EXHIBIT 10.56

                         REVOLVING CREDIT LOAN AGREEMENT


     THIS  REVOLVING  CREDIT  LOAN  AGREEMENT  (this  "Agreement")  is made  and
delivered  this 4th day of March 2008, by and between  Mission West  Properties,
Inc., a Maryland  corporation  ("Borrower"),  and Heritage Bank of Commerce (the
"Bank").

                                   WITNESSETH

     WHEREAS,  the  Borrower  desires  to  borrow  up  to  Ten  Million  Dollars
($10,000,000.00)  from the Bank  from time to time to meet the  working  capital
needs of the Borrower; and

     WHEREAS, the Bank is willing to provide such financing subject to the terms
and conditions set forth in this Agreement;

     NOW,  THEREFORE,  in  consideration of the premises and the mutual promises
herein contained and in reliance upon Borrower's  representations and warranties
set forth herein, the Borrower and the Bank agree as follows:

1. DEFINITIONS.

     1.1 DEFINED TERMS.  As used in this  Agreement,  the following  terms shall
have the following respective meanings:

     "Affiliate"  shall mean,  when used with  respect to any person,  any other
person which,  directly or indirectly,  controls or is controlled by or is under
common  control with such person.  For  purposes of this  definition,  "control"
(including  the  correlative  meanings of the terms  "controlled  by" and "under
common  control  with"),  with  respect to any  person,  shall mean  possession,
directly or  indirectly,  of the power to direct or cause the  direction  of the
management and policies of such person,  whether through the ownership of voting
securities or by contract or otherwise.

     "Agreement" is defined in the first paragraph of this Agreement.

     "Average  Annual Rate of Interest"  is defined the weighted  average of the
annual  interest  rate on variable  and fixed rate debt as reflected in the Form
10-K, Item 7A.

     "Bank" is defined in the first paragraph of this Agreement.

     "Bankruptcy  Code"  shall  mean  Title 11 of the  United  States  Code,  as
amended, or any successor act or code.

     "Borrower" is defined in the first paragraph of this Agreement.

     "Business  Day"  shall mean a day on which the Bank is open to carry on its
normal commercial lending business.

     "Commitment"  shall  mean  the  Bank's  agreement  to lend to  Borrower  in
accordance with and subject to the terms of this Agreement.

     "Commitment Amount" shall mean, as of any applicable date of determination,
Ten Million Dollars and no cents ($10,000,000.00).

     "Consolidated"  or  "consolidated"  shall mean, when used with reference to
any financial term in this  Agreement,  the aggregate for two or more persons of
the  amounts  signified  by such  term  for all  such  persons  determined  on a
consolidated  basis in accordance with GAAP as defined below.  Unless  otherwise
specified herein,  reference to "consolidated"  financial  statements or data of
the Borrower includes  consolidation with its Subsidiaries (as defined below) in
accordance with GAAP.

     "Controversy" is defined in Section 8.16.

     "Cost Award" is defined in Section 8.16.

     "Cost Statement of Decision" is defined in Section 8.16.

     "Debt" shall mean, as of any applicable date of determination, all items of
indebtedness, obligation or liability of a person, whether matured or unmatured,
liquidated or unliquidated, direct or indirect, absolute or contingent, joint or
several, that should be classified as liabilities in accordance with GAAP.

<PAGE>


     "Debt  Coverage   Ratio"  shall  mean,  as  of  any   applicable   date  of
determination,  the ratio of: (1) the sum of Borrower's  Net  Operating  Income,
divided by (2) annual debt service on total outstanding mortgage debt plus total
open line of credit  commitments  amortized over 25 years at the "Average Annual
Rate of Interest." The Debt Coverage Ratio shall be determined by the Bank as of
each Fiscal Quarter (as defined below) and on the basis of the preceding  twelve
(12) month period (actual or based on annualized quarters) as follows: (i) as to
each  Fiscal  Quarter  ending on March  31,  June 30,  and  September  30,  from
Borrower's  SEC Form 10-Q  filed with the  Securities  and  Exchange  Commission
relating to such quarter,  with such quarterly year to date results  annualized;
and (ii) as to each Fiscal  Quarter  ending on December 31, from  Borrower's SEC
Form  10-K  relating  to the  year  ending  on such  date.  Notwithstanding  the
foregoing,  the  Bank  may  also  rely on other  information  that  Borrower  is
obligated  to provide to the Bank  pursuant  to Section  5.1 of this  Agreement.
Exhibit C hereto  includes an example of the  calculation of Debt Coverage Ratio
as defined herein from Borrower's SEC Form 10-K for the period ending  September
30, 2007, and is provided for example purposes only.

     "Debt to Tangible Net Worth Ratio" shall mean, as of any applicable date of
determination,  the ratio of (1)  Borrower's  Debt,  divided  by (2)  Borrower's
Tangible Net Worth.  The Debt to Tangible Net Worth Ratio shall be determined by
the Bank as of each Fiscal  Quarter  (as defined  below) and on the basis of the
preceding  twelve  (12) month  period  (actual or based on annual  quarters)  as
follows:  (i) as to each  Fiscal  Quarter  ending  on March  31,  June  30,  and
September  30,  from  Borrower's  SEC Form 10-Q  filed with the  Securities  and
Exchange  Commission relating to the quarter ending on such date; and (ii) as to
each  Fiscal  Quarter  ending on  December  31,  from  Borrower's  SEC Form 10-K
relating to the year ending on such date.  Notwithstanding  the  foregoing,  the
Bank may also rely on other information that Borrower is obligated to provide to
the Bank pursuant to Section 6.1 of this Agreement. Exhibit C hereto includes an
example of the calculation of Debt to Tangible Net Worth Ratio as defined herein
from  Borrower's SEC Form 10-Q for the period ending  September 30, 2007, and is
provided for example purposes only.

     "Default" shall mean a condition or event which,  with the giving of notice
or the  passage of time,  or both,  would  become an Event of Default as defined
below.

     "Default  Rate"  shall  mean,  as  of  the  applicable   date  or  time  of
determination,  the Variable Rate, as defined below, plus five percent (5%), or,
if the Bank  exercises its option under Section 2.13 of this Agreement to change
the rate of interest to the Prime Variable  Rate,  then the Prime Variable Rate,
as defined below, plus five percent (5%).

     "Effective  Date" shall mean the date this Agreement  becomes  effective as
set forth in Section 8.1 herein.

     "ERISA" shall mean the Employee  Retirement Income Security Act of 1974, as
amended, or any successor act or code.

     "Event of Default"  shall mean any of those  conditions or events listed in
Section 7.1 of this Agreement.

     "Financial  Statements" shall mean all those  consolidated  balance sheets,
consolidated  earnings  statements and other  consolidated  financial data which
have been furnished to the Bank for the purposes of, or in connection with, this
Agreement and the transactions  contemplated hereby, including without limit the
following: the Borrower's SEC Form 10-K for the period ending December 31, 2007.

     "Fiscal  Quarter"  shall mean each three month  period  ending on March 31,
June 30, September 30, and December 31 of each year.

     "Funding  Date" shall mean,  with respect to any Revolving Loan made by the
Bank hereunder, the date of the funding of such Revolving Loan by Bank.

     "GAAP" shall mean, as of any applicable  date of  determination,  generally
accepted accounting principles consistently applied in the United States.

     "Indebtedness" shall mean all loans,  advances,  indebtedness,  obligations
and liabilities of Borrower to the Bank under this Agreement,  together with all
other  indebtedness,  obligations and liabilities  whatsoever of the Borrower to
the Bank,  whether matured or unmatured,  liquidated or unliquidated,  direct or
indirect,  absolute or contingent,  joint or several,  due or to become due, now
existing or hereafter arising.

     "Internal  Revenue  Code" shall mean the Internal  Revenue Code of 1986, as
amended from time to time and hereafter, and any successor statute.

     "Legal Rate" shall mean the maximum interest rate allowed by law to be paid
by the  Borrower  or  received  by the Bank  with  respect  to the  Indebtedness
represented by the Note.

     "Lender"  shall  mean any bank,  financial  institution,  finance  company,
insurance or other financial  institution or any other person who extends or has
extended any credit or loan or line of credit to any other person.

<PAGE>

     "LIBOR" shall mean the one-month London  Inter-Bank  Offered Rate,  rounded
up, if necessary, to the nearest whole 1/100 of 1%.

     "Loan" shall mean the Revolving Loans.

     "Loan  Documents"  shall  mean  this  Agreement,  the  Note,  and all other
agreements,   instruments  and  documents  (together  with  all  amendments  and
supplements  thereto and  replacements  thereof)  now or  hereafter  executed by
Borrower  that  evidence  or secure all or any  portion of the  Indebtedness  or
Borrower's obligations hereunder.

     "Material  Adverse Effect" or "Materially  Adverse Effect" shall mean, with
respect to a Person, a material adverse effect upon the condition  (financial or
otherwise), operations, performance or properties or assets of such Person.

     "Net Operating  Income" shall mean total revenues less expenses adding back
interest expense and adding back depreciation expense.

     "Note" shall mean the Revolving Credit Note.

     "Notice  of  Borrowing"  shall mean a notice  substantially  in the form of
Exhibit B hereto.

     "PBGC" shall mean the Pension  Benefit  Guaranty  Corporation or any person
succeeding to the present powers and functions of the Pension  Benefit  Guaranty
Corporation.

     "Person" or "person" shall mean any individual,  corporation,  partnership,
joint  venture,  association,  trust,  unincorporated  association,  joint stock
company,  government,  municipality,  political  subdivision or agency, or other
entity.

     "Prime  Variable  Rate" shall mean that variable rate of interest  equal to
the Prime Rate as published in the Wall Street Journal minus 3/4 percent (3/4%),
per annum,  with the interest rate to be initially  calculated by the Bank as of
approximately 10:00 a.m. San Jose, California time on the date on which the Bank
exercises  its option under Section 2.13 if such option date is the first day of
the month, or, if not, as of approximately 10:00 a.m. San Jose,  California time
as the first day of the month during which such option date occurs, and with the
interest rate to thereafter  fluctuate with changes in such Prime Rate with such
fluctuations to be effective, and the interest rate to be adjusted, on the first
day of each month.

     "Revolving  Credit Note" shall mean a promissory note conforming to Section
2.4 of  this  Agreement  and in the  form  and  content  of  Exhibit  A to  this
Agreement.

     "Revolving  Loan"  shall  mean  advances  or loans  made by the Bank to the
Borrower under this Agreement.

     "Section" when used to refer to a portion of this Agreement  shall mean the
section to which reference is made plus all subparts and subsections thereof.

     "Solvent" shall mean, as to any person at the time of  determination,  that
such  person  (a) owns  property  and  assets  the value of which  (both at fair
valuation and at present fair salable value) is greater than the amount required
to pay all of such person's liabilities  (including  contingent  liabilities and
debts);  (b) is able to pay all of its debts as such debts  mature;  and (c) has
capital  sufficient to carry on its business and  transactions  and all business
and transactions in which it is about to engage.

