Document:

ex10_1.htm

Exhibit 10.1

PICO HOLDINGS, INC.

2005 Long-Term Incentive Plan

Grant of Restricted Stock Awards

	
Grantee:___________________

 
	
Date:__________________

Pursuant to Section 8 of the PICO Holdings, Inc. 2005 Long-Term Incentive Plan, (the “LTIP”), the Compensation Committee and the Board of Directors have granted you, as part of your Director’s compensation, the following Restricted Stock Award:

	
Number of Restricted Stock Awards in Grant:
	
__________________

 

	
Date of Grant:
	
__________________

 

	
Vesting Schedule:
	
__________________

 

This award is subject entirely to the terms and provisions of the 2005 Long-Term Incentive Plan.

	
 

__________________________________

James F. Mosier

General Counsel and Secretary

PICO Holdings, Inc.ex10-1.htm

    
      

    

     

     

    

    AMENDED
AND RESTATED

     

    CONSTRUCTION
LOAN AGREEMENT

     

    MADE
BY AND BETWEEN

     

    CJUF
II STRATUS BLOCK 21 LLC

    c/o

    Stratus
Properties Inc.

     

    98
San Jacinto, Suite 200

     

    Austin,
Texas 78701

     

    AND

     

    BEAL
BANK NEVADA, as Lender

    6000
Legacy Drive

    Plano,
Texas 75024

     

    Dated
as of October 21, 2009

     

    
 

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    TABLE OF
CONTENTS

    Page

    
      	
              Article 1
      INCORPORATION OF RECITALS AND EXHIBITS

            	
              2

            
	
              1.1           Incorporation
      of Recitals

            	
              2

            
	
              1.2           Incorporation
      of Exhibits

            	
              2

            
	
              Article 2
      DEFINITIONS

            	
              3

            
	
              2.1           Defined
      Terms

            	
              3

            
	
              2.2           Other
      Definitional Provisions

            	
              15

            
	
              Article 3
      BORROWER'S REPRESENTATIONS AND WARRANTIES

            	
              15

            
	
              3.1           Representations
      and Warranties

            	
              15

            
	
              3.2           Survival
      of Representations and Warranties

            	
              20

            
	
              Article 4
      LOAN AND LOAN DOCUMENTS

            	
              21

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

            	
              21

            
	
              4.2           Loan
      Documents

            	
              22

            
	
              4.3           Term
      of the Loan

            	
              23

            
	
              4.4           Prepayments

            	
              23

            
	
              4.5           Required
      Principal Payments

            	
              24

            
	
              4.6           Receipt
      of Payments

            	
              24

            
	
              4.7           Termination
      of Lender's Unfunded Commitment

            	
              24

            
	
              4.8           Lender's
      Inability to Fund

            	
              25

            
	
              Article 5
      INTEREST

            	
              25

            
	
              5.1           Interest
      Rate

            	
              25

            
	
              Article 6
      COSTS OF MAINTAINING LOAN

            	
              25

            
	
              6.1           Increased
      Costs and Capital Adequacy

            	
              25

            
	
              6.2           Borrower
      Withholding

            	
              26

            
	
              Article 7
      LOAN EXPENSE AND ADVANCES

            	
              26

            
	
              7.1           Loan
      and Administration Expenses

            	
              26

            
	
              7.2           Loan
      Fees

            	
              27

            
	
              7.3           Loan
      Administration Fees

            	
              27

            
	
              7.4           Reserved

            	
              27

            
	
              7.5           Lender's
      Attorneys' Fees and Disbursements

            	
              27

            
	
              7.6           Time
      of Payment of Fees and Expenses

            	
              27

            
	
              7.7           Expenses
      and Advances Secured by Loan Documents

            	
              28

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

            	
              28

            
	
              Article 8
      NON-CONSTRUCTION REQUIREMENTS PRECEDENT

            	
              28

            
	
              8.1           Non-Construction
      Conditions Precedent

            	
              28

            
	
              Article 9
      CONSTRUCTION REQUIREMENTS PRECEDENT

            	
              34

            
	
              9.1           Construction
      Documents Required as of Closing

            	
              34

            
	
              9.2           Construction
      Deliveries Required as of Full Loan Opening

            	
              36

            
	
              Article 10
      BUDGET, CONTINGENCY FUND AND CHANGE ORDERS

            	
              37

            
	
              10.1           Budget

            	
              37

            

    

    

    

    
      
        
           
(i)

        

        
           

          
            

          

        

        
           

        

      

    

    

    

    
      	
              10.2           Budget
      Line Items

            	
              37

            
	
              10.3           Owner's
      Contingency

            	
              39

            
	
              10.4           Optional
      Method for Payment of Interest / Additional Interest
    Reserve

            	
              39

            
	
              10.5           Change
      Orders

            	
              40

            
	
              Article 11
      SUFFICIENCY OF LOAN

            	
              40

            
	
              11.1           Loan
      In Balance

            	
              40

            
	
              Article 12
      CONSTRUCTION PAYOUT REQUIREMENTS

            	
              42

            
	
              12.1           Applicability
      of Sections

            	
              42

            
	
              12.2           Monthly
      Payouts

            	
              42

            
	
              12.3           Documents
      to be Furnished for Each Disbursement

            	
              43

            
	
              12.4           Retainages

            	
              45

            
	
              12.5           Disbursements
      for Materials Stored On-Site

            	
              45

            
	
              12.6           Disbursements
      for Off-site Materials

            	
              45

            
	
              12.7           Specific
      Limitation on Disbursements

            	
              46

            
	
              12.8           Disbursements
      Related to Commercial Space Leases

            	
              46

            
	
              Article 13
      FINAL DISBURSEMENT FOR CONSTRUCTION

            	
              47

            
	
              13.1           Final
      Disbursement for Construction

            	
              47

            
	
              Article 14
      SALE OF RESIDENTIAL UNITS

            	
              48

            
	
              14.1           Price
      List Schedule

            	
              48

            
	
              14.2           Sales
      Agreements

            	
              48

            
	
              14.3           Purchaser
      Deposits

            	
              49

            
	
              14.4           Residential
      Unit Sales

            	
              50

            
	
              14.5           Sales
      Operations and Seller's Obligations; Amendment and Termination of Sales
      Agreements

            	
              53

            
	
              14.6           Delivery
      of Sales Information and Documents

            	
              53

            
	
              14.7           Borrower's
      Acknowledgment Regarding Buyer Financing

            	
              54

            
	
              14.8           Condominium
      Regime

            	
              54

            
	
              14.9           Release
      of Residential Units

            	
              59

            
	
              14.10           Application
      of Sales Proceeds

            	
              60

            
	
              Article 15
      OTHER COVENANTS

            	
              60

            
	
              15.1           Borrower
      further covenants and agrees as follows:

            	
              60

            
	
              15.2           Single
      Purpose Entity Covenants

            	
              71

            
	
              15.3           Authorized
      Representative

            	
              73

            
	
              Article 16
      CASUALTIES AND CONDEMNATION

            	
              74

            
	
              16.1           Lender's
      Election to Apply Proceeds on Indebtedness

            	
              74

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

            	
              75

            
	
              Article 17
      ASSIGNMENTS BY LENDER AND BORROWER

            	
              75

            
	
              17.1           Assignments
      and Participations

            	
              75

            
	
              17.2           Prohibition
      of Assignments and Transfers by Borrower

            	
              75

            
	
              17.3           Prohibition
      of Transfers in Violation of ERISA

            	
              76

            
	
              17.4           Successors
      and Assigns

            	
              77

            
	
              Article 18
      TIME OF THE ESSENCE

            	
              77

            
	
              18.1           Time
      is of the Essence

            	
              77

            

    

    

    

    
      
        
          (ii) 

        

        
           

          
            

          

        

        
           

        

      

    

    

    

    
      	
              Article 19
      EVENTS OF DEFAULT

            	
              77

            
	
              19.1           Events
      of Default

            	
              77

            
	
              Article 20
      LENDER'S REMEDIES IN EVENT OF DEFAULT

            	
              80

            
	
              20.1           Remedies
      Conferred Upon Lender

            	
              80

            
	
              Article 21
      GENERAL PROVISIONS

            	
              81

            
	
              21.1           Captions

            	
              81

            
	
              21.2           Modification;
      Waiver

            	
              81

            
	
              21.3           Governing
      Law

            	
              81

            
	
              21.4           Acquiescence
      Not to Constitute Waiver of Lender's Requirements

            	
              81

            
	
              21.5           Disclaimer
      by Lender

            	
              82

            
	
              21.6           Partial
      Invalidity; Severability

            	
              82

            
	
              21.7           Definitions
      Include Amendments

            	
              83

            
	
              21.8           Execution
      in Counterparts

            	
              83

            
	
              21.9           Entire
      Agreement

            	
              83

            
	
              21.10           Waiver
      of Damages and Limitation of Liability

            	
              83

            
	
              21.11           Reserved

            	
              85

            
	
              21.12           Jurisdiction

            	
              85

            
	
              21.13           Set-Offs

            	
              85

            
	
              21.14           Binding
      Effect

            	
              86

            
	
              21.15           Waiver
      of Accord and Satisfaction

            	
              86

            
	
              Article
      22
      NOTICES

            	
              86

            
	
              Article 23
      WAIVER OF JURY TRIAL

            	
              88

            
	 
      	 
      

    

    

    

    

    
      
        
           
(iii)

        

        
           

          
            

          

        

        
           

        

      

    

     

    EXHIBITS TO LOAN AGREEMENT

      

    
      	 Exhibit
      A	 Legal
      Description of Land
	 Exhibit
      B	 Construction
      Schedule
	 Exhibit
      C	 Permitted
      Exceptions
	 Exhibit
      D	 Litigation
	 Exhibit
      E 	 Insurance
      Requirements
	 Exhibit
      F	 Architect's
      Certificate
	 Exhibit
      G	 Budget
	 Exhibit
      H	 Draw Request
      Form
	 Exhibit
      I 	 Approved Plans
      and Specifications and Approved Finish Standards
	 Exhibit
      J	 Subcontracts
	 Exhibit
      K	 Bailment
      Letter (Warehousemen)
	 Exhibit
      L 	 Bailment
      Letter (Other Than Warehousemen)
	 Exhibit
      M	 List of Sales
      Agreements
	 Exhibit
      M-1	 List of Sales
      Agreements Discrepancy Items
	 Exhibit
      M-2	 Price List
      Schedule
	 Exhibit
      N	 Required
      Changes to Condominium Documents
	 Exhibit
      O	 Approved Form
      of Sales Agreement
	 Exhibit
      P	 Materials
      Purchases Not Subject to Retainage
	 Exhibit
      Q	 Leasing
      Parameters and Allowable Tenant Improvements
	 Exhibit
      R	 List of Change
      Orders
	 Exhibit
      S	 Form of Fourth
      Estoppel and Agreement from City of Austin
	 Exhibit
      T	 Due Diligence
      materials provided to Lender

    

     

    
      
        (iv) 

      

      
         

        
          

        

      

      
         

      

    

    
 

    AMENDED
AND RESTATED

     

    CONSTRUCTION LOAN
AGREEMENT

    Project
Commonly Known as

    "W Hotel
and Residences"

    Block 21,
Austin, Texas

     

    THIS
AMENDED AND RESTATED CONSTRUCTION LOAN AGREEMENT ("Agreement") is made
as of October 21, 2009, by and between CJUF II STRATUS BLOCK 21 LLC, a Delaware
limited liability company ("Borrower"), and BEAL
BANK NEVADA, a Nevada thrift, its successors and assigns ("Lender").

     

    W I T N E S S E T
H:

     

    RECITALS

     

    A.           Borrower
is the owner in fee simple of an approximately 76,176 square foot parcel of land
commonly known as "Block 21," bounded by Second, Third, Guadalupe and Lavaca
Streets, City of Austin, County of Travis, State of Texas, and legally described
in Exhibit A
attached hereto (the "Land").  Borrower
proposes to construct on the Land a mixed use project to be known as the "W
Hotel and Residences," consisting of a building of thirty-six (36) stories (the
"Building") and
other facilities containing: (i) one hundred fifty-nine (159) residential
condominium units (each, a "Residential Unit") on
twenty (20) floors, from floor 18 through floor 37 of the Building, containing
at least 272,272 Saleable Square Feet (with each capitalized term used and not
defined in these Recitals being defined hereinbelow) of interior space and with
interior finished ceiling heights of at least ten (10) feet (outside of areas
containing mechanical runs), (ii) a "W" flagged hotel with two hundred
fifty-two (252) guest rooms, situated on ten (10) floors, from floor 6 through
floor 16 of the Building, to be furnished and managed pursuant to the Hotel
Operating Agreement (as hereinafter defined), and containing at least 100,408
square feet of interior room space and 88,212 square feet of hotel operating
space, collectively with, on floor 2 through floor 4 of the Building, 9,583
square feet of meeting space, a 8,060 square foot fitness facility, a 9,935
square foot pool and pool deck, and a business center (collectively, the "Hotel"),
(iii) on floor 1 through floor 3 of the Building, 18,341 net Rentable
Square Feet of retail space (the "Retail Space") and
restaurant space (provided that such restaurant space will not consist of more
than 15,900 net Rentable Square Feet exclusive of any outdoor space and Hotel
kitchen space) (the "Restaurant Space") and 37,382 net Rentable Square Feet of
office space (the "Office Space"),
(iv) a live performance venue, on the top three (3) floors of an attached
4-story structure, containing at least 86,750 square feet and a minimum capacity
of 2,480 people, with seating for approximately 2,160 people (the "Venue"),
(v) 10,995 square feet of storage space, and (vi) a three (3)-level
subterranean parking garage (the "Parking Garage"),
with a direct connection to elevators servicing the Residential Units, and
containing parking spaces for at least 480 automobiles (each, a "Parking Space"), of
which, 300 Parking Spaces shall be allocated for the Residential Units, and 122
Parking Spaces shall be allocated, collectively, for the Hotel, the Commercial
Space, and the Venue.  The Residential Units shall have a la carte
access to the Hotel amenities on a pay-by-use basis, as provided in the Hotel
Operating Agreement.

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

     

    B.           Borrower
and Corus Bank, N.A. ("Corus") previously entered into a Construction Loan
Agreement (the "Existing Loan Agreement"), dated as of May 2, 2008, pursuant to
which Corus agreed, provided certain conditions were satisfied, to make a loan
to Borrower in the aggregate amount of up to One Hundred Sixty-Five Million
Dollars ($165,000,000) to fund construction, development and marketing costs of
the Project.

     

    C.           Corus
became unable to fund such loan and, as a result, Stratus Partnership
Investments, L.P. ("SPI"), an affiliate of Borrower, purchased all right, title
and interest of Corus in and to such loan, including, without limitation, all
rights of Corus under the Existing Loan Agreement and the Loan Documents, as
such term is defined in the Existing Loan Agreement (the "Existing Loan
Documents").

     

    D.           Borrower
has requested that Lender provide the Loan, as hereinafter defined, to Borrower
and Lender has agreed to do so. Borrower, the Guarantors, as hereinafter
defined, and Lender have entered into that certain Commitment Letter, dated
September 14, 2009, relating to the Loan (as amended, the "Commitment
Letter").  Contemporaneously with the execution of this Agreement,
Borrower has caused SPI to sell, assign, transfer and convey to Lender all
right, title and interest SPI acquired from Corus in regard to the loan
contemplated by the Existing Loan Agreement, including, without limitation, all
right, title and interest of the Lender, as defined in the Existing Loan
Agreement, under the Existing Loan Agreement and the Existing Loan Documents,
together with all other rights, titles and interests of SPI in and to the loan
contemplated by the Existing Loan Agreement.

     

    E.           Borrower
and Lender have agreed to amend and restate the Existing Loan Agreement as
provided herein and amend and restate and/or amend the Existing Loan Documents,
to evidence, secure, govern and otherwise relate to the Loan, and as
contemplated by the Commitment Letter.

     

    NOW,
THEREFORE, in consideration of the mutual covenants and agreements herein
contained, the parties hereto amend and restate the Existing Loan Agreement, and
agree, as follows:

     

    Article
1

     

    INCORPORATION
OF RECITALS AND EXHIBITS

     

    
      	
              1.1  

            	
              Incorporation
      of Recitals.

            

    

     

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

     

    
      	
              1.2  

            	
              Incorporation
      of Exhibits.

            

    

     

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

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    Article
2

     

    DEFINITIONS

     

    
      	
              2.1  

            	
              Defined
      Terms.

            

    

     

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

     

    Additional Interest
Reserve:  An interest bearing account of Borrower with Lender
or, at Lender's option, Beal Bank, an Affiliate of Lender, which must be first
established and funded on the earliest to occur of (i) January 15, 2011,
(ii) Substantial Completion or (iii) within ten (10) days following
the date Lender first provides a Funding Notice to Borrower as a result of
Lender having determined that the unfunded balance of the Interest Reserve
Budget Line Item contains less than the amount of interest anticipated to accrue
on the Loan over the succeeding three (3) months based on the then applicable
Interest Rate and the then outstanding principal balance of the Loan, and into
which from time to time Borrower will deposit funds sufficient to satisfy the
Interest Reserve Funding Requirement.

     

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

     

    Agreement:  This
Amended and Restated Construction Loan Agreement.

     

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

     

    Applicable Condominium
Laws:   As such term is defined in Section
14.8(c).

     

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

     

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

     

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

     

    Approved Plans and
Specifications:  As such term is defined in Section
9.1(f).

     

    Architect:  BOKA
Powell, L.L.C.

     

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

     

    Associations:   As
such term is defined in Section
14.8(d).

     

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

     

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

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

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

     

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

     

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

     

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

     

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

     

    Building:  As
such term is defined in Recital A.

     

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

     

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

     

    City Documents:
Declaration of Restrictive Covenants (as amended, the "Declaration") dated as of
December 15, 2006, by the City of Austin, a Texas home rule city and municipal
corporation, recorded in the Official Public Records of Travis County, Texas as
Document No. 2006240877; and Special Warranty Deed (as amended, the "Deed")
dated as of December 15, 2006, by the City, in favor of Stratus Block 21
Investments, L.P., a Texas limited partnership, recorded in the Official Public
Records of Travis County, Texas as Document No. 2006240878, as both were amended
by Estoppel Certificate and Agreement dated April 26, 2008 and recorded in the
Official Public Records of Travis County, Texas under Document No. 2008078527
and by Estoppel Certificate and Agreement dated May 13, 2008 and recorded in the
Official Public Records of Travis County, Texas under Document No.
2008085863

     

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

     

    Closing: The date of
the Closing Funding.

     

    Closing Funding: The
first disbursement of Loan proceeds in an amount of $3,348,457.08, which shall
be advanced on or about the date hereof.

     

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

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

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

     

    Commitment:  Lender's
maximum aggregate funding obligation hereunder of up to One Hundred Twenty
Million Dollars ($120,000,000), less any reduction thereof in accordance with
the terms of this Agreement.

     

    Commitment
Letter:  As such term is defined in Recital
D.

     

    Completion
Date:  With respect to the Residential Units, July 25, 2011;
with respect to the Hotel, January 7, 2011; with respect to the Venue May 25,
2011; with respect to the Commercial Space, January 7, 2011; and with respect to
the entire Project, December 31, 2011.

     

    Condominiums:   All
condominium units, including, without limitation, Residential Units, included
within the Project.

     

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

     

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

     

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

     

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

     

    Construction
Schedule:  The schedule attached hereto as Exhibit B
establishing a timetable for completion of the Construction, showing, on a
monthly basis, the anticipated progress of the Construction, and showing that
the Improvements can be completed on or before the applicable Completion Date
and that the Residential Units will be delivered prior to any outside dates, if
any, provided for in the Sales Agreements.

     

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

     

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

     

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

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    Deed of
Trust:  That certain Amended and Restated Construction Deed of
Trust, Assignment of Rents, Security Agreement and Fixture Filing, executed by
Borrower for the benefit of Lender and its successors and assigns, securing this
Agreement, the Note, and all obligations of Borrower in connection with the
Loan, granting a first priority lien on Borrower's fee interest in the Project,
subject only to the Permitted Exceptions.

     

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

     

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

     

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

     

    Deposits:  The
Earnest Money Deposits and the Upgrade Deposits.

     

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

     

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

     

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

     

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

     

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

     

    Equity
Investment:  The sum of the Initial Equity Investment plus all
other amounts of equity required to be provided by Borrower pursuant to this
Agreement to keep the Loan In Balance and otherwise complete Construction and
perform all other obligations of Borrower in regard to the Loan and/or under
this Agreement and the other Loan Documents.

     

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

     

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

     

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

     

    Event of
Default:  As such term is defined in Section 19.1.

     

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

     

    Existing Loan
Documents:  As such term is defined in Recital
C.

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

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

     

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

     

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

     

    Funding
Notice:    As such term is defined in Section
10.4.

     

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

     

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

     

    General
Contractor:  Austin Building Company.

     

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

     

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

     

    Guarantor and
Guarantors:  Stratus Properties and CJUF Stratus Properties and
CJUF are referred to herein individually as a "Guarantor".

     

    Guarantor Financial
Covenants: The covenants of Guarantors set forth in Section 25 of the
Guaranty.

     

    Guaranty:  That
certain Amended and Restated Guaranty Agreement, of even date herewith, executed
by each Guarantor in favor of Lender, by which each Guarantor jointly and
severally guarantees the payment and performance of all obligations of Borrower
with regard to the Loan, including, without limitation, (i) payment of all
amounts due with regard to the Loan and (ii) the lien-free and timely
completion of the Project in accordance with all provisions of this Agreement
and Borrower's obligation to keep the Loan In Balance and to pay for all cost
overruns.

     

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

     

    Hazardous
Material:  Means and includes gasoline, petroleum, asbestos
containing materials, explosives, radioactive materials or any hazardous or
toxic material, substance or waste which is defined by those or similar terms or
is regulated as such under any Law of any 

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    Governmental
Authority having jurisdiction over the Project or any portion thereof or its
use, including: (i) any "hazardous substance" defined as such in (or for
purposes of) the Compre­hensive Environmental Response, Compensation and
Liability Act, 42 U.S.C.A. § 9601(14) as may be amended from time to time,
or any so-called "superfund" or "superlien" Law, including the judicial
interpretation thereof; (ii) any "pollutant or contaminant" as defined in
42 U.S.C.A. § 9601(33); (iii) any material now defined as "hazardous waste"
pursuant to 40 C.F.R. Part 260; (iv) any petroleum, including crude oil or
any fraction thereof; (v) natural gas, natural gas liquids, liquefied
natural gas, or synthetic gas usable for fuel; (vi) any "hazardous
chemical" as defined pursuant to 29 C.F.R. Part 1910; (vii) any mold or
fungus that may cause an allergic, toxic or inflammatory response in humans
arising from exposure to such mold or fungus in indoor air; and (viii) any
other toxic substance or contaminant that is subject to any other Law or other
past or present requirement of any Governmental Authority.  Any
reference above to a Law, includes the same as it may be amended from time to
time, including the judicial interpretation thereof.

     

    Hotel:  As
such term is defined in Recital
A.

     

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

     

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

     

    Hotel Operating
Agreement:  That certain W Austin Hotel Operating Agreement by
and between Stratus Block 21 Investments, L.P., and Starwood Hotel & Resorts
Worldwide, Inc., dated as of October 26, 2006, as amended by First
Amendment to Operating Agreement dated January 30, 2008, and Second
Amendment to W Austin Hotel Operating Agreement, dated May 6, 2008, as such agreement was
assigned by Stratus Block 21 Investments, L.P. to Borrower by virtue of that
certain Assignment and Assumption Agreement dated as of July 30, 2007; and as
such agreement was assigned by Starwood Hotel & Resorts Worldwide, Inc. to
Hotel Operator by virtue of that certain Assignment and Assumption Agreement
dated as of July 30, 2007.

     

    HUD:  United
States Department of Housing and Urban Development.

     

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

     

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

     

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

     

    Including or
including:  Means "including, but not limited to" of
determination in question.

     

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

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

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

     

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

     

    Interest
Rate:  The interest rate in effect from time to time under the
Note.

     

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

     

    Interest Reserve Funding
Requirement:  The amount required from time to time to be in
the Additional Interest Reserve which will be equal to three (3) months of
interest on the Loan at the Interest Rate applicable as of the date of
determination on the then outstanding principal balance of the Loan, less any
funds then remaining unfunded under the Interest Reserve Budget Line Item
calculated and adjusted as provided in Section 10.4 as of the first (1st) day
of each calendar month.

     

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

     

    Land:  As
such term is defined in Recital A.

     

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

     

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

     

    Lender:  As
such term is defined in the opening paragraph of this Agreement and including
any successor owner or holder of the Loan or any part of the Loan (other than a
participation interest in the Loan) from time to time.

     

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

     

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

     

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

     

    Loan:  The
loan, in the maximum principal amount of $120,000,000.00 to be provided by
Lender to Borrower pursuant to this Agreement and which is evidenced by the
Note.

     

    Loan Commitment
Fee:  As such term is defined in the Commitment
Letter.

     

    Loan
Documents:  The collective reference to this Agreement, the
documents and instruments listed in Section 4.2, and all
the other documents and instruments entered into from time to time, evidencing
or securing the Loan or any obligation of payment thereof or per-

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    ­formance
of Borrower's or Guarantor's obligations in connection with the transaction
con­templated hereunder, each as amended and/or amended and restated.
Without limitation of the foregoing, the Loan Documents include the Existing
Loan Documents to the extent they have been amended and/or amended and restated
by Borrower and Lender.

     

    Loan Origination
Fee:                                           As
such term is defined in the Commitment Letter.

