Authorization
        ID AAA4442

      Investment
        ID M-0005934

      


      


      


      DEED
        OF TRUST, ASSIGNMENT OF LEASES AND RENTS,

      SECURITY
        AGREEMENT AND FIXTURE FILING

      


      


      by

      


      


      ESCARPMENT
        VILLAGE, L.P.,

      as
        Borrower

      


      to

      


      RANDI
        MARGOLIN,

      as
        Trustee

      


      for
        the
        benefit of

      


      TEACHERS
        INSURANCE AND ANNUITY ASSOCIATION OF AMERICA,

      as
        Lender

      


      


      Property
        Known As

      


      Escarpment
        Village

      Slaughter
        Lane at Escarpment Blvd.

      Austin,
        Texas

      


      


      After
        Recordation This Deed of Trust Should Be Returned To:

      


      Randi
        Margolin, Esquire

      c/o
        Teachers Insurance and Annuity

      Association
        of America

      730
        Third
        Avenue

      New
        York,
        New York 10017

      



      
        
          
             

          

          
          

        

        
          
          

          
            

          

        

        
          
          

          
          

        

      


      DEED
        OF TRUST, ASSIGNMENT OF LEASES AND RENTS,

      SECURITY
        AGREEMENT AND FIXTURE FILING

      


       

      THIS
        DEED
        OF TRUST, ASSIGNMENT OF LEASES AND RENTS, SECURITY AGREEMENT AND FIXTURE
        FILING
        made this 30th day of June, 2006 by ESCARPMENT VILLAGE, L.P., a Texas
        limited partnership (“Borrower”)
        having
        its principal place of business at c/o Stratus Properties Inc., 98 San Jacinto
        Blvd., Suite 220, Austin, Texas 78701, to Randi Margolin (“Trustee”),
        an
        individual having
        an
        office at 730 Third Avenue, New York, New York 10017, for the benefit of
        TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF AMERICA (“Lender”),
        a New
        York corporation, having an address at 730 Third Avenue, New York, New York
        l0017.

       

      RECITALS:

       

      A.  Lender
        agreed to make and Borrower agreed to accept a loan (the “Loan”)
        in the
        maximum principal amount of $22,800,000.00.

       

      B.  To
        evidence the Loan, Borrower executed and delivered to Lender a promissory
        note
        (the “Note”),
        dated
        the date of this Deed of Trust, in the principal amount of TWENTY-TWO MILLION
        EIGHT HUNDRED THOUSAND AND NO/100 DOLLARS ($22,800,000.00) (that amount or
        so
        much as is outstanding from time to time is referred to as the “Principal”),
        promising to pay the Principal with interest thereon to the order of Lender
        as
        set forth in the Note and with the balance, if any, of the Debt being due
        and
        payable on July 1, 2016 (the “Maturity
        Date”).

       

      C.  To
        secure
        the Note, this Deed of Trust grants, bargains, sells and conveys, among other
        things, Borrower’s fee interest in the real property located in the City of
        Austin, County of Travis, State of Texas more particularly described in
Exhibit
        A
        (the
“Land”)
        to
        Trustee.

       

      ARTICLE
        I  


       

      DEFINITIONS
        AND RULES OF CONSTRUCTION

       

      Section
        1.1  Definitions.
        Capitalized terms used in this Deed of Trust are defined in Exhibit
        B
        or in
        the text with a cross-reference in Exhibit
        B.

       

      Section
        1.2  Rules
        of Construction.
        This
        Deed of Trust will be interpreted in accordance with the rules of construction
        set forth in Exhibit
        C.

       

      ARTICLE
        II  


       

      GRANTING
        CLAUSES

       

      Section
        2.1  Encumbered
        Property.
        Borrower irrevocably grants, bargains, sells, transfers, conveys and assigns
        to
        Trustee, the following property, rights, interests and estates now or in
        the
        future owned or held by Borrower (the “Property”)
        for
        the uses and purposes set 

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      forth
        in
        this Deed of Trust (capitalized terms used in this Section 2.1 and not defined
        in this Deed of Trust have the meanings ascribed to them in the Uniform
        Commercial Code):

       

      (i)  the
        Land;

       

      (ii)  all
        buildings and improvements located on the Land (the “Improvements”);

       

      (iii)  all
        right, title and interest Borrower has in and to all easements; rights of
        way or
        use, including any rights of ingress and egress; streets, roads, ways,
        sidewalks, alleys and passages; strips and gores; sewer rights; water, water
        rights, water courses, riparian rights and drainage rights; air rights and
        development rights; oil and mineral rights; and tenements, hereditaments
        and
        appurtenances, in each instance adjoining or otherwise appurtenant to or
        benefiting the Land or the Improvements;

       

      (iv)  all
        right, title and interest Borrower has in and to all General Intangibles
        (including Software) and Goods, related to, attached to, contained in or
        used in
        connection with the Land or the Improvements (excluding personal property
        owned
        by tenants);

       

      (v)  the
        interest of Borrower, to the extent related to the Land, in all agreements,
        ground leases, grants of easements or rights-of-way, permits, declarations
        of
        covenants, conditions and restrictions, disposition and development agreements,
        planned unit development agreements, cooperative, condominium or similar
        ownership or conversion plans, management, leasing, brokerage or parking
        agreements or other material documents affecting Borrower or the Property,
        including the documents described on Exhibit
        D
        but
        expressly excluding the Leases (the “Property
        Documents”);

       

      (vi)  all
        Inventory held for sale, lease or resale or furnished or to be furnished
        under
        contracts of service, or used or consumed in the ownership, use or operation
        of
        the Property, and all Documents of title evidencing any part of any of the
        foregoing;

       

      (vii)  all
        Accounts, Documents, Goods, Instruments, money, Deposit Accounts, Chattel
        Paper,
        Letter-of-Credit Rights, Investment Property, General Intangibles and Supporting
        Obligations relating to the Property, including all deposits held from time
        to
        time by the Accumulations Depositary to provide reserves for Taxes and
        Assessments together with interest thereon, if any (the “Accumulations”),
        and
        all deposits for reserves held from time to time by Lender’s pledge agent in
        accordance with the Reserve and Security Agreements described in the Section
        entitled “Reserves”
and
        all
        accounts established to maintain the deposits together with investments thereof
        and interest thereon;

       

      (viii)  all
        awards and other compensation paid after the date of this Deed of Trust for
        any
        Condemnation (the “Condemnation
        Awards”);

       

      
        
          
          

        

        
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      (ix)  all
        proceeds of and all unearned premiums on the Policies (the “Insurance
        Proceeds”);

       

      (x)  all
        right, title and interest of Borrower in all licenses, certificates of
        occupancy, contracts, management agreements, operating agreements, operating
        covenants, franchise agreements, permits and variances relating to the
        Property;

       

      (xi)  all
        books, records and other information, wherever located, which are in Borrower’s
        possession, custody or control or to which Borrower is entitled at law or
        in
        equity and which are related to the Property, including all computer hardware
        and software or other equipment used to record, store, manage, manipulate
        or
        access the information; and

       

      (xii)  all
        after-acquired title to or remainder or reversion in any of the Property;
        all
        proceeds (excluding, however, sales or other dispositions of Inventory in
        the
        ordinary course of the business of operating the Land or the Improvements),
        replacements, substitutions, products, accessions and increases, all additions,
        accessions and extensions to, improvements of and substitutions or replacements
        for any of the Property described in this Section; and all additional lands,
        estates, interests, rights or other property acquired by Borrower after the
        date
        of this Deed of Trust for use in connection with the Land or the Improvements,
        all without the need for any additional mortgage, assignment, pledge or
        conveyance to Lender but Borrower will execute and deliver to Lender, upon
        Lender’s request, any documents reasonably requested by Lender to further
        evidence the foregoing.

       

      Section
        2.2  Habendum
        Clause.
        The
        Property, together with all and singular rights, hereditaments and appurtenances
        in any way appertaining or belonging to the Property is conveyed to Trustee
        and
        Trustee’s successors, assigns or substitutes in this trust, to have and to hold
        forever in trust and for the uses and purposes set forth in this Deed of
        Trust.

       

      Section
        2.3  Security
        Agreement.

       

      (a)  This
        Deed
        of Trust also constitutes a security agreement with respect to, and Borrower
        hereby grants to Lender a security interest in, the Collateral. This Deed
        of
        Trust shall constitute a “fixture filing” for purposes of Chapter 9 of the
        Uniform Commercial Code. Portions of the Collateral are or may become
        fixtures.

       

      (b)  For
        purposes of the fixture filing, Borrower represents, as of the date hereof,
        that
        the following information set forth in clauses (i), (v) and (vi), is true
        and
        correct:

       

      (i)  The
        exact
        legal name and address of Debtor is:

       

      Escarpment
        Village, L.P.

      98
        San
        Jacinto Blvd, Suite 220

      Austin,
        Texas 78701

      


      
        
          
          

        

        
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      (ii)  Name
        and
        address of Secured Party:

       

      Teachers
        Insurance and Annuity 

      Association
        of America

      730
        Third
        Avenue 

      New
        York,
        NY 10017 

       

      (iii)  Description
        of the types (or items) of property covered by this Financing
        Statement:
        all of
        the property described in section ii-xii of the Section entitled “Encumbered
        Property”
        described or referred to herein and included as part of the
        Property.

       

      (iv)  Description
        of real estate to which collateral is attached or upon which it is located:
        Described in Exhibit
        A.

       

      (v)  Debtor’s
        Federal Tax ID Number: 20-0917067, and Debtor’s Organizational Number in Texas
        is 80032932.

       

      (vi)  Debtor’s
        chief executive office and principal place of business are both located in
        the
        State of Texas, and Debtor’s state of formation is the State of
        Texas.

       

      Lender
        may file this Deed of Trust, or a reproduction thereof, in the real estate
        records or other appropriate index, as a financing statement for any of the
        items specified above as part of the Property. Any reproduction of this Deed
        of
        Trust or of any other security agreement or financing statement is sufficient
        as
        a financing statement.

       

      Section
        2.4  Common
        Law Assignment.
        To the
        extent that any of the Collateral is not subject to the Uniform Commercial
        Code
        of the state or states where it is situated, Borrower hereby assigns to Lender
        all of Borrower’s right, title, and interest in and to the Collateral to secure
        the indebtedness secured hereby, together with the right of set-off with
        regard
        to such Collateral (or any part thereof). Release of the lien of this Deed
        of
        Trust will automatically terminate this assignment.

       

      Section
        2.5  Warrant.
        Borrower, for Borrower and its successors and assigns, hereby agrees to warrant
        and forever defend, all and singular, title to the Property unto Trustee,
        and
        Trustee’s successors or substitutes in this trust, forever, against every person
        whomsoever lawfully claiming, or to claim, the same or any part thereof,
        subject, however, to the Permitted Exceptions.

       

      Section
        2.6  Deed
        of Trust as Security.
        This
        Deed of Trust, and all rights, remedies, powers, privileges, and benefits,
        and
        all titles, interests, liens, and security interests created hereby, or arising
        by virtue hereof, are given to secure payment and performance of the
        Obligations.

       

      
        
          
          

        

        
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      ARTICLE
        III  

       

      OBLIGATIONS
        SECURED

       

      Section
        3.1  The
        Obligations.
        This
        Deed of Trust secures the Principal, the Interest, the Late Charges, the
        Prepayment Premiums, the Expenses, any additional advances made by Lender
        in
        connection with the Property or the Loan and all other amounts payable under
        the
        Loan Documents together with all renewals, extension, modification, refinancings
        and rearrangements thereof (the “Debt”)
        and
        also secures both the timely payment of the Debt as and when required and
        the
        timely performance of all other obligations and covenants to be performed
        under
        the Loan Documents (the “Obligations”).

       

      ARTICLE
        IV  


       

      TITLE
        AND AUTHORITY

       

      Section
        4.1  Title
        to the Property.

       

      (a)  Subject
        to the conveyance effectuated by this Deed of Trust, Borrower has and will
        continue to have good and indefeasible title in fee simple absolute to the
        Land
        and the Improvements and good and marketable title to the Fixtures and Personal
        Property, all free and clear of liens, encumbrances and charges except the
        Permitted Exceptions. To Borrower’s knowledge, there are no facts or
        circumstances that might give rise to a lien, encumbrance or charge on the
        Property, except as contemplated hereby or shown as a Permitted
        Exception.

       

      (b)  Borrower
        owns and will continue to own all of the other Property free and clear of
        all
        liens, encumbrances and charges except the Permitted Exceptions.

       

      (c)  This
        Deed
        of Trust is and will remain a valid and enforceable first lien on and security
        interest in the Property, subject only to the Permitted Exceptions.

       

      Section
        4.2  Authority.

       

      (a)  Borrower
        is and will continue to be (i) duly organized, validly existing and in good
        standing under the Laws of the state in which it was formed, organized or
        incorporated as set forth in Section 2.3 and (ii) duly qualified to conduct
        business, in good standing, in the state or commonwealth where the Property
        is
        located.

       

      (b)  Borrower
        has and will continue to have all approvals required by Law or otherwise
        and
        full right, power and authority to (i) own and operate the Property and carry
        on
        Borrower’s business as now conducted or as proposed to be conducted; (ii)
        execute and deliver the Loan Documents; (iii) grant, mortgage, warrant the
        title
        to, convey, assign and pledge the Property to Lender pursuant to the provisions
        of this Deed of Trust; and (iv) perform the Obligations.

       

      (c)  The
        execution and delivery of the Loan Documents and the performance of the
        Obligations do not and will not conflict with or result in a default under
        any
        Laws 

       

      
        
          
          

        

        
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      or
        any
        Leases or Property Documents and do not and will not conflict with or result
        in
        a default under any agreement binding upon any party to the Loan
        Documents.

       

      (d)  The
        Loan
        Documents constitute and will continue to constitute legal, valid and binding
        obligations of all parties to the Loan Documents enforceable in accordance
        with
        their respective terms, subject to laws regarding bankruptcy, insolvency,
        liquidation, receivership and reorganization.

       

      (e)  Borrower
        has not changed its legal name or its state or commonwealth of organization
        or
        the state where its place of business is located, as set forth in Section
        2.3,
        in the four months prior to the date hereof, except as Borrower has disclosed
        any such change to Lender in writing and delivered to Lender appropriate
        Uniform
        Commercial Code search reports in connection therewith.

       

      (f)  Borrower
        has not (i) merged with or into any other entity or otherwise been involved
        in
        any reorganization or (ii) acquired substantially all of the assets of any
        other
        entity where Borrower became subject to the obligations of such entity, for
        a
        period of one year ending on the date hereof, except as Borrower has disclosed
        any such change, merger, reorganization or acquisition to Lender in writing
        and
        delivered to Lender appropriate Uniform Commercial Code search reports in
        connection therewith.

       

      Section
        4.3  No
        Foreign Person.
        Neither
        Borrower nor the entity into which Borrower is disregarded for Federal tax
        purposes is a “foreign person” within the meaning of Section 1445(f)(3) of the
        Code.

       

      Section
        4.4  Litigation.
        There
        are no Proceedings or, to Borrower’s knowledge, investigations against or
        affecting Borrower or the Property and, to Borrower’s knowledge, there are no
        facts or circumstances that might give rise to a Proceeding or an investigation
        against or affecting Borrower or the Property. Borrower will give Lender
        prompt
        notice of the commencement of any Proceeding or investigation against or
        affecting the Property or Borrower which could have a material adverse effect
        on
        the Property or on Lender’s interests in the Property or under the Loan
        Documents and, at Borrower’s expense, will appear in and defend any such
        Proceeding or investigation. Borrower also will deliver to Lender such
        additional information relating to the Proceeding or investigation as Lender
        may
        request from time to time.

       

      ARTICLE
        V  


       

      PROPERTY
        STATUS, MAINTENANCE AND LEASES

       

      Section
        5.1  Status
        of the Property.

       

      (a)  Borrower
        has obtained and will maintain in full force and effect all certificates,
        licenses, permits and approvals that are issued or required by Law or by
        any
        entity having jurisdiction over the Property or over Borrower or that are
        necessary for the Permitted Use, for occupancy and operation of the Property
        for
        the conveyance described in this Deed of Trust and for the conduct of Borrower’s
        business on the Property in accordance with the Permitted Use; provided the
        Leases shall require each of the tenants 

       

      
        
          
          

        

        
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      to
        obtain
        specific licenses and permits required by their operations such as health
        department licenses and alcohol and mixed beverage permits, .

       

      (b)  The
        Property is and will continue to be serviced by all public utilities required
        for the Permitted Use of the Property.

       

      (c)  All
        roads
        and streets necessary for service of and access to the Property for the current
        or contemplated use of the Property have been completed and are and will
        continue to be serviceable, physically open and dedicated to and accepted
        by the
        Government for use by the public.

       

      (d)  The
        Property is free from damage caused by a Casualty.

       

      (e)  All
        costs
        and expenses of labor, materials, supplies and equipment used in the
        construction of the Improvements have been paid in full, other than certain
        leasehold improvements by tenants for which tenants are responsible for
        payment.

       

      Section
        5.2  Maintenance
        of the Property.
        Borrower will maintain the Property in thorough repair and good and safe
        condition, suitable for the Permitted Use, including, to the extent necessary,
        replacing the Fixtures and Personal Property with property at least equal
        in
        quality and condition to that being replaced and free of liens. Borrower
        will
        not erect any new buildings, building additions or other structures on the
        Land
        or otherwise materially alter the Improvements without Lender’s prior consent
        which may be withheld in Lender’s sole discretion (which approval for tenant
        improvements that are not structural in nature may be in the form of approval
        or
        deemed approval of a Lease; structural improvements or alterations will require
        Lender’s approval). The Property will be managed by Trammell Crow Central Texas,
        Ltd or another property manager satisfactory to Lender pursuant to a management
        agreement satisfactory to Lender and terminable by Borrower upon 30 days
        notice
        to the property manager.

       

      Section
        5.3  Change
        in Use.
        Borrower will use and permit the use of the Property for the Permitted Use
        and
        for no other purpose.

       

      Section
        5.4  Waste.
        Borrower will not commit or permit any waste (including economic and
        non-physical waste), impairment or deterioration of the Property or any
        alteration, demolition or removal of any of the Property (except as may be
        expressly permitted by the provisions of this Deed of Trust) without Lender’s
        prior consent which may be withheld in Lender’s sole discretion.

       

      Section
        5.5  Inspection
        of the Property.
        Subject
        to the rights of tenants under the Leases, Lender has the right to enter
        and
        inspect the Property on reasonable prior notice, except during the existence
        of
        an Event of Default, when no prior notice is necessary. Lender has the right
        to
        engage an independent expert to review and report on Borrower’s compliance with
        Borrower’s obligations under this Deed of Trust to maintain the Property, comply
        with Law and refrain from waste, impairment or deterioration of the Property
        and
        the alteration, demolition or removal of any of the Property except as may
        be
        permitted by the provisions of this Deed of Trust. If the independent expert’s
        report discloses material failure to comply with such obligations or if Lender
        engages the independent expert after the occurrence of an Event of 

       

      
        
          
          

        

        
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      Default,
        then the independent expert’s review and report will be at Borrower’s expense,
        payable on demand.

       

      Section
        5.6  Leases
        and Rents.

       

      (a)  Borrower
        assigns the Leases and the Rents to Lender absolutely and unconditionally
        and
        not merely as additional collateral or security for the payment and performance
        of the Obligations, but subject to a license back to Borrower of the right
        to
        collect the Rents unless and until an Event of Default occurs at which time
        the
        license will terminate automatically, all as more particularly set forth
        in the
        Assignment, the provisions of which are incorporated in this Deed of Trust
        by
        reference.

       

      (b)  Borrower
        appoints Lender as Borrower’s attorney-in-fact to execute unilaterally and
        record, at Lender’s election, a document subordinating this Deed of Trust to the
        Leases, provided
        that the
        subordination will not affect (i) the priority of Lender’s entitlement to
        Insurance Proceeds or Condemnation Awards or (ii) the priority of this Deed
        of
        Trust over intervening liens or liens arising under or with respect to the
        Leases.

       

      Section
        5.7  Parking.
        Borrower will provide, maintenance and light parking areas within the Property,
        including any sidewalks, aisles, streets, driveways, sidewalk cuts and
        rights-of-way to and from the adjacent public streets, in a manner consistent
        with the Permitted Use and sufficient to accommodate the greatest of: (i)
        the
        number of parking spaces required by Law; (ii) the number of parking spaces
        required by the Leases and the Property Documents; or (iii) 577 parking spaces.
        The parking areas will be reserved and used exclusively for ingress, egress
        and
        parking for Borrower and the tenants under the Leases and their respective
        employees, customers and invitees and in accordance with the Leases and the
        Property Documents.

       

      Section
        5.8  Separate
        Tax Lot.
        The
        Property is and will remain assessed for real estate tax purposes as one
        or more
        wholly independent tax lots, separate from any property that is not part
        of the
        Property.

