information regarding the nominees for election to the
Board of Directors:
Name Position(s) with the Company First Elected Director
- ------------------------------ ------------------------------ ------------------------
Carl E. Berg Chairman of the Board, Chief 1997
Executive Officer, and President
John C. Bolger Director 1998
William A. Hasler Director 1998
Lawrence B. Helzel Director 1998
In accordance with the Bylaws, it is a qualification of two directors that
they be nominated by the Berg Group and that one such director be Carl E. Berg
or the Berg Designee as long as the Berg Group and its affiliates (other than
the Company and the Operating Partnership) own at least 15% of the fully-diluted
number of shares. The Company has been advised by Mr. Berg, who represents the
Berg Group, that he will be the only Berg Group nominee for election at this
meeting.
A plurality of the votes cast at the Meeting is required to elect each
nominee as a director. Unless authority to vote for any of the nominees named
above is withheld, the shares represented by the enclosed proxy will be voted
FOR the election as directors of such nominees. Each person nominated has agreed
to serve if elected, and the Board of Directors has no reason to believe that
any nominee will be unavailable or will decline to serve. In the event, however,
that any nominee is unable or declines to serve as a director at the time of the
Meeting, the proxies will be voted for any nominee who is designated by the
current Board of Directors to fill the vacancy.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE
ELECTION OF ALL OF THE ABOVE NOMINEES.
- 20 -
--------------------------------------------------
PROPOSAL NO. 2:
INDEPENDENT PUBLIC ACCOUNTANTS
--------------------------------------------------
The Board of Directors has appointed PricewaterhouseCoopers LLP,
independent public accountants, to audit the financial statements of the Company
for the year ending December 31, 2001. The Board of Directors proposes that the
stockholders ratify this appointment. The Company expects that representatives
of PricewaterhouseCoopers LLP will be present at the Annual Meeting, will have
the opportunity to make a statement if they desire to do so, and will be
available to respond to appropriate questions.
In the event that stockholders fail to ratify the appointment, the Board of
Directors will reconsider its selection. Even if the selection is ratified, the
Board of Directors, in its discretion, may direct the appointment of a different
independent accounting firm at any time during the year if the Board of
Directors determines that such a change would be in the Company's best
interests.
The affirmative vote of a majority of the votes cast affirmatively or
negatively at the Meeting is required to ratify the appointment of the
independent public accountants.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE
PROPOSAL TO RATIFY THE SELECTION OF PRICEWATERHOUSECOOPERS LLP TO SERVE AS THE
COMPANY'S INDEPENDENT PUBLIC ACCOUNTANTS FOR THE YEAR ENDING DECEMBER 31, 2001.
- 21 -
STOCKHOLDER PROPOSALS FOR 2002 ANNUAL MEETING
In addition, if you desire to bring business (including director
nominations) before the Company's 2002 Annual Meeting, the Company's Bylaws
states that it must be received by the Company's Secretary no earlier than [90th
day prior to the date of this year's annual meeting] and no later than [60th day
prior to the date of this year's annual meeting]. For additional requirements, a
stockholder should refer to our Bylaws, Article II, Section 12, "Nominations and
Proposals by Stockholders," a current copy of which may be obtained from our
Secretary. If the Company does not receive timely notice pursuant to the
Company's Bylaws, any proposal will be excluded from consideration at the
meeting, regardless of any earlier notice provided in accordance with SEC Rule
14a-8. All stockholder proposals should be addressed to the attention of the
Chief Executive Officer at the principal office of the Company.
OTHER MATTERS
The Board of Directors knows of no other matters to be presented for
stockholder action at the Annual Meeting. However, if other matters do properly
come before the Annual Meeting or any adjournments or postponements thereof, the
Board of Directors intends that the persons named in the proxies will vote upon
such matters in accordance with the best judgment of the proxy holders.
BY ORDER OF THE BOARD OF DIRECTORS
Michael L. Knapp
----------------------------------
Secretary
Cupertino, California
April 25, 2001
- 22 -
Exhibit A
MISSION WEST PROPERTIES, INC.
AUDIT COMMITTEE CHARTER
AS ADOPTED BY THE BOARD OF DIRECTORS ON JUNE 9, 2000
PURPOSE
The purpose of the Audit Committee of the Board of Directors of Mission West
Properties Inc. is to oversee and monitor the Company's financial reporting
process and systems of internal controls regarding finance and accounting on
behalf of the Board of Directors.
RESPONSIBILITIES OF AUDIT COMMITTEE
The Board of Directors recognizes that the Company's management is responsible
for preparing the Company's financial statements and that independent auditors
are responsible for auditing those financial statements. In fulfilling these
responsibilities, management and the independent auditors are ultimately
accountable to the Audit Committee and the Board of Directors.
