ex10-4.htm


    
      
        

      
Exhibit 10.4

     

     

    CONSTRUCTION
LOAN AGREEMENT

     

    MADE
BY AND BETWEEN

     

    CJUF
II STRATUS BLOCK 21 LLC

    c/o

    Stratus
Properties, Inc.

     

    98
San Jacinto, Suite 200

     

    Austin,
Texas 78701

     

    AND

     

    CORUS BANK, N.A., as
Lender

     

    3959
North Lincoln Avenue

     

    Chicago,
Illinois 60613

     

    Dated
as of May 2, 2008

    


    
      
        
           


        

        
           


          
            

          

        

        
           


          
            


             

            Table of Contents


            Page 

             

          

        

      

    

     

    
      
        	
                Article 1
      INCORPORATION OF RECITALS AND EXHIBITS

              	
                2

              
	
                1.1           Incorporation
      of Recitals

              	
                2

              
	
                1.2           Incorporation
      of Exhibits

              	
                2

              
	
                Article 2
      DEFINITIONS

              	
                2

              
	
                2.1           Defined
      Terms

              	
                2

              
	
                2.2           Other
      Definitional Provisions

              	
                14

              
	
                Article 3
      BORROWER’S REPRESENTATIONS AND WARRANTIES

              	
                14

              
	
                3.1           Representations
      and Warranties

              	
                14

              
	
                3.2           Survival
      of Representations and Warranties

              	
                19

              
	
                Article 4
      LOAN AND LOAN DOCUMENTS

              	
                19

              
	
                4.1           Agreement
      to Borrow and Lend; Lender’s Obligation to Disburse; Excess
      Disbursements

              	
                19

              
	
                4.2           Loan
      Documents

              	
                21

              
	
                4.3           Term
      of the Loan

              	
                21

              
	
                4.4           Prepayments

              	
                23

              
	
                4.5           Required
      Principal Payments

              	
                23

              
	
                4.6           Receipt
      of Payments

              	
                23

              
	
                4.7           Termination
      of Lender’s Unfunded Commitment

              	
                23

              
	
                4.8           Lender
      Default

              	
                24

              
	
                Article
      5
      INTEREST

              	
                24

              
	
                5.1           Interest
      Rate

              	
                24

              
	
                Article 6
      COSTS OF MAINTAINING LOAN

              	
                24

              
	
                6.1           Increased
      Costs and Capital Adequacy

              	
                24

              
	
                6.2           Borrower
      Withholding

              	
                25

              
	
                Article 7
      LOAN EXPENSE AND ADVANCES

              	
                25

              
	
                7.1           Loan
      and Administration Expenses

              	
                25

              
	
                7.2           Loan
      Fee

              	
                26

              
	
                7.3           Draw
      Fees

              	
                26

              
	
                7.4           Exit
      Fee

              	
                26

              
	
                7.5           Lender’s
      Attorneys’ Fees and Disbursements

              	
                27

              
	
                7.6           Time
      of Payment of Fees and Expenses

              	
                27

              
	
                7.7           Expenses
      and Advances Secured by Loan Documents

              	
                27

              
	
                7.8           Right
      of Lender to Make Advances to Cure Borrower’s Defaults

              	
                28

              
	
                Article 8
      NON-CONSTRUCTION REQUIREMENTS PRECEDENT

              	
                28

              
	
                8.1           Non-Construction
      Conditions Precedent

              	
                28

              
	
                Article 9
      CONSTRUCTION REQUIREMENTS PRECEDENT

              	
                33

              
	
                9.1           Construction
      Documents Required as of Closing

              	
                33

              
	
                9.2           Construction
      Deliveries Required as of Full Loan Opening.

              	
                35

              
	
                Article 10
      BUDGET, CONTINGENCY FUND AND CHANGE ORDERS

              	
                37

              
	
                10.1           Budget

              	
                37

              
	
                10.2           Budget
      Line Items

              	
                38

              
	 
      	 
      


      

    

     

    
      
        
           


        

        
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                10.3           Contingency
      Fund

              	
                39

              
	
                10.4           Optional
      Method for Payment of Interest

              	
                40

              
	
                10.5           Change
      Orders

              	
                40

              
	
                Article 11
      SUFFICIENCY OF LOAN

              	
                41

              
	
                11.1           Loan
      In Balance

              	
                41

              
	
                11.2           Additional
      Equity Investment

              	
                43

              
	
                Article 12
      CONSTRUCTION PAYOUT REQUIREMENTS

              	
                43

              
	
                12.1           Applicability
      of Sections

              	
                43

              
	
                12.2           Monthly
      Payouts

              	
                43

              
	
                12.3           Documents
      to be Furnished for Each Disbursement

              	
                44

              
	
                12.4           Retainages

              	
                45

              
	
                12.5           Disbursements
      for Materials Stored On-Site

              	
                46

              
	
                12.6           Disbursements
      for Off-site Materials

              	
                46

              
	
                12.7           Specific
      Limitation on Disbursements

              	
                46

              
	
                12.8           Disbursements
      Related to Commercial Space Leases

              	
                47

              
	
                12.9           Delivery
      of Subcontracts

              	
                47

              
	
                Article 13
      FINAL DISBURSEMENT FOR CONSTRUCTION

              	
                48

              
	
                13.1           Final
      Disbursement for Construction

              	
                48

              
	
                Article 14
      SALE OF RESIDENTIAL UNITS OR OTHER PORTIONS OF THE PROJECT

              	
                49

              
	
                14.1           Price
      List Schedule

              	
                49

              
	
                14.2           Sales
      Agreements

              	
                49

              
	
                14.3           Purchaser
      Deposits

              	
                50

              
	
                14.4           Residential
      Unit Sales

              	
                51

              
	
                14.5           Sales
      Operations and Seller’s Obligations

              	
                53

              
	
                14.6           Delivery
      of Sales Information and Documents

              	
                53

              
	
                14.7           Borrower’s
      Acknowledgment Regarding Buyer Financing

              	
                54

              
	
                14.8           Condominium
      Regime

              	
                54

              
	
                14.9           Release
      of Residential Units

              	
                55

              
	
                14.10         Application
      of Sales Proceeds

              	
                57

              
	
                Article 15
      OTHER COVENANTS

              	
                58

              
	
                15.1           Borrower
      further covenants and agrees as follows:

              	
                58

              
	
                15.2           Single
      Purpose Entity Covenants

              	
                68

              
	
                15.3           Authorized
      Representative

              	
                70

              
	
                Article 16
      CASUALTIES AND CONDEMNATION

              	
                70

              
	
                16.1           Lender’s
      Election to Apply Proceeds on Indebtedness

              	
                70

              
	
                16.2           Borrower’s
      Obligation to Rebuild and Use of Proceeds Therefor

              	
                71

              
	
                Article 17
      ASSIGNMENTS BY LENDER AND BORROWER

              	
                72

              
	
                17.1           Assignments
      and Participations

              	
                72

              
	
                17.2           Prohibition
      of Assignments and Transfers by Borrower

              	
                72

              
	
                17.3           Prohibition
      of Transfers in Violation of ERISA

              	
                72

              
	
                17.4           Successors
      and Assigns

              	
                73

              


      





    
      
        
           


        

        
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                Article 18
      TIME OF THE ESSENCE

              	
                73

              
	
                18.1           Time
      is of the Essence

              	
                73

              
	
                Article 19
      EVENTS OF DEFAULT

              	
                73

              
	
                19.1           Events
      of Default

              	
                73

              
	
                Article 20
      LENDER’S REMEDIES IN EVENT OF DEFAULT

              	
                76

              
	
                20.1           Remedies
      Conferred Upon Lender

              	
                76

              
	
                Article 21
      GENERAL PROVISIONS

              	
                77

              
	
                21.1           Captions

              	
                77

              
	
                21.2           Modification;
      Waiver

              	
                77

              
	
                21.3           Governing
      Law

              	
                78

              
	
                21.4           Acquiescence
      Not to Constitute Waiver of Lender’s Requirements

              	
                78

              
	
                21.5           Disclaimer
      by Lender

              	
                78

              
	
                21.6           Partial
      Invalidity; Severability

              	
                79

              
	
                21.7           Definitions
      Include Amendments

              	
                79

              
	
                21.8           Execution
      in Counterparts

              	
                79

              
	
                21.9           Entire
      Agreement

              	
                79

              
	
                21.10         Waiver
      of Damages

              	
                79

              
	
                21.11         Claims
      Against Lender

              	
                79

              
	
                21.12          Jurisdiction

              	
                80

              
	
                21.13          Set-Offs

              	
                80

              
	
                21.14          Binding
      Effect

              	
                81

              
	
                21.15          Waiver
      of Accord and Satisfaction

              	
                81

              
	
                Article
      22
      NOTICES

              	
                81

              
	
                Article 23
      WAIVER OF JURY TRIAL

              	
                83

              
	
                Illinois Collateral
      Protection Act Notice

              	
                viii

              
	 
      	 
      


      

    

     

    
      EXHIBITS
TO LOAN AGREEMENT

    


    Exhibit
A                                Legal
Description of Land

    Exhibit
B                                Permitted
Exceptions

    Exhibit
C                                Title
Requirements

    Exhibit
D                                Form
of Survey Certification

    Exhibit
E                                Insurance
Requirements

    Exhibit
F                                Architect’s
Certificate

    Exhibit
G                                Initial
Budget

    Exhibit
H                                Draw
Request Forms

    Exhibit
I                                Partial
Plans and Specifications

    Exhibit
J                                Proposed
Finish Standards

    Exhibit
K                                Bailment
Letter (Warehousemen)

    Exhibit
L                                Bailment
Letter (Other Than Warehousemen)

    Exhibit
M                                List
of Sales Agreements and Price List Schedule

    Exhibit
N                                Subcontract
Delivery Deadline Dates

    Exhibit
O                                Approved
Form of Sales Agreement

    


    
      
        
           


        

        
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    Exhibit
P                                Materials
Purchases Not Subject to Retainage

    Exhibit
Q                                Allowable
Tenant Improvements

    Exhibit
R                                Delivery
Schedule for Plans and Specifications

    Exhibit
S                                Form
of Second Estoppel and Agreement from City of Austin

    


    
      
        
           


        

        
          iv

          
            

          

        

        
           


        

      

    

     

     

    CONSTRUCTION
LOAN AGREEMENT

     

    Project
Commonly Known as

     

    “W Hotel
and Residences”

     

    Block 21,
Austin, Texas

     

    THIS
CONSTRUCTION LOAN AGREEMENT (“Agreement”) is made
as of May 2, 2008, by and between CJUF II STRATUS BLOCK 21 LLC, a Delaware
limited liability company (“Borrower”), and
CORUS BANK,
N.A., a national banking association, its successors and assigns (“Lender”).

     

    W I T N E S S E T
H:

     

    RECITALS

     

    A.           Borrower
is the owner in fee simple of an approximately 76,176 square foot parcel of land
commonly known as “Block 21,” bounded by Second, Third, Guadalupe and Lavaca
Streets, City of Austin, County of Travis, State of Texas, and legally described
in Exhibit A
attached hereto (the “Land”).  Borrower
proposes to construct on the Land a mixed use project to be known as the “W
Hotel and Residences,” consisting of a building of thirty-six (36) stories (the
“Building”) and
other facilities containing:  (i) one hundred ninety-eight (198)
residential condominium units (each, a “Residential Unit”) on
twenty (20) floors, from floor 18 through floor 37 of the Building, containing
at least 272,272 Saleable Square Feet (with each capitalized term used and not
defined in these Recitals being defined hereinbelow) of interior space and with
interior finished ceiling heights of at least ten (10) feet (outside of areas
containing mechanical runs),  (ii) a “W” flagged hotel with two
hundred fifty-two (252) guest rooms, situated on ten (10) floors, from floor 6
through floor 16 of the Building, to be furnished and managed pursuant to the
Hotel Operating Agreement (as hereinafter defined), and containing at least
100,408 square feet of interior room space and 88,212 square feet of hotel
operating space, collectively with, on floor 2 through floor 4 of the Building,
9,583 square feet of meeting space, a 8,060 square foot fitness facility, a
9,935 square foot pool and pool deck, and a business center (collectively, the
“Hotel”), (iii)
on floor 1 through floor 3 of the Building, 18,341 net rentable square feet of
retail space (the “Retail Space”) and
37,382 net Rentable Square Feet of office space (the “Office Space”), (iv)
a live performance venue, on the top three (3) floors of an attached 4-story
structure, containing at least 50,336 square feet and a minimum capacity of
2,480 people, with seating for approximately 2,160 people (the “Venue”), (v) 10,995
square feet of storage space, and (vi) a three (3)-level subterranean parking
garage (the “Parking
Garage”), with a direct connection to elevators servicing the Residential
Units, and containing parking spaces for at least 480 automobiles (each, a
“Parking
Space”), of which, 306 Parking Spaces shall be allocated for the
Residential Units, and 116 Parking Spaces shall be allocated, collectively, for
the Hotel, the Commercial Space, and the Venue.  The Residential Units
shall have a la carte access to the Hotel amenities on a pay-by-use basis, as
provided in the Hotel Operating Agreement.

     

    B.           Borrower
has applied to Lender for a loan in the aggregate amount of up to One Hundred
Sixty-Five Million Dollars ($165,000,000) to fund construction, development and marketing costs of
the Project, and Lender is willing to make the Loan on the terms and conditions
hereinafter set forth.

     

    


    
      
        
           


        

        
           


          
            

          

        

        
           


        

      

    

    


    NOW,
THEREFORE, in consideration of the mutual covenants and agreements herein
contained, the parties hereto agree as follows:

     

     

    Article
1

     

     

    INCORPORATION
OF RECITALS AND EXHIBITS

     

    1.1 Incorporation
of Recitals.

     

    The
foregoing preambles and all other recitals set forth herein are made a part
hereof by this reference.

     

    1.2 Incorporation
of Exhibits.

     

    Exhibits A through
S to this
Agreement, attached hereto, are incorporated in this Agreement and expressly
made a part hereof by this reference.

     

     

    Article
2

     

     

    DEFINITIONS

     

    2.1 Defined
Terms.

     

    The
following terms as used herein shall have the following meanings:

     

    Additional Equity
Investment:  As such term is defined in Section
11.2.

     

    Affiliate:  With
respect to a specified person or entity, any individual, partnership,
corporation, limited liability company, trust, unincorporated organization,
association or other entity that, directly or indirectly, through one or more
intermediaries, controls or is controlled by or is under common control with
such person or entity, including, without limitation, any general or limited
partnership in which such person or entity is a partner.

     

    Agreement:  This
Construction Loan Agreement.

     

    Allowable Tenant
Improvements:  As such term defined in Section
12.8.

     

    Appraisal:  An
MAI certified appraisal of the Project performed in accordance with FIRREA and
Lender’s appraisal requirements by an appraiser selected and retained by
Lender.

     

    Approved Finish
Standards:  As such term is defined in Section
9.2(f).

     

    Approved
Lease:  As such term is defined in Section
15.1(m).

     

    Approved Plans and
Specifications:  As such term is defined in Section
9.2(e).

     

    Architect:  BOKA
Powell, L.L.C.

     

    Architect’s
Certificate:  A certificate in the form of Exhibit F
attached hereto executed by the Architect in favor of Lender.

     

    


    
      
        
           


        

        
          2

          
            

          

        

        
           


        

      

    

    


    Authorized
Representative:  William H. Armstrong, an individual, or such
other individual that is designated in accordance with Section 15.3 of this
Agreement.

     

    Available Sources of
Funds:  As such term is defined in Section
11.1(c).

     

    Bankruptcy
Code:  Title 11 of the United States Code entitled
“Bankruptcy” as now or hereafter in effect, or any successor thereto or any
other present or future bankruptcy or insolvency statute.

     

    Bonds:  As
such term is defined in Section
9.1(d).

     

    Borrower:  As
such term is defined in the opening paragraph of this Agreement.

     

    Budget:  The
budget for the Project specifying all costs and expenses of every kind and
nature whatsoever to be incurred by Borrower in connection with the Project
prior to the Maturity Date, as approved by Lender as set forth in Section 10.1.

     

    Budget Line
Item:  As such term is defined in Section 10.2.

     

    Building:  As
such term is defined in Recital A.

     

    Business
Day:  Any Monday through Friday, excluding days on which Lender
is closed for business.

     

    Change
Order:  Shall mean any of the following: (i) a request for
changes in the Approved Plans and Specifications (other than minor field changes
involving no extra cost) or for a change to the General Contract Price, (ii) an
amendment to the General Contract, (iii) a construction change directive or (iv)
a written order for a minor change in the work issued by the
architect.

     

    CJUF:  Canyon-Johnson
Urban Fund II L.P., a Delaware limited partnership.

     

    Closing: The date of
the Closing Funding.

     

    Closing Funding: The
first disbursement of Loan proceeds in an amount of $2,000,000, which shall be
advanced on or about the date hereof.

     

    Collateral Assignment of
Hotel Documents:  That certain Assignment of Hotel Documents
collaterally assigning Borrower’s interests in the Hotel Documents (and related
documents) to Lender.

     

    Commercial
Space:  Together, the Office Space and the Retail
Space.

     

    Commitment:  Lender’s
maximum aggregate funding obligation hereunder of up to One Hundred Sixty-Five
Million Dollars ($165,000,000), less any reduction thereof in accordance with
the terms of this Agreement.

     

    Completion
Date:  With respect to the Residential Units, July 25, 2011;
with respect to the Hotel, January 7, 2011; with respect to the Venue May 25,
2011; with respect to the

     

    


    
      
        
           


        

        
          3

          
            

          

        

        
           


        

      

    

    


    Commercial
Space, January 7, 2011; and with respect to the entire Project, the Initial
Maturity Date.

     

    Completion and Carveout
Guaranty:  A guaranty of performance and completion, executed
by Guarantor and pursuant to which Guarantor guarantees the lien-free and timely
completion of the Project in accordance with all provisions of this Agreement
and Borrower’s obligation to keep the Loan In Balance and to pay for all cost
overruns, subject to the limits stated therein, and guarantees specified
non-recourse carve-out obligations.

     

    Condominium
Documents:  As such term is defined in Section
8.1(s).

     

    Condominium Marketing
License Agreement:  That certain Condominium Marketing License
Agreement dated as of October 26, 2006 by and between Stratus Block 21
Investments, L.P. (predecessor in interest to Borrower), and Starwood Hotels
& Resorts Worldwide, Inc.

     

    Construction or
construction:  The construction and equipping of the
Improvements in accordance with the Approved Plans and Specifications, and
related improvements required to be performed by Borrower under Sales Agreements
(including all off-site improvements reasonably required for use and operation
of the Improvements) and the installation of all personal property, fixtures and
equipment required for the operation of the Project or required under Sales
Agreements.

     

    Construction
Disbursement:  As such term is defined in Section
7.3.

     

    Construction
Schedule:  A schedule reasonably satisfactory to Lender,
establishing a timetable for completion of the Construction, showing, on a
monthly basis, the anticipated progress of the Construction, and showing that
the Improvements can be completed on or before the Completion Date and that the
Residential Units will be delivered prior to any outside dates, if any, provided
for in the Sales Agreements.

     

    Contingency
Fund:  As such term is defined in Section
10.3.

     

    Contractor’s
Contingency:  As such term is defined in Section
10.3.

     

    Control:  As
such term is used with respect to any person or entity, including the
correlative meanings of the terms “controlled by” and “under common control
with,” shall mean the possession, directly or indirectly, of the power to direct
or cause the direction of the management policies of such person or entity,
whether through the ownership of voting securities, by contract or
otherwise.

     

    Declaration of
Condominium:  The Master Condominium Declaration and the
Residential Condominium Declaration, individually or collectively, as the
context shall infer.

     

    Deed of
Trust:  A construction deed of trust, assignment of rents,
security agreement and fixture filing executed by Borrower for the benefit of
Lender securing this Agreement, the Note, and all obligations of Borrower in
connection with the Loan, granting a first priority lien on Borrower’s fee
interest in the Project, subject only to the Permitted Exceptions.

     

    


    
      
        
           


        

        
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    Default or
default:  Any event, circumstance or condition, which, if it
were to continue uncured, would, with notice or lapse of time or both,
constitute an Event of Default hereunder.

     

    Default
Rate:  As such term is defined in the Note.

     

    Deficiency
Deposit:  As such term is defined in Section
11.1(b).

     

    Deposits:  The
Earnest Money Deposits and the Upgrade Deposits.

     

    Design
Professionals:  As such term is defined in Section
9.1(a).

     

    Earnest Money
Deposits:  As such term is defined in Section 14.3
(a).

     

    Environmental
Indemnity:  An environmental indemnity from Borrower and
Guarantor, jointly and severally, indemnifying Lender with regard to all matters
related to Hazardous Material and other environmental matters.

     

    Environmental
Proceedings:  Any environmental proceedings, whether civil
(including actions by private parties), criminal, or administrative proceedings,
relating to the Project.

     

    Environmental
Report:  An environmental report prepared at Borrower’s expense
by a qualified environmental consultant approved by Lender in its sole
discretion addressed to Lender (or subject to separate letter agreement
permitting Lender to rely on such environmental report), which complies with the
USEPA “all appropriate inquiry” rule contained in 40 CRF Part 312.

     

    Equity
Investment:  As such term is defined in Section
11.2.

     

    ERISA:  The
Employee Retirement Income Security Act of 1974, as amended, and the regulations
promulgated thereunder from time to time.

     

    Escrow
Agent:  As such term is defined in Section
14.3(a).

     

    Escrow
Agreement:  As such term is defined in Section
8.1(v).

     

    Event of
Default:  As such term is defined in Article 19.

     

    Excess Parking
Spaces: As such term is defined in Section
14.1.

     

    Exit
Fee:  As such term is defined in Section
7.4.

     

    Extended Maturity
Date:  The date that is forty-six (46) months after the date of
this Agreement, as the Initial Maturity Date may be extended by Borrower subject
to the conditions contained in Section
4.3.

     

    Extension
Fee:  As such term is defined in Section
4.3(b)(iii).

     

    Extension
Option:  As such term is defined in Section
4.3(a).

     

    


    
      
        
           


        

        
          5

          
            

          

        

        
           


        

      

    

    


    FIRREA:  The
Financial Institutions Reform, Recovery and Enforcement Act of 1989, as amended
from time to time.

     

    Full Loan Opening
Date:  The date of Full Loan Opening.

     

    Full Loan Opening or Full
Opening of the Loan:  The second disbursement of Loan proceeds,
being the first disbursement of Loan proceeds other than the Closing
Funding.

     

    General
Contract:  As such term is defined in Section
9.1(a).

     

    General Contract
Price:  As such term is defined in Section
9.1(a).

     

    General
Contractor:  Austin Building Company.

     

    Governmental
Approvals:  Collectively, all consents, licenses, and permits
and all other authorizations or approvals required from any Governmental
Authority for the Construction in accordance with the Approved Plans and
Specifications or the sale of the Residential Units.

     

    Governmental
Authority:  Any federal, state, county or municipal government,
or political subdivision thereof, any governmental or quasi-governmental agency,
authority, board, bureau, commission, department, instrumentality, or public
body, or any court, administrative tribunal, or public utility.

     

    Guarantor:  Stratus
Properties, Inc., a Delaware corporation.

     

    Guarantor Financial
Covenants: The covenants of Guarantor set forth in Section 16 of the
Limited Payment Guaranty.

     

    Hard
Costs:  Any and all costs related to or incurred in connection
with the construction of the Project, including, without limitation, the cost of
all labor, materials and equipment, but excluding any fees for architectural and
engineering services, marketing fees, financing costs, developers’ fees and
other similar soft fees and costs.  The Hard Costs include the items
delineated as such on the Budget.

     

    Hazardous
Material:  Means and includes gasoline, petroleum, asbestos
containing materials, explosives, radioactive materials or any hazardous or
toxic material, substance or waste which is defined by those or similar terms or
is regulated as such under any Law of any Governmental Authority having
jurisdiction over the Project or any portion thereof or its use, including: (i)
any “hazardous substance” defined as such in (or for purposes of) the
Compre­hensive Environmental Response, Compensation and Liability Act, 42
U.S.C.A. § 9601(14) as may be amended from time to time, or any so-called
“superfund” or “superlien” Law, including the judicial interpretation thereof;
(ii) any “pollutant or contaminant” as defined in 42 U.S.C.A. § 9601(33); (iii)
any material now defined as “hazardous waste” pursuant to 40 C.F.R. Part 260;
(iv) any petroleum, including crude oil or any fraction thereof; (v) natural
gas, natural gas liquids, liquefied natural gas, or synthetic gas usable for
fuel; (vi) any “hazardous chemical” as defined pursuant to 29 C.F.R. Part 1910;
(vii) any mold or fungus that may cause an allergic, toxic or inflammatory
response in humans arising from exposure to such mold or fungus in indoor air;
and (viii) any other toxic substance or contaminant that is subject to any other
Law or

     

    


    
      
        
           


        

        
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    other
past or present requirement of any Governmental Authority.  Any
reference above to a Law, includes the same as it may be amended from time to
time, including the judicial interpretation thereof.

     

    Hotel:  As
such term is defined in Recital
A.

     

    Hotel Documents: The
Condominium Marketing License Agreement, the Hotel Operating Agreement, and/or
the Technical Services Agreement, individually or collectively, as the context
may infer.

     

    Hotel
Operator:  W Hotel Management, Inc., a Delaware corporation, an
Affiliate of Starwood Hotel & Resorts Worldwide, Inc.,

     

    Hotel Operating
Agreement:  That certain W Austin Hotel Operating Agreement by
and between Stratus Block 21 Investments, L.P., and Starwood Hotel & Resorts
Worldwide, Inc., dated as of October 26, 2006, as amended by First
Amendment to Operating Agreement dated January 30, 2008, as such agreement was
assigned by Stratus Block 21 Investments, L.P. to Borrower by virtue of that
certain Assignment and Assumption Agreement dated as of July 30, 2007; and as
such agreement was assigned by Starwood Hotel & Resorts Worldwide, Inc. to
Hotel Operator by virtue of that certain Assignment and Assumption Agreement
dated as of July 30, 2007.

     

    HUD:  United
States Department of Housing and Urban Development.

     

    ILSA:  The
Interstate Land Sales Full Disclosure Act, 42 USC 1701 et. seq., as
amended.

     

    Improvements:  All
of the improvements referred to in Recital A hereto and
more particularly described in the Approved Plans and Specifications and any
offsite improvements reasonably required to be constructed by Borrower for the
use or operation of the improvements described in Recital
A.

     

    In Balance or in
balance:  As such term is defined in Article 11.

     

    Including or
including:  Means “including, but not limited to”.

     

    Indemnified
Party:  As such term is defined in Section
15.1(t).

     

    Initial Equity
Investment:  As such term is defined in Section
8.1(a).

     

    Initial Maturity
Date:  The date that is forty (40) months from the date of this
Agreement.

     

    Insurance
Policy:  As such term is defined in Section
8.1(e).

     

    Interest
Rate:  As such term is defined in the Note.

     

    Interest Reserve Budget Line
Item:  As such term is defined in Section
10.4.

     

    Internal Revenue
Code:  The Internal Revenue Code of 1986, as amended from time
to time.

     

    


    
      
        
           


        

        
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    Land:  As
such term is defined in Recital A.

     

    Laws:  Collectively,
all federal, state and local laws, statutes, codes, ordinances, orders, rules
and regulations, including judicial opinions or precedential authority in the
applicable jurisdiction.

     

    Leases:  The
collective reference to all leases, subleases and occupancy agreements affecting
the Project or any part thereof now existing or hereafter executed and all
amendments, modifications or supplements thereto approved in writing by
Lender.

     

    Lender:  As
such term is defined in the opening paragraph of this Agreement and including
any successor holder of the Loan from time to time.

     

    Lender’s
Consultant:  An independent consulting architect, inspector,
and/or engineer designated by Lender in Lender’s sole discretion.

     

    Lender’s Estimate of
Remaining Costs:  As such term is defined in Section
11.1(d).

     

    Lender’s Remaining
Exposure:  The sum, at any date, of the outstanding principal
balance of the Loan and the Unfunded Commitment.

     

    Limited Payment
Guaranty:  A guaranty of payment, executed by Guarantor and
pursuant to which Guarantor guarantees the repayment of the Loan, in an amount
up to $20,000,000 of the principal amount of the Loan, plus accrued interest
thereon (including default interest, if any), and the cost of the enforcement of
such guaranty, all in accordance with the terms and provisions more particularly
described therein.

     

    List
Price:  As such term is defined in Section
14.1.

     

    Loan:  As
such term is defined in Recital
B.

     

    Loan
Documents:  The collective reference to this Agreement, the
documents and instruments listed in Section 4.2, and all
the other documents and instruments entered into from time to time, evidencing
or securing the Loan or any obligation of payment thereof or per­formance of
Borrower’s or Guarantor’s obligations in connection with the transaction
con­templated hereunder, each as amended.

     

    Loan
Term:  The period of time commencing on the date of this
Agreement through and including the date the Loan is repaid in
full.

     

    Master Condominium
Declaration:  That certain Declaration of Condominium Regime
for Block 21 Master Condominiums to be recorded against the Project upon
completion thereof, which will subdivide the Project into thirteen (13) “Master
Units.”

     

    Material Adverse Change or
material adverse change:  If, in Lender’s sole and reasonable
discre­tion, the operations or financial condition of a person, entity, or
property has changed in a manner likely to impair materially the value of
Lender’s security for the Loan, prevent timely

     

    


    
      
        
           


        

        
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    repayment
of the Loan, or otherwise prevent the applicable person or entity from timely
performing any of its material obligations under the Loan
Documents.

     

    Maturity
Date:  As such term is defined in Section
4.3.

     

    Mezzanine
Borrower:  One or more constituent entities of Borrower, as
agreed to between Borrower and Mezzanine Lender.

     

    Mezzanine
Lender:  A institutional lender experienced in condominium
development selected by Borrower and approved in writing by Lender in its
reasonable discretion.

     

    Mezzanine
Loan:  A loan from a Mezzanine Lender to Mezzanine Borrower in
an aggregate principal amount such that the Qualifying Portion thereof is equal
to or greater than Twenty Million Dollars ($20,000,000), but no greater than
Fifty Million Dollars ($50,000,000), maturing on a date no earlier than the
Maturity Date, and secured by pledges of the membership interests in
Borrower.

     

    Mezzanine Loan
Documents:  The collective reference to the documents and
instruments entered into from time to time, evidencing or securing the Mezzanine
Loan or any obligation of payment thereof or per­formance of Mezzanine
Borrower’s or Guarantor’s obligations in connection with the transaction
con­templated thereunder, each as amended.

     

    Mezzanine Loan Intercreditor
Agreement.  A subordination and intercreditor agreement by and
between Lender and Mezzanine Lender, prepared by counsel to Lender, in form and
substance acceptable to Lender in its reasonable discretion, which provides,
without limitation, that (i) the Mezzanine Loan is fully subordinate in right of
payment and priority of lien to the Loan; (ii) Mezzanine Lender has no interest
in any collateral which is unrelated to the Project and shall not accept any
payments of the Mezzanine Loan until Lender is indefeasibly paid in full and
Lender has released its Deed of Trust, except interest payments to be funded
solely from the Mezzanine Loan interest reserve, if any; (iii) Mezzanine Lender
shall not interfere in any manner with the enforcement of Lender’s remedies;
(iv) Mezzanine Lender shall not enforce any remedies with respect to its
collateral or any other collateral (or against Guarantor), except that Mezzanine
Lender may foreclose on the pledges of ownership interest in Borrower, provided
that (A) any monetary default under the Loan (including any payment due to make
the Loan In Balance) is cured by Mezzanine Lender, and (B) Mezzanine Lender
delivers to Lender a replacement guaranty substantially similar to the
Completion and Carveout Guaranty, and (v) provided that Lender consents to such
price reduction in its sole discretion, Mezzanine Lender shall permit Borrower
to enter into contracts and thereafter close on any Residential Unit provided
that the gross purchase price (exclusive of Upgrades) is greater than or equal
to 80% of the List Price for such Residential Unit as specified on the approved
Price List Schedule attached hereto as Exhibit M; (vi) Mezzanine Lender
shall be authorized (but not required) by the terms of the Mezzanine Loan to
make protective advances with respect to the Project and the Loan; (vii) a
default under the Loan shall be a default under the Mezzanine Loan; and (viii)
Mezzanine Lender shall not be permitted to (A) sell, transfer, or otherwise
assign its interest in the Mezzanine Loan, (B) sell or otherwise offer any
participations in the Mezzanine Loan, except at par to a Qualified Transferee,
or (C) cause or permit the sale, assignment or other transfer of any of the
ownership interests in a Mezzanine Lender which is a single purpose entity; in
each case,

     

    


    
      
        
           


        

        
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    without
the express prior written approval of Lender.  Notwithstanding the
foregoing, Lender shall permit the transfer of an economic interest of less than
fifty percent (50%) in the Mezzanine Loan to a Qualified Transferee, provided
(x) the identity, ownership, and financial profile of such Qualified Transferee
is disclosed to Lender prior to such transfer, (y) the Loan is In Balance, and
(z) there is no Default or Event of Default.

     

    Net Operating
Income:  For the applicable month, the gross income from the
Project less a prorated management fee (not to exceed 4% of annual gross
revenues), customary monthly operating expenses, and reasonable prorated tax and
insurance reserves; provided, however, for the Hotel, Net Operating Income shall
be deemed the amount distributable by Hotel Operator to Borrower pursuant to the
Hotel Operating Agreement.

     

    Net Sales
Proceeds:  The gross sales price paid by any Residential Unit
Purchaser for its respective Residential Unit (exclusive of Residential Unit
customization items paid for from Upgrade Deposits, but inclusive of all Upgrade
Profits and inclusive of all fees and other amounts paid by Residential Unit
Purchasers in excess of the purchase price) minus brokerage commissions, title
costs, legal fees and other customary closing costs associated with the sale of
such Residential Unit that are paid or incurred by Borrower, provided that in
calculating Net Sales Proceeds closing costs shall be excluded from this clause
to the extent funded from the Loan (rather than being paid from gross sales
proceeds).

     

    Non-Disturbance
Agreement:  That certain subordination, non-disturbance and
attornment agreement by and among Hotel Operator, Lender and
Borrower.

     

    Note:  A
promissory note in the amount of One Hundred Sixty-Five Million Dollars
($165,000,000), executed by Borrower and payable to the order of Lender,
evidencing the Loan.

     

    OFAC:  As
such term is defined in Section
3.1(x).

     

    Office
Space:  As such term is defined in Recital
A.

     

    Owner’s Hard Cost
Contingency:  As such term is defined in Section
10.3.

     

    Parking
Garage:  As such term is defined in Recital
A.

     

    Parking
Space:  As such term is defined in Recital
A.

     

    Partial Plans and
Specifications:  Those certain partially completed Plans and
Specifications set forth on Exhibit I
hereto.

     

    Partial Proposed Finish
Standards:  Those certain partially completed Proposed Finish
Standards set forth on Exhibit J
hereto.

     

    Permitted Affiliate
Expenses:  As such term is defined in Section
12.7.

     

    Permitted
Exceptions:  Those matters listed on Exhibit B
attached hereto, to which title to the Project may be subject at the Closing,
and thereafter such other title exceptions as are acceptable to Lender in its
sole discretion and approved by Lender in writing.

     

    


    
      
        
           


        

        
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    Person:  Any
natural person, partnership, limited liability company, corporation, trust,
Governmental Authority or other entity.

     

    Plans and
Specifications:  As such term is defined in Section
9.2(e).

     

    Pre-sale
Requirement:  As such term is defined in Section
8.1(u).

     

    Price List
Schedule:  As such term is defined in Section
14.1.

     

    Proceeding:  As
such term is defined in Section
21.12.

     

    Proceeds:  As
such term is defined in Section
16.1(a).

     

    Project:  The
collective reference to (i) the Land, together with all buildings, structures
and improvements located or to be located thereon, including the Improvements,
(ii) all rights, privileges, easements and hereditaments relating or
appertaining thereto, and (iii) all personal property, fixtures and equipment
required or beneficial for the operation thereof.