     "Subsidiary" shall mean any corporation  (whether now existing or hereafter
organized or acquired) in which more than fifty percent (50%) of the outstanding
securities having ordinary voting power for the election of directors, as of any
applicable date of determination, shall be owned directly, or indirectly through
one or more Subsidiaries, by the Borrower.

     "Tangible  Net Worth"  shall be  calculated  each Fiscal  Quarter and shall
mean, as of any applicable date of  determination,  Total  Stockholders'  Equity
(but not  including  Minority  Interest) as stated in the  Consolidated  Balance
Sheet of Borrower in Borrower's SEC Form 10-Q or, as  applicable,  SEC Form 10-K
(or other financial  information that Bank may obtain regarding Borrower or that
may be  provided  by  Borrower to Bank in  accordance  with),  less  intangibles
calculated in accordance with GAAP.

     "Termination Date" shall mean June 15, 2009.

     "Total  Loans  of  Borrower"  shall  mean,  as of  the  date  of  any  such
determination, the sum of the total outstanding principal balance of all secured
loans to Borrower  from any Lender plus the total amount of all the balances and
the credit  commitments  under any and all unsecured  loans,  unsecured lines of
credit,  unsecured  credit  facilities of any kind (including but not limited to
the Commitment  Amount),  and any other commitments  evidencing any extension of
unsecured debt to Borrower by any Lender.

<PAGE>

     "UCC"  shall  mean  Uniform  Commercial  Code of the  State  of  California
(approved June 8, 1968) as amended.

     "Variable  Rate" shall mean that variable rate of interest equal to the sum
of the one-month LIBOR plus 1.75 percent  (1.75%),  per annum, the interest rate
to be initially  calculated by the Bank as of approximately 10:00 a.m. San Jose,
California  time on the Funding  Date if the Funding  Date is the first day of a
month, or, if not, as of approximately  10:00 a.m. San Jose,  California time on
the first day of the month during  which the Funding  Date occurs,  and with the
interest  rate to  thereafter  fluctuate  with  changes  in such LIBOR with such
fluctuations to be effective, and the interest rate to be adjusted, on the first
day of each month.

     1.2 ACCOUNTING TERMS. All accounting terms not specifically defined in this
Agreement shall be construed in accordance with GAAP.

     1.3 SINGULAR AND PLURAL.  Where the context herein  requires,  the singular
number shall be deemed to include the plural, the masculine gender shall include
the feminine and neuter genders, and vice versa.

2.   COMMITMENT, PROCEDURES, INTEREST AND FEES.

     2.1 REVOLVING  CREDIT  COMMITMENT.  Subject to the terms and  conditions of
this  Agreement and at any time from the Effective Date until the earlier of (a)
the Termination  Date, (b) such earlier date on which,  pursuant to the terms of
this Agreement and a result of  acceleration or otherwise,  the  Indebtedness is
fully due and payable,  or (c) the termination of the Bank's Commitment pursuant
to Section 7.2 of this Agreement or otherwise, the Bank agrees to make Revolving
Loans to the Borrower on a revolving basis up to an aggregate  principal  amount
outstanding at any time not to exceed the Commitment Amount. Notwithstanding the
foregoing,  the Bank shall not be obligated to make the  Revolving  Loan if: (i)
any of the conditions  precedent set forth in Section 3 of this Agreement  shall
not have been satisfied or waived by the Bank in accordance  with Section 8.4 of
this Agreement,  or (ii) such proposed  Revolving Loan would cause the aggregate
unpaid principal amount of the Revolving Loans  outstanding under this Agreement
to exceed the Commitment Amount on the Funding Date.

     2.2 INTEREST RATE. Except as otherwise  provided herein (including  without
limitation  Section 2.5 relating to the Default Rate),  each Revolving Loan will
bear interest on the unpaid principal amount thereof at the Variable Rate.

     2.3 BORROWING PROCEDURES.

          2.3.1  NOTICE OF  BORROWING.  Whenever  Borrower  desires  to  borrow,
     Borrower  shall  provide to the Bank at 150  Almaden  Boulevard,  San Jose,
     California  95113,  Attention  Roxanne  Vane,  or to such other  persons or
     entities as Bank may  designate,  an  original  Notice of  Borrowing.  Such
     Notice of  Borrowing  shall be  provided  by no later than 11:00 A.M.  (San
     Jose,  California time) for each Revolving Loan requested and not less than
     two (2) nor more than five (5) Business  Days prior to the noticed  Funding
     Date of each such Revolving  Loan.  Each Notice of Borrowing  shall specify
     (A) the  Funding  Date  (which  shall be a Business  Day) in respect of the
     Revolving  Loan,  (B) the amount of the proposed  Revolving  Loan,  (C) the
     deposit  account  number of Borrower with Bank to which the funds are to be
     directed,  and (D) the proposed use of such  Revolving  Loan. Any Notice of
     Borrowing shall be irrevocable.  At the time of execution of this Agreement
     and as a condition  to the Bank's  obligations  hereunder,  Borrower  shall
     provide  the  Bank  with  written  documentation  satisfactory  to the Bank
     specifying  the names of those  employees,  officers  or agents of Borrower
     authorized  by Borrower to execute and submit  Notices of  Borrowing to the
     Bank ("Authorized  Agent") and a signature exemplar of each such Authorized
     Agent, and the Bank shall be entitled to rely on such  documentation  until
     notified  in  writing  by  Borrower  of any  change(s)  of the  persons  so
     authorized. Borrower agrees to indemnify, defend and hold the Bank harmless
     from and against any and all  liabilities,  out of pocket costs  (including
     but not  limited to  reasonable  out of pocket  attorneys'  fees),  claims,
     damages  and  demands  arising  from or  related  to Bank's  acceptance  of
     instructions  in  any  Notice  of  Borrowing   executed  and  submitted  an
     Authorized  Agent,  unless  caused  by  the  gross  negligence  or  willful
     misconduct of the Person to be indemnified.

          2.3.2 BANK  OBLIGATIONS.  Subject to the terms and  conditions of this
     Agreement   including  without   limitation  Section  2.1  and  subject  to
     Borrower's  performance of and compliance  with the terms hereof  including
     without  limitation  Section  2.3.1  herein,  the Bank  agrees  to make the
     Revolving  Loan  pursuant  to a Notice of  Borrowing  on the  Funding  Date
     established by the Notice of Borrowing by crediting the deposit  account of
     the  Borrower  with the Bank  specified  in the Notice of  Borrowing in the
     amount of such Revolving Loan.

     2.4 REVOLVING  CREDIT NOTE.  The Revolving  Loans shall be evidenced by the
Revolving  Credit  Note,  executed  by the  Borrower,  dated  the  date  of this
Agreement,  payable to the Bank on the Termination Date (or such earlier date as
the  Indebtedness is due under the terms of this Agreement  whether by reason of
acceleration  or  otherwise),  and  in the  principal  amount  of  the  original
Commitment  Amount.  The date and amount of each Revolving Loan made by the Bank
and of each  repayment  of  principal  thereon  received  by the  Bank  shall be
recorded by the Bank in its records.  The aggregate  unpaid  principal amount so
recorded by the Bank shall  constitute the best evidence of the principal amount
owing and unpaid on the  Revolving  Credit  Note,  provided,  however,  that the
failure  by the Bank so to record any such  amount or any error in so  recording
any such  amount  shall not limit or  otherwise  affect the  obligations  of the
Borrower  under  this  Agreement  or the  Revolving  Credit  Note to  repay  the
principal  amount of all the Revolving Loans together with all interest  accrued
or accruing thereon.

<PAGE>

     2.5 DEFAULT  INTEREST.  Upon the  occurrence  of an Event of  Default,  all
amounts due and owing by Borrower to the Bank shall bear interest at the Default
Rate.

     2.6 INTEREST PAYMENTS.  Interest shall be payable by Borrower to the extent
then accrued on the first day of each  consecutive  calendar month  beginning on
April 1, 2008,  with all remaining  interest due and payable on the  Termination
Date (or such  earlier date as the  Indebtedness  is due under the terms of this
Agreement whether by reason of acceleration or otherwise). Any interest not paid
when due shall  become part of the  principal  and bear  interest as provided in
this Agreement.

     2.7  MAXIMUM  RATE.  At no time shall the rate of  interest  payable on the
Revolving  Loans or pursuant to the Revolving  Credit Note pursuant to the terms
of this  Agreement be deemed to exceed the Legal Rate. In the event any interest
is charged or  received by the Bank in excess of the Legal  Rate,  the  Borrower
acknowledges  that any such excess interest shall be the result of an accidental
and bona fide  error,  and such  excess  shall  first be  applied  to reduce the
principal  then  unpaid  hereunder  (in  inverse  order of their  maturities  if
principal  amounts  are due in  installments);  second,  applied  to reduce  any
obligation for other  indebtedness  of the Borrower to the Bank; and third,  any
remaining excess returned to the Borrower.

     2.8 TERM. The  Indebtedness  and the  outstanding  balance of all Revolving
Loans and all other accrued and unpaid interest,  charges and expenses hereunder
and under the Note  shall be  payable  in full on the  Termination  Date or such
earlier  date as the  Indebtedness  is due  under  the  terms of this  Agreement
whether by reason of acceleration pursuant to Section 7.2 or otherwise.

     2.9 FEES.  Borrower  shall pay to Bank the fees  described  in this Section
2.9. All fees described herein are earned as of the date they are accrued.

          2.9.1 MINIMUM ANNUAL FEE. The Borrower shall pay to the Bank a minimum
     annual fee of Ten Thousand Dollars and no cents  ($10,000.00) (the "Minimum
     Annual Fee").  The Minimum  Annual Fee shall be payable in advance,  in the
     manner provided in Section 2.11 herein, on the Effective Date for the first
     year  hereunder,  and on each  anniversary  of the Effective  Date for each
     subsequent  year. The Minimum Annual Fee shall be pro-rated for any partial
     year.

          2.9.2 NO FEE AFTER  TERMINATION OF BANK  OBLIGATIONS.  Notwithstanding
     Section  2.9.1,  the  Borrower  shall not be  obligated  to pay any Minimum
     Annual  Fee  earned by the Bank after the date which is ten (10) days after
     Borrower has: (i) given written notice to the Bank  terminating  the Bank's
     Commitment and any further obligation by the Bank under this Agreement; and
     (ii) paid the Indebtedness in full.

          2.9.3  PREPARATION  FEES.  Simultaneously  with the  execution of this
     Agreement  and as a  condition  to the Bank's  obligations  hereunder,  the
     Borrower  shall pay to the Bank the  amount  of the out of pocket  expenses
     (including  without limit reasonable  attorneys' fees, whether of inside or
     outside counsel, and disbursements) incurred by the Bank in connection with
     the  preparation  of this Agreement and the Loan Documents in the amount of
     Nine Thousand Sixty-One Dollars ($9,061.00).

