Exhibit 10.1


    
      

    


    MODIFICATION
      AND EXTENSION AGREEMENT

    


    This
      MODIFICATION AND EXTENSION AGREEMENT (this “Agreement”)
      dated
      as of May 30, 2006 by and between STRATUS
      PROPERTIES INC.,
      a
      Delaware corporation (“Stratus”),
      STRATUS
      PROPERTIES OPERATING CO., L.P.,
      a
      Delaware limited partnership (“SPOC”),
      CIRCLE
      C LAND, L.P.,
      a Texas
      limited partnership (“Circle
      C”),
      and
AUSTIN
      290 PROPERTIES, INC.,
      a Texas
      corporation (“Austin”)
      (Stratus, SPOC, Circle C and Austin are sometimes referred to in this Agreement
      severally as “Borrower”),
      CALERA
      COURT, L.P.,
      a Texas
      limited partnership ("Calera
      Court"),
      OLY STRATUS BARTON CREEK I JOINT VENTURE,
      a Texas
      joint venture ("Stratus
      JV")
      and
COMERICA
      BANK
      ("Lender");

    


    W
      I T N E
      S S E T H:

    


    WHEREAS,
      Borrower has executed and delivered to Lender, inter alia,
      (i)
      that certain Revolving Promissory Note dated as of September 30, 2005, payable
      to the order of Lender in the original principal sum of $45,000,000.00, with
      interest and principal payable as therein provided (the “Note”);
      (ii)
      that certain Loan Agreement dated of even date with the Note between Borrower,
      Calera Court and Lender (the "Loan
      Agreement");
      (iii)
      that certain Deed of Trust, Security Agreement and Assignment of Rents dated
      of
      even date with the Note from Stratus to Melinda Chausse, Trustee, securing
      the
      payment of the Note, covering certain real and personal property described
      therein, recorded under Clerk’s File No. 2005183345 of the Real Property Records
      of Travis County, Texas (the “Stratus
      Deed of Trust”);
      (iv)
      that certain Deed of Trust, Security Agreement and Assignment of Rents dated
      of
      even date with the Note from Circle C to Melinda Chausse, Trustee, securing
      the
      payment of the Note, covering certain real and personal property described
      therein, recorded under Clerk’s File No. 2005183344 of the Real Property Records
      of Travis County, Texas (the “Circle
      C Deed of Trust”);
      (v)
      that certain Deed of Trust, Security Agreement and Assignment of Rents dated
      of
      even date with the Note from SPOC to Melinda Chausse, Trustee, securing the
      payment of the Note, covering certain real and personal property described
      therein, recorded under Clerk’s File No. 2005183343 of the Real Property Records
      of Travis County, Texas (the “SPOC
      Deed of Trust”);
      (vi)
      that certain Deed of Trust, Security Agreement and Assignment of Rents dated
      of
      even date with the Note from Austin to Melinda Chausse, Trustee, securing the
      payment of the Note, covering certain real and personal property described
      therein, recorded under Clerk’s File No.2005183347 of the Real Property Records
      of Travis County, Texas (the “Austin
      Deed of Trust”);
      (vii)
      that certain Deed of Trust, Security Agreement and Assignment of Rents dated
      of
      even date with the Note from Calera Court to Melinda Chausse, Trustee, securing
      the payment of the Note, covering certain real and personal property described
      therein, recorded under Clerk’s File No. 2005183346 of the Real Property Records
      of Travis County, Texas (the “Calera
      Court Deed of Trust”);
      (viii) that certain Deed of Trust, Security Agreement and Assignment of Rents
      dated of even date with the Note from Stratus JV to Melinda Chausse, Trustee,
      securing the payment of the Note, covering certain real and personal property
      described therein, recorded under Clerk’s File No. 2005183348 of the Real
      Property Records of Travis County, Texas (the “Stratus
      JV Deed of Trust”)
      (the
      Stratus Deed of Trust, Circle C Deed of Trust, SPOC Deed of Trust, Austin Deed
      of Trust, Calera Court and Stratus JV Deed of Trust are herein collectively
      called the "Deed
      of Trust",
      and
      all of the property covered by the Deed of Trust is herein collectively called
      the “Mortgaged
      Property”)
      (the
      Note, Loan Agreement, Deed of Trust and all other documents executed by Borrower
      and/or any other party or parties evidencing or securing or otherwise in
      connection with the loans evidenced by the Note being herein collectively called
      the "Loan
      Documents");

