Document:

gleneagles_securityagreement.htm

    SECURITY
AGREEMENT

    

    

    THIS SECURITY AGREEMENT (the
"Agreement") made the 22nd day of January, 2009, by and between GLENEAGLES APARTMENTS, LLC, a
Delaware limited liability company, with offices at 222 Smallwood Village
Center, St. Charles, Maryland 20602 (referred to in this Agreement as the
"Debtor"), and CAPMARK FINANCE
INC., a California corporation, having an office and place of business at
116 Welsh Road, Horsham, Pennsylvania 19044 (referred to in this Agreement as
the "Secured Party").

    

    The Debtor is indebted to the Secured
Party in the amount of $25,045,200.00 in connection with the construction of a
certain multifamily housing rental project known or to be known as “Gleneagles Apartments”, FHA
Project No. 052-35658, located in St. Charles, Charles County, Maryland
(referred to in this Agreement as the "Project").  The indebtedness
(which is referred to in this Agreement as the "Indebtedness") is evidenced by a
Deed of Trust Note (referred to in this Agreement as the “Mortgage”) dated of
even date herewith, payable to the order of the Secured Party (referred to in
this Agreement as the "Note"), and is secured by a Deed of Trust dated of even
date herewith, and recorded or to be recorded among the land records of Charles
County, Maryland.  The Mortgage securing the indebtedness is insured
by the Secretary of Housing and Urban Development (referred to in this agreement
as the "Secretary") under Section 221(d)(4) of the National Housing Act, as
amended.

    

    To further secure the repayment of the
Indebtedness and at the request of the Secured Party and the Secretary, the
Debtor wishes to grant to the Secured Party, pursuant to the Uniform Commercial
Code as in effect in the State of Maryland (referred to in this agreement as the
"State") a security interest in certain property related to the
Project.  The parties also intend to set forth in this instrument
their agreement with respect to that security interest.

    

    NOW, THEREFORE, in
consideration of the foregoing and of the mutual promises set forth below, and
in further consideration of the sum of One Dollar ($1.00) and other good and
valuable consideration in hand paid by each party to the other, the receipt and
sufficiency of which are hereby acknowledged, the parties hereby agree as
follows:

    

    1.           Creation of Security
Interest.

    

    (a)           Granting
Clause.  The Debtor hereby grants a security interest (referred
to in this Agreement as the “Security Interest”) to the Secured Party in all
property (referred to in this Agreement as the “Collateral”) which (i) is owned
by the Debtor or becomes the property of the Debtor hereafter and is used in the
operation of the Project, and/or (ii) is described in Exhibit “B” attached to
this Agreement; and/or (iii) is part of, attached to, or located on the land and
premises legally described in Exhibit “A” attached to this
Agreement.  Exhibits “A” and “B” are hereby incorporated into this
Agreement by reference.  The Security Interest is granted for the
purpose of securing the Indebtedness.

    

    (b)           Warranty.  The
Debtor warrants and represents to the Secured Party that it owns the Collateral
free and clear of any lien, security interest, encumbrance, and other claim of
any kind, other than the Security Interest created by this Agreement, and has
the full power to grant the Security Interest; provided, however that this
warranty is subject to: (i) the rights of the lessor with respect to any
personal property or equipment leased by the Debtor; (ii) any security deposits,
accounts or monies in the custody of the Debtor or under its control which are
subject to the rights of third parties; and (iii) any account or deposit which
is subject to terms and conditions contained in special purpose escrow
agreements and other documents relating to the indebtedness.

