EXHIBIT 10.56.5
CHANGE IN TERMS AGREEMENT

THIS CHANGE IN TERMS AGREEMENT (this “CIT”) is made by and between Heritage Bank
of Commerce, a California banking corporation (“Bank”), with its headquarters
address at 150 Almaden Boulevard, San Jose, California 95113, and Mission West
Properties, Inc., a Maryland corporation (“Borrower”), with its principal
address at 10050 Bandley Drive, Cupertino, California 95014.  This CIT is
executed on September 1, 2011, and is made effective upon the satisfaction of
all of the conditions precedent set forth herein (the “Effective Date”) at San
Jose, California.
 
RECITALS
 
A.           As of March 4, 2008, Bank and Borrower entered into certain
agreements (the “March 2008 Loan Documents”) including but not limited to a
Revolving Credit Loan Agreement (the “Loan Agreement”), pursuant to which Bank
agreed, subject to the terms and conditions set forth therein, to lend up to the
sum of Ten Million Dollars ($10,000,000.00) to Borrower, and pursuant to which
Borrower agreed to repay the loan on or before June 15, 2009.
 
B.           Thereafter, pursuant to a Change in Terms Agreement dated April 17,
2008 (the “April 2008 CIT”), Bank and Borrower made certain changes to the March
2008 Loan Documents, including but not limited to revising the Loan Agreement to
provide for a Commitment Amount (as defined in the April 2008 CIT), to Seventeen
Million Five Hundred Thousand and 00/100 Dollars ($17,500,000.00).  Borrower
executed an Amended and Restated Revolving Credit Note dated April 17, 2008
pursuant to the April 2008 CIT (the “Note”).
 
C.           Thereafter, pursuant to a Change in Terms Agreement dated June 5,
2009 (the “June 2009 CIT”), Bank and Borrower made certain changes to the March
2008 Loan Documents, including but to limited to revising the Loan Agreement to
extend the maturity date to September 15, 2009.
 
D.           Thereafter, pursuant to a Change in Terms Agreement dated August
20, 2009 (the “August 2009 CIT”), Bank and Borrower made certain changes to the
March 2008 Loan Documents, including but to limited to revising the Loan
Agreement to extend the maturity date to October 15, 2009.
 
E.           Thereafter, pursuant to a Change in Terms Agreement dated October
13, 2009, (the “October 2009 CIT”), Bank and Borrower (i) made certain changes
to the March 2008 Loan Documents, including but to limited to revising the Loan
Agreement (A) to modify of the interest rate applicable to the Loan to provide a
“floor” of four percent (4%) per annum, (B) to adjust the amount of the Minimum
Annual Fee and the date for payment thereof, and (C) to extend the maturity date
to September 15, 2011, and (ii) pursuant to the October 2009 CIT, Mission West
Properties, L.P. II, a Delaware limited partnership (“MWP LP II”) executed,
acknowledged and delivered to Bank (i) an Agreement Not to Convey or Encumber
(the “Agreement Not to Encumber”) and (ii) an Accommodation Deed of Trust -
Variable Interest Rate – Revolving Line of Credit (the “Deed of Trust”), with
respect to that certain real property owned by MWP LP II and located at 1600
Memorex Drive and 1688 – 1700 Richard Avenue, Santa Clara, California.  The
Agreement Not to Encumber was recorded in the Official Records, Office of the
County
 
 
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Recorder of Santa Clara County, State of California (“Official Records”) on
October 19, 2009 as Document Number 20470137.
 
F.           The Termination Date (as defined in the October 2009 CIT), is
September 15, 2011. Borrower has requested, and Bank has agreed, subject to the
terms and conditions of this CIT, to extend the Termination Date to September
15, 2013.
 
AGREEMENT
 
In consideration of the covenants, terms and conditions set forth herein, and in
consideration and for other good and valuable consideration, the parties hereto
agree as set forth below.
 
1. Incorporation by Reference.  The Recitals set forth above are true and
correct and are incorporated herein by reference in this CIT, together with the
March 2008 Loan Documents, the April 2008 CIT, the June 2009 CIT, the August
2009 CIT, the October 2009 CIT and any other documents executed by and between
Bank and Borrower in connection with or after the March 2008 Loan Documents
(sometimes, collectively, the “Loan Documents”).  All capitalized terms not
defined herein shall have the meaning given in the Loan Documents.
 
2. Amendment of Definition of Termination Date.  The definition of “Termination
Date” in Section 1.1 of the Loan Agreement is hereby deleted and replaced by the
following:
 
“‘Termination Date’ shall mean September 15, 2013.”
 
3. Warranties and Representations.  Sections 4.16 and 4.17 of the Loan Agreement
(which were added to the end of Article 4 of the Loan Agreement pursuant to the
October 2009 CIT), are hereby amended deleted and replaced by the following:
 
“4.16.           Title to the Property.  (a) MWP LP II holds marketable and
indefeasible fee simple absolute title to that certain real property owned by
MWP LP II and located at 1600 Memorex Drive and 1688 – 1700 Richard Avenue,
Santa Clara, California (the “Property”), (b) MWP LP II has the right and is
lawfully authorized to encumber the Property, (c) the Property is subject only
to those exceptions to title identified in that certain preliminary report
prepared by First American Title Insurance Company dated July 12, 2011 (Update),
Order Number NCS-303379-SC, which has been previously provided to Bank (the
“Permitted Exceptions”), and (d) the Property is free from all due and
unpaid  taxes, assessments and  mechanics’ and materialmen’s liens.
 
