REVOLVING CREDIT AGREEMENT

Exhibit 10(q)

REVOLVING CREDIT AGREEMENT

THIS REVOLVING CREDIT AGREEMENT (the “ Agreement ” ) is made and entered into as of the 28th day of January, 2005, by and between (i) SAUL HOLDINGS LIMITED PARTNERSHIP , a Maryland limited partnership (hereinafter called “Borrower” ); (ii) U.S. BANK NATIONAL ASSOCIATION , a national banking association, as administrative agent and sole lead arranger (“ Agent ”); (iii) WELLS FARGO BANK, NATIONAL ASSOCIATION , as syndication agent (“ Syndication Agent ”), and (iv) U.S. BANK NATIONAL ASSOCIATION, WELLS FARGO BANK, NATIONAL ASSOCIATION , COMPASS BANK, SOVEREIGN BANK, FIRST HORIZON BANK 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 hereby 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:

Accessibility Regulation : Any federal, state or local law, statute, code, ordinance, rule, regulation or requirement relating to accessibility to facilities or properties for disabled, handicapped and/or physically challenged persons, including, without limitation, the Americans with Disabilities Act of 1991, as amended.

Accordion Amount : Up to $50,000,000.00.

Accordion Expiration Date : January 27, 2007.

Acquisition Costs : All costs of acquiring Real Estate Assets, including purchase price and reasonable and customary closing costs, as determined by Agent.

Adjusted EBITDA : An amount equal to ninety seven percent (97%) of EBITDA.

Advance : Any portion of the Loan (or a Swing Loan) advanced to or for the benefit of Borrower in accordance with the terms hereof and as to which Borrower has elected or is deemed to have elected one (1) of the available interest rate options and, if applicable, a LIBOR Rate Period. An Advance may be a LIBOR Rate Advance or a Loan Rate Advance; provided, however, that if Borrower has made no election of an interest rate option with respect to any Advance (other than for a Swing Loan), Borrower shall be deemed to have elected that it be a Loan Rate Advance. Swing Loans shall be deemed to be Loan Rate Advances.

Advance Date : The date on which an Advance of Loan (or Swing Loan) proceeds requested by Borrower hereunder is funded.

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Agreement : This Revolving Credit Agreement, including any amendments hereof and supplements hereto executed by Borrower and Agent on behalf of Lenders.

Applicable Margin : With respect to:

(a) Loan Rate Advances — 0.00%.

(b) LIBOR Rate Advances — shall be equal to 1.625% unless the Leverage Ratio requirement set forth below is satisfied in which event the Applicable Margin for LIBOR Rate Advances shall be reduced as follows:

Approved Asset : An Unencumbered Asset (including, without limitation, a Proposed Acquisition that would constitute an Unencumbered Asset upon the acquisition thereof by Borrower or an Approved Subsidiary) which has been approved by all Lenders pursuant to Section 2.B.2 . A schedule identifying the Approved Assets as of the date hereof is attached hereto as Exhibit E .

Approved Subsidiary : A Subsidiary that (x) is wholly and directly owned and controlled by Borrower, Guarantor or a combination thereof, (y) has delivered a Subsidiary Guaranty pursuant to Section 5.09.E hereof that remains in full force and effect, and (z) holds fee simple title to an Approved Asset.

Assignee Lender : As defined in Section 8.8.A hereof.

Board : The Board of Governors of the Federal Reserve System or any successor thereto.

Borrower : As defined in the preamble to this Agreement.

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

Calculation Date : The date upon which Borrower submits a Draw Request, the date upon which Borrower requests that Agent issue a Letter of Credit, the date upon which Borrower requests that an Approved Asset be added to or removed from the pool of Unencumbered Assets, the date upon which a Capital Event occurs, or the date upon which there exists an Event of Default under the Loan, as applicable.

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Capital Event : The occurrence from time to time of an equity or debt offering by Borrower (which shall specifically exclude stock issued in connection with a dividend reinvestment plan), a Disqualifying Environmental Event, or if an Encumbrance, Imposition or Lien arises against an Approved Asset.

Capitalization Value : For any period of determination, an amount equal to the sum of (a) the aggregate Adjusted EBITDA for the previous four calendar quarters, divided by eight and three-quarters percent (8.75%) (provided that, with respect to Real Estate Assets which Borrower or an Approved Subsidiary has owned for more than three (3) months but less than one (1) year, as of the Calculation Date, Adjusted EBITDA shall be annualized based upon the period of time Borrower or an Approved Subsidiary has owned them); (b) 100% of the value of Unrestricted Cash and Cash Equivalents; (c) with respect to Real Estate Assets Under Development, including those projects which have been operating for less than one year, the greater of (x) 100% of the aggregate costs incurred and paid to the Calculation Date by the Borrower or an Approved Subsidiary or (y) Adjusted EBITDA (provided that, with respect to Real Estate Assets which have been in operation for less than one (1) year, as of the Calculation Date, Adjusted EBITDA shall be annualized based upon the most recent three-month period) divided by eight and three-quarters percent (8.75%); (d) 60% of the Acquisition Costs with respect to Real Estate Assets which, as of the date of calculation, Borrower or an Approved Subsidiary has owned for less than three (3) months and (e) contractual purchase price of any property subject to a purchase obligation, repurchase obligation or forward commitment, which obligation at such time could be specifically enforced by the seller, but only to the extent such obligations are included in the definition of Total Adjusted Outstanding Indebtedness or Total Adjusted Committed Indebtedness, as appropriate.

Closing Date : The date of this Agreement.

Code : The Internal Revenue Code of 1986, as amended.

Commitment Percentage : Each Lender’s share of all right, title, and interest in the Loan and the Loan Documents, as set forth on Schedule 1 attached hereto, as amended and modified by unilateral action of Agent from time to time to reflect the sale or assignment of a portion or portions of the Loan.

Debt Service : For any period of determination, the following amount incurred by Borrower during the previous four (4) fiscal quarters, as determined by Agent in its sole discretion: (a) Interest Expense plus (b) the aggregate amount of scheduled principal payments of indebtedness of the Borrower (excluding optional prepayments but expressly including scheduled principal payments in respect of any indebtedness which is not amortized through equal periodic installments of principal and interest over the term of such indebtedness, including, without limitation, balloon payments at maturity that are not refinanced or paid off on or before the maturity date thereof) required to be made during such time period by the Borrower plus (c) the aggregate amount of capitalized interest required in accordance with GAAP to be paid or accrued by the Borrower during such time period, plus (d) expenses attributable to preferred stock (including preferred stock dividends whether the preferred stock is classified upon the obligor’s balance sheet as equity or liability) or a similar type of investment.

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Declining Bank : As defined in Section 3.6(a) hereof.

Default Rate : As defined in Section 1.12 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 after notice from Agent.

