Edgar Filing: MISSION WEST PROPERTIES INC

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the
Securities and Exchange Act of 1934

Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]

Check the appropriate box:
[ ]Preliminary Proxy Statement
[ ]Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
[X]Definitive Proxy Statement
[ ]Definitive Additional Materials
[ ]Soliciting Material Under Rule 14a-12

MISSION WEST PROPERTIES, INC.
(Name of Registrant as Specified In Its Charter)

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(Name of Person(s) Filing Proxy Statement, if other than Registrant)

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previously. Identify the previous filing by registration statement number, or
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MISSION WEST PROPERTIES, INC.

10050 Bandley Drive
Cupertino, California 95014

Dear Stockholder,

You are cordially invited to attend the 2009 Annual Stockholders' Meeting
of MISSION WEST PROPERTIES, INC. (the "Company") to be held on May 20, 2009 at
10:00 a.m., Pacific Time, 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 2009 Annual Stockholders' Meeting and
Proxy Statement.

On or about April 13, 2009, our Board of Directors expects to mail our
stockholders either (i) a copy of our Proxy Statement, the accompanying proxy
card and our Annual Report on Form 10-K for the year ended December 31, 2008 or
(ii) a Notice of Internet Availability of Proxy Materials (the "Notice"), which
will indicate how to access our proxy materials on the Internet.

Whether or not you plan to attend the Annual Meeting, your vote is very
important, and we encourage you to vote promptly. This will ensure your proper
representation at the Annual Meeting. If you received a paper copy of the proxy
card by mail, you may sign, date and mail the proxy card in the envelope
provided. Instructions regarding both methods of voting will be contained in the
proxy card or Notice that you receive. If you submit proxy voting instructions
over the Internet or by telephone or you complete, sign and mail a proxy card,
but later decide to attend the Annual Meeting in person, or for any other reason
desire to revoke your proxy, you may do so at any time before your proxy is
voted.

Sincerely,

/s/ Carl E. Berg
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Carl E. Berg
Chairman of the Board
and Chief Executive Officer

Important Notice Regarding the Availability of Proxy Materials for
Mission West Properties, Inc.'s Annual Stockholders' Meeting to be held
on May 20, 2009.
Mission West Properties, Inc.'s Proxy Statement and Annual Report on Form 10-K
for the fiscal year ended December 31, 2008 are available free of charge at the
following website: www.missionwest.com.

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YOUR VOTE IS IMPORTANT.
PLEASE REMEMBER TO PROMPTLY RETURN YOUR PROXY.
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MISSION WEST PROPERTIES, INC.

10050 Bandley Drive
Cupertino, CA 95014

NOTICE OF 2009 ANNUAL STOCKHOLDERS' MEETING
TO BE HELD ON MAY 20, 2009

To the Stockholders of Mission West Properties, Inc.:

NOTICE IS HEREBY GIVEN that the 2009 Annual Stockholders' Meeting (the
"Annual Meeting") of Mission West Properties, Inc., a Maryland corporation (the
"Company"), will be held at the Company's offices at 10050 Bandley Drive,
Cupertino, California 95014 on May 20, 2009 at 10:00 a.m., Pacific Time, for the
following purposes:

1. To elect five members of the Board of Directors to hold office until the
next Annual Stockholders' Meeting or until their respective successors have
been elected and qualified. The nominees are Carl E. Berg, William A.
Hasler, Lawrence B. Helzel, Raymond V. Marino and Martin S. Roher.
2. To ratify the appointment of the accounting firm of Burr, Pilger & Mayer,
LLP as the Company's independent registered public accounting firm for the
calendar year ending December 31, 2009.
3. To transact such other business as may properly come before the Annual
Meeting or any adjournment of the Annual Meeting.

The Board of Directors has fixed the close of business on April 3, 2009 as
the record date for the determination of stockholders entitled to receive 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.

We generally are providing our stockholders access to our proxy materials
over the Internet instead of mailing them. On or about April 13, 2009, our Board
of Directors expects to mail to all stockholders whose shares are registered in
the name of a nominee holding shares for a beneficial owner (i.e., "street
name") a Notice of Internet Availability of Proxy Materials (the "Notice") in
connection with the solicitation of proxies by our Board of Directors for use at
the Annual Meeting and any adjournments or postponements thereof. On the date of
mailing, we will make our Proxy Statement, including this Notice of Annual
Meeting, the form of proxy and our Annual Report on Form 10-K for the year ended
December 31, 2008 (collectively the "proxy materials") publicly available on the
Internet according to the instructions provided in the Notice.

If you receive Notice by mail, you will not receive a printed copy of the
proxy materials with the Notice. The Notice will instruct you as to how you may
access and review all of the important information contained in the proxy
materials, including by requesting a printed copy of the proxy materials. The
Notice also will instruct you as to how you may submit voting instructions for
your proxy over the Internet.

In lieu of mailing the Notice, our Board of Directors will mail the
complete set of proxy materials to all stockholders of record who are not
nominees for the beneficial owners.

All stockholders are cordially invited to attend the Annual Meeting. 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

/s/ Raymond V. Marino
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Raymond V. Marino
Corporate Secretary
Cupertino, California
April 9, 2009

MISSION WEST PROPERTIES, INC.
10050 Bandley Drive
Cupertino, California 95014
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PROXY STATEMENT

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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 2009
Annual Stockholders' Meeting to be held at 10050 Bandley Drive, Cupertino,
California 95014 on May 20, 2009, at 10:00 a.m., Pacific Time, and any
postponement or adjournments thereof (the "Annual Meeting").

On or about April 13, 2009, our Board of Directors expects to mail to all
stockholders whose shares are registered in the name of a nominee holding shares
for a beneficial owner a Notice of Internet Availability of Proxy Materials (the
"Notice") in connection with the solicitation of proxies by our Board of
Directors for use at the Annual Meeting and any adjournments or postponements
thereof. On the date of mailing, we will make our Proxy Statement, the Notice of
Annual Meeting, the form of proxy and our Annual Report on Form 10-K for the
year ended December 31, 2008 (collectively the "proxy materials") publicly
available on the Internet according to the instructions provided in the Notice.

In lieu of mailing the Notice, our Board of Directors will mail the
complete set of proxy materials to all stockholders of record who are not
nominees for the beneficial owners.

SOLICITATION AND VOTING PROCEDURES

Shares represented by valid proxies in the form enclosed, received in time
for use at the Annual Meeting and not revoked at or before the Annual Meeting,
will be voted at the Annual Meeting, as discussed below. 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 Annual Meeting. Holders of common stock are
entitled to one vote per share on all matters.

Assuming the presence of a quorum, for Proposal No. 1 the affirmative vote
of a plurality of the votes cast at the Annual Meeting and entitled to vote is
required to elect the directors, and the five nominees who receive the most
votes will be elected to the Company's Board of Directors. An affirmative vote
of the holders of a majority of the votes cast affirmatively or negatively at
the Annual Meeting also is necessary for approval of Proposal No. 2 to ratify
the appointment of the Company's independent registered public accounting firm
for the fiscal year 2009 audit. All proxies will be voted as specified on the
proxy cards or electronic voting instructions submitted by stockholders as long
as the proxy is properly submitted in accordance with our voting procedures and
is received by us before the close of voting at the Annual Meeting or any
adjournment or postponement thereof. If no choice has been specified, a properly
executed and timely proxy will be voted for the Board of Directors' five
nominees and for Proposal No. 2, which proposals are described in detail
elsewhere in this Proxy Statement.

To vote in person, a stockholder must attend the Annual Meeting, and then
complete and submit the ballot provided at the meeting. To vote by proxy, a
stockholder of record who is not a beneficial owner must mark, sign, and date
the accompanying proxy card and mail it to our corporate office. A beneficial
owner receiving the Notice may submit proxy voting instructions electronically
by using the Internet and logging on to www.proxyvote.com and following the
instructions provided on the Notice, and if a beneficial owner requests and
reviews the proxy materials in accordance with such instructions, the beneficial
owner also may submit voting instructions by calling the toll free telephone
number provided on the Notice, the available website, or the proxy card provided
for beneficial owners. In addition, a beneficial owner may vote by submitting a
properly completed and signed proxy card by mail, or by attending the Annual
Meeting and voting in person.

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An automated system administered by Broadridge Financial Solutions, Inc.
("Broadridge") will tabulate stockholder votes by proxy instructions submitted
by beneficial owners over the Internet, by telephone, or by proxy cards mailed
to Broadridge. We will tabulate stockholder votes submitted by proxies mailed to
us by stockholders of record other than beneficial owners. An officer of the
Company serving as the inspector of the election will tabulate votes cast in
person at the Annual Meeting.