     

    Proposed Finish
Standards:  As such term is defined in Section
9.2(f).

     

    Qualified
Transferee:  As such term shall be defined in the Mezzanine
Loan Intercreditor Agreement.

     

    Qualifying
Portion:  As such term is defined in Section
8.1(a).

     

    Qualifying Sales
Agreement:  As such term is defined in Section
14.4.

     

    Reinvested Proceeds:
As such term is defined in Section
14.10(a).

     

    Release
Price:  As such term is defined in Section 14.9 or
Section 14.9A,
as applicable for the component of the Project being released.

     

    Remaining
Units:  Residential Units which have not been conveyed to
Residential Unit Purchasers as of the time of determination of the Remaining
Units (and, therefore, remain as collateral for the Loan).

     

    Rentable Square
Feet:  The number of indoor net rentable square feet in any
particular portion of the Commercial Space or other space, as measured from the
interior of the glass in the exterior walls, the middle of demising walls
between rentable spaces and to the public side of any common area walls, but
excluding balconies, terraces, hallways, common areas, lobbies, loft space or
“loft walls” and the structural walls and areas of exit stairs, elevator shafts,
and common mechanical shafts.  (One such rentable square foot is
referred to in the singular as a “Rentable Square
Foot”.)

     

    Replacement
Lender:  As such term is defined in Section
4.8(b).

     

    Required Construction
Commencement Date:  The date that is thirty (30) days after the
date hereof.

     

    


    
      
        
           


        

        
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    Required
Permits:  Each building permit, environmental permit, utility
permit, land use permit and any other permits, approvals or licenses issued by
any Governmental Authority that are required in connection the Construction,
marketing, sale or operation of the Project.

     

    Residential Condominium
Declaration:  That certain sub-condominium declaration,
entitled the “Subordinate Declaration of Condominium Regime for Block 21 Hotel
Residential Condominiums,” to be recorded against the Residential Units and
Hotel.

     

    Residential
Unit:  As such term is defined in Recital
A.  For the sake of clarity, the Hotel is not included in the
defined term “Residential Units.”

     

    Residential Unit
Purchaser:  The contract purchaser(s) under each Sales
Agreement.

     

    Retail
Space:  As such term is defined in Recital
A.

     

    Retainage:  As
such term is defined in Section
12.4.

     

    Revised GMP: As such
term is defined in Section
9.2(a).

     

    Saleable Square
Feet:  The number of indoor net saleable square feet in a
Residential Unit or other space, as measured from the exterior of the exterior
walls, the middle of demising walls between Residential Units and to the public
side of any common area walls, but excluding balconies, terraces, common
hallways, common mechanical shafts, lobbies, loft space or “loft walls” and the
structural walls and areas of exit stairs, elevator shafts, and other common
areas.  (One such saleable square foot is referred to in the singular
as a “Saleable Square
Foot”.)

     

    Sales
Agreement:  As such term is defined in Section
14.2.

     

    Sales
Report:  As such term is defined in Section
14.6.

     

    Soft Cost
Contingency:  As such term is defined in Section
10.3.

     

    Soft
Costs:  All costs incurred or to be incurred in connection with
the Project, other than the Hard Costs, including, without limitation, interest
on the Loan, fees incurred in connection with the Loan, commissions, appraisal
fees, architectural and engineering fees, title and recording charges, legal
fees, real estate taxes and other impositions and sales and marketing
costs.  Soft Costs shall include the items delineated as such on the
Budget.

     

    Soil
Report:  A soil test report prepared by a licensed engineer
satisfactory to Lender indicating to the satisfaction of Lender that the soil
and subsurface conditions underlying the Project will support the
Improvements.

     

    State:  The
state in which the Land is located.

     

    Subcontracts:  Subcontracts
for labor or materials to be furnished to the Project.

     

    Substantial
Completion:  The satisfaction of all of the following
conditions: (a) the date when the Construction shall have been completed (except
for Punch List Items and minor items

     

    


    
      
        
           


        

        
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    which can
be fully completed without material interference with the use and operation of
the Project) in accordance with the Approved Plans and Specifications; and (b)
all material permits and approvals required for the normal use and occupancy of
the Project (including a temporary certificate of occupancy) shall have been
issued by the appropriate Governmental Authority and shall be in full force and
effect to such extent under items (a) and (b) so that Borrower has the absolute
right and ability under applicable Laws to convey and deliver Residential Units
to the respective Residential Unit Purchasers and open and operate the
Hotel.

     

    Technical Services
Agreement: That certain Technical Services Agreement dated as of October
26, 2006 by and between Stratus Block 21 Investments, L.P. (predecessor in
interest to Borrower), and Starwood Hotels & Resorts Worldwide,
Inc.

     

    Tenant:  The
tenant under a Lease.

     

    Title
Insurer:  Commonwealth Land Title Insurance Company, or such
other title insurance company licensed in the State as may be approved in
writing by Lender.

     

    Title
Policy:  An ALTA 2006 Lender’s Title Insurance Policy, or an
equivalent Texas Lender’s Title Insurance Policy, with extended coverage issued
by the Title Insurer insuring the lien of the Deed of Trust as a valid first,
prior and paramount lien upon the Project and all appurtenant easements, and
subject to no other exceptions other than the Permitted Exceptions and otherwise
satisfying the requirements of Exhibit C
attached hereto and made a part hereof, all to the extent permitted by the Laws
of the State.

     

    Transfer:  Any
sale, transfer, lease (other than a Lease approved by Lender), conveyance,
alienation, pledge, assignment, Deed of Trust, encumbrance, hypothecation or
other disposition of (a) all or any portion of the Project or any portion
of any other security for the Loan, (b) all or any portion of Borrower’s right,
title and interest (legal or equitable) in and to the Project or any portion of
any other security for the Loan, or (c) any interest in Borrower or any interest
in any entity, including, without limitation, Guarantor, which directly or
indirectly holds an interest in, or directly or indirectly controls,
Borrower.

     

    Unavoidable
Delay:  Any delay in the construction of the Project, caused by
natural disaster, fire, earthquake, hurricanes, tropical storms, floods, war,
acts of terrorism, explosion, extraordinary adverse weather conditions,
inability to procure or a general shortage of labor, equipment, facilities,
energy, materials or supplies in the open market, failure of transportation,
strikes or lockouts, or like causes, so long as such cause is not within the
reasonable control of Borrower, but in no event to exceed ninety (90) days in
the aggregate.  In no event shall lack of funds be deemed an
Unavoidable Delay.

     

    Unfunded
Commitment:  The Commitment less all disbursements of the Loan
made prior to the date on which the amount of the Unfunded Commitment is being
calculated.

     

    Upgrade
Deposits:  As such term is defined in Section
14.3(c).

     

    Upgrade:  As
such term is defined in Section
14.3(c).

     

    


    
      
        
           


        

        
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    Upgrade
Profit:  The amount by which Borrower’s costs of providing any
upgrades is less than the cost charged to the Residential Unit Purchaser for any
upgrades.

     

    Venue:  As
such term is defined in Recital
A.

     

    Waste Management
Plan: As such term is defined in Section 9.2(e).

     

    2.2 Other
Definitional Provisions.

     

    All terms
defined in this Agreement shall have the same meanings when used in the Note,
Deed of Trust, any other Loan Documents, or any certificate or other document
made or delivered pursuant hereto.  The words “hereof,” “herein” and
“hereunder” and words of similar import when used in this Agreement shall refer
to this Agreement.

     

     

    Article
3

     

     

    BORROWER’S
REPRESENTATIONS AND WARRANTIES

     

    3.1 Representations
and Warranties.

     

    To induce
Lender to execute this Agreement and perform its obligations hereunder, Borrower
hereby represents and warrants to Lender as follows:

     

    (a) Borrower
has good and indefeasible fee simple title to the Project, subject only to the
Permitted Exceptions.

     

    (b) Except as
previously disclosed to Lender in writing, no litigation or proceedings are
pending, or to the best of Borrower’s actual knowledge threatened in writing,
against Borrower or Guarantor, that could, if adversely determined, be
reasonably expected to cause a Material Adverse Change with respect to Borrower,
Guarantor or the Project.  There are no pending Environmental
Proceedings and Borrower has no actual knowledge of any threatened Environmental
Proceedings or any facts or circumstances that are reasonably likely give rise
to any future Environmental Proceedings.

     

    (c) Borrower
is a duly organized and validly existing limited liability company and has full
power and authority to execute, deliver and perform all Loan Documents to which
Borrower is a party, and such execution, delivery and performance have been duly
authorized by all requisite action on the part of Borrower; Borrower has been a
single purpose entity in compliance with Section 15.2 hereof
since its formation.

     

    (d) No
consent, approval or authorization of or declaration, registration or filing
with any Governmental Authority or nongovernmental person or entity, including
any creditor, partner, member or shareholder of Borrower or Guarantor, is
required in connection with the execution, delivery and performance of this
Agreement or any of the Loan Documents other than the recordation of the Deed of
Trust and Declaration of Condominium for the Project and the filing of UCC-1
Financing Statements, except for such consents, approvals or authorizations of
or declarations or filings with any Governmental Authority or non-governmental
person or entity

     

    


    
      
        
           


        

        
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    where the
failure to so obtain would not have a material adverse effect on Borrower or
Guarantor or which have been obtained as of any date on which this
representation is made or remade.

     

    (e) The
execution, delivery and performance of this Agreement, the execution and payment
of the Note and the granting of the Deed of Trust and other security interests
under the other Loan Documents have not constituted and will not constitute,
upon the giving of notice or lapse of time or both, a breach or default under
any other agreement to which Borrower or Guarantor is a party or may be bound or
affected, or a violation of any law or court order that may affect the Project,
any part thereof, any interest therein, or the use thereof.

     

    (f) There is
no default under this Agreement or the other Loan Documents, nor any condition
that, after notice or the passage of time or both, would constitute a default or
an Event of Default under said documents.

     

    (g) (i) No
condemnation of any portion of the Project, (ii) no condemnation or relocation
of any roadways abutting the Project, and (iii) no proceeding to deny access to
the Project from any point or planned point of access to the Project, has
commenced or, to Borrower’s actual knowledge, is contemplated by any
Governmental Authority.

     

    (h) The
amounts set forth in the Budget present a full and complete itemization by
category of all costs, expenses and fees that Borrower reasonably expects to pay
or reasonably anticipates becoming obligated to pay to complete the Construction
(including all off-site improvements to be paid for by Borrower), operate the
Project and market and sell the Residential Units.  Borrower is
unaware of any other such costs, expenses or fees that are material and are not
covered by the Budget.  Borrower further warrants that neither
Borrower, Guarantor, nor any of their respective Affiliates are receiving any
other payments, distributions, or other consideration directly or indirectly
from Borrower, the Project, its seller, contractors or any other party
associated with the Project other than the Permitted Affiliate
Expenses.

     

    (i) Neither
the construction of the Improvements nor the use of the Project when completed
in accordance with the Approved Plans and Specifications and the contemplated
accessory uses will violate (i) any Laws (including subdivision, zoning,
building, environmental protection and wetland protection Laws), or (ii) any
building permits, restrictions of record, or agreements affecting the Project or
any part thereof.  Neither the zoning authorizations, approvals or
variances nor any other right to construct or to use the Project is to any
extent dependent upon or related to any real estate other than the
Land.  All Governmental Approvals required for the Construction in
accordance with the Approved Plans and Specifications have been obtained or will
be obtained prior to Closing (except for those Governmental Approvals that
cannot or need not be obtained until a later stage of the Construction or
completion of Construction, in which case such Governmental Approvals will be
obtained by Borrower on a timely basis and copies will be delivered to Lender on
the earliest possible date) and all Laws relating to the Construction and
operation of the Improvements have been complied with in all material respects
and to Borrower’s knowledge, after due inquiry, all permits and licenses,
required for the operation of the Project that cannot be obtained until the
Construction is completed can be obtained if the Improvements are completed in
accordance with the Approved Plans and Specifications.

     

    


    
      
        
           


        

        
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    (j) The
Project will have adequate water, gas, if applicable, and electrical supply,
storm and sanitary sewerage facilities, other required public utilities, fire
and police protection, and means of access between the Project and public
highways, and none of the foregoing will be foreseeably delayed or impeded by
virtue of any requirements under any applicable Laws.

     

    (k) No
brokerage fees or commissions are payable by or to any person in connection with
this Agreement or the Loan to be disbursed hereunder, other than to Holliday
Fenoglio Fowler, who will be paid by Borrower.

     

    (l) All
financial statements and other information previously furnished by Borrower or
Guarantor to Lender in connection with the Loan are true, complete and correct
in all material respects and fairly present the financial conditions of the
subjects thereof as of the respective dates thereof and do not fail to state any
material fact necessary to make such statements or information not misleading,
and no Material Adverse Change with respect to Borrower or Guarantor has
occurred since the respective dates of such statements and
information.  Neither Borrower nor Guarantor has any material
liability, contingent or otherwise, not disclosed in such financial statements
and that all charges payable with respect to the Project are current and not in
default.  Except as previously disclosed in writing to Lender, neither
Borrower, nor Guarantor, nor any officer or director of Borrower, nor any equity
owner of Borrower or Guarantor, or any of Borrower’s or Guarantor’s respective
Affiliates (excluding investors in CJUF and any shareholders of Guarantor other
than those that are considered “insiders” under SEC regulations): (i) has ever
been the subject of any criminal proceedings (other than minor traffic
violations); (ii) has ever been the owner, whether directly or indirectly, of a
parcel of real property that has been the subject of foreclosure proceedings
(whether judicial or non-judicial); (iii) has ever been a party, whether
directly or indirectly, to a deed in lieu of foreclosure; or (iv) is currently a
party to any material pending litigation or administrative proceedings, or
subject to any judicial or non-judicial orders or consent
agreements.

     

    (m) Except as
disclosed in any Environmental Report delivered by Borrower to Lender prior to
the date hereof, (i) to Borrower’s actual knowledge, the Project is in a safe
condition, and, except for small quantities of Hazardous Materials lawfully used
in the ordinary course of construction, maintenance and operation of the
Project, is free of all Hazardous Material and is in compliance with all
applicable Laws; (ii) except for small quantities of Hazardous Materials
lawfully used in the ordinary course of construction, maintenance and operation
of the Project, neither Borrower nor, to the actual knowledge of Borrower, any
other person or entity, has ever caused or permitted any Hazardous Material to
be placed, held, located or disposed of on, under, at or in a manner to affect
the Project, or any part thereof, and the Project has never been used (whether
by Borrower or, to the actual knowledge of Borrower, by any other person or
entity) for any activities involving, directly or indirectly, the use,
generation, treatment, storage, transportation, or disposal of any Hazardous
Material; (iii) neither the Project nor Borrower is subject to any existing,
pending, or, to Borrower’s actual knowledge, threatened investigation or inquiry
by any Governmental Authority, and the Project is not subject to any remedial
obligations under any applicable Laws pertaining to health or the environment;
and (iv) to the actual knowledge of Borrower, there are no underground tanks,
vessels, or similar facilities for the storage, containment or accumulation of
Hazardous Materials of any sort on, under or affecting the Project.

     

    


    
      
        
           


        

        
          16

          
            

          

        

        
           


        

      

    

    


    


     

    (n) For all
purposes the Project may be mortgaged, conveyed and otherwise dealt with as an
independent parcel and is a separate real estate tax parcel.

     

    (o) Borrower
and its agents have not entered into any Leases, subleases or other arrangements
for occupancy of space within the Project (other than Sales Agreements that permit occupancy by the
Residential Unit Purchasers following closing thereunder and the Hotel Operating
Agreement).

     

    (p) When the
Construction is completed substantially in accordance with the Approved Plans
and Specifications, no building or other improvement will encroach upon any
property line, building line, setback line, side yard line or any recorded or
visible easement (or other easement of which Borrower is aware or has reason to
believe may exist) in violation thereof.

     

    (q) The Loan
is not being made for the purpose of purchasing or carrying “margin stock”
within the meaning of Regulation T, U or X issued by the Board of Governors of
the Federal Reserve System, and Borrower agrees to execute all instruments
necessary to comply with all the requirements of Regulation U of the Federal
Reserve System.

     

    (r) Borrower
is not a party in interest to any plan defined or regulated under ERISA, and the
assets of Borrower are not “plan assets” of any employee benefit plan covered by
ERISA or Section 4975 of the Internal Revenue Code.

     

    (s) Borrower
is not a “foreign person” within the meaning of Section 1445 or 7701 of the
Internal Revenue Code.

     

    (t) Borrower
uses no trade name other than (i) its actual name set forth herein and (ii) “W
Hotel and Residences.”  The principal place of business of Borrower is
as stated in Article 22.

     

    (u) Borrower’s
place of organization is Delaware.

     

    (v) Except as
set forth in Exhibit M, there
are no Sales Agreements to purchase Residential Units.  The Sales
Agreements listed on Exhibit M are in
full force and effect and such Sales Agreements are not subject to any rights of
rescission.  Borrower hereby represents that Exhibit M is a
true, accurate and complete schedule of all Sales Agreements and sets
forth:  (i) the name of Residential Unit Purchaser, (ii) the
Residential Unit being purchased, (iii) any upgrades, (iv) any Upgrade
Deposit, (v) the purchase price, and (vi) the Earnest Money
Deposit.  All Sales Agreements are (or when entered into, and after
expiration of statutory rescission periods, will be) Qualifying Sales
Agreements.  No event of default, or any event that, with the passage
of time or the giving of notice, or both, would constitute an event of default,
has occurred pursuant to the terms of any of the Sales Agreements on the part of
Borrower or, to Borrower’s actual knowledge, the other parties
thereto.  No Residential Unit Purchaser under the Sales Agreements
listed on Exhibit M has
terminated its respective Sales Agreement and there are no side agreements with
any Residential Unit Purchasers modifying any of the terms of the Sales
Agreements or otherwise.

     

    


    
      
        
           


        

        
          17

          
            

          

        

        
           


        

      

    

    


    


     

    (w) All Sales
Agreements are exempt from or will comply with the requirements of ILSA, and Laws of the State
(and any applicable local Laws), so that (i) the sale of the Residential Units
is lawful and will not be subject to interruption due to a violation of Laws,
(ii) no Sales Agreement is terminable under any of such Laws (other than the
termination rights contained in such Sales Agreement), and (iii) neither
Borrower nor the Project will be subject to any civil or criminal penalties by
reason of failure to comply with such Laws.  The marketing and sale of
Residential Units by Borrower (and any marketing or sales of Residential Units)
is, and at all times has been, in compliance with all Laws pertaining to the
sale of condominiums (and/or residential real estate generally).  All
consents and approvals needed for the sale of Residential Units under applicable
federal, state and local Laws have been received and remain in full force and
effect.

     

    (x) The Hotel
Documents are in full force and effect.  No event of default, or any
event that, with the passage of time or the giving of notice, or both, would
constitute an event of default, has occurred pursuant to the terms of the Hotel
Documents, either on the part of Borrower or, to Borrower’s actual knowledge,
the other parties thereto.  Hotel Operator, or any other party to any
Hotel Document, has not sent to Borrower any notices of default under any Hotel
Document, nor has Hotel Operator, or any other party to any Hotel Document, sent
to Borrower any other written notices of a material nature.  The Hotel
Documents have not been amended (except as set forth in the definition of Hotel
Documents).  There are no other agreements, written or oral, with
Hotel Operator, Starwood Hotels & Resorts Worldwide, Inc., or any Affiliates
of the foregoing, that supplement or modify any of the terms of any of the Hotel
Documents or otherwise.

     

    (y) Neither
Borrower, Guarantor or any other person owning an interest in Borrower is (or
will be) a person with whom Lender is restricted from doing business with under
regulations of the Office of Foreign Asset Control (“OFAC”) of the
Department of the Treasury of the United States of America (including, those
persons named on OFAC’s Specially Designated and Blocked Persons list) or under
any statute, executive order (including the September 24, 2001 Executive
Order Blocking Property and Prohibiting Transactions With Persons Who Commit,
Threaten to Commit, or Support Terrorism), or other governmental action and is
not and shall not knowingly engage in any dealings or transactions or otherwise
be associated with such persons.  In addition, Borrower hereby agrees
to provide Lender with any additional information that Lender deems reasonably
necessary from time to time in order to ensure compliance with all applicable
Laws concerning money laundering and similar activities.

     

    (z) Borrower
shall have complied, in all respects, with the provisions of the USA PATRIOT Act
of 2001, as applicable to Borrower and the Project.

     

    (aa) The
Project complies and, when constructed, shall comply with all requirements of
that certain Declaration of Restrictive Covenants by the City of Austin, dated
December 15, 2006 recorded in the official public records of Travis County,
Texas as Instrument No. 2006240877.

     

    (bb) All
statements set forth in the Recitals are true and correct in all material
respects.

     

    


    
      
        
           


        

        
          18

          
            

          

        

        
           


        

      

    

    


    


    3.2 Survival
of Representations and Warranties.

     

    Borrower
agrees that all of the representations and warranties set forth in Section 3.1 and
elsewhere in this Agreement are true in all material respects as of the date
hereof, will be true in all material respects at Closing and, except for matters
that have been disclosed by Borrower and approved by Lender in writing, will be
true in all material respects at all times thereafter (including at Full Loan
Opening) until the Loan has been repaid and Borrower’s obligations hereunder
have been satisfied in full.  Each request for a disbursement under
the Loan Documents shall constitute a reaffirmation of such representations and
warranties, as deemed modified in accordance with the disclosures made and
approved as aforesaid, as of the date of such request.  It shall be a
condition precedent to the Closing Funding and each subsequent disbursement that
each of said representations and warranties is true and correct in all material
respects as of the date of such requested disbursement.  In addition,
at Lender’s request, Borrower shall reaffirm such representations and warranties
in writing prior to each disbursement hereunder.

     

     

    Article
4

     

     

    LOAN
AND LOAN DOCUMENTS

     

    4.1 Agreement
to Borrow and Lend; Lender’s Obligation to Disburse; Excess
Disbursements.

     

    Subject
to the terms, provisions and conditions of this Agreement and the other Loan
Documents, Borrower agrees to borrow from Lender and Lender agrees to lend to
Borrower the Loan, for the purposes and subject to all of the terms, provisions
and conditions contained in this Agreement.  If Lender consists of
more than one party, the obligations of each such party with respect to the
amount it has agreed to loan to Borrower shall be several (and not joint and
several) and each lending party’s obligations shall be limited to its
proportionate share of the Loan and of each advance.

     

    (a) The
maximum aggregate principal amount of the Loan to be funded hereunder shall be
the lesser of (i) the Commitment, or (ii) the total costs associated with the
Project (as described in the Budget) less the required Equity
Investment.

     

    (b) Lender
agrees, upon Borrower’s compliance with and satisfaction of all conditions
precedent to the Closing Funding set forth in this Agreement and provided (i)
the Loan is In Balance, (ii) no Material Adverse Change has occurred and is
continuing with respect to Borrower, Guarantor or the Project, (iii) no material
casualty to the Project has occurred that has not been repaired and there is no
existing or threatened condemnation or taking which could cause a Material
Adverse Change with respect to the Project and (iv) no Default or Event of
Default has occurred and is continuing hereunder, to make the Closing
Funding.

     

    (c) After the
Closing Funding, Borrower shall be entitled to receive further successive
disbursements of the proceeds of the Loan in accordance with Articles 8, 9, 12 and
13 following
compliance with all conditions precedent thereto set forth in this Agreement,
provided that (i) the Loan remains In Balance, (ii) Borrower has complied with
all conditions precedent to disbursement from time to time set forth in this
Agreement including the requirements of Section

     

    


    
      
        
           


        

        
          19

          
            

          

        

        
           


        

      

    

    


    3.2 and Articles 8, 9, 12 and
13, (iii) no
Material Adverse Change has occurred and is continuing with respect to Borrower,
Guarantor or the Project, (iv) no material casualty to the Project has occurred
that has not been repaired or is not being repaired in accordance with Article
16 hereof, and there is no existing or threatened condemnation or taking which
could cause a Material Adverse Change with respect to the Project and (v) no
Event of Default and no material Default has occurred and is continuing
hereunder or under any other Loan Document.  Lender shall make
commercially reasonable efforts to fund such subsequent disbursements within ten
(10) Business Days after receipt of all of the documents required under this
Agreement, including a draw request together with all items listed in Section
12.3.

     

    (d) To the
extent that Lender may acquiesce in noncompliance with any requirements set
forth in this Agreement precedent to the Closing Funding, the Full Opening of
the Loan, or any subsequent disbursement of Loan proceeds, such acquiescence
shall not constitute a waiver by Lender, and Lender may at any time after such
acquiescence require Borrower to comply with all such requirements.

     

    (e) All
payments by Borrower on account of the Loan shall be made as such amounts become
due or are declared due pursuant to the terms of this Agreement and the other
Loan Documents.  All payments shall be made without deduction,
defense, setoff or counterclaim as follows:

     

    
      	
               
      

            	
              For
      payments made by Regular Mail:

            


    

     

    
      	
               
      

            	
              Corus
      Bank N.A.

            


    

     

    
      	
               
      

            	
              P.O.
      Box 102865

            


    

     

    
      	
               
      

            	
              Atlanta,
      Georgia 30368-2865

            


    

     

    
      	
               
      

            	
              For
      payments made by Federal Express:

            


    

     

    
      	
               
      

            	
              Corus
      Bank N.A. – #102865

            


    

     

    
      	
               
      

            	
              Lockbox
      Mail Department

            


    

     

    
      	
               
      

            	
              Georgia
      Operations Center

            


    

     

    
      	
               
      

            	
              100
      South Crest Drive

            


    

     

    
      	
               
      

            	
              Stockbridge,
      Georgia 30281

            


    

     

    
      	
               
      

            	
              For
      payments made by Wire Transfer and
ACH:

            


    

     

    
      	
               
      

            	
              SUNTRUST
      BANK, ATLANTA

            


    

     

    
      	
               
      

            	
              ABA
      061000104

            


    

     

    
      	
               
      

            	
              TO
      CREDIT ACCOUNT 1000008140328

            


    

     

    
      	
               
      

            	
              ACCOUNT
      NAME:  CORUS BANK NA

            


    

     

    
      	
               
      

            	
              FOR
      FURTHER CREDIT TO: Corus Bank Loan

            


    

     

    
      	
               
      

            	
                 No.
      67920-11152

            


    

     

    


    
      
        
           


        

        
          20

          
            

          

        

        
           


        

      

    

    


    


    4.2 Loan
Documents.

     

    Borrower
agrees that it will, on or before the date hereof, execute and deliver or cause
to be executed and delivered to Lender the following documents in form and
substance acceptable to Lender:

     

    (a) The
Note.

     

    (b) The Deed
of Trust.

     

    (c) The
Completion and Carveout Guaranty.

     

    (d) The
Limited Payment Guaranty.

     

    (e) The
Environmental Indemnity.

     

    (f) The
Collateral Assignment of Hotel Documents.

     

    (g) A
collateral assignment, to the extent assignable, of construction documents,
including, without limitation, the General Contract, all architecture, Design
Professional and engineering contracts, Plans and Specifications, permits,
licenses, approvals and development rights, together with consents to the
assignment and continuation agreements from the General Contractor, the
architect, real estate broker and other parties reasonably specified by
Lender.

     

    (h) A
collateral assignment, to the extent assignable, of all Sales Agreements,
Earnest Money Deposits, Upgrade Deposits and all other documents relating to the
establishment of a condominium regime at the Project.

     

    (i) Such UCC
financing statements as Lender determines are advisable or necessary to perfect
or notify third parties of the security interests intended to be created by the
Loan Documents.

     

    (j) A
collateral assignment, to the extent assignable, of any management contract
entered into with respect to the Project.

     

    (k) Such
other documents, instruments or certificates as Lender and its counsel may
reasonably require, including such documents as Lender in its reasonable
discretion deems necessary or appropriate to effectuate the terms and conditions
of this Agreement and the Loan Documents, and to comply with the laws of the
State.

     

    4.3 Term
of the Loan.

     

    (a) All
principal, interest and other sums due under the Loan Documents shall be due and
payable in full on the Initial Maturity Date, provided that Borrower shall have
the option to extend the Maturity Date for one (1) additional six-month period
(the “Extension
Option”), provided Borrower has satisfied the conditions set forth in
subparagraph (b) below.  All references herein to the “Maturity Date” shall
mean the Initial Maturity Date, or, in the event Borrower satisfies the
conditions to the exercise of the Extension Option in accordance with this


    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

    

     

    Section 4.3, the
“Maturity Date”
shall mean the Extended Maturity Date.  Interest only payments shall
continue to be due and payable on the first of the month according to the
Interest Rate then in effect on the outstanding principal balance of the Loan
during the extension period.

     

    (b) Borrower
may only exercise the Extension Option upon satisfying the following
conditions:

     

    (i) The
Project has been completed in accordance with the Approved Plans and
Specifications in all material respects, the Project is lien free (other than
liens for the benefit of Lender and Permitted Exceptions), and certificates of
occupancy shall have been issued by the appropriate Governmental Authority for
all of the Project sufficient, among other things, to allow operation of the
Hotel and Venue, leasing and occupancy of the Commercial Space, the conveyance
and occupancy of the Residential Units, and the use and occupancy of the Parking
Garage and all Parking Spaces, and to allow satisfaction of item (vii) below
(any certificate of occupancy for the Commercial Space may be conditioned upon
the completion of tenant finish improvements);

     

    (ii) The Hotel
is open and operating in accordance with the Hotel Documents, and the Hotel
Operator, on behalf of Starwood Hotel & Resorts Worldwide, Inc., has
accepted and confirmed the completion of the Hotel in accordance with the Hotel
Documents;

     

    (iii) Borrower
shall have delivered to Lender written notice of such election no earlier than
seventy-five (75) days and no later than thirty (30) days prior to the Initial
Maturity Date;

     

    (iv) Borrower
shall pay, together with its written notice of such election, an extension fee
(the “Extension
Fee”) equal to 0.5% of Lender’s Remaining Exposure at the time the
Extension Option is requested;

     

    (v) If there
is a Mezzanine Loan, the Mezzanine Lender extends the maturity date of the
Mezzanine Loan to a date no earlier than the Extended Maturity
Date;

     

    (vi) The Loan
has not matured and no Event of Default or material Default has occurred and is
continuing under the Loan Documents;

     

    (vii) Following
the full funding of the Reinvested Proceeds pursuant to Section 14.10(b)
hereof, Borrower has closed and conveyed, pursuant to Qualifying Sales
Agreements and each at no less than 90% of the applicable List Price,
Residential Units in an amount sufficient to generate aggregate gross sales
proceeds of at least $55,000,000 (apart from and in addition to the gross sales
proceeds which generated the Reinvested Proceeds), and Borrower shall have paid
to Lender the Release Prices for each such Residential Unit sold;
and

     

    (viii) Borrower
has funded the Additional Equity Investment, as and to the extent required
hereunder.

     

    (c) Notwithstanding
the above provisions of this Section 4.3, in the
event that (x) Borrower does not repay the Loan in full on or before the Initial
Maturity Date and (y) the Maturity Date is not extended pursuant to the
provisions of Section
4.3(b) (whether because

     

    


    
      
        
           


        

        
          22

          
            

          

        

        
           


        

      

    

    


    Borrower
did not request the extension or Borrower requested the extension but did not
qualify for such extension) then the Maturity Date shall nevertheless be
extended from the Initial Maturity Date to a date that is thirty (30) days after
the Initial Maturity Date and the Extension Fee shall be due and payable from
Borrower to Lender on the Initial Maturity Date.  The Deed of Trust
will not be released until the Extension Fee and all other amounts due under the
Loan have been paid in full.  In such event, Borrower shall not be
entitled to any further extensions of the Maturity Date.  No such
extension shall occur if the Loan has been accelerated prior to the Initial
Maturity Date.

     

    (d) If
Borrower timely sends written notice of Borrower’s election to exercise the
Extension Option in accordance with Section 4.3(b),
Lender, no later than twenty (20) days prior to the Initial Maturity Date, shall
notify Borrower (“Lender’s Response
Notice”) whether, with respect to the Extension Option, the conditions
set forth in Section
4.3(b) have been satisfied and accordingly the Maturity Date has been
extended to the Extended Maturity Date.

     

    (e) If Lender
fails to timely send Lender’s Response Notice, but Borrower has not qualified
for such Extension Option, then Lender shall not thereby be deemed to have
waived the Extension Fee payable under subparagraph 4.3(c); provided,
however, that in such circumstance, if (x) Borrower repays the Loan in full
prior to its receipt of Lender’s Response Notice or (y) Borrower repays the Loan
in full no later than the date twenty (20) days after its receipt of Lender’s
Response Notice, then no Extension Fee shall be owed under subparagraph 4.3(c).

     

    4.4 Prepayments.

     

    Borrower
shall have the right to make prepayments of the Loan in accordance with and
subject to the terms of the Note.

     

    4.5 Required
Principal Payments.

     

    All
principal shall be paid on or before the Maturity Date.

     

    4.6 Receipt
of Payments.

     

    All
payments received by Lender prior to or at 3:00 p.m. (Chicago time) on a
Business Day shall be credited to Borrower on the day of receipt; all payments
received after 3:00 p.m. (Chicago time) on a Business Day shall be deemed
received on the next succeeding Business Day.

     

    4.7 Termination
of Lender’s Unfunded Commitment.

     

    Upon the
repayment in full of the outstanding principal balance of the Loan, Lender’s
obligation to fund the Unfunded Commitment shall thereupon terminate and Lender
shall have no further obligation to fund Loan proceeds hereunder.  If,
in Lender’s sole discretion, Lender agrees (in writing) that the Commitment
shall not so terminate, all Release Prices for the sale of Residential Units or
any other part of the Project shall be escrowed with Lender until such time as
Lender’s obligation to fund the Commitment expires or is terminated and the Loan
has been repaid.

     

    


    
      
        
           


        

        
          23

          
            

          

        

        
           


        

      

    

    


    


    4.8 Lender
Default.

     

    If Lender
is prevented from funding the Unfunded Commitment by reason of bankruptcy or
insolvency proceedings or an order from regulatory authorities in connection
with Lender’s insolvency or failure to meet regulatory requirements, then Lender
shall notify Borrower and, so long as no Event of Default exists, Borrower shall
have the right to do either of the following no later than ninety (90) days
after receipt of such notice:

     

    (a) Borrower
may prepay the Loan in full without the payment of any Prepayment Charge (as
such term is defined in the Note) or the remaining Exit Fee; or

     

    (b) Borrower
may cause another financial institution experienced at making similar
construction loans and reasonably acceptable to Lender (the “Replacement Lender”)
to agree to fund the Unfunded Commitment.  Pursuant to a standard
Assignment and Assumption Agreement, Lender shall assign to Replacement Lender,
without recourse, and Replacement Lender shall assume, Lender’s rights and
obligations with respect to the Unfunded Commitment and whereupon Lender shall
be released therefrom.  Lender and Replacement Lender shall execute a
co-lender agreement in form and substance reasonably acceptable to Lender and
Replacement Lender, providing, among other things, for the priority of the
Unfunded Commitment to the previously advanced Loan proceeds.

     

     

    Article
5

     

     

    INTEREST

     

    5.1 Interest
Rate.

     

    The Loan
shall bear interest as set forth in the Note.  Interest shall be paid
on the Loan when and as set forth in the Note.

