Exhibit 10.20


    
      

    


    Exhibit
      10.20

    


    


    


    LOAN
      AGREEMENT

    


    THIS
      LOAN
      AGREEMENT (this “Agreement”)
      is
      made as of December 12, 2006 between STRATUS PROPERTIES INC., a Delaware
      corporation (“Borrower”),
      and
      HOLLIDAY FENOGLIO FOWLER, L.P., a Texas limited partnership (“Lender”).

    


    WHEREAS,
      Borrower and Lender desire to set forth herein the terms and conditions upon
      which Lender shall provide financing to Borrower; 

    


    NOW,
      THEREFORE, the parties hereto hereby agree as follows:

     

    


    Section
      1. Certain
      Definitions and Index to Definitions.

    


    A. Accounting
      Terms.
      Unless
      otherwise specified herein, all accounting terms used herein shall be
      interpreted, all accounting determinations hereunder shall be made, and all
      financial statements required to be delivered hereunder shall be prepared in
      accordance with GAAP and practices consistently applied.

    


    B. Definitions.
      Capitalized terms used herein shall have the respective meanings set forth
      in
Schedule
      1
      attached
      hereto when used in this Agreement (including the Exhibits hereto) except as
      the
      context shall otherwise require. Schedule
      1
      is
      hereby made a part of this Agreement.

    


    Section
      2. Loan.

    


    A. Loan
      Amount.
      Lender
      agrees to provide a loan to Borrower in the amount of SEVEN
      MILLION AND 00/100 DOLLARS ($7,000,000.00)
      (“Loan”),
      provided that all conditions precedent described in this Agreement have been
      met
      or waived by Lender and that Borrower is not otherwise in default as of the
      date
      of disbursement.

    


    B. Note.
      Borrower’s obligation to repay the Loan shall be further evidenced by the Note.
      Reference is made to the Note for certain terms relating to interest rate,
      payments, prepayment, Maturity Date and additional terms governing the
      Loan.

    


    C. Referral
      Fee/Application Fee.
      In
      connection with the Loan, Borrower agrees to pay a referral fee of $70,000.00
      to
      Lender and an application fee of $2,500 to FAF Advisors, Inc.

    


    Section
      3. Payments
      by Borrower.

    


    A. General.
      All
      payments hereunder shall be made by Borrower to Lender at the Lending Office,
      or
      at such other place as Lender may designate in writing. Payments shall be made
      by wire transfer.

    


    B. Other
      Outstanding Obligations.
      Unless
      required to be paid sooner hereunder, any and all Obligations in addition to
      the
      amounts due under the Note shall be due and payable in full upon the Maturity
      Date.

    


    Section
      4. Conditions
      Precedent.
      As
      conditions precedent to Lender’s obligation to advance the Loan to
      Borrower:

    


    A. Borrower
      shall deliver, or cause to be delivered, to Lender:

    


    (1) A
      duly
      executed copy of this Agreement, the Note, and any and all other Loan
      Documents.

    


    (2) A
      favorable written opinion of counsel for Borrower, addressed to Lender and
      in
      form and substance acceptable to Lender and its counsel.

    


    (3) Current
      financial statements of Borrower in form and substance acceptable to
      Lender.

    


    (4) The
      following organizational documents of Borrower: 

    


    
      	 	 	
              (a)
                

            	
              Borrower’s
                Certificate of Incorporation as certified by the Secretary of State
                of the
                state of Borrower’s organization and by the corporate secretary of
                Borrower, a Certificate of Good Standing dated no less recently than
                thirty (30) calendar days prior to the date of this Agreement, issued
                by
                the Secretary of State of the state of Borrower’s organization, stating
                that Borrower is in good standing in such state, and evidence of
                good
                standing to transact business in the State of Texas, dated no less
                recently than thirty (30) calendar days prior to the date of this
                Agreement, issued by the Secretary of State of the State of
                Texas.

            


    

    


    
      	 	 	
              (b)
                

            	
              A
                resolution of the board of directors of Borrower, certified as of
                the date
                of this Agreement by its corporate secretary, authorizing the execution,
                delivery and performance of this Agreement and the other Loan Documents,
                and all other instruments or documents to be delivered by Borrower
                pursuant to this Agreement.

            


    

    


    
      	 	 	
              (c)
                

            	
              A
                certificate of Borrower’s corporate secretary as to the incumbency and
                authenticity of the signatures of the officers of Borrower executing
                any
                Loan Documents (Lender being entitled to rely thereon until a new
                such
                certificate has been furnished to
                Lender).

            


    

    


    (5) The
      written consent of Comerica Bank-Texas to the Loan as required under the
      Comerica Loan Agreement (and / or the written consent of any other lender whose
      consent is required to the financing evidenced by this Agreement pursuant to
      agreements between Borrower and such lender(s)).

    


    B. All
      acts,
      conditions, and things (including, without limitation, the obtaining of any
      necessary regulatory approvals and the making of any required filings,
      recordings or registrations) required to be done and performed and to have
      happened prior to the execution, delivery and performance of the Loan Documents
      to constitute the same legal, valid and binding obligations of Borrower,
      enforceable in accordance with their respective terms, subject to limitations
      as
      to enforceability which might result from bankruptcy, insolvency, moratorium
      and
      other similar laws affecting creditors’ rights generally and subject to
      limitations on the availability of equitable remedies, shall have been done
      and
      performed and shall have happened in compliance with all applicable laws or
      shall have been waived by Lender in writing.

    


    C. All
      documentation shall be satisfactory in form and substance to Lender, and Lender
      shall have received any and all further information, documents and opinions
      which Lender may reasonably have requested in connection therewith, such
      documents, where appropriate, to be certified by proper authorities and
      officials of Borrower.

    


    D. All
      representations and warranties of Borrower to Lender set forth herein or in
      any
      of the Loan Documents shall be accurate and complete in all material
      respects.

    


    E. There
      shall not exist an Event of Default or an event which with the giving of notice
      or passage of time, or both, would be an Event of Default.

    


    Section
      5. Representations
      and Warranties of Borrower.
      Borrower represents and warrants to Lender as follows:

    


    A. Capacity.
      Borrower is duly organized, validly existing, and in good standing under the
      laws of the state of its organization (as described herein) and is authorized
      to
      do business in the State of Texas and in any and all other jurisdictions in
      which its ownership of Property or conduct of business legally requires such
      authorization and the failure to do so would have a Material Adverse Effect,
      and
      has full power, authority, and legal right to own its properties and assets
      and
      to conduct its business as presently conducted or proposed to be conducted,
      and
      the consummation of the transactions contemplated herein do not, and will not,
      require the consent or approval of, or filing with, any Person which has not
      been obtained.