With respect to the tabulation of proxies for purposes of constituting a
quorum, abstentions and broker non-votes are treated as present. Abstentions
will not be counted as votes cast at the Annual Meeting with respect to any
proposal and will have no effect on the result of the vote. A broker "non-vote"
occurs when a nominee holding shares for a beneficial owner (i.e., in "street
name") does not have discretionary voting power with respect to a proposal and
has not received instructions from the beneficial owner. If the nominee broker
properly and timely requests instructions from the beneficial owner and does not
receive them, under applicable rules the broker has discretionary authority to
vote on certain routine matters such as the election of directors in Proposal
No. 1 and the ratification of the Company's independent registered public
accounting firm in Proposal No. 2.

The close of business on April 3, 2009 has been fixed as the record date
for determining the stockholders entitled to receive notice of and to vote at
the Annual Meeting. As of March 31, 2009, the Company had 21,748,211 shares of
common stock outstanding and entitled to vote at the Annual Meeting. Holders of
common stock outstanding as of the close of business on the record date will be
entitled to one vote for each share of common stock held.

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.

REVOCABILITY OF PROXIES

You can revoke your proxy at any time before the voting at the Annual
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 Annual Meeting and voting in person.
Attendance at the Annual Meeting will not itself revoke an earlier submitted
proxy. 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: Corporate Secretary. Requests for
additional copies of the Annual Report on Form 10-K for the year ended December
31, 2008 and Proxy Statement may also be made by calling the Company at (408)
725-0700.

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DIRECTORS AND EXECUTIVE OFFICERS

The names of the Company's executive officers and directors as of March 31,
2008 and certain information about them are set forth below:

Name Age Position with the Company
Carl E. Berg 71 Chairman of the Board, Chief Executive Officer and Director
William A. Hasler (1) 67 Director
Lawrence B. Helzel (1) 61 Director
Raymond V. Marino 50 President, Chief Operating Officer and Director
Wayne N. Pham 39 Vice President of Finance and Controller
Martin S. Roher ((1)) 59 Director

(1) Member of the Audit Committee, the Compensation Committee and the
Independent Directors Committee.

The following is a biographical summary of the business experience of the
Company's executive officers and directors:

CARL E. BERG. Mr. Berg has served as Chairman of the Board and Chief
Executive Officer 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 a
private investor and also serves as a director of MoSys, Inc., Valence
Technology, Inc., and Hancock Fabrics, Inc.

WILLIAM A. HASLER. Mr. Hasler became a director of the Company in December
1998. Mr. Hasler previously served as co-chief executive officer and Vice
Chairman of Aphton Corporation, an international biotechnology firm. For seven
years, Mr. Hasler was Dean of the Haas School of Business at the University of
California, Berkeley, and is a former vice chairman and director of KPMG LLP. In
1998, he retired as Dean Emeritus. Mr. Hasler serves as a director of Technical
Olympic USA, Inc., Ditech Networks, Inc., Stratex Networks, Inc. and Genitope
Corporation. He is a trustee of the Schwab Funds.

LAWRENCE B. HELZEL. Mr. Helzel became a director of the Company in December
1998. He is a private investor and a general partner of Helzel Kirshman, L.P., a
private investment partnership, a position which he has held since 1996. Mr.
Helzel has been a councilmember for the city of Ketchum, Idaho since January
2008.

RAYMOND V. MARINO. Mr. Marino joined the Company in June 2001 as President
and Chief Operating Officer and was appointed by the Board of Directors to fill
a newly created board seat in July 2001. From November 1996 to August 2000, he
was President, Chief Executive Officer and a member of the board of directors of
Pacific Gateway Properties, Inc.

WAYNE N. PHAM. Mr. Pham joined the Company in March 2000 as Controller and
was promoted to Vice President of Finance in October 2000. Mr. Pham was formerly
the Corporate Accountant and Accounting Manager at AvalonBay Communities, Inc.,
a multi-family apartment REIT, from 1995 to 1999.

MARTIN S. ROHER. Mr. Roher has been at MSR Capital Management, an
independent, wholly-owned money management firm exclusively designed to manage
funds for individual clients, which he founded in 1986. He was a securities
analyst at Goldman, Sachs and Company, Neuberger, Berman and Company and
Montgomery Securities from 1974 to 1986.

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CORPORATE GOVERNANCE

DIRECTOR INDEPENDENCE

The Company's Board of Directors has determined that for all of 2008
Messrs. Hasler, Helzel and Roher were "independent," as defined under
Marketplace Rule 4200(a)(15) of the NASDAQ Stock Market (the "NASDAQ") and are
independent as of the date of this proxy statement. No director qualifies as
independent unless the Board of Directors determines that the director has no
direct or indirect material relationship with the Company. On an annual basis,
each director and executive officer is obligated to complete a Director and
Officer Questionnaire which requires disclosure of any transactions with the
Company in which the director or executive officer, or any member of his or her
immediate family, have a direct or indirect material interest. The Company also
independently reviews the relationship of the Company to any entity for whom one
of our directors is an employee or a member of the board of directors. The Board
of Directors has determined that all director nominees, other than Messrs. Berg
and Marino, are independent in accordance with SEC rules and regulations and the
NASDAQ Marketplace Rules. The Board of Directors has concluded that there are no
business relationships that are material or that would interfere with the
exercise of independent judgment by any of these directors in their service on
the Board of Directors or its committees.

CODE OF BUSINESS CONDUCT AND ETHICS

The Company has adopted a code of business conduct and ethics that applies
to all of its directors, officers and employees. The code of ethics is available
on the Company's website at www.missionwest.com. If the Company makes any
substantive amendments to the code of ethics or grants any waiver, including any
implicit waiver, from a provision of the code to the Company's Chief Executive
Officer, President and Chief Operating Officer, Vice President of Finance and
Controller, or persons performing similar functions, where such amendment or
waiver is required to be disclosed under applicable SEC rules, the Company
intends to disclose the nature of such amendment or waiver on its website.

STOCKHOLDER COMMUNICATIONS WITH THE BOARD OF DIRECTORS

Stockholders who desire to communicate with the Board of Directors, or to a
specific director, may do so by delivering the communication addressed to either
the Board of Directors or any director, c/o Mission West Properties, Inc., 10050
Bandley Drive, Cupertino, California 95014. These communications will be
delivered to the Board of Directors, or any individual director, as specified.

ANNUAL MEETING ATTENDANCE

The Board of Directors encourages each director to attend the Company's
annual meetings of stockholders, but attendance is not required. Mr. Berg and
Mr. Marino attended our 2008 annual stockholders' meeting.

NUMBER, TERM AND ELECTION OF DIRECTORS

The Company's Bylaws currently provide for a board of directors consisting
of five directors. Each director serves for a term of one year or until the next
annual meeting at which directors are elected and the director's successor is
elected and qualified.

DESIGNATION OF CERTAIN DIRECTORS

Under the Company's Articles of Amendment and Restatement, or its Charter,
its Bylaws and contracts with the "Berg Group," which consists of Carl E. Berg,
Clyde J. Berg, the members of their respective immediate families, and
affiliated entities owning limited partnership interests, or O.P. Units, in any
of the Company's four operating partnerships, the Berg Group has special rights
with respect to meetings of the Board of Directors. A quorum for any meeting
requires the presence of Carl E. Berg, or in the event of his death, disability
or other event which results in his ceasing to be director, the presence of
someone who Mr. Berg has designated to replace him ("Berg Designee"). With
written consent from Mr. Berg or the Berg Designee, meetings of the Board of
Directors may be held without the presence of either of them. Mr. Berg is
obligated to submit a written statement identifying the Berg Designee to the
Company from time to time and may amend the statement at his sole discretion. In
addition, a majority of the Board of Directors, which must include Mr. Berg or
the Berg Designee, is required for approval of any amendment to the Charter or
Bylaws and any merger, consolidation or sale of all or substantially all of the
Company's assets or those of the Operating Partnerships. These special
provisions will remain in effect as long as the Berg Group collectively owns at
least 15% of the Company's voting stock computed on a diluted, or "fully
diluted," basis taking into account all voting stock issuable 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 ours without regard to any
percentage ownership limit set forth in the Charter or Bylaws, or by agreement.

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COMMITTEES OF THE BOARD OF DIRECTORS AND MEETINGS

The Company's Board of Directors has standing Independent Directors, Audit
and Compensation Committees. All three of these committees had the same three
members in 2008: William A. Hasler, Lawrence B. Helzel and Martin S. Roher.

The Independent Directors Committee is responsible for reviewing and 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 "Transactions with Related Persons" below. Generally, the meetings
of this committee occur at the same time as the Audit Committee meetings, unless
a special meeting is required.

