CONSTRUCTION LOAN AGREEMENT

Exhibit 10. (a)

CONSTRUCTION LOAN AGREEMENT

BY AND AMONG

SAUL HOLDINGS LIMITED PARTNERSHIP,

a Maryland limited partnership (“ Borrower ”)

U.S. BANK NATIONAL ASSOCIATION,

a national banking association, as agent (“ Agent ”)

and

U.S. BANK NATIONAL ASSOCIATION,

a national banking association, as lender,

and any other lenders who are now or

who may hereafter become

parties to this Agreement (collectively, the “ Lenders ”)

TABLE OF CONTENTS

[SCHEDULES AND EXHIBITS INTENTIONALLY OMITTED]

CONSTRUCTION LOAN AGREEMENT

THIS CONSTRUCTION LOAN AGREEMENT (this “ Agreement ”) is made and entered into as of the 14th day of May, 2008, by and among (i)  SAUL HOLDINGS LIMITED PARTNERSHIP , a Maryland limited partnership (“ Borrower ”), (ii)  U.S. BANK NATIONAL ASSOCIATION , a national banking association, as agent (“ Agent ”), and (iii)  U.S. BANK NATIONAL ASSOCIATION , a national banking association, as lender, and any other lenders who are now or who may hereafter become parties to this Agreement (collectively, the “ Lenders ”).

WITNESSETH THAT , in consideration of the mutual covenants and agreements hereinafter set forth, the parties hereto agree as follows:

DEFINITIONS

For the purposes of this Agreement, the following terms shall have the following respective meanings, unless the context hereof clearly requires otherwise:

Advance : Any portion of the Loan advanced to or for the benefit of Borrower in accordance with the terms hereof.

Advance Date : The date on which an Advance requested by Borrower hereunder is to be made.

Affiliate : Any parent of Borrower, subsidiary of Borrower or entity controlled by or under common control with Borrower.

Agent : U. S. Bank National Association, its successors and assigns as agent for the Lenders.

Agreement : This Construction Loan Agreement, including any amendments hereof and supplements hereto executed by Borrower and Agent.

Architect’s Certificate : That certain Certificate of Architect regarding the Property from the Project Architect.

Assignee Lender : As defined in Section 8.9(a) .

Assignment and Assumption Agreement : An instrument in the form of Exhibit A , duly completed and executed and delivered.

Bank-Provided Interest Rate Hedge : An Interest Rate Hedge which is provided by any Lender and which meets the following requirements: such Interest Rate Hedge (i) is documented in a standard International Swap Dealer Association Agreement, (ii) provides for the method of calculating the reimbursable amount of the provider’s credit exposure in a reasonable and customary manner, and (iii) is entered into for hedging (rather than speculative) purposes. If Borrower elects to obtain a Bank-Provided Interest Rate Hedge, and provided that Agent confirms that such Interest Rate Hedge meets the foregoing requirements, the liabilities of the Borrower to the provider of any Bank-Provided Interest Rate Hedge shall be a part of Borrower’s obligations hereunder, guaranteed by the Guaranty and secured by the Deed of Trust and other Loan Documents.

Borrower : Saul Holdings Limited Partnership, a Maryland limited partnership, and its permitted successors and assigns.

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Business Day : Any day, other than a Saturday, a Sunday, or a legal holiday on which Agent is not open for business.

Closing Date : The date of this Agreement.

Code : The Internal Revenue Code of 1986, as amended, and applicable U.S. Department of Treasury regulations issued pursuant thereto in temporary or final form.

Commitment Percentage : With respect to each Lender’s share of all right, title and interest in the Loan and the Loan Documents, as set forth on Exhibit I attached hereto, as amended and modified by unilateral action of Agent from time to time to reflect the sale or assignment of a portion of the Loan.

Committed Amount : One Hundred Fifty-Seven Million Five Hundred Thousand and 00/100ths Dollars ($157,500,000.00).

Completion : All Improvements have achieved Substantial Completion (as defined in the Construction Contract), free of all mechanics’, labor, materialmen’s and other similar lien claims; said Substantial Completion has been approved by the Inspecting Architect; Borrower and Project Architect have delivered a certification to Agent on AIA Form G704 that the Property has been substantially completed in accordance with the approved Plans; Borrower has obtained and delivered to Agent copies of all licenses and permits needed to operate the Property; Agent has received photographs of the completed Improvements, copies of all warranties from suppliers covering materials, equipment and appliances included within the Property and evidence that all insurance required hereby is in full force and effect; and no Event of Default exists hereunder.

Completion Date : December 24, 2010, provided however that such Completion Date shall be subject to extension by reason of acts of God (including hurricanes, tornadoes, cyclones, other severe storms, high winds, lightning, floods or earthquakes); action or inaction of governmental authorities having jurisdiction over the Project; strikes; shortages or unavailability of labor or materials; lockouts or labor difficulty; explosion; sabotage; accident; riot or civil commotion; act of war, fire or other casualty; legal requirements; and causes beyond the reasonable control of Borrower; provided, Borrower provides written notice to Agent immediately upon becoming aware of the occurrence of any of the foregoing conditions and provided further that the aggregate period of such delay(s) shall not extend beyond April 26, 2011.

Construction Contract : As defined in Section 2.1(c) hereof.

Consultants : Third party experts retained by Agent to assist it in connection with closing, advancing, disbursing or administering the Loan.

Contingency Reserve : A reserve of Loan proceeds to pay costs of the Property which are in excess of the amounts thereof anticipated on the date hereof, whether as a result of price increases, changes in the Plans or otherwise, the initial amount of which shall be Seven Million Four Hundred and Five Thousand and Two Hundred Eighteen and 00/100ths Dollars ($7,405,218.00).

Contractor : Any person, party or entity (other than the Project Architect) which has a contract or subcontract under which payment may be required for any work done, material supplied or services furnished in connection with acquiring, constructing, financing, equipping and/or developing the Property.

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Debt Service : An amount equal to (x) the amount of the Loan outstanding at the time of determination multiplied by (y) the greater of (i) a debt constant calculated using a rate of interest equal to 2.25% per annum in excess of the then prevailing T-Note Rate and assuming a thirty (30) year principal amortization schedule, or (ii) seven percent (7.0%) per annum.

Debt Service Test : The determination by Agent, in its sole discretion exercised in good faith, that the Property has generated Net Operating Income during the immediately preceding three (3) months which, when annualized, equals or exceeds the product of (a) with respect to a proposed reduction in the Interest Rate payable under the Loan Documents, as contemplated in the definition of “LIBOR Rate” below, 1.00 times Debt Service (the “ Interest Rate Reduction Debt Service Test ”), (b) with respect to the condition set forth in Section 1.4(b) hereof for the Second Extension Period, as determined as of the first day of such Extension Period, 1.00 times Debt Service (the “ Extension Debt Service Test ”), and (c) with respect to a proposed reduction in the liability of Borrower under the Loan Documents, as contemplated in Section 8.17 hereof, 1.00 times Debt Service (the “ Recourse Reduction Debt Service Test ”).

Deed of Trust : The Combination Credit Line Deed of Trust, Security Agreement and Fixture Financing Statement of even date herewith covering the Property, executed by Borrower in favor of Agent for the benefit of the Lenders to secure the Loan, including any amendments thereof and supplements thereto executed by Borrower and Agent.

Default Rate : As defined in Section 1.11 hereof.

Defaulting Lender : Any Lender who for any reason shall fail or refuse to abide by its obligations under the Loan Documents or this Agreement within the time periods specified for performance of such obligation or, if no time frame is specified, if such failure or refusal continues for a period of five (5) Business Days. Agent shall notify Lender of its determination that such Lender is a Defaulting Lender. Any such Defaulting Lender shall have a period of five (5) Business Days after Agent’s notice within which to cure such Defaulting Lender’s failure or refusal to comply with its obligations hereunder and the under the Loan Documents.

