BEDFORD PROPERTY INVESTORS INC/MD
UNION BANK LOAN AGREEMENT; PROMISSORY NOTE
<DOCUMENT>
<TYPE>EX-10
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<FILENAME>ex1040.txt
<DESCRIPTION>UNION BANK LOAN AGREEMENT; PROMISSORY NOTE
<TEXT>







             AMENDED AND RESTATED LOAN AGREEMENT


               Dated as of November 19, 2001


                            Between


              BEDFORD PROPERTY INVESTORS, INC.


                          as Borrower


                              and


                UNION BANK OF CALIFORNIA, N.A.

                           as Lender



                     TABLE OF CONTENTS

ARTICLE I:  DEFINITIONS	1
ARTICLE II:  LOAN	7
Section 2.1	Loan.	7
Section 2.2	Use of Loan Proceeds.	8
Section 2.3	Debt Service on the Loan;
Disqualification
of the Property.	8
Section 2.4	No Revolving Loan.	9
Section 2.5	Fees.	9
(a)	Loan Fee.	9
(b)	Payment of Fees.	9
Section 2.6	Payments.	9
(a)	Manner and Time of Payment.	9
(b)	Prepayments.	10
Section 2.7	Release of Property.	10
Section 2.8	Substitution of Property.	11
Section 2.9	Option to Extend.	13
Section 2.10	Limitation on Borrower's Liability.	14
ARTICLE III:  CONDITIONS TO LOAN	16
Section 3.1	Conditions to Disbursement of Loan.	16
(a)	Loan Documents.	16
(b)	Property Documents.	17
(c)	Corporate Documents.	17
(d)	Performance.	17
(e)	Material Adverse Changes.	18
(f)	Litigation, Other Proceedings.	18
(g)	Perfection of Liens.	18
(h)	No Event of Default.	18
(i)	Fees.	18
(j)	Consents and Approvals.	18
(k)	Insurance.	19
(l)	Due Diligence.	19
(m)	Representations and Warranties.	19
(n)	Opinion(s) of Counsel.	19
(o)	Tenant Letter(s) of Credit; Security Deposits
			19
ARTICLE IV:  REPRESENTATIONS AND WARRANTIES	20
Section 4.1	Representations and Warranties.	20
(a)	Organization; Power.	20
(b)	Authority.	20
(c)	No Conflict.	21
(d)	Consents and Authorizations.	21
(e)	Financial Statements.	21
(f)	Projections and Forecasts.	21
(g)	Litigation; Adverse Effects.	22
(h)	Payment of Taxes.	22
(i)	Material Adverse Agreements.	22
(j)	Performance.	22
(k)	Disclosure.	23
(l)	Requirements of Law.	23
(m)	Major Agreements; Leases.	23
(n)	Title to Assets; No Liens.	24
(o)	Location of Borrower.	24
(p)	Status as a REIT.	24
(q)	NYSE Listing.	24
ARTICLE V:  REPORTING COVENANTS	24
Section 5.1	Financial Statements and Other Financial
              and Operating Information.	25
(a)	Quarterly Property Statements.	25
(b)	Quarterly Financial Statements.	25
(c)	Annual Financial Statements.	25
(d)	Cash Flow Projections.	25
(e)	Knowledge of Event of Default.	26
(f)	Litigation, etc.	26
(g)	Election to Terminate Status as a REIT.	26
(h)	SEC Filings.	27
(i)	Other Information.	27
Section 5.2	Notice of Change.	27
ARTICLE VI:  OTHER COVENANTS	27
Section 6.1	Existence, etc.	28
Section 6.2	Taxes.	28
Section 6.3	Insurance.	28
Section 6.4	Compliance with Law.	29
Section 6.5	Inspection of Properties; Books and
              Records.	29
Section 6.6	Conduct of Business.	30
Section 6.7	Tenant Estoppel Certificates;
Subordination, Nondisturbance and Attornment
              Agreements.       30
Section 6.8	Leases; Major Agreements.	30
Section 6.9	Chief Executive Office.	30
Section 6.10	Consolidations and Mergers.	30
Section 6.11	State of Organization.	30
Section 6.12	Security Deposits And Draws Under
    Tenant Letter Of Credit.	31
Section 6.13	Delivery of Additional Security;
    Special Letters of Credit.	33
ARTICLE VII:  EVENTS OF DEFAULT AND REMEDIES	34
Section 7.1	Events of Default.	34
(a)	Payment.	34
(b)	Other Covenants.	34
(c)	Representations and Warranties.	35
(d)	Involuntary Bankruptcy; Appointment of
        Receiver.	35
(e)	Voluntary Bankruptcy; Appointment of
        Receiver.	35
(f)	Solvency; Material Adverse Change.	35
(g)	Management Changes.	36
(h)	Change in Control.	36
Section 7.2	Rights and Remedies.	36
(a)	Acceleration.	36
(b)	Waiver of Demand.	37
(c)	Environmental Assessment.	27
ARTICLE VIII:  MISCELLANEOUS	37
Section 8.1	Expenses.	37
(a)	Generally.	37
(b)	After Event of Default.	38
Section 8.2	Indemnity.	38
Section 8.3	Notices and Delivery.	39
Section 8.4	Survival of Warranties, Indemnities
    and Agreements.	39
Section 8.5	No Waiver; Remedies Cumulative.	39
Section 8.6	Marshalling; Recourse to Security; Payments Set Aside.	40
Section 8.7	Severability.	40
Section 8.8	Headings.	40
Section 8.9	Governing Law.	40
Section 8.10	Successors and Assigns.	40
Section 8.11	Sale of Loan, Participations.	41
Section 8.12	Counterparts; Inconsistencies.	41
Section 8.13	Construction.	41
Section 8.14	Entire Agreement.	42

List of Exhibits

Exhibit A	Properties
Exhibit B	List of Tenants
Exhibit C	Insurance Requirements
Exhibit D	Reserve Requirements per Property Type




           AMENDED AND RESTATED LOAN AGREEMENT


  This Amended and Restated Loan Agreement ("Agreement")
is made and entered into as of November 19, 2001, between
BEDFORD PROPERTY INVESTORS, INC., a Maryland corporation
("Borrower"), and UNION BANK OF CALIFORNIA, N.A.
("Lender").

                    R E C I T A L S:

A. Borrower and Lender are parties to a non-revolving
Loan Agreement dated as of December 24, 1996, as amended
by a First Amendment to Loan Agreement dated July 31,
1997 (as amended, "Prior Loan Agreement") in the maximum
principal amount of $25,000,000 whereby Lender provided
certain secured credit accommodations to Borrower.  The
current principal balance outstanding under the Prior
Loan Agreement is $14,065,067.49, as of November 1, 2001.

B. Borrower has requested that Lender advance to
Borrower
an additional $7,753,931.51, thereby increasing the
outstanding principal balance of the Loan to Twenty-One
Million Eight Hundred Nineteen Thousand and 00/100ths
Dollars $21,819,000, and that Lender extend the term of
the Loan and make certain other modifications and
amendments to the Prior Loan Agreement.

C. Lender is willing to provide such additional funds
to Borrower and make such requested modifications on the
terms and conditions set forth in this Agreement.
(Unless otherwise indicated, all Section references
herein refer to provisions of this Agreement.)

D. Effective as of the Closing Date, this Agreement
shall fully amend and restate the Prior Loan Agreement,
and Borrower and Lender shall concurrently amend the
Deeds of Trust, Note, and other Loan Documents.

  NOW, THEREFORE, in consideration of the premises and
mutual covenants herein contained, the parties hereto
hereby agree as follows:

               ARTICLE I:  DEFINITIONS
  As used in this Agreement, the following words and
phrases shall have the following meanings (such meanings
to be equally applicable to both the singular and plural
forms of the terms defined):

"Affiliate", as applied to any Person, means any
other Person directly or indirectly controlling,
controlled by or under common control with, that Person.
For the purposes of this definition, "control"
(including, with correlative meanings, the terms
"controlling", "controlled by" and "under common
control with"), as applied to any Person, means the
possession, directly or indirectly, of
the power to direct or cause the direction of the
management and policies of that Person, whether through
the ownership of voting securities, by contract or
otherwise.

"Appraisal" means a written appraisal prepared by
an MAI appraiser acceptable to Lender in its sole
discretion and subject to Lender's customary independent
appraisal requirements and prepared in compliance with
all applicable regulatory requirements, including,
without limitation, FIRREA.

"Applicable Rate" means the rate(s) from time to
time applicable to the Loan as determined in accordance
with the provision of the Note.

"Appraised Value" means, as to any Property, the
fair market value of such Property as reflected in the
then most-recent Appraisal of such Property, as the same
may have been adjusted by Lender based upon its
internal review of such Appraisal.

"Business Day" means any day excluding Saturday,
Sunday and any day which is a legal holiday under the
laws of the State of California, or which is a day on
which banking institutions located in the State of
California are required or authorized by law or other
governmental action to close.

"Closing Date" means the date on which all of the
conditions precedent to Lender's obligations set forth in
Section 3.1 shall have been satisfied, as determined by
Lender in its sole discretion, but in no event later than
November 19, 2001.

"Collateral" means, collectively, the Property, the
Personal Property and any other real or personal property
in or upon which a Lien is granted by Borrower, or as to
which an assignment for security purposes is made by
Borrower from time to time, pursuant to this Agreement,
the Deeds of Trust or any other Loan Document.

"Contractual Obligation" as applied to any Person,
means any indenture, mortgage, deed of trust, lease,
contract, undertaking, document or instrument to which
that Person is a party or by which it or any of its
properties is bound, or to which it or any of its
properties is subject (including, without limitation, any
restrictive covenant affecting such Person or any of its
properties).

"Court Order" means any judgment, writ, injunction,
decree, rule or regulation of any court or Governmental
Authority binding upon or applicable to the Person in
question.

"Debt Service" means, for the relevant one-year
period, total principal and interest due and payable on
the Loan based upon a per annum rate of interest equal to
the greatest of (i) Lender's then-applicable LIBOR Rate
for an interest period of thirty (30) days, as determined
by Lender in its sole discretion, (ii) eight percent
(8.00%), or (iii) a rate equal to two percent (2.00%) in
excess of the then prevailing yield (as published in The
Wall Street Journal) for on-the-run (i.e., the most
recently auctioned) ten (10) year United States Treasury
Notes, as determined by Lender.  In determining Debt
Service, the outstanding principal amount of the Loan
shall be fully amortized over a twenty-five year (25)
term  in equal monthly payments of principal and
interest.

"Debt Service Coverage Ratio" means the ratio of
the Net Operating Income for the relevant one-year period
to Debt Service for the relevant period.

"Deeds of Trust" mean, collectively, the Deeds of
Trust, Assignments of Rents, Security Agreements and
Fixture Filings executed and delivered by Borrower in
favor of Lender pursuant to this Agreement and
encumbering all right, title and interest of Borrower in
the Property.

"Event of Default" means any of the events of
default specified in Section 7.1 of this Agreement.

"FIRREA" means the Financial Institutions Recovery,
Reform and Enforcement Act of 1989, as amended from time
to time.

"GAAP" means generally accepted accounting
principles set forth in the opinions and pronouncements
of the Accounting Principles Board and the American
Institute of Certified Public Accountants and statements
and pronouncements of the Financial Accounting Standards

Board, or in such other statements by such other entity
as may be in general use by significant segments of the
accounting profession, which are applicable to the
circumstances as of the date of determination.

"Governmental Authority" means any federal, state
or local governmental or quasi-governmental agency,
authority, board, bureau, commission, department,
instrumentality or public body, court, administrative
tribunal or public
utility.

"Hazardous Substance" shall have the meaning given
to it in the Environmental Compliance Agreement of even
date herewith executed by Borrower in favor of Lender.

"Indebtedness", as applied to any Person, means (a)
all indebtedness, obligations or other liabilities of
such Person with respect to borrowed money created,
incurred, assumed or guaranteed by such Person, (b) all
indebtedness, obligations or other liabilities of such
Person or others secured by a Lien on any asset of such
Person, whether or not such indebtedness, obligations or
liabilities are assumed by, or are a personal liability
of, such Person (including, without limitation, the
principal amount of any assessment or similar
indebtedness encumbering any property), and (c) all other
indebtedness, obligations or other liabilities of such
Person.

"Interest Rate Adjustment Premium" shall have the
meaning set forth in the Note.

"Lease" means a lease, occupancy agreement or other
agreement creating possessory rights in all or any
portion of a Property, including any improvements
included in a Property.

"Liabilities and Costs" means losses, costs,
claims, damages, liabilities and causes of action
(including, without limitation, the fees and costs of
attorneys, expert witnesses and consultants, and the cost
of investigation and feasibility studies), direct or
indirect, known or unknown, absolute or contingent, post,
present or future.

"Lien" means any lien, mortgage, deed of trust,
pledge, security interest, charge or encumbrance of any
kind (including any conditional sale or other title
retention agreement, any lease in the nature thereof, and
any agreement to give any security interest).
"Loan" means the secured credit accommodation in
the principal amount of Twenty-One Million Eight Hundred
Nineteen Thousand and 00/100ths Dollars ($21,819,000.00)
which Lender has agreed to provide to Borrower pursuant
to this Agreement.

"Loan Documents" means this Agreement, the Note,
the Deeds of Trust, the Environmental Compliance
Agreement, and the Alternative Dispute Resolution
Agreement, and all other agreements, instruments and
documents (together with all amendments thereto and
modifications and replacements thereof) now or hereafter
executed by Borrower, which evidence, guarantee or secure
the Obligations.

"Major Agreement" means (a) any Lease covering more
than 20,000 net rentable square feet, (b) any reciprocal
easement agreement, cross-parking or access agreement,
covenants, conditions or restrictions or other material
agreement binding upon a Property, (c) any management
agreement with respect to a Property that (i) provides
for the payment of management fees in excess of five
percent (5%) of gross rents (including expense
reimbursements accounted for as rent), or (ii) is not
terminable by Borrower (or any successor or assign of
Borrower) on not more than thirty days' prior written
notice, and (d) unless terminable by Borrower (or any
successor or assign of Borrower) on not more than thirty
days' prior written notice:  (i) any leasing agreement
with respect to a Property, and (ii) any other agreement,
contract or document or instrument material to the use,
operation, management or maintenance of a Property.


"Material Adverse Effect" means, with respect to a
Person or Property, a material adverse effect upon the
business, the assets, the condition (financial or
otherwise), the income or the prospects of such Person or
Property, as determined by Lender.

"Maturity Date" shall mean the date set forth in
Section 2.1.

