CONSTRUCTION LOAN AGREEMENT


         THIS CONSTRUCTION LOAN AGREEMENT, dated as of the 20th day of May, 2002
(the "Loan Agreement"), is by and between

         DCF I, LLC, a limited liability company organized and existing under
the laws of the State of North Carolina (the "Borrower"),

         Anthony Dilweg, an individual and resident of the State of North
Carolina, (the "Guarantor"), and

         MERISEL  PROPERTIES,  INC., a corporation  organized and existing
under the laws of the State of Delaware (the "Lender").

                                    RECITALS

         A.       The Borrower has requested that Lender provide a  construction
loan in a principal  amount of up to $1,000,000 (the "Loan") to be advanced by
the Lender pursuant to the terms hereof.

         B. The Borrower will use the proceeds of the Loan to construct certain
improvements to the office building located at 305 and 315 Gregson Drive, Cary,
Wake County, North Carolina (the "Project").

         C.       The Lender is willing to make the Loan  described  hereinabove
based on the terms and conditions set forth in this Loan Agreement.

         NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Borrower and the Lender hereby
agree as follows:

ARTICLE I

1.1.     Definitions

                  For the purposes hereof:

(a)      "Architect" means Borrower's design architect for the Project;

(b)      "Closing Date" means the date as of which this Loan  Agreement is
         executed by the Borrower,  the Guarantor and the Lender;

(c)      "Construction Documents" means the construction contract between the
         Borrower and the General Contractor (the "Construction Contract"), and
         all other contracts, plans or documents concerning the construction of
         the Project; such Construction Documents, or other agreement
         satisfactory to the Lender, shall specifically provide that they may be
         assigned to the Lender as additional collateral for the Loan and that
         upon the occurrence of an Event of Default under the Loan, the General

<PAGE>

         Contractor will continue to perform, at the Lender's option, for the
         Lender or its assigns under the Construction Documents;

(d)      "Construction  Inspector" shall be Ron Bodkin, the construction
         manager of Dilweg Construction  Services, LLC, or his  replacement.  In
         the event Lender is not  satisfied  with the services of Ron Bodkin,
         Lender shall  have the right to engage an  architectural  or
         engineering  firm  acceptable  to the Lender at the Borrower's  expense
         (not to exceed  $10,000).  The  Construction  Inspector shall perform
         various services on behalf of the Borrower and the Lender,  including:
         a preconstruction  review or front-end  analysis of the intended
         construction  (including a review of the Plans,  soil tests,  and
         permits and examination of the  Construction  Documents,  Cost
         Breakdown,  estimates and  schedules);  periodic  inspections  of the
         Project for  conformity  with the Plans,  Cost  Breakdown  and
         schedules;  approvals of requests for Loan disbursements;  a review and
         analysis of each  proposed  change to the Plans,  Construction
         Documents or schedule;  and advising and  rendering  periodic  reports
         to the  Borrower and the Lender  concerning  the same;  it being
         expressly  understood  and agreed  that the  Lender  shall have the
         right to rely on such reports from the  Construction  Inspector and the
         Construction  Inspector shall have an obligation to the
         Lender in addition to the Borrower in connection therewith;

(e)      "Cost Breakdown" means the detailed trade breakdown of the cost of
         constructing the Project, including a detailed construction ledger with
         hard costs, and the cost of acquiring the related personalty on AIA
         form G703, or other form acceptable to the Lender and an itemization of
         non-construction costs in a form and substance acceptable to the
         Lender, together with such periodic updates as the Lender may from time
         to time require; such costs breakdown and all updates thereof shall be
         certified by the Construction Inspector as fair and reasonable and
         shall include all costs and items necessary to complete the project in
         accordance with the Plans;

(f)      "Deed of Trust" means the deed of trust dated as of the Closing Date in
         favor of the Lender securing the Loan executed by the Borrower for the
         benefit of the Lender covering the property as more particularly
         described therein;

(g)      "Default Condition" means the occurrence or existence of an event or
         condition which, upon the giving of notice or the passage of time, or
         both, would constitute an Event of Default;

(h)      "Draw Request" means a written request for any disbursement of Loan
         proceeds, which shall be submitted for each requested disbursement as
         set forth in Section 2.4 hereof;

(i)      "Event of Default" means an Event of Default as defined in Article VII;

(j)      "Financing Statements" means the UCC financing statements filed in
         order to perfect the Lender's lien on certain personal property and
         fixtures as more particularly described therein;

(k)      "Force Majeure" means strikes, lock-outs, riots or other labor
         troubles, unavailability of materials, a national emergency, any rule,

<PAGE>

         order or regulation of Governmental Authorities enacted after the
         Closing Date, tornadoes, floods, hurricanes or other natural disasters,
         or other similar causes not within the Borrower's control;

(l)      "General Contractor" means the general contractor for the construction
         of the Project;

(m)      "Governmental Authorities" means any governmental (including health and
         environmental) office, officer or official whose consent or approval is
         required as a prerequisite to the commencement of the construction of
         the Project or to the operation and occupancy of the Improvements or
         the Premises or to the performance of any act or obligation or the
         observance of any agreement, provision or condition of whatsoever
         nature herein contained;

(n)      "Guaranty" means the Guaranty Agreement dated of even date herewith
         evidencing the direct and unconditional guaranty of the Guarantor of
         payment of all sums due under the Loan Documents and of performance of
         all obligations of the Borrower thereunder including the lien free
         completion of the Improvements in accordance with the plans;

(o)      "Improvements" means all improvements on the Land, including without
         limitation the improvements described in Recital B above, and all
         improvements constructed pursuant to the Construction Documents;

(p)      "Indebtedness" means with respect to any person, all indebtedness,
         obligations and liabilities of such person for money borrowed, all
         indebtedness of such person for the acquisition of property,
         indebtedness secured by any lien on the property of such person whether
         or not such indebtedness is assumed, all liability of such person by
         way of endorsements (other than for collection or deposit of negotiable
         instruments in the ordinary course of business), all contingent
         obligations and all capitalized leases and other items which in
         accordance with generally accepted accounting principles are classified
         as liabilities on a balance sheet;

(q)      "Land" means the real property containing approximately 6.989 acres
         located at 305 and 315 Gregson Drive in Cary, Wake County, North
         Carolina, owned or to be acquired by the Borrower and encumbered by the
         Deed of Trust;

(r)      "Liabilities"  means all obligations and  Indebtedness of any and every
         kind and nature of the Borrower to the Lender (including,  without
         limitation,  interest,  charges, expenses,  attorneys' fees and other
         sums chargeable  to the  Borrower by the  Lender) and future  advances
         by the Lender made to or for the benefit of the Borrower,  whether
         arising under this Agreement,  or arising under the Note, the Deed of
         Trust, the Purchase  Money Note,  the Purchase  Money Deed of Trust or
         any of the other Loan Documents or acquired by the Lender from any
         other source,  whether heretofore,  now or hereafter owing,  arising,
         due, or payable from the Borrower to the Lender and howsoever
         evidenced,  created,  incurred,  acquired or owing, whether
         primary, secondary, direct, contingent, fixed, or otherwise, including
         obligations of performance;
<PAGE>

(s)      "Loan Documents" means this Loan Agreement, the Note, the Deed of
         Trust, the Guaranty, the Financing Statements and any other instruments
         evidencing or securing the Loan;

(t)      "Note" means the promissory note of the Borrower dated as of the
         Closing Date in favor of the Lender in the maximum principal amount of
         $1,000,000 as well as any promissory note or notes issued by the
         Borrower in substitution, replacement, extension, amendment or renewal
         of any such promissory note or notes;

(u)      "Permitted  Encumbrances" means liens,  encumbrances,  easements and
         other matters listed as exceptions to the final Title Policy;

(v)      "Personalty"  means all  fixtures,  equipment,  furnishings,  inventory
         and other  articles  of  tangible  personal  property now owned or
         hereafter  acquired by the Borrower attached to, located on, contained
         in, or used  exclusively  in  connection  with the Land and
         Improvements,  or any  portion  thereof,  and all renewals or
         replacements  thereof or articles in substitution  thereof, or
         accessions thereto,  whether or not the same are or shall be  attached
         to the Land and  Improvements  in any  manner;  together  with all
         accounts,  instruments,  and general  intangibles of every nature and
         kind arising out of or in connection with the Premises,  whether now
         owned or hereafter  acquired by the  Borrower,  together with all
         proceeds thereof;

(w)      "Plans" means the plans and specifications for the construction of the
         Project prepared by the Architect and delivered to the Lender, and
         including such amendments thereto as may from time to time be made by
         the Borrower with the written consent of the Lender;

(x)      "Premises" means the collective reference to the Land, the Improvements
         and the Personalty;

(y)      "Title Policy" means the mortgagee title policy meeting the
         requirements of this Loan Agreement.

                                  ARTICLE II

                                    The Loan

2.1. Loan Terms. The purpose of the Loan is to finance the construction of the
Project. Loan proceeds may not be used for any other purpose. Subject to the
terms and conditions of this Loan Agreement, the Lender will lend and the
Borrower will borrow up to $1,000,000, such borrowing to be evidenced by the
Note, secured by the Deed of Trust and guaranteed by the Guaranty. Of even date
herewith, Lender has conveyed the Premises to Borrower and taken back a purchase
money note (the "Purchase Money Note") secured by a purchase money deed of trust
(the "Purchase Money Deed of Trust") encumbering the Premises with a first
priority lien. Borrower shall make and fund the Improvements to the Premises
prior to the disbursal of Loan proceeds hereunder. Specifically, Lender shall
not be required to disburse Loan proceeds to Borrower until such time as
Borrower has funded the cost of the Improvements to the Premises in the amount
of $1,000,000, which amount shall be evidenced to Lender in a Cost Breakdown.