Developer : Saul Holdings Limited Partnership, a Maryland limited partnership.

Development Fee : A sum equal to $8,500,000.00, representing the fee payable by Borrower to Developer. The Development Fee shall not be a part of any Advance hereunder.

Draw Request : A written request by Borrower, in the form of Exhibit K hereto, or such other form as may be reasonably requested by Agent, for an advance of Loan proceeds under this Agreement.

Employee Benefit Plan : Any employee benefit or other plan establishing benefits or compensation for employees established or maintained, or to which contributions have been made, by Borrower.

Environmental Audit : A written environmental review, audit, assessment or report addressed to Agent, setting forth the results of an investigation of the Property, including an historical investigation of the uses and ownership of the Land, contacts with appropriate governmental agencies and any Tests which may be requested by Agent, prepared by a competent environmental engineer or consultant who is acceptable to Agent and is licensed, bonded and insured in accordance with all applicable statutes.

Environmental Laws : Any judgment, decree, order, law, license, rule or regulation pertaining to environmental matters, including without limitation, those arising under the Resource Conservation and

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Recovery Act (“ RCRA ”), the Comprehensive Environmental Response, Compensation and Liability Act of 1980 as amended (“ CERCLA ”), the Superfund Amendments and Reauthorization Act of 1986 (“ SARA ”), the Federal Clean Water Act, the Federal Clean Air Act, the Toxic Substances Control Act, or any state or local statute, regulation, ordinance, order or decree relating to health, safety or the environment.

Equipment : All fixtures, equipment and personal property owned by Borrower and located or to be located in or on, and used in connection with, the construction, management, maintenance or operation of the Land and the Improvements.

Equity Requirement : An aggregate amount of Fifty-Three Million Five Hundred Thousand and 00/100ths Dollars ($53,500,000.00), consisting of (i) Twenty Nine Million Seven Hundred Thirty Five Thousand Three Hundred Thirty One and 00/100ths Dollars ($29,735,331.00) which shall be contributed on or prior to the Closing Date, (ii) the Development Fee, and (iii) Fifteen Million Two Hundred Sixty Four Thousand Six Hundred Sixty Nine and 00/100th Dollars ($15,264,669.00) which shall be contributed on a pari passu (50/50) basis with the Loan proceeds until all such additional Fifteen Million Two Hundred Sixty Four Thousand Six Hundred Sixty Nine and 00/100th Dollars ($15,264,669.00) has been contributed. The Equity Requirement shall not be deemed satisfied unless and until confirmed by Agent in writing, in its sole discretion, upon Borrower’s written request.

ERISA : As defined in Section 5.16 .

ERISA Affiliate : Any corporation which is a member of the same controlled group of corporations (within the meaning of Section 414(b) of the Code) as Borrower or any trade or business which is under common control (within the meaning of Section 414(c) of the Code) with Borrower or any organization which is required to be treated as a single employer with Borrower under Section 414(m) or 414(o) of the Code.

Event of Default : Any event set forth in Section 6.1 .

Extension Debt Service Test : As defined in the definition of Debt Service Test.

Extension Fee : Fifteen hundredths of one percent (0.15%) of the then outstanding principal balance of the Loan.

Extension Periods : As defined in Section 1.4 .

Extension Request : As defined in Section 1.4 .

Federal Funds Rate : As of any date of determination, the rate set forth in the weekly statistical release designated as H.15(519), or any successor publication, published by the Federal Reserve Board (including any such successor, “H.15(519)”) for such date opposite the caption “ Federal Funds (Effective) ”. If for any relevant date such rate is not yet published in H.15(519), the rate for such date will be the rate set forth in the daily statistical release designated as the Composite 3:30 p.m. Quotations for U.S. Government Securities, or any successor publication, published by the Federal Reserve Bank of New York (including any such successor, the “ Composite 3:30 p.m. Quotation ”) for such date under the caption “ Federal Funds Effective Rate ”. If on any relevant date the appropriate rate for such date is not yet published in either H.15(519) or the Composite 3:30 p.m. Quotation, the rate for such date will be the arithmetic mean of the rates for the last transaction in overnight Federal funds arranged prior to 9:00 a.m. (New York City time) on that date by each of three leading brokers of Federal funds transactions in New York City selected by Agent.

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Fee Letter : That certain Fee Letter between Borrower and Agent of even date herewith.

First Extension Period : As defined in Section 1.4 .

GAAP : Generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board of 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 approved by a significant segment of the accounting profession, which are applicable to the circumstances as of any date of determination. Except as may be expressly provided to the contrary herein, all accounting terms used herein shall be interpreted, and all accounting determinations hereunder shall be made, in accordance with GAAP. To the extent any change in GAAP affects any computation or determination required to be made pursuant to this Agreement, such computation or determination shall be made as if such change in GAAP had not occurred, unless Borrower and Agent agree in writing on an adjustment to said computation or determination to account for such change in GAAP.

General Contractor : Clark Residential, LLC.

Governmental Requirements : All laws, statutes, codes, ordinances, and governmental rules, regulations and requirements (including, without limitation, the Proffers) applicable to Borrower and the Property.

Guarantor : Saul Centers, Inc., a Maryland corporation.

Guaranty : That certain Guaranty of even date herewith given by Guarantor in favor of Agent and the Lenders.

Hazardous Substances : Any hazardous waste, as defined by 42 U.S.C. § 9601(5), any hazardous substances as defined by 42 U.S.C. § 9601(14), any pollutant or contaminant as defined by 42 U.S.C. §9601(33) or any toxic substances, oil or hazardous materials or other chemicals or substances regulated by any Environmental Laws.

Improvements : The buildings and improvements that are now or are hereafter placed or constructed upon the Land, as more particularly described on Exhibit B attached hereto (including all sitework, utilities, infrastructure, paving, striping, signage, curb and gutter, landscaping and installation of all “common area” improvements required under any covenants encumbering the Property, required by applicable law, or zoning approvals entered into by Borrower).

Initial Advance : The first advance of Loan proceeds.

Inspecting Architect : EMJ Construction Consultants and/or any other independent architect, engineer or consultant selected by Agent.

Interest Rate Hedge : An interest rate exchange, collar, cap, swap, adjustable strike cap, adjustable strike corridor or similar agreements entered into by Borrower to provide protection to, or minimize the impact upon, the Borrower of increasing floating rates of interest applicable to the Loan .

Interest Rate Reduction Debt Service Test : As defined in the definition of Debt Service Test.

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Interest Reserve : A reserve of Loan proceeds to pay interest on the Loan through Completion of the Improvements, the initial amount of which shall be Twenty Million Nine Hundred Forty Eight Thousand Nine Hundred Eighty Nine and 00/100ths Dollars ($20,948,989.00).

Land : The land legally described on Exhibit C attached hereto and hereby made a part hereof, together with all additions thereto and substitutions therefor agreed to by Borrower and Agent.

Law : Any federal, state or local law, statute, rule, regulation, ordinance, order, decree, directive, requirement, code, notice of violation or rule of common law, now or hereafter in effect, and in each case as amended, and any judicial or administrative interpretation thereof by a governmental authority or otherwise, including any judicial or administrative order, determination, consent decree or judgment.

Leadership : Leadership Institute, a Virginia non-stock corporation

Leadership Agreements : Collectively, those certain documents by and between Borrower and Leadership relating to the Project, as may be amended, modified, supplemented or replaced from time to time, including, without limitation, (i) that certain Development Agreement dated as of June 7, 2006, as amended by that certain First Amendment to Development Agreement dated as of September 5, 2007; (ii) that certain Lease dated as of June 7, 2006; and (iii) that certain Temporary Construction Easement and Crane Swing License Agreement dated as of June 7, 2006.