"Net Operating Income" means the actual net cash
flow derived by Borrower from the relevant Property,
before payment of principal and interest under the Loan,
as determined by Lender in its reasonable discretion, and
shall be further defined as follows:  (i) the sum of (A)
stabilized and recurring cash rentals received by
Borrower from tenants occupying space in such Property
("Base Rents") ; (B) cash reimbursements of operating
expenses, including real estate taxes and assessments and

premiums on casualty and liability insurance, received by
Borrower from such tenants ("Expense Reimbursements");
and (C) other normal and recurring operating income
received by Borrower from such Property and approved by
Lender ("Approved Income"), less (ii) the sum of (a) all
ownership and operating expenses of such Property,
whether or not recoverable from tenants, including,
without limitation, real estate taxes and assessments;
premiums on casualty, liability and other insurance
carried by Borrower; utility, maintenance, repair,
janitorial, security, landscaping and general building
costs and expenses; (b) an amount for reasonable
administrative costs and management fees not less than
four percent (4%) of the amount of Base Rents and Expense
Reimbursements; and (c) an amount for reasonable capital
reserves not less than the applicable amount per net
rentable square foot per month for the particular
property type, as shown on Exhibit D attached hereto.

"Note" means the Amended and Restated Promissory
Note Secured by Deeds of Trust of even date herewith, in
the aggregate principal amount of the Loan, executed by
Borrower in favor of Lender, as hereafter amended,
supplemented, replaced or modified.

"Obligations" means, from time to time, all
Indebtedness of Borrower owing to Lender (or any Person
entitled to indemnification pursuant to Section 8.2)
pursuant to this Agreement or any other Loan Document, or
any of their respective transferees, successors or
assigns, of every type and description.  The term
includes, without limitation, all principal, interest,
charges, expenses, fees, attorneys' fees and
disbursements, expert witness fees and disbursements,
other consultant fees and disbursements, and any other
sum now or hereafter chargeable to Borrower under or in
connection with this Agreement or any other Loan
Document.

"Person" means and includes any natural person,
corporation, limited partnership, general partnership,
limited liability company, joint stock company, joint
venture, association, company, trust, bank, trust
company, land trust, business trust or other
organization, whether or not a legal entity, and any
Governmental Authority.

"Personal Property" means the tangible and
intangible personal property of any Borrower in which
Lender shall be granted a Lien pursuant to the Deeds of
Trust or any other Loan Document.

"Potential Event of Default" means a condition or
event which would constitute an Event of Default
specified in Section 7.1 of this Agreement following the
giving of any notice and/or the passage of any time
period applicable to such condition or event.

"Property" means, individually and collectively,
the parcels of real property owned by Borrower listed on
Exhibit A attached hereto (subject to additions and
deletions in accordance with Sections 2.7 and 2.8), and
more particularly described in the Deeds of Trust under
which Lender shall be granted Liens pursuant to this
Agreement.

"Tenant Letter of Credit" means any letter of
credit provided to Borrower, as landlord, by a tenant
under a Lease as security for, or payment of, any tenant
obligations under such Lease.

"Tenant Security Account" means a blocked interest
bearing account with Lender into which tenant security
deposits and draws under Tenant Letters of Credit shall
be deposited, as required and in accordance with Section
6.12. As of the Effective Date, the Tenant Security
6.13. Account is Bancontrol Account No. 070-196431,
6.14. maintained at Lender.

ARTICLE II:  LOAN
Section 2.1  Loan.
Subject to the terms of this Agreement, on the
Closing Date, Lender agrees to lend to Borrower and
Borrower agrees to borrow from Lender the principal sum
of Twenty-One Million Eight Hundred Nineteen Thousand and
00/100ths Dollars ($21,819,000.00); said sum to be
evidenced by the Note of even date herewith.  The
Maturity Date under the Note is November 19, 2004
("Maturity Date"), as such date may be extended to the
Extended Maturity Date pursuant to Section 2.9 below.
The Note shall be secured by the Collateral.
Notwithstanding any of the terms and provisions of this
Agreement or the Deeds of Trust, the Deeds of Trust shall
not secure the obligations of Borrower under the
Environmental Compliance Agreement.

Section 2.2  Use of Loan Proceeds.
Amounts disbursed to Borrower pursuant to the Prior
Loan Agreement were used to leverage Borrower's prior
acquisition of the Property.  The additional advance
under the Loan disbursed to Borrower pursuant to this
Agreement shall be used by Borrower for general working
capital purposes.

Section 2.3  Debt Service on the Loan;
Disqualification of the Property.
(a) Interest shall accrue on the Loan at the
Applicable Rate, as provided in the Note, and principal
and interest shall be paid by Borrower in the amounts and
at the times provided for in the Note, all the terms and
provisions of which are fully incorporated into this
Agreement.  The monthly amortization required under the
Note will be recalculated in the event that Borrower
exercises the Option to Extend set forth in Section 2.9
below.

(b)  Upon the occurrence of:
a material uninsured casualty
affecting any Property; or
(A) a taking by any public authority
through condemnation, eminent domain or otherwise,
or (B) a casualty in respect of which Borrower
maintains insurance, in either such case, if the
improvements located on the affected Property cannot
be repaired or restored within nine (9) months after
the date of such taking or casualty to substantially
the same condition as that existing prior to such
taking or casualty at a cost that does not exceed
the sum of (1) the net condemnation award or
insurance proceeds payable to Borrower with respect
thereto, plus (2) such additional amount for which
Borrower provides Lender with adequate security as
to the availability of funds for application to such
restoration and/or repair; or

the discovery of any material
Hazardous Substances on any Property,
Lender may, in its sole discretion, determine to
disqualify such Property as Collateral for the Loan by
written notice to Borrower.  Not later than ninety (90)
days following delivery by Lender to Borrower of such
written notice of disqualification, Borrower shall either
comply with all conditions applicable to a voluntary
release of such disqualified Property (including payment
of the applicable Release Price) as set forth in Section
2.7, or (ii) cause a New Property to be substituted for
such disqualified Property in compliance with the
requirements of Section 2.8.

Section 2.4  No Revolving Loan.
The Loan is not a revolving loan, and amounts repaid
from time to time may not be reborrowed.

Section 2.5  Fees.
(a)  Loan Fee.
On the Closing Date, Borrower shall pay to Lender a
loan fee in an amount of One Hundred Sixty-Three Thousand
Six Hundred Forty-Two Dollars ($163,642), less any amount
previously paid by Borrower to Lender under the July 30,
2001 letter from Lender to Borrower.  Borrower hereby
authorizes Lender to disburse on the Closing Date a
portion of the proceeds of the Loan in such amount
directly to Lender in payment of such loan fee and such
other expenses as to which Lender has then requested
reimbursement pursuant to Section 8.1(a) below.

(b)  Payment of Fees.
The fees described in this Section 2.5 and in any
other provision of this Agreement represents 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 or any other Loan
Documents.  Such fees shall be payable when due in
immediately available funds and shall be non-refundable
when paid.

Section 2.6  Payments.
(a)  Manner and Time of Payment.
All payments of principal, interest and fees
hereunder payable to Lender shall be made without
condition or reservation of right and free of set-off or
counterclaim, in immediately available funds, delivered
to Lender not later than 2:00 p.m. (San Francisco,
California time) on the date due; and funds received by
Lender after that time and date shall be deemed to have
been paid on the next succeeding Business Day.
(b)  Prepayments.
Borrower is precluded from prepaying all or any
portion of the Loan prior to November 19, 2002.  Borrower
may, at any time on or after November 19, 2002 and from
time to time thereafter, prepay all or any portion of the
outstanding principal balance of the Loan, together with
any Interest Rate Adjustment Premium assessed pursuant to
the Note.  If, notwithstanding the prohibition set forth
in the preceding sentence, any portion of the outstanding
principal balance of the Loan is prepaid prior to
November 19, 2002 as a consequence of damage or
condemnation of the Collateral or acceleration under the
Note and application of proceeds of foreclosure upon any
Collateral, Borrower shall pay to Lender, in addition to
any Interest Rate Adjustment Premium, a prepayment
premium equal to one percent (1.00%) of the principal
amount of the Loan so prepaid.

Section 2.7  Release of Property.
Provided that no Event of Default or Potential Event
of Default then exists, and provided that at least four
(4) Properties shall remain subject to the lien of the
Deed of Trust, at Borrower's written request at any time
on or after November 19, 2002 and from time to time
thereafter, Lender shall cause a Property to be released
from the Lien of the Deed of Trust encumbering such
Property, upon satisfaction of the following conditions
precedent:

(a) Borrower shall provide Lender with written
notice of Borrower's request for a release of a Property
not less than thirty (30) days prior to the date on which
Borrower desires such release to become effective;
(b) Borrower shall represent and warrant to
Lender that (i) no Event of Default or Potential Event of
Default exists as of the date of such release, and (ii)
there has been no declared event of default under
Borrower's line of credit agented by Bank of America,
N.A.(or any successor facility) as of the date of such
release;

(c) For the Property to be released, Lender
shall have been paid an amount equal to the release price
allocable to such Property as shown on Exhibit A hereto
(the "Release Price"); provided, however, that Borrower
shall have the right to prepay additional outstanding
principal under the Loan, together with any applicable
Interest Rate Adjustment Premium, in order to comply with
subparagraph (d) and/or subparagaph (e) below;
(d) The Debt Service Coverage Ratio applicable
to the Property remaining subject to the Lien of the
Deeds of Trust shall be equal to or greater than 1.3:1 as
of the date of such release; in calculating such Debt
Service Coverage Ratio, (i) Net Operating Income shall be
calculated with reference to the Property remaining
subject to the Lien of the Deeds of Trust following the
requested release, (ii) the outstanding principal under
the Loan shall reflect the prepayment of principal
required under subparagraph (c) above, and (iii) Net
Operating Income shall be determined by Lender on the
basis of the one-year ended as of the most recent
calendar quarter for which the Lender shall have received
operating statements for such Property;

(e) In connection with (i) the first requested
release of any Property for which the Appraised Value,
when aggregated with the Appraised Value for all Property
previously released, would exceed twenty-five percent
(25%) of the total Appraised Value of the Property as of
the Closing Date, and (ii) each requested release of
Property thereafter:  (1) Lender shall have the right, in
its sole discretion, to conduct Appraisals of any or all
of the Property that will remain part of the Collateral
following the requested release, and (2) the outstanding
principal balance of the Loan, immediately after giving
effect to such requested release (taking into account all
prepayments to be effected in connection therewith, and
whether or not Lender has conducted new Appraisals of any
Property), shall not exceed sixty percent (60%) of the
aggregate Appraised Value of all such remaining Property;
and
(f) Lender shall have been paid all Interest
Rate Adjustment Premiums, escrow, closing and recording
costs, the costs of preparing and delivering a
reconveyance of the Deed of Trust encumbering released
Property, and the costs of any title insurance
endorsements required by Lender.

Following any reappraisals conducted in connection with
this Section 2.7 or Section 2.8, allocated loan amounts
for each Property shall be adjusted, in proportion to the
relative Appraised Values of each Property, and the
Release Prices adjusted accordingly.


Section 2.8  Substitution of Property.
Provided that no Event of Default or Potential Event
of Default then exists, Borrower shall have the right to
substitute (a "Substitution") one of the Properties
listed on Exhibit A (the "Old Property") with other real
property owned by Borrower (the "New Property"), upon
satisfaction of the following conditions precedent:
(a) Approval by Lender of the New Property in
its sole discretion, including all matters pertaining
thereto as referred to in Section 3.1(b); without
limiting the foregoing, Borrower shall provide Lender
with any and all leases, financial statements, tenant
credit reports, rent rolls, preliminary title reports,
licenses, permits and any other documents, instruments or
reports requested by Lender relating to the New Property;

(b) Borrower shall make no more than (i) three
(3) Substitutions during the term of the Loan nor (ii)
one (1) Substitution during any one calendar year;
provided, however, that a Substitution pursuant to
Section 2.3(b) shall not constitute a "Substitution" for
purposes of this Section 2.8(b);

(c) Borrower shall provide Lender with written
notice of Borrower's request for a Substitution not less
than ninety (90) days prior to the date on which Borrower
desires such Substitution to become effective;

(d) The Net Operating Income attributable to
the New Property shall be equal to or greater than the
Net Operating Income of the Old Property, in each case
for the one-year period ended as of the most recent
calendar quarter for which Lender has received operating
statements for each such Property;

(e) The then Appraised Value of the New
Property shall be equal to or greater than the most
recent Appraised Value of the Old Property;

(f) Lender shall have been paid a fee of
twenty one-hundredths of one percent (0.20%) multiplied
by the allocated loan amount applicable to the Old
Property as shown on Exhibit A hereto, together with all
appraisal, escrow, closing and recording costs, the costs
of preparing and delivering a reconveyance of the Deed of
Trust encumbering the Old Property, the costs of any
title insurance endorsements required by Lender, the
costs of preparing and recording a Deed of Trust to
encumber the New Property, title insurance with respect
to the New Property acceptable to Lender, and all other
costs and expenses incurred by Lender in the connection
with the Substitution; and

(g) Borrower shall represent and warrant to
Lender that (i) no Event of Default or Potential Event of
Default exists as of the date of such Substitution, and
(ii) there has been no declared event of default under
Borrower's line of credit agented by Bank of America,
N.A.(or any successor facility) as of the date of the
such Substitution.

The Release Price applicable to the Old Property as shown
on Exhibit A hereto shall be the applicable Release Price
for the New Property, subject to the final sentence of
Section 2.7.  Each Deed of Trust and other document or
instrument executed and delivered by Borrower in
connection with the addition of the New Property as
Collateral shall constitute a Loan Document.