     

     

    Article
6

     

     

    COSTS
OF MAINTAINING LOAN

     

    6.1 Increased
Costs and Capital Adequacy.

     

    (a) Borrower
recognizes that the cost to Lender of maintaining the Loan or any portion
thereof may fluctuate, and Borrower agrees to pay Lender additional amounts to
compensate Lender for any increase in its actual costs incurred in maintaining
the Loan or any portion thereof outstanding or for the reduction of any amounts
received or receivable from Borrower as a result of any change after the date
hereof in any applicable Law, regulation or treaty, or in the interpretation or
administration thereof, or by any domestic or foreign court, (i) changing
the basis of taxation of payments under this Agreement and/or the Note to Lender
(other than taxes imposed on all or any portion of the overall net income or
receipts of Lender), or (ii) imposing, modifying or applying any reserve (other
than a loan loss reserve), special deposit or similar requirement against assets
of, deposits with or for the account of, credit extended by, or any other
acquisition of funds for loans by Lender (which includes the Loan or any
applicable portion thereof) or (iii) imposing on Lender any other condition
affecting the Loan, provided that the result of the foregoing is to increase the
cost to Lender of maintaining the

     

    


    
      
        
           


        

        
          24

          
            

          

        

        
           


        

      

    

    


    Loan or
any portion thereof or to reduce the amount of any sum received or receivable
from Borrower by Lender under the Loan Documents.

     

    (b) If the
adoption after the date hereof of any Law, rule, regulation or guideline
regarding capital adequacy, or any change after the date hereof in any of the
foregoing, or in the interpretation or administration thereof by any domestic or
foreign Governmental Authority, central bank or comparable agency charged with
the interpretation or administration thereof, or compliance by Lender with any
request or directive regarding capital adequacy (whether or not having the force
of law) of any such authority, central bank or comparable agency, has the effect
of reducing the rate of return on Lender’s capital to a level below that which
Lender would have achieved but for such application, adoption, change or
compliance, then, from time to time Borrower shall pay to Lender such additional
amounts as will compensate Lender for such reduction with respect to any portion
of the Loan outstanding.

     

    (c) Any
amount payable by Borrower under subsection (a) or subsection (b) of this Section 6.1 shall be
paid within ten (10) Business Days of receipt by Borrower of a certificate
signed by an authorized officer of Lender setting forth the amount due and the
basis for the determination of such amount, which statement shall be conclusive
and binding upon Borrower absent manifest error.  Lender shall also
provide to Borrower copies of any applicable invoices, bills, demands or
statements of account.  Failure on the part of Lender to demand
payment from Borrower for any such amount attributable to any particular period
shall not constitute a waiver of Lender’s right to demand payment of such amount
for any subsequent or prior period.

     

    6.2 Borrower
Withholding.

     

    If by
reason of a change in any applicable Laws occurring after the date hereof,
Borrower is required by Law to make any deduction or withholding in respect of
any taxes (other than taxes imposed on or measured by the net income of Lender
or any franchise tax imposed on Lender), duties or other charges from any
payment due under the Note to the maximum extent permitted by law, the sum due
from Borrower in respect of such payment shall be increased to the extent
necessary to ensure that, after the making of such deduction or withholding,
Lender receives and retains a net sum equal to the sum that it would have
received had no such deduction or withholding been required to be
made.

     

     

    Article
7

     

     

    LOAN
EXPENSE AND ADVANCES

     

    7.1 Loan
and Administration Expenses.

     

    Borrower
unconditionally agrees to pay all reasonable expenses of the Loan, including all
amounts payable pursuant to Sections 7.2 and
7.3 and any and
all other fees owing to Lender pursuant to the Loan Documents, and also
including, without limiting the generality of the foregoing, all recording,
filing and registration fees and charges, Deed of Trust, intangible or
documentary taxes, escrow charges, title charges, all insurance premiums, title
insurance premiums and other charges of the Title Insurer, printing and
photocopying expenses, survey fees and charges, cost of certified copies of
instruments, cost of premiums on the Title Policy, charges of the Title Insurer
or other escrowee for administering disbursements, all reasonable

     

    


    
      
        
           


        

        
          25

          
            

          

        

        
           


        

      

    

    


    fees and
disbursements of Lender’s Consultant, all appraisal fees, insurance consultant’s
fees, investigator’s fees, environmental consultant’s fees, reasonable travel
related expenses and all reasonable costs and expenses incurred by Lender in
connection with the determination of whether or not Borrower has performed the
obligations undertaken by Borrower hereunder or has satisfied any conditions
precedent to the obligations of Lender hereunder.  Borrower shall pay
the airfare and other reasonable travel expenses for each officer or analyst of
Lender who inspects the Project as part of Lender’s due
diligence.  The amount charged for airfare shall be the lesser of (i)
the actual cost thereof incurred by Lender, or (ii) $1,200 per person per
visit.  Borrower agrees to pay all brokerage, finder or similar fees
or commissions payable in connection with the transactions contemplated hereby
and shall indemnify, defend, and hold Lender harmless against all claims,
liabilities, costs and expenses (including attorneys’ fees and expenses)
incurred in relation to any such claim by broker, finder or similar person
alleging to have dealt with Borrower in connection with this
transaction.

     

    7.2 Loan
Fee.

     

    Borrower
shall pay to Lender on or before the date of this Agreement a loan fee in the
amount of One Million Six Hundred Fifty Thousand Dollars ($1,650,000), which
includes an application fee of Two Hundred Fifty Thousand Dollars ($250,000)
(which was previously received by Lender), a commitment fee in the amount of Two
Hundred Fifty Thousand Dollars ($250,000) (which was previously received by
Lender), and a closing fee in the amount of One Million One Hundred Fifty
Thousand Dollars ($1,150,000).  Such fees are fully earned and
non-refundable.  Lender may deduct the closing fee and any costs from
the Closing Funding.

     

    7.3 Draw
Fees.

     

    The first
disbursement of funds for Hard Costs associated with construction and each such
disbursement thereafter shall be referred to as a “Construction
Disbursement.”  Borrower shall pay to Lender at the time of
each Construction Disbursement a draw fee in the amount of Five Thousand Dollars
($5,000) per disbursement as compensation to Lender for its costs
in  reviewing and processing each Construction
Disbursement.  Borrower hereby authorizes Lender to retain such fee
from each such disbursement without further direction from
Borrower.

     

    7.4 Exit
Fee.

     

    Borrower
shall pay to Lender a fee equal to the amount of $1,650,000 (the “Exit Fee”), which
Exit Fee shall be due and payable to Lender upon the earlier of (i) payment in
full of the Loan for any reason (which shall be deemed to include Borrower’s
cancellation or termination of the Loan prior to any funding after the Closing
Funding) or (ii) maturity of the Loan, whether by acceleration or
otherwise.  Prior to payment in full or maturity of the Loan, the Exit
Fee shall be payable at the rate of the full Exit Fee for the release of the
Hotel in accordance with the terms of this Agreement, or in installments of
$20,000 per Residential Unit at the closing of the sale of any Residential Unit
sold in accordance with the terms of this Agreement (such amounts to be paid out
of the Release Price paid to Lender in accordance with Section 14.9 until
such time as Borrower has paid the Exit Fee in full).  Any unpaid
portion of the Exit Fee shall be due and payable on the first to occur of the
acceleration of the Loan, the Maturity Date or payment in full of the Loan for
any reason if prior to the Maturity Date.

     

    


    
      
        
           


        

        
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    7.5 Lender’s
Attorneys’ Fees and Disbursements.

     

    Borrower
agrees to pay Lender’s reasonable attorneys fees and disbursements incurred in
connection with this Loan both before and after the date hereof (and whether or
not the Loan closes), including (i) the preparation of this Agreement, any
intercreditor agreements and the other Loan Documents and the preparation of the
closing binders, (ii) the disbursement and administration of the Loan and (iii)
the enforcement of the terms of this Agreement and the other Loan
Documents.  The reasonable legal fees and disbursements to be paid by
Borrower under this Section 7.5 and the
reasonable legal fees and disbursements to be paid by Borrower under all other
applicable provisions of this Loan Agreement and the other Loan Documents shall
include the reasonable fees and expenses of Lender’s inside counsel charged at a
rate not higher than the rate charged by Lender’s outside counsel for an
attorney with equivalent experience.  Without limiting the generality
of the foregoing, Borrower hereby acknowledges and agrees that Lender will incur
additional expenses, including attorneys fees and disbursements, in connection
with any Mezzanine Loan that Borrower proposes to obtain in accordance with this
Agreement, and Borrower hereby covenants to pay, at such time and in such manner
requested by Lender, all such reasonable expenses of Lender incurred for its
review of the proposed and final Mezzanine Loan Documents, drafting and
negotiating an intercreditor agreement, and all other reasonable expenses of
Lender in connection with such Mezzanine Loan, regardless of whether such
Mezzanine Loan closes during the term of the Loan.

     

    7.6 Time
of Payment of Fees and Expenses.

     

    Borrower
shall pay all expenses and fees incurred by Lender in connection with the Loan
as of the date of this Agreement at Closing.  At Closing, Lender may
pay from the Closing Funding all reasonable Loan expenses and all fees payable
to Lender and not previously paid.  Lender may require the payment of
outstanding fees and expenses as a condition to any disbursement of the
Loan.  Lender is hereby authorized, without any specific request or
direction by Borrower, to make disbursements from time to time in payment of or
to reimburse Lender for all reasonable Loan expenses and fees (whether or not,
at such time, there may be any undisbursed amounts of the Loan allocated in the
Budget for the same).  Lender shall provide to Borrower copies of all
applicable invoices relating to such expenses and fees.  Lender may
charge any such disbursement to any applicable Budget Line Item or, if in
Lender’s judgment there is no available source of funds in the Budget, may
require Borrower to pay excess expenses from Borrower’s own funds.  If
the actual amount of charges are not ascertainable at Closing, then Lender may
charge the same, at its option, at Full Loan Opening or to the Soft Cost
Contingency or other applicable Budget Line Item, and Borrower shall pay upon
demand any excess monies due.

     

    7.7 Expenses
and Advances Secured by Loan Documents.

     

    Any and
all advances or payments made by Lender under this Article 7 from
time to time, and any amounts expended by Lender pursuant to Section 20.1(a),
shall, as and when advanced or incurred, constitute additional indebtedness
evidenced by the Note and secured by the Deed of Trust and the other Loan
Documents and shall bear interest at the rate then applicable under the Note
(including the Default Rate, when applicable).

     

    


    
      
        
           


        

        
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    7.8 Right
of Lender to Make Advances to Cure Borrower’s Defaults.

     

    In the
event that Borrower fails to perform any of Borrower’s covenants, agreements or
obligations contained in this Agreement or any of the other Loan Documents (and
applicable grace or cure periods have expired, unless in Lender’s judgment an
emergency or other exigent circumstance exists, in which case Lender need not
wait for such period to expire), Lender may (but shall not be required to)
perform any of such covenants, agreements and obligations, and any reasonable
amounts expended by Lender in so doing and shall constitute additional
indebtedness evidenced by the Note and secured by the Deed of Trust and the
other Loan Documents and shall bear interest at the Default
Rate.  Lender may expend any such amounts even if such advance would
result in the balance owing to Lender exceeding the stated amount of the
Note.

     

     

    Article
8

     

     

    NON-CONSTRUCTION
REQUIREMENTS PRECEDENT

     

    8.1 Non-Construction
Conditions Precedent.

     

    Borrower
agrees that Lender’s obligation to make the Loan is conditioned upon Borrower’s
delivery, performance and satisfaction of the following conditions precedent in
form and substance satisfactory to Lender in its reasonable discretion (except
as otherwise expressly set forth herein) prior to (or at the time of) Closing,
with the exception of the conditions listed in Section 8.1(a), Section 8.1(u), Section 8.1(w), Section 8.1(y)(b) and
Section 8.1(z)(ii) and
(iii) hereunder that must be satisfied at such other time as is set forth
therein:

     

    (a) Equity:  Borrower
shall have provided evidence reasonably satisfactory to Lender prior to Full
Loan Opening (which, for the avoidance of doubt, shall exclude the Closing
Funding) that Borrower’s equity invested in the Project for costs in the Budget
is not less than $124,412,805.92 in cash (the “Initial Equity
Investment”), of which, Guarantor or its Affiliates shall contribute at
least $49,165,122.37, and CJUF shall contribute the balance; provided, however,
that Lender shall permit $1,500,000 (which amount shall be credited pro rata to
the respective contributions of Guarantor and CJUF) of the Initial Equity
Investment to be deferred until on or after the repayment in full of the Loan,
provided that the Developer Fee Budget Line Item is paid only in strict
accordance with Section 12.7
hereof.  Such Initial Equity Investment must be used to pay Project
costs contained in the Budget and approved by Lender, with evidence of payment
of the Initial Equity Investment to be delivered to Lender prior to Full Loan
Opening.  In all events, any equity contribution shall be subordinate
to the rights of Lender and general unsecured creditors of
Borrower.  Borrower may not be indebted to any Person for any equity
contribution.  Borrower shall provide Lender with documentation
identifying all equity investors and supporting the actual Land cost and
predevelopment expenses (which actual cost and expenses shall be credited
against the Initial Equity Investment, provided same appear in the Project
Budget and such expenditures are validated by Lender in its reasonable
discretion), such documentation to be in form and substance acceptable to
Lender, in its sole discretion.

     

    Borrower’s
Initial Equity Investment was increased by $1,505,000 (the “Equity Increase”) to
a total of $124,412,805.92 so as to permit the creation of the “Sales
Commissions Paid During Construction” Budget Line Item in the amount of
$1,505,000. ($460,179 of
this Budget Line

     

    


    
      
        
           


        

        
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    Item has
already been funded and the remainder is to be funded at a rate of approximately
$35,000 per month as an advance against brokerage commissions for Unit sales.)
Notwithstanding anything to the contrary contained herein, so long as no Event
of Default exists, at the time of Unit closings  up to fifty percent
(50%) of the brokerage commissions payable upon each such closing may be used to
return to Borrower the Equity Increase. The foregoing shall not reduce any
Release Price payable to Lender.

     

    If
Borrower obtains a Mezzanine Loan with the consent of Lender and otherwise in
accordance Section
15.1(u) hereof, the Initial Equity Investment may be reduced by the
Qualifying Portion of such Mezzanine Loan; provided, however, that such
reduction in the Initial Equity Investment shall only be applicable to such
portion of the Initial Equity Investment that has not been contributed at the
time of the closing of the Mezzanine Loan, such that no part of the Initial
Equity Investment may be recouped by Borrower or other contributor, and Borrower
hereby acknowledges and agrees that, as a result, less than all of the reduction
in the Initial Equity Investment may be realized.  The “Qualifying Portion”
of the Mezzanine Loan shall mean the portion available for borrowing to pay
costs in the Budget attached as Exhibit G hereto
(e.g.,
the Qualifying Portion shall not include items such as interest and/or fees and
expenses payable with respect to the Mezzanine Loan).  The Qualifying
Portion must be fully funded prior to Full Loan Opening.

     

    Borrower’s
Equity Investment requirement shall be increased as a result of any changes to
the Budget and as necessary to maintain the Loan In Balance as described in
Section 11.1.  Lender
shall not be required to disburse any proceeds to reimburse Borrower for its
Equity Investment unless Lender has determined that Borrower has invested
amounts in excess of its required Equity Investment.  In the event
that Borrower, or such other Person on behalf of Borrower, invests such funds
that render the total actual equity investment to be in excess of the required
Equity Investment (excluding the Additional Equity Investment or any equity
deposited as a result of the Loan being not In Balance), the Commitment shall be
permanently reduced by such excess investment, unless Borrower delivers to
Lender a written request for a refund of such excess within thirty (30) days of
such excess investment, but in no event shall such a request be required sooner
than thirty (30) days after the date hereof.

     

    (b) Fees and
Expenses:  Borrower shall have paid all of Lender’s fees and
expenses as required by Article 7 or
elsewhere in this Agreement, to the extent due and payable.

     

    (c) Title and Other
Documents:  Borrower shall have furnished to Lender a
Commitment for the Title Policy with the premiums for such Title Policy paid in
full, and a pro forma Title Policy, with coverage effective as of Closing,
together with legible copies of all title exception documents cited in the
Commitment for the Title Policy and all other legal documents affecting the
Project or the use thereof.  Borrower shall provide to Lender the
final original Title Policy within fifteen (15) days following
Closing.  The pro forma Title Policy and the Title Policy shall be
subject only to the Permitted Exceptions.  Any exception for the
rights of Residential Unit Purchasers shall only be permissible if the Title
Insurer insures such rights are subordinate to the Deed of Trust.

     

    (d) Survey:  Borrower
shall have furnished to Lender an ALTA/ACSM “Class A” Land Title Survey of
the Project prepared by a licensed surveyor satisfactory to
Lender.  Said

     

    


    
      
        
           


        

        
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    survey
shall be dated no earlier than ninety (90) days prior to the date hereof, shall
be made (and certified to have been made) as set forth in Exhibit D
attached hereto and made a part hereof.  Such survey shall be
sufficient to permit issuance of the Title Policy in the form required by this
Agreement.  Such survey shall include the legal description of the
Land.

     

    (e) Insurance
Policies:  Borrower shall have furnished to Lender, prior to
the date hereof, certificates evidencing that insurance coverages are in effect
with respect to the Project and Borrower, in accordance with the Insurance
Requirements attached hereto as Exhibit E and
incorporated herein by reference as if fully set forth herein (or such other
insurance coverages reasonably acceptable to Lender), for which the premiums
have been prepaid, and with endorsements satisfactory to Lender.  On
or before the date that is thirty (30) days after the date hereof, Borrower
shall provide a copy of the insurance policy with respect to the Project and
Borrower in accordance with Exhibit E (the “Insurance
Policy”).

     

    (f) No
Litigation:  Borrower shall have furnished evidence that no
litigation or proceedings shall be pending or threatened that is reasonably
likely to cause a Material Adverse Change with respect to Borrower, Guarantor or
the Project, other than litigation that is disclosed in writing to Lender prior
to the Loan closing and is acceptable to Lender, in its sole
discretion.

     

    (g) Utilities:  Borrower
shall have furnished to Lender (by way of utility letters or otherwise) evidence
establishing to the reasonable satisfaction of Lender that the Project, when
constructed, will have adequate water supply, storm and sanitary sewerage
facilities, telephone, gas (if applicable), electricity, fire and police
protection, means of ingress and egress to and from the Project and public
highways and any other required public utilities and that the Project is
benefited by insured easements as may be required for any of the
foregoing.

     

    (h) Attorney
Opinions:  Borrower shall have furnished to Lender an opinion
from counsel for Borrower and Guarantor, in a form satisfactory to Lender,
covering due authorization, execution and delivery and enforceability of the
Loan Documents and also containing such other legal opinions as Lender shall
reasonably require, with customary assumptions and qualifications.

     

    (i) Appraisal:  Lender
shall have obtained, at Borrower’s expense, an Appraisal acceptable to Lender in
all respects, in Lender’s sole discretion.  The Appraisal of the
Project performed by CB Richard Ellis of Austin, dated March 5, 2008, is hereby
accepted by Lender.  A copy of such Appraisal will be supplied to
Borrower upon request, subsequent to Closing.

     

    (j) Searches:  Borrower
shall have furnished to Lender current bankruptcy, federal tax lien and judgment
searches and searches of all Uniform Commercial Code financing statements filed
in each place UCC Financing Statements are to be filed hereunder for Borrower
and Guarantor, demonstrating the absence of materially adverse
claims.

     

    (k) Financial Statements; Tax
Returns:  Borrower shall have furnished to Lender current
annual financial statements of Borrower and Guarantor, each in form and
substance and certified by such individual as acceptable to
Lender.  Borrower shall have furnished to Lender any federal and state
tax returns of Borrower or Guarantor for the past two (2)
years.  Borrower and Guarantor shall have signed and delivered to
Lender an Internal Revenue Service Tax Return

     

    


    
      
        
           


        

        
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    Verification
Form (IRS Form 4506-T).  Borrower and Guarantor shall provide such
other additional financial information as Lender reasonably requires, including
financial statements of income and expenses for the Project and tax returns for
all entities reporting the income and expenses on the Project.

     

    (l) Price List
Schedule.  Borrower shall have furnished to Lender the Price
List Schedule, as approved by Lender.

     

    (m) Other
Agreements:  Borrower shall have delivered to Lender executed
copies of any marketing, brokerage and development agreements entered into by
Borrower in connection with the Construction and/or the sale of Residential
Units at, or any other part of, the Project, each of which Lender shall have
approved in Lender’s reasonable discretion.

     

    (n) Flood
Hazard:  Lender has received evidence that the Project is not
located in an area designated by the Secretary of Housing and Urban Development
as a special flood hazard area, or flood hazard insurance acceptable to Lender
in its reasonable discretion.

     

    (o) Zoning:  The
Title Policy shall include an ALTA 3.1 zoning endorsement modified for plans and
specifications, or, if not available in the State, Borrower shall have furnished
to Lender a legal opinion that provides the same zoning compliance assurance as
an ALTA 3.1 zoning endorsement subject to customary qualifications,
clarifications and assumptions.

     

    (p) Organizational
Documents:  Borrower shall have furnished to Lender proof
satisfactory to Lender of authority, formation, organization and good standing
in the state of its incorporation or formation and, if applicable, qualification
as a foreign entity in good standing in the state of its incorporation or
formation, of all corporate, partnership, trust and limited liability company
entities (including Borrower and Guarantor) executing any Loan Documents,
whether in their own name or on behalf of another entity.  Borrower
shall also provide an organizational chart as well as certified resolutions in
form and content satisfactory to Lender, authorizing execution, delivery and
performance of the Loan Documents, and such other documentation as Lender may
require to evidence the authority of the persons executing the Loan
Documents.

     

    (q) No Default; No Material
Adverse Change; No Condemnation; etc.:  There shall be no
Default or continuing Event of Default by Borrower hereunder; there shall have
not occurred a Material Adverse Change in the financial condition of Borrower or
Guarantor or the condition of the Project that has not been cured or satisfied;
and neither the Project nor any part thereof shall have suffered any material
casualty or be subject to any existing or threatened condemnation or taking by
eminent domain proceeding or otherwise.

     

    (r) Easements:  Borrower
shall have furnished to Lender all easements reasonably required for the
construction, maintenance or operation of the Project, and such easements shall
be insured by the Title Policy.

     

    (s) Condominium
Documents:  Borrower shall have delivered to Lender a copy of
all proposed and/or executed condominium plats, declarations, agreements
regarding cost sharing, filings, escrow agreements and other documents
pertaining to the establishment of a condominium regimes at the Project or
relating to the Project’s compliance with all applicable

     

    


    
      
        
           


        

        
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    local,
state and federal Laws relating to condominiums (collectively, the “Condominium
Documents”), including, without limitation, the draft Master Condominium
Declaration and Residential Condominium Declaration, all of which Condominium
Documents shall be acceptable to Lender in its sole and absolute discretion.
Lender shall be satisfied with the sufficiency of the services and
infrastructure provided and the adequacy of their funding.

     

    (t) [Intentionally
Omitted]

     

    (u) Lease.  Borrower
shall have delivered to Lender the form of Lease to be used for the leases of
space in the Retail Space and in the Office Space.

     

    (v) Pre-sales.  Borrower
shall have delivered to Lender, prior to Closing, Qualifying Sales Agreements
(in full force and effect) for at least 55 Residential Units comprising at least
70,761 Saleable Square Feet together with Parking Spaces for such applicable
Residential Units at prices greater than or equal to the List Price for each and
every such Residential Unit, constituting, in the aggregate, gross sales of
greater than or equal to $45,184,250 (collectively, the “Pre-sale
Requirement”).  The mix of Residential Unit types and locations
within the Project must be reasonably acceptable to Lender.

     

    (w) Earnest Money and Upgrade
Deposits.  All existing Earnest Money Deposits and Upgrade
Deposits shall have been deposited by the Escrow Agent, or by Lender to the
extent allowed by Law, in accounts in accordance with Section
14.3.  If an Escrow Agent is being used, Borrower shall have
delivered to Lender a copy of the escrow agreement pursuant to which the Earnest
Money Deposits are being held (the “Escrow Agreement”),
together with a letter from the Escrow Agent agreeing to deliver such deposits
to Lender when and as Borrower has a right to receive such deposits for
application in accordance with Section 14.3 and
Section 14.9
below.  Prior to Full Loan Opening, Borrower shall have deposited with
either the Escrow Agent or Lender, as applicable, cash Earnest Money Deposits
equal to at least ten percent (10%) of the contract price for each Residential
Unit included in the Pre-sale Requirement.

     

    (x) Required Condominium
Approvals.  Borrower shall have furnished to Lender evidence
satisfactory to Lender that Borrower has received all approvals required for the
condominium subdivision of the Project pursuant to the Declaration of
Condominium, the sale or marketing of the Residential Units under the
requirements of ILSA, applicable laws of the State and any applicable local
Laws.  Borrower also shall have furnished to Lender as filed copies of
Borrower’s HUD Property Report and any additional reports required by the State
of Texas or City of Austin.

     

    (y) Operating
Agreements.  Borrower shall have provided to Lender (a) the
executed Hotel Documents, Non-Disturbance Agreement and an estoppel letters
addressed to Lender with respect to the Hotel Documents, and (b) before Full
Loan Opening, (x) the management agreement for the management and operation of
the Venue, together with a subordination, estoppel and collateral assignment
thereof and (y) an amendment to the Hotel Operating Agreement extending the
outside completion date thereunder to January 7, 2012; all of the foregoing in
form and substance reasonably satisfactory to Lender

     

    


    
      
        
           


        

        
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    (z) City Estoppel and
Agreement.  (i) Prior to Closing, Borrower shall have provided
to Lender an Estoppel Certificate and Agreement from the City of Austin, a Texas
home rule city and municipal corporation (“City”) in form and substance
satisfactory to Lender addressing certain matters relative to (A) that certain
Declaration of Restrictive Covenants dated as of December 15, 2006, by the City,
recorded in the official public records of Travis County, Texas as Instrument
No. 2006240877; and (B) Special Warranty Deed dated as of December 15, 2006, by
the City, in favor of Stratus Block 21 Investments, L.P., a Texas limited
partnership, recorded in the official public records of Travis County, Texas as
Instrument No. 2006240878; (ii) prior to Full Loan Opening, a direction by
Borrower to the City to pay any repurchase price payable under such deed to
Lender (to be applied to the indebtedness under the Loan Documents in such order
as Lender shall elect, with any excess payable to Borrower), which direction is
accepted by the City and (iii) prior to Full Loan Opening, Borrower shall have
provided to Lender a Second Estoppel Certificate and Agreement from the City in
all material respects in the form of Exhibit S or
otherwise in form and substance satisfactory to Lender.

     

    (aa) Patriot
Act:  Borrower shall have provided Lender with proof that
Borrower has complied in all respects with the provisions of the USA PATRIOT Act
of 2001, as applicable, including without limitation, furnishing to Lender proof
that Borrower has taken all action necessary to comply with Section 326 of such
Act.

     

    (bb) Additional
Documents.  Borrower shall have furnished to Lender such other
materials, documents, papers or requirements regarding the Project, Borrower or
Guarantor as Lender shall reasonably request.

     

     

    Article
9

     

     

    CONSTRUCTION
REQUIREMENTS PRECEDENT

     

    9.1 Construction
Documents Required as of Closing.

     

    Borrower
shall cause to be furnished to Lender and to Lender’s Consultant the following,
in form and substance satisfactory to Lender in its reasonable discretion
(except as otherwise expressly set forth herein), and Lender shall have approved
the following in its reasonable discretion (except as otherwise expressly set
forth herein), prior to (and at the time of) Closing (or such later time as is
specified in any subparagraph hereof) as additional conditions to Lender’s
obligations to make any disbursements of the Loan:

     

    (a) Fully
executed copies of the following shall be delivered: (i) prior to the Closing, a
general contract with the General Contractor pertaining to the construction of
the Project (the “General Contract”),
which must be acceptable to Lender in all respects in Lender’s sole discretion,
with a guaranteed maximum price not to exceed $186,889,641 (the “General Contract
Price”), and the General Contract shall not be entered into until after
the Deed of Trust is recorded; (ii) [intentionally omitted]; (iii) copies of all
other direct contracts to be entered into by Borrower for construction, purchase
of materials or furniture, fixtures or equipment; and (iv) all contracts with
the architects, engineers, third-party owner’s representatives and other design
professionals (the “Design
Professionals”) acceptable to Lender in all respects in Lender’s
reasonable discretion.  None of General Contractor and any Design
Professionals shall be an Affiliate of Borrower or of Guarantor, and all shall
be of acceptable credit quality, as determined

     

    


    
      
        
           


        

        
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    by Lender
in its sole discretion.  If Lender shall determine that the General
Contractor is not of acceptable credit quality, Lender may require, in its sole
discretion, certain guaranties or other assurances from the parent entity or
entities or Affiliates of General Contractor. Lender hereby approves the General
Contract and approves Austin Building Company as General Contractor, subject to
the execution and delivery of a guaranty of the General Contract, in form and
substance satisfactory to Lender in its sole discretion, from General
Contractor’s parent company, Austin Commercial, L.P., a Delaware limited
partnership.  General Contractor may not be replaced without Lender’s
prior written consent. No Design Professional
may be replaced without Lender’s prior written consent, subject to its
reasonable discretion;

     

    (b) A
schedule of values, as included in the General Contract;

     

    (c) [Intentionally
Omitted];

     

    (d)  In
lieu of Bonds, Lender agrees to accept subguard insurance with terms, limits,
and endorsements (including a Financial Interest Endorsement naming Lender)
acceptable to Lender in its reasonable discretion covering all
Subcontracts;

     

    (e) Copies of
each of the Required Permits, except for those Required Permits that cannot be
issued until a later stage or completion of Construction, in which event such
Required Permits will be obtained by Borrower on a timely basis in accordance
with all recorded maps and conditions and applicable building, land use, zoning
and environmental codes, statutes and regulations and will be delivered to
Lender promptly thereafter;

     

    (f) The
Partial Plans and Specifications and the Partial Proposed Finish Standards, each
of which Lender approves as of the date hereof;

     

    (g) The
Construction Schedule;

     

    (h) The Soil
Report;

     

    (i) The
Environmental Report, which shall, at a minimum, (i) demonstrate the
absence of any existing or potential Hazardous Material contamination or
violations of environmental Laws at the Project, except as acceptable to Lender
in its sole and absolute discretion, (ii) include the results of all sampling or
monitoring to confirm the extent of existing or potential Hazardous Material
contamination at the Project, including the results of leak detection tests for
each underground storage tank located at the Project, if any, (iii) describe
response actions appropriate to remedy any existing or potential Hazardous
Material contamination, and report the estimated cost of any such appropriate
response, (iv) confirm that any prior removal of Hazardous Material or
underground storage tanks from the Project was completed in accordance with
applicable Laws, (v) confirm whether or not the Land is located in a wetlands
district, and (vi) comply with the USEPA “all appropriate inquiry” rule
contained in 40 C.F.R. Part 312.  Borrower shall also have caused to
be furnished to Lender any environmental disclosure statement required pursuant
to the law of the State;

     

    (j) A report
from Lender’s Consultant that contains an analysis of the Approved Plans and
Specifications, the Budget, the Construction Schedule, the General Contract, all
subcontracts then existing and the Soil Report.  Such report shall be
solely for the benefit of

     

    


    
      
        
           


        

        
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    Lender
and shall contain (i) an analysis satisfactory to Lender demonstrating the
adequacy of the Budget to complete the Project and (ii) a confirmation that the
Construction Schedule is realistic.  Lender’s Consultant shall monitor
construction of the Project and shall visit the Project at least one (1) time
each month, and shall certify as to amounts of construction costs for all
requested fundings; each report of Lender’s Consultant is for the sole benefit
of Lender and Lender shall not be bound by any recommendation or conclusion of
Lender’s Consultant;

     

    (k) Each
Architect’s Certificate;

     

    (l) The
Budget, as approved by Lender pursuant to Article 10
hereof;

     

    (m) Original
executed consents, in form and substance satisfactory to Lender, of the General
Contractor, the Architect, and any other Design Professional to the Collateral
Assignment of Construction Documents; and

     

    (n) Such
other papers, materials and documents as Lender may reasonably require with
respect to the Construction, the Project, Borrower, or Guarantor.

     

    9.2 Construction
Deliveries Required as of Full Loan Opening.

     

    Prior to
Full Loan Opening, in addition to fully satisfying the conditions set forth
above in Section 9.1, Borrower shall also satisfy the following
conditions:

    


    (a) General
Contractor shall have affirmed in writing the validity of the General Contract
and described any Change Orders or pending Change Orders as of the Full Loan
Opening.  As of Full Loan Opening, General Contractor shall provide to
Lender the then-current guaranteed maximum price based upon the 100% complete
and final Approved Plans and Specifications (and 100% buyout of Subcontracts
based upon such 100% complete and final Approved Plans and Specifications) and
the reductions of Allowances as set forth in this subsection (the “Revised
GMP”).  After giving effect to such Revised GMP and Change
Orders, if the Loan is not In Balance, Borrower shall contribute any additional
equity required to put the Loan In Balance (including, without limitation, the
available amount under the Owner’s Hard Cost Contingency being equal to or
greater than 4% of the remaining Project hard costs).  An additional
condition to Full Loan Opening shall be that no more than two percent (2%) of
the total General Contract may be an “Allowance” (as such term is defined under
the AIA A201-1997 General Conditions of the Contract for Construction)
(excluding general conditions, General Contractor’s fees and the Contractor’s
Contingency) and such allowances shall be subject to Lender’s reasonable
approval;

     

    (b) An
initial sworn statement of the General Contractor, approved by Borrower, and
Lender covering all work done and to be done, together with lien waivers
covering all work and materials for which payments have been made by Borrower
prior to the Full Loan Opening;

     

    (c) An update
of the consultant’s report set forth in Section 9.1(j)
above;

     

    (d) Executed
contract(s) for all owner direct cost items signed by the applicable suppliers
of such items, including, without limitation, those for the purchase of the
furniture, fixtures and equipment for the Project.

     

    


    
      
        
           


        

        
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    (e) In
addition to the Partial Plans and Specifications addressed in Section 9.1(f) above,
full and complete detailed plans and specifications for the Improvements in
duplicate, prepared by the Architect (the “Plans and
Specifications”).  Without limiting the foregoing, such Plans
and Specifications must be predicated on, among other things, the Partial Plans
and Specifications approved by Lender, and the characteristics in the Recitals
of this Agreement and the floor layouts and elevations substantially similar to
those which have been previously submitted to Lender.  Lender must
also be satisfied, in its reasonable discretion, that the specifications,
project manual, floor plans, mechanical, electrical, plumbing, fire protection
and life safety, structural and site plans are sufficient and appropriate for
the Project.  Borrower shall deliver packages of such Plans and
Specifications to Lender in accordance with the delivery schedule attached
hereto as Exhibit
R.  Lender shall review each such package of Plans and
Specifications and approve or comment on same within a commercially reasonable
period of time following its receipt thereof.  Borrower shall have
delivered the final package of Plans and Specifications required under Exhibit R, for
Lender’s final review and approval in its reasonable discretion, as more
specifically addressed in Section 9.1(f) above, at least sixty (60) days prior
to the expected day of Full Loan Opening.  Upon Lender’s written
approval of such final package of Plans and Specifications, such final Plans and
Specifications shall be the “Approved Plans and
Specifications”.  Borrower shall have obtained Lender’s
approval of the Approved Plans and Specifications prior to Full Loan Opening.
Other than Change Orders permitted pursuant to the terms of this Agreement, no
changes to the Approved Plans and Specifications shall be permitted without
Lender’s prior written approval;

     

    (f) Borrower
shall have furnished to Lender and Lender’s Consultant, for Lender’s approval,
detailed Plans and Specifications based upon the Partial Proposed Finish
Standards and setting forth a detailed description and quality level for
materials used for the type of construction, the façade and the finishes of each
Residential Unit, and throughout the Hotel, and of all fixtures and personal
property that will be included in the standard price of the individual
Residential Units, and throughout the Hotel, including, without limitation,
items such as floor coverings, wall coverings, electrical systems, lighting
plans, HVAC systems, bathroom and kitchen fixtures and countertops, cabinetry,
appliances and furniture (collectively, “Proposed Finish
Standards”).  Lender must be satisfied, in its reasonable
discretion, that the quality level of the Proposed Finish Standards is
comparable to other condominium developments or hotels, as applicable, in the
same price range and located in Austin, Texas, that the Proposed Finish
Standards are consistent with the Plans and Specifications submitted to Lender,
and that the Hotel finish standards are in accordance with the Hotel
Documents.  Borrower shall have delivered the final Proposed Finish
Standards for Lender’s final review and approval in its reasonable discretion at
least sixty (60) days prior to Full Loan Opening, and Lender shall review and
approve or comment on same within a reasonable period of time following its
receipt thereof.   Borrower shall have obtained Lender’s approval
of such Proposed Finish Standards prior to Full Loan Opening, in which event
such standards shall constitute the “Approved Finish
Standards.”  No material changes to the Approved Finish
Standards shall be permitted without the prior written approval by Lender, to be
determined in Lender’s reasonable discretion.  Borrower shall finish
all Residential Units and the Hotel to the Approved Finish Standards as part of
the Construction required hereunder;

     

    (g) Borrower
has provided evidence to Lender that all of the work, other than that certain
water filtration system, contemplated by that certain Waste Management Plan
dated

     

    


    
      
        
           


        

        
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    March 4,
2008 and prepared by Terracon Consultants, Inc., and any amendments or updates
thereto (the “Waste
Management Plan”), has been completed or otherwise addressed to Lender’s
reasonable satisfaction, such evidence to include, but not be limited to, a
written statement from an authorized representative of Terracon Consultants,
Inc., affirming that the recommendations of such Waste Management Plan were
complied with and no further actions, other than the ongoing use and maintenance
of the water filtration system during the operation of the Project, are required
to address the conditions at the Project site that were disclosed in any of
Environmental Reports delivered to Lender.