Lease : Any lease, sublease or sub-sublease, letting, license, concession or other agreement (whether written or oral and whether now or hereafter in effect), pursuant to which any Person is granted a possessory interest in, or right to use or occupy, all or any portion of any space in the Project, and every modification, amendment or other agreement relating to such lease, sublease, sub-sublease or other agreement entered into in connection with such lease, sublease, sub-sublease or other agreement and every guarantee of the performance and observance of the covenants, conditions and agreements to be performed and observed by the other party thereto; provided, however, that such term shall not include any agreements, instruments or other documents that are necessary to satisfy the Proffers.

Leasing Guidelines : As set forth on Exhibit N attached hereto and hereby made a part hereof.

Lenders : Each Lender that is a party to this Agreement and which hereafter becomes party to this Agreement, collectively, and each of their respective permitted successors and assigns.

LIBOR : With respect to any requested LIBOR Rate Advance, the one month LIBOR Rate quoted by Agent from Reuters Screen LIBOR01 or any successor thereto, which shall be that one-month LIBOR Rate in effect two New York Banking Days prior to the beginning of each calendar month, adjusted for any reserve requirement and any subsequent costs arising from a change in government regulation, such rate to be reset monthly on the first day of each calendar month.

LIBOR Rate : (a) For the period commencing on the date of this Agreement and continuing thereafter unless and until the effective date of any reduction in such rate in accordance with clause (b) below, LIBOR Rate shall mean a rate of interest equal to two and one-half percent (2.5%) per annum plus LIBOR; (b) if, upon Borrower’s written request, Agent determines, in its sole discretion acting in good faith, that Completion has occurred, LIBOR Rate shall mean a rate of interest equal to two and thirty-five hundredths percent (2.35%) per annum plus LIBOR, and (c) if, upon Borrower’s written request, Agent determines, in its sole discretion acting in good faith, that the Interest Rate Reduction Debt Service Test is satisfied, LIBOR Rate shall mean a rate of interest equal to two and twenty hundredths percent (2.20%) per annum plus LIBOR. In no event shall the LIBOR Rate ever exceed the maximum lawful rate.

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LIBOR Rate Advance : Any portion of the Principal Balance which bears interest at a LIBOR Rate; provided, however, that any LIBOR Rate Advance must be in the aggregate principal amount of at least $500,000.00.

Loan : The loan of the proceeds of the Note by the Lenders to Borrower in advances to be made pursuant to the terms of this Agreement.

Loan Documents : The documents enumerated in Section 2.2 of this Agreement, which evidence and secure the Loan, including, but not limited to, the Note, the Deed of Trust, this Agreement, the Assignment of Leases and Rents and the Indemnification Agreement, and including any amendments thereof and supplements thereto executed by Borrower and Agent.

Majority Lenders : Lenders holding Notes representing, in the aggregate, not less than sixty six and sixty seven hundredths percent (66.67%) of the Committed Amount or, if no such principal amount is then outstanding, Lenders representing not less than sixty six and sixty seven hundredths percent (66.67%) of the Commitment Percentages.

Maturity Date : November 14, 2011, as such date may be extended in accordance with the provisions of Section 1.4 hereof.

Money Markets : One or more wholesale funding markets available to Agent, including negotiable certificates of deposit, commercial paper, eurodollar deposits, bank notes, federal funds and others.

Multiemployer Plan : Any plan defined as such in Section 3(37) of ERISA.

Net Operating Income : For any period of determination, net operating income generated by the Property for such period ( i.e. , gross operating income determined in accordance with GAAP, less (x) all operating expenses payable in the ordinary course of operating the Property, determined in accordance with GAAP (exclusive of debt service, capital expenditures, leasing costs, tenant improvement costs, depreciation and amortization) and (y) reserves calculated for the first year on the basis of (1) for apartments units, $250.00 per unit per year, or $61,000.00, (2) for office space, $0.25 per rentable square foot per year, or $42,600.00; and (3) for retail space, $0.25 per rentable square foot per year, or $10,575, for a total reserve deduction in the first year of operations of $114,175. After completing the first full year of operations, reserves shall be escalated at 4% per annum. Borrower shall provide Agent with all information and materials required by Agent necessary for the determination of Net Operating Income.

New York Banking Day : Any day (other than a Saturday or Sunday) on which commercial Lenders are open for business in New York, New York.

Note : Individually or collectively, as the context may require, the Promissory Notes, of even date herewith, executed and delivered by Borrower to the Lenders in the aggregate maximum principal amount of One Hundred Fifty-Seven Million Five Hundred Thousand and 00/l00ths Dollars ($157,500,000.00), to evidence the Loan, as the same may be amended, modified or replaced from time to time.

Obligations : The obligations of Borrower to Agent and the Lenders described in the Loan Documents.

Operating Budget : A detailed listing of all anticipated annual income and expenses from and for managing, maintaining and operating the Property, prepared by Borrower or its agent and in form and substance acceptable to Agent.

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Operating Statement : A current, detailed statement of income and expenses from and for managing, maintaining and operating the Property, in form and substance acceptable to Agent, certified as true, correct and complete by the chief financial officer of Borrower (or officer acting in a similar such capacity), and expressly showing all variations from the Operating Budget for the period covered thereby.

Pension Plan : Any employee pension benefit plan within the meaning of Section 3(2) of ERISA with respect to which Borrower or any ERISA Affiliate at any relevant time has liability or an obligation to contribute.

Permitted Encumbrances : The liens, charges and encumbrances on title to the Property listed on Exhibit D hereto, if any, or otherwise approved by the Agent in writing.

Permitted Transfer : The following transfers, pledges and other changes in the direct or indirect ownership interests in Borrower and/or Guarantor (which shall be permitted without payment of any fee to Agent or the Lenders):

(a) transfers of interests, admissions of additional members, limited partners or shareholders, and other structural changes, in Borrower, Guarantor, or any owner of a direct or indirect legal or beneficial interest in either of them, including, but not limited to, their respective partners, members or shareholders, provided that after giving effect thereto (i) B. Francis Saul II, B. Francis Saul III, members of their respective families, trusts for the benefit of any of the same and/or companies or other entities controlled directly or indirectly by any of the same, continue to (A) own and control, directly or indirectly, at least ten percent (10%), in the aggregate, of (x) the limited partnership units of Borrower, and (y) the common stock of Guarantor on a fully diluted basis, and (B) retain responsibility for the day-to-day management of the Property; and (ii) Guarantor continues to be the sole managing general partner of Borrower; and

(b) transfers of the publicly traded stock of Guarantor, provided that after giving effect thereto, B. Francis Saul II, B. Francis Saul III, members of their respective families, trusts for the benefit of any of the same and/or companies or other entities controlled directly or indirectly by any of the same, continue to (i) own and control, directly or indirectly, at least ten percent (10%), in the aggregate, of the common stock of Guarantor on a fully diluted basis, and (ii) retain responsibility for the day-to-day management of the Property.

For purposes of the foregoing, a pledge of any interest shall not constitute a transfer of such interest unless and until the interest so pledged has been transferred pursuant to a foreclosure of the lien of such pledge, provided that any such pledge shall not exceed one hundred percent (100%), in the aggregate, of the limited partnership interests in Borrower. As necessary, all representations and warranties of Borrower and Guarantor in the Loan Documents shall be deemed modified to conform to any such transfers, pledges or other changes.

Person : Any natural person, corporation, limited liability company, partnership (general or limited), limited liability partnership, joint venture, firm, association, trust, unincorporated organization, government or governmental agency or political subdivision or any other entity, whether acting in an individual, fiduciary or other capacity.

