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AMENDED AND RESTATED PROMISSORY NOTE
 
 

 $120,000,000.00  October 21, 2009

 
FOR VALUE RECEIVED, CJUF II STRATUS BLOCK 21 LLC, a Delaware limited liability
company ("Maker"), does hereby promise to pay to the order of BEAL BANK NEVADA
("Payee"), at 6000 Legacy Drive, Plano, Texas 75024, or at such other place as
the holder hereof may from time to time designate in writing, in lawful money of
the United States, the principal sum of ONE HUNDRED TWENTY MILLION AND NO/100
DOLLARS ($120,000,000.00), or as much thereof as is advanced on the loan
evidenced hereby, with interest thereon as provided in this Note.

1.           Certain Definitions.  For the purposes hereof, the terms set forth
below shall have the following meanings:

(a)           "Applicable Law" shall mean (i) the laws of the United States of
America applicable to contracts made or performed in the State of Texas, now or
at any time hereafter prescribing maximum rates of interest or eliminating
maximum rates of interest on loans and extensions of credit, (ii) the laws of
the State of Texas including, without limitation, Chapter 303 of the Texas
Finance Code, as the same may be amended from time to time ("Chapter 303"), now
or at any time hereafter prescribing or eliminating maximum rates of interest on
loans and extensions of credit, and (iii) any other laws at any time applicable
to contracts made or performed in the State of Texas which permit a higher
interest rate ceiling hereunder.  Notwithstanding the foregoing, in no event
shall Chapter 346 of the Texas Finance Code (which regulates certain revolving
loan accounts and revolving tri-party accounts) apply to this Note.

(b)           "Base Rate" shall mean the per annum rate equal to The Wall Street
Journal Prime Rate, as it changes from time to time, plus six and one-quarter
percent (6¼%).

(c)           "Deed of Trust" shall mean that certain Amended and Restated
Construction Deed of Trust, Assignment of Rents, Security Agreement and Fixture
Filing, dated of even date herewith, executed by Maker for the benefit of Payee,
covering the Property as security for this Note and certain other indebtedness
of Maker to Payee.

(d)           "Final Maturity Date" shall mean October 21, 2014.

(e)           "Highest Lawful Rate" shall mean at the particular time in
question the maximum rate of interest which, under Applicable Law, Payee is then
permitted to charge Maker on this Note.  If the maximum rate of interest which,
under Applicable Law, Payee is permitted to charge Maker on this Note shall
change after the date hereof, the Highest Lawful Rate shall be automatically
increased or decreased, as the case may be, from time to time as of the
effective date of each change in the Highest Lawful Rate without notice to
Maker.  For purposes of determining the Highest Lawful Rate under the Applicable
Law of the State of Texas, the applicable rate ceiling shall be the weekly
 
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ceiling described in and computed in accordance with the provisions of Chapter
303; provided, however, that in determining the Highest Lawful Rate, all fees
and other charges contracted for, charged or received by Payee in connection
with the loan evidenced by this Note which are either deemed interest under
Applicable Law or required under Applicable Law to be deducted from the
principal balance hereof to determine the rate of interest charged on this Note
shall be taken into account.  To the extent permitted by Applicable Law, Payee
may from time to time substitute for the "weekly ceiling" referred to above any
ceiling under Chapter 303 or any other statute and revise the rate, index,
formula or provision of law used to compute the rate hereunder as provided
therein.

(f)           "Loan Agreement" shall mean that certain Amended and Restated
Construction Loan Agreement of even date herewith by and between Maker and
Payee.

(g)           "Loan Documents" has the meaning set forth in the Loan Agreement.

(h)           "Project" has the meaning set forth in the Loan Agreement.

(i)           "Property" shall mean the real property, improvements and fixtures
located in Travis County, Texas, and personal property which are more
particularly described in the Deed of Trust.

