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Limited Guaranty

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LIMITED GUARANTY


THIS LIMITED GUARANTY is made and given as of the 26 day of July, 2005 by MISSION WEST PROPERTIES, INC., a Maryland corporation ("Guarantor"), to and for the benefit of ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA, a Minnesota corporation ("Lender").


WITNESSETH :


WHEREAS, Lender has agreed to make a loan (the "Loan") to Mission West Properties, L.P., a Delaware limited partnership, and Mission West Properties, L.P. I, a Delaware limited partnership doing business in California as Mission West Properties I, L.P., a Delaware limited partnership (collectively, "Borrower"), in the original principal amount of ONE HUNDRED TWENTY-FIVE MILLION DOLLARS ($125,000,000.00), which Loan will be evidenced by a Secured Installment Note in the original principal amount of the Loan (the "Note"), and will be secured by a Deed of Trust, Security Agreement, Fixture Filing with Absolute Assignment of Rents (the "Deed of Trust") to create a lien on certain real property, and all improvements thereon, located in the County of Santa Clara, California (the Note, Deed of Trust and all other documents evidencing or securing the Loan are herein collectively called the "Security Documents"); and


WHEREAS, to induce Lender to make the Loan, Guarantor has agreed to provide a limited guaranty for the payment of certain sums due under the Security Documents. The purpose of this Limited Guaranty is to specify the terms and conditions of those limited guarantees; and


WHEREAS, Guarantor acknowledges that it is the general partner of each Borrower and has a financial interest in Borrower, and that it will receive a direct and substantial benefit from the making of the Loan, and Guarantor agrees that the making of the Loan constitutes adequate consideration and reasonably equivalent value for the execution and delivery of this Limited Guaranty by Guarantor.


NOW, THEREFORE, incorporating the recitals of facts above, and to induce Lender to make the Loan to Borrower, and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, Guarantor agrees as follows:


1. Guarantor hereby absolutely and unconditionally guarantees payment to Lender for payment in full of (i) all amounts identified in subparagraphs (1) through (7), inclusive, of Paragraph 15(b) of the Note, and (ii) all amounts which may become due and payable by Borrower to Lender under the provisions of Paragraph 15(c) of the Note (collectively, the "Guaranteed Obligations").


2. It is understood that each limited guaranty herein is a guaranty of immediate payment in accordance with the terms and conditions of the Security Documents, and that Lender may enforce its right to immediate payment without proceeding against or joining Borrower and without applying or enforcing any security for the Loan.


3. Lender may assign or transfer this Limited Guaranty and its rights hereunder, in whole or in part, in connection with the assignment or transfer of the Loan or an interest therein. The benefit of this Limited Guaranty shall automatically pass with a transfer or assignment by Lender or its successor or assign of the Loan or any portion thereof to any subsequent party to the extent of such party's interest in the Loan. In the event of any such transfer or assignment, this Limited Guaranty shall remain in full force and effect with respect to any interest retained by Lender. All rights and privileges of Lender herein shall inure to the benefit of each and every assign and successor to the rights of Lender, regardless of whether such assign or successor holds an interest in the Loan currently with Lender, and all references to Lender herein shall be deemed to include every assignee or successor of Lender or any subsequent holder of the Loan or any portion thereof.


4. (a) No action Lender may take or omit to take in connection with the Loan or any security given therefor, nor any course of dealing with Borrower or any representative or employee of Borrower, shall relieve Guarantor of its obligations hereunder, affect this Limited Guaranty in any way, or afford Guarantor any recourse against Lender. By way of example, but not in limitation of the foregoing, Guarantor hereby expressly agrees that Lender may, from time to time and without notice to Guarantor:


(1) Amend, change, or modify, in whole or in part, the Security
Documents;


(2) Accelerate, change, extend, or renew the time for payment of the
Note;


(3) Waive any terms, conditions, or covenants of any of the Security
Documents, or grant any extension of time or forbearance for performance of
the same;


(4) Compromise or settle any amount due or owing or claimed to be due
or owing under any of the Security Documents; or


(5) Surrender, release, or subordinate any or all of the security for
the Loan or accept additional or substituted security therefor.


(b) The provisions of this Limited Guaranty shall extend and be applicable to all renewals, amendments, extensions, and modifications of the Security Documents, and all references to any Security Documents shall be deemed to include any such renewal, extension, amendment, or modification thereof.


5. (a) Guarantor expressly waives notice of acceptance of this Limited Guaranty, presentment of payment, or performance of Borrower's obligations under the Security Documents, protest and notice of protest, demand, notice of dishonor, notice of any and all proceedings to collect amounts due under the Security Documents, and to enforce any security given for the Loan, and diligence in collecting sums due under the Loan or to any liability under this Limited Guaranty. Guarantor also waives any right to require Lender to proceed against Borrower, to proceed against or exhaust any security held to guarantee performance of Borrower's obligations to Lender, or to pursue any other remedy whatsoever available to Lender. Guarantor expressly waives any defense arising by reason of any disability or other defense by Borrower (other than payment and performance of the Guaranteed Obligations), by reason of the cessation from any cause whatsoever of the liability of Borrower, or by reason of Lender's election of any remedy against Borrower or Guarantor, or both, including without limitation election of Lender to exercise its rights to foreclose the Deed of Trust and the potential loss by Guarantor of the right to recover any deficiency from Borrower.


(b) Until all indebtedness of Borrower to Lender shall have been paid in full, Guarantor shall have no right of subrogation as to its obligations hereunder, and Guarantor hereby expressly waives any right to enforce any remedy which Lender now has or may hereafter have against Borrower and waives any benefit of and any right to participate in any security now or hereafter held by Lender.


(c) If Borrower or Guarantor shall at any time become insolvent or make a general assignment for the benefit of creditors, or if a petition in bankruptcy or any insolvency or reorganization proceeding shall be filed or commenced by, against, or in respect of the Borrower or any Guarantor, such action shall not in any manner affect the continuing obligations of the other Guarantors hereunder, if any.


(d) The validity of this Limited Guaranty and obligations of Guarantor shall not be terminated, affected, or impaired by the relief, discharge, or release of any or all of the indebtedness by operation of law or otherwise, including, without limitation, a discharge in bankruptcy, receivership, or other proceedings, a disaffirmation or rejection of the indebtedness by a trustee or other representative in bankruptcy, a stay or other enforcement restriction, or any other reduction, modification, impairment, or limitation of any of the indebtedness.


6. (a) Guarantor hereby: (i) waives notice of any extension, modification, refunding, amendment, addition or supplement to, deletion or departure from, or breach of any of the terms of this Limited Guaranty or the other Security Documents or any other agreement that may be made relating hereto or thereto; (ii) waives notice of the occurrence of any default hereunder or the occurrence of any default or Event of Default under any of the Security Documents, any compromise, release, consent or other action or inaction with respect to the collateral granted to Lender under any of the Security Documents or any of the terms and provisions of the Security Documents; (iii) waives notice with respect to any exercise or non-exercise by Lender, or any right, power, or remedy under or in respect of the Security Documents or any security, lien, deposit, pledge, or guaranty held in connection with the liabilities of Borrower under the Security Documents; (iv) waives any defense based upon an election of remedies by Lender whether or not the right of Guarantor to proceed against Borrower for reimbursement is affected; (v) waives, to the extent Guarantor may lawfully do so, any defense based upon any statute or rule which provides that the obligation of a surety must be neither larger in amount nor in other respects more burdensome than that of the principal; (vi) waives any defense based on Borrower's waiver or relinquishment of its right to designate which portion of the Indebtedness shall be satisfied by a partial payment,
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