       

      Section
        5.9  Changes
        in Zoning or Restrictive Covenants.
        Borrower will not (i) initiate, join in or consent to any change in any Laws
        pertaining to zoning, any restrictive covenant or other restriction which
        would
        restrict the Permitted Uses for the Property; (ii) permit the Property to
        be
        used to fulfill any requirements of Law for the construction or maintenance
        of
        any improvements on property that is not part of the Property; (iii) permit
        the
        Property to be used for any purpose not included in the Permitted Use; or (iv)
        impair the integrity of the Property as a single, legally subdivided zoning
        lots
        separate from all other property.

       

      Section
        5.10  Lender’s
        Right to Appear.
        Lender
        has the right to appear in and defend any Proceeding brought regarding the
        Property and to bring any Proceeding, in the name and on behalf of Borrower
        or
        in Lender’s name, which Lender, in its sole discretion, determines should be
        brought to protect Lender’s interest in the Property.

       

      
        
          
          

        

        
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      ARTICLE
        VI  

       

      IMPOSITIONS
        AND ACCUMULATIONS

       

      Section
        6.1  Impositions.

       

      (a)  Borrower
        will pay each Imposition at least 15 days before the date (the “Imposition
        Penalty Date”)
        that
        is the earlier of (i) the date on which the Imposition becomes delinquent
        and
        (ii) the date on which any penalty, interest or charge for non-payment of
        the
        Imposition accrues.

       

      (b)  At
        least
        10 days before each Imposition Penalty Date, Borrower will deliver to Lender
        a
        receipted bill or other evidence of payment.

       

      (c)  Borrower,
        at its own expense, may contest any Taxes or Assessments, provided
        that the
        following conditions are met:

       

      (i)  not
        less
        than 30 days prior to the Imposition Penalty Date, Borrower delivers to Lender
        notice of the proposed contest;

       

      (ii)  the
        contest is by a Proceeding promptly initiated and conducted diligently and
        in
        good faith;

       

      (iii)  there
        is
        no Event of Default;

       

      (iv)  the
        Proceeding suspends the collection of the contested Taxes or
        Assessments;

       

      (v)  the
        Proceeding is permitted under and is conducted in accordance with the Leases
        and
        the Property Documents;

       

      (vi)  the
        Proceeding precludes imposition of criminal or civil penalties and sale or
        forfeiture of the Property and Lender will not be subject to any civil suit;
        and

       

      (vii)  Borrower
        either deposits with the Accumulations Depositary reserves or furnishes a
        bond
        or other security satisfactory to Lender, in either case in an amount sufficient
        to pay the contested Taxes or Assessments, together with all interest and
        penalties or Borrower pays all of the contested Taxes or Assessments under
        protest.

       

      (d)  Installment
        Payments.
        If any
        Assessment is payable in installments, Borrower will nevertheless pay the
        Assessment in its entirety on the day the first installment becomes due and
        payable or a lien, unless Lender, in its sole discretion, approves payment
        of
        the Assessment in installments.

       

      
        
          
          

        

        
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      Section
        6.2  Accumulations.

       

      (a)  Borrower
        made an initial deposit with either Lender or a mortgage servicer or financial
        institution designated or approved by Lender from time to time, acting on
        behalf
        of Lender as Lender’s agent or otherwise such that Lender is the “customer”, as
        defined in the Uniform Commercial Code, of the depository bank with respect
        to
        the deposit account into which the Accumulations are deposited, to receive,
        hold
        and disburse the Accumulations in accordance with this Section (the
“Accumulations
        Depositary”).
        On
        the first day of each calendar month during the Term Borrower will deposit
        with
        the Accumulations Depositary an amount equal to 1/12 of the annual Taxes
        and
        Assessments as determined by Lender or its designee. At least 45 days before
        each Imposition Penalty Date, Borrower will deliver to the Accumulations
        Depositary any bills and other documents that are necessary to pay the Taxes
        and
        Assessments.

       

      (b)  Prior
        to
        an Event of Default the Accumulations will be applied to the payment of Taxes
        and Assessments. From and after an Event of Default, Lender may apply the
        Accumulations to the balance of the Debt in such order as Lender determines.
        Any
        excess Accumulations after payment of Taxes and Assessments will be returned
        to
        Borrower or credited against future payments of the Accumulations, at Lender’s
        election or as required by Law. If the Accumulations are not sufficient to
        pay
        Taxes and Assessments, Borrower will pay the deficiency to the Accumulations
        Depositary within 5 days of demand.

       

      (c)  The
        Accumulations Depositary will hold the Accumulations as security for the
        Obligations until applied in accordance with the provisions of this Deed
        of
        Trust and any agreement among Borrower, Lender and the Accumulations Depositary.
        If Lender is not the Accumulations Depositary, the Accumulations Depositary
        will
        deliver the Accumulations to Lender upon Lender’s demand at any time after an
        Event of Default.

       

      (d)  If
        the
        Property is sold or conveyed other than by foreclosure or transfer in lieu
        of
        foreclosure, all right, title and interest of Borrower to the Accumulations
        will
        automatically, and without necessity of further assignment, be held for the
        account of the new owner, subject to the provisions of this Section and Borrower
        will have no further interest in the Accumulations.

       

      (e)  The
        Accumulations Depositary has deposited the initial deposit and will deposit
        the
        monthly deposits into a separate interest bearing account with Lender
        denominated as secured party, all in accordance with an agreement among
        Borrower, Lender and the Accumulations Depositary dated the date of this
        Deed of
        Trust.

       

      (f)  Lender
        has the right to pay, or to direct the Accumulations Depositary to pay, any
        Taxes or Assessments unless Borrower is contesting the Taxes or Assessments
        in
        accordance with the provisions of this Deed of Trust, in which event any
        payment
        of the contested Taxes or Assessments will be made under protest in the manner
        prescribed by Law or, at Lender’s election, will be withheld.

       

      
        
          
          

        

        
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      (g)  If
        Lender
        assigns this Deed of Trust, Lender will pay, or cause the Accumulations
        Depositary to pay, the unapplied balance of the Accumulations to or at the
        direction of the assignee. Simultaneously with the payment, Lender and the
        Accumulations Depositary will be released from all liability with respect
        to the
        Accumulations and Borrower will look solely to the assignee with respect
        to the
        Accumulations. When the Obligations have been fully satisfied, any unapplied
        balance of the Accumulations will be returned to Borrower. At any time after
        an
        Event of Default occurs, Lender may apply the Accumulations as a credit against
        any portion of the Debt selected by Lender in its sole discretion.

       

      Section
        6.3  Changes
        in Tax Laws.
        If a
        Law requires the deduction of the Debt from the value of the Property for
        the
        purpose of taxation or imposes a tax, either directly or indirectly, on the
        Debt, any Loan Document or Lender’s interest in the Property, Borrower will pay
        the tax with interest and penalties, if any. If Lender determines that
        Borrower’s payment of the tax may be unlawful, unenforceable, usurious or
        taxable to Lender, the Debt will become immediately due and payable on 90
        days’
prior written notice without any prepayment premium or penalty unless the
        tax
        must be paid within the 90-day period, in which case, the Debt will be due
        and
        payable within the lesser period.

       

      Section
        6.4  Reserves.
        Borrower made an initial deposit and will make monthly deposits into an account
        established as security for the payment and performance of the Obligations,
        to
        be held and disbursed in accordance with a Tenant Improvement Pledge and
        Security Agreement (the “Reserve
        and Security Agreement”)
        dated
        the date of this Deed of Trust among Borrower, Lender and Lender’s pledge
        agent.

       

      ARTICLE
        VII  


       

      INSURANCE,
        CASUALTY, CONDEMNATION AND
        RESTORATION

       

      Section
        7.1  Insurance
        Coverages.

       

      (a)  Borrower
        will maintain such insurance coverages and endorsements in form and substance
        and in amounts as Lender may require in its sole discretion, from time to
        time.
        Until Lender notifies Borrower of changes in Lender’s requirements, Borrower
        will maintain not less than the insurance coverages and endorsements Lender
        required for closing of the Loan.

       

      (b)  The
        insurance, including renewals, required under this Section will be issued
        on
        valid and enforceable policies and endorsements satisfactory to Lender (the
        “Policies”).Each
        Policy will contain a standard waiver of subrogation and a replacement cost
        endorsement and will provide that Lender will receive not less than 30 days’
prior written notice of any cancellation, termination or non-renewal of a
        Policy
        or any material change other than an increase in coverage and that Lender
        will
        be named under a standard mortgage endorsement as loss payee.

       

      (c)  The
        insurance companies issuing the Policies (the “Insurers”)
        must
        be authorized to do business in the State or Commonwealth where the Property
        is
        located, 

       

      
        
          
          

        

        
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        must
          have
          been in business for at least 5 years, must carry an A.M. Best Company,
          Inc.
          policy holder rating of A or better and an A.M. Best Company, Inc. financial
          category rating of Class X or better and must be otherwise satisfactory
          to
          Lender. Lender may select an alternative credit rating agency and may impose
          different credit rating standards for the Insurers. Notwithstanding Lender’s
          right to approve the Insurers and to establish credit rating standards
          for the
          Insurers, Lender will not be responsible for the solvency of any
          Insurer.

      

       

      (d)  Notwithstanding
        Lender’s rights under this Article, Lender will not be liable for any loss,
        damage or injury resulting from the inadequacy or lack of any insurance
        coverage.

       

      (e)  Borrower
        will comply with the provisions of the Policies and with the requirements,
        notices and demands imposed by the Insurers and applicable to Borrower or
        the
        Property.

       

      (f)  Borrower
        will pay the Insurance Premiums for each Policy not less than 30 days before
        the
        expiration date of the Policy being replaced or renewed and will deliver
        to
        Lender an original certificate of insurance not less than 15 days prior to
        the
        expiration of the Policy and an original or, if a blanket policy, a certified
        copy of each Policy marked “Paid” not less than 30 days thereafter.

       

      (g)  Borrower
        will not carry separate insurance concurrent in kind or form or contributing
        in
        the event of loss with any other insurance carried by Borrower.

       

      (h)  Borrower
        will not carry any of the insurance required under this Section on a blanket
        or
        umbrella policy without in each instance Lender’s prior written approval. If
        Lender approves, Borrower will deliver to Lender a certified copy of the
        blanket
        policy which will allocate to the Property the amount of coverage required
        under
        this Section and otherwise will provide the same coverage and protection
        as
        would a separate policy insuring only the Property.

       

      (i)  Borrower
        will give the Insurers prompt notice of any change in ownership or occupancy
        of
        the Property. This subsection does not abrogate the prohibitions on transfers
        set forth in this Deed of Trust.

       

      (j)  If
        the
        Property is sold at a foreclosure sale or otherwise is transferred so as
        to
        extinguish the Obligations, all of Borrower’s right, title and interest in and
        to the Policies then in force will be transferred automatically to the purchaser
        or transferee.

       

      Section
        7.2  Casualty
        and Condemnation.

       

      (a)  Borrower
        will give Lender notice of any Casualty immediately after it occurs and will
        give Lender notice of any Condemnation Proceeding immediately after Borrower
        receives notice of commencement or notice that such a Condemnation Proceeding
        will be commencing. Borrower immediately will deliver to Lender copies of
        all
        documents Borrower delivers or receives relating to the Casualty or the
        Condemnation Proceeding, as the case may be.

       

      
        
          
          

        

        
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      (b)  Borrower
        authorizes Lender, at Lender’s option, to act on Borrower’s behalf to collect,
        adjust and compromise any claims for loss, damage or destruction under the
        Policies on such terms as Lender determines in Lender’s sole discretion.
        Borrower authorizes Lender to act, at Lender’s option, on Borrower’s behalf in
        connection with any Condemnation Proceeding. Borrower will execute and deliver
        to Lender all documents requested by Lender and all documents as may be required
        by Law to confirm such authorizations. Nothing in this Section will be construed
        to limit or prevent Lender from joining with Borrower either as a co-defendant
        or as a co-plaintiff in any Condemnation Proceeding.

       

      (c)  If
        Lender
        elects not to act on Borrower’s behalf as provided in this Section, then
        Borrower promptly will file and prosecute all claims (including Lender’s claims)
        relating to the Casualty and will prosecute or defend (including defense
        of
        Lender’s interest) any Condemnation Proceeding; provided, Borrower’s engagement
        of any legal counsel for such Condemnation Proceeding on a contingent fee
        or
        percent of recovery basis will be subject to Lender’s prior written approval.
        Borrower will have the authority to settle or compromise the claims or
        Condemnation Proceeding, as the case may be, provided
        that
        Lender has approved in Lender’s sole discretion any compromise or settlement
        that exceeds $250,000.00. Any check for Insurance Proceeds or Condemnation
        Awards, as the case may be (the “Proceeds”)
        will
        be made payable to Lender and Borrower. Borrower will endorse the check to
        Lender immediately upon Lender presenting the check to Borrower for endorsement
        or if Borrower receives the check first, will endorse the check immediately
        upon
        receipt and forward it to Lender. If any Proceeds are paid to Borrower, Borrower
        immediately will deposit the Proceeds with Lender, to be applied or disbursed
        in
        accordance with the provisions of this Deed of Trust. Lender will be responsible
        for only the Proceeds actually received by Lender.

       

      Section
        7.3  Application
        of Proceeds.
        After
        deducting the costs incurred by Lender in collecting the Proceeds, Lender
        may,
        in its sole discretion, (i) apply the Proceeds as a credit against any portion
        of the Debt selected by Lender in its sole discretion of the Debt (without
        payment of any prepayment premium or penalty, so long as no Event of Default
        then exists); (ii) apply the Proceeds to restore the Improvements, provided
        that
        Lender will not be obligated to see to the proper application of the Proceeds
        and provided further
        that any
        amounts released for Restoration will not be deemed a payment on the Debt;
        or
        (iii) deliver the Proceeds to Borrower.

       

      Section
        7.4  Conditions
        to Availability of Proceeds for Restoration.
        Notwithstanding the preceding Section, after a Casualty or a Condemnation
        (a
“Destruction
        Event”),
        Lender will make the Proceeds (less any costs incurred by Lender in collecting
        the Proceeds) available for Restoration in accordance with the conditions
        for
        disbursements set forth in the Section entitled “Restoration”,
        provided
        that the
        following conditions are met:

       

      (i)  Escarpment
        Village, L.P. or the transferee under a Permitted Transfer, if any, continues
        to
        be Borrower at the time of the Destruction Event and at all times thereafter
        until the Proceeds have been fully disbursed;

       

      
        
          
          

        

        
          13

          
            

          

        

        
          
          

        

      

      (ii)  no
        default under the Loan Documents exists at the time of the Destruction Event
        and
        no Event of Default has occurred during the 12 months prior to the Destruction
        Event; and

       

      (iii)  all
        Leases in effect immediately prior to the Destruction Event and all Property
        Documents in effect immediately prior to the Destruction Event that are
        essential to the use and operation of the Property continue in full force
        and
        effect notwithstanding the Destruction Event.

       

      (iv)  if
        the
        Destruction Event is a Condemnation, Borrower delivers to Lender evidence
        satisfactory to Lender that the Improvements can be restored to an economically
        and architecturally viable unit;

       

      (v)  Borrower
        delivers to Lender evidence satisfactory to Lender that the Proceeds are
        sufficient to complete Restoration or if the Proceeds are insufficient to
        complete Restoration, Borrower first deposits with Lender funds (“Additional
        Funds”)
        that
        when added to the Proceeds will be sufficient to complete
        Restoration;

       

      (vi)  if
        the
        Destruction Event is a Casualty, Borrower delivers to Lender evidence
        satisfactory to Lender that the Insurer under each affected Policy has not
        denied liability under the Policy as to Borrower or the insured under the
        Policy;

       

      (vii)  Lender
        is
        satisfied that the proceeds of any business interruption insurance in effect
        together with other available gross revenues from the Property and any
        additional sums (separate and apart from the Additional Funds) deposited
        by
        Borrower with Lender are sufficient to pay Debt Service Payments after paying
        the Impositions, Insurance Premiums, reasonable and customary operating expenses
        and capital expenditures until Restoration is complete;

       

      (viii)  Lender
        is
        satisfied that Restoration will be completed on or before the date (the
“Restoration
        Completion Date”)
        that
        is the earliest of: (A) 12 months prior to the Maturity Date; (B) 12 months
        after the Destruction Event; (C) the earliest date required for completion
        of
        Restoration under any Lease or any Property Document; or (D) any date required
        by Law; and

       

      (ix)  the
        annual Rents (excluding security deposits) under Leases in effect on the
        date of
        the Destruction Event are providing debt service coverage for the annual
        Debt
        Service Payments of 1.15 after payment of annual Insurance Premiums, Impositions
        and operating expenses of the Property (including ground rent, if any),
provided
        that, if
        the Rents do not provide such debt service coverage, then Borrower expressly
        authorizes and directs Lender to apply an amount from the Proceeds to reduction
        of Principal in order to reduce the annual Debt Service Payments sufficiently
        for such debt service coverage to be achieved. The reduced debt service payments
        will be calculated using the Fixed Interest Rate and an amortization schedule
        that will achieve the same proportionate amortization of the reduced Principal
        over the then remaining Term as would have been achieved if 

       

      
        
          
          

        

        
          14

          
            

          

        

        
          
          

        

      

       

      the
        Principal and the originally scheduled Debt Service Payments had not been
        reduced. Borrower will execute any documentation that Lender deems reasonably
        necessary to evidence the reduced Principal and debt service
        payments.

       

      Section
        7.5  Restoration.

       

      (a)  If
        the
        total Proceeds for any Destruction Event are $250,000.00 or less and Lender
        elects or is obligated by Law or under this Article to make the Proceeds
        available for Restoration, Lender will disburse to Borrower the entire amount
        received by Lender and Borrower will commence Restoration promptly after
        the
        Destruction Event and complete Restoration not later than the Restoration
        Completion Date.

       

      (b)  If
        the
        Proceeds for any Destruction Event exceed $250,000.00 and Lender elects or
        is
        obligated by Law or under this Article to make the Proceeds available for
        Restoration, Lender will disburse the Proceeds and any Additional Funds (the
        “Restoration
        Funds”)
        upon
        Borrower’s request as Restoration progresses, generally in accordance with
        normal construction lending practices for disbursing funds for construction
        costs, provided
        that the
        following conditions are met:

       

      (i)  Borrower
        commences Restoration promptly after the Destruction Event and completes
        Restoration on or before the Restoration Completion Date;

       

      (ii)  if
        Lender
        requests, Borrower delivers to Lender prior to commencing Restoration, for
        Lender’s approval, plans and specifications and a detailed budget for the
        Restoration;

       

      (iii)  Borrower
        delivers to Lender satisfactory evidence of the costs of Restoration incurred
        prior to the date of the request, and such other documents as Lender may
        request
        including mechanics’ lien waivers and title insurance endorsements;

       

      (iv)  Borrower
        pays all costs of Restoration whether or not the Restoration Funds are
        sufficient and, if at any time during Restoration, Lender determines that
        the
        undisbursed balance of the Restoration Funds is insufficient to complete
        Restoration, Borrower deposits with Lender, as part of the Restoration Funds,
        an
        amount equal to the deficiency within 30 days of receiving notice of the
        deficiency from Lender; and

       

      (v)  there
        is
        no default under the Loan Documents at the time Borrower requests funds or
        at
        the time Lender disburses funds.

       

      (c)  If
        an
        Event of Default occurs at any time after the Destruction Event, then Lender
        will have no further obligation to make any remaining Proceeds available
        for
        Restoration and may apply any remaining Proceeds as a credit against any
        portion
        of the Debt selected by Lender in its sole discretion.

       

      (d)  Lender
        may elect at any time prior to commencement of Restoration or while work
        is in
        progress to retain, at Borrower’s expense, an independent engineer or


       

      
        
          
          

        

        
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        other
          consultant to review the plans and specifications, to inspect the work
          as it
          progresses and to provide reports. If any matter included in a report by
          the
          engineer or consultant is unsatisfactory to Lender, Lender may suspend
          disbursement of the Restoration Funds until the unsatisfactory matters
          contained
          in the report are resolved to Lender’s satisfaction.

      

       

      (e)  If
        Borrower fails to commence and complete Restoration in accordance with the
        terms
        of this Article, then in addition to the Remedies, Lender may elect to restore
        the Improvements on Borrower’s behalf and reimburse itself out of the
        Restoration Funds for costs and expenses incurred by Lender in restoring
        the
        Improvements, or Lender may apply the Restoration Funds as a credit against
        any
        portion of the Debt selected by Lender in its sole discretion (without payment
        of any prepayment premium or penalty) so long as no Event of Default shall
        then
        exist.

       

      (f)  Lender
        may commingle the Restoration Funds with its general assets and will not
        be
        liable to pay any interest or other return on the Restoration Funds unless
        otherwise required by Law. Lender will not hold any Restoration Funds in
        trust.
        So long as no Event of Default shall have occurred and be continuing and
        so long
        as Borrower pays all costs and expenses of preparing and negotiating a pledge
        and security agreement acceptable to Lender, and the fees and expenses of
        the
        depositary, Lender will deposit the Restoration Funds with a depositary
        satisfactory to Lender under a disbursement and security agreement satisfactory
        to Lender to be held by the depositary in an interest-bearing
        account.