Disqualifying Environmental Event : Any release or threatened release of Hazardous Substances, any violation of Environmental Laws or any other similar environmental event with respect to a Real Estate Asset which is not cured within sixty (60) days or that would cause, in Agent’s determination, such Real Estate Asset to no longer be financeable on a non-recourse (with customary exceptions) debt basis under the then generally accepted underwriting standards of national insurance company or pension fund real estate institutional lenders. In the event that such release or threatened release, violation or similar environmental event is susceptible of cure but is not cured within said sixty (60) days, so long as Borrower is diligently and continuously pursuing such cure, as evidenced to Agent’s satisfaction, Agent shall permit Borrower an additional one hundred twenty (120) days to effectuate such cure; provided, however that such additional one hundred twenty (120) days shall not apply where such release or threatened release, violation or similar environmental event results, in Agent’s judgment, in a matter which is of an emergency nature.

Distribution . With respect to:

(i) the Borrower, any distribution of cash or other cash equivalent, directly or indirectly, to the partners of the Borrower; or any other distribution on or in respect of any partnership interests of the Borrower excluding distributions reinvested pursuant to Borrower’s distribution reinvestment program; and

(ii) the Guarantor, the declaration or payment of any dividend on or in respect of any shares of any class of capital stock of Guarantor, excluding dividends payable solely in shares of common stock by Guarantor and dividends reinvested pursuant to Guarantor’s dividend reinvestment program; the purchase, redemption, or other retirement of any shares of any class of capital stock of Guarantor, directly or indirectly through a subsidiary of Guarantor, or otherwise; the return of capital by Guarantor to its shareholders as such; or any other distribution on or in respect of any shares of any class of capital stock of Guarantor (except as excluded above).

Draw Request : A written request by Borrower for an Advance of Loan proceeds under this Agreement, in the form and with the certifications included within Exhibit A attached hereto and hereby made a part hereof.

EBITDA : For any period of determination, an amount equal to the net income of Borrower and Guarantor on a consolidated basis and their pro rata share of earnings of unconsolidated subsidiaries, the unconsolidated subsidiaries of the general partners of

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Borrower, and joint ventures in which Borrower, Guarantor and/or Borrower’s general partners is a party, and before interest, taxes, depreciation, amortization and gains and losses on property sales, extraordinary items and other non-recurring gains or losses, all as calculated in accordance with GAAP, as determined by Agent.

Encumbrance : As defined in Section 5.6 .

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

Euro Day : A Business Day which is also a day on which commercial banks are open for international business (including dealings in dollar deposits) in London, England.

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

Existing Lenders : As defined in Section 3.6(c) .

Extension Period : 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.

Fee Letter . That certain fee letter of even date herewith, between the Borrower and Agent.

First Solicitation : As defined in Section 3.6(a) .

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Forward Purchase Contract . A purchase agreement entered into by the Borrower for the fee or leasehold purchase of a retail, office or industrial real estate property to be constructed.

Funds from Operations . Net income, computed in accordance with GAAP, excluding minority interests, gains, or losses from debt restructuring and sales of property (inclusive of non-recurring items such as asset sales or property valuation adjustments), plus depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. Adjustments for unconsolidated partnerships and joint ventures will be calculated to reflect Funds From Operations on the same basis.

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 Majority Lenders agree in writing on an adjustment to said computation or determination to account for such change in GAAP.

Governmental Requirements : All laws, statutes, codes, ordinances, and governmental rules, regulations and requirements applicable to Borrower, Guarantor, Agent, any Lender and/or the Approved Assets.

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

Guaranty : That certain Guaranty of even date herewith, executed by Guarantor to Agent on behalf of the Lenders to guaranty the Loan, as the same may be amended, modified or replaced from time to time.

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.

Immediately Available Funds : Funds with good value on the day and in the city in which payment is received.

Imposition : As defined in Section 5.6 .

Interest Differential : That sum equal to the greater of zero (0) or the financial loss incurred by the Lenders resulting from prepayment of a LIBOR Rate Advance, calculated as the difference between the amount of interest the Lenders would have earned (from like investments in the Money Markets as of the first day of the LIBOR Rate

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Advance) had prepayment not occurred and the interest the Lenders will actually earn (from like investments in the Money Markets as of the date of prepayment) as a result of the redeployment of funds from the prepayment.

Interest Expense : For any period of determination, an amount determined by Agent in its sole discretion equal to the aggregate amount of interest required in accordance with GAAP to be paid or accrued (but excluding interest reserves funded from the proceeds of any construction loan) by the Borrower during such time period on: (i) all indebtedness of the Borrower (including the Loan and including original issue discount and amortization of prepaid interest, if any) (ii) all amounts available for borrowing, or for drawing under letters of credit, if any, issued for the account of the Borrower, but only if such interest was or is required to be reflected as an item of expense, excluding commitment fees, agency fees, facility fees, balance deficiency fees and similar fees and expenses in connection with the borrowing of money and (iii) preferred stock or a similar type of investment.

Legal Holiday: New Year’s Day, Martin Luther King’s Birthday, President’s Day, Memorial Day, Fourth of July, Labor Day, Columbus Day, Veteran’s Day, Thanksgiving Day and Christmas Day.

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

Letter of Credit : An irrevocable letter of credit issued by Agent pursuant to this Agreement for the account of Borrower.

Letter of Credit Fee : As defined in Section 2.A.7 .

Letter of Credit Participation : As defined in Section 2.A.9 .

Leverage Ratio : The ratio of Total Adjusted Outstanding Indebtedness to Capitalization Value.

LIBOR : With respect to each LIBOR Rate Period applicable to any requested LIBOR Rate Advance, the rate per annum (rounded up to the next whole multiple of 1/100th of 1%) equal to the rate obtained by dividing (a) the LIBOR rate quoted by Agent from Telerate Page 3750 or any successor thereto, at approximately 5:00 o’clock a.m., Central time, on the second Euro Day prior to the first day of such LIBOR Rate Period for delivery in Immediately Available Funds on the first day of such LIBOR Rate Period for the approximate number of days as are in such LIBOR Rate Period and in an amount comparable to the principal amount of such LIBOR Rate Advance being made by the Lenders for which LIBOR is being determined, by (b) a percentage equal to 100% minus the maximum rate in effect on the first day of such LIBOR Rate Period at which reserves (including any marginal, supplemental or emergency reserves) are required to be maintained by the Lenders under Regulation D against “Eurocurrency liabilities” (as such term is defined in Regulation D). LIBOR shall be adjusted automatically on and as of the effective date of any change in such reserve requirements.

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LIBOR Rate : A rate of interest equal to LIBOR plus the Applicable Margin.

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 $1,000,000.00.

LIBOR Rate Notice : A telephonic notice from Borrower to Agent, received by Agent prior to 10:00 o’clock a.m. (Central time) on a Euro Day at least three (3) Euro Days prior to the date the LIBOR Rate is to be applicable with respect to such portion of the Principal Balance referred to therein, in which Borrower elects to have said portion of the Principal Balance, or a portion thereof as specified in said notice, be a LIBOR Rate Advance.