Plan : As defined in Section 5.16 .

Plans : The construction documents for the Improvements, including the plans, drawings and specifications, as approved (or deemed approved) by Agent from time to time.

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Pollutant : Any hazardous or toxic substance, waste or material, or other pollutant or contaminant (including but not limited to radioactive materials, gasoline, asbestos, ureaformaldehyde and polychlorinated biphenyls), as those terms are defined or used in any Environmental Law.

Pre-Leasing Test : As defined on Exhibit Q hereto.

Prime Rate : The rate publicly announced by Agent from time to time as its prime rate, as and when such rate changes; provided, however, that Agent may lend to its customers at interest rates that are above or below the Prime Rate.

Prime Rate Advance : Any portion of the Principal Balance which bears interest at the Prime Rate.

Principal Balance : One Hundred Fifty-Seven Million Five Hundred Thousand and 00/100ths Dollars ($157,500,000.00) or so much thereof as may have been advanced to or for the benefit of Borrower and remains unpaid from time to time.

Prior Advance : As defined in Section 3.5(d)(2) .

Proffers : The approved development conditions of Arlington County special exception site plan no. 397, and all agreements contemplated thereby, whether or not existing in separate written form as of the date of this Agreement.

Project : A mixed use development located on two parcels of land straddling the North and South sides of Clarendon Boulevard between North Garfield and North Highland Streets comprised of approximately 244 rental apartment units, approximately 170,400 square feet of office space, approximately 42,300 square feet of ground floor and retail space and an underground parking garage containing approximately 600 spaces.

Project Architect : Torti Gallas and Partners, or such other architectural firm that may be selected by Borrower, subject to the approval of Agent, such approval not to be unreasonably withheld, conditioned or delayed.

Projected Sources : As defined in Section 5.3 .

Property : The Land, the Improvements and the Equipment.

Protective Advances : Any amount advanced or expended by the Agent and/or the Lenders pursuant to the Loan Documents to preserve or protect the Lenders’ rights with respect to the Loan.

Recourse Reduction Debt Service Test : As defined in the definition of Debt Service Test.

Regulation D; Regulation U : Regulations D and U, respectively (or any substitute regulations), of the Board of Governors of the Federal Reserve System (or any successor thereto), together with all amendments from time to time thereto.

Regulatory Change : Any change, after the date of the initial funding of the Note, in United States federal, state or foreign laws, regulations or treaties, or the adoption or making after such date of any interpretations, directives or requests applying to Agent and/or the Lenders of or under any United States federal, state or foreign laws or regulations (whether or not having the force of law) by any court or

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governmental or monetary authority charged with the interpretation or administration thereof, excluding, however, for purposes of LIBOR Rate Advances, any such change which results in an adjustment of the reserve requirement specified by Regulation D and the effect of which is reflected in a change in rate applicable to any such LIBOR Rate Advance.

Reserves : The Interest Reserve, Contingency Reserve and Tenant Improvement Reserve.

Revolving Credit Agreement : As defined in Section 5.14 .

Second Extension Period : As defined in Section 1.4 .

Set-Off : A security interest granted by Borrower to Agent and the Lenders, a lien on and an express contractual right to set off against all depository account balances, cash and any other property of the Borrower now or hereafter in the possession of Agent or the Lenders and the right to refuse to allow withdrawals from any account, subject to the terms of the Loan Documents and applicable law.

Sworn Construction Cost Statement : An itemized, certified statement of actual and estimated costs of the Property, in the form of Exhibit E attached hereto or to be attached hereto within ninety (90) days after the date hereof and hereby made a part hereof, signed and sworn to by Borrower (as indicated on Exhibit E hereto), as the same may be amended or supplemented with the approval of Agent from time to time, Section I of which is referred to as the “ Summary Sworn Construction Cost Statement ”.

Tenant Improvements : All finish improvements to the basic building shell of the Improvements for tenant space within the Improvements, as shown on the schedule thereof delivered by Borrower to Agent.

Tenant Improvement Reserve : A reserve of Loan proceeds to pay the costs of Tenant Improvements for retail and office space, the initial amounts of which shall be $2,750,085.00 and $10,310,760.00, respectively.

Tests : Such soil tests, chemical tests, materials tests and other tests and analyses as are appropriately required to confirm, with relative certainty, the absence of Pollutants from the Property.

Title Company : Commonwealth Land Title Insurance Company.

Title Policy : A loan policy of title insurance in favor of Agent for the benefit of the Lenders issued by the Title Company and complying with the requirements of Exhibit F attached hereto and hereby made a part hereof.

T-Note Rate : The annualized yield on ten (10) year United States Treasury notes having a maturity date closest to the Maturity Date, as determined by Agent in its sole discretion.

I. LOAN

1.1 Principal . Subject to the terms, provisions and conditions of this Agreement, each Lender severally, but not jointly, agrees to lend to Borrower pro rata in accordance with its Commitment Percentage, and Borrower agrees to borrow from the Lenders, the proceeds of the Loan, from time to time, in accordance with the terms hereof until the Maturity Date, for the purpose of constructing the Improvements and otherwise developing the Property. All advances of Loan proceeds shall be evidenced by the Note. Notwithstanding the expressed principal amount of the Note, Borrower shall not be obligated to repay more than the unpaid balance of advances made to or for the

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benefit of Borrower by Agent and the Lenders pursuant hereto and to the other Loan Documents, together with interest thereon at the rates specified below, computed on each Advance from the date it is made by the Lenders. In no event shall the Lenders be obligated hereunder to lend to Borrower more than Borrower has qualified to receive under the terms of Article III hereof.

1.2 Payment of Interest . Interest shall accrue on the Principal Balance from and after the date hereof. All interest payable hereunder shall be computed on the basis of a 360 day year, but shall be charged for the actual number of days principal is unpaid. Interest accruing in accordance herewith shall be payable, as accrued, on the first Business Day of each calendar month, commencing with the first Business Day of the next calendar month following the calendar month in which the Initial Advance is made to Borrower, and continuing on the first Business Day of each and every calendar month thereafter until the Principal Balance and all accrued interest thereon are paid in full. Agent shall provide a monthly notice to Borrower setting forth the amount of interest due and the due date thereof, which notice shall be mailed on or prior to the tenth (10th) day preceding the first day of each month; provided, however, that Borrower shall be obligated to pay interest on the Loan when due regardless of the date Borrower receives such notice. All unpaid, accrued interest shall be paid in full at the time the Principal Balance is paid in full.

In the event that the interest and/or charges in the nature of interest, if any, provided for by this Agreement or by any other Loan Document, shall contravene a legal or statutory limitation applicable to the Loan, if any, Borrower shall pay only such amounts as would legally be permitted; provided, however, that if the defense of usury and all similar defenses are unavailable to Borrower, Borrower shall pay all amounts provided for herein. If, for any reason, amounts in excess of the amounts permitted in the foregoing sentence shall have been paid, received, collected or applied hereunder, whether by reason of acceleration or otherwise, then, and in that event, any such excess amounts shall be applied to principal, unless principal has been fully paid, in which event such excess amount shall be refunded to Borrower.

1.3 Prepayment . The Principal Balance and accrued interest thereon may be prepaid in full or in part at any time, without premium or penalty, after a minimum of three (3) Business Days’ prior written notice from Borrower to Agent of the date of prepayment. In the event that Borrower shall fail to provide at least such three (3) Business Days’ notice when herein required, Agent will charge, and Borrower shall pay, additional interest on the amount prepaid, at the LIBOR Rate or at the Default Rate, whichever is then applicable, from the earlier of the date such notice is given or the date the prepayment is made through the date three (3) Business Days after the date of such notice or, if no notice is given, such prepayment. Each prepayment shall be in an amount not less than the lesser of $100,000.00 or the Principal Balance.