4.17.           Existing Leases and Existing Tenants. Borrower further
represents and warrants to Bank that portions of the Property are currently
leased to (i) Silicon Valley Colocation, (ii) Forward Technology, and (iii) BT
INS (collectively, the “Existing Tenants”), pursuant to written leases, and any
amendments thereto, copies of which have been provided to Bank (the “Existing
Leases”).  The Existing Leases are in full force and effect; no event of default
(and no event which, with the giving of notice and the passage of time would
become an event of default) exists under any of the Existing Leases, and no
changes or amendments have been made to any
 
 
 
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            of the Existing Leases that have not been provided to Bank.  There
are no occupants of the Property other than the Existing Tenants.”
 
4. Conditions Precedent. The effectiveness of this CIT and Bank’s obligations
hereunder are conditioned upon the satisfaction of each and all of the following
conditions on or before September 9, 2011:
 
(a) Borrower shall have executed and delivered this CIT to Bank;
 
(b) Borrower shall have provided to Bank a copy of resolutions of the Board of
Directors of Borrower in form and substance satisfactory to Bank in its sole and
absolute discretion authorizing the execution, delivery, and performance of this
CIT, which shall have been certified by the Secretary or Assistant Secretary of
Borrower as of the date of delivery as being complete, accurate, and in effect.
 
(c) Borrower shall have caused MWP LP II to procure and deliver to Bank and
thereafter maintain a policy or policies of insurance in form and content and by
an insurer or insurers satisfactory to Bank, naming Bank as Loss Payee,
Mortgagee or Additional Insured (as applicable), including a clause giving Bank
a minimum of thirty (30) days’ notice if such insurance is cancelled, as
follows:  (i) fire insurance with standard extended coverage endorsements on a
fair value basis for the full insurable value covering all Improvements on the
Property in an amount sufficient to avoid application of any coinsurance clause,
and with a standard mortgagee clause in favor of Bank; (ii) commercial general
liability insurance on an “occurrence” basis, indicating coverage satisfactory
to Bank, and naming Bank as an additional insured; (iii) workers’ compensation
insurance, issued to MWP LP II, as may be required by applicable workers’
compensation insurance laws; (iv) any additional or different coverage as may be
specified in Bank’s Agreement to Provide Insurance; and (v) any and all
additional insurance that Bank in its reasonable judgment may from time to time
require (including, without limitation, flood coverage), against insurable
hazards which at the time are commonly insured against in the case of property
similarly situated.  The Bank expressly will not require earthquake
insurance.  Should the Property be located in an area designated by the Director
of the Federal Emergency Management Agency as a special flood hazard area,  MWP
LP II agrees to obtain and maintain Federal Flood Insurance, if available, for
the full unpaid principal balance of the loan and any prior liens on the
Property securing the loan, up to the maximum policy limits set under the
National Flood Insurance Program, or as otherwise required by Bank, and to
maintain such insurance for the term of the loan.  Borrower shall deliver (or
shall cause MWP LP to deliver) to Bank a Lender’s Loss Payable Endorsement
(438BFU or CP 12-18).  At Bank’s request, Borrower shall supply Bank with a
counterpart original of any policy.
 
(d) Borrower shall have paid the sum of Four Thousand Five Hundred and 00/100
Dollars ($4,500.00) to Bank as and for the cost of the appraisal for the
Property.
 
(e) Borrower shall have paid the sum of Two Thousand Five Hundred and 00/100
Dollars ($2,500.00) to Bank as and for a portion of Bank’s attorneys’ fees
incurred in preparing this Agreement and any related documents.
 
 
 
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(f) Borrower shall have paid to Bank the sum of Seventeen Thousand Five Hundred
and 00/100 Dollars ($17,500.00) to Bank as and for the Minimum Annual Fee.
 
5. Legal Effect.  Except as specifically provided herein, all of the terms and
conditions of the Loan Documents remain in full force and effect.
 
6. Integration.  This CIT is an integrated agreement.  Except as specifically
set forth herein, and except for the Loan Documents as modified hereby, it
supersedes all prior representations and agreements, if any, between the parties
to this CIT.  This CIT and the Loan Documents as modified hereby contain the
entire and only understanding of the parties with respect to the subject matter
hereof and thereof, and may not be altered, amended or extinguished, except by a
writing signed by all parties.
 
IN WITNESS WHEREOF, the parties hereto have executed and entered into this CIT
effective as of the Effective Date first written above.
 
BANK:
 
HERITAGE BANK OF COMMERCE
a California banking corporation
 
By:           /s/ Roxanne
Vane                                                                
                 Roxanne Vane
Its:           Senior Vice President / Regional Manager
 
BORROWER:
 
MISSION WEST PROPERTIES, INC.
a Maryland corporation
 
By:           /s/ Raymond V.
Marino                                                                
 Raymond V. Marino
Its:           President and Chief Operating Officer
 

 
                                                                  
 
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