LIBOR Rate Period : The period commencing on the date any LIBOR Rate Advance is made and ending one (1) month, two (2) months, three (3) months or six (6) months thereafter as selected by Borrower in the applicable LIBOR Rate Notice; provided, however, that (a) if any LIBOR Rate Period would end on a day that is not a Euro Day, such LIBOR Rate Period shall extend to the next Euro Day, unless, in the case of said LIBOR Rate Advance, such Euro Day would fall in the next calendar month, in which event such LIBOR Rate Period shall end on the immediately preceding Euro Day, and (b) no LIBOR Rate Period shall end later than the then applicable Maturity Date.

Loan : The loan evidenced by the Note.

Loan Availability : That portion of the Revolving Commitment Amount determined by Agent to be available to be advanced as more particularly described in Section 2.B.3 .

Loan Documents : The documents described in Section 2.B.1 , which evidence, secure or otherwise relate to the Loan, including but not limited to the Note, this Agreement, the Fee Letter, the Letter of Credit applications, the Letters of Credit, the Closing Certification, the Sworn Statement, the Guaranty, each Subsidiary Guaranty and including any amendments thereof and supplements thereto executed by Agent and Borrower (and/or any other party thereto).

Loan Rate : A rate of interest equal to the Prime Rate. Changes in the Loan Rate shall become effective on the same day as the date of any change in the Prime Rate and shall apply to all advances made hereunder (other than LIBOR Rate Advances), whether such advances are made prior to, the same day as, or subsequent to any particular change in the Loan Rate. In no event shall the Loan Rate ever exceed the maximum rate permitted by applicable law (if any such maximum rate is established by applicable law), and such maximum rate shall change if and when applicable law changes to permit a higher maximum rate.

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

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Major Asset : The Unencumbered Assets known as Beacon, French Market and Southdale, and such other Approved Assets as Borrower and all Lenders may agree to designate as a Major Asset from time to time.

Majority Lenders : Lenders holding not less than sixty-six and two-thirds of one percent (66  ² / 3 %) of the then aggregate outstanding unpaid principal amount of the Loan or, if no such principal amount is then outstanding, not less than sixty-six and two-thirds of one percent (66  ² / 3 %) of the Revolving Commitment.

Maturity Date : January 27, 2008, unless extended pursuant to the terms of Section 1.4 .

Maximum Drawing Amount : The maximum aggregate amount that the beneficiaries may at any time draw under outstanding Letters of Credit, as such maximum aggregate amount may be reduced from time to time pursuant to the terms of the Letters of Credit.

Minimum Equity Value : For any period of determination, an amount equal to Capitalization Value less Total Adjusted Outstanding Indebtedness.

Minimum Lease Up Requirement : The requirement that any Real Estate Asset that on any date of determination has been improved with a building or buildings has been leased to third party tenants and has an aggregate average occupancy of all building(s) in such Real Estate Asset of not less than seventy five percent (75%) for the fiscal quarter most recently ended, other than Lexington and West Park, and except as otherwise approved by Majority Lenders; provided, however, in the event that the occupancy rate with respect to any Approved Asset meeting the Minimum Lease Up Requirement as of the date hereof falls below seventy-five percent (75%), Borrower shall have a period of eight (8) months thereafter to re-lease such asset in order to satisfy the Minimum Lease Up Requirement before such property shall no longer be deemed an Approved Asset. If, at any time thereafter, such former Approved Asset again meets the Minimum Lease-Up Requirement, it shall, as of the date it meets such requirement, again be deemed an Approved Asset. For purposes of this definition, a tenant shall be deemed to be in “occupancy” if such tenant or its subtenant(s) is in possession of the leased premises and such tenant is paying stipulated rent, if any; provided, however, when determining whether the Minimum Lease Up Requirement has been satisfied pursuant to Section 2.B.2 hereof, a tenant shall be deemed to be in occupancy if, within six (6) months prior to the date of determination, such tenant entered into a lease for space in the Real Estate Asset which such tenant previously did not occupy and there exists no default under such lease and no material contingencies to such tenant’s occupancy under the lease other than completion of tenant improvement work.

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.

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Net Equity Proceeds : The proceeds of a sale of an equity interest in the Borrower or the Guarantor (including those attributable to a dividend reinvestment program), net of usual and customary closing costs and expenses.

New Lenders : As defined in Section 3.6(b) .

New Notes : As defined in Section 3.6(b) .

Note : Individually or collectively as the context may require, the Unsecured Revolving Promissory Note(s) of even date herewith executed and delivered by Borrower to Lenders to evidence the Loan, together with (a) any New Notes and/or Supplemental Notes issued pursuant to Section 3.6 hereof, and (b) any Swing Loan Note executed and delivered by Borrower to the Swing Lender to evidence a Swing Loan, in the aggregate maximum principal amount of up to One Hundred Fifty Million and 00/100ths Dollars ($150,000,000.00) plus the Accordion Amount, if applicable, as any or all of the foregoing may be amended, modified or replaced from time to time.

Obligations : All indebtedness, obligations and liabilities of the Borrower to any of the Lenders, the Swing Lender and the Agent, individually or collectively, under this Agreement, any of the other Loan Documents, or in respect to the Loan, the Note or Reimbursement Obligations incurred or the Letter of Credit applications or the Letters of Credit, any Swing Loan or other instruments at any time evidencing any thereof, whether existing on the date of this Agreement or arising or incurred hereafter, direct or indirect, joint or several, absolute or contingent, matured or unmatured, liquidated or unliquidated, secured or unsecured, arising by contract, operation of law or otherwise.

Outstanding Percentage : As defined in Section 3.6(c) hereof.

Permanent Loan Estimate : For any period of determination, a determination by Agent of a hypothetical principal amount of indebtedness which Borrower could incur assuming (i) payments of annual debt service equal to Unencumbered Adjusted EBITDA measured with respect to the Approved Assets divided by 1.35, (ii) an interest rate equal to the greater of (a) two and one-quarter percent (2.25%) in excess of the then-current annual yield on ten-year United States Treasury obligations issued most recently prior to such date and (b) seven and three-quarters percent (7.75%), and (iii) a twenty five (25) year principal amortization schedule.

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.

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 at, above or below the Prime Rate.

Principal Balance : One Hundred Fifty Million and 00/100ths Dollars ($150,000,000.00) or so much thereof as may have been advanced to or for the benefit of Borrower (including, without limitation, under any Swing Loan) and remains unpaid from time to time, as such amount may be increased pursuant to Section 3.6 hereof.

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Proposed Acquisition : A Real Estate Asset that would constitute an Unencumbered Asset at the time of its acquisition.

Real Estate Assets : The fixed and tangible properties consisting of land, buildings and/or other improvements owned or ground leased (subject to the following proviso) by the Borrower or by an Approved Subsidiary at the relevant time of reference thereto, provided however that with the exception of the Unencumbered Assets known as Beacon, Olney and Southdale, a ground leased property shall not be deemed a Real Estate Asset (and thus shall not be eligible as an Approved Asset) unless unanimously approved as such by the Lenders.