    


    WHEREAS,
      the Note is due and payable on May 30, 2007, and Borrower has requested that
      Lender extend the term of the Note to March 30, 2008 and make certain other
      modifications to the Loan Documents, and Lender is willing to do so on the
      terms
      and conditions set forth below; and

    


    WHEREAS,
      Lender is the owner and holder of the Note and Borrower is the owner of the
      legal and equitable title to the Mortgaged Property;

    


    NOW,
      THEREFORE, for and in consideration of the mutual covenants contained herein
      and
      for other valuable consideration, the receipt and sufficiency of which are
      hereby acknowledged, the parties hereto agree as follows:

    


    1.  Defined
      Terms.
      Capitalized terms used but not defined in this Agreement shall have the meaning
      given to such capitalized terms in the Loan Agreement.

    


    2.  Extension
      of Maturity Date.
      The
      maturity date of the Note is hereby extended to May 30, 2008, and the liens,
      security interests, assignments and other rights evidenced by the Loan Documents
      are hereby renewed and extended to secure payment of the Note as extended
      hereby. 

    


    3.  Modification
      of Interest Rate.
      

    


    (a) The
      definition of Applicable Base Rate in the Note is hereby amended in its entirety
      to read as follows:

     

    “'Applicable
      Base Rate'
      shall
      mean the lesser of (a) the Base Rate from time to time in effect minus
      eight-tenths of one percent (.8%) per annum, or (b) the Maximum Lawful Rate,
      but
      in no event shall the Applicable Base Rate ever be less than the Floor Rate.
      Fluctuations in the Applicable Base Rate shall become effective immediately,
      without necessity for any notice whatsoever."

     

    (b) The
      definition of Applicable LIBOR Rate in the Note is hereby amended in its
      entirety to read as follows:

     

    “'Applicable
      LIBOR Rate'
      shall
      mean the lesser of (a) the rate of interest equal to the Adjusted LIBOR Rate
      in
      effect for the subject Interest Period plus
      one and
      ninety-five one hundredths percent (1.95%) or (b) the Maximum Lawful Rate,
      but
      in no event shall the Applicable LIBOR Rate ever be less than the Floor
      Rate."


    4.  Representations
      and Warranties.
      Borrower hereby represents and warrants that (a) Borrower is the sole legal
      and beneficial owner of the Mortgaged Property; (b) Borrower is duly organized
      and legally existing under the laws of the State of Texas; (c) the
      execution and delivery of, and performance under this Agreement are within
      Borrower's power and authority without the joinder or consent of any other
      party
      and have been duly authorized by all requisite action and are not in
      contravention of law or the powers of Borrower's articles of incorporation
      and
      bylaws; (d) this Agreement constitutes the legal, valid and binding obligations
      of Borrower enforceable in accordance with its terms; (e) the execution and
      delivery of this Agreement by Borrower do not contravene, result in a breach
      of
      or constitute a default under any deed of trust, loan agreement, indenture
      or
      other contract, agreement or undertaking to which Borrower is a party or by
      which Borrower or any of its properties may be bound (nor would such execution
      and delivery constitute such a default with the passage of time or the giving
      of
      notice or both) and do not violate or contravene any law, order, decree, rule
      or
      regulation to which Borrower is subject; and (f) to the best of Borrower's
      knowledge there exists no uncured default under any of the Loan Documents.
      Borrower agrees to indemnify and hold Lender harmless against any loss, claim,
      damage, liability or expense (including without limitation reasonable attorneys'
      fees) incurred as a result of any representation or warranty made by it herein
      proving to be untrue in any respect.

    


    5.  Further
      Assurances.
      Borrower, upon request from Lender, agrees to execute such other and further
      documents as may be reasonably necessary or appropriate to consummate the
      transactions contemplated herein or to perfect the liens and security interests
      intended to secure the payment of the loan evidenced by the Note.