    


    B. Authority.
      Borrower has full power, authority and legal right to execute and deliver,
      and
      to perform and observe the provisions of the Loan Documents to be executed
      by
      Borrower. The execution, delivery and performance of the Loan Documents have
      been duly authorized by all necessary action, and when duly executed and
      delivered, will be legal, valid, and binding obligations of Borrower enforceable
      in accordance with their respective terms, subject to limitations as to
      enforceability which might result from bankruptcy, insolvency, moratorium and
      other similar laws affecting creditors’ rights generally and subject to
      limitations on the availability of equitable remedies.

    


    C. Compliance.
      The
      execution and delivery of the Loan Documents and compliance with their terms
      will not violate any provision of applicable law and will not result in a breach
      of any of the terms or conditions of, or result in the imposition of any lien,
      charge, or encumbrance upon any properties of Borrower pursuant to, or
      constitute a default (with due notice or lapse of time or both) or result in
      an
      occurrence of an event pursuant to which any holder or holders of Indebtedness
      may declare the same due and payable.

    


    D. Financial
      Statements.
      The
      financial statements provided by Borrower to Lender pursuant to subsection
      4.A(3) are correct and complete as of the dates indicated in such statements
      and
      fairly present the financial condition and results of operations of Borrower
      for
      the fiscal periods indicated therein.

    


    E. Material
      Adverse Events.
      Since
      the Statement Dates, neither any event nor the passage of time has resulted
      in a
      Material Adverse Effect.

    


    F. Litigation.
      Except
      as heretofore disclosed by Borrower to Lender in writing, there are no actions
      or proceedings pending, or to the knowledge of Borrower threatened, against
      or
      affecting Borrower which, if adversely determined, could reasonably be expected
      to have a Material Adverse Effect. Borrower is not in default with respect
      to
      any applicable laws or regulations which materially affect the operations or
      financial condition of Borrower, nor is it in default with respect to any other
      writ, injunction, demand, or decree or in default under any indenture,
      agreement, or other instrument to which Borrower is a party or by which Borrower
      may be bound where any such default would have a Materially Adverse
      Effect.

    


    G. Taxes.
      Borrower has filed or caused to be filed all tax returns which are required
      to
      be filed by it. Borrower has paid, or made provision for the payment of, all
      taxes which have or may have become due pursuant to said returns or otherwise
      or
      pursuant to an assessment received by Borrower, except such taxes, if any,
      as
      are being contested in good faith and as to which adequate reserves have been
      provided. The charges, accruals, and reserves in respect of income taxes on
      the
      books of Borrower are adequate. Borrower knows of no proposed material tax
      assessment against it and no extension of time for the assessment of federal,
      state, or local taxes of Borrower is in effect or has been requested, except
      as
      disclosed in the financial statements furnished to Lender.

     

    H. Accurate
      Information.
      All
      written information supplied to Lender by or on behalf of Borrower is and shall
      be true and correct in all material respects, and all financial projections
      or
      forecasts of future results or events supplied to Lender by or on behalf of
      Borrower have been prepared in good faith and based on good faith estimates
      and
      assumptions of the management of Borrower, and Borrower has no reason to believe
      that such projections or forecasts are not reasonable.

    


    I. Use
      of
      Loan Proceeds.
      Borrower is not engaged principally in, nor does it have as one of its important
      activities, the business of extending credit for the purpose of purchasing
      or
      carrying any margin stock (within the meaning of Regulation U of the Board
      of
      Governors of the Federal Reserve System), and no part of any advance made
      hereunder will be used to purchase or carry margin stock, extend credit to
      others for the purpose of purchasing or carrying any margin stock, or used
      for
      any purpose which violates Regulation U or Regulation X of the Board of
      Governors of the Federal Reserve System or any other provision of law.


    


    J. ERISA.
      No plan
      (as that term is defined in the Employee Retirement Income Security Act of
      1974
      (“ERISA”))
      of
      the Borrower (a “Plan”)
      which
      is subject to Part 3 of Subtitle B of Title 1 of ERISA had an accumulated
      funding deficiency (as such term is defined in ERISA) as of the last day of
      the
      most recent fiscal year of such Plan ended prior to the date hereof, or would
      have had such an accumulated funding deficiency on such date if such year were
      the first year of such Plan, and no material liability to the Pension Benefit
      Guaranty Corporation has been, or is expected by the Borrower to be, incurred
      with respect to any such Plan. No Reportable Event (as defined in ERISA) has
      occurred and is continuing in respect to any such Plan.

    


    Section
      6. Affirmative
      Covenants of Borrower.
      Until
      payment in full of the Obligations, Borrower agrees that:

    


    A. Financial
      Statements, Reports and Certifications.
      Borrower will furnish to Lender, in form and substance satisfactory to
      Lender:

    


    (1) As
      soon
      as possible after the end of each fiscal year of Borrower, and in any event
      within ninety (90) Business Days thereafter, (i) a complete copy of its annual
      audit which shall include the balance sheet of Borrower as of the close of
      the
      fiscal year and an income statement for such year, certified by the Auditors
      without material qualification, (ii) a statement of changes in partners’ equity
      and cash flows for the period ended on such date, certified by the Auditors,
      and
      (iii) a statement certified by the chief financial officer of Borrower that
      no
      act or omission has occurred which has resulted in an Event or Default or,
      if
      not cured, remedied, waived or otherwise eliminated to the satisfaction of
      Lender, would result in an Event of Default;

    


    (2) No
      later
      than thirty (30) Business Days after the close of each Accounting Period, (i)
      Borrower’s balance sheet as of the close of such Accounting Period and its
      income statement for that portion of the then current fiscal year through the
      end of such Accounting Period prepared in accordance with GAAP and certified
      as
      being complete, correct, and fairly representing its financial condition and
      results of operations by the chief financial officer of Borrower, subject to
      the
      absence of footnotes and year-end adjustments, (ii) a statement of changes
      in
      equity and cash flows for the period ended on such date, certified by the chief
      financial officer of Borrower, (iii) the calculation of the Debt Service
      Coverage Ratio demonstrating compliance with Subsection 8.G. of this Agreement,
      together with any supporting calculations used to arrive at such calculation,
      certified by the chief financial officer of Borrower, and (iv) a completed
      Borrower’s Officer’s Compliance Certificate;

    


    (3) Promptly
      upon the filing or receiving thereof, copies of all reports which the Borrower
      files under ERISA or which the Borrower receives from the Pension Benefit
      Guaranty Corporation if such report shows any material violation or potential
      violation by the Borrower of its obligations under ERISA; and

    


    (4) Such
      other information concerning Borrower as Lender may reasonably
      request.