Section 2.9  Option to Extend.
Borrower shall have the option to extend the term of
the Loan ("Extension Option") from the Maturity Date to
the date that is two years following the Maturity Date
("Extended Maturity Date"), upon satisfaction of each of
the following conditions precedent:

(a) Notice.  Borrower shall provide Lender
with written notice of Borrower's request to exercise the
Extension Option not more than one hundred twenty (120)
days, but not less than sixty (60) days, prior to the
Maturity Date;

(b) Default.  Both as of the date of
Borrower's delivery of written notice of Borrower's
request to exercise the Extension Option, and as of the
Maturity Date, no Event of Default or Potential Default
shall have occurred and be continuing, and Borrower shall
so certify to Lender in writing;

(c) Documents.  Borrower shall execute, or
cause the execution of, all documents required by Lender
to exercise the Extension Option, and shall deliver to
Lender, at Borrower's sole cost and expense, such
endorsements to Lender's title insurance policy as Lender
shall reasonably require;
(d) Material Adverse Change.  There shall have
occurred no change in Borrower or any Property, as
determined by Lender, which has a Material Adverse
Effect.
(e) Extension Fee.  Borrower shall pay to
Lender an extension fee in the amount of one quarter of
one percent (0.25%) of the principal amount of the Loan
outstanding on the original Maturity Date;

(f) Loan-to-Value Ratio.  Lender shall have
the right, in its sole discretion, to conduct Appraisals
of any or all of the Property that will remain part of
the Collateral as of the Maturity Date, confirming to
Lender's satisfaction that the outstanding principal
balance of the Loan as of the original Maturity Date
(taking into account all prepayments to be effected in
connection therewith, and whether or not Lender has
conducted new Appraisals of any Property), does not
exceed sixty percent (60%) of the aggregate Appraised
Value of all such remaining Property

(g) Debt Service Coverage Ratio.  As of the
Maturity Date, the Debt Service Coverage Ratio applicable
to the Property remaining subject to the Lien of the
Deeds of Trust shall be equal to or greater than 1.3:1,
calculated in accordance with Section 2.7(d) above.

   If the foregoing conditions have been timely
satisfied, the term of the Loan shall be extended from
the Maturity Date to the Extended Maturity Date.
Borrower shall have the right to prepay additional
outstanding principal under the Loan, together with any
applicable Interest Rate Adjustment Premium, in order to
comply with subparagraph (f) and/or subparagaph (g)
above.
Section 2.10  Limitation on Borrower's Liability.
Lender's recovery against Borrower under the Loan
Documents shall be limited solely to the Collateral
(including all rents, issues, profits and income
therefrom and proceeds thereof) and the Special Letters
of Credit given to Lender as security for Borrower's
performance under the Loan Documents, and such recovery

shall not be a lien, or the basis of a claim of lien or
levy of execution, against the general assets of
Borrower.  Notwithstanding the foregoing, Borrower and
the general assets of Borrower shall be fully and
personally liable to Lender to the same extent that
Borrower would be liable absent the foregoing limitation
of this paragraph for:

(a) fraud, willful misrepresentation, gross
negligence or waste, to the full extent of Lender's loss
attributable thereto;

(b) failure to pay taxes, assessments or other
charges attributable to Borrower which can create liens
on any portion of the Collateral senior in priority to
the lien of the Deed of Trust encumbering the affected
Collateral, including mechanic's liens, stop notices or
contractor's liens (to the full extent of any such taxes,
assessments or other charges);

(c) any loss which would have been covered by
any policy of insurance that Borrower is required to
maintain, but failed to maintain, under this Agreement or
any of the other Loan Documents;

(d) tenant security deposits held by Borrower
upon foreclosure of the subject Property;

(e) any inaccuracy in or breach of any
representation or warranty pertaining to any Hazardous
Substance or any failure in the due, prompt and complete
observance and performance of any covenant or any other
obligation imposed upon Borrower under or pursuant to the
Environmental Compliance Agreement;

(f) retention of any rents or other income,
insurance proceeds, condemnation or eminent domain awards
or other similar funds or payments attributable to any
Collateral which, under the terms of any Loan Document,
should have been paid to Lender;

(g) the full amount of the Loan and all other
obligations evidenced or secured by the Loan Documents,
in the event of any transfer of all or any part of the
Property without Lender's prior written approval; or

(h) all costs and expenses (including, without
limitation, attorneys' fees) incurred by Lender in
enforcing its rights and remedies under the Loan
Documents subsequent to any of the following:  (i) an
Event of Default under Section 7.1(e) below; (ii) an
Event of Default under Section 7.1(d) if the filing is
made against Borrower by any third party which was
solicited or induced to do so by Borrower; or (iii) after
the occurrence of any Event of Default under either
Section 7.1(d) or Section 7.1(e):  (A) any objection by
Borrower to (1) any request by Lender for the dismissal
of any proceeding referred to in Section 7.1(d) or
Section 7.1(e); (2) any attempt by Lender to obtain
relief from the automatic stay; or (3) any attempt by
Lender to secure the continuation of any receiver
appointed pre-petition or to obtain control, directly or
through a receiver, of the rents, issues and profits of
any Property; (B) any request by Borrower for authority
to use cash collateral over Lender's objection; (C) any
action brought by Borrower or on its behalf against
Lender; (D) any request by Borrower to sell Collateral
over Lender's objection; or (E) Borrower's taking of any
position adverse to Lender with respect to any plan of
reorganization proposed in any such proceedings.

   The limitations of this Section 2.10 shall not be
deemed to limit:  (i) any right Lender might otherwise
have to obtain injunctive relief against Borrower; (ii)
any suit or action in connection with the preservation,
enforcement or foreclosure of the liens, mortgages,
assignments and security interests now or at any time
hereafter securing the payment and performance of the
Obligations; or (iii) the collection of amounts which may
become owing or payable under or on account of insurance,
condemnation awards or damages for other public actions
or surety bonds maintained or provided by Borrower.  In
addition, nothing herein shall be deemed to constitute a
waiver of any obligation evidenced by the Loan Documents,
nor limit, amend, alter or diminish any right which
Lender may have under the provisions of Sections 506(a),
506(b), 1111(b) or any other provision of the Bankruptcy
Reform Act of 1978, or any successor statute thereto, or
any similar provision under applicable state law, to file
a claim for the full amount of the Obligations or to
require that all Collateral shall continue to secure the
Loan owing to Lender in accordance with the Loan
Documents.

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ARTICLE III:  CONDITIONS TO LOAN
Section 3.1  Conditions to Disbursement of Loan.
The obligation of Lender to make the Loan shall be
subject to satisfaction of each of the following
conditions precedent on or before the Closing Date:
(a)  Loan Documents.
Borrower shall have executed, acknowledged (if
appropriate) and delivered to Lender each of the
following, in form and substance acceptable to Lender:
(i)  this Agreement;
(ii)  the Note;
(iii) Modifications of the Deeds of Trust
(which shall be executed and acknowledged by
Borrower as to each Property listed on Exhibit A
hereto);
(iv) UCC-1 Financing Statements with
respect to the Liens on the Personal Property
granted under the Deeds of Trust;
(v) each other Loan Document, including,
without limitation, the Environmental Compliance
Agreement; and
(vi) all other documents, instruments or
other items to be executed and/or delivered by or on
behalf of Borrower pursuant to this Agreement or as
Lender shall otherwise require.
(b)  Property Documents.
Lender shall have received the following documents
with respect to each Property, in form and substance
acceptable to Lender:
(i)  an Appraisal;
(ii) all necessary endorsements to
Lender's ALTA Loan Policy of Title Insurance in the
amount of the Loan (with title insurance coverage
afforded thereby not allocated for each Property,
but subject to an appropriate tie-in endorsement),
issued by First American Title Insurance Company,
 insuring Lender that the Deed of Trust encumbering
each Property constitutes a valid first priority
Lien upon such Property, subject only to such title
exceptions as Lender shall approve in its sole
discretion, with such additional endorsements,
reinsurance and reinsurers and otherwise in such
form and substance as shall be acceptable to Lender;
(iii) Lessee Estoppel Certificates, in
form and substance approved by Lender, executed by
each tenant listed on Exhibit B hereto and marked
with a single asterisk, each of which shall be in
form and substance approved by Lender;
(iv) an environmental assessment for such
Property, prepared by an environmental consultant
acceptable to Lender, and satisfactory evidence that
such Property is in compliance with all laws and
regulations is pertaining to Hazardous Substances;
and

(v) such other documents with respect to
such Property as are required pursuant to this
Agreement or as Lender shall otherwise require.
(c)  Corporate Documents.
Lender shall have received such corporate documents
with respect to Borrower as Lender shall require,
including evidence of authorization and incumbency
of all Persons executing the Loan Documents on
behalf of Borrower.
(d)  Performance.
Borrower shall have performed in all material
respects all agreements and covenants to be performed by
them under this Agreement or the other Loan Documents on
or before the Closing Date.
(e)  Material Adverse Changes.
No change in Borrower or any Property, as determined
by Lender, shall have occurred which has a Material
Adverse Effect.
(f)  Litigation, Other Proceedings.
There shall not have been instituted or threatened
any litigation or proceeding in any court or by or before
any Governmental Authority affecting or threatening to
affect Borrower or any Property which has a Material
Adverse Effect, as determined by Lender.

(g)  Perfection of Liens.
All Deeds of Trust and financing statements shall
have been recorded or filed, as applicable, and Lender
shall have a valid, perfected first priority Lien on all
of the Property, the Personal Property and any other
Collateral.

(h)	No Event of Default.
On the Closing Date, no Event of Default or
Potential Event of Default shall exist.
(i)	Fees.
On the Closing Date, Lender shall have received the
loan fee described in Section 2.5(a) and any other fees
or other amounts then due to Lender under this Agreement
and the other Loan Documents, and all expenses of Lender
incurred prior to the Closing Date (including without
limitation all attorneys' and appraisers' fees,
environmental review costs and market study costs) shall
have been paid by Borrower.

(j)	Consents and Approvals.
Any licenses, permits, consents and approvals of
Governmental Authorities, and all corporate action
necessary to enable Borrower to enter into the financing
transactions contemplated by this Agreement shall have
been obtained and/or taken by Borrower (including,
without limitation, any required consents of
shareholders).

(k)	Insurance.
Lender shall have received evidence that Borrower
has, with respect to the Collateral, property, casualty
and liability insurance which complies with the
requirements set forth in Exhibit C attached hereto and
is otherwise satisfactory to Lender and issued by

insurance companies acceptable to Lender, and loss
payable endorsements in form and substance satisfactory
to Lender naming Lender as loss payee with respect to
property and casualty insurance shall have been executed
and delivered to Lender, together with such certificates
of insurance and binders as are requested by Lender
naming Lender as additional insured with respect to
liability insurance.

(l)	Due Diligence.
Lender shall have obtained and completed its review
of Appraisals of the Property and determination of
Appraised Values therefor and its review of the other
Collateral, and Lender shall have completed such other
due diligence investigations as it deems necessary, and
such review and investigations shall provide Lender with
results and information which, in Lender's determination,
are satisfactory to permit Lender to enter into this
Agreement and fund the Loan.

(m)	Representations and Warranties.
All representations and warranties of Borrower
contained in this Agreement or the other Loan Documents
shall be true and correct in all material respects.
(n)	Opinion(s) of Counsel.
Lender shall have received an opinion or opinions of
counsel for Borrower dated as of the Closing Date as to
such matters as Lender shall require, in form and
substance satisfactory to Lender and its counsel.

(o) Tenant Letter(s) of Credit; Security
Deposits.
Borrower shall have delivered to Lender (i) any
tenant security deposits which are in excess of $50,000,
and (ii) all Tenant Letters of Credit with face amounts
in excess of $50,000, in each case together with an (A)
an executed transfer document and (B) an executed
assignment of proceeds document, each consented to and
with documentation in a form approved by the issuer of
such letter of credit and otherwise satisfactory to
Lender, sufficient to assign to Lender the beneficiary's
rights under such letter of credit; provided, however,
that such transfer document shall not be presented to the
issuer thereof except following a foreclosure or deed-in-
lieu of foreclosure under the applicable Deed of Trust or
a failure by Borrower to comply with the requirements of
Section 6.12 below.

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ARTICLE IV:  REPRESENTATIONS AND WARRANTIES
Section 4.1	Representations and Warranties.
In order to induce Lender to make the Loan, Borrower
hereby represents and warrants to Lender as follows as of
the Closing Date:
(a)	Organization; Power.
(i) Borrower is a corporation, duly incorporated,
validly existing and in good standing under the laws of
the jurisdiction of its organization, (ii) is duly
qualified to do business in and is in good standing under
the laws of each jurisdiction other than California in
which it owns or leases real property or in which the
nature of its business requires it to be so qualified,
except for those jurisdictions where failure to so
qualify and be in good standing would not have a Material
Adverse Effect on Borrower, and (iii) has all requisite
corporate power and authority to own, operate and
encumber its property and assets and to conduct its
business as presently conducted and as proposed to be
conducted in connection with and following the
consummation of the Loan contemplated by the Loan
Documents.  Borrower has heretofore provided to Lender
true, correct and complete copies of the formation and
other organizational documents, and all amendments
thereto, of Borrower; all such formation and other
organizational documents remain in full force and effect
and have not been amended or modified since the date on
which copies thereof were delivered to Lender.

(b)	Authority.
Borrower has the requisite legal, corporate power
and authority to execute, deliver and perform each of the
Loan Documents.  The execution, delivery and performance
thereof, and the consummation of the transactions
contemplated thereby, have been duly authorized by all
requisite corporate action of Borrower, and no other
corporate proceedings or authorizations on the part of
Borrower are necessary to consummate such transactions.
Each of the Loan Documents has been duly executed and
delivered by Borrower and constitutes its legal, valid
and binding obligation, enforceable against it in
accordance with its terms, subject to bankruptcy,
insolvency and other laws affecting creditors' rights
generally.

(c)	No Conflict.
The execution, delivery and performance by Borrower
of the Loan Documents, and the transactions contemplated
thereby, do not and will not (i) conflict with or violate
Borrower's articles of incorporation, by-laws, or other
organizational documents, or (ii) conflict with, result
in a breach of or constitute (with or without notice or
lapse of time or both) a default under any (A)
Contractual Obligation, (B) statute, ordinance, rule or
regulation of any Governmental Authority applicable to
Borrower, the Property or its other properties or assets

or (C) Court Order, or (iii) result in or require the
creation or imposition of any Lien whatsoever upon any of
the properties or assets of Borrower (other than Liens in
favor of Lender arising pursuant to the Loan Documents).

(d)	Consents and Authorizations.
Borrower has obtained all consents and
authorizations required pursuant to its Contractual
Obligations with any other Person, and shall have
obtained all consents and authorizations of, and effected
all notices to and filings with, any Governmental
Authority, as may be necessary to allow Borrower to
lawfully execute, deliver and perform its obligations
under the Loan Documents.

(e)	Financial Statements.
Borrower has heretofore furnished to Lender its
financial statements.  Such financial statements and
related schedules and reports have been prepared in
accordance with GAAP, are true, correct and complete and
present fairly and accurately the financial condition of
Borrower as of the dates and the for periods indicated.
There has been no change that would have a Material
Adverse Effect on Borrower, or the ability of Borrower to
perform its obligations under the Loan Documents, since
the date of such financial statements.  There are no
known material unrealized or anticipated losses of
Borrower.
(f)	Projections and Forecasts.
Each of the projections delivered to Lender has been
prepared by Borrower in light of the past business and
performance of Borrower and represents the reasonable
good faith estimates of Borrower's financial personnel.