<PAGE>

Attached hereto as Exhibit A and incorporated herein by reference is a schedule
and timeline that defines Borrower's obligations to make and fund the
Improvements to the Premises ("Borrower's Initial Construction Obligations"). At
such time as Borrower has contributed $500,000 of its own funds to the
completion of Borrower's Initial Construction Obligations, which amount shall be
evidenced to Lender in a Cost Breakdown, Borrower may fund the remaining
$500,000 by securing a loan from a third party lender. Any lien against the
Premises securing such third-party loan shall be subordinate to the Purchase
Money Deed of Trust and the Deed of Trust. At such time as Borrower has
contributed the remaining $500,000 to the completion of Borrower's Initial
Construction Obligations, which amount shall be evidenced to Lender in a Cost
Breakdown, Borrower may request advances of the Loan proceeds from Lender in
accordance with the terms of this Loan Agreement.

2.2.     Interest  Rate/Repayment.  The  outstanding  principal  balance  of the
Loan  shall  bear  interest,  and principal and interest shall be repayable in
accordance with the terms of the Note.

2.3.     Disbursements. Subject to the requirements of Section 2.1, Lender shall
from time to time, so long as there shall exist no Default Condition or Event of
Default, but not more frequently than once a month, disburse Loan proceeds to
the Borrower. The conditions set forth in Article III hereof must be satisfied
before the Lender will make the first advance or disbursement, and the
conditions set forth in Article IV hereof must be satisfied before the Lender
will make each subsequent disbursement or advance.

2.4.     Draw  Requests.  At least  five (5)  business  days prior to each Loan
disbursement  by the  Lender,  the Borrower must submit to the Lender a Draw
Request, which shall include:

(a)      A completed and properly executed request for disbursement in form
         reasonably acceptable to the Lender setting forth the amount of Loan
         proceeds desired, together with such certifications and additional
         information as the Lender may reasonably require, signed by an
         authorized representative of the Borrower reasonably acceptable to the
         Lender certified to the Lender in writing to be an authorized
         representative for the purpose of submitting Draw Requests;

(b)      If the  Draw  Request  includes  an  application  for  payment  for
         amounts  to be  paid  to the  General Contractor,  a written
         memorandum  of advance,  originals of AIA Document  G702 and AIA
         Document G703 (or equivalents  approved by the Lender)  together  with
         a report on the status of any stored  materials  in a format
         reasonably  acceptable  to the  Lender  and  copies of the  supplier
         invoices  as to such  stored materials;  the  application  for payment
         shall  contain a breakdown  by trade  and/or  other  categories
         reasonably acceptable to the Lender,  completed to the reasonable
         satisfaction of the Lender and executed by the General  Contractor and
         Construction  Inspector,  accompanied by invoices relating to items
         covered thereby when requested by the Lender;

(c)      If the Draw Request includes a request for amounts for non-construction
         items previously approved by the  Lender or as provided in the Plans,
         invoices for such items; and
<PAGE>

(d)      In each instance, certification in proper form and substance from the
         Construction Inspector, together with such other items as may be
         reasonably required by the Lender.

2.5. Evidence of Progress of Construction: Without in any way limiting the
documentation that the Lender may require, each Draw Request shall be
accompanied by evidence in form and content reasonably satisfactory to the
Lender (including, but not limited to, certificates and affidavits of the
Borrower, General Contractor and Construction Inspector, or such other persons
as the Lender may reasonably require) setting forth the following:

(a)      The percentage of the Project completed at that time; the total funds
         expended to date by the Borrower in connection with the construction of
         the Project (including the portions thereof for which Loan proceeds
         have been previously disbursed); and the funds required to complete the
         construction of the Project;

(b)      That all outstanding claims for labor, materials and fixtures have been
         paid (except for bills not yet past due and for which payment will be
         promptly made upon receipt by the Borrower of the then requested Loan
         disbursement);

(c)      That there are no liens outstanding against the Premises except for the
         Lender's security title, other than inchoate liens for property taxes
         not yet due;

(d)      That the Borrower and Guarantor  have complied with all of their
         respective  obligations,  as of the date thereof, under the Loan
         Documents;

(e)      That all construction  prior to the date of the Draw Request has been
         done in substantial  accordance with the Plans;

(f)      That all funds  previously  disbursed  by the  Lender  have been
         applied  directly  to  construction  and development costs approved by
         the Lender;

(g)      That attached to such Draw Request are (i) a complete list of invoices
         or statements to be paid from the Loan disbursement, (ii) as to
         individual costs paid from the last preceding Loan disbursement, copies
         of invoices and statements, and (iii) satisfactory receipts from all
         subcontractors and materialmen paid from the last preceding Loan
         disbursement; and

(h)      That all material change orders shall have been approved in writing by
         the Lender ("material change orders" shall be defined as change orders
         in excess of Twenty-Five Thousand Dollars ($25,000)); unless the Lender
         elects to orally consent to changes followed within ten (10) days by
         the Lender's written confirmation, in the Lender's discretion;

2.6.     Disbursement  Amount.  Following  receipt of a Draw  Request  and
receipt and review of the report of the Construction  Inspector,  the Lender
shall  determine the amount of the  disbursement  to be made under the Loan in
accordance with the standards of this Section:
<PAGE>

(a)      Construction Work and Materials. Loan disbursements for construction
         work, materials and other "hard costs" shall be made on a pro rata
         basis less retainage as provided in the Construction Documents for the
         value of the work and materials then in place on the Improvements and
         materials acquired and stored on site in a manner reasonably
         satisfactory to the Lender, as shown on applications for payment from
         the General Contractor reviewed and approved by the Construction
         Inspector and the Lender. The final disbursement of the pro rata
         portion of the construction retainage shall be made upon compliance in
         full with the requirements set forth in Section 4.2.

(b)      Non-Construction Items. Loan disbursements for non-construction items
         (i.e., so-called "soft costs") shall be made on a pro-rata basis of all
         such costs as shown on the Cost Breakdown and approved by the Lender in
         its reasonable discretion and the Lender may require that invoices for
         such costs be submitted to it for approval prior to making any
         disbursements for such items. The Lender shall, in its reasonable
         discretion, determine what are "construction items" and what are
         "non-construction items" for the purposes of determining the amount of
         disbursements to be made with respect to such items.

(c)      Stored Materials. Pro rata disbursements for stored materials will be
         made based upon the invoice costs of materials provided the same are
         adequately identified, secured and insured. All invoices for stored
         materials are subject to the Lender's review and approval. The Lender
         must have a perfected first lien on the stored materials, and a
         disbursement therefor must not be in conflict with the terms of the
         Construction Documents. Lender, at its option, may elect to make
         disbursements for materials stored off-site, provided that in any
         event, such materials must be adequately identified, secured and
         insured, and the Lender must have a perfected first lien thereon.

(d)      Materials Stored Off-Site. The Lender will not make disbursements based
         on the cost of materials not stored on the Premises unless otherwise
         specifically agreed in writing by the Lender.

(e)      Deposits. Disbursements will not be made for deposits or prepayments
         required by manufacturers or fabricators of building materials,
         fixtures or equipment unless otherwise specifically agreed in writing
         by the Lender.

(f)      Construction  Loan Budget.  In addition to the limitations and
         requirements  set forth above, the Lender, at its  option,  may,  prior
         to the  commencement  of the Loan or at any time during the term of the
         Loan,  require  the  Borrower  to submit  to the  Lender  an  updated
         budget  of  construction  and other  costs associated with the
         construction  and  development of the Project (the "Budget").  The
         Budget shall be in such  reasonable  detail as the Lender may  require
         and all  aspects  thereof are subject to the  Lender's reasonable
         approval.  Disbursements  for such items or category  listed in such
         Budget  shall not, at any time,  exceed the amount  budgeted in such
         item or category in the budget  without the  Lender's  consent,
         said  consent  not to be  unreasonably  withheld,  conditioned  or
         delayed.  If the  cost of any  item or category listed in the Budget
         exceeds the budgeted  amount,  the Borrower  shall,  unless the Lender
         shall then  otherwise  agree,  pay such excess for its own funds.

<PAGE>

         Borrower  may,  subject to Lender's  consent, which consent may not be
         unreasonable  withheld,  conditioned or delayed,  agree to reallocate
         undisbursed funds for other items or  categories  to the item or
         category  that exceeds the  budgeted  amount with the exception that no
         undisbursed funds shall be reallocated to the development fee/profit
         line item.

2.7. Value of Work; Percentage Completion: The value of work and material in
place as well as stored on the Premises at any time shall be determined by the
Lender based upon the items set forth herein, and the percentage of completion
so determined shall be binding on the Borrower, absent manifest error.

2.8. Advances Do Not Constitute a Waiver: No advance of Loan proceeds hereunder
shall constitute a waiver of any of the conditions of the Lender's obligations
to make further advances nor, in the event the Borrower is unable to satisfy any
such condition, shall any such advance have the effect of precluding the Lender
from thereafter declaring such inability to be an Event of Default hereunder.