The Audit Committee has been established in accordance with section
3(a)(58)(A) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"). The Audit Committee reviews, acts on and reports to the Board of
Directors with respect to various auditing and accounting matters. The Audit
Committee has the authority and responsibility to select, evaluate, and where
appropriate, replace the Company's independent registered public accounting
firm. The Board of Directors has determined that Mr. Roher, the Chairman of the
Audit Committee, and Mr. Hasler each as an "audit committee financial expert" in
accordance with applicable SEC rules based upon their prior business experience
as described above under "Directors and Executive Officers." The Audit Committee
also approves the scope of the services provided and reviews the annual audit
fees to be paid to the Company's independent registered public accounting firm,
the performance of that firm, the audit report of 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 has delegated to the Compensation Committee
responsibility for reviewing, recommending and approving its compensation
policies and benefits programs, including the compensation of Carl E. Berg,
Chairman of the Board and Chief Executive Officer, and the Company's other two
executive officers. The Compensation Committee also has the principal
responsibility for the administration of the Company's 2004 Equity Incentive
Plan (the "2004 Plan"), including approving stock option grants and awards to
executive officers.

During the year ended December 31, 2008, there were six meetings of the
Board of Directors, four meetings of the Audit Committee and two meetings of the
Independent Directors Committee. All five directors attended 100% of the Board
of Directors meetings. All five directors attended 100% of the meetings of the
committees of the Board of Directors of which he is a member. The Board of
Directors, Audit Committee and Compensation Committee also acted by unanimous
written consent periodically during 2008.

BOARD NOMINATIONS AND OTHER STOCKHOLDER PROPOSALS

The Board of Directors does not believe that a separate nominating
committee is necessary because all of the independent directors currently serve
on the Independent Directors, Audit and Compensation Committees, and any
additional committee of independent directors would consist of the same
individuals. The Berg Group has the right to designate two nominees to the Board
of Directors under the Company's Charter and Bylaws. Currently, Mr. Berg and Mr.
Marino are the two nominees proposed by the Berg Group. The three current
independent directors, Messrs. Hasler, Helzel and Roher have been designated by
the Board to review the qualifications of all other candidates for director and
to give their recommendations to the entire Board of Directors, which reviews
and approves nominations for election to the Board of Directors at the next
annual stockholders' meeting. The independent directors will give director
candidates proposed by stockholders the same consideration as other proposed
candidates.

When there is a need to identify or evaluate a prospective nominee, the
Independent Directors Committee is authorized to undertake a careful review
process which may involve, among other things, candidate interviews, inquiries
of the person or persons recommending the candidate, engagement of an outside
firm to gather additional information and/or discussions with management and
incumbent directors. In evaluating candidates, including current directors
eligible for re-election, the Independent Directors Committee considers various
factors that it considers necessary or appropriate, including the size and
composition of the Board of Directors and its committees, the needs of the Board
of Directors and its committees, the candidate's expertise and experience, the
candidate's independence and potential conflicts of interest, the candidate's
character and integrity, and the candidate's existing commitments. Upon
completion of its review and evaluation, the Independent Directors Committee
makes its recommendations to the Board of Directors regarding the candidate(s).
After considering the Independent Directors Committee's recommendations, the
Board of Directors determines and approves which candidate(s) shall be nominated
for election to the Board of Directors, subject to stockholder approval.

In general, the Independent Directors Committee will consider candidates
for nomination as director who are recommended by the Company's stockholders and
will not evaluate such candidates differently than other nominations for
director. The submission deadline for next year's annual meeting is set forth
under "Stockholder Proposals for 2010 Annual Meeting" elsewhere in this proxy
statement. Stockholders may suggest qualified candidates for director by giving
timely notice in writing to the committee at the following address: Mission West
Properties, Inc., 10050 Bandley Drive, Cupertino, CA 95014, Attention: Corporate
Secretary, and must include the candidate's name, home and business contact
information, detailed biographical data and qualifications and an

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explanation of the reasons why the stockholder believes this candidate is
qualified for service on the Company's Board of Directors. The stockholder must
also provide the stockholder's name and address as they appear on the Company's
books, the number of shares of Common Stock owned of record and beneficially by
the stockholder, and such other information about the candidate that would be
required by the SEC rules to be included in a proxy statement. In addition, the
stockholder must include the consent of the candidate and describe any
arrangements or undertakings between the stockholder and the candidate regarding
the nomination. The Corporate Secretary will then forward this information to
the Independent Directors Committee.

To date, the Company has neither rejected nor received any recommendations
for any candidate from any stockholder or group of stockholders owning more than
five percent of our common stock.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The Compensation Committee of the Board of Directors was formed in December
1998 and currently is comprised of Messrs. Hasler, Helzel and Roher. None of
these individuals were at any time during 2008, 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 or board of directors 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.

COMPENSATION OF DIRECTORS

The Company pays each director who is not an officer or employee of the
Company a fee for serving as director. The annual fee is equal to $25,000 plus
$1,500 for attendance (in person or by telephone) at each meeting of the Board
of Directors, and $500 for attendance at each separate committee meeting.
Officers who are also directors do not receive any directors' fees.

Each non-employee member of the Board of Directors who became or becomes a
member of the Board of Directors 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. The 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. Generally, the options must be exercised while the
optionee remains a director. All of the current directors received such an
initial option grant.

Under the 2004 Plan, the Board of Directors may authorize annual option
grants or awards to non-employee directors at the Board of Director's discretion
as long as the number of shares or equivalent number of underlying shares of
common stock, in the case of certain awards, does not exceed 50,000 per year.
Such option grants or awards become exercisable cumulatively with respect to
1/48th of the underlying shares on the first day of each month following the
date of grant. Generally, stock options must be exercised while the optionee
remains a director. In addition, the full Board of Directors, acting through a
disinterested majority, may authorize additional shares to a director who
performs significant additional tasks, such as chairing a Board of Directors
committee, or otherwise provides extraordinary service to the Board of
Directors. Under the 2004 Plan, in the event of certain acquisitions
representing the transfer of more than 50% of the voting power of the Company's
stock, all options and awards to non-employee directors will fully vest upon the
completion of the acquisition.

Although the Company considers option grants under the 2004 Plan to be an
adequate form of long-term compensation for directors, to provide regular
periodic compensation to the Company's independent directors, each of the
Company's three non-employee directors has received an award of 45,000 dividend
equivalent rights ("DERs"). Each DER represents the right to receive payment of
the dividend declared with respect to one share of common stock at the time the
Company pays the dividend and continues in effect as to each recipient as long
as he continues to serve on the Board of Directors.

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The following table sets forth the compensation for each independent
director during the year ended December 31, 2008.

Director Compensation Table
------------------------------------------------------------------------------------------------------

Fees Earned or Stock Option All Other
Name Paid in Cash ($) Awards Awards ($)(1) Compensation ($)(2) Total ($)
-------------------- ---------------- ------------ ---------------- ------------------- --------------

John C. Bolger (3) 15,500 - 2,122 9,000 26,622
William A. Hasler 31,000 - 32,586 36,000 99,586
Lawrence B. Helzel 31,000 - 32,586 36,000 99,586
Martin S. Roher (4) 17,583 - 13,488 18,000 49,071

(1) Represents the amount of compensation cost related to option grants to
directors, recognized by the Company for financial statement reporting
purposes for the fiscal year ended December 31, 2008 calculated using the
Black-Scholes option pricing method under FAS 123(R), but excluding any
estimate of future forfeiture. This cost relates to option awards granted
in 2008, 2007 and 2005. These amounts do not represent payments actually
received by the directors. For further information on the Black-Scholes
calculation, please refer to Item 8, "Financial Statements and
Supplementary Data - Note 10" in the Company's Annual Report on Form 10-K
for the year ended December 31, 2008.

(2) Represents the amount of dividends paid and accrued in 2008 on DER awards,
as discussed above.

(3) Mr. Bolger did not stand for re-election to the Board of Directors in 2008
and is no longer a member of the Board of Directors. His total compensation
represents the time he served during 2008.

(4) Mr. Roher was nominated and elected to the Board of Directors by
stockholder approval at the Company's 2008 Annual Meeting. His total
compensation represents the time he served during 2008.

In January 2008, each of the Company's three independent directors (Messrs.
Bolger, Hasler and Helzel) received a grant of options to purchase 45,000 shares
of common stock at an exercise price of $9.51 per share, which was the closing
price of a share of common stock on the date of grant. The options vest monthly
for 48 months and each option grant has a term of six years from date of grant,
subject to continued service to the Company. These options were granted for
their service as members of the Board of Directors. Options to purchase 41,250
shares of common stock held by Mr. Bolger expired in 2008 because he did not
stand for re-election to the Board of Directors and ceased to be a director in
May 2008.