     

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

     

    Margin:  As
such term is defined in the Commitment Letter.

     

    Master
Association:                                As
such term is defined in Section
14.8(d).

     

    Master
Condominium:   As such term is defined in Section
14.8(c).

     

    Master Condominium
Declaration:  That certain Declaration of Condominium Regime
for Block 21 Master Condominiums to be recorded against the Project upon
completion thereof, which will subdivide the Project into eleven (11) "Master
Units."

     

    Material Adverse Change or
material adverse change:  If, in Lender's sole and reasonable
discre­tion, the operations or financial condition of a person, entity, or
property has changed in a manner likely to impair materially the value of
Lender's security for the Loan, prevent timely repayment of the Loan, or
otherwise prevent the applicable person or entity from timely performing any of
its material obligations under the Loan Documents.

     

    Material
Contracts:                                The
City Documents, the Hotel Documents, the General Contract, each Sale
Agreement,

     

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

     

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

     

    Net Sales
Proceeds:  The greater of (i) gross sales price paid by
any Residential Unit Purchaser for its respective Residential Unit (exclusive of
Residential Unit customization items paid for from Upgrade Deposits, but
inclusive of all Upgrade Profits and inclusive of all fees and other amounts
paid by Residential Unit Purchasers in excess of the purchase price) minus
brokerage commissions (limited to 3% of such gross sales price if no Residential
Unit Purchaser's broker is to be paid by Borrower and 6% of such gross sales
price if both the Residential Unit Purchaser's broker and Borrower's broker are
to be paid by Borrower), Starwood Hotels & Resorts Worldwide, Inc. licensing
fees in the amount of 4.5% of the gross sales price for each Residential Unit
sold, title costs, legal fees and other customary closing costs associated with
the sale of such Residential Unit that are paid or incurred by Borrower,
provided 

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    that in
calculating Net Sales Proceeds closing costs shall be excluded from this clause
to the extent funded from the Loan (rather than being paid from gross sales
proceeds) or (ii) 89% of such gross sales price if both the Residential
Unit Purchaser's broker and Borrower's broker are to be paid by Borrower and 92%
of such gross sales price if the Residential Unit Purchaser's broker is not to
be paid by Borrower.

     

    Non-Disturbance
Agreement:  That certain Subordination and Non-Disturbance
Agreement by and among Hotel Operator, Lender and Borrower, dated as of October
21, 2009.

     

    Note:  That
certain Amended and Restated Promissory Note, of even date herewith, in the
amount of One Hundred Twenty Million Dollars ($120,000,000), executed by
Borrower and payable to the order of Lender, evidencing the Loan.

     

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

     

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

     

    Owner's
Contingency:  As such term is defined in Section
10.3.

     

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

     

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

     

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

     

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

     

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

     

    Plans and
Specifications:  As such term is defined in Section
9.1(f).

     

    Pledge
Agreement:  That certain Pledge and Security Agreement to be
executed and delivered at or prior to the Closing by the Pledgors to Lender by
which all ownership interests in Borrower are pledged to Lender as security for
the Loan.

     

    Pledgor and
Pledgors:  Stratus Block 21 Investments, L.P. and CJUF II Block
21 Member, LLC and each other owner of any interest in Borrower.

     

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

     

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

     

    Proceeding:  As
such term is defined in Section
21.12.

     

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

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

    Project:  The
collective reference to (i) the Land, together with all buildings,
structures and improvements located or to be located thereon, including the
Improvements, (ii) all rights, privileges, easements and hereditaments
relating or appertaining thereto, including, without limitation, all of
Borrower's right, title and interest under the Condominium Documents, including,
without limitation, all telecommunication easements, development rights and
Declarant/special Declarant rights, and (iii) all personal property,
fixtures and equipment required or beneficial for the operation
thereof.

     

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

     

    Release
Price:  As such term is defined in Section 14.9 for
the  Residential Unit being released.

     

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

     

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

     

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

     

    Residential
Association:  As such term is defined in Section
14.8(d).

     

    Residential
Condominium:  As such term is defined in Section
14.8(c).

     

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

     

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

     

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

     

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

     

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

     

    Retainage:  As
such term is defined in Section
12.4.

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

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

     

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

     

    Sales
Notice:  As such term is defined in Section
14.9.

     

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

     

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

     

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

     

    Spa
Amendment:  As such term is defined in Section
9.2(g).

     

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

     

    State:  The
State of Texas.

     

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

     

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

     

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

     

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

     

    Tenant:  The
tenant under a Lease.

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

     

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

     

    Title
Policy:  That certain Lender's Title Insurance Policy, dated
May 2, 2008, issued by the Title Insurer to Corus with regard to the Existing
Loan Agreement, as endorsed as required by Lender to confirm that Lender is now
the insured thereunder, insuring the lien of the Deed of Trust as a valid first,
prior and paramount lien upon the Project and all appurtenant easements, and
subject to no other exceptions other than the Permitted Exceptions.

     

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

     

    TUCA:   As
such term is defined in Section
14.8(c).

     

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

     

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

     

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

     

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

     

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

     

    Venue:  As
such term is defined in Recital
A.

     

    Venue
Documents:  The documents hereafter entered into by Borrower as
herein provided for the operation of the Venue.  It is currently
contemplated that the Venue Documents will include a Management Agreement with
Live Nation Worldwide, Inc. and a Block 21 Master Agreement with Capital of
Texas Telecommunications Council.

     

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

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

     

    
      	
              2.2  

            	
              Other
      Definitional Provisions.

            

    

     

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

     

    Article
3

     

    BORROWER'S
REPRESENTATIONS AND WARRANTIES

     

    
      	
              3.1  

            	
              Representations
      and Warranties.

            

    

     

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

     

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

     

    (b) Except as
described on Exhibit
D hereto, no litigation or proceeding is pending, or to the best of
Borrower's actual knowledge threatened in writing, against Borrower, either
Pledgor or either Guarantor, that could, if adversely determined, be reasonably
expected to cause a Material Adverse Change with respect to Borrower, either
Pledgor, either Guarantor or the Project.  There are no pending
Environmental Proceedings and Borrower has no actual knowledge of any threatened
Environmental Proceedings or any facts or circumstances that are reasonably
likely give rise to any future Environmental Proceedings.

     

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

     

    (d) No
consent, approval or authorization of or declaration, registration or filing
with any Governmental Authority or nongovernmental person or entity, including
any creditor, partner, member or shareholder of Borrower, either Pledgor or
either Guarantor, is required in connection with the execution, delivery and
performance of this Agreement or any of the Loan Documents other than the
recordation of the Deed of Trust and the Declaration of Condominium for the
Project and the filing of UCC-1 Financing Statements, except for such consents,
approvals or authorizations of or declarations or filings with any Governmental
Authority or non-governmental person or entity where the failure to so obtain
would not have a material adverse effect on Borrower, either Pledgor or either
Guarantor or which have been obtained as of any date on which this
representation is made or remade.

     

    (e) The
execution, delivery and performance of this Agreement, the execution and payment
of the Note and the granting of the Deed of Trust and other security interests
under the other Loan Documents have not constituted and will not constitute,
upon the giving of notice or lapse of time or both, a breach or default under
any other agreement to which Borrower, either 

     

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

     

    Pledgor
or either Guarantor is a party or may be bound or affected, or a violation of
any law or court order that may affect the Project, any part thereof, any
interest therein, or the use thereof.

     

    (f) Each of
the Material Contracts, other than the Hotel Documents, is in full force and
effect.  There is no Default or Event of Default under the Existing
Loan Agreement, any of the Existing Loan Documents, this Agreement, the other
Loan Documents, or, to the knowledge of Borrower, any of the Material Contracts
(other than the Hotel Documents), nor, to Borrower's knowledge, is there any
condition that, after notice or the passage of time or both, would constitute a
Default or an Event of Default under any of said documents.  No
counterparty to any Material Contract has sent to Borrower any notice alleging a
default on the part of Borrower under any Material Contract or any other
material notice of an adverse matter relating to any such Material Contract,
except for the notices, if any, which have been provided by Borrower to
Lender.  Borrower is not aware of any material default or failure to
perform which exists under any Material Contract on the part of any party to
such Material Contract.  Certain Residential Unit Purchasers have not
yet fully funded the required Earnest Money Deposit as reflected on Exhibit
M-1.

     

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

     

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

     

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

     

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

     

    the
Project that cannot be obtained until the Construction is completed can be
obtained if the Improvements are completed in accordance with the Approved Plans
and Specifications.

     

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

     

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

     

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

     

    (m) Except as
disclosed in any Environmental Report delivered by Borrower to Lender prior to
the date hereof, (i) to Borrower's actual knowledge, the Project is in a
safe condition, and, except for small quantities of Hazardous Materials lawfully
used in the ordinary course of construction, maintenance and operation of the
Project, is free of all Hazardous Material and is in compliance with all
applicable Laws; (ii) except for small quantities of Hazardous Materials
lawfully used in the ordinary course of construction, maintenance and operation
of the Project, neither Borrower nor, to the actual knowledge of Borrower, any
other person or entity, has ever caused or permitted any Hazardous Material to
be placed, held, located or disposed of on, under, at or in a manner to affect
the Project, or any part thereof, and the Project has never been used (whether
by Borrower or, to the actual knowledge of Borrower, by any other person or
entity) for any activities involving, directly or indirectly, the use,
generation, treatment, storage, transportation, or disposal of any Hazardous
Material; (iii) neither the Project nor Borrower is subject to any
existing, pending, or, to Borrower's actual knowledge, threatened investigation
or inquiry by any Governmental Authority, and the Project is not subject to any

     

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

     

    remedial
obligations under any applicable Laws pertaining to health or the environment;
and (iv) to the actual knowledge of Borrower, there are no underground
tanks, vessels, or similar facilities for the storage, containment or
accumulation of Hazardous Materials of any sort on, under or affecting the
Project.

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

    (v) Except as
set forth in Exhibit M, there
are no Sales Agreements to purchase Residential Units.  The Sales
Agreements listed on Exhibit M are in
full force and effect and such Sales Agreements are not subject to any rights of
rescission.  Borrower hereby represents that Exhibit M is a
true, accurate and complete schedule of all Sales Agreements and sets
forth:  (i) the name of Residential Unit Purchaser, (ii) the
Residential Unit being purchased, (iii) any Upgrades, (iv) any Upgrade
Deposit, (v) the purchase price, and (vi) the Earnest Money Deposit.
All Sales Agreements are (or when entered into, and after expiration of
statutory rescission periods, will be) Qualifying Sales
Agreements.  Except for the Sales Agreements referenced on Exhibit M-1 where
delinquent Earnest Money Deposit installments are noted, no event of default, or
any event that, with the passage of time or the giving of notice, or both, would
constitute an event of default, has occurred pursuant to the terms of any of the
Sales Agreements 

     

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

     

    on the
part of Borrower or, to Borrower's actual knowledge, the other parties
thereto.  No Residential Unit Purchaser under the Sales Agreements
listed on Exhibit M has
terminated its respective Sales Agreement and there are no side agreements with
any Residential Unit Purchasers modifying any of the terms of the Sales
Agreements or otherwise.

     

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

     

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

     

    (y) Neither
Borrower, either Pledgor, either Guarantor nor any other person owning an
interest in Borrower is (or will be) a person with whom Lender is restricted
from doing business under regulations of the Office of Foreign Asset Control
("OFAC") of the
Department of the Treasury of the United States of America (including, those
persons named on OFAC's Specially Designated and Blocked Persons list) or under
any statute, executive order (including the September 24, 2001 Executive
Order Blocking Property and Prohibiting Transactions With Persons Who Commit,
Threaten to Commit, or Support Terrorism), or other governmental action and is
not and shall not knowingly engage in any dealings or transactions or otherwise
be associated with such persons.  In addition, Borrower hereby agrees
to provide Lender with any additional information that Lender deems reasonably
necessary from time to time in order to ensure compliance with all applicable
Laws concerning money laundering and similar activities.

     

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

     

    (aa) The
Project complies and, when constructed, shall comply with all requirements of
(i) the City Documents, (ii) that certain Restrictive Covenant by
Zoning Case No. C14-06-0190, dated December 5, 2006 by The City of Austin
recorded as Instrument No. 200634734, 

     

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

     

    and
(iii) that certain Restrictive Covenant Regarding Unified Development and
Maintenance of Drainage Facilities, dated January 9, 2008 by CJUF II Stratus
Block 21, LLC recorded as Instrument No. 2008013723.

     

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

     

    (cc) Construction
of the Improvements to date is in compliance with the Approved Plans and
Specifications, the Governmental Approvals and the requirements of each
applicable Material Contract. To date, Borrower has utilized $105,918,438.51 of
its Initial Equity Investment to pay Budget Line Item Costs as shown on Exhibit
G.

     

    (dd) To
Borrower’s actual knowledge, all factual information with respect to the
Borrower, the Guarantors, the Project, the loan evidenced by the Existing Loan
Documents and/or the Loan, set forth in the Existing Loan Documents or in the
reports, other papers and data set forth in the items listed on Exhibit T (the “Due Diligence
Materials”) and, to Borrower’s actual knowledge, all factual statements
and representations made to the Lender by or on behalf of the Borrower in the
Due Diligence Materials, were, at the time the same were so furnished or made,
when taken together with all such other factual information, reports and other
papers and data previously so furnished in connection with this Agreement and
the Loan and all such other factual statements and representations previously so
made in connection with this Agreement and the Loan, complete and correct in all
material respects, and, to Borrower’s actual knowledge, did not as of the date
so furnished or made and as of the date hereof, contain any untrue statement of
a material fact or omit to state any material fact necessary in order to make
the statements contained therein not misleading in light of the circumstances in
which the same were made.  Borrower has not intentionally withheld any
material information from Lender concerning the Borrower, the Guarantors, the
Project or the loan evidenced by the Existing Loan Documents.

     

    

    
      	
              3.2  

            	
              Survival
      of Representations and Warranties.

            

    

     

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

     

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    

     

    Article
4

     

    LOAN
AND LOAN DOCUMENTS

     

    
      	
              4.1  

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

            

    

     

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

     

    (a) The
maximum aggregate principal amount of the Loan to be funded hereunder shall be
the lesser of (i) $120,000,000.00, or (ii) the total costs associated
with the Project (as described in the Budget) less the required Equity
Investment.

     

    (b) Lender
agrees, upon Borrower's compliance with and satisfaction of all conditions
precedent to the Closing Funding set forth in this Agreement and provided
(i) the Loan is In Balance, (ii) no Material Adverse Change has
occurred and is continuing with respect to Borrower, either Guarantor or the
Project, (iii) no material casualty to the Project has occurred that has
not been repaired and there is no existing or threatened condemnation or taking
which could cause a Material Adverse Change with respect to the Project and
(iv) no Default or Event of Default has occurred and is continuing
hereunder, to make the Closing Funding.  As a result of Lender's
purchase from SPI of the loan made pursuant to the Existing Loan Agreement, the
outstanding balance of such loan, as of the date of the closing of Lender's
purchase thereof from SPI, which outstanding principal balance was $25,000.00,
will be outstanding under the Note.  In addition, the amounts advanced
by Lender to or for the account of Borrower as part of the Closing Funding will
also be considered outstanding under the Note. Accordingly, immediately
following the completion of the Closing Funding the outstanding principal
balance of the Loan and the Note is $3,373,457.08.

     

    (c) After the
Closing Funding, Borrower shall be entitled to receive further successive
disbursements of the proceeds of the Loan in accordance with Articles 8, 9, 12 and
13 following
compliance with all conditions precedent thereto set forth in this Agreement,
provided that (i) the Loan remains In Balance, (ii) Borrower has
complied with all conditions precedent to disbursement from time to time set
forth in this Agreement including the requirements of Section 3.2 and
Articles 8, 9,
12 and 13, (iii) no
Material Adverse Change has occurred and is continuing with respect to Borrower,
either Guarantor or the Project, (iv) no material casualty to the Project
has occurred that has not been repaired or is not being repaired in accordance
with Article 16 hereof, and there is no existing or threatened condemnation or
taking which could cause a Material Adverse Change with respect to the Project
and (v) no Event of Default and no material Default has occurred and is
continuing hereunder or under any other Loan Document.  Lender shall
make commercially reasonable efforts to fund such subsequent disbursements
within ten (10) Business Days after receipt of all of the documents required
under this Agreement, including a draw request together with all items listed in
Section
12.3.

     

    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

    

     

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

     

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

     

    
      	
               
      

            	
              For
      payments made by Regular Mail:

            

    

     

    
      	
               
      

            	
              Beal
      Bank Nevada

            

    

    6000
Legacy Drive

    Plano,
Texas 75024

    

     

    
      	
               
      

            	
              For
      payments made by Federal Express:

            

    

     

    
      	
               
      

            	
              Beal
      Bank Nevada

            

    

    6000
Legacy Drive

    Plano,
Texas 75024

    

    
      	
               
      

            	
              For
      payments made by Wire Transfer and
ACH:

            

    

     

    
      	
               
      

            	
              ABA
      111040195

            

    

    
      	
               
      

            	
              TO
      CREDIT ACCOUNT 4991001

            

    

    
      	
               
      

            	
              ACCOUNT
      NAME:  BEAL BANK NEVADA

            

    

    
      	
               
      

            	
              FOR
      FURTHER CREDIT TO: CJUFFII STRATUS BLOCK 21
LLC

            

    

    
      	
               
      

            	
              Attn:
      Anthony Sassine

            

    

    

    
      	
              4.2  

            	
              Loan
      Documents.

            

    

     

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

     

    (a) The
Note.

     

    (b) The Deed
of Trust.

     

    (c) The
Guaranty.

     

    (d) The
Environmental Indemnity.

     

    (e) The
Collateral Assignment of Hotel Documents.

     

    
      
        
        

      

      
        22

        
          

        

      

      
        
        

      

    

     

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

     

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

     

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

     

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

     

    (j) Estoppel
Agreement with the City of Austin.

     

    (k) The
Pledge Agreement.

     

    (l) A Pledge
and Security Agreement.

     

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

     

    
      	
              4.3  

            	
              Term
      of the Loan.

            

    

     

    (a) All
principal, interest and other sums due under the Loan Documents shall be due and
payable in full on the fifth (5th)
anniversary of the date hereof (the "Maturity Date").  The Loan may
become due and payable prior to the Maturity Date as a result of an acceleration
thereof as provided in the Loan Documents.

     

    
      	
              4.4  

            	
              Prepayments.

            

    

     

    Except
for offered prepayments the Lender agrees to accept as described in Section 4.5 below and
except for any insurance proceeds or condemnation awards that are applied to the
payment of the Loan pursuant to the Loan Documents, the Loan may not be prepaid,
in whole or in part, at any time prior to the third (3rd)
anniversary of the date of Full Loan Opening.  The Loan may be prepaid
in whole or in part subsequent to the third (3rd)
anniversary of the date of Full Loan Opening and on or prior to the fourth
(4th)
anniversary of the date of Full Loan Opening provided Borrower pays to Lender
with each such prepayment a prepayment fee equal to one percent (1%) of the
amount of principal then being prepaid.  Subsequent to the fourth
(4th)
anniversary of the date of Full Loan Opening, Borrower may prepay the Loan, in
whole or in part, without premium or fee.  Except for offered payments
Lender agrees to accept as described in Section 4.5 below and
except for any insurance proceeds or condemnation awards that are 

     

    
      
        
        

      

      
        23

        
          

        

      

      
        
        

      

    

     

    applied
to the payment of the Loan pursuant to the Loan Documents, Borrower must provide
to the Lender at least ten (10) business days prior written notice of each
prepayment.

     

    
      	
              4.5  

            	
              Required
      Principal Payments.

            

    

     

    The
unpaid Principal Balance of and all accrued and unpaid interest on the Loan
shall be due and payable on the Maturity Date. In addition, (i) as and when
Residential Units are sold, as permitted by the Loan Documents, all Net Sales
Proceeds from the sale of the Residential Unit sold, and (ii) all Net
Operating Income, must be offered to Lender as a principal prepayment on the
Loan.  Lender, in its sole discretion, may at any time elect to accept
or reject some or all of each such offered prepayment(s).  Within
thirty (30) days following the end of each month during which there is Net
Operating Income, Borrower will provide to Lender a written report (the "NOI
Report") which will include the amount of Net Operating Income for the month in
question and the calculation of same.  Within seven (7) Business Days
following Lender's receipt of, as applicable (a) a Sales Notice or (b) a NOI
Report, Lender fails to notify Borrower in writing of the acceptance or
rejection of some or all of the Net Sales Proceeds or Net Operating Income in
question, Lender will be deemed to have elected to accept all of the Net Sales
Proceeds and/or Net Operating Income in question, as a prepayment on the
Loan.  Provided the Loan is then In Balance, no Default or Event of
Default then exists under any Loan Document and Borrower has deposited with
Lender in cash such amounts (x) as are necessary to satisfy the Interest
Reserve Funding Requirement and (y) as are to be retained as otherwise provided
in this Agreement, Borrower may retain such Net Sales Proceeds and/or Net
Operating Income, as applicable, that Lender does not require as a prepayment on
the Loan for use at Borrower's discretion; provided, however, if a Default
exists but such Default is cured before such Default becomes an Event of
Default, then upon the curing of such Default and so long as all other
conditions set forth above are satisfied, Borrower may retain the related Net
Sales Proceeds and related Net Operating Income Lender does not require as a
prepayment on the Loan for use at Borrower's discretion.  Subject to
the terms of this Section 4.5, Borrower
may transfer Net Sales Proceeds and Net Operating Income that is released to
Borrower hereunder to a Borrower account that is not pledged to Lender to secure
the Loan.

     

    
      	
              4.6  

            	
              Receipt
      of Payments.

            

    

     

    All
payments received by Lender prior to or at 2:00 p.m. (Dallas time) on a
Business Day shall be credited to Borrower on the day of receipt; all payments
received after 2:00 p.m. (Dallas time) on a Business Day shall be deemed
received on the next succeeding Business Day.

     

    
      	
              4.7  

            	
              Termination
      of Lender's Unfunded Commitment.

            

    

     

    Upon the
repayment in full of the outstanding principal balance of the Loan, Lender's
obligation to fund the Unfunded Commitment shall thereupon terminate and Lender
shall have no further obligation to fund Loan proceeds
hereunder.  Upon request by Borrower, if agreed to in writing by
Lender, in Lender's sole discretion, that the Commitment shall not so terminate,
all Release Prices for the sale of Residential Units shall be escrowed with
Lender until such time as Lender's obligation to fund the Commitment expires or
is terminated and the Loan has been repaid.

     

    
      
        
        

      

      
        24

        
          

        

      

      
        
        

      

    

        

     
     4.8   Lender's Inability to
Fund.

     

    If Lender
is prevented from funding the Unfunded Commitment by reason of bankruptcy or
insolvency proceedings or an order from regulatory authorities in connection
with Lender's insolvency or failure to meet regulatory requirements, then Lender
shall notify Borrower and, so long as no Event of Default exists, Borrower may
prepay the Loan in full without the payment of any prepayment premium or
fee.  This Section 4.8 is in
addition to the legal rights and remedies of Borrower under Section 21.10
below.

     

    Article
5

     

    INTEREST

     

    
      	
              5.1  

            	
              Interest
      Rate.

            

    

     

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

     

    Article
6

     

    COSTS
OF MAINTAINING LOAN

     

    
      	
              6.1  

            	
              Increased
      Costs and Capital Adequacy.

            

    

     

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

     

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

     

    
      
        
        

      

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

     

    
      	
              6.2  

            	
              Borrower
      Withholding.

            

    

     

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

     

    Article
7

     

    LOAN
EXPENSE AND ADVANCES

     

    
      	
              7.1  

            	
              Loan
      and Administration Expenses.

            

    

     

    Borrower
unconditionally agrees to pay all reasonable expenses of the Loan, including all
amounts payable pursuant to Sections 7.2 and
7.3 and any and
all other fees owing to Lender pursuant to the Loan Documents, and also
including, without limiting the generality of the foregoing, all recording,
filing and registration fees and charges, mortgage, intangible or documentary
taxes, escrow charges, title charges, all insurance premiums, title insurance
premiums and other charges of the Title Insurer, printing and photocopying
expenses, survey fees and charges, cost of certified copies of instruments, cost
of premiums on the Title Policy, charges of the Title Insurer or other escrowee
for administering disbursements, all reasonable fees and disbursements of
Lender's Consultant, all appraisal fees, insurance consultant's fees,
investigator's fees, environmental consultant's fees, reasonable travel related
expenses and all reasonable costs and expenses incurred by Lender in connection
with the determination of whether or not Borrower has performed the obligations
undertaken by Borrower hereunder or has satisfied any conditions precedent to
the obligations of Lender hereunder.  Borrower shall pay the airfare
and other reasonable travel expenses for each officer or analyst of Lender who
inspects the Project as part of Lender's due diligence.  The amount
charged for airfare shall be the lesser of (i) the actual cost thereof
incurred by Lender, or (ii) $500.00 per person per
visit.  Borrower agrees to pay all brokerage, finder or similar fees
or commissions payable in connection with the transactions contemplated hereby
and shall indemnify, defend, and hold Lender harmless against all claims,
liabilities, costs and expenses (including attorneys' fees and expenses)
incurred in relation to any such claim by broker, finder or similar person
alleging to have dealt with Borrower in connection with this
transaction.

     

    
      
        
        

      

      
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              7.2  

            	
              Loan
      Fees.