          2.9.4  BASIS OF  COMPUTATION.  The  amount  of all  interest  and fees
     hereunder  shall be computed  for the actual  number of days elapsed in the
     period in which interest accrues on the basis of a year consisting of three
     hundred sixty (360) days.

     2.10 MANDATORY PAYMENTS AND PREPAYMENTS.

          2.10.1 MANDATORY PAYMENTS.  In addition to all other payments required
     to be made  under the Loan  Documents,  Borrower  shall pay to the Bank the
     amount,  if any,  by which the  aggregate  unpaid  principal  amount of all
     Revolving Loans from time to time exceeds the Commitment  Amount,  together
     with all  interest  accrued and unpaid on the amount of such  excess.  Such
     payment shall be  immediately  due and owing without  notice or demand upon
     the occurrence of any such excess,  provided,  however,  that any mandatory
     payment  made under this  Section  2.10.1  shall not reduce the  Commitment
     Amount.

          2.10.2 OPTIONAL PREPAYMENTS AND CONVERSIONS. The Borrower, at any time
     and from  time to time,  may  prepay  the  unpaid  principal  amount of the
     Revolving  Loans.  Any optional  prepayment  made under this Section 2.10.2
     shall not reduce the Commitment Amount.

     2.11 BASIS OF PAYMENTS.  All sums payable by the Borrower to the Bank under
this Agreement or the Loan Documents shall be paid  immediately by Borrower when
due  directly  to the Bank at its  principal  office set forth in  Section  8.12
hereof in immediately available United States funds, without condition, set off,
deduction or counterclaim.  In its sole discretion,  the Bank may charge any and
all deposit or other accounts (including without limit an account evidenced by a
certificate  of deposit) of the Borrower  with the Bank for all or a part of any
Indebtedness when due;  provided,  however,  that this  authorization  shall not
affect the Borrower's  obligation to pay, when due, any Indebtedness  whether or
not account balances are sufficient to pay amounts due.  Whenever any payment to
be made by Borrower  hereunder shall be stated to be due on a day which is not a
Business Day,  payments  shall be made on the next  succeeding  Business Day and
such  extension of time shall be included in the  computation  of the payment of
interest  hereunder  and of any of the fees  specified in Section 2.9.  Borrower
acknowledges  and  agrees  that the fees  described  in  Section  2.9  represent
compensation  for services  rendered and to be rendered  separate and apart from
the  lending  of  money  or the  provision  of  credit  and  do

<PAGE>

not constitute  compensation for the use, detention or forbearance of money, and
the obligation of Borrower to pay the fees described herein shall be in addition
to, and not in lieu of, the  obligation of Borrower to pay interest,  other fees
and expenses  otherwise  described in this Agreement.  If Borrower fails to make
any payment of fees or expenses specified or referred to in this Agreement owing
to Bank,  including  without  limitation  those  referred to in Section  2.9, or
otherwise under this Agreement,  or any separate fee agreement  between Borrower
or Bank  relating to this  Agreement,  when due, the amount shall bear  interest
until paid at the Default Rate.

     2.12 RECEIPT OF PAYMENTS. Any payment of the Indebtedness made by mail will
be deemed  tendered  and  received  only upon actual  receipt by the Bank at the
address  designated  for such  payment,  whether or not the Bank has  authorized
payment by mail or any other  manner,  and shall not be deemed to have been made
in a timely manner unless received on the date due for such payment,  time being
of the  essence.  Borrower  expressly  assumes  all  risks of loss or  liability
resulting  from  non-delivery  or  delay  of  delivery  of any  item of  payment
transmitted  by mail  or in any  other  manner.  Acceptance  by the  Bank of any
payment in an amount less than the amount then due shall be deemed an acceptance
on account only,  and the failure to pay the entire amount then due shall be and
continue to be a Default or Event of Default as provided in Section  7.1, and at
any time thereafter and until the entire amount then due has been paid, the Bank
shall be entitled to exercise any and all rights  conferred  upon it herein upon
the  occurrence  of a Default or Event of Default as  provided  in Section  7.1.
Borrower  waives the right to direct the  application of any and all payments at
any time or  times  hereafter  received  by the Bank  from or on  behalf  of the
Borrower.  Borrower  agrees  that the Bank shall have the  continuing  exclusive
right to apply and to reapply any and all payments received at any time or times
hereafter  against  the  Indebtedness  in  such  manner  as the  Bank  may  deem
advisable,  notwithstanding  any  entry by the Bank  upon any of its  books  and
records. Borrower expressly agrees that to the extent that the Bank receives any
payment  of  benefit  and such  payment  or  benefit,  or any part  thereof,  is
subsequently invalidated,  declared to be fraudulent or preferential,  set aside
or is required to be repaid to a trustee, receiver, or any other party under any
bankruptcy act, state or federal law, common law or equitable cause, then to the
extent of such payment or benefit,  the Indebtedness or part thereof intended to
be satisfied  shall be revived and continued in full force and effect as if such
payment or benefit  had not been made and,  further  any such  repayment  by the
Bank, to the extent that the Bank did not directly receive a corresponding  cash
payment, shall be added to and be additional Indebtedness payable upon demand by
the Bank.

     2.13 LIBOR UNLAWFUL OR UNAVAILABLE.  Should the Bank in its sole discretion
binding on Borrower  determine that the introduction of or any change in any law
or the  interpretation  of any law  makes  it  unlawful  for the Bank to make or
maintain  Revolving  Loans  bearing  interest  based on LIBOR or that  LIBOR has
become unavailable as an index, then, at the Bank's option and upon its exercise
of such  option,  the interest  rate on any  outstanding  Revolving  Loans shall
thenceforth bear interest at the Prime Variable Rate.

3.   CONDITIONS TO OBLIGATIONS OF BANK.

     3.1 Conditions  Precedent to  Effectiveness of Agreement and Obligations of
Bank. At Bank's sole and absolute option and for its benefit,  the effectiveness
of this  Agreement and Bank's  obligations  hereunder are  conditioned  upon the
satisfaction  of each and all of the following  conditions on or before March 4,
2008:

          3.1.1  BORROWER  DOCUMENTS  EXECUTED  AND  FILED  AND FEES  PAID.  The
     Borrower  shall have  executed (or caused to be executed)  and delivered to
     the Bank the following in form and substance acceptable to Bank:

               3.1.1.1 This Agreement;

               3.1.1.2 The Revolving Credit Note;

               3.1.1.3  Copy of  Borrower's  Bylaws,  including  all  amendments
          thereto and restatements  thereof,  which shall have been certified by
          the Secretary or Assistant Secretary of the Borrower as of the Funding
          Date first occurring as being complete, accurate and in effect; and

               3.1.1.4 A copy of  resolutions  of the Board of  Directors of the
          Borrower  authorizing the execution,  delivery and performance of this
          Agreement,  the borrowing hereunder, the Revolving Credit Note and any
          other documents contemplated by this Agreement,  which shall have been
          certified by the  Secretary or Assistant  Secretary of the Borrower as
          of the Funding Date first occurring as being complete, accurate and in
          effect.

          3.1.2 PAYMENT OF FEES. Borrower shall have paid the Minimum Annual Fee
     and the Preparation Fees in accordance with Sections 2.9.1 and 2.9.3.

          3.1.3 APPROVAL OF BANK COUNSEL. All actions, proceedings,  instruments
     and documents  required to carry out the transactions  contemplated by this
     Agreement or  incidental  thereto and all other related legal matters shall
     have been  satisfactory  to and approved by legal counsel for the Bank, and
     said  counsel  shall  have been  furnished  with such  certified  copies of
     actions and  proceedings  and such other  instruments and documents as they
     shall have reasonably requested.

<PAGE>

          3.2 CONDITIONS PRECEDENT TO ALL DISBURSEMENTS.  The obligations of the
     Bank to make any  Revolving  Loan on any Funding Date,  including,  but not
     limited  to,  the  Funding  Date  first  occurring,   are  subject  to  the
     occurrence, prior to or on the Funding Date related to such Revolving Loan,
     of each of the following  conditions as well as other  conditions set forth
     in this Agreement:

               3.2.1  BANK  SATISFACTION.  The Bank  shall  not know or have any
          reason to believe that, as of such Funding Date:

                    3.2.1.1 Any Default or Event of Default has  occurred and is
               continuing;

                    3.2.1.2 Any warranty or representation  set forth in Section
               4 of this Agreement shall not be true and correct; or

                    3.2.1.3 Any  provision of law, any order of any court or any
               regulation,  rule or  interpretation  thereof  shall have had any
               Material Adverse Effect on Borrower's financial condition,  or on
               the validity or enforceability  of this Agreement,  the Revolving
               Credit Note or any other Loan Document.

          3.3 OTHER  DOCUMENTS TO BE PROVIDED BY BORROWER.  No later than thirty
     (30) days after the  Effective  Date,  Borrower  shall  provide to Bank the
     following documents:

               3.3.1 Copy of Borrower's Articles of Incorporation  including all
          amendments  thereto and  restatements  thereof,  and all other charter
          documents of the Borrower,  all of which shall have been  certified by
          the  Maryland  Department  of  Corporations  or  similar  governmental
          authority   in  the  state  in  which   Borrower  is   organized   and
          incorporated,  as of a date within  thirty  days of the  Funding  Date
          first occurring;

               3.3.2 Certified copy of Borrower's Good Standing certificate from
          the  California  Secretary of State,  dated as of a date within thirty
          days of the Funding Date first occurring.

4.   WARRANTIES AND REPRESENTATIONS.

     On a continuing  basis from the date of this  Agreement  until the later of
(a) the  Termination  Date or (b) the date on which the  Indebtedness is paid in
full and the  Borrower has  performed  all of its other  obligations  hereunder,
Borrower represents and warrants to the Bank that:

     4.1  CORPORATE  EXISTENCE  AND POWER.  (a) Borrower is a  corporation  duly
organized,  validly existing and in good standing under the laws of the State of
Maryland  and in good  standing  under  the laws  of,  and is  authorized  to do
business in, the State of  California,  (b) Borrower has the power and authority
to own its  properties  and  assets and to carry out its  business  as now being
conducted  and is  qualified  to do  business  and in  good  standing  in  every
jurisdiction wherein such qualification is necessary, (c) Borrower has the power
and authority to execute, deliver and perform this Agreement, to borrow money in
accordance with its terms, to execute,  deliver and perform the Revolving Credit
Note and other documents contemplated hereby, and to do any and all other things
required of it  hereunder,  (d) Borrower is a qualified  real estate  investment
trust as defined in Section 856 of the Internal  Revenue Code (or any  successor
provision  thereto) and has no knowledge of any  circumstance  that is likely to
lead to its failure to qualify as such a real estate  investment  trust; (e) the
execution,  delivery and  performance  of the Loan  Documents will not result in
Borrower being  disqualified  as such a real estate  investment  trust;  and (f)
Borrower  has made and  will  timely  make all  filings  with and  obtained  all
consents of the Securities and Exchange Commission required under the Securities
Act of 1933 (as amended from time to time) or the Security  Exchange Act of 1934
(as amended from time to time) in connection  with the  execution,  delivery and
performance by Borrower of the Loan Documents.