    


    B. Other
      Information.
      Borrower will (1) maintain accurate books and records concerning its business
      in
      a manner consistent with Borrower’s current bookkeeping and record-keeping
      practices (provided such practices result in accurate books and records), (2)
      upon request, furnish to Lender such information, statements, lists of Property
      and accounts, budgets, forecasts, or reports as Lender may reasonably request
      with respect to the business, affairs, and financial condition of Borrower,
      and
      (3) permit Lender or representatives thereof, upon at least forty-eight (48)
      hours prior written notice to Borrower, to inspect during Borrower’s usual
      business hours, the properties of Borrower and to inspect, audit, make copies
      of, and make extracts from the books or accounts of Borrower.

    


    C. Expenses.
      Borrower shall pay all reasonable out-of-pocket expenses of Lender (including,
      but not limited to, fees and disbursements of Lender’s counsel) incident to (1)
      preparation and negotiation of the Loan Documents and any amendments, extensions
      and renewals thereof, (2) following an Event of Default, the protection and
      exercise of the rights of Lender under the Loan Documents, or (3) defense by
      Lender against all claims against Lender relating to any acts of commission
      or
      omission directly or indirectly relating to the Loan Documents, all whether
      by
      judicial proceedings or otherwise, but excluding claims related to Lender’s
      gross negligence or intentional misconduct. Borrower will also pay and save
      Lender harmless from any and all liability with respect to any stamp or other
      taxes (other than transfer or income taxes) which may be determined to be
      payable in connection with the making of the Loan Documents.

    


    D. Taxes
      and Expenses Regarding Borrower’s Property.
      Borrower shall make due and timely payment or deposit of all taxes, assessments
      or contributions required of it, except such deposits, assessments or
      contributions which are being contested in good faith and as to which, in the
      reasonable determination of Lender, adequate reserves have been
      provided.

    


    E. Notice
      of Events.
      Promptly after the later of (i) the occurrence thereof or (ii) such time as
      Borrower has knowledge of the occurrence thereof, Borrower will give Lender
      written notice of any Event of Default or any event which with the giving of
      notice or passage of time, or both, would become an Event of Default; provided,
      however, in the event that the respective Event of Default is subsequently
      cured
      as permitted herein, such failure to give notice shall also be deemed to be
      cured.

    


    F. Notice
      of Litigation.
      In
      addition to any regularly scheduled reporting required to be delivered with
      the
      Borrower’s Officer’s Certificate, Borrower will promptly give notice to Lender
      in writing of (i) any litigation or other proceedings against Borrower involving
      claims for amounts in excess of $250,000 that Borrower does not reasonably
      expect are covered by insurance, (ii) any labor controversy resulting in or
      threatening to result in a strike against Borrower, or (iii) any proposal by
      any
      public authority to acquire a material portion of the assets or business of
      Borrower.

    


    G. Other
      Debt.
      Borrower will promptly pay and discharge any and all Indebtedness when due
      (where the failure to do so either individually or in the aggregate with any
      such other unpaid Indebtedness would have a Material Adverse Effect), and lawful
      claims which, if unpaid, might become a lien or charge upon the Property of
      Borrower, except such as may in good faith be contested or disputed or for
      which
      arrangements for deferred payment have been made, provided appropriate reserves
      are maintained to the satisfaction of Lender for the eventual payment thereof
      in
      the event it is found that such Indebtedness is an Indebtedness payable by
      Borrower, and when such dispute or contest is settled and determined, will
      promptly pay the full amount then due.

    


    H. Cooperation.
      Borrower will execute and deliver to Lender any and all documents, and do or
      cause to be done any and all other acts reasonably deemed necessary by Lender,
      in its reasonable discretion, to effect the provisions and purposes of this
      Agreement.

    


    I. Maintenance
      of Insurance; Notice of Loss.
      Borrower shall maintain such insurance with reputable insurance carriers as
      is
      normally carried by companies engaged in similar businesses and owning similar
      Property. Upon request from Lender, Borrower will provide Lender with
      certificates indicating that such insurance is in effect and all premiums due
      have been paid. 

    


    J. Location
      of Business.
      Borrower will give Lender written notice immediately upon forming an intention
      to change the location of its chief place of business.

    


    K. Maintenance
      of Existence.
      Borrower will preserve and maintain its legal existence and all rights,
      privileges and franchises necessary or desirable in the normal conduct of its
      business, will conduct its business in an orderly, efficient and regular manner,
      and will comply with all applicable laws and regulations and the terms of any
      indenture, contract or other instrument to which it may be a party or under
      which it or its properties may be bound, in each instance where the failure
      to
      do so would have a Material Adverse Effect.

    


    L. Compliance
      with ERISA.
      Cause
      each Plan to comply and be administered in accordance with those provisions
      of
      ERISA which are applicable to such Plan.

    


    Section
      7. Negative
      Covenants of Borrower.
      Except
      as expressly provided for in Section 7 H. below, and subject to the terms and
      conditions set forth therein, until payment in full of the Obligations, without
      the prior written consent of Lender (which consent may be withheld in the sole
      discretion and determination of Lender), Borrower will not do any of the
      following items A through G:

    


    A. Sale
      of Assets.
      Borrower will not sell, abandon, or otherwise dispose of any of its assets
      except in the ordinary course of business.

    


    B. Consolidation,
      Merger, etc.
      Borrower will not consolidate with, merge into, or sell (whether in a single
      transaction or in a series of transactions) all or substantially all of its
      assets to any Person.

    


    C. Change
      in Business.
      Borrower will not make any change in the nature of the business of Borrower
      or a
      Subsidiary which would result in a material change in the character of the
      business of Borrower, taken as a whole.

    


    D. Transactions
      with Affiliates.
      Borrower will not enter into any transaction with any Person affiliated with
      Borrower on terms materially less favorable to Borrower, than at the time could
      be available to Borrower, from any Person not affiliated with
      Borrower.

    


    E. Plans.
      Borrower will not sponsor or contribute to any other Plan or other defined
      benefit pension plan or contributes to any multi-employer pension
      plan.

    


    F. Dividends,
      Redemptions.

    


    (1) Borrower
      will not, except as allowed below, declare or pay any dividend on, or declare
      or
      make any other distribution on account of, any stock interest or other ownership
      interest.

    


    (2) Borrower
      will not, except as allowed below, directly or indirectly redeem, retire,
      purchase, or otherwise acquire beneficially any shares of any class of its
      own
      stock now or hereafter outstanding or set apart any sum for any such purpose.
      The foregoing notwithstanding, Borrower may redeem, retire, purchase or
      otherwise acquire beneficially shares of common stock of Borrower in an
      aggregate amount that does not exceed $5,000,000. 