            

    

     

    Borrower
shall pay to Lender on or before the date of this Agreement (i) the balance
of the Loan Commitment Fee, in the amount of Nine Hundred Thousand Dollars
($900,000), and (ii) the Loan Origination Fee, in the amount of One Million
Two Hundred Thousand Dollars ($1,200,000).  Such Fees are fully earned
and non-refundable.  Lender will advance the Loan Fees and any costs
due from Borrower to Lender as part of the Closing Funding.

     

    
      	
              7.3  

            	
              Loan
      Administration Fees.

            

    

     

    The first
disbursement of Loan proceeds for Hard Costs associated with construction and
each such disbursement thereafter shall be referred to as a "Construction
Disbursement."  In addition to amounts due from Borrower
pursuant to Section
7.5 below, Borrower shall pay to Lender on each date on which an interest
payment is due on the Loan a Loan administration fee in the amount of $3,000.00
per month in connection with Lender's reimbursement for reviewing and processing
each Construction Disbursement and other materials relating to the Loan and/or
the Project, including, without limitation, proposed Sales Agreements and
Leases.  Borrower hereby authorizes Lender to retain such fee from
each Construction Disbursement without further direction from Borrower but
without limitation of Borrower's obligation to pay such fee if it is not so
retained by Lender.

     

    
      	
              7.4  

            	
              Reserved.

            

    

     

    
      	
              7.5  

            	
              Lender's
      Attorneys' Fees and Disbursements.

            

    

     

    Borrower
agrees to pay Lender's reasonable attorneys fees and disbursements incurred in
connection with this Loan both before and after the date hereof (and whether or
not the Loan closes), including (i) the preparation of this Agreement, any
intercreditor agreements and the other Loan Documents and the preparation of the
closing binders, (ii) the disbursement and administration of the Loan and
(iii) the enforcement of the terms of this Agreement and the other Loan
Documents.  The reasonable legal fees and disbursements to be paid by
Borrower under this Section 7.5 and the
reasonable legal fees and disbursements to be paid by Borrower under all other
applicable provisions of this Loan Agreement and the other Loan Documents shall
include the reasonable fees and expenses of Lender's inside counsel charged at a
rate not higher than the rate charged by Lender's outside counsel for an
attorney with equivalent experience.

     

    
      	
              7.6  

            	
              Time
      of Payment of Fees and Expenses.

            

    

     

    Borrower
shall pay all expenses and fees incurred by Lender in connection with the Loan
as of the date of this Agreement at Closing.  At Closing, Lender will
pay from the Closing Funding all reasonable Loan expenses and all fees payable
to Lender and not previously paid.  Lender may require the payment of
outstanding fees and expenses as a condition to any disbursement of proceeds of
the Loan.  Lender is hereby authorized, without any specific request
or direction by Borrower, to make disbursements from time to time in payment of
or to reimburse Lender for all reasonable Loan expenses and fees (whether or
not, at such time, there may be any undisbursed amounts of the Loan allocated in
the Budget for the same).  Following Lender's receipt of a request
from Borrower, Lender shall provide to Borrower copies of all applicable
invoices (redacted as Lender deems reasonably appropriate) relating to such
expenses 

     

    
      
        
        

      

      
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    and
fees.  Lender may charge any such disbursement to any applicable
Budget Line Item or, if in Lender's judgment there is no available source of
funds in the Budget, may require Borrower to pay excess expenses from Borrower's
own funds.  If the actual amount of charges are not ascertainable at
Closing, then Lender may charge the same, at its option, at Full Loan Opening or
to the Owner's Contingency or other applicable Budget Line Item, and Borrower
shall pay within ten (10) days of written demand any excess monies
due.

     

    
      	
              7.7  

            	
              Expenses
      and Advances Secured by Loan
Documents.

            

    

     

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

     

    
      	
              7.8  

            	
              Right
      of Lender to Make Advances to Cure Borrower's
  Defaults.

            

    

     

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

     

    Article
8

     

    NON-CONSTRUCTION
REQUIREMENTS PRECEDENT

     

    
      	
              8.1  

            	
              Non-Construction
      Conditions Precedent.

            

    

     

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

     

    (a) Equity:  Borrower
shall have provided to Lender prior to the Closing evidence satisfactory to
Lender in its sole discretion of (i) the amount of the Initial Equity
Investment that has been expended as of the date which is ten (10) Business Days
prior to the Closing for the payment of costs included in the Budget and
(ii) the sources of and unconditional availability of all remaining amounts
of the Initial Equity Investment.  In addition, Borrower shall have
provided evidence satisfactory to Lender in its sole discretion prior to Full
Loan Opening (which, for the avoidance of doubt, shall exclude the Closing
Funding) that Borrower's equity invested in the Project for costs in the Budget
is not less than $175,570,670.00 in cash (the "Initial Equity
Investment"). Such Initial Equity Investment must be used to pay Project
costs contained in the 

     

    
      
        
        

      

      
        28

        
          

        

      

      
        
        

      

    

     

    Budget
and approved by Lender, with evidence of payment of the Initial Equity
Investment to be delivered to Lender prior to Full Loan Opening.  In
all events, any equity contribution shall be subordinate to the rights of Lender
and general unsecured creditors of Borrower.  Borrower may not be
indebted to any Person for any equity contribution.  Borrower shall
provide Lender with documentation identifying all equity investors and
supporting the actual Land cost, predevelopment expenses and Budgeted costs paid
prior to x) Closing and (y) Full Loan Opening, as applicable (which actual cost
and expenses shall be credited against the Initial Equity Investment, provided
same appear in the Project Budget and such expenditures are validated by Lender
in its reasonable discretion), such documentation to be in form and substance
acceptable to Lender, in its sole discretion.

     

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

     

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

     

    (c) Title and Other
Documents:  Borrower shall have furnished to Lender an
Endorsement to the Title Policy, in form as required by Lender, with the premium
for such Endorsement paid in full, together with legible copies of all documents
creating Permitted Exceptions and all other legal documents affecting the
Project or the use thereof.  The Title Policy, as endorsed, shall be
subject only to the Permitted Exceptions.  Any exception for the
rights of Residential Unit Purchasers shall only be permissible if the Title
Insurer insures such rights are subordinate to the Deed of Trust.

     

    (d) Survey:  Borrower
shall have furnished to Lender an ALTA/ACSM "Class A" Land Title Survey of
the Project prepared by a licensed surveyor satisfactory to
Lender.  Said survey shall be dated no earlier than thirty (30) days
prior to the date hereof, shall be made (and certified to have been made) in
accordance with the requirements set forth in the Commitment
Letter.  Such survey shall be sufficient to permit issuance of the
Title Policy in the form required by this Agreement.  Such survey
shall include the legal description of the Land.

     

    (e) Insurance
Policies:  Borrower shall have furnished to Lender, prior to
the date hereof, certificates evidencing that insurance coverages are in effect
with respect to the Project and Borrower, in accordance with the Insurance
Requirements attached hereto as Exhibit E and
incorporated herein by reference as if fully set forth herein (or such other
insurance coverages 

     

    
      
        
        

      

      
        29

        
          

        

      

      
        
        

      

    

     

    reasonably
acceptable to Lender), for which the premiums have been prepaid, and with
endorsements satisfactory to Lender.  On or before the date hereof,
Borrower shall provide a copy of the insurance policy with respect to the
Project and Borrower in accordance with Exhibit E (the
"Insurance
Policy").

     

    (f) No
Litigation:  Prior to the Closing and in connection with each
request from Borrower for an advance of Loan proceeds at and subsequent to Full
Loan Opening, Borrower shall have furnished evidence that no litigation or
proceedings shall be pending or threatened that is reasonably likely to cause a
Material Adverse Change with respect to Borrower, either Pledgor, either
Guarantor or the Project, other than litigation that is disclosed on Exhibit D
attached hereto.  A sworn certificate, in form as reasonably required
by Lender, executed by an officer or manager of Borrower will serve as the
evidence of no litigation or proceeding hereunder for each advance of Loan
proceeds.

     

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

     

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

     

    (i) Appraisal:  Lender
shall have obtained, at Borrower's expense, an Appraisal acceptable to Lender in
all respects, in Lender's sole discretion.  A copy of such Appraisal
will be supplied to Borrower upon request, subsequent to Closing.

     

    (j) Searches:  Borrower
shall have furnished to Lender current bankruptcy, federal tax lien and judgment
searches and searches of all Uniform Commercial Code financing statements filed
in each place UCC Financing Statements are to be filed hereunder for Borrower,
each Pledgor and each Guarantor, demonstrating the absence of (i) any UCC
Financing Statement that reflect Borrower as debtor other than those filed in
connection with the Existing Loan Agreement and (ii) any materially adverse
claims.

     

    (k) Financial Statements; Tax
Returns:  Borrower shall have furnished to Lender current
annual financial statements of Borrower, each Pledgor and each Guarantor, each
in form and substance and certified by such individual as is acceptable to
Lender.  Borrower shall have furnished to Lender any federal and state
tax returns of Borrower, each Pledgor and each Guarantor for the past two (2)
years.  Borrower, each Pledgor and Stratus Properties shall have
signed and delivered to Lender an Internal Revenue Service Tax Return
Verification Form (IRS Form 4506-T).  Borrower, each Pledgor and each
Guarantor shall provide such other additional financial information as Lender
reasonably requires, including financial statements of income and expenses for
the Project and tax returns for all entities reporting the income and expenses
on

     

    
      
        
        

      

      
        30

        
          

        

      

      
        
        

      

    

     

    the
Project.  The foregoing notwithstanding, Lender has approved the form
tax returns previously provided by CJUF without K-1 Schedules to Lender as
satisfying the requirements of this paragraph.

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

    (s) Condominium
Documents:  Borrower shall have delivered to Lender a copy of
all proposed and/or executed condominium information statements, condominium
plats and/or 

     

    
      
        
        

      

      
        31

        
          

        

      

      
        
        

      

    

     

    plans,
declarations (including exhibits), budgets, owners' association certificates of
formation, bylaws, resolutions, rules and regulations, agreements regarding cost
sharing, filings, escrow agreements and other documents pertaining to the
establishment of the condominium regimes at the Project or relating to the
Project's compliance with all applicable local, state and federal Laws relating
to condominiums (collectively, the "Condominium
Documents"), including, without limitation, the draft Master Condominium
Declaration and Residential Condominium Declaration. The Condominium Documents
previously provided to Lender for review will be revised, in a manner reasonably
acceptable to Lender, as further described in Section
14.8.  Borrower agrees that it shall not record any Declaration
of Condominium or other Condominium Document without the prior written consent
of Lender, as further described in Section
14.8.  Without limiting the foregoing, Borrower agrees that it
shall deliver the final form of Condominium Documents, including, without
limitation, condominium plats and plans for both the Block 21 Master and Block
21 Hotel/Residential Condominiums, not later than 30 days prior to the date that
Borrower desires to record any Declaration of Condominium or other Condominium
Document.

     

    (t) General Contractor and
Design Professional Agreements.  Borrower shall have provided
to Lender agreements, in form as required by Lender, executed by the General
Contractor and each Design Professional confirming, among such other things as
Lender may require, (i) the amounts paid to date to such parties for the
Construction and design of the Project and the amount of Retainage then held by
or on behalf of Borrower, (ii) that all sub-contractors of the respective
parties have been paid all amounts owed to such sub-contractors for work
performed with regard to the Project to the date of such agreements and
(iii) that no mechanic's or materialmen's liens or lien claims exist as of
the date of such agreements for the benefit of the General Contractor or any of
the Design Professionals or any of their respective sub-contractors for any work
theretofore performed with regard to the Project.  In addition,
Borrower will cause to be delivered to Lender a sworn statement of the General
Contractor, approved by Borrower and Lender, covering all work done and to be
done, together with lien waivers covering all work and materials for which
payments have been made by Borrower as of the date that is five (5) Business
Days prior to the Closing.

     

    (u) Lease.  Borrower
shall have delivered to Lender the forms of Lease to be used for the leasing of
Retail Space.  Prior to Full Loan Opening, Borrower shall have
delivered to Lender the form of Lease to be used for the leasing of Restaurant
Space and Office Space for approval by Lender, which approval will not be
unreasonably withheld or delayed.

     

    (v) Pre-sales.  Borrower
shall have delivered to Lender, prior to Closing, Qualifying Sales Agreements
(in full force and effect) for at least 70 Residential Units relating to the
sale of at least 70,761 Saleable Square Feet together with Parking Spaces for
such applicable Residential Units at prices greater than or equal to the List
Price for each and every such Residential Unit, constituting, in the aggregate,
gross sales of greater than or equal to $72,995,425.00 (collectively, the "Pre-sale
Requirement").  The mix of Residential Unit types and locations
within the Project must be reasonably acceptable to Lender.

     

    (w) Earnest Money and Upgrade
Deposits.  All existing Earnest Money Deposits and Upgrade
Deposits, if any, (in the amounts set forth on Exhibit M) shall have
been deposited with the Escrow Agent or with Lender in accounts in accordance
with Section
14.3.  The Earnest 

     

    
      
        
        

      

      
        32

        
          

        

      

      
        
        

      

    

     

    Money
Deposits are being held by Escrow Agent in accordance with the terms and
provisions of each Sales Agreement (such provisions are referred to herein as
the "Escrow
Agreement").  Prior to the Closing, Borrower shall deliver to
Lender a letter from the Escrow Agent agreeing to deliver such Earnest Money
Deposits to Lender when and as Borrower has a right to receive such Earnest
Money Deposits for application in accordance with Section 14.3 and
Section 14.9
below and recognizing that Lender will be entitled to all right, title and
interest of Borrower in and to such Earnest Money Deposits upon foreclosure of
Borrower's interest in the Sales Agreements and the Property after an Event of
Default.  Prior to the Closing, Borrower will provide to Lender
evidence satisfactory to Lender that all Earnest Money Deposits for all of the
Sales Agreement included within the Pre-sale Requirement have been deposited
with, and are currently held by, the Escrow Agent in the amounts shown on Exhibit M attached
hereto.

     

    (x) Required Condominium
Approvals.  Except with respect to the requirements to be
satisfied post Closing as set forth in Section 14.8 below,
Borrower shall have furnished to Lender evidence satisfactory to Lender that
Borrower has received all approvals required for the recordation of the
Declaration of Condominium, the sale or marketing of the Residential Units under
the requirements of ILSA, applicable laws of the State and any applicable local
Laws.  Borrower also shall have furnished to Lender as filed copies of
Borrower's HUD Property Report and any additional reports currently required by
the State of Texas or City of Austin.

     

    (y) Material
Contracts.  Borrower shall have provided to Lender  the
executed Hotel Documents, Non-Disturbance Agreement and estoppel letters
addressed to Lender with respect to the Hotel Documents, and all of the
foregoing must be in form and substance reasonably satisfactory to
Lender.  A condition to Lender's obligation to make any advance of
proceeds of the Loan, whether at the Closing, the Full Loan Opening or
thereafter, is that no material default on the part of any party thereto may
exist under any Material Contract and each Material Contract (other than, solely
with regard to the Closing, the Venue Documents) must be in full force and
effect.

     

    (z) City Estoppel and
Agreement. (i)  Prior to Closing, Borrower shall have provided to
Lender an Estoppel Certificate and Agreement from the City of Austin, a Texas
home rule city and municipal corporation ("City") in form and substance
satisfactory to Lender addressing certain matters relative to the City
Documents; (ii) prior to the Closing, a direction by Borrower to the City
to pay any repurchase price payable under the City Documents to Lender (to be
applied to the indebtedness under the Loan Documents in such order as Lender
shall elect, with any excess payable to Borrower), which direction is accepted
by the City; and (iii) prior to Full Loan Opening, Borrower shall have provided
to Lender a Fourth Estoppel Certificate and Agreement from the City in all
material respects in the form of Exhibit S or
otherwise in form and substance satisfactory to Lender.

     

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

     

    
      
        
        

      

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

     

    Article
9

     

    CONSTRUCTION
REQUIREMENTS PRECEDENT

     

    
      	
              9.1  

            	
              Construction
      Documents Required as of Closing.

            

    

     

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

     

    (a) Fully
executed copies of the following shall be delivered: (i) prior to the
Closing, a general contract with the General Contractor pertaining to the
construction of the Project together with all Change Orders entered into between
General Contractor and Borrower as of the date of this Agreement (collectively,
the "General
Contract"), which must be acceptable to Lender in all respects in
Lender's sole discretion, with a guaranteed maximum price not to exceed
$191,981,143.00 (the "General Contract
Price"), and evidence satisfactory to Lender that the General Contract
was not entered into until after the Deed of Trust was recorded; (ii) those
certain fully-executed Subcontracts for the trades and divisions set forth on
Exhibit J,
which Subcontracts shall be in form and substance satisfactory to Lender in its
reasonable discretion; (iii) copies of all other direct contracts
previously entered into or to be entered into by Borrower for construction,
purchase of materials or furniture, fixtures or equipment; and (iv) all
contracts with the architects, engineers, third-party owner's representatives
and other design professionals (the "Design
Professionals") acceptable to Lender in all respects in Lender's
reasonable discretion.  None of General Contractor and any Design
Professionals shall be an Affiliate of Borrower, either Pledgor or either
Guarantor, and all shall be of acceptable credit quality, as determined by
Lender in its sole discretion.  Lender hereby approves the General
Contract and approves Austin Building Company as General
Contractor.  General Contractor may not be replaced without Lender's
prior written consent. No Design Professional
may be replaced without Lender's prior written consent, subject to its
reasonable discretion;

     

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

     

    (c) General
Contractor shall have affirmed in writing the validity of the General
Contract.  An additional condition to Closing shall be (i) that
no more than two percent (2%) of the total General Contract may be an
"Allowance" (as such term is defined under the AIA A201-1997 General Conditions
of the Contract for Construction) (excluding general conditions, General
Contractor's fees and the Contractor's Contingency) and such Allowances shall be
subject to Lender's reasonable approval, and (ii) an initial sworn
statement of the General Contractor, approved by Borrower, and Lender covering
all work done prior to Closing, together with a lien waiver covering all work
and materials for which payments have been made by Borrower prior to
Closing;

     

    
      
        
        

      

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

     

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

     

    (f) The Plans
and Specifications and the Finish Standards described on Exhibits "I", which do not
include the Spa Plans and Specifications, are each approved by Lender as of the
date hereof. As so approved, they are sometimes referred to as the "Approved Plans and
Specifications" and the "Approved Finish
Standards," respectively.  Other than Change Orders permitted
pursuant to the terms of this Agreement and Change Orders entered into prior to
the date of this Agreement, all of which are listed on Exhibit R and copies
of which have been provided by Borrower to Lender, no changes to the Approved
Plans and Specifications or the Approved Finish Standards shall be permitted
without Lender's prior written approval to be determined in Lender's reasonable
discretion except for Change Orders that do not require Lender's approval under
this Agreement.  Borrower shall finish all Residential Units and the
Hotel to the Approved Finish Standards as part of the Construction required
hereunder;

     

    (g) The
Construction Schedule;

     

    (h) The Soil
Report;

     

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

     

    (j) A report
from Lender's Consultant that contains an analysis of the Approved Plans and
Specifications, the Budget, the Construction Schedule, the General Contract, all
subcontracts then existing and the Soil Report.  Such report shall be
solely for the benefit of Lender and shall contain (i) an analysis
satisfactory to Lender demonstrating the adequacy of the Budget to complete the
Project and (ii) a confirmation that the Construction Schedule is
realistic.  Lender's Consultant shall monitor construction of the
Project and shall visit the Project at least one (1) time each month, and shall
certify as to amounts of construction costs for all requested 

     

    
      
        
        

      

      
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    fundings;
each report of Lender's Consultant is for the sole benefit of Lender and Lender
shall not be bound by any recommendation or conclusion of Lender's
Consultant;

     

    (k) Each
Architect's Certificate;

     

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

     

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

     

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

     

    
      	
              9.2  

            	
              Construction
      Deliveries Required as of Full Loan
Opening.

            

    

     

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

     

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

     

    (b) Executed
contract(s) for all owner direct cost items (except for non-material items)
signed by the applicable suppliers of such items, including, without limitation,
those for the purchase of the furniture, fixtures and equipment for the
Project;

     

    (c) Borrower
has provided evidence to Lender that all of the work contemplated by that
certain Waste Management Plan dated March 4, 2008 and prepared by Terracon
Consultants, Inc., and any amendments or updates thereto (the "Waste Management
Plan") contemplated to be performed on or before the Full Loan Opening,
has been completed or otherwise addressed to Lender's reasonable satisfaction,
such evidence to include, but not be limited to, a written statement from an
authorized representative of Terracon Consultants, Inc., affirming that the
recommendations of such Waste Management Plan were complied with and no further
actions, other than the ongoing use and maintenance of the water filtration
system during the operation of the Project, are required to address the
conditions at the Project site that were disclosed in any of Environmental
Reports delivered to Lender;

     

    (d) Hotel
Operator, and, as may be required by the Hotel Documents, Starwood Hotels &
Resorts Worldwide, Inc., shall have approved the Approved Plans and
Specifications (including, without limitation, the Spa Plans and Specifications,
as approved by Lender) and Approved Finish Standards and Borrower shall have
provided to Lender evidence of such approval, reasonably satisfactory to
Lender;

     

    (e) To the
extent not previously delivered at Closing, the Required Permits, and updates
thereof, no later than thirty (30) days prior to Full Loan Opening;

     

    
      
        
        

      

      
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    (f) Fully
executed Venue Documents and collateral assignment, estoppel and subordination
agreements relating thereto, in forms, on terms and with counterparties
acceptable to Lender; and

     

    (g) A fully
executed amendment to the Hotel Operating Agreement (the “Spa Amendment”)
providing for (i) the management of the spa related to the Hotel, and (ii) the
plans and specifications for finishout of the spa facility (the “Spa Plans and
Specifications”) on terms acceptable to the Lender.  The Spa Plans and
Specifications, once approved by Lender in conjunction with approval of the Spa
Amendment, will be part of the Approved Plans and Specifications
hereunder.

     

    Article
10

     

    BUDGET,
CONTINGENCY FUND AND CHANGE ORDERS

     

    
      	
              10.1  

            	
              Budget.

            

    

     

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

     

    
      	
              10.2  

            	
              Budget
      Line Items.

            

    

     

    (a) The
Budget shall include as line items ("Budget Line Items"),
to the extent determined to be applicable by Lender in its reasonable
discretion, the cost of all labor, materials, equipment, fixtures and
furnishings needed for the completion of the Construction, and all other costs,
fees and expenses relating in any way whatsoever to the Construction of the
Improvements, marketing and sales costs, commissions, operating deficits, real
estate taxes, and all other sums due in connection with Construction and
operation of the Project, the Loan, and 

     

    
      
        
        

      

      
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    this
Agreement.  Each line item in the trade breakdown of the General
Contract as provided to and approved by Lender prior to the Closing shall be
considered a separate Budget Line Item for all purposes of this Agreement
whether or not separately shown as Budget Line Items on the Budget attached
hereto. Borrower agrees that all Loan proceeds disbursed by Lender shall be used
only for the Budget Line Items for which such proceeds were disbursed, except as
reallocated in accordance with this Agreement or otherwise permitted by Lender
in its reasonable discretion.  The Budget shall not contain any line
items payable to Borrower, either Guarantor or any Affiliate of either Borrower
or either Guarantor and Borrower and each Guarantor shall not pay or cause to be
paid any Loan proceeds to any Affiliate of either, except for the Permitted
Affiliate Expenses.  The Budget shall include as Budget Line Items,
outside of Owner's Contingency, (i) all fees and sums payable to Hotel
Operator or its Affiliates pursuant to the Hotel Documents, including without
limitation, (a) the marketing assistance fee of $1,250 per Residential Unit
payable in twenty-four (24) equal monthly installments commencing upon the
effective date of the Condominium Marketing License Agreement,
(b) pre-opening services budget of $2,536,085, (c) pre-opening
information technology budget of $1,261,604 (which shall be included within the
TV Lease and Technology Line Item), (d) pre-opening inventories budget of
$3,276,000, (e) FF&E of $15,000 per Hotel key, (f) technical
services fees of $513,000, consisting of $1,250 per Hotel key, plus $1,000 per
Residential Unit, and (g) reimbursable expenses under the Technical
Services Agreement up to $5,000 per Hotel key and initial working capital budget
of $1500 per Hotel key, but excluding the Condominium Licensing Fee of 4.5% of
gross sales revenue per Residential Unit, which shall be payable to Hotel
Operator from sales proceeds, as opposed to the Budget, and (ii) all costs
contemplated by the Waste Management Plan.

     

    (b) Borrower
shall have the right to reallocate cost savings effected by a final Change Order
or other appropriate final documentation to other Budget Line Items subject to
(x) Lender's prior written consent, in its reasonable discretion, and (y)
the limits contained in this Section 10.2 and
Section 10.3 of
this Agreement. No
reallocations shall be permitted to or from the Interest Reserve Budget Line
Item, Developer Fee Budget Line Item or for any amounts payable to Borrower,
either Guarantor or any Affiliates of Borrower or either
Guarantor.  If there is a savings in Hard Costs upon completion of the
construction work contemplated by the General Contract, as determined by Lender
in its reasonable discretion, savings may be reallocated to Owner's Contingency
(except to the extent a portion of such savings are paid to the General
Contractor pursuant to the terms of the General
Contract).  Notwithstanding the foregoing in the immediately preceding
sentence and subject to Lender's reasonable approval, Borrower may reallocate
any final savings in Hard Costs, which accrue prior to completion of the
Project, to the Owner's Contingency for use by Borrower for other Hard Costs
and/or Soft Costs.  If the total and final expenditures for any Soft
Cost Budget Line Item are less than the amount provided for in the Budget, then
the savings may be reallocated to the Owner's Contingency.  In the
event that the final costs of the Project are less than the total amount of
sources of funds in the Budget (including the Loan), the amount of the cost
savings shall not be available for borrowing (e.g., as a return of
equity).  Without limitation of the foregoing, if as a result of any
amendment or modification of any Subcontract as permitted by this Agreement the
Borrower realizes any savings, the amount of such savings shall be reallocated
to the Owner's Contingency.