2.9.     Deposit Of Disbursements.  Loan  disbursements may be made by
depositing same in the Borrower's  operating account as directed by Borrower.

2.10. Equity Requirements. If the Lender at any time determines in its
reasonable discretion that the Loan proceeds plus the amount of all equity
investments made by the Borrower are not sufficient to fully complete the
Project in accordance with the Plans, to pay all interest accrued (or to accrue
prior to maturity under the Note), and to pay all other sums due under the Loan
Documents the Lender shall have the option of requiring the Borrower to deposit
with the Lender additional funds from some other source in amounts sufficient to
cover the resulting deficit before the Lender will disburse any additional Loan
proceeds. Deposited funds shall be held by the Lender and shall be advanced as
construction progresses in accordance with this Loan Agreement before any
additional Loan disbursements are made.

2.11. Option to Pay Contractors. If an Event of Default shall exist, at its
option, the Lender may make Loan disbursements directly to the General
Contractor or any unpaid subcontractor, laborer or material supplier providing
labor, services or materials in connection with the construction of the Project,
and the execution of this Loan Agreement by the Borrower shall, and hereby does,
constitute an irrevocable direction and authorization to so disburse the funds.
No further direction or authorization from the Borrower shall be necessary to
warrant such direct disbursements and all such disbursements shall be secured by
the Deed of Trust as fully as if made to the Borrower, regardless of the
disposition thereof by the General Contractor, any subcontractor, laborer or
material supplier so paid. All such disbursements shall be conclusively deemed
to be a necessary expenditure for the preservation of the security in accordance
with N.C.G.S. ss.45-70(c).

         NOTWITHSTANDING ANYTHING HEREIN TO THE CONTRARY, THE LENDER SHALL BE
UNDER NO OBLIGATION TO ADVANCE ANY SUMS UNDER THIS LOAN AGREEMENT, THE NOTE, OR
THE OTHER LOAN DOCUMENTS, IF AT THE TIME OF THE REQUEST THE LOAN HAS MATURED, OR
THERE EXISTS A DEFAULT CONDITION OR AN EVENT OF DEFAULT UNDER THIS LOAN
AGREEMENT OR ANY OF SUCH AGREEMENTS.
<PAGE>

2.12. Collateral. The Loan will be secured by (a) the Deed of Trust; (b) a first
lien on all general intangibles, accounts, furniture, machinery, equipment,
chattels, building materials and other personal property now or hereafter
located on the Premises; (c) a first lien priority assignment of all leases,
rents, issues and profits arising out of or related to the Premises, (d) a first
lien assignment, as security, of the Construction Contract, Architect Contract,
Plans, easements and other rights and documents relating to construction of the
Project, and (e) all proceeds of the above collateral.

         Prior to or upon closing of the Loan, the Lender will require recorded
documents, and UCC filings in order to perfect its lien on all collateral
described above and the Lender will require documentation, satisfying the terms
of this Agreement (including a title insurance policy and UCC-11's completed by
the appropriate authority) evidencing compliance with Lender's requirement that
no liens prior to Lender's have been filed on any of the collateral.


                                ARTICLE III

              Conditions Precedent to First Disbursement

         The Lender shall not be obligated to make the first Loan disbursement
until all of the following conditions have been satisfied by proper evidence,
execution and/or delivery to the Lender of the following items within sixty (60)
days of the Closing Date, or, for those items that cannot be satisfied within
sixty (60) days of the Closing Date, within sixty (60) days of the date Borrower
receives site plan approval for the Project, all in form and substance
satisfactory to the Lender and the Lender's counsel:

3.1.     Loan Documents.  Fully executed and recorded or filed (if necessary)
originals of the Loan Documents.

3.2. UCC-11 Search Results. UCC-11 search results from the North Carolina
Secretary of State, Wake County, North Carolina and such other jurisdiction as
the Lender may request, each showing no liens or encumbrances prior to the
Lender's against the Personalty.

3.3.     Insurance.  Evidence  that the Borrower has obtained  each of the
insurance  policies  required  under the Deed of Trust and Section 6.12 herein.
Satisfactory evidence of premium payments must also be provided.

3.4.     Authority Documents of the Borrower.
         -----------------------------------

(a)      A Certificate of Existence of the Borrower issued by the applicable
Governmental Authorities.

(b)      A certified copy of the Articles of Organization of the Borrower.

(c)      A certified copy of the Operating Agreement of the Borrower, together
with any amendments thereto.
<PAGE>

(d)      A certified  copy of the resolution  authorizing  the Borrower to enter
into and perform under the Loan Documents.

3.5. Compliance with Laws. Evidence that the Premises, and the intended uses of
the Premises are or will be in compliance with all applicable laws, regulations
and ordinances. Such evidence may include letters, licenses, permits,
certificates and other correspondence from the appropriate Governmental
Authorities, and opinions or certifications from the General Contractor or the
Architect. The laws, regulations and ordinances with which compliance should be
evidenced include, without limitation, the following: building codes, health and
environmental protection laws, erosion control ordinances, doing business and/or
licensing laws and zoning laws (the evidence submitted as to zoning should
include the zoning designation made for the Land, the permitted uses of the Land
under such zoning designation and zoning requirements as to parking, lot size,
ingress, egress and building setbacks).

3.6.     Taxes.  Evidence  that the ad  valorem  taxes have been paid or shall
be paid  prior to  delinquency,  and information  as to tax parcel
identification  numbers,  tax rates,  estimated tax values and the identities of
the taxing authorities.

3.7. Plans and Specifications. One complete set of the Plans in final form. The
Plans must have been approved in writing by the Borrower and the General
Contractor either by initialing same or by other written approval identifying
all pages and dates, including revision dates. The Plans must include
architectural, structural, mechanical, plumbing, electrical and site development
(including storm drainage, utility lines, erosion control and landscaping) plans
and specifications and must incorporate the recommendations in the soil testing
report.

3.8.     Licensee and Permits.  A copy of all necessary  licenses and permits
for the  construction of the Project, including a copy of the building permit.

3.9. General Construction Contract and Budget. A certified copy of the
Construction Contract (must be fixed cost contract or guaranteed maximum cost
contract) executed by the Borrower and the General Contractor and copies of all
other executed contracts as may be reasonably required by the Lender, a Cost
Breakdown and a certified copy of the Budget, describing the proposed cash
disbursements and building schedule. The Lender shall have the right to approve
the General Contractor, and the Lender may require such information related to
the General Contractor as it deems appropriate related to such approval,
including without limitation, the prior three years financial statements, credit
reports, a list of supplies and subcontractors and a experience resume. The
Budget will include a funding schedule reflecting sources of funds and
disbursement of funds planned for construction of the Project.

3.10.    Consent of General  Contractor.  Consents from the General  Contractor
and all other prime  contractors to the  Borrower's  assignments  to the  Lender
of the  Borrower's  interests  in the  contract  with  each of  them,
respectively.

3.11.    Architect's  Contract.  Copies  of the  contract  between  the
Borrower  and  the  Architect  for  design services.

3.12. Consent of Architect. Consent from the Architect to the Borrower's
assignment to the Lender of the Borrower's interest in the contract between the

<PAGE>

Borrower and the Architect in which the Architect agrees that the Lender may use
and copy the Plans if an Event of Default occurs.

3.13.    Current Financial  Statements.  Complete,  current financial statements
(including all exhibits) for each of the Guarantor and the Borrower.

3.14.    Taxpayer Identification Number.  The Borrower's and Guarantor's federal
taxpayer identification numbers.

3.15.    No Defaults.  No Default Condition or Event of Default shall exist.

3.16.    Draw Request.  The Lender shall have received the Borrower's Draw
Request.

3.17.    Consents and  Approvals.  The consent and approval of all persons
required in order to construct,  occupy and utilize the Project for its intended
purpose and to comply with all of the terms of the Loan Documents.

3.18. Title Policy. A standard ALTA mortgagee policy from a company or from
companies approved by the Lender (the "Title Company") (including any
reinsurance agreements required by the Lender) as to both the Land (a) providing
coverage in the amount satisfactory to the Lender (b) including a variable rate
endorsement and a future advance endorsement; (c) deleting all standard titled
exceptions except taxes for the current year; (d) listing only those title
exceptions acceptable to the Lender; (e) including insurance of all appurtenant
easements, if any; (f) containing such affirmative coverage as may be required
by the Lender.

3.19.    Miscellaneous.  All other Loan Documents or items that are  customarily
provided in loan  transactions of this type and all other loan documents or
which the Lender may reasonably require.

                                 ARTICLE IV

                      Conditions Precedent to Disbursements

                        Following the First Disbursement

4.1.     Periodic  Disbursements.  The  Lender  shall not be  obligated  to make
any Loan  disbursements  after the first disbursement until all of the following
conditions have been made and remain satisfied:

(a)      All of the conditions stated in Article III hereof, including
         submission of a Draw Request.

(b)      No other lien or other interest shall have been permitted to attach to
         the Premises superior to the interest of the Lender under the Deed of
         Trust, except taxes for the current year and other matters acceptable
         to the Lender. From and after any Event of Default, and upon the
         request of the Lender, the state of the title shall be evidenced by a
         title update and report.
<PAGE>

(c)      Construction of the Project has been substantially in accordance with
         the Plans.