Following Martin Roher's election to the Company's Board of Directors, in
July 2008 he received a grant of options to purchase 45,000 shares of common
stock at an exercise price of $11.36 per share, which was the closing price of a
share of common stock on the date of grant. The options vest monthly for 48
months and each option grant has a term of six years from date of grant, subject
to continued service to the Company. The Board of Directors also approved an
award of 45,000 DERs to Mr. Roher. Each such DER represents the right to receive
the dividend paid on one share of the Company's common stock when paid by the
Company, for as long as the recipient remains on the Company's Board of
Directors.

In November 2008, each of the Company's three independent directors
(Messrs. Hasler, Helzel and Roher) received a grant of options to purchase
45,000 shares of common stock at an exercise price of $6.14 per share, which was
the closing price of a share of common stock on the date of grant. 11,250
options, or 25%, of the total options vested immediately, while the remainder
vests monthly for 36 months. Each option grant has a term of six years from date
of grant, subject to continued service to the Company. These options were
granted for their service as members of the Board of Directors.

The following table sets forth all outstanding DER and option awards for
each independent director as of December 31, 2008.

Director DER and Option Award Table
--------------------------------------------------------------------------------
# of Shares Grant Date Fair
Director Grant Date # of DER Granted Value per Share
-------------------- ---------------- ------------ ------------ ----------------

William A. Hasler 04/27/2005 45,000 - -
04/27/2005 - 45,000 $10.00
01/12/2007 - 45,000 $12.09
01/01/2008 - 45,000 $9.51
11/19/2008 - 45,000 $6.14
Lawrence B. Helzel 04/27/2005 45,000 - -
04/27/2005 - 45,000 $10.00
01/12/2007 - 45,000 $12.09
01/01/2008 - 45,000 $9.51
11/19/2008 - 45,000 $6.14
Martin S. Roher 07/16/2008 45,000 - -
07/16/2008 - 45,000 $11.36
11/19/2008 - 45,000 $6.14

- 7 -

COMPENSATION DISCUSSION AND ANALYSIS

The Company's Compensation Discussion and Analysis explains the material
elements of the Company's compensation arrangements for its three executive
officers, Carl E. Berg, Raymond V. Marino and Wayne N. Pham (the "Named
Executive Officers"), for the fiscal year ended December 31, 2008.

The Company's current executive compensation programs are determined and
approved by the Compensation Committee of the Board of Directors. None of the
Named Executive Officers is a member of the Compensation Committee. Mr. Berg,
the Company's Chief Executive Officer, recommends to the Compensation Committee
the base salary, annual bonus and long-term compensation levels for the other
Named Executive Officers. None of the other Named Executive Officers had any
role in determining the compensation of any Named Executive Officers in 2008.
Although Mr. Berg is a Named Executive Officer, in light of the Berg Group's
substantial financial interest in the Company, Mr. Berg never has received, and
the Compensation Committee does not expect to pay him, incentive compensation of
any kind.

EXECUTIVE COMPENSATION PROGRAM OVERVIEW AND OBJECTIVES

In connection with the Compensation Committee's responsibility of
determining the compensation for the Named Executive Officers, the Compensation
Committee seeks to:

- attract, reward and retain highly qualified and motivated executives; and
- ensure executive compensation is aligned with the Company's corporate
strategies, business objectives and the long-term interests of the
Company's stockholders;

EXECUTIVE COMPENSATION PROGRAM ELEMENTS

The material elements of the Company's current executive compensation
program for the Named Executive Officers, other than Mr. Berg, include the
following:

- a base salary,
- an annual cash bonus opportunity (at the discretion of the Compensation
Committee)
- long-term equity incentive awards,
- DERs and
- 401(k) retirement benefits.

The Company believes that each executive compensation element helps it to
achieve one or more of the Company's compensation objectives.

Compensation decisions are approved by the Compensation Committee. The
Company does not have a set date or period during the fiscal year as to when
compensation decisions are made. The evaluations of the Named Executive
Officers, not including Mr. Berg, are solely determined by the Compensation
Committee at the recommendation of the Chief Executive Officer. Accordingly, the
Compensation Committee makes all compensation decisions when necessary and
appropriate during the year.

BASE SALARIES

Each Named Executive Officer receives a base salary. Base salaries are
intended to provide the executive with a base level of annual income that is not
contingent on the Company's performance. Mr. Berg's base salary was set in 1998
not long after the Berg Group acquired control of the Company and has not been
modified since then. Initial base salaries paid to the Company's other executive
officers are intended to recognize each individual's scope of responsibilities,
past accomplishments, fundamental skills and experience within the industry. The
Compensation Committee may give different weight to each of these factors for
each executive officer, as it deems appropriate. None of the Company's Named
Executive Officers has a written employment agreement. The Company's policy is
to pay the Named Executive Officers' base salaries in cash. The base salaries
are reviewed annually by the Compensation Committee and may be adjusted from
time to time, at its discretion, to recognize increases in responsibility,
outstanding individual performance and promotions.

There were no base salary adjustments in 2008.

- 8 -

ANNUAL CASH INCENTIVE

The Company does not have a cash incentive program or other bonus plan.
However, the Compensation Committee may decide to grant bonuses in its
discretion for outstanding individual performance and contributions to the
Company. No cash bonus was awarded in 2008.

LONG-TERM EQUITY INCENTIVE AWARDS

The objectives of the Company's long-term incentive compensation program
are to:

- reward achievement over a multi-year period,
- align the interests of executives with those of stockholders by focusing
executives on the stockholder return performance of the Company, and
- provide a retention mechanism through multi-year vesting.

The 2004 Plan allows for long-term equity incentive awards to executives
and key employees of, and consultants and other service providers to, the
Company, its subsidiaries and advisors through grants of stock option rights and
other equity awards, including restricted stock, stock grants, restricted stock
units, performance units, other stock-based compensation, including O.P. Units
exchangeable for shares of common stock, and dividend equivalent rights.
Generally, awards are granted in the form of options to purchase shares of
common stock of the Company. The awards align the recipient's interest with the
interests of stockholders by providing him with an ownership interest in the
Company and a stake in the Company's success. The 2004 Plan is administered by
the Compensation Committee, which has the discretion to determine those
individuals or entities to whom awards will be granted, the number of shares
subject to such rights and awards and other terms and conditions of the grants.
Each stock option award has a vesting period that is tied to each employee's
continued service to the Company.

STOCK OPTION RIGHTS

The Compensation Committee determines and approves all stock option grants
and other equity awards to executive officers and has authorized the Company's
Chief Executive Officer to determine stock option grants and other equity awards
for all other employees, subject to the Compensation Committee's approval of
total share allocations from the 2004 Plan. The Company's policy has been to
grant options to purchase shares upon hiring an executive and periodically
thereafter as part of the annual performance reviews, presented to the
Compensation Committee by Mr. Berg. No options to purchase common stock have
ever been granted to Mr. Berg, or any member of the Berg Group, under any
compensation arrangement. In determining the initial size of stock option
grants, the Compensation Committee considers the executive position with and
responsibilities to the Company, potential for increased responsibility and
promotion over the option term. In making additional option grants pursuant to
performance reviews, the Compensation Committee bases its decision upon a
subjective evaluation of the executive officers' performance in meeting the
Company's corporate objectives. Generally, each stock option grant allows the
executive officer to purchase shares of the Company's common stock at a price
per share equal to the market value on the date of grant, but the Compensation
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 (typically monthly over four years), or contingent upon
the executive's continued employment with the Company. The stock option grants
generally expire on the sixth anniversary of the grant date.

The Company has established a policy and procedure on stock option grants
that includes the following provisions governing the timing of such grants:

- The Compensation Committee determines and approves all stock option awards;
- The grant date of stock option awards is always the date of the approval of
the grants;
- Management has no control over selecting the date;
- The exercise price of the stock options is equal to fair market value,
which under the 2004 Plan is the closing price of a share of common stock
on the date of grant on the principal trading market for the common stock,
which was the AMEX until the Company transferred its exchange listing to
NASDAQ in March 2008; and
- Stock option awards are promptly reported on Form 4 with the Securities and
Exchange Commission for all Named Executive Officers.

The Company grants options infrequently at the Compensation Committee's
discretion. The Company does not have a policy providing for the coordination of
option grants with the release of material non-public information.

- 9 -

In November 2008, the Compensation Committee approved and granted options
to purchase 225,000 shares of common stock to Mr. Pham at an exercise price of
$6.14 per share, which was the closing price of a share of common stock on the
date of grant. 37,500 options vested immediately while 112,500 options vest
monthly for 36 months and 75,000 options vest monthly for 48 months. The options
have a term of six years from date of grant. These options were approved by the
Compensation Committee, with respect to his 2008 individual performance.