(j)           "Wall Street Journal Prime Rate" shall mean the prime rate of
interest for commercial borrowings published from time to time by The Wall
Street Journal in the Money Rates Section, provided that if at any time The Wall
Street Journal ceases to be published or ceases to publish such prime rate,
Payee shall select a nationally recognized substitute publication comparable to
The Wall Street Journal for use in determining such prime rate, and Payee shall
provide written notice to Maker of any such substitution.

2.           Calculation and Payment of Principal and Interest.

(a)           Subject to the provisions of Section 7 hereafter, interest on the
unpaid principal balance hereof from time to time outstanding shall be computed
at a rate equal to the lesser of (i) the Base Rate in effect from time to time
and (ii) the Highest Lawful Rate.  The Base Rate shall change and be adjusted as
and when The Wall Street Journal Prime Rate changes.

(b)           Accrued and unpaid interest, computed as set forth in (a) above,
or, if applicable, as set forth in Section 7 below, shall be due and payable
monthly on the first (1st) day of each month hereafter commencing November 1,
2009 and continuing throughout the term of this Note.

(c)           In accordance with the terms of Section 4.5 of the Loan Agreement,
(i) as and when Residential Units (as defined in the Loan Agreement) are sold,
as permitted by the Loan Documents, all Net Sales Proceeds (as defined in the
Loan Agreement) from the sale of the Residential Unit sold, and (ii) all Net
Operating Income (as defined in the Loan Agreement) must be offered to Payee as
a principal prepayment of this Note.
 
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(d)           The unpaid principal balance of and all accrued and unpaid
interest upon this Note, including interest computed at the Base Rate, the
Highest Lawful Rate and/or the Default Rate, as hereinafter defined, whichever
is applicable from time to time, are due and payable on the maturity date hereof
(the "Maturity Date") whether such Maturity Date is the Final Maturity Date or
an accelerated Maturity Date, and Maker hereby agrees to pay all such amounts to
Payee on such Maturity Date.

(e)           Interest on this Note shall be computed on the basis of three
hundred sixty-five (365) day or three hundred sixty-six (366) day years, as the
case may be.

(f)           If the date for any payment or prepayment hereunder falls on a day
which is a Saturday, Sunday or holiday in the State of Texas on which banks are
required or permitted by law to be closed, then for all purposes of this Note,
the same shall be deemed to have fallen on the next following day, and such
extension of time shall in such case be included in the calculation of interest.

 
(g)
All payments on this Note shall be applied first to the payment of any Late
Charge, as hereinafter defined, due hereunder, then to the payment of any costs
and expenses of Payee which are to be reimbursed by Maker as provided herein or
in any of the other Loan Documents, then to the payment of  accrued and unpaid
interest and then to the payment of the principal balance hereof; provided,
however, if an Event of Default, as hereinafter defined, is then in existence,
payments on this Note shall be applied as Payee shall elect, in Payee’s sole
discretion.

3.           Prepayment.  This Note may not be prepaid, in whole or in part,
except as permitted by the express  terms of the Loan Agreement.

4.           Waiver.  Except to the extent otherwise expressly set forth in
Paragraph 5 below, Maker and all sureties, endorsers, accommodation parties,
guarantors and other parties now or hereafter liable for the payment of this
Note, in whole or in part, hereby severally (i) waive demand, notice of demand,
presentment for payment, notice of nonpayment, notice of default, protest,
notice of protest, notice of intent to accelerate the Maturity Date, notice of
acceleration of the Maturity Date, notice of dishonor and all other notices, and
further waive diligence in collecting this Note, in taking action to collect
this Note, in bringing suit to collect this Note, or in enforcing this Note or
any of the security for this Note; (ii) agree to any substitution,
subordination, exchange or release of any security for this Note or the release
of any party primarily or secondarily liable for the payment of this Note;
(iii) agree that Payee shall not be required to first institute suit or exhaust
its remedies hereon against Maker or others liable or to become liable for the
payment of this Note or to enforce its rights against any security for the
payment of this Note; and (iv) consent to any extension of time for the payment
of this Note, or any installment hereof, made by agreement by Payee with any
person now or hereafter liable for the payment of this Note, even if Maker is
not a party to such agreement.