(d)      The Title Company shall have agreed to issue to the Lender a pending
         disbursement endorsement to the Title Policy updating the effective
         date of the Title Policy or have otherwise agreed to insure that since
         the last preceding disbursement, there has been no change in the state
         of the title to the Premises (superior to the lien of the Deed of
         Trust), there are no liens which may take priority over the
         disbursement to be made and there are no survey exceptions not
         theretofore approved by the Lender in writing.

(e)      At the  time  of each  disbursement:  (1)  the  Lender  is  reasonably
         satisfied  with  the  progress  of  construction; and (2) no Default
         Condition or Event of Default exists.

                                  ARTICLE V

                         Representations and Warranties

         In order to induce the Lender to enter into this Loan Agreement and to
make the Loan as herein provided, the Borrower and, where applicable, the
Guarantor make the following representations and warranties which shall survive
the execution and delivery of this Loan Agreement, the Note, the Deed of Trust,
the other Loan Documents, and any inspection or examinations at any time made by
or on behalf of the Lender:

5.1. No Default. Neither the Borrower nor the Guarantor is in default under any
indenture, mortgage, deed of trust, agreement or other instrument to which
either is a party or by which it may be bound. Neither the execution and
delivery of this Loan Agreement, the Note or the other Loan Documents, nor the
consummation of the transactions herein and therein contemplated, nor compliance
with the provisions hereof or thereof will violate any law or regulation, or any
order or decree of any court or governmental authority, or will conflict with,
or result in the breach of, or constitute a default under, any indenture,
mortgage, deed of trust, agreement, or instrument to which either the Borrower
or the Guarantor is a party.

5.2. No Actions. There are no actions, suits, or proceedings pending, or to the
knowledge of the Borrower threatened, against or affecting the Borrower or the
Guarantor, before any court, arbitrator, or governmental or administrative body
or agency which might result in any materially adverse change in the business
operations, properties, or assets of the Borrower or the Guarantor or affect
either the Borrower's or the Guarantor's ability to observe and perform their
respective obligations to the Lender.

5.3. Tax Returns. The Borrower and the Guarantor have filed all federal tax
returns and all state and other tax returns which are required to be filed by
them and all taxes, assessments and other governmental charges (other than those
presently payable without penalty or interest and those being contested in good
faith by appropriate proceedings) due by them have been paid. The Borrower and
the Guarantor have established on their books reserves adequate for the payment
of all federal, state and other tax liabilities.
<PAGE>

5.4.     Validity of Loan  Documents.  Upon  execution and delivery,  this Loan
Agreement,  the Note,  the Deed of Trust,  the Guaranty,  and the other Loan
Documents are valid and binding  agreements and enforceable in accordance
with the terms thereof.

5.5. Priority of Liens. Upon proper recordation of the Deed of Trust and the
Financing Statements, Lender will hold a security interest in and lien on the
collateral described therein free and clear of all liens and encumbrances except
the Permitted Encumbrances with respect to the Land.

5.6. No Untrue Statements. Neither this Loan Agreement nor any certificate,
statement, or other document furnished to the Lender by the Borrower or the
Guarantor in connection with the Loan or in connection with any transaction
contemplated hereby, contains any untrue statement of a material fact or omits
disclosure of a material fact necessary to make the statements contained herein
or therein not misleading. There is no fact known to the Borrower or the
Guarantor which has not been disclosed to the Lender in writing which materially
affects the Premises, business, prospects, profits or condition (financial or
otherwise) of the Borrower or the Guarantor, or the ability of the Borrower or
the Guarantor to perform this Loan Agreement, the Note or the other Loan
Documents.

5.7. Permits and Licenses. The Borrower and/or the Guarantor have obtained or
shall obtain all permits, licenses and approvals necessary for the construction
of the Project, and, to the best of Borrower's knowledge, there are no
restrictions, covenants, or other matters, whether private, governmental or
regulatory, that prevent or may prevent the construction of the Premises and/or
the intended use thereof.

5.8.     Zoning.  To the best of Borrower's  knowledge,  the proposed use of the
Premises is in compliance with all zoning  ordinances  and all municipal and
other  governmental  and regulatory  approvals  shall be obtained for the
operation of the Premises.

5.9.     Certification.    There is no fact or  condition  known to the Borrower
that  constitutes  a material or significant threat or risk to the completion of
the Project in accordance with the terms of the Loan Documents.

                                  ARTICLE VI

                     The Borrower's Covenants and Agreements

6.1. Payment/Performance. The Borrower shall pay when due all sums owing to the
Lender under the Purchase Money Note, the Note, this Loan Agreement, and the
other Loan Documents and shall promptly perform all other obligations of the
Borrower thereunder.

6.2. Further Assurances. On demand of the Lender, the Borrower shall do any act,
or execute any additional documents consistent with the Loan Documents
reasonably required by the Lender to secure the Loan, confirm the lien of the
Deed of Trust or to comply with the Loan Documents, including, but not limited
to, additional financing statements or continuation statements, new or
replacement notes and/or deeds of trust and agreements supplementing, extending
or otherwise modifying the Note, Loan Agreement, and/or Deed of Trust and
certificates as to the amount of the indebtedness evidenced by the Note from
time to time.
<PAGE>

6.3. Construction. The Borrower shall conscientiously continue the construction
of the Project; will not discontinue or permit the discontinuance of work on the
Project for as much as five (5) business days, except for Force Majeure causes,
in which event construction of the Project may be discontinued for the length of
such Force Majeure or other event, but in no event for more than ten (10) days,
and, in any event, will complete the Project, including installation of any
required items of personalty in substantial compliance with the Plans, free and
clear of liens or claims of liens for material supplied or for labor services
performed in connection with the construction of the Project. Commencement of
construction shall include any required site preparation and grading.

6.4. Payment of Contractors. The Borrower shall advise the Lender in writing
within five (5) days after receipt or communication if the Borrower receives any
notice, written or oral, from any laborer, contractor, subcontractor or material
furnisher to the effect that said laborer, contractor or material furnisher has
not been paid for any labor or materials furnished to or in the Premises, and
the Borrower shall deliver to the Lender within five (5) days after demand any
contracts, bills of sale, statements, receipted vouchers or agreements, under
which the Borrower claims title to any materials, fixtures or articles used in
the construction of the Project.

6.5. Compliance with Plans. The Borrower shall, within twenty (20) days after
receipt of written demand of the Lender, correct any material defects in the
Project or any material departure from the Plans not approved by the Lender. The
Borrower shall not change, alter or amend either the Plans or installation of
the Project without the prior written consent of the Lender, and will not permit
any deviations by any contractor from the Plans.

6.6.     Subcontractors.  The Borrower  shall deliver to the Lender,  upon
request,  the names of persons with whom the General  Contractor has contracted
or intends to contract for the  construction of the  Improvements or for the
furnishing of labor or materials therefor.

6.7. Construction Inspector. The Borrower shall permit the Lender and its
contractors and agents, including the Construction Inspector, to enter upon the
Premises during normal working hours and as often as the Lender desires, for the
purpose of inspecting the construction of the Improvements. When requested, the
Borrower shall furnish to the Lender detailed plans, shop drawings and
specifications which relate to the Improvements. Failure of the Lender, the
Construction Inspector or its authorized agents to (i) discover defects, or
errors or omissions in design, materials or workmanship, or (ii) to otherwise
reject materials or workmanship due to non-compliance with plans, or due to
defects, errors or omissions shall not make it liable to the Borrower or to any
other person on account of such deficiency, nor shall any prior failure
constitute a waiver of the Lender's right to subsequently reject any such
workmanship or materials.

6.8. Fees and Expenses. Whether or not the Loan is made, or all Loan proceeds
disbursed hereunder, the Borrower shall pay all expenses reasonable in amount
incurred by the Lender (excluding Lender's attorneys' fees unless otherwise
provided herein), or by the Borrower in order to meet the Lender's requirements,
in connection with the Loan, including (without limitation) commitments and
renewal fees or deposits to the Lender, fees for appraisal, reappraisal, survey,
recording, and title insurance, builder's risk and other insurance premiums,
property taxes, intangible taxes, architect's fees, and the Construction

<PAGE>

Inspector's fees, incurred by the Lender in connection with the making of the
Loan and the enforcement of the Lender's rights under the Loan Documents. Any
such amounts paid by the Lender shall be due and payable upon demand.

6.9. Preservation of Contracts. The Borrower shall not, without the prior
written approval of the Lender, terminate or cancel its contracts or agreements
with the General Contractor or the Construction Inspector for the providing of
labor, services or materials in connection with the construction of the Project.
The Borrower shall not materially modify any contract with any contractor,
subcontractor, architect or engineer without the Lender's prior written consent,
said consent not to be unreasonably withheld, conditioned or delayed. Subsequent
to the Closing Date, notice must be given to the Lender by the Borrower of any
contractors or architects contracted with by the Borrower as substitutes for the
General Contractor or the Construction Inspector or as additional general
contractors, architects or project coordinators, and the Lender has the right to
approve or disapprove such substitution in its reasonable discretion and to
require the submission of any additional Loan documentation regarding such
substitutes reasonably required by the Lender for such approval or disapproval.
The Borrower shall not, without the prior consent of the Lender (said consent
not to be unreasonably withheld, conditioned or delayed): (i) modify or amend
the terms of the Borrower Plans or the Construction Documents; or (ii) waive or
release the performance of any material obligation to be performed by the
General Contractor thereunder

6.10.    Other Surveys.  In addition to the surveys  specifically  required by
this  Agreement,  the Borrower shall provide the Lender during construction with
such additional surveys as requested by the Lender.