(g)	Litigation; Adverse Effects.
(j) There is no action, suit, proceeding,
governmental investigation or arbitration, at law or
in equity, or before or by any Governmental
Authority, pending or, to the best of Borrower's
knowledge, threatened against Borrower or any
Property which could (A) result in a Material
Adverse Effect on Borrower or any Property, or (B)
materially and adversely affect the ability of
Borrower to perform its obligations contemplated in
the Loan Documents.
(ii) Borrower is not (A) in violation of
any applicable law, which violation would have a
Material Adverse Effect on Borrower or any Property,
or (B) subject to or in default with respect to any
Court Order which would have a Material Adverse
Effect on Borrower or any Property.  There are no
proceedings pending or, to the best of Borrower's
knowledge, threatened against Borrower or any
Property, which, if adversely decided, would have a
Material Adverse Effect on Borrower or any Property.

(h)	Payment of Taxes.
All tax returns and reports to be filed by Borrower
have been timely filed, and all taxes, assessments, fees
and other governmental charges shown on such returns or
otherwise payable by Borrower have been paid when due and
payable, except such taxes, if any, as are being
contested in good faith by appropriate proceedings, and
subject to such extensions of the filing and/or due date
thereof as Borrower shall have obtained.  Borrower has no
knowledge of any proposed tax assessment against Borrower
that will have a Material Adverse Effect on Borrower,
which is not being actively contested in good faith by
Borrower.

(i)	Material Adverse Agreements.
Borrower is not a party to or subject to any
Contractual Obligation or to any restriction contained in
its organizational documents which has a Material Adverse
Effect on Borrower.

(j)	Performance.
(h) Borrower is not in default in the
performance, observance or fulfillment of any
Contractual Obligation of Borrower in favor of Bank
of America, N.A.
(ii) Borrower is not in default in the
performance, observance or fulfillment of any
Contractual Obligation of Borrower in favor of any
other Person, and no condition exists which, with
the giving of notice or the passage of time or both,
would constitute such a default, in each case,
except where the consequences, direct or indirect,
of such default or defaults, if any, will not have a
Material Adverse Effect on Borrower.

(k)	Disclosure.
The representations and warranties of Borrower
contained in this Agreement and the other Loan Documents
and all certificates, financial statements and other
documents delivered to Lender in connection therewith, do
not contain any untrue statement of a material fact or
omit to state a material fact necessary in order to make
the statements contained herein or therein, in light of
the circumstances under which they were made, not
misleading.  All organizational documents, financial
statements, Leases, agreements and other documents and
instruments delivered by Borrower to Lender pursuant to
this Agreement and the other Loan Documents are true,
correct and complete copies of the originals.  Borrower

has not intentionally withheld any material fact from
Lender in regard to any matter addressed in or material
to the Loan Documents.
(l)	Requirements of Law.
Borrower is in compliance with all statutes,
ordinances, rules and regulations of Governmental
Authorities applicable to Borrower or to the Property
(including, without limitation, the Americans with
Disabilities Act of 1990, 42 U.S.C.  12101, et seq.), in
each case, where the failure to so comply will have a
Material Adverse Effect on Borrower.

(m)	Major Agreements; Leases.
With respect to each Property, Lender has received
true, complete and correct copies of each Major
Agreement.  All such Major Agreements are in full force
and effect and have not been modified or terminated, and
no default or event of default (or event or occurrence
which with the passage of time or the giving of notice,
or both, will constitute a default or event of default)
exists or will exist under such Major Agreements as a
result of the consummation of the transactions
contemplated by the Loan Documents.  Lender has also
received true, correct and complete copies of all Leases
currently in effect and of the form lease, as applicable,
used for each Property.  Except as reflected on the most
current rent rolls delivered to Lender, all Leases are in
full force and effect and no default or event or default
(or event or occurrence which with the passage of time or
the giving of notice, or both, will constitute a default
or event of default) exists or will exist thereunder as a
result of the consummation of the transactions
contemplated by the Loan Documents.  Other than the
Leases provided to Lender, there are no leases, occupancy
agreements or other possessory rights relating to the
maintenance, occupancy, use or operation of any of the
Properties which are not terminable by Borrower upon
thirty (30) days or less notice, with penalty or premium.

(n)	Title to Assets; No Liens.
Borrower has good, indefeasible and merchantable
title to the Collateral and to all other properties
and assets owned by Borrower, and all of the Collateral
is free and clear of all Liens, except for any Liens
permitted by Lender.
(o)	Location of Borrower.
Borrower's place of business (or, if the Borrower
has more than one place of business, its chief executive
office) is located at the address listed under Borrower's
signature on this Agreement.

(p)	Status as a REIT.
The Borrower (i) is a real estate investment trust
as defined in Section 856 of the Internal Revenue Code
(the "Code") (or any successor provision thereto), (ii)
has not revoked its election to be a real estate
investment trust, (iii) has not engaged in any
"prohibited transactions" as defined in Section
856(b)(6)(iii) of the Code (or any successor provision
thereto), and (iv) for its current "tax year" (as
defined in the Code) is and for all prior tax years
subsequent to its election to be a real estate investment
trust has been entitled to a dividends paid deduction
which meets the requirements of Section 857 of the Code.

(q)	NYSE Listing.
The common stock of Borrower is listed for trading
and traded on the New York Stock Exchange.
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ARTICLE V:  REPORTING COVENANTS
Borrower covenants and agrees that, on and after the
Closing Date and until payment in full of the Obligations
and the termination of this Agreement:
Section 5.1	Financial Statements and Other
Financial and Operating Information.
Borrower shall deliver or cause to be delivered to
Lender:
(a)	Quarterly Property Statements.
As soon as practicable, and in any event within
twenty (20) days after the end of each calendar quarter,
operating statements for each Property in a form approved
by Lender, and rent rolls and lease expiration reports in
the form customarily generated by Borrower for such
Property, or other form required by Lender, dated as of
the last day of such quarter, in form and substance
satisfactory to Lender, certified by the Borrower.

(b)	Quarterly Financial Statements.
As soon as publicly available, but not later than
sixty (60) days after the close of each of the first
three (3) calendar quarters of each year, a copy of the
unaudited consolidated balance sheets of Borrower as of
the end of such quarter and the related consolidated
statements of income, shareholders' equity and cash flows
for the period commencing on the first day and ending on
the last day of such quarter, certified by the chief
financial officer of Borrower as being complete and
correct and fairly presenting the financial position and
results of operations of Borrower in accordance with
GAAP.
(c)	Annual Financial Statements.
As soon as publicly available, but not later than
one hundred twenty (120) days after the close of each
calendar year, a copy of the audited consolidated balance
sheets of Borrower as at the end of such year and the
related consolidated statements of income, shareholders'

equity and cash flows for such calendar year, setting
forth in each case in comparative form the figures for
the previous year, and accompanied by the opinion of a
nationally recognized independent public accounting firm
stating that such consolidated financial statements
present fairly the financial positions of Borrower for
the periods indicated in conformity with GAAP applied on
a basis consistent with prior years.

(d)	Cash Flow Projections.
Not later than (i) thirty (30) days prior to the end
of each calendar year, a projection of Borrower detailing
expected sources and uses of funds from the Property for
the next calendar year and (ii) sixty (60) days following
the end of each calendar year, a statement of actual cash
flow for the immediately preceding calendar year, in each
case accompanied by a certificate executed by the chief
financial officer of Borrower certifying (i) as to the
completeness, fairness and consistency of such cash flow
statements, and (ii) that such projection has been
prepared by Borrower in light of the past business and
performance of Borrower and represents the reasonable
good faith estimates of Borrower's financial personnel.
With respect to the foregoing cash flow statements,
Borrower shall provide such additional supporting details
as Lender shall reasonably request.

(e)	Knowledge of Event of Default.
Promptly upon Borrower obtaining knowledge of (i)
any condition or event which constitutes an Event of
Default or Potential Event of Default, or (ii) any
condition or event which has a Material Adverse Effect on
Borrower or any Property, written notice specifying the
nature and period of existence of any such condition or
event and what action Borrower has taken, is taking and
proposes to take with respect thereto.  Each delivery of
quarterly financial statements by Borrower pursuant to
subparagraph (b) above shall be deemed to constitute a
representation and warranty by Borrower that there then
exists no Event of Default or Potential Event of Default,
unless the same shall be qualified pursuant to a written
notice delivered with such financial statements in
accordance with this subparagraph (e).

(f)	Litigation, etc.
Promptly upon Borrower obtaining knowledge of (i)
the institution of, or threat of, any material action,
suit, proceeding, governmental investigation or
arbitration against or affecting Borrower or any Property
not previously disclosed in writing by Borrower to Lender
pursuant to this Agreement, including any casualty or
eminent domain or other condemnation proceeding affecting
any Property, or (ii) any material development in any

action, suit, proceeding, governmental investigation or
arbitration already disclosed, which, in either case, has
a Material Adverse Effect on Borrower or any Property,
written notice thereof to Lender and such other
information as may be reasonably available to Borrower to
enable Lender and its counsel to evaluate such matters.

(g)	Election to Terminate Status as a REIT.
Promptly upon Borrower's election to revoke its
election to be a real estate investment trust (which
election shall be made only upon the basis of a
resolution of Borrower's Board of Directors finding that
it would be in Borrower's best interests to revoke such
election), written notice thereof to Lender of such
election.

(h)	SEC Filings.
Promptly after the same are sent, copies of all
financial statements and reports which Borrower sends to
its shareholders; and promptly after the same are filed
(but in the case of Borrower's (i) Form 10-K filing, in
no event later than one hundred twenty (120) days after
the end of the calendar year to which it relates, and
(ii) Form 10-Q filing, in no event later than sixty (60)
days after the end of the calendar quarter to which it
relates), copies of all financial statements and regular,
periodical or special reports which Borrower may make to,
or file with, the Securities and Exchange Commission or
any successor or similar governmental authority.

(i)	Other Information.
Such other information, reports, contracts,
schedules, lists, documents, agreements and instruments
in the possession of Borrower with respect to (i) the
Collateral, or (ii) Borrower's business, assets,
condition (financial or otherwise), income or prospects
as Lender may from time to time reasonably request,
including, without limitation, annual information with
respect to cash flow projections, budgets, operating
statements (current year and immediately preceding year),
rent rolls, lease expiration reports, leasing status
reports, equity funding requirements, contingent
liability summaries, projections of leasing fees and
overhead budgets.

Section 5.2	Notice of Change.
Borrower shall deliver to Lender prior written
notice of any change in (a) the location of Borrower's
place of business (or Borrower's chief executive office
if it has more than one place of business) or (b)
Borrower's name, business structure, or place of
incorporation or other formation.  Unless otherwise
approved by Lender in writing, Borrower agrees that all

property that consists of tangible personal property
(other than the books and records) will be located at one
of the Properties and that all books and records will be
located at Borrower's place of business (or chief
executive office if Borrower has more than one place of
business).

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ARTICLE VI:  OTHER COVENANTS
Borrower covenants and agrees that, on and after the
Closing Date and until payment in full of the Obligations
and the termination of this Agreement:

Section 6.1	Existence, etc.
Borrower shall at all times maintain its corporate
existence and shall do or cause to be done all things
necessary to preserve and keep in full force and effect
its rights to do business in, and shall remain in good
standing in, each jurisdiction in which the character of
the properties owned or leased by it therein or in which
the transaction of its business makes such qualification
necessary.  In addition, Borrower shall take such actions
as may be required to ensure that Borrower's common stock
is at all times listed for trading and traded on the New
York Stock Exchange, the American Stock Exchange, or the
Nasdaq National Markets System.

Section 6.2	Taxes.
(i) Borrower shall pay and discharge all taxes,
assessments and other governmental charges assessed
against or imposed upon any Property or other properties
or assets of Borrower prior to the date on which any
penalty or interest accrues thereon; and (ii) Borrower
shall pay and discharge all claims (including, without
limitation, claims for labor, services, materials and
supplies) for sums which have become due and payable and
which by law have or may become a Lien upon any Property
or other properties or assets of Borrower, prior to the
time when any penalty or fine shall be incurred with
respect thereto; provided, however, that each of the
foregoing covenants shall be subject to the right of
Borrower to contest such taxes, assessments, other
governmental charges and claims in good faith by
appropriate proceedings, and subject to such extensions
of the filing or due date thereof as Borrower shall have
obtained.

Section 6.3	Insurance.
Borrower shall keep the improvements on each
Property insured (through an approved blanket policy of
insurance or through individual policies for each

Property) at all times against loss or damage with
property hazard insurance in an amount at least equal to
the full insurable value of such improvements (including
tenant improvements) on a replacement cost basis, as
determined by Lender (as such insurable value may change
from time to time) and against any other risk or hazard
which in the opinion of Lender should be insured against
including, without limitation, earthquake, flood and
business interruption (including rent loss and/or extra
expense or as appropriate).  Borrower shall also carry
public liability insurance with coverage amounts
(including deductibles) as determined by Lender (as such
coverage amounts may change from time to time).  All
insurance policies shall (a) be in such form and with
such endorsements as may be required by Lender,
(b) provide a lender's loss payable
     endorsement or be
(c) endorsed with a standard non-contributory
mortgage clause, as appropriate, in favor of
Lender, (c) be underwritten by insurance
providers acceptable to Lender, and (d) provide
Lender at least thirty (30) days' prior notice
of cancellation, non-renewal or modification.
The policy or policies evidencing all insurance
required hereunder (or certificates of such
insurance) shall be delivered to and held by
Lender.  Borrower shall pay premiums on such
insurance as they become due, and shall not
permit any condition to exist on or with
respect to the Property which would wholly or
partially invalidate any insurance.  Borrower
currently maintains earthquake insurance
covering the Property, and shall continue to
maintain such insurance so long as it is
available at commercially reasonable rates or
Borrower is able to recoup the costs of such
insurance from tenants at the Property.   All
insurance policies shall comply with the
insurance requirements set forth on Exhibit C
attached hereto.  In addition, Borrower shall
file with Lender, from time to time upon
Lender's request, a detailed list of the
insurance then in effect and stating the names
of the insurance companies, the amounts and
rates of the insurance, deductibles and co-
insurance features, if any, dates of the
expiration thereof and the properties and risks
covered thereby.
Secti
on 6.4	Compliance with Law.
Borrower shall comply with all statutes, ordinances,
rules and regulations of Governmental Authorities
applicable to the Property, and Borrower shall obtain as

needed all licenses, permits and approvals of
Governmental Authorities necessary for Borrower's
operation of the Property and maintain such permits,
licenses and approvals in good standing.