    


    6.  Default;
      Remedies.
      If
      Borrower shall fail to keep or perform any of the covenants or agreements
      contained herein or if any statement, representation or warranty contained
      herein is false, misleading or erroneous in any material respect, Borrower
      shall
      be deemed to be in default under the Deed of Trust and Lender shall be entitled
      at its option to exercise any and all of the rights and remedies granted
      pursuant to the any of the Loan Documents or to which Lender may otherwise
      be
      entitled, whether at law or in equity.

    


    7.  Endorsement
      to Mortgagee Title Policy.
      Contemporaneously with the execution and delivery hereof, Borrower shall, at
      its
      sole cost and expense, obtain and deliver to Lender an Endorsement of the
      Mortgagee Title Policy insuring the lien of the Deed of Trust, under Procedural
      Rule P-9b(3) of the applicable title insurance rules and regulations, in form
      and content acceptable to Lender, stating that the company issuing said
      Mortgagee Title Policy will not claim that policy coverage has terminated or
      that policy coverage has been reduced, solely by reason of the execution of
      this
      Agreement.

    


    8.  Ratification
      of Loan Documents.
      Except
      as provided herein, the terms and provisions of the Loan Documents shall remain
      unchanged and shall remain in full force and effect. Any modification herein
      of
      any of the Loan Documents shall in no way adversely affect the security of
      the
      Deed of Trust and the other Loan Documents for the payment of the Note. The
      Loan
      Documents as modified and amended hereby are hereby ratified and confirmed
      in
      all respects. All liens, security interests, mortgages and assignments granted
      or created by or existing under the Loan Documents remain unchanged and
      continue, unabated, in full force and effect, to secure Borrower's obligation
      to
      repay the Note.

    


    9.  Liens
      Valid; No Offsets or Defenses.
      Borrower hereby acknowledges that the liens, security interests and assignments
      created and evidenced by the Loan Documents are valid and subsisting and further
      acknowledges and agrees that there are no offsets, claims or defenses to any
      of
      the Loan Documents.

    


    12. Merger;
      No Prior Oral Agreements.
      This
      Agreement supersedes and merges all prior and contemporaneous promises,
      representations and agreements. No modification of this Agreement or any of
      the
      Loan Documents, or any waiver of rights under any of the foregoing, shall be
      effective unless made by supplemental agreement, in writing, executed by Lender
      and Borrower. Lender and Borrower further agree that this Agreement may not
      in
      any way be explained or supplemented by a prior, existing or future course
      of
      dealings between the parties or by any prior, existing, or future performance
      between the parties pursuant to this Agreement or otherwise.

    


    13. Notices.
      Any
      notice or communication required or permitted hereunder or under any of the
      Loan
      Documents shall be given in writing and sent in the manner required under the
      Loan Agreement. 

    


    14. Costs
      and Expenses.
      Contemporaneously with the execution and delivery hereof, Borrower shall pay,
      or
      cause to be paid, all costs and expenses incident to the preparation hereof
      and
      the consummation of the transactions specified herein, including without
      limitation title insurance policy endorsement charges, recording fees and fees
      and expenses of legal counsel to Lender.

    


    15. Release
      of Lender.
      Borrower hereby releases, remises, acquits and forever discharges Lender,
      together with its employees, agents, representatives, consultants, attorneys,
      fiduciaries, servants, officers, directors, partners, predecessors, successors
      and assigns, subsidiary corporations, parent corporations, and related corporate
      divisions (all of the foregoing hereinafter called the "Released
      Parties"),
      from
      any and all actions and causes of action, judgments, executions, suits, debts,
      claims, demands, liabilities, obligations, damages and expenses of any and
      every
      character, known or unknown, direct and/or indirect, at law or in equity, of
      whatsoever kind or nature, whether heretofore or hereafter accruing, for or
      because of any matter or things done, omitted or suffered to be done by any
      of
      the Released Parties prior to and including the date hereof, and in any way
      directly or indirectly arising out of or in any way connected to this Agreement
      or any of the Loan Documents, or any of the transactions associated therewith,
      or the Mortgaged Property, including specifically but not limited to claims
      of
      usury.

    


    16. Counterparts.
      This
      Agreement may be executed in any number of counterparts with the same effect
      as
      if all parties hereto had signed the same document. All such counterparts shall
      be construed together and shall constitute one instrument, but in making proof
      hereof it shall only be necessary to produce one such counterpart.