    


    G. Indebtedness.
      Borrower will not incur any Indebtedness other than Permitted Debt.

    


    H. Change
      of Control.
      Notwithstanding anything to the contrary, in the event of a contemplated Change
      in Control (as defined below) Borrower shall give thirty (30) days’ prior
      written notice to Lender indicating whether it (i) intends to prepay the Loan,
      which it shall have the right to do in its sole and absolute discretion, subject
      to a prepayment premium of one percent (1%) of the then outstanding balance
      of
      the Loan (the “Change
      in Control Prepayment Premium”)
      or in
      the event of a voluntary Change in Control under H.(a)(iii) below, the
      Reinvestment Charge, or (ii) requests Lender’s written consent to such Change in
      Control (with the intent to keep the Loan in place, subject to the terms hereof)
      which may be withheld, conditioned or delayed, for any or no reason, in its
      sole
      and absolute discretion. 

     

    Provided,
      notwithstanding anything to the contrary (including any prepayment provisions
      or
      limitations in the Note, and without limiting its ability to prepay the Loan
      pursuant to the provisions of the Note), if such consent is not granted,
      Borrower may subsequently choose to prepay the Loan, together with (i) the
      Change in Control Prepayment Premium or (ii) in the case of a voluntary Change
      in Control under H.(a)(iii) below (i.e., one not necessitated by the death,
      incapacity or other occurrence preventing a member of the senior management
      from
      fulfilling his role in the management of Borrower), the Reinvestment Charge.
      Any
      Change in Control in contravention of the provisions set forth herein, shall
      be
      an immediate Event of Default (as defined in Section 8 below) and Borrower
      shall
      be liable for the Change in Control Prepayment Premium and Lender may also
      pursue any other remedies available to it at law, in equity or under Section
      8
      of this Agreement. 

     

    (a) As
      used
      herein “Change
      of Control”
means
      (capitalized terms not otherwise defined will have the meanings ascribed to
      them
      in paragraph (b) below):

     

    (i) the
      acquisition by any Person together with all Affiliates of such Person,
      of Beneficial Ownership of the Threshold Percentage or more; provided, however,
      that for
      purposes of this Section 7 H.(a)(i), the following will not constitute a Change
      of Control:

     

    (A)  any
      acquisition of Company Voting Stock by the Company or its subsidiaries,

     

    (B)  any
      acquisition of Company Voting Stock by any employee benefit plan
      (or
      related trust) sponsored or maintained by the Company or any corporation or
      other entity controlled
      by the Company; or

     

    (ii) individuals
      who, as of the effective date of this Agreement, constitute the Board (the
      “Incumbent
      Board”)
      cease
      for any reason to constitute at least a majority
      of the Board; provided, however, that any individual becoming a director
      subsequent to the
      effective date of this Agreement whose election, or nomination for election
      by
      the Company’s shareholders, was approved by a vote of at least a majority of the
      directors then comprising the Incumbent Board will be considered a member of
      the
      Incumbent Board, unless such
      individual’s initial assumption of office occurs as a result of an actual or
      threatened election contest
      with respect to the election or removal of directors or any other actual or
      threatened solicitation
      of proxies or consents by or on behalf of a Person other than the Incumbent
      Board; or

     

    (iii) a
      majority of those three individuals currently comprising senior management,
      William H. Armstrong, President, John E. Baker, Senior Vice President, and
      Kenneth N. Jones, General Counsel, cease to serve in their current positions;
      or

     

    (iv) the
      consummation of a reorganization, merger or consolidation (including
      a merger or consolidation of the Company or any direct or indirect subsidiary
      of
      the Company), or sale or other disposition of all or substantially all of the
      assets of the Company (a “Business
      Combination”),
      in
      each case, unless, immediately following such Business Combination:

     

    (A)  the
      individuals and entities who were the Beneficial Owners of the Company Voting
      Stock immediately prior to such Business Combination have direct or indirect
      Beneficial Ownership of more than 50% of the then outstanding shares of
common
      stock, and more than 50% of the combined voting power of the then outstanding
      voting securities
      entitled to vote generally in the election of directors, of the Post-Transaction
      Corporation, and

     

    (B)  no
      Person
      together with all Affiliates of such Person (excluding the Post-Transaction
      Corporation and any employee benefit plan or related trust of either
      the Company, the Post-Transaction Corporation or any subsidiary of either
      corporation) Beneficially
      Owns 30% or more of the then outstanding shares of common stock of the
      Post-Transaction
      Corporation or 30% or more of the combined voting power of the then outstanding
      voting
      securities of the Post-Transaction Corporation, and 

     

    (C)  at
      least
      a majority of the members of the board of directors of the Post-Transaction
      Corporation were members of the Incumbent Board at the time of the execution
      of
      the initial agreement, and of the action of the Board, providing for such
      Business Combination; or

     

    (v) approval
      by the shareholders of the Company of a complete liquidation
      or dissolution of the Company.

     

    (b) As
      used
      in this Section 7 H. and elsewhere in this Agreement, the following terms
      have the meanings indicated:

     

    (i) Affiliate:
      “Affiliate”
means
      a
      Person that directly, or indirectly through
      one or more intermediaries, controls, or is controlled by, or is under common
      control with,
      another specified Person.

     

    (ii) Beneficial
      Owner: “Beneficial
      Owner”
(and
      variants thereof), with respect to a security, means a Person who, directly
      or
      indirectly (through any contract, understanding, relationship or otherwise),
      has
      or shares (A) the power to vote, or direct the voting of, the security, and/or
      (B) the power to dispose of, or to direct the disposition of, the
      security.

     

    (iii) Company
      Voting Stock: “Company
      Voting Stock”
means
      any capital stock of the Company that is then entitled to vote for the election
      of directors.

     

    (iv) Majority
      Shares: “Majority
      Shares”
means
      the number of shares of Company
      Voting Stock that could elect a majority of the directors of the Company if
      all
      directors were
      to
      be elected at a single meeting.

     

    (v) Person:
      “Person”
means
      a
      natural person or entity, and will also mean
      the
      group or syndicate created when two or more Persons act as a syndicate or other
      group (including
      without limitation a partnership, limited partnership, joint venture or other
      joint undertaking) for the purpose of acquiring, holding, or disposing of a
      security, except that “Person” will not include an underwriter temporarily
      holding a security pursuant to an offering of the security.

     

    (vi) Post-Transaction
      Corporation: Unless a Change of Control includes
      a Business Combination, “Post-Transaction
      Corporation”
means
      the Company after the Change
      of
      Control. If a Change of Control includes a Business Combination, “Post-Transaction
      Corporation”
will
      mean the corporation or other entity resulting from the Business Combination
      unless, as a result of such Business Combination, an ultimate parent entity
      controls the Company or
      all or
      substantially all of the Company’s assets either directly or indirectly, in
      which case, “Post-Transaction Corporation” will mean such ultimate parent
      entity.