1.4 Maturity Date; Extension . If not sooner paid in accordance with the terms hereof, the Principal Balance, together with all unpaid interest accrued thereon, shall be due and payable, in full, on the Maturity Date; provided, however, the Maturity Date may be extended for two (2) additional periods of nine (9) months each (individually, the “ First Extension Period ” and the “ Second Extension Period ” and collectively, the “Extension Periods” ) upon the written request (the “Extension Request” ) of Borrower given not less than thirty (30) days nor more than ninety (90) days prior to the Maturity Date then existing, each such extension being subject to satisfaction of all of the following conditions:

(a) Payment on or before the first day of each Extension Period of the Extension Fee;

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(b) With respect to the Second Extension Period, the Extension Debt Service Test shall be satisfied as of the first day of such Extension Period, as determined by Agent in its sole discretion exercised in good faith (assuming that all principal and interest payments due hereunder are paid in a timely manner after receipt by Agent of the Extension Request); provided, however, if the Extension Debt Service Test is not satisfied, Borrower may elect to satisfy this condition by paying a principal curtailment in an amount sufficient to reduce the Principal Balance as of the first day of the Second Extension Period such that the Extension Debt Service Test shall be satisfied as of such date, as determined by Agent in its sole discretion exercised in good faith (assuming that all principal and interest payment due hereunder are paid in a timely manner after receipt by Agent of the Extension Request);

(c) At the time of each Extension Request and on the first day of each Extension Period, there shall exist no uncured Event of Default (as hereinafter defined);

(d) Borrower shall deliver to Agent a title bringdown or, in the event Agent requires that any documentation be recorded in connection with such extension, an endorsement to the existing title insurance policy held by Agent on behalf of the Lenders in connection with the Loan, bringing current the effective date of such coverage setting forth no liens or encumbrances other than Permitted Encumbrances and stating that the coverage afforded by such title insurance policy, or the agreements thereunder, shall not be affected because of such extension;

(e) Completion of the Improvements has been achieved to the satisfaction of Agent and all certificates of occupancy and use permits shall have been issued in connection therewith;

(f) Borrower shall deliver to Agent all financial information relating to Borrower and the Guarantor required hereunder, and such information shall reflect that no Materially Adverse Effect (as defined in the Deed of Trust), financial or otherwise, as determined by Agent, in its sole discretion exercised in good faith, shall have occurred with respect to Borrower;

(g) Borrower shall deliver to Agent on or before the then existing Maturity Date such documentation as Agent may reasonably require in connection with such proposed extension, all of which shall be in form and substance acceptable to Agent;

(h) Borrower shall pay all costs and expenses reasonably incurred by or on behalf of Agent in connection with such extension, including appraisal fees, internal or external appraisal review fees, inspection fees, legal fees and such other professional services which Agent requires; Borrower shall also pay survey costs and costs of environmental studies and reports if such survey(s) and/or environmental studies or reports are deemed necessary by Agent pursuant to Agent’s internal policies or pursuant to applicable laws, rules or regulations; the payment by Borrower of these costs and expenses shall not be credited, in any way or to any extent, against any portion of the outstanding balance of the Loan; and

(i) At the time of each Extension Request and on the first day of each Extension Period, Agent shall have determined that the Loan is in balance pursuant to Section 3.2 .

Notwithstanding Borrower’s right to extend the Maturity Date of the Loan as set forth above, Borrower hereby agrees that Agent and the Lenders shall have no commitment or obligation to extend the Maturity Date unless each of the foregoing conditions shall have been satisfied.

1.5 Calculation of Interest . From and after the date hereof, and until the date on which the Note is paid in full, Borrower shall pay interest only on the outstanding Principal Balance at the

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rate per annum equal to the LIBOR Rate, except as otherwise provided in this Agreement and the Loan Documents.

1.6 Regulatory Costs . Notwithstanding any other provision herein, if any Regulatory Change shall change the basis of taxation of payments to the Lenders of the principal of or interest on any LIBOR Rate Advance or any other fees or amounts payable hereunder (other than taxes imposed on the overall net income of the Lenders by the jurisdiction in which the Lenders have their principal offices or by any political subdivision or taxing authority therein), or shall subject the Lenders to any new or additional charge, fee, withholding or tax of any kind with respect to the Loan hereunder or change the method of taxation of the Loan or impose, modify or deem applicable any reserve, special deposit or similar requirement against assets of, deposits with or for the account of, or credit or loan commitments extended by, the Lenders (except any such reserve requirement which is reflected in LIBOR) or shall impose on the Lenders or the London interbank market any other condition affecting this Agreement, the Note or the LIBOR Rate Advances made by the Lenders, and the result of any of the foregoing shall be to increase the cost to the Lenders of making or maintaining any LIBOR Rate Advance or to reduce the amount of any sum received or receivable by the Lenders hereunder (whether of principal, interest or otherwise) in respect thereof, by an amount deemed by such Lender to be material, then Borrower shall pay to Agent for the benefit of such Lender upon demand, such additional amount or amounts as will compensate such Lender for such additional costs or reduction, including lost income resulting therefrom as reasonably determined by such Lender. A statement from such Lender setting forth such amount or amounts as shall be necessary to so compensate such Lender shall be delivered to Borrower and shall, in the absence of manifest error, be conclusive and binding upon Borrower. Borrower shall pay Agent on behalf of such Lender the amount shown as due on any such statement within ten (10) Business Days after its receipt of the same. Failure on the part of any Lender to demand compensation for any increased costs, lost income or reduction in amounts received or receivable shall not constitute a waiver of such Lender’s rights to demand compensation for any increased costs or reduction in amounts received or receivable. The protection under this section shall be available to the Lenders regardless of any possible contention of the invalidity or inapplicability of any law, regulation or directive which shall give rise to any demand by the Lenders.

1.7 Inability to Determine LIBOR . In the event that on any date for determining the LIBOR Rate, Agent shall determine (which determination shall be conclusive in the absence of manifest error) that, by reason of circumstances affecting the London interbank market, adequate and fair means do not exist for ascertaining the LIBOR Rate, Agent shall promptly give to Borrower notice (confirmed as soon as practicable in writing) of the nature and effect of such circumstances, and the Principal Balance shall bear interest at a rate based upon an alternate index selected by the Agent, reasonably comparable to that of LIBOR, intended to generate a return substantially the same as that generated by the LIBOR Rate. If at any time subsequent to Agent’s giving of such notice, Agent determines that because of a change in circumstances the LIBOR Rate is again available to Borrower, Agent shall so notify Borrower and shall convert the rate of interest payable with respect to such portion of the Principal Balance from such alternative rate to the LIBOR Rate. Nothing in this Section shall affect the LIBOR Rate then in effect on any LIBOR Rate Advance outstanding at the time of receipt by Borrower of such notice until the expiration of the LIBOR Rate period in effect with respect to such LIBOR Rate Advance at such time.

1.8 Illegality . Notwithstanding anything to the contrary herein contained, if any Regulatory Change shall make it unlawful for Agent and/or the Lenders to make or maintain any LIBOR Rate Advance or to give effect to its obligations as contemplated hereby, then, by written notice to Borrower, Agent may:

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(a) declare that LIBOR Rate Advances will not thereafter be made hereunder, in which event Borrower shall be prohibited from requesting LIBOR Rate Advances, and the Lenders shall not be required to make LIBOR Rate Advances to Borrower, hereunder unless such declaration is subsequently withdrawn; and

(b) require, but only to the extent and for so long as the Regulatory Change affects outstanding LIBOR Rate Advances, that all outstanding LIBOR Rate Advances made by Lenders be converted to Prime Rate Advances as of the effective date of such notice as is hereinafter provided for (notwithstanding any provisions of the Note or this Agreement to the contrary), and interest shall accrue thereon, from and after said date, at the Prime Rate or the Default Rate, whichever is then applicable. For purposes of this Section, a notice to Borrower by Agent shall be effective, if lawful, on the date of receipt by Borrower.