Real Estate Assets Under Development : Any Real Estate Assets for which the Borrower (or Approved Subsidiary) is actively pursuing construction and for which construction is proceeding to completion without undue delay from permit denial, construction delays or otherwise, all pursuant to such Person’s ordinary course of business; provided that such Real Estate Asset will no longer be considered a Real Estate Asset Under Development on the date which is twelve (12) months after the Borrower (or Approved Subsidiary) obtains the necessary governmental approvals to permit occupancy of the building. Notwithstanding the foregoing, tenant improvements to previously constructed and/or leased Real Estate Assets shall not be considered Real Estate Assets Under Development.

Refunding Date : As defined in Section 3.5(c) .

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

Regulatory Change : Any change, after the date hereof 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 under any federal, state or foreign laws or regulations (whether or not having the force of law) by any court or governmental or monetary authority charged with the interpretation or administration thereof.

Reimbursement Obligations : The Borrower’s obligation to reimburse the Lenders and the Agent on account of any drawing under any Letter of Credit as provided in Section 2.A.4 . Notwithstanding the foregoing, unless Borrower shall notify Agent of its intention to repay the Reimbursement Obligations on the date of the related drawing under any Letter of Credit, as set forth in Section 2.A.4 , such Reimbursement Obligation shall simultaneously with such drawing be converted to and become a Loan Rate Advance.

Requested Increase : As defined in Section 3.6(a) .

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Revolving Commitment : The obligation of the Lenders to make Advances to Borrower and to participate in the issuance, extension and renewal of Letters of Credit and the obligation of Agent to issue, extend and renew Letters of Credit, in an aggregate principal amount at any time not to exceed the Revolving Commitment Amount upon the terms and subject to the conditions and limitations set forth in this Agreement.

Revolving Commitment Amount : One Hundred Fifty Million and 00/100ths Dollars ($150,000,000.00), as such amount may be increased in accordance with the provisions of Section 3.6(a) hereof.

Shortfall : As defined in Section 3.6(a) .

Subsidiary : For any entity, any corporation, partnership or other entity of which at least a majority of the securities or other ownership interests having by the terms thereof ordinary voting power to elect a majority of the board of directors or other persons performing similar functions of such corporation, partnership or other entity (without regard to the occurrence of any contingency) which is at the time directly or indirectly owned or controlled by such entity or one or more subsidiaries of such entity or by such entity and one or more subsidiaries of such entity.

Subsidiary Guaranty : As defined in Section 5.09.E .

Supplemental Notes : As defined in Section 3.6(b) .

Swing Lender : U.S. Bank National Association, in its capacity as the lender under the Swing Loan facility described in Section 3.5 , and its successors in such capacity.

Swing Loan : A loan made by the Swing Lender pursuant to Section 3.5 .

Swing Loan Commitment : $20,000,000.

Swing Loan Draw Request : A written request by Borrower for an Advance of Swing Loan proceeds under this Agreement, in the form and with the certifications included within Exhibit A-2 attached hereto and hereby made a part hereof.

Swing Loan Maturity Date : As defined in Section 3.5 .

Swing Loan Note : As defined in Section 3.5 .

Swing Loan Refund Amount : As defined in Section 3.5 .

Termination Date : The earlier of (a) the Maturity Date, or (b) the date on which the Note is declared to be immediately due and payable pursuant to the terms hereof or of the Note.

Total Adjusted Committed Indebtedness : As of any date of determination, the sum as determined by Agent of all committed obligations, contingent and otherwise of the Borrower and Borrower’s pro rata share of all committed obligations of Borrower’s

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unconsolidated subsidiaries, the unconsolidated subsidiaries of the general partners of Borrower, and joint ventures in which Borrower and/or Borrower’s general partners is a party, whether secured or unsecured, that in accordance with GAAP should be classified upon the obligor’s balance sheet as liabilities, or to which reference should be made by footnotes thereto, including in any event and whether or not so classified: (a) the committed amount of all debt and similar monetary obligations, whether direct or indirect (excluding trade payables and other operating expenses paid by Borrower within sixty days); (b) the committed amount of all liabilities secured by any mortgage, pledge, security interest, lien, charge, or other encumbrance existing on property owned or acquired subject thereto, whether or not the liability secured thereby shall have been assumed; (c) the maximum liability which Borrower could incur under all guarantees for borrowed money, endorsements and other contingent obligations, whether direct or indirect, in respect of indebtedness or obligations of others, including any obligation to supply funds (including partnership obligations and capital requirements) to or in any manner to invest in, directly or indirectly, the debtor, to purchase indebtedness, or to assure the owner of indebtedness against loss, through an agreement to purchase goods, supplies, or services for the purpose of enabling the debtor to make payment of the indebtedness held by such owner or otherwise, and the obligations to reimburse the issuer in respect of any letters of credit; (d) preferred stock outstanding or a similar type of investment; and (e) all liability under forward equity arrangements and Forward Purchase Contracts which at such time could be specifically enforced by the seller thereunder. For the avoidance of doubt, preferred stock outstanding or a similar type of investment that in accordance with GAAP is classified upon the obligor’s balance sheet as equity shall not be included in the definition of “ Total Adjusted Committed Indebtedness.”

Total Adjusted Outstanding Indebtedness : As of any date of determination, the sum as determined by Agent of all advanced and outstanding obligations, contingent and otherwise of the Borrower and Borrower’s pro rata share of all advanced and outstanding obligations of Borrower’s unconsolidated subsidiaries, the unconsolidated subsidiaries of the general partners of Borrower, and joint ventures in which Borrower and/or Borrower’s general partners is a party, whether secured or unsecured, that in accordance with GAAP should be classified upon the obligor’s balance sheet as liabilities, or to which reference should be made by footnotes thereto, including in any event and whether or not so classified: (a) all debt and similar monetary obligations, whether direct or indirect (excluding trade payables and other operating expenses paid by Borrower within sixty days); (b) all liabilities secured by any mortgage, pledge, security interest, lien, charge, or other encumbrance existing on property owned or acquired subject thereto, whether or not the liability secured thereby shall have been assumed; (c) all guarantees for borrowed money, endorsements and other contingent obligations, whether direct or indirect, in respect of advanced and outstanding indebtedness or obligations of others, including any obligation to supply funds (including partnership obligations and capital requirements) to or in any manner to invest in, directly or indirectly, the debtor, to purchase indebtedness, or to assure the owner of indebtedness against loss, through an agreement to purchase goods, supplies, or services for the purpose of enabling the debtor to make payment of the indebtedness held by such owner or otherwise, and the obligations to reimburse the issuer in respect of any letters of credit; (d) preferred stock outstanding or a similar type of investment; and (e) all liability under forward equity arrangements and Forward Purchase Contracts which at such time could be specifically enforced by the seller thereunder. For

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the avoidance of doubt, preferred stock outstanding or a similar type of investment that in accordance with GAAP is classified upon the obligor’s balance sheet as equity shall not be included in the definition of “ Total Adjusted Outstanding Indebtedness.”

Total Revolving Outstandings : As of any date of determination, the aggregate unpaid principal balance of Advances outstanding on such date.

Unencumbered Adjusted EBITDA : Adjusted EBITDA calculated only with respect to the Approved Assets.