5.           Events of Default
 
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(a)           Upon the happening of any of the following events (each an "Event
of Default"), Payee, at its option, and without limitation of other rights Payee
has under the Loan Documents, at law or in equity, may declare immediately due
and payable the entire unpaid principal balance of this Note together with all
interest accrued and owing hereon, plus any other sums payable at the time of
such declaration pursuant to this Note or any other Loan Document, including,
without limitation, the Loan Agreement and the Deed of Trust.  Events of Default
include the following:

(i)           If Maker shall fail to pay any installment of principal and/or
interest and/or other sums due under this Note as and when same becomes due and
payable in accordance with the terms hereof and/or any other Loan Document, or
if Maker shall default in any other obligation under this Note, the Loan
Agreement, the Deed of Trust and/or any other Loan Document which can be cured
by the payment of money and if any such failure or default remains uncured upon
the expiration of five (5) days following the date written notice thereof is
given by or on behalf of Payee to Maker; provided, however, (x) Payee will not
be obligated to give such written notice more than twice during any twelve (12)
month period, and following the second such notice during a twelve (12) month
period, any subsequent default or failure during the then current twelve (12)
month period shall constitute an Event of Default without any notice given by or
on behalf of Payee and (y) such written notice of default and five (5) day cure
period provisions shall not apply to Maker's obligation to pay the balance due
on this Note on the Maturity Date hereof (whether such Maturity Date is the
Final Maturity Date or any accelerated Maturity Date effected pursuant to any of
the Loan Documents);

(ii)           The occurrence of any Event of Default, as defined in the Loan
Agreement, or the occurrence of a default under any other Loan Document which
remains uncured upon the expiration of any cure period applicable thereto as set
forth in the Loan Document under which such default occurred.

(b)           The failure to exercise the foregoing option to accelerate the
Maturity Date of this Note upon the happening of one or more Events of Default
shall not constitute a waiver of the right to exercise the same or any other
option at any subsequent time during the continuance of an Event of Default, and
no such failure shall nullify any prior exercise of any such option without the
express written consent of Payee.

6.           Collateral.  This Note is secured, among other things, by the Deed
of Trust, which contains provisions for the acceleration of the maturity hereof
upon the happening of certain events.

7.           Default Interest; Late Charge.  If (a) any installment of principal
and/or interest due hereon is not paid on or before the due date thereof, and
until such payment is received by Payee, or (b) if the entire unpaid principal
balance of and/or accrued but unpaid interest on this Note are not paid on or
before the earlier to occur of the Final Maturity Date or any accelerated date
of maturity designated pursuant hereto, or (c) if any Event of Default shall
occur and so long as any such Event of Default continues, all unpaid amounts of
this Note, including principal and
 
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interest (to the extent permitted by Applicable Law), shall thereafter bear
interest at a per annum rate of interest (the “Default Rate") equal to the
lesser of (i) the Base Rate plus five percent (5%) or (ii) the Highest Lawful
Rate; provided, however, that the obligation to pay such interest is subject to
the limitation contained in the following paragraph.  Without limitation of the
rights of Payee if a payment is not paid on the due date thereof (other than on
the Maturity Date) and without limitation of the obligation of Maker to pay such
payments on the due dates thereof, at the option of Payee, Maker will pay a late
charge (the “Late Charge") as designated by Payee but not exceeding five percent
(5%) of any installment of principal and/or interest that is not paid on or
before the tenth (10th) day following the day such payment is due (other than
the Maturity Date) to cover the extra expenses involved in handling delinquent
payments, subject to the limitation contained in the following paragraph.