     

    (h) Hotel
Operator, and, as may be required by the Hotel Documents, Starwood Hotels &
Resorts Worldwide, Inc., shall have approved the Approved Plans and
Specifications and Approved Finish Standards; and

     

    (i) To the
extent not previously delivered at Closing, the Required Permits, and updates
thereof, which shall include the final full building permits for the Project no
later than thirty (30) days prior to Full Loan Opening.

     

     

    Article
10

     

     

    BUDGET,
CONTINGENCY FUND AND CHANGE ORDERS

     

    10.1 Budget.

     

    Disbursement
of the Loan shall be governed by the Budget for the Project, in form and
substance acceptable to Lender in Lender’s reasonable
discretion.  Borrower shall only be entitled to disbursements that are
in accordance with the Budget.  The Budget shall specify the amount of
cash equity invested in the Project, and all costs and expenses of every kind
and nature whatsoever to be incurred by Borrower in connection with the
Project.  Costs associated with Residential Unit sales (including but
not limited to broker’s commissions, closing and escrow costs) may be paid from
proceeds resulting from any Residential Unit closing to the extent the gross
sales price paid by any Residential Unit Purchaser for its respective
Residential Unit exceeds the applicable Release Price; otherwise, such closing
costs shall be paid in cash by Borrower.  The Budget shall include, in
addition to the Budget Line Items described in Section 10.2 below,
the Contingency Fund described in Section 10.3 below
and amounts satisfactory to Lender for Hard Costs, Soft Costs and other reserves
reasonably acceptable to Lender.  The construction trade line items
contained in the General Contract (or in the schedule of values) shall each be
deemed a Budget Line Item for purposes of this Agreement.  The Budget
is attached hereto as Exhibit G and
made a part hereof.  Except as set forth in this Agreement, all
changes to the Budget shall in all respects be subject to the prior written
approval of Lender, which approval shall be granted or withheld in Lender’s
reasonable discretion.  Borrower shall promptly notify Lender of any
anticipated changes in the line items of the Budget that, if approved, would
result in a net increase in the total amount of the Budget and Borrower shall
not enter into any agreement that would increase the total amount of the costs
in the Budget without Lender’s prior written consent.  In the event
the total Project costs are less than the final Budget, Borrower shall have no
right to borrow the balance of the Loan not needed for Project
costs.

     

    


    
      
        
           


        

        
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    10.2 Budget
Line Items.

     

    (a) The
Budget shall include as line items (“Budget Line Items”),
to the extent determined to be applicable by Lender in its reasonable
discretion, the cost of all labor, materials, equipment, fixtures and
furnishings needed for the completion of the Construction, and all other costs,
fees and expenses relating in any way whatsoever to the Construction of the
Improvements, marketing and sales costs, commissions, operating deficits, real
estate taxes, and all other sums due in connection with Construction and
operation of the Project, the Loan, and this Agreement.  Each line
item in the trade breakdown of the General Contract shall be considered a
separate Budget Line Item for all purposes of this Agreement whether or not
separately shown as Budget Line Items on the Budget attached
hereto.  Borrower agrees that all Loan proceeds disbursed by Lender
shall be used only for the Budget Line Items for which such proceeds were
disbursed, except as reallocated in accordance with this Agreement or otherwise
permitted by Lender in its reasonable discretion.  The Budget shall
not contain any line items payable to Borrower, Guarantor or any Affiliate of
either Borrower or Guarantor and Borrower and Guarantor shall not pay or cause
to be paid any Loan proceeds to any Affiliate of either, except for the
Permitted Affiliate Expenses.  The Budget shall include as Budget Line
Items, outside of Owner’s Hard Cost Contingency and the Soft Cost Contingency,
(i) all fees and sums payable to Hotel Operator or its Affiliates pursuant to
the Hotel Documents, including without limitation, (A) the marketing assistance
fee of $1,250 per Residential Unit payable in twenty-four (24) equal monthly
installments commencing upon the effective date of the Condominium Marketing
License Agreement, (B) pre-opening services budget of $2,536,085, (C)
pre-opening information technology budget of $1,261,604 (which shall be included
within the TV Lease and Technology Line Item), (D) pre-opening inventories
budget of $3,276,000, (E) FF&E of $15,000 per Hotel key, (F) technical
services fees of $513,000, consisting of $1,250 per Hotel key, plus $1,000 per
Residential Unit, and (G) reimbursable expenses under the Technical Services
Agreement up to $5,000 per Hotel key and initial working capital budget of $1500
per Hotel key, but excluding the Condominium Licensing Fee of 4.5% of gross
sales revenue per Residential Unit, which shall be payable to Hotel Operator
from sales proceeds, as opposed to the Budget, and (ii) all costs contemplated
by the Waste Management Plan.

     

    (b) Borrower
shall have the right to reallocate cost savings effected by a final Change Order
or other appropriate final documentation to other Budget Line Items subject to
(x) Lender’s prior written consent, in its reasonable discretion, and (y) the
limits contained in this Section 10.2 and
Section 10.3 of
this Agreement. No
reallocations shall be permitted to or from the Interest Reserve Budget Line
Item, Developer Fee Budget Line Item or for any amounts payable to Borrower,
Guarantor or any Affiliates of Borrower or Guarantor.  If there is a
savings in Hard Costs upon completion of the construction work contemplated by
the General Contract, as determined by Lender in its reasonable discretion,
savings may be reallocated to Owner’s Hard Cost Contingency (except to the
extent a portion of such savings are paid to the General Contractor pursuant to
the terms of the General Contract).  Notwithstanding the foregoing in
the immediately preceding sentence and subject to Lender’s reasonable approval,
Borrower may reallocate any final savings in Hard Costs, which accrue prior to
completion of the Project, to the Owner’s Hard Cost Contingency for use by
Borrower for other Hard Costs.  If the total and final expenditures
for any Soft Cost Budget Line Item are less than the amount provided for in the
Budget, then the savings may be reallocated to the Soft Cost
Contingency.  In the event that the final costs of the
Project

     

    


    
      
        
           


        

        
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    are less
than the total amount of sources of funds in the Budget (including the Loan),
the amount of the cost savings shall not be available for borrowing (e.g., as a
return of equity).

     

    (c) Except as
reallocated in accordance with this Agreement or otherwise permitted by Lender
in its reasonable discretion, Lender shall not be obligated to disburse any
amount for any category of costs set forth as a Budget Line Item that is greater
than the amount set forth for such category in the applicable Budget Line
Item.  Borrower shall pay as they become due all amounts set forth in
the Budget with respect to costs to be paid for by Borrower.

     

    10.3 Contingency
Fund.

     

    The
Budget shall contain Budget Line Items available to Borrower for (i) payment of
Hard Costs, separate and apart from the General Contract (the “Owner’s Hard Cost
Contingency”) and (ii) for payment of Soft Costs (the “Soft Cost
Contingency;” together, the Owner’s Hard Cost Contingency and the Soft
Cost Contingency constitute the “Contingency
Fund”).  At Closing, the funds in the (i) Owner’s Hard Cost
Contingency Budget Line Item must be in an amount equal to $8,000,000, and at no
time shall the Owner’s Hard Cost Contingency be reduced below $8,000,000 to pay
for an increase in the initial contractual amount of such General Contract, and
(b) the Soft Cost Contingency Budget Line Item must be in an amount equal to
$750,000.  At Full Loan Opening, the remaining unallocated Owner’s
Hard Cost Contingency must equal at least 4% of the unpaid cost of all
construction hard cost Budget Line Items.

     

    Lender
shall not be obligated to disburse or reallocate all or any part of the
Contingency Fund, except as set forth herein.  The Owner’s Hard Cost
Contingency may be used by Borrower to pay the cost of Change Orders (which have
been approved by Lender or as to which Lender’s approval is not required under
Section 10.5) or
reallocated to other Hard Costs (in accordance with this Agreement) on a pro rata basis over the
course of Construction, according to the percentage of construction trade items
(which shall equal the amount of the General Contract Price less general
conditions, the General Contractor’s fee and any Contractor’s Contingency)
expended by Borrower and completed to such date.  Funds from the Soft
Cost Contingency may be reallocated to pay other Soft Costs, excluding the
Developer Fee Budget Line Item (and any other amounts payable to Borrower,
Guarantor, or any of their Affiliates) and the Interest Reserve Budget Line Item
(i) without Lender’s approval on a pro rata basis such that the cumulative
percentage of such reallocated funds is equal to or less than the percentage of
completion of the Project, and (ii) otherwise subject to Lender’s prior written
approval, in its reasonable discretion.

     

    The
Budget Line Item for amounts payable to the General Contractor under the General
Contract may also include a contingency amount that is available to the General
Contractor (the “Contractor’s
Contingency”).  This is in addition to the Contingency Fund,
which is intended to afford protection to Lender, and any Contractor’s
Contingency may not be counted towards the amounts required to be contained in
the Contingency Fund by the preceding paragraphs of this Section 10.3. The
Contractor’s Contingency shall be used in accordance with the terms of the
General Contract.

     

    


    
      
        
           


        

        
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    10.4 Optional
Method for Payment of Interest.

     

    For
Borrower’s benefit, the Budget includes a Budget Line Item for interest on the
Loan (the “Interest
Reserve Budget Line Item”). (Neither the Interest Reserve Budget Line
Item nor any other part of the Loan shall be available to pay interest on any
Mezzanine Loan.)  Borrower hereby authorizes Lender from time to time,
for the mutual convenience of Lender and Borrower, to disburse Loan proceeds to
pay all the then accrued interest on the Note when due, regardless of whether
Borrower shall have specifically requested a disbursement of such
amount.  Any such disbursement, if made, shall be added to the
outstanding principal balance of the Note and shall, when disbursed, bear
interest pursuant to the Note.  Borrower may borrow the Interest
Reserve Budget Line Item to pay interest on the Loan upon qualifying for such
disbursement by satisfying the applicable requirements of Section 4.1(c)
hereof.  Without limiting the foregoing, or the provisions of Article 11
below, once the Interest Reserve Budget Line Item has been expended, Borrower
shall pay interest from its own funds.  In the event the Project,
during any month during the term of the Loan, achieves a positive Net Operating
Income, such Net Operating Income shall be applied to the payment of interest
before the funds in the Interest Reserve Budget Line Item are used to pay such
interest.  If the Net Operating Income exceeds the monthly interest
then due, the excess shall continue to be held in the operating account for the
Project established pursuant to Section 15.1(ii), and
such excess shall be applied to pay the interest accrued on the Loan for the
following month.

     

    10.5 Change
Orders.

     

    Borrower
agrees that no changes will be made in the Approved Plans and Specifications (or
in such Plans and Specifications as have been approved by Lender from time to
time) without the prior written approval of Lender in Lender’s reasonable
discretion, and Borrower must notify Lender in writing of any such change at
least seven (7) days prior to date such change order will be implemented,
provided, however, that Borrower may make changes to the Approved Plans and
Specifications without Lender’s approval if (a) Borrower notifies Lender in
writing of such change in no event later than the next construction draw
following Borrower’s agreement to the changes; (b) Borrower obtains the approval
of all parties whose approval is legally required, including any affected
Residential Unit Purchaser, sureties, and any Governmental Authority to the
extent approval from such parties is required; (c) the structural integrity of
the Improvements is not impaired; (d) no change in architectural appearance is
effected; (e) the performance of the mechanical, electrical, and life safety
systems of the Improvements is not affected; (f) the change does not result in a
use of a particular component that is not of similar quality or functional
equivalency as the original components of the Project and as a result of such
change there would be no diminution in value or impairment of the marketability
of the Project as described in the Approved Plans and Specifications; (g) the
cost of, or reduction in cost, resulting from any such change does not exceed
$200,000; and (h) the Loan will remain In Balance (after giving effect to
any reallocation of the Contingency Fund or other Budget Line Items that
Borrower has qualified for pursuant to this Article 10).  Changes
in the scope of construction work or to any construction related contract must
be documented with a Change Order on the AIA Form G 701 or equivalent
form.  Borrower shall not agree to or implement any Change Order
without the prior written consent of Hotel Operator (or its Affiliate) where
such approval is required under any of the Hotel Documents.

     

    


    
      
        
           


        

        
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Article
11

     

     

    SUFFICIENCY
OF LOAN

     

    11.1 Loan
In Balance.

     

    (a) The Loan
is required to be In Balance at all times.  The Loan shall be “In Balance” only when
both (i) the Available Sources of Funds equal or exceed Lender’s Estimate of
Remaining Costs and (ii) each Budget Line Item is sufficient to pay the costs
such Budget Line Item was established to pay for (including, with respect to the
Interest Reserve Budget Line Item interest in the Loan through the Maturity
Date), all as determined by Lender from time to time in its reasonable
discretion in accordance with the provisions of this Article
11.  The determination by Lender at any time that the Loan is
In Balance shall not preclude Lender from determining at a later time that the
Loan is not In Balance.  Lender shall not be obligated to make any
disbursements unless the Loan is In Balance.

     

    (b) Borrower
agrees that if Lender determines in its reasonable discretion that the Loan is
not In Balance, regardless of how such condition may have been caused, Borrower
shall within ten (10) days after written request by Lender (and in any event
prior to any further disbursement of the Loan) deposit the deficiency with
Lender (“Deficiency
Deposit”). The Deficiency Deposit shall be first exhausted for costs of
the Project before any further disbursements of the Loan shall be made.
Disbursement of a Deficiency Deposit shall be subject to the same conditions
precedent and the same requirements as apply to a disbursement of the Loan
pursuant to this Agreement.  Any Deficiency Deposit deposited with
Lender shall be added to and made a part of the Equity Investment of Borrower in
the Project, and no interest shall be paid to Borrower with respect to any such
amounts.  Borrower pledges to Lender any Deficiency Deposit (and
Borrower’s rights in any such account and interest earned thereon) as security
for the Loan.

     

    (c) (i) The
“Available Sources of
Funds” shall mean the Unfunded Commitment, adjusted as provided below,
plus any remaining unexpended Deficiency Deposit, less the remaining balance of
the Contingency Fund.  Prior to Full Loan Opening, the unfunded
Initial Equity Investment shall be an Available Source of
Funds.  Borrower may seek to increase the Available Sources of Funds
(or the amount of any Budget Line Item) by requesting that Lender reallocate
cost savings in another Budget Line Item or a portion of the Contingency Fund to
pay for cost increases in Budget Line Items, and Lender shall grant or deny such
request in accordance with the provisions of Sections 10.2(b) or
10.3.  Lender
may, so long as it is entitled to do so under Sections 10.2(b)
or 10.3, deny a
request for reallocation of cost savings or a portion of the Contingency Fund,
even if as a result thereof Borrower would be required to make a Deficiency
Deposit to maintain the Loan In Balance.

     

    (ii) The
following specific adjustments shall be made to the Available Sources of Funds
for this transaction:  (i) Upgrade Deposits may be counted as an
Available Source of Funds but only up to the amount of costs of upgrades
included in Lender’s Estimate of Remaining Costs, and (ii) tax escrow
deposits may be counted as an Available Source of Funds to the extent real
estate taxes are included in Lender’s Estimate of Remaining Costs.

     

    


    
      
        
           


        

        
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    (d) “Lender’s Estimate of
Remaining Costs” shall mean the amount which Lender estimates in its
reasonable discretion is necessary to pay for all Hard Costs and Soft Costs of
the Project which have not yet been paid, including, without limitation, the
following:  (i) all costs of the Construction in accordance with the
Approved Plans and Specifications; (ii) all costs required to complete the
preparation of the Residential Units and the Hotel in accordance with the
Approved Finish Standards, including, without limitation, all finishes of
Residential Units required to be paid for by Borrower under Sales Agreements or
reasonably anticipated for unsold Residential Units; (iii) marketing and sales
costs for the Residential Units (other than closing costs which are paid from
gross sales proceeds or by Borrower pursuant to Section 10.1); (iv)
marketing, sales, and operation costs for the Hotel, Commercial Space and Venue;
(v) costs of furniture, fixtures and equipment for the Hotel, Commercial Space
and Venue; (vi) any work to be completed by Borrower in accordance with the
Budget; (vii) the amount required to pay interest on the Loan through the
Maturity Date; (viii) all expenses payable or reimbursable to Lender under
the terms of this Agreement; (ix) all real estate taxes, insurance premiums
and operating costs of the Project (in excess of any Net Operating Income which
Lender estimates will be available for payment of such costs); (x) all amounts
needed for tenant allowances, tenant improvements and leasing commissions with
respect to executed Leases and with respect to unleased space at the Project;
(xi) all other amounts of any type or nature incurred or expected to be incurred
in connection with the acquisition, Construction, marketing and sale of the
Project or in order for Borrower to comply with the Loan Documents or the
requirements of Governmental Authorities.

     

    (e) In
determining Lender’s Estimate of Remaining Costs (or the amount of any Budget
Line Item), Lender shall be entitled to take into account all conditions, facts
and circumstances related to the Project or the Loan then existing, and all
other considerations which Lender, in its reasonable discretion, determines are
relevant to, or reasonably likely to have an impact upon, any of the amounts
included in Lender’s Estimate of Remaining Costs.  By way of example
and not limitation, Lender shall have the right, in making Lender’s Estimate of
Remaining Costs (or determining the sufficiency of any Budget Line Item), to
consider in such manner and to such extent as Lender determines is appropriate
in its reasonable discretion: (i) all existing and proposed modifications to the
Approved Plans and Specifications (whether or not Lender has the right to
approve the same), whether the same are proposed by Borrower or by a contractor,
(ii) all existing construction contracts and purchase orders or, in those
instances where construction contracts or purchase orders have not yet been let,
written bids from responsible contractors, tradesmen and material suppliers
acceptable to Lender in its reasonable discretion, or Lender’s estimate of such
costs, (iii) all Change Orders and pending Change Orders, (iv) all claims by any
contractors or suppliers for increased or additional amounts, including all
claims by the General Contractor for increases in the amount payable under
General Contract, (v) all disputes between Borrower and any supplier or
contractor (including the General Contractor), (vi) whether any savings in a
Budget Line Item have been demonstrated to Lender’s satisfaction to be final and
permanent and whether any proposed reallocation of such savings to pay other
costs satisfies the limitations and restrictions in Section 10.2(b)
of this Agreement (and any applicable restrictions or limitations in the General
Contract), and (vii) the effect of actual or anticipated delays, whether or not
permitted by the terms of this Agreement.

     

    


    
      
        
           


        

        
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    11.2 Additional
Equity Investment.

     

    The
Budget has been prepared and approved with the expectation that Eight Million
Dollars ($8,000,000) in Project costs set forth in such Budget will be funded by
Reinvested Proceeds available pursuant to Section
14.10.  Such anticipated Eight Million Dollars ($8,000,000) of
Reinvested Proceeds shall be an Available Source of Funds for determining
whether the Loan is In Balance, provided that if less than Eight Million Dollars
($8,000,000) of Reinvested Proceeds has been generated and is on deposit with
Lender upon the earliest to occur of the following: (A) the Initial Maturity
Date, (B) the occurrence of an Event of Default, and (C) the date upon which the
Unfunded Commitment (exclusive of the Interest Reserve Budget Line Item) is
insufficient to fund a draw request for Project Costs then due, Borrower, in
addition to the Initial Equity Investment, shall deposit with Lender additional
equity in an amount equal to (i) Eight Million Dollars ($8,000,000), less (ii)
the aggregate amount of Reinvested Proceeds actually received by Lender to date
(the “Additional
Equity Investment,” and collectively with the Initial Equity Investment
and any additional equity investment that may be required by Lender hereunder,
the “Equity
Investment”).   Borrower shall deposit any required
Additional Equity Investment with Lender within ten (10) days of written request
by Lender (and, in any event, any further disbursement of the
Loan).  Provided Borrower contributes such Additional Equity
Investment as and when required pursuant hereto and provided further that no
Default or Event of Default then exists, on or following such time as the full
amount of the Reinvested Proceeds are contributed pursuant to Section 14.10(b)
hereof, Borrower may, as part of its draw package, request that Lender reimburse
Borrower in the amount of the Additional Equity Investment.

     

     

    Article
12

     

     

    CONSTRUCTION
PAYOUT REQUIREMENTS

     

    12.1 Applicability
of Sections.

     

    The
provisions contained in this Article 12 shall
apply to the Full Opening of the Loan and to all disbursements of proceeds
during Construction.

     

    12.2 Monthly
Payouts.

     

    After the
Full Opening of the Loan, further disbursements shall be made during
Construction from time to time as the Construction progresses, but no more
frequently than once in each calendar month, except to pay interest from the
Interest Reserve Budget Line Item in accordance with Section 10.4 or as
Lender may otherwise permit in its sole discretion.  Hard Costs shall
be disbursed as incurred, less the Retainage.  The General
Contractor’s fee shall be disbursed on a pro rata basis according
to the percentage of construction trade items (excluding general conditions,
Contractor’s fees and the Contractor’s Contingency) completed.  All
disbursements of Loan proceeds must be approved by Lender in its reasonable
discretion based on costs expended as contained in the Budget.  Lender
shall have no obligation to disburse funds if an Event of Default or material
Default has occurred and is continuing.  Lender reserves the right to
at any time to make disbursements into an escrow to be subsequently disbursed to
Borrower by the Title Insurer.

     

    


    
      
        
           


        

        
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    Lender,
through Lender’s Consultant and/or its own employees, may perform site
inspections to confirm that progress on the Project conforms to the sworn
statements, and that the Project is progressing within the Budget and the
Approved Plans and Specifications.  Such inspections and confirmations
are solely for the benefit of Lender and may not be relied upon by
Borrower.  Upon such confirmation, and upon receipt of a title
company’s commitment to issue a date down endorsement insuring the funds about
to be disbursed, the Title Insurer shall disburse money to Borrower or General
Contractor pursuant to the escrow agreement, or, after any default, directly to
subcontractors or other payees.  Provided Lender receives complete and
orderly draw requests, together with the appropriate lien waivers, it shall make
every commercially reasonable effort to fund such requests within ten (10)
Business Days.  No disbursements for costs arising under the General
Contract for a particular component of the Project shall be made later than
ninety (90) days after the applicable Completion Date for such
component.

     

    12.3 Documents
to be Furnished for Each Disbursement.

     

    As a
condition precedent to each disbursement of the Loan proceeds (including the
initial disbursement at the Full Opening of the Loan), Borrower shall furnish or
cause to be furnished to Lender the following documents covering each
disbursement, in form and substance reasonably satisfactory to
Lender:

     

    (a) A
completed draw request in the form attached as Exhibit H hereto
and made a part hereof, including a Borrower’s Sworn Statement executed by an
Authorized Representative and a completed standard AIA Form G702 and Form G703
(or similar forms acceptable to Lender) signed by the General Contractor and
certified by the Architect, together with General Contractor’s sworn statements
and unconditional waivers of lien, and all Design Professionals’, consultants’,
vendors’, contractors’, subcontractors’, material suppliers’ and laborers’
waivers of lien (except that partial lien waivers from subcontractors and Design
Professionals may be delivered on a trailing thirty (30) day basis, except for the final
disbursement to each subcontractor) substantiating each line item of the draw
request and covering all work, paid with the proceeds of the prior draw
requests, together with such invoices, contracts or other supporting data as
Lender may reasonably require to evidence that all costs for which disbursement
is sought have been incurred, to be followed by lien waivers for such draw no
later than the subsequent draw request, so long as the Title Insurer provides
Lender with a date down endorsement to the Title Policy as provided in Section 12.3(f)
below;

     

    (b) A sworn
owner’s statement detailing the names of all suppliers, vendors, consultants and
contractors with whom Borrower has contracted, amounts of contracts, amounts
paid to date, and amounts of current payment and balances due, broken down in a
consistent manner with the Budget;

     

    (c) A
Contractor’s statement detailing the names and addresses of all suppliers,
contractors and its own forces contracted to perform work including amounts of
contracts, amounts paid to date, change orders, amounts of current payment,
Retainage, and balances due;

     

    (d) The
Contractor’s application and certification for payment executed by Borrower’s
lead Design Professional;

     

    


    
      
        
           


        

        
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    (e) Paid
invoices or other evidence reasonably satisfactory to Lender that fixtures and
equipment, if any, have been paid for and are free of any lien or security
interest therein;

     

    (f) A date
down endorsement to the Title Policy issued to Lender covering the date of
disbursement and showing the Deed of Trust as a first, prior and paramount lien
on the Project subject only to the Permitted Exceptions and real estate taxes
that have accrued but are not yet due and payable and particularly that nothing
has intervened to affect the validity or priority of the Deed of
Trust.  If the Title Policy is subject to a pending disbursement
endorsement, the amount of such endorsement must be increased to the full amount
funded;

     

    (g) A report
from Lender’s Consultant (who shall be retained solely at Borrower’s expense)
that contains an analysis satisfactory to Lender demonstrating the adequacy of
the Budget to complete the Project, a confirmation that Construction is
proceeding in accordance with the Construction Schedule and the Approved Plans
and Specifications, and a certification as to amounts of Construction costs for
the applicable requested funding, provided, however, that the opinion of
Lender’s Consultant shall not be binding on Lender;

     

    (h) Copies of
any proposed or executed Change Orders on the standard AIA G701 form that have
not been previously furnished to Lender;

     

    (i) Copies of
all construction contracts (including subcontracts) that have been executed
since the last disbursement;

     

    (j) Verification
of expenditures for Soft Costs;

     

    (k) All
Required Permits not previously delivered to Lender;

     

    (l) Upon
commencement of sales, the Sales Report; and

     

    (m) Such
other instruments, documents and information as Lender or the Title Insurer may
reasonably request.

     

    12.4 Retainages.

     

    At the
time of each disbursement of Loan proceeds, ten percent (10%) of the draw
request for Hard Cost Line Items in the Budget (excluding the General
Contractor’s fee line item and the General Contractor’s general conditions)
shall be withheld from the amount disbursed to the various contractors,
subcontractors and material suppliers for costs of the Construction (the “Retainage”).  Once
Lender determines, in its sole discretion, that any given Subcontract is 50%
complete and all such work thereunder has been approved by Lender and Lender’s
Consultant, no further Retainage for such Subcontract will be
required.  Once Lender determines, in its sole discretion, that any
given Subcontract is fully complete and all work thereunder has been approved by
Lender and Lender’s Consultant, any Retainage payable under such Subcontract
shall be released.  The remaining Retainage shall be disbursed when
Borrower has satisfied the requirements set forth in Article 13
below.  Retainage may be witheld from tenant improvement work to be
performed by Borrower on the same basis.  Notwithstanding the
foregoing, Lender shall not withhold a Retainage for purchases of those
materials set forth on Exhibit P attached
hereto.

     

    


    
      
        
           


        

        
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    12.5 Disbursements
for Materials Stored On-Site.

     

    Any
requests for disbursements that in whole or in part relate to materials,
equipment or furnishings that Borrower owns and that are not incorporated into
the Improvements as of the date of the request for disbursement, but are to be
temporarily stored at the Project, shall be made in an aggregate amount not to
exceed $3,000,000 with respect to materials covered by the General Contract plus
$1,000,000 for materials under owner direct contracts other than the General
Contract (such amounts are subject to increase at Lender’s reasonable discretion
upon request of Borrower).  Any such request must be accompanied by
evidence satisfactory to Lender that (a) such stored materials are included
within the coverages of insurance policies carried by Borrower, (b) the
ownership of such materials is vested in Borrower free of any liens and claims
of third parties, and Lender has a purported security interest in such stored
materials; (c) such materials are properly protected against theft or damage,
(d) Lender’s Consultant has viewed and inspected the stored materials, and (e)
in the opinion of Lender’s Consultant the stored materials are physically
secured and can be incorporated into the Project within forty-five (45)
days.

     

    12.6 Disbursements
for Off-site Materials.

     

    Lender
shall make disbursements for materials stored off-site, in which event all of
the requirements of Section 12.5 shall be
applicable to such disbursement, provided that the following additional
requirements must have been complied with:  (a) such stored
materials are stored in a bonded public warehouse or another facility acceptable
to Lender in its sole discretion; (b) Borrower has caused any warehouseman
(as defined in Section 7-102 of the Uniform Commercial Code) that possesses,
holds or controls the stored materials to execute (i) a bailment letter in the
form of Exhibit K and
(ii) a non-negotiable warehouse receipt covering such stored materials in form
sufficient to enable Lender to have perfected security interest therein and (c)
Borrower has caused any party other than a warehouseman that possesses, holds or
controls the stored materials to execute and deliver to Lender a bailment letter
in the form of Exhibit L.  At
any one time, the maximum amount of disbursements for materials stored offsite
shall not exceed $3,000,000 with respect to materials  covered by the
General Contract plus $3,000,000 for materials under owner direct contracts
other than the General Contract (such amounts are subject to increase at
Lender’s reasonable discretion upon request of Borrower).

     

    12.7 Specific
Limitation on Disbursements.

     

    No
amounts in the Budget shall be disbursed to Borrower, Guarantor, any direct or
indirect beneficial owner of an interest in Borrower, Guarantor or any Affiliate
of any of the foregoing, except for (a) the Developer Fee Budget Line Item equal
to $6,000,000 (the “Permitted Affiliate
Expenses”), which shall be paid, provided no Event of Default exists and
the Loan is In Balance as follows: (i) $4,500,000, to be paid in equal monthly
installments of $112,500 per month over Loan Term (or until such earlier time as
such amount has been fully disbursed), and (ii) the remaining balance of
$1,500,000 to be paid after the repayment in full of the Loan; and (b) a payment
to Guarantor of up to $500,000 for a employee salary reimbursement for OCIP
administration on behalf of Borrower.  Borrower shall have no right to
borrow any portion of the developer’s fee referred to in clause (a)(ii) above
from Lender.

     

    


    
      
        
           


        

        
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    All
disbursements of Permitted Affiliate Expenses are subject to the same conditions
precedent as apply to disbursements generally under this Agreement.

     

    12.8 Disbursements
Related to Commercial Space Leases.

     

    Loan
proceeds may be used to fund leasing commissions and tenant improvements with
respect to Approved Leases, provided (a) the maximum cost to be funded with
respect to each Commercial Space Lease shall not exceed (i) for tenant
improvements, the dollar amount per Rentable Square Foot set forth on Exhibit Q attached
hereto with respect to the type of space being leased (the “Allowable Tenant
Improvements”), and (ii) for leasing commissions, $21.00 per Rentable
Square Foot, and (b) the undisbursed amount in the (i) Tenant Improvements
Budget Line Item must be sufficient to pay for the Allowable Tenant Improvements
for all Commercial Space for which tenant improvements have not been paid, and
(ii) the undisbursed amount in the Commercial Leasing Commissions Budget Line
Item must equal at least $21 times the number of unleased Rentable Square Feet
in the Commercial Space.  Borrower shall fund any excess as the first
dollars to be funded for any Commercial Space, provided that cost savings in (i)
tenant improvements for any one Commercial Space Lease may be reallocated to
tenant improvements with respect to any other Commercial Space Lease, and (ii)
leasing commissions for any one Commercial Space Lease may be reallocated to
leasing commissions with respect to any other Commercial Space
Lease.  In addition to any items to be provided by Borrower pursuant
to Section 12.3
hereof, and as a condition precedent to the first advance for any tenant
improvements pursuant to a Lease, Borrower shall furnish to Lender for approval
a budget for the tenant improvements, an estimated schedule for the completion
of the improvements, copies of all proposed contracts with trades or
subcontractors relating to the completion of the tenant improvements, plans and
specifications for the tenant improvements and such other documents and
information which will demonstrate that the tenant improvements will be
completed in accordance with the Lease and the Budget.  Borrower shall
also promptly provide to Lender proof of payment of all leasing
commissions.

     

    12.9 Delivery
of Subcontracts.  »

     

    


     

    Borrower
shall deliver to Lender by the deadlines specified in Exhibit N those
certain fully-executed Subcontracts for the trades and divisions set forth on
Exhibit N,
which Subcontracts shall be in form and substance satisfactory to Lender in its
reasonable discretion.  The receipt of Subcontracts by the applicable
deadline as set forth in Exhibit N shall be a
condition to funding any then-pending or forthcoming draw request.

     

    


    
      
        
           


        

        
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    Article
13

     

     

    FINAL
DISBURSEMENT FOR CONSTRUCTION

     

    13.1 Final
Disbursement for Construction.

     

    Lender
will advance to Borrower the final disbursement for the cost of the Construction
(including retainages not yet disbursed) when the following conditions have been
complied with, provided that all other conditions in this Agreement for
disbursements have been complied with:

     

    (a) The
Improvements have been fully completed and equipped substantially in accordance
with the Approved Plans and Specifications free and clear of materialmen’s liens
and security interests and are ready for occupancy;

     

    (b) Borrower
shall have furnished or caused to be furnished to Lender “all risks”
casualty insurance and windstorm and flood insurance each in form and amount and
with companies reasonably satisfactory to Lender in accordance with the
requirements contained herein;

     

    (c) Borrower
shall have furnished to Lender copies of all licenses and permits required by
any Governmental Authority having jurisdiction for the occupancy of the
Improvements and the operation thereof, including a final certificate of
occupancy from the municipality in which the Project is located or a temporary
certificate of occupancy, so long as (i) Residential Units may still be sold and
occupied, (ii) the Hotel is open and operating in accordance with the Hotel
Documents, (iii) the Commercial Space may still be rented and/or sold and
occupied, and (iv) the Venue is open and operating in accordance with the
management agreement reviewed and approved by Lender in accordance
herewith;

     

    (d) Borrower
shall have furnished a plat of survey covering the completed Improvements in
compliance with Section
8.1(d);

     

    (e) All
fixtures, furnishings, furniture, equipment and other property required for the
operation of the Project shall have been installed free and clear of all liens
and security interests, except in favor of Lender;

     

    (f) Borrower
shall have furnished to Lender copies of all final waivers of lien (other than
the liens that Borrower is contesting and has insured or bonded over in
accordance with Section 15.1(f) of
this Agreement), and sworn statements from contractors, subcontractors and
material suppliers and an affidavit from the General Contractor in accordance
with the mechanic’s lien law of the State or as otherwise established by
Lender;

     

    (g) Borrower
shall have furnished to Lender a certificate from the Architect or other
evidence satisfactory to Lender in Lender’s sole discretion dated at or about
the Completion Date stating that (i) the Improvements have been completed
substantially in accordance with the Approved Plans and Specifications, and (ii)
the Improvements as so completed comply with all applicable Laws in all material
respects; and

     

    


    
      
        
           


        

        
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    (h) Lender
shall have received a certificate from Lender’s Consultant for the sole benefit
of Lender that the Improvements have been satisfactorily completed substantially
in accordance with the Approved Plans and Specifications.