Unencumbered Asset . Any Real Estate Asset that on any date of determination: (a) is not subject to any material liens (including any such lien imposed by the organizational documents of the owner of such asset), (b) is not the subject of any matter that materially adversely affects the value of such Real Estate Asset, (c) is not the subject of a Disqualifying Environmental Event, (d) has been improved with a building or buildings which (1) have been issued a certificate of occupancy (where available) or is otherwise lawfully occupied for its intended use, and (2) are fully operational, (e) is wholly owned or ground-leased (to the extent permitted hereunder) by the Borrower or an Approved Subsidiary and (f) has not been designated by the Borrower in writing to the Agent as a Real Estate Asset that is not an Unencumbered Asset, which designation shall not be permitted during the continuance of an Event of Default and shall be accompanied by a compliance certificate in the form of Exhibit B-6 attached hereto.

Uniform Customs : With respect to any Letter of Credit, the Uniform Customs and Practice for Documentary Credits (1993 Revision), International Chamber of Commerce Publication No. 500, or any successor version thereof adopted by the Agent in the ordinary course of its business as a letter of credit issuer and in effect at the time of issuance of such Letter of Credit.

Unrestricted Cash and Cash Equivalents : As of any date of determination, the sum of (a) the aggregate amount of unrestricted cash then held by the Borrower and (b) the aggregate amount of unrestricted cash equivalents (valued at fair market value) then held by the Borrower. As used in this definition, (i) “unrestricted” means the specified asset is not subject to any liens in favor of any Person and (ii) “cash equivalents” include overnight deposits and also means that such asset has a liquid, par value in cash and is convertible to cash on demand. Notwithstanding anything contained herein to the contrary, the term Unrestricted Cash and Cash Equivalents shall not include the commitments of the Lenders to make Advances under this Agreement or any other commitments from which the access to such cash or cash equivalents would create indebtedness or tenant security and other restricted deposits, until forfeited or otherwise entitled to be retained by the Borrower.

ARTICLE I.

LOAN

1.1 Principal Advances

Upon the terms and subject to the conditions set forth in this Agreement, each Lender severally, but not jointly, agrees to lend to Borrower, pro rata in accordance with

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its Commitment Percentage, and Borrower agrees to borrow from Lenders, on a revolving basis, at any time and from time to time, in accordance with the terms hereof, from the Closing Date to the Termination Date, during which period Borrower may borrow, repay and reborrow in accordance with the terms hereof, for the purpose of acquisitions, pre-development, development, and renovations/expansions, entitled land (not to exceed 20% of the Revolving Commitment Amount in the aggregate at any one time), short-term working capital (including Distributions not to exceed $10,000,000.00 in the aggregate at any one time), principal amortization requirements and letters of credit issued for the account of Borrower (not to exceed $10,000,000.00 in the aggregate at any one time); provided, however, that (A) at no time shall any Lender be obligated to lend to Borrower more than its Commitment Percentage of the total amount of proceeds of the Loan which Borrower is then qualified to receive hereunder, and (B) the amount of the Total Revolving Outstandings shall never exceed the lesser of (x) the Revolving Commitment Amount and (y) the Loan Availability. In no event shall Borrower use Loan proceeds in connection with the acquisition of unentitled land ( i.e ., land with none of the following: (i) existing or approved infrastructure, (ii) access or entitlement to utilities or (iii) plan for development), mortgages or public or private securities (other than the purchase of shares in Saul Centers, Inc. not to exceed $5,000,000.00 in the aggregate at any one time), without in each instance obtaining Agent’s prior written consent.

All Advances by each Lender shall be evidenced by a Note. Each Note executed by the Borrower shall be in the aggregate principal amount equal to such Lender’s Commitment Percentage of the Revolving Commitment Amount. Each Lender shall enter in its ledgers and records the amount of each such Advance, and of each payment made upon the Loan, and each Lender is authorized by Borrower to enter on a schedule attached to the Note a record of such Advances and payments; provided, however, that the failure by any Lender to make any such entry or any error by such Lender in making such entry shall not limit or otherwise affect the Obligations. Notwithstanding the express principal amount of the Note, Borrower shall not at any time be obligated to repay more or less than the total of all Advances made by each Lender pursuant hereto and to the other Loan Documents, together with interest thereon at the rates specified below and in the Note, computed on each Advance from the date it is so made by such Lender, and all other advances made by such Lender pursuant to the terms of the Loan Documents, with interest thereon as therein provided, less all payments of principal of and interest on the Note, and of such advances and interest thereon, made by Borrower. The entire unpaid principal amount of the Loan shall be due and payable on the Termination Date.

1.2 Payment of Interest and Principal . 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, in arrears, 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 (as advanced and readvanced) 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,

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that Borrower shall be obligated to pay interest on the Loan (and any Swing Loan) when due regardless of the date Borrower receives such notice. All unpaid, accrued interest shall be paid in full on the Termination Date.

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 (or any Swing 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 (other than as set forth in Section 1.11 with respect to prepayments of any LIBOR Rate Advances), after a minimum of one (1) Business Day prior written notice from Borrower to Agent of the date of prepayment. Upon any such prepayment in full, Borrower may terminate this Agreement, without fee or penalty, pursuant to written notice to Agent. 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 one (1) additional period of one (1) year (the “ Extension Period ) upon the written request (the “Extension Request” ) of Borrower given not less than thirty (30) days nor more than one hundred twenty (120) days prior to the Maturity Date, such extension being subject to satisfaction of all of the following conditions:

A. Payment on or before the first day of the Extension Period of the Extension Fee set forth in the Fee Letter;

B. At the time of the Extension Request and on the first day of the Extension Period, there shall exist no uncured Event of Default (as hereinafter defined) or event which, with the giving of notice or passage of time, or both, could become an Event of Default;

C. Borrower shall deliver to Agent all financial information relating to Borrower and Guarantor required hereunder, and such information shall reflect that no material adverse change, financial or otherwise, as determined by Agent, in its sole discretion, shall have occurred with respect to Borrower or Guarantor;

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 beyond January 27, 2008 unless each of the foregoing conditions shall have been satisfied.

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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 on the Principal Balance at the Loan Rate, as the same may fluctuate from time to time; provided, however, subject to the limitations stated herein, Borrower may elect in accordance with the procedures set forth herein to have interest accrue and be paid on all or a portion of the outstanding Principal Balance (other than with respect to a Swing Loan) at a rate per annum equal to the LIBOR Rate.