       

      (g)  Borrower
        will pay all of Lender’s expenses incurred in connection with a Destruction
        Event or Restoration. If Borrower fails to do so, then in addition to the
        Remedies, Lender may from time to time reimburse itself out of the Restoration
        Funds.

       

      (h)  If
        any
        excess Proceeds remains after Restoration, Lender may elect, in its sole
        discretion either to apply the excess as a credit against any portion of
        the
        Debt as selected by Lender in its sole discretion (without payment of any
        prepayment premium or penalty, so long as no Event of Default shall then
        exist)
        or to deliver the excess to Borrower.

       

      ARTICLE
        VIII  


       

      COMPLIANCE
        WITH LAW AND AGREEMENTS

       

      Section
        8.1  Compliance
        with Law.
        Borrower, the Property and the use of the Property comply and will continue
        to
        comply with Law and with all agreements and conditions necessary to preserve
        and
        extend all rights, licenses, permits, privileges, franchises and concessions
        (including zoning variances, special exceptions and non-conforming uses)
        relating to the Property or Borrower. Borrower will notify Lender of the
        commencement of any investigation or Proceeding relating to a possible violation
        of Law immediately after Borrower receives notice thereof and, will deliver
        promptly to Lender copies of all documents Borrower receives or delivers
        in
        connection with the investigation or Proceeding. Borrower will not alter
        the
        Property in any manner that would increase Borrower’s responsibilities for
        compliance with Law.

       

      
        
          
          

        

        
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      Section
        8.2  Compliance
        with Agreements.
        There
        are no defaults, events of defaults or events which, with the passage of
        time or
        the giving of notice, would constitute an event of default under the Property
        Documents. Borrower will pay and perform all of its obligations under the
        Property Documents as and when required by the Property Documents. Borrower
        will
        cause all other parties to the Property Documents to pay and perform their
        obligations under the Property Documents as and when required by the Property
        Documents. Borrower will not amend or waive any provisions of the Property
        Documents; exercise any options under the Property Documents; give any approval
        required or permitted under the Property Documents that would adversely affect
        the Property or Lender’s rights and interests under the Loan Documents; cancel
        or surrender any of the Property Documents; or release or discharge or permit
        the release or discharge of any party to or entity bound by any of the Property
        Documents, without, in each instance, Lender’s prior approval (excepting
        therefrom all service contracts or other agreements entered into in the normal
        course of business that are cancelable upon not more than 30 days notice).
        Borrower promptly will deliver to Lender copies of any notices of default
        or of
        termination that Borrower receives or delivers relating to any Property
        Document.

       

      Section
        8.3  ERISA
        Compliance.

       

      (a)  Neither
        Borrower nor any of Borrower’s constituent entities is or will be an “employee
        benefit plan” as defined in Section 3(3) of the Employee Retirement Income
        Security Act of 1974 (“ERISA”)
        that
        is subject to Title I of ERISA or a “plan” as defined in Section 4975(e)(1) of
        the Code that is subject to Section 4975 of the Code, and neither the assets
        of
        Borrower or of Borrower’s constituent entities are or will constitute “plan
        assets” of one or more such plans for purposes of Title I of ERISA or Section
        4975 of the Code.

       

      (b)  Borrower
        is not and will continue not to be a “governmental
        plan”
within
        the meaning of Section 3(32) of ERISA and transactions by or with Borrower
        are
        not and will not be subject to any Laws regulating investments of and fiduciary
        obligations with respect to governmental plans.

       

      (c)  Borrower
        will not engage in any transaction which would cause any obligation or any
        action under the Loan Documents, including Lender’s exercise of the Remedies, to
        be a non-exempt prohibited transaction under ERISA.

       

      Section
        8.4  Anti-Terrorism.

       

      (a)  None
        of
        Borrower, Indemnitor or their respective constituents or affiliates are in
        violation of any Laws relating to terrorism or money laundering, including
        Executive Order No. 13224 on Terrorist Financing, effective September 24,
        2001
        and relating to Blocking Property and Prohibiting Transactions With Persons
        Who
        Commit, Threaten to Commit, or Support Terrorism, (the “Executive
        Order”)
        and
        the Uniting and Strengthening America by Providing Appropriate Tools Required
        to
        Intercept and Obstruct Terrorism Act of 2001 (Public Law 107-56, the
“Patriot
        Act”).

       

      (b)  None
        of
        Borrower, Indemnitor, any of their respective constituents or affiliates,
        any of
        their respective brokers or other agents acting or benefiting in any


       

      
        
          
          

        

        
          17

          
            

          

        

        
          
          

        

      

       

      capacity
        in connection with the Loan or, to Borrower’s knowledge as of the date hereof,
        the Seller of the Subject Property (if any portion of the Subject Property
        is
        being acquired with proceeds of the Loan) is a “Prohibited
        Person”
which
        is defined as follows: a person or entity that is listed in the Annex to,
        or is
        otherwise subject to the provisions of, the Executive Order No. 13224 on
        Terrorist Financing, effective September 24, 2001 and relating to the Executive
        Order; a person or entity owned or controlled by, or acting for or on behalf
        of,
        any person or entity that is listed in the Annex to, or is otherwise subject
        to
        the provisions of, the Executive Order; a person or entity with whom Lender
        is
        prohibited from dealing or otherwise engaging in any transaction by any
        terrorism or money laundering Law, including the Executive Order and the
        Patriot
        Act;

       

      (i)  a
        person
        or entity who commits, threatens or conspires to commit or supports “terrorism”
as defined in the Executive Order; a person or entity that is named as a
        “specially designated national and blocked person” on the most current list
        published by the U.S. Treasury Department Office of Foreign Assets Control
        at
        its official website, or at any replacement website or other replacement
        official publication of such list; and a person or entity who is affiliated
        with
        a person or entity listed above.

       

      (c)  None
        of
        Borrower, Indemnitor, any of their respective affiliates or constituents,
        any of
        their respective brokers or other agents acting in any capacity in connection
        with the Loan or to Borrower’s knowledge as of the date hereof the seller of the
        Subject Property (if any portion of the Property is being acquired with proceeds
        of the Loan), is or will (i) conduct any business or engage in any transaction
        or dealing with any Prohibited Person, including the making or receiving
        any
        contribution of funds, goods or services to or for the benefit of any Prohibited
        Person, (ii) deal in, or otherwise engage in any transaction relating to,
        any
        property or interests in property blocked pursuant to the Executive Order;
        or
        (iii) engage in or conspire to engage in any transaction that evades or avoids,
        or has the purpose of evading or avoiding, or attempts to violate, any of
        the
        prohibitions set forth in the Executive Order or the Patriot Act.

       

      (d)  Borrower
        covenants and agree to deliver to Lender any certification or other evidence
        requested from time to time by Lender in its sole discretion, confirming
        Borrower’s compliance with this section.

       

      Section
        8.5  Section
        6045(e) Filing.
        Borrower will supply or cause to be supplied to Lender either (i) a copy
        of a
        completed Form 1099-B, Statement for Recipients of Proceeds from Real Estate,
        Broker and Barter Exchange Proceeds prepared by Borrower’s attorney or other
        person responsible for the preparation of the form, together with a certificate
        from the person who prepared the form to the effect that the form has, to
        the
        best of the preparer’s knowledge, been accurately prepared and that the preparer
        will timely file the form; or (ii) a certification from Borrower that the
        Loan
        is a refinancing of the Property or is otherwise not required to be reported
        to
        the Internal Revenue Service pursuant to Section 6045(e) of the Code. Under
        no
        circumstances will Lender or Lender’s counsel be obligated to file the reports
        or returns.

       

      
        
          
          

        

        
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      ARTICLE
        IX  

       

      ENVIRONMENTAL

       

      Section
        9.1  Environmental
        Representations and Warranties.

       

      Except
        as
        disclosed in the Environmental Report and to Borrower’s knowledge as of the date
        of this Deed of Trust:

       

      (i)  no
        Environmental Activity has occurred or is occurring on the Property other
        than
        the use, storage, and disposal of Hazardous Materials which (A) is in the
        ordinary course of business consistent with the Permitted Use; (B) is in
        compliance with all Environmental Laws and (C) has not resulted in Material
        Environmental Contamination of the Property;

       

      (ii)  no
        Environmental Activity has occurred or is occurring on any property in the
        vicinity of the Property which has resulted in Material Environmental
        Contamination of the Property; and

       

      (iii)  the
        Property is in compliance with (and at all times during the development and
        construction thereof) was in compliance with all Laws related to (A) applicable
        protected habitat and species, (B) tree mitigation and impervious coverage
        rules
        of the City of Austin, Texas and Travis County, Texas, and (C) any applicable
        Laws related to any applicable aquifer recharge zone.

       

      Section
        9.2  Environmental
        Covenants.

       

      (a)  Borrower
        will not cause or permit any Material Environmental Contamination of the
        Property. Borrower shall, at all times during the term of the Loan, comply
        with
        (and upon request by Lender, deliver evidence of compliance to Lender) all
        Laws
        related to (A) applicable protected habitat and species, (B) tree mitigation
        and
        impervious coverage rules of the City of Austin, Texas and Travis County,
        Texas,
        and (C) any applicable Laws related to any applicable aquifer recharge
        zone.

       

      (b)  No
        Environmental Activity will occur on the Property other than the use, storage
        and disposal of Hazardous Materials which (A) is in the ordinary course of
        business consistent with the Permitted Use; (B) is in compliance with all
        Environmental Laws; and (C) does not create a risk of Material Environmental
        Contamination of the Property.

       

      (c)  Borrower
        will notify Lender immediately upon Borrower becoming aware of (i) any Material
        Environmental Contamination of the Property or (ii) any Environmental Activity
        with respect to the Property that is not in accordance with the preceding
        subsection (b). Borrower promptly will deliver to Lender copies of all documents
        delivered to or received by Borrower regarding the matters set forth in this
        subsection, including notices of Proceedings or investigations concerning
        any
        Material Environmental Contamination of the Property or Environmental Activity
        or concerning Borrower’s status as a potentially responsible party (as defined
        in the Environmental 

       

      
        
          
          

        

        
          19

          
            

          

        

        
          
          

        

      

       

      Laws).
        Borrower’s notification of Lender in accordance with the provisions of this
        subsection will not be deemed to excuse any default under the Loan Documents
        resulting from the violation of Environmental Laws or the Material Environmental
        Contamination of the Property or Environmental Activity that is the subject
        of
        the notice. If Borrower receives notice of a suspected violation of
        Environmental Laws in the vicinity of the Property that poses a risk of Material
        Environmental Contamination of the Property, Borrower will give Lender notice
        and copies of any documents received relating to such suspected
        violation.

       

      (d)  From
        time
        to time at Lender’s request, Borrower will deliver to Lender any information
        known and documents available to Borrower relating to the environmental
        condition of the Property.

       

      (e)  Lender
        may perform or engage an independent consultant to perform an assessment
        of the
        environmental condition of the Property and of Borrower’s compliance with this
        Section on an annual basis, or at any other time for reasonable cause, or
        after
        an Event of Default. In connection with the assessment: (i) Lender or consultant
        may enter and inspect the Property and perform tests of the air, soil, ground
        water and building materials; (ii) Borrower will cooperate and use best efforts
        to cause tenants and other occupants of the Property to cooperate with Lender
        or
        consultant; (iii) Borrower will receive a copy of any final report prepared
        after the assessment, to be delivered to Borrower not more than 10 days after
        Borrower requests a copy and executes Lender’s standard confidentiality and
        waiver of liability letter; (iv) Borrower will accept custody of and arrange
        for
        lawful disposal of any Hazardous Materials required to be disposed of as
        a
        result of the tests; (v) Lender will not have liability to Borrower with
        respect
        to the results of the assessment; and (vi) Lender will not be responsible
        for
        any damage to the Property resulting from the tests described in this subsection
        and Borrower will look solely to the consultants to reimburse Borrower for
        any
        such damage. The consultant’s assessment and reports will be at Borrower’s
        expense (i) if the reports disclose any material adverse change in the
        environmental condition of the Property from that disclosed in the Environmental
        Report; (ii) if Lender engaged the consultant when Lender had reasonable
        cause
        to believe Borrower was not in compliance with the terms of this Article
        and,
        after written notice from Lender, Borrower failed to provide promptly reasonable
        evidence that Borrower is in compliance; or (iii) if Lender engaged the
        consultant after the occurrence of an Event of Default.

       

      (f)  If
        Lender
        has reasonable cause to believe that there is Environmental Activity at the
        Property, Lender may elect in its sole discretion to direct the Trustee to
        reconvey any portion of the Property affected by the Environmental Activity
        and
        Borrower will accept the reconveyance.

       

      
        
          
          

        

        
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      ARTICLE
        X  

       

      FINANCIAL
        REPORTING

       

      Section
        10.1  Financial
        Reporting.

       

      (a)  Borrower
        will deliver to Lender within 120 days after the close of each Fiscal Year
        an
        annual financial statement (the “Annual
        Financial Statement”)
        for
        the Property (and, upon request by Lender, Borrower) for the Fiscal Year,
        which
        will include a comparative balance sheet, a cash flow statement, an income
        and
        expense statement, a detailed breakdown of all receipts and expenses and
        all
        supporting schedules. The Annual Financial Statement will be:

       

      (i)  certified
        to be true and correct in all material respects by the Chief Financial Officer
        of Stratus Properties Inc.; and after an Event of Default, audited by a
        CPA;

       

      (ii)  accompanied
        by a statement from the Chief Financial Officer of Stratus Properties Inc.
        (and,
        after an Event of Default, an opinion of the CPA) that, in all material
        respects, the Annual Financial Statement fairly presents the financial position
        of the Property; and

       

      (iii)  separate
        and distinct from any consolidated statement or report for Borrower or any
        other
        entity or any other property.

       

      In
        addition, on or before May 1 of each year, Borrower shall deliver to Lender
        an
        audited annual financial statement of Stratus Properties Inc. audited by
        a
        CPA.

       

      (b)  Borrower
        will keep full and accurate Financial Books and Records for each Fiscal Year.
        Borrower will permit Lender or Lender’s accountants or auditors to inspect or
        audit the Financial Books and Records from time to time and without notice.
        Borrower will maintain the Financial Books and Records for each Fiscal Year
        for
        not less than 3 years after the date Borrower delivers to Lender the Annual
        Financial Statement and the other financial certificates, statements and
        information to be delivered to Lender for the Fiscal Year. Financial Books
        and
        Records will be maintained at Borrower’s address set forth in the section
        entitled “Notices”
or
        at
        any other location as may be approved by Lender.

       

      Section
        10.2  Annual
        Budget.
        Not
        less than 60 days prior to the end of each Fiscal Year, Borrower will deliver
        to
        Lender a detailed comparative budget (the “Budget”)
        for
        the Property for the next succeeding Fiscal Year showing anticipated operating
        expenses, Insurance Premiums, Impositions, leasing commissions, capital
        improvement costs, tenant improvement costs and any other information Lender
        requests. Unless Lender notifies Borrower within 60 days after Lender receives
        the Budget that Lender disputes information in the Budget, the Budget as
        submitted will constitute the Budget for the next succeeding Fiscal Year.
        If
        Borrower concludes in good faith that a Budget needs material revision, Borrower
        will submit a revised Budget to Lender, together with a detailed explanation
        of
        the revisions. Unless Lender notifies Borrower within 60 days after Lender
        receives the revised Budget that Lender disputes 

       

      
        
          
          

        

        
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      information
        in the revised Budget, the revised Budget as submitted will constitute the
        Budget for the remainder of the then Fiscal Year. Borrower and Lender will
        use
        reasonable efforts to resolve promptly any differences over a Budget or revised
        Budget. If Borrower and Lender fail to agree on a Budget or revised Budget,
        Borrower will continue to manage and operate the Property under the last
        undisputed Budget. Borrower waives any defense or right of offset to the
        Obligations, and any claim or counterclaim against Lender, arising out of
        any
        discussions between Borrower and Lender regarding any Budget or revised Budget
        delivered to Lender or the resolution of any disagreements relating to a
        Budget
        or revised Budget including any defense, right of offset, claim or counterclaim
        alleging in substance, that by virtue of such delivery, discussions or
        resolution, Lender has interfered with, influenced or controlled Borrower
        or the
        operations at the Property.

       

      Section
        10.3  Certificate
        of Good Standing.
        Borrower will cause to be delivered to Lender, together with the annual
        financial statement required to be delivered hereunder, or as otherwise
        requested by Lender from time to time, a chief executive officer certificate
        addressed to Lender, certifying the location of its
        chief
        executive office if Borrower is a general partnership.

       

      ARTICLE
        XI  

       

      EXPENSES
        AND DUTY TO DEFEND

       

      Section
        11.1  Payment
        of Expenses.

       

      (a)  Borrower
        is obligated to pay all reasonable fees and expenses (the “Expenses”)
        incurred by Lender or Trustee or that are otherwise payable in connection
        with
        the Loan, the Property or Borrower, including reasonable attorneys’ fees and
        expenses and any fees and expenses relating to (i) the preparation, execution,
        acknowledgment, delivery and recording or filing of the Loan Documents; (ii)
        any
        Proceeding or other claim asserted against Lender or any Proceeding described
        in
        the Section entitled “Lender’s
        Right to Appear”;
        (iii)
        any inspection, assessment, survey and test permitted under the Loan Documents
        except to the extent the same is specifically proscribed as a Lender expense
        herein; (iv) any Destruction Event; (v) the preservation of Trustee’s title,
        Lender’s security and the exercise of any rights or remedies available at Law,
        in equity or otherwise; (vi) administration of the Loan; (vii) the Leases
        and
        the Property Documents; and (viii) any Proceeding in or for bankruptcy,
        insolvency, reorganization or other debtor relief or similar Proceeding relating
        to Borrower, the Property or any person liable under any guarantee, indemnity
        or
        other credit enhancement delivered in connection with the Loan.

       

      (b)  Borrower
        will pay the Expenses immediately on demand, together with any applicable
        interest. If Lender pays any of the Expenses, Borrower will reimburse Lender
        the
        amount paid by Lender immediately upon demand, together with interest on
        such
        amount at the Default Interest Rate from the date Lender paid the Expenses
        through and including the date Borrower reimburses Lender. The Expenses,
        together with any applicable interest, constitute a portion of the Debt secured
        by this Deed of Trust.

       

      
        
          
          

        

        
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      Section
        11.2  Duty
        to Defend.
        If
        Lender or the Trustee or any of its trustees, officers, participants, employees
        or affiliates or the Trustee is a party in any Proceeding relating to the
        Property, Borrower or the Loan, Borrower will indemnify and hold harmless
        the
        party and will defend the party with attorneys and other professionals retained
        by Borrower and approved by Lender. Lender or the Trustee, as the case may
        be,
        may elect to engage its own attorneys and other professionals, at Borrower’s
        expense, to defend or to assist in the defense of the party. In all events,
        case
        strategy will be determined by Lender if Lender so elects and no Proceeding
        will
        be settled without Lender’s prior approval which may be withheld in its sole
        discretion.

       

      ARTICLE
        XII  

       

      TRANSFERS,
        LIENS AND ENCUMBRANCES

       

      Section
        12.1  Borrower
        Composition.

       

      (a)  Borrower
        represents, warrants and covenants that:

       

      (i)  Borrower
        is a Texas limited partnership. The sole general partner of Borrower is
        Escarpment Village Management, L.L.C., a Texas limited liability company
        (“Management”).
        The
        sole member of Management is Circle C Land, L.P., a Texas limited partnership
        (“CC
        Land”).
        The
        sole general partner of CC Land is Circle C GP, L.L.C., a Delaware limited
        liability company (“CC
        GP”),
        and
        the sole limited partner is _____________________. The sole member of CC
        GP is
        Stratus Properties, Inc., a Delaware corporation.

       

      Management
        is herein sometimes referred to as the “Existing
        General Partners.”

       

      (ii)  If
        Borrower’s general partners are in turn partnerships, corporations or limited
        liability companies, the general partners, principals or members thereof
        and the
        percentage of the partnership interests, stock or membership interests held
        by
        each (and so on at each level) shall be owned, directly or indirectly, by
        Stratus Properties, Inc.

       

      (iii)  So
        long
        as the capital stock or other securities of Stratus Properties Inc. are publicly
        traded, the term “Transfer” is not intended to include, and shall not be
        interpreted to include, ordinary market transactions in such publicly traded
        Stratus Properties, Inc. securities, including sales, transfers and other
        dispositions thereof. However, the term “Transfer” does include all other
        transfers in such securities, including, but not limited to, mergers,
        consolidations, share exchanges, or business combinations of, by or involving
        Stratus Properties, Inc., regardless of the form of such
        transaction.

       

      Section
        12.2  Permitted
        Transfers.