Section 6.5	Inspection of Properties; Books and
Records.

Borrower shall permit any authorized representative
designated by Lender to visit and inspect any Property
upon reasonable prior notice, to inspect financial and
accounting records and Leases, and to make copies and
take extracts therefrom, all at such times during normal
business hours and as often as Lender may reasonably
request.

Section 6.6	Conduct of Business.
Borrower shall engage principally in the business of
direct ownership, operation and development of suburban
office and industrial properties of the general type
owned by Borrower as of the Closing Date in the Western
United States, and any other business activities of
Borrower will remain incidental thereto.

Section 6.7	Tenant Estoppel Certificates;
Subordination, Nondisturbance and Attornment
Agreements.
At Lender's request, from time to time, Borrower
shall exercise due diligence to obtain Tenant Estoppel
Certificates and/or Subordination, Nondisturbance and
Attornment Agreements, in form and substance approved by
Lender, with respect to any tenant of the Property
designated by Lender.

Section 6.8	Leases; Major Agreements.

Borrower shall at all times comply with all
obligations imposed upon it under all Leases and under
all other Major Agreements, and shall not enter into any
Major Agreement without Lender's prior written consent,
which shall not be unreasonably withheld or delayed.
Borrower shall not enter into any Lease, whether or not
such Lease constitutes a Major Agreement, that does not
contain provisions pursuant to which the tenant
thereunder agrees to attorn to a mortgagee in the event
of a foreclosure, subject only to customary conditions.

Section 6.9	Chief Executive Office.

Borrower shall not relocate its place of business
(or, if Borrower has more than one place of business, its
chief executive office), except upon prior written notice
to Lender.

Section 6.10	Consolidations and Mergers.
Borrower shall not merge, consolidate with or into,
or convey, transfer, lease or otherwise dispose of
(whether in one transaction or a series of transactions)
all or substantially all of its assets (whether now owned
or hereafter acquired) to or in favor of any person or
entity.

Section 6.11	State of Organization.
Borrower shall provide Lender with prior notice of
any change in Borrower's name, business structure, state
of organization, or the location of any Collateral for
the Loan.

Section 6.12	Security Deposits And Draws Under
Tenant Letter Of Credit.
(a) Upon Lender's request, Borrower shall
immediately deposit into the Tenant Security Account, all
security deposits under Leases, provided, however, that
all security deposits in excess of $50,000 shall be
deposited by Borrower into such account.  Borrower's
assignment of leases and rents pursuant to the Deed of
Trust shall expressly include as additional security for
the Loan any lease guaranty, as well as each Tenant
Letter of Credit and all other security, which Borrower
receives in conjunction with a Lease.  Additionally,
concurrently with the execution of this Agreement, and
from time to time thereafter as Borrower receives new
Tenant Letters of Credit in excess of $50,000 (or, upon
Lender's request, all Tenant Letters of Credit), Borrower
shall (i) confirm assignment to Lender of Borrower's
rights to proceeds from draws under all Tenant Letters of
Credit as additional security for the Loan and (ii)
provide to Lender each original Tenant Letter of Credit
along with an executed transfer of beneficiary document
(provided, however, that such transfer document shall not
be presented to the issuer thereof except following a
foreclosure or deed-in-lieu of foreclosure under the Deed
of Trust or a failure by Borrower to comply with the
requirements of subsection (c) or (d) below).  Pursuant
to such assignment of proceeds, all draws under Tenant
Letters of Credit shall be deposited (upon payment by the
applicable issuing bank with respect to such Tenant
Letter of Credit) by Lender into the Tenant Security
Account.  Any draws under Tenant Letters of Credit and
the tenant security deposits shall remain in the Tenant
Security Account pending disposition of such draws and/or
security deposits in a manner consistent with this
Agreement.  Borrower hereby grants to Lender a security
interest in said Tenant Security Account and all proceeds
thereof.

(b) Provided there is no Event of Default by
Borrower under this Agreement, Borrower may request a
withdrawal of funds from the Tenant Security Account for
application in respect of tenant defaults under the
applicable Lease and to cover any losses which Borrower
certifies in writing to Lender are recoverable from the
applicable tenant's Tenant Letter of Credit or security
deposit, and Lender shall disburse to Borrower from the
Tenant Security Account such requested amount.

(c) Borrower shall (i) promptly notify Lender
of any event or condition which permits a draw under a
Tenant Letter of Credit previously delivered to Lender,
(ii) provide to Lender a copy of the notice of Lease
default, as applicable, and (iii) in a timely manner
request a draw from the applicable issuing bank of such
Tenant Letter of Credit.  Additionally, if an issuing
bank of such Tenant Letter of Credit notifies Borrower
that such issuing bank will not renew such Tenant Letter
of Credit (or if the applicable tenant has failed to
provide a replacement letter of credit not later than
sixty (60) days prior to the expiration thereof), then
Borrower shall (x) provide Lender prompt written notice
of such nonrenewal or failure, and (y) timely draw the
full amount under such Tenant Letter of Credit (with the
proceeds thereof to be deposited directly into the Tenant
Security Account).  Borrower shall not amend or terminate
any such Tenant Letter of Credit without Lender's prior
approval.

(d) The procedures for a draw under a Tenant
Letter of Credit shall be as follows:  No later than five
(5) Business Days following written notice of an event or
condition which permits a draw under a Tenant Letter of
Credit (with all documentation and certifications as
required by this Section 6.12) from Borrower pursuant to
subsection (c) above, Lender shall either (i) return the
relevant Tenant Letter of Credit to Borrower so that
Borrower can draw the full amount which may be drawn
thereunder when such credit may be drawn (and, in any
event not later than twenty (20) days prior to the
expiration thereof), or (ii) present such Tenant Letter
of Credit to the issuing bank directly, in which case
Borrower shall concurrently provide to such issuing bank
any required draw request or other documentation so that
the full amount which may be drawn thereunder is drawn,
in either such case with the proceeds of such draw to be
deposited (upon payment by the applicable issuing bank
with respect to such Tenant Letter of Credit) by Lender
into the Tenant Security Account.  Immediately following
any partial draw by Borrower under such Tenant Letter of
Credit, Borrower shall return (or cause to be returned)
the original Tenant Letter of Credit to Lender to be held
in accordance with this Section 6.12.  Borrower also
shall take such other actions consistent with the
foregoing as may reasonably be requested by Lender with
respect to such Tenant Letters of Credit.
(e) Upon satisfaction of the Loan in full, any
Tenant Letters of Credit or tenant security deposits held
by Lender shall be returned to Borrower.  In addition,
following termination of any Lease, any Tenant Letters of
Credit or tenant security deposits held by Lender with
respect to such terminated Lease shall be returned to
Borrower to the extent that Borrower is obligated to
return same to tenant.

(f) Borrower hereby represents to and for the
benefit of Lender that nothing contained in this Section
6.12 conflicts with the terms of any Lease, provided,
however, that with respect to the letter of credit
provided by Quester Technology, Inc., in addition to the
requirements set forth in this Section 6.12, Lender's
rights and responsibilities with respect to such letter
of credit are further articulated and qualified by a Tri-
Party Agreement between Borrower, Lender and Quester
Technology, Inc., dated July 31, 1997, and modified by
letter agreement on January 31, 2001.  In addition, the
indemnity provisions contained in Section 8.2 of this
Agreement shall apply to and include any claims against
Lender by tenants or issuers of Tenant Letters of Credit,
or by any person or entity on their behalf.

Section 6.13	Delivery of Additional Security;
Special Letters of Credit.
(a) Borrower shall deliver to Lender, not
later than October 31, 2002, two (2) irrevocable standby
letters of credit (each such letter of credit, a
"Special Letter of Credit"), one such letter of credit
with respect to the Property at 47600 Westinghouse Drive
in Fremont, California, and the other letter of credit
with respect to the Property at 47633 Westinghouse Drive
in Fremont, California, each naming Lender as
beneficiary, in form and substance and from an issuer
satisfactory to Lender and in an amount, agreed to by
Borrower and Lender, sufficient to cover the projected
re-tenanting and re-leasing cost associated with the two
aforementioned Properties, such Special Letters of Credit
to provide recourse support for the Loan, provided,
however, that the amount of such Special Letters of
Credit may be reduced from time to time, by agreement
between Borrower and Lender, after Borrower has provided
sufficient evidence to Lender as to actual re-tenanting
and/or re-leasing costs expended by Borrower with respect
to the aforementioned Properties.  Without in any manner
limiting Lender's other remedies hereunder, Lender may
draw on such Special Letters of Credit at any time
following a Default hereunder and apply the proceeds
thereof against Borrower' obligations under the Loan
Documents.  Such Special Letters of Credit shall be
returned to Borrower, if at all, in accordance with
subsection (b) below.

(b) Provided that no Event of Default or
Potential Event of Default then exists, at Borrower's
written request Lender shall return one or both of the
Special Letters of Credit to Borrower, upon Borrower's
delivery to Lender of satisfactory evidence of renewal or
releasing of the applicable Property, completion of and
payment for any relevant retenanting work, payment of any
applicable leasing commissions, and acceptance and
occupancy of such Property by the tenant along with
commencement of rent, all in accordance with Leases
approved by Lender pursuant to Section 6.8 below.

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ARTICLE VII:  EVENTS OF DEFAULT AND REMEDIES
Section 7.1	Events of Default.
Each of the following events or occurrences shall
constitute an Event of Default under this Agreement:
(a)	Payment.
Borrower shall fail to pay any installment of the
principal of or interest on the Loan when and as the same
shall become due and payable, whether on the due date
thereof, by acceleration or otherwise, or Borrower shall
fail to make payment of any other amount payable under
this Agreement or the other Loan Documents when and as
the same shall become due and payable, and any such
failure shall continue for a period of five (5) days
following written notice thereof from Lender to Borrower;
provided, however, that following the first occasion
during each year of the term of the Loan for which Lender
shall have given to Borrower such written notice of
Borrower's failure to pay any such amount when due and
payable, Borrower's failure to pay when due and payable
any such amount shall constitute an Event of Default
without the requirement of any notice from Lender.
(b)	Other Covenants.
Borrower shall fail to perform any other covenant or
obligation to be performed by Borrower under this
Agreement or any other Loan Document, including, without
limitation, the Environmental Compliance Agreement, and
such failure shall continue for thirty (30) days after
written notice thereof from Lender to Borrower specifying
the failure and demanding that Borrower remedy the same;
provided, however, that if (i) Lender determines in good
faith that such failure can be cured within ninety (90)
days, (ii) no lien or security interest created by the
Loan Documents will be impaired, and (iii) Borrower
diligently commences to cure such failure within thirty
(30) days after the date of Lender's notice and

thereafter diligently prosecutes such cure, such failure
shall not constitute an Event of Default unless it
continues for ninety (90) days after Lender's initial
notice.

(c)	Representations and Warranties.
Any representation or warranty made by Borrower in
this Agreement or in the other Loan Documents, or in any
certificate, document or instrument furnished in
connection with this Agreement or the transactions
contemplated hereby, shall prove to have been false or
misleading in any material respect when made.

(d)	Involuntary Bankruptcy; Appointment of Receiver.
(j) An involuntary case shall be
commenced against Borrower and the petition shall
not be dismissed within thirty (30) days after
commencement of the case, or a court having
jurisdiction shall enter a decree or order for
relief in respect of Borrower in an involuntary
case, under any applicable bankruptcy, insolvency or
other similar law now or hereinafter in effect; or

(ii) A decree or order of a court for
the appointment of a receiver, liquidator,
sequestrator, trustee, custodian or other officer
having similar powers shall be entered against
Borrower or over all or a substantial part of the
property of Borrower; or a warrant of attachment,
execution or similar process against any substantial
part of the property of Borrower shall be issued and
the same shall not be stayed, vacated, dismissed,
bonded or discharged within thirty (30) days of
entry, appointment or issuance.

(d) Voluntary Bankruptcy; Appointment of Receiver.

Borrower shall have an order for relief entered with
respect to it or commence a voluntary case under any
applicable bankruptcy, insolvency or other similar law
now or hereafter in effect, or shall consent to the entry
of an order for relief in an involuntary case, or to the
conversion of an involuntary case to a voluntary case,
under any such law, or shall consent to the appointment
of or taking of possession by a receiver, trustee or
other custodian for all or a substantial part of its
property; or Borrower shall make any assignment for the
benefit of creditors or shall be unable or fail, or admit
in writing its inability, to pay its debts as such debts
become due.

(f)	Solvency; Material Adverse Change.
There shall have occurred any change in the
business, operations, properties, assets or condition
(financial or otherwise) of Borrower which Lender
determines could have a Material Adverse Effect upon
Borrower.

(g)	Management Changes.
The Chairperson of the Board or the chief executive
office of Borrower resigns, is terminated or otherwise
ceases to act for any reason, and such officer of
Borrower is not replaced with a person reasonably
satisfactory to Lender within twelve (12) months after
such person ceases to hold such position.

(h)	Change in Control.
Any change in control of Borrower occurs.  For
purposes of this section, "change in control" shall mean
(i) the acquisition of beneficial ownership by any
"person" or "group" (as defined in Section 13(d)(3) or
14(d)(2) of the Securities Exchange Act of 1934, as
amended) of a direct or indirect interest in more than
fifty percent (50%) of the voting power of the then
outstanding capital stock of Borrower; or (b) a merger or
consolidation of the Borrower with any other entity or
the merger of any other entity into Borrower or any other
transaction, as a result of which the stockholders of
Borrower immediately prior to such transaction own, in
the aggregate, less than a majority of the voting power
of the outstanding capital stock of the surviving or
resulting entity; or (c) the first day on which a
majority of the members of the Board of Directors of
Borrower are not Continuing Directors.  A "Continuing
Director" shall mean any director of the Board of
Directors of Borrower who is either (i) a member of such
Board of Directors on the date of this Agreement or (ii)
nominated or elected to such Board of Directors with the
approval of a majority of the Continuing Directors who
were members of such Board of Directors at the time of
such nomination or elections.