1.6 LIBOR Pricing Options . Borrower may elect to fix the rate of interest payable upon the Principal Balance (other than with respect to a Swing Loan) or any portion thereof pursuant to the provisions of this Section. The provisions of this Section 1.6 shall govern the computation, accrual and payment of interest with respect to the Principal Balance or any portion thereof for which Borrower properly makes such an election. If no Event of Default has occurred and is continuing under this Agreement or any of the other Loan Documents, Borrower may from time to time elect, by a LIBOR Rate Notice, to pay interest on the LIBOR Rate Advance described in said LIBOR Rate Notice at a LIBOR Rate during the LIBOR Rate Period specified in said LIBOR Rate Notice; provided, however, Borrower may not elect to have more than five (5) LIBOR Rate Advances outstanding at any one time. Upon request by Borrower, prior to the submission by Borrower to Agent of any LIBOR Rate Notice, Agent shall by telephone advise Borrower from time to time of the then applicable LIBOR Rate with respect to any LIBOR Rate Period promptly after the same is determined by Agent, which determination shall be final, conclusive and binding on Borrower. All interest accruing hereunder at a LIBOR Rate shall accrue and be computed and charged in the same manner as interest at the Loan Rate. From and after the end of each LIBOR Rate Period, in the event Borrower does not timely select another interest rate option at least three (3) Euro Days before a particular LIBOR Rate Advance expires, Agent may, at any time thereafter convert such LIBOR Rate Advance to a Loan Rate Advance, but until such conversion, the funds advanced under the expired LIBOR Rate Advance shall continue to accrue interest at the same rate as the interest rate under such expired LIBOR Rate Advance. Agent’s internal records of applicable interest rates shall be determinative in the absence of manifest error. Notwithstanding the foregoing, all LIBOR Rate Periods at any one time outstanding shall end on not more than five (5) different dates, and the duration of any LIBOR Rate Periods which would exceed such limitation shall be adjusted to coincide with the remaining term of such other shorter LIBOR Rate Period(s) as Borrower shall notify Agent of in writing, or absent such notice, as Agent may elect. Except as hereinafter expressly provided, no LIBOR Rate Advance may be repaid or prepaid on any day other than the last day of the LIBOR Rate Period applicable thereto; provided, however, that if Agent is required by any applicable law, statute, rule, regulation or requirement to accept any such prepayment, Borrower shall also pay to Agent for the benefit of the Lenders, from time to time, on demand, any sums necessary to compensate the Lenders for all costs, expenses, claims, penalties and liabilities incurred by the Lenders by virtue of the repayment or prepayment of funds, or the inability of the Lenders to repay or prepay funds borrowed by the Lenders in the London interbank market to advance to Borrower.

1.7 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

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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 a Lender 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 a Lender 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.

1.8 Inability to Determine LIBOR . In the event that on the date for determining LIBOR in respect of the LIBOR Rate Period for any LIBOR Rate Advance, 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 LIBOR for such LIBOR Rate Period, Agent shall promptly give to Borrower telephonic notice (confirmed as soon as practicable in writing) of the nature and effect of such circumstances. After receipt of such notice and during the existence of such circumstances, Borrower shall have no right to elect a LIBOR Rate with respect to advances hereunder; provided that 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.

1.9 Illegality . Notwithstanding anything to the contrary herein contained, if any Regulatory Change shall make it unlawful for any Lender 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:

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

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B. Require, but only to the extent the Regulatory Change affects outstanding LIBOR Rate Advances, that all outstanding LIBOR Rate Advances made by the Lenders be added to, and become a part of, the Loan Rate Advance hereunder, in which event all such LIBOR Rate Advances shall automatically be added to, and become a part of, the Loan Rate Advance 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 Loan Rate or the Default Rate, whichever is then applicable. For purposes of this Section, a notice to Borrower by Agent shall be effective on the date of receipt by Borrower.

1.10 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. 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.

1.11 Indemnification of Agent and the Lenders . If a LIBOR Rate Advance is prepaid, whether by the Borrower as a result of acceleration upon default or otherwise, the Borrower agrees to pay all of the losses, costs, expenses and Interest Differential (as determined by the Agent) of Agent and the Lenders incurred or sustained as a result of such prepayment. Because of the short-term nature of this facility, the Borrower agrees that the Interest Differential shall not be discounted to its present value. Any prepayment of a LIBOR Rate Advance shall be in an amount equal to the remaining entire principal balance of such advance. Agent shall provide to Borrower a statement, signed by an officer of Agent, explaining any such loss or expense and setting forth, if applicable, the computations used to determine such loss or expense which shall be conclusive and binding on Borrower, absent manifest error.

1.12 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 four percent (4%) per annum in excess of the Loan Rate or the

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LIBOR Rate, as applicable, 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.

1.13 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.

1.14 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 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 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 and any other instrument which secures the Note.

1.15 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.

1.16 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.

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1.17 Non-Usage Fees

In addition to any other fees set forth in this Agreement, Borrower shall pay to Agent on behalf of Lenders in Immediately Available Funds a non-usage fee equal to the percentage set forth below per annum multiplied by the unadvanced portion of the Revolving Commitment Amount (after deducting the undrawn amount of any Letters of Credit outstanding hereunder), payable on the first day of each calendar quarter, calculated in arrears based on the average daily balance of the unadvanced portion of the Revolving Commitment Amount during the prior calendar quarter; the first payment of such fee shall be due and payable on April 1, 2005 and shall be pro rated based upon that portion of the calendar quarter during which the Revolving Commitment is outstanding. The non-usage fee shall be shared among the Lenders in accordance with the daily average Commitment Percentages of the Lenders during such calendar quarter.

The non-usage fee shall be equal to 0.15%; provided, however, in the event that Agent determines in its sole discretion (and to the extent that such determination is in reliance upon documentation provided by Borrower, copies shall be provided to each Lender by Agent) that the average daily balance of the unadvanced portion of the Revolving Commitment Amount during the prior calendar quarter shall have been greater than or equal to fifty percent (50%) of the Revolving Commitment Amount, then the non-usage fee as to such quarter shall be equal to 0.20% per annum.

ARTICLE II.A.

LETTERS OF CREDIT

2.A Terms of the Letter of Credit Facility

2.A.1. Letters of Credit . Upon the terms and subject to the conditions of this Agreement, Agent agrees, in its individual capacity, to issue, extend and renew Letters of Credit for the account of Borrower from time to time between the Closing Date and the Termination Date in such form as may be requested by Borrower and reasonably agreed to by Agent and in such amounts as the Borrower shall request up to an aggregate amount at any time outstanding not exceeding the Revolving Commitment Amount; provided , however , that, after giving effect to such issuance, (a) the Maximum Drawing Amount shall not exceed $10,000,000.00 at any time, (b) the sum of (i) the Maximum Drawing Amount on all Letters of Credit and (ii) Total Revolving Outstandings shall not exceed the Loan Availability in effect at any time, and (c) the total number of Letters of Credit outstanding shall not exceed five (5).

2.A.2. Procedures for Letters of Credit . Each request for a Letter of Credit shall be made by the Borrower, in writing, by telex, facsimile transmission or electronic conveyance received by the Agent by 2:00 p.m. (Central time) on a Business Day which is not less than five (5) Business Days preceding the requested date of issuance (which shall also be a Business Day) and shall be accompanied by a certificate executed by the Borrower in the form of Exhibit B-7 . Each request for a Letter of Credit shall specify (i) the date of issuance of the requested Letter of Credit, (ii) the amount of the requested Letter of Credit, (iii) the name of the account party on such Letter of Credit, and (iv) the beneficiary of such Letter of Credit. The Agent may require that such request be made on such letter of credit application and reimbursement agreement form as the Agent may from time to time specify, along with satisfactory evidence of the authority and incumbency of the

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representative of the Borrower making such request. Each request for a Letter of Credit shall be deemed a representation by the Borrower that, on the date of issuance of such Letter of Credit and after giving effect thereto, the applicable conditions specified in Article III have been and will be satisfied. Unless the Agent determines that any applicable condition specified in Article III has not been satisfied, the Agent will issue the requested Letter of Credit at its principal office in Minneapolis, Minnesota not later than 3:00 p.m. on the requested date of issuance.