In March 2009, the Compensation Committee approved and granted options to
purchase 500,000 shares of common stock to Mr. Marino at an exercise price of
$5.99 per share, which was the closing price of a share of common stock on the
date of grant. 175,000 options vested immediately while 100,000 options vest
monthly for nine months and 225,000 options vest monthly for 36 months. The
options have a term of six years from date of grant. These options were approved
by the Compensation Committee, with respect to his 2008 individual performance.
The Compensation Committee intended to grant these options in 2008, but because
the number of shares exceeded the calendar year maximum provided under the 2004
Plan, it was made at this time.

DIVIDEND EQUIVALENT RIGHTS

In April 2005, the Compensation Committee approved awards of 80,000 DERs to
Mr. Marino and 20,000 DERs to Mr. Pham under the 2004 Plan. Each such DER
represents the current right to receive the dividend paid on one share of the
Company's common stock when paid by the Company, for as long as the recipient
remains employed by the Company. The DERs were awarded to enable these
executives to participate in distributions to stockholders without having to
exercise their stock options, which may not have significant value in the short
run.

The dividend rate declared for each quarter in 2008 was $0.20 per share of
common stock, which is equivalent to $0.80 per share of common stock for the
year. Consequently, in 2008, the Company paid $64,000 and $16,000 to Messrs.
Marino and Pham, respectively, with respect to their DERs.

401(K) RETIREMENT BENEFITS

The Company provides retirement benefits to all of its Named Executive
Officers under the terms of its tax-qualified 401(k) defined contribution
retirement plan. Each year the Company makes an automatic matching contribution
on behalf of each participant equal to 15% of the participant's compensation,
regardless of whether the participant contributes to the plan. The Named
Executive Officers participate in the plan on substantially the same terms as
the Company's other participating employees.

For 2008, the Company made 401(k) plan contributions in the amounts of
$22,500, $34,500 and $22,980 for Messrs. Berg, Marino and Pham, respectively.

TAX CONSIDERATIONS

The Compensation Committee endeavors to award compensation that will be
deductible for income tax purposes. Section 162(m) of the Internal Revenue Code
generally disallows a tax deduction to publicly-held companies for compensation
paid to "covered" executive officers, to the extent that compensation paid to
such an officer exceeds $1 million during the taxable year. None of the
compensation paid to our covered executive officers for the year ended December
31, 2008 that would be taken into account in determining a Section 162(m)
limitation exceeded the $1 million limit. The Company's 2004 Plan and awards to
executives under that plan have been structured so that any compensation deemed
paid to an executive officer in connection with the exercise of options with an
exercise price equal to the fair market value the shares on the grant date will
qualify as performance-based compensation that will not be subject to the $1
million limitation. The Compensation Committee does not expect to take any
action at this time to modify cash compensation payable to the executive
officers that would result in the application of Section 162(m).

- 10 -

COMPENSATION COMMITTEE REPORT

The Compensation Committee has reviewed and discussed with management the
Compensation Discussion and Analysis included in this Proxy Statement. Based on
this review and discussion, the Compensation Committee recommended to the Board
of Directors that the Compensation Discussion and Analysis be included in this
Proxy Statement and in the Company's Annual Report on Form 10-K filed with the
SEC for the fiscal year ended December 31, 2008.

The Compensation Committee of the Board of Directors:

William A. Hasler
Lawrence B. Helzel
Martin S. Roher

- 11 -

EXECUTIVE COMPENSATION

Summary Compensation Table

The following table summarizes the compensation received by the Company's
Named Executive Officers for the fiscal years ended December 31, 2008, 2007 and
2006.

Stock Option All Other
Name and Principal Position Year Salary ($) Bonus ($)(1) Awards Awards ($)(2) Compensation ($)(3) Total ($)
---------------------------- -------- ------------ ------------ --------- ------------- ------------------- ----------

Carl E. Berg 2008 100,000 - - - 22,500 122,500
Chairman and 2007 100,000 - - - 22,500 122,500
Chief Executive Officer 2006 100,000 - - - 22,500 122,500
Raymond V. Marino 2008 250,000 - - 186,856 98,500 535,356
President and 2007 250,000 150,000 - 223,752 84,950 708,702
Chief Operating Officer 2006 200,000 - - 93,151 81,200 374,351
Wayne N. Pham 2008 138,000 - - 85,084 38,980 262,064
Vice President of Finance 2007 138,000 - - 88,108 35,420 261,528
and Controller 2006 112,500 - - 30,993 29,675 173,168

(1) Mr. Marino's bonus comprised of $75,000 for 2006 and 2007.
(2) Represents the amount of compensation cost related to option grants to the
Named Executive Officers recognized by the Company for financial statement
reporting purposes for the fiscal years ended December 31, 2008, 2007 and
2006 calculated using the Black-Scholes option pricing method under FAS
123(R), but excluding any estimate of future forfeiture. This cost relates
to option awards granted in 2008, 2007 and 2005. These amounts do not
represent payments actually received by the officers. For further
information on the Black-Scholes calculation, please refer to Item 8,
"Financial Statements and Supplementary Data - Note 10" in the Company's
Annual Report on Form 10-K for the year ended December 31, 2008.
(3) Represents matching contributions to the Company's defined contribution
retirement plan (401(k) Plan) and payments received from DERs, which
amounts are discussed above under "Compensation Discussion and Analysis."

GRANTS OF PLAN-BASED AWARDS FOR 2008

The following table sets forth summary information regarding all grants of
plan-based awards made to the Company's Named Executive Officers during the year
ended December 31, 2008.

All Other
Options
Awards: Exercise
Number of or Base
Securities Price of
Underlying Option Grant Date
Name Grant Date Options(#) Awards($/Sh) Fair Value
--------------------- ------------ ------------ ------------ ------------
(a) (b)(1) (j) (k) (l)(4)

Raymond V. Marino 01/01/2008 300,000(2) $9.51 $169,789

Wayne N. Pham 01/01/2008 135,000(2) $9.51 $ 76,405
11/19/2008 225,000(3) $6.14 $ 27,837
-------------------------------------------------------------------------------------

(1) The table excludes the following option award that was made in respect of
2008 performance, but was not granted until March 6, 2009: 500,000 options
granted to Raymond V. Marino at an exercise price of $5.99 per share. This
option award vests as follows: 175,000 options vest immediately on the date
of grant, 225,000 options vest monthly for 36 months and 100,000 options
vest monthly for nine months. These options have a term of six years from
the date of grant, subject to continued employment with the Company. The
grant date fair value for these 500,000 options was $71,619.

(2) These option awards vest monthly for 48 months and have a term of six years
from the date of grant, subject to continued employment with the Company.

(3) This option award vests as follows: 37,500 options vest immediately on the
date of grant, 112,500 options vest monthly for 36 months and 75,000
options vest monthly for 48 months. These options have a term of six years
from the date of grant, subject to continued employment with the Company.

(4) These amounts are the grant date fair value of the option awards determined
in accordance with FAS 123(R).

OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END

The following table provides information about outstanding stock options
held by the Named Executive Officers as of December 31, 2008.

- 12 -

Option Awards
-------------------------------------------------------------------------------------------------------
Number of Securities Number of Securities
Underlying Unexercised Underlying Unexercised
Options (#) Options (#)
Named Executive Officer Exercisable Unexercisable Option Exercise Price($)(1) Option Expiration Date
---------------------------- ------------------------ ------------------------- --------------------------- ------------------------

Carl E. Berg - - - -

Raymond V. Marino 375,000 - 11.33 (2) 04/23/2009
250,000 - 10.00 (3) 04/26/2011
119,792 130,208 12.09 (4) 01/11/2013
68,750 231,250 9.51 (5) 12/31/2013

Wayne N. Pham 100,000 - 10.00 (6) 04/26/2011
47,917 52,083 12.09 (7) 01/11/2013
30,938 104,062 9.51 (8) 12/31/2013
42,188 182,812 6.14 (9) 11/18/2014

(1) The exercise price for each of the stock option grants was based on the
closing price of the Company's common stock on the AMEX or NASDAQ on the
date the Compensation Committee approved the grant.
(2) Represents options to purchase 375,000 shares granted on April 24, 2001,
which vest and become exercisable as follows: approximately 8.33% of the
total number of shares granted six months after the date of grant and
approximately 1.39% of the shares each month thereafter for 66 months.
(3) Represents options to purchase 250,000 shares granted on April 27, 2005,
which vest and become exercisable as follows: approximately 11.11% of the
total number of shares on the date of grant and approximately 1.39% of the
shares each month thereafter for 32 months.
(4) Represents options to purchase 250,000 shares granted on January 12, 2007,
which vest and become exercisable as follows: approximately 2.08% of the
total shares each month for 48 months.
(5) Represents options to purchase 300,000 shares granted on January 1, 2008,
which vest and become exercisable as follows: approximately 2.08% of the
total shares each month for 48 months.
(6) Represents options to purchase 100,000 shares granted on April 27, 2005,
which vest and become exercisable as follows: approximately 11.11% of the
total number of shares on the date of grant and approximately 1.39% of the
shares each month thereafter for 32 months.
(7) Represents options to purchase 100,000 shares granted on January 12, 2007,
which vest and become exercisable as follows: approximately 2.08% of the
total shares each month for 48 months.
(8) Represents options to purchase 135,000 shares granted on January 1, 2008,
which vest and become exercisable as follows: approximately 2.08% of the
total shares each month for 48 months.
(9) Represents options to purchase 225,000 shares granted on November 19, 2008,
which vest and become exercisable as follows: 37,500 shares on the date of
grant, approximately 2.78% of 112,500 shares each month thereafter for 36
months and approximately 2.08% of 75,000 shares each month for 48 months.