Nothing in this Charter should be construed to imply that the Audit Committee is
required to provide or does provide any assurance or certification as to the
Company's financial statements or as to its compliance with laws, rules or
regulations. In order to fulfill its oversight responsibility, the Audit
Committee must be capable of conducting free and open discussions with
management, internal and independent auditors, employees and others regarding
the quality of the financial statements and the system of internal controls.
The specific duties of the Audit Committee shall be as follows:
Independent Auditors
1. Select and evaluate independent auditors, review their performance and
recommend to the Board of Directors the appointment or replacement of
independent auditors; and, to review and recommend to the Board of
Directors fee arrangements in connection with such appointments.
2. Ensure the auditor's independence by:
(i) ensuring that the auditors annually submit to the Audit Committee
a formal written statement delineating all relationships between
the auditors and the Company;
(ii) actively engaging in a dialogue with the auditors with respect to
any disclosed relationships or services that may impact their
objectivity and independence, including the matters required by
Independence Standards Board Standard No. 1 Independence
Discussions with Audit Committees (as it may be as may be
modified or supplemented);
(iii)reviewing and discussing with the Board of Directors any
relationships between the auditors and the Company, or any other
relationship, that may adversely
- 23 -
affect independence; and, reviewing and approving any significant
management consulting engagements proposed to be undertaken by
such auditors on behalf of the Company; and
(iv) recommending that the Board of Directors take appropriate action
in response to the auditors' report to satisfy itself of their
independence.
3. Annually require the auditors to confirm in writing their
understanding of the fact that they are ultimately accountable to the
Board of Directors of the Company and its Audit Committee.
4. Annually review the auditors' proposed audit plan and approach, as
well as staffing and timing of the audit and related matters.
5. Obtain from management, review and approve, a description of issues
and responses whenever a second opinion is proposed by management to
be sought from another outside accountant.
Financial Statements
6. Conduct a post-audit, pre-issuance review of the Company's annual
financial statements, the auditor's opinion thereon, and any
significant difficulties or disagreements with management encountered
during the course of the audit.
7. Discuss the annual financial statements with the appropriate officers
and/or employees of the Company and with the independent auditors, and
discuss with the auditors the matters required to be discussed by
relevant auditing standards, including the quality, and not just the
acceptability, of the accounting principles and underlying estimates
used in the statements.
8. If the Committee finds the annual financial statements acceptable, to
recommend to the Board of Directors that they be included in the
Company's annual report on Form 10-K.
9. Prepare a report to the shareholders of the Company in each proxy
statement, as required by the rules of the Securities and Exchange
Commission ("Commission").
10. Review with the Company's financial management and the independent
auditors the quarterly earnings releases and the schedule of
unrecorded adjustments to the Company's financial statements and the
reasons underlying the Company's assessment of the immateriality of
such adjustments.
11. With regard to quarterly reports to the Commission on Form 10-Q, the
Chairman of the Committee and/or any member or members of the
Committee whom he designates, shall review with management and the
independent auditor the financial statements to be included in such
filing prior to filing with the Commission.
12. Review prior to publication or filing and approve such other Company
financial information, including appropriate regulatory filings and
releases that include financial information, as the Committee deems
desirable.
- 24 -
Internal Accounting and Control Functions
13. Review the adequacy of the Company's system of internal accounting and
financial control.
14. Annually review the quality of internal accounting and financial
control, the auditor's report or opinion thereon and any
recommendations the auditor may have for improving or changing the
Company's internal controls, as well as management's letter in
response thereto and any other matters required to be discussed under
Statement of Auditing Standards No. 61 (as it may be modified or
supplemented).
15. Review the Company's major financial risk exposures and the steps
management has taken and proposes to take to monitor and control such
exposures.
16. Recommend to the Board of Directors for appointment and evaluate, in
consultation with executive management, the Company's controller.
17. Review and approve the budgets and staffing for the Accounting
Department.
General
18. Annually review this Audit Committee Charter, and any provisions of
the Company's by-laws that refer to the Audit Committee, and to
propose to the Board of Directors necessary or appropriate revisions.
19. At least annually, the Committee shall hold separate, private meetings
without other members of management present, with each of the
Company's Chief Financial Officer, Controller, and the Company's
independent auditor; and, each such person shall have free and direct
access to the Committee and any of its members.
20. Prior to the beginning of each fiscal year, the Chairman shall draft a
proposed schedule of the Committee's activities for the coming year,
and the times at which such activities shall occur, including
preliminary agendas for each proposed meeting of the Committee, which
shall be submitted to the Committee for its review and approval, with
such changes as the Committee shall determine to be appropriate.