1.9 Capital Adequacy . Borrower shall also pay to the applicable Lenders from time to time on demand such amounts as such Lender may determine to be necessary to compensate such Lender for any costs which such Lender determines are attributable to the extension of credit hereunder in respect of any amount of capital maintained by such Lender or any of its affiliates pursuant to any law, guideline or regulation of any jurisdiction or any interpretation, directive or request (whether or not having the force of law) of any court or governmental or monetary authority enacted, whether proposed on the date of this Agreement or enacted, promulgated or issued after the date of this Agreement, but only to the extent that such costs are charged generally by such Lender to similarly situated borrowers in similar loan transactions; provided, however, that the applicable Lender(s) shall use good faith efforts to provide Borrower with notice of such amounts not later than ten (10) Business Days after the date on which such Lender(s) learn of the same. Without limiting the foregoing, such compensation shall include an amount equal to any reduction in return on assets or return on equity to a level below that which the Lenders could have achieved absent their extension of credit hereunder and but for such law, regulation, interpretation, directive or request. Each Lender will notify Agent as promptly as practicable after it determines to demand such compensation.

1.10 [Intentionally Omitted] .

1.11 Default Rate . If a default shall occur and continue beyond any applicable notice, cure or grace period under the Note, this Agreement or any of the other Loan Documents or the entire Principal Balance, all interest accrued thereon, and all other amounts payable under the Loan have not been repaid on or before the Maturity Date, then the entire Principal Balance shall (without notice to or demand upon Borrower) become due and payable on said date, together with all unpaid, accrued interest thereon and all other amounts payable under the Loan, and with interest computed thereon from and after that date at a rate which is five percent (5%) per annum in excess of the current rate of interest accruing on the Principal Balance, or at the maximum lawful rate of interest which may be charged thereon by Agent, if any, whichever is less (hereinafter called “ Default Rate ”), until all such amounts are paid in full.

1.12 Late Payment Charge . In the event that any required payment of principal and/or interest hereunder (other than full payment at maturity) is not made within five (5) days of the due date thereof, Borrower shall pay to Agent an additional payment of a late payment charge to compensate for Lenders’ loss of use of funds and for the expenses of handling the delinquent payment, in an amount equal to five percent (5.0%) of such delinquent payment. In the event the maturity of the indebtedness hereunder is accelerated by Agent, this section shall apply only to payments overdue prior to the time of such acceleration.

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1.13 Effective Rate . Borrower, Agent and the Lenders agree that no payment of interest or other consideration made or agreed to be made by Borrower to Agent and/or the Lenders pursuant to this Agreement, the Note, the Deed of Trust or any other instrument referring to or securing the Note shall, at any time, be deemed to have been computed at an interest rate in excess of the maximum rate of interest permissible by law, if any. In the event such payments of interest or other consideration provided for in this Agreement, the Note, the Deed of Trust or any other instrument referring to or securing the Note shall result in payment of an effective rate of interest which, for any period of time, is in excess of the limit of the usury law or any other law applicable to the Loan evidenced by the Note, all sums in excess of those lawfully collectible as interest for the period in question shall, without further agreement or notice between or by any party or parties hereto, be applied to the Principal Balance immediately upon receipt of such monies by Agent with the same force and effect as though Borrower had specifically designated, and Agent had agreed to accept, such extra payments as a principal payment, without premium or penalty. If principal has been fully paid, any such excess amount shall be refunded to Borrower. This provision shall control over every other obligation of Borrower, Agent and the Lenders hereunder and under the Note, the Deed of Trust and any other instrument which secures the Note.

1.14 Payments . All payments made under the Note shall be applied to any late payment charge then due, to accrued interest, to the Principal Balance and, if Agent and the Lenders have advanced any sums under the terms of any instrument which secures the Note, to repayment of the funds so advanced, even though the same have become part of the Principal Balance, together with interest thereon at the Default Rate, in such order as Agent, at its option, may elect. All payments made under the Loan shall be made in immediately available funds, without counterclaim or set off and free and clear of, and without any deduction or withholding for any taxes or other payments.

1.15 Fees . On the date hereof and on or before the dates set forth therein, Borrower shall pay Agent all fees, costs and expenses referenced in the Fee Letter. The agency fee set forth in the Fee Letter is for the services to be performed by Agent in acting as Agent and is fully earned on the date paid. The agency fee paid to the Agent is solely for its own account and is nonrefundable.

1.16 No Waiver by Agent . Agent shall not by any act, delay, omission or otherwise be deemed to have waived any of its rights or remedies, and no waiver of any kind shall be valid unless in writing and signed by Agent. All rights and remedies of Agent under the terms of this Agreement, the Note, or any of the other Loan Documents, and under any statutes or rules of law shall be cumulative and may be exercised successively or concurrently. Any provision of this Agreement and the Note which may be unenforceable or invalid under any law shall be ineffective to the extent of such unenforceability or invalidity without affecting the enforceability or validity of any other provision hereof.

II. CONDITIONS OF BORROWING

Neither Agent nor the Lenders shall be required to make any advances hereunder until the pre-closing requirements, conditions and other requirements set forth below have been completed and fulfilled to the satisfaction of Agent, at Borrower’s sole cost and expense. It is agreed, however, that Agent and the Lenders may, in their discretion, make advances prior to completion and fulfillment of any or all of such pre-closing requirements, conditions and requirements, without waiving their right to require such completion and fulfillment before any additional advances are made.

2.1 Pre-Closing Requirements . At least five (5) Business Days prior to the closing of the Loan, Borrower shall provide to Agent each of the following, in form and substance acceptable to Agent.

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(a) A commitment for the Title Policy or a preliminary title report from the Title Company, complying with the standard requirements of Agent therefor, a copy of which has been delivered to Borrower.

(b) Two (2) complete sets of the Plans for the Improvements set forth in Exhibit M . All mechanical, electrical, structural and other specialized drawings for the Improvements shall be signed by licensed engineers of the respective disciplines normally responsible for such drawings. All portions of such Plans prepared by the Project Architect shall be signed by the Project Architect.

(c) The General Contractor’s construction contract and the guarantee given to Owner in connection therewith (collectively, the “ Construction Contract ”) and a schedule of values of all trades, the Project Architect’s agreement (the “ Architect’s Agreement ”), a schedule listing all subcontracts signed to date relating to the construction of the Improvements on the Property, and such other contracts, subcontracts and schedules relating to the Property as Agent may reasonably require to the extent then executed.

(d) Three (3) copies of a current, certified ALTA/ACSM land title survey prepared in accordance with Agent’s standard requirements therefor, copies of which have been delivered to Borrower.

(e) Soil reports on the Land, showing that the soil will adequately support the Improvements.

(f) An Environmental Audit running to the benefit of Agent, satisfactory to Agent, and all reports, data and other information produced in connection with the Tests. The Environmental Audit shall also specify whether or not any environmental assessment, study or statement with respect to the Property is required by any Governmental Requirement. If such an assessment, study or statement is so required, Borrower shall provide a copy thereof to Agent.

(g) Copies of insurance policies or certificates of insurance for Borrower and the General Contractor written by insurers satisfactory to Agent and in amounts satisfactory to Agent, prepared in accordance with Agent’s standard requirements therefor, a copy of which has been delivered to Borrower. Agent confirms that the insurance coverage currently carried by Borrower and General Contractor, as previously provided to Agent, is currently satisfactory as to the insurer and all other requirements; provided, however, nothing contained herein shall be deemed to limit Agent’s right to modify its insurance requirements from time to time.