OPTION EXERCISES IN LAST FISCAL YEAR

There was no exercise of option awards by the Named Executive Officers
during the year ended December 31, 2008.

POTENTIAL PAYMENTS UPON TERMINATION OR A CHANGE IN CONTROL

The Company does not have any written employment agreements or any
arrangements or commitments with regard to the payment of compensation upon
termination of employment or a change in control of the Company with any of its
Named Executive Officers.

SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLAN

The following table provides information as of December 31, 2008 regarding
equity compensation plans approved by the Company's security holders. The
Company does not have any equity compensation plans that have not been approved
by its security holders.

Number of Shares of
Number of Shares of Common Stock Remaining
Common Stock to be Weighted-Average Available for Future
Issued Upon Exercise Exercise Price of Issuance Under Equity
Plan Category of Outstanding Options Outstanding Options Compensation Plans
-------------------------------------------------- ---------------------- ----------------------- --------------------------

Equity Compensation plans approved by security holders 3,132,500 $9.63 1,380,535

Total 3,132,500 $9.63 1,380,535

- 13 -

SHARE OWNERSHIP

The following table sets forth certain information as of March 31, 2009,
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 Named Executive Officer 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 stockholders and on information contained in filings with the SEC.

Percent of All
Shares of Common
Stock(Assuming
Number of Shares Percent of Exchange of Percent of All
of Common Stock All Shares of Number of Holder's O.P. Shares of Common
Name and Address (1(4)) Beneficially Owned(1) Common Stock O.P. Units Units)(2) Stock/O.P. Units(1)(2)
------------------------------------------------------------------------------------------------------------------------------------

Executive Officers and Directors:
Carl E. Berg 2,000,000 8.52% 43,213,297(3)(10) 67.81% 42.26%
Chairman of the Board, Chief Executive
Officer and Director
Raymond V. Marino 1,150,555 (4) 4.93% - 4.93% 1.08%
President, Chief Operating Officer and
Director
Wayne N. Pham 284,958 (5) 1.21% - 1.21% *
Vice President of Finance and Controller
William A. Hasler, Director 117,125 (6) * - * *
Lawrence B. Helzel, Director 287,625 (7) 1.23% - 1.23% *
Martin S. Roher, Director 116,250 (8) * - * *
5% Stockholders:
Integre Advisors, LLC 1,498,248 (12) 6.39% - 6.39% 1.40%
277 Park Avenue, 49th Floor
New York, NY 10172
Ingalls & Snyder, LLC 3,212,129 (13) 13.69% - 13.69% 3.00%
61 Broadway
New York, NY 10006
Clyde J. Berg - * 43,478,470(9)(10) 64.95% 40.64%
Berg & Berg Enterprises, Inc. (10) - * 10,789,383 31.50% 10.08%
Thelmer G. Aalgaard - * 1,849,505 7.31% 1.73%
All Directors and Officers as a group 4,089,847 (11) 17.43% 43,213,297(3) 70.94% 44.21%
(6 persons)

* Less than 1%.

(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 include
securities which such person has the right to acquire within 60 days of
March 31, 2009. 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. Common stock percentage
ownership interest calculations are based on 21,748,211 shares outstanding
as of March 31, 2009 and exclude all shares of common stock issuable upon
the exercise of outstanding options other than the shares so issuable
within 60 days under options held by the named person. Common stock/O.P.
Units percentage ownership interest calculations are based on 105,275,176
shares of common stock and O.P. Units exchangeable for common stock as of
March 31, 2009.

(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 31, 2009, and (ii) certain ownership limit
provisions set forth in the Company's Articles of Amendment and
Restatement, including the overall ownership limit of 20% applicable to all
members of the Berg Group by agreement with the Company.

(3) Includes O.P. Units in which Mr. Carl E. Berg has a pecuniary interest
because of his status as a limited partner in the operating partnerships.
Also includes an additional 10,789,383, 196,428 and 169,131 shares of
common stock held by or issuable on exchange of O.P. Units beneficially
owned by Berg & Berg Enterprises, Inc., Berg & Berg Enterprises, LLC and
West Coast Venture Capital, Inc., respectively. Mr. Berg disclaims
beneficial interest in any shares or O.P. Units deemed beneficially owned
by Kara Ann Berg, his adult daughter, and the 1981 Kara Ann Berg Trust.

(4) Includes 1,080,555 shares of common stock issuable on exercise of options.
Does not include 594,445 unvested shares of common stock issuable on
exercise of options that are not exercisable within 60 days.

(5) Includes 268,958 shares of common stock issuable on exercise of options.
Does not include 291,042 unvested shares of common stock issuable on
exercise of options that are not exercisable within 60 days.

- 14 -

(6) Includes 103,125 shares of common stock issuable on exercise of options.
Does not include 76,875 unvested shares of common stock issuable on
exercise of options that are not exercisable within 60 days.

(7) Includes 103,125 shares of common stock issuable on exercise of options.
Does not include 76,875 unvested shares of common stock issuable on
exercise of options that are not exercisable within 60 days.

(8) Includes 26,250 shares of common stock issuable on exercise of options.
Does not include 63,750 unvested shares of common stock issuable on
exercise of options that are not exercisable within 60 days.

(9) Includes O.P. Units in which Mr. Clyde J. 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 1981 Kara Ann
Berg Trust and an additional 10,789,383 shares of common stock held by or
issuable on exchange of O.P. Units beneficially owned by Berg & Berg
Enterprises, Inc. This does not include any shares deemed beneficially
owned by Sonya L. Berg and Sherri L. Berg, his adult daughters, as to which
he disclaims beneficial ownership.

(10) 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. Amounts are reported
separately based on the Schedule 13G/A filed on behalf of certain members
of the Berg Group under common control reporting shared voting and
dispositive power for 75,902,384 O.P. Units representing the right to
acquire the same number of shares of common stock, subject to certain
conditions, including ownership limits.

(11) Current officers and directors include Carl E. Berg, Raymond V. Marino,
Wayne N. Pham, William A. Hasler, Lawrence B. Helzel and Martin S. Roher.
See Notes 3 through 8.

(12) Represents the number of shares of common stock beneficially owned as
reported on Schedule 13G filed with the Securities and Exchange Commission
on March 23, 2009 by Integre Advisors, LLC. The Schedule 13G indicates that
the reporting entity is an investment adviser and has sole voting and
dispositive powers for the number of shares of common stock listed above.

(13) Represents the number of shares of common stock beneficially owned as
reported on Schedule 13G/A filed with the Securities and Exchange
Commission on March 24, 2009 by Ingalls & Snyder, LLC. The Schedule 13G/A
indicates that the reporting entity is a broker dealer and an investment
adviser and has shared dispositive power for the number of shares of common
stock listed above.

(14) Unless otherwise indicated, the address for each of the person listed is
c/o Mission West Properties, Inc., 10050 Bandley Drive, Cupertino, CA
95014.

- 15 -

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 the Company's 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. 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 the Company's 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 the
Company.

SUBSTANTIAL OWNERSHIP INTEREST. The Berg Group currently owns O.P. Units
representing approximately 72.1% 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 for the Berg Group), 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 of the
Operating Partnerships, 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 the Company;
(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.

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.