    

    (c)           Perfection.  The
Debtor agrees to comply with all applicable laws and requirements in order to
grant to the Secured Party a valid, perfected first lien in the Collateral,
authorizes the Secured Party to file financing statements pursuant to the
Uniform Commercial Code which name the Debtor and identify the Collateral in
such places as are necessary and appropriate under the Uniform Commercial Code,
and upon request of the Secured Party, from time to time execute and deliver to
the Secured Party one or more financing statements pursuant to the Uniform
Commercial Code then in effect in the State, and any other instruments
reasonably required by the Secured Party in connection herewith the filing of
which is advisable, in the sole judgment of the Secured Party, to perfect the
Secured Party's Security Interest in the Collateral under the laws of the United
States, the State, or any other jurisdiction in which the Secured Party shall
determine such filings to be advisable.  The Debtor hereby authorizes
the Secured Party to execute and file, at any time and from time to time, on
behalf of the Debtor one or more financing statements with respect to the
Collateral, the filing of which is advisable, in the sole judgment of the
Secured Party including, especially, but without limitation, continuation
statements and statements reperfecting a security interest in any of the
Collateral where the financing statements with respect thereto had
lapsed.  The Debtor hereby irrevocably appoints the Secured Party as
the Debtor's attorney-in-fact to execute and file, from time to time, on its
behalf, one or more financing statements with respect to the Collateral and to
execute such other documents and instruments on behalf of the Debtor as the
Secured Party, in its sole judgment, shall deem necessary or desirable for the
purposes of effectuating this Agreement, such power being coupled with an
interest and irrevocable.  The Debtor agrees to notify the Secured
Party prior to any change in its mailing address or principal place of business,
in order that a prompt filing or refiling of any outstanding financing
statements or other public notices may be made, if necessary.  The
Debtor further agrees to advise the Secured Party promptly of any new facts
which, to the best of its knowledge, would adversely affect the priority of the
Security Interest granted to the Secured Party by this Agreement.

    

    (d)           Proceeds,
etc.  The Security Interest shall extend to and include the
proceeds of any Collateral and any property which the Debtor may receive on
account of any Collateral.

    

    (e)           Costs and
Expenses of Secured Party.  The Debtor agrees to pay any and
all fees, costs and expenses, of whatever kind and nature, which the Secured
Party may incur in filing any financing statements or other public notices, and
the charges of any attorneys whom the Secured Party may engage in preparing and
filing such documents, making title examinations and rendering opinion letters,
as well as all costs and expenses incurred by the Secured Party, including
reasonable attorney's fees and court costs in protecting, maintaining,
preserving, enforcing or foreclosing the Security Interest granted to the
Secured Party hereunder, whether through judicial proceedings or otherwise, or
in defending or prosecuting any actions or proceedings arising out of or
relating to this transaction, promptly after the Debtor shall have been notified
by the Secured Party of the amount of such fees, costs or expenses, together
with interest thereon at the rate of ten percent (10%) per annum until
paid.

    

    2.           Care of
Collateral.  Unless specifically otherwise agreed by the
Secured Party in writing, the Debtor shall at its sole cost and
expense:

    

    (a)           Maintain
possession of the Collateral on the Project premises (which are described in
Exhibit “A”) and not remove the Collateral from that location.

    

    (b)           Keep
the Collateral separate and identifiable.

    

    (c)           Maintain
the Collateral in good repair and condition as the same is as of the date
hereof, as the same is when acquired, reasonable wear and tear excepted, making
replacements when and where necessary, and otherwise deal with the Collateral in
all such ways as are considered good practice by owners of such
property.

    

    (d)           Use
the Collateral lawfully and only as permitted by insurance
policies.

    

    (e)           Permit
the Secured Party to inspect the Collateral and any records relating to the
Collateral upon reasonable request and notice during normal business
hours.

    

    (f)           Insure
the Collateral for its full replacement value, subject to a deductible of not
more than the lesser of (i) $10,000 or (ii) one percent (1%) of the Mortgage
Loan (unless the Secured Party has given written approval of a larger
deductible) in the name of and with loss or damage payable to the Secured Party,
the Federal Housing Administration and the Debtor as their interests may
appear.  All such policies shall provide for not less than thirty (30)
days minimum written notice to the Secured Party of cancellation or material
change.

    

    (g)           Keep
the Collateral free and clear of all liens and security interests of
others.