     

    (c) Except as
reallocated in accordance with this Agreement or otherwise permitted by Lender
in its reasonable discretion, Lender shall not be obligated to disburse any
amount for 

     

    
      
        
        

      

      
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    any
category of costs set forth as a Budget Line Item that is greater than the
amount set forth for such category in the applicable Budget Line
Item.  Borrower shall pay as they become due all amounts set forth in
the Budget with respect to costs to be paid for by Borrower.

     

    
      	
              10.3  

            	
              Owner's
      Contingency.

            

    

     

    The
Budget shall contain a contingency Budget Line Item available to Borrower for
payment of Hard Costs and Soft Costs that is separate and apart from General
Contractor's contingency in the General Contract (the "Owner's
Contingency").  At Closing, the funds in the Owner's
Contingency Budget Line Item must be in an amount equal to $5,100,000.00, and at
Full Loan Opening, the remaining unallocated Owner's Contingency must equal at
least 4% of the unpaid cost of all construction hard cost Budget Line
Items.

     

    Lender
shall not be obligated to disburse or reallocate all or any part of the Owner's
Contingency, except as set forth herein.  The Owner's Contingency may
be used by Borrower to pay the cost of Change Orders (which have been approved
by Lender or as to which Lender's approval is not required under Section 10.5) or
reallocated to other Budget Line Items on a pro rata basis over the
course of Construction according to the percentage of construction trade items
(which shall equal the amount of the General Contract Price less general
conditions costs, the General Contractor’s fee and any Contractor Contingency)
expended by Borrower.

     

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

     

    
      	
              10.4  

            	
              Optional
      Method for Payment of Interest / Additional Interest
    Reserve.

            

    

     

    For
Borrower's benefit, the Budget includes a Budget Line Item for interest on the
Loan (the "Interest
Reserve Budget Line Item"). Prior to Full Loan Opening, Borrower will pay
interest on the Loan from the Initial Equity Investment.  Upon Full
Loan Opening, the Interest Reserve Budget Line Item will be in the amount equal
to the difference between (i) $4,700,000.00 and (ii) the amount of interest on
the Loan paid by Borrower prior to Full Loan Opening.  Borrower hereby
authorizes Lender from time to time after Full Loan Opening,  for the
mutual convenience of Lender and Borrower, to disburse Loan proceeds to pay all
the then accrued interest on the Note when due, regardless of whether Borrower
shall have specifically requested a disbursement of such amount.  Any
such disbursement, if made, shall be added to the outstanding principal balance
of the Note and shall, when disbursed, bear interest pursuant to the
Note.  Lender will promptly notify Borrower of any such
disbursement.  So long as no Event of Default or material Default
exists, Borrower may utilize the Interest Reserve Budget Line Item to pay
interest on the Loan.  Without limiting the foregoing, (i) once
the Interest Reserve Budget Line Item has been expended or (ii) if an Event
of Default or material Default exists, Borrower shall pay interest from the
Additional Interest Reserve and, to the extent not available in the Additional
Interest Reserve, from Borrower's own funds.  Lender will notify
Borrower in writing 

     

    
      
        
        

      

      
        39

        
          

        

      

      
        
        

      

    

     

    when
additional amounts are required to be funded into the Additional Interest
Reserve together with reasonable backup documentation of the amount required to
be funded (the "Funding
Notice").  Borrower will fund the required amounts into the
Additional Interest Reserve within ten (10) days of receipt of the related
Funding Notice.

     

    
      	
              10.5  

            	
              Change
      Orders.

            

    

     

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

     

    Article
11

     

    SUFFICIENCY
OF LOAN

     

    
      	
              11.1  

            	
              Loan
      In Balance.

            

    

     

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

     

    
      
        
        

      

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

     

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

     

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

     

    (d) "Lender's Estimate of
Remaining Costs" shall mean the amount which Lender estimates in its
reasonable discretion is necessary to pay for all Hard Costs and Soft Costs of
the Project which have not yet been paid, including, without limitation, the
following:  (i) all costs of the Construction in accordance with
the Approved Plans and Specifications; (ii) all costs required to complete
the preparation of the Residential Units and the Hotel in accordance with the
Approved Finish Standards, including, without limitation, all finishes of
Residential Units required to be paid for by Borrower under Sales Agreements or
reasonably anticipated for unsold Residential Units; (iii) marketing and
sales costs for the Residential Units (other than closing costs which are paid
from gross sales proceeds or by Borrower pursuant to Section 10.1);
(iv) marketing, sales, and operation costs for the Hotel, Commercial Space
and Venue; (v) costs of furniture, fixtures and equipment for the Hotel,
Commercial Space and Venue; (vi) any work to be completed by Borrower in
accordance with the Budget; (vii) all expenses payable or reimbursable to
Lender under the terms of this Agreement; (viii) all real estate taxes,
insurance premiums and operating costs of the Project (in excess of any Net
Operating Income which Lender estimates will be available for payment of such
costs); (ix) all amounts needed for tenant 

     

    
      
        
        

      

      
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    allowances,
tenant improvements and leasing commissions with respect to executed Leases and
with respect to unleased space at the Project; and (x) all other amounts of
any type or nature incurred or expected to be incurred in connection with the
acquisition, Construction, marketing and sale of the Project or in order for
Borrower to comply with the Loan Documents or the requirements of Governmental
Authorities. Lender's Estimate of Remaining Costs excludes interest requirements
for the Loan since these are addressed with the Interest Reserve Funding
Requirement.

     

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

     

    Article
12

     

    CONSTRUCTION
PAYOUT REQUIREMENTS

     

    
      	
              12.1  

            	
              Applicability
      of Sections.

            

    

     

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

     

    
      	
              12.2  

            	
              Monthly
      Payouts.

            

    

     

    After the
Full Opening of the Loan, further disbursements of proceeds of the Loan shall be
made during Construction from time to time as the Construction progresses, but
no more frequently than once in each calendar month, except to pay interest from
the Interest Reserve Budget Line Item in accordance with Section 10.4 or as
Lender may otherwise permit in its sole discretion.  Hard Costs shall
be disbursed as incurred, less the Retainage.  The General
Contractor's fee shall be disbursed on a prorata basis according
to the percentage of construction 

     

    
      
        
        

      

      
        42

        
          

        

      

      
        
        

      

    

     

    trade
items (excluding general conditions, Contractor's fees and the Contractor's
Contingency) completed.  All disbursements of Loan proceeds must be
approved by Lender in its reasonable discretion based on costs expended as
contained in the Budget and must be at least $500,000.00 (except for the final
draw of the Loan).  Lender shall have no obligation to disburse funds
(i) if an Event of Default or Default has occurred and is continuing or
(ii) subsequent to April 30, 2013.  Lender reserves the right to
at any time to make disbursements into an escrow to be subsequently disbursed to
Borrower by the Title Insurer.

     

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

     

    
      	
              12.3  

            	
              Documents
      to be Furnished for Each
Disbursement.

            

    

     

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

     

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

     

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

     

    
      
        
        

      

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

     

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

     

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

     

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

     

    (g) A monthly
report from Lender's Consultant (who shall be retained by Lender, but whose fees
and expenses shall be reimbursed to Lender by Borrower from time to time upon
request by Lender) that contains an analysis satisfactory to Lender
demonstrating the adequacy of the Budget to complete the Project, a confirmation
that Construction is proceeding in accordance with the Construction Schedule and
the Approved Plans and Specifications, and a certification as to amounts of
Construction costs for the applicable requested funding, provided, however, that
the opinion of Lender's Consultant shall not be binding on Lender;

     

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

     

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

     

    (j) Verification
of expenditures for Soft Costs;

     

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

     

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

     

    (m) Evidence
satisfactory to Lender, in its reasonable business judgment, that the Loan is In
Balance;

     

    (n) True,
correct and complete copies of all reports provided to Borrower, any Guarantor
or any Affiliate of Borrower or any Guarantor with regard to the Construction
and/or the request for an advance of Loan proceeds, including, without
limitation, the reports prepared by Newbanks, Inc./ Dallas and La Jolla Pacific,
Ltd.; and

     

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

     

    
      
        
        

      

      
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              12.4  

            	
              Retainages.

            

    

     

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

     

    
      	
              12.5  

            	
              Disbursements
      for Materials Stored On-Site.

            

    

     

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

     

    
      	
              12.6  

            	
              Disbursements
      for Off-site Materials.

            

    

     

    Lender
shall make disbursements for materials stored off-site, in which event all of
the requirements of Section 12.5 shall be
applicable to such disbursement, provided that the following additional
requirements must have been complied with:  (a) such stored
materials are stored in a bonded public warehouse or another facility acceptable
to Lender in its sole discretion; (b) Borrower has caused any warehouseman
(as defined in Section 7-102 of the Uniform Commercial Code) that possesses,
holds or controls the stored materials to execute (i) a bailment letter in
the form of Exhibit K and
(ii) a non-negotiable warehouse receipt covering such stored materials in
form sufficient to enable Lender to have a perfected security interest therein
and (c) Borrower has caused any party other than a warehouseman that
possesses, holds or controls the stored materials to execute and deliver to
Lender a bailment letter in the form of Exhibit L.  At
any one time, the maximum amount of disbursements for materials stored offsite

     

    
      
        
        

      

      
        45

        
          

        

      

      
        
        

      

    

     

    shall not
exceed $3,000,000 with respect to materials  covered by the General
Contract plus $3,000,000 for materials under owner direct contracts other than
the General Contract (such amounts are subject to increase at Lender's
reasonable discretion upon request of Borrower). If, as of the Closing, Borrower
is storing any materials off-site, Borrower will cause the warehouseman storing
such materials to execute and deliver to Lender a bailment letter in the form of
Exhibit
K.   In addition, if Borrower proposes to store materials
off-site in premises leased by Borrower, Borrower must first obtain Lender's
written consent to such proposed action, which consent will not be unreasonably
withheld, and if such consent is given, Borrower must obtain Lender's written
consent to the lease applicable to the premises in which such materials are to
be stored, and the Borrower must provide to Lender an agreement (which will
include a waiver of landlord's lien) in form as required by Lender, executed by
the landlord under such lease.

     

    
      	
              12.7  

            	
              Specific
      Limitation on Disbursements.

            

    

     

    No
amounts in the Budget shall be disbursed to Borrower, either Pledgor, either
Guarantor, any direct or indirect beneficial owner of an interest in Borrower,
either Pledgor, either Guarantor or any Affiliate of any of the foregoing,
except for (a) the Developer Fee Budget Line Item equal to $6,000,000, with
$3,750,000 left to fund (the "Permitted Affiliate
Expenses"), which shall be paid, provided no Event of Default or material
Default exists and the Loan is In Balance, in equal monthly installments of
$150,000.00 over the remaining term of the Construction Schedule (or until such
time as such amount has been fully disbursed) provided that if the Construction
Schedule is extended by Change Order, then such monthly amount will be adjusted
pro rata to reflect the extended Construction Schedule.  Borrower
shall have no right to borrow any portion of the developer's fee referred to in
clause (a)(ii) above from Lender.

     

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

     

    
      	
              12.8  

            	
              Disbursements
      Related to Commercial Space Leases.

            

    

     

    Loan
proceeds may be used to fund leasing commissions and tenant improvements with
respect to Approved Leases, provided (a) the maximum cost to be funded with
respect to each Commercial Space Lease shall not exceed (i) for tenant
improvements, the dollar amount per Rentable Square Foot set forth on Exhibit Q attached
hereto with respect to the type of space being leased (the "Allowable Tenant
Improvements"), and (ii) for leasing commissions, the applicable
dollar amount set forth on Exhibit Q, payable to
Borrower's representative and the applicable Tenant's representative as set
forth on Exhibit
Q and (b) the undisbursed amount in the (i) Tenant Improvements
Budget Line Item must be sufficient to pay for the Allowable Tenant Improvements
for all Commercial Space for which tenant improvements have not been paid, and
(ii) the undisbursed amount in the Commercial Leasing Commissions Budget
Line Item must equal at least the applicable dollar amount set forth on Exhibit Q times the
number of unleased Rentable Square Feet in the Commercial
Space.  Borrower shall fund any excess as the first dollars to be
funded for any Commercial Space, provided that cost savings in (i) tenant
improvements for any one Commercial Space Lease may be reallocated to tenant
improvements with respect to any other Commercial Space Lease, and
(ii) leasing commissions for any one Commercial Space Lease may be
reallocated to leasing commissions with respect to any other 

     

    
      
        
        

      

      
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    Commercial
Space Lease. In addition to any items to be provided by Borrower pursuant to
Section 12.3
hereof, and as a condition precedent to the first advance for any tenant
improvements pursuant to a Lease, Borrower shall furnish to Lender for approval
a budget for the tenant improvements, an estimated schedule for the completion
of the improvements, copies of all proposed contracts with trades or
subcontractors relating to the completion of the tenant improvements, plans and
specifications for the tenant improvements and such other documents and
information which will demonstrate that the tenant improvements will be
completed in accordance with the Lease and the Budget.  Borrower shall
also promptly provide to Lender proof of payment of all leasing commissions and
compliance by Borrower with the requirements of Exhibit
Q.

     

    Article
13

     

    FINAL
DISBURSEMENT FOR CONSTRUCTION

     

    
      	
              13.1  

            	
              Final
      Disbursement for Construction.

            

    

     

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

     

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

     

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

     

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

     

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

     

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

     

    (f) Borrower
shall have furnished to Lender copies of all final waivers of lien (other than
the liens that Borrower is contesting and has insured or bonded over in
accordance with Section
15.1(f) of this Agreement), and sworn statements from contractors,
subcontractors and 

     

    
      
        
        

      

      
        47

        
          

        

      

      
        
        

      

    

     

    material
suppliers and an affidavit from the General Contractor in accordance with the
mechanic's lien law of the State or as otherwise established by
Lender;

     

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

     

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

     

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

     

    Article
14

     

    SALE
OF RESIDENTIAL UNITS

     

    
      	
              14.1  

            	
              Price
      List Schedule.

            

    

     

    Borrower
has submitted to Lender for its written approval a Price List Schedule (the
"Price List
Schedule") stating, at a minimum, a detailed breakdown of each
condominium Residential Unit's size, type, location and gross sales price
("List Price")
for each Residential Unit (including, but not limited to, a weighted average
gross sales price (excluding Parking Spaces and Upgrades) of not less than $620
per Saleable Square Foot for each Residential Unit).  The approved
Price List Schedule is attached to this Agreement as Exhibit
M-2.  No changes to the approved Price List Schedule shall be
permitted without Lender's prior written approval, in Lender's sole and
reasonable discretion.  The List Prices for each Residential Unit
include the price of one (1) Parking Space per bedroom in such Residential Unit,
up to two (2) Parking Spaces per Residential Unit, except for the penthouse
Residential Units on floors 35, 36 and 37, which are each allocated three (3)
Parking Spaces but does not include storage space.  Of the 300 Parking
Spaces allocated to the Residential Units collectively, 275 Parking Spaces shall
be included in the List Prices of such Residential Units as set forth above, and
25 Parking Spaces (the "Excess Parking
Spaces") shall not be included in the List Price of any Residential Unit
and shall be available for sale at an additional charge.

     

    
      	
              14.2  

            	
              Sales
      Agreements.

            

    

     

    Each
Residential Unit shall be sold under a written agreement (the "Sales Agreement") in
the form of the sales agreements attached hereto as Exhibit O, or on a
form otherwise approved by Lender, in its sole discretion in all material
respects conforming to all Laws, including those requiring disclosures to
prospective and actual buyers.  Lender has previously approved the
form of the Sales Agreement to be used for such Residential Unit sales, which
form of sales contract is attached hereto as Exhibit O and has
approved the Sales Agreement for each of the pending sales listed on Exhibit
M-1.  No Residential Unit may be leased, sold or conveyed under
any lease, conditional sales contract or other arrangement where Borrower
retains a deferred portion of the purchase price or any residual or contingent
interest in the Residential Unit, including any 

     

    
      
        
        

      

      
        48

        
          

        

      

      
        
        

      

    

     

    purchase
money security interest, without the express prior written consent of Lender in
each instance.  All agreements (each, also a "Sales Agreement")
with respect to the sale of any portion of the Project other than the
Residential Units shall be subject to the prior written approval of Lender in
its reasonable discretion; provided, however, that (i) no portion of the
Project other than Residential Units that are sold as permitted by this
Agreement, may be sold without the prior written consent of Lender, which
consent may be granted or withheld by Lender, in its sole discretion and
(ii) Borrower may not enter into any Sales Agreement for any part of the
Project, other than Sales Agreements for Residential Units which satisfy the
requirements set forth in this Agreement, without the Lender's prior written
consent, which may be granted or withheld in Lender's sole discretion. Borrower
shall deliver to Lender a copy of each executed Sales Agreement within
thirty-one (31) days of its execution.  Borrower shall promptly
enforce the obligations of the purchasers under each Sales Agreement upon
default by any such purchaser, except as Lender may otherwise agree in writing
in its reasonable discretion.

     

    
      	
              14.3  

            	
              Purchaser
      Deposits.

            

    

     

    (a) On or
before Closing (as to earnest money deposits received prior to Closing), and
promptly after receiving any additional earnest money deposits made by the
Residential Unit Purchasers from time to time (as to earnest money deposits
received following Closing), Borrower shall deposit with Armbrust & Brown,
L.L.P. and Heritage Title Company of Austin, Inc., jointly and severally, as
escrow agent (or any successor agent approved by Lender in writing in its sole
discretion) (together, jointly and severally, the "Escrow Agent"), in
accordance with the Escrow Agreement, and shall cause Escrow Agent to maintain
in one or more accounts titled in the name and subject to the control of Escrow
Agent all earnest money deposits paid by Residential Unit Purchasers under the
Sales Agreements (the "Earnest Money
Deposits").

     

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

     

    (c) If a
Residential Unit Purchaser desires to alter the Approved Finish Standards, which
results in additional costs to Borrower to complete a Residential Unit (an
"Upgrade"),
Borrower shall require such Residential Unit Purchaser to deposit funds with
Lender prior to the commencement of any work relating to such Upgrade (the
"Upgrade
Deposit").  Borrower shall require Residential Unit Purchasers
to make Upgrade Deposits equal to one hundred percent (100%) of the cost to
Borrower of such Upgrade.  All Upgrade or Residential Unit
customization costs shall be subject to Lender's approval if such costs for any
Residential Unit are in excess of ($40.00) per Saleable Square
Foot.  Loan proceeds shall not be available for payment of costs
incurred in connection with Upgrades or customization items, the sole
responsibility for such 

     

    
      
        
        

      

      
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    costs
being with Borrower.  So long as permitted under applicable Laws,
Lender shall permit Borrower to use Upgrade Deposits to pay for such Upgrades as
provided in this Agreement.  To the extent that the amount of Upgrade
Deposit on deposit with Lender is not sufficient to pay in full the costs of any
such Upgrades when due, Borrower shall promptly deposit with Lender an
additional Equity Investment equal to the costs of the Upgrade.  Such
deposit will be required at the time of the execution of the Sales Agreement
containing the Upgrade.  Lender shall also be entitled to inspect any
Upgrade work, and shall be entitled to review and approve reasonable supporting
documentation with respect to such Upgrade work, in a manner commensurate with
other Hard Cost disbursements before approving payment
therefor.  Borrower shall request release of Upgrade Deposits for
payment of costs of the related Upgrade at the time and in the manner, and, to
the extent lawful, subject to the conditions applicable to, Construction
Disbursements.

     

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

     

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

     

    
      	
              14.4  

            	
              Residential
      Unit Sales.

            

    

     

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

     

    (a) A Sales
Agreement is executed with the Residential Unit Purchaser, the form and
substance of which does not materially differ from the form of sales contract
attached hereto as Exhibit O and
approved by Lender in writing and that otherwise conforms to the requirements of

     

    
      
        
        

      

      
        50

        
          

        

      

      
        
        

      

    

     

    this
Agreement, and Borrower has not entered into any side agreements relating to the
purchase of the Residential Units with any Residential Unit
Purchaser.

     

    (b) The Sales
Agreement requires full payment in cash not later than closing, with no purchase
money financing provided by Borrower, and the sale of the Residential Unit is
for a base purchase price (including one (1) Parking Space per bedroom in such
Residential Unit, up to two (2) Parking Spaces per Residential Unit, except for
the penthouse Residential Units, which are allocated three (3) Parking Spaces
per Residential Unit) that is greater than or equal to  such
Residential Unit's List Price set forth in the Price List Schedule, excluding
from such base sale price any Upgrades and any seller concessions or discounts;
provided, however, Borrower may hereafter enter into Sales Agreements for
Residential Units with a base purchase price that is not less than 90% the
subject Residential Unit's List Price set forth in the Price List Schedule so
long as at no time will the aggregate of the base purchase prices under all then
existing Sales Agreements be less than 95% of the related List Prices for all
Residential Units then subject to a Sales Agreement as set forth on the Price
List Schedule;

     

    (c) The Sales
Agreement requires a non-refundable Earnest Money Deposit of at least ten
percent (10%) of the gross sales price to be deposited with Lender or the Escrow
Agent in accordance with Section 14.3 hereof
except as otherwise set forth on Exhibit
M-1;

     

    (d) The
Residential Unit Purchaser is not affiliated with Borrower, either Pledgor or
either Guarantor, and no more than two Residential Units may be purchased by any
single Residential Unit Purchaser or its Affiliates without Lender's prior
approval, except that up to three (3) Residential Units, in the aggregate, may
be sold to Affiliates of Borrower, either Pledgor or either
Guarantor;

     

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

     

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

     

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

     

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

     

    (i) Any Sales
Agreement executed (a) on or before May 31, 2011, the date that the residential
condominium component of the Project is scheduled to be completed, must provide
for a closing of the sale of the Residential Unit in question on or before the
later (i) thirty (30) days after Borrower secures a certificate of
occupancy for the Residential Unit being sold, or (ii) one hundred eighty
(180) days after the effective date of such Sales Agreement, but in no

     

    
      
        
        

      

      
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    event
later than three hundred sixty (360) days after the scheduled date of completion
for such Residential Unit as currently set forth in the Construction Schedule,
and (b) after May 31, 2011 must provide for a closing of the sale of the
Residential Unit in question on or before one hundred eighty (180) days after
the effective date of such Sales Agreement;

     

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

     

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

     

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

     

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

     

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

     

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

     

    "Qualifying Sales
Agreement" shall mean (i) an agreement for the sale of a Residential
Unit meeting all of the conditions required by this Agreement, and
(ii) those certain Sales Agreements described on Exhibit M attached
hereto that have been delivered to Lender prior to the date of this
Agreement.  Borrower shall not, without the prior written consent of
Lender, enter into any Sales Agreement that is not a Qualifying Sales Agreement,
or any other documentation pertaining to the sale of any portion of the Project;
provided, however, that Borrower may enter into a Qualifying Sales Agreement
subject to a commercially reasonable financing contingency for up to sixty (60)
days provided such Qualifying Sales Agreements will not be deemed Qualifying
Sales Agreements until the expiration or satisfaction of the financing
contingency.  Borrower shall not terminate a 

     

    
      
        
        

      

      
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    Qualifying
Sales Agreement for any reason other than the default of the Residential Unit
Purchaser thereunder without Lender's prior written consent.

     

    
      	
              14.5  

            	
              Sales
      Operations and Seller's Obligations; Amendment and Termination of Sales
      Agreements.

            

    

     

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

     

    (b) Borrower
may not amend or modify any Sales Agreement without Lender's prior written
consent, which will not be unreasonably withheld except Borrower may amend a
Sales Agreement without Lender's prior written consent to provide for
(i) upgrades to the Residential Unit to be purchased pursuant to such Sales
Agreement provided that the Residential Unit Purchaser under such Sales
Agreement pays the costs of the upgrades contemporaneously with the execution of
the amendment, and (ii) so long as the Lender is satisfied that the
remaining, uncommitted Parking Spaces and storage units are sufficient for the
sale of Residential Units not then subject to a Sales Agreement, the addition of
one or more Parking Spaces or storage units to the Sales Agreement in accordance
with the approved Price List Schedule provided that the Residential Unit
Purchaser under such Sales Agreement pays an additional Earnest Money Deposit in
the amount of 10% of the cost of such Parking Space(s) and/or storage unit(s)
contemporaneously with the execution of the amendment.  In such case,
Borrower will provide to Lender a copy of the amendment promptly following its
execution.

     

    (c) Borrower
may not terminate a Sales Agreement without Lender's prior written consent
except as a result of the default of the Residential Unit Purchaser under such
Sales Agreement and provided the Deposits paid under such Sales Agreement are
released to Borrower, as the seller, subject to the requirements of the Loan
Documents in regard to such Deposits.

     

    
      	
              14.6  

            	
              Delivery
      of Sales Information and Documents.