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TRANSACTIONS WITH RELATED PERSONS

PROPERTY ACQUISITIONS AND FINANCIAL TRANSACTIONS BETWEEN THE COMPANY AND THE
BERG GROUP

In the past, including fiscal year 2008, the Company has entered into
agreements and engaged in transactions with Carl E. Berg, the Company's Chief
Executive Officer, Chairman and Director, and with other members of the Berg
Group. The Company expects to enter into additional agreements and transactions
with the Berg Group and Mr. Berg in the future. All such transactions and
agreements must be approved for the Company by the Independent Directors
Committee, as described above under "Corporate Governance." The Independent
Directors Committee is responsible for reviewing, evaluating and authorizing
action with respect to any transaction between the Company and any member of the
Berg Group.

FORMATION OF THE COMPANY. 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 the states of California, Oregon and Washington the details of which
are set forth above. Since September 1998, the Company has acquired a total of
approximately 3,386,000 million rentable square feet of R&D buildings under the
Pending Projects Acquisition Agreement (expired) and the Berg Land Holdings
Option Agreement. The total cost of these properties was approximately $510
million. The Company issued a total of 28,510,261 O.P. Units and assumed debt
totaling approximately $232 million to acquire them.

The following transactions with the Berg Group occurred or effected the
Company's operations or financial condition in fiscal year 2008:

ACQUISITION OF PROPERTY FROM THE BERG GROUP. In January 2008, the Company
acquired an approximately 111,500 rentable square foot newly constructed R&D
building located at 5981 Optical Court in San Jose, California from the Berg
Group under the Berg Land Holdings Option Agreement. The total acquisition price
for this property was approximately $19.1 million. The Company acquired this
property by issuing a short-term note payable to the Berg Group, which was fully
repaid in July 2008. The transaction was approved by the Independent Directors
Committee of the Company's Board of Directors.

RELATED PARTY DEBT. As of December 31, 2008, debt in the amount of
approximately $8.8 million was due the Berg Group under a mortgage note
established May 15, 2000 in connection with the acquisition of a 50% interest in
Hellyer Avenue Limited Partnership, the obligor under the mortgage note. The
mortgage note bears interest at 7.65%, and is due in ten years with principal
payments amortized over 20 years. In the fourth quarter of 2008, the Company and
the Berg Group agreed to extend the loan maturity date to June 2013. Interest
expense incurred in connection with the Berg Group mortgage note was
approximately $0.7 million for the year ended December 31, 2008.

During 2008, the Company issued multiple short-term notes payable to the
Berg Group in connection with a property acquisition, quarterly dividend
distributions and a cash loan. The interest rates on these notes were LIBOR plus
2%. The aggregate loan amount totaled approximately $50.6 million and was fully
repaid as of December 31, 2008. For the year ended December 31, 2008, interest
expense incurred in connection with those short-term notes payable was
approximately $0.6 million.

If the Company is unable to repay its debt to the Berg Group when due, the
Berg Group could take action to enforce the Company's payment obligations.
Potential actions by the Berg Group to enforce these obligations could result in
the foreclosure in one or more of the Company's properties and a reduction in
the amount of cash distributions to its stockholders. In turn, if the Company
fails to meet the minimum distributions test because of a loan default or
another reason, it could lose its REIT classification for federal income tax
purposes.

TRANSFER OF INTEREST TO BERG GROUP IN CONSOLIDATED JOINT VENTURE. In July
2000, the Hellyer Avenue Limited Partnership ("Hellyer LP") was formally
organized as a California limited partnership between Mission West Properties,
L.P. ("MWP"), of which the Company is the managing general partner, and Republic
Properties Group ("RPC"), an unaffiliated third party, as a general partner and
limited partner. MWP was designated as the managing general partner of Hellyer
LP. For a 50% ownership interest in Hellyer LP, RPC agreed to cause Stellex
Microwave Systems, Inc. ("Stellex") to provide a 15-year lease on an approximate
160,000 square foot R&D building to be constructed by Berg & Berg Enterprises,
Inc. ("BBE") on land owned by another Berg Group member.

As part of the transaction, MWP acquired the underlying land pursuant to
the Berg Land Holdings Option Agreement for a price of $5.7 million by issuing
659,223 O.P. Units to the Berg Group entity that owned the property. Further,
under the terms of the Hellyer LP partnership agreement MWP then contributed the
land to the partnership at an agreed value of $9.6 million which amount

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was to be amortized and paid to MWP in the form of income and cash flow
preferences. The transaction was reviewed and approved by the Independent
Directors Committee.

In connection with the transaction, BBE built and paid for all improvements
on the land. The total cost of the R&D building, exclusive of specified tenant
improvements obligations, was approximately $11.4 million. Hellyer LP issued a
note for the amount of those construction costs to BBE, which note was secured
by the buildings.

Because RPC's interest in Hellyer LP was attributable solely to its
commitment to obtain Stellex as a tenant for the property, the partnership
agreement provided that if a payment default occurred within the first five
years of the Stellex lease, RPC would lose 100% of its interest in the
partnership, and if a payment default occurred during the second five year
period under the lease, RPC would lose 50% of its interest in Hellyer LP.

Pursuant to RPC's commitment to Hellyer LP, Stellex executed a lease
agreement obligating Stellex, among other things, to pay monthly rent starting
at $1.60 per square foot on a triple net basis for 15 years and to reimburse BBE
for the tenant improvement obligations, which ultimately totaled approximately
$10.5 million.

Under the lease terms, Stellex was obligated to reimburse BBE in full for
the tenant improvement costs no later than August 25, 2000. Several days before
the due date, representatives of Stellex met with representatives of the Company
and informed them that Stellex could not pay the balance due BBE. Stellex
requested the Company immediately to draw down the letter of credit as a result
of a default on the tenant improvement payment required under the lease.

On September 1, 2000, MWP, as the general partner of Hellyer LP, ceased all
allocations of income and cash flow to RPC and exercised the right under the
partnership agreement to cancel RPC's entire interest in the partnership.
Following discussions with and approval by the Independent Directors Committee,
the Company authorized the transfer of RPC's interest in Hellyer LP to BBE.
Under the Berg Land Holdings Option Agreement and the Acquisition Agreement
dated as of May 14, 1998, the Independent Directors Committee had the right, but
not the obligation, to reacquire the property interest and the related
distributions related to the property interest at any time. The transfer was
effective as of September 1, 2000.

Stellex filed for bankruptcy protection on September 12, 2000. On November
20, 2000, RPC filed suit in the Circuit Court of Maryland for Baltimore City to
recover past distributions and its interest in the Hellyer LP., and the Company
counter-sued on behalf of MWP and itself in Superior Court of California for the
County of Santa Clara in February 2001.

In January 2002, Stellex was acquired through its bankruptcy proceeding by
a division of Tyco Corporation. In connection with the acquisition of Stellex,
the purchaser assumed the lease with Hellyer LP, agreed to comply with all terms
of the lease and reimbursed BBE for the tenant improvements, as required under
the lease agreement and the Bankruptcy Court order.

Since the inception of Hellyer LP, the Company has accounted for the
properties owned by the partnership on a consolidated basis, with reductions for
the minority interest held by the minority partner (first RPC and then BBE). In
each period, the Company has accrued amounts payable by Hellyer LP to the
minority interest partner, including BBE, prior to payment. Through December 31,
2008, accumulated cash flow distributions from Hellyer LP totaling approximately
$5.6 million were accrued, of which $5.3 million was distributed to BBE, which
has been classified on the Company's consolidated balance sheets as an account
receivable from BBE with an offsetting account payable to BBE. The Company did
not object to that proposed classification.

On November 20, 2000, RPC commenced a lawsuit against MWP in the Circuit
Court of Maryland for Baltimore City. After lengthy litigation, which included a
trial on the merits and subsequent appeals, in April 2006 Maryland's highest
Court upheld an earlier Maryland Appeals Court ruling in favor of MWP, finding
that the Circuit Court of Maryland could not assert personal jurisdiction over
MWP in the RPC suit. The Court vacated the judgment and decision in the trial
court and dismissed the entire Maryland suit. In February 2001, while the
Maryland case was pending, MWP filed a suit against RPC in the Superior Court of
the State of California for the County of Santa Clara, Case No. CV 796249. The
case was stayed pending resolution of the Maryland case, and the Company
dismissed its suit on March 4, 2005. In April 2005, RPC submitted a motion
asking the Superior Court to reinstate the case, which the Court granted on May
25, 2005. On July 5, 2006, RPC filed a cross-complaint in the case seeking
partnership distributions to which we demurred. The Court sustained the
Company's demurrer with leave to amend. Subsequently, RPC filed an amended
complaint, and the Company submitted another demurrer seeking dismissal of the
claims on statute of limitations grounds. On February 20, 2007, the Court
overruled the Company's demurrer. The Company sought a writ from the California
State Court of Appeal for the Sixth District to direct the lower court to
reverse its decision, but the petition for the writ was denied. In April 2008,
the Company filed a motion for summary judgment in the California Superior Court
which was denied. In October 2008, a motion filed by RPC for summary judgment in
the California Superior Court was denied. A trial in the California Superior
Court commenced in February 2009 and is expected to conclude in May 2009.