8.           Compliance with Law.  All agreements between Maker and Payee,
whether now existing or hereafter arising and whether written or oral, are
hereby limited so that in no contingency, whether by reason of demand or
acceleration of the Final Maturity Date or otherwise, shall the interest
contracted for, charged, received, paid or agreed to be paid to Payee exceed the
maximum amount permissible under Applicable Law.  If, from any circumstance
whatsoever, interest in regard to the loan evidenced by this Note would
otherwise be payable to Payee in excess of the maximum amount permissible under
Applicable Law, the interest payable to Payee shall be reduced to the maximum
amount permissible under Applicable Law; and if from any circumstance Payee
shall ever receive anything of value deemed interest in regard to the loan
evidenced by this Note by Applicable Law in excess of the maximum amount
permissible under Applicable Law, an amount equal to the excessive interest
shall be applied to the reduction of the principal balance hereof and not to the
payment of interest, or if such excessive amount of interest exceeds the unpaid
balance of principal hereof, such excess shall be refunded to Maker.  All
interest paid or agreed to be paid to Payee, to the extent permitted by
Applicable Law, shall be amortized, prorated, allocated and spread throughout
the full period (including any renewal or extension) until payment in full of
the principal so that the interest hereon for such full period shall not exceed
the maximum amount permissible under Applicable Law.  Payee expressly disavows
any intent to contract for, charge or receive interest in regard to the loan
evidenced by this Note in an amount which exceeds the maximum amount permissible
under Applicable Law.  This paragraph shall control all agreements between Maker
and Payee.

9.           Attorneys' Fees and Costs.  If an Event of Default shall occur, and
in the event that thereafter this Note is placed in the hands of an attorney for
collection, or in the event this Note is collected in whole or in part through
legal proceedings of any nature, then and in any such case Maker promises to pay
on demand by Payee all reasonable costs of collection, including, but not
limited to, reasonable attorneys' fees incurred by the holder hereof, on account
of such collection, whether or not suit is filed.

10.           Cumulative Rights.  No delay on the part of the holder of this
Note in the exercise of any power or right under this Note or under any other
instrument executed pursuant hereto shall operate as a waiver thereof, nor shall
a single or partial exercise of any power or right preclude other or further
exercise thereof or the exercise of any other power or right.  Enforcement by
the holder of this Note of any security for the payment hereof shall not
constitute any election by it of remedies so as to preclude the exercise of any
other remedy available to it.
 
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11.           Headings.  The paragraph headings used in this Note are for
convenience of reference only, and shall not affect the meaning or
interpretation of this Note.

12.           Notices and Demands.  Any notice or demand to be given or to be
served upon Maker in connection with this Note must be in writing and shall be
given by certified or registered mail, return receipt requested, properly
addressed, with postage prepaid, addressed to Maker as follows:

 
Maker:
CJUF II Stratus Block 21 LLC

c/o Stratus Properties, Inc.
98 San Jacinto, Suite 220
Austin, Texas  78701
Attention:                      W.H. Armstrong III
Telephone:                       512-478-6396
Facsimile:                       512-478-5788
 
 
With a copy to:
Armbrust & Brown, L.L.P.

100 Congress Avenue, Suite 1300
Austin, Texas  78701
Attention:                      Kenneth N. Jones, Esq.
Telephone:                      512-435-2312
Facsimile:                      512-435-2360
 
 
And a copy to:
Canyon-Johnson Urban Fund II, L.P.

2000 Avenue of the Americas
Los Angeles, California  90067
Attention:                      K. Robert Turner
Telephone:                      310-272-1500
Facsimile:                      310-272-1523

 
And a copy to:
DLA Piper US LLP

550 South Hope Street, Suite 2300
Los Angeles, California  90071
Attention:                      Steven A. Fein, Esq.
Telephone:                      213-330-7772
Facsimile:                      213-330-7572

or at such other address within the continental United States as Maker may
designate from time to time by written notice given to the holder hereof.  Any
notice or demand will be given and deemed received as provided in the Loan
Agreement.