       

      (a)  Notwithstanding
        anything to the contrary contained in the Section entitled “Events of Default”,
        a Permitted Transfer may occur without Lender’s prior consent and will not
        constitute an Event of Default provided
        that the
        following conditions are met:

       

      
        
          
          

        

        
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      (i)  at
        least
        30 days prior to the proposed Permitted Transfer, Borrower delivers to Lender
        a
        notice that is sufficiently detailed to enable Lender to determine that the
        proposed Permitted Transfer complies with the terms of this
        Section;

       

      (ii)  there
        is
        no default under the Loan Documents either when Lender receives the notice
        or
        when the proposed Permitted Transfer occurs;

       

      (iii)  the
        proposed Permitted Transfer will not result in a violation of any of the
        covenants contained in the Section entitled, “ERISA
        Compliance”
and
        Borrower will deliver to Lender such documentation of compliance as Lender
        requests in its sole discretion;

       

      (iv)  when
        Lender receives the notice and when the proposed Permitted Transfer occurs,
        the
        transferee has never been an adverse party to Lender in any litigation to
        which
        Lender was a party; the transferee has never defaulted on a loan from Lender
        or
        on any contract or other agreement with Lender; and the transferee has never
        threatened litigation against Lender (for purposes of this subsection
“transferee” includes the transferee’s constituent entities at all levels and
“Lender” includes Lender’s subsidiaries); the transferee is free from
        bankruptcy; transferee (including any affiliates of the transferee) is not
        a
        Prohibited Person and is not in violation of any Laws relating to terrorism
        or
        money laundering and Borrower provides Lender with a certification to that
        effect executed by an entity satisfactory to Lender;

       

      (v)  Borrower
        pays all of Lender’s expenses relating to the Transfer including Lender’s
        attorneys’ fees;

       

      (vi)  Lender
        is
        satisfied that the Property will continue to be managed by a manager
        satisfactory to Lender;

       

      (vii)  On
        the
        date of the proposed Permitted Transfer, if so requested by Lender, a Uniform
        Commercial Code search report is delivered to Lender relating to (i) the
        transferee, (ii) any predecessor entity that transferee merged with or into,
        and
        (iii) any entity where transferee acquired substantially all of its assets,
        in
        each case satisfactory to Lender and indicating that Lender’s security interest
        in such portion of the Property as is perfected by filing a financing statement
        is prior to all other security interests reflected in the report;
        and

       

      (viii)  Borrower
        pays to Lender a transfer fee of one percent (1%) of the outstanding Principal,
        plus Lender’s processing and legal fees.

       

      (b)  Upon
        compliance with the conditions set forth in the preceding subsection, the
        following Transfers (the “Permitted
        Transfers”)
        may
        occur without Lender’s prior consent and will not constitute Events of
        Default:

       

      (i)  a
        one-time sale of the Property to an unaffiliated bona fide purchaser, and
        the
        following conditions are met:

       

      
        
          
          

        

        
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      a)  the
        transferee has a net worth of at least $38,000,000.00;

       

      b)  the
        transferee is an Institutional Investor or a developer or manager of first-class
        commercial real estate comparable to the Property and having a reputation
        in the
        industry at least equivalent to that of Borrower as of the date of this Deed
        of
        Trust;

       

      c)  the
        transferee has expressly assumed the obligations of Borrower under the Property
        Documents and under the Loan Documents;

       

      d)  subsequent
        to the Transfer, the Property is managed by a property manager of first-class
        commercial real estate comparable to the Property for not less than 10 years
        and
        having a reputation in the industry at least equivalent to that of Borrower
        or
        the existing property manager as of the Closing and otherwise satisfactory
        to
        Lender;

       

      e)  Borrower
        delivers to Lender a substitute for the environmental indemnity delivered
        to
        Lender in connection with the Loan and, if applicable, a substitute guaranty
        or
        surety instrument, satisfactory to Lender, executed by a substitute indemnitor,
        guarantor or surety, as the case may be, satisfactory to Lender in its sole
        discretion; provided, with respect to the net worth requirements of the
        substitute indemnitor/guarantor for a substitute indemnitor/guarantor that
        meets
        the net worth requirements of 12.2(b)(i)(a), approval of the net worth
        requirements for such substitute indemnitor/guarantor shall not be unreasonably
        withheld, but with respect to other factors, such approval shall be in Lender’s
        sole discretion; and

       

      f)  Upon
        satisfaction of the requirements in 12.2(a) and 12.2(b)(i)(a)-(e), the
        then-existing guarantor under the guaranty and indemnitor under the
        environmental indemnity shall be released from any liability arising solely
        from
        post-transfer events and circumstances.

       

      Section
        12.3  Right
        to Contest Liens.
        Borrower, at its own expense, may contest the amount, validity or application,
        in whole or in part, of any mechanic’s, materialmen’s or environmental liens in
        which event Lender will refrain from exercising any of the Remedies,
provided
        that the
        following conditions are met:

       

      (i)  Borrower
        delivers to Lender notice of the proposed contest not more than 30 days after
        the lien is filed;

       

      (ii)  the
        contest is by a Proceeding promptly initiated and conducted in good faith
        and
        with due diligence unless a bond, as contemplated in Section
        12.3(vi)
        below
        effectively prevents attachment of the lien to the Property;

       

      (iii)  there
        is
        no Event of Default other than the Event of Default arising from the filing
        of
        the lien;

       

      
        
          
          

        

        
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      (iv)  either
        the Proceeding or the bond contemplated in Section
        12.3(vi)
        effectively suspends enforcement or collection of the lien, imposition of
        criminal or civil penalties and sale or forfeiture of the Property and Lender
        will not be subject to any civil suit;

       

      (v)  the
        Proceeding is permitted under and is conducted in accordance with the Leases
        and
        the Property Documents;

       

      (vi)  Borrower
        furnishes a bond in the amount required by law in accordance with the Texas
        Property Code, as amended such that the lien attaches only to the bond and
        not
        to the Property or, at Lender’s option, other security satisfactory to Lender,
        in either case in an amount sufficient to pay the claim giving rise to the
        lien,
        together with all interest and penalties, or Borrower pays the contested
        lien
        under protest; and

       

      (vii)  with
        respect to an environmental lien, Borrower is using best efforts to mitigate
        or
        prevent any deterioration of the Property resulting from the alleged violation
        of any Environmental Laws or the alleged Environmental Activity.

       

      ARTICLE
        XIII  

      


      ADDITIONAL
        REPRESENTATIONS, WARRANTIES

      AND
        COVENANTS FURTHER ASSURANCES

      


      (a)  Borrower
        will execute, acknowledge and deliver to Lender or to any other entity Lender
        designates any additional or replacement documents and perform any additional
        actions that Lender determines are reasonably necessary to evidence, perfect
        or
        protect Lender’s first lien on and prior security interest in the Property or to
        carry out the intent or facilitate the performance of the provisions of the
        Loan
        Documents.

       

      (b)  Borrower
        appoints Lender as Borrower’s attorney-in-fact to perform, at Lender’s election,
        any actions and to execute and record any of the additional or replacement
        documents referred to in this Section, in each instance only at Lender’s
        election and only to the extent Borrower has failed to comply with the terms
        of
        this Section.

       

      Section
        13.2  Estoppel
        Certificates.

       

      (a)  Within
        10
        days of Lender’s request, Borrower will deliver to Lender or to any entity
        Lender designates a certificate certifying (i) the original principal amount
        of
        the Note; (ii) the unpaid principal amount of the Note; (iii) the Fixed Interest
        Rate; (iv) the amount of the then current Debt Service Payments; (v) the
        Maturity Date; (vi) the date a Debt Service Payment was last made; (vii)
        that,
        except as may be disclosed in the statement, there are no defaults or events
        which, with the passage of time or the giving of notice, would constitute
        an
        Event of Default; and (viii) there are, except as may be 

       

      
        
          
          

        

        
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      disclosed
        in the statement, no offsets or defenses against any portion of the Obligations
        except as may be disclosed in the statement.

       

      (b)  If
        Lender
        requests, Borrower promptly will deliver to Lender or to any entity Lender
        designates a certificate from each party to any Property Document (provided,
        for
        each party that is not related to or affiliated with Seller or its Members,
        Borrower shall only be obligated to use its commercially reasonable efforts
        to
        deliver such statement), certifying that the Property Document is in full
        force
        and effect with no defaults or events which, with the passage of time or
        the
        giving of notice, would constitute an event of default under the Property
        Document and that there are no defenses or offsets against the performance
        of
        its obligations under the Property Document, or noting specifically any
        discrepancies with the foregoing.

       

      (c)  If
        Lender
        requests, Borrower promptly will deliver to Lender, or to any entity Lender
        designates, a certificate from each tenant under a Lease then affecting the
        Property, certifying to any facts regarding the Lease as Lender may require,
        including that the Lease is in full force and effect with no defaults or
        events
        which, with the passage of time or the giving of notice, would constitute
        an
        event of default under the Lease by any party, that the rent has not been
        paid
        more than one month in advance and that the tenant claims no defense or offset
        against the performance of its obligations under the Lease, or noting
        specifically any discrepancies with the foregoing.

       

      Section
        13.3  Credit
        Enhancements.
        Borrower will maintain in good standing all credit enhancement documents
        delivered to Lender in connection with the Loan throughout the Term or such
        shorter or longer period as Borrower and Lender may have agreed to in writing.
        Credit enhancement documents include any letters of credit, cash deposits,
        pledges, guarantees or indemnities delivered to Lender in connection with
        the
        Loan but excluding any letters of credit, promissory notes or cash deposits
        delivered to Lender as good faith or standby fees in connection with Lender’s
        agreement to make the Loan. If the provider of any credit enhancement document
        becomes insolvent, commences or is the target of a Proceeding in bankruptcy
        or
        ceases to exist or if Lender determines that the provider’s insolvency is
        imminent, Borrower will deliver to Lender a replacement credit enhancement
        document within seven (7) Business Days of the date insolvency is known,
        the
        Proceeding in bankruptcy is filed, the cessation occurs or Lender gives Borrower
        notice that Lender has determined the provider’s insolvency is imminent. The
        replacement credit enhancement document will be satisfactory to Lender from
        an
        alternate provider satisfactory to Lender. Upon receipt of the replacement,
        Lender will deliver promptly to Borrower the credit enhancement document
        being
        replaced.

       

      ARTICLE
        XIV  

       

      DEFAULTS
        AND REMEDIES

       

      Section
        14.1  Events
        of Default.The
        term
“Event
        of Default”
means
        the occurrence of any of the following events:

       

      (i)  if
        Borrower fails to pay any amount due, as and when required, under any Loan
        Document and the failure continues for a period of 5 days;

       

      
        
          
          

        

        
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      (ii)  if
        Borrower makes a general assignment for the benefit of creditors or generally
        is
        not paying, or is unable to pay, or admits in writing its inability to pay,
        its
        debts as they become due; or if Borrower or any other party commences any
        Proceeding (A) relating to bankruptcy, insolvency, reorganization,
        conservatorship or relief of debtors, in each instance with respect to Borrower;
        (B) seeking to have an order for relief entered with respect to Borrower;
        (C)
        seeking attachment, distraint or execution of a judgment with respect to
        Borrower; (D) seeking to adjudicate Borrower as bankrupt or insolvent; (E)
        seeking reorganization, arrangement, adjustment, winding-up, liquidation,
        dissolution, composition or other relief with respect to Borrower or Borrower’s
        debts; or (F) seeking appointment of a Receiver, trustee, custodian, conservator
        or other similar official for Borrower or for all or any substantial part
        of
        Borrower’s assets, provided
        that if
        the Proceeding is commenced by a party other than Borrower or any of Borrower’s
        general partners or members, Borrower will have 120 days to have the Proceeding
        dismissed or discharged before an Event of Default occurs;

       

      (iii)  if
        Borrower is in default beyond any applicable grace and cure period under
        any
        other mortgage, deed of trust, deed to secure debt or other security agreement
        encumbering the Property whether junior or senior to the lien of this Deed
        of
        Trust;

       

      (iv)  if
        there
        is a default beyond any applicable grace and cure period under any indemnity
        or
        guaranty in favor of Lender delivered to Lender in connection with the Loan
        or
        in connection with any loan cross-collateralized with the Loan;

       

      (v)  except
        as
        otherwise specifically set forth in this Deed of Trust, if Borrower or its
        partners, members or principals to, effect a Transfer without Lender’s prior
        approval, which may be withheld in Lender’s sole discretion or if Borrower fails
        to keep the Property free from all liens and encumbrances other than the
        lien of
        this Deed of Trust and the Permitted Exceptions, Borrower acknowledging that
        in
        making the Loan, Lender is relying to a material extent on the business
        expertise and net worth of Borrower and Borrower’s general partners, members or
        principals and on the continuing interest that each of them has, directly
        or
        indirectly, in the Property;

       

      (vi)  if
        a
        Transfer occurs except in accordance with the provisions of this Deed of
        Trust;

       

      (vii)  if
        Borrower abandons the Property or ceases to conduct its business at the
        Property; or

       

      (viii)  if
        there
        is a default in the performance of any other provision of any Loan Document
        or
        if there is any inaccuracy or falsehood in any representation or warranty
        contained in any Loan Document which is not remedied within 30 days after
        Borrower receives notice thereof, provided
        that if
        the default, inaccuracy or falsehood is of a nature that it cannot be cured
        within 

       

      
        
          
          

        

        
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      the
        30-day period and during that period Borrower commences to cure, and thereafter
        diligently continues to cure, the default, inaccuracy or falsehood, then
        the
        30-day period will be extended for a reasonable period not to exceed 120
        days
        after the notice to Borrower.

       

      Section
        14.2  Remedies.

       

      (a)  If
        an
        Event of Default occurs, Lender may take any of the following actions (the
        “Remedies”)
        without notice (notice of intention to accelerate and notice of acceleration
        being waived by Borrower) to Borrower:

       

      (i)  declare
        all or any portion of the Debt immediately due and payable (“Acceleration”);

       

      (ii)  pay
        or
        perform any Obligation;

       

      (iii)  institute
        a Proceeding for the specific performance of any Obligation;

       

      (iv)  apply
        for
        and obtain the appointment of a Receiver to be vested with the fullest powers
        permitted by Law, without bond being required, which appointment may be made
        ex parte,
        as a
        matter of right and without regard to the value of the Property, the amount
        of
        the Debt or the solvency of Borrower or any other person liable for the payment
        or performance of any portion of the Obligations;

       

      (v)  directly,
        by its agents or representatives or through a Receiver appointed by a court
        of
        competent jurisdiction, enter on the Land and Improvements, take possession
        of
        the Property, dispossess Borrower and exercise Borrower’s rights with respect to
        the Property, either in Borrower’s name or otherwise;

       

      (vi)  institute
        a Proceeding for the foreclosure of this Deed of Trust or, sell by power
        of sale
        all or any portion of the Property as more particularly described in Section
        14.4 below;

       

      (vii)  institute
        proceedings for the partial foreclosure of this Deed of Trust for the portion
        of
        the Debt then due and payable, subject to the continuing lien of this Deed
        of
        Trust for the balance of the Debt not then due;

       

      (viii)  exercise
        any and all rights and remedies granted to a secured party under the Uniform
        Commercial Code; and

       

      (ix)  pursue
        any other right or remedy available to Lender at Law, in equity or
        otherwise.

       

      
        
          
          

        

        
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      (b)  If
        an
        Event of Default occurs, the license granted to Borrower in the Loan Documents
        to collect Rents will terminate automatically without any action required
        of
        Lender.

       

      Section
        14.3  General
        Provisions Pertaining to Remedies.

       

      (a)  The
        Remedies are cumulative and may be pursued by Lender or Trustee concurrently
        or
        otherwise, at such time and in such order as Lender or Trustee may determine
        in
        their sole discretion and without presentment, demand, protest, notice of
        acceleration, notice of intention to accelerate or further notice of any
        kind,
        all of which are expressly waived by Borrower.

       

      (b)  The
        enumeration in the Loan Documents of specific rights or powers will not be
        construed to limit any general rights or powers or impair Lender’s or Trustee’s
        rights with respect to the Remedies.

       

      (c)  If
        Lender
        or Trustee exercises any of the Remedies, Lender will not be deemed a
        mortgagee-in-possession unless Lender has elected affirmatively to be a
        mortgagee-in-possession.

       

      (d)  Lender
        and Trustee will not be liable for any act or omission of Lender or Trustee
        in
        connection with the exercise of the Remedies.

       

      (e)  Lender’s
        and Trustee’s right to exercise any Remedy will not be impaired by any delay in
        exercising or failure to exercise the Remedy and the delay or failure will
        not
        be construed as extending any cure period or constitute a waiver of the default
        or Event of Default.

       

      (f)  If
        an
        Event of Default occurs, Lender’s payment or performance or acceptance of
        payment or performance will not be deemed a waiver or cure of the Event of
        Default.

       

      (g)  Lender’s
        acceptance of partial payment or receipt of Rents will not extend or affect
        any
        grace period or constitute a waiver of a default or Event of Default or
        constitute a rescission of Acceleration.

       

      Section
        14.4  Foreclosure
        by Power of Sale.
        Trustee, his successor or substitute, is authorized and empowered and it
        will be
        his special duty at the request of Lender to sell the Property or any part
        thereof situated in the State of Texas at the courthouse of any county in
        the
        State of Texas in which any part of the Property is situated, at public venue
        to
        the highest bidder for cash. The sale shall take place at such area of the
        courthouse as will be properly designated from time to time by the commissioners
        court (or, if not so designated by the commissioners court, at the courthouse
        door) of the specified county, between the hours of 10 o’clock a.m. and 4
        o’clock p.m. (the commencement of such sale to occur within three (3) hours
        following the time designated in the hereinafter described notice of sale
        as the
        earliest time at which such sale will occur, if required by applicable laws)
        on
        the first Tuesday in any month after having given notice of such sale at
        least
        twenty-one (21) days before the day of sale of the time, place and terms
        of said
        sale (including the earliest time at which such sale will occur) in accordance
        with the 

       

      
        
          
          

        

        
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      statutes
        of the State of Texas then in force governing sales of real estate under
        powers
        conferred by deeds of trust. Notice of a sale of all or part of the Property
        by
        Trustee will be given by posting written notice thereof at the courthouse
        door
        (or other area in the courthouse as may be designated for such public notices)
        of the county in which the sale is to be made, and by filing a copy of the
        notice in the office of the county clerk of the county in which the sale
        is to
        be made at least twenty-one (21) days preceding the date of the sale, and
        if the
        Property to be sold is in more than one county, a notice shall be posted
        at the
        courthouse door and filed with the county clerk of each county in which the
        Property is situated. In addition, Lender will, at least twenty-one (21)
        days
        preceding the date of sale, serve written notice of the proposed sale by
        certified mail on Borrower, and each debtor obligated to pay the Debt or
        any
        portion thereof according to the records of Lender. Service of such notice
        will
        be completed upon deposit of the notice, enclosed in a postpaid certified
        mail
        wrapper, properly addressed to Borrower, and each such debtor at the most
        recent
        address as shown by the records of Lender, in a post office or official
        depository under the care and custody of the United States Postal Service.
        The
        affidavit of any person having knowledge of the facts to the effect that
        such
        service was completed will be prima facie evidence of the fact of service.
        Any
        sale made by Trustee hereunder may be as an entirety or in such parcels as
        Lender may request, and any sale may be adjourned by announcement at the
        time
        and place appointed for such sale without further notice except as may be
        required by Law. The sale by Trustee of less than the whole of the Property
        will
        not exhaust the power of sale herein granted, and Trustee is specifically
        empowered to make successive sale or sales under such power until the whole
        of
        the Property is sold; and, if the proceeds of such sale of less than the
        whole
        of the Property is less than the aggregate of the Debt and the expense of
        executing this trust as provided herein, this Deed of Trust and the lien
        hereof
        will remain in full force and effect as to the unsold portion of the Property
        just as though no sale had been made; provided, however, that Borrower will
        never have any right to require the sale of less than the whole of the Property
        but Lender will have the right, at its sole election, to request Trustee
        to sell
        less than the whole of the Property. After each sale, Trustee will make to
        the
        purchaser or purchasers at such sale good and sufficient conveyances in the
        name
        of Borrower conveying the property so sold to the purchaser or purchasers
        in fee
        simple or leasehold, as the case may be, with general warranty of title,
        and
        will receive the proceeds of said sale or sales and apply the same as herein
        provided. Payment of the purchase price to Trustee will satisfy the obligation
        of purchaser at such sale therefor, and such purchaser will not be responsible
        for the application thereof. The power of sale granted herein will not be
        exhausted by any sale held hereunder by Trustee or his substitute or successor,
        and such power of sale may be exercised from time to time and as many times
        as
        Lender may deem necessary until all of the Property has been duly sold and
        all
        the Debt has been fully paid. If any sale hereunder is not completed or is
        defective in the opinion of Lender, such sale will not exhaust the power
        of sale
        hereunder and Lender will have the right to cause a subsequent sale or sales
        to
        be made hereunder. Any and all statements of fact or other recitals made
        in any
        deed or deeds given by Trustee or any successor or substitute appointed
        hereunder as to nonpayment of the Debt, or as to the occurrence of any Event
        of
        Default, or as to Lender having declared all of the Debt to be due and payable,
        or as to the request to sell, or as to notice of time, place and terms of
        sale
        and of the properties to be sold having been duly given, or as to the refusal,
        failure or inability to act of Trustee or any substitute or successor, or
        as to
        the appointment of any substitute or successor Trustee, or as to any other
        act
        or thing having been duly done by Lender or by Trustee or any substitute
        or
        successor, will be taken as prima facie evidence of the truth of the facts
        so
        stated and recited. Trustee, his successor or substitute, may 

       

      
        
          
          

        

        
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      appoint
        or delegate any one or more persons as agent to perform any act or acts
        necessary or incident to any sale held by Trustee, including the posting
        of
        notices and the conducting of sales, but in the name and on behalf of Trustee,
        his successor or substitute.