     

    (vii) Threshold
      Percentage: “Threshold
      Percentage”
means
      30% of all then outstanding Company Voting Stock.

    


    


    Section
      8. Events
      of Default; Remedies.
      If any
      of the following events occurs, it is hereby defined as and declared to be
      and
      to constitute an “Event
      of Default”:

    


    A. Borrower
      shall fail to make any payment of principal, interest or other amount under
      the
      Note, when due whether at maturity, upon acceleration, or otherwise, and such
      default shall continue for three (3) Business Days after written notice to
      Borrower from Lender (except that Borrower shall not be entitled to said three
      (3) Business Day notice period more than twice in any twelve (12) calendar
      month
      period); or

    


    B. Borrower
      shall default in the payment of any of the other Obligations when due, and
      such
      default shall continue for ten (10) Business Days after written notice to
      Borrower from Lender; or

    


    C. An
      order
      for relief shall be entered against Borrower or any Subsidiary by any United
      States Bankruptcy Court; or Borrower or any Subsidiary shall generally not
      pay
      its debts as they become due (within the meaning of 11 U.S.C. 303(h) as at
      any
      time amended or any successor statute thereto) or make an assignment for the
      benefit of creditors; or Borrower or any Subsidiary shall apply for or consent
      to the appointment of a custodian, receiver, trustee, or similar officer for
      it
      or for all or any substantial part of its Property; or such custodian, receiver,
      trustee, or similar officer shall be appointed without the application or
      consent of Borrower or such Subsidiary and such appointment shall continue
      undischarged for a period of sixty (60) calendar days; or Borrower or such
      Subsidiary shall institute (by petition, application, answer, consent, or
      otherwise) any bankruptcy, insolvency, reorganization, moratorium, arrangement,
      readjustment of debt, dissolution, liquidation or similar proceeding relating
      to
      it under the laws of any jurisdiction; or any such proceeding shall be
      instituted (by petition, application, or otherwise) against Borrower or such
      Subsidiary and shall remain undismissed for a period of sixty (60) calendar
      days; or any judgment, writ, warrant of attachment, execution, or similar
      process shall be issued or levied against a substantial part of the Property
      of
      Borrower or such Subsidiary and such judgment, writ, or similar process shall
      not be released, vacated, or fully bonded within sixty (60) calendar days after
      its issue or levy; or

    


    D. Borrower
      shall be in breach of any other agreement, covenant, obligation, representation
      or warranty hereunder or with respect to any of the Loan Documents, and such
      breach shall continue for twenty (20) Business Days after whichever of the
      following dates is the earliest: (i) the date on which Borrower gives notice
      of
      such breach to Lender, and (ii) the date on which Lender gives notice of such
      breach to Borrower; provided, however, such twenty (20) Business Day period
      may
      be extended for up to an additional thirty (30) calendar days if and only if
      Lender extends such time period in writing following Lender’s good faith
      determination that (X) Borrower is continuously and diligently taking action
      to
      cure such breach, and (Y) such breach cannot be cured within the initial twenty
      (20)-day cure period; or

    


    E. The
      aggregate book value of the Borrower’s assets shall at any time be less than (1)
      $50,000,000 minus (2) the product of $50,000,000 multiplied by the Cash
      Collateral Factor.

    


    F. The
      aggregate market value of the Borrower’s assets shall at any time be less than
      (1) $100,000,000 minus (2) the product of $100,000,000 multiplied by the Cash
      Collateral Factor.

    


    G. The
      Debt
      Service Coverage Ratio measured on a quarterly basis for the previous twelve
      (12) months shall be less than (1) (a) 5.0 minus (b) the product of 5.0
      multiplied by the Cash Collateral Factor, to (2) 1.0.

    


    H. The
      ratio
      of (1) the Borrower’s Indebtedness to (2) the aggregate market value of the
      Borrower’s assets shall at any time exceed (a) sixty percent (60.0%) minus (b)
      the product of sixty percent (60.0%) multiplied by the Cash Collateral
      Factor.

    


    I. The
      ratio
      of (1) the Borrower’s Secured Indebtedness to (2) the aggregate market value of
      the Borrower’s assets shall at any time exceed (1) forty percent (40.0%) minus
      (2) forty percent (40.0%) multiplied by the Cash Collateral Factor.

    


    J. An
“Event
      of Default” as defined in the Comerica Loan Agreement shall occur.

    


    K. Any
      Reportable Event (as defined in ERISA) shall have occurred and continue for
      30
      days; or any Plan shall have been terminated by the Borrower not in compliance
      with ERISA, or a trustee shall have been appointed by a court to administer
      any
      Plan, or the Pension Benefit Guaranty Corporation shall have instituted
      proceedings to terminate any Plan or to appoint a trustee to administer any
      Plan.

    


    THEN,
      at
      Lender’s option unless and until cured or waived in writing by Lender and
      regardless of any prior forbearance by Lender, all Obligations shall, without
      presentment, demand, protest, or notice of any kind, all of which are hereby
      expressly waived, be forthwith automatically due and payable in full, and Lender
      may, immediately and without expiration of any period of grace, enforce payment
      of all Obligations and exercise any and all other remedies granted to it at
      law,
      in equity, or otherwise.

    


    Section
      9. Disclaimer
      for Negligence.
      Lender
      shall not be liable for any claims, demands, losses or damages made, claimed
      or
      suffered by Borrower, excepting such as may arise through or could be caused
      by
      Lender’s gross negligence or willful misconduct, and specifically disclaiming
      any liability of Lender to Borrower arising or claimed to have arisen out of
      Lender’s ordinary negligence.

    


    Section
      10. Limitation
      of Consequential Damage.
      Lender
      shall not be responsible for any lost profits of Borrower arising from any
      breach of contract, tort (excluding Lender’s gross negligence or willful
      misconduct), or any other wrong arising from the establishment, administration
      or collection of the obligations evidenced hereby.