            

    

     

    Within
thirty (30) days after the end of each month, Borrower shall deliver to Lender a
sales report (the "Sales Report")
showing (a) each Residential Unit under a Sales Agreement, including the
date of the Sales Agreement, the Residential Unit number, the base contract
price plus the charge for Upgrades, the amount of the Earnest Money Deposit and,
if applicable, the Upgrade Deposit, and the date expected to close; and
(b) for each Residential Unit closed, the Residential Unit number, the base
contract price plus the charge for Upgrades, the date closed, and the Net Sales
Proceeds from the sale of such Residential Unit; and (c) for each Sales
Agreement cancelled by a Residential Unit Purchaser, the Residential Unit
number, the date cancelled, the reason the Sales Agreement was cancelled by the
Residential Unit Purchaser and a statement regarding whether the Deposit was
returned to the Residential Unit Purchaser or retained by Borrower (and remitted
to Lender).  Borrower shall also promptly deliver to Lender such other
sales information and documents that Lender from time to time may reasonably
request, including operating statements, all new Sales Agreements, and notice of
or information regarding any claimed breach or disavowal of buyer's or seller's
obligations under any one or more Sales Agreements.

     

    
      
        
        

      

      
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              14.7  

            	
              Borrower's
      Acknowledgment Regarding Buyer
Financing.

            

    

     

    Borrower
acknowledges that Lender is not committed to, and does not intend to offer
to,  provide any financing to or for the buyers of any individual
Residential Units or any other part of the Project.

     

    
      	
              14.8  

            	
              Condominium
      Regime.

            

    

     

    (a)           Borrower
shall revise the Condominium Information Statement, the Master Condominium
Declaration and the Residential Condominium Declaration in accordance with Exhibit N attached
hereto.  Borrower shall promptly, and in any event prior to the
closing of the first purchase and sale of any Residential Unit, cause the
Condominium Documents, including, without limitation, the Master Condominium
Declaration and the Residential Condominium Declaration, each in form and
containing terms approved by Lender as provided below, to be filed or recorded,
as appropriate. At least thirty (30) days prior to recording or filing any of
the Condominium Documents, Borrower shall submit to Lender for Lender's final
review and approval (which approval will not be unreasonably withheld provided
the final Condominium Documents provided by Borrower to Lender are in
substantially the forms of the Condominium Documents approved by Lender prior to
the Closing with the changes required by Exhibit N made
thereto), executed copies of the proposed Condominium Documents, which, once
approved, shall be filed or recorded, as applicable.  Borrower shall
on an ongoing basis comply with all requirements of ILSA, TUCA and all other
Applicable Condominium Laws.  Without limiting the generality of the
foregoing, Borrower shall (i) timely file its Annual Report of Activity
with HUD each year during the term hereof; (ii) pay any fees in connection
therewith before the due date; (iii) deliver financial statements to HUD
within one hundred and twenty (120) days after the close of Borrower's fiscal
year; and (iv) amend the HUD Property Report to reflect any change in any
material representation of a material fact required in the Statement of Record
within fifteen (15) days of learning of the change.  Borrower shall
deliver to Lender (simultaneously with delivery to the applicable governmental
authority) copies of all filings and notices delivered to HUD in accordance with
ILSA, and Borrower shall, within five (5) Business Days after receipt thereof,
deliver to Lender all notices, requests, correspondence and demands delivered by
HUD, the State or the City to Borrower.  Borrower shall not amend the
HUD Property Report or the City or State Property Report without Lender's prior
written consent which approval will not be unreasonably
withheld.  Provided that no Event of Default or material Default
exists, Lender, prior to the initial conveyance of Residential Units, shall
execute such subordinations of the Deed of Trust and other documents as are
needed to permit the recordation or filing of Condominium
Documents.  Prior to such execution by Lender and as a condition
thereto, Borrower shall furnish to Lender a copy of (a) a notice sent by
Borrower to the condominium association informing the association of Lender's
rights under the declaration as a beneficiary under the Deed of Trust and
furnishing the association with Lender's address for notice purposes,
(b) resignations of all Borrower-appointed directors and officers, which
Lender may deliver at any time an Event of Default exists, and (c) such
other documents in connection with the establishment of such condominium regime
as Lender reasonably requests.

     

    (b)           Notwithstanding
the foregoing or any other provision of this Agreement, Lender shall not be
deemed to have represented or warranted that the Condominium Documents comply

     

    
      
        
        

      

      
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    with
Applicable Condominium Laws.  Lender shall have no liability for the
failure of the Condominium Documents to comply with any Applicable Condominium
Law.

     

    (c)           Borrower
represents and warrants that:

     

    (i)           The
sale of Units, as defined in the Declarations, has complied, and at all times
will comply, with ILSA and regulations promulgated in connection therewith and
Texas Uniform Condominium Act, Tex. Prop. Code, Ch. 82 (2009) ("TUCA").

     

    (ii)           Borrower
has delivered to Lender true, correct and complete copies of all ILSA-related
disclosure statements and property reports that, as of the date hereof, have
been prepared or delivered in connection with the Condominiums, the Condominium
Documents or the Project, together with evidence those items that are, as of the
date hereof, required by law to be delivered to prospective purchasers of
Residential Units, have been so delivered.

     

    (iii)           From
time-to-time as Residential Units are sold, Borrower shall deliver to Lender
evidence those items required by Applicable Condominium Laws to be delivered to
prospective purchasers of Residential Units have been so delivered in a timely
manner.

     

    (iv)           There
shall be no material agreements relating to the Condominiums entered into after
date of this Agreement other than the Condominium Documents unless the same have
been approved by Lender in advance and in writing, which approval will not be
unreasonably withheld or delayed or are otherwise expressly permitted by this
Agreement (such as the Sales Agreement).

     

    (v)           Borrower
shall at all times (a) exercise its rights and powers
as  "Declarant" "Member" or "Owner" (as defined in the Condominium
Documents) strictly in accordance with this Loan Agreement, the Condominium
Documents and the Applicable Condominium Laws, and (b) take all steps and
action necessary to assure that all officers and directors of the Associations
appointed or elected by Borrower or any principal or affiliate of Borrower,
exercise their rights and powers in accordance with the Applicable Condominium
Laws and consistent with their duties under Applicable Condominium Laws,
including the Texas Business Organizations Code, and the terms and provisions of
this Agreement.

     

    (vi)           Not
later than the recordation of the Master Condominium Declaration and the
Residential Condominium Declaration, Block 21 Hotel/Residential Condominiums
("Residential
Condominium") and the Block 21 Master Condominiums ("Master Condominium") shall
each comply with all of the requirements of TUCA, ILSA, and each other state and
federal law applicable to the creation, management, ownership or operation of
the Residential Condominium or Master Condominium or sale of units located
therein (the "Applicable
Condominium Laws").  Borrower shall indemnify and hold Lender
harmless from any and all costs, damages, claims, or losses incurred by Lender,
including attorneys' fees and court costs, arising from the failure of the
Condominium Documents or the Condominiums to comply with Applicable Condominium
Laws.

     

    
      
        
        

      

      
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    (d)           (i)           Not
later than the date of recordation of the Master Condominium Declaration or the
Residential Condominium Declaration, whichever is first recorded:

     

    (x)           The
Block 21 H/R Condominium Community, Inc., a Texas nonprofit corporation (the
"Residential
Association"), described in the Residential Condominium Declaration shall
have been formed as a nonprofit corporation under the laws of the State of
Texas, the board of directors shall have been appointed or elected in accordance
with the requirements of the Residential Condominium Declaration and the
applicable law and all officers contemplated by the Residential Condominium
Declaration and the bylaws of the Residential  Association shall have
been properly appointed or elected, as the case may be.

     

    (y)           The
Block 21 Master Condominium Community, Inc., a Texas nonprofit corporation (the
"Master Association"),
described in the Master Condominium Declaration shall have been formed as a
nonprofit corporation under the laws of the State of Texas, the board of
directors shall have been appointed or elected in accordance with the
requirements of the Master Condominium Declaration and the applicable law and
all officers contemplated by the Master Condominium Declaration and the bylaws
of the Master Association shall have been properly appointed or elected, as the
case may be.  The Residential Association and Master Association are
referred to collectively as the "Associations."

     

    (ii)           Not
later than 15 days after the recordation of the Master Condominium Declaration
or the Residential Condominium Declaration, whichever is first recorded,
Borrower shall cause the dedicatory instruments with respect to the Condominiums
described in Texas Property Code Section 202.006, as the same may be amended or
superceded, to be recorded in Travis County, Texas and certified copies of the
same delivered to Lender.

     

    (iii)           Concurrently
with the recordation, filing, or adoption, as the case may be, of the
Condominium Documents true, correct, and legible copies thereof, including
without limitation, a certified copy of each of the recorded Master Condominium
Declaration or the Residential Condominium Declaration, the Associations'
certificates of formation, bylaws, minute books, other books and records, and
any rules and regulations and other Condominium Documents which may have been
promulgated, shall have been delivered to Lender and, where applicable, showing
the recordation or filing data.  After the date thereof, Borrower
shall not amend or supplement or consent to the amendment or supplement of any
of the Condominium Documents unless Lender first approves such amendment or
supplement in writing, which approval will not be unreasonably
withheld.  Borrower covenants and agrees to make or cause to be made
each revision to any Condominium Document requested by Lender in Lender's
reasonable judgment.

     

    (e)           Concurrently
with the recordation of the Declarations, Borrower shall cause to be delivered
to the Lender an opinion, reasonably acceptable to the Lender, from Armbrust
& Brown, LLP or, at Borrower's option, other Texas legal counsel acceptable
to Lender, opining that the Condominium Documents are in compliance with the
Applicable Condominium Laws.

     

    
      
        
        

      

      
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    (f)           Concurrently
with the recordation of the Master Condominium Declaration and the Residential
Condominium Declaration, Borrower shall deliver true, complete, and legible
copies of the following to Lender:

     

    (i)           A
current accounting for the Associations' funds and financial statements
certified by Borrower and stating unconditionally that the financial statements
present fairly the financial position of each Association in conformity with
generally accepted accounting principles;

     

    (ii)           The
budgets for the Master Condominium and Residential Condominium in the form
required by TUCA, including Section 82.153 (a) 6 and (b), for the calendar
year(s) the Master Condominium Declaration and the Residential Condominium
Declaration are recorded and the proposed budgets for the calendar year
following such recordation;

     

    (iii)           A
current inventory of tangible personal property owned: by the Associations; or
by Borrower and used in connection with the ownership or operation of the
Condominiums.

     

    (iv)           A
copy of the final as built plans and specifications used for the construction of
the improvements in the Condominiums, together with a CAD version of the
same;

     

    (v)           Certified
duplicate copies of all insurance policies currently in force, in which the
Borrower, the Residential Unit Owners, the Associations, and/or the directors
and officers of the Associations are named as insured persons;

     

    (vi)           Copies
of any certificates of occupancy that have been issued with respect to any
improvements comprising the Condominiums;

     

    (vii)           Any
other permits issued by governmental bodies applicable to the Condominiums and
which are currently in force or which were issued within one year prior to the
date construction of the Project was commenced, including without limitation,
all licenses for the use of public property;

     

    (viii)           Written
warranties of the contractor, subcontractors, suppliers, and manufacturers that
are still effective related to the Project or any portion thereof or interest
therein;

     

    (ix)           A
roster of Owners, Eligible Mortgagees, and Mortgagees, each as defined in the
Declarations, and their addresses and telephone numbers;

     

    (x)           Employment
contracts in which the Associations are a contracting party;

     

    (xi)           Service
contracts in which the Associations are a contracting party or in which the
Associations or the Owners have any obligation to pay a fee to the persons
performing the services;

     

    
      
        
        

      

      
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    (xii)           To
the extent not previously delivered to Lender, true, correct and complete copies
of all other documents and records the Associations are required to keep
pursuant to TUCA § 82.114; and

     

    (xiii)           Copies
of all recorded deeds and all recorded and unrecorded leases evidencing
ownership or leasehold rights in general common elements within the
Condominiums.

     

    (xiv)           During
the term of the Loan, to the extent of any material change in any of the
foregoing or the Condominium Documents, Borrower shall promptly deliver a copy
of the same to Lender.  It is the intention of the Borrower and Lender
that Lender shall have at all times duplicate copies of all of the foregoing
that are in the possession or control of Borrower, including in its capacity as
Declarant under the Declarations.

     

    (g)           The
addresses of the respective Associations for the purposes of Article 18 of the
Master Declaration and Article 16 of the Residential Declaration
are:

     

    Block 21
H/R Condominium Community, Inc.

    c/o
Armbrust & Brown, LLP

    Attn:  Bob
Burton

    100
Congress Avenue, Suite 1300

    Austin,
Texas 78701

     

    Block 21
Master Condominium Community, Inc.

    c/o
Armbrust & Brown, LLP

    Attn:  Bob
Burton

    100
Congress Avenue, Suite 1300

    Austin,
Texas 78701

     

    Borrower
may change the addresses set forth above upon thirty (30) days prior written
notice to Lender specifying the new address or addresses.  On behalf
and for the benefit of Lender, concurrently with the recordation of the Master
Condominium Declaration and the Residential Condominium Declaration, Borrower
shall deliver written notice in accordance with the Declarations to the
Associations that Lender is an "Eligible Mortgagee" with respect to the
Condominiums.  Such notice shall include the name and address of
Lender as set forth in this Agreement. Evidence of the delivery of the foregoing
shall be delivered to Lender not later than five (5) days after filing of the
Certificates of Formation of the Associations or each Association, if filed at
different times.  If the address of an Association shall change,
Borrower shall (i) immediately notify Lender in writing of the new address and
(ii) send notice to such Association at such new address that Lender is an
"Eligible Mortgagee", as defined in the Condominium Documents, together with
such other information as may be required to assure Lender is recognized by each
Association as an Eligible Mortgagee.  Time is of the essence of the
foregoing sentence.

     

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

     

    
      
        
        

      

      
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    14.9           Release
of Residential Units.

     

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

     

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

     

    (ii) No Event
of Default exists;

     

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

     

    (iv) the
Release Price (defined below) for the Residential Unit in an amount determined
as set forth below has been funded into the Net Sales Proceeds Account (defined
below) pending Lender’s determination of whether to apply the Net Sales Proceeds
to the Loan in accordance with Section 4.5 above;

     

    (v) Lender
receives from Borrower a written notice of the sale in question (each a "Sales
Notice") which will include a copy of the closing statement and applicable
Residential Unit release no later than 5:00 p.m. (Dallas time) on the day of
such Residential Unit sale; and

     

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

     

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

     

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

     

    (d) The
"Release Price"
for a Residential Unit (including one (1) Parking Space per bedroom in such
Residential Unit, up to two (2) Parking Spaces per Residential Unit, except for
the penthouse Residential Units, which are each allocated three (3) Parking
Spaces ) shall be 100% of Net Sales Proceeds from the sale of the applicable
Residential Unit and associated Parking Spaces (including any additional charge
or fee in excess of the purchase price payable to Borrower or its
Affiliates).  The "Net Sales Proceeds
Account" is an interest bearing account established at Lender or, at
Lender's option, Beal Bank, for the deposit of the Release Price for each
closing of a sale of a Residential Unit in accordance with this
Agreement.  Borrower hereby pledges the Net Sales Proceeds Account and
all funds on deposit therein to Lender.  Net Sales Proceeds may,
however, be disbursed from the Net Sales Proceeds Account pursuant to and
subject to the terms and conditions of Section 4.5 above.
The Escrow Agent will be jointly 

     

    
      
        
        

      

      
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    instructed
by Lender and Borrower (and will agree in writing) to pay (by wire transfer
pursuant to instructions provided by Lender) and deliver all Net Sales Proceeds
from the sale of each Residential Unit into the Net Sales Proceeds Account on
the Business Day following the day on which the sale of the Residential Unit in
question is closed.

     

    (e) Borrower
shall pay all reasonable costs and expenses associated with the sale of the
Residential Unit, including title expenses, reasonable legal fees, brokerage and
sales commissions and other closing costs, from the portion of the sales price
in excess of such Release Price and, if such excess is insufficient for such
purpose, shall pay such excess costs from its own funds.

     

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

     

    14.10           Application
of Sales Proceeds.

     

    Except as
otherwise expressly provided herein, all Release Prices in connection with the
sale of a Residential Unit shall be offered by Borrower to Lender as a payment
on the Loan as provided in Section 4.5, and if Lender elects to accept some or
all of such offered payment so much of such offered payment as Lender shall
designate shall be applied by Lender as follows (regardless of any contrary
order of payment specified by Borrower):

     

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

     

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

     

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

     

    Article
15

     

    OTHER
COVENANTS

     

    
      	
              15.1  

            	
              Borrower
      further covenants and agrees as
follows:

            

    

     

    (a) Full Opening of Loan on or
Prior to Full Loan Opening Date.  Borrower shall cause all
conditions precedent to the Full Opening of the Loan to be complied with, and
Borrower shall qualify for Full Loan Opening, no later than July 31,
2010.  If Borrower fails to satisfy timely such requirement, an Event
of Default shall exist and, without limitation of the 

     

    
      
        
        

      

      
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    other
rights and remedies of Lender, Lender may terminate its commitment to fund the
Loan by written notice to Borrower.

     

    (b) Compliance with Condominium
Documents.  Once the Declaration of Master Condominium and/or
Residential Condominium Declaration are recorded, and subject to the provisions
of Section 82.112(b) of the TUCA, Borrower shall pay all general and
special assessments for common charges and expenses and insurance premiums made
against or relating to the Residential Units owned by Borrower or otherwise
payable by Borrower under the Condominium Documents as the same shall become due
and payable and prior to delinquency, and not later than the fifteenth (15th) day
of each month provide to Lender evidence of such payments, and in the event
Borrower shall fail to make such payments as the same become due and payable and
prior to delinquency, Lender may from time to time at its option, but without
any obligation to do so and without notice or demand upon Borrower, make such
payments, and all expenses paid by Lender for such purpose, including, without
limitation, attorneys' fees, shall be added to the outstanding principal amount
of the Loan and shall be payable on demand and bear interest at the Default Rate
until repaid.  Borrower shall not (and shall not permit any Borrower
appointed directors to), without the prior written consent of Lender which may
be granted or withheld in Lender's sole discretion), give any consent or perform
any action in furtherance of any material modification or amendment of the
Condominium Documents, including any modifications or amendments to the
Condominium Documents which would permit a Residential Unit Purchaser to rescind
its Sales Agreement under applicable Laws.  Borrower shall comply with
all of the material terms, covenants and conditions on its part to be performed
under the Condominium Documents, as the same shall be in force and effect from
time to time; provided, however, that if Borrower fails to cure such
non-compliance within any applicable cure periods provided in the Condominium
Documents, Lender may from time to time at its option, but without any
obligation to do so, cure or remedy any such default by Borrower (Borrower
hereby authorizing Lender to enter upon the Project as may be necessary for such
purposes), and all reasonable expenses paid by Lender for such purpose,
including, without limitation, reasonable attorneys' fees, shall be added to the
outstanding principal balance of the Loan and shall be payable on demand and
bear interest at the Default Rate until repaid.  Borrower shall
deliver to Lender a true and complete copy of each and every notice of default,
if any, received by Borrower with respect to Borrower under any of the
Condominium Documents or applicable law regarding the condominium regimes
created thereby.  Borrower shall not (and shall not permit any
Borrower appointed director to), without the prior written consent of Lender,
exercise any right it may have to vote for (x) the expenditure of insurance
proceeds (which are governed by Article 16 below) or condemnation awards for the
repair or restoration of the Project or (y) any additions or improvements to the
common elements of the Project.

     

    (c) Construction of
Improvements.  The Improvements shall be constructed and fully
equipped in a good and workmanlike manner with materials of high quality,
substantially in accordance with the Approved Plans and Specifications (or in
accordance with any changes therein that may be approved in writing by Lender or
as to which Lender's approval is not required).  Such construction and
equipping shall be commenced and completed, as applicable, and shall be
prosecuted with due diligence and continuity in substantial accordance with the
Construction Schedule, the requirements of all Sales Agreements and the
Operating Agreement.  Without limiting the foregoing, Borrower has
commenced construction of the Project, and shall substantially complete
(i) the entire Project no later than the Completion Date applicable to the

     

    
      
        
        

      

      
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    entire
Project, and (ii) each particular portion of the Project no later than the
Completion Date applicable to such portion.  The Completion Dates are
not subject to extension for any reason, except that Lender may elect, but shall
be under no obligation, to extend such dates at its sole discretion, but such
election shall not constitute a waiver of Lender's right to enforce any other
Completion Date or a waiver of any of Lender's remedies and shall not constitute
any custom or course of dealing between the parties hereto.

     

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

     

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

     

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

     

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

     

    
      
        
        

      

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

     

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

     

    (j) Payment of
Taxes.  Borrower shall pay all real estate taxes and
assessments and charges of every kind upon the Project before the same become
delinquent.  Borrower may use Loan proceeds for such purpose to the
extent available in the Budget for such purpose upon meeting all conditions
precedent set forth in this Agreement to any such
disbursement.  Borrower shall have the right to pay such tax under
protest or to otherwise contest any such tax or assessment, but only if
(i) such contest has the effect of preventing the collection of such taxes
so contested and also of preventing the sale or forfeiture of the Project or any
part thereof or any interest therein, (ii) Borrower has notified Lender of
Borrower's intent to contest such taxes, and (iii) Borrower has deposited
security in form and amount reasonably satisfactory to Lender, in its reasonable
discretion, and has increased the amount of such security so deposited promptly
after Lender's request therefor.  If Borrower fails to commence such
contest or, having commenced to contest the same, and having deposited such
security required by Lender for its full amount, shall thereafter fail to
prosecute such contest in good faith or with due diligence, or, upon adverse
conclusion of any such contest, shall fail to pay such tax, assessment or
charge, Lender may, at its election (but shall not be required to), pay and
discharge any such tax, assessment or charge, and any interest or penalty
thereon, and any amounts so expended by Lender shall be deemed to constitute
disbursements of the Loan proceeds hereunder (even if the total amount of
disbursements would exceed the face amount of the Note).  Borrower
shall furnish to Lender evidence that taxes are paid at least five (5) days
prior to the last date for payment of such taxes and before imposition of any
penalty or accrual of interest.

     

    
      
        
        

      

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

     

    (l) Personal
Property.  All of Borrower's personal property, fixtures,
attachments and equipment delivered upon, attached to or used in connection with
the Construction or the operation of the Project shall always be located at the
Project and shall be kept free and clear of all liens, encumbrances and security
interests, other than as otherwise permitted under the Loan Documents. Borrower
shall not acquire by lease any of the personal property, fixtures, attachments
or equipment which is to be used in connection with the Project without Lender's
prior written consent, which consent will not be unreasonably withheld with
regard to leases of non-essential, movable equipment utilized in the operation
of the Project, but may otherwise be granted or withheld in Lender's sole
discretion.  Borrower has notified Lender that Borrower does not
currently intend to lease any such personal property and that the Budget
includes funds necessary to purchase all such personal property.

     

    (m) Leasing
Restrictions.

     

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

     

    
      
        
        

      

      
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    standard
lease concessions and tenant improvements in excess of the budgeted amount will
be amortized at a per annum rate of ten percent (10%) over the full term of the
Lease, including any free rent period. The resulting amount will be deducted
from the lowest stated rent at any point in the term of the Lease, and that
figure must be equal to or greater than the applicable minimum rent as specified
in Exhibit
Q.  Furthermore, Borrower will in no event offer more than six
(6) months of free rent, tenant improvements in excess of twenty percent (20%)
more than the budgeted amount, or other non-standard concessions unacceptable to
the Lender.  Each Lease must otherwise satisfy the applicable
requirements set forth on Exhibit Q (including,
without limitation, the amount of leasing commissions that may be paid to
Borrower's representative and the Tenant's representative), unless Lender
otherwise consents in writing, which consent may be granted or withheld in
Lender's sole discretion.

     

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

     

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

     

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

     

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

     

    
      
        
        

      

      
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    terminate
or cancel the Approved Lease, shall constitute a Default
hereunder.  Borrower shall notify Lender promptly in writing in the
event a tenant commits a material default under a material Lease.

     

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

     

    (p) Appraisals.  Lender
shall have the right to obtain a new or updated Appraisal of the Project at any
time and from time to time.  Borrower shall cooperate with Lender in
this regard.  If the Appraisal is obtained to comply with any
applicable law or regulatory requirement, or bank policy promulgated to comply
therewith, or if a material Default or an Event of Default exists, Borrower
shall pay the reasonable costs for any such Appraisal upon Lender's request. In
addition, the Borrower shall pay the reasonable costs for two (2) Appraisals
obtained by Lender which are not obtained for any of the reasons specified in
the preceding sentence.

     

    (q) Financial Statements and
Reports.