     4.2 AUTHORIZATION AND APPROVALS. The execution, delivery and performance of
this  Agreement,  the  borrowings  hereunder  and the  execution,  delivery  and
performance  of the  Revolving  Credit Note,  and other  documents  contemplated
hereby (a) have been duly  authorized by all requisite  corporate  action of the
Borrower,  (b) do not require  registration  with or consent or approval  of, or
other  action  by,  any  federal,  state  or  other  governmental  authority  or
regulatory body, or, if such registration,  consent or approval is required, the
same has been  obtained  and  disclosed  in  writing  to the Bank,  (c) will not
violate  any  provision  of law,  any  order of any  court or  other  agency  of
government,  the Articles of Incorporation and Bylaws of Borrower, any provision
of any indenture, note, agreement or other instrument to which the Borrower is a
party, or by which it or any of its properties or assets are bound, (d) will not
be in conflict with, result in a breach of or constitute (with or without notice
or passage of time) a default under any such indenture, note, agreement or other
instrument,  and (e) will not result in the creation or  imposition of any lien,
charge or  encumbrance  of any nature  whatsoever  upon any of the properties or
assets  of the  Borrower  (other  than in favor of the Bank and as  contemplated
hereby).

     4.3 VALID AND  BINDING  AGREEMENT.  This  Agreement  is, and the  Revolving
Credit  Note,  and  all  other  documents  contemplated  hereby  will  be,  when
delivered,  valid,  binding,  and  enforceable  obligations of the Borrower,  in
accordance with their terms.

<PAGE>

     4.4  ACTIONS,  SUITS  OR  PROCEEDINGS.  There  are  no  actions,  suits  or
proceedings, at law or in equity, and no proceedings before any arbitrator or by
or before any governmental  commission,  board,  bureau, or other administrative
agency,  pending, or, to the best knowledge of the Borrower,  threatened against
or affecting the Borrower or any of its Subsidiaries or any properties or rights
of the Borrower or any of its  Subsidiaries,  which,  if  adversely  determined,
could materially  impair the right of the Borrower or any of its Subsidiaries to
carry on  business  substantially  as now  conducted  or could  have a  Material
Adverse  Effect  upon the  financial  condition  of the  Borrower  or any of its
Subsidiaries.

     4.5 ACCOUNTING  PRINCIPLES.  All  consolidated  and  consolidating  balance
sheets,  earnings  statements and other financial data furnished to the Bank for
the purposes of, or in connection  with,  this  Agreement  and the  transactions
contemplated by this Agreement,  have been prepared in accordance with GAAP, and
do or will fairly  present  the  financial  condition  of the  Borrower  and its
Subsidiaries,  as of the  dates,  and the  results of their  operations  for the
periods,  for which the same are  furnished  to the Bank.  Without  limiting the
generality  of the  foregoing,  the Financial  Statements  have been prepared in
accordance  with GAAP  (except as  disclosed  therein)  and fairly  present  the
financial  condition of the Borrower and its  Subsidiaries as of the dates,  and
the results of its  operations  for the fiscal  periods,  for which the same are
furnished  to the Bank.  The Borrower  has no material  contingent  obligations,
liabilities  for  taxes,  long-term  leases  or  unusual  forward  or  long-term
commitments not disclosed by, or reserved against in, the Financial Statements.

     4.6 FINANCIAL CONDITION.  The Borrower is solvent, able to pay its debts as
they mature,  has capital sufficient to carry on its business and has assets the
fair market value of which exceed its liabilities,  and the Borrower will not be
rendered  insolvent,  under-capitalized  or unable to pay maturing  debts by the
execution or performance of this Agreement or the other  documents  contemplated
hereby. There has been no material adverse change in the business, properties or
condition  (financial or  otherwise) of the Borrower or any of its  Subsidiaries
since the date of the latest Financial Statements.

     4.7  CONDITIONS  PRECEDENT.  As  of  each  Funding  Date,  all  appropriate
conditions  precedent  referred to in Section 3 hereof have been  satisfied  or,
alternatively, have been waived in writing by the Bank.

     4.8 TAXES.  Borrower and its  Subsidiaries  have each filed by the due date
therefor (including any extensions) all federal, state and local tax returns and
other  reports it is required by law to file,  has paid or caused to be paid all
taxes,  assessments and other governmental  charges that are shown to be due and
payable under such returns,  and has made adequate  provision for the payment of
such taxes, assessments or other governmental charges which have accrued but are
not yet payable.  The Borrower  has no knowledge of any material  deficiency  or
assessment  in  connection  with any taxes,  assessments  or other  governmental
charges not adequately disclosed in the Financial Statements.

     4.9 COMPLIANCE WITH LAWS.  Borrower and its Subsidiaries have each complied
with all applicable  laws, to the extent that failure to comply would materially
interfere  with  the  conduct  of the  business  of the  Borrower  or any of its
Subsidiaries.

     4.10 INDEBTEDNESS. Except as disclosed in the Financial Statements or other
public  filings,   neither   Borrower  nor  any  of  its  Subsidiaries  has  any
indebtedness for money borrowed or any direct or indirect  obligations under any
leases (whether or not required to be capitalized  under GAAP) or any agreements
of guarantee or surety except for the  endorsement of negotiable  instruments by
the Borrower and its Subsidiaries in the ordinary course of business for deposit
or collection.

     4.11 MATERIAL  AGREEMENTS.  Except as disclosed in the Financial Statements
or other public filings, neither the Borrower or any of its Subsidiaries has any
material  leases,  contracts  or  commitments  of any kind  (including,  without
limitation,  employment agreements,  collective bargaining agreements, powers of
attorney,  distribution contracts,  patent or trademark licenses,  contracts for
future  purchase or delivery of goods or rendering of services,  bonus,  pension
and  retirement   plans,  or  accrued   vacation  pay,   insurance  and  welfare
agreements);  to the best knowledge of Borrower,  all parties to such agreements
have complied with the provisions of such leases, contracts or commitments;  and
to the best knowledge of the Borrower, no party to such agreements is in default
thereunder, nor has there occurred any event which with notice or the passage of
time, or both, would constitute such a default.

     4.12 MARGIN  STOCK.  Neither the  Borrower nor any of its  Subsidiaries  is
engaged principally,  or as one of its important activities,  in the business of
extending  credit for the purpose of purchasing  or carrying any "margin  stock"
within the  meaning of  Regulation  U of the Board of  Governors  of the Federal
Reserve System,  and no part of the proceeds of any loan hereunder will be used,
directly  or  indirectly,  to  purchase  or carry any margin  stock or to extend
credit to others for the purpose of  purchasing  or carrying any margin stock or
for any other purpose  which might violate the  provisions of Regulation G, T, U
or X of the said Board of Governors. The Borrower does not own any margin stock.

     4.13 PENSION FUNDING.  Neither the Borrower nor any of its Subsidiaries has
incurred  any  accumulated  funding  deficiency  within the  meaning of ERISA or
incurred any liability to the PBGC in connection with any employee  benefit plan
established  or  maintained  by the Borrower or any of its  Subsidiaries  and no
reportable  event or prohibited  transaction,  as defined in ERISA, has occurred
with respect to such plans.

<PAGE>

     4.14  MISREPRESENTATION.  No warranty  or  representation  by the  Borrower
contained  herein  or in any  certificate  or other  document  furnished  by the
Borrower pursuant hereto contains any untrue statement of material fact or omits
to state a material fact necessary to make such warranty or  representation  not
misleading in light of the  circumstances  under which it was made.  There is no
fact  which  the  Borrower  has  not  disclosed  to the  Bank in  writing  which
materially and adversely affects nor, so far as the Borrower can now foresee, is
likely to prove to affect  materially  and adversely  the business,  operations,
properties,  prospects,  profits or condition  (financial  or  otherwise) of the
Borrower or any of its  Subsidiaries  or ability of the Borrower to perform this
Agreement.

     4.15  NO  CONFLICTING  AGREEMENTS.  Neither  the  Borrower  nor  any of its
Subsidiaries  is in default under any  shareholder  agreement,  preferred  stock
agreement or any other agreement to which it is a party or by which it or any of
its property is bound,  the effect of which might have a Material Adverse Effect
on the business or  operations  of the Borrower or any of its  Subsidiaries.  No
provision  of the  Certificate  of  Incorporation,  Articles  of  Incorporation,
By-Laws or preferred  stock,  if any, of the  Borrower,  and no provision of any
existing mortgage,  indenture,  note, contract,  agreement,  statute (including,
without  limitation,  any applicable  usury or similar law),  rule,  regulation,
judgment,  decree or order  binding on the Borrower or affecting the property of
the Borrower  conflicts with, or requires any consent under, or would in any way
prevent the execution,  delivery or carrying out of the terms of, this Agreement
and the documents  contemplated  hereby,  and the taking of any such action will
not constitute a default  under,  or result in the creation or imposition of, or
obligation to create any lien upon the property of the Borrower  pursuant to the
terms of any such mortgage, indenture, note, contract or agreement.

5.   AFFIRMATIVE  COVENANTS.  On a  continuing  basis  from  the  date  of  this
     Agreement  until the later of (a) the  Termination  Date or (b) the date on
     which the  Indebtedness  is paid in full and the Borrower has performed all
     of its other obligations hereunder,  the Borrower covenants and agrees that
     it will:

     5.1 FINANCIAL AND OTHER INFORMATION. Borrower shall maintain or cause to be
maintained a system of accounting  established  and  administered  in accordance
with sound  business  practices  and  consistent  with past  practice  to permit
preparation  of quarterly and annual  financial  statements  in conformity  with
GAAP,  and Borrower shall deliver or cause to be delivered to Bank the following
information and/or documents:

          5.1.1 ANNUAL FINANCIAL REPORTS.  On an annual basis (starting with the
     fiscal year ending December 31, 2007) and within ten (10) days after filing
     of the same with the  Securities  and Exchange  Commission,  furnish to the
     Bank a copy of  Borrower's  SEC Form 10-K filed or to be filed by  Borrower
     with the  Securities  and Exchange  Commission or, if such statement is not
     available  for  any  reason,  financial  statements  of the  Borrower  on a
     consolidated  basis  containing the balance sheet of the Borrower as of the
     close of such fiscal year, statements of income and retained earnings and a
     statement of cash flows for each such fiscal year,  and such other comments
     and  financial  details  as are  usually  included  in SEC  Form  10-K  and
     certified  by  Borrower's  chief  financial  officer  or  chief  accounting
     officer.  Such  reports  shall  be  prepared  in  accordance  with  GAAP by
     independent certified public accountants of recognized standing selected by
     the Borrower and shall contain  unqualified  opinions as to the fairness of
     the statements therein contained.