    


    17. Severability.
      If any
      covenant, condition, or provision herein contained is held to be invalid by
      final judgment of any court of competent jurisdiction, the invalidity of such
      covenant, condition, or provision shall not in any way affect any other
      covenant, condition or provision herein contained.

    


    18. Time
      of the Essence.
      It is
      expressly agreed by the parties hereto that time is of the essence with respect
      to this Agreement.

    


    19. Representation
      by Counsel.
      The
      parties acknowledge and confirm that each of their respective attorneys have
      participated jointly in the review and revision of this Agreement and that
      it
      has not been written solely by counsel for one party. The parties hereto
      therefore stipulate and agree that the rule of construction to the effect that
      any ambiguities are to or may be resolved against the drafting party shall
      not
      be employed in the interpretation of this Agreement to favor either party
      against the other.

    


    20. Governing
      Law.
      This
      Agreement and the rights and duties of the parties hereunder shall be governed
      for all purposes by the law of the State of Texas and the law of the United
      States applicable to transactions within said State.

    


    21. Successors
      and Assigns.
      The
      terms and provisions hereof shall be binding upon and inure to the benefit
      of
      the parties hereto and their respective successors and assigns.

    


    22. Notice
      of No Oral Agreements.
      Borrower and Lender hereby take notice of and agree to the
      following:

    


    A. PURSUANT
      TO SUBSECTION 26.02(b) OF THE TEXAS BUSINESS AND COMMERCE CODE, A LOAN AGREEMENT
      IN WHICH THE AMOUNT INVOLVED THEREIN EXCEEDS $50,000 IN VALUE IS NOT ENFORCEABLE
      UNLESS THE AGREEMENT IS IN WRITING AND SIGNED BY THE PARTY TO BE BOUND OR BY
      THAT PARTY'S AUTHORIZED REPRESENTATIVE.

    


    B. PURSUANT
      TO SUBSECTION 26.02(c) OF THE TEXAS BUSINESS AND COMMERCE CODE, THE RIGHTS
      AND
      OBLIGATIONS OF THE PARTIES TO THE LOAN DOCUMENTS SHALL BE DETERMINED SOLELY
      FROM
      THE LOAN DOCUMENTS, AND ANY PRIOR ORAL AGREEMENTS BETWEEN THE PARTIES ARE
      SUPERSEDED BY AND MERGED INTO THE LOAN DOCUMENTS.

    


    C. THE
      LOAN DOCUMENTS AND THIS AGREEMENT REPRESENT THE FINAL AGREEMENT BETWEEN THE
      PARTIES THERETO AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
      CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES THERETO. THERE
      ARE
      NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

    


    [SIGNATURE
      PAGE FOLLOWS]



    IN
      WITNESS WHEREOF, this Agreement is executed on the respective dates of
      acknowledgement below but is effective as of the date first above
      written.

    


    BORROWER:

    


    STRATUS
      PROPERTIES INC., 

    a
      Delaware corporation

    


    


    By: /s/
      John E. Baker

    John
      E.
      Baker, Senior Vice President

    


    STRATUS
      PROPERTIES OPERATING CO., L.P., a
      Delaware limited partnership

    


    
      	 	
              By:

            	
              STRS
                L.L.C., a Delaware limited liability 

              company,
                General Partner

            


    

    


    
      	 	
              By

            	
              Stratus
                Properties Inc., a Delaware 

              corporation,
                Sole Member

            


    

    


    


    By: /s/
      John E. Baker

    John
      E.
      Baker, 

    Senior
      Vice President

    


    CIRCLE
      C LAND, L.P., 

    a
      Texas
      limited partnership

    


    
      	 	
              By:

            	
              Circle
                C GP, L.L.C., a Delaware limited 

              liability
                company,
                General Partner

            


    

    


    
      	 	
              By

            	
              Stratus
                Properties Inc., a Delaware 

              corporation,
                Sole Member

            


    

    


    


    By:  /s/
      John E. Baker

    John
      E.
      Baker, 

    Senior
      Vice President

    


    AUSTIN
      290 PROPERTIES, INC., 

    a
      Texas
      corporation

    


    By: /s/
      John E. Baker

    John
      E.
      Baker, Senior Vice President

    


    LENDER:

    


    COMERICA
      BANK

    


    


    By: /s/
      Shery Layne

    Shery
      Layne, Vice President

    


    




    STATE
      OF
      TEXAS                   
§

                                                          
      §

    COUNTY
      OF TRAVIS 
§

    


    This
      instrument was acknowledged before me on the 14th day of June, 2006, by
      John E. Baker, Senior Vice President of Stratus Properties Inc., a Delaware
      corporation, on behalf of said corporation.