Section 7.2	Rights and Remedies.
(a)	Acceleration.
Upon the occurrence of any Event of Default
described in Sections 7.1(d) or (e) of this Agreement
with respect to Borrower, the unpaid principal amount of
and any and all accrued interest on the Loan shall
automatically become immediately due and payable, with
all additional interest from time to time accrued thereon
and without presentment, demand or protest or other
requirements of any kind (including, without limitation,
valuation and appraisement, diligence, presentment,

notice of intent to demand or accelerate or notice of
acceleration), all of which are hereby expressly waived
by Borrower.  Upon the occurrence of any other Event of
Default, Lender, by written notice to Borrower, may
declare the unpaid principal amount of, any and all
accrued and unpaid interest on, the Loan and all of the
other Obligations to be, and the same shall thereupon be,
immediately due and payable with all additional interest
from time to time accrued thereon and without
presentment, demand or protest or other requirements of
any kind (including without limitation, valuation and
appraisement, diligence, presentment, notice of intent to
demand or accelerate and of acceleration), all of which
are hereby expressly waived by Borrower.  Without
limiting Lender's authority hereunder, on or after the
Maturity Date, Lender may exercise any or all rights and
remedies under the Loan Documents or applicable law,
including, without limitation, foreclosure upon all or
any part of the Collateral.

(b)	Waiver of Demand.
Demand, presentment, protest and notice of
nonpayment are hereby waived by Borrower.  Borrower also
waives, to the extent permitted by law, the benefit of
all valuation, appraisal and exemption laws.

(c)	Environmental Assessment.
As part of a foreclosure upon any Property or the
acceptance by Lender of any deed in lieu of foreclosure,
Lender shall have the right to cause an environmental
assessment for such Property to be prepared by an
environmental consultant acceptable to Lender, the cost
of which shall constitute an Obligation of Borrower
hereunder.

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ARTICLE VIII:  MISCELLANEOUS
Section 8.1	Expenses.
(a)	Generally.
Borrower shall pay, or reimburse Lender for, all of
Lender's reasonable audit, legal, appraisal, valuation
and investigation expenses and for all other reasonable
out-of-pocket costs and expenses of every type and nature
(including, without limitation, the fees, expenses and
disbursements of Lender's internal appraisers,
environmental advisors or legal counsel) incurred by
Lender in connection with (i) the negotiation,
preparation and execution of this Agreement, the Deeds of
Trust and the other Loan Documents, the obtaining of
compliance with the closing conditions and the making of
the Loan; (ii) the pre-closing investigation and review
of Borrower and the Property, including appraisal fees

and costs of environmental assessment; (iii) title
insurance premiums and endorsement charges for the title
insurance described in Section 3.1(b), recording fees and
attorneys' fees and costs incurred in connection
therewith; (iv) the creation, perfection or protection of
Lender's Liens on the Collateral; (v) obtaining
Appraisals of the Properties (A) periodically, but not
more frequently than once in any calendar year, in order
to comply with regulatory requirements applicable to
Lender, or (B) pursuant to Section 2.7, 2.8 or 2.9 above,
or (C) during the continuance of an Event of Default; and
(vi) the protection, collection or enforcement of any of
the Obligations or the Collateral.  On the Closing Date,
Borrower shall pay, or reimburse Lender for, all such
costs and expenses paid or incurred by Lender as of such
date, and all other such costs and expenses shall be paid
or reimbursed by Borrower to Lender on demand.

(b)	After Event of Default.
Borrower further agrees to pay, or reimburse Lender
for, all reasonable out-of-pocket costs and expenses,
including, without limitation, attorneys' fees and
disbursements incurred by Lender after the occurrence of
an Event of Default (i) in enforcing any Obligations or
in foreclosing against the Collateral or exercising or
enforcing any other right or remedy available by reason
of such Event of Default; (ii) in connection with any
refinancing or restructuring of the credit arrangements
provided under this Agreement in the nature of a "work-
out" or in any insolvency or bankruptcy proceeding;
(iii) in commencing, defending or intervening in any
litigation or in filing a petition, complaint, answer,
motion or other pleadings in any legal proceeding
relating to Borrower and related to or arising out of the
transactions contemplated hereby; (iv) in taking any
other action in or with respect to any suit or proceeding
(whether in bankruptcy or otherwise); (v) in protecting,
preserving, collecting, leasing, selling, taking
possession of, or liquidating any of the Collateral; or
(vi) in attempting to enforce or enforcing any Lien on
any of the Collateral or any other rights under the Deeds
of Trust.
Section 8.2	Indemnity.
Borrower shall indemnify, defend and hold harmless
Lender and its Affiliates and participants and each of
the respective officers, directors, employees, agents,
shareholders, representatives, attorneys and consultants
of each of the foregoing (collectively called the
"Indemnitees") from and against any and all Liabilities
and Costs imposed on, incurred by, or asserted against
such Indemnitees in any manner relating to or arising out
of this Agreement, the Deeds of Trust or the other Loan

Documents, or any act, event or transaction related or
attendant thereto, the making of the Loan and the
management of the Loan, or the use or intended use of the
proceeds of the Loan (collectively, the "Indemnified
Matters"); provided, however, that Borrower shall have
no obligation to an Indemnitee hereunder with respect to
Indemnified Matters to the extent caused by or resulting
from the willful misconduct or gross negligence of that
Indemnitee, as determined by a court of competent
jurisdiction.

Section 8.3	Notices and Delivery.
Unless otherwise specifically provided herein, any
consent, notice or other communication herein required or
permitted to be given shall be in writing and may be
personally served, telecopied or sent by courier service
or United States mail and shall be deemed to have been
given when delivered in person or by courier service,
upon receipt of a telecopy (or on the next Business Day
if such telecopy is received on a non-Business Day or
after 5:00 p.m. on a Business Day) or three (3) Business
Days after deposit in the United States mail (registered
or certified, with postage prepaid and properly
addressed).  For the purposes hereof, the addresses of
the parties hereto (until notice of a change thereof is
delivered as provided in this Section 8.3) shall be as
set forth below each party's name on the signature pages
hereof, or, as to each party, at such other address as
may be designated by such party in a written notice to
the other party.

Section 8.4	Survival of Warranties, Indemnities and Agreements.
All agreements, representations, warranties and
indemnities made or given herein shall survive the
execution and delivery of this Agreement and the other
Loan Documents and the making and repayment of the Loan
hereunder and such indemnities shall survive termination
hereof.

Section 8.5	No Waiver; Remedies Cumulative.
No failure or delay on the part of Lender in the
exercise of any power, right or privilege under any of
the Loan Documents shall impair such power, right or
privilege or be construed to be a waiver of any default
or acquiescence therein, nor shall any single or partial
exercise of any such power, right or privilege preclude
other or further exercise thereof or of any other right,
power or privilege.  All rights and remedies existing
under the Loan Documents are cumulative to and not
exclusive of any rights or remedies otherwise available.

Section 8.6	Marshalling; Recourse to Security; Payments Set Aside.
Lender shall not be under any obligation to marshall
any assets in favor of Borrower or any other party or
against or in payment of any or all of the Obligations.
To the extent that Borrower makes a payment or payments
to Lender, or Lender shall enforce its Liens or exercise
its rights of setoff, and such payment or payments or the
proceeds of such enforcement or setoff or any part
thereof are subsequently invalidated, declared to be
fraudulent or preferential, set aside and/or required to
be repaid to a trustee, receiver or any other party under
any bankruptcy law, state or federal law, common law or
equitable cause, then to the extent of such recovery, the
Obligations or part thereof originally intended to be
satisfied, and all Liens, rights and remedies therefor,
shall be revived and continued in full force and effect
as if such payment had not been made or such enforcement
or setoff had not occurred.

Section 8.7	Severability.
In case any provision of this Agreement or the other
Loan Documents shall be held to be invalid, illegal or
unenforceable, the validity, legality and enforceability
of the remaining provisions shall not in any way be
affected or impaired thereby.

Section 8.8	Headings.

Section headings in this Agreement are included
herein for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose
or be given any substantive effect.

Section 8.9	Governing Law.
This Agreement shall be governed by, and shall be
construed and enforced in accordance with, the laws of
the State of California.

Section 8.10	Successors and Assigns.
This Agreement and the other Loan Documents shall be
binding upon the parties hereto, and their respective
successors and assigns, and shall inure to the benefit of
the parties hereto and their respective successors and
permitted assigns.  Notwithstanding the foregoing,
Borrower's rights hereunder, and Borrower's duties and
Obligations hereunder, shall not be assigned without the
prior written consent of Lender.

Section 8.11	Sale of Loan, Participations.
Lender may, at any time, sell, transfer, assign,
dispose of, grant participations in or syndicate the Loan
and the Loan Documents, provided that, unless otherwise
consented to by Borrower (such consent not to be

unreasonably withheld):  (a) no more than three (3)
Persons shall hold interests in the Loan (as Lender,
assignee or participant), and (b) (i) Lender, or an
assignee of Lender reasonably acceptable to Borrower,
shall at all times retain an interest in the Loan that is
greater than 50% (the "Majority Lender"), and (ii)
Borrower shall not be required to communicate with any
Person holding an interest in the Loan other than the
Majority Lender.  Lender shall have the right to forward
to any prospective purchaser, co-lender or participant
all documents and information relating to the Loan and
the Loan Documents, Borrower and the Collateral, whether
furnished by Borrower or otherwise, as Lender deems
necessary or desirable.  Borrower shall reasonably
cooperate with Lender in any efforts by Lender to sell,
transfer, assign, dispose of, grant participations in or
syndicate the Loan and the Loan Documents, including,
without limitation, by executing and delivering to Lender
replacement a promissory note or notes in the form of the
Note and in the aggregate principal amount of then
outstanding principal amount of the Loan.

Section 8.12	Counterparts; Inconsistencies.
This Agreement and any amendments, waivers, consents
or supplements may be executed in counterparts, each of
which when so executed and delivered shall be deemed an
original, but all of which together shall constitute but
one and the same instrument.  This Agreement and each of
the other Loan Documents shall be construed to the extent
reasonable to be consistent one with the other, but to
the extent that the terms and provisions of this
Agreement are actually and directly inconsistent with the
terms and provisions of any other Loan Document, the
terms and provisions of this Agreement shall govern.

Section 8.13	Construction.
The parties acknowledge that each party has reviewed
and participated in preparing, and has had the
opportunity to have such party's counsel review and
participate in preparing, the Loan Documents and that the
normal rule of construction to the effect that any
ambiguities are to be resolved against the drafting party
shall not be employed in the interpretation of the Loan
Documents or any amendments or exhibits thereto.

Section 8.14	Entire Agreement.

This Agreement, taken together with all of the other
Loan Documents and all certificates and other documents

delivered by Borrower to Lender, embodies the entire
agreement, and supersedes all prior agreements, written
and oral, relating to the subject matter hereof.



IN WITNESS WHEREOF, this Agreement has been duly executed
on the date set forth above.


BORROWER:               BEDFORD PROPERTY INVESTORS, INC.,
                          a Maryland corporation


                          By:/s/Hanh Kihara
                         Its: Sr. V.P. and Chief
                              Financial Officer


                              ADDRESS FOR NOTICE AND
                              DELIVERY FOR
                              BORROWER:

                       Bedford Property Investors, Inc.
                              270 Lafayette Circle
                              Lafayette, CA  94549
                              Attn:  Hahn Kihara
                              Tel: (925) 283-8910
                              Fax:  (925) 283-5697


LENDER:                   UNION BANK OF CALIFORNIA, N.A.


                              By: /s/David B. Hunzbly
                              Its: Vice President


                              ADDRESS FOR NOTICE AND
                              DELIVERY TO
                              LENDER:

                              Union Bank of California, N.A.
                              Real Estate Industries Group
                              350 California Street, 7th Floor
                              Attn:  Annette L. Billingsley
                              Tel:  (415) 705-5075
                              Fax:  (415) 433-7438


                          EXHIBIT A

               PROPERTIES AND RELEASE PRICES

<TABLE>
<S>                        <C>                <C>

(A)
PROPERTY
(B)
ALLOCATED LOAN AMOUNT*
(C)
RELEASE PRICE
(B X 120%)
1.	Canyon Vista, San Diego, CA.
 $4,059,000
$4,870,800
2.	Napa Corporate Center, Napa, CA.
 $4,620,000
$5,544,000
3.	Carroll Tech Center I, San Diego, CA.
 $1,338,000
$1,605,600
4.	Carroll Tech Center II, San Diego, CA.
 $2,497,900
$2,997,480
5.	Carroll Tech Center III, San Diego, CA.
 $1,939,100
$2,326,920
6.	47633 Westinghouse Drive, Fremont, CA.
 $3,060,000
$3,672,000
7.	47650 Westinghouse Drive, Fremont, CA.
 $1,320,000
$1,584,000
8.	47600 Westinghouse Drive, Fremont, CA.
 $1,320,000
$1,584,000
9.	115 Mason Circle, Concord, CA.
 $1,665,000
$1,998,000

$21,819,000


</TABLE>
*Allocated loan amount to be adjusted, in proportion to
the relative Appraised Values of each Property from time
to time, upon each and any reappraisal of any Property,
and the Release Prices adjusted accordingly.

                            EXHIBIT B
<TABLE>
<S>                   <C>                          <C>

Building
Tenant
Square Footage



47650 Westinghouse Drive I
SMT Unlimited, L.P.
24,030



47600 Westinghouse Drive
Quester Technology, Inc.
24,030



47633 Westinghouse/Quester
Quester Technology, Inc.




115 Mason Circle
Koppl Industrial Systems, Inc.
8,154

LMH, Inc.
7,885

Community Resources
5,832

Taylor Made Water Systems
7,296

Pacific Mechanical Supply, Inc.
5,833



860-870 Napa (Napa 9)
Bank of America
2,640

Enterprise Productivity Systems, Inc.
7,558

PPI Engineering, Inc.
4,336

Tandy Corporation
1,017

Oakville Grocery Corporation
1,989

Fulcrum Integration Technologies
2,160

Fat Angel Aviation
1,854

J. Lohr Winery
1,602

Walsh Vineyard Management
2,021

Greg D. Long
3,204

Saverglass, Inc.
3,048

K&L Manco
4,610

Robert Mondavi Winery
17,551

PPI Engineering, Inc.
936

E&F ATMI, Inc.
4,326

Oris Pacheco & Sons, Inc.
985

Javorina's American Window Sys.
2,472

ATMI, Inc.
1,602

Visicon Inspection
3,864



Carroll Tech Center I
San Diego Cash Register Co.
21,936



Carroll Tech Center II
Sony Online Entertainment
39,900



Carroll Tech Center III
Verant Interactive, Inc.
29,307



Canyon Vista Center
TUV Product Service, Inc.
17,591

Midway Home Entertainment, Inc.
27,512

Entrada Networks
18,643
</TABLE>
* Estoppel required prior to closing



                EXHIBIT C - Insurance Requirements


1.  REQUIRED POLICY FORMS AND COVERAGES
A. COMMERCIAL GENERAL LIABILITY INSURANCE in the
          minimum amount of $5,000,000 ($1,000,000 per
          occurrence).
B. BUILDING  AND  PERSONAL PROPERTY COVERAGE with
SPECIAL FORM (All Risk/Extended Coverage) in the
minimum amount shown in the following table
("Insurable Value").  The following clauses or
endorsements shall be included:  Full Replacement
Cost Endorsement and Stipulated Value/Agreed Amount
Endorsement.
<TABLE>
<S>                               <C>
[PROPERTY
INSURABLE VALUE
47633 Westinghouse Drive, Fremont, Alameda County, California
$4,192,000
47600 Westinghouse Drive, Fremont, Alameda County, California
$1,767,000
47650 Westinghouse Drive, Fremont, Alameda County, California
$1,767,000
8929 Terman Court, San Diego, San Diego County, California
$1,668,750
8958 Terman Court, San Diego, San Diego County, California
$3,155,500
8959 Terman Court, San Diego, San Diego County, California
$2,228,750
860-870 Napa Valley Corporate Way, Napa, Napa County California
$4,724,000
10040, 10070, 10110 Mesa Rim Road, San Diego, San Diego County, California
$3,248,000
115 Mason Circle, Concord, Contra Costa County, California
$1,725,000
</TABLE>
C.	BOILER AND MACHINERY COVERAGE.
D.	BUSINESS  INCOME AND EXTRA EXPENSE OR RENTAL INCOME/ RENTAL VALUE COVERAGE.
E.	[EARTHQUAKE and/or FLOOD insurance - pending UBOC review]
2. ACCEPTABLE INSURANCE CARRIERS.  All carriers of
property insurance shall have a Best Guide Rating of A
VIII or better and shall be licensed to do business in
the state where the property is located.