2.A.3. Terms of Letters of Credit . Letters of Credit shall be issued in support of obligations of the Borrower. All Letters of Credit must expire not later than thirty (30) days prior to the Maturity Date. Each Letter of Credit so issued, extended or renewed shall be subject to the Uniform Customs.

2.A.4. Agreement to Repay Letter of Credit Drawing . If the Agent has received documents purporting to draw under a Letter of Credit that the Agent believes conform to the requirements of the Letter of Credit, or if the Agent has decided that it will comply with the Borrower’s written request or authorization to pay a drawing on any Letter of Credit that the Agent does not believe conforms to the requirements of the Letter of Credit, it will notify Borrower, of that fact. Except as contemplated in Section 2.A.10 below, the Borrower shall reimburse the Agent for the account of the Agent or (as the case may be) the Lenders by 9:30 a.m. (Central time) on the day on which such drawing is to be paid in Immediately Available Funds in an amount equal to the amount of such drawing. In addition, Borrower agrees to reimburse or pay to Agent for the account of the Agent or (as the case may be) the Lenders with respect to each Letter of Credit issued, extended or renewed by Agent hereunder:

A. Upon reduction (but not termination) of the Revolving Commitment Amount to an amount less than the then Maximum Drawing Amount, an amount equal to such difference, which amount shall be held by the Agent in a non-interest bearing account as cash collateral for the benefit of Lenders and the Agent for all Reimbursement Obligations, and

B. Upon the termination of the Revolving Commitment, or the acceleration of the Reimbursement Obligations with respect to all Letters of Credit in accordance with Section 6.2(C) , an amount equal to the then Maximum Drawing Amount on all Letters of Credit, which amount shall be held by Agent in a non-interest bearing account as cash collateral for the benefit of Lenders and Agent for all Reimbursement Obligations.

2.A.5. Obligations Absolute . The obligation of the Borrower under Section 2.A.4. to repay the Agent for any amount drawn on any Letter of Credit shall be absolute, unconditional and irrevocable, shall continue for so long as any Letter of Credit is outstanding, notwithstanding any termination of this Agreement, and shall be paid strictly in accordance with the terms of this Agreement, under all circumstances whatsoever, including without limitation the following circumstances:

A. Any lack of validity or enforceability of any Letter of Credit;

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B. The existence of any claim, setoff, defense or other right which the Borrower may have or claim at any time against any beneficiary, transferee or holder of any Letter of Credit (or any Person for whom any such beneficiary, transferee or holder may be acting), the Agent or any other Person, whether in connection with a Letter of Credit, this Agreement, the transactions contemplated hereby, or any unrelated transaction; or

C. Any statement or any other document presented under any Letter of Credit proving to be forged, fraudulent, invalid or insufficient in any respect or any statement therein being untrue or inaccurate in any respect whatsoever.

Neither the Agent nor its officers, directors or employees shall be liable or responsible for, and the Obligations of the Borrower shall not be impaired by:

(i) The use which may be made of any Letter of Credit or any acts or omissions of any beneficiary, transferee or holder thereof in connection therewith;

(ii) The validity, sufficiency or genuineness of documents, or of any endorsements thereon, even if such documents or endorsements should, in fact, prove to be in any or all respects invalid, insufficient, fraudulent or forged;

(iii) The acceptance by the Agent of documents that appear on their face to be in order, without responsibility for further investigation, regardless of any notice or information to the contrary; or

(iv) Any other action of the Agent in making or failing to make payment under any Letter of Credit if in good faith and in conformity with U.S. or foreign laws, regulations or customs applicable thereto.

2.A.6. Increased Cost for Letters of Credit . If any Regulatory Change shall either (a) impose, modify or make applicable any reserve, deposit, capital adequacy or similar requirement against Letters of Credit issued by the Agent, or (b) shall impose on the Agent any other conditions affecting this Agreement or any Letter of Credit; and the result of any of the foregoing is to increase the cost to the Agent of issuing or maintaining any Letter of Credit, or reduce the amount of any sum received or receivable by the Agent hereunder, then, upon written demand (which demand shall be given by the Agent promptly after it determines such increased cost or reduction), the Borrower shall pay to the Agent the additional amount or amounts as will compensate the Agent for such actual or imputed increased cost or reduction. A certificate submitted to the Borrower by the Agent setting forth the basis for the determination of such additional amount or amounts necessary to compensate the Agent as aforesaid, and stating in reasonable detail the basis for the charge and the method of computation, shall be conclusive and binding on the Borrower absent error.

2.A.7. Letter of Credit Fees . For each Letter of Credit issued, the Borrower shall pay to the Agent (a) a fee equal to the higher of (a) $1,000.00, or (b) 12.5 basis points on each Letter of Credit face amount, payable upon issuance of each such Letter of Credit, and (b) a fee (a “Letter of Credit Fee” ) in an amount equal to the Applicable Margin per

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annum multiplied by the face amount of each outstanding Letter of Credit, which Letter of Credit Fee (i) shall be payable quarterly in arrears on the first day of each calendar quarter for the immediately preceding calendar quarter (which Letter of Credit Fee shall be pro-rated for any calendar quarter in which such Letter of Credit is issued, drawn upon or otherwise reduced or terminated) and (ii) shall be for the account of the Lenders pro rata in accordance with their respective Commitment Percentages. In addition to the Letter of Credit Fee, the Borrower shall pay to the Agent, on demand, all amendment, drawing and other fees regularly charged by the Agent to its letter of credit customers and all out-of-pocket expenses incurred by the Agent in connection with the issuance, amendment, administration or payment of any Letter of Credit.

2.A.8 Regulations U and X . No portion of any Letter of Credit is to be obtained for the purpose of purchasing or carrying any “margin security” or “margin stock” as such terms are used in Regulations U and X of the Board, 12 C.F.R. Parts 221 and 224.

2.A.9 Letter of Credit Participation . Each Lender severally agrees that it shall be absolutely liable, without regard to the occurrence of any default or Event of Default or any other condition precedent whatsoever, to the extent of such Lender’s Commitment Percentage, to reimburse Agent on demand pursuant to Section 2.A.10 for the amount of each draft paid by Agent under each Letter of Credit to the extent that such amount is not reimbursed by the Borrower pursuant to Section 2.A.4 (such agreement for a Lender being called herein the “ Letter of Credit Participation ” of such Lender).