     

    Borrower
shall comply with and satisfy each of the foregoing final disbursement
conditions contained in this Section 13.1 within
ninety (90) days after the Completion Date.

     

     

    Article
14

     

     

    SALE
OF RESIDENTIAL UNITS OR OTHER PORTIONS OF THE PROJECT

     

    14.1 Price
List Schedule.

     

    Borrower
has submitted to Lender for its written approval a Price List Schedule (the
“Price List
Schedule”) stating, at a minimum, a detailed breakdown of each
condominium Residential Unit’s size, type, location and gross sales price
(“List Price”)
for each Residential Unit (including, but not limited to, a weighted average
gross sales price (excluding Parking Spaces and Upgrades) of not less than $620
per Saleable Square Foot for each Residential Unit).  The approved
Price List Schedule is attached to this Agreement as Exhibit
M.  No changes to the approved Price List Schedule shall be
permitted without Lender’s prior written approval, in Lender’s sole and
reasonable discretion.  The List Prices for each Residential Unit
include the price of one (1) Parking Space per bedroom in such Residential Unit,
up to two (2) Parking Spaces per Residential Unit, except for the penthouse
Residential Units, which are each allocated three (3) Parking Spaces but does
not include storage space.  Of the 306 Parking Spaces allocated to the
Residential Units collectively, 300 Parking Spaces shall be included in the List
Prices of such Residential Units as set forth above, and 6 Parking Spaces (the
“Excess Parking
Spaces”) shall not be included in the List Price of any Residential Unit
and shall be available for sale at an additional charge.

     

    14.2 Sales
Agreements.

     

    Each
Residential Unit shall be sold under a written agreement (the “Sales Agreement”) in
the form of the sales agreements attached hereto as Exhibit O, or on a
form otherwise approved by Lender, in its sole discretion in all material
respects conforming to all Laws, including those requiring disclosures to
prospective and actual buyers.  Lender has previously approved the
form of the Sales Agreement to be used for such Residential Unit sales, which
form of sales contract is attached hereto as Exhibit
O.  No Residential Unit may be leased, sold or conveyed under
any lease, conditional sales contract or other arrangement where Borrower
retains a deferred portion of the purchase price or any residual or contingent
interest in the Residential Unit, including any purchase money security
interest, without the express prior written consent of Lender in each
instance.  All agreements (each, also a “Sales Agreement”)
with respect to the sale of any portion of the Project other than the
Residential Units shall be subject to the prior written approval of Lender in
its reasonable discretion. Borrower shall deliver to Lender a copy of each
executed Sales Agreement within thirty-one (31) days of its
execution.  Borrower shall promptly enforce the obligations of the
purchasers under each Sales Agreement upon default by any such purchaser, except
as lender may otherwise agree in writing in its reasonable
discretion.

     

    


    
      
        
           


        

        
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    14.3 Purchaser
Deposits.

     

    (a) On or
before Closing (as to earnest money deposits received prior to Closing), and
promptly after receiving any additional deposits made by the Residential Unit
Purchasers from time to time (as to earnest money deposits received following
Closing), Borrower shall deposit with Armbrust & Brown, L.L.P. and Heritage
Title Company of Austin, Inc., jointly and severally, as escrow agent (or any
successor agent approved by Lender in writing in its sole discretion) (together,
jointly and severally, the “Escrow Agent”), in
accordance with the Escrow Agreement, a copy of which has been delivered to
Lender, and shall cause Escrow Agent to maintain in one or more accounts titled
in the name and subject to the control of Escrow Agent all earnest money
deposits paid by Residential Unit Purchasers under the Sales Agreements (the
“Earnest Money
Deposits”).  At Lender’s option, Borrower shall require Escrow
Agent to use Lender as the depository bank for all deposits, and in such case,
the deposits shall be placed in an interest bearing account.  Such
account(s) shall bear interest at a rate comparable to the rate provided by
Escrow Agent.

     

    (b) Borrower
shall require all Residential Unit Purchasers to make cash Earnest Money
Deposits of at least ten percent (10%) of the gross sales price at the time of
contract execution.  If Earnest Money Deposits are held by an Escrow
Agent, Borrower shall cause Escrow Agent to deliver to Lender within seven (7)
days of the end of each calendar month a statement indicating the amount of
funds on deposit representing Earnest Money Deposits, together with information
on the date of deposit, and to which Residential Unit all such deposits
apply.  Borrower shall not accept any non-cash Earnest Money Deposits
or Upgrade Deposits.  Borrower shall not be permitted to use or apply
the Earnest Money Deposits prior to the closing of the sale of a Residential
Unit, whereupon the Earnest Money Deposit shall be considered part of the Net
Sales Proceeds and applied as set forth in Section
14.9.

     

    (c) If a
Residential Unit Purchaser desires to alter the Approved Construction Finish
Standards, which results in additional costs to Borrower to complete a
Residential Unit (an “Upgrade”), Borrower
shall require such Residential Unit Purchaser to deposit funds with Lender prior
to the commencement of any work relating to such Upgrade (the “Upgrade
Deposit”).  Borrower shall require Residential Unit Purchasers
to make Upgrade Deposits equal to one hundred percent (100%) of the cost to
Borrower of such Upgrade.  All Upgrade or Residential Unit
customization costs shall be subject to Lender’s approval if such costs for any
Residential Unit are in excess of Forty Dollars ($40.00) per Saleable Square
Foot.   Loan proceeds shall not be available for payment of costs
incurred in connection with Upgrades or customization items, the sole
responsibility for such costs being with Borrower.  So long as
permitted under applicable law, Lender shall permit Borrower to use Upgrade
Deposits to perform such Upgrades.  To the extent that the amount of
Upgrade Deposit on deposit with Lender is not sufficient to pay in full the
costs of any such Upgrades when due, Borrower shall promptly deposit with Lender
an additional Equity Investment equal to the costs of the
Upgrade.  Such deposit will be required at the time of the execution
of the Sales Agreement containing the Upgrade.  Lender shall also be
entitled to inspect any Upgrade work, and shall be entitled to review and
approve reasonable supporting documentation with respect to such Upgrade work,
in a manner commensurate with other Hard Cost disbursements before approving
payment therefor.

     

    


    
      
        
           


        

        
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    (d) The
Deposits shall be segregated from other funds and shall be held, applied or
returned, as applicable, in accordance with the terms of the respective Sales
Agreement and applicable Laws.  To the extent Borrower becomes
entitled to retain any Deposits that have not been previously applied in
accordance herewith (i.e. upon the forfeiture of any deposit by a Residential
Unit Purchaser), such amounts shall be paid to Lender and applied to the
Loan.  To the extent that a Residential Unit Purchaser becomes
entitled to return of its Deposits under its Sales Agreement or under applicable
Laws, so long as the Upgrade Deposit has not already been spent by Borrower,
Borrower shall be entitled to notify either Lender or the Escrow Agent, as
applicable, and withdraw from the escrow account such Deposit for return to the
Residential Unit Purchaser, with a copy of such notice to be simultaneously sent
to Lender if Deposits are held by an Escrow Agent.  The Escrow Agent
may not be changed without the prior written consent of Lender. Notwithstanding
the foregoing, Lender hereby acknowledges and agrees that Borrower’s rights to
the Deposits are subject to the rights of the Residential Unit Purchasers to
such Deposits as set forth in the Sales Agreements, the Escrow Agreement and
under applicable Law, and that Lender or the Escrow Agent, as the case may be,
may be obligated to return the Deposits to such Residential Unit Purchasers when
and as so required even if an Event of Default exists.

     

    (e) Borrower
hereby grants to Lender a security interest in all of Borrower’s right, title
and interest in and to the Deposits and all accounts holding any such deposits
from time to time.  Upon request by Lender, Borrower shall promptly
provide to Lender such documentation as Lender determines is necessary to
confirm and perfect such security interest.  Such security interest is
subject to the rights of Residential Unit Purchasers in and to such Deposits in
accordance with the terms of their respective Sales Agreements and applicable
Laws.

     

    14.4 Residential
Unit Sales.

     

    Borrower
may enter into Sales Agreements and sell Residential Units without Lender’s
prior written consent only if:

     

    (a) A Sales
Agreement is executed with the Residential Unit Purchaser, the form and
substance of which does not materially differ from the form of sales contract
attached hereto as Exhibit O and
approved by Lender in writing and that otherwise conforms to the requirements of
this Agreement, and Borrower has not entered into any side agreements relating
to the purchase of the Residential Units with any Residential Unit
Purchaser.

     

    (b) The Sales
Agreement requires full payment in cash not later than closing, with no purchase
money financing provided by Borrower, and the sale of the Residential Unit is
for a base price (including one (1) Parking Space per bedroom in such
Residential Unit, up to two (2) Parking Spaces per Residential Unit, except for
the penthouse Residential Units, which are allocated three (3) Parking Spaces
per Residential Unit) that is greater than or equal to 90% of such Residential
Unit’s List Price set forth in the Price List Schedule, excluding from such base
sale price any Upgrades and any seller concessions or discounts;

     

    (c) The Sales
Agreement requires non-refundable earnest money of at least ten percent (10%) of
the gross sales price to be deposited with Lender or the Escrow Agent in
accordance with Section 14.3
hereof;

     

    


    
      
        
           


        

        
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    (d) The
Residential Unit Purchaser is not affiliated with Borrower or Guarantor, and no
more than two Residential Units may be purchased by any single Residential Unit
Purchaser or its Affiliates without Lender’s prior approval, except that up to
nine (9) Residential Units may be sold to Affiliates of Borrower or
Guarantor;

     

    (e) The Sales
Agreement must not be cancelable or contain any unexpired contingencies except
as set forth in Exhibit
O;

     

    (f) The Sales
Agreement must not include a Residential Unit completion, delivery, or closing
date which gives the Residential Unit Purchaser the ability to cancel or
terminate the Sales Agreement.  Notwithstanding the foregoing, the
Sales Agreement may include an outside estimated Project completion date that is
no earlier than one (1) year following the completion date for the floor upon
which such Residential Unit is to be located, as stated in the construction
schedule attached to the General Contract, plus extensions for Unavoidable
Delay;

     

    (g) The Sales
Agreement clearly identifies any Upgrade required to be provided by Borrower, as
seller, which Upgrade and Upgrade Deposit shall comply with the requirements
hereof and all Laws;

     

    (h) The Sales
Agreement is not assignable by the Residential Unit Purchaser, except to an
Affiliate of the Residential Unit Purchaser;

     

    (i) [Intentionally
Omitted];

     

    (j) Subject
to subsection (k) below, the Sales Agreement stipulates that, in the event that
the Residential Unit Purchaser fails to perform thereunder, Borrower shall be
entitled to the full amount of the Earnest Money Deposit and Upgrade
Deposit and can sue
the Residential Unit Purchaser to collect any unpaid portion of such Earnest
Money Deposit; and

     

    (k) The Sales
Agreement complies with ILSA through a HUD filing, not through an exemption or
exception, and complies with all other local and state regulations applying to
condominium sales.  Lender shall have received an executed
acknowledgement by each Residential Unit Purchaser stipulating that prior to the
date of the Sales Agreement acceptance, Residential Unit Purchaser received a
copy of the Property Report which has been accepted for filing by
HUD.  The Sales Agreement must not be dated earlier than the effective
date on which HUD accepted the Statement of Record.  In addition,
Lender shall have approved the specific terms of the form contract, which shall
contain provisions required by ILSA including:

     

    (i) A
statement that the Residential Unit Purchaser may revoke the Sales Agreement for
a period of seven (7) days from the date of signing, or if applicable state law
provides for a longer period, the longer period shall be stated.

     

    (ii) A
statement that if the Residential Unit Purchaser has not received the ILSA
Property Report prior to executing the Sales Agreement, the Sales Agreement
shall be revocable for two (2) years from the date the Sales Agreement was
signed by Residential Unit Purchaser.

     

    


    
      
        
           


        

        
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    (iii) A
provision which states that if the Residential Unit Purchaser defaults under the
terms of the Sales Agreement, the Residential Unit Purchaser shall receive
written notice of default, and shall have a period of twenty (20) days from the
date of the notice to cure the default.

     

    (iv) Damages
payable to Borrower under the Sales Agreement must conform to the limitations in
ILSA, which generally limit damages to the greatest of 15% liquidated damages or
actual damages.

     

    “Qualifying Sales
Agreement” shall mean (i) an agreement meeting all of the conditions
required by this Agreement, and (ii) those certain Sales Agreements delivered to
Lender prior to the date of this Agreement, despite the failure of such Sales
Agreements to comply with the requirements of Sections 14.4(d),
(e) (f) and (h) above. Borrower
shall not, without the prior written consent of Lender, enter into any Sales
Agreement that is not a Qualifying Sales Agreement, or any other documentation
pertaining to the sale of any portion of the Project; provided, however, that
Borrower may enter into a Qualifying Sales Agreement subject to a commercially
reasonable financing contingency for up to sixty (60) days provided such
Qualifying Sales Agreements will not be deemed Qualifying Sales Agreements until
the expiration or satisfaction of the Deed of Trust
contingency.  Borrower shall not terminate a Qualifying Sales
Agreement for any reason other than the default of the Residential Unit
Purchaser thereunder without Lender’s prior written consent.

     

    14.5 Sales
Operations and Seller’s Obligations.

     

    Borrower
shall at all times maintain adequate marketing capability, and shall timely
perform all obligations required to be performed by it under each Sales
Agreement.

     

    14.6 Delivery
of Sales Information and Documents.

     

    Within
ten (10) days after the end of each month, Borrower shall deliver to Lender a
sales report (the “Sales Report”)
showing (a) each Residential Unit under contract for sale, including the date of
the contract, the Residential Unit number, the base contract price plus the
charge for Upgrades, the amount of the Earnest Money Deposit and, if applicable,
the Upgrade Deposit, and the date expected to close; and (b) for each
Residential Unit closed, the Residential Unit number, the base contract price
plus the charge for Upgrades, the date closed, and the Net Sales Proceeds paid
to Lender; and (c) for each Sales Agreement cancelled by a Residential Unit
Purchaser, the Residential Unit number, the date cancelled, the reason the
contract was cancelled by the Residential Unit Purchaser and a statement
regarding whether the Earnest Money Deposit was returned to the Residential Unit
Purchaser or retained by Borrower (and remitted to Lender).  Borrower
shall also promptly deliver to Lender such other sales information and documents
that Lender from time to time may reasonably request, including operating
statements, all new Sales Agreements, and notice of or information regarding any
claimed breach or disavowal of buyer’s or seller’s obligations under any one or
more Sales Agreements.

     

    


    
      
        
           


        

        
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    14.7 Borrower’s
Acknowledgment Regarding Buyer Financing.

     

    Borrower
acknowledges that Lender is not committed to provide any financing to or for the
buyers of any individual Residential Units.

     

    14.8 Condominium
Regime.

     

    Borrower
shall promptly, and in any event (a) prior to the closing of the first purchase
and sale of any Residential Unit, cause the Condominium Documents to be filed or
recorded, as appropriate, and (b) prior to Lender’s execution of any partial
release of the Deed of Trust, cause the Master Condominium Declaration to be
recorded.  Prior to recording or filing any documents, Borrower shall
submit to Lender for Lender’s final review and reasonable approval, executed
copies of the proposed Condominium Documents, which, once approved, shall be
filed or recorded, as applicable.  If such documents have been
submitted to and approved by Lender prior to the Full Loan Opening Date, any
changes or additions to such documents from those submitted to Lender prior to
the Full Loan Opening Date shall be subject to Lender’s consent, which consent
shall not unreasonably be withheld.  Borrower shall on an ongoing
basis comply with all requirements of ILSA and all other applicable Laws
relating to the sale or marketing of the Residential Units.  Without
limiting the generality of the foregoing, Borrower shall (i) timely file its
Annual Report of Activity with HUD each year during the term hereof; (ii) pay
any fees in connection therewith before the due date; (iii) deliver financial
statements to HUD within one hundred and twenty (120) days after the close of
Borrower’s fiscal year; and (iv) amend the HUD Property Report to reflect any
change in any material representation of a material fact required in the
Statement of Record within fifteen (15) days of learning of the
change.  Borrower shall deliver to Lender (simultaneously with
delivery to the applicable governmental authority) copies of all filings and
notices delivered to HUD in accordance with ILSA, and Borrower shall, within
five (5) Business Days after receipt thereof, deliver to Lender all notices,
requests, correspondence and demands delivered by HUD, the State of Texas or the
City of Austin to Borrower.  Borrower shall not amend the HUD Property
Report or the City or State Property Report without Lender’s prior written
consent.  Provided that no Event of Default exists, Lender, prior to
the initial conveyance of Residential Units, shall execute such subordinations
of the Deed of Trust and other documents as are needed to permit the recordation
or filing of such documents.  Prior to such execution by Lender and as
a condition thereto, Borrower shall furnish to Lender a copy of (a) a notice
sent by Borrower to the condominium association informing the association of
Lender’s rights under the declaration as a beneficiary under the Deed of Trust
and furnishing the association with Lender’s address for notice purposes, (b)
resignations of all Borrower-appointed directors and officers, which Lender may
deliver at any time an Event of Default exists, and (c) such other documents in
connection with the establishment of such condominium regime as Lender
reasonably requests.

     

    Borrower
shall not permit control of any condominium association to be turned over to the
Residential Unit owners more than thirty (30) days prior to the date that is
required by Texas law.

     

    


    
      
        
           


        

        
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    14.9 Release
of Residential Units.

     

    (a)  At
Borrower’s request upon the closing of a Residential Unit sale, Lender shall
issue a partial release of the Residential Unit from the Deed of Trust, so long
as all of the following conditions are satisfied at the time of, and with
respect to, the partial release:

     

    (i) The
Master Declaration of Condominium and the Residential Condominium Declaration
have each been recorded in the public records of Travis County, Texas;

     

    (ii) No Event
of Default exists;

     

    (iii) Such sale
is pursuant to a Qualifying Sales Agreement;

     

    (iv) Lender
has been paid, in immediately available funds, a Release Price (defined below)
for the Residential Unit in an amount determined as set forth below to be
applied to the Loan as set forth in Section
14.10;

     

    (v) Lender
receives a copy of the closing statement and applicable Residential Unit release
no later than 9:00 a.m. (Chicago time) at least one (1) Business Day prior to
any Residential Unit sale; and

     

    (vi) All
escrow, closing and recording costs have been paid at no expense to
Lender.

     

    (b) The
execution of a Sales Agreement shall not by itself satisfy the conditions for
release of the Residential Unit that is being sold; those conditions must be
satisfied in full at the time the Residential Unit is to be
released.

     

    (c) If Lender
does not require satisfaction of all of the conditions described above before
releasing one or more Residential Units, that alone shall not be a waiver of
such conditions, and Lender reserves the right to require their satisfaction in
full before releasing any further Residential Units from the Deed of
Trust.

     

    (d) The
“Release Price”
for a Residential Unit (including one (1) Parking Space per bedroom in such
Residential Unit, up to two (2) Parking Spaces per Residential Unit, except for
the penthouse Residential Units, which are each allocated three (3) Parking
Spaces ) shall be the greatest of (x) 100% of Net Sales Proceeds from the sale
of the applicable Residential Unit and associated Parking Spaces (including any
additional charge or fee in excess of the purchase price payable to Borrower or
its Affiliates), (y) 90% of the gross sales proceeds, exclusive of any extras
and/or Upgrades, plus 100% of any Upgrade Profits for such Residential Unit, and
(z) 90% of the Sales Agreement contract sales price (excluding the selling price
of any extras and/or Upgrades, and without accounting for sales commissions paid
from the Project Budget), plus 100% of any Upgrade Profits for such Residential
Unit.

     

    (e) Borrower
shall pay all reasonable costs and expenses associated with the sale of the
Residential Unit, including title expenses, reasonable legal fees, brokerage and
sales commissions and other closing costs, from the portion of the sales price
in excess of such

     

    


    
      
        
           


        

        
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    Release
Price and, if such excess is insufficient for such purpose, shall pay such
excess costs from its own funds.

     

    (f) If
requested by Lender, Borrower shall also deposit with Lender (to the extent not
required to be deposited in condominium association bank accounts) all amounts
deducted or set aside for real estate taxes or retained for assessments or
working capital (and pledges its interest in such account(s) to
Lender).  Lender shall hold such amount subject to the rights of
Residential Unit Purchasers and the condominium association therein, provided,
however, Lender shall permit Borrower to use the funds deposited in such
accounts for their legally required purposes.

     

    14.9A                      Sales of Parking, Storage, Commercial
Space or Venue.

    


    (a) The Hotel
may be released from the Deed of Trust during the term of the Loan in accordance
herewith.  The Venue and the Commercial Space may be subject to
release from the Deed of Trust, provided that, in addition to the satisfaction
of the other conditions of this Section 14.9A, the Venue and the Commercial
Space must be released concurrently.  Borrower shall provide for
Lender’s prior review and written approval any agreement for the sale of any
Excess Parking Space, Storage, Hotel, and/or Venue and Commercial Space, and
Borrower shall obtain Lender’s consent thereto prior to executing such sale
agreement.  Lender’s consent and approval under this paragraph shall
not be unreasonably withheld or delayed.

     

    (b) At
Borrower’s request upon the closing of a sale of the Hotel, the Commercial Space
or Venue, Lender shall issue a partial release of the portion of the Project
from the Deed of Trust, so long as all of the following conditions are satisfied
at the time of, and with respect to, the partial release:

     

    (i) The
Declaration of Condominium has been recorded in the public records of Travis
County, Texas;

     

    (ii) All
rights of the declarant under the Declaration of Condominium shall remain with
Borrower following the sale and release;

     

    (iii) No Event
of Default exists;

     

    (iv) With
respect to the Venue and Commercial Space only, Borrower shall have closed and
conveyed, pursuant to Qualifying Sales Agreements, and Lender shall have
received, Release Prices for such number of Residential Units totaling or
exceeding 137,500 Saleable Square Feet of space; and

     

    (v) Such
other conditions as Lender shall reasonably require.

     

    (c) The
“Release Price”
for:

     

    (i) Any
Excess Parking Space shall be the greater of (x) 100% of the Net Sales Proceeds
for such Parking Space(s), and (y) $20,000 per Parking Space;

     

    (ii) The
storage space shall be the greater of (x) 100% of the Net Sales Proceeds for
such storage space, and (y) $20 per square foot of such storage
space;

     

    


    
      
        
           


        

        
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    (iii) The Venue
and the Commercial Space, together, shall be the greater of: (x) 100% of the Net
Sales Proceeds or proceeds of the third-party re-financing of such area, and (y)
$20,000,000; and

     

    (iv) The Hotel
shall be the greatest of: (x) 100% of the Net Sales Proceeds or proceeds of the
third-party re-financing of the Hotel, (y) $70,000,000, and (z) an amount, to be
applied as a payment of principal, that, after payment of the Exit Fee and the
escrow of Reinvested Proceeds, would be sufficient to reduce Lender’s Remaining
Exposure to: (A) $175, multiplied by (B) the Saleable Square Feet in the
Remaining Units.

     

    14.10 Application
of Sales Proceeds.

     

    Except as
otherwise expressly provided herein, all Release Prices received by Lender in
connection with the sale of a Residential Unit or other component of the Project
addressed in Section
14.9A above shall be applied by Lender as follows (regardless of any
contrary order of payment specified by Borrower):

     

    (a) First,
with respect to Release Prices from Residential Units, to the payment of any
Exit Fee then due, or, with respect to the Release Price from the Hotel, to the
payment of the full Exit Fee;

     

    (b) Second,
the first $8,000,000 of aggregate Release Prices collected pursuant to closings
that otherwise satisfy the terms and provisions of this Agreement (collectively,
the “Reinvested
Proceeds”) shall be held by Lender and shall be used by Lender (before
funding from the Loan proceeds) to fund un-depleted line items in the Budget
(except for the interest payable on the Loan, which shall be paid from the
Interest Reserve Budget Line Item); provided, however, Lender shall not be
required to disburse any Reinvested Proceeds unless: (i) the Initial Equity
Investment has been contributed in accordance with Section 8.1(a) hereof, (ii)
the Additional Equity Investment, if any, has been contributed, and (iii) all
conditions set forth in Section 4.1(c) are satisfied.  Borrower hereby
pledges to Lender all Reinvested Proceeds held by Lender from time to time as
additional security for the Loan.

     

    (c) Third, to
the payment of principal then due and owing under the Note, until the amounts
due thereunder have been paid in full; and

     

    (d) Finally,
to any other amounts payable to Lender under the Loan Documents, including any
costs and expenses of Lender.

     

    Notwithstanding
the foregoing, (i) Lender may elect in its sole discretion to apply Release
Prices proceeds first to payment of accrued interest (but shall never be
obligated to do so, even if doing so would cure a default in the payment of
interest) and (ii) if an Event of Default exists, Lender may apply all
amounts received to the indebtedness under the Loan Documents in such order as
Lender may elect in its sole discretion.

     

    


    
      
        
           


        

        
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    Article
15

     

    OTHER
COVENANTS

     

    15.1 Borrower
further covenants and agrees as follows:

     

    (a) Full Opening of Loan on or
Prior to Full Loan Opening Date.  Borrower shall cause all
conditions precedent set forth in Article 8 and
Section 9.1 of
this Agreement, except those which are expressly required to be satisfied by a
later date, to be satisfied on or before May 15, 2008.  Borrower shall
cause all conditions precedent to the Full Opening of the Loan to be complied
with, and Borrower shall qualify for Full Loan Opening, no later than January 1,
2010.  If Borrower fails to satisfy timely either of such
requirements, an Event of Default shall exist and Lender may terminate its
commitment to fund the Loan by written notice to Borrower.

     

    (b) Compliance with Condominium
Documents.  Once the Declaration of Master Condominium and/or
Residential Condominium Declaration are recorded, and subject to the provisions
of Section 82.112(b) of the Texas Uniform Condominium Act, Borrower shall pay
all general and special assessments for common charges and expenses and
insurance premiums made against or relating to the Residential Units owned by
Borrower or otherwise payable by Borrower under the Condominium Documents as the
same shall become due and payable and prior to delinquency, and not later than
the tenth (10th) day of
each month provide to Lender evidence of such payments, and in the event
Borrower shall fail to make such payments as the same become due and payable and
prior to delinquency, Lender may from time to time at its option, but without
any obligation to do so and without notice or demand upon Borrower, make such
payments, and all expenses paid by Lender for such purpose, including, without
limitation, attorneys’ fees, shall be added to the outstanding principal amount
of the Loan and shall be payable on demand and bear interest at the Default Rate
until repaid.  Borrower shall not (and shall not permit any Borrower
appointed directors), without the prior written consent of Lender (not to be
unreasonably withheld or delayed), give any consent or perform any action in
furtherance of any material modification or amendment of the Condominium
Documents, including any modifications or amendments to the Condominium
Documents which would permit a Residential Unit Purchaser to rescind its Sales
Agreement under Texas Laws.  Borrower shall comply with all of the
material terms, covenants and conditions on its part to be performed under the
Condominium Documents, as the same shall be in force and effect from time to
time; provided, however, that if Borrower fails to cure such non-compliance
within any applicable cure periods provided in the Condominium Documents, Lender
may from time to time at its option, but without any obligation to do so, cure
or remedy any such default by Borrower (Borrower hereby authorizing Lender to
enter upon the Project as may be necessary for such purposes), and all
reasonable expenses paid by Lender for such purpose, including, without
limitation, reasonable attorneys’ fees, shall be added to the outstanding
principal balance of the Loan and shall be payable on demand and bear interest
at the Default Rate until repaid.  Borrower shall deliver to Lender a
true and complete copy of each and every notice of default, if any, received by
Borrower with respect to Borrower under any of the Condominium Documents or
applicable law regarding the condominium.  Borrower shall not (and
shall not permit any Borrower appointed director to), without the prior written
consent of Lender, exercise any right it may have to vote for (x) the
expenditure of insurance proceeds (which are governed by Article 16 below) or
condemnation awards for the repair or restoration of the Project or (y) any
additions or improvements to the common elements of the Project.

     

    


    
      
        
           


        

        
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    (c) Construction of
Improvements.  The Improvements shall be constructed and fully
equipped in a good and workmanlike manner with materials of high quality,
substantially in accordance with the Approved Plans and Specifications (or in
accordance with any changes therein that may be approved in writing by Lender or
as to which Lender’s approval is not required).  Such construction and
equipping shall be commenced and completed, as applicable, and shall be
prosecuted with due diligence and continuity in substantial accordance with the
Construction Schedule, the requirements of all Sales Agreements and the
Operating Agreement.  Without limiting the foregoing, Borrower shall
commence construction by the Required Commencement Date, and shall substantially
complete (i) the entire Project no later than the Completion Date applicable to
the entire Project, and (ii) each particular portion of the Project no later
than the Completion Date applicable to such portion.  The Completion
Dates are not subject to extension for any reason, except that Lender may elect,
but shall be under no obligation, to extend such dates at its sole discretion,
but such election shall not constitute a waiver of Lender’s right to enforce any
other Completion Date or a waiver of any of Lender’s remedies and shall not
constitute any custom or course of dealing between the parties
hereto.

     

    (d) Payment for
Work.  Borrower agrees to fully pay and discharge when due and
payable all claims for labor done and material and services furnished in
connection with the construction of the Project and to take all other steps to
forestall the assertion of claims against the Project or the Loan.

     

    (e) Inspection by
Lender.  Borrower shall reasonably cooperate with Lender in
arranging for inspections by representatives of Lender of the progress of the
Construction from time to time including an examination of (i) the Improvements,
(ii) all materials to be used in the Construction, (iii) all plans and shop
drawings that are or may be kept at the construction site, (iv) any contracts,
bills of sale, statements, receipts or vouchers in connection with the
Improvements, (v) all work done, labor performed, and materials furnished in and
about the Improvements, (vi) all books, contracts and records with respect to
the Improvements, and (vii) any other documents relating to the Improvements or
the Construction. Borrower shall cooperate with Lender’s Consultant to enable
him to perform his functions hereunder and will promptly comply with Lender’s
requirements and remove any defect regarding the Construction of the
Improvements or the progress thereof.

     

    (f) Materialmen’s Liens and
Contest Thereof.  Borrower shall not suffer or permit any
materialmen’s lien claims to be filed or otherwise asserted against the Project
or any funds due to the General Contractor, and shall promptly discharge the
same in case of the filing of any claims for lien or proceedings for the
enforcement thereof, provided, however, that Borrower shall have the right to
contest in good faith by appropriate legal proceeding and with reasonable
diligence the validity of any such lien or claim, provided that Borrower posts a
statutory lien bond over such lien.   Lender shall not be
required to make any further disbursements of the proceeds of the Loan until any
materialmen’s lien claims have been removed or bonded over, and Lender may, at
its option, restrict disbursements to reserve sufficient sums to pay 125% of the
face amount of the lien unless and until the lien is removed or bonded
over.

     

    (g) Settlement of Materialmen’s
Lien Claims.  If Borrower shall fail promptly either (i) to
discharge any such lien, or (ii) to post a statutory lien bond over such lien,
in each case, within thirty (30) days after the filing of the lien, Lender may,
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    required
to), procure the release and discharge of any such claim and any judgment or
decree thereon and, further, may in its sole discretion effect any settlement or
compromise of the same, or may furnish such security or indemnity to the Title
Insurer, and any amounts so expended by Lender, including premiums paid or
security furnished in connection with the issuance of any surety company bonds,
shall be deemed to constitute disbursement of the proceeds of the Loan
hereunder.  In settling, compromising or discharging any claims for
lien, Lender shall not be required to inquire into the validity or amount of any
such claim.

     

    (h) Proceedings.  In
addition to (and not in lieu of Borrower’s covenants set forth in Section 15.1(f)), if
any action, claim or proceeding affecting title to the Land, the construction of
the Project, Borrower, Guarantor, the rights of Lender under any Loan Document,
or otherwise affecting the Project, be filed or commenced, then at the request
of Lender, Borrower shall appear in and defend, at Borrower’s sole cost and
expense, any such action or proceeding and, if applicable, Borrower shall insure
or bond over such action, claim or proceeding in accordance with Section
15.1(f).  If Borrower fails to appear and defend any such
action or proceeding, then Lender may commence, intervene in, and defend actions
or proceedings affecting the Project or the transactions contemplated herein,
and compromise or settle any claim or controversy pertaining thereto, employing
legal counsel acceptable to Lender to defend such claims at Borrower’s sole
cost, unless due to the willful misconduct of Lender.  Lender shall
not be liable to Borrower for any action, error, mistake, omission or delay
pertaining to the actions described in this Section or any damages resulting
therefrom, unless due to the willful misconduct of Lender.  Any cost
incurred by Lender under this Section shall be deemed to be expenses of the Loan
payable by Borrower pursuant to Article 7 of
this Agreement.

     

    (i) Insurance.  Borrower
shall cause insurance policies to be maintained in compliance with Exhibit E, or
such other insurance requirements as may be reasonably required by Lender, at
all times.  Borrower shall provide Lender, prior to the date hereof, a
certificate(s) demonstrating appropriate insurance coverage(s), which shall
demonstrate insurance coverage that meets or exceeds the requirements on Exhibit
E.  Borrower shall timely pay all premiums on all insurance
policies required hereunder, and as and when additional insurance is required,
from time to time, during the progress of Construction, and as and when any
policies of insurance may expire, furnish to Lender, premiums prepaid,
additional and renewal insurance policies with companies, coverage and in
amounts reasonably satisfactory to Lender in accordance with Exhibit
E.

     

    (j) Payment of
Taxes.  Borrower shall pay all real estate taxes and
assessments and charges of every kind upon the Project before the same become
delinquent.  Borrower may use Loan proceeds for such purpose to the
extent available in the Budget for such purpose upon meeting all conditions
precedent set forth in this Agreement to any such
disbursement.  Borrower shall have the right to pay such tax under
protest or to otherwise contest any such tax or assessment, but only if (i) such
contest has the effect of preventing the collection of such taxes so contested
and also of preventing the sale or forfeiture of the Project or any part thereof
or any interest therein, (ii) Borrower has notified Lender of Borrower’s intent
to contest such taxes, and (iii) Borrower has deposited security in form and
amount reasonably satisfactory to Lender, in its reasonable discretion, and has
increased the amount of such security so deposited promptly after Lender’s
request therefor.  If Borrower fails to commence such contest or,
having commenced to contest the same, and having deposited such security
required by Lender for its full amount, shall

     

    


    
      
        
           


        

        
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    thereafter
fail to prosecute such contest in good faith or with due diligence, or, upon
adverse conclusion of any such contest, shall fail to pay such tax, assessment
or charge, Lender may, at its election (but shall not be required to), pay and
discharge any such tax, assessment or charge, and any interest or penalty
thereon, and any amounts so expended by Lender shall be deemed to constitute
disbursements of the Loan proceeds hereunder (even if the total amount of
disbursements would exceed the face amount of the Note).  Borrower
shall furnish to Lender evidence that taxes are paid at least five (5) days
prior to the last date for payment of such taxes and before imposition of any
penalty or accrual of interest.

     

    (k) Tax Escrow
Accounts.  After the earlier to occur of (i) an Event of
Default or (ii) the Budget Line Item for real estate taxes having been exhausted
(in either case, a “Triggering Event”),
Borrower shall make monthly tax escrow deposits in the amount of one-twelfth
(1/12) of one hundred ten percent (110%) of the annual real estate taxes as
reasonably estimated by Lender, such deposit to be held in an interest bearing
escrow account held by Lender in Lender’s name and under its sole dominion and
control.  (If an Event of Default occurs and Lender requires real
estate tax escrow deposits to be made, but such Event of Default is thereafter
cured, then, so long as no other Triggering Event exists, Lender shall not
require further real estate tax deposits to be made.)  If at any time
Lender determines in its sole discretion that the amount of the monthly escrow
payments made pursuant to this Section 15.1(k) are
not sufficient to pay in full the next installment of real estate taxes then
due, then upon written notice from Lender of the amount of any expected
deficiency (and regardless of whether a Triggering Event then exists), Borrower
shall then deposit funds equal to such amount with Lender.  All
payments deposited in the escrow account, and all interest accruing thereon, are
pledged as additional collateral for the Loan.  Notwithstanding
Lender’s holding of the escrow account, nothing herein shall obligate Lender to
pay any real property taxes with respect to any portion of the Project at any
time an Event of Default exists.

