Document:

EXHIBIT
      10.55

     

    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.
      

     

    “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.

     

    “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.

     

    “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. 

     

    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 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.

     

    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. 

     

    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. 

     

    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. 

     

    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. 

     

    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.

     

    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 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
      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. 

     

    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. 

     

    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.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    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

            

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    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. 

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    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
                & COOEXHIBIT
      10.55.1

    

    CHANGE
      IN TERMS AGREEMENT

    

    This
      Change in Terms Agreement (this “CIT”) is made as of and delivered on April 17,
      2008, by and between Mission West Properties, Inc., a Maryland corporation
      (“Borrower”), and Heritage Bank of Commerce (the “Bank”).

    

    Recitals

    

    A. As
      of
      March 4, 2008, the Bank and Borrower entered into certain agreements (the “March
      2008 Loan Documents”) including but not limited to a Revolving Credit Loan
      Agreement (the “Agreement”) pursuant to which the Bank agreed, subject to the
      terms and conditions set forth therein, to lend up to the sum of Ten Million
      Dollars ($10,000,000.00) to Borrower, and pursuant to which Borrower agreed
      to
      repay the loan on or before June 15, 2009.

     

    B. The
      Borrower now desires to borrow up to Seventeen Million Five Hundred Thousand
      Dollars and no cents ($17,500,000.00) from the Bank from time to time to meet
      the working capital needs of the Borrower; and 

    

    C. The
      Bank
      is willing to provide such financing subject to the terms and conditions set
      forth in this Agreement. 

     

    In
      consideration of the premises and the mutual promises herein contained, Borrower
      and the Bank agree as follows:

    

    Agreement

    

    1. Incorporation
      of Recitals.
      Each of
      the foregoing Recitals is hereby incorporated herein by this reference as though
      set forth in full herein.

    

    2.  Commitment
      Amount.
      The
      definition of “Commitment Amount” in Section
      1.1 of
      the
      Revolving Credit Loan Agreement is hereby replaced in full by the following:
      “Commitment Amount” shall mean, as of any applicable date of determination,
      Seventeen Million Five Hundred Thousand Dollars ($17,500,000.00)."

    

    3. Minimum
      Loan Fee.
      The
      first sentence in Section
      2.9.1
      of the
      Agreement is hereby deleted and replaced by the following: “The Borrower shall
      pay to the Bank a minimum loan fee of Seventeen Thousand Five Hundred Dollars
      ($17,500.00) (the “Minimum Loan Fee”).”

    

    4. Conditions
      Precedent.
      At the
      Bank’s sole and absolute option and for its benefit, the effectiveness of this
      CIT and Bank’s obligations hereunder are conditioned upon the satisfaction of
      each and all of the following conditions on or before April 17,
      2008:

    

    (a) Borrower
      shall have paid to the Bank the sum of Seven Thousand Five Hundred Dollars
      ($7,500.00) in order to bring its currently paid Minimum Loan Fee of Ten
      Thousand Dollars to the required total of Seventeen Thousand Five Hundred
      Dollars ($17,500,000.00).

    

    (b) Borrower
      shall have paid one-half of Bank’s attorneys’ fees incurred in preparing this
      Agreement and any related documents in the current estimated sum of Nine Hundred
      Dollars ($900.00.), Borrower’s share Four Hundred Fifty Dollars
      ($450.00)

    

    (c) Borrower
      shall have executed and delivered to the Bank an Amended and Restated Revolving
      Credit Note (the “Amended Note”) in the form attached hereto as Exhibit
      A.
      All
      references in the Agreement to either the “Revolving Credit Note” or the “Note”
shall refer to the original Revolving Credit Note until such time as Borrower
      executes and delivers the Amended Note, after which time all references in
      the
      Revolving Credit Loan Agreement to either the “Revolving Credit Note” or the
“Note” shall refer to the Amended Note.

    

    (d) Borrower
      shall have provided to the Bank a copy of resolutions of the Board of Directors
      of the Borrower in form satisfactory to the Bank in its sole and absolute
      discretion authorizing the execution, delivery, and performance of this CIT,
      the
      borrowing hereunder, and the Amended Note, which shall have been certified
      by
      the Secretary or Assistant Secretary of the Borrower as of the date of delivery
      as being complete, accurate, and in effect by a certification in the form
      attached hereto as Exhibit
      B.

    

    5. No
      Other Changes to March 2008 Loan Documents.
      Except
      as expressly stated in this CIT or the Amended Note, there are no other changes
      or modifications to the March 2008 Loan Documents, and all terms of the March
      2008 Loan Documents remain in effect.  

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    IN
      WITNESS WHEREOF, the Borrower and the Bank have caused this CIT 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

            

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    AMENDED
      AND RESTATED REVOLVING CREDIT NOTE

    

      
        	
                $17,500,000.00
                  

              	
                San
                  Jose, California

              

      

    

    

    April
      17,
      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 Seventeen Million Five
      Hundred Thousand Dollars ($17,500,000.00) 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 endorser, 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. 

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    IN
      WITNESS WHEREOF, this Note has been delivered and accepted at Cupertino,
      California and the undersigned has executed this Note as of the 17th day of
      April, 2008. 

    

    
      	
              MISSION
                WEST PROPERTIES, INC.

            
	
              A
                Maryland corporation

            
	 	 
	
              By:

            	
              /s/
                Raymond V. Marino

            
	 	 
	
              Print Name: 

            	
              Raymond
                V. Marino

            
	 	 
	
              Its:

            	
              President
                & COO

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