     

    (i) Borrower
and each Guarantor shall deliver or cause to be delivered to Lender annual
financial statements with respect to Borrower and each Guarantor within ninety
(90) days after the end of its fiscal year. Each Guarantor's financial
statements shall be audited and Borrower's financial statements shall be
certified by Borrower's managing member. Each Guarantor and, or Borrower shall
also each deliver to Lender quarterly financial statements within sixty (60)
days after the end of each fiscal quarter. Each such quarterly financial
statement shall be accompanied by a certification by an authorized financial
officer of each Guarantor as to such Guarantor's compliance with the Guarantor
Financial Covenants and attaching information sufficient to demonstrate such
compliance. All such financial statements shall be in a format approved in
writing by Lender in Lender's reasonable discretion and in substance acceptable
to Lender.  Each financial statement shall be certified as true,
complete and correct by its preparer and by Borrower or, in the case of each
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    whom it
relates.  Financial statements of each Guarantor shall include
verifications, supporting schedules and additional statements as needed to
substantiate the information contained in such statements.  In
addition, such financial statements shall include disclosure of any pending or
threatened litigation and judgments entered against Borrower or each
Guarantor.  Borrower and each Guarantor shall deliver to Lender
Borrower's, each Guarantor's, and each entity in which a Guarantor has a
material interest, federal and state tax returns by April 15 of each year
(except that if the date on which such returns may be filed is extended beyond
April 15, then such entity shall provide Lender with a copy of the extension
request and shall furnish such tax returns to Lender within thirty (30) days
after the date such returns are filed).  Borrower shall inform Lender
as to any filed or threatened (in writing) litigation which would have a
material adverse effect on Borrower's, either Pledgor's or either Guarantor's
ability to perform their respective obligations under the Loan Documents
promptly after learning thereof.  Within thirty (30) days following
the end of each month during the term of the Loan, Borrower will provide to
Lender, unaudited, certified (by Borrower) operating statements of the Project,
and leasing reports relating to the Project, in such form as Lender may
reasonably request.  Borrower and each Guarantor shall provide such
additional financial information as Lender reasonably
requires.  Borrower shall during regular business hours permit Lender
or any of its agents or representatives to have access to and examine all of its
books and records regarding the development and operation of the Project and, in
addition, agrees to provide Lender with copies of any purchase contracts
pertaining to the Project.  Borrower agrees that Lender may retain an
investigator to research available public records and information relating to
Borrower, the principals of Borrower and each Guarantor;

     

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

     

    (iii) Borrower
shall, within five (5) Business Days of receipt from time to time furnish to
Lender (1) all "Operating Reports" received under Section 10.2 of the Hotel
Operating Agreement, (2) all financial statements received under
Section 10.3 of the Hotel Operating Agreement, (3) all other material
information or notices received from Hotel Operator, and, (4) all material
notices, reports and other information received by or issued by or on behalf of
Borrower under any Venue Document or any other Material Contract;
and

     

    (iv) After the
Closing and up to and including Full Loan Opening, Borrower shall provide to
Lender on or before the 15th day of each month, a certified (by Borrower)
statement, in form acceptable to Lender, specifying amounts paid during the
preceding month from the Equity Investment to pay costs set forth on the Budget
Line Items and a reconciliation of the unfunded Equity Investment and unpaid
Budget Line Items.

     

    
      
        
        

      

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

     

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

     

    (t) Indemnification.  Borrower
shall indemnify Lender, including each party owning an interest in the Loan and
their respective officers, directors, employees and consultants (each, an "Indemnified Party")
and defend and hold each Indemnified Party harmless from and against all claims,
injury, damage, loss, liability, cost and/or expense (including reasonable
attorneys' fees, costs and expenses) of any and every kind to any persons or
property by reason of (i) the Construction; (ii) the sale, operation
or maintenance of the Project; (iii) any claim with respect to application,
disposition or return of any Earnest Money Deposit or Upgrade Deposit,
(iv) any breach of representation or warranty, Default or Event of Default
under this Agreement or any other Loan Document or related Document; or
(v) any other matter arising in connection with the Loan, Borrower,
Pledgors, Guarantors, any Residential Unit Purchaser or Sales Agreement, or the
Project.  No Indemnified Party shall be entitled to be indemnified
against its own gross negligence or willful misconduct.  The foregoing
indemnification shall survive repayment of the Loan.

     

    (u) No Additional
Debt.   Except for the Loan, Borrower shall not incur or
guarantee any indebtedness (whether personal or nonrecourse, secured or
unsecured) other than customary trade payables paid within ninety (90) days
after they are incurred.  Except for the liens securing the Loan and
except for the Permitted Exceptions, Borrower shall keep the Project free and
clear of liens, provided, however, mechanics' liens may be contested in
compliance with Section
15.1(f).

     

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

     

    (w) Organizational
Documents.  Borrower shall not, without the prior written
consent of Lender, permit or suffer (i) a material amendment or
modification of its organizational documents (however, Lender's consent will not
be unreasonably withheld with regard to any such amendment or modification to
provide for the admission of a new member, partner or shareholder as permitted
by Section 17.2 of this Agreement), (ii) the admission of any new

     

    
      
        
        

      

      
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    member,
partner or shareholder in violation of Section 17.2 of this
Agreement, or (iii) any dissolution or termination of its
existence.

     

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

     

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

     

    (z) Furnishing
Notices.  Borrower shall provide Lender with copies of all
material notices pertaining to the Project received by Borrower from any
Governmental Authority, any counterparty under any Material Contract or
insurance company within seven (7) days after such notice is
received.  Borrower shall promptly notify Lender of any judgment
entered against, or any material litigation filed against, Borrower, either
Pledgor or either Guarantor.

     

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

     

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

     

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

     

    
      
        
        

      

      
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    (dd) Food and Liquor
Licenses.  Borrower does not currently believe it will, or will
need to, obtain any food or liquor licenses in connection with the
Project.  Instead, all such licenses will be obtained by the Hotel
Operator and the lessee(s) of the Restaurant Space.

     

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

     

    (ff) Cash
Distributions.  Borrower shall not make any distributions to
its partners or other equity holders (including, without limitation, either
Pledgor), either Guarantor or any Affiliate of Borrower, either Pledgor or
either Guarantor until the Loan has been repaid, except for (i) the
disbursements set forth in Section 12.7 hereof
and (ii) Net Sales Proceeds and Net Operating Income not applied to payment
of the Loan under Section 4.5 and not
used to fund the Additional Interest Reserve in accordance with Section
10.4.

     

    (gg) Injunctive
Proceedings.  If any proceedings are filed seeking to enjoin or
otherwise prevent or declare invalid or unlawful the construction, sale,
occupancy, maintenance or operation of the Project, including, without
limitation, the Residential Units, Borrower shall cause such proceedings to be
diligently contested in good faith, and in the event of an adverse ruling or
decision, shall prosecute all allowable appeals therefrom, and shall, without
limiting the generality of the foregoing, resist the entry or seek the stay of
any temporary or permanent injunction that may be entered and use commercially
reasonable efforts to bring about a favorable and speedy disposition of all such
proceedings.  Lender's reasonable costs and disbursements (including
attorney's fees) in connection with any such proceedings, whether or not Lender
is a party thereto, shall be deemed to be expenses of the Loan payable by
Borrower in accordance with Article 7 of
this Agreement.

     

    (hh) Reserved.

     

    (ii) Operating
Revenues.  In the event the Project produces gross operating
revenues, Borrower shall establish with Lender or, at Lender's option, Beal
Bank, an interest bearing operating account for the Project (the "Project Operating
Account") into which Borrower shall deposit, on the Business Day received
or, if received on a day which is not a Business Day, the first Business Day
following the day of receipt, all revenue associated with the Project (including
any Net Operating Income distributed by Hotel Operator to the Borrower), and
from which Borrower shall make withdrawals to pay all operating expenses (other
than interest on the Loan) of the Project  and, to the extent of any
remaining Net Operating Income, payments on the Loan pursuant to Section 4.5 if
accepted by Lender and to fund the Additional Interest Reserve if required by
Section
10.4.  Borrower's failure to deposit operating revenues or Net
Operating Income into the Project Operating Account as set forth above shall
constitute an Event of Default hereunder.  In the event that there is
excess Net Operating Income in the Project Operating Account after satisfaction
of the requirements of this paragraph, they may be retained by Borrower and
disbursed at Borrower's discretion pursuant to and upon satisfaction of the
requirements of Section
4.5.  Borrower hereby pledges the Project Operating Account and
all funds on deposit therein to Lender subject, however, to Borrower's rights to
excess Net Operating Income under Section
4.5.  Borrower hereby pledges, to the extent permitted by, and
subject to the limits of, the Hotel Operating Agreement and the Non-Disturbance
Agreement, all 

     

    
      
        
        

      

      
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    other
accounts to be established in accordance with the terms and provisions of the
Hotel Operating Agreement, and all funds on deposit therein to
Lender.  Prior to the opening of the Hotel, Borrower shall deliver, or
shall cause to be delivered, to Lender, a control agreement from each depository
bank with which each such Hotel operating account has been established
substantially similar in form and substance to the reasonable form of same
prepared by Lender's legal counsel to the extent a pledge is permitted under the
Hotel Operating Agreement and the Non-Disturbance Agreement.

     

    (jj) Environmental
Remediation.  Borrower has performed all recommended
remediation set forth in those certain Environmental Reports dated October 24,
2007, May 3, 2007, October 18, 2006, and October 9, 2009, prepared by Terracon
Consultants, Inc. in each case, by the dates such remediation is recommended to
be completed in such Environmental Report, except in the case of the Waste
Management Plan, the water filtration system discussed in the Waste Management
System shall continue to be operated and maintained in accordance with the Waste
Management Plan during the construction and operation of the
Project.

     

    (kk) Hotel
Documents.  Borrower shall timely perform and comply with all
of its obligations under the Hotel Documents and all other agreements with Hotel
Operator, Starwood Hotels & Resorts Worldwide, Inc., and their affiliates
with respect to the Hotel, and shall keep all such agreements in full force and
effect.  Borrower shall not modify, amend or terminate any such
agreements without Lender's prior written consent, to be given in its reasonable
discretion.

     

    (ll) Venue
Documents.  Once fully executed, Borrower shall timely perform
and comply with all of its obligations under the Venue Documents, shall keep all
such Venue Documents in full force and effect.  Once fully executed,
Borrower shall not modify, amend or terminate any such Venue Document without
Lender's prior written consent, to be given in its reasonable
discretion.

     

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

     

    
      	
              15.2  

            	
              Single
      Purpose Entity Covenants.

            

    

     

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

     

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

     

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

     

    (c) merge
into or consolidate with any Person or entity or dissolve, terminate or
liquidate in whole or in part, transfer or otherwise dispose of all or
substantially all of its assets or change its legal structure or acquire by
purchase or otherwise all or substantially all the business or assets of, or
stock or other evidence of beneficial ownership of, any Person, without

     

    
      
        
        

      

      
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    in each
case the prior written consent of Lender, which consent may be withheld or
delayed in Lender's sole and absolute discretion;

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

    (o) fail to
file its own tax returns; provided, however, that Borrower may file a
consolidated tax return with any of its Affiliates, but only because such
consolidated tax return is 

     

    
      
        
        

      

      
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    required
by applicable Laws, and provided such consolidated tax return includes footnotes
identifying the separate assets or liabilities of Borrower and/or its
Affiliates, as applicable;

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

    
      	
              15.3  

            	
              Authorized
      Representative.

            

    

     

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

     

    
      
        
        

      

      
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    Article
16

     

    CASUALTIES
AND CONDEMNATION

     

    
      	
              16.1  

            	
              Lender's
      Election to Apply Proceeds on
Indebtedness.

            

    

     

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

     

    (b) Notwithstanding
anything in Section
16.1(a) to the contrary, in the event of any casualty to the
Improvements or any condemnation of part of the Project, Lender agrees to make
available the Proceeds for restoration of the Improvements if and as required by
the Non-Disturbance Agreement or if (i) no Event of Default or material
Default exists, (ii) all Proceeds are deposited with Lender, (iii) in
Lender's reasonable judgment, the amount of Proceeds available for restoration
of the Improvements (together with undisbursed proceeds of the Loan, if any,
allocated for the cost of the Construction and any sums deposited with Lender by
Borrower for such purpose) is sufficient to pay the full and complete costs of
such restoration, (iv) the cost of restoration does not exceed twenty
percent (20%) of the stated amount of the Note, (v) if Lender determines
that the cost of restoration exceeds $5,000,000, Lender determines in its
reasonable discretion that the values set forth in the Appraisal reviewed and
approved by Lender at Closing remain valid; (vi) in Lender's reasonable
determination, the Project can be restored to an architecturally and
economically viable project in compliance with applicable Laws, (vii) each
Guarantor reaffirms the Guaranty in writing, (viii) Borrower shall have
provided evidence reasonably acceptable to Lender that following restoration
(and completion of the Project) the Pre-Sale Requirement will remain satisfied,
(ix) the Hotel Documents, and the Venue Documents, will each remain in full
force and effect; and (x) in Lender's reasonable determination, such
restoration is likely to be completed so that the Residential Units sufficient
to satisfy the Pre-sale Requirement may be delivered to all Residential Unit
Purchasers prior to the outside delivery dates contained in their respective
Sales Agreements and in any event not later than the Maturity
Date.  On and after such time as the condominium is formed, Borrower
agrees to vote its votes with respect to all unsold Residential Units (and to
cause all Borrower appointed directors to vote their votes) in a manner
consistent with the provisions of this Article 16.

     

    
      
        
        

      

      
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              16.2  

            	
              Borrower's
      Obligation to Rebuild and Use of Proceeds
  Therefor.

            

    

     

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

     

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

     

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

     

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

     

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

     

    Article
17

     

    ASSIGNMENTS
BY LENDER AND BORROWER

     

    
      	
              17.1  

            	
              Assignments
      and Participations.

            

    

     

    Lender
may from time to time, with written notice to Borrower, sell all or any part of
the Loan and the Loan Documents (or any interest therein) and may grant
participations in the Loan (i) if and to the extent required by applicable
regulatory authority and (ii) to any Affiliate of Lender.  Except
as provided in the preceding sentence, Lender will not sell all or any part of
the Loan or grant participation in the Loan without Borrower's prior written
consent. Borrower agrees to reasonably cooperate with Lender's efforts to do any
of the foregoing and to execute all documents reasonably required by Lender in
connection therewith that do not materially adversely affect Borrower's or
either Guarantor's rights under the Loan Documents or materially increase
Borrower's or either Guarantor's obligations under the Loan
Documents.  No such assignment or participation will release Lender
from any liability under the Loan Documents.

     

    
      	
              17.2  

            	
              Prohibition
      of Assignments and Transfers by
Borrower.

            

    

     

    Borrower
shall not assign or attempt to assign its rights under this Agreement and any
purported assignment shall be void.  Without the prior written consent
of Lender, in Lender's sole discretion, Borrower shall not suffer or permit any
change in the ownership, or management or economic interests (whether direct or
indirect) of the Project, or any Transfer.  Notwithstanding the
foregoing, so long as all owners of interests in Borrower satisfy the
requirements of Section 3.1 (y) above (a) so long as CJUF continues to hold
the ownership interest in Borrower (directly or indirectly including through
CJUF II Block 21 Member, LLC) which CJUF held at Closing (directly or indirectly
including through CJUF II Block 21 Member, 

     

    
      
        
        

      

      
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    LLC) and
no monetary Event of Default then exists (including without limitation default
in making a Deficiency Deposit), or if a monetary Event of Default does exist
and is cured by Borrower or CJUF, CJUF may  with prior written notice
to Lender (but without Lender's consent) replace Stratus Block 21 Investments,
L.P. as the managing member of Borrower (with Stratus Block 21 Investments, L.P.
retaining its current ownership interest but as non-managing member),
(b) even if a monetary Event of Default then exists, so long as CJUF
continues to hold the ownership interest in Borrower (directly or indirectly
including through CJUF II Block 21 Member, LLC) which CJUF held at Closing
(directly or indirectly including through CJUF II Block 21 Member, LLC), CJUF
may request that Lender approve CJUF replacing Stratus Block 21 Investments,
L.P. as managing member of Borrower (with Stratus Block 21 Investments, L.P.
retaining its current ownership interest but as non-managing member), and Lender
shall grant or deny such consent in its reasonable discretion, (c) any
buyout of a member's interest or change in control permitted by the Operating
Agreement of Borrower, as such Operating Agreement has been consented to by
Lender, may be effected provided all membership interests in Borrower remain
encumbered by the Pledge Agreement, it being agreed that when and as required by
Lender, any new member in Borrower must execute and deliver to Lender a Joinder
Agreement relating to the Pledge Agreement and (d) the following Transfers
of interests in Borrower's direct or indirect constituent entities shall be
permitted without Lender's consent:  (i) Transfers of direct or
indirect interests in Canyon-Johnson Urban Fund II, L.P., (ii) Transfers of
non-controlling interests in either Guarantor, (iii) the transfer of an interest
of no more than twenty percent (20%) in Borrower to Wheelock Street Capital (or
an entity affiliated with Wheelock Street Capital) or another preferred equity
provider who may provide up to $35,000,000.00 of equity through Borrower for the
Project and any transfers of direct and indirect interests in that new equity
partner; (iv) Leases permitted hereunder; and (v) the sale and release
of Residential Units pursuant to Article 14
hereof.  Borrower may also dispose of immaterial quantities of
personal property in the ordinary course of business without Lender's prior
consent.

     

    
      	
              17.3  

            	
              Prohibition
      of Transfers in Violation of ERISA.

            

    

     

    In
addition to the prohibitions set forth in Section 17.2 above,
Borrower shall not assign, sell, pledge, encumber, transfer, hypothecate or
otherwise dispose of its interest or rights in this Agreement or in the Project,
or attempt to do any of the foregoing or suffer any of the foregoing, nor shall
any party owning a direct or indirect interest in Borrower assign, sell, pledge,
mortgage, encumber, transfer, hypothecate or otherwise dispose of any of its
rights or interest (direct or indirect) in Borrower, attempt to do any of the
foregoing or suffer any of the foregoing, if such action would cause the Loan,
or the exercise of any of Lender's rights in connection therewith, to constitute
a prohibited transaction under ERISA or the Internal Revenue Code or otherwise
result in Lender being deemed in violation of any applicable provision of
ERISA.  Borrower agrees to indemnify and hold Lender free and harmless
from and against all losses, costs (including reasonable attorneys' fees and
expenses), taxes, damages (including consequential damages) and expenses Lender
may suffer by reason of the investigation, defense and settlement of claims and
in obtaining any prohibited transaction exemption under ERISA necessary or
desirable in Lender's sole judgment or by reason of a breach of the foregoing
prohibitions.  The foregoing indemnification shall be a recourse
obligation of Borrower and shall survive repayment of the Note, notwithstanding
any limitations on recourse contained herein or in any of the Loan
Documents.

     

    
      
        
        

      

      
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              17.4  

            	
              Successors
      and Assigns.

            

    

     

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

     

    Article
18

     

    TIME
OF THE ESSENCE

     

    
      	
              18.1  

            	
              Time
      is of the Essence.

            

    

     

    Time is
of the essence under this Agreement.

     

    Article
19

     

    EVENTS
OF DEFAULT

     

    
      	
              19.1  

            	
              Events
      of Default.

            

    

     

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

     

    (a) Failure
of Borrower (i) to make any principal, interest or other payment on or with
regard to the Loan, when due, and such payment remains unpaid upon the
expiration of five (5) days following the date written notice of such failure to
pay is provided to Borrower; provided, however, Lender will not be obligated to
give such written notice more than twice during any twelve (12) month period and
following the second such notice, any subsequent default during the then current
twelve (12) month period will constitute an Event of Default without any notice
being required and the Lender shall not be obligated to provide any such written
notice or cure period in regard to the payment due on the Loan on the maturity
date of the Loan, whether such maturity date is the stated Maturity Date thereof
or any accelerated maturity date declared by the Lender pursuant to the Loan
Documents or (ii) to observe or perform any of the other covenants or
conditions by Borrower to be performed under the terms of this Agreement or any
other Loan Document for a period of thirty (30) days after written
notice from Lender, provided that if any such failure concerning a non-monetary
covenant or condition is susceptible to cure and cannot reasonably be cured
within said thirty (30) day period, then
Borrower shall have an additional ninety (90) day period to cure such
failure and no Event of Default shall be deemed to exist under this paragraph
(a) so long as Borrower commences such cure within the initial thirty (30)
day period and diligently and in good faith pursues such cure to completion
within the one hundred and twenty (120) day period from the date
of Lender's notice; and provided further that if a different notice or grace
period is specified under any other subsection of this Article 19 with
respect to a particular breach, or if another subsection of this Article 19 applies to
a particular breach and does not expressly provide for a notice or grace period,
the specific provision shall control.

     

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

     

    
      
        
        

      

      
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    (c) (i) a
discontinuance of the Construction for a period of twenty (20) consecutive days
(other than by reason of Unavoidable Delays), or in any event a delay in the
Construction of any component of the Project so that such component is not, in
Lender's sole judgment, likely to be completed on or before the applicable
Completion Date, (ii) failure of Borrower to comply with the Construction
Schedule resulting in a delay (which is not an Unavoidable Delay) of more than
forty-five (45) days  behind the Construction Schedule with respect to
any material component of Construction, or (iii) failure to complete
Construction of the all or any component of the Improvements substantially in
accordance with the Approved Plans and Specifications (or in accordance with any
changes therein that may be approved in writing by Lender or as to which
Lender's approval is not required) on or before the applicable Completion
Date.

     

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

     

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

     

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

     

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

     

    (h) Borrower,
either Pledgor or either Guarantor shall make an assignment for the benefit of
creditors, or shall admit in writing its inability to pay its debts generally as
they become due, or shall consent to the appointment of a receiver or trustee or
liquidator of all of its property or the major part thereof or if all or a
substantial part of the assets of Borrower, either 

     

    
      
        
        

      

      
        78

        
          

        

      

      
        
        

      

    

     

    Pledgor
or either Guarantor are attached, seized, subjected to a writ or distress
warrant, or are levied upon, or come into the possession of any receiver,
trustee, custodian or assignee for the benefit of creditors.

     

    (i) Borrower,
either Pledgor or either Guarantor shall dissolve or its existence shall
otherwise terminate.

     

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

     

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

     

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

     

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

     

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

     

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

     

    (p) Borrower
shall fail to comply with its obligations under this Agreement and/or any other
Loan Document relating to the obtaining and maintenance of insurance
coverages.

     

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

     

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

     

    (s) Borrower
shall default under any Material Contract, other than the Hotel Documents, and
shall fail to cure such default within the shorter of the applicable cure period
set forth in Section 19.1 (a) or the applicable grace or cure period set
forth in such Material Contract, or such Material Contract shall otherwise cease
to be in full force and effect.

     

    
      
        
        

      

      
        79

        
          

        

      

      
        
        

      

    

     

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

     

    Article
20

     

    LENDER'S
REMEDIES IN EVENT OF DEFAULT

     

    
      	
              20.1  

            	
              Remedies
      Conferred Upon Lender.

            

    

     

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

     

    (a) Take
possession of the Project and complete the Construction and do anything that is
necessary or appropriate in its sole judgment to fulfill the obligations of
Borrower under this Agreement and the other Loan Documents, including either the
right to avail itself of and procure performance of existing contracts or let
any contracts with the same contractors or others.  Without
restricting the generality of the foregoing and for the purposes aforesaid,
Borrower hereby appoints and constitutes Lender its lawful attorney-in-fact with
full power of substitution to complete the Construction in the name of Borrower;
to use unadvanced proceeds of the Loan or that may be reserved, escrowed or set
aside for any purposes hereunder at any time, or to advance funds in excess of
the face amount of the Note, to complete the Construction; to make changes in
the Plans and Specifications that shall be necessary or desirable to complete
the Construction in substantially the manner contemplated by the Approved Plans
and Specifications; to retain or employ new general contractors, subcontractors,
architects, engineers and inspectors as shall be required for said purposes; to
pay, settle or compromise all existing bills and claims that may be liens or
security interests, or to avoid such bills and claims becoming liens against the
Project; to execute all applications and certificates in the name of Borrower
prosecute and defend all actions or proceedings in connection with the
Improvements or Project; and to do any and every act that Borrower might do in
its own behalf; it being understood and agreed that this power of attorney shall
be a power coupled with an interest and cannot be revoked;

     

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

     

    (c) Accelerate
the Maturity Date and declare the Note to be immediately due and
payable;

     

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

     

    (e) Reserved;

     

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

     

    
      
        
        

      

      
        80

        
          

        

      

      
        
        

      

    

     

    (g) Exercise
or pursue any other remedy or cause of action permitted under this Agreement
and/or any of the other Loan Documents (including, without limitation, the
exercise of the power of sale under the Deed of Trust), or conferred upon Lender
by operation of Law.

     

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

     

    If, prior
to the fourth (4th)
anniversary of the Full Loan Opening, the Maturity Date of the Loan has been
accelerated as a result of an Event of Default and the Loan is subsequently
repaid, Borrower must pay to Lender (i) a yield maintenance fee, calculated
as provided below, for the period from the date the Loan is repaid until the
third (3rd)
anniversary of the Full Loan Opening, if the Loan is repaid prior to such third
(3rd)
anniversary and (ii) a fee equal to one percent (1%) of the principal
repaid if the Loan is repaid after the third (3rd)
anniversary, and before the fourth (4th)
anniversary, of the Full Loan Opening (but in any case not in excess of the
maximum amount the Lender may charge or receive without violating applicable
law). The yield maintenance fee will be equal to the amount of interest, based
on the Margin, that would accrue on the principal balance of the Loan as of the
date the Loan is repaid until the third (3rd)
anniversary of the Full Loan Opening Date, plus one percent (1%) of such
principal balance of the Loan, discounted at the Federal Funds Rate-Target, as
published in The Wall Street
Journal as of the date of such repayment, minus one-half percent (1⁄2
%).

     

    Article
21

     

    GENERAL
PROVISIONS

     

    
      	
              21.1  

            	
              Captions.

            

    

     

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

     

    
      	
              21.2  

            	
              Modification;
      Waiver.

            

    

     

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

     

    
      	
              21.3  

            	
              Governing
      Law.

            

    

     

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

     

    
      	
              21.4  

            	
              Acquiescence
      Not to Constitute Waiver of Lender's
  Requirements.

            

    

     

    Each and
every covenant and condition for the benefit of Lender contained in this
Agreement may be waived by Lender, provided, however, that to the extent that
Lender may have acquiesced in any noncompliance with any construction or
nonconstruction conditions 

     

    
      
        
        

      

      
        81

        
          

        

      

      
        
        

      

    

     

    precedent
to the Closing Funding, the Full Opening of the Loan or to any subsequent
disbursement of Loan proceeds, such acquiescence shall not be deemed to
constitute a waiver by Lender of such requirements with respect to any future
disbursements of Loan proceeds.