     

    (l) Personal
Property.  All of Borrower’s personal property, fixtures,
attachments and equipment delivered upon, attached to or used in connection with
the Construction or the operation of the Project shall always be located at the
Project and shall be kept free and clear of all liens, encumbrances and security
interests, other than as otherwise permitted under the Loan
Documents.

     

    (m) Leasing
Restrictions.  (i) Borrower shall not enter into any Leases
pertaining to the Project without Lender’s prior written approval in its sole
discretion.  Borrower shall provide Lender with a copy of any proposed
Lease no less than ten (10) days prior to the proposed execution date of such
Lease.  Lender’s approval of any Lease for the Commercial Space shall
be predicated upon, among other things: (A) current tenant financial information
in sufficient detail to assess the experience and credit worthiness of the
tenant, (B) credit worthiness of tenant, (C) form and content of the Lease,
including, among other things, tenant’s obligation to provide, at least
annually, its financial information to Borrower, (D) tenant’s agreement to enter
into an acceptable subordination, non-disturbance and attornment agreement, and
(E) a minimum (7) seven year term, without any right to cancel prior to five (5)
years; provided, however, Lender shall approve a five (5) year Lease term, but
the tenant improvement funding permitted for such Lease shall be reduced
proportionately.  Except as otherwise approved by Lender, each Lease
must provide for a minimum triple net rent of $35 per Rentable Square Foot at
all times throughout the term of the Loan, and, for purposes of calculating such
rent, the total value of free

     

    


    
      
        
           


        

        
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    rent,
non-standard lease concessions and tenant improvements in excess of the budgeted
amount will be amortized at a per annum rate of ten percent (10%) over the full
term of the Lease, including any free rent period. The resulting amount will be
deducted from the lowest stated rent at any point in the term of the Lease, and
that figure must be equal to or greater than the minimum rent noted
above.  Furthermore, Borrower will in no event offer more than six (6)
months of free rent, tenant improvements in excess of twenty percent (20%) more
than the budgeted amount, or other non-standard concessions unacceptable to the
Lender.

     

    (ii)           Borrower
shall not execute any Lease without written acknowledgement of Lease approval by
the Lender, except that Leases of Commercial Space covering not more than 1,500
Rentable Square Feet individually, and 8,000 Rentable Square Feet in the
aggregate, and otherwise satisfying the leasing requirements set forth above may
be entered into without Lender’s consent.  Lender shall endeavor to
provide (i) preliminary approval or disapproval of any proposed Lease within
five (5) Business Days of the receipt of all pertinent information needed for
approval, and (ii) final approval or disapproval of any proposed lease
transaction within ten (10) Business Days of the receipt of final proposed lease
documentation and any other information needed for its decision, and Lender’s
failure to approve a Lease within such ten (10) Business Day period shall be
deemed its disapproval thereof.

     

    (iii)           A
Lease, which has been approved by the Lender (or as to which Lender’s approval
is not required under the terms of clause (ii)), is hereinafter referred to as
an “Approved
Lease.”  Approval of a Lease shall not create a presumption
that the Loan is In Balance as the result of excess tenant improvements or
leasing commissions as set forth in Section 12.8
hereof.  To the extent that the Loan is not In Balance due to tenant
improvements or leasing commissions in excess of the amount allowed pursuant to
Section 12.8,
Borrower shall deposit additional equity within ten (10) days following the
execution of the Lease. An Approved Lease shall not be amended or modified (in
any material respect) or terminated without the Lender’s prior written
consent.

     

    (iv) Borrower
shall not accept any rental payment under any Approved Lease in advance of its
due date, other than acceptance of a prepayment of the first month’s rent upon
the execution of an Approved Lease.

     

    (n) Defaults Under
Leases.  Borrower will not suffer or permit any material breach
or default to occur in any of Borrower’s obligations under any of the Leases,
nor suffer or permit the same to terminate by reason of any failure of Borrower
to meet any requirement of any Lease, including those requirements with respect
to any time limitation within which any of Borrower’s work is to be done or the
space is to be available for occupancy by the lessee.  Without
limiting the generality of the foregoing, a default by Borrower under the terms
of an Approved Lease that would allow the tenant to withhold or delay the
payment of rent, or to terminate or cancel the Approved Lease, shall constitute
a Default hereunder.  Borrower shall notify Lender promptly in writing
in the event a tenant commits a material default under a material
Lease.

     

    (o) Lender’s Attorneys’ Fees for
Enforcement of Agreement.  In case of any Event of Default
hereunder, Borrower (in addition to Lender’s attorneys’ fees, if any, to be paid
pursuant to Section
7.5) will pay Lender’s reasonable attorneys’ and paralegal fees
(including, without

     

    


    
      
        
           


        

        
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    limitation,
any attorney and paralegal fees and costs incurred in connection with any
litigation or bankruptcy or administrative hearing and any appeals therefrom and
any post-judgment enforcement action including, without limitation,
supplementary proceedings) in connection with the enforcement of this Agreement;
without limiting the generality of the foregoing, if at any time or times
hereafter Lender employs counsel (whether or not any suit has been or shall be
filed and whether or not other legal proceedings have been or shall be
instituted) for advice or other representation with respect to the Project, this
Agreement, or any of the other Loan Documents, or to protect, collect, lease,
sell, take possession of, or liquidate any of the Project, or to attempt to
enforce any security interest or lien in any portion of the Project, or to
enforce any rights of Lender or Borrower’s obligations hereunder, then in any of
such events all of the reasonable attorneys’ fees arising from such services,
and any expenses, costs and charges relating thereto (including fees and costs
of paralegals), shall constitute an additional liability owing by Borrower to
Lender, payable on demand.  Such attorneys’ fees and expenses shall
include fees and expenses of Lender’s in-house counsel as specified in Section
7.5.

     

    (p) Appraisals.  Lender
shall have the right to obtain a new or updated Appraisal of the Project from
time to time, but not more frequently than two (2) times after Closing, provided
Lender shall have the right to obtain a new or updated Appraisal at any time a
Default or Event of Default exists.  Borrower shall cooperate with
Lender in this regard.  If the Appraisal is obtained to comply with
this Agreement or any applicable law or regulatory requirement, or bank policy
promulgated to comply therewith, or if an Event of Default exists, Borrower
shall pay the reasonable costs for any such Appraisal upon Lender’s
request.

     

    (q) Financial
Statements.

     

    (i) Borrower
and each Guarantor shall deliver or cause to be delivered to Lender annual
financial statements with respect to Borrower and each Guarantor within ninety
(90) days after the end of its fiscal year.  Guarantor’s financial
statements shall be audited and Borrower’s financial statements shall be
certified by Borrower’s managing member.  Guarantor and, after the
opening of the Commercial Space and/or Venue, Borrower shall also each deliver
to Lender quarterly financial statements within forty five (45) days after the
end of each fiscal quarter. Each such quarterly financial statement shall be
accompanied by a certification by an authorized financial officer of Guarantor
as to Guarantor’s compliance with the Guarantor Financial Covenants and
attaching information sufficient to demonstrate such compliance. All such
financial statements shall be in a format approved in writing by Lender in
Lender’s reasonable discretion and in substance acceptable to
Lender.  Each financial statement shall be certified as true, complete
and correct by its preparer and by Borrower or, in the case of each Guarantor’s
financial statements, by the Guarantor to whom it relates.  Financial
statements of each Guarantor shall include verifications, supporting schedules
and additional statements as needed to substantiate the information contained in
such statements.  In addition, such financial statements shall include
disclosure of any pending or threatened litigation and judgments entered against
Borrower or each Guarantor.  Borrower and each Guarantor shall deliver
to Lender Borrower’s, each Guarantor’s, and each entity in which a Guarantor has
a material interest, federal and state tax returns by April 15 of each year
(except that if the date on which such returns may be filed is extended beyond
April 15, then such entity shall provide Lender with a copy of the extension
request and shall furnish such tax returns to Lender within thirty (30) days
after the date such returns are filed).  Borrower shall inform Lender
as to any filed or threatened

     

    


    
      
        
           


        

        
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    (in
writing) litigation which would have a material adverse effect on Borrower’s or
each Guarantor’s ability to perform their respective obligations under the Loan
Documents promptly after learning thereof.  Borrower and each
Guarantor shall provide such additional financial information as Lender
reasonably requires.  Borrower shall during regular business hours
permit Lender or any of its agents or representatives to have access to and
examine all of its books and records regarding the development and operation of
the Project and, in addition, agrees to provide Lender with copies of any
purchase contracts pertaining to the Project.  Borrower agrees that
Lender may retain an investigator to research available public records and
information relating to Borrower, the principals of Borrower and each
Guarantor.

     

    (ii) Borrower
shall furnish to Lender within three (3) Business Days of receipt from time to
time each proposed budget and “Operating Plan” received from Hotel
Operator.  Borrower shall not approve any such budget or Operating
Plan without Lender’s prior written consent, to be granted or withheld in
Lender’s reasonable discretion.

     

    (iii) Borrower
shall, within five (5) Business Days of receipt from time to time furnish to
Lender all “Operating Reports” received under Section 10.2 of the Hotel
Operating Agreement, all financial statements received under Section 10.3
of the Hotel Operating Agreement and all other material information or notices
received from Hotel Operator.

     

    (r) Sign and
Publicity.  Upon Lender’s request, Borrower shall, at Lender’s
sole cost and expense, promptly erect a sign approved in advance by Lender in a
conspicuous location on the Project during the Construction indicating that the
financing for the Project is provided by Lender, so long as such sign complies
with Laws and requirements of all Governmental Authorities.  Lender
reserves the right to publicize the making of the Loan.  Without
limiting the foregoing, following Closing, Lender shall have the right to
announce publicly in print or otherwise that Lender has made and closed the Loan
to Borrower.  In connection therewith, Lender shall have the right to
describe the Loan, including Borrower’s name, the type of loan and the amount
thereof (but excluding the interest rate, the amounts of Lender’s fees and the
specific nature of the non-recourse guaranty), and to identify the Project and
the location thereof by way of description and/or photographs of the
Project.

     

    (s) Lost
Note.  Upon Lender’s furnishing to Borrower an affidavit to
such effect, Borrower shall, if the Note is mutilated, destroyed, lost or
stolen, deliver to Lender, in substitution therefor, a new note containing the
same terms and conditions as the Note

     

    (t) Indemnification.  Borrower
shall indemnify Lender, including each party owning an interest in the Loan and
their respective officers, directors, employees and consultants (each, an “Indemnified Party”)
and defend and hold each Indemnified Party harmless from and against all claims,
injury, damage, loss, liability, cost and/or expense (including reasonable
attorneys’ fees, costs and expenses) of any and every kind to any persons or
property by reason of (i) the Construction; (ii) the sale, operation or
maintenance of the Project; (iii) any claim with respect to application,
disposition or return of any Earnest Money Deposit or Upgrade Deposit, (iv) any
breach of representation or warranty, default or Event of Default under this
Agreement or any other Loan Document or related Document; or (v) any other
matter arising in connection with the Loan, Borrower, Guarantors, any
Residential Unit Purchaser or Sales Agreement, or the Project.

     

    


    
      
        
           


        

        
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    No
Indemnified Party shall be entitled to be indemnified against its own gross
negligence or willful misconduct.  The foregoing indemnification shall
survive repayment of the Loan.

     

    (u) No Additional Debt;
Mezzanine Loan.

     

    (i) Except
for the Loan, Borrower shall not incur or guarantee any indebtedness (whether
personal or nonrecourse, secured or unsecured) other than customary trade
payables paid within ninety (90) days after they are incurred.  Except
for the liens securing the Loan and except for the Permitted Exceptions,
Borrower shall keep the Project free and clear of liens, provided, however,
mechanics’ liens may be contested in compliance with Section
15.1(f).

     

    (ii) No
mezzanine financing may be borrowed by Borrower or its constituent entities,
except that Mezzanine Borrower shall be entitled to obtain a Mezzanine Loan upon
delivery of forty-five (45) days’ prior written notice to Lender, provided
(A) the identity of the Mezzanine Lender has been approved in writing by
Lender, (B) Mezzanine Lender has executed the Mezzanine Loan Intercreditor
Agreement, as prepared by Lender’s counsel in compliance with the requirements
set forth in the definition of Mezzanine Loan Intercreditor Agreement,
(C) the Mezzanine Loan Documents are acceptable to Lender in its reasonable
discretion, (D) the Mezzanine Loan shall have been closed and the
Qualifying Portion thereof shall have been fully funded for costs in the Budget,
with evidence of such funding delivered to Lender, prior to Full Loan Opening,
(E) Borrower shall have furnished to Lender current contact information for
each of the individuals comprising the Mezzanine Lender, and (F) such other
reasonable requirements of Lender have been satisfied.  Such right of
Borrower to obtain a Mezzanine Loan shall expire unless such Mezzanine Loan has
closed and the Qualifying Portion thereof has fully funded prior to Full Loan
Opening.

     

    (v) Compliance With
Laws.  Borrower shall comply with all applicable requirements
(including applicable Laws) of any Governmental Authority having jurisdiction
over Borrower or the Project.

     

    (w) Organizational
Documents.  Borrower shall not, without the prior written
consent of Lender, permit or suffer (i) a material amendment or modification of
its organizational documents, (ii) the admission of any new member, partner or
shareholder in violation of Section 17.2 of this
Agreement, or (iii) any dissolution or termination of its
existence.

     

    (x) Furnishing
Reports.  Upon Lender’s request, Borrower shall provide Lender
with copies of all inspections, reports, test results and other information
received by any Borrower, that in any way relate to the Project or any part
thereof.

     

    (y) Management
Contracts.  Borrower shall not enter into, modify, amend,
terminate or cancel any management, sales or marketing contracts for the
Project, without the prior written approval of Lender, not to be unreasonably
withheld or delayed.

     

    (z) Furnishing
Notices.  Borrower shall provide Lender with copies of all
material notices pertaining to the Project received by Borrower from any
Governmental Authority or insurance company within seven (7) days after such
notice is received.  Borrower shall promptly

     

    


    
      
        
           


        

        
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    notify
Lender of any judgment entered against, or any material litigation filed
against, Borrower or Guarantor.

     

    (aa) Construction
Contracts.  Borrower shall not enter into, materially modify or
materially amend, or terminate or cancel any material contracts for the
Construction, without the prior written approval of Lender.  Borrower
shall not enter into any contract which would cause the Loan to cease to be In
Balance.  Borrower will furnish Lender promptly after execution
thereof, executed copies of all contracts between Borrower, architects,
engineers and contractors and all subcontracts between the General Contractor or
contractors and all of their subcontractors and suppliers, which contracts and
subcontracts may not have been furnished pursuant to Section 9.1(a) at
Closing.  The development agreement between the Borrower and Guarantor
(or Guarantor’s Affiliate) may be modified without Lender’s consent so long as
such modification does not materially adversely affect Lender and may be
terminated upon satisfaction of the same conditions as are applicable to CJUF’s
replacement of Stratus Block 21 Investments, L.P. as the managing member of
Borrower under Section
17.2 below.

     

    (bb) Correction of
Defects.  Within five (5) days after Borrower acquires
knowledge of or receives notice of a material defect in the Improvements or any
material departure from the Approved Plans and Specifications, or any other
requirement of this Agreement, Borrower shall proceed with diligence to correct
all such defects and departures.

     

    (cc) Hold Disbursements in
Trust.  Borrower shall receive and hold in trust for the sole
benefit of Lender (and not for the benefit of any other person, including, but
not limited to, contractors or any subcontractors) all advances made hereunder
directly to Borrower, for the purpose of paying costs of the Construction in
accordance with the Budget.  Borrower shall use the proceeds of the
Loan solely for the payment of costs as specified in the
Budget.  Borrower shall pay all other costs, expenses and fees
relating to the acquisition, equipping, use, sale and operation of the
Project.

     

    (dd) Foundation
Survey.  Not later than thirty (30) days after completion of
the foundation with respect to the Improvements, Borrower shall furnish to
Lender a survey of the Land with the foundation of the Improvements located
thereon satisfying the requirements set forth in Section
8.1(d).

     

    (ee) Alterations.  Without
the prior written consent of Lender, Borrower shall not make any material
alterations to the Project (other than completion of the Construction in
accordance with the Approved Plans and Specifications).

     

    (ff) Cash
Distributions.  Borrower shall not make any distributions to
its partners or other equity holders, Guarantor or any Affiliate of Borrower or
Guarantor until the Loan has been repaid, except for the disbursements set forth
in Section 12.7
hereof.

     

    (gg) Injunctive
Proceedings.  If any proceedings are filed seeking to enjoin or
otherwise prevent or declare invalid or unlawful the construction, sale,
occupancy, maintenance or operation of the Project or the Residential Units,
Borrower shall cause such proceedings to be diligently contested in good faith,
and in the event of an adverse ruling or decision, shall prosecute all allowable
appeals therefrom, and shall, without limiting the generality of
the

     

    


    
      
        
           


        

        
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    foregoing,
resist the entry or seek the stay of any temporary or permanent injunction that
may be entered and use commercially reasonable efforts to bring about a
favorable and speedy disposition of all such proceedings.  Lender’s
reasonable costs and disbursements (including attorney’s fees) in connection
with any such proceedings, whether or not Lender is a party thereto, shall be
deemed to be expenses of the Loan payable by Borrower in accordance with Article 7 of
this Agreement.

     

    (hh) Commencement of
Work.  No work or Construction of any character shall be
commenced upon, nor shall any materials be delivered to, the Project until (i)
the Deed of Trust has been recorded in the records of Travis County, Texas and a
file stamped copy thereof has been received by Lender, or, if work has commenced
with Lender’s consent, the Title Insurer has agreed to insure Lender to Lender’s
satisfaction and (ii) the subguard insurance required by Lender has been
properly received and approved by Lender.

     

    (ii) Operating
Revenues.  In the event the Project produces gross operating
revenues, Borrower shall establish with Lender (i) an interest bearing operating
account for the Project (other than the Hotel) into which Borrower shall deposit
all revenue associated with the Project (other than the Hotel), and from which
Borrower shall make withdrawals to pay all operating expenses of the Project
(other than the Hotel) and, to the extent of any remaining Net Operating Income,
interest due on the Loan in accordance with Section 10.4, and
(ii) an interest bearing Hotel revenue account into which Borrower shall deposit
or shall cause to be deposited all Net Operating Income distributed by Hotel
Operator to Borrower, and from which Borrower shall pay interest due on the Loan
in accordance with Section
10.4.  Borrower’s failure to deposit operating revenues or Net
Operating Income into such accounts as set forth above shall constitute an Event
of Default hereunder.  In the event that Net Operating Income,
together, in such accounts exceeds the monthly interest due, the then excess
shall remain in the applicable account for the payment of future month’s
interest. Borrower hereby pledges each such account and all funds on deposit
therein to Lender.  Borrower hereby pledges, to the extent permitted
by, and subject to the limits of, the Hotel Operating Agreement, all accounts to
be established in accordance with the terms and provisions of the Hotel
Operating Agreement, and all funds on deposit therein to
Lender.  Prior to the opening of the Hotel, Borrower shall deliver, or
shall cause to be delivered, to Lender, a control agreement from each depository
bank with which each such Hotel operating account has been established
substantially similar in form and substance to the reasonable form of same
prepared by Lender’s legal counsel.

     

    (jj) Environmental
Remediation.  Borrower shall perform all recommended
remediation set forth in those certain Environmental Reports, in each case, by
the dates such remediation is recommended to be completed in such report, except
in the case of the Waste Management Plan, with respect to which all
recommendations must be complied with by Full Loan Opening; provided, however,
that the water filtration system discussed in the Waste Management System shall
be completed at such later date as is sufficient to comply with the
recommendations of the Waste Management Plan, and same shall continue to be
operated and maintained in accordance with the Waste Management Plan during the
construction and operation of the Project.

     

    (kk) Hotel
Documents.  Borrower shall timely perform and comply with all
of its obligations under the Hotel Documents and all other agreements with Hotel
Operator, Starwood

     

    


    
      
        
           


        

        
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    Hotels
& Resorts Worldwide, Inc., and their affiliates with respect to the Hotel,
and shall keep all such agreements in full force and effect.  Borrower
shall not modify, amend or terminate any such agreements without Lender’s prior
written consent, to be given in its reasonable discretion.

     

    (ll) Pre-sale
Requirement.  The Pre-sale Requirement must remain satisfied
throughout the Loan Term.

     

    15.2 Single
Purpose Entity Covenants.

     

    Borrower
hereby represents, warrants and covenants that without Lender’s prior written
consent, which may be withheld in Lender’s sole discretion, and except as
otherwise expressly permitted hereunder, Borrower has not, will not and shall
not:

     

    (a) engage in
any business or activity other than the ownership, management, construction and
operation of the Project;

     

    (b) acquire
or own any material assets other than the Project, and such incidental personal
property as may be necessary for the operation of the Project;

     

    (c) merge
into or consolidate with any Person or entity or dissolve, terminate or
liquidate in whole or in part, transfer or otherwise dispose of all or
substantially all of its assets or change in its legal structure or acquire by
purchase or otherwise all or substantially all the business or assets of, or
stock or other evidence of beneficial ownership of, any Person, without in each
case the prior written consent of Lender, which consent may be withheld or
delayed in Lender’s sole and absolute discretion;

     

    (d) fail to
preserve its existence as an entity duly organized, validly existing and in good
standing under the laws of the State of Delaware or without the prior written
consent of Lender amend, modify, terminate or fail to comply with the provisions
of Borrower’s formation documents, as same may be further amended or
supplemented, if such amendment, modification, termination or failure to comply
would adversely affect the ability of Borrower to perform its obligations under
the applicable Loan Documents or jeopardize Borrower’s existence as a single
purpose entity;

     

    (e) own any
subsidiary or make any investment in, any Person without the consent of
Lender;

     

    (f) commingle
its assets with the assets of any of its Affiliates, or of any other
Person;

     

    (g) incur any
debt, secured or unsecured, direct or contingent (including guaranteeing any
obligation), other than other indebtedness expressly permitted under this
Agreement, provided that any such debt is paid before such payments are past
due;

     

    (h) become
insolvent and fail to pay its debts, liabilities and obligations of any kind,
including all administrative expenses, from its own separate assets as the same
shall become due;

     

    


    
      
        
           


        

        
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    (i) fail to
maintain its records, books or accounts and bank accounts separate and apart
from those of any Affiliate of Borrower, any Affiliate of a partner of Borrower
and any other Person or entity;

     

    (j) enter
into any contract or agreement with any of its Affiliates except on terms and
conditions that are intrinsically fair and substantially similar to those that
would be available on an arms-length basis with third parties other than an
Affiliate or as provided in this Agreement;

     

    (k) seek the
dissolution or winding up in whole, or in part, of Borrower;

     

    (l) maintain
its assets in such manner that it will be costly or difficult to segregate,
ascertain or identify its individual assets from those of any partner, member,
constituent, principal or Affiliate of Borrower, or any member, general partner,
principal or Affiliate thereof, or any other person;

     

    (m) hold
itself out to be responsible for the debts of another Person except as
specifically permitted in this Agreement;

     

    (n) make any
loans or advances to any third party, including any partner, member,
constituent, principal or Affiliate of Borrower or any member, general partner,
principal or Affiliate thereof;

     

    (o) fail to
file its own tax returns; provided, however, that Borrower may file a
consolidated tax return with any of its Affiliates, but only because such
consolidated tax return is required by applicable Laws, and provided such
consolidated tax return includes footnotes identifying the separate assets or
liabilities of Borrower and/or its Affiliates, as applicable;

     

    (p) fail
either to hold itself out to the public as a legal entity separate and distinct
from any other Person or to conduct its business solely in its own name in order
not (A) to mislead others as to the identity with which such other party is
transacting business, or (B) to suggest that it is responsible for the debts of
any third party (including any partner, principal, member of Affiliate or
Borrower, or any partner, principal, member or Affiliate thereof) except as
specifically permitted in this Agreement;

     

    (q) fail to
maintain adequate capital for the normal obligations reasonably foreseeable in a
business of its size and character and in light of its contemplated business
operations;

     

    (r) file or
consent to the filing of any petition, either voluntary or involuntary, to take
advantage of any applicable insolvency, bankruptcy, liquidation or
reorganization statute, or make an assignment for the benefit of
creditors;

     

    (s) fail to
maintain a reasonably sufficient number of employees in light of its
contemplated business operations if any employees are required for the
contemplated business operations;

     

    (t) fail to
allocate fairly and reasonably any overhead expenses that are shared with any of
their respective partners, members, principals or Affiliates of Borrower, any
guarantor or indemnitor, or any partner, member, principal or Affiliate thereof,
including paying for office

     

    


    
      
        
           


        

        
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    space and
services performed by any employee of any of their respective partners, of any
members, principals or Affiliates, any guarantor or indemnitor, or any partner,
member, principal or Affiliate of any thereof;

     

    (u) except to
the extent required by generally accepted accounting principles or applicable
law, fail to maintain separate financial statements, which shows its assets and
liabilities, separate and apart from those of any other Person or entity and not
have its assets listed in the financial statement of any other entity;
or

     

    (v) fail to
correct any known misunderstanding regarding its separate identity.

     

    15.3 Authorized
Representative.

     

    Borrower
hereby appoints the Authorized Representative as its authorized representative
for purposes of dealing with Lender on behalf of Borrower in respect of any and
all matters in connection with this Agreement, the other Loan Documents, and the
Loan.  The Authorized Representative shall have the power, in his
discretion, to give and receive all notices, monies, approvals, and other
documents and instruments, and to take any other action on behalf of
Borrower.  All actions by the Authorized Representative shall be final
and binding on Borrower.  Lender may rely on the authority given to
the Authorized Representative until actual receipt by Lender of a duly
authorized resolution substituting a different person as the Authorized
Representative.  If Borrower appoints more than one Authorized
Representative, the action of any one Authorized Representative shall be binding
and sufficient.

     

     

    Article
16

     

     

    CASUALTIES
AND CONDEMNATION

     

    16.1 Lender’s
Election to Apply Proceeds on Indebtedness.

     

    (a) Subject
to the provisions of Section 16.1(b)
below, Lender may elect to negotiate, settle, collect, retain and apply upon the
indebtedness of Borrower under this Agreement or any of the other Loan Documents
all proceeds of insurance or condemnation (individually and collectively
referred to as “Proceeds”) after
deduction of all expenses of collection and settlement, including reasonable
attorneys’ and adjusters’ fees and charges.  Lender shall have the
right to participate with Borrower in negotiation of any settlement, adjustment
or compromise of any claim arising in connection with a casualty to the
Improvements or any condemnation of all or part of the Project; provided,
however, if an Event of Default exists, Lender shall have the right to settle
any claim without Borrower’s participation or consent.  Any Proceeds
remaining after repayment of the indebtedness under the Loan Documents shall be
paid by Lender to Borrower.

     

    (b) Notwithstanding
anything in Section
16.1(a) to the contrary, in the event of any casualty to the Improvements
or any condemnation of part of the Project, Lender agrees to make available the
Proceeds for restoration of the Improvements if (i) no Event of Default exists,
(ii) all Proceeds are deposited with Lender, (iii) in Lender’s reasonable
judgment, the amount of Proceeds available for restoration of the Improvements
(together with undisbursed proceeds of the Loan, if any, allocated for the cost
of the Construction and any sums deposited with Lender

     

    


    
      
        
           


        

        
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    by
Borrower for such purpose) is sufficient to pay the full and complete costs of
such restoration, (iv) the cost of restoration does not exceed twenty percent
(20%) of the stated amount of the Note, (v) if Lender determines
that the cost of restoration exceeds $5,000,000, Lender determines in its
reasonable discretion that the values set forth in the Appraisal reviewed and
approved by Lender at Closing remain valid; (vi) in Lender’s reasonable
determination, the Project can be restored to an architecturally and
economically viable project in compliance with applicable Laws, (vii) Guarantor
reaffirms the Completion and Carveout and the Limited Payment Guaranty in
writing, (viii) Borrower shall have provided evidence reasonably acceptable to
Lender that following restoration (and completion of the Project) the Pre-Sale
Requirement will remain satisfied, (ix) the Hotel Documents, and the management
agreement for the Venue, will each remain in full force and effect; and (x) in
Lender’s reasonable determination, such restoration is likely to be completed so
that the Residential Units sufficient to satisfy the Pre-sale Requirement may be
delivered to all Residential Unit Purchasers prior to the outside delivery dates
contained in their respective Sales Agreements and in any event not later than
the Maturity Date.  On and after such time as the condominium is
formed, Borrower agrees to vote its votes with respect to all unsold Residential
Units (and to cause all Borrower appointed directors to vote their votes) in a
manner consistent with the provisions of this Article 16.

     

    16.2 Borrower’s
Obligation to Rebuild and Use of Proceeds Therefor.

     

    In case
Lender does not elect to apply or does not have the right to apply the Proceeds
to the indebtedness, as provided in Section 16.1 above,
Borrower shall:

     

    (a) Proceed
with diligence to make settlement with insurers or the appropriate Governmental
Authorities and cause the Proceeds to be deposited with Lender;

     

    (b) In the
event the Proceeds and the available proceeds of the Loan are insufficient to
assure Lender that the Loan will be In Balance, promptly deposit with Lender any
amount necessary to place the Loan In Balance; and

     

    (c) Promptly
proceed with the assumption of construction of the Improvements, including the
repair of all damage resulting from such fire, condemnation or other cause and
restoration to its former condition.

     

    Any
request by Borrower for a disbursement by Lender of Proceeds and funds deposited
by Borrower shall be treated by Lender as if such request were for an advance of
the Loan hereunder, and the disbursement thereof shall be conditioned upon
Borrower’s compliance with and satisfaction of the same conditions precedent as
would be applicable under this Agreement for an advance of the
Loan.

     

    


    
      
        
           


        

        
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    Article
17

     

    ASSIGNMENTS
BY LENDER AND BORROWER

     

    17.1 Assignments
and Participations.

     

    Lender
may from time to time, with written notice to Borrower, sell the Loan and the
Loan Documents (or any interest therein) and may grant participations in the
Loan.  Borrower agrees to reasonably cooperate with Lender’s efforts
to do any of the foregoing and to execute all documents reasonably required by
Lender in connection therewith that do not materially adversely affect
Borrower’s or Guarantor’s rights under the Loan Documents or materially increase
Borrower’s or Guarantor’s obligations under the Loan Documents.

     

    17.2 Prohibition
of Assignments and Transfers by Borrower.

     

    Borrower
shall not assign or attempt to assign its rights under this Agreement and any
purported assignment shall be void.  Without the prior written consent
of Lender, in Lender’s sole discretion, Borrower shall not suffer or permit (a)
any change in the ownership, or management or economic interests (whether direct
or indirect) of the Project, or (b) any Transfer.  Notwithstanding the
foregoing, (A) so long as CJUF continues to hold the ownership interest in
Borrower which CJUF held at Closing and no monetary Event of Default then exists
(including without limitation default in making a Deficiency Deposit), or if a
monetary Event of Default does exist and is cured by Borrower or CJUF, CJUF
may  with prior written notice to Lender (but without Lender’s
consent) replace Stratus Block 21 Investments, L.P. as the managing member of
Borrower (with Stratus Block 21 Investments, L.P. retaining its current
ownership interest but as non-managing member), (B) even if a monetary Event of
Default then exists, so long as CJUF continues to hold the ownership interest in
Borrower which CJUF held at Closing, CJUF may request that Lender approve CJUF
replacing Stratus Block 21 Investments, L.P. as managing member of Borrower
(with Stratus Block 21 Investments, L.P. retaining its current ownership
interest but as non-managing member), and Lender shall grant or deny such
consent in its reasonable discretion, and (C) the following Transfers of
interests as Borrower’s direct or indirect constituent entities shall be
permitted without Lender’s consent:  (i) Transfers of direct or
indirect interests in Canyon-Johnson Urban Fund II, L.P., (ii) Transfers of
non-controlling interests in Guarantor, (iii) Leases permitted hereunder; and
(iv) the sale and release of various components of the Project pursuant to Sections 14.9 and
14.9A
hereof.  The sale and conveyance of Residential Units shall be
permitted in accordance with Article 14
hereof.  Borrower may also dispose of immaterial quantities of
personal property without Lender’s prior consent.

     

    17.3 Prohibition
of Transfers in Violation of ERISA.

     

    In
addition to the prohibitions set forth in Section 17.2 above,
Borrower shall not assign, sell, pledge, encumber, transfer, hypothecate or
otherwise dispose of its interest or rights in this Agreement or in the Project,
or attempt to do any of the foregoing or suffer any of the foregoing, nor shall
any party owning a direct or indirect interest in Borrower assign, sell, pledge,
Deed of Trust, encumber, transfer, hypothecate or otherwise dispose of any of
its rights or interest (direct or indirect) in Borrower, attempt to do any of
the foregoing or suffer any of the foregoing, if such action would cause the
Loan, or the exercise of any of Lender’s rights in connection therewith, to
constitute a prohibited transaction under ERISA or the Internal Revenue Code or
otherwise result

     

    


    
      
        
           


        

        
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    in Lender
being deemed in violation of any applicable provision of
ERISA.  Borrower agrees to indemnify and hold Lender free and harmless
from and against all losses, costs (including reasonable attorneys’ fees and
expenses), taxes, damages (including consequential damages) and expenses Lender
may suffer by reason of the investigation, defense and settlement of claims and
in obtaining any prohibited transaction exemption under ERISA necessary or
desirable in Lender’s sole judgment or by reason of a breach of the foregoing
prohibitions.  The foregoing indemnification shall be a recourse
obligation of Borrower and shall survive repayment of the Note, notwithstanding
any limitations on recourse contained herein or in any of the Loan
Documents.

     

    17.4 Successors
and Assigns.

     

    Subject
to the foregoing restrictions on transfer and assignment contained in this Article 17, this
Agreement shall inure to the benefit of and shall be binding on the parties
hereto and their respective successors and permitted assigns.

     

     

    Article
18

     

     

    TIME
OF THE ESSENCE

     

    18.1 Time
is of the Essence.

     

    Time is
of the essence under this Agreement.

     

     

    Article
19

     

     

    EVENTS
OF DEFAULT

     

    19.1 Events
of Default.

     

    The
occurrence of any one or more of the following shall constitute an “Event of
Default” as said term is used herein:

     

    (a) Failure
of Borrower (i) (A) to make any principal payment when due, (B) to pay any
interest within ten (10) days after the date when due or (C) to observe or
perform any of the other covenants or conditions by Borrower to be performed
under the terms of this Agreement or any other Loan Document concerning the
payment of money, for a period of ten (10) days after written notice from Lender
that the same is due and payable; or (ii) for a period of thirty (30) days after written
notice from Lender, to observe or perform any non-monetary covenant or condition
contained in this Agreement or any other Loan Documents, provided that if any
such failure concerning a non-monetary covenant or condition is susceptible to
cure and cannot reasonably be cured within said thirty (30) day period, then
Borrower shall have an additional sixty (60) day period to cure such
failure and no Event of Default shall be deemed to exist hereunder so long as
Borrower commences such cure within the initial thirty (30) day period and
diligently and in good faith pursues such cure to completion within such
resulting ninety (90) day period from the date
of Lender’s notice; and provided further that if a different notice or grace
period is specified under any other subsection of this Article 19 with
respect to a particular breach, or if another subsection of this Article 19 applies to
a particular breach and does not expressly provide for a notice or grace period,
the specific provision shall control.

     

    


    
      
        
           


        

        
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    (b) The
disapproval by Lender or Lender’s Consultant at any time of any material aspect
of the construction work and failure of Borrower to cause the same to be
corrected to the satisfaction of Lender within the cure period provided in Section 19(a)(ii)
above.