       

      Section
        14.5  General
        Provisions Pertaining to Receiver and other Remedies.

       

      (a)  If
        an
        Event of Default occurs, any court of competent jurisdiction will, upon
        application by Lender, appoint a Receiver as designated in the application
        and
        issue an injunction prohibiting Borrower from interfering with the Receiver,
        collecting Rents, disposing of any Rents or any part of the Property, committing
        waste or doing any other act that will tend to affect the preservation of
        the
        Leases, the Rents, and the Property and Borrower approves the appointment
        of the
        designated Receiver or any other Receiver appointed by the court. Borrower
        agrees that the appointment may be made ex parte
        and as a
        matter of right to Lender or Trustee, either before or after sale of the
        Property, without further notice, and without regard to the solvency or
        insolvency, at the time of application for the Receiver, of the person or
        persons, if any, liable for the payment of any portion of the Debt and the
        performance of any portion of the Obligations and without regard to the value
        of
        the Property or whether the Property is occupied as a homestead and without
        bond
        being required of the applicant.

       

      (b)  The
        Receiver will be vested with the fullest powers permitted by Law including
        all
        powers necessary or usual in similar cases for the protection, possession
        and
        operation of the Property and all the powers and duties of Lender as a
        mortgagee-in-possession as provided in this Deed of Trust and may continue
        to
        exercise all the usual powers and duties until the Receiver is discharged
        by the
        court.

       

      (c)  In
        addition to the Remedies and all other available rights, Lender or the Receiver
        may take any of the following actions:

       

      (i)  take
        exclusive possession, custody and control of the Property and manage the
        Property so as to prevent waste;

       

      (ii)  require
        Borrower to deliver to Lender or the Receiver all keys, security deposits,
        operating accounts, prepaid Rents, past due Rents, the Books and Records
        and all
        original counterparts of the Leases and the Property Documents;

       

      (iii)  collect,
        sue for and give receipts for the Rents and, after paying all expenses of
        collection, including reasonable receiver’s, broker’s and attorney’s fees, apply
        the net collections to any portion of the Debt selected by Lender in its
        sole
        discretion,

       

      (iv)  enter
        into, modify, extend, enforce, terminate, renew or accept surrender of Leases
        and evict tenants except that in the case of a Receiver, such actions may
        be
        taken only with the written consent of Lender as provided in this Deed of
        Trust
        and in the Assignment;

       

      
        
          
          

        

        
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      (v)  enter
        into, modify, extend, enforce, terminate or renew Property Documents except
        that
        in the case of a Receiver, such actions may be taken only with the written
        consent of Lender as provided in this Deed of Trust and in the
        Assignment;

       

      (vi)  appear
        in
        and defend any Proceeding brought in connection with the Property and bring
        any
        Proceeding to protect the Property as well as Borrower’s and Lender’s respective
        interests in the Property (unless any such Proceeding has been assigned
        previously to Lender in the Assignment, or if so assigned, Lender has not
        expressly assigned such Proceeding to the Receiver and consented to such
        appearance or defense by the Receiver); and

       

      (vii)  perform
        any act in the place of Borrower that Lender or the Receiver deems necessary
        (A)
        to preserve the value, marketability or rentability of the Property; (B)
        to
        increase the gross receipts from the Property; or (C) otherwise to protect
        Borrower’s and Lender’s respective interests in the Property.

       

      (d)  Effective
        upon an Event of Default, Borrower appoints Lender as Borrower’s
        attorney-in-fact, at Lender’s election, to perform any actions and to execute
        and record any instruments necessary to effectuate the actions described
        in this
        Section, in each instance only at Lender’s election and only to the extent
        Borrower has failed to comply with the provisions of this Section.

       

      Section
        14.6  General
        Provisions Pertaining to Foreclosures and the Power of Sale.
        Except
        to the extent provided otherwise in Section 14.4, the following provisions
        will
        apply to any Proceeding to foreclose and to any sale of the Property by power
        of
        sale or pursuant to a judgment of foreclosure and sale:

       

      (i)  Lender’s
        or Trustee’s right to institute a Proceeding to foreclose or to sell by power of
        sale will not be exhausted by a Proceeding or a sale that is defective or
        not
        completed;

       

      (ii)  any
        sale
        may be postponed or adjourned by Lender by public announcement at the time
        and
        place appointed for the sale without further notice;

       

      (iii)  with
        respect to any sale pursuant to a judgment of foreclosure and sale or by
        power
        of sale, the Property may be sold as an entirety or in parcels, at one or
        more
        sales, at the time and place, on terms and in the order that Lender deems
        expedient in its sole discretion;

       

      (iv)  if
        a
        portion of the Property is sold pursuant to this Article, the Loan Documents
        will remain in full force and effect with respect to any unmatured portion
        of
        the Debt and this Deed of Trust will continue as a valid and enforceable
        first
        lien on and security interest in the remaining portion of the Property, subject
        only to the Permitted Exceptions, without loss of priority and without
        impairment of any of Lender’s or Trustee’s rights and remedies with respect to
        the unmatured portion of the Debt;

       

      
        
          
          

        

        
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      (v)  Lender
        may bid for and acquire the Property at a sale and, in lieu of paying cash,
        may
        credit the amount of Lender’s bid against any portion of the Debt selected by
        Lender in its sole discretion after deducting from the amount of Lender’s bid
        the expenses of the sale, costs of enforcement and other amounts that Lender
        is
        authorized to deduct at Law, in equity or otherwise; and

       

      (vi)  Lender’s
        receipt of the proceeds of a sale will be sufficient consideration for the
        portion of the Property sold and Lender will apply the proceeds as set forth
        in
        this Deed of Trust.

       

      Section
        14.7  Application
        of Proceeds.
        Lender
        may apply the proceeds of any sale of the Property by power of sale or pursuant
        to a judgment of foreclosure and sale and any other amounts collected by
        Lender
        in connection with the exercise of the Remedies to payment of the Debt in
        such
        priority and proportions as Lender may determine in its sole discretion or
        in
        such priority and proportions as required by Law.

       

      Section
        14.8  Power
        of Attorney.
        Effective upon an Event of Default, Borrower appoints Lender as Borrower’s
        attorney-in-fact to perform any actions necessary and incidental to exercising
        the Remedies.

       

      Section
        14.9  Tenant
        at Sufferance.
        If
        Lender, Trustee, or a Receiver enters the Property in the exercise of the
        Remedies and Borrower is allowed to remain in occupancy of the Property,
        Borrower will pay to Lender, Trustee, or the Receiver, as the case may be,
        in
        advance, a reasonable rent for the Property occupied by Borrower. If Borrower
        fails to pay the rent, Borrower may be dispossessed by the usual Proceedings
        available against defaulting tenants.

       

      Section
        14.10  State
        Laws Pertaining to Remedies.

       

      (a)  In
        addition to the rights and powers of sale granted under the preceding
Subsection
        14.4,
        if any
        Event of Default occurs concerning the payment of any installment of the
        Obligations, Lender, at its option, at once or at any time thereafter while
        any
        matured installment remains unpaid, without declaring the entire Obligations
        to
        be due and payable, may orally or in writing direct the Trustee to enforce
        this
        trust and to sell the Property subject to such unmatured indebtedness and
        the
        assignments, liens, and security interests securing its payment, in the same
        manner, on the same terms, at the same place and time and after having given
        notice in the same manner, all as provided in the preceding provisions of
        Section
        14.4.
        After
        such sale, the Trustee will make due conveyance to the purchaser or purchasers.
        Sales made without maturing the Obligations may be made hereunder whenever
        there
        occurs an Event of Default in the payment of any installment of the Obligations
        without exhausting the power of sale granted hereby, and without affecting
        in
        any way the power of sale granted under this Section
        14.10(a),
        the
        unmatured balance of the Obligations (except as to any proceeds of any sale
        which Lender may apply as a prepayment of the Obligations) or the assignments,
        liens and security interests securing payment of the Obligations.

       

      (b)  It
        is
        intended by each of the foregoing provisions of Section
        14.4 and 14.10(a)
        that
        Trustee may, after any request or direction by Lender, sell not only the
        Land


       

      
        
          
          

        

        
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      and
        Improvements but also the Collateral and other interests constituting a part
        of
        the Property, or any part thereof, along with the Land and Improvements,
        or any
        part thereof, all as a unit and as a part of a single sale, or may sell any
        part
        of the Property separately from the remainder of the Property. The sale or
        sales
        by Trustee of less than the whole of the Property will not exhaust the power
        of
        sale herein granted and Trustee is specifically empowered to make successive
        sale or sales under such power until the whole of the Property is sold; and
        if
        the proceeds of such sale or sales of less than the whole of such Property
        is
        less than the aggregate of the Obligations and the expense of executing this
        trust, this Deed of Trust and the assignments, liens, and security interests
        hereof will remain in full force and effect as to the unsold portion of the
        Property just as though no sale or sales of less than the whole of the Property
        had occurred, but Lender will have the right, at its sole election, to request
        Trustee to sell less than the whole of the Property.

       

      (c)  Borrower
        and Lender agree that, in any assignments, deeds, bills of sale, notice of
        sale,
        or postings, given by Trustee or Lender, any and all statements of fact or
        other
        recitals therein made as to the identity of Lender, or as to the occurrence
        or
        existence of any Event of Default, or as to the acceleration of the Maturity
        Date, or as to the request to sell, posting of notice of sale, notice of
        sale,
        time, place, terms and manner of sale and receipt, distribution and application
        of the money realized therefrom, or as to the due and proper appointment
        of a
        substitute trustee and without being limited by the foregoing, as to any
        other
        act or thing having been duly done by Lender or by Trustee, will be taken
        by all
        courts of law and equity as prima facie
        evidence
        that the said statements or recitals state facts and are without further
        question to be so accepted, and Borrower hereby ratifies and confirms any
        and
        all acts that Trustee may lawfully do in the premises by virtue
        hereof.

       

      (d)  In
        the
        event of the resignation or death of Trustee, or Trustee’s failure, refusal or
        inability, for any reason, to make any such sale or to perform any of the
        trusts
        herein declared, or, at the option of Lender, without cause, Lender may appoint,
        orally or in writing, a substitute trustee, who will thereupon succeed to
        all
        the estates, titles, rights, powers, and trusts herein granted to and vested
        in
        Trustee. If Lender is a corporation, such appointment may be made on behalf
        of
        such Lender by any person who is then the president, or a vice-president,
        assistant vice-president, treasurer, cashier, secretary, or any other authorized
        officer or agent of Lender. In the event of the resignation or death of any
        substitute trustee, or such substitute trustee’s failure, refusal or inability
        to make any such sale or perform such trusts, or, at the option of Lender,
        without cause, successive substitute trustees may thereafter, from time to
        time,
        be appointed in the same manner. Wherever herein the word “Trustee”
used,
        the same means the person who is the duly appointed trustee in the first
        paragraph of this Deed of Trust or substitute trustee hereunder at the time
        in
        question.

       

      (e)  Lender
        may, or Trustee may upon written request of Lender, proceed by suit or suits,
        at
        law or in equity, to enforce the payment and performance of the Obligations
        in
        accordance with the terms hereof or of the Note or the other Loan Documents,
        to
        foreclose or otherwise enforce the assignments, liens, and security interests
        created or evidenced by the other Loan Documents, or this Deed of Trust as
        

       

      
        
          
          

        

        
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      against
        all, or any part of, the Property, and to have all or any part of the Property
        sold under the judgment or decree of a court of competent
        jurisdiction.

       

      (f)  To
        the
        extent permitted by law, Lender, as a matter of right without notice to Borrower
        and without regard to the sufficiency of the security, and without any showing
        of insolvency, fraud, or mismanagement on the part of Borrower, and without
        the
        necessity of filing any judicial or other proceeding other than the proceeding
        for appointment of a receiver, will be entitled to the appointment of a receiver
        or receivers of the Property, or any part thereof, and of the income, rents,
        issues, and profits thereof.

       

      (g)  To
        the
        extent permitted by Law, Lender may enter upon the Land, take possession
        of the
        Property and remove the Collateral or any part thereof, with or without judicial
        process, and, in connection therewith, without any responsibility or liability
        on the part of Lender, take possession of any property located on or in the
        Land
        which is not a part of the Property and hold or store such property at
        Borrower’s expense.

       

      (h)  Lender
        may require Borrower to assemble the Collateral, or any part thereof, and
        make
        it available to Lender at a place to be designated by Lender which is reasonably
        convenient to Borrower and Lender.

       

      (i)  After
        notification, if any, hereafter provided in this Subsection, Lender may,
        or the
        Trustee may, upon request of Lender, sell, lease, or otherwise dispose of,
        at
        the office of Lender, or on the Land, or elsewhere as chosen by Lender, all
        or
        any part of the Collateral, in its then condition, or following any commercially
        reasonable preparation or processing, and each “Sale”
(as
        used herein, the term “Sale”
means
        any such sale, lease, or other disposition made pursuant to this Section
        4.10(i))
        may be
        as a unit or in parcels, by public or private proceedings, and by way of
        one or
        more contracts, and, at any Sale, it will not be necessary to exhibit the
        Collateral, or part thereof, being sold. The Sale of any part of the Collateral
        shall not exhaust Lender’s power of Sale, but Sales may be made, from time to
        time, until the Obligations are paid and performed in full. Reasonable
        notification of the time and place of any public Sale pursuant to this Section,
        or reasonable notification of the time after which any private Sale is to
        be
        made pursuant to this Subsection, will be sent to Borrower and to any other
        person entitled to notice under Chapter 9 of the Uniform Commercial Code;
        provided, that if the Collateral being sold, or any part thereof, is perishable,
        or threatens to decline speedily in value, or is of a type customarily sold
        on a
        recognized market, Lender may sell, lease, or otherwise dispose of such
        Collateral without notification, advertisement or other notice of any kind.
        It
        is agreed that notice sent or given not less than ten (10) calendar days
        prior
        to the taking of the action to which the notice relates, is reasonable
        notification and notice for the purposes of this Section.

       

      (j)  Lender
        may retain the Collateral in satisfaction of the Obligations whenever the
        circumstances are such that Lender is entitled to do so under the Uniform
        Commercial Code, and Lender unequivocally and expressly confirms in writing
        that
        Lender’s intention is to retain such Collateral in full satisfaction of the
        Obligations.

       

      
        
          
          

        

        
          36

          
            

          

        

        
          
          

        

      

      (k)  Lender
        may buy the Property, or any part thereof, at any public Sale or judicial
        Sale
        (including any Sale of the Collateral as contemplated in Section
        4.10(i)
        hereof).

       

      (l)  Lender
        may buy the Collateral, or any part thereof, at any private Sale if the
        Collateral, or part thereof, being sold is a type customarily sold in a
        recognized market or a type which is the subject of widely distributed standard
        price quotations.

       

      (m)  Lender
        will have and may exercise any and all other rights and remedies which Lender
        may have at law or in equity, or by virtue of any other security instrument,
        or
        under the Uniform Commercial Code, or otherwise.

       

      (n)  Notwithstanding
        anything contained herein to the contrary, pursuant to TEX. BUS & COM. CODE
        ANN. §9.604 (a) (Vernon 2002), Lender may proceed under Chapter 9 of the Uniform
        Commercial Code as to all personal property covered hereby without prejudicing
        any rights with respect to the real property or, at Lender’s election, Lender
        may proceed as to both the real and personal property covered hereby in
        accordance with Lender’s rights and remedies in respect of real property, in
        which case the provisions of Chapter 9 of the Uniform Commercial Code (and
        Section
        4.10(i)
        hereof)
        will not apply.

       

      (o)  If
        Lender
        is the purchaser of the Property, or any part thereof, at any sale thereof
        (including any Sale of the Collateral as contemplated in Section
        4.10(i)
        hereof),
        whether such sale be under the power of sale hereinabove vested in Trustee,
        or
        upon any other foreclosure or enforcement of the assignments, liens, and
        security interests hereof, or otherwise, Lender shall, upon any such purchase,
        acquire good title to the Property so purchased, free of the assignments,
        liens,
        and security interests of these presents.

       

      (p)  This
        Deed
        of Trust is effective as a mortgage as well as a deed of trust, and upon
        the
        occurrence of an Event of Default may be foreclosed as to the Property or
        any
        portion thereof in any manner permitted by the laws of Texas and any other
        state
        in which any part of the Property is situated. Any foreclosure suit may be
        brought by Trustee or Lender. If a foreclosure hereunder is commenced by
        Trustee, Lender may, at any time before the sale, direct the Trustee to abandon
        the sale, and may then institute suit for the collection of the Obligations,
        and
        for the foreclosure or enforcement of the assignments, liens, and security
        interests hereof. If Lender should institute a suit for the collection of
        the
        Obligations, and for a foreclosure or enforcement of the assignments, liens,
        and
        security interests hereof, it may, at any time before the entry of a final
        judgment in said suit, dismiss the same, and require Trustee to sell the
        Property, or any part thereof, in accordance with the other provisions of
        this
        Deed of Trust.

       

      Section
        14.11  Waiver
        of Deficiency Statute.

       

      (a)  In
        the
        event an interest in any of the Property is foreclosed upon pursuant to a
        judicial or nonjudicial foreclosure sale, Borrower agrees as follows:
        Notwithstanding the provisions of Sections 51.003, 51.004, and 51.005 of
        the Texas Property Code (as the same may be amended from time to time), and
        to
        the extent 

       

      
        
          
          

        

        
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      permitted
        by Law, Borrower agrees that, subject to the provisions of Article XV hereof,
        Lender shall be entitled to seek a deficiency judgment from Borrower and
        any
        other party obligated on the Note equal to the difference between the amount
        owing on the Note and the amount for which the Property was sold pursuant
        to
        judicial or nonjudicial foreclosure sale. Borrower expressly recognizes that
        this Section constitutes a waiver of the above-cited provisions of the Texas
        Property Code which would otherwise permit Borrower and other persons against
        whom recovery of deficiencies is sought (even absent the initiation of
        deficiency proceedings against them) to present competent evidence of the
        fair
        market value of the Property as of the date of the foreclosure sale and offset
        against any deficiency the amount by which the foreclosure sale price is
        determined to be less than such fair market value. Borrower further recognizes
        and agrees that this waiver creates an irrebuttable presumption that the
        foreclosure sale price is equal to the fair market value of the Property
        for
        purposes of calculating deficiencies owed by Borrower and others against
        whom
        recovery of a deficiency is sought.

       

      (b)  Alternatively,
        in the event the waiver provided for in subsection (a) above is determined
        by a court of competent jurisdiction to be unenforceable, the following shall
        be
        the basis for the finder of fact’s determination of the fair market value of the
        Property as of the date of the foreclosure sale in proceedings governed by
        Sections 51.003, 51.004 and 51.005 of the Texas Property Code (as amended
        from time to time): (i) the Property shall be valued in an “as is”
condition as of the date of the foreclosure sale, without any assumption
        or
        expectation that the Property will be repaired or improved in any manner
        before
        a resale of the Property after foreclosure; (ii) the valuation shall be
        based upon an assumption that the foreclosure purchaser desires a resale
        of the
        Property for cash promptly (but no later than twelve (12) months) following
        the
        foreclosure sale; (iii) all reasonable closing costs customarily borne by
        the seller in commercial real estate transactions should be deducted from
        the
        gross fair market value of the Property, including, without limitation,
        brokerage commissions, title insurance, a survey of the Property, tax
        prorations, attorneys’ fees, and marketing costs; (iv) the gross fair
        market value of the Property shall be further discounted to account for any
        estimated holding costs associated with maintaining the Property pending
        sale,
        including, without limitation, utilities expenses, property management fees,
        taxes and assessments (to the extent not accounted for in (iii) above), and
        other maintenance, operational and ownership expenses; and (v) any expert
        opinion testimony given or considered in connection with a determination
        of the
        fair market value of the Property must be given by persons having at least
        five
        (5) years experience in appraising property similar to the Property and who
        have
        conducted and prepared a complete written appraisal of the Property taking
        into
        consideration the factors set forth above.

       

      ARTICLE
        XV  

       

      LIMITATION
        OF LIABILITY

       

      Section
        15.1  Limitation
        of Liability.