          5.1.2 QUARTERLY FINANCIAL  STATEMENTS.  On a quarterly basis (starting
     with the  quarter  ending  March 31,  2008) and  within ten (10) days after
     filing of the same with the Securities and Exchange Commission,  furnish to
     Bank a copy of  Borrower's  SEC Form 10-Q filed or to be filed by  Borrower
     with the  Securities  and Exchange  Commission or, if such statement is not
     available  for  any  reason,  financial  statements  of the  Borrower  on a
     consolidated  basis  containing the balance sheet of the Borrower as of the
     end of each such period,  statements of income and retained earnings of the
     Borrower  and a statement  of cash flows of the Borrower for the portion of
     the fiscal year up to the end of such period,  and such other  comments and
     financial details as are usually included in SEC Form 10-Q and certified by
     Borrower's  chief  financial  officer or chief  accounting  officer.  These
     statements  shall be prepared in accordance  with GAAP and shall be in such
     detail  as the  Bank  may  reasonably  require,  and  the  accuracy  of the
     statements  shall be certified by the chief executive or financial  officer
     of the Borrower.

          5.1.3  ADVERSE  EVENTS;  LITIGATION.  Promptly  inform the Bank of the
     occurrence of any Default or Event of Default,  or of any other  occurrence
     which has or could  reasonably  be  expected to have a  Materially  Adverse
     Effect upon the Borrower, or upon any of Borrower's  Subsidiaries,  or upon
     the Borrower's ability to comply with its obligations  hereunder.  Borrower
     shall promptly  inform Bank in writing upon obtaining  knowledge of (i) the
     institution of, or threat of, any material action, proceeding, governmental
     investigation or arbitration  against or affecting  Borrower not previously
     disclosed by Borrower in writing to Bank, or (ii) any material  development
     in any action, suit, proceeding,  governmental investigation or arbitration
     already  disclosed,  which has a Material  Adverse Affect on Borrower,  and
     shall provide such  information  as Bank may  reasonably  request to enable
     Bank and its counsel to evaluate such matters.

          5.1.4 SHAREHOLDER REPORTS.  Promptly furnish to the Bank upon becoming
     available  a copy of all  financial  statements,  reports,  notices,  proxy
     statements  and other  communications  sent by the  Borrower  or any of its
     Subsidiaries to their  stockholders,  and all regular and periodic  reports
     filed  by the  Borrower  or any of its  Subsidiaries  with  any  securities
     exchange,  the Securities and Exchange  Commission,  the  Corporations  and
     Securities  Bureau  of the  Department  of  Corporations  of the  State  of
     California  or like agency for the State of  Maryland  or any  governmental
     authorities succeeding to any or all of the functions of such Commission or
     Bureau.

<PAGE>

          5.1.5 MANAGEMENT  LETTERS.  Furnish to the Bank, promptly upon receipt
     thereof,  copies of all  management  letters and other reports of substance
     submitted  to  the  Borrower  or any of  its  Subsidiaries  by  independent
     certified public accountants in connection with any annual or interim audit
     of the financial records of the Borrower or any of its Subsidiaries.

          5.1.6 OTHER  INFORMATION  AS REQUESTED.  Promptly  furnish to the Bank
     such other  information  regarding  the  operations,  business  affairs and
     financial  condition of the Borrower and its  Subsidiaries  as the Bank may
     reasonably  request from time to time,  and permit the Bank, its employees,
     attorneys and agents,  to inspect all of the books,  records and properties
     of the Borrower and its Subsidiaries at any reasonable time.

          5.1.7  INSURANCE.  Keep its  insurable  properties  and the  insurable
     properties  of  its  Subsidiaries   adequately  insured  and  maintain  (a)
     insurance against fire and other risks customarily insured against under an
     "all-risk" policy and such additional risks customarily  insured against by
     companies engaged in the same or a similar business to that of the Borrower
     or  its  Subsidiaries,   as  the  case  may  be,  (b)  necessary   workers'
     compensation   insurance,   (c)  public  liability  and  product  liability
     insurance, and (d) such other insurance as may be required by law or as may
     be reasonably required in writing by the Bank, all of which insurance shall
     be in such amounts, containing such terms, in such form, for such purposes,
     prepaid  for such time  period,  and  written by such  companies  as may be
     satisfactory to the Bank.  Notwithstanding anything to the contrary herein,
     Borrower is not required,  unless otherwise  required by applicable law, to
     maintain  earthquake  or flood or terrorist  insurance.  The Borrower  will
     promptly deliver to the Bank, at the Bank's request,  evidence satisfactory
     to the Bank that such insurance has been so procured. If the Borrower fails
     to maintain satisfactory  insurance as herein provided, the Bank shall have
     the option to do so, and the Borrower agrees to repay the Bank upon demand,
     with interest at the Variable Rate, all amounts so expended by the Bank.

     5.2 TAXES.  Pay  promptly and within the time that they can be paid without
late charge, penalty or interest all taxes,  assessments and similar imposts and
charges of every kind and nature lawfully  levied,  assessed or imposed upon the
Borrower or its  Subsidiaries,  and their  property,  except to the extent being
contested in good faith and, if  requested by the Bank,  bonded in an amount and
manner satisfactory to the Bank.

     5.3 MAINTAIN  CORPORATION  AND BUSINESS.  Do or cause to be done all things
necessary to preserve and keep in full force and effect the  Borrower's and each
of its Subsidiaries' corporate existence,  rights and franchises and comply with
all applicable laws;  maintain its good standing in all states and jurisdictions
in which it is currently authorized to conduct business; continue to conduct and
operate its and each of its  Subsidiaries'  business  substantially as conducted
and  operated  during the  present and  preceding  calendar  year;  at all times
maintain,  preserve and protect all  franchises and trade names and preserve all
the  remainder of its and its  Subsidiaries'  property and keep the same in good
repair, working order and condition;  and from time to time make, or cause to be
made, all needed and proper  repairs,  renewals,  replacements,  betterments and
improvements thereto so that the business carried on in connection therewith may
be properly and advantageously conducted at all times.

     5.4 CONTINUED STATUS AS A REIT; PROHIBITED TRANSACTIONS. Borrower will: (i)
continue to be a real estate  investment  trust as defined in Section 856 of the
Internal Revenue Code (or any successor provision thereto), (ii) will not revoke
its election to be a real estate investment trust;  (iii) will not engage in any
"prohibited  transactions"  as defined in Section 857(b) of the Internal Revenue
Code (or any  successor  provision  thereto) that the Bank  reasonably  believes
could lead to Borrower's  disqualification  as a real estate investment trust as
defined in Section 856 of the Internal Revenue Code (or any successor  provision
thereto); (iv) will continue to be entitled to a dividend paid deduction meeting
the requirements of Section 857 of the Internal Revenue Code; and will otherwise
comply with all provisions and  requirements  of Internal  Revenue Code Sections
856 and 857 to maintain its real estate  investment  trust status under  Section
856.

     5.5  FAILURE  OF  BORROWER  TO  QUALIFY AS REAL  ESTATE  INVESTMENT  TRUST.
Borrower  shall promptly  inform Bank in writing,  and in any event within forty
eight  (48)  hours  after  Borrower  has  actual  knowledge,  of  the  following
circumstances  or occurrences:  (i) Borrower failing to continue to qualify as a
real estate  investment  trust as defined in Section 856 of the Internal Revenue
Code (or any successor provision  thereof);  (ii) any act by Borrower causing or
which will cause its election to be taxed as a real estate  investment  trust to
be terminated; (iii) any act causing Borrower to be subject to the taxes imposed
by Section  857(b)(6) of the Internal  Revenue Code (or any successor  provision
thereto),  or (iv) Borrower failing to be entitled to a dividends paid deduction
which meets the requirements of Section 857 of the Internal Revenue Code.

     5.6 AMEX LISTED COMPANY. The common stock of Borrower shall at all times be
listed  for  trading  and  be  traded  on the  American  Stock  Exchange  or any
alternative recognized stock exchange.

     5.7 COMPLIANCE WITH SECURITIES LAWS.  Borrower shall comply in all material
respects with all rules and regulations with the Securities  Exchange Commission
and file all reports required by the Securities  Exchange Commission relating to
Borrower's publicly held securities.

     5.8 MAINTAIN  TANGIBLE NET WORTH. On a consolidated  basis,  Borrower shall
maintain  a  Tangible  Net  Worth  of  not  less  than  Ninety  Million  Dollars
($90,000,000.00), not including minority interests.

<PAGE>

     5.9 MAINTAIN DEBT COVERAGE RATIO. On a consolidated  basis,  Borrower shall
maintain a Debt Coverage Ratio of at least 1.75 to 1.00.

     5.10 MAINTAIN DEBT TO TANGIBLE NET WORTH RATIO.  On a  consolidated  basis,
Borrower  shall maintain a Debt to Tangible Net Worth Ratio of no more than 5.00
to 1.00.

     5.11  MAINTAIN  OPERATING  ACCOUNTS.  Borrower  shall  maintain  all of its
operating accounts with Bank.

     5.12  ERISA.  (a) At all times meet and cause each of the  Subsidiaries  to
meet the minimum  funding  requirements  of ERISA with respect to the Borrower's
and  Subsidiaries'  employee  benefit plans subject to ERISA; (b) promptly after
the  Borrower  knows or has reason to know (i) of the  occurrence  of any event,
which  would   constitute  a  reportable  event  instituted  or  will  institute
proceedings  to  terminate  an  employee  pension  plan,  deliver  to the Bank a
certificate of the chief financial officer of the Borrower setting forth details
as to such event or  proceedings  and the action which the Borrower  proposes to
take with  respect  thereto,  together  with a copy of any  notice of such event
which may be required to be filed with the PBGC; and (c) furnish to the Bank (or
cause the plan  administrator  to furnish the Bank) a copy of the annual  return
(including all schedules and  attachments)  for each plan covered by ERISA,  and
filed with the Internal  Revenue Service by the Borrower not later than ten (10)
days after such report has been so filed.

     5.13  USE OF  LOAN  PROCEEDS.  Use  the  proceeds  of the  Revolving  Loans
hereunder  only for the purposes set forth in the recitals to this Agreement and
as set forth in the Notice of Borrowing relating to each Revolving Loan.

6.   NEGATIVE COVENANTS.

     On a continuing  basis from the date of this  Agreement  until the later of
(a) the  Termination  Date or (b) the date on which the  Indebtedness is paid in
full and the Borrower has performed all of its other obligations hereunder,  the
Borrower  covenants  and  agrees  that it will  not,  and  will not  permit  any
Subsidiary to:

     6.1 STOCK ACQUISITION. Purchase, redeem, retire or otherwise acquire any of
the shares of its capital stock, or make any commitment to do so.

     6.2  EXTENSION OF CREDIT.  Make loans,  advances or extensions of credit to
any Person,  except for sales on open  account  and  otherwise  in the  ordinary
course of business.