     

    (c) (i)
Failure of Borrower to commence Construction of the Project on or before the
Required Construction Commencement Date, (ii) a discontinuance of the
Construction for a period of twenty (20) consecutive days (other than by reason
of Unavoidable Delays), or in any event a delay in the Construction of any
component of the Project so that such component is not, in Lender’s sole
judgment, likely to be completed on or before the applicable Completion Date,
(iii) failure of Borrower to comply with the Construction Schedule resulting in
a delay of more than ninety (90) days behind the Construction Schedule with
respect to any material component of Construction, or (iv) failure to complete
Construction of the all or any component of the Improvements substantially in
accordance with the Approved Plans and Specifications (or in accordance with any
changes therein that may be approved in writing by Lender or as to which
Lender’s approval is not required) on or before the applicable Completion
Date.

     

    (d) The
bankruptcy or insolvency of the General Contractor and failure of Borrower to
procure a contract with a new contractor satisfactory to Lender within
forty-five (45) days from the occurrence of such bankruptcy or
insolvency.

     

    (e) Any
Transfer or other disposition in violation of Section 17.2 or 17.3.

     

    (f) Any
warranty, representation, statement, report or certificate made now or hereafter
by Borrower or any Guarantor is untrue or incorrect in any material respect at
the time made or delivered, provided that if such breach is reasonably
susceptible to cure, then no Event of Default shall exist so long as Borrower
cures said breach (i) within the notice and cure period provided in (a)(i) above
for a breach that can be cured by the payment of money or (ii) within the notice
and cure period provided in (a)(ii) above for any other breach.

     

    (g) Borrower
or any Guarantor shall commence a voluntary case concerning Borrower or any
Guarantor under the Bankruptcy Code; or an involuntary proceeding is commenced
against Borrower or any Guarantor under the Bankruptcy Code and relief is
ordered against Borrower or any Guarantor, or the petition is controverted but
not dismissed or stayed within sixty (60) days after the commencement of the
case, or a custodian (as defined in the Bankruptcy Code) is appointed for or
takes charge of all or substantially all of the property of Borrower or any
Guarantor; or Borrower or any Guarantor commences any other proceedings under
any reorganization, arrangement, readjustment of debt, relief of debtors,
dissolution, insolvency or liquidation or similar Law of any jurisdiction
whether now or hereafter in effect relating to Borrower or any Guarantor; or
there is commenced against Borrower or any Guarantor any such proceeding that
remains undismissed or unstayed for a period of sixty (60) days; or Borrower or
any Guarantor fails to controvert in a timely manner any such case under the
Bankruptcy Code or any such proceeding, or any order of relief or other order
approving any such case or proceeding is entered; or Borrower or any Guarantor
by any act or failure to act indicates its consent to, approval of, or
acquiescence in any such case or proceeding or the appointment of any custodian
or the like of or for it for any substantial part of its property or suffers any
such appointment to continue undischarged or unstayed for a period of sixty (60)
days.

     

    


    
      
        
           


        

        
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    (h) Borrower
or any Guarantor shall make an assignment for the benefit of creditors, or shall
admit in writing its inability to pay its debts generally as they become due, or
shall consent to the appointment of a receiver or trustee or liquidator of all
of its property or the major part thereof or if all or a substantial part of the
assets of Borrower or any Guarantor are attached, seized, subjected to a writ or
distress warrant, or are levied upon, or come into the possession of any
receiver, trustee, custodian or assignee for the benefit of
creditors.

     

    (i) Any
Guarantor shall dissolve or its existence shall otherwise
terminate.

     

    (j) Any
Guarantor shall breach any of the Guarantor Financial Covenants.

     

    (k) Borrower
is enjoined, restrained or in any way prevented by any court order from
constructing or operating the Project or marketing or selling Residential Units
for a period in excess of thirty (30) days.

     

    (l) Failure
by Borrower to (i) make any Deficiency Deposit to Lender within the time and in
the manner required by Article 11
hereof, or (ii) deposit Net Operating Income into the operating account
addressed in Section
15.1(ii)(i) or Hotel operating revenue into the Hotel operating account
addressed in Section
15.1(ii)(ii).

     

    (m) One or
more final, unappealable judgments are entered against (i) Borrower in amounts
aggregating in excess of $250,000, or (ii) against any Guarantor in amounts
aggregating in excess of $250,000 for any Guarantor, and said judgments are not
paid, stayed or bonded over within thirty (30) days after entry.

     

    (n) Borrower
or any Guarantor shall fail to pay any debt owed by it or him, as applicable,
when due (either by maturity (without forbearance) or acceleration) to Lender or
any other party (other than a failure or default for which Borrower’s maximum
liability does not exceed $200,000 and any Guarantor’s maximum liability does
not exceed $500,000).

     

    (o) If a
Material Adverse Change occurs with respect to Borrower, the Project or any
Guarantor.

     

    (p) Borrower
shall fail to deliver the Insurance Policy within ninety (90) days after the
date hereof.

     

    (q) The
Pre-Sale Requirement shall cease to be satisfied.

     

    (r) Borrower
shall default under the Hotel Documents and shall fail to cure such default
within the shorter of (i) the applicable cure period set forth in Section 19.1(a),
and (ii) the applicable grace or cure period set forth in the applicable
Hotel Document, or any Hotel Document shall otherwise cease to be in full force
and effect (or any other event occurring thereunder which would give the Hotel
Operator the right to terminate a Hotel Document).

     

    (s) Borrower
shall default under the management agreement for the Venue reviewed and approved
by Lender in accordance with this Agreement, and shall fail to cure such default
within the applicable grace or cure period set forth in such management
agreement, or such management agreement shall otherwise cease to be in full
force and effect.

     

    


    
      
        
           


        

        
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    (t) Borrower
shall fail to deliver to Lender any executed Subcontract required under Exhibit O within
thirty days (30) following in the delivery date for such Subcontract as set
forth in Exhibit
O.

     

    (u) The
occurrence of any other event or circumstance identified as an Event of Default
in this Agreement or under any of the other Loan Documents and the expiration of
any applicable grace or cure periods, if any, specified for such Event of
Default herein or therein, as the case may be.

     

    Notwithstanding
anything to the contrary set forth herein, in the event that any Event of
Default shall occur with respect to Guarantor under Section 19.1(g),
(h), (i), (j), (m), (n) or (o) (a “Guarantor Financial
Default”), Borrower or Guarantor may cure such Event of Default by
depositing with Lender, within ten (10) Business Days following Lender’s written
notice to Borrower of such Event of Default, an irrevocable and unconditional
letter of credit in the amount of Twenty Million Dollars ($20,000,000.00) from
an issuer and otherwise in form and substance satisfactory to Lender in its sole
discretion.  Once such letter of credit is deposited with Lender
pursuant hereto and for so long as same remains in effect, no Guarantor
Financial Default shall be considered an Event of Default
hereunder.  Lender may draw upon such letter of credit and apply such
drawn funds to the indebtedness under the Loan Documents in such order as Lender
shall elect if an Event of Default occurs thereafter (except for a Guarantor
Financial Default), or the letter of credit shall expire in less than thirty
(30) days, or if the Loan is not paid in full on the Maturity Date.

     

     

    Article
20

     

     

    LENDER’S
REMEDIES IN EVENT OF DEFAULT

     

    20.1 Remedies
Conferred Upon Lender.

     

    Upon the
occurrence and during the continuance of any Event of Default, Lender may pursue
any one or more of the following remedies concurrently or successively, it being
the intent hereof that none of such remedies shall be to the exclusion of any
other:

     

    (a) Take
possession of the Project and complete the Construction and do anything that is
necessary or appropriate in its sole judgment to fulfill the obligations of
Borrower under this Agreement and the other Loan Documents, including either the
right to avail itself of and procure performance of existing contracts or let
any contracts with the same contractors or others.  Without
restricting the generality of the foregoing and for the purposes aforesaid,
Borrower hereby appoints and constitutes Lender its lawful attorney-in-fact with
full power of substitution in the Project to complete the Construction in the
name of Borrower; to use unadvanced funds remaining under the Note or that may
be reserved, escrowed or set aside for any purposes hereunder at any time, or to
advance funds in excess of the face amount of the Note, to complete the
Construction; to make changes in the Plans and Specifications that shall be
necessary or desirable to complete the Construction in substantially the manner
contemplated by the Plans and Specifications; to retain or employ new general
contractors, subcontractors, architects, engineers and inspectors as shall be
required for said purposes; to pay, settle or compromise all existing bills and
claims that may be liens or security interests, or to avoid such bills and
claims becoming liens against the Project; to execute all applications and
certificates in

     

    


    
      
        
           


        

        
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    the name
of Borrower prosecute and defend all actions or proceedings in connection with
the Improvements or Project; and to do any and every act that Borrower might do
in its own behalf; it being understood and agreed that this power of attorney
shall be a power coupled with an interest and cannot be revoked;

     

    (b) Withhold
further disbursement of the proceeds of the Loan and/or terminate Lender’s
obligations to make further disbursements hereunder;

     

    (c) Declare
the Note to be immediately due and payable;

     

    (d) Use and
apply any monies or letters of credit deposited by Borrower with Lender,
regardless of the purposes for which the same was deposited, to cure any such
default or to apply on account of any indebtedness under this Agreement that is
due and owing to Lender;

     

    (e) Fund
proceeds of the Loan to Guarantor to complete the Project (if Guarantor is
entitled to receive such proceeds under the Completion and Carveout Guaranty or
Lender otherwise elects to fund such proceeds to Guarantor), and in such event
such proceeds shall be considered disbursements of the Loan, whether or not
requested by Borrower (Borrower’s authorization of such disbursements being
deemed given hereby);

     

    (f) Assess
interest on all amounts outstanding under the Note at the Default Rate;
and

     

    (g) Exercise
or pursue any other remedy or cause of action permitted under this Agreement or
any other Loan Documents, or conferred upon Lender by operation of
Law.

     

    Notwithstanding
the foregoing, upon the occurrence of any Event of Default under Section 19.1(g) with
respect to Borrower, all amounts evidenced by the Note shall automatically
become due and payable, without any presentment, demand, protest or notice of
any kind to Borrower.

     

     

    Article
21

     

     

    GENERAL
PROVISIONS

     

    21.1 Captions.

     

    The
captions and headings of various Articles, Sections and subsections of this
Agree­ment and Exhibits pertaining hereto are for convenience only and are
not to be considered as defining or limiting in any way the scope or intent of
the provisions hereof.

     

    21.2 Modification;
Waiver.

     

    No
modification, waiver, amendment or discharge of this Agreement or any other Loan
Document shall be valid unless the same is in writing and signed by the party
against which the enforcement of such modification, waiver, amendment or
discharge is sought.

     

    


    
      
        
           


        

        
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    21.3 Governing
Law.

     

    Irrespective
of the place of execution and/or delivery, this Agreement shall be governed by,
and shall be construed in accordance with, the laws of the State of
Illinois.

     

    21.4 Acquiescence
Not to Constitute Waiver of Lender’s Requirements.

     

    Each and
every covenant and condition for the benefit of Lender contained in this
Agreement may be waived by Lender, provided, however, that to the extent that
Lender may have acquiesced in any noncompliance with any construction or
nonconstruction conditions precedent to the Closing Funding, the Full Opening of
the Loan or to any subsequent disbursement of Loan proceeds, such acquiescence
shall not be deemed to constitute a waiver by Lender of such requirements with
respect to any future disbursements of Loan proceeds.

     

    21.5 Disclaimer
by Lender.

     

    This
Agreement is made for the sole benefit of Borrower and Lender, and no other
person or persons shall have any benefits, rights or remedies under or by reason
of this Agreement, or by reason of any actions taken by Lender pursuant to this
Agreement.  Lender shall not be liable to any contractors,
subcontractors, supplier, architect, engineer, tenant or other party for labor
or services performed or materials supplied in connection with the
Construction.  Lender shall not be liable for any debts or claims
accruing in favor of any such parties against Borrower or others or against the
Project.  Lender, by making the Loan or taking any action pursuant to
any of the Loan Documents, shall not be deemed a partner or a joint venturer
with Borrower or fiduciary of Borrower.  No payment of funds directly
to a contractor or subcontractor or provider of services shall be deemed to
create any third-party beneficiary status or recognition of same by
Lender.  Without limiting the generality of the
foregoing:

     

    (a) Lender
shall have no liability, obligation or responsibility whatsoever with respect to
the Construction.  Any inspections of the Construction made by or
through Lender are for purposes of administration of the Loan only and neither
Borrower nor any third party is entitled to rely upon the same with respect to
the quality, adequacy or suitability of materials or workmanship, conformity to
the Plans and Specifications, state of completion or otherwise;

     

    (b) Lender
neither undertakes nor assumes any responsibility or duty to Borrower to select,
review, inspect, supervise, pass judgment upon or inform Borrower of any matter
in connection with the Project, including matters relating to the quality,
adequacy or suitability of:  (i) the Plans and Specifications, (ii)
architects, contractors, subcontractors and material suppliers employed or
utilized in connection with the Construction, or the workmanship of or the
materials used by any of them, or (iii) the progress or course of Construction
and its conformity or nonconformity with the Plans and Specifications; Borrower
shall rely entirely upon its own judgment with respect to such matters, and any
review, inspection, supervision, exercise of judgment or supply of information
to Borrower by Lender in connection with such matters is for the protection of
Lender only, and neither Borrower nor any third party is entitled to rely
thereon; and

     

    


    
      
        
           


        

        
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    (c) Lender
owes no duty of care to protect Borrower, Guarantor, or any Tenant or
Residential Unit Purchaser against negligent, faulty, inadequate or defective
building or construction.

     

    21.6 Partial
Invalidity; Severability.

     

    If any of
the provisions of this Agreement, or the application thereof to any person,
party or circumstances, shall, to any extent, be invalid or unenforceable, the
remainder of this Agreement, or the application of such provision or provisions
to persons, parties or circumstances other than those as to whom or which it is
held invalid or unenforceable, shall not be affected thereby, and every
provision of this Agreement shall be valid and enforceable to the fullest extent
permitted by law.

     

    21.7 Definitions
Include Amendments.

     

    Definitions
contained in this Agreement that identify documents, including, but not limited
to, the Loan Documents, shall be deemed to include all amendments and
supplements to such documents from the date hereof, and all future amendments,
modifications, and supplements thereto entered into from time to time to satisfy
the requirements of this Agreement or otherwise with the consent of
Lender.  Reference to this Agreement contained in any of the foregoing
documents shall be deemed to include all amendments and supplements to this
Agreement.

     

    21.8 Execution
in Counterparts.

     

    This
Agreement may be executed in any number of counterparts and by different parties
hereto in separate counterparts, each of which when so executed shall be deemed
to be an original and all of which taken together shall constitute one and the
same agreement.

     

    21.9 Entire
Agreement.

     

    This
Agreement, taken together with all of the other Loan Documents and all
certificates and other documents delivered by Borrower to Lender, embodies the
entire agreement and supersede all prior agreements, written or oral, relating
to the subject matter hereof.

     

    21.10 Waiver
of Damages.

     

    In no
event shall Lender be liable to Borrower for consequential, punitive or
exemplary damages, whatever the nature of a breach by Lender of its obligations
under this Agreement or any of the Loan Documents, and Borrower, for itself and
Guarantor, waives all claims for consequential, punitive or exemplary
damages.

     

    21.11 Claims
Against Lender.

     

    Lender
shall not be in default under this Agreement, or under any other Loan Documents,
unless a written notice specifically setting forth the claim of Borrower shall
have been given to Lender and Lender shall have failed to cure such default
within thirty (30) days after receipt of written notice from Borrower, provided
that if any such default cannot reasonably be cured

     

    


    
      
        
           


        

        
          79

          
            

          

        

        
           


        

      

    

    


    within
said thirty (30) day period, then Lender shall have an additional sixty (60) day
period to cure such failure and no default shall be deemed to exist hereunder so
long as Lender commences such cure within the initial thirty (30) day period and
diligently and in good faith pursues such cure to completion within such
resulting ninety (90) day period from the date of Borrower’s
notice.  Borrower waives any claim, set-off or defense against Lender
arising by reason of any alleged default by Lender as to which Borrower does not
give such notice timely as aforesaid.  Borrower acknowledges that such
waiver is or may be essential to Lender’s ability to enforce its remedies
without delay and that such waiver therefore constitutes a substantial part of
the bargain between Lender and Borrower with regard to the Loan.

     

    21.12 Jurisdiction.

     

    TO THE
GREATEST EXTENT PERMITTED BY LAW, BORROWER HEREBY WAIVES ANY AND ALL RIGHTS TO
REQUIRE MARSHALLING OF ASSETS BY LENDER.  WITH RESPECT TO ANY SUIT,
ACTION OR PROCEEDINGS RELATING TO THIS AGREEMENT (EACH, A “PROCEEDING”),
BORROWER IRREVOCABLY (A) SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF THE STATE
AND FEDERAL COURTS HAVING JURISDICTION IN THE COUNTY OF COOK AND STATE OF
ILLINOIS, AND (B) WAIVES ANY OBJECTION THAT IT MAY HAVE AT ANY TIME TO THE
LAYING OF VENUE OF ANY PROCEEDING BROUGHT IN ANY SUCH COURT, WAIVES ANY CLAIM
THAT ANY PROCEEDING HAS BEEN BROUGHT IN AN INCONVENIENT FORUM AND FURTHER WAIVES
THE RIGHT TO OBJECT, WITH RESPECT TO SUCH PROCEEDING, THAT SUCH COURT DOES NOT
HAVE JURISDICTION OVER SUCH PARTY.  NOTHING IN THIS AGREEMENT SHALL
PRECLUDE LENDER FROM BRINGING A PROCEEDING IN ANY OTHER JURISDICTION NOR WILL
THE BRINGING OF A PROCEEDING IN ANY ONE OR MORE JURISDICTIONS PRECLUDE THE
BRINGING OF A PROCEEDING IN ANY OTHER JURISDICTION.  BORROWER FURTHER
AGREES AND CONSENTS THAT, IN ADDITION TO ANY METHODS OF SERVICE OF PROCESS
PROVIDED FOR UNDER APPLICABLE LAW, ALL SERVICE OF PROCESS IN ANY PROCEEDING IN
ANY ILLINOIS STATE OR UNITED STATES COURT HAVING JURISDICTION OVER THE COUNTY OF
COOK MAY BE MADE, TO THE EXTENT PERMITTED BY LAW, BY CERTIFIED OR REGISTERED
MAIL, RETURN RECEIPT REQUESTED, DIRECTED TO BORROWER AT THE ADDRESS INDICATED
BELOW, AND SERVICE SO MADE SHALL BE COMPLETE UPON RECEIPT; EXCEPT THAT IF
BORROWER SHALL REFUSE TO ACCEPT DELIVERY (AS OPPOSED TO UNABLE TO RECEIVE
DELIVERY), SERVICE SHALL BE DEEMED COMPLETE FIVE (5) DAYS AFTER THE SAME SHALL
HAVE BEEN SO MAILED.

     

    21.13 Set-Offs.

     

    After the
occurrence and during the continuance of an Event of Default, Borrower hereby
irrevocably authorizes and directs Lender from time to time to charge Borrower’s
accounts and deposits with Lender (or its Affiliates), and to pay over to Lender
an amount equal to any amounts from time to time due and payable to Lender
hereunder, under the Note or under any other Loan Document.  Borrower
hereby grants to Lender a security interest in and to all such accounts and
deposits maintained by Borrower with Lender (or its Affiliates).

     

    


    
      
        
           


        

        
          80

          
            

          

        

        
           


        

      

    

    


    


     

    21.14 Binding
Effect.

     

    The
covenants, conditions, waivers, releases and agreements contained in this
Agreement shall bind, and the benefits thereof shall inure to the parties hereto
and their respective heirs, executors, administrators, successors and
assigns.

     

    21.15 Waiver of Accord and
Satisfaction.

     

    Borrower
hereby expressly waives any and all rights to effect an accord and satisfaction
of any secured obligation or any other debt of Borrower to Lender in accordance
with section 3-311 of the UCC.  Notwithstanding anything to the
contrary contained in this agreement or any other loan document, except as
expressly directed in a writing addressed to Borrower after the date hereof, any
and all communications or notices by Borrower or any other loan party to Lender
concerning disputed debts, obligations or liabilities, whether arising under
this agreement or otherwise, including without limitation any instrument
tendered as full satisfaction of a debt, shall be, in addition to the notices
required under Article 22
hereof, delivered to Corus Bank, Department 311, attention Rosa Paz, 3959 North
Lincoln Avenue, Chicago, Illinois 60613.

     

     

    Article
22

     

     

    NOTICES

     

    Any
notice, demand, request or other communication that any party hereto may be
required or may desire to give hereunder shall be in writing and shall be deemed
to have been properly given (a) if hand delivered, when delivered; (b) if by
Federal Express or other reliable overnight courier service, on the next
Business Day after delivered to such courier service or (c) if by telecopier on
the day of transmission so long as copy is sent on the same day by overnight
courier as set forth below:

     

     

    
      	
               
      

            	
              If to
      Borrower:

            


    

     

     

    
      	
               
      

            	
              c/o
      Stratus Properties

            


    

     

     

    
      	
               
      

            	
              98
      San Jacinto, Suite 220

            


    

     

     

    
      	
               
      

            	
              Austin,
      Texas 78701

            


    

     

     

    
      	
              Attention:

            	
              W.H.
      Armstrong III

            


    

     

     

    
      	
              Telephone:

            	
              (512)
      478-6396

            


    

     

     

    
      	
              Facsimile:

            	
              (512)
      478-5788

            


    

     

     

    
      	
               
      

            	
              And
      to:

            


    

     

     

    
      	
               
      

            	
              Armbrust
      & Brown, L.L.P.

            


    

     

     

    
      	
               
      

            	
              100
      Congress Avenue, Suite 1300

            


    

     

     

    
      	
               
      

            	
              Austin,
      TX  78701

            


    

     

     

    
      	
              Attention:

            	
              Kenneth
      N. Jones, Esq.

            


    

     

     

    
      	
              Telephone:

            	
              (512)
      435-2312

            


    

     

     

    
      	
              Facsimile:

            	
              (512)
      435-2360

            


    

     

    


    
      
        
           


        

        
          81

          
            

          

        

        
           


        

      

    

    


     

    


     

     

    
      	
               
      

            	
              And
      to:

            


    

     

     

    
      	
               
      

            	
              Canyon-Johnson
      Urban Fund II, L.P.

            


    

     

     

    
      	
               
      

            	
              9665
      Wilshire Boulevard, Suite 200

            


    

     

     

    
      	
               
      

            	
              Beverly
      Hills, California  90212

            


    

     

     

    
      	
              Attention:

            	
              K.
      Robert Turner

            


    

     

     

    
      	
              Telephone:

            	
              (310)
      247-2700

            


    

     

     

    
      	
              Facsimile:

            	
              (310)
      247-8067

            


    

     

     

    
      	
               
      

            	
              And
      to:

            


    

     

     

    
      	
               
      

            	
              Sidley
      Austin LLP

            


    

     

     

    
      	
               
      

            	
              555
      West Fifth Street, 40th
      Floor

            


    

     

     

    
      	
               
      

            	
              Los
      Angeles,
California  90013

            


    

     

     

    
      	
              Attention:

            	
              Brian
      C. Flavell, Esq.

            


    

     

     

    
      	
              Telephone:

            	
              (213)
      896-6603

            


    

     

     

    
      	
              Facsimile:

            	
              (213)
      896-6600

            


    

     

    
      	
               
      

            	
              If to
      Lender:

            


    

     

    
      	
               
      

            	
              CORUS Bank,
      N.A.

            


    

     

    
      	
               
      

            	
              3959
      North Lincoln Avenue

            


    

     

    
      	
               
      

            	
              Chicago,
      Illinois 60613

            


    

     

    
      	
              Attention:

            	
              Brian
      Brodeur

            


    

     

    
      	
              Telephone:

            	
              (773)
      832-3452

            


    

     

    
      	
              Facsimile:

            	
              (773)
      832-3540

            


    

     

    
      	
               
      

            	
              With a copy
      to:

            


    

     

    
      	
               
      

            	
              CORUS Bank,
      N.A.

            


    

     

    
      	
               
      

            	
              3959
      North Lincoln Avenue

            


    

     

    
      	
               
      

            	
              Chicago,
      Illinois 60613

            


    

     

    
      	
              Attention:

            	
              Joel
      Solomon, General Counsel

            


    

     

    
      	
              Telephone:

            	
              (773)
      832-3526

            


    

     

    
      	
              Facsimile:

            	
              (773)
      832-3626

            


    

     

    
      	
               
      

            	
              And
      to:

            


    

     

    
      	
               
      

            	
              Katten
      Muchin Rosenman LLP

            


    

     

    
      	
               
      

            	
              525
      West Monroe Street

            


    

     

    
      	
               
      

            	
              Chicago,
      Illinois 60661

            


    

     

    
      	
              Attention:

            	
              Mark
      C. Simon, Esq.

            


    

     

    
      	
              Telephone:

            	
              (312)
      902-5301

            


    

     

    
      	
              Facsimile:

            	
              (312)
      577-4517

            


    

     

    or at
such other address as the party to be served with notice may have furnished in
writing to the party seeking or desiring to serve notice as a place for the
service of notice.

     

    


    
      
        
           


        

        
          82

          
            

          

        

        
           


        

      

    

    


    


     

    Article
23

     

     

    WAIVER
OF JURY TRIAL

     

    BORROWER
AND LENDER EACH WAIVE ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING
TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS OR RELATING THERETO OR ARISING FROM THE LENDING RELATIONSHIP THAT IS
THE SUBJECT OF THIS AGREEMENT AND AGREE THAT ANY SUCH ACTION OR PROCEEDING SHALL
BE TRIED BEFORE A COURT AND NOT BEFORE A JURY.

     

    


    
      
        
           


        

        
          83

          
            

          

        

        
           


        

      

    

    


    EXECUTED
as of the date first set forth above.

     

    


     

    
      	
               
      

            	
              BORROWER:

            


    

     

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

    


    
      	
               
      

            	
              By:

            	
              Stratus
      Block 21 Investments, L.P., a Texas

            


    

    
      	
               
      

            	
              limited
      partnership, Manager

            


    

    


    
      	
               
      

            	
              By:

            	
              Stratus
      Block 21 Investments GP,

            


    

    
      	
               
      

            	
              L.L.C.,
      a Texas limited liability

            


    

    
      	
               
      

            	
              company,
      General Partner

            


    

    


    
      	
               
      

            	
              By:/s/ John E.
      Baker

            


    

    
      	
               
      

            	
                                 
      Name:

            	
              John
      E. Baker

            

                                                                                    Title:   Senior
Vice President

    


    By:           Canyon-Johnson
Urban Fund II, L.P., aDelaware limited partnership, Member

     

    By:           Canyon-Johnson
Realty Advisors IILLC, a Delaware limited liabilitycompany, General
Partner

     

    
      	
               
      

            	
              By:
      /s/ K. Robert
      Turner

            


    

    
      	
               
      

            	
                                 
      Name:

            	
              K.
      Robert Turner

            

                                                                                   
Title:   Managing Partner

    
 

     

    


    
      
        
           


        

        
           


          
            

          

        

        
           


        

      

    

    


    


     

    
      	
              LENDER:

            	 
      
	 
      	
              CORUS BANK,
      N.A.

            
	 
      	 
      
	 
      	
              By:
      /s/ Brian
      Brodeur

            
	 
      	
              Name:
      Brian Brodeur

            
	 
      	
              Title:
      Senior Vice President

            


    

    


    


    
      
        
           


        

        
           


          
            

          

        

        
           


        

      

    

    


    EXHIBIT
A

     

    Legal
Description of Land

     

    Lots 1
through 12, Block 21, of the Original City of Austin, Travis County, Texas,
according to the map or plat of record in the General Land Office of the State
of Texas, together with the area within the alley traversing said Block, which
was vacated by Ordinance recorded under Document No. 1999086902 and described in
Memorandum Designating the Vacation of a 20 foot wide alley on Block 21 and
Block 22, in the City of Austin as recorded under Document No. 2004040650 of the
Official Public Records of Travis County, Texas.

     

    


    
      
        
          
            A-i

          

           


        

        
           


          
            

          

        

        
           


        

      

    

    


    EXHIBIT
B

     

    Permitted
Exceptions

     

    


     

    


    
      
        
          
            B-i

          

           


        

        
           


          
            

          

        

        
           


        

      

    

    


    EXHIBIT
C

     

    Title
Requirements

     

    
      	
              1.

            	
              Title Insurance
      Company Requirements.  The maximum single risk (i.e., the
      amount insured under any one policy) by a title insurer may not exceed 25%
      of that insurer’s surplus and statutory reserves.  Reinsurance
      must be obtained by closing for any policy exceeding such
      amount.

            


    

     

    
      	
              2.

            	
              Loan Policy
      Forms.  Standard 2006 American Land Title Association
      (“ALTA”)
      form of loan title insurance policy, the 1970 (amended October 17, 1970)
      ALTA loan, or an equivalent Texas form policies must be
    used.

            


    

     

    
      	
              3.

            	
              Insurance
      Amount.  The amount insured must equal at least the
      original principal amount of the
Loan.

            


    

     

    
      	
              4.

            	
              Named
      Insured.  The named insured under the Title Policy must
      be substantially the same as the following:  “Corus Bank, N.A.
      and its respective successors and
assigns.”

            


    

     

    
      	
              5.

            	
              Creditors’
      Rights.  Any “creditors’ rights” exception or other
      exclusion from coverage for voidable transactions under bankruptcy,
      fraudulent conveyance, or other debtor protection laws or equitable
      principles must be removed by either an endorsement or a written waiver or
      issuance of a 1970 Form Policy with 1982
  modifications.

            


    

     

    
      	
              6.

            	
              Arbitration.  In
      the event that the form policy which is utilized includes a compulsory
      arbitration provision, the insurer must agree, if permitted by law, that
      such compulsory arbitration provisions do not apply to any claims by or on
      behalf of the insured. Please note that the 1987 and 1992 ALTA form loan
      policies include such provisions.

            


    

     

    
      	
              7.

            	
              Date of
      Policy.  The effective date of the Title Policy must be
      as of the date and time of the
closing.

            


    

     

    
      	
              8.

            	
              Legal
      Description.  The legal description of the property
      contained in the Title Policy must conform to (a) the legal description
      shown on the survey of the property, and (b) the legal description
      contained in the Deed of Trust.  In any event, the Title Policy
      must be endorsed to provide that the insured legal description is the same
      as that shown on the survey.

            


    

     

    
      	
              9.

            	
              Easements.  Each
      Title Policy shall insure, as separate parcels: (a) all appurtenant
      easements and other estates benefiting the property, and (b) all other
      rights, title, and interests of the borrower in real property under
      reciprocal easement agreements, access agreements, operating agreements,
      and agreements containing covenants, conditions, and restrictions relating
      to the Project.

            


    

     

    
      	
              10.

            	
              Exceptions to
      Coverage.  With respect to the exceptions, the following
      applies:

            


    

     

    a)           Each
Title Policy shall afford the broadest coverage available in the state in which
the subject property is located.

     

    


    
      
        
          
            C-i

          

           


        

        
           


          
            

          

        

        
           


        

      

    

    


    b)           The
“standard” exceptions (such as for parties in possession or other matters not
shown on public records) must be deleted.

     

    c)           The
“standard” exception regarding tenants in possession under residential leases,
should also be deleted.  For commercial properties, a rent roll should
be attached in lieu of the general exception.

     

    d)           The
standard survey exception to the Title Policy must be
deleted.  Instead, a survey reading reflecting the current survey
should be incorporated.

     

    e)           Any
exception for taxes, assessments, or other lienable items must expressly insure
that such taxes, assessments, or other items are not yet due and
payable.

     

    f)           Any
lien, encumbrance, condition, restriction, or easement of record must be listed
in the Title Policy, and, if permitted by law, the Title Policy must
affirmatively insure that the improvements do not encroach upon the insured
easements or insure against all loss or damage due to such
encroachment.

     

    g)           The
Title Policy may not contain any exception for any filed or unfiled mechanic’s
or materialmen’s liens.

     

    h)           In
the event that a comprehensive endorsement has been issued and any Schedule B
exceptions continue to be excluded from the coverage provided through that
endorsement, then a determination must be made whether such exceptions would be
acceptable to Lender.  In the event that it is determined that such
exception is acceptable, a written explanation regarding the acceptability must
be submitted as part of the delivery of the loan documents.

     

    (i)           No
exception(s) relating to the use of a purchaser’s upgrade deposits or earnest
money deposits in the construction of the Project shall be
permitted.

     

    If
Schedule B indicates the presence of any easements that are not located on the
survey, the Title Policy, if permitted by law, must provide affirmative
insurance against any loss resulting from the exercise by the holder of such
easement of its right to use or maintain that easement.  ALTA Form
103.1 or an equivalent endorsement is required for this purpose.

     

    
      	
              11.

            	
              Endorsements.  With
      respect to endorsements, the following
applies:

            


    

     

    a)           Each
Title Policy must include an acceptable environmental protection lien
endorsement on ALTA Form 8.1.  Please note that Form 8.1 may take
exception for an entire statute which contains one or more specific sections
under which environmental protection liens could take priority over the Deed of
Trust, provided, however, that such specific sections under which the lien could
arise must also be referenced.

     

    


    
      
        
          
            C-ii

          

           


        

        
           


          
            

          

        

        
           


        

      

    

    


    b)           Each
Title Policy must contain an endorsement which provides that the insured legal
description is the same as shown on the survey.

     

    c)           Each
Title Policy must contain a comprehensive endorsement (ALTA Form 9) if a lien,
encumbrance, condition, restriction, or easement is listed in Schedule B to the
title insurance policy.

     

    d)           Lender
may require the following endorsements where applicable and
available:

     

    
      	
              -access

            	 
      	
              -due
      execution

            	 
      	
              -single
      tax lot

            
	
              -address

            	 
      	
              -first
      loss

            	 
      	
              -subdivision

            
	
              -adjustable
      rate

            	 
      	
              -last
      dollar

            	 
      	
              -tie
      in

            
	
              -assessments

            	 
      	
              -leasehold

            	 
      	
              -usury

            
	
              -assignment
      of leases and rents

            	 
      	
              -mineral
      rights

            	 
      	
              -zoning
      (ALTA 3.1

              -with
      parking)

            
	
              -assignment
      of loan documents

            	 
      	
              -Deed
      of Trust tax

            	 
      
	
              -condominium
      endorsement

            	
              -reverter

            
	
              -contiguity

            	
              -revolving
      credit

            
	
              -doing
      business

            	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      


    

    
      	
              12.

            	
              Other
      Coverages.  If permitted by applicable law, each Title
      Policy shall insure the following by endorsement or affirmative insurance
      to the extent such coverage is not afforded by the ALTA Form 9 or its
      equivalent in a particular
jurisdiction:

            


    

     

    a)           that
no conditions, covenants, or restrictions of record affecting the
property:

     

    (i)           have
been violated,

    (ii)           create
lien rights which prime the insured Deed of Trust,

    (iii)           contain
a right of reverter or forfeiture, a right of reentry, or power of termination,
or

    (iv)           if
violated in the future would result in the lien created by the insured Deed of
Trust or title to the property being lost, forfeited, or subordinated;
and

     

    b)           that
except for temporary interference resulting solely from maintenance, repair,
replacement, or alteration of lines, facilities, or equipment located in
easements and rights of way taken as certain exceptions to each Title Policy,
such exceptions do not and shall not prevent the use and operation of the
Project or the improvements as used and operated on the effective date of the
Title Policy.

     

    
      	
              13.

            	
              Informational
      Matters.  The Policy must include, as an informational
      note, the following:

            


    

     

    a)           The
recorded plat number together with recording information; and

     

    


    
      
        
          
            C-iii

          

           


        

        
           


          
            

          

        

        
           


        

      

    

    


    b)           The
property parcel number or the tax identification number, as
applicable.