    

    (h)           Pay,
when due, all taxes, assessments and other charges lawfully and validly levied
or assessed upon the Collateral.

    

    3.           Defense
of Collateral.  The Debtor will promptly defend any proceeding
which may affect the Security Interest or the title to the Collateral, and will
reimburse the Secured Party for all costs and expenses incurred by the Secured
Party in connection with such defense.

    

    4.           Charges,
Liens and Encumbrances Affecting Collateral.  The Debtor will
pay when due all existing or future charges, liens, or encumbrances on and all
taxes and assessments now or hereafter imposed on or affecting the
Collateral.

    

    5.           Remedies
on Default.  In the event of a default, as defined in Section
6:

    

    (a)           The
Secured Party may, at its option, declare the full principal amount of the
Indebtedness, and any interest accrued on that amount, to be immediately due and
payable; and

    (b)           The
Secured Party shall have all of the rights and remedies of a Secured Party
against the Collateral under the Uniform Commercial Code as in effect in the
State.

    

    Without limitation of those rights and
remedies, the Secured Party may, upon written notice to the Debtor, take, and
publicly or privately sell or convey full right, title and interest in and to,
the Collateral, or any part of it, in the name of the Secured Party and/or its
designees.  The Debtor hereby constitutes and appoints the Secured
Party as its true and lawful attorney-in-fact, such power being coupled with an
interest and irrevocable, to assign and transfer its interest in any or all of
the Collateral in the event of a default.

    

    (c)           The
Debtor further specifically agrees that, in any exercise of the rights of the
Secured Party under this or any other instruments, any combination or all of the
property, rights or security given to secure the Debtor’s indebtedness to the
Secured Party may be offered for sale for one total price, and the proceeds of
any such sale accounted for in one account without distinction between the items
of security or without assigning to them any proportion of such proceeds, the
Debtor hereby waiving the application of any doctrine of
marshalling.

    

    6.           Defaults.  For
purposes of this Agreement, the Debtor shall be deemed to be in default
if:

    

    (a)           The
Debtor violates any provision of (i) the Note (which evidences the
Indebtedness); (ii) the Mortgage (which also secures the Indebtedness); (iii)
this Security Agreement; or (iv) any other instrument related to the
Indebtedness (which Note, Mortgage, Security Agreement and other instruments
related to the Indebtedness are hereinafter sometimes collectively referred to
as the “Security Documents”); provided, however, that an event of default shall
not occur unless such violations are not cured within applicable cure periods,
if any, as may be provided in said Security Documents or Regulatory
Agreement;

    

    (b)           There
occurs any actual or threatened demolition of or injury or waste to the Project
premises, not covered by insurance, or not replaced or restored by the Debtor,
which may impair the value of the Collateral; or

    

    (c)           A
receiver is appointed for or a petition in bankruptcy is filed by or against the
Debtor, its successors or its assigns, which receiver or involuntary bankruptcy
petition is not removed, vacated or stayed within sixty (60) days from the first
date of appointment or filing thereof; or

    

    (d)           The
Debtor is dissolved and liquidation of the Debtor is commenced in accordance
with the Debtor's organizational documents and/or the law of the
State.

    

    (e)           The
Debtor changes its name or the jurisdiction in which it is organized without the
prior written consent of the Secured Party.

    

    7.           No
Waiver.  No failure on the part of the Secured Party to
exercise, and no delay on the part of the Secured Party in exercising, any right
or remedy under this Agreement shall operate as a waiver of that right or
remedy.  A single or partial exercise by the Secured Party of any
right or remedy under this Agreement shall not constitute an election of
remedies by the Secured Party or preclude any other or further exercise of that
right or remedy or the exercise of any other right or remedy.  The
remedies provided in this Agreement are not exclusive of any remedies provided
by law.