2.A.10 Letter of Credit Payments; Advance of Loan . Notwithstanding anything contained in Section 2.A.4 above to the contrary, unless Borrower shall have notified the Agent prior to 11:00 a.m. (Central time) on the Business Day immediately prior to the date of such drawing that Borrower intends to reimburse Agent for the amount of such drawing, Borrower shall be deemed to have requested a Loan Rate Advance on the date on which such drawing is honored and in an amount equal to the amount of such drawing. The Borrower may thereafter convert any such Loan Rate Advance to a LIBOR Rate Advance in accordance with Section 1.6 . Each Lender shall, in accordance with Section 1.1 , make available such Lender’s Commitment Percentage of such Advance to Agent, the proceeds of which shall be applied directly by Agent to reimburse Agent and/or Lenders for the amount of such draw. Agent is irrevocably authorized by the Borrower and each of the Lenders to honor draws on each Letter of Credit by the beneficiary thereof in accordance with the terms of the Letter of Credit. The responsibility of the Agent to the Borrower and the Lenders shall be only to determine that the documents (including each draft) delivered under each Letter of Credit in connection with such presentment shall be in conformity in all material respects with such Letter of Credit.

2.A.11 Existing Letter of Credit . The parties hereto acknowledge and agree that that certain Letter of Credit No. SLCMMSP03477 in the face amount of $2,100,000.00, issued by Agent for the benefit of Teachers Insurance and Annuity Association of America on behalf of Borrower, shall be deemed to have been issued pursuant to this Agreement, in accordance with the terms and conditions set forth in this Article IIA.

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ARTICLE II.B

CONDITIONS OF BORROWING

Lenders shall not 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, with respect to said Advance, at Borrower’s sole cost and expense.

2.B.1 Prerequisites to Effectiveness of Agreement

The obligations of Lenders to make Advances and the effectiveness of this Agreement are subject to the following documents, certificates and opinions, each in form and substance acceptable to Agent and its counsel, having been delivered to and approved by Agent. It is agreed, however, that Lenders may, in their discretion, make such Advances prior to completion and fulfillment of any or all of such pre-closing requirements, conditions and other requirements, without waiving its right to require such completion and fulfillment before any additional Advances are made.

A. This Agreement duly executed by Borrower, Agent, Swing Lender and Lenders; the Note duly executed by Borrower; the Fee Letter; and the Guaranty duly executed by Guarantor;

B. A copy of the Certificate of Limited Partnership of Borrower and all amendments thereto, and a Certificate of Good Standing for Borrower, currently certified by the Secretary of State of its state of organization; Borrower’s Agreement of Limited Partnership, and any necessary consents and resolutions authorizing the transactions described herein, all currently certified by Borrower’s general partner, and upon which Agent and Lenders may rely until revoked by written notice to Agent;

C. A copy of the Articles of Incorporation of Guarantor and all amendments thereto, and a Certificate of Good Standing for Guarantor, each currently certified by the Secretary of State of its state of incorporation; Guarantor’s By-Laws, Resolutions of Guarantor’s Board of Directors authorizing the transactions described herein, and an incumbency certificate for Guarantor (including the names, titles and specimen signatures of officers thereof authorized to execute Loan Documents), all currently certified by Guarantor’s corporate secretary or assistant secretary, as appropriate, and upon which Agent and Lenders may rely until revoked by written notice to Agent;

D. A Certificate from the general partner of Borrower and from a duly authorized officer of Guarantor, setting forth the names, titles, specimen signatures and telephone numbers of all persons authorized to (i) sign Draw Requests and/or other documents, instruments, certificates and agreements to be delivered by Borrower and/or Guarantor to Agent, and/or (ii) to give instructions to Agent hereunder, each of which Certificates shall be deemed to be in full force and effect until forty-eight (48) hours after receipt by Agent of an amendment thereof duly executed by a duly authorized officer or Guarantor;

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E. A signed, written opinion from counsel to Borrower and Guarantor, addressed to Agent and currently dated, as to the due organization, existence, qualification and good standing of Borrower and Guarantor; as to the due authorization, validity, legality, binding nature and enforceability of the Loan Documents listed in Section 2.B.1.A , without the consent or approval of any other Person; that, to such counsel’s knowledge, the execution, delivery and performance by Borrower and Guarantor of the Loan Documents to which each is a party will not violate any contracts or agreements of Borrower or Guarantor or any applicable Governmental Requirements; as to the absence, to such counsel’s knowledge, of litigation or governmental proceedings which could materially, adversely affect Borrower or Guarantor; and such other matters as may be required by Agent on behalf of Lenders;

F. 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 immediately preceding the time period covered by said current financial statements; and

G. A sworn statement from and agreement by Borrower and Guarantor listing all guarantees and contingent liabilities to which Borrower and Guarantor are a party or for which Borrower or Guarantor may be liable and agreeing to periodically update said listing, to which sworn statement shall be attached (or in which sworn statement shall be described) current financial statements of Borrower and of Guarantor, which shall be, in such sworn statement, certified and sworn to by Borrower and Guarantor as being true, correct, complete and not misleading in any material respect, and Borrower and Guarantor shall also, in such sworn statement, certify that there has been no material change in the financial status of Borrower or of Guarantor since the dates thereof.

H. With respect to each Unencumbered Asset which is to become an Approved Asset on the Closing Date, (i) a written description of the Unencumbered Asset, including the size, legal description and location of the Unencumbered Asset; (ii) a title report, dated within thirty (30) days of the date on which such Unencumbered Asset is included as an Approved Asset, running in favor of the Agent on behalf of the Lenders, together with a copy of each document referred to therein (collectively “ Title Evidence ”), evidencing that such Real Estate Asset is an Unencumbered Asset; (iii) a current, certified rent roll for such Unencumbered Asset; (iv) operating statements for the prior three (3) years, if available (but in no event less than the prior twelve (12) months); (v) market, location and demographic information; (vi) pro forma operating and capital budgets and (vii) such other information as may be reasonably requested by Agent.

I. Receipt of a Closing Certificate and a Compliance Certificate in the form attached hereto as Exhibit B-1 (if Borrower has requested that an Advance be funded on the Closing Date).

J. The Borrower agrees that at the request of Agent it will furnish supplements of all materials described in this Section 2.B.1 to Agent after the Closing Date, updating such material.

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K. All proceedings in connection with the transactions contemplated by this Agreement, the other Loan Documents and all other documents incident thereto shall be satisfactory in form and substance to Agent and to the Agent’s counsel, and the Agent and such counsel shall have received all information and such counterpart originals or certified or other copies of such documents as the Agent may request.

L. The Borrower shall have paid to the Agent, for the account of the Lenders or for its own account, as applicable, all of the fees and expenses that are due and payable as of the Closing Date in accordance with this Agreement.

M. The obligation of the Agent to issue any Letter of Credit shall be subject to the fulfillment of the following conditions:

(1) Representations and Warranties . The representations and warranties contained in Article IV shall be true and correct on and as of the date upon which Borrower requests that Agent issue the Letter of Credit and on the date of issuance of each Letter of Credit with the same force and effect as if made on such date.

(2) No Default . No default or Event of Default shall have occurred and be continuing on the date upon which Borrower requests that Agent issue the Letter of Credit and on the date of issuance of eac