       

      (a)  Notwithstanding
        any provision in the Loan Documents to the contrary, except as set forth
        in
        subsections (b) and (c), if Lender seeks to enforce the collection of


       

      
        
          
          

        

        
          38

          
            

          

        

        
          
          

        

      

       

      the
        Debt,
        Lender will foreclose this Deed of Trust instead of instituting suit on the
        Note. If a lesser sum is realized from a foreclosure of this Deed of Trust
        and
        sale of the Property than the then outstanding Debt, Lender will not institute
        any Proceeding against Borrower or Borrower’s general partners, if any, for or
        on account of the deficiency, except as set forth in subsections (b) and
        (c).

       

      (b)  The
        limitation of liability in subsection (a) will not affect or impair (i) the
        lien
        of this Deed of Trust or Lender’s other rights and Remedies under the Loan
        Documents, including Lender’s right as mortgagee or secured party to commence an
        action to foreclose any lien or security interest Lender has under the Loan
        Documents; (ii) the validity of the Loan Documents or the Obligations; (iii)
        Lender’s rights under any Loan Document that are not expressly non-recourse; or
        (iv) Lender’s right to present and collect on any letter of credit or other
        credit enhancement document held by Lender in connection with the
        Obligations.

       

      (c)  The
        following are excluded and excepted from the limitation of liability in
        subsection (a) and Lender may recover personally against Borrower and its
        general partners, if any, for the following:

       

      (i)  all
        losses suffered and liabilities and expenses incurred by Lender relating
        to any
        fraud or intentional misrepresentation or omission by Borrower or any of
        Borrower’s partners, members, officers, directors, shareholders or principals in
        connection with (A) the performance of any of the conditions to Lender making
        the Loan; (B) any inducements to Lender to make the Loan; (C) the execution
        and
        delivery of the Loan Documents; (D) any certificates, representations or
        warranties given in connection with the Loan; or (E) Borrower’s performance of
        the Obligations;

       

      (ii)  all
        Rents
        derived from the Property after a default under the Loan Documents which
        default
        is a basis of a Proceeding by Lender to enforce collection of the Debt and
        all
        moneys that, on the date such a default occurs, are on deposit in one or
        more
        accounts used by or on behalf of Borrower relating to the operation of the
        Property, except to the extent properly applied to payment of Debt Service
        Payments, Impositions, Insurance Premiums and any reasonable and customary
        expenses incurred by Borrower in the operation, maintenance and leasing of
        the
        Property or delivered to Lender;

       

      (iii)  the
        cost
        of remediation of any Environmental Activity affecting the Property, any
        diminution in the value of the Property arising from any Environmental Activity
        affecting the Property and any other losses suffered and liabilities and
        expenses incurred by Lender relating to a default under the Article entitled
        “Environmental”;

       

      (iv)  all
        security deposits collected by Borrower or any of Borrower’s predecessors and
        not refunded to Tenants in accordance with their respective Leases, applied
        in
        accordance with the Leases or Law or delivered to Lender, and all rents
        collected by Borrower or any of Borrower’s predecessors more than 30


       

      
        
          
          

        

        
          39

          
            

          

        

        
          
          

        

      

       

      days
        in
        advance and not applied in accordance with the Leases or delivered to Lender;
        provided, however, that nothing contained herein shall limit Borrower’s or
        general partners’ liability under clause (ii) above;

       

      (v)  the
        replacement cost of any Fixtures or Personal Property removed from the Property
        after a default occurs (which is not cured within any applicable grace or
        cure
        period) and not replaced as required by the Loan Documents);

       

      (vi)  all
        losses suffered and liabilities and expenses incurred by Lender relating
        to any
        acts or omissions by Borrower that result in waste (including economic and
        non-physical waste) on the Property;

       

      (vii)  all
        protective advances and other payments made by Lender pursuant to express
        provisions of the Loan Documents to protect Lender’s security interest in the
        Property or to protect the assignment of the property described in and effected
        by the Assignment, but only to the extent that the Rents would have been
        sufficient to permit Borrower to make the payment and Borrower failed to
        do
        so;

       

      (viii)  all
        mechanics’ or similar liens relating to work performed on or materials delivered
        to the Property prior to Lender exercising its Remedies, but only to the
        extent
        Lender had advanced funds to pay for the work or materials;

       

      (ix)  all
        Proceeds that are not applied in accordance with this Deed of Trust or not
        paid
        to Lender as required under this Deed of Trust;

       

      (x)  all
        losses suffered and liabilities and expenses incurred by Lender relating
        to a
        Transfer that is not permitted under the Section entitled “Permitted
        Transfers”
        including the prohibition on any Transfer that results in a violation of
        ERISA
        or any anti-terrorism or money laundering laws.

       

      (xi)  all
        losses suffered and liabilities and expenses incurred by Lender relating
        to
        forfeiture or threatened forfeiture of the Property to the
        Government;

       

      (xii)  all
        losses suffered and liabilities and expenses incurred by Lender relating
        to any
        default by Borrower under any of the provisions of this Deed of Trust relating
        to ERISA; and

       

      (xiii)  all
        losses suffered and liabilities and expenses incurred by Lender relating
        to any
        default under any of the provisions of this Deed of Trust relating to
        anti-terrorism or money laundering.

       

      (d)  Nothing
        under subparagraph (a) above will be deemed to be a waiver of any right which
        Lender may have under Section 506(a), 506(b), 1111(b) or any other provisions
        of
        the Bankruptcy Code or under any other Law relating to bankruptcy or insolvency
        to file a claim for the full amount of the Debt or to require that all
        collateral will continue to secure all of the Obligations in accordance with
        the
        Loan Documents.

       

      
        
          
          

        

        
          40

          
            

          

        

        
          
          

        

      

      ARTICLE
        XVI 

       

      WAIVERS

       

      Section
        16.1  WAIVER
        OF STATUTE OF LIMITATIONS.
        TO THE EXTENT PERMITTED BY LAW, BORROWER WAIVES THE RIGHT TO CLAIM ANY STATUTE
        OF LIMITATIONS AS A DEFENSE TO BORROWER’S PAYMENT AND PERFORMANCE OF THE
        OBLIGATIONS.

       

      Section
        16.2  WAIVER
        OF NOTICE.
        TO THE EXTENT PERMITTED BY LAW, BORROWER WAIVES THE RIGHT TO RECEIVE ANY
        NOTICE
        FROM LENDER OR TRUSTEE WITH RESPECT TO THE LOAN DOCUMENTS EXCEPT FOR THOSE
        NOTICES THAT LENDER OR TRUSTEE IS EXPRESSLY REQUIRED TO DELIVER PURSUANT
        TO THE
        LOAN DOCUMENTS.

       

      Section
        16.3  WAIVER
        OF MARSHALLING AND OTHER MATTERS.
        TO THE EXTENT PERMITTED BY LAW, BORROWER WAIVES THE BENEFIT OF ANY RIGHTS
        OF
        MARSHALLING OR ANY OTHER RIGHT TO DIRECT THE ORDER IN WHICH ANY OF THE PROPERTY
        WILL BE (i) SOLD; OR (ii) MADE AVAILABLE TO ANY ENTITY IF THE PROPERTY IS
        SOLD
        BY POWER OF SALE OR PURSUANT TO A JUDGMENT OF FORECLOSURE AND SALE. BORROWER
        ALSO WAIVES THE BENEFIT OF ANY LAWS RELATING TO APPRAISEMENT, VALUATION,
        STAY,
        EXTENSION, REINSTATEMENT, MORATORIUM, HOMESTEAD AND EXEMPTION RIGHTS OR A
        SALE
        IN INVERSE ORDER OF ALIENATION.

       

      Section
        16.4  WAIVER
        OF TRIAL BY JURY.
        TO THE EXTENT PERMITTED BY LAW, BORROWER WAIVES TRIAL BY JURY IN ANY PROCEEDING
        BROUGHT BY, OR AGAINST, OR COUNTERCLAIM OR CROSS-COMPLAINT ASSERTED BY OR
        AGAINST, LENDER OR TRUSTEE RELATING TO THE LOAN, THE PROPERTY DOCUMENTS OR
        THE
        LEASES.

       

      Section
        16.5  WAIVER
        OF COUNTERCLAIM.
        TO THE EXTENT PERMITTED BY LAW, BORROWER WAIVES THE RIGHT TO ASSERT A
        COUNTERCLAIM OR CROSS-COMPLAINT, OTHER THAN COMPULSORY OR MANDATORY
        COUNTERCLAIMS OR CROSS-COMPLAINTS, IN ANY PROCEEDING LENDER OR TRUSTEE BRINGS
        AGAINST BORROWER RELATING TO THE LOAN, INCLUDING ANY PROCEEDING TO ENFORCE
        REMEDIES.

       

      Section
        16.6  WAIVER
        OF JUDICIAL NOTICE AND HEARING.
        TO THE EXTENT PERMITTED BY LAW, BORROWER WAIVES ANY RIGHT BORROWER MAY HAVE
        UNDER LAW TO NOTICE OR TO A JUDICIAL HEARING PRIOR TO THE EXERCISE OF ANY
        RIGHT
        OR REMEDY PROVIDED BY THE LOAN DOCUMENTS TO LENDER AND BORROWER WAIVES THE
        RIGHTS, IF ANY, TO SET ASIDE OR INVALIDATE ANY SALE DULY CONSUMMATED IN
        ACCORDANCE WITH THE PROVISIONS OF THE LOAN DOCUMENTS ON THE


       

      
        
          
          

        

        
          41

          
            

          

        

        
          
          

        

      

       

      GROUND
        (IF SUCH BE THE CASE) THAT THE SALE WAS CONSUMMATED WITHOUT A PRIOR JUDICIAL
        HEARING.

       

      Section
        16.7  WAIVER
        OF SUBROGATION.
        BORROWER WAIVES ALL RIGHTS OF SUBROGATION TO LENDER’S RIGHTS OR CLAIMS RELATED
        TO OR AFFECTING THE PROPERTY OR ANY OTHER SECURITY FOR THE LOAN UNTIL THE
        LOAN
        IS PAID IN FULL AND ALL FUNDING OBLIGATIONS UNDER THE LOAN DOCUMENTS HAVE
        BEEN
        TERMINATED.

       

      Section
        16.8  GENERAL
        WAIVER.
        BORROWER ACKNOWLEDGES THAT (A) BORROWER AND BORROWER’S PARTNERS, MEMBERS OR
        PRINCIPALS, AS THE CASE MAY BE, ARE KNOWLEDGEABLE BORROWERS OF COMMERCIAL
        FUNDS
        AND EXPERIENCED REAL ESTATE DEVELOPERS OR INVESTORS WHO UNDERSTAND FULLY
        THE
        EFFECT OF THE ABOVE PROVISIONS; (B) LENDER WOULD NOT MAKE THE LOAN WITHOUT
        THE
        PROVISIONS OF THIS ARTICLE; (C) THE LOAN IS A COMMERCIAL OR BUSINESS LOAN
        UNDER
        THE LAWS OF THE STATE OR COMMONWEALTH WHERE THE PROPERTY IS LOCATED NEGOTIATED
        BY LENDER AND BORROWER AND THEIR RESPECTIVE ATTORNEYS AT ARMS LENGTH; AND
        (D)
        ALL WAIVERS BY BORROWER IN THIS ARTICLE HAVE BEEN MADE VOLUNTARILY,
        INTELLIGENTLY AND KNOWINGLY, AFTER BORROWER FIRST HAS BEEN INFORMED BY COUNSEL
        OF BORROWER’S OWN CHOOSING AS TO POSSIBLE ALTERNATIVE RIGHTS, AND HAVE BEEN MADE
        AS AN INTENTIONAL RELINQUISHMENT AND ABANDONMENT OF A KNOWN RIGHT AND PRIVILEGE.
        THE FOREGOING ACKNOWLEDGMENT IS MADE WITH THE INTENT THAT LENDER AND ANY
        SUBSEQUENT HOLDER OF THE NOTE WILL RELY ON THE
        ACKNOWLEDGMENT.

       

      ARTICLE
        XVII 

       

      NOTICES

       

      Section
        17.1  Notices.
        Except
        for foreclosure notices and notices of sale which will be sent as required
        by
        the Texas Property Code, as amended, all acceptances, approvals, consents,
        demands, notices, requests, waivers and other communications (the “Notices”)
        required or permitted to be given under the Loan Documents must be in writing
        and (a) delivered personally by a process server providing a sworn declaration
        evidencing the date of service, the individual served, and the address where
        the
        service was made; (b) sent by certified mail, return receipt requested; or
        (c)
        delivered by nationally recognized overnight delivery service that provides
        evidence of the date of delivery (for next morning delivery if sent by overnight
        delivery service), in all cases with charges prepaid addressed to the
        appropriate party at its address listed below:

       

      
        
          
          

        

        
          42

          
            

          

        

        
          
          

        

      

      

        
          	
                  If
                    to Lender:

                	
                  Teachers
                    Insurance and Annuity

                  Association
                    of America

                  730
                    Third Avenue 

                  New
                    York, New York 10017 

                
	 	
                  Attention:        
                    Director of Portfolio Management

                  Mortgage
                    and Real Estate Division 

                  Domestic
                    Portfolio - West 

                  Authorization
                    ID#AAA4442

                  Investment
                    ID#M-0005934

                
	 	 
	
                  with
                    a courtesy copy to: 

                	
                  Teachers
                    Insurance and Annuity 

                  Association
                    of America

                  730
                    Third Avenue 

                  New
                    York, New York 10017 

                  Attention:         
                    Managing Counsel, Investment

                  Management
                    Law, New York

                  Authorization
                    ID#AAA4442

                  Investment
                    ID#M-0005934

                
	 	 
	
                  If
                    to Borrower:

                	
                  c/o
                    Stratus Properties, Inc.

                  98
                    San Jacinto Blvd., Suite 220

                  Austin,
                    Texas 78701

                  Attention:
                    John E. Baker

                
	 	 
	
                  with
                    a courtesy copy to:

                	
                  Ambrust
                    & Brown, L.L.P.

                  100
                    Congress, Suite 1300

                  Austin,
                    Texas 78701

                  Attention:
                    Ken Jones

                
	 	 


        

      

      Lender
        and Borrower each may change from time to time the address to which Notices
        must
        be sent, by notice given in accordance with the provisions of this Section.
        All
        Notices given in accordance with the provisions of this Section will be deemed
        to have been received on the earliest of (i) actual receipt; (ii) Borrower’s or
        Lender’s, as applicable, rejection of delivery; or (iii) 3 Business Days after
        having been deposited in any mail depository regularly maintained by the
        United
        States postal service, if sent by certified mail, or 1 Business Day after
        having
        been deposited with a nationally recognized overnight delivery service, if
        sent
        by overnight delivery or on the date of personal service, if served by a
        process
        server.

       

      Section
        17.2  Change
        in Borrower’s Legal Name, Place of Business or State of
        Formation.
        Borrower will notify Lender in writing prior to any change in Borrower’s legal
        name, place of business, including as a result of, or in connection with,
        any
        Transfer, including any Permitted Transfer.

       

      
        
          
          

        

        
          43

          
            

          

        

        
          
          

        

      

      ARTICLE
        XVIII 


       

      MISCELLANEOUS

       

      Section
        18.1  Applicable
        Law.
        The
        Loan Documents are governed by and will be construed in accordance with the
        Laws
        of the state or commonwealth in which the Property is located without regard
        to
        conflict of law provisions, except to the extent that the Uniform Commercial
        Code requires otherwise.

       

      Section
        18.2  Usury
        Limitations.
        All
        agreements between Borrower and Lender, whether now existing or hereafter
        arising and whether written or oral, are hereby limited so that in no
        contingency, whether by reason of acceleration of the maturity hereof or
        otherwise, will the interest contracted for, charged or received by Lender
        exceed the maximum amount permissible under applicable law. If, from any
        circumstance whatsoever, interest would otherwise be payable to Lender in
        excess
        of the maximum lawful amount, the interest payable to Lender will be reduced
        to
        the maximum amount permitted under applicable law; and if from any circumstance
        Lender will ever receive anything of value deemed interest by applicable
        Law in
        excess of the maximum lawful amount, an amount equal to any excessive interest
        shall be applied to the reduction of the principal portion of the Debt and
        Obligations and not to the payment of interest, or if such excessive interest
        exceeds the unpaid principal portion of the Debt and Obligations, such excess
        will be refunded to Borrower. All interest paid or agreed to be paid to Lender
        will, to the extent permitted by applicable law, be amortized, prorated,
        allocated, and spread throughout the full period until payment in full of
        the
        principal (including the period of any renewal or extension hereof) so that
        the
        interest hereon for such full period will not exceed the maximum amount
        permitted by applicable Law. This paragraph will control all agreements between
        Borrower and Lender. 

       

      Section
        18.3  Lender’s
        Discretion.
        Wherever under the Loan Documents any matter is required to be satisfactory
        to
        Lender, Lender has the right to approve or determine any matter or Lender
        has an
        election, Lender’s approval, determination or election will be made in Lender’s
        reasonable discretion unless expressly provided to the contrary.

       

      Section
        18.4  Unenforceable
        Provisions.
        If any
        provision in the Loan Documents is found to be illegal or unenforceable or
        would
        operate to invalidate any of the Loan Documents, then the provision will
        be
        deemed expunged and the Loan Documents will be construed as though the provision
        was not contained in the Loan Documents and the remainder of the Loan Documents
        will remain in full force and effect.

       

      Section
        18.5  Survival
        of Borrower’s Obligations.
        Borrower’s representations, warranties and covenants contained in the Loan
        Documents will continue in full force and effect and survive (i) release
        of the
        lien of this property by Lender; (ii) assignment or other transfer of all
        or any
        portion of Lender’s interest in the Loan Documents or the Property; (iii)
        Lender’s or Trustee’s exercise of any of the Remedies or any of Lender’s or
        Trustee’s other rights under the Loan Documents; (iv) a Transfer (except to the
        extent Borrower is expressly released as specifically provided herein); (v)
        amendments to the Loan Documents; and (vi) any other act or omission that
        might
        otherwise be construed as a release or discharge of Borrower (except for
        a
        specific release or discharge of Borrower).

       

      
        
          
          

        

        
          44

          
            

          

        

        
          
          

        

      

      Section
        18.6  Relationship
        Between Borrower and Lender; No Third Party Beneficiaries.

       

      (a)  Lender
        is
        not a partner of or joint venturer with Borrower or any other entity as a
        result
        of the Loan or Lender’s rights under the Loan Documents; the relationship
        between Lender and Borrower is strictly that of creditor and debtor. Each
        Loan
        Document is an agreement between the parties to that Loan Document for the
        mutual benefit of the parties and no entities other than the parties to that
        Loan Document will be a third party beneficiary or will have any claim against
        Lender or Borrower by virtue of the Loan Document. As between Lender and
        Borrower, any actions taken by Lender under the Loan Documents will be taken
        for
        Lender’s protection only, and Lender has not and will not be deemed to have
        assumed any responsibility to Borrower or to any other entity by virtue of
        Lender’s actions.

       

      (b)  All
        conditions to Lender’s performance of its obligations under the Loan Documents
        are imposed solely for the benefit of Lender. No entity other than Lender
        will
        have standing to require satisfaction of the conditions in accordance with
        their
        provisions or will be entitled to assume that Lender will refuse to perform
        its
        obligations in the absence of strict compliance with any of the
        conditions.

       

      Section
        18.7  Partial
        Reconveyances or Releases, Extensions, Waivers.
        Lender
        may: (i) permit the release of any part of the Property or release any entity
        obligated for the Obligations; (ii) extend the time for payment or performance
        of any of the Obligations or otherwise amend the provisions for payment or
        performance by agreement with any entity that is obligated for the Obligations
        or that has an interest in the Property; (iii) accept additional security
        for
        the payment and performance of the Obligations; and (iv) waive any entity’s
        performance of an Obligation, release any entity or individual now or in
        the
        future liable for the performance of the Obligation or waive the exercise
        of any
        Remedy or option. Lender may exercise any of the foregoing rights without
        notice, without regard to the amount of any consideration given, without
        affecting the priority of the Loan Documents, without releasing any entity
        not
        specifically released from its obligations under the Loan Documents, without
        releasing any guarantor(s) or surety(ies) of the Obligations, without effecting
        a novation of the Loan Documents and, with respect to a waiver, without waiving
        future performance of the Obligation or exercise of the Remedy
        waived.

       

      Section
        18.8  Service
        of Process.
        Borrower irrevocably consents to service of process by registered or certified
        mail, postage prepaid, return receipt requested, to Borrower at its address
        set
        forth in the Article entitled “Notices”.

       

      Section
        18.9  Entire
        Agreement.
        Oral
        agreements or commitments between Borrower and Lender to lend money, to extend
        credit or to forbear from enforcing repayment of a debt, including promises
        to
        extend or renew the debt, are not enforceable. Any agreements among Borrower,
        Lender and Trustee relating to the Loan are contained in the Loan Documents,
        which contain the complete and exclusive statement of the agreements among
        Borrower, Lender and Trustee, except as Borrower, Lender and, if applicable,
        Trustee may later agree in writing to amend the Loan Documents. The language
        of
        each Loan Document will be construed as a whole according to its fair meaning
        and will not be construed against the party by or for whom it was
        drafted.