    


    Section
      11. Indemnification
      and Expenses.
      Borrower
      agrees to hold Lender harmless from and indemnify Lender against all
      liabilities, losses, damages, judgments, costs and expenses of any kind which
      may be imposed on, incurred by or asserted against Lender (collectively, the
      “Costs”)
      relating to or arising out of this Agreement, any other Loan Document, or any
      transaction contemplated hereby or thereby, or any amendment, supplement or
      modification of, or any waiver or consent under or in respect of, this
      Agreement, any other Loan Document, or any transaction contemplated hereby
      or
      thereby, that, in each case, results from anything other than Lender’s gross
      negligence or willful misconduct. Borrower also agrees to reimburse Lender
      as
      and when billed by Lender for all Lender’s reasonable costs and expenses
      incurred in connection with the enforcement or the preservation of Lender’s
      rights under this Agreement, any other Loan Document, or any transaction
      contemplated hereby or thereby, including without limitation the reasonable
      fees
      and disbursements of its counsel. Borrower’s obligations under this Section 11
      shall survive repayment of the Loan.

    


    Section
      12. Miscellaneous.

    


    A. Entire
      Agreement.
      The
      Loan Documents embody the entire agreement and understanding between the parties
      hereto and supersede all prior agreements and understandings relating to the
      subject matter hereof. No course of prior dealings between the parties, no
      usage
      of the trade, and no parole or extrinsic evidence of any nature, shall be used
      or be relevant to supplement, explain or modify any term used
      herein.

    


    B. No
      Waiver.
      No
      failure to exercise and no delay in exercising any right, power, or remedy
      hereunder or under the Loan Documents shall impair any right, power, or remedy
      which Lender may have, nor shall any such delay be construed to be a waiver
      of
      any of such rights, powers, or remedies, or any acquiescence in any breach
      or
      default under the Loan Documents; nor shall any waiver of any breach or default
      of Borrower hereunder be deemed a waiver of any default or breach subsequently
      occurring. The rights and remedies specified in the Loan Documents are
      cumulative and not exclusive of each other or of any rights or remedies which
      Lender would otherwise have.

    


    C. Survival.
      All
      representations, warranties and agreements herein contained on the part of
      Borrower shall survive the making of advances hereunder and all such
      representations, warranties and agreements shall be effective so long as the
      Obligations arising pursuant to the terms of this Agreement remain unpaid or
      for
      such longer periods as may be expressly stated therein.

    


    D. Notices. All
      notices of any type hereunder shall be effective as against Borrower or Lender,
      as the case may be, upon the first to occur of (a) three (3) Business Days
      after
      deposit in a receptacle under the control of the United States Postal Service,
      (b) one (1) Business Day after being transmitted by electronic means to a
      receiver under the control of the receiving party, provided there is an
      electronic confirmation of receipt, or (c) actual receipt by an employee or
      agent of the receiving party. For the purposes hereof, the addresses are as
      follows:

     

    
      	
              DEBTOR:

            	
              with
                a copy to:

            
	
              Stratus
                Properties Inc.

              98
                San Jacinto Boulevard, Suite 220

              Austin,
                TX 78791

              Attention:
                Mr. William H. Armstrong III

            	
              Armbrust
                & Brown, L.L.P.

              100
                Congress Avenue, Suite 1300

              Austin,
                TX 78701

              Attention:
                Kenneth Jones, Esq.

            
	
              Phone:
                (512) 478-5788

              Fax:
                (512) 478-6340

            	
              Phone:
                (512) 435-2312

              Fax:
                (512) 435-2360

            


    

    


    
      	
              LENDER:

            	
              with
                a copy to:

            
	
              Holliday
                Fenoglio Fowler, L.P.

              8401
                North Central Expressway, 

              Suite
                700

              Dallas,
                TX 75225

              Attn:
                Whitaker Johnson

            	
              Leonard,
                Street and Deinard

              Suite
                2300, 150 S. Fifth Street

              Minneapolis,
                Minnesota 55402

              Attention:
                Andrew P. Lee

            
	
               

              Phone:
                (214) 265-0880

              Fax:
                (469) 232-1955

            	
               

              Phone:
                (612) 335-1881

              Fax:
                (612) 335-1657

            


    

    


    E. Separability
      of Provisions.
      In the
      event that any one or more of the provisions contained in this Agreement should
      be invalid, illegal or unenforceable in any respect, the validity, legality,
      and
      enforceability of the remaining provisions contained herein shall not in any
      way
      be affected or impaired thereby.

    


    F. Successors
      and Assigns.
      This
      Agreement shall be binding upon and inure to the benefit of Borrower, Lender,
      and their respective successors and assigns, provided, however, that Borrower
      may not transfer its rights or obligations under any of the Loan Documents
      without the prior written consent of Lender which may be withheld in its sole
      and absolute discretion. Lender may assign its interest in the Loan Documents,
      in whole, or in part, without any consent from, or notice to,
      Borrower.

    


    G. Counterparts.
      This
      Agreement may be executed in any number of counterparts all of which taken
      together shall constitute one agreement and any party hereto may execute this
      Agreement by signing any such Counterpart.

    


    H. Choice
      of Law; Location of Loan.
      This
      Agreement shall be governed by and construed in accordance with the laws of
      the
      State of Minnesota. Lender and Borrower agree that the Loan will be negotiated,
      funded and closed in the State of Minnesota.

    


    I. Amendment
      and Waiver.
      Neither
      this Agreement nor any provisions hereof may be changed, waived, discharged
      or
      terminated orally, but only by an instrument in writing signed by the party
      against whom enforcement of the change, waiver, discharge or termination is
      sought.

    


    J. Plural.
      When
      permitted by the context, the singular includes the plural and vice
      versa.

    


    K. Retention
      of Records.
      Lender
      shall retain any documents, schedules, invoices or other papers delivered by
      Borrower only for such period as Lender, at its sole discretion, may determine
      necessary.

    


    L. Headings.
      Section
      and paragraph headings and numbers have been set forth for convenience
      only.

    


    M. Information
      to Participants.
      Borrower agrees that Lender may furnish any financial or other information
      concerning Borrower or any of its Subsidiaries heretofore or hereafter provided
      by Borrower to Lender, pursuant to this Agreement or otherwise, to any
      prospective or actual purchaser of any participation or other interest in any
      of
      the loans made by Lender to Borrower (whether under this Agreement or
      otherwise), or to any prospective purchaser of any securities issued or to
      be
      issued by Lender; provided, however, any such delivery shall be delivered on
      the
      condition that such information is delivered on a confidential
      basis.

    


    N. Acknowledgments. Borrower
      hereby acknowledges that: (i) it has been advised by counsel in the negotiation,
      execution and delivery of this Agreement and the other Loan Documents; (ii)
      Lender has no fiduciary relationship to Borrower, and the relationship between
      Borrower and Lender is solely that of debtor and creditor; and (iii) no
      joint venture exists between Lender and Borrower.