    

    8.           Priority
of Remedies; Renewals and Extensions.  Neither the Debtor nor
any other persons interested in the Collateral or the proceeds of the Collateral
shall have any right to require the Secured Party first to resort to or proceed
personally against any other person or to proceed against any other collateral
security, or to give priority or preference to any item of Collateral, or to
proceed upon any guaranty prior to exercising its rights
hereunder.  No renewal or extension of the Indebtedness, no release or
surrender of any Collateral given as security for the Indebtedness, no release
of any obligor with respect to the Indebtedness, and no delay by the Secured
Party in enforcing the Indebtedness or exercising any right or power with
respect to the Indebtedness shall affect the Secured Party's rights with respect
to the Collateral.

    

    9.           Termination.  This
Agreement, and each of the rights and remedies afforded to the Secured Party
hereunder shall automatically terminate upon payment of the Indebtedness in full
in compliance with the provisions of the Note.  Upon termination
hereunder, the Secured Party hereby agrees to execute a Termination Statement
and any other documents reasonably necessary to terminate this Agreement and
release the Collateral from the Security Interest.

    

    10.           Non-Recourse
Obligation.  Notwithstanding any other provision contained
herein or in the Note, it is agreed that the execution of the Note shall impose
no personal liability upon the Debtor for payment of the indebtedness evidenced
thereby, and in the event of a default the Secured Party shall look solely to
the property subject to the Mortgage and this Security Agreement and to the
rents, issues and profits thereof in satisfaction of the indebtedness evidenced
by the Note and will not seek or obtain any deficiency or personal judgment
against the Debtor except such judgment as may be necessary to foreclose or bar
its interest in the property subject to the Mortgage and this Security Agreement
and all other property mortgaged, pledged, conveyed or assigned to secure
payment of the Note; provided, that nothing in this condition and no action so
taken shall operate to impair any obligation of the Debtor under that certain
Regulatory Agreement of even date herewith between the Debtor and the
Secretary.

    

    11.           Terms.  Unless
otherwise defined, all words used in this Agreement shall have the meanings
given them in the Uniform Commercial Code as in effect in the
State.

    

    12.           Notices.  All
notices, demands and communications between the parties concerning this
Agreement shall be in writing and shall be delivered, or mailed by registered or
certified mail with postage prepaid, or telegraphed, addressed in each case as
follows, and shall be deemed to have been given or made when so delivered,
deposited in the mail, or telegraphed:

    

    If to the Debtor, to:

    Gleneagles
Apartments, LLC

    Smallwood
Village Center

    St.
Charles, Maryland 20602

    Attention:    Matthew
Martin, Chief Financial Officer

    

    

    If to the Secured Party,
to:

    Capmark
Finance Inc.

    116 Welsh
Road

    Horsham,
Pennsylvania 19044

    Attention:   Senior Vice
President, Agency Servicing

    

    Either party, at any time, by written
notice given to the other in accordance with this Section, may designate a
different address to which such communications shall thereafter be
directed.

    

    13.           Rights of
Secretary as Secured Party.

    

    (a)           Contemporaneously
herewith the Secretary and the Debtor have executed the Regulatory Agreement,
which Regulatory Agreement is hereby incorporated by reference
herein.

    

    (b)           The
Regulatory Agreement is incorporated in the Mortgage by
reference.  Under the terms of the Regulatory Agreement, the Secretary
may exercise certain rights in and to the Collateral prior to the assignment of
the Note, Mortgage, this Security Agreement and any other collateral documents
which have been executed and delivered to the Secretary as a condition precedent
to the Secretary's endorsement of the Note for mortgage insurance.

    

    (c)           The
Debtor and the Secured Party hereby agree that the Secretary shall be an
additional secured party under this Security Agreement together with the Secured
Party, as their interests may appear, and that the Secretary shall be listed on
the Uniform Commercial Code Financing Statements to be filed contemporaneously
herewith; provided, however, that nothing herein or in the Uniform Commercial
Code Financing Statements shall require the execution, now or at any future
time, of any amendment, extension, or other document by the
Secretary.