    


                                 
      /s/ Jerre
      Ruth Ryburn

    Notary
      Public, State of Texas

    My
      Commission Expires:  02-02-2008

    Printed
      Name of Notary:  Jerre Ruth Ryburn    

    


    


    STATE
      OF
      TEXAS              
§

                      §

    COUNTY
      OF TRAVIS         §

    


    This
      instrument was acknowledged before me on the 14th day of June, 2006, by
      John E. Baker, Senior Vice President of Stratus Properties Inc., a Delaware
      corporation, Sole Member of STRS L.L.C., a Delaware limited liability company,
      General Partner of Stratus Properties Operating Co., L.P., a
      Delaware limited partnership, on behalf of said corporation, limited liability
      company and limited partnership.

    


                                                 
         /s/ Jerre
      Ruth Ryburn
      Notary
        Public, State of Texas

      My
        Commission Expires:  02-02-2008

      Printed
        Name of Notary:  Jerre Ruth Ryburn            
        

       

    

    STATE
      OF TEXAS    §

                          
      §

    COUNTY
      OF TRAVIS      §

    


    This
      instrument was acknowledged before me on the 14th day of June, 2006, by
      John E. Baker, Senior Vice President of Stratus Properties Inc., a Delaware
      corporation, Sole Member of Circle C GP, L.L.C., a Delaware limited liability
      company, General Partner of Circle C Land, L.P., a
      Delaware limited partnership, on behalf of said corporation, limited liability
      company and limited partnership.

    


                                                  

                                                                               /s/
        Jerre
        Ruth Ryburn
        Notary
          Public, State of Texas

        My
          Commission Expires:  02-02-2008

        Printed
          Name of Notary:  Jerre Ruth Ryburn    

      

    

    


    STATE
      OF TEXAS        §

                                              
      §

    COUNTY
      OF TRAVIS  §

    


    This
      instrument was acknowledged before me on the 14th day of June, 2006, by
      John E. Baker, Senior Vice President of Austin 290 Properties Inc., a Delaware
      corporation, on behalf of said corporation.

    


                                                   
      /s/ Jerre
      Ruth Ryburn
      Notary
        Public, State of Texas

      My
        Commission Expires:  02-02-2008

      Printed
        Name of Notary:  Jerre Ruth Ryburn    

      
 

    

    STATE
      OF TEXAS         
§

                                                
      §

    COUNTY
      OF DALLAS   §

    


    This
      instrument was acknowledged before me on the 19th day of July, 2006, by
      Shery Layne, Vice President of Comerica Bank, on behalf of said
      bank.

    


                                                    
      /s/ Allene
      Medlock
      Notary
        Public, State of Texas

      My
        Commission Expires:  11-14-07

      Printed
        Name of Notary: Allen Medlock   

      
 

    


    CONSENT
      OF CALERA COURT

    


    The
      undersigned, Calera Court, L.P., hereby executes the Agreement to evidence
      its
      agreement to be bound by the extension of the Maturity Date, and confirms and
      agrees that all of its obligations under the Loan Documents applicable to it
      remain in full force and effect.

    


    Executed
      on the date of acknowledgement below but effective as of May 30,
      2006.