       

      
        
          
          

        

        
          45

          
            

          

        

        
          
          

        

      

      Section
        18.10  No
        Oral Amendment.
        The
        Loan Documents may not be amended, waived or terminated orally or by any
        act or
        omission made individually by Borrower, Lender or Trustee but may be amended,
        waived or terminated only by a written document signed by the party against
        which enforcement of the amendment, waiver or termination is
        sought.

       

      Section
        18.11  Lost
        or Destroyed Note.
        If the
        Note is lost, mutilated, destroyed or stolen, Borrower will deliver to Lender
        a
        new, substitute note containing the same provisions as the Note, provided
        that
        Borrower is furnished with reasonably satisfactory evidence of the loss,
        mutilation, destruction or theft of the Note.

       

      Section
        18.12  Covenants
        Run with the Land.
        Subject
        to the restrictions on transfer contained in the Article entitled “TRANSFERS,
        LIENS AND ENCUMBRANCES”,
        all of
        the covenants of this Deed of Trust and the Assignment run with the Land,
        will
        bind all parties hereto and all tenants and subtenants of the Land or the
        Improvements and their respective heirs, executors, administrators, successors
        and assigns, and all occupants and subsequent owners of the Property, and
        will
        inure to the benefit of Lender and all subsequent holders of the Note and
        this
        Deed of Trust.

       

      Section
        18.13  Time
        of the Essence.
        Time is
        of the essence with respect to Borrower’s payment and performance of the
        Obligations.

       

      Section
        18.14  Subrogation.
        If the
        Principal or any other amount advanced by Lender is used directly or indirectly
        to pay off, discharge or satisfy all or any part of an encumbrance affecting
        the
        Property, then Lender is subrogated to the encumbrance and to any security
        held
        by the holder of the encumbrance, all of which will continue in full force
        and
        effect in favor of Lender as additional security for the
        Obligations.

       

      Section
        18.15  Joint
        and Several Liability.
        If
        Borrower consists of more than one person or entity, the obligations and
        liabilities of each such person or entity under this Deed of Trust are joint
        and
        several.

       

      Section
        18.16  Successors
        and Assigns.
        The
        Loan Documents bind the parties to the Loan Documents and their respective
        successors, assigns, heirs, administrators, executors, agents and
        representatives and inure to the benefit of Lender and its successors, assigns,
        heirs, administrators, executors, agents and representatives and to the extent
        applicable inure to the benefit of Trustee and its successors, assigns, heirs,
        administrators, executors, agents and representatives.

       

      Section
        18.17  Duplicates
        and Counterparts.
        Duplicate counterparts of any of the Loan Documents, other than the Note,
        may be
        executed and together will constitute a single original document.

       

      
        
          
          

        

        
          46

          
            

          

        

        
          
          

        

      

      ARTICLE
        XIX 

       

      TRUSTEE
        PROVISIONS

       

      Section
        19.1  Acceptance
        of Trust.

       

      (a)  Lender
        may from time to time unilaterally substitute a successor to Trustee pursuant
        to
        a recordable instrument that complies with Law for substitution of Trustees.
        The
        recorded substitution will be conclusive proof of proper substitution of
        trustee
        who will, without conveyance from predecessor trustee, succeed to all of
        the
        predecessor trustee’s title, estate, rights, powers and duties.

       

      (b)  Trustee
        may resign by an instrument in writing addressed to Lender, or Trustee may
        be
        removed at any time with or without cause by an instrument in writing executed
        by Lender. In case of the death, resignation, removal or disqualification
        of
        Trustee or if for any reason Lender shall deem it desirable to appoint a
        substitute or successor Trustee to act instead of the herein named Trustee
        or
        any substitute or successor Trustee, then Lender shall have the right and
        is
        hereby authorized and empowered to appoint a successor Trustee, or a substitute
        Trustee, without formality other than appointment and designation in writing
        executed by Lender and the authority hereby conferred shall extend to the
        appointment of other successor and substitute Trustees successively until
        the
        Debt has been paid in full or until the Property is sold hereunder. Such
        appointment and designation by Lender shall be full evidence of the right
        and
        authority to make the same and of all facts therein recited. If Lender is
        a
        banking association or corporation and such appointment is executed in its
        behalf by an officer of such banking association or corporation, such
        appointment shall be conclusively presumed to be executed with authority
        and
        shall be valid and sufficient without proof of any action by the board of
        directors or any superior officer of the association or corporation. Upon
        the
        making of any such appointment and designation, all of the estate and title
        of
        Trustee in the Property shall vest in the named successor or substitute Trustee
        and he shall thereupon succeed to and shall hold, possess and execute all
        the
        rights, powers, privileges, immunities and duties herein conferred upon Trustee;
        but nevertheless, upon the written request of Lender or of the successor
        or
        substitute Trustee, Trustee ceasing to act shall execute and deliver an
        instrument transferring to such successor or substitute Trustee all of the
        estate and title in the Property of Trustee so ceasing to act, together with
        all
        the rights, powers, privileges, immunities and duties herein conferred upon
        Trustee, and shall duly assign, transfer and deliver any of the properties
        and
        moneys held by said Trustee hereunder to said successor or substitute Trustee.
        All references herein to Trustee shall be deemed to refer to Trustee (including
        any successor or substitute appointed and designated as herein provided)
        from
        time to time acting hereunder. Borrower hereby ratifies and confirms any
        and all
        acts which the herein named Trustee or his successor or successors, substitute
        or substitutes, in this trust, shall do lawfully by virtue hereof.

       

      (c)  TRUSTEE
        SHALL NOT BE LIABLE FOR ANY ERROR OF JUDGMENT OR ACT DONE BY TRUSTEE IN GOOD
        FAITH, OR BE OTHERWISE RESPONSIBLE OR ACCOUNTABLE UNDER ANY CIRCUMSTANCES
        

       

      
        
          
          

        

        
          47

          
            

          

        

        
          
          

        

      

      WHATSOEVER
        (INCLUDING, WITHOUT LIMITATION, TRUSTEE’S NEGLIGENCE), EXCEPT FOR TRUSTEE’S
        GROSS NEGLIGENCE OR WILLFUL MISCONDUCT. Trustee shall have the right to rely
        on
        any instrument, document or signature authorizing or supporting any action
        taken
        or proposed to be taken by him hereunder, believed by him in good faith to
        be
        genuine. All moneys received by Trustee shall, until used or applied as herein
        provided, be held in trust for the purposes for which they were received,
        but
        need not be segregated in any manner from any other moneys (except to the
        extent
        required by law), and Trustee shall be under no liability for interest on
        any
        moneys received by him hereunder.

       

      ARTICLE
        XX 

       

      INDEMNIFICATION

       

      Section
        20.1  Indemnity.
        BORROWER SHALL INDEMNIFY, DEFEND, PROTECT AND HOLD HARMLESS LENDER AND TRUSTEE,
        THEIR RESPECTIVE PARENTS, SUBSIDIARIES, DIRECTORS, OFFICERS, EMPLOYEES,
        REPRESENTATIVES, AGENTS, SUCCESSORS, AND ASSIGNS FROM AND AGAINST ANY AND
        ALL
        LIABILITY, DAMAGE, LOSS, COST, OR EXPENSE (INCLUDING, WITHOUT LIMITATION,
        ATTORNEYS’ FEES AND EXPENSES), IN CONNECTION WITH ANY ACTION, PROCEEDING, CLAIM
        OR DISPUTE INCURRED OR SUFFERED BY THE FOREGOING PARTIES SO INDEMNIFIED,
        WHETHER
        VOLUNTARILY OR INVOLUNTARILY INCURRED OR SUFFERED (BUT NOT TO THE EXTENT
        SUFFERED OR INCURRED AS THE RESULT OF A BREACH OF THE PROVISIONS OF THIS
        DEED OF
        TRUST BY THE PARTY ASSERTING INDEMNIFICATION), IN RESPECT OF THE
        FOLLOWING:

       

      (a)  ANY
        LITIGATION CONCERNING THIS DEED OF TRUST, THE OTHER LOAN DOCUMENTS OR THE
        PROPERTY, OR ANY INTEREST OF BORROWER OR LENDER THEREIN, OR THE RIGHT OF
        OCCUPANCY THEREOF BY BORROWER OR LENDER, WHETHER OR NOT ANY SUCH LITIGATION
        IS
        PROSECUTED TO A FINAL, NON-APPEALABLE JUDGMENT;

       

      (b)  ANY
        DISPUTE, INCLUDING DISPUTES AS TO THE DISBURSEMENT OF PROCEEDS OF THE NOTE
        NOT
        YET DISBURSED, AMONG OR BETWEEN ANY OF THE CONSTITUENT PARTIES OR OTHER PARTNERS
        OR VENTURERS OF BORROWER IF BORROWER IS A GENERAL OR LIMITED PARTNERSHIP,
        OR
        AMONG OR BETWEEN ANY EMPLOYEES, OFFICERS, DIRECTORS, SHAREHOLDERS, MEMBERS
        OR
        MANAGERS OF BORROWER IF BORROWER IS A CORPORATION OR LIMITED LIABILITY COMPANY,
        OR AMONG OR BETWEEN ANY MEMBERS, TRUSTEES OR OTHER RESPONSIBLE PARTIES IF
        BORROWER IS AN ASSOCIATION, TRUST OR OTHER ENTITY;

       

      (c)  ANY
        ACTION TAKEN OR NOT TAKEN BY LENDER OR TRUSTEE WHICH IS ALLOWED OR PERMITTED
        UNDER THIS DEED OF TRUST OR ANY OF THE OTHER LOAN DOCUMENTS RELATING TO
        BORROWER, THE PROPERTY, ANY CONSTITUENT PARTIES OR OTHERWISE IN CONNECTION
        WITH
        THE LOAN DOCUMENTS, INCLUDING WITHOUT LIMITATION, THE 

       

      
        
          
          

        

        
          48

          
            

          

        

        
          
          

        

      

       

      PROTECTION
        OR ENFORCEMENT OF ANY LIEN, SECURITY INTEREST OR OTHER RIGHT, REMEDY OR RECOURSE
        CREATED OR AFFORDED BY THIS DEED OF TRUST OR THE OTHER LOAN DOCUMENTS;
        AND

       

      (d)  ANY
        ACTION BROUGHT BY LENDER OR TRUSTEE AGAINST BORROWER UNDER THIS DEED OF TRUST
        OR
        THE OTHER LOAN DOCUMENTS AFTER AN EVENT OF DEFAULT, WHETHER OR NOT SUCH ACTION
        IS PROSECUTED TO A FINAL, NON-APPEALABLE JUDGMENT.

       

      LENDER
        AND/OR TRUSTEE MAY EMPLOY AN ATTORNEY OR ATTORNEYS TO PROTEST OR ENFORCE
        ITS
        RIGHTS, REMEDIES AND RECOURSES UNDER THIS DEED OF TRUST AND THE OTHER LOAN
        DOCUMENTS, AND TO ADVISE AND DEFEND LENDER AND/OR TRUSTEE WITH RESPECT TO
        ANY
        SUCH ACTIONS AND OTHER MATTERS. BORROWER SHALL REIMBURSE LENDER AND/OR TRUSTEE
        FOR THEIR RESPECTIVE ATTORNEYS’ FEES AND EXPENSES (INCLUDING EXPENSES AND COSTS
        FOR EXPERTS) IMMEDIATELY UPON RECEIPT OF A WRITTEN DEMAND THEREFOR (TOGETHER
        WITH REASONABLE SUPPORTING DOCUMENTATION), WHETHER ON A MONTHLY OR OTHER
        TIME
        INTERVAL, AND WHETHER OR NOT AN ACTION IS ACTUALLY COMMENCED OR CONCLUDED.
        ALL
        OTHER REIMBURSEMENT AND INDEMNITY OBLIGATIONS HEREUNDER SHALL BECOME DUE
        AND
        PAYABLE WHEN ACTUALLY INCURRED BY LENDER AND/OR TRUSTEE. ANY PAYMENTS NOT
        MADE
        WITHIN FIVE (5) DAYS AFTER WRITTEN DEMAND THEREFOR SHALL BEAR INTEREST AT
        THE
        DEFAULT INTEREST RATE FROM THE DATE OF SUCH DEMAND UNTIL FULLY PAID. THE
        PROVISIONS OF THIS SECTION 20.1 SHALL SURVIVE REPAYMENT OF THE DEBT AND
        PERFORMANCE OF THE OBLIGATIONS, THE RELEASE OF THE LIEN OF THIS DEED OF TRUST,
        ANY FORECLOSURE (OR ACTION IN LIEU OF FORECLOSURE), THE TRANSFER BY BORROWER
        OF
        ANY OR ALL OF ITS RIGHT, TITLE AND INTEREST IN OR TO THE PROPERTY AND THE
        EXERCISE BY LENDER OF ANY AND ALL REMEDIES SET FORTH HEREIN OR IN THE LOAN
        DOCUMENTS. Notwithstanding
        anything to the contrary contained herein or in any other Loan Document,
        in no
        event shall any indemnification of Lender or the other Indemnified Parties
        be
        applicable to any loss that is the result of the gross negligence or willful
        misconduct of Lender or any other indemnified party or that is incurred solely
        as a result of acts, omissions, events, facts or circumstances first arising
        or
        occurring after the date on which the lien of the Deed of Trust is fully
        and
        finally foreclosed or a conveyance by deed in lieu of foreclosure is fully
        and
        finally effective and possession of the Property has been given to the purchaser
        or grantee free of occupancy, claims of occupancy or redemption by Borrower,
        except to the extent such acts, omissions, events, facts or circumstances
        were
        caused in whole or in part by Borrower or any Borrower Party.

       


      
        
           

          
          

        

        
          49

          
            

          

        

        
          
          

        

      

      ARTICLE
        XXI 

       

      ADDITIONAL
        PROVISIONS PERTAINING TO STATE LAWS

       

      IN
        WITNESS WHEREOF, Borrower has executed and delivered this Deed of Trust as
        of
        the date first set forth above.

       

      ESCARPMENT
        VILLAGE, L.P., a Texas limited partnership

      


      By: Escarpment
        Village Management, L.L.C., a Texas

      limited
        liability company, General Partner

      


      By: Circle
        C
        Land, L.P., a Texas limited partnership,

      Manager

      


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

      liability
        company, its general partner

      


      By: Stratus
        Properties Inc., a Delaware

      corporation,
        its Manager

      


      


      By:
        /s/ John E. Baker    

      John
        E.
        Baker

      Senior
        Vice President

      


      



      
        
           

          
          

        

        
          50

          
            

          

        

        
          
          

        

      


      


      STATE
        OF
        TEXAS      §

                                              
        §

      COUNTY
        OF
        TRAVIS §

      


      The
        foregoing instrument was acknowledged before me this 28th day of June, 2006
        by
        John E. Baker, Senior Vice President of Stratus Properties Inc., as Manager
        of
        Circle C GP, L.L.C., a Delaware limited liability company, general partner
        of
        Circle C Land, L.P., a Texas limited partnership, Manager of Escarpment Village
        Management, L.L.C., a Texas limited liability company, general partner of
        Escarpment Village, L.P., a Texas limited partnership, on behalf of such
        limited
        liability companies, and limited partnerships.

      


      


                                  /s/
        Carol
        Fahs

      Notary
        Public in and for the State of Texas

      


      


       


      
        
          
             

          

          
          

        

        
          51

          
            

          

        

        
          
          

          
          

        

      



      Exhibit
        A

       

      LEGAL
        DESCRIPTION

      


      


      
        
          
            Exhibit
              A

          

          
          

        

        
          
          

          
            

          

        

        
          
          

          
          

        

      



      Exhibit
        B

       

      DEFINITIONS

       

      “Acceleration”
is
        defined in Section 14.2(a)(i).

       

      “Accumulations”
is
        defined in Section 2.1(xii).

       

      “Accumulations
        Depositary”
is
        defined in Section 6.2(a).

       

      “Additional
        Funds”
is
        defined in Section 7.4(v).

       

      “Annual
        Financial Statement”
is
        defined in Section 10.1(a).

       

      “Assessments”
is
        defined as all assessments now or hereafter levied, assessed or imposed against
        the Property.

       

      “Assignment”
is
        defined as the Assignment of Leases and Rents dated of even date with this
        Deed
        of Trust made by Borrower for the benefit of Lender.

       

      “Bankruptcy
        Code”
means
        Title 11 of the United States Code.

       

      “Borrower”
is
        defined in the introductory paragraph.

       

      “Budget”
is
        defined in Section 10.2.

       

      “Business
        Days”
is
        defined as any day on which commercial banks are not authorized or required
        by
        Law to close in New York, New York.

       

      “Casualty”
is
        defined as damage to or destruction of the Property by fire or other
        casualty.

       

      “Code”
is
        defined as the Internal Revenue Code of 1986 and the regulations promulgated
        thereunder.

       

      “Collateral”
is
        defined as any part of the Property which constitutes personal
        property.

       

      “Condemnation”
is
        defined as the permanent or temporary taking of all or any portion of the
        Property, or any interest therein or right accruing thereto, by the exercise
        of
        the right of eminent domain (including any transfer in lieu of or in
        anticipation of the exercise of the right), inverse condemnation or any similar
        injury or damage to or decrease in the value of the Property, including
        severance and change in the grade of any streets and a Condemnation will
        be
        deemed to have occurred on the date title to the property taken passes or
        if the
        Condemnation is temporary, on the date Borrower no longer has use of the
        affected property.

       

      “Condemnation
        Awards”
is
        defined in Section 2.1(viii).

       

      “Condemnation
        Proceeding”
is
        defined as a Proceeding that could result in a Condemnation.

       

      
        
          
          

        

        
          B-1

          
            

          

        

        
          
          

        

      

      “CPA”
is
        defined as an independent certified public accountant satisfactory to
        Lender.

       

      “Debt”
is
        defined in Section 3.1.

       

      “Debt
        Coverage Ratio”
shall
        have the meaning assigned to such term in the Assignment.

       

      “Debt
        Service Payments”
is
        defined as the monthly installments of principal and interest payable by
        Borrower to Lender as set forth in the Note.

       

      “Deed
        of Trust”
is
        defined as this Deed of Trust, Assignment of Leases and Rents, Security
        Agreement and Fixture Filing.

       

      “Default
        Interest Rate”
is
        defined as the lower of 10.5% per annum or the Maximum Interest Rate, if
        any.

       

      “Destruction
        Event”
is
        defined in Section 7.4.

       

      “Environmental
        Activity”
is
        defined as any actual, suspected or threatened abatement, cleanup, disposal,
        generation, handling, manufacture, possession, release, remediation, removal,
        storage, transportation, treatment or use of any Hazardous Material. The
        actual,
        suspected or threatened presence of any Hazardous Material, or the actual,
        suspected or threatened noncompliance with any Environmental Laws, will be
        deemed Environmental Activity.

       

      “Environmental
        Laws”
is
        defined as all Laws pertaining to health, safety, protection of the environment,
        natural resources, conservation, habitat management and preservation, endangered
        species, solid waste disposal, wildlife, waste management, Environmental
        Activities and pollution.

       

      “Environmental
        Report”
is
        defined as the report prepared by _______________ dated __________________,
        as
        amended.

       

      “ERISA”
is
        defined in Section 8.3(a).

       

      “Event
        of Default”
is
        defined in Section 14.1.

       

      “Executive
        Order”
is
        defined in Section 8.4.

       

      “Existing
        General Partners”
is
        Managment.

       

      “Existing
        Limited Partners”
is
        defined in Section 12.1(b).

       

      “Expenses”
is
        defined in Section 11.1(a).

       

      “Financial
        Books and Records”
is
        defined as detailed accounts of the income and expenses of the Property and
        of
        Borrower and all other data, records and information that either are
        specifically referred to in the Article entitled “FINANCIAL
        REPORTING”
or
        are
        necessary to the preparation of any of the statements, reports or certificates
        required under such Article and 

       

      
        
          
          

        

        
          B-2

          
            

          

        

        
          
          

        

      

       

      includes
        all supporting schedules prepared or used by the CPA in auditing the Annual
        Financial Statement or in issuing its opinion.

       

      “Fiscal
        Year”
is
        defined as any calendar year or partial calendar year during the
        Term.

       

      “Fixed
        Interest Rate”
is
        defined as 5.5% per annum.

       

      “Fixtures”
is
        defined as all of the Property that constitutes “fixtures” as defined in the
        Uniform Commercial Code.

       

      “Government”
is
        defined as any federal, state or municipal governmental or quasi-governmental
        authority including any executive, legislative or judicial branch, division
        and
        any subdivision or agency of any of them and any entity to which any of them
        has
        delegated authority.

       

      “Hazardous
        Materials”
is
        defined as (i) any by-product, chemical, compound, contaminant, pollutant,
        product, substance, waste or other material that is hazardous or toxic, (ii)
        any
        by-product, chemical, compound, contaminant, pollutant, product, substance,
        waste or other material, the abatement, cleanup, discharge, disposal, emission,
        exposure to, generation, handling, manufacture, possession, presence, release,
        removal, remediation, storage, transportation, treatment or use of which
        is
        controlled, prohibited or regulated by any Environmental Laws, including
        asbestos, petroleum, petroleum products and polychlorinated biphenyls and
        (iii)
        mold, mildew, fungi, bacteria, viruses and other microbial matter at the
        Property in quantities that are hazardous to human health.