    

    (d)           To
the extent any party herein is required or desires to give notice to the
Secretary hereunder, such notice shall be delivered in accordance with the
provisions of Paragraph 12 hereof, as follows:

    

    U.S. Department of Housing and Urban
Development

    Maryland State Office

    City
Crescent Building

    10 South
Howard Street, Fifth Floor

    Baltimore,
Maryland 21201-2505

    Attention:  Office of Chief
Counsel

    

    14.           Miscellaneous.

    

    (a)           This
Agreement is intended to be supplemental to and not in substitution or in
derogation of any security agreement contained in the Mortgage.  In
the event of any conflict between this Agreement and the Mortgage, the Mortgage
shall be controlling.

    

    (b)           In
any instance where the consent or approval of the Secured Party may be given or
is required or any determination is to be rendered by the Secured Party
hereunder, the granting, withholding or denial of such consent or approval and
the rendering of such determination shall be made or exercised by the Secured
Party at its sole and exclusive option and in its reasonable
discretion.

    

    (c)           It
is understood and agreed that no judgment or decree which may be entered on any
debt secured or intended to be secured by the Mortgage shall operate to abrogate
or lessen the effect of this Agreement, but that this Agreement shall continue
in full force and effect until the payment and discharge of the Indebtedness due
under the Security Documents.

    

    (d)           It
is understood and agreed that the remedies granted to the Secured Party herein
shall not be deemed exclusive of any other remedies possessed by the Secured
Party under the Note, the Mortgage, any other of the Security Documents or at
law or in equity, but shall be deemed additional and cumulative
thereto.

    

    (e)           This
Agreement shall be governed by and construed in accordance with the laws of the
State.

    

    (f)           All
captions in this Agreement are for convenience only, and shall not be considered
in construing this Agreement.

    

    (g)           Any
reference in this Agreement to a “Section” shall be construed as referring to a
Section of this Agreement.

    

    

    (h)           This
Agreement shall be binding upon and inure to the benefit of the parties and
their respective successors and assigns.

    

    (i)           The
invalidity or unenforceability of any provision of this Agreement shall not
affect the validity or enforceability of the remaining provisions, which shall
remain in full force and effect.

    

    (j)           This
instrument contains the entire agreement between the parties as to the rights
granted and the obligations assumed in this instrument.  This
Agreement may be amended only by a subsequent written instrument signed by both
parties.

    

    

    

    

    IN WITNESS WHEREOF, the
parties have executed this Agreement as of the day and year
hereinabove first written.

    

    

    

    SECURED
PARTY:

    CAPMARK
FINANCE INC.

    a
California corporation

    

    

    By:           ____________________________________

                                                                                                   
 Eric M. Keifer

     Senior
Vice President

    

    

    

      
        
           

        

        
           

          
            

          

        

        
           

          
            --  --

          

        

      

      EXHIBIT “B” TO SECURITY
AGREEMENT

      AND FINANCING
STATEMENTS

      

      

      This Exhibit “B” is attached to,
incorporated by reference in, and forms a part of that certain Security
Agreement and Financing Statements (collectively, the “Security Documents”),
executed and delivered by the Debtor in connection with the financing of the
Project (as hereinafter defined) in favor of CAPMARK FINANCE INC., a
California corporation (the “Secured Party”).

       

          This Exhibit “B”
refers to the following collateral, which may be now or hereafter located on the
premises of, relate to, or be used in connection with, the construction,
financing, repair, ownership, management, and operation of a certain multifamily
housing rental apartment project known as “Gleneagles Apartments” (the
“Project”), located in St. Charles, Charles County, Maryland and owned by GLENEAGLES APARTMENTS, LLC, a
Delaware limited liability company (the “Debtor”):

      

      1.           All
income, rents, profits, receipts and charges from the Project.

      

      2.           All
accounts including without limitation the following: Reserve Fund for
Replacement, residual receipts, and special funds; ground rents, taxes, water
rents, assessments and fire and other hazard-insurance premiums; accounts
receivable; operating revenue; initial operating escrow; and escrow for latent
defects.