     6.3 SUBORDINATE INDEBTEDNESS.  Subordinate any indebtedness due to Borrower
from a Person to indebtedness or other creditors of such Person.

     6.4  PROPERTY  TRANSFER,  MERGER  OR  LEASE-BACK.  (a)  Sell,  transfer  or
otherwise  dispose of properties  and assets  having an aggregate  book value of
more  than  Five  Hundred  Million  Dollars   ($500,000,000)   (whether  in  one
transaction or in a series of  transactions)  except as to the sale of inventory
in the ordinary  course of business;  (b) change its name,  consolidate  with or
merge into any other corporation or entity, permit another corporation or entity
to  merge  into  it,  enter  into  any  reorganization  or  recapitalization  or
reclassify its capital stock, or (c) enter into any  sale-leaseback  transaction
where Borrower is lessee.

     6.5 PENSION PLAN. (a) Allow any fact,  condition or event to occur or exist
with respect to any employee  pension or profit  sharing  plans  established  or
maintained by it which might constitute grounds for termination of any such plan
or for the court  appointment  of a trustee to administer  any such plan, or (b)
permit  any such plan to be the  subject  of  termination  proceedings  (whether
voluntary or involuntary) from which termination  proceedings there may result a
liability of the Borrower or any of its  Subsidiaries  to the PBGC which, in the
opinion of the Bank, will have a materially  adverse effect upon the operations,
business, property, assets, financial condition or credit of the Borrower or any
of its Subsidiaries.

     6.6  MISREPRESENTATION.  Furnish  the Bank  with any  certificate  or other
document that contains any untrue statement of a material fact or omits to state
a material fact necessary to make such certificate or document not misleading in
light of the circumstances under which it was furnished.

     6.7 MARGIN  STOCK.  Apply any of the proceeds of the Note or of any loan in
any manner which might cause the extension of credit or the  application of such
proceeds to violate Regulation G, U or X (or any regulations, interpretations or
rulings  thereunder) or any other  regulation of the Federal Reserve Board or to
violate the  Securities  Exchange Act of 1934 (as amended to the date hereof and
from time to time  hereafter) or the  Securities  Act of 1933 (as amended to the
date hereof and from time to time hereafter).

     6.8 AMENDMENT OF CONSTITUENT  DOCUMENTS.  Amend or re-state its articles of
incorporation  or by-laws without the prior written consent of Bank,  except (i)
to increase authorized capital, (ii) as required by applicable law or applicable
tax requirements, or (iii) as prudent to maintain qualification as a real estate
investment  trust as defined in Section 856 of the Internal  Revenue Code or any
successor provision thereto.

<PAGE>

     6.9 ORGANIZATION OF BORROWER. Cease to remain a Maryland corporation.

     6.10 UNSECURED BORROWINGS. No additional outside unsecured loans other than
trades payable incurred in the ordinary course of business.

7.   EVENTS OF DEFAULT, ENFORCEMENT, APPLICATION OF PROCEEDS.

     7.1 EVENTS OF DEFAULT. The occurrence of any of the following conditions or
events  shall  constitute  an Event of  Default  hereunder  if  either:  (i) the
condition  or event is  continuing  for more than ten (10)  days  after the Bank
sends  written  notice  thereof,  or (ii) the  condition or event is  reasonably
deemed by the Bank to require immediate action to protect its rights hereunder:

          7.1.1  FAILURE TO PAY MONIES DUE. If the  Borrower  shall fail to pay,
     when due, any  principal or interest or other sums due under the  Revolving
     Credit  Note or this  Agreement  or any taxes,  insurance  or other  amount
     payable by the Borrower  under this  Agreement or if the Borrower or any of
     its Subsidiaries shall fail to pay, when due, any indebtedness,  obligation
     or liability  whatsoever of the Borrower or any of its  Subsidiaries to the
     Bank.

          7.1.2  BREACH OF  COVENANTS.  If  Borrower  shall  fail to  satisfy or
     perform any of the covenants in this Agreement including without limitation
     Section 5 and Section 6.

          7.1.3  MISREPRESENTATION.  If any  warranty or  representation  of the
     Borrower in  connection  with or  contained  in this  Agreement or any Loan
     Document,  or if any financial data or other  information  now or hereafter
     furnished  to the Bank by or on behalf of the  Borrower,  shall prove to be
     false, incorrect or misleading in any material respect.

          7.1.4 SOLVENCY; MATERIAL ADVERSE CHANGE. If Borrower shall cease to be
     Solvent,  or there shall have occurred any Material  Adverse  Effect in the
     business,  operations,   properties,  assets  or  condition  (financial  or
     otherwise) of Borrower.

          7.1.5 OTHER DEFAULTS. If the Borrower or any of its Subsidiaries shall
     default in the payment when due of any of its  indebtedness  (other than to
     the Bank) or in the  observance  or  performance  of any term,  covenant or
     condition in any agreement or instrument  evidencing,  securing or relating
     to such indebtedness, and such default be continued for a period sufficient
     to permit  acceleration of the indebtedness,  irrespective of whether there
     has been acceleration by the holder thereof. Notwithstanding the foregoing,
     such a default shall not  constitute  an Event of Default  hereunder if all
     persons to whom the  indebtedness  is owed have fully and completely and in
     writing waived the default. In addition,  if a default occurs and continues
     to  exist  on an  indebtedness  of the  Borrower  that is  secured  by real
     property and is fully  non-recourse  to the Borrower,  such default may not
     represent a default under this  agreement if Bank, it its sole  discretion,
     determines that Borrower is in compliance and can maintain compliance going
     forward with all the financial covenants of this Agreement.

          7.1.6  JUDGMENTS.  If there shall be rendered  against the Borrower or
     any of its  Subsidiaries  one or more  judgments  or decrees  involving  an
     aggregate liability of Five Million Dollars  ($5,000,000.00) or more, which
     has  or  have  become   non-appealable   and  shall  remain   undischarged,
     unsatisfied by insurance, not reserved in full by the Borrower prior to the
     judgment  or  unstayed  for more than  thirty  (30)  days,  whether  or not
     consecutive; or if a writ of attachment or garnishment against the property
     of the Borrower or any of its Subsidiaries shall be issued and levied in an
     action  claiming  Five  Million  Dollars  ($5,000,000.00)  or more  and not
     released or appealed and bonded in an amount and manner satisfactory to the
     Bank within twenty-five (25) days after such issuance and levy.

          7.1.7 BUSINESS SUSPENSION,  BANKRUPTCY, ETC. If the Borrower or any of
     its Subsidiaries shall voluntarily suspend transaction of its business;  or
     if the Borrower or any of its Subsidiaries  shall not pay its debts as they
     mature or shall make a general assignment for the benefit of creditors,  or
     proceedings  in  bankruptcy,  or for  reorganization  or liquidation of the
     Borrower or any of its Subsidiaries  under the Bankruptcy Code or under any
     other state or federal law for the relief of debtors  shall be commenced or
     shall be  commenced  against the  Borrower or any of its  Subsidiaries  and
     shall not be discharged within twenty-five (25) days of commencement;  or a
     receiver,  trustee or custodian  shall be appointed for the Borrower or any
     of its  Subsidiaries  or for any  substantial  portion of their  respective
     properties or assets.

          7.1.8  CHANGE  OF  MANAGEMENT  OR  OWNERSHIP.  If  the  Borrower  or a
     controlling  portion of its voting  stock or a  substantial  portion of its
     assets comes under the practical, beneficial or effective control of one or
     more  persons  other  than Carl Berg,  whether by reason of death,  merger,
     consolidation,  sale or purchase of stock or assets or  otherwise;  and Ray
     Marino,  who is the  President  and COO of the  Borrower,  shall no  longer
     remain  in such  offices,  whether  by  reason  of  death,  resignation  or
     otherwise;  and any such change of control or office  holder may  adversely
     affect,  in the sole  judgment of the Bank,  the ability of the Borrower to
     carry on its business as conducted before such change.

          7.1.9  INADEQUATE  FUNDING OR TERMINATION OF EMPLOYEE BENEFIT PLAN(S).
     If the Borrower or any of its  Subsidiaries  shall fail to meet its minimum
     funding  requirements under ERISA with respect to any employee benefit plan
     established  or  maintained  by it, or if any such plan shall be subject of
     termination  proceedings (whether voluntary or involuntary) and there shall

<PAGE>


     result from such termination  proceedings a liability of Borrower or any of
     its  Subsidiaries  to the PBGC which in the opinion of the Bank will have a
     materially adverse effect upon the operations,  business,  property, assets
     financial  condition or credit of the Borrower or any of its  Subsidiaries,
     as the case may be.

          7.1.10 OCCURRENCE OF CERTAIN  REPORTABLE EVENTS. If there shall occur,
     with respect to any pension plan  maintained  by the Borrower or any of its
     Subsidiaries any reportable event (within the meaning of Section 4043(b) of
     ERISA)  which  the  Bank  shall  determine  constitutes  a  ground  for the
     termination of any such plan,  and if such event  continues for thirty (30)
     days after the Bank gives  written  notice to the  Borrower,  provided that
     termination  of such plan or  appointment  of such  trustee  would,  in the
     opinion of the Bank, have a materially  adverse effect upon the operations,
     business,  property,  assets, financial condition or credit of the Borrower
     or any of its Subsidiaries, as the case may be.

     7.2 ACCELERATION OF INDEBTEDNESS; REMEDIES. Upon the occurrence of an Event
of Default,  at the Bank's option,  the Bank shall have no further obligation to
advance  funds  to  Borrower  and  the  Commitment  shall  terminate.  Upon  the
occurrence of an Event of Default,  all Indebtedness shall be due and payable in
full  immediately  at the  option  of the  Bank  without  presentation,  demand,
protest, notice of dishonor or other notice of any kind, all of which are hereby
expressly  waived.  Upon the  occurrence of an Event of Default,  the Bank shall
have and may  exercise  any one or more of the  rights  and  remedies  for which
provision is made hereunder or under any other document  contemplated  hereby or
for  which  provision  is  provided  by law  or in  equity,  including,  without
limitation,  the right to set off against the  Indebtedness  any amount owing by
the Bank to the Borrower  and/or any property of the Borrower in  possession  of
the Bank.  Any  amounts  collected  by the Bank after an Event of Default may be
applied,  at the Bank's option and in any order against  outstanding  principal,
interest, fees and/or costs.

     7.3 CUMULATIVE REMEDIES. The remedies provided for herein are cumulative to
the remedies for collection of the Indebtedness as provided by law, in equity or
by any document contemplated hereby.  Nothing herein contained is intended,  nor
shall it be  construed,  to preclude the Bank from pursuing any other remedy for
the  recovery of any other sum to which the Bank may be or become  entitled  for
the breach of this Agreement by the Borrower.