(h) Borrower’s estimated schedules for construction of the Improvements and for disbursement of the Loan proceeds.

(i) Copies of all building permits required for the then current stage of construction of the Improvements, and a schedule of all other necessary licenses and permits which must be obtained in order to occupy and operate the Property.

(j) A zoning opinion from Borrower’s counsel in form and substance acceptable to Agent.

(k) An appraisal of the Property showing an “as stabilized” loan to value ratio less than or equal to seventy-five percent (75%), addressed to Agent, prepared by an M.A.I. appraiser acceptable to Agent.

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(l) Letters addressed to Agent from the suppliers confirming the availability of water, storm and sanitary sewer, gas, electric and telephone utilities for the Improvements, prepared in accordance with Agent’s standard requirements therefor, copies of which have been delivered to Borrower.

(m) A Certificate of the Project Architect (the “ Architect’s Certificate ”) addressed to Agent, prepared in accordance with Agent’s standard requirements therefor, a copy of which has been delivered to Borrower. Borrower agrees that it shall not, without the prior written consent of Agent, consent to any release or settlement of any claims under the Architect’s Certificate or any agreements pursuant to which the Plans and Specifications were, or are to be, prepared, including, but not limited to, any architect’s contracts, which consent shall not be unreasonably conditioned, withheld, or delayed given the overall interests of constructing the Improvements and otherwise developing the Property.

(n) UCC chattel lien searches from the Maryland State Department of Assessments and Taxation (“ MSDAT ”) in the name of Borrower.

(o) A Certificate of Good Standing for Borrower, currently issued by MSDAT; copies of Borrower’s Limited Partnership Agreement, Certificate of Limited Partnership currently certified by MSDAT, Certificate of Fact currently issued by the Virginia State Corporation Commission, and resolutions of Borrower’s general partner authorizing the transaction described herein, all currently certified by Borrower’s general partner; a Certificate of Good Standing for Guarantor, currently issued by MSDAT; and copies of the Guarantor’s Articles of Incorporation, currently certified by MSDAT, and Guarantor’s Bylaws, all currently certified by Guarantor.

(p) A copy of each agreement relating to the management, operation or maintenance of the Property.

(q) A proposed Operating Budget for the Property.

(r) The most current available annual financial statements for Borrower and Guarantor on a consolidated basis, as well as financial statements on a consolidated basis for each of the three (3) full fiscal years of Guarantor immediately preceding the time period covered by said current financial statements;

(s) All property tax information regarding the Property requested by Agent;

(t) The Sworn Construction Cost Statement for the Property;

(u) A flood zone certification indicating that the portion of the Property on which the Improvements are located is not located in a flood plain or any other flood prone area, as designated by any governmental agency; provided, however, that if the portion of the Property on which the Improvements are so located, Borrower shall obtain and deliver to Agent evidence of flood insurance acceptable to Agent;

(v) A copy of any subdivision plat and site plan for the Property;

(w) One or more standard forms of lease to be used by Borrower in leasing residential, retail and office space within the Property;

(x) Copies of the Leadership Agreements;

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(y) Copies of the Proffers;

(x) Other agreements, documents and exhibits, without limitation, which may be required, in Agent’s judgment, exercised in good faith, to assure compliance with the requirements of this Agreement.

In addition to the above, at least five (5) Business Days prior to the initial advance of Loan Proceeds, Borrower shall provide to Agent evidence satisfactory to Agent that Borrower has contributed to the Property cash equity in an amount not less than $29,735,331.00 prior to the date hereof.

2.2 Loan Documents . Except to the extent expressly set forth below in this Section 2.2 , on or before the date of closing of the Loan, Borrower shall execute and deliver (or cause to be executed and delivered) to Agent the following documents in form and substance acceptable to Agent and to its counsel, to evidence and secure the Loan:

(a) The Note.

(b) The Deed of Trust.

(c) This Agreement.

(d) An Assignment of Leases and Rents.

(e) An Indemnification Agreement.

(f) A first security interest in all Equipment and in all of Borrower’s intangible property relating to the Property, created and evidenced by a security agreement (which may be incorporated within the Deed of Trust) and by appropriate Uniform Commercial Code financing statements.

(g) A covenant compliance certificate, in the form attached hereto as Exhibit O .

(h) The Fee Letter.

(i) An assignment of the Plans and of the Project Architect’s agreement pursuant to which the same were prepared, along with written acknowledgment from the Project Architect authorizing Agent to rely on and utilize the Plans, without additional charge, and further confirming to Agent that, if an Event of Default has occurred, the Project Architect will cooperate with Agent regarding the completion of construction of the Property.

(j) An assignment of the Construction Contract for the Property and an agreement from the General Contractor to honor and perform the same for Agent in the event of an Event of Default under the Loan Documents.

(k) Such other documents as Agent may reasonably require to evidence and secure the Loan.

Agent may designate which of the Loan Documents are to be placed of record, the order of recording thereof, and the offices in which the same are to be recorded. Borrower shall pay all documentary, recording and/or registration taxes and/or fees, if any, due upon the Loan Documents.

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2.3 Title Insurance . Agent shall have received a pro forma copy of the Title Policy.

2.4 Opinion of Borrower’s Attorneys . Agent shall have received from outside counsel for Borrower and Guarantor a current written opinion, subject to customary assumptions and qualifications, in scope, form and substance acceptable to Agent.

III. ADVANCES OF LOAN PROCEEDS

3.1 General . Subject to the terms and conditions set forth in this Agreement, each Lender shall, pro rata according to such Lender’s Commitment Percentage of the Committed Amount, make advances for the benefit of Borrower, not more frequently than once per month, in such amounts as Borrower may request, in accordance with the terms of this Agreement. All monies advanced by Agent and the Lenders (including amounts payable to Agent and the Lenders and advanced by Agent and the Lenders to themselves pursuant to the terms hereof) shall constitute loans made to Borrower under this Agreement, evidenced by the Note and this Agreement and secured by the other Loan Documents, and interest shall be computed thereon, as prescribed by this Agreement and the Note, from the date of the Advance, whether or not an Advance made to the Title Company is fully disbursed by the Title Company or is withheld in full or in part.

Subject to Section 6.2(e), Agent reserves the right, exercisable after the occurrence of an Event of Default and for so long as such Event of Default exists, to make advances of amounts which are allocated to any of the designated items in the Sworn Construction Cost Statement for such other purposes or in such different proportions as Agent may, in its sole discretion exercised in good faith, deem necessary or advisable.

No advance shall constitute a waiver of any condition precedent to the obligation of the Lenders to make any further advance. All conditions precedent to the obligation of the Lenders to make any advance are imposed hereby solely for the benefit of Agent and the Lenders, and no other party may require satisfaction of any such condition precedent or shall be entitled to assume that Agent and the Lenders will make or refuse to make any advance in the absence of strict compliance with such condition precedent.

Lenders may advance to themselves, when due after the occurrence of an Event of Default and for so long as such Event of Default exists, from the proceeds of the Loan, without further order or request from Borrower, all interest payable to the Lenders under the terms hereof or of the Note, and shall, at Agent’s option, advance to Agent all other sums then due under this Agreement or under any of the other Loan Documents, including but not limited to fees, attorneys’ fees, Inspecting Architect’s fees and all out-of-pocket expenses incurred by Agent in connection with this Agreement and the other Loan Documents. After the occurrence of an Event of Default and for so long as such Event of Default exists, Agent shall also have the right, but not the obligation, to advance and directly apply the proceeds of the Loan to the satisfaction of any of Borrower’s other obligations hereunder or under any of the other Loan Documents.