6.11. Use of Loan Funds. The Borrower shall use all Loan proceeds disbursed to
the Borrower solely in payment of costs incurred in connection with acquiring,
constructing, and developing the Premises, in accordance with the Cost Breakdown
and the Budget.

6.12.    Insurance.  The Borrower  shall  maintain  insurance as required
herein and in the other Loan  Documents, including the following:

(a)      Builder's Risk Insurance.  All risk  replacement  cost insurance with
         agreed amount  endorsement,  written in  builder's  risk form,  with
         standard  noncontributing  mortgagee  clauses  and  standard
         subrogation clauses,  such  insurance to be in such amounts and form
         and by such companies as shall be approved by the Lender,  the
         originals of which policies  (together with  appropriate  endorsements
         thereto,  evidence of  payment of  premiums  thereon  and written
         agreement  by insurer or  insurers  therein to give the Lender
         thirty  (30) days'  prior  written  notice of  intention  to cancel)
         shall be  delivered  promptly to the Lender;  said insurance  coverage
         to be kept in full force and effect at all times until the completion
         of construction of the Project;

(b)      Hazard  Insurance.  All risk  replacement  cost  insurance with agreed
         amount  endorsement  and such other hazard insurance as the Lender may
         require with standard  noncontributing  mortgagee  clauses and standard
         waiver of  subrogation  clauses,  such  insurance to be in such amounts
         and form and by such  companies as shall be approved by the Lender, the

<PAGE>

         originals of which policies  (together with appropriate  endorsements
         thereto,  evidence  of payment of  premiums  thereon  and  written
         agreement  by the  insurer or insurers therein to give the Lender
         thirty  (30) days'  prior  written  notice of  intention  to cancel)
         shall be promptly  delivered upon  completion of construction of the
         Project and before any portion of the Premises is occupied by the
         Borrower or any tenant of the  Borrower,  with such  insurance to be
         kept in full force and effect at all times thereafter  until the
         payment in full of the Loan (the hazard  insurance  required
         to be maintained under this subsection is in addition to the hazard
         insurance  required under the Deed of Trust and in the event of an
         inconsistency this Loan Agreement shall control; and

(c)      Public Liability Insurance. A certificate from an insurance company
         indicating that the Borrower is covered by public liability insurance
         to the reasonable satisfaction of the Lender in the form and covering
         risks customarily carried in similar properties issued by a company
         acceptable to the Lender and covering the Lender as an additional
         insured.

(d)      Flood  Insurance.  If  required  by the  Lender,  a flood  insurance
         policy  in the  amount  of the  Loan containing a standard mortgagee
         clause naming the Lender as loss-payee.

         All insurance carriers shall have a Best's Key Rating of at least "A"
and shall have a Best's Key Rating Class of at least "IX".

         The foregoing insurance requirements are in addition to, and not in
lieu of, any insurance requirements contained in the Deed of Trust, and in the
event of any inconsistency, the insurance requirements contained in this Loan
Agreement shall control.

6.13. Taxes and Insurance. Upon the request of the Lender, the Borrower shall
submit to the Lender such receipts and other statements which shall evidence, to
the satisfaction of the Lender, that all taxes, assessments and insurance
premiums have been paid in full.

6.14. Title Policy. In the event that periodic title endorsements are not
required to be issued in connection with the Title Policy, the Borrower shall
cause title endorsements to be issued as reasonably required by the Lender.
After the final disbursement of the Loan, the Borrower will provide the Lender
with an endorsement to the final Title Policy insuring the principal balance of
the Loan and containing no exceptions not approved by the Lender.

6.15.    Additional   Construction.   The  Borrower  shall  not  construct  or
permit  the   construction  of  any improvements on the Premises other than
those improvements described in the Plans.

6.16.    Financial  Statements.  The Borrower and the Guarantor  shall provide
to the Lender  financial  statements from time to time as Lender may require in
form and substance satisfactory to the Lender.

6.17. Sale or Disposition of Premises. Upon the sale or other disposition of the
Premises by the Borrower, the Borrower shall pay to the Lender an amount (the
"Sale Payment") equal to the lesser of (a) the applicable percentage of the Gain

<PAGE>

on the sale or other disposition of the Premises determined in accordance with
Exhibit B attached hereto and incorporated herein by reference, or (b)
$1,100,000. The "Gain" on the sale or other disposition of the Premises shall be
the difference between (c) the aggregate sales price on such sale or other
disposition of the Premises net of any costs directly related to such sale paid
to third parties, and (d) the sum of the $3,000,000 purchase price for the
Premises plus the aggregate amount funded for improvements to the Premises by
Borrower and Lender pursuant to Section 2.1. The obligation to make the Sale
Payment shall be secured by the Deed of Trust. The Deed of Trust may be
satisfied only by (e) the payment of the Note in full, and (f) the payment to
Lender of the Sale Payment.


                                 ARTICLE VII

                                Events of Default

         Any one or more of the following shall constitute events of default
under the Loan Documents (herein called "Events of Default"):

7.1.     Payment  of  Liabilities.  If  the  Borrower  defaults  in  the payment
when  due  of  all or any of the Liabilities  beyond any applicable cure or
grace period,  including payments due under the Purchase Money Note, the
Note and the other Loan Documents.

7.2. Payment of Other Obligations. If the Borrower (i) defaults in payment of
principal of or interest on any Indebtedness other than the Liabilities beyond
any period of grace provided with respect thereto, or (ii) defaults in the
performance of any other agreement, term or condition contained in any agreement
under which any such Indebtedness is created, if the effect of such performance
default described in this clause (ii) is to cause the holder or holders of such
obligation (or a trustee in behalf of such holder or holders) to cause such
obligation to become due prior to its stated maturity provided, however, that no
payment default or performance default described in clause (i) or (ii) of this
Section arising from a bona fide dispute shall constitute an Event of Default
under this Loan Agreement, provided that the Borrower gives written notice of
any such dispute to the Lender when the same arises; and, upon request of the
Lender, deposits with it an amount equal to the sum in dispute.

7.3. Representation or Warranty. If any representation or warranty made by the
Borrower herein or by any Guarantor in any of the other Loan Documents or any
writing furnished in connection with or pursuant to this Agreement or any of the
other Loan Documents shall be false or misleading in any material respect on the
date as of which made.

7.4. Other Covenants. If the Borrower defaults in the performance or observance
of any other agreement, covenant, term or condition binding on the Borrower
contained herein, the Purchase Money Note, the Purchase Money Deed of Trust, or
in any other of the Loan Documents and such default shall not have been remedied
within any applicable cure period set forth in such agreement or documents.

7.5. Liquidation or Dissolution. Liquidation or dissolution of the Borrower, or
suspension of the business of the Borrower, or filing by the Borrower of a
voluntary petition or an answer seeking reorganization, arrangement,

<PAGE>

readjustment of its debts or for any other relief under the United States
Bankruptcy Code, as amended, or under any other insolvency act or law, state or
federal, now or hereafter existing, or any other action of the Borrower
indicating its consent to, approval of, or acquiescence in, any such petition or
proceeding; the application by the Borrower for, or the appointment by consent
or acquiescence or, a receiver, a trustee or a custodian of the Borrower or for
all or a substantial part of its property; the making by the Borrower of an
assignment for the benefit of creditors; or the inability of the Borrower or the
admission by the Borrower in writing of its inability to pay its debts as they
mature.

7.6. Involuntary Proceedings. Filing of an involuntary petition against the
Borrower in bankruptcy or seeking reorganization, arrangement, readjustment of
its debts or for any other relief under the United States Bankruptcy Code, as
amended, or under any other insolvency act or law, state or federal, now or
hereafter existing; or the involuntary appointment of a receiver, a trustee or a
custodian of the Borrower or for all or a substantial part of its property; the
issuance of a warrant of attachment, execution or similar process against any
substantial part of the property of the Borrower, and the continuance of any of
such foregoing events for sixty (60) days undismissed or undischarged.

7.7. Order of Dissolution; Forfeiture Action. If (i) any order is entered in any
proceedings against the Borrower decreeing the dissolution or split-up of the
Borrower, and such order remains in effect for more than forty-five (45) days;
or (ii) any charges (whether by indictment, information or other criminal
process) are instituted against the Borrower under any criminal statute, state
or federal, for which seizure or forfeiture of assets is a potential penalty or
remedial measure.

7.8.     Reports and Certificates.  If any report,  certificate,  financial
statement or other instrument delivered by any person to the Lender by or on
behalf of the  Borrower  is at any time false or  misleading  in any  material
respect as of the date as of which made.

7.9. Judgment. If a final judgment, which with other outstanding final judgments
against the Borrower, if any, exceeds an aggregate of $10,000.00, shall be
rendered against the Borrower, and if within ten (10) days after entry thereof
such judgment shall not have been discharged or execution thereof stayed pending
appeal, or if within ten (10) days after the expiration of any such stay such
judgment shall not have been discharged, or if an action is commenced to enforce
any judgment against the Borrower or the assets of the Borrower, including the
Premises.