8.   MISCELLANEOUS.

     8.1 EFFECTIVENESS.  This Agreement shall become effective when Borrower and
Bank have duly executed and delivered  signature pages of this Agreement to each
other,  and, at Bank's sole and  absolute  option and for its  benefit,  all the
conditions contained in Section 3.1 are satisfied.

     8.2 INDEPENDENT  RIGHTS. No single or partial exercise of any right,  power
or privilege  hereunder,  or any delay in the exercise  thereof,  shall preclude
other or further exercise of the rights of the parties to this Agreement.

     8.3 COVENANT INDEPENDENCE.  Each covenant in this Agreement shall be deemed
to be independent of any other  covenant,  and an exception or illegality of one
covenant shall not create an exception or illegality in another covenant.

     8.4 WAIVERS AND AMENDMENTS.  No forbearance,  delay or omission on the part
of the Bank in enforcing  any of its rights  under this  Agreement or any of the
Loan Documents,  nor any renewal,  extension or  rearrangement of any payment or
covenant to be made or performed by the Borrower hereunder,  shall constitute or
be construed as a waiver of any of the terms of, or remedies of Bank under, this
Agreement or any of the Loan Documents or of any such right. No Default or Event
of Default shall be waived by the Bank except in a writing  signed and delivered
by an  officer  of the Bank,  and no waiver  of any  other  Default  or Event of
Default  shall  operate as a waiver of any Default or Event of Default or of the
same  Default  or Event of  Default on a future  occasion.  No other  amendment,
modification  or waiver of, or consent  with  respect to, any  provision of this
Agreement or the Note or any other Loan Documents  contemplated  hereby shall be
effective unless the same shall be in writing and signed and delivered by a duly
authorized officer of the Bank and the President or CEO of the Borrower.

     8.5 GOVERNING  LAW. This  Agreement,  and each and every term and provision
hereof,  shall be governed by and construed in accordance  with the internal law
of the State of California.  If any  provisions of this Agreement  shall for any
reason be held invalid or  unenforceable,  such  invalidity or  unenforceability
shall not  affect  any  other  provision  hereof,  but this  Agreement  shall be
construed  as if  such  invalid  or  unenforceable  provisions  had  never  been
contained herein.

     8.6  SURVIVAL  OF  WARRANTIES,   ETC.  All  of  the  Borrower's  covenants,
agreements,   representations  and  warranties  made  in  connection  with  this
Agreement and any document  contemplated  hereby shall survive the borrowing and
the delivery of the Note  hereunder and shall be deemed to have been relied upon
by the Bank,  notwithstanding any investigation  heretofore or hereafter made by
the  Bank.  All  statements  contained  in any  certificate  or  other  document
delivered  to the  Bank at any time by or on  behalf  of the  Borrower  pursuant
hereto  or  in  connection  with  the  transactions  contemplated  hereby  shall
constitute  representations  and  warranties by the Borrower in connection  with
this Agreement.

     8.7 COSTS AND  EXPENSES.  The Borrower  agrees that it will  reimburse  the
Bank, upon demand,  for all reasonable fees and out-of-pocket  costs incurred by
the  Bank in  connection  with (i)  collecting  or  attempting  to  collect  the
Indebtedness  or any part

<PAGE>


thereof,  (ii) maintaining or defending the Bank's security  interests or liens,
if any (or the priority thereof),  (iii) the enforcement of the Bank's rights or
remedies under this Agreement or the other documents  contemplated  hereby, (iv)
the preparation or making of any amendments,  modifications, waivers or consents
with  respect to this  Agreement  or the other  documents  contemplated  hereby,
and/or (v) any other matters or proceedings arising out of or in connection with
any  lending  arrangement  between  the Bank and the  Borrower,  which costs and
expenses  include without limit payments made by the Bank for taxes,  insurance,
assessments,  or other costs or expenses  which the  Borrower is required to pay
under this Agreement or the other documents contemplated hereby; audit expenses;
court costs and reasonable  attorneys' fees (whether in-house or outside counsel
is used,  whether legal assistants are used, and whether such costs are incurred
in formal or informal collection  actions,  federal bankruptcy  proceedings,  of
Borrower or affecting any  collateral or rights of Bank,  whether an involuntary
or voluntary bankruptcy case, including, without limitation, all attorneys' fees
and costs  incurred  in  connection  with  motions  for relief  from stay,  cash
collateral motions, nondischargeability motions, preferential liability motions,
fraudulent  conveyance liability motions,  fraudulent transfer liability motions
and all other  motions  brought by  Borrower,  Bank or third  parties in any way
relating to Bank's  rights with  respect to such  Borrower or third party and/or
affecting any collateral  securing any obligation  owed to Bank by Borrower,  or
any third party,  probate  proceedings,  on appeal or otherwise);  and all other
costs and expenses of the Bank incurred in connection with any of the foregoing.

     8.8  ATTORNEYS'  FEES AND COSTS.  Bank may hire or pay someone else to help
collect the Note if Borrower does not pay. In such event, Borrower agrees to pay
all reasonable fees and out-of-pocket  costs incurred by Bank in connection with
collecting the Note. In addition,  the prevailing party (the "Prevailing Party")
in any  litigation,  arbitration,  bankruptcy  proceeding,  or other  formal  or
informal resolution (collectively,  a "Proceeding") brought by Bank or any party
to this  Agreement of any claims  brought to enforce the terms of this Agreement
or any of the Loan Documents based upon,  arising from, or in any way related to
this  Agreement  or the  transactions  contemplated  herein,  including  without
limitation  contract claims,  tort claims,  breach of duty claims, and all other
common law or statutory claims (collectively,  the "Claims"),  shall be entitled
to recover from such other party all its fees and costs  incurred in  connection
with the Proceeding,  including  without  limitation all its attorneys' fees and
costs,  whether incurred by in-house counsel or outside counsel,  all its expert
witness and/or  consultant's  fees and costs,  all its paralegal fees and costs,
and all its other  costs and  expenses,  regardless  of  whether  such costs are
otherwise  statutorily  recoverable  (collectively,  the "Fees and Costs"),  and
including  without  limitation all the Fees and Costs incurred by the Prevailing
Party in  connection  with  proceedings  in  bankruptcy  for relief  from and/or
modification  of  automatic  stay,  for  orders of  nondischargeability,  and/or
regarding use of cash  collateral,  claims,  and/or plans.  The Prevailing Party
shall also be entitled to recover  from such other party all its costs  incurred
in enforcing the judgment or award giving rise to the Prevailing  Party's status
as the Prevailing  Party.  Each party hereto  acknowledges  that it is on notice
that,  in the event  that the other  party  retain the  services  of one or more
experts in connection with the Proceeding, such other party will seek to recover
the fees and costs of such expert or experts hereunder,  and that, if such party
becomes the Prevailing Party in the Proceeding,  such party shall be entitled to
recover  such fees and costs  hereunder,  whether such fees and costs are sought
before trial,  during trial, or by post-trial motion or memorandum of costs. The
parties to this Agreement waive the provisions of Civil Code section 1717(b)(2),
and agree that, in the event of a unilateral voluntary dismissal,  the dismissed
party shall be deemed the  Prevailing  Party  entitled to the recovery of all of
its Fees and Costs.

     8.9 PAYMENTS ON SATURDAYS,  ETC.  Whenever any payment to be made hereunder
shall be stated to be due on a Saturday,  Sunday or any other day which is not a
Business Day, such payment may be made on the next succeeding  Business Day, and
such  extension,  if any, shall be included in computing  interest in connection
with such payment.

     8.10 BINDING EFFECT. This Agreement shall inure to the benefit of and shall
be binding upon the parties hereto and their respective  successors and assigns;
provided,  however,  that the  Borrower may not assign or transfer its rights or
obligations  hereunder  without the prior written consent of the Bank.  Borrower
authorizes  Bank,  without  notice or demand and  without  affecting  Borrower's
liability  hereunder,  to assign,  without  notice,  the Loan  Documents  or the
Indebtedness  in whole or in part and Bank's rights  thereunder to anyone at any
time or to transfer one or more participation interests in the Loan Documents or
the  Indebtedness  in whole  or in part to one or more  purchasers  and  provide
information to  prospective  purchasers  relating to Borrower.  The Bank agrees,
upon  written  request by  Borrower,  to provide  the  identity  of any  current
participants.

     8.11  MAINTENANCE  OF RECORDS.  The  Borrower  will keep all of its records
concerning  its business  operations  and  accounting at its principal  place of
business. The Borrower will give the Bank prompt written notice of any change in
its principal place of business, or in the location of its records.

     8.12 NOTICES. All notices and communications  provided for herein or in any
document  contemplated hereby or required by law to be given shall be in writing
and shall be served (i) personally in which case the notice or  communication is
effective immediately,  (ii) by overnight mail by a national, reputable carrier,
in which case the notice or  communication  is effective  upon deposit with such
carrier,  (ii) by certified  mail in which case the notice or  communication  is
effective upon mailing,  or (iv) by first class mail,  postage  prepaid in which
case the notice or communication  is effective two (2) days after mailing,  with
all notices or communications  to be delivered,  mailed, or sent as aforesaid as
follows: (a) If the Borrower,  to: Mission West Properties,  Inc., 10050 Bandley
Drive, Cupertino, CA 95014 Attention Carl E. Berg and Raymond V. Marino, and (b)
if to the Bank, to: Heritage Bank of Commerce, 150 Almaden Boulevard,  San Jose,
CA 95113,  Attention Ms. Roxanne Vane, or to such other address as a party shall
have designated to the other in writing in accordance with this section.

<PAGE>

     8.13  COUNTERPARTS.   This  Agreement  may  be  signed  in  any  number  of
counterparts  with the  same  effect  as if the  signatures  were  upon the same
instrument.

     8.14 HEADINGS.  Article and section headings in this Agreement are included
for the  convenience  of reference  only and shall not constitute a part of this
Agreement for any purpose.

     8.15  RELEASE AND  DISCHARGE.  Upon full  payment of the  Indebtedness  and
performance by the Borrower of all its other  obligations  hereunder,  except as
otherwise  provided in this Agreement  including  without  limitation in Section
2.12,  the parties  shall  thereupon  automatically  each be fully,  finally and
forever  released and  discharged  from any claim,  liability or  obligation  in
connection with this Agreement and the Loan Documents.

     8.16 JUDICIAL REFERENCE. The parties hereto agree as follows:

          8.16.1 Any controversy,  claim,  action,  or dispute (a "Controversy")
     arising out of or related to this Agreement or the Loan Documents,  whether
     based on contract, tort, or otherwise, and including without limitation the
     determination  of the  prevailing  party and award of fees and costs  under
     this Agreement, shall be decided by a general reference proceeding pursuant
     to Code of Civil Procedure  Section 638 et. seq. (All references  herein to
     sections  of the Code of Civil  Procedure  shall be  deemed to refer to the
     statute, as it may be amended from time to time.)