- 18 -

The Independent Directors Committee of the Board of Directors has exercised
the right to acquire on behalf of the Company the former RPC interest and
related distributions from Berg & Berg Enterprises, Inc. under the terms of the
Berg Land Holdings Option Agreement between the Company and the Berg Group if
the litigation is ultimately decided in favor of the Company.

BERG COMMITMENT TO COMPLETE FUTURE IMPROVEMENTS AND BUILDING IN CONNECTION
WITH CERTAIN ACQUISITIONS FROM THE BERG GROUP UNDER THE BERG LAND HOLDINGS
OPTION AGREEMENT. The Berg Group has an approximately $7.5 million commitment to
complete an approximately 75,000 to 90,000 rentable square foot building in
connection with the Company's 2001 acquisition of 245 Caspian in Sunnyvale,
which consisted of approximately three acres of unimproved land zoned for
commercial development. The Berg Group plans to satisfy this commitment to
construct a building when requested by the Company following the approval of the
Independent Directors Committee.

In 2008, the Berg Group satisfied a $2.5 million commitment to complete
certain tenant improvements in connection with the Company's 2002 acquisition of
5345 Hellyer Avenue in San Jose, California.

BERG CONTROLLED ENTITIES HAVE FINANCIAL INTERESTS IN CERTAIN TENANTS THAT
LEASE SPACE FROM THE COMPANY. During the year ended December 31, 2008, Carl E.
Berg or entities controlled by Mr. Berg held financial interests in several
companies that lease space from the operating partnerships, which include
companies where Mr. Berg has a greater than 10% ownership interest. These
related tenants contributed approximately $1.2 million in rental revenue in
2008.

LEASING AND OVERHEAD REIMBURSEMENTS PROVIDED BY BERG CONTROLLED ENTITY. The
Company currently leases office space owned by Berg & Berg Enterprises, Inc., an
affiliate of Carl E. Berg and Clyde J. Berg. Rental amounts and overhead
reimbursements paid to Berg & Berg Enterprises, Inc. were $0.1 million for the
year ended December 31, 2008.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's directors, executive officers and persons who own more than 10% of
a registered class of the Company's equity securities to file with the SEC
initial reports of ownership and reports of changes in ownership of common stock
and other equity securities of ours. Directors, executive officers and greater
than 10% 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,
2008, all Section 16(a) filing requirements applicable to its directors,
officers and greater than ten percent holders were complied with on time.

- 19 -

AUDIT COMMITTEE REPORT

The Board of Directors adopted an amended Audit Committee Charter on April
28, 2004, which sets forth the responsibilities of the Audit Committee. The
Company notes, however, that management has primary responsibility for its
consolidated financial statements and the overall financial reporting process,
including its system of internal controls. Furthermore, the Company's
independent registered public accounting firm audits management's assessment of
the effectiveness of internal control over financial reporting and the
consolidated financial statements prepared by management, expresses an opinion
on whether those consolidated financial statements fairly present the financial
position, results of operations and cash flows in conformity with accounting
principles generally accepted in the United States of America, and discusses
with the Audit Committee any issues they believe should be raised with the
Company.

The Audit Committee has reviewed and discussed the Company's audited
consolidated financial statements for fiscal year 2008 and management's
assessment of the effectiveness of internal control over financial reporting
with management and the Company's independent registered public accounting firm,
Burr, Pilger & Mayer, LLP ("BPM"). The Audit Committee has discussed with BPM
matters required to be discussed by Statement on Auditing Standards No. 61, as
amended (AICPA, Professional Standard, Vol. 1, AU section 380). BPM has provided
to the Audit Committee the written disclosures and letter required by applicable
requirements of the Public Company Accounting Oversight Board regarding the
independent accountants' communications with the audit committee regarding
independence, and the Audit Committee has discussed BPM's independence with
members of that firm.

Based on the discussions with BPM concerning the audits, the independence
discussions, the consolidated financial statements review and such other matters
deemed relevant and appropriate by the Audit Committee, the Company recommended
to the Board of Directors that the Company's consolidated financial statements
for the fiscal year ended December 31, 2008 be included in its 2008 Annual
Report on Form 10-K filed with the SEC.

The Audit Committee of the Board of Directors:

William A. Hasler
Lawrence B. Helzel
Martin S. Roher, Chairman

- 20 -

-------------------------------------------
PROPOSAL NO. 1:
ELECTION OF DIRECTORS
-------------------------------------------

At the Annual Meeting, five directors (constituting the entire Board of
Directors) are to be elected to serve until the next annual stockholders'
meeting and until each director's successor is elected and qualified, or until
the death, resignation or removal of such director. There are five nominees.

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 Executive Officer and Director 1997
William A. Hasler Director 1998
Lawrence B. Helzel Director 1998
Raymond V. Marino President, Chief Operating Officer and Director 2001
Martin S. Roher Director 2008

In accordance with the Company's 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 Annual 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 Annual 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 UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS VOTE
"FOR" THE ELECTION OF ALL OF THE NOMINEES NAMED ABOVE FOR DIRECTOR.

- 21 -

-----------------------------------------------------------
PROPOSAL NO. 2:
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
-----------------------------------------------------------

The Audit Committee has appointed Burr, Pilger & Mayer, LLP as the
Company's independent registered public accounting firm to audit the
consolidated financial statements of the Company for the year ending December
31, 2009. The Board of Directors proposes that the stockholders ratify this
appointment.

In the event that stockholders fail to ratify the appointment, the Audit
Committee will reconsider its selection. Even if the selection is ratified, the
Audit Committee, in its discretion, may direct the appointment of a different
independent registered public accounting firm at any time during the year if the
Audit Committee determines that such a change would be in the Company's best
interests.

PRINCIPAL ACCOUNTANT FEES AND SERVICES

The aggregate fees billed to the Company by Burr, Pilger & Mayer, LLP for
professional services rendered with respect to 2008 and 2007 fiscal years are as
follows:

Burr, Pilger & Mayer, LLP 2008 2007
-------- --------
Audit Fees (1) $295,822 $279,162

(1) Includes the aggregate fees billed for the audit and review of the
Company's annual and quarterly consolidated financial statements and the
audit of internal controls over financial reporting in 2008 and 2007.

There were no other audit related, tax or other fees or any fees for
non-audit services accrued by or billed to the Company by BPM in 2008 and 2007.

The Audit Committee pre-approves all annual audit engagement services and
fees and all fees for non-audit services (other than non-audit services that are
de minimus within the meaning of section 10A(i)(l)(B) of the Securities Exchange
Act and non-audit services that the independent accountants are prohibited from
providing to the Company). The Audit Committee requires the independent
accountants to submit a detailed proposal and budget for each engagement prior
to the commencement of the engagement. Additional services must be pre-approved
by the Audit Committee or the Chairman of the Audit Committee to whom
pre-approval authority has been delegated. All services of the independent
registered public accountants relating to review and attestation of internal
controls and procedures are pursuant to section 404 of the Sarbanes Oxley Act.

There were no fees paid to independent accountants in the past three fiscal
years that were for non-audit services that the Audit Committee or Chairman did
not pre-approve.

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS VOTE
"FOR" THE RATIFICATION OF THE APPOINTMENT OF BURR, PILGER & MAYER, LLP TO SERVE
AS THE COMPANY'S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE CALENDAR
YEAR ENDING DECEMBER 31, 2009.

- 22 -

STOCKHOLDER PROPOSALS FOR 2010 ANNUAL MEETING

To be considered for inclusion in the Company's proxy card and proxy
statement relating to the 2010 Annual Stockholders' Meeting, proposals subject
to SEC Rule 14a-8 must be received at the Company's principal office no later
than January 19, 2010.

In addition, if you desire to bring other business, including director
nominations, for the 2010 Annual Meeting that will not be included in the
Company's proxy card and proxy statement, your notice must be delivered to the
Company no earlier than February 18, 2010 and no later than March 20, 2010.

For additional requirements, a stockholder should refer to the Company's
Bylaws, Article II, Section 12, "Nominations and Proposals by Stockholders," a
current copy of which may be obtained from the Company's Secretary. If the
Company does not receive timely notice pursuant to the Company's Bylaws, any
proposal will be excluded from consideration at the 2010 Annual Meeting.

All stockholder proposals should be addressed to the attention of the
Secretary 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

/s/ Raymond V. Marino
----------------------------------
Raymond V. Marino
Corporate Secretary

Cupertino, California
April 9, 2009

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