     

    
      	
              21.5  

            	
              Disclaimer
      by Lender.

            

    

     

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

     

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

     

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

     

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

     

    
      	
              21.6  

            	
              Partial
      Invalidity; Severability.

            

    

     

    If any of
the provisions of this Agreement, or the application thereof to any person,
party or circumstances, shall, to any extent, be invalid or unenforceable, the
remainder of this Agreement, or the application of such provision or provisions
to persons, parties or circumstances other than those as to whom or which it is
held invalid or unenforceable, shall not 

     

    
      
        
        

      

      
        82

        
          

        

      

      
        
        

      

    

     

    be
affected thereby, and every provision of this Agreement shall be valid and
enforceable to the fullest extent permitted by law.

     

    
      	
              21.7  

            	
              Definitions
      Include Amendments.

            

    

     

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

     

    
      	
              21.8  

            	
              Execution
      in Counterparts.

            

    

     

    This
Agreement may be executed in any number of counterparts and by different parties
hereto in separate counterparts, each of which when so executed shall be deemed
to be an original and all of which taken together shall constitute one and the
same agreement.  Notwithstanding anything to the contrary contained
herein or in the Commitment Letter, in the event of any conflict between the
terms and conditions of this Agreement and those of the Commitment Letter, then
the conflicting terms and provisions of this Agreement will supersede those of
the Commitment Letter.

     

    
      	
              21.9  

            	
              Entire
      Agreement.

            

    

     

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

     

    
      	
              21.10  

            	
              Waiver
      of Damages and Limitation of
Liability.

            

    

     

    IN THE EVENT  THE CLOSING
FUNDING IS MADE BUT  THEREAFTER THE LENDER DEFAULTS IN ITS OBLIGATION
TO ADVANCE PROCEEDS OF THE LOAN PROVIDED ALL APPLICABLE CONDITIONS TO ITS
OBLIGATION TO FUND SUCH PROCEEDS HAVE BEEN SATISFIED, OR THE  LENDER
IS OTHERWISE IN DEFAULT OF ANY OF ITS OTHER MATERIAL OBLIGATIONS WITH REGARD TO
THE LOAN, AND IN ANY SUCH CASE SUCH FUNDING OR OTHER MATERIAL DEFAULT REMAINS
UNCURED FOR A PERIOD OF (i) FIVE (5) BUSINESS DAYS FOR A FUNDING DEFAULT OR
(ii) THIRTY (30) DAYS FOR ANY OTHER MATERIAL DEFAULT, IN EACH CASE
FOLLOWING LENDER'S RECEIPT FROM BORROWER OF WRITTEN NOTICE OF THE DEFAULT IN
QUESTION,  THEN:

     

               (i)           IF,
PRIOR TO THE DATE THE DEFAULT BY LENDER IS CURED,  LITIGATION IS FILED
BY ONE OR MORE OF THE PARTIES IN A COURT OF COMPETENT JURISDICTION WITH REGARD
TO THE ALLEGED DEFAULT BY LENDER AS DESCRIBED ABOVE, BORROWER MAY, AT ITS OPTION
REQUIRE THAT LENDER, CONCURRENTLY WITH THE DELIVERY OF THE PAYMENTS DESCRIBED IN
(a) AND (b) BELOW, AND PRIOR TO A DETERMINATION BY SUCH COURT OF

     

    
      
        
        

      

      
        83

        
          

        

      

      
        
        

      

    

     

    WHETHER
LENDER IS IN DEFAULT (BUT SUBJECT TO THE REQUIREMENTS BELOW), ASSIGN (WITHOUT
RECOURSE, REPRESENTATION OR WARRANTY) THE LOAN DOCUMENTS (INCLUDING THE DEED OF
TRUST LIEN WITH ITS EXISTING FIRST LIEN POSITION) TO A REPLACEMENT LENDER FOR
THE PROJECT (WHICH MAY BE AN AFFILIATE OF BORROWER) AND ENDORSE THE NOTE,
WITHOUT RECOURSE, REPRESENTATION OR WARRANTY, TO THE REPLACEMENT LENDER AND
RELEASE ALL OTHER COLLATERAL FOR THE LOAN.  IN THAT CASE, THE LOAN
WILL BE ASSIGNED TO THE REPLACEMENT LENDER IN ACCORDANCE WITH A CUSTOMARY
ASSIGNMENT AND ASSUMPTION AGREEMENT IN CONFORMITY WITH THE FOREGOING
PROVISIONS.  CONTEMPORANEOUSLY WITH, AND AS A CONDITION TO SUCH
TRANSFER OF THE LOAN AND RELEASE OF COLLATERAL, BORROWER MUST (a) PAY OR
CAUSE TO BE PAID TO LENDER THE OUTSTANDING PRINCIPAL BALANCE OF THE LOAN AND ALL
ACCRUED, UNPAID INTEREST THEREON AND OTHER AMOUNTS OWED TO LENDER WITH REGARD TO
THE LOAN, INCLUDING OUTSTANDING REIMBURSABLE EXPENSES BUT WITHOUT PAYMENT OF ANY
PREPAYMENT PREMIUM OR YIELD MAINTENANCE, AND (b) PAY OR CAUSE TO BE PAID
INTO THE REGISTRY OF SUCH COURT ALL REQUIRED YIELD MAINTENANCE AND PREPAYMENT
FEES (CALCULATED IN ACCORDANCE WITH THE LOAN DOCUMENTS) TO BE HELD BY SUCH COURT
PENDING FINAL DETERMINATION OF THE DISPUTE BETWEEN THE PARTIES, WITH SUCH YIELD
MAINTENANCE AND PREPAYMENT FEES TO BE RELEASED AND PAID (1) TO BORROWER IF SUCH
COURT DETERMINES LENDER WAS IN DEFAULT OF ITS OBLIGATIONS UNDER THE LOAN
DOCUMENTS AS ALLEGED BY BORROWER AND (2) TO LENDER IF SUCH COURT DOES NOT
DETERMINE LENDER WAS IN DEFAULT AS ALLEGED BY BORROWER AND

     

               (ii)           IF
SUCH COURT DETERMINES LENDER WAS IN DEFAULT AS ALLEGED BY BORROWER, BORROWER AND
ANY GUARANTOR WILL BE ENTITLED TO RECOVERY OF ACTUAL DAMAGES (BUT NO PUNITIVE,
SPECIAL OR OTHER DAMAGES) INCURRED AGAINST LENDER DUE TO LENDER'S DEFAULT AND
AWARDED BY THE COURT IN A FINAL JUDGMENT WHICH IS UNAPPEALED AND UNAPPEALABLE;
PROVIDED, HOWEVER, THAT THE AGGREGATE AMOUNT OF ALL SUCH ACTUAL DAMAGES
INCLUDING ATTORNEYS FEES AND RELATED COSTS THAT MAY BE RECOVERED AGAINST LENDER
WILL BE LIMITED TO THE "DAMAGE CAP" AS DEFINED BELOW.  THE "DAMAGE
CAP" FOR LENDER WITH REGARD TO ALL LENDER DEFAULTS OCCURRING AFTER THE CLOSING
FUNDING WILL BE (a) THE SUM OF $15,000,000.00 UP UNTIL THE DATE THAT LENDER
HAS FUNDED $60,000,000.00 OF THE LOAN, (b) THE SUM OF $10,000,000.00 AFTER
LENDER HAS FUNDED $60,000,000.00 OF THE LOAN BUT BEFORE ALL AMOUNTS LENDER IS
OBLIGATED TO FUND UNDER THE PROCEEDS OF THE LOAN DOCUMENTS HAVE BEEN FUNDED, AND
(c) THE SUM OF $5,000,000.00 AFTER ALL PROCEEDS OF THE LOAN LENDER IS
OBLIGATED TO FUND UNDER THE LOAN DOCUMENTS HAVE BEEN FUNDED.  THE
FOREGOING NOTWITHSTANDING, IN THE EVENT LENDER IS PUT INTO RECEIVERSHIP BY
APPLICABLE REGULATORY AUTHORITIES, THEN THE DAMAGE CAP WILL AUTOMATICALLY BE
VOID AND OF NO FURTHER FORCE OR EFFECT.

     

    
      
        
        

      

      
        84

        
          

        

      

      
        
        

      

    

     

    THIS
SECTION SETS FORTH THE SOLE REMEDIES AND RELIEF OF THE BORROWER AND THE
GUARANTORS FOR A DEFAULT BY LENDER UNDER THE LOAN DOCUMENTS.  THE
BORROWER AND THE GUARANTORS HEREBY WAIVE ALL OTHER REMEDIES AND RELIEF,
INCLUDING, WITHOUT LIMITATION, EQUITABLE RELIEF (INCLUDING, WITHOUT LIMITATION,
SPECIFIC PERFORMANCE OR INJUNCTIVE RELIEF EXCEPT TO THE EXTENT NECESSARY TO
ENFORCE THE REMEDIES SET FORTH ABOVE).

     

    
      	
              21.11  

            	
              Reserved.

            

    

     

    
      	
              21.12  

            	
              Jurisdiction.

            

    

     

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

     

    
      	
              21.13  

            	
              Set-Offs.

            

    

     

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

     

    
      
        
        

      

      
        85

        
          

        

      

      
        
        

      

    

     

    
      	
              21.14  

            	
              Binding
      Effect.

            

    

     

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

     

    
      	
              21.15  

            	
              Waiver of Accord and
      Satisfaction.

            

    

     

    Borrower
hereby expressly waives any and all rights to effect an accord and satisfaction
of any secured obligation or any other debt of Borrower to Lender in accordance
with section 3-311 of the UCC.  Notwithstanding anything to the
contrary contained in this agreement or any other Loan Document, except as
expressly directed in a writing addressed to Borrower after the date hereof, any
and all communications or notices by Borrower or any other loan party to Lender
concerning disputed debts, obligations or liabilities, whether arising under
this agreement or otherwise, including without limitation any instrument
tendered as full satisfaction of a debt, shall be, in addition to the notices
required under Article 22
hereof, delivered to Lender, attention Stephen J. Costas, 6000 Legacy Drive,
Plano, Texas 75024.

     

    Article
22

     

    NOTICES

     

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

     

    
      	
               
      

            	
              If to
      Borrower:

            

    

     

    
      	
               
      

            	
              c/o
      Stratus Properties

            

    

     

    
      	
               
      

            	
              98
      San Jacinto, Suite 220

            

    

     

    
      	
               
      

            	
              Austin,
      Texas 78701

            

    

     

    
      	
               
      

            	
              Attention:

            	
              W.H.
      Armstrong III

            

    

     

    
      	
               
      

            	
              Telephone:

            	
              (512)
      478-6396

            

    

     

    
      	
               
      

            	
              Facsimile:

            	
              (512)
      478-5788

            

    

     

     

    
      	
               
      

            	
              And
      to:

            

    

     

    
      	
               
      

            	
              Armbrust
      & Brown, L.L.P.

            

    

     

    
      	
               
      

            	
              100
      Congress Avenue, Suite 1300

            

    

     

    
      	
               
      

            	
              Austin,
      Texas  78701

            

    

     

    
      	
               
      

            	
              Attention:

            	
              Kenneth
      N. Jones, Esq.

            

    

     

    
      	
               
      

            	
              Telephone:

            	
              (512)
      435-2312

            

    

     

    
      	
               
      

            	
              Facsimile:

            	
              (512)
      435-2360

            

    

     

    
      
        
        

      

      
        86

        
          

        

      

      
        
        

      

    

     

    
      	
               
      

            	
              And
      to:

            

    

     

    
      	
               
      

            	
              Canyon-Johnson
      Urban Funds

            

    

     

    
      	
               
      

            	
              2000
      Avenue of the Stars, 11th
      Floor

            

    

     

    
      	
               
      

            	
              Los
      Angeles,
California  90067

            

    

     

    
      	
               
      

            	
              Attention:

            	
              Head
      of Asset Management

            

    

     

    
      	
               
      

            	
              Telephone:

            	
              (310)
      272-1500

            

    

     

    
      	
               
      

            	
              Facsimile:

            	
              (310)
      272-1523

            

    

     

     

    
      	
               
      

            	
              And
      to:

            

    

     

    
      	
               
      

            	
              Canyon-Johnson
      Urban Funds

            

    

     

    
      	
               
      

            	
              2000
      Avenue of the Stars, 11th
      Floor

            

    

     

    
      	
               
      

            	
              Los
      Angeles,
California  90067

            

    

     

    
      	
               
      

            	
              Attention:

            	
              General
      Counsel

            

    

     

    
      	
               
      

            	
              Telephone:

            	
              (310)
      272-1500

            

    

     

    
      	
               
      

            	
              Facsimile:

            	
              (310)
      272-1523

            

    

     

    
      	
               
      

            	
              And
      to:

            

    

     

    
      	
               
      

            	
              DLA
      Piper US LLP

            

    

     

    
      	
               
      

            	
              550
      South Hope Street, Suite 2300

            

    

     

    
      	
               
      

            	
              Los
      Angeles,
California  90071

            

    

     

    
      	
               
      

            	
              Attention:

            	
              Steven
      A. Fein, Esq.

            

    

     

    
      	
               
      

            	
              Telephone:

            	
              (213)
      330-7772

            

    

     

    
      	
               
      

            	
              Facsimile:

            	
              (213)
      330-7572

            

    

     

    
      	
               
      

            	
              If to
      Lender:

            

    

    

    
      	
               
      

            	
              Beal
      Bank Nevada

            

    

    
      	
               
      

            	
              6000
      Legacy Drive

            

    

    
      	
               
      

            	
              Plano,
      Texas 75024

            

    

    Attention:                      Stephen
J. Costas, General Counsel

     

    Telephone:                      (469)
467-5534

     

    Facsimile:                        
(469)

     

    
      	
               
      

            	
              With a copy
      to:

            

    

     

    
      	
               
      

            	
              Hunton
      & Williams LLP

            

    

     

    
      	
               
      

            	
              1445
      Ross Avenue, Suite 3700

            

    

     

    
      	
               
      

            	
              Dallas,
      Texas 75202

            

    

     

    
      	
               
      

            	
              Attention:

            	
              Lawrence
      C. Adams

            

    

     

    
      	
               
      

            	
              Telephone:

            	
              (469)
      467-5513

            

    

     

    
      	
               
      

            	
              Facsimile:

            	
              (469)
      241-9568

            

    

     

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

     

    
      
        
        

      

      
        87

        
          

        

      

      
        
        

      

    

     

    Article
23

     

    WAIVER
OF JURY TRIAL

     

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

     

    

     

    [REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]

     
 

     

    
      
         

      

      
        88

        
          

        

      

      
         

      

    

    EXECUTED as of the date first set forth
above.

     

    BORROWER:

    

    CJUF II
STRATUS BLOCK 21 LLC,

    a
Delaware limited liability company

    

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

    a Texas limited partnership,
Manager

    

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

    a Texas limited liability
company,

    General Partner

    

    

    By:    /s/ Erin D.
Pickens                                     

    Name:         Erin
D. Pickens

    Title:           Senior
Vice President

    

    By:        CJUF
II Block 21 Member, LLC,

    a Delaware limited liability company,
Member

    

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

    a Delaware limited partnership,
Member

    

    By:          Canyon-Johnson
Realty Advisors II LLC,

    a Delaware limited liability
company,

    General Partner

    

    

               By:      /s/ K. Robert
Turner                             

    Name:          K.
Robert Turner

    Title:            Managing
Partner

    

    

    LENDER:

    

    BEAL BANK
NEVADA

    

    

    By:  /s/ Anthony Sassine 
                                             

    Name:   Anthony Sassine                                                   

    Title:   Authorized
Signer                                                  

    
      
         

      

      
        89

        
          

        

      

      
         

      

    

    EXHIBIT
A

     

    Legal
Description of Land

     

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

     

    
      
        
          Exhibit A
- Page 1

        

         

      

      
         

        
          

        

      

      
         

      

    

    EXHIBIT
B

     

    Construction
Schedule

     

     

    
      
        
          Exhibit B
- Page 1

        

         

      

      
         

        
          

        

      

      
         

      

    

    EXHIBIT
C

     

    Permitted
Exceptions

     

    
      	
              1.

            	
              Restrictive
      Covenants recorded under Document No(s). 2006234734, 2006240877,
      2008013712, 2008078527 and 2008085863 of the Official Public Records of
      Travis County, Texas.

            

    

     

    
      	
              2.

            	
              All
      interest in all oil, gas and other minerals reserved by Missouri Pacific
      Railroad Company in instrument recorded in Volume 8687, Page 248 of the
      Real Property Records of Travis County, Texas, as modified and amended by
      the Modification of Mineral Reservation dated January 7, 2000, recorded
      under Document No. 2000010490 in the Official Public Records of Travis
      County, Texas.  Said mineral estate not traced further
      herein.  (Surface Rights waived therein) (Lots
    7-12)

            

    

     

    
      	
              3.

            	
              The
      terms, conditions and stipulations, including but not limited to
      repurchase rights, set forth in that certain Special Warranty Deed dated
      to be effective December 15, 2006 and recorded under Document No.
      2006240878 of the Official Public Records of Travis County, Texas, as
      further affected by Estoppel Certificate and Agreement recorded under
      Document No(s). 2008078527 and 2008085863 of the Official Public Records
      of Travis County, Texas and Estoppel Certificate and Agreement recorded
      concurrently with the Deed of
Trust.

            

    

     

    
      	
              4.

            	
              The
      terms, conditions and stipulations set out in that certain Restrictive
      Covenant Regarding Unified Development and Maintenance of Drainage
      Facilities dated January 9, 2008, recorded under Document No. 2008013712
      of the Official Public Records of Travis County,
  Texas.

            

    

     

    
      	
              5.

            	
              The
      terms, conditions and stipulations set out in that certain Temporary Right
      of Way Encroachment License Agreement dated June 4, 2008, recorded under
      Document No. 2008094734 of the Official Public Records of Travis County,
      Texas.

            

    

     

    
      	
              6.

            	
              The
      terms, conditions and stipulations set out in that certain Temporary Right
      of Way Encroachment License Agreement dated August 29, 2008, recorded
      under Document No. 2008151032 of the Official Public Records of Travis
      County, Texas.

            

    

     

    
      	
              7.

            	
              Terms,
      conditions and stipulations set out in that certain Operating Agreement
      dated October 26, 2006, as amended by First Amendment to Operating
      Agreement dated January 30, 2008 (and by Second Amendment to Operating
      Agreement dated as of May 6, 2008), as evidenced by Subordination and
      Non-Disturbance Agreement, recorded under Document No. 2008078528 of the
      Official Public Records of Travis County, Texas, and as further evidenced
      by Subordination and Non-Disturbance Agreement in recorded concurrently
      with the Deed of Trust.

            

    

     

    
      	
              8.

            	
              Apparent
      easement evidenced by the location of electric panel, abandoned service
      pole, power poles and guy anchors, breaker box, overhead electric line,
      electric meter outside of a dedicated easement as shown on the Survey
      dated February 26, 2008, prepared by William H. Ramsey, Registered
      Professional Land Surveyor No.
4532.

            

    

     

    
      
        Exhibit C - Page
1

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	
              9.

            	
              The
      terms, conditions and stipulations set out in that certain Electric
      Utility Easement and Vault Agreement dated August 4, 2009, recorded under
      Document No. 2009133082 of the Official  Public Records of
      Travis County, Texas.

            

    

     

     

    
      
        
          Exhibit C
- Page 2

        

         

      

      
         

        
          

        

      

      
         

      

    

    EXHIBIT
D

     

    Litigation

     

    NONE

     

    
      
        
          Exhibit D
- Page 1

        

         

      

      
         

        
          

        

      

      
         

      

    

    EXHIBIT
E

     

    INSURANCE
REQUIREMENTS DURING AND POST CONSTRUCTION

    

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

     

    A.           During
Construction.

     

    (a)           Builder's
Risk.  From the closing of the loan until replaced by permanent
property insurance, "All Risk" form of Builder's Risk Insurance, in such amount
as Lender shall reasonably require, but in no event less than 100% of the
replacement cost value of the Project (including Upgrades and any leasehold
improvements) (the "Builder's
Risk Insurance").  Such policy shall be written on a Builder's
Risk Completed Value Form (100% non-reporting) or its equivalent and shall not
contain a permission to occupy limitation or a coinsurance
clause.  Such policy shall not have exclusion for sidewalks, retaining
walls or underground property.  The policy shall include coverage for
Flood and Earthquake with sub-limits no less than $250,865,764 per occurrence
and in the annual aggregate. Such insurance policy shall also include coverage
for:

     

    
      	
               
      

            	
              (i)

            	
              Loss
      suffered with respect to Borrower's materials, equipment, machinery, and
      supplies whether on-site, in transit, or stored off site, with a limit in
      amounts sufficient to cover the replacement cost of such exposure subject
      to a minimum limit of $10,000,000 for both transit and off site storage
      (per location)  provided that Borrower shall obtain or cause to
      be obtained additional insurance whenever the value of materials in
      transit or storage exceed those
limits;

            

    

     

    
      	
               
      

            	
              (ii)

            	
              $21,820,000
      in coverage will be provided for additional Soft Cost expenses including
      coverage for all types (including but not limited to interest expense;
      fees; and plans, specifications, blueprints and models, in connection with
      any restoration following an insured
loss);

            

    

     

    
      	
               
      

            	
              (iii)

            	
              If
      applicable, loss or delay of rental income will be provided up to a
      minimum of $12,302,173 on an actual loss sustained
  basis.

            

    

     

    (b)           Comprehensive Broad Form
Boiler and Machinery Insurance, covering all mechanical and electrical
apparatus and pressure vessels.  Such insurance shall provide coverage
against loss or damage from an accident to and/or caused by boilers and
machinery, including but not limited to: heating 

     

    
      
        Exhibit E - Page
1

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    apparatus,
pressure vessels, pressure pipes, electrical or air conditioning equipment on a
blanket comprehensive coverage form, in such amount as Lender shall reasonably
approve but no less than $10,000,000.  All exclusions for testing
shall be removed.

     

    (c)           Professional
Liability.  Borrower will require the architect, engineers
(including Structural and MEP contractors) and all other design professionals
retained by Borrower to purchase and maintain continuous professional liability
coverage in the amount of $1,000,000 per claim.  This policy may be on
a  "claims made" basis, and shall include coverage for bodily injury
and property damage and retroactive coverage back to the first date that
professional services were provided to the Project.

     

    (d)           Commercial General Liability
and Umbrella Liability coverage, for contractors excluded from the Owner
Controlled Insurance Program, including but not limited to, coverage for
Personal Injury, Bodily Injury, Death, Property Damage, with limits of not less
than $2,000,000 per occurrence and in the annual aggregate. The policies
described in this paragraph shall cover, without limitation: elevators,
escalators, independent contractors, contractual liability (covering, to the
maximum extent permitted by the commercial general liability policy, Borrower's
obligation to indemnify Lender as required under this Exhibit) and Products and
Completed Operations Liability coverage. Coverage should also include host
liquor liability. Borrower shall add Lender, its directors, officers, employees
and agents as additional insured.

     

    (e)           Worker's
Compensation.  Worker's compensation insurance, for contractors
excluded from the Owner Controlled Insurance Program, covering Borrower and its
employees at the site to the extent required, and in the amounts required by
applicable Laws. An endorsement providing U.S. Longshore and Harbor Workers
Compensation Act (USL&HW) coverage should be added on an "if any" basis if
there is an exposure.

     

    (f)           Employers
Liability.  If applicable in the amount of $1,000,000 per
accident, $1,000,000 per illness, per employee and $1,000,000 per illness, in
the aggregate, for contractors excluded from the Owner Controlled Insurance
Program.

     

    (g)           Owner Controlled Insurance
Program.  The following coverage shall be provided by the
Borrower for all enrolled parties. Coverage shall include Borrower as an
additional insured on the general liability and excess liability policies. If
applicable, the Workers Compensation/Employers Liability policy shall also cover
the Borrower.

     

    (i)           Workers' Compensation
Insurance - Statutory Limits of the Workers' Compensation Laws of the
State of Texas, with Coverage B - Employer's Liability (with limits of
$1,000,000 each accident for Bodily Injury by accident, $1,000,000 each employee
for Bodily Injury by disease 

     

    
      
        Exhibit E - Page
2

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    and
$1,000,000 policy limit Bodily Injury by disease), covering operations of the
enrolled party performing Work at the project site.

    

    Coverage
under the CIP will remain in force through completion or other similar period
described in the CIP policy. This insurance is extended for an additional period
of time with respects to liability for "bodily injury" or "property damage"
arising out of "repair work".  This extension shall commence as of the
date that work is completed and shall end as of the expiration of any express
warranty for the work, or up to 24 months from the date of completion
of  work, whichever comes first.

    

    (ii)           Commercial General Liability
Insurance
-(Excluding Automobile and Professional Liability) in form providing
coverage not less than a Commercial General Liability insurance policy,
including hazards of explosion, collapse, underground, independent
Contractor(s), employees as additional insureds, completed operations for 10
years after the Project has reached substantial completion as defined in Article
9.8 of the General Conditions of the Contract for
construction,  contractual liability coverage for claims arising out
of the Work for personal injury, bodily injury and property damage in policy or
policies of insurance such that the total available limits, reinstated annually
to all insureds combined will not be less than:

    

    $2,000,000
per occurrence

    $2,000,000
personal and advertising injury aggregate

    $2,000,000
general aggregate

    $2,000,000
completed operations aggregate - term limit.