    


    Section
      13. Submission
      to Jurisdiction; Venue.
      To
      induce Lender to enter into this Agreement, Borrower irrevocably agrees that,
      subject to Lender’s sole discretion, all actions and proceedings in any way,
      manner or respect, arising out of, from or related to this Agreement or the
      other Loan Documents shall be litigated in courts having situs within the City
      of Minneapolis, State of Minnesota. Borrower hereby consents and submits to
      the
      jurisdiction of any local, state or federal court located within said City
      and
      State. Borrower hereby waives any right it may have to transfer or change the
      venue of any litigation brought against Borrower by Lender in accordance with
      this paragraph.

    


    Section
      14. Waiver
      Of Trial By Jury.
      In
      recognition of the higher costs and delay which may result from a jury trial,
      the parties hereto waive any right to trial by jury of any claim, demand, action
      or cause of action (1) arising hereunder or any other instrument, document
      or
      agreement executed or delivered in connection herewith, or (2) in any way
      connected with or related or incidental to the dealings of the parties hereto
      or
      any of them with respect hereto or any other instrument, document or agreement
      executed or delivered in connection herewith, or the transactions related hereto
      or thereto, in each case whether now existing or hereafter arising, and whether
      sounding in contract or tort or otherwise; and each party hereby agrees and
      consents that any such claim, demand, action or cause of action shall be decided
      by court trial without a jury, and that any party hereto may file an original
      counterpart or a 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.

    


    Section
      15. Liability
      of Officers, Directors, Shareholders.
      Notwithstanding anything contained herein or in the other Loan Documents, or
      any
      conduct or course of conduct by the parties hereto, before or after signing
      the
      Loan Documents, this Agreement shall not be construed as creating any rights,
      claims or causes of action against any partner of Borrower or any officers,
      directors, or shareholders of Borrower.

    


    


    [Signature
      page follows.]

    



    
      
         

      

      
         

        
          

        

      

      
         

        
        

      

    



    LOAN
      AGREEMENT

    


    [SIGNATURE
      PAGE]

    


    


    IN
      WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
      as
      of the day and year first above written.

    


    


    
      	
              BORROWER:

            
	
              STRATUS
                PROPERTIES INC., 

              a
                Delaware corporation

               

               

               

              By:___/s/
                John E. Baker________________________

              Name:
                John E. Baker

              Title:
                Senior Vice President

            


    

    


    


    


    
      	
              LENDER:

            
	
              HOLLIDAY
                FENOGLIO FOWLER, L.P.,
                a Texas limited partnership, by Holliday GP Corp., a Delaware corporation,
                its General Partner

               

               

               

              By:
                ____/s/ Nancy Goodson_________

              Name:
                Nancy Goodson

              Its:
                Vice President 

               

            


    

    


    


    


    



    
      
        
           

          SIGNATURE
            PAGE TO $7,000,000 LOAN AGREEMENT

        

         

      

      
         

        
          

        

      

      
         

        
        

      

    



    SCHEDULE
      1 TO LOAN AGREEMENT

    


    CERTAIN
      DEFINITIONS

    


    


    “Accounting
      Period”
means
      each calendar quarter during the term of the Loan, commencing on July 1,
      2006.

    


    “Agreement”
means
      the Loan Agreement to which this Schedule
      1
      is
      attached to and made a part of.

    


    “Auditors”
means
      Borrower’s independent certified public accountants, which shall be of
      nationally recognized standing and otherwise reasonably acceptable to
      Lender.

    


    “Borrower”
has
      the
      meaning provided in the introductory paragraph of the Agreement.

    


    “Borrower’s
      Officer’s Compliance Certificate”
means
      a
      certificate made by a duly authorized officer of Borrower and addressed to
      Lender, in the form attached hereto as Exhibit
      B.

    


    “Business
      Day”
means
      any day excluding Saturday or Sunday and excluding any day on which national
      banking associations are closed for business.

    


    “Capital
      Improvements Expenditures”
means
      investments of Borrower and certain affiliates of Borrower in real estate and
      facilities investments, plus any municipal utility reimbursements which have
      been credited to such real estate and/or facilities investments, determined
      on a
      consolidated basis.

    


    “Cash
      and Cash Equivalents”
means
      cash and cash equivalents of Borrower and certain affiliates of Borrower,
      determined on a consolidated basis.

    


    “Cash
      Collateral Account”
means
      a
      blocked deposit account held by Lender in which funds are deposited by Borrower,
      which funds are pledged as collateral for the Loan pursuant to an agreement
      satisfactory to Lender in form and substance and in which Lender has a perfected
      first security interest.

    


    “Cash
      Collateral Factor”
means
      at any time the ratio of (1) the balance in the Cash Collateral Account to
      (2)
      the principal balance of the Loan.

    


    “Comerica
      Debt”
means
      the Indebtedness incurred by Borrower from time to time pursuant to the Comerica
      Loan Agreement.

    


    “Comerica
      Loan Agreement”
means
      that certain Loan Agreement dated as of September 30, 2005, among Borrower
      and
      certain Affiliates of Borrower and Comerica Bank-Texas.

    


    “Controlled
      Group”
means
      a
“controlled group of corporations” as defined in Section 1563(a) (4) of the
      Internal Revenue Code of 1954, as amended, determined without regard to Section
      1563(a) and (e) (3) (c) of such Code, of which Borrower is a part.

    


    “Costs”
has
      the
      meaning contained in Section 11.

    


    “Debt
      Service”
means,
      with respect to a specified period, scheduled payments of principal and interest
      with respect to the respective Indebtedness.

    


    “Debt
      Service Coverage Ratio”
means
      for any period of time the ratio of (1) the sum of the Borrower’s increase (or
      decrease) in Cash and Cash Equivalents during that period, plus Capital
      Improvements Expenditures during that period, plus Debt Service on all of
      Borrower’s Indebtedness during that period, to (2) Debt Service on all of
      Borrower’s Indebtedness.

    


    “Events
      of Default”
has
      the
      meaning contained in Section 8 of the Agreement.

    


    “GAAP”
shall
      mean generally accepted accounting principles as in effect from time to time
      in
      the United States.

    


    “Indebtedness”
of
      any
      Person means all items of indebtedness which, in accordance with GAAP, would
      be
      deemed a liability of such Person as of the date as of which indebtedness is
      to
      be determined and shall also include, without duplication, all indebtedness
      and
      liabilities of others assumed or guaranteed by such Person or in respect of
      which such Person is secondarily or contingently liable (other than by
      endorsement of instruments in the course of collection) that would otherwise
      be
      deemed to be liabilities under GAAP, whether by reason of any agreement to
      acquire such indebtedness, to supply or advance sums, or otherwise.

    


    “Lender”
has
      the
      meaning provided in the introductory paragraph of the Agreement.

    


    “Lending
      Office”
shall
      refer to Lender’s office described in Section 12.D of the
      Agreement.