7.10. Deviation from Plans. Any material deviation from the Plans, in the
methods or in the materials, fixtures or articles used in construction of the
Project without the prior written approval of the Lender, or the appearance of
defective workmanship or materials except as specifically permitted herein.

7.11. Encroachment. The appearance on any survey required hereunder of easements
or encroachments which have occurred without the written approval of the Lender
and which are not removed or corrected within thirty (30) business days after
written notice thereof to the Borrower.
<PAGE>

7.12. Injunction Against Construction. Any court of competent jurisdiction
(including without limitation the U.S. Bankruptcy Courts) enjoins the
development of the Land or the installation of the Improvements, other than as a
result of the Lender's failure to comply with the laws or due to events beyond
the reasonable control of Borrower or its agents, contractors or employees
(excluding the unavailability to obtain funding for completion of the Project),
or enjoins or prohibits the Borrower or the Lender or either of them, other than
as a result of the Lender's failure to comply with the laws or due to events
beyond the reasonable control of Borrower or its agents, contractors or
employees (excluding the unavailability to obtain funding for completion of the
Project), from performing under this Loan Agreement or the other Loan Documents,
and such proceedings are not discontinued or such decree is not vacated within
ten (10) business days after the granting thereof.

7.13. Cessation of Construction. Cessation or abandonment of the work of
construction prior to the completion of the Project for a continuous period of
five business (5) days or more unless caused by Force Majeure or unless
consented to in writing by the Lender.

7.14.    Default  Under  Construction  Documents  or  Other  Agreements.  A
default  by  the  Borrower  under  the Construction  Contract or the  contract
with the  Construction  Inspector  or any other  agreement  related to the
construction of the Project.

7.15     Default under Borrower's Initial Construction Obligations.
A default by the Borrower in the performance of Borrower's Initial Constructions
Obligations.

7.16 Sale or Transfer of Premises; Junior Liens. Except as permitted in
this Section and in Section 2.1 of this Loan Agreement, if all or any part of
the Premises, or any interest or estate therein, is sold, further encumbered or
otherwise transferred by Borrower (including without limitation by way of
mortgage, deed of trust, or declaration of trust), without the Lender's prior
written consent. The aggregate transfer(s) of control in the Borrower whereby
persons or entities not owning on the date hereof, singly or in the aggregate,
forty percent (40%) or more of the membership interest of the limited liability
company, become the owner(s), singly or in the aggregate, of forty percent (40%)
or more of such membership interest, shall be deemed a sale of the Premises
requiring Lender's consent for the purposes of this Section. The aggregate
transfer(s) of control in the Borrower constituting less than forty percent
(40%) of the membership interests of the limited liability company shall not be
deemed a sale of the Premises requiring Lender's consent for the purposes of
this Section; provided, however, Borrower shall be required to deliver written
notice of any such transfer to Lender. Except as permitted in this Section and
in Section 2.1 of this Loan Agreement, in the event all or any part of the
Premises, or any interest or estate therein, is sold, further encumbered or
otherwise transferred by Borrower without the Lender's prior written consent,
such conveyance shall be deemed to be a below market sale, and the Sale Payment
due from Borrower to Lender shall be equal to the greater of (a) the applicable
percentage of the Gain on the sale or other disposition of the Premises
determined in accordance with Exhibit B attached hereto and incorporated herein
by reference, or (b) $1,100,000.

<PAGE>



                                 ARTICLE VIII

                        The Lender's Rights and Remedies

         8.1 Default. In addition to any other remedy which may be available to
the Lender and without limiting any other remedy granted to the Lender in the
Loan Documents, if a Default Condition or an Event of Default shall occur and
after expiration of any applicable grace period, the Lender shall have the
following rights and remedies, all of which are exercisable at the Lender's sole
discretion, and accumulative, concurrent and/or independent rights, as provided
herein, to wit:

         (a) Acceleration. The entire unpaid principal balance of the Loan and
the loan evidenced by the Purchase Money Note and all accrued interest thereon
shall, at the option of the Lender and without advance notice to the Borrower,
become immediately due and payable. In addition, upon acceleration, any and all
other obligations of the Borrower to the Lender shall be immediately due and
payable.

         (b) Completion of Construction. As additional security for the Loan and
for the performance by the Borrower of all of its obligations hereunder, the
Borrower has assigned to the Lender all of the Borrower's interest in contracts
relating to the construction of the Project, including but not limited to the
Construction Documents and the Borrower Plans. This assignment shall not,
however, in the absence of affirmative ratification of such contracts by the
Lender, be deemed to impose upon the Lender any of the Borrower's obligations
under any such contract. Incident to the assignment of the Construction
Documents and the Borrower Plans, the Lender may, if it chooses to do so,
fulfill the obligations of the Borrower thereunder, enforce the performance
thereof and give immediate notice to the Borrower of any default by the General
Contractor thereunder. From and after the occurrence of an Event of Default, the
Lender shall be entitled to have and use the Plans and the Construction
Documents and, after first having given written notice to the General
Contractor, as applicable, shall be entitled from and after such notice to enjoy
and enforce all of the rights of the Borrower under the Borrower Plans or the
Construction Documents. The Borrower hereby constitutes and appoints the Lender
its true and lawful attorney-in-fact with full power of substitution in the
premises to complete the Project in the name of the Borrower. The Borrower
hereby empowers said attorney as follows: (i) to use any funds of the Borrower,
including any Loan proceeds or equity deposits which may remain undisbursed
hereunder, at the Lender's option, for the purpose of completing the Project in
the manner called for by the Plans; (ii) to make such additions, changes, and
corrections in the Plans as shall be reasonably necessary or desirable to
complete the Project; (iii) to employ such contractors, subcontractors, agents,
architects and inspectors as shall be reasonably required for said purposes;
(iv) to pay, settle, or compromise all existing bills and claims which may be
liens against the Project, or as may be reasonably necessary or desirable in the
reasonable discretion of the Lender for the completion of the Project or for
clearance of title; (v) to take over and use all or any part of the labor,
materials, supplies and equipment contracted for, owned by, or under the control
of the Borrower, whether or not previously incorporated into the Project; (vi)
to execute all applications and certificates in the name of the Borrower which

<PAGE>

may be required by any of the contract documents; (vii) to prosecute and defend
all actions or proceedings in connection with the Premises or the construction
of the Project and take such action and require such performance as the Lender
shall deem reasonably necessary under any performance or payment bond; and
(viii) to do any and every act with respect to construction or completion of the
Project or the closing of any other construction financing or permanent
financing or the cure of any default in any such financing which the Borrower
might do in its own behalf including, without limitation, execution,
acknowledgment, and delivery of all instruments, documents, and papers in the
name of the Borrower as may be reasonably necessary or desirable in the
reasonable discretion of the Lender. It is further understood and agreed that
this power of attorney, which shall be deemed to be a power coupled with an
interest, cannot be revoked. All sums so expended by the Lender shall be deemed
to have been disbursed to the Borrower and secured by the Deed of Trust and any
other Loan Documents.

         (c)      Foreclosure.
                  -----------

                  (i) The Lender may, either with or without entry or taking
         possession as herein provided or otherwise, and without regard to
         whether or not all of the obligations shall be due and without
         prejudice to the right of the Lender thereafter to bring one or more
         actions of foreclosure or any other action for any default existing at
         the time such earlier action was commenced, by any appropriate action
         or proceeding seek (A) to enforce at law or in equity payment of all or
         a part of the obligations or the performance of any term hereof or any
         other right; (B) to foreclose or to authorize the foreclosure of all or
         a part of the Premises in one or more foreclosure proceedings and to
         sell, as an entirety or in separate lots or parcels, at one or more
         sales, the Premises, or any part thereof, under the power of sale
         granted in the Deed of Trust, if any (to the extent permitted by law),
         or the judgment or decree of a court or courts of competent
         jurisdiction; and (C) to pursue any other remedy available to it. The
         Lender may take action either by such proceedings or by the exercise of
         its powers with respect to entry or taking possession, or both, as the
         Lender may determine, from time to time and at all times upon the
         occurrence of an Event of Default.

         (ii) Purchase at Foreclosure. Upon any foreclosure sale, the Lender may
         bid for and purchase the Premises and, upon compliance with the terms
         of sale, may hold, retain, and possess and dispose of such property in
         its own absolute right without further accountability.

         (iii) Credit Toward Purchase Price. To the extent permitted by law,
         upon any foreclosure sale, the Lender may, in lieu of paying cash
         toward the purchase price, after allowing for costs and expenses of the
         sale, compensation and other charges, including attorneys' fees, apply
         any portion or all of the amounts due under the Loan to the purchase
         price to the extent necessary to satisfy the purchase price.

         8.2 Disputes. Where disputes have arisen which, in the reasonable
opinion of the Lender, may endanger timely completion of the Project or
fulfillment of any condition precedent or covenant herein, the Lender may agree
to disburse Loan proceeds for the account of the Borrower without prejudice to
the Borrower's rights, if any, to recover said proceeds from the party to whom
paid. Such agreement or agreements may take the form which the Lender, in its
reasonable discretion, deems proper, including, but without limiting the
generality of the foregoing, agreements to indemnify (on behalf of the Borrower
and/or the Lender's own account) any title insurer against possible assertion of
lien claims, agreements to pay disputed amounts and the like. All sums paid or

<PAGE>

agreed to be paid pursuant to such undertaking shall be advances of Loan
proceeds.