    


    CALERA
      COURT, L.P. a
      Texas
      limited partnership

    


    
      	 	
              By:

            	
              Calera
                Court Management, L.L.C., a Texas limited 

              liability
                company, its general partner

            


    

    


    
      	 	
              By:

            	
              Stratus
                Properties Operating Co., L.P., a 

              Delaware
                limited partnership, its Manager

            


    

    


    
      	 	
              By:

            	
              STRS
                L.L.C., a Delaware limited 

              liability
                company, its general partner

            


    

    


    
      	 	
              By:

            	
              Stratus
                Properties Inc., a 

              Delaware
                corporation, its 

              Sole
                Member

            


    

    
 

    By: 
      _/s/ John E. Baker     

    John
      E.
      Baker, 

    Senior
      Vice President

    


    


    


    STATE
      OF
      TEXAS                   
§

                                                         
      §

    COUNTY
      OF
      TRAVIS  §

    


    This
      instrument was acknowledged before me on the 14th day of June, 2006, by
      John E. Baker, Senior Vice President of Stratus Properties Inc., a Delaware
      corporation , Sole Member of STRS L.L.C., a Delaware limited liability company,
      General Partner of Stratus Properties Operating Co., L.P., a Delaware limited
      partnership, Manager of Calera Court Management, L.L.C., a Texas limited
      liability company, General Partner of Calera Court, L.P., a Texas limited
      partnership, on behalf of each said entity and said limited partnership.


     

    
                             /s/
      Jerry
      Ruth Ryburn

          
                Notary
      Public in and for the State of Texas

    


                                        
      Jerry
      Ruth Ryburn

    Printed/Typed
      Name of Notary

    My
      Commission Expires:

    2-02-2008.

    


    



    CONSENT
      OF STRATUS JV

    


    The
      undersigned, Stratus Barton Creek I Joint Venture, hereby executes the Agreement
      to evidence its agreement to be bound by the extension of the Maturity Date,
      and
      confirms and agrees that all of its obligations under the Loan Documents
      applicable to it remain in full force and effect.

    


    Executed
      on the date of acknowledgement below but effective as of May 30,
      2006.

    


    OLY
      STRATUS BARTON CREEK I JOINT VENTURE, 

    a
      Texas
      joint venture

     

    
      	 	
              By:

            	
              STRS
                L.L.C., a Delaware limited liability company, 

              its
                General Partner

            


    

     

    
      	 	
              By:

            	
              Stratus
                Properties Inc., a Delaware 

              corporation,
                its Sole Member

            


    

    


    


    By:
      _/s/ John E. Baker     

    John
      E.
      Baker, Senior Vice President

    


    
      	 	
              By:

            	
              Stratus
                ABC West I, L.P., a Texas limited 

              partnership,
                Venturer

            


    

     

    
      	 	
              By:

            	
              STRS
                L.L.C., a Delaware limited liability 

              company,
                General Partner

            


    

    


    
      	 	
              By:

            	
              Stratus
                Properties Inc., a Delaware 

              corporation,
                its sole member

            


    

     

    


    By: 
      /s/ John E. Baker

    John
      E.
      Baker, 

    Senior
      Vice President

    


    


    STATE
      OF
      TEXAS 
§

                                                    
      §

    COUNTY
      OF
      TRAVIS          §

     

    The
      foregoing instrument was acknowledged before me on the 14th day of June,
      2006, by John E. Baker, Senior Vice President of Stratus Properties Inc., a
      Delaware corporation, Sole Member of STRS L.L.C., a Delaware limited liability
      company, venturer of Oly Stratus Barton Creek I Joint Venture, a Texas joint
      venture, on behalf of each such entities.

     

    


     

    [
      S E A L
      ]      

    /s/
      Jerry Ruth Ryburn

    Notary
      Public, State of Texas

    


    My
      Commission
      Expires:                                                    Jerry Ruth
      Ryburn      

    (Printed
      Name of Notary Public)

    2-02-2008.

     

    


    


    


    


    


    STATE
      OF
      TEXAS  §

                                                    
      §

    COUNTY
      OF
      TRAVIS          §

     

    The
      foregoing instrument was acknowledged before me on the 14th day of June,
      2006, by John E. Baker, Senior Vice President of Stratus Properties Inc., a
      Delaware corporation, Sole Member of STRS L.L.C., a Delaware limited liability
      company, General Partner of Stratus ABC West I, L.P., a Texas limited
      partnership, venturer of Oly Stratus Barton Creek I Joint Venture, a Texas
      joint
      venture, on behalf of each such entities.

     

    


    
       

      [
        S E A L
        ]

      
        /s/
          Jerry Ruth Ryburn

        Notary
          Public, State of Texas

        


        My
          Commission
          Expires:                                                    Jerry Ruth
          Ryburn      

        (Printed
          Name of Notary Public)

        2-02-2008.