          8.16.2 Pursuant to Code of Civil Procedure Section 638(a), the referee
     shall  hear  and  determine  any  and  all of the  issues  relating  to the
     Controversy,  whether of fact or of law,  and shall  report a statement  of
     decision.

          8.16.3 The Court shall appoint a single  referee and that such referee
     shall be selected and appointed pursuant to Code of Civil Procedure Section
     640(b), subject to Code of Civil Procedure Sections 640(c) and 641.

          8.16.4 Pursuant to Code of Civil Procedure Section 643(b), the referee
     shall report  his/her  statement of decision in writing to the court within
     twenty (20) days after the  hearing,  if any,  has been  concluded  and the
     matter has been submitted.

          8.16.5  Pursuant  to Code  of  Civil  Procedure  Section  644(a),  the
     decision of the referee  upon the whole issue must stand as the decision of
     the court,  and, upon filing of the statement of decision with the clerk of
     the  court,  or with the  judge  where  there is no  clerk,  judgment  (the
     "Judgment")  may be entered thereon in the same manner as if the action had
     been tried by the court.

          8.16.6 The referee shall retain  authority and  jurisdiction and shall
     decide  all issues of fact and law  relating  to the  awarding  of fees and
     costs pursuant to this Agreement or otherwise, including without limitation
     reasonable  attorneys' fees. The referee shall report his/her  statement of
     decision  relating to such issues (the "Cost  Statement  of  Decision")  in
     writing to the court  within  twenty  (20) days  after the  hearing on such
     issues,  if any, has been concluded and the matter has been submitted;  and
     the Cost  Statement  of Decision  of the referee  upon the whole issue must
     stand as the decision of the court,  and, upon filing of the Cost Statement
     of Decision  with the clerk of the court,  or with the judge where there is
     no clerk,  fees and costs shall be awarded (the "Cost Award") in accordance
     with the Cost  Statement  of Decision by  modification  of the  Judgment or
     entry of such other appropriate order.

          8.16.7  Pursuant  to Code of Civil  Procedure  Section  645.1(a),  the
     payment of the referee's fees shall be paid as follows:

               8.16.7.1 Subject to Subsection 8.16.7.2 below, the referee's fees
          incurred  prior  to the Cost  Award  shall be  shared  equally  by the
          parties.

               8.16.7.2  Upon  entry  of the  Cost  Award,  the  referee's  fees
          (including  without  limitation  those  paid  pursuant  to  Subsection
          8.16.7.1  above) as well as all other  awarded fees and costs shall be
          payable  as set forth in the  Judgment  or order  containing  the Cost
          Award.

          8.16.8 Any party may,  without  thereby  waiving  the right to general
     reference set forth  herein,  apply  directly to the court for  provisional
     relief  including   without   limitation   attachment,   receivership,   or
     injunction,  and/or may file a complaint to allow the  recordation of a lis
     pendens or a motion to expunge lis pendens.  The court,  at its discretion,
     may transfer any such proceeding for provisional  relief to the referee for
     disposition.

          8.16.9  Nothing  herein  shall be  construed  to prevent the  exercise
     and/or  enforcement of remedies that do not require the  initiation  and/or
     pendency of a civil  action,  including  without  limitation  any remedy of
     setoff,  notification of account debtors,  or foreclosure  under a power of
     sale,  pursuant  to the  provisions  of the  Uniform  Commercial  Code,  or
     pursuant to other applicable law.

<PAGE>

EACH PARTY TO THIS AGREEMENT HEREBY WAIVES  HIS/HER/ITS RIGHT TO A JURY TRIAL IN
CONNECTION WITH ANY CONTROVERSY.

NOTICE:  BY  INITIALING  IN THE  SPACE  BELOW,  YOU ARE  AGREEING  TO  HAVE  ANY
CONTROVERSY  AS  DEFINED  ABOVE  DECIDED  BY A REFEREE  IN A  GENERAL  REFERENCE
PROCEEDING  AS SET  FORTH  ABOVE,  AND YOU ARE  GIVING UP ANY  RIGHTS  YOU MIGHT
POSSESS TO HAVE THE DISPUTE DECIDED BY A JURY.

EACH OF THE  UNDERSIGNED  HAS  READ AND  UNDERSTANDS  THE  FOREGOING  PROVISION,
VOLUNTARILY AGREES TO EACH AND ALL OF ITS TERMS, AND EXPRESSLY AND HEREBY WAIVES
A TRIAL BY JURY IN CONNECTION WITH ANY CONTROVERSY AS DEFINED ABOVE.


INITIALS           INITIALS            INITIALS    RV        INITIALS    RM
        --------           --------            ---------             ----------

          8.16.10 Further Assurances.  Immediately  following reasonable request
     by the Bank, the Borrower shall provide to the Bank such further documents,
     instruments,  and  assurances as may be requested from time to time by Bank
     in connection  with this Agreement or any documents  executed in connection
     herewith.

          8.16.11 Integrated Agreement. This is an integrated agreement.  Except
     as set  forth  specifically  otherwise  herein  and  except  for  the  Loan
     Documents, it supersedes all prior representations and agreements,  if any,
     between the parties to this  Agreement and other  respective  legal counsel
     relating to the subject  matter  hereof.  This  Agreement  and the exhibits
     hereto and the other Loan  Documents  when executed  contain the entire and
     only understanding between the parties, and may not be altered,  amended or
     extinguished, except by a writing which expressly refers to this instrument
     and is signed subsequent to the execution of this instrument by the parties
     to this Agreement.

              The balance of this page is intentionally left blank.

<PAGE>



IN WITNESS  WHEREOF,  the Borrower and the Bank have caused this Agreement to be
executed by their duly authorized  officers as of the day and year first written
above.

                                  MISSION WEST PROPERTIES, INC.
                                  A Maryland corporation


                                  By: /s/ Raymond V. Marino
                                     -------------------------------------------

                                  Print Name: Raymond V. Marino
                                             -----------------------------------

                                  Its:  President & COO
                                      ------------------------------------------

                                  HERITAGE BANK OF COMMERCE


                                  By: /s/ Roxanne Vane
                                     -------------------------------------------

                                  Its: Senior Vice President
                                      ------------------------------------------



<PAGE>



                              REVOLVING CREDIT NOTE


$10,000,000.00                                              San Jose, California

                                                                   March 4, 2008

     FOR  VALUE  RECEIVED,  the  undersigned  promises  to pay to the  order  of
HERITAGE  BANK OF  COMMERCE  (the  "Bank") at 150 Almaden  Boulevard,  San Jose,
California  (or such other place as Bank may  designate),  on June 15, 2009 (the
"Termination  Date"),  the  principal sum or so much of the principal sum of Ten
Million Dollars ($10,000,000.00) as may from time to time have been advanced and
be outstanding under that certain Revolving Credit Loan Agreement dated March 4,
2008,  between the undersigned and the Bank (the  "Agreement")  plus all accrued
but unpaid interest thereon.  Capitalized  terms used herein without  definition
shall have the same meanings as in the Agreement.

     The unpaid  principal  amount of this Note shall bear  interest at the rate
provided in the Agreement,  which  Agreement,  as it may be amended from time to
time, is by this reference incorporated herein and made a part hereof.  Interest
shall be  payable to the  extent  accrued  on the first day of each  consecutive
calendar month,  beginning  March 4, 2008,  with all remaining  interest due and
payable on the Termination Date.

     This Note is a Master  Note under  which  sums must be repaid  from time to
time,  and  under  which  Revolving  Loans  may be  made  by the  Bank up to the
Commitment  Amount,  pursuant to the terms and conditions of the Agreement,  and
the books and records of the Bank shall  constitute  prima facie evidence of the
amount of the  Indebtedness  at any time owing hereunder or under the Agreement,
provided,  however, that the failure by the Bank so to record any such amount or
any error in so recording  any such amount  shall not limit or otherwise  affect
the  obligations  of the Borrower  under this Note or the Agreement to repay the
principal  amount  of all the  Revolving  Loans  outstanding  together  with all
interest accrued or accruing thereon.

     The unpaid principal amount of all Revolving Loans,  unless  accelerated in
accordance with the terms of the Agreement,  if not paid sooner, will be due and
payable, together with all accrued and unpaid interest and all other amounts due
and unpaid under the Agreement, on the Termination Date.

     Interest on the  Revolving  Loans is payable in arrears on the first day of
each month during the term of the Agreement  and as set forth in the  Agreement.
The Agreement  provides for the payment by Borrower of various other charges and
fees in addition to interest charges as more fully set forth in the Agreement.

     All  payments of any amount  becoming  due under this Note shall be made in
the manner provided in Section 2.11 of the Agreement.

     Reference is made to the Agreement for, among other things,  the conditions
under  which  this  Note may or must be paid in  whole  or in part  prior to the
Termination Date (whether accelerated or otherwise).

     If an Event of  Default  (as  defined in the  Agreement)  occurs and is not
cured within the time provided for by the  Agreement,  the Bank may exercise any
one or more of the rights and  remedies  granted by the  Agreement or any of the
Loan Documents or available under  applicable law,  including  without limit the
right to accelerate this Note or the  Indebtedness,  and may set off against the
principal of and interest on this Note or against any other Indebtedness (i) any
amount  owing  by  the  Bank  to  the  undersigned,  (ii)  any  property  of the
undersigned  at any time in the possession of the Bank or any Affiliate (as that
term is  defined  in the  Agreement)  of the Bank and  (iii)  any  amount in any
deposit or other  account  (including  without  limit an account  evidenced by a
certificate of deposit) of the undersigned with the Bank or any Affiliate of the
Bank.

     The  undersigned  and its  successors  and assigns  and all  accommodations
parties,  guarantors and endorsers (i) waive  presentment,  demand,  protest and
notice  of  dishonor,  (ii)  agree  that  no  extension  or  indulgence  to  the
undersigned  or  release or  non-enforcement  of any  security,  with or without
notice,  shall affect the obligations of any accommodation  party,  guarantor or
indorser,  and (iii) agree to reimburse  the holder of this Note for any and all
costs and expenses  incurred in  collecting or attempting to collect any and all
principal  and interest  under this Note  (including,  but not limited to, court
costs and attorney fees, whether in-house or outside counsel is used and whether
such costs and expenses are incurred in formal or informal  collection  actions,
federal bankruptcy proceedings,  appellate proceedings,  probate proceedings, or
otherwise,  all as more  specifically  set forth in Sections  8.7 and 8.8 of the
Agreement).  This Note shall be governed by and construed in accordance with the
laws of the State of California.




<PAGE>


IN WITNESS  WHEREOF,  this Note has been  delivered  and accepted at  Cupertino,
California  and the  undersigned  has  executed  this  Note as of the 4th day of
March, 2008.

                                              MISSION WEST PROPERTIES, INC.
                                              A Maryland corporation


                                              By:  /s/ Raymond V. Marino
                                                 -------------------------------

                                             Print Name:  Raymond V. Marino
                                                        ------------------------

                                             Its:  President & COO
                                                 -------------------------------