         8.3 Waiver of Rights. The Borrower and the Guarantor agree to the full
extent permitted by law that upon the occurrence of a default or an Event of
Default, neither the Borrower, Guarantor, nor anyone claiming through or under
either of them shall or will set up, claim or seek to take advantage of any
appraisement, valuation, stay, extension or redemption laws now or hereafter in
force in any jurisdiction, in order to prevent or hinder the enforcement or
foreclosure or the absolute sale of all or any of the Premises, or the final and
absolute putting into possession thereof, immediately after such sale, of the
purchasers at such sale, and the Borrower and the Guarantor for themselves and
all who may at any time claim through or under them, hereby waive, to the full
extent that they may lawfully so do, the benefit of all such laws, and any and
all right to have the Premises marshalled upon any foreclosure of the Lender's
lien or security interest on all or any of the Premises. The Borrower and the
Guarantor also agree that the Lender, or any court(s) having jurisdiction to
foreclose such security interest, may sell any or all of the Premises, in part
or as an entirety, and in one or more public or private sales, and in such
combination as the Lender or any court deems appropriate. Notwithstanding
anything contained herein, the Borrower and the Guarantor shall not be deemed to
have waived their equity of redemption.

         8.4 Proceedings. The Lender shall have the power and authority to
institute and maintain any suits and proceedings as the Lender may deem
advisable in its judgment (a) to prevent any impairment of the Premises by any
acts which may be unlawful or in violation of this Loan Agreement, the Note, or
any other Loan Document, (b) to preserve or protect its interest in the
Premises, and (c) to restrain the enforcement of or compliance with any
legislation or other governmental enactment, rule or order that may be
unconstitutional or otherwise invalid, if the enforcement of or compliance with
such enactment, rule or order might impair the Lender's security interest or be
prejudicial to the Lender's interest in any other manner.


         8.5      Nonwaiver.

         (a) No delay or omission of the Lender to exercise any right, power or
remedy accruing upon any Event of Default shall exhaust or impair any such
right, power or remedy or shall be construed to waive any such Event of Default
or to constitute acquiescence therein. Every right, power and remedy given to
the Lender may be exercised from time to time and as often as may be deemed
expedient by the Lender.

         (b) No waiver of any Event of Default hereunder shall extend to or
affect any subsequent or any other Event of Default then existing, or impair any
rights, powers or remedies consequent thereon. If the Lender (i) grants
forbearance or an extension of time for the payment of any amounts due under the
Loan; (ii) takes other or additional security for the payment thereof; (iii)
waives or does not exercise any right granted in the Note, or the other Loan
Documents; (iv) releases any part of the Premises, with or without
consideration, from its security interest; or (v) makes or consents to any
agreement changing the terms of the Note, or any other Loan Document, including
any modification, extension, or renewal of each of the foregoing, or any

<PAGE>

agreement subordinating the security interest; no such act or omission shall
release, discharge, modify, change or affect the liability of the Borrower or
the Guarantor under the Note, or any other Loan Document. No such act or
omission shall preclude the Lender from exercising any right, power or privilege
herein granted in case of an Event of Default then existing or of any subsequent
Event of Default nor, except as otherwise expressly provided in an instrument
executed by the Lender, shall the Lender's lien or security interest be altered
thereby except to the extent of releases given in writing by the Lender. In the
event of the sale or transfer by operation of law or otherwise of all or any
part of the Premises, the Lender, without notice to any person, firm, or
corporation, is hereby authorized and empowered to deal with any such vendee or
transferee with reference to the Premises, or the obligations secured thereby,
or with reference to any of the terms or conditions hereof, as fully and to the
same extent as it might deal with the original parties hereto and without in any
way releasing or discharging any of the liabilities or undertakings hereunder.

         8.6 Restoration. If the Lender shall have proceeded to enforce any
right or remedy under this Loan Agreement, the Note, or any other Loan Document
by foreclosure, entry, or otherwise and such proceedings shall have been
discontinued or abandoned for any reason, or such proceedings shall have
resulted in a final determination adverse to the Lender, then and in every such
case the Borrower, the Guarantor, and the Lender shall be restored to their
former positions and rights hereunder, and all rights, powers and remedies of
the Lender shall continue as if no such proceedings had occurred or had been
taken.

         8.7 Setoff. The Lender shall have the right to set-off against any and
all deposits or other sums at any time or times credited by or due from the
Lender to the Borrower and/or the Guarantor, whether in a special account or
other account (to the extent allowed by law), or represented by a certificate of
deposit (whether or not matured), which deposits and other sums shall at all
times constitute additional security for the amounts due under the Loan.

         8.8 Security Interest. It is understood and agreed that the Lender
shall have and enjoy and is hereby granted a lien on and a security interest in,
any and all materials (stored on-site or off-site), reserves, deferred payments,
deposits or advance payments for materials (stored on-site or off-site)
undisbursed Loan proceeds, insurance refunds, impound accounts, refunds for
overpayment of any kind, and any surplus of withheld funds resulting from the
invalidity of "stop notice" claims or the failure of claimants to prosecute
their claims to judgment, to the extent the same arise out of or occur in
connection with the construction of the Project, and such lien and security
interest shall constitute additional security for the indebtedness of the
Borrower evidenced by the Note, and the Lender shall have and possess any and
all rights and remedies of a secured party provided by law with respect to
enforcement of and recovery on its security interest on such items and amounts.

         8.9 Remedies Cumulative: Nonwaiver. All remedies of the Lender provided
for herein or in the other Loan Documents are cumulative and shall be in
addition to any and all other rights and remedies provided for or available
under the other Loan Documents, at law or in equity. The exercise of any right
or remedy by the Lender hereunder shall not in any way constitute a cure or
waiver of a Default Condition or an Event of Default hereunder or under the
Note, the Deed of Trust or any Loan Document, or invalidate any act done
pursuant to any notice of the occurrence of a Default Condition or Event of
Default, or prejudice the Lender in the exercise of any of its rights hereunder
or under the Note, the Purchase Money Note, the Deed of Trust, the Purchase

<PAGE>

Money Deed of Trust or any Loan Document, unless, in the exercise of said
rights, the Lender realizes all amounts owed to it under the Note, the Purchase
Money Note, the Deed of Trust, the Purchase Money Deed of Trust and other Loan
Documents.

         8.10 No Liability of the Lender. Whether or not the Lender elects to
employ any or all remedies available to it in the event of an occurrence of a
Default Condition or an Event of Default, the Lender shall not be liable for the
construction of or failure to construct or complete or protect the Project or
for payment of any expense incurred in connection with the exercise of any
remedy available to the Lender or for the construction or completion of the
Improvements or for the performance or nonperformance of any other obligation of
the Borrower.

                                  ARTICLE IX

                               General Conditions

         The following conditions shall be applicable throughout the term of
this Loan Agreement:

9.1. Benefit. This Loan Agreement is made and entered into for the sole
protection and benefit of the Lender, the Borrower and the Guarantor, their
successors and assigns, and no other person or persons shall have any right to
action hereon or rights to the Loan proceeds at any time, nor shall the Lender
owe any duty whatsoever to any claimant for labor performed or material
furnished in connection with the construction of the Project, or to apply any
undisbursed portion of the Loan to the payment of any such claim, or to exercise
any right or power of the Lender hereunder or arising from any Default Condition
or Event of Default by the Borrower.

9.2. Assignment. The terms hereof shall be binding upon and inure to the benefit
of the heirs, successors, assigns, and personal representatives of the parties
hereto; provided, however, that the Borrower shall not assign this Loan
Agreement or any of its rights, interests, duties or obligations hereunder or
any Loan proceeds or other moneys to be advanced hereunder in whole or in part
without the prior written consent of the Lender and that any such assignment
(whether voluntary or by operation of law) without said consent shall be void.
It is expressly recognized and agreed that the Lender may assign this Loan
Agreement, the Note, the Deed of Trust and any other Loan Documents, in whole or
in part, to any other person, firm, or legal entity provided that all of the
provisions hereof shall continue in full force and effect and, in the event of
such assignment, the Lender shall thereafter be relieved of all liability
hereunder, and any Loan disbursements made by any assignee shall be deemed made
in pursuance and not in modification hereof and shall be evidenced by the Note
and secured by the Deed of Trust and any other Loan Documents.

9.3.     Amendments.  This Loan  Agreement  shall not be  amended  except  by a
written  instrument  signed by all parties hereto.

9.4.     Terms.  Whenever the context and  construction  so require,  all words
used in the singular  number herein shall be deemed to have been used in the
plural,  and vice  versa,  and the  masculine  gender  shall  include the
feminine and neuter and the neuter shall include the masculine and feminine.
<PAGE>

9.5. Governing Law and Jurisdiction. This Loan Agreement and the other Loan
Documents and all matters relating thereto shall be governed by and construed
and interpreted in accordance with the laws of the State of North Carolina. The
Borrower (and all of its members) and each of the Guarantor hereby submit to the
jurisdiction of the state and Federal courts located in North Carolina and agree
that the Lender may, at its option, enforce its rights under the Loan Documents
in such courts, and the Borrower and Guarantor waive any and all objections they
might otherwise now or hereafter have to the laying of venue of any lawsuit in
any federal or state court located in North Carolina.

9.6.     Saving Clause.  Invalidation  of any one or more of the provisions of
this Loan Agreement  shall in no way affect any of the other provisions hereof,
which shall remain in full force and effect.