Reporting Responsibilities
21. Periodically report its activities, concerns, conclusions and
recommendations to the Board of Directors.
AUTHORITY
22. The Audit Committee and each of its members may communicate directly
and/or privately with the Company's directors, officers, employees,
consultants, agents, internal auditors, independent auditors,
attorneys-in-fact, counsel (including inside and outside counsel) and
advisors, and any and all third parties in the performance of the
Committee's functions.
- 25 -
23. The Committee may cause an investigation to be made into any matter
within the scope of its responsibilities under this Charter as the
Committee deems necessary, or as otherwise requested by the Board or
Directors. The Committee may require Company personnel to assist in
any such investigation, and may engage independent resources to assist
in such investigations as it deems necessary.
COMMITTEE MEMBERSHIP
24. The membership of the Audit Committee shall consist of three directors
each of whom shall:
(i) have been appointed by the Board of Directors.
(ii) be free of any relationship to the Company which, in the opinion
of the Board of Directors, may interfere with the exercise of
independence from management and the Company;
(iii)be or shall become (within a reasonable period of time after his
or her appointment to the Committee) "financially literate," as
such qualification is interpreted by the Board of Directors in
its discretion; and
(iv) otherwise meet the requirements of independence as set forth in
the rules of the American Stock Exchange or any other market on
or through which the Company's securities may be traded (the
"relevant listing authority"), as such rules may be amended from
time to time. In addition, at least one member of the Audit
Committee shall have accounting or related financial management
expertise, as determined by the Board of Directors in its
discretion.
25. The Board of Directors reserves all authority permitted under the
rules of the Commission and the relevant listing authority in
connection with any matter referred to in this Charter, including but
not limited to the determination of independence of Audit Committee
members.
MEETINGS
26. The Audit Committee shall meet as often as necessary to fulfill its
functions as determined by the Committee, but no less than three times
annually.
- 26 -
MISSION WEST PROPERTIES, INC.
------------------
------------------------
SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS
The undersigned hereby appoints Carl E. Berg and Michael Knapp, each with
the power to appoint his substitute, and hereby authorizes them to represent and
to vote, all shares of common stock of Mission West Properties, Inc. (the
"Company") held of record by the undersigned on April 20, 2001 at the Annual
Meeting of Stockholders to be held May 17, 2001 and any adjournments thereof.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED. IF NO
DIRECTION IS GIVEN WITH RESPECT TO A PARTICULAR PROPOSAL, THIS PROXY WILL BE
VOTED FOR SUCH PROPOSAL.
PLEASE MARK, DATE, SIGN, AND RETURN THIS PROXY CARD PROMPTLY, USING THE
ENCLOSED ENVELOPE. NO POSTAGE REQUIRED IF MAILED IN THE UNITED STATES.
Dear Stockholder:
Please take note of the important information enclosed with this
Proxy. There are a number of issues related to the operation of the Company
that require your immediate attention.
Your vote counts, and you are strongly encouraged to exercise your
right to vote your shares.
Please mark the boxes on the proxy card to indicate how your shares
will be voted. Then sign the card, detach it and return your proxy in the
enclosed postage paid envelope.
Thank you in advance for your prompt consideration of these matters.
Sincerely,
Mission West Properties, Inc.
- --------------------------------------------------------------------------------
DETACH HERE
[X] Please mark vote
as in this example
FOR AGAINST ABSTAIN
1. Election of Directors 2. Ratify the appointment of [ ] [ ] [ ]
NOMINEES: Carl E. Berg, John C. Bolger, PricewaterhouseCoopers
William A. Hasler, and Lawrence B. Helzel as independent LLP auditors.
FOR WITHHELD
[ ] [ ]
3. In their discretion, the
proxies are authorized to
vote upon any other business
that may properly come
before the meeting.
- ------------------------------------- MARK HERE FOR [ ]
Name ADDRESS CHANGE
AND NOTE AT LEFT
- -------------------------------------
Street Address
PLEASE SIGN EXACTLY AS NAME APPEARS HEREON. JOINT OWNERS SHOULD
- ------------------------------------- EACH SIGN. EXECUTORS, ADMINISTRATORS, TRUSTEES, GUARDIANS OR OTHER
City State Country Zip Code FIDUCIARIES SHOULD GIVE FULL TITLE AS SUCH. IF SIGNING FOR A
CORPORATION, PLEASE SIGN IN FULL CORPORATE NAME BY A DULY
AUTHORIZED OFFICER.
[ ] PLEASE CHECK HERE IF YOU PLAN ON ATTENDING THE ANNUAL
STOCKHOLDERS MEETING.
Signature: _______________________ Date: _____________ Signature: _______________________ Date: _____________