13.           Governing Law; Jurisdiction and Venue.  This Note shall be
governed by and construed in accordance with the laws of the State of Texas and
the laws of the United States applicable to transactions in the State of
Texas.  Courts within the State of Texas shall have jurisdiction over any and
all disputes between Maker and Payee, whether at law or in equity, and
 
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the proper venue for any such dispute shall be either the state courts located
in Collin County, Texas or the federal courts located in the Northern District
of Texas, Dallas Division.

14.           Successors and Assigns.  The term "Payee" shall include all of
Payee's successors and assigns to whom the benefits of this Note shall inure.

15.           WAIVER OF JURY TRIAL.  MAKER AND PAYEE, BY ITS ACCEPTANCE OF THIS
NOTE, HEREBY EXPRESSLY, VOLUNTARILY, KNOWINGLY AND IRREVOCABLY WAIVE ANY
CONSTITUTIONAL OR OTHER RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN THE
EVENT OF LITIGATION CONCERNING ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (A)
ARISING UNDER THIS NOTE, THE PARTIES' PERFORMANCE HEREUNDER OR ANY OTHER LOAN
DOCUMENT, OR (B) IN ANY WAY CONNECTED WITH, OR RELATED OR INCIDENTIAL TO, THE
DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT TO ANY LOAN DOCUMENT
RELATED IN ANYWAY WHATSOEVER TO THE SUBJECT MATTER OF THIS NOTE; AND IN ANY
CASE, WHETHER NOW OR HEREAFTER ARISING AND WHETHER SOUNDING IN TORT, CONTRACT OR
OTHERWISE.  ANY PARTY MAY FILE AN ORIGINAL COUNTERPART OR COPY OF THIS SECTION
WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE
WAIVER OF THEIR RIGHT TO TRIAL BY JURY.

16.           Amends and Restates.  This Note modifies, amends, extends and
restates that certain Promissory Note in the original principal amount of
$165,000,000.00 dated May 6, 2008, executed by Maker and made payable to the
order of Corus Bank, N.A. ("Corus") which Promissory Note was subsequently
endorsed by Corus to Stratus Partnership Investments, L.P. ("SPI"), an affiliate
of Maker, pursuant to an Allonge dated June 26, 2009, and thereafter endorsed by
SPI to Maker pursuant to an Allonge of even date herewith (the “Prior
Note”).  This Note is entitled to all of the liens, benefits and priorities of
the Prior Note.  This Note shall not be deemed to create a new obligation of
Maker in satisfaction of the indebtedness evidenced by the Prior Note.  This
Note constitutes a restatement and modification of, but not a novation of, the
debt of the Prior Note.  As of the date hereof, the outstanding principal
balance of the Prior Note is $25,000.00 and no accrued and unpaid interest is
due as of the date hereof.  Accordingly, the $25,000.00 principal balance of the
Prior Note is deemed outstanding hereunder.

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IN WITNESS WHEREOF, this Note has been executed and delivered under seal on the
date first set froth above.

MAKER:

CJUF II STRATUS BLOCK 21 LLC,
a Delaware limited liability company

 
By:
Stratus Block 21 Investments, L.P.,

 
a Texas limited partnership, Manager

 
 
By:
Stratus Block 21 Investments GP, L.L.C.,

 
its General Partner

                        By:   /s/ Erin D. Pickens                               
Name:           Erin D. Pickens
Title:           Senior Vice President

 
By:
CJUF II Block 21 Member, LLC,

 
a Delaware limited liability company, Member

 
 
By:
Canyon-Johnson Urban Fund II, L.P.,

 
a Delaware limited partnership, Member

 
By:
Canyon-Johnson Realty Advisors II LLC, a Delaware limited liability company,
General Partner

 
 
By:
 /s/ K. Robert Turner                          

 
 
Name: K. Robert Turner

 
 
Title:  Managing Partner

 
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