    


    “Loan”
has
      the
      meaning contained in Subsection 2.A. of the Agreement.

    


    “Loan
      Documents”
means
      the Agreement, the Note, and any riders, supplements and amendments thereto,
      mortgages, security agreements, assignments, pledges, subordination agreements
      or guaranties delivered in connection with the Agreement and all other documents
      or instruments heretofore, now or hereafter executed, pursuant to the Agreement,
      or any of the aforesaid.

    


    “Material
      Adverse Effect”
means
      with respect to any event or circumstance, a material adverse effect
      on:

    


    (i) the
      ability of Borrower to perform its obligations under the Agreement, the Note,
      or
      any other Loan Document; or

    


    (ii) the
      validity, enforceability or collectibility of the Note, the Agreement or any
      other Loan Document.

    


    “Maturity
      Date”
means
      December 31, 2011.

    


    “Note”
means
      the Promissory Note dated as of the date of the Agreement made by Borrower
      to
      Lender pursuant to Subsection 2.B. of the Agreement in the form attached hereto
      as Exhibit
      A,
      together with any replacements, modifications, amendments, renewals and
      extensions thereof.

    


    “Obligations”
means
      and includes all amounts owing by Borrower to Lender under the Note and the
      other Loan Documents, together with any and all loans, advances, debts,
      liabilities, obligations, letters of credit, or acceptance transactions, trust
      receipt transactions, or any other financial accommodations, owing by Borrower
      to Lender of every kind and description (whether or not evidenced by any note
      or
      other instrument and whether or not for the payment of money), direct or
      indirect, absolute or contingent, due or to become due, now existing or arising
      hereafter with respect to the Note and the other Loan Documents, including,
      without limitation, all interest, fees, charges, expenses, attorneys’ fees, and
      accountants’ fees chargeable to Borrower and incurred by Lender in connection
      the Loan.

    


    “Permitted
      Debt”
means
      (i) the Loan and other Indebtedness to Lender or Related Lenders, (ii) the
      Comerica Debt (as of the date hereof), (iii) any other Indebtedness of Borrower
      for fair value received that is secured by assets owned by Borrower having
      an
      appraised value equal to or greater than the indebtedness secured thereby (and
      which assets do not secure other indebtedness), (iv) debt outstanding as of
      the
      date of the Loan Agreement, (v) unsecured trade, utility or non-extraordinary
      accounts payable in the ordinary course of business and other unsecured debt
      of
      Borrower at any one time not to exceed $500,000.00, and (vi) guaranties of
      Borrower guaranteeing project development and/or construction costs and related
      costs, provided that Borrower has a direct or indirect interest in such projects
      and that the aggregate amount, at any one time, of such guaranties does not
      exceed the sum of $15,000,000.00.

    


    “Person”
means
      any individual, entity, government, governmental agency or any other entity
      and
      whether acting in an individual, fiduciary or other capacity.

    


    “Plan”
means
      any employee pension benefit plan subject to Title IV of ERISA and maintained
      by
      Borrower or any member of a Controlled Group or any such plan to which Borrower
      or any member of a Controlled Group is required to contribute on behalf of
      any
      of its employees.

    


    “Property”
shall
      mean any and all right, title and interest of a specified Person in and to
      any
      and all property, whether real or personal, tangible or intangible, and wherever
      situated.

    


    “Related
      Lenders”
shall
      mean American Select Portfolio Inc., a Minnesota corporation, American Strategic
      Income Portfolio Inc.—II, a Minnesota corporation, and American Strategic Income
      Portfolio Inc.—III, a Minnesota corporation.

    


    “Secured
      Indebtedness”
means
      any Indebtedness that is subject to any security interest or lien securing
      the
      payment of money.

    


    “Statement
      Dates”
means
      the dates of the financial statements delivered to Lender pursuant to Section
      4.A(3) of the Agreement.

    


    “Subsidiary”
means
      (i) any entity of which more than fifty percent (50%) of the outstanding having
      ordinary voting power (irrespective of whether or not at the time class or
      classes of shall have or might have voting power by reason of the happening
      of
      any contingency) is at the time directly or indirectly owned by Borrower and/or
      any Subsidiary, (ii) any limited liability company or similar entity of which
      more than fifty percent (50%) of the member interests of such limited liability
      company are directly or indirectly owned by Borrower and/or any Subsidiary,
      and
      (iii) any partnership of which more than fifty percent (50%) of the limited
      partner interests of such limited partnership or any of the general partner
      interests of such limited partnership are directly or indirectly owned by
      Borrower and/or any Subsidiary.

    



    
      
         

      

      
         

        
          

        

      

      
         

        
        

      

    



    EXHIBIT
      A
      TO LOAN AGREEMENT

    


    FORM
      OF NOTE

    


    


    


    



    
      
         

      

      
         

        
          

        

      

      
         

        
        

      

    



    EXHIBIT
      B
      TO LOAN AGREEMENT

    


    FORM
      OF BORROWER’S OFFICER’S COMPLIANCE CERTIFICATE

    


    Stratus
      Properties Inc.

    98
      San
      Jacinto Boulevard, Suite 220

    Austin,
      TX 78791

    


    


    [DATE]

    


    Holliday
      Fenoglio Fowler, L.P.

    c/o
      FAF
      Advisors, Inc.

    800
      Nicollet Mall, Suite 500

    BC-MN-H05W

    Minneapolis,
      MN 55402

    Attention:
      John G. Wenker

    


    


    
      	
              Re

            	
              Loan
                Agreement dated as of December 12, 2006 between Stratus Properties
                Inc.
                (“Borrower”)
                and Holliday
                Fenoglio Fowler, L.P.
                (“Lender”)
                (the “Loan
                Agreement”)
                (capitalized terms not defined herein have the respective meanings
                contained in the Loan Agreement)

            


    

    


    Ladies
      and Gentlemen:

    


    Pursuant
      to subsection 6.A(2) of the Loan Agreement, Borrower certifies to Lender as
      follows:

    


    1. As
      of the
      date of this Certificate, no act or omission has occurred which has resulted
      in
      an Event or Default or, if not cured, remedied, waived or otherwise eliminated
      to the satisfaction of Lender, would result in an Event of Default.

    


    2. The
      undersigned officer is authorized to make this Certificate on behalf of Borrower
      and has reviewed the terms of the Loan Agreement and has made, or caused to
      be
      made under such officer’s supervision, a review in reasonable detail of the
      facts necessary to make the certifications contained herein.

    


    
      	 
	
              STRATUS
                PROPERTIES INC., 

              a
                Delaware corporation

               

               

               

              By:__/s/
                John E. Baker_______

              Name:
                John E. Baker

              Title:
                Senior Vice President