       

      “Imposition
        Penalty Date”
is
        defined in Section 6.1(a).

       

      “Impositions”
is
        defined as all Taxes, Assessments, ground rent, if any, water and sewer rents,
        fees and charges, levies, permit, inspection and license fees and other dues,
        charges or impositions, including all charges and license fees for the use
        of
        vaults, chutes and similar areas adjoining the Land, maintenance and similar
        charges and charges for utility services, in each instance whether now or
        in the
        future, directly or indirectly, levied, assessed or imposed on the Property
        or
        Borrower and whether levied, assessed or imposed as excise, privilege or
        property taxes.

       

      “Improvements”
is
        defined in Section 2.1(ii).

       

      “Insurance
        Premiums”
is
        defined as all present and future premiums and other charges due and payable
        on
        policies of fire, rental value and other insurance covering the Property
        and
        required pursuant to the provisions of this Deed of Trust.

       

      “Insurance
        Proceeds”
is
        defined in Section 2.1(ix).

       

      “Insurers”
is
        defined in Section 7.1(c).

       

      “Institutional
        Investor”
is
        defined as any bank, savings institution, charitable foundation, insurance
        company, real estate investment trust, pension fund or investment advisor
        registered under the Investment Advisors Act of 1940, as amended, and acting
        as
        trustee or agent.

       

      
        
          
          

        

        
          B-3

          
            

          

        

        
          
          

        

      

      “Interest”
is
        defined as the fixed interest payable under the Note at the Fixed Interest
        Rate
        and any other sums which are deemed to be interest under Law.

       

      “Land”
is
        defined in the Recitals.

       

      “Late
        Charge”
is
        defined in the Note.

       

      “Law”
is
        defined as all present and future codes, constitutions, cases, opinions,
        rules,
        manuals, regulations, determinations, laws, orders, ordinances, requirements
        and
        statutes, as amended, of any Government that affect or that may be interpreted
        to affect the Property, Borrower or the Loan, including amendments and all
        guidance documents and publications promulgated thereunder.

       

      “Leases”
is
        defined as all present and future leases, subleases, licenses and other
        agreements for the use and occupancy of the Land and Improvements, any related
        guarantees and including any use and occupancy arrangements created pursuant
        to
        Section 365 (h) of the Bankruptcy Code or otherwise in connection with the
        commencement or continuation of any bankruptcy, reorganization, arrangement,
        insolvency, dissolution, receivership or similar Proceedings, or any assignment
        for the benefit of creditors, in respect of any tenant or other occupant
        of the
        Land and Improvements.

       

      “Lender”
is
        defined in the introductory paragraph.

       

      “Loan”
is
        defined in the Recitals.

       

      “Loan
        Documents”
is
        defined as the Note, this Deed of Trust, the Assignment and all documents
        now or
        hereafter executed by Borrower or held by Lender or Trustee relating to the
        Loan, including all amendments but excluding any indemnities or guaranties
        delivered in connection with the Loan.

       

      “Material
        Environmental Contamination”
is
        defined as contamination of the Property with Hazardous Materials (i) that
        constitutes a violation of one or more Environmental Laws; (ii) for which
        there
        is a significant possibility that remediation will be required under
        Environmental Laws; (iii) that results in a material risk of liability or
        expense to Lender; or (iv) that diminishes the value of the
        Property.

       

      “Maturity
        Date”
is
        defined in the Recitals.

       

      “Maximum
        Interest Rate”
is
        defined as the maximum rate of interest, if any, permitted by Law as of the
        date
        of this Deed of Trust to be charged with respect to the Loan.

       

      “Note”
is
        defined in the Recitals.

       

      “Note
        Payments”
is
        defined in the Note.

       

      “Notices”
is
        defined in Section 17.1.

       

      “Obligations”
is
        defined in Section 3.1.

       

      
        
          
          

        

        
          B-4

          
            

          

        

        
          
          

        

      

      “Permitted
        Exceptions”
is
        defined as the matters shown in Schedule B, Part 1 and 2 of the title insurance
        policy insuring the lien of this Deed of Trust.

       

      “Permitted
        Transfers”
is
        defined in Section 12.2(b).

       

      “Permitted
        Use”
is
        defined as use as a first-class shopping center and uses incidentally and
        directly related to such use.

       

      “Personal
        Property”
is
        defined as the Property, other than Fixtures, the Land or the
        Improvements.

       

      “Policies”
is
        defined in Section 7.1(b).

       

      “Prepayment
        Premium”
is
        defined in the Note.

       

      “Principal”
is
        defined in the Recitals.

       

      “Proceeding”
is
        defined as a pending or threatened action, claim or litigation before a legal,
        equitable or administrative tribunal having proper jurisdiction.

       

      “Proceeds”
is
        defined in Section 7.2(c).

       

      “Prohibited
        Person”
is
        defined in Section 8.4.

       

      “Property”
is
        defined in Section 2.1.

       

      “Property
        Documents”
is
        defined in Section 2.1(v).

       

      “Receiver”
is
        defined as a receiver, custodian, trustee, liquidator or conservator of the
        Property.

       

      “Releasing
        Escrow”
is
        defined as the Tenant Improvement Pledge and Security Agreement between
        Borrower, Lender and Holliday Fenoglio Fowler, L.P. dated of even date
        herein.

       

      “Remedies”
is
        defined in Section 14.2(a).

       

      “Rents”
is
        defined as all present and future rents, prepaid rents, percentage,
        participation or contingent rents, issues, profits, proceeds, parking fees,
        revenues and other consideration accruing under or in connection with the
        Leases
        or otherwise derived from the use and occupancy of the Land or the Improvements,
        including tenant contributions to expenses, security deposits and royalties,
        if
        any, all other fees or payments paid to or for the benefit of Borrower,
        including liquidated damages after a default under a Lease, any termination,
        cancellation, modification or other fee or premium payable by a tenant for
        any
        reason, the proceeds of any rental insurance and any payments received pursuant
        to Sections 502(b) or 365 of the Bankruptcy Code or otherwise in connection
        with
        the commencement or continuance of any bankruptcy, reorganization, arrangement,
        insolvency, dissolution, receivership or similar proceedings, or any assignment
        for the benefit of creditors, in respect of any tenant or other occupant
        of the
        Land or the Improvements and all claims as a creditor in connection with
        any of
        the foregoing.

       

      
        
          
          

        

        
          B-5

          
            

          

        

        
          
          

        

      

      “Restoration”
is
        defined as the restoration of the Property after a Destruction Event as nearly
        as possible to its condition immediately prior to the Destruction Event,
        in
        accordance with the plans and specifications, in a first-class workmanlike
        manner using materials substantially equivalent in quality and character
        to
        those used for the original improvements, in accordance with Law and free
        and
        clear of all liens, encumbrances or other charges other than this Deed of
        Trust
        and the Permitted Exceptions.

       

      “Restoration
        Completion Date”
is
        defined in Section 7.4(viii).

       

      “Restoration
        Funds”
is
        defined in Section 7.5(b).

       

      “Taxes”
is
        defined as all present and future real estate taxes or personal property
        taxes,
        if any, levied, assessed or imposed against the Property.

       

      “Term”
is
        defined as the scheduled term of this Deed of Trust commencing on the date
        Lender makes the first disbursement of the Loan and terminating on the Maturity
        Date.

       

      “Transfer”
is
        defined as any sale, grant, lease (other than bona fide third-party space
        leases
        with tenants), conveyance, assignment or other transfer of, or any encumbrance
        or pledge against, the Property, any interest in the Property, any interest
        of
        Borrower’s partners, members or principals in the Property, or any change in
        Borrower’s composition (except as permitted by this Deed of Trust), in each
        instance whether voluntary or involuntary, direct or indirect, by operation
        of
        law or otherwise and including the grant of an option or the execution of
        an
        agreement relating to any of the foregoing matters.

       

      “Uniform
        Commercial Code”
is
        defined as the Uniform Commercial Code as in effect from time to time in
        the
        jurisdiction where the Land is located or, to the extent required by the
        Uniform
        Commercial Code, where the Borrower is located, as applicable.

      

        
          
            
               

            

            
            

          

          
            B-6

            
              

            

          

          
            
            

            
            

          

        

Exhibit
        C

       

      RULES
        OF CONSTRUCTION

       

      (a)  References
        in any Loan Document to numbered Articles or Sections are references to the
        Articles and Sections of that Loan Document. References in any Loan Document
        to
        any numbered or lettered Exhibits or Schedules are references to the Exhibits
        or
        Schedules attached to that Loan Document, all of which are incorporated in
        and
        constitute a part of that Loan Document. Article, Section, Exhibit and Schedule
        captions used in any Loan Document are for reference only and do not describe
        or
        limit the substance, scope or intent of that Loan Document or the individual
        Articles, Sections, Exhibits or Schedules of that Loan Document.

       

      (b)  The
        terms
“include”, “including” and similar terms are construed as if followed by the
        phrase “without limitation”.

       

      (c)  The
        terms
“Land”, “Improvements”, “Fixtures and Personal Property”, “Condemnation Awards”,
“Insurance Proceeds” and “Property” are construed as if followed by the phrase
“or any part thereof”.

       

      (d)  Any
        agreement by or duty imposed on Borrower in any Loan Document to perform
        any
        obligation or to refrain from any act or omission constitutes a covenant
        running
        with the ownership or occupancy of the Land and the Improvements, which will
        bind all parties hereto and their respective successors and assigns, and
        all
        lessees, subtenants and assigns of same, and all occupants and subsequent
        owners
        of the Property, and will inure to the benefit of Lender and all subsequent
        holders of the Note and this Deed of Trust and includes a covenant by Borrower
        to cause its partners, members, principals, agents, representatives and
        employees to perform the obligation or to refrain from the act or omission
        in
        accordance with the Loan Documents. Any statement or disclosure contained
        in any
        Loan Document about facts or circumstances relating to the Property, Borrower
        or
        the Loan constitutes a representation and warranty by Borrower made as of
        the
        date of the Loan Document in which the statement or disclosure is
        contained.

       

      (e)  The
        term
“to Borrower’s knowledge” is construed as meaning to the best of Borrower’s
        knowledge after diligent inquiry.

       

      (f)  The
        singular of any word includes the plural and the plural includes the singular.
        The use of any gender includes all genders.

       

      (g)  The
        terms
“person”, “party” and “entity” include natural persons, firms, partnerships,
        limited liability companies and partnerships, corporations and any other
        public
        or private legal entity.

       

      (h)  The
        term
“provisions” includes terms, covenants, conditions, agreements and
        requirements.

       

      
        
          
          

        

        
          C-1

          
            

          

        

        
          
          

        

      

      (i)  The
        term
“amend” includes modify, supplement, renew, extend, replace or substitute and
        the term “amendment” includes modification, supplement, renewal, extension,
        replacement and substitution.

       

      (j)  Reference
        to any specific Law or to any document or agreement, including the Note,
        this
        Deed of Trust, any of the other Loan Documents, the Leases and the Property
        Documents includes any future amendments to the Law, document or agreement,
        as
        the case may be.

       

      (k)  No
        inference in favor of or against a party with respect to any provision in
        any
        Loan Document may be drawn from the fact that the party drafted the Loan
        Document.

       

      (l)  The
        term
“certificate” means the sworn, notarized statement of the entity giving the
        certificate, made by a duly authorized person satisfactory to Lender affirming
        the truth and accuracy of every statement in the certificate. Any document
        that
        is “certified” means the document has been appended to a certificate of the
        entity certifying the document that affirms the truth and accuracy of everything
        in the document being certified. In all instances the entity issuing a
        certificate must be satisfactory to Lender.

       

      (m)  Any
        appointment of Lender as Borrower’s attorney-in-fact is irrevocable and coupled
        with an interest. Lender may appoint a substitute attorney-in-fact. Borrower
        ratifies all actions taken by the attorney-in-fact but, nevertheless, if
        Lender
        requests, Borrower will specifically ratify any action taken by the
        attorney-in-fact by executing and delivering to the attorney-in-fact or to
        any
        entity designated by the attorney-in-fact all documents necessary to effect
        the
        ratification.

       

      (n)  Any
        document, instrument or agreement to be delivered by Borrower will be in
        form
        and content satisfactory to Lender.

       

      (o)  All
        obligations, rights, remedies and waivers contained in the Loan Documents
        will
        be construed as being limited only to the extent required to be enforceable
        under the Law.

       

      (p)  The
        unmodified word “days” means calendar days.

       


      
        
          
             

          

          
          

        

        
          C-2

          
            

          

        

        
          
          

          
          

        

      



      Exhibit
        D

       

      PROPERTY
        DOCUMENTS

      


      


      
        
          
          

        

        
          D-1

          
            

          

        

        
          
          

        

      

    

    EXHIBIT
      D

     

    
      	1.  	
              Restrictive
                Covenants recorded in Volume 10602, Page 896, Volume 11999, Page
                11 of the
                Real Property Records and Master Declaration of Covenants, Conditions,
                Restrictions and Easements recorded as Document No. 2002151143, amended
                under Document No. 2003245641, Document No(s). 2002151145, 2002151988,
                2002151985 amended under Document No. 2004236025, 2002151984 amended
                under
                Document No. 2004135909, 2004236024 and 2002151986, amended under
                Document
                No. 2003152218 and 2004135908; and Document Nos. 2004030367, 2004122661,
                2004191682, 2004213360, 2004224634, 2004235043, 2005024751, 2005054995,
                2005072058, 2005083877, 2005086875, 2006042570, 2005054992 and 2006054993
                and plat(s) recorded under Document No(s). 200400299 and 200600023
                of the
                Official Public Records, all of Travis County,
                Texas.

            


    

     

    
      	2.  	
              Pipeline
                easement granted to Shell Pipe Line Corporation, by instrument dated
                November 27, 1928, recorded in Volume 430, Page 40, Volume 430, Page
                151
                of the Deed Records of Travis County, Texas. Said easement assigned
                by
                instruments recorded in Volume 1162, Page 249, Volume 1359, Page
                261,
                Volume 3750, Page 1563 and Volume 3979, Page 2019 of the Deed Records
                and
                under Document No(s). 2002146654, 2003153649 and 2003219097 of the
                Official Public Records, all of Travis County, Texas, and partially
                modified by Volume 5307, Page 1339 of the Deed Records of Travis
                County,
                Texas. Additional easements for risers and valves granted to Phillips
                Pipe
                Line Company by instrument recorded in Volume 10059, Page 527 of
                the Real
                Property Records of Travis County, Texas. Said easement further affected
                by Partial Release of Easement recorded in Volume 13105, Page 376
                of the
                Real Property Records and of Travis County, Texas, including but
                not
                limited to 5 foot temporary workspace easement, and Amendment to
                Partial
                Release of Easement recorded under Document No. 2000150667 of the
                Official
                Public Records of Travis County, Texas. Further affected by Conveyance,
                Assignment and Bill of Sale recorded under Document No(s). 2000137109,
                2000137110, 2000137111, 2000137112 and 2000137113 of the Official
                Public
                Records of Travis County, Texas. Easement further affected by Encroachment
                Agreement recorded under Document No(s). 2004199918 and 2004224634
                of the
                Official Public Records of Travis County, Texas and Assignment of
                Easements recorded under Document No. 2004224024 of the Official
                Public
                Records of Travis County, Texas, additionally shown on plats recorded
                under Document No(s). 200400299 and 200600023 of the Official Public
                Records of Travis County, Texas, and as shown on survey dated June
                13,
                2006, prepared by William H. Ramsey, R.P.L.S. No. 4532. (ALL
                LOTS)

            


    

     

    
      	3.  	
              Pipeline
                easement granted to Humble Pipe Line Company, by instrument dated
                December
                16, 1949, recorded in Volume 994, Page 397 of the Deed Records of
                Travis
                County, Texas and amended and defined in Volume 9684, Page 844 of
                the Real
                Property Records of Travis County, Texas, and assigned in Volume
                13051,
                Page 141, corrected by Volume 13202, Page 76 of the Real Property
                Records
                of Travis County, Texas. Easement further affected by Encroachment
                Agreement recorded under Document No. 2004213360 of the Official
                Public
                Records of Travis
                County, Texas, additionally shown on plats recorded under Document
                No(s).
                200400299 and 200600023 of the Official Public Records of Travis
                County,
                Texas, and as shown on survey dated June 13, 2006, prepared by William
                H.
                Ramsey, R.P.L.S. No. 4532. (ALL
                LOTS)

            


    

     

    
      	4.  	
              Conservation
                Easement to Restrict Impervious Cover between the City of Austin
                and
                Circle C Land Corp. dated August 15, 2002, recorded under Document
                No.
                2002151985, amended under Document No(s). 2004236025, 2005054992
                and
                2005054993 of the Official Public Records of Travis County, Texas.
                (ALL
                LOTS)

            


    

     

    
      	5.  	
              Development
                Agreement between the City of Austin and Circle C Land Corp. dated
                August
                15, 2002, recorded under Document No. 2002151984 amended under Document
                No(s). 2004135909, 2004236024, 2005054992 and 2005054993 of the Official
                Public Records of Travis County, Texas, including but not limited
                to
                Critical Environmental Features Setback. (ALL
                LOTS)

            


    

     

    
      	6.  	
              A
                9.783 acre water quality easement of various width across subject
                property, as shown by the Plat(s) recorded under Document No(s).
                200400299
                and 200600023 of the Official Public Records of Travis County, Texas,
                and
                as shown on survey dated June 13, 2006, prepared by William H. Ramsey,
                R.P.L.S. No. 4532. (LOT 1, BLOCK A)

            


    

     

    
      	7.  	
              A
                1.393 acre water quality easement of various width across subject
                property, as shown by the Plat(s) recorded under Document No(s).
                200400299
                and 200600023 of the Official Public Records of Travis County, Texas,
                and
                as shown on survey dated June 13, 2006, prepared by William H. Ramsey,
                R.P.L.S. No. 4532. (LOT 2, BLOCK A)

            


    

     

    
      	8.  	
              A
                0.394 acre water quality easement of varied width along the eastern
                portion of subject property, as shown by the Plat(s) recorded under
                Document No(s). 200400299 and 200600023 of the Official Public Records
                of
                Travis County, Texas, and as shown on survey dated June 13, 2006,
                prepared
                by William H. Ramsey, R.P.L.S. No. 4532. (LOT 3, BLOCK
                A)

            


    

     

    
      	9.  	
              A
                7.567 acre water quality easement of various width across northern
                portion
                of subject property, as shown by the Plat(s) recorded under Document
                No.
                200400299 of the Official Public Records of Travis County, Texas.
                (LOTS 1
                AND 6, BLOCK B)

            


    

     

    
      	10.  	
              The
                terms, conditions and stipulations set out in that certain Declaration
                of
                Easements and Restrictive Covenants Regarding the Maintenance of
                Water
                Quality Controls for Escarpment Village Development dated December
                13,
                2004, recorded under Document No. 2004235043 of the Official Public
                Records of Travis County, Texas. (ALL
                LOTS)

            


    

     

    
      	11.  	
              The
                terms, conditions and stipulations set out in that certain Declaration
                of
                Restrictive Covenants dated June 10, 2004, recorded under Document
                No.
                2005054995 of the Official Public Records of Travis County, Texas,
                including but not limited to building setback lines set forth herein,
                and
                as shown on survey dated June 13, 2006, prepared by William H. Ramsey,
                R.P.L.S. No. 4532. (ALL LOTS)

            


    

     

    
      	12.  	
              Terms,
                conditions and stipulations of that certain Edwards Aquifer Protection
                Plan approved August 27, 2004, evidenced by Affidavit recorded under
                Document No. 2005083668 of the Official Public Records of Travis
                County,
                Texas. (ALL LOTS)

            


    

     

    
      	13.  	
              The
                terms, conditions and stipulations set out in that certain Declaration
                Regarding Development Allocations dated March 23, 2005, recorded
                under
                Document No. 2005083877 of the Official Public Records of Travis
                County,
                Texas. (ALL LOTS)

            


    

     

    
      	14.  	
              The
                terms, conditions and stipulations set out in that certain Water
                Quality
                Easement dated September 9, 2005, recorded under Document No. 2005171427
                of the Official Public Records of Travis County, Texas, and as shown
                on
                survey dated June 13, 2006, prepared by William H. Ramsey, R.P.L.S.
                No.
                4532. (LOTS 1 AND 6, BLOCK B)

            


    

     

    
      	15.  	
              Terms,
                conditions and stipulations of that certain Edwards Aquifer Protection
                Plan approved February 23, 2006, evidenced by Affidavit recorded
                under
                Document No. 2006069610 of the Official Public Records of Travis
                County,
                Texas. (ALL LOTS)

            


    

     

    
      	16.  	
              Terms,
                conditions and stipulations of that certain Edwards Aquifer Protection
                Plan approved August 27, 2004, evidenced by Affidavit recorded under
                Document No. 2005083668 of the Official Public Records of Travis
                County,
                Texas. (ALL LOTS)