3. MINIMUM COVERAGE.  The amount of property
insurance coverage shall equal or exceed the Insurable
Value on a replacement cost basis, as such Insurable
Value may change from time to time.
4. MAXIMUM DEDUCTIBLE.  The deductible shall not
exceed the lesser of $25,000 or 5% of the coverage
amount (per Property).

5.	CO-INSURANCE.  Co-Insurance clauses are not
acceptable unless (i) the policy includes an Agreed
Value Endorsement or (ii) the amount calculated under
the co-insurance formula exceeds the Insurable Value.

6.	ACCEPTABLE EVIDENCE OF PROPERTY INSURANCE.  Evidence
     of property insurance shall be presented on ACORD
form 27, a Declarations Page, or an equivalent form
that confers rights on the Certificate Holder.
ACORD Form 75-S is acceptable only for loans less
than $1,000,000 (unless attached to ACORD "Cover
Note") and must be replaced prior to expiration by
one of the aforementioned forms or an equivalent.
ACORD forms 24 and 25S are not acceptable as
evidence of property insurance.  Evidence of
property insurance shall include the loan number, if
any, indicated below.

7.	NAMED INSURED.  All policies shall name Borrower as
Insured.  Property insurance policies shall name
UNION BANK OF CALIFORNIA, N.A., ITS SUCCESSORS AND/OR ASSIGNS
as Mortgagee or Loss Payee.  Liability Insurance
policies shall name UNION BANK OF CALIFORNIA, N.A., ITS
SUCCESSORS AND/OR ASSIGNS as Additional Insured.

8.	LOSS PAYABLE ENDORSEMENT.  All property insurance
policies shall include a Lender's Loss Payable

Endorsement (438BFU, CP1218, or an equivalent clause
or endorsement) naming UNION BANK OF CALIFORNIA, N.A.,
ITS SUCCESSORS AND/OR ASSIGNS as Loss Payee.
9. NOTICE OF CANCELLATION.  All policies shall
provide

10. Lender at least thirty (30) days notice of
cancellation, non-renewal or modification.

11. INITIAL POLICY TERM.  All evidence of property
insurance shall indicate a policy term of at least
12 months, or coverage must be continuous until
canceled.
12. MULTIPLE INSUREDS.  If property insurance is
provided by more than one party (e.g., Borrower
and major tenants), the sum of the coverages
provided shall equal or exceed the Insurable
Value.

13. CHANGES TO INSURANCE REQUIREMENTS.  From time to
time, Lender may require insurance against other
hazards, as such hazards are commonly insured
against by reasonably prudent business persons
operating properties of similar construction,
configuration and location, or as such insurance
is required by law.  These insurance requirements
may be modified or amended by Lender in its sole
discretion.  Upon expiration of any existing
policy, a replacement policy meeting such modified
or amended insurance requirements shall be
provided.

14. OBLIGATION TO MAINTAIN COVERAGE.  It is the
obligation of Borrower to keep required insurance
in force at all times and to provide the required
evidence of insurance to Lender.  Failure to do so
constitutes a default under the terms of the deed
of trust securing the loan.  At renewal, evidence
of insurance shall be received by Lender at least
thirty (30) days before existing coverage expires.
If acceptable coverage is not received by Lender
within thirty (30) days of the expiration of
existing coverage, Lender may place interim
coverage to protect its security interest at
Borrower's expense.  Interim insurance may be
considerably more expensive than coverage
purchased by Borrower.  Such interim insurance
will not protect the interest of Borrower.  Lender
shall not be liable for any loss incurred by
Borrower as a result of failure to maintain
adequate coverage.
	Borrower will instruct the insurance agent for such
insurance to provide Lender with proof of insurance in
the form of a policy or certificate of insurance,
including the endorsements set forth above, to be
delivered to the following address:

Union Bank of California, N.A.
Commercial Real Estate Loan Administration
Re Loan No. 0709450182
Attn: Cindy Rafael
18300 Von Karman Avenue, Suite 200
Irvine, CA  92612
Telephone #: (949) 553-7156
FAX#: (949) 553-7123



BORROWER'S INSURANCE AGENT:
Name
Address
City, State, Zip
Telephone #   					 Fax #:




               EXHIBIT D - RESERVE REQUIREMENTS
<TABLE>
<S>                                 <C>

PROPERTY
PROPERTY TYPE
Canyon Vista, San Diego, CA.
Research & Development
Napa Corporate Center, Napa, CA.
Office
Carroll Tech Center I, San Diego, CA.
Research & Development
Carroll Tech Center II, San Diego, CA.
Research & Development
Carroll Tech Center III, San Diego, CA.
Research & Development
47633 Westinghouse Drive, Fremont, CA.
Research & Development
47650 Westinghouse Drive, Fremont, CA.
Research & Development
47600 Westinghouse Drive, Fremont, CA.
Research & Development
115 Mason Circle, Concord, CA.
Industrial
</TABLE>

Reserve Requirements

Office:  $1.00 per net rentable square foot per month
Research & Development:  $.30 per net rentable square foot per month
Industrial:  $.10 per net rentable square foot per month






AMENDED AND RESTATED PROMISSORY NOTE
SECURED BY DEEDS OF TRUST

<TABLE>
<S>
                                <C>             <C>
Debtor Name	BEDFORD PROPERTY INVESTORS, INC., a Maryland corporation
Debtor Address
	270 Lafayette Circle
	Lafayette, CA  94549
Office
	95371
Loan Number
        0709450182

Maturity Date
	November 19, 2004

Amount
	$21,819,000
</TABLE>
$21,819,000                        Date: November 19, 2001
FOR VALUE RECEIVED, on November 19, 2004 ("Maturity Date"),
as such date may be extended by Section 2.9 of the Loan
Agreement, the undersigned ("Debtor") promises to pay to the
order of UNION BANK OF CALIFORNIA, N.A. ("Bank"), as indicated
below, the principal sum of Twenty-One Million Eight Hundred
Nineteen Thousand and 00/100ths Dollars ($21,819,000.00), or
if less, the aggregate unpaid principal amount of all
disbursements made by Bank pursuant to the Amended and
Restated Loan Agreement dated concurrently herewith, between
Debtor and Bank ("Loan Agreement"), together with interest on
the unpaid balance of such principal amount, at the per annum
rate or rates and at the times set forth below.  This Amended
and Restated Promissory Note Secured by Deeds of Trust
("Note") fully amends, supercedes and restates the Promissory
Note Secured by Deed of Trust executed by Debtor for the
benefit of Bank dated December 24, 1996 (the "Original
Note"), and outstanding obligations of Debtor under the
Original Note shall be deemed outstanding for all purposes
under this Note.  Upon delivery of this Note, the Original
Note shall be conspicuously marked to reflect that it has been
amended and restated, in its entirety, by this Note.  (Unless
otherwise defined in Paragraph 8 below or elsewhere herein,
capitalized terms used in this Note shall have the meanings
given to them in the Loan Agreement.)

1.	PAYMENTS.
a.	PRINCIPAL PAYMENTS.
i.	INITIAL TERM.
A. During the first year of the initial term
     of the Loan (from the Closing Date until
     November 19, 2002), Debtor shall pay
     principal in installments of $44,769.60
     each on the first day of each month
     commencing December 1, 2001;

B. During the second year of the initial term
of the Loan (from November 19, 2002 until
November 19, 2003), Debtor shall pay
principal in installments of $46,476.76
each on the first day of each month
commencing December 1, 2002; and

C. During the third year of the initial term
of the Loan (from November 19, 2003 until
the Maturity Date), Debtor shall pay
principal in installments of $48,249.01
each on the first day of each month
commencing December 1, 2003.

Notwithstanding the required principal
amortization payments set forth above, any

outstanding principal balance under the Note on
the Maturity Date shall be due and payable on
the Maturity Date.

ii. EXTENSION TERM.  If Debtor exercises the
Extension Option set forth in Section 2.9 of
the Loan Agreement, then on the original
Maturity Date Lender will determine
amortization due during the extension period
and calculate such amortization payments so
that during the extension period Debtor shall
be required to pay to Bank principal
amortization payments as follows:

A. During the first year of the extension
term of the Loan (from the original
Maturity Date until November 19, 2005)
("Extension Year One"), Debtor shall pay,
on the first day of each month commencing
December 1, 2004, principal payments each
in an equal amount that, in the aggregate,
equate to the principal amortization that
would be due under the Loan during
Extension Year One based on a calculation
of total principal amortization that would
be due under the Loan during the time
period from the Maturity Date to the
Extended Maturity Date under a 22-year
amortization schedule of equal monthly
payments of principal and interest using a
rate equal to the Fixed Rate (using a 360-
day Fixed Rate Period) in effect at the
original Maturity Date; and

B. During the second year of the extension
term of the Loan (from the November 19,
2005 until the Extended Maturity Date)
("Extension Year Two"), Debtor shall pay,
on the first day of each month commencing
December 1, 2005, principal payments each
in an equal amount that, in the aggregate,
equate to the principal amortization that
would be due under the Loan during
Extension Year Two based on a calculation
of total principal amortization that would
be due under the Loan during the time
period from November 19, 2005 to the
Extended Maturity Date under a 22-year
amortization schedule of equal monthly
payments of principal and interest using a
rate equal to the Fixed Rate (using a 360-
day Fixed Rate Period) in effect at the
original Maturity Date.
Notwithstanding the required principal
amortization payments set forth above, any
outstanding principal balance under the Note on
the applicable Extended Maturity Date shall be
due and payable on such Extended Maturity Date.
b. INTEREST PAYMENTS.  Debtor shall pay to Bank accrued
interest on the outstanding principal amount of the
disbursements made by Bank to Debtor under the Loan
Agreement on the first day of each month commencing
December 1, 2001, and on the Maturity Date.  If
interest shall not be paid when due, it shall become
part of the principal and bear interest as herein
provided.  All computations of interest under this
Note shall be made on the basis of a year of 360
days, for actual days elapsed.  If any interest rate
defined in this Note ceases to be available from
Bank for any reason, then such interest rate shall
be replaced by the rate then offered by Bank, which,
in the sole discretion of Bank, most closely
approximates the unavailable rate.  Interest shall
be payable at the following applicable rate(s),
subject to Paragraph 3 below:

i. LIBOR BASED INTEREST RATE.  At Debtor's option,
amounts outstanding hereunder in minimum
amounts of at least $500,000 and increments of
at least $100,000 shall bear interest at a rate
("Fixed Rate") which is one and sixty one-
hundredths percent (1.60%) per annum in excess
of Bank's LIBOR Rate for the Interest Period
selected by Debtor.

Any Fixed Rate may not be changed, altered or
otherwise modified until the expiration of the
Interest Period selected by Debtor.  The
exercise of such interest rate option by Debtor
shall be as recorded in Bank's records, which
records shall be prima facie evidence of the
amount borrowed under such interest rate option
and the interest rate; provided, however, that
the failure of Bank to make any such notation
in its records shall not discharge Debtor from
its obligations to repay in full with interest
all amounts borrowed.  In no event shall any
Interest Period extend beyond the then Maturity
Date.
To select a Fixed Rate, Debtor may, from time
to time with respect to principal outstanding
on which a Fixed Rate is not accruing, and on
the expiration of any Interest Period with
respect to principal outstanding on which a
Fixed Rate has been accruing, select an

interest rate and an Interest Period by
telephoning an authorized lending officer of
Bank located at the banking office identified
below prior to 10:00 a.m., Pacific time, on any
Business Day and advising that officer of the
Interest Period and the Fixed Rate Commencement
Date selected (which Fixed Rate Commencement
Date shall follow the date of such selection by
no more than two (2) Business Days).

In no event shall Debtor be entitled to select
a Fixed Rate if an Event of Default shall have
occurred and be continuing.  In addition, no
more than five (5) Fixed Rate Components may be
outstanding under this Note at any one time.
Further, notwithstanding anything to the
contrary contained in this paragraph, Debtor
shall not be entitled to select a Fixed Rate
with respect to any portion of the outstanding
principal balance of this Note which Debtor is
obligated to repay to Bank prior to the
expiration of the Interest Period for such
Fixed Rate.

Bank will mail a confirmation of the terms of
the selection to Debtor promptly after the
selection is made.  Agent's failure to send
such confirmation shall not affect Bank's
rights to collect interest at the rate
selected.  If, on the date of the selection,
the Fixed Rate selected is unavailable for any
reason, the selection shall be void.  Banks
reserve the right to fund the principal from
any source of funds notwithstanding any Fixed
Rate selected by Debtor.

ii. VARIABLE INTEREST RATE.  All principal
outstanding hereunder which is not bearing
interest at a Fixed Rate shall bear interest at
a rate per annum equal to the Reference Rate,
which rate shall vary as and when the Reference
Rate changes.

c. PAYMENT MECHANICS.  Debtor shall pay all amounts due
under this Note in lawful money of the United States
at Bank's Monterey Park, California, Office, or such
other office as may be designated by Bank from time
to time.  Payments received by Bank under this Note
shall first be applied to accrued and unpaid
interest then due and owing hereunder, and
thereafter to the repayment of principal.
2. LATE PAYMENTS.  If any payment required by the terms of
this Note shall remain unpaid ten days after same is
due, at the option of Bank, Debtor shall pay to Bank
a late payment fee of five percent (5%) of the
amount unpaid.