    

    Coverage
will apply only to work performed at the Project site.  Such insurance
will not include coverage for products liability for any product(s)
manufactured, assembled, or otherwise worked upon away from the Project site for
any enrolled party or excluded party performing such off-site work.

    

    (iii)           Umbrella/Excess Liability
Insurance in limits of:

    

    $150,000,000
per occurrence

    $150,000,000
general aggregate

    $150,000,000
products/completed operations aggregate

    

    excess of
Employers Liability and Commercial General Liability stated above, to all
insureds combined.

    

    (h)           Automobile
Liability.  Contractors shall be required to carry automobile
liability insurance for all owned, hired and no owned vehicles with limits of at
least $1 million.

     

    
      
        Exhibit E - Page
3

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (i)           Contractors Pollution
Liability.  The Project will have a limit of $15,000,000 per
claim and a $15,000,000 aggregate limit.  The policy period shall
coincide with the construction term.  Coverage will apply to all
claims as a result of Bodily Injury, Property Damage or Clean-up Costs caused by
Pollution Conditions resulting from Covered Operations that are performed by or
on the behalf of the Contractor at the project site.  Coverage shall
also include transportation, disposal site coverage and a minimum of ten (10)
years completed operations.

     

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

     

    (a)           "All Risk" insurance
including Flood and Earthquake, and such other insurable hazards as, under good
insurance practices are insured against for other property and buildings similar
to the premises in nature, use, location, height, and type of construction. The amount of such
insurance shall be not less than one hundred percent (100%) of the replacement
cost without depreciation of the Project.  Such insurance policy shall
contain an agreed amount endorsement.  Flood and Earthquake sublimits
shall be what is commercially available at reasonable costs in the market but in
no event be less than $100,000,000 each per occurrence and in the annual
aggregate. Such insurance shall cover increased cost of law or ordinance
insurance, costs of demolition and increased cost of construction with a
sublimit of not less than $10,000,000, debris removal with a sublimit of not
less than $15,000,000.    Deductibles shall not exceed
$250,000 for physical damage.   Cover shall also include extra
expense cover with sublimits not less than $5,000,000. Lender shall be named as
sole Loss Payee and Mortgagee for the Project, for all claim proceeds, including
business interruption insurance loss proceeds, in excess of
$250,000.

     

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

     

    (c)           Business
Interruption.  Loss of rental income on an actual loss
sustained, in an amount equal to 12 months of projected rental income, with a
120 day extended period of indemnification.  Cover shall also include
extra expense with a sublimit of not less than $5,000,000.  Waiting
period of not greater than 30 days can apply.

     

    
      
        Exhibit E - Page
4

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (d)           Commercial General
Liability. Commercial General Liability Insurance, for Personal Injury,
Bodily Injury, Death, Accident and Property Damage providing in combination no
less than $100,000,000 per occurrence (with sublimits approved by Lender) and in
the annual aggregate, per
location.  The policies described in this paragraph shall
cover, without limitation: elevators, escalators, independent contractors,
contractual liability and Products and Completed Operations Liability coverage.
It is understood that umbrella or excess policies can be used to meet the
required limits.

     

    (e)           Dram
Shop.  Prior to any tenant selling alcoholic beverages on any
part of the Project, Borrower either itself or through the Tenant shall provide
evidence of so-called "Dram Shop" against claims or liabilities arising directly
or indirectly to Persons or property on account of the sale or dispensing of
alcoholic beverages.  Coverage shall include loss of means of support.
Limits shall equal those limits as may be required by applicable Laws or
$5,000,000, whichever is greater. If state law allows, Lender shall be named as
an additional insured on such policy.

     

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

     

    (g)           Employers
Liability.                                           If
applicable in the amount of $10,000,000 per accident; $10,000,000 per illness,
per employee; and $10,000,000 per illness, in the aggregate.  Such
limits can be met through excess liability policies of insurance.

     

    (h)           Auto Liability for Owned (if
any) and Hired and Non Owned with limits not less than $10,000,000, unless
otherwise approved by Lender.  If owner /Operator does not have
any Automobiles , the Commercial General Liability policy must be endorsed to
cover Non-Owned Automobile Liability.

     

    (i)           Directors & Officers
Liability.  To the extent the project has the exposure at the
time it becomes operational, Directors and Officers liability insurance
providing cover for Side A and Side B in an amount not less than $5,000,000
subject to industry standard deductibles.  If deemed to be required,
this requirement can be satisfied by the separate coverage of the individual
Borrower membership entities.

     

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

     

    II.           Requirements
of Insurance Policies.

     

    (a)           All
insurance policies shall be issued by an insurer or insurers with an A.M. Best
rating of A:IX or better or a Standard and Poor's rating of "AA", or equivalent
rating from another agency acceptable to Lender and be authorized in the state
where the Project is located.  All insurance acquired pursuant to this

     

    
      
        Exhibit E - Page
5

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Exhibit
shall be in form, amounts and with coverage and deductibles satisfactory to
Lender, in Lender's sole discretion.

     

    (b)           The
Builder's Risk insurance policies required to be carried pursuant to Section
I.A., Subsections (a) and (b) of this Exhibit, and the All Risk
required pursuant to Section I.B, Subsections (a) and (b), shall name
Borrower as the insured and shall also name Lender as Loss Payee and Mortgagee,
under a non-contributing standard mortgagee clause.

     

    (c)           The
Commercial General Liability, Automobile Liability, and Pollution Liability
policies required in this Exhibit E shall name Lender, its directors, officers,
and employees as Additional Insured.

     

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

     

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

     

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

     

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

     

    
      
        Exhibit E - Page
6

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    premium
satisfactory to Lender.  Not later than ninety (90) days after the
renewal of each of the insurance policies, Borrower shall deliver to Lender an
original or certified copy (as required pursuant to this Section) of a renewal
policy or policies.

     

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

     

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

     

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

     

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

     

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

     

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

    

    
      
        
          Exhibit E
- Page 7

        

         

      

      
         

        
          

        

      

      
         

      

    

    EXHIBIT
F

     

    Architect’s
Certificate

     

    The firm
of BOKA Powell, LLC (“Architect”), hereby certifies for the benefit of Beal Bank
Nevada and CJUF II Stratus Block 21 LLC, to the best of its current knowledge,
information and belief, that:

     

    Architect
has been employed by Stratus Block 21 Investments GP, L.L.C., a Texas limited
liability company (“Stratus Block 21”), pursuant to a contract dated May 3, 2006
(as amended and assigned, the “Architect Agreement”), to provide architectural
and engineering services for what is commonly known as W Hotel & Residences,
which is located at Block 21 in Austin, Texas (the “Project”).  The
Architect Agreement was assigned by Stratus Block 21 to CJUF II Stratus Block 21
LLC, a Delaware limited liability company, the current owner of the Project, by
assignment dated July 30, 2007 (referred to herein as the
“Owner”).  The Project is located on the property described on Exhibit “A” attached
hereto (the “Land”) and the improvements being constructed on the Land in
conjunction with the Project is referred to herein as the
“Improvements.”

     

    A true
and correct copy of the Architect Agreement, together with all amendments
thereto, which sets out Architect’s services is attached hereto as Exhibit
“B.”

     

    The firm
is duly licensed and in good standing under laws of the State of Texas, License
No. 10147.

     

    The
foundations were designed by a structural engineer retained by Architect in
accordance with the recommendations contained in a soil report dated August 10,
2007, which was prepared by Henley-Johnston & Associates, Inc.

     

    Plans
listed on the attached Schedule I comprise
the plans which are necessary for the construction of the Project, excepting
tenant space designs, and when the Project is built in accordance therewith the
Project will (excepting completion of tenant improvements) be ready for
occupancy.  Calculations of the gross building and the net rentable
building area are attached as Schedule
II.  The plans as prepared by Architect and Architect’s
consultants (and the Project will, when constructed in accordance therewith)
comply with all applicable building, zoning, land use, subdivision,
environmental, fire, safety and other applicable governmental laws, statutes,
codes, ordinances, rules and regulations.  In addition, (i) the Urban
Design Section of the Neighborhood Planning and Zoning Department at the City of
Austin approved the design of the streetscape improvements for the Project in
accordance with Restrictive Covenant recorded under Document No. 2006234734 of
the Official Public Records of Travis County, Texas, (ii) the Project is
designed as a unified Development under its Site Development Permit No.
SP-20070371C issued by the City of Austin (the “Site Development Permit”) in
accordance with Restrictive Covenant Regarding Unified Development and
Maintenance of Drainage Facilities recorded under Document No. 2008013712 of the
Official Public Records of Travis County, Texas (the “Unified Development RC”),
(iii) joint access for the Project is designed in accordance with Section 4 of
the Unified Development RC, and (iv) parking for the Project is designed in
accordance with Section 5 of the Unified Development RC.

     

    
      
        Exhibit F - Page
1

      

      
        
        

        
          

        

      

      
        
        

      

    

     

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

     

    The
following design drawings or plans have been prepared with assistance from other
designers or contractors.

     

    
      	
              Type of Plans

            	 
      	
              Name of Preparing Firm

            
	 
      	 
      	 
      
	
              Construction
      Document Package No. 1

            	 
      	
              BOKA
      Powell & all Consultants

            
	
              Construction
      Document Package No. 2

            	 
      	
              BOKA
      Powell & all Consultants

            
	
              Construction
      Document Package No. 3

            	 
      	
              BOKA
      Powell & all Consultants

            
	
              Construction
      Document Package No. 4

            	 
      	
              BOKA
      Powell & all Consultants

            
	
              Construction
      Document Package No. 5

            	 
      	
              BOKA
      Powell & all Consultants

            

    

     

    The
Construction Document Pages have been supplemented by the Addenda issued as
described on Schedule
I attached hereto.  The Specifications are included as part of
the aforementioned Construction Documents.

     

    Architect
has received payment of all sums due under the Architect Agreement (the
“Progress Payments”) other than the current amount due in the amount of
$145,572.29 (the “Current Amount”) for services provided through September 21,
2009.  In consideration of the payment by Owner of the Progress
Payments and other good and valuable consideration, the receipt of all of which
is hereby acknowledged, Architect has waived and released and, acting herein by
and through me, does hereby waive and release, any and all liens, rights and
interests (whether choate or inchoate and including, without limitation, all
mechanic’s and materialman’s liens under the Constitution, statutes and laws of
the State of Texas) owned, claimed or held, or to be owned, claimed or held by
Architect in and to the Land and in and to the Improvements, whether now or
hereafter constructed thereon, by reason of services performed by Architect to
September 21, 2009 (but not after such date); and the Architect for itself, its
representatives and assigns does release, acquit and forever discharge Owner,
its successors and assigns from any and all claims, debts, demands and causes of
action that Architect has or may have as a result of the same; provided,
however, that the release contained in this paragraph shall in no way diminish,
modify or otherwise affect the validity of any liens, rights and interests to be
owned, claimed or held by Architect by reason of services performed subsequent
to September 21, 2009 hereby by Architect or for the Current Amount
due.

     

    Architect
has actual knowledge, and hereby certifies, that all bills owed by Architect to
others for materials furnished and services performed in connection with any
services or work product provided under the Architect Agreement with regard to
the Land or the Improvements have been fully paid and satisfied except for
amounts reflected in the Current Amount and for services and/or work product
performed subsequent to September 21, 2009.

     

    
      
        
          Exhibit F
- Page 2

        

         

      

      
         

        
          

        

      

      
         

      

    

    BOKA POWELL, LLC

    

    

    By:                                                                

     

    Name:__________________________

     

    Title:                                                                

     

    Date:                                                                

     

    

     

    THE STATE
OF
TEXAS                     §

    §

    COUNTY OF
____________        
   §

     

    This
instrument was acknowledged before me on the ___ day of October, 2009 by
________________________________, ____________________________ of BOKA Powell,
LLC, a____________________, on behalf of said entity.

     

    

          __________________________________________

    Notary
Public Signature

     

    (SEAL)

     

    
      
        
          Exhibit F
- Page 3

        

         

      

      
         

        
          

        

      

      
         

      

    

    EXHIBIT
G

     

    Budget

     

    
      
        
          Exhibit G
- Page 1

        

         

      

      
         

        
          

        

      

      
         

      

    

    EXHIBIT
H

     

    Draw
Request Form

     

    
      
        
          Exhibit H
- Page 1

        

         

      

      
         

        
          

        

      

      
         

      

    

    EXHIBIT
I

     

    Approved
Plans and Specifications and Approved Finish Standards

     

    (see
attached)

     

    
      
        
          Exhibit I
- Page 1

        

         

      

      
         

        
          

        

      

      
         

      

    

    EXHIBIT
J

     

    

     

    Subcontracts

     

     

     

    
      
        
          Exhibit J
- Page 1

        

         

      

      
         

        
          

        

      

      
         

      

    

    EXHIBIT
K

     

    PLEASE
INCLUDE IN DRAW PACKAGE SENT TO BEAL BANK NEVADA

     

    FORM OF BAILEE LETTER FOR
PUBLIC WAREHOUSEMEN

     

    [WAREHOUSEMEN
LETTERHEAD]

     

    [DATE]

     

    Beal Bank
Nevada

    6000
Legacy Drive

    Plano,
Texas 75024

    Attention:
Anthony Sassine

     

    Re:           W
Hotel and Residences Condominiums

     

    Austin, Texas

     

    (the
"Project")

     

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

     

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

     

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

     

    Notwithstanding
the issuance of such receipts or other documents to or for the account of
Lender, we acknowledge and agree that Lender has authorized us to release any of
the Stored 

     

    
      
        
          Exhibit K
- Page 1

        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Materials
to any authorized agent of Owner upon Owner's request (including, without
limitation, Contractor); provided, however, upon our receipt of written
direction from Lender, we shall refuse to release any of the Stored Materials to
Owner or Owner's agent (including, without limitation, Contractor) and we shall
only release such Stored Materials to Lender or the party designated by Lender
in such written direction.

     

    Very
truly yours,

     

    [PUBLIC
WAREHOUSEMEN]

     

    

    By:                                                      

    Name:                                                                

    Title:                                                      

    
      
        
          Exhibit K
- Page 2

        

         

      

      
         

        
          

        

      

      
         

      

    

    SCHEDULE
1

     

    DESCRIPTION OF
MATERIALS

     

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

     

     

    
      
        
          Exhibit K
- Page 3

        

         

      

      
         

        
          

        

      

      
         

      

    

    EXHIBIT
L

     

    PLEASE
INCLUDE IN DRAW PACKAGE SENT TO BEAL BANK NEVADA

     

    FORM OF BAILEE
LETTER

     

    [SUBCONTRACTOR
LETTERHEAD]

     

    [DATE]

     

    Beal Bank
Nevada

    6000
Legacy Drive

    Plano,
Texas 75024

    Attention:  Anthony
Sassine

     

    Re:           W
Hotel and Residences Condominiums

     

    Austin, Texas

     

    (the
"Project")

     

    

     

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

     

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

     

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

     

    
      	
               
      

            	
              (i)

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

            

    

     

    
      	
               
      

            	
              (ii)

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

            

    

     

    
      
        
          Exhibit L
- Page 1

        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	
               
      

            	
              (iii)

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

            

    

     

    
      	
               
      

            	
              (iv)

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

            

    

     

    
      	
               
      

            	
              (v)

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

            

    

     

    Very
truly yours,

     

    [BAILEE]

     

    

    By:                                                      

    Name:                                                      

    Title:                                                      

    
      
        
          Exhibit L
- Page 2

        

         

      

      
         

        
          

        

      

      
         

      

    

    SCHEDULE
1

     

    DESCRIPTION OF
MATERIALS

     

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

     

    
      
        
          Exhibit L
- Page 3

        

         

      

      
         

        
          

        

      

      
         

      

    

    EXHIBIT
M

     

    List of
Sales Agreements

     

    

     

    
      
        
          Exhibit M
- Page 1

        

         

      

      
         

        
          

        

      

      
         

      

    

     

    EXHIBIT
M-1

     

    List of
Sales Agreements Discrepancies

     

    
      
        
          Exhibit
M-1 - Page 1

        

         

      

      
         

        
          

        

      

      
         

      

    

    EXHIBIT
M-2

     

    Approved
Price List

     

    
      
        
          Exhibit
M-2 - Page 1

        

         

      

      
         

        
          

        

      

      
         

      

    

    EXHIBIT
N

     

    Required
Changes to Condominium Documents

     

    CIS
Revisions

     

    The CIS
shall be revised to:

     

    Comply
with all of the requirements of § 82.153 of the Texas Uniform Condominium Act
(“TUCA”) for both the
Master and Residential Condominiums;

     

    List with
specificity each lien, lease, or encumbrance in the Declarations for the Master
Condominium and the Residential Condominium;

     

    Either
list the written warranties to be provided with respect to the Master Units in
addition to the Residential Master Unit or add a statement there are
none;

     

    Provide a
general description of all insurance provided by declarant or any owners
association with respect to either the Master or Residential
Condominiums;

     

    Provide a
more detailed description of the expected fees to be paid by unit owners for use
of common elements and other facilities related to the
Condominiums;

     

    State the
pro forma or projected
budgets for the Master and Residential Condominiums were prepared in accordance
with generally accepted accounting principles and (a) taking into consideration
the physical condition of the condominium or (b) are based on assumptions that,
to the best of [Declarant’s/preparer’s] knowledge, are reasonable; each budget
must also state the amount of each reserve or that no reserve is included; the
budget for the Master Condominium must state the projected monthly common
expense assessment for each Master Condominium; each budget must identify the
person who prepared the budget, and contain a statement of the budget's
assumptions concerning occupancy and inflation factors; and

     

    Delete
the word “maximum” when referring to the number of units that may be created
when used in connection with the Declarant Control Period or appointment of
directors to the board of directors of the owners association.

     

    Master
Condominium Declaration

     

    The Master Condominium Declaration
shall be revised to:

     

    Attach a
plat and plans that strictly comply with all applicable requirements of
TUCA;

     

    
      
        
          Exhibit N
- Page 1

        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Modify
Attachments 6 and 7 so that the allocated percentages of ownership interests and
expenses total exactly 100 percent;

     

    Limit §
19.4(h) to those amendments declarant expressly permitted by TUCA to
make;

     

    State
that the Owner of the Parking Master Unit shall pay 18 percent of the Parking
Master Unit Assessments described in Attachment 7 so that exactly 100 percent of
such assessments are allocated to specifically named Owners;

     

    Designate
the number, size and location of sales, leasing, or management offices and model
units;

     

    Correct
reference in § 19.4 to nonexistent § 17.4;

     

    Clarify
application of Tex. Prop. Code Ch. 27 (Residential Construction Liability Act)
to commercial damage claims;

     

    Delete
the word “maximum” when referring to the number of units that may be created
when used in connection with the Declarant Control Period or appointment of
directors to the board of directors of the owners association; and

     

    Attach
original tax certificates or tax receipts with respect to the
property.

     

    Residential
Condominium Declaration

     

    The Residential Condominium Declaration
shall be revised to:

     

    Attach a
plat and plans that strictly comply with all applicable requirements of
TUCA;

     

    Revise
Exhibits C-1 and C-2 so that the allocated percentages of ownership interests
and expenses total exactly 100 percent;

     

    Limit §
17.4(h) to those amendments declarant expressly permitted by TUCA to
make;

     

    Designate
the number, size and location of sales, leasing, or management offices and model
units;

     

    Clarify
application of Tex. Prop. Code Ch. 27 (Residential Construction Liability Act)
to hotel damage claims;

     

    Delete
the word “maximum” when referring to the number of units that may be created
when used in connection with the Declarant Control Period; and

     

    Attach
original tax certificates or tax receipts with respect to the
property.

     

    
      
        
          Exhibit N
- Page 2

        

         

      

      
         

        
          

        

      

      
         

      

    

    EXHIBIT
O

     

    Approved
Form of Sales Agreement

     

    
      
        
          Exhibit O
- Page 1

        

         

      

      
         

        
          

        

      

      
         

      

    

    EXHIBIT
P

     

    Materials
Purchases Not Subject to Retainage

     

    
      
        
          Exhibit P
- Page 1

        

         

      

      
         

        
          

        

      

      
         

      

    

    EXHIBIT
Q

     

    LEASING
PARAMETERS AND ALLOWABLE TENANT IMPROVEMENTS

    W Austin
Commercial Space Leases

                                 Retail                                                                                                                   
Restaurant                                                                                                               Office

    
      	
              Term
      (Years)

               

              Minimum
      1st
      Year Base Rent

              Annual
      Bumps

              Minimum
      Average Base Rent

              Additional
      Rent

               

              Maximum
      Allowable Tenant Improvements Allowance

               

              Maximum
      Commission

               

            	
              5                       7                       10

               

              $27.00          $27.00            $27.00

              $  0.50          $
      0.50             $
      0.50

              $28.00          $28.50            $29.25

                     6%                6%                 6%

               

              $28.00          $30.00            $35.00

               

               

              $12.00          $16.80             $24.00

            	
              AVERAGE

               

              $27.00

              $
      0.50

              $28.58

                     6%

               

              $31.00

               

               

              $17.60

            	
              5                       7                    10

               

              $29.00          $29.00          $29.00

              $  0.50          $
      0.50            $
      0.50

              $30.00          $30.50          $31.25

                     6%                6%              6%

               

              $80.00          $95.00        $120.00

               

               

              $13.50          $18.90         $27.00

            	
              AVERAGE

               

              $29.00

              $
      0.50

              $30.58

              6%

               

              $98.33

               

               

              $19.80

            	
              5                       7                    10

               

              $26.00          $26.00        $26.00

              $  0.50           $
      0.50        $ 0.50

              $27.00           $27.50       $28.25

               

               

              $28.00           $30.00       $35.00

               

               

              $16.20          $22.68        $32.40

            	
              AVERAGE

               

              $26.00

              $
      0.50

              $27.58

               

               

              $31.00

               

               

              $23.76

            

    

    Notes:

    
      	
              1.

            	
              Borrower
      has required duty to employ Urban Partners to market retail and restaurant
      space.  U.P. represents all retail in the Second Street
      District.

            

    

    
      	
              2.

            	
              Retail
      and Restaurant commissions are calculated as 6% of base rent over the
      initial term of the lease. Split is 4% to tenant rep and 2% to landlord
      rep for Retail and Restaurant.

            

    

    
      	
              3.

            	
              Office
      commissions are calculated as 6% of gross rent over the initial term of
      the lease. Splits are the same as
Retail.

            

    

    
      	
              4.

            	
              Additional
      Rent applies to the retail and restaurant leases. It is calculated as 6%
      of annual Gross Sales over the Natural
  Breakpoint.

            

    

    
      	
               
      

            	
              The
      Natural Breakpoint = Base Rent / 6%.  The landlord will then
      receive 6% of all annual Gross Sales in excess of the Natural
      Breakpoint.

            

    

    
      	
               
      

            	
              For
      example: Base Rent = $30 psf. Natural Breakpoint = $30 / 6% = $500 psf.
      Gross Sales = $800 psf.

            

    

    
      	
               
      

            	
              Landlord
      will receive additional rent on top of Base Rent equal to $18 psf = ($800
      - $500) * 6%.

            

    

    
      	
               
      

            	
              Total
      Rent = Base Rent + Percentage Rent = $30 + $18 = $48
  psf.

            

    

    
      	
               
      

            	
              Commissions
      are not payable on Percentage Rent.

            

    

    
      	
              5.

            	
              Lease
      terms not in compliance with this Exhibit or the Amended and Restated
      Construction Loan Agreement require Lender's prior written
      consent.

            

    

    
      	
              6.

            	
              Any
      leasing commissions payable to parties affiliated with Borrower shall
      require Lender's prior written
consent.

            

    

    
      	
              7.

            	
              Each
      Lease to a tenant affiliated with the Borrower requires Lender's prior
      written consent.

            

    

    
      
        
          Exhibit Q
- Page 1

        

         

      

      
         

        
          

        

      

      
         

      

    

    EXHIBIT
R

     

    W
AUSTIN CHANGE ORDER SUMMARY

     

    

     

    
      	
              Date

            	
              Description

            	
              Total

            
	
              10/01/2008

              10/27/2008

              10/27/2008

              11/07/2008

              12/29/2008

              01/15/2009

              02/25/2009

              04/09/2009

              05/05/2009

              05/27/2009

              06/18/2009

              06/29/2009

              08/19/2008

              09/15/2009

            	
              Owner
      Change Order 1

              Owner
      Change Order 2

              Owner
      Change Order 3

              Owner
      Change Order 4

              Owner
      Change Order 5

              Owner
      Change Order 6

              Owner
      Change Order 7

              Owner
      Change Order 8

              Owner
      Change Order 9 A

              Owner
      Change Order 9 B

              Owner
      Change Order 10

              Owner
      Change Order 11

              Owner
      Change Order 12

              Owner
      Change Order 13

              Total

            	
              $ 39,645

              $ 125,716

              $ 101,002

              $ 167,312

              $ 417,003

              $ 525,313

              $ 238,237

              $ 190,957

              $ 102,886

              $ 993,608

              $ 255,071

              $ 365,263

              $ 100,818

              $2,447,936

              $ 6,070,767

            

    

     

    
      
        
          Exhibit R
- Page 1

        

         

      

      
         

        
          

        

      

      
         

      

    

    EXHIBIT
S

     

    Form of
Fourth Estoppel and Agreement from City of Austin

    

    

    

     

    
      
        
          Exhibit
S- Page 1

        

         

      

      
         

        
          

        

      

      
         

      

    

    EXHIBIT
T

    

    Due
Diligence Materials Provided to Lender

    

    

    
      
        
          S-i

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