In the event that the total amount of the Loan exceeds the amount needed to fully pay all cost allocations set forth on the Sworn Construction Cost Statement approved by Agent, Agent and the Lenders shall not be required to advance, and Borrower shall not be entitled to receive, the excess. Upon extension of the Maturity Date as herein provided, Borrower shall not be entitled to borrow, and Agent and the Lenders shall not be obligated to advance, additional proceeds of the Loan.

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3.2 Loan In Balance . Agent and the Lenders shall not be obligated to make any advance of Loan proceeds unless and until Borrower has provided Agent with evidence, acceptable to Agent, that the Loan is in balance: i . e ., that all remaining unpaid costs of the Property for the remaining period until the Maturity Date, as determined by Agent, in its sole discretion exercised in good faith, including the Reserves, do not exceed the sum of the amount of the Loan proceeds not yet advanced by the Lenders, the remaining amount, if any, to be contributed in respect of the Equity Requirement, and the net operating income from the Property reasonably projected to be received during such period. The initial amount of the Reserves has been designated in the Sworn Construction Cost Statement. The required amount of said Reserves shall decline as costs and payments for which they are maintained are paid therefrom; provided, however, that the amount of any such Reserves shall never decline below an amount sufficient to pay all costs and payments for which it is maintained which then remain unpaid, as determined by Agent. If the Reserves become depleted, such depletion shall not limit Borrower’s obligation hereunder to pay all sums which otherwise would have been payable from such Reserves.

Notwithstanding any provision of this Agreement to the contrary, in the event that Agent or Borrower determines in good faith that the Loan is not in balance, it shall notify the other party hereto of such determination, and Borrower shall, within ten (10) Business Days, deposit with Agent funds equal to said insufficiency in order to bring the Loan back into balance. Said funds shall be disbursed by Agent pursuant to and in accordance with the disbursement procedures set forth in this Agreement prior to any advances by Agent or the Lenders of additional Loan proceeds.

3.3 Inspections . Agent, the Title Company, the Inspecting Architect, Consultants and their representatives shall have access to the Property at all reasonable times and shall have the right to enter the Property and to conduct such inspections thereof as they shall reasonably deem necessary or desirable for the protection of the interests of Agent and the Lenders.

Agent may retain the Inspecting Architect, and any other consultants deemed necessary or desirable by Agent, in its sole discretion exercised in good faith, at Borrower’s expense, to make periodic inspections of the Property and to review all change orders relating to the Property. Agent may request the Inspecting Architect, before any advance of Loan proceeds is made, to inspect all work and materials for which payment is requested and all other work upon the Property, review the current Draw Request, approve such work and Draw Request and/or submit to Agent a progress inspection report. Agent may also retain such other Consultants as Agent reasonably deems necessary or convenient to perform such services as may, from time to time, be required by Agent in connection with the Loan, this Agreement, the other Loan Documents or the Property.

Neither Borrower nor any third party shall have the right to use or rely upon the reports of the Inspecting Architect or any other reports generated by Agent or its Consultants for any purpose whatsoever, whether made prior to or after commencement of construction. Borrower shall be responsible for making its own inspections of the Property during the course of construction and shall determine to its own satisfaction that the work done and materials supplied are in accordance with applicable contracts with its contractors. By advancing funds after any inspection of the Property by Agent or the Inspecting Architect, Agent shall not be deemed to waive any Event of Default, waive any right to require construction defects to be corrected, or acknowledge that all construction conforms with the Plans.

Notwithstanding any provision of this Agreement to the contrary, in the event that Agent should determine in good faith that the actual quality or value of the work performed or the materials furnished does not correspond with the quality or value of the work required by the Plans, Agent shall

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notify Borrower of its objections thereto, and, as soon as reasonably practicable, Borrower shall correct the conditions to which Agent objects if such conditions are not in accordance with the Plans.

3.4 Responsibility of Agent and the Lenders . It is expressly understood and agreed that neither Agent nor the Lenders assume any liability or responsibility for the sufficiency of the Loan proceeds to complete the Property, for protection of the Property, for the satisfactory completion of the Property, for inspection during construction, for the adequacy or accuracy of the Sworn Construction Cost Statement, for any representations made by Borrower, or for any acts on the part of Borrower or its contractors to be performed in the construction of the Property.

3.5 Advance Procedures .

(a) Borrower shall submit to Agent a copy of the Sworn Construction Cost Statement for the Property, and shall advise Agent of the names of each Contractor providing goods or services in connection with the development and construction of the Improvements. If requested by Agent, Borrower shall also furnish to Agent a copy of each contract with each of the Contractors. Borrower shall keep the Agent advised at all times of the names of all Contractors, and of the type of work, material or services and of the dollar amount covered by each of their respective contracts with Borrower or with the General Contractor. It is understood that only Contractors whose names, contract descriptions and, after a request therefor, contracts have been furnished to Agent shall be entitled to receive disbursements of Loan proceeds under this Agreement. Borrower shall also provide or cause to be provided to Agent a date down of the Title Policy.

(b) Borrower shall either (a) refrain from commencing construction of, and from accepting delivery of materials for, the Property prior to the recording of the Deed of Trust, or (b) provide such evidence and/or documents to the Title Company as shall be sufficient to secure from the Title Company priority insurance over all possible mechanic’s lien claims, relating to construction of the Improvements that may have commenced prior to the recording of the Deed of Trust.

(c) Subject to the provisions of this Section 3.5(c), Borrower may obtain advances for disbursement to Contractors only to the extent of the amount of the contract work satisfactorily completed or materials actually incorporated into the Property by each such Contractor in accordance with his contract, less retainage determined and held in accordance with the terms of the Construction Contract. Borrower agrees that all sums requested hereunder for disbursement to each Contractor shall not exceed that amount; provided, however, Agent will, at Borrower’s request, make Advances for materials, supplies and equipment purchased for the Improvements stored on-site, or off-site within the continental United States, in either case which materials will largely be those made specifically for inclusion in the Improvements rather than being stock goods, the aggregate of which Advances shall not at any time exceed $2,500,000, and otherwise in accordance with the provisions of the balance of this Section 3.5(c).

Borrower may not obtain advances for disbursement to Contractors for the cost of materials acquired for the Property and stored on-site but not yet incorporated therein, unless Agent has received and approved (i) such financing statements and other documents and evidence as Agent may reasonably require sufficient to create, perfect and protect a first lien on said materials (including, but not limited to, lien searches) which such documents and evidence Agent shall request, to the extent Agent determines them to be necessary, promptly after receipt of the applicable Draw Request Form, (ii) evidence that upon payment therefor Borrower has acquired title to the same and that the same are covered by all risk insurance covering 100% of the total value of said materials, with Agent, Borrower and the General Contractor as named insureds under the policy; (iii) such materials are reasonably protected against theft or damage as determined by the Inspecting Architect; (iv) the Inspecting Architect

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has viewed and inspected such materials; and (v) in the opinion of the Inspecting Architect, the stored materials are physically secured and can be incorporated into the Improvements within ninety (90) days. Each request for an advance of Loan proceeds for materials to be stored on-site shall constitute Borrower’s representation to Agent and Lenders that the conditions set forth in items (i) through (v)  above in this paragraph have been satisfied.

Borrower may not obtain advances for disbursement to Contractors for the cost of materials acquired for the Property and stored off-site but not yet incorporated therein, unless Agent has received and approved (i) such security agreements, financing statements and other documents and evidence as Agent may reasonably require sufficient to create, perfect and protect a first lien on said materials including, but not limited to, lien searches which materials Agent shall request, to the extent Agent determines them to be necessary, promptly after receipt