3. INTEREST RATE FOLLOWING DEFAULT.  Upon the occurrence
of an Event of Default, at the option of Bank and to
the extent permitted by law, interest shall be payable
on the outstanding principal under this Note at a per
annum rate equal to five percent (5%) in excess of the
applicable interest rate specified in Paragraph 1
above, calculated from the date of the occurrence of
such Event of Default until all amounts payable under
this Note are paid in full.

4.	PREPAYMENT; INTEREST RATE ADJUSTMENT PREMIUM.
a. Except as provided in this Paragraph 4 or as limited
by Section 2.6(b) of the Loan Agreement, amounts
outstanding under this Note may be prepaid in whole
or in part at any time without penalty or premium.
Debtor may prepay amounts outstanding under this
Note bearing interest at a Fixed Rate, in whole or
in part, provided Debtor has given Bank not less
than five (5) Business Days' prior written notice of
Debtor's intention to make such prepayment and
Debtor pays to Bank the prepayment fee due as a
result ("Interest Rate Adjustment Premium").  The
Interest Rate Adjustment Premium shall also be due
if Bank, for any other reason, including
acceleration or foreclosure, receives all or any
portion of principal bearing interest at a Fixed
Rate prior to the Fixed Rate Maturity Date.  The
Interest Rate Adjustment Premium shall be an amount
equal to the present value of the product of:  (i)
the difference (but not less than zero) between (a)
the Fixed Rate applicable to the principal amount
which is being prepaid, and (b) the return which
Bank could obtain if it used the amount of such
prepayment of principal to purchase at bid price
regularly quoted securities issued by the United
States having a maturity date most closely
coinciding with the relevant Fixed Rate Maturity
Date and such securities were held by Bank until the
relevant Fixed Rate Maturity Date ("Yield Rate");
(ii) a fraction, the numerator of which is the
number of days in the period between the date of
prepayment and the relevant Fixed Rate Maturity Date
and the denominator of which is 360; and (iii) the
amount of the principal so prepaid.  Present value
under this Note is determined by discounting the
above product to present value using the Yield Rate
as the annual discount factor.
b. In no event shall Bank be obligated to make any
payment or refund to Debtor, nor shall Debtor be
entitled to any setoff or other claim against Bank,
should the return which Bank could obtain under the
above prepayment formula exceed the interest that
Bank would have received if no prepayment had
occurred.  All prepayments shall include payment of
accrued interest on the principal amount so prepaid
and shall be applied to payment of interest before
application to principal.  A determination by Bank
as to the Interest Rate Adjustment Premium amount,
if any, shall be conclusive.  In the event of
partial prepayment, such prepayments shall be
applied to principal payments in sequential order,
beginning with the next maturing Fixed Rate
Component and ending with the last Maturing Fixed
Rate Component.

c. Bank shall provide Debtor a statement of the amount
payable on account of prepayment.  Debtor
acknowledges that (i) Bank provides for a Fixed Rate
upon the understanding that it apply to the Fixed
Rate Component for the entire Interest Period, and
(ii) Bank would not lend to Debtor without Debtor's
express agreement to pay Bank the Interest Rate
Adjustment Premium described above.

d. The Interest Rate Adjustment Premium shall also be
payable if prepayment occurs as the result of the
acceleration of the principal of this Note by Bank
because of any Event of Default.  If, following such
acceleration, all or any portion of a Fixed Rate
Component is satisfied, whether through sale of
property encumbered by any security agreement or
other agreement securing this Note, at a foreclosure
sale held thereunder or through the tender of
payment at any time following such acceleration, but
prior to such a foreclosure sale, then such
satisfaction shall be deemed an evasion of the
prepayment conditions set forth above, and Bank
shall, automatically and without notice or demand,
be entitled to receive, concurrently with such
satisfaction the Interest Rate Adjustment Premium
set forth above, and the amount of such Interest
Rate Adjustment Premium shall be added to the
principal.  DEBTOR HEREBY ACKNOWLEDGES AND AGREES
THAT BANK WOULD NOT MAKE THE LOAN TO DEBTOR
EVIDENCED IN WHOLE OR IN PART BY THIS NOTE WITHOUT
DEBTOR'S AGREEMENT, AS SET FORTH ABOVE, TO PAY BANK
A INTEREST RATE ADJUSTMENT PREMIUM UPON THE
SATISFACTION OF ALL OR ANY PORTION OF THE PRINCIPAL
BEARING INTEREST AT A FIXED RATE FOLLOWING THE
ACCELERATION OF THE MATURITY DATE HEREOF BY REASON
OF AN EVENT OF DEFAULT.  DEBTOR HAS CAUSED THOSE
PERSONS SIGNING THIS NOTE ON ITS BEHALF TO
SEPARATELY INITIAL THE AGREEMENT CONTAINED IN THIS
PARAGRAPH BY PLACING THEIR INITIALS BELOW:
		INITIALS: ____________________

5.  DEFAULT AND ACCELERATION OF TIME FOR PAYMENT.  For the
purposes of this Note, the term "Event of Default" shall
mean any of the following: (a) the failure of Debtor to make
any payment required under this Note when due; or (b) the
occurrence of any other "Event of Default" or "Default"
as defined in the Loan Agreement or the other Loan
Documents.  Upon the occurrence of an Event of Default, Bank
shall be entitled to declare all obligations under this Note
immediately due and payable, and to exercise all rights and
remedies provided for in the Loan Agreement and the other
Loan Documents, provided, however, that upon the occurrence
of an Event of Default under Section 7.1(d) or Section
7.1(e) of the Loan Agreement, all principal and interest
shall automatically become immediately due and payable

6.	ADDITIONAL AGREEMENTS OF DEBTOR.  If any amounts owing
under this Note are not paid when due, Debtor promises to
pay all costs and expenses, including attorneys' fees
(including the allocated costs of Bank's in-house counsel
and legal staff), incurred by Bank in the collection or
enforcement of this Note.  Debtor and any endorsers of
this Note, for the maximum period of time and the full
extent permitted by law, (a) waive diligence,
presentment, demand, notice of nonpayment, protest,
notice of protest, and notice of every kind; (b) waive
the right to assert the defense of any statute of
limitations to any debt or obligation hereunder; and (c)
consent to renewals and extensions of time for the
payment of any amounts due under this Note.  If this Note
is signed by more than one party, the term "Debtor"
includes each of the undersigned and any successors in
interest thereof; all of whose liability shall be joint
and several.  Any married person who signs this Note
agrees that recourse may be had against the separate
property of that person for any obligations hereunder.
The receipt of any check or other item of payment by
Bank, at its option, shall not be considered a payment on
account until such check or other item of payment is
honored when presented for payment at the drawee bank.
Bank may delay the credit of such payment based upon
Bank's schedule of funds availability, and interest under
this Note shall accrue until the funds are deemed
collected.  In any action brought under or arising out of
this Note, Debtor and any other Loan Party, including

their successors and assigns, hereby consent to the
jurisdiction of any competent court within the State of
California, except as provided in any alternative dispute
resolution agreement executed between Debtor and Bank,
and consent to service of process by any means authorized
by said state's law.  The term "Bank" includes, without
limitation, any holder of this Note.  This Note shall be
construed in accordance with and governed by the laws of
the State of California.  This Note hereby incorporates
any alternative dispute resolution agreement previously,
concurrently or hereafter executed between Debtor and
Bank.  The deeds of trust securing this Note permits the
Bank to declare all obligations hereunder immediately due
and payable upon breach of the following provision:
"Trustor shall not, directly or indirectly, sell, convey,
assign, further encumber, transfer, alienate or otherwise
dispose of the real property encumbered by such deed of
trust or any part thereof or any interest therein,
whether voluntarily, involuntarily, by operation of law
or otherwise, or lease all or any portion thereof or an
undivided interest therein, or enter into an agreement to
do so, without the prior written consent of Beneficiary,
except as otherwise permitted by the Loan Agreement."

6. LIMITATION OF DEBTOR'S LIABILITY. Bank's recovery against
Debtor under the Loan Documents shall be limited solely
to the Collateral (including all rents, issues, profits
and income therefrom and proceeds thereof) and the
Special Letters of Credit given to Bank as security for
Debtor's performance under the Loan Documents, and such
recovery shall not be a lien, or the basis of a claim of
lien or levy of execution, against the general assets of
Debtor.  Notwithstanding the foregoing, Debtor and the
general assets of Debtor shall be fully and personally
liable to Bank to the same extent that Debtor would be
liable absent the foregoing limitation of this paragraph
for the following:

a. fraud, willful misrepresentation, gross negligence
or waste, to the full extent of Bank's loss
attributable thereto;

b. failure to pay taxes, assessments or other charges
attributable to Debtor which can create liens on any
portion of the Collateral senior in priority to the
lien of the Deed of Trust encumbering the affected
Collateral, including mechanic's liens, stop notices
or contractor's liens (to the full extent of any
such taxes, assessments or other charges);

c. any loss which would have been covered by any policy
of insurance that Debtor is required to maintain,
but failed to maintain, under the Loan Agreement or
any of the other Loan Documents;

d. tenant security deposits held by Debtor upon
foreclosure of the subject Property;

e. any inaccuracy in or breach of any representation or
warranty pertaining to any Hazardous Substance or
any failure in the due, prompt and complete
observance and performance of any covenant or any
other obligation imposed upon Debtor under or
pursuant to the Environmental Compliance Agreement;

f. retention of any rents or other income, insurance
proceeds, condemnation or eminent domain awards or
other similar funds or payments attributable to any
Collateral which, under the terms of any Loan
Document, should have been paid to Bank;

g. the full amount of the Loan and all other
obligations evidenced or secured by the Loan
Documents, in the event of any transfer of all or
any part of the Property without Bank's prior
written approval; or

h. all costs and expenses (including, without
limitation, attorneys' fees) incurred by Bank in
enforcing its rights and remedies under the Loan
Documents subsequent to any of the following:  (i)
an Event of Default under Section 7.1(e) of the Loan
Agreement; (ii) an Event of Default under
Section 7.1(d) of the Loan Agreement if the filing
is made against Debtor by any third party which was
solicited or induced to do so by Debtor; or (iii)
after the occurrence of any Event of Default under
either Section 7.1(d) or Section 7.1(e) of the Loan
Agreement:  (A) any objection by Debtor to (1) any
request by Bank for the dismissal of any proceeding
referred to in Section 7.1(d) or Section 7.1(e) of
the Loan Agreement; (2) any attempt by Bank to
obtain relief from the automatic stay; or (3) any
attempt by Bank to secure the continuation of any
receiver appointed pre-petition or to obtain
control, directly or through a receiver, of the
rents, issues and profits of any Property; (B) any
request by Debtor for authority to use cash
collateral over Bank's objection; (C) any action
brought by Debtor or on its behalf against Bank; (D)

any request by Debtor to sell Collateral over Bank's
objection; or (E) Debtor's taking of any position
adverse to Bank with respect to any plan of
reorganization proposed in any such proceedings.

The foregoing shall not be deemed to limit:  (i) any
right Bank might otherwise have to obtain injunctive
relief against Debtor; (ii) any suit or action in
connection with the preservation, enforcement or
foreclosure of the liens, mortgages, assignments and
security interests now or at any time hereafter securing
the payment and performance of the Obligations; or (iii)
the collection of amounts which may become owing or
payable under or on account of insurance, condemnation
awards or damages for other public actions or surety
bonds maintained or provided by Debtor.  In addition,
nothing herein shall be deemed to constitute a waiver of
any obligation evidenced by the Loan Documents, nor
limit, amend, alter or diminish any right which Bank may
have under the provisions of Sections 506(a), 506(b),
1111(b) or any other provision of the Bankruptcy Reform
Act of 1978, or any successor statute thereto, or any
similar provision under applicable state law, to file a
claim for the full amount of the Obligations or to
require that all Collateral shall continue to secure the
Loan owing to Bank in accordance with the Loan Documents.

7. DEFINITIONS.  As used herein, the following terms shall
have the meanings respectively set forth below:
a. "Business Day" shall mean a day which is not a
Saturday or Sunday on which Bank is open for
business in the state identified in Paragraph 6
above, and on which dealings in U.S. dollar
deposits outside of the United States may be
carried on by Bank.

b. "Fixed Rate Commencement Date" shall means the
first day of the Interest Period with respect to
principal outstanding under a Fixed Rate
Component.

c. "Fixed Rate Component" shall mean amounts
outstanding under this Note that bear interest at
a Fixed Rate.

d. "Fixed Rate Maturity Date" shall mean the last day
of the Interest Period with respect to principal
outstanding under a Fixed Rate Component.

e. "Interest Period" shall mean any calendar period
of one, two, three, six or twelve months. In
determining an Interest Period, a month means a
period that starts on one Business Day in a month
and ends on and includes the day preceding the
numerically corresponding day in the next month.
For any month in which there is no such
numerically corresponding day, then as to that
month, such day shall be deemed to be the last
calendar day of such month.  Any Interest Period
which would otherwise end on a non-Business Day
shall end on the next succeeding Business Day
unless that is the first day of a month, in which
event such Interest Period shall end on the next
preceding Business Day.

f. "LIBOR Rate" shall mean a per annum rate of
interest (rounded upward, if necessary, to the
nearest 1/100 of 1%) at which dollar deposits, in
immediately available funds and in lawful money of
the United States would be offered to Bank,
outside of the United States, for a term
coinciding with the Interest Period selected by
Debtor and for an amount equal to the amount of
principal covered by Debtor's interest rate
selection, plus Bank's costs, including the cost,
if any, of reserve requirements.

g. "Reference Rate" shall mean the rate announced by
Bank from time to time at its corporate
headquarters as its "Reference Rate."  The
Reference Rate is an index rate determined by Bank
from time to time as a means of pricing certain
extensions of credit and is neither directly tied
to any external rate of interest or index nor
necessarily the lowest rate of interest charged by
Bank at any given time.

DEBTOR:  BEDFORD PROPERTY INVESTORS, INC.,
         a Maryland corporation

By:  /s/Hanh Kihara
     ****************************
Its:  Vice President and Chief
      Financial Officer
     ****************************





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