9.7. Execution in Counterparts. This Loan Agreement may be executed in two or
more counterparts, each of which shall be deemed to be an original, but all of
which shall constitute one and the same instrument, and in making proof of this
Loan Agreement, it shall not be necessary to produce or account for more than
one such counterpart.

9.8.     Captions.  The captions  herein are inserted only as a matter of
convenience  and for reference and in no way define, limit or describe the scope
of this Loan Agreement nor the intent of any provision hereof.

9.9.     Notices.  All notices and other  communications  hereunder shall be
sufficiently given and shall be deemed given when hand delivered or three
business days after mailed by registered or certified  mail,  postage  prepaid,
addressed as follows:

                 (a)      if to the Borrower:

                           DCF I, LLC
                           ATTN:  Mr. Anthony Dilweg
                           14 Consultant Place, Suite 250
                           Durham, North Carolina  27707
                           Telefax: (919) 402-9119

with a copy to:            DCF I, LLC
                           ATTN:  Steve Hunter, Esq.
                           14 Consultant Place, Suite 250
                           Durham, North Carolina  27707
                           Telefax:  (919) 402-9119


                  (b)      if to Guarantor:

                           Anthony Dilweg
                           14 Consultant Place, Suite 250
                           Durham, North Carolina  27707
                           Telefax:  (919) 402-9119

<PAGE>




                  (c)      if to the Lender:

                           Merisel Properties, Inc.
                           ATTN:  Mr. Timothy Jenson
                           200 Continental Boulevard
                           El Sequndo, California  90245-0984
                           Telefax: (310) 615-6882

     with a copy to:       Kennedy Covington Lobdell & Hickman, LLP
                           ATTN:  Robert B. Womble, Esq. and
                           Michael F. King, Esq.
                           434 Fayetteville Street Mall
                           Suite 1900
                           Raleigh, North Carolina  27601
                           Telefax:  (919) 743-7358


9.10. Conflict. It is the intention of the parties that this Loan Agreement and
the other Loan Documents be interpreted in a consistent manner; provided,
however, in the event of any conflict in the provisions of this Loan Agreement
and the provisions of any of the other Loan Documents, the provisions of this
Loan Agreement shall control.

9.11. No Partnership, Joint Venture or Agency. This Loan Agreement shall not in
any respect be interpreted, deemed or construed as making the Lender a partner
or joint venturer with the Borrower and/or the Guarantor, nor shall it be
interpreted, deemed or construed as making the Lender the agent or
representative of the Borrower or the Guarantor. In no event shall the Lender be
liable for debts or claims accruing or arising against the Borrower or the
Guarantor.


9.12. Indemnity. The Borrower hereby agrees to defend, protect, indemnify and
hold harmless the Lender, all directors, officers, employees, attorneys, and
agents of Lender, from and against all claims, actions, liabilities, damages,
costs and expenses (including, without limitation, all reasonable attorneys',
legal assistants, and experts' fees, costs and expenses incurred in the
investigation or defense of any matter) asserted against, imposed upon or
incurred by Lender or any of such other persons, whether direct, indirect or
consequential and whether based on any federal or state laws or other statutes
or regulations (including, without limitation, securities, commercial and
environmental laws and regulations), under common law or on equitable cause, or
on contract or otherwise, as a result of or arising from or relating to this
Loan Agreement, the Loan Documents or the transactions contemplated hereby or
any credit extended or used hereunder or any act done or omitted by any person,
or any event occurring, in connection therewith, or the exercise of any rights
or remedies thereunder, including without limitation the acquisition of the
property securing any loans by the Lender by way of foreclosure of the lien

<PAGE>

thereof, deed in lieu of such foreclosure or otherwise, except only the
recklessness or willful misconduct of the person otherwise to be indemnified
hereunder. In the event this indemnity is unenforceable as a matter of law as to
a particular matter or consequence referred to herein, it shall be enforceable
to the full extent permitted by law. The obligations under this paragraph are
independent of all other rights and obligations set forth herein and shall
survive the consummation of the Loan.



             [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

<PAGE>


         IN WITNESS WHEREOF, the undersigned individuals have executed this Loan
Agreement under seal by adopting the word "SEAL" beside their names, and the
undersigned limited liability company has executed this Loan Agreement under
seal through its duly authorized manager/member, and the undersigned corporation
has executed this Loan Agreement by and through its duly authorized officers,
all as of the day and year first above written.

                             BORROWER:

                             DCF I, LLC,
                             a North Carolina limited liability company (SEAL)



                              BY: /s/Anthony Dilweg
                                  ---------------------------------- (SEAL)
                                  Anthony Dilweg, Manager



STATE OF NORTH CAROLINA

COUNTY OF ________________


         I, a Notary Public of the County and State aforesaid, certify that
Anthony Dilweg personally came before me this day and acknowledged that he is
Manager of DCF I, LLC, a North Carolina limited liability company, and that by
authority duly given and as the act of the company, the foregoing instrument was
signed in its name by him.

         Witness my hand and official stamp or seal, this the ______ day of
_________, 2002.



(SEAL)                            ___________________________________
                                  Notary Public

My Commission Expires:

----------------------


<PAGE>





                                      GUARANTOR:
                                      /s/Anthony Dilweg
                                      -------------------------------

                                      Anthony Dilweg, individually



STATE OF NORTH CAROLINA
COUNTY OF WAKE

I, ___________________________________________________________, a Notary Public
of the County and State aforesaid, certify that Anthony Dilweg, personally
appeared before me this day and acknowledged the execution of the foregoing
instrument. Witness my hand and official stamp or seal, this _____ day of
____________, 2002.


My Commission Expires:                 _______________________________________
                                       Notary Public
------------------------------------


                                       [NOTARIAL SEAL]



<PAGE>






                                        LENDER:

                                        MERISEL PROPERTIES, INC. (SEAL])



                                        By:/s/Karen Tallman
                                          ------------------------------(SEAL)
                                           Karen Tallman, Senior Vice President








STATE OF ________________

COUNTY OF ________________


         I, a Notary Public of the County and State aforesaid, certify that
Karen Tallman personally came before me this day and acknowledged that she is
Senior Vice President of Merisel Properties, Inc, a Delaware corporation, and
that by authority duly given and as the act of the corporation, the foregoing
instrument was signed in its name by her.

         Witness my hand and official stamp or seal, this the ______ day of
_________, 2002.



(SEAL)                           ___________________________________
                                  Notary Public

My Commission Expires:

----------------------


<PAGE>


                                    Exhibit A

                   Borrower's Initial Construction Obligations


         Borrower shall furnish all labor and materials to construct and
complete in a good, expeditious, workmanlike and substantial manner the work
described in the Plans (the "Work" ) for the Project. Borrower shall supervise
and direct all Work, using its best skill and attention. Borrower shall be
solely responsible for all construction means and methods, techniques, sequences
and procedures, and for coordinating all portions of the Work. All Work shall be
performed in accordance with this Loan Agreement and the schedule entitled
"Dilweg Construction Services, Merisel Master Planning Schedule" attached hereto
and made part hereof by reference ("Permitting and Construction Timeline"). In
addition, Borrower shall provide Lender with a Cost Breakdown on the last day of
each month commencing on the last day of the month following the Closing Date
until such time as Borrower submits its first draw request to Lender, in which
event the Cost Breakdown submitted with Borrower's draw request shall serve as
the Cost Breakdown for such month; provided, however, in the event Borrower does
not submit a draw request in a particular month, Borrower shall be required to
submit a Cost Breakdown to Lender on the last day of such month.
         Borrower shall complete each item identified on the Permitting and
Construction Timeline by the date set forth therein. In the event Borrower fails
to complete each item identified on the Permitting and Construction Timeline by
the date set forth therein with regard to submission of plans or receipt of
governmental approvals as a result caused in whole or part by any action or
inaction on the part of any governmental or quasi-governmental authority or any
cause beyond the reasonable control of Borrower, the submittal date or time
period set forth in the Permitting and Construction Timeline shall be extended
for the length of the delay caused by the governmental or quasi-governmental
authority or by an event beyond the reasonable control of Borrower.


<PAGE>
<TABLE>
<CAPTION>


                                    Exhibit B

                    Applicable Percentage of Gains to Lender



                                                Amount of Loan proceeds disbursed to Borrower by Lender

<S>                                         <C>               <C>              <C>             <C>
Period from Date of Closing to the Date     $1 to $250,000    $250,001 to      $500,001 to     $750,001 to
of the Payment in Full of the Note                             $500,000         $750,000        $1,000,000
------------------------------------------- --------------- ---------------- ---------------- ---------------

More than 12 months and less than 15 months      2.5%             5.0%             7.5%           10.0%

More than 15 months and less than 18 months      5.0%             7.5%            10.0%           12.5%

More than 18 months and less than 21 months      7.5%            10.0%            12.5%           15.0%

More than 21 months and less than 24 months     10.0%            12.5%            15.0%           17.5%

More than 24 months                             12.5%            15.0%            17.5%           20.0%

</TABLE>





By way of example, if the Project is sold after twenty (20) months and Lender
has disbursed $700,000 to Borrower, then Lender shall receive 12.5% of the Gain
from such sale. If the Project is sold after thirty (30) months and the Lender
has disbursed $400,000 to Borrower, then Lender shall receive 15% of the Gain
from such sale.