     

    
      	
              14.

            	
              Delivery of
      Copies.  Legible copies of all easements, encumbrances,
      or other restrictions shown as exceptions on the Title Policy must be
      delivered with the first draft of the title
  commitment.

            


    

     

    


    
      
        
          
            C-iv

          

           


        

        
           


          
            

          

        

        
           


        

      

    

    


    EXHIBIT
D

     

    Form of
Survey Certification

     

    CERTIFICATION
FOR SURVEYS (LONG-FORM)

     

    I hereby
certify to CORUS Bank, N.A., its
successors and assigns, and __________ (insert Borrower and Title Insurance
Company) that the survey prepared by me entitled “__________” was actually made
upon the ground and that it and the information, courses and distances shown
thereon are correct; that the title lines and lines of actual possession are the
same; that the size, location and type of buildings and improvements are as
shown and all are within the boundary lines of the property; that there are no
violations of zoning ordinances, restrictions or other rules and regulations
with reference to the location of said building and improvements; that there are
no easements, encroachments or use affecting this property appearing from a
careful physical inspection of the same, other than those shown and depicted
thereon; that all utility services required for the operations of the premises
either enter the premises through adjoining public streets, or the survey shows
the point of entry and location of any utilities which pass through or are
located on adjoining private land; that the survey shows the location and
direction of all storm drainage systems for the collection and disposal of all
roof and surface drainage; that any discharge into streams, rivers or other
conveyance system is shown on the survey; and that the parcels described heron
do not lie within [or lie
within] flood hazard areas in accordance with the document entitled
“Department of Housing and Urban Development, Federal Insurance
Administration–Special Flood Hazard Area Maps.” This survey is made in
accordance with the “Minimum Standard Detail Requirements for Land Title
Surveys” jointly established and adopted by ALTA and ACSM in 2005 and includes
items 1-4, 6-7(b)(i), 8-10, 11(b) and 13 of Table A.  Pursuant to
the Accuracy Standards as adopted by ALTA, NSPS, and ACSM and in effect on the
date of this certification, the undersigned further certifies
that:  [Surveyor to complete with appropriate choice from Minimum
Standard Detail Requirement]

     

    


    
      
        
          
            D-i

          

           


        

        
           


          
            

          

        

        
           


        

      

    

    


    EXHIBIT
E

     

    INSURANCE
REQUIREMENTS DURING AND POST CONSTRUCTION

    


    I.           Insurance.  Borrower
shall obtain, and maintain at all times during term of the Loan, such insurance
as Corus Bank, N.A. (“Lender”) may reasonably
require, including, but not limited to the insurance coverage set forth
below.  Unless otherwise expressly defined herein, capitalized terms
set forth in this Exhibit are terms of art, as used in and understood in the
insurance industry or are defined terms in the Construction Loan Agreement to
which this is attached.

     

    A.           During
Construction.

     

    (a)           Builder’s
Risk.  From the closing of the loan until replaced by permanent
property insurance, “All Risk” form of Builder’s Risk Insurance, in such amount
as Lender shall reasonably require, but in no event less than 100% of the
replacement cost value of the Project (including Upgrades and any leasehold
improvements) (the “Builder’s
Risk Insurance”).  Such policy shall be written on a Builder’s
Risk Completed Value Form (100% non-reporting) or its equivalent and shall not
contain a permission to occupy limitation or a coinsurance
clause.  Such policy shall not have exclusion for sidewalks, retaining
walls or underground property.  The policy shall include coverage for
Flood and Earthquake with sub-limits no less than 25% of the replacement cost,
but each not less than $5,000,000 per occurrence and in the annual aggregate,
unless building or Project is located in Earthquake Mercalli Zone VII or
greater, or a Flood Zone  “A”, as defined by the National Insurance
Flood Plan.  If the Project is located in an Earthquake Mercalli Zone
VII or greater, Borrower shall maintain Earthquake limits providing for 75% of
the replacement cost, with a deductible not greater than 5% of replacement
costs. If the Project is located in a Flood Zone “A”, Borrower shall maintain
Flood limits providing for 30% of the replacement cost (or such other limits
approved by Lender), with a deductible not greater than 3% of replacement costs.
Such insurance policy shall also include coverage for:

    


    
      	
               
      

            	
              (i)

            	
              Loss
      suffered with respect to Borrower’s materials, equipment, machinery, and
      supplies whether on-site, in transit, or stored off site, with a limit of
      no less than 100% replacement cost   and subject to a
      minimum limit of $250,000 for loans less than $25 Million, $500,000 for
      loans $25 Million up to $50 Million, and $1,000,000 for loans $50 Million
      or more for both transit and off site storage provided that Borrower shall
      obtain or cause to be obtained additional insurance whenever the value of
      materials in transit or storage exceed those
  limits;

            


    

    


    
      	
               
      

            	
              (ii)

            	
              At
      least 25% of the Soft Costs contained in the Approved Budget, and
      including coverage for all types (including but not limited to interest
      expense; fees; and plans, specifications, blueprints
  and

            


    

    


    
      
        
          
            E-i

          

           


        

        
           


          
            

          

        

        
           


        

      

    

    


    
      	
               
      

            	
              models,
      in connection with any restoration following an insured
    loss);

            


    

    


    
      	
               
      

            	
              (iii)

            	
              If
      applicable, loss or delay of rental income for a period of at least 6
      months on an actual loss sustained basis.  Lender reserves the
      right to require an endorsement providing for an extended period of
      indemnity for the rental income
insurance.

            


    

    


    (b)           Comprehensive Broad Form
Boiler and Machinery Insurance, covering all mechanical and electrical
apparatus and pressure vessels.  Such insurance shall provide coverage
against loss or damage from an accident to and/or caused by boilers and
machinery, including but not limited to: heating apparatus, pressure vessels,
pressure pipes, electrical or air conditioning equipment on a blanket
comprehensive coverage form, in such amount as Lender shall reasonably approve
but no less than $10,000,000.  All exclusions for testing shall be
removed.

    


    (c)           Professional
Liability.  Borrower will require the architect, engineers
(including Structural and MEP contractors) and all other design professionals
retained by Borrower to purchase and maintain continuous professional liability
coverage in the amount of $1,000,000 per claim / and $1,000,000 annual
aggregate.  This policy may be on a  “claims made” basis,
and shall include coverage for bodily injury and property damage and retroactive
coverage back to the first date that professional services were provided to the
Project.  Evidence of this insurance shall be provided to Borrower in
form of insurance certificate for a period of 3 years after substantial
completion of the Project (unless the loan is paid off).

    


    (d)           Commercial General Liability
and Umbrella Liability coverage, including but not limited to, coverage
for Personal Injury, Bodily Injury, Death, Property Damage, with limits of not
less than $10,000,000 per occurrence and in the annual aggregate per
location.  If commercially available in the location of the
Project, the policy shall contain an Extended Products/Completed Operations
Hazard Endorsement (“Extended
Products Endorsement”) for a period of at least three years or the state
requirement (if any), whichever is greater, acceptable to Lender in its
reasonable discretion.  The policies described in this paragraph shall
cover, without limitation: elevators, escalators, independent contractors,
contractual liability (covering, to the maximum extent permitted by the
commercial general liability policy, Borrower’s obligation to indemnify Lender
as required under this Exhibit) and Products and Completed Operations Liability
coverage. Coverage should also include host liquor liability. Borrower shall add
Lender, its directors, officers, employees and agents as additional
insured.

    


    (e)           Worker’s
Compensation.  If applicable, worker’s compensation insurance
covering Borrower and its employees at the site to the extent required, and in
the amounts required by applicable Laws. An endorsement providing
U.S.

    


    
      
        
          
            E-ii

          

           


        

        
           


          
            

          

        

        
           


        

      

    

    


    Longshore
and Harbor Workers Compensation Act (USL&HW) coverage should be added on an
“if any” basis if there is an exposure.

    


    (f)           Employers
Liability.  If applicable in the amount of $1,000,000 per
accident, $1,000,000 per illness, per employee and $1,000,000 per illness, in
the aggregate.

    


    (g)           Contractor’s
Liability.  Borrower shall cause the Contractor to maintain
Commercial General Liability coverage, including, without limitation, products
and completed operations insurance with no less than $10,000,000 in limits per
occurrence and in the aggregate per
project through primary and
umbrella liability policies.  For all condominium projects if
commercially available in location of the Project the Contractor shall be
insured by the Extended Products Endorsement or by comparable
coverage.  Borrower shall also ensure that all subcontractors maintain
similar coverage with limits appropriate to the hazard associated with their
respective work on the site.  Contractor shall be required to carry
automobile liability insurance for all owned, hired and non owned vehicles with
limits of at least $10 Million. All parties engaged in work on the Project shall
maintain statutory Workers Compensation, Employer’s Liability with limits of at
least $1,000,000 and any legally mandated Disability insurance in force for all
employees on the job. It is understood that umbrella or excess policies may be
used to reach the required limits.

    


    (h)           Borrower
may provide the Commercial General and Umbrella Liability and Workers
Compensation and Employers Liability required to be carried pursuant to Sections
I.A., Subsections (d), (e) and (f) of this Exhibit through the
purchase of a Wrap-up or Owner Controlled Insurance Program or a Contractor
Controlled Insurance Program.  This program shall provide coverage for
all parties engaged in construction operations at the Project with limits
approved by Lender.

    


    (i)           Surety
bonds as required by the terms of the Application Letter/Commitment
Letter.

    


    (j)           Such
other insurance reasonably required by Lender.

    


     

    B.           Post
Construction.  After the earlier of: (i) substantial completion
of the Project, or (ii) cancellation or expiration of the Builder’s Risk Policy,
Borrower shall provide the following coverages:

     

    (a)           “All Risk” insurance
including Flood and Earthquake, and such other insurable hazards as, under good
insurance practices are insured against for other property and buildings similar
to the premises in nature, use, location, height, and type of construction. The amount of such
insurance shall be not less than one hundred percent (100%) of the replacement
cost without depreciation of the Project.  Such insurance policy shall
contain an agreed amount endorsement.

    


    
      
        
          
            E-iii

          

           


        

        
           


          
            

          

        

        
           


        

      

    

    


    Flood and
Earthquake sublimits shall be at least 25% of the replacement cost, but not less
than $5,000,000 each per occurrence and in the annual aggregate, unless the risk
is location in a Mercalli Zone VII or greater or a Flood Zone “A”, as defined by
the National Insurance Flood Plan.  If the Project is located in an
Earthquake Mercalli Zone VII or greater Borrower shall maintain Earthquake
limits providing for 75% of the replacement cost, with a deductible not greater
than 5% of the replacement cost.  If the Project is located in a Flood
Zone “A”, Borrower shall maintain Flood limits providing for 30% of the
replacement cost (or such other limits approved by Lender), with a deductible
not greater than 3% of replacement costs.  Such insurance shall cover
increased cost of law or ordinance insurance, costs of demolition and increased
cost of construction with a sublimit of not less than $1,000,000.  If
coverage is provided under a blanket policy, Lender shall be named as sole Loss
Payee and Mortgagee for the Project.

    


    (b)           Comprehensive Broad Form
Boiler and Machinery. Insurance, in the minimum amount of $10,000,000
covering all mechanical and electrical equipment against physical damage and
covering, without limitation, all tenant improvements and betterments that
Borrower is required to insure pursuant to any lease on a replacement cost
basis.  Such insurance shall provide coverage against loss or damage
from an accident to and/or caused by boilers and machinery, including but not
limited to: heating apparatus, pressure vessels, pressure pipes, and electrical
or air conditioning equipment on a blanket comprehensive coverage form, in such
amount Lender shall reasonably approve.  All exclusions for testing
shall be removed. Coverage shall be extended to include loss of rental income
for 6 months as a result of damage from an insured peril.

    


    (c)           Business
Interruption.  Upon Lender’s reasonable request,
business

    income
and extra expense, against the perils insured by the “All Risk” Property, for a
period of indemnity of twelve months.

    


    (d)           Commercial General
Liability. Commercial General Liability Insurance, for Personal Injury,
Bodily Injury, Death, Accident and Property Damage providing in combination no
less than $10,000,000 per occurrence (with sublimits approved by Lender) and in
the annual aggregate, per
location.  The policies described in this paragraph shall
cover, without limitation: elevators, escalators, independent contractors,
contractual liability and Products and Completed Operations Liability coverage.
It is understood that umbrella or excess policies can be used to meet the
required limits.

    


    (e)           Dram Shop. Upon
Lender’s reasonable request or prior to any tenant selling alcoholic beverages
on any part of the Project, Borrower either itself or through the Tenant shall
provide evidence of so-called “Dram Shop” against claims or liabilities arising
directly or indirectly to Persons or property on account of the sale or
dispensing of alcoholic beverages.  Coverage shall include loss of
means of support. Limits shall equal those limits as may be required
by

    


    
      
        
          
            E-iv

          

           


        

        
           


          
            

          

        

        
           


        

      

    

    


    applicable
Laws or as Lender may reasonably specify. If state law allows, Lender shall be
named as an additional insured on such policy.

    


    (f)           Worker’s
Compensation.  If applicable, worker’s compensation insurance
covering Borrower and its employees at the site to the extent required, and in
the amounts required by applicable Laws.

    


    (g)           Employers
Liability.                                                      If
applicable in the amount of $1,000,000 per accident; $1,000,000 per illness, per
employee; and $1,000,000 per illness, in the aggregate.

    


    (h)           Auto Liability for Owned (if
any) and Hired and Non Owned with limits approved by Lender.

    


    (i)           Other. Such other
insurances as may be reasonably requested by Lender.

    


     

    II.           Requirements
of Insurance Policies.

     

    (a)           All
insurance policies shall be issued by an insurer or insurers with an A.M. Best
rating of A:IX or better or a Standard and Poor’s rating of “AA”, or equivalent
rating from another agency acceptable to Lender and be authorized in the state
where the Project is located.    All insurance acquired
pursuant to this Exhibit shall be in form, amounts and with coverage and
deductibles satisfactory to Lender, in Lender’s sole discretion.

    


    (b)           The
Builder’s Risk insurance policies required to be carried pursuant to Section
I.A., Subsections (a) and (b) of this Exhibit, and the All Risk required
pursuant to Section I.B, Subsections (a) and (b), shall name Borrower as the
insured and shall also name Lender as Loss Payee and Mortgagee, under a
non-contributing standard mortgagee clause.  Without Lender’s prior
written consent, Borrower shall not name any Person other than Lender, as loss
payee under any property insurance policies that Borrower is required to insure
pursuant to any Lease.

    


    (c)           The
Commercial General Liability and Contractors Liability set forth in Section
I.A., Subsections (d) and (g) and Section I.B., Subsection (d), shall name
Lender, its directors, officers, and employees as Additional
Insured.

    


    (d)           Lender
shall be named as a dual-obligee on the Performance Bond required to be obtained
by General Contractor pursuant to Section I.A., Subsection (i) of this
Exhibit.

    


    (e)           The
amount of any deductible under any insurance policy must be reasonably
acceptable to Lender.

    


    
      
        
          
            E-v

          

           


        

        
           


          
            

          

        

        
           


        

      

    

    


    


    (f)           Borrower
may provide required insurance under blanket policies.  Borrower shall
not maintain any insurance on the Project that does not name Lender as Loss
Payee.

    


    (g)           Borrower
shall pay the premiums for the insurance policies as the same become due and
payable.  Borrower shall deliver to Lender certified copies of the
insurance policies required to be maintained pursuant to this Exhibit within
sixty (60) days after the date of this Agreement or ten (10) days after the
issuance of the policies by the insurer, whichever is later, but in all events,
no later than ninety (90) days after the date of this Agreement, and failure to
do so will be an immediate Event of Default.  Notwithstanding the
foregoing, Lender shall not be deemed by reason of the custody of such insurance
policies to have knowledge of the contents thereof.  Borrower also
shall deliver to Lender, within ten (10) days of Lender’s request, a certificate
of Borrower or Borrower’s insurance agent setting forth the particulars as to
all such insurance policies, that all premiums due thereon have been paid
currently and that the same are in full force and effect.  BORROWER
SHALL DELIVER A CERTIFICATE OR OTHER EVIDENCE OF INSURANCE ACCEPTABLE TO LENDER
EVIDENCING THE INSURANCE REQUIRED HEREUNDER ON THE CLOSING DATE, TOGETHER WITH
RECEIPTS FOR THE PAYMENT OF PREMIUMS THEREON.  ALL CERTIFICATES FOR
PROPERTY INSURANCE MUST BE ON ACORD FORM 27 or the equivalent; ACORD 25
certificates are acceptable for liability insurance.  Not later than
fifteen (15) days prior to the expiration date of each of the insurance policies
Borrower shall deliver to Lender a certificate of insurance evidencing renewal
of coverage as required herein.  Within ten (10) days after such
renewal, Borrower shall deliver to Lender evidence of payment of premium
satisfactory to Lender.  Not later than ninety (90) days after the
renewal of each of the insurance policies, Borrower shall deliver to Lender an
original or certified copy (as required pursuant to this Section) of a renewal
policy or policies.

    


    (h)           Each
insurance policy shall contain a provision whereby the insurer agrees that so
long as the Loan is outstanding, such policy shall not be canceled or fail to be
renewed, lapsed or materially changed without in each case, at least thirty (30)
days prior written notice to Lender, except ten (10) days for non-payment of
premium

    


    (i)           In
the event any insurance policy (except for general and other liability and
Workers Compensation insurance) shall contain breach of warranty provisions,
such policy shall provide that with respect to the interest of Lender, such
insurance policy shall not be invalidated by and shall insure Lender regardless
of; (A) any act, failure to act or negligence of or violation of warranties,
declarations or conditions contained in such policy by any named insured; (B)
the occupancy or use of the property for purposes more hazardous than permitted
by the terms thereof; or (C) any foreclosure or other action or proceeding taken
by Lender pursuant to any provision of this Agreement.

    


    
      
        
          
            E-vi

          

           


        

        
           


          
            

          

        

        
           


        

      

    

    


    


    (j)           Any
insurance maintained pursuant to this Agreement may be evidenced by blanket
insurance policies covering the premises and other properties or assets of
Borrower or its affiliates; provided that any such policy shall in all other
respects comply with the requirements of this section.  Lender, in its
reasonable discretion, shall determine whether such blanket policies contain
sufficient limits of insurance.

    


    (k)           Any
insurance carried by Lender shall be for its sole benefit and shall not inure to
the benefit of Borrower and Insurance required from Borrower shall be primary to
any available, if any, to Lender.

    


    (l)           All
required policies, other than professional liability, shall provide that
insurers have waived rights of subrogation against Lender.  The
required insurance shall be primary without right of contribution from any
insurance, which may be carried by Lender.

    


    (m)           The
required limits are minimum limits established by Lender and nothing contained
herein shall be construed to mean the required limits are adequate or
appropriate to protect Borrower from greater loss.

    


    


    If there
are any questions regarding our insurance requirements, please contact our
insurance consultants:

    


    Alpha
Risk Management, Inc., 60 Cutter Mill Road, Great Neck, NY 11021

    Attention:
Heidi M. Bucher, ARM

    hbucher@alphariskmanagement.com

    Tel:
(516) 829-3500 x6 or Fax: (516) 829-6029

    


    Final
insurance policies should be forwarded for review directly to the attention of
Heidi M. Bucher at Alpha Risk Management, Inc. Renewals should be sent to the
attention of Josefina Reyes, Corus Bank, 3959 N. Lincoln, Chicago, Illinois
60613

    


    


    


    
      
        
          
            E-vii

          

           


        

        
           


          
            

          

        

        
           


        

      

    

    


     

    Illinois Collateral
Protection Act Notice

     

    


    Unless
Borrower provides Lender with evidence of the insurance coverage required by
this Agreement, Lender may purchase insurance at Borrower’s expense to protect
Lender’s interest in the Project.  This insurance may, but need not,
protect Borrower’s interest.  The coverage that Lender purchases may
not pay any claim that Borrower makes or any claim that is made against Borrower
in connection with the Project.  Borrower may later cancel any
insurance purchased by Lender, but only after providing Lender with evidence
that Borrower has obtained insurance as required by this
Agreement.  If Lender purchases insurance for the Project, Borrower
will be responsible for the cost of that insurance, including interest and any
other charges Lender may impose in connection with the placement of the
insurance, until the effective date of the cancellation or expiration of the
insurance.  The cost of the insurance may be added to Borrower’s total
outstanding balance or obligation.  The cost of insurance may be more
than the cost of insurance Borrower may be able to obtain on its
own.

     

    


     

    


    
      
        
          
            E-viii

          

           


        

        
           


          
            

          

        

        
           


        

      

    

    


    EXHIBIT
F

     

    Architect’s
Certificate

     

    The firm
of ________________________________________ hereby certifies for the
benefit of CORUS Bank, N.A.
that:

     

    The firm
has been employed by _______________ pursuant to a contract dated
_______________ to provide architectural and engineering services commonly known
as _______________ which is located at ______________.

     

    The
contract provides for the following services:

     

    
      	 
      	
              preparation
      of plans and specifications

            
	 
      	
              Pre-qualification
      of contractors

            
	 
      	
              Contract
      administration and supervision of construction

            
	 
      	
              Tenant
      space design

            
	 
      	 
      
	 
      	 
      
	 
      	 
      


    

    The firm
is duly licensed and in good standing under laws of the state of
___________________________License
No.__________________________________.

     

    The
foundations were designed in accordance with the recommendations contained in a
soil report dated _________________which was prepared
by______________________________________.

     

    The
following are all of the permits or governmental agency approvals required for
the construction and occupancy of the building:

     

    
      	 
      	
              Issuing Agency

            	 
      	
              Date Issued

            
	 
      	 
      	 
      	 
      
	
              Excavation
      Permit

            	 
      	 
      	 
      
	
              Foundation
      Permit

            	 
      	 
      	 
      
	
              Building
      Permit

            	 
      	 
      	 
      
	
              EPA
      – Water

            	 
      	 
      	 
      
	
              EPA
      – Sewer

            	 
      	 
      	 
      
	
              EPA
      – Air

            	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	
              Cert.
      Of Occupancy Bldg.

            	 
      	 
      	 
      
	
              Cert.
      Of Occupancy – Tenant

            	 
      	 
      	 
      
	
              Other
      (Specify)

            	 
      	 
      	 
      
	 
      	 
      	 
      	 
      


    

    


    
      
        
          
            F-i

          

           


        

        
           


          
            

          

        

        
           


        

      

    

    


    All
utilities necessary for the operation of the project are available with
sufficient capacity at the boundaries of the project.  If utility
services must be brought to site, please explain:.

     

    The plans
listed on the attached Schedule I comprise all of the plans which will be
necessary for the complete construction of the project, excepting tenant space
designs, and when the project is built in accordance therewith the project will
(excepting completion of tenant improvements) be ready for
occupancy.  The plans are complete and contain all detail necessary
for construction.  Calculations of the gross building and the net
rentable building area are attached as Schedule II.  The plans (and
the project will, when constructed in accordance therewith) comply with all
applicable building, zoning, land use, subdivision, environmental, fire, safety
and other applicable governmental laws, statutes, codes, ordinances, rules and
regulations.

     

    The
attached Schedule III, establishing a timetable for completion of the project
and showing on a monthly basis the anticipated progress of the work, is
realistic and can be adhered to.

     

    The
following design drawings or plans have been or will be prepared by other
designers or contractors.

     

    
      	
              Type of Plans

            	 
      	
              Name of Preparing Firm

            
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      


    

    The
Specifications
are:                                                                                                
shown on plans

     

     Bound separately

    


    By:                                                                

     

    Title:                                                                           

     

    Date:                                                                           

     

    


    


    
      
        
          
            F-ii

          

           


        

        
           


          
            

          

        

        
           


        

      

    

    


    EXHIBIT
G

     

    Initial
Budget

     

    


    


    
      
        
          
            G-i

          

           


        

        
           


          
            

          

        

        
           


        

      

    

    


    EXHIBIT
H

     

    Draw
Request Form

    


    


    
      
        
          
            H-i

          

           


        

        
           


          
            

          

        

        
           


        

      

    

    


    EXHIBIT
I

     

    Partial
Plans and Specifications

    


    (see
attached)

    


    
      
        
          
            I-i

          

           


        

        
           


          
            

          

        

        
           


        

      

    

    


    EXHIBIT
J

     

    Proposed
Finish Standards

     

    


     

    Proposed Construction Finish
for Residential Units:

     

     

    1. Building
Foundations:  CIP Concrete

    


    2. Building Frame: CIP
Concrete

    


    3. Description of Exterior Wall System
Including Design and Materials: 

    Unitized
Curtainwall System; Exterior Materials - High Performance Vision Glass,
Insulated Spandrel Glass, Composite Aluminum Panels

    


    4. Description of Window
System: See Above, Ext Wall System

    


    5. Description of Common Area
Amenities: Private Condo swimming pool, Terrace deck, access to all
hotel amenities.

    


    6. Ceiling Heights:

    


    
      	
              a.  

            	
              Standard units: Minimum
      ceiling: 8' in enclosed toilet rooms only, typically 9'-4" minimum, 10-6"
      max with curtain slots up to
11'-1".

            


    

    
      	
              b.  

            	
              Subpenthouses: 9'-0"
      minimum, 12'-6" max with curtain slots up to
  15'-1".

            


    

    
      	
              c.  

            	
              Penthouse levels 35 and
      36: 10-0" minimum, 14'-0" max with curtain slots up to
      15'-1".

            


    

    
      	
              d.  

            	
              Penthouse level 37:
      10'-0" minimum, 20'-0" max.

            


    

    


    7.  Description of Kitchen
and Bath Millwork, Countertops, and Plumbing
Fixtures: Bulthaup Kitchen Cabinets; Stone Countertops (selection by
buyer); Plumbing Fixtures by Dornbracht and Kohler

    


    8. Flooring (Units and Common
Areas): Mafi Hardwood Engineered Wood Floors, Stone Tile (selections
vary), Carpet

    


    9. Description of
Appliances: Miele Brand Appliances

    


    10. Other Features:
n/a

    


    


    


    


    


    
      
        
          
            J-i

          

           


        

        
           


          
            

          

        

        
           


        

      

    

    


    Proposed Unit Construction
Finish for Hotel

    


     

     

    1. Building
Foundations:  CIP Concrete

    


    2. Building Frame: CIP
Concrete

    


    3. Description of Exterior Wall System
Including Design and Materials: 

    Unitized
Curtainwall System; Exterior Materials - High Performance Vision Glass,
Insulated Spandrel Glass, Composite Aluminum Panels

    


    4. Description of Window
System: See Above, Ext Wall System

    


    5. Description of Common Area
Amenities: Hotel pool, Terrace deck, ballroom, spa, fitness, lobby
bar, restaurants, valet, shopping, dining, hike and bike trail.

    


    6. Ceiling Heights:

    
      	
              a.  

            	
              First Floor: 12’6” to
      18’0”  (bathrooms and secret bar at 9’ –
  12’)

            


    

    
      	
              b.  

            	
              Second Floor: 12’ to
      16’

            


    

    
      	
              c.  

            	
              Tower Floors: 8’ to
      9’3”

            


    

    


    7. Description of Kitchen
and Bath Millwork, Countertops, and Plumbing
Fixtures: Built-in stained and lacquered closets and desk, Silestone
(or similar) counters, Kohler plumbing fixtures

    


    8. Flooring (Units and Common
Areas): Carpet in Units, Concrete, Hardwood, rugs, porcelain tile,
and carpet.

    


    9. Description of
Appliances: n/a

    


    10. Other Features:
n/a

    


    


    
      
        
          
            J-ii

          

           


        

        
           


          
            

          

        

        
           


        

      

    

    


    EXHIBIT
K

     

    PLEASE
INCLUDE IN DRAW PACKAGE SENT TO CORUS BANK, N.A.

     

    FORM OF BAILEE LETTER FOR
PUBLIC WAREHOUSEMEN

     

    [WAREHOUSEMEN
LETTERHEAD]

     

    [DATE]

     

    Corus
Bank, N.A.

     

    3959
North Lincoln Avenue

     

    Chicago,
Illinois 60613

     

    Attention:
Corus Construction Manager

     

    Re:           W
Hotel and Residences Condominiums

     

    Austin, Texas

     

    (the
“Project”)                                                                                                                                

     

    Corus
Construction Manager:

     

    This
letter is to confirm that the undersigned, [Insert name of Public Warehousemen]
(“Warehousemen”), is
holding and will hold, from time to time, for storage in its public warehouse
located at the address set forth above, the materials described on Schedule 1,
attached hereto and made a part hereof, for the Project (the “Stored
Materials”).  Such Schedule 1 may
be revised and updated as additional materials are delivered to Warehousemen and
stored in accordance with this letter.

     

    Warehousemen
is holding such Stored Materials on behalf of [Insert name of Contractor],
as the “Contractor” of the
Project and [____________], as owner of the Project (“Owner”) and the Owner
owns and has title to the Stored Materials or will own and obtain title to the
Stored Materials upon receipt of a bill of sale for such Stored
Materials.  Pursuant to a certain Construction Loan Agreement (the
“Loan
Agreement”) between Owner and Corus Bank, N.A. (“Lender”), Owner has
granted to Lender a security interest in, among other things, the Stored
Materials.

     

    We
acknowledge and agree that Lender’s security interest in the Stored Materials is
senior to all liens, claims and interests, other than our warehouseman’s lien
for any accrued and unpaid warehousing fees charged by us for the actual storage
of the Stored Materials.  To protect Lender’s security interest in the
Stored Materials, from and after the date of this letter, all warehouse receipts
and other documents of title which evidence any Stored Materials now or
hereafter delivered by Owner to us shall be non-negotiable and issued to or for
the account of Lender.  We shall provide Lender with a copy of such
receipts or other documents upon Lender’s request for those items.  We
will notify all of our successors and assigns of the existence of the agreements
contained herein.

     

    


    
      
        
          
            K-i

          

           


        

        
           


          
            

          

        

        
           


        

      

    

    


    Notwithstanding
the issuance of such receipts or other documents to or for the account of
Lender, we acknowledge and agree that Lender has authorized us to release any of
the Stored Materials to any authorized agent of Owner upon Owner’s request
(including, without limitation, Contractor); provided, however, upon our receipt
of written direction from Lender, we shall refuse to release any of the Stored
Materials to Owner or Owner’s agent (including, without limitation, Contractor)
and we shall only release such Stored Materials to Lender or the party
designated by Lender in such written direction.

     

    Very
truly yours,

    


    [PUBLIC
WAREHOUSEMEN]

    


    By:                                                      

    Name:                                                                

    Title:                                                                

    


    
      
        
          
            K-ii

          

           


        

        
           


          
            

          

        

        
           


        

      

    

    


    SCHEDULE
1

     

    DESCRIPTION OF
MATERIALS

     

    [Warehousemen:
Please insert/attach a detailed inventory of the Stored Materials, including,
without limitation, a statement of the quantity stored, relevant invoices,
warehouse receipts or other documents of title and any applications for
payment.]

     

    


     

    


    
      
        
          
            K-iii

          

           


        

        
           


          
            

          

        

        
           


        

      

    

    


    EXHIBIT
L

     

    PLEASE
INCLUDE IN DRAW PACKAGE SENT TO CORUS BANK, N.A.

     

    FORM OF BAILEE
LETTER

     

    [SUBCONTRACTOR
LETTERHEAD]

     

    [DATE]

     

    Corus
Bank, N.A.

     

    3959
North Lincoln Avenue

     

    Chicago,
Illinois 60613

     

    Attention:  Corus
Construction Manager

     

    Re:           W
Hotel and Residences Condominiums

     

    Austin, Texas

     

    (the
“Project”)                                                                                                                                

     

    Corus
Construction Manager:

     

    This
letter is to confirm that the undersigned, [Insert name of
Sub-Contractor] (“Bailee”), is holding
for processing and/or storage the materials described on Schedule 1,
attached hereto and made a part hereof, for the Project (the “Stored
Materials”).  Such Schedule 1 may
be revised and updated as additional materials are delivered to Bailee and
stored in accordance with this letter.

     

    Bailee is
holding such Stored Materials on behalf of [Insert name of Contractor],
as the “Contractor” of the
Project and [_________________], as owner of the Project (“Owner”) and the Owner
owns and has title to the Stored Materials or will own and obtain title to the
Stored Materials upon receipt of a bill of sale for such Stored
Materials.  Pursuant to a certain Construction Loan Agreement (the
“Loan
Agreement”) between Owner and Corus Bank, N.A. (“Lender”), Owner has
granted to Lender a security interest in, among other things, the Stored
Materials.

     

    In order
to protect Owner’s ownership interest and Lender’s security interest in the
Stored Materials, Bailee agrees, acknowledges, represents and warrants as
follows:

     

    
      	
               
      

            	
              (i)

            	
              We
      are holding and will hold the Stored Materials on bailment for processing
      or warehousing;

            


    

     

    
      	
               
      

            	
              (ii)

            	
              The
      Stored Materials are Owner’s property and are subject to Lender’s security
      interest, and we are holding and will hold the Stored Materials for
      Lender’s benefit;

            


    

     

    


    
      
        
          
            L-i

          

           


        

        
           


          
            

          

        

        
           


        

      

    

    


    
      	
               
      

            	
              (iii)

            	
              Lender’s
      security interest in the Stored Materials shall be senior to all liens,
      claims and interests, including any fees charged by us for the actual
      processing or storage of the Stored Materials and we will notify all of
      our successors and assigns of the existence of the agreements contained
      herein;

            


    

     

    
      	
               
      

            	
              (iv)

            	
              If,
      at any time after the date of this letter, Lender shall notify us in
      writing that Owner has defaulted on its obligations to Lender under the
      Loan Agreement, we will comply with Lender’s written instructions as to
      the disposition of the Stored Materials;
and

            


    

     

    
      	
               
      

            	
              (v)

            	
              Until
      we are notified in writing by Lender that the financing arrangements under
      the Loan Agreement have been terminated and Lender has been paid in full,
      we shall not deduct from or offset against any amounts due and owing to us
      by Owner, by applying any of the Stored Materials in payment for such
      amounts.

            


    

     

    Very
truly yours,

    


    [BAILEE]

    


    By:                                                      

    Name:                                                                

    Title:                                                                

    


    
      
        
          
            L-ii

          

           


        

        
           


          
            

          

        

        
           


        

      

    

    


    SCHEDULE
1

     

    DESCRIPTION OF
MATERIALS

     

    [Bailee:
Please insert/attach a detailed inventory of the Stored Materials, including,
without limitation, a statement of the quantity stored, relevant invoices and
any applications for payment.]

     

    


    
      
        
          
            L-iii

          

           


        

        
           


          
            

          

        

        
           


        

      

    

    


    EXHIBIT
M

     

    List of
Sales Agreements and Price List Schedule

     

    


     

    


     

    


    
      
        
          
            M-i

          

           


        

        
           


          
            

          

        

        
           


        

      

    

    


    EXHIBIT
N

     

    Subcontract
Delivery Dates

     

    


     

    


     

    


    
      
        
          
            N-i

          

           


        

        
           


          
            

          

        

        
           


        

      

    

    


    EXHIBIT
O

     

    Approved
Form of Sales Agreement

     

    


     

    


    
      
        
          
            O-i

          

           


        

        
           


          
            

          

        

        
           


        

      

    

    


    EXHIBIT
P

     

    Materials
Purchases Not Subject to Retainage

     

    


    
      
        
          
            P-i

          

           


        

        
           


          
            

          

        

        
           


        

      

    

    


    EXHIBIT
Q

     

    Allowable
Tenant Improvements

     

    


     

    


    
      
        
          
            Q-i

          

           


        

        
           


          
            

          

        

        
           


        

      

    

    


    EXHIBIT
R

     

    Delivery
Schedule for Plans and Specifications

     

    


    
      
        
          
            R-i

          

           


        

        
           


          
            

          

        

        
           


        

      

    

    


    EXHIBIT
S

    Form of
Second Estoppel and Agreement from City of Austin

    


    
      
        
          
            S-i