      

      3.           All
insurance and condemnation proceeds; and all inventories.

      

      4.           All
materials now owned or hereafter acquired by the Debtor and intended for the
construction, reconstruction, alteration and repair of any building, structure
or improvement now or hereafter erected or placed on the property described in
Exhibit "A" attached hereto (the "Property"), all of which materials shall be
deemed to be included within the Project immediately upon the delivery thereof
to the Project.

      

      5.           All
of the walks, fences, shrubbery, driveways, fixtures, machinery, apparatus,
equipment, fittings, and other goods and other personal property of every kind
and description whatsoever, now owned or hereafter acquired by the Debtor and
attached to or contained in and used or usable in connection with any present or
future operation of the Project, including, by way of example rather than of
limitation, all lighting, laundry, incinerating and power equipment; all
engines, boilers, machines, motors, furnaces, compressors and transformers; all
generating equipment; all pumps, tanks, ducts, conduits, wire, switches,
electrical equipment and fixtures, fans and switchboards; all telephone
equipment; all piping, tubing, plumbing equipment and fixtures; all heating,
refrigeration, air conditioning, cooling, ventilating, sprinkling, water, power
and communications equipment, systems and apparatus; all water coolers and water
heaters; all fire prevention, alarm and extinguishing systems and apparatus; all
cleaning equipment; all lift, elevator and escalator equipment and apparatus;
all partitions, shades, blinds, awnings, screens, screen doors, storm doors,
exterior and interior signs, gas fixtures, stoves, ovens, refrigerators, garbage
disposals, dishwashers, cabinets, mirrors, mantles, floor coverings, carpets,
rugs, draperies and other furnishings and furniture installed or to be installed
or used or usable in the operation of any part of the Project or facilities
erected or to be erected in or upon the Property; and every renewal or
replacement thereof or articles in substitution therefor, whether or not the
same are now or hereafter attached to the Property in any manner; all except for
any right, title or interest therein owned by any tenant (it being agreed that
all personal property owned by the Debtor and placed by it on the Property
shall, so far as permitted by law, be deemed to be affixed to the Property,
appropriated to its use, and covered by each of the Security Documents to which
this Exhibit is attached).

      

      6.           All
of the Debtor's right, title and interest in and to any and all judgments,
awards of damages (including but not limited to severance and consequential
damages), payments, proceeds, settlements or other compensation (collectively,
the "Awards") heretofore or hereafter made, including interest thereon, and the
right to receive the same, as a result of, in connection with, or in lieu of (i)
any taking of the Property or any part thereof by the exercise of the power of
condemnation or eminent domain, or the police power, (ii) any change or
alteration of the grade of any street, or (iii) any other injury or decrease in
the value of the Property or any part thereof (including but not limited to
destruction or decrease in value by fire or other casualty), all of which
Awards, rights thereto and shares therein are hereby assigned to the Secured
Party, who is hereby authorized to collect and receive the proceeds thereof and
to give proper receipts and acquittances therefor and to apply, at its option,
the net proceeds thereof, after deducting expenses of collection, as a credit
upon any portion, as selected by the Secured Party, of the indebtedness secured
by the Security Documents.

      

      7.           All
of the Debtor's right, title and interest in and to any and all payments,
proceeds, settlements or other compensation heretofore or hereafter made,
including any interest thereon, and the right to receive the same from any and
all insurance policies covering the Property or any portion thereof, or any of
the other property described herein.

      

      8.           The
interest of the Debtor in and to all of the rents, royalties, issues, profits,
revenues, income and other benefits of the Property, or arising from the use or
enjoyment of all or any portion thereof, or from any lease or agreement
pertaining thereto, and all right, title and interest of the Debtor in and to,
and remedies under, all contract rights, accounts receivable and general
intangibles arising out of or in connection with any and all leases and
subleases of the Property, or any part thereof, and of the other property
described herein, or any part thereof, both now in existence or hereafter
entered into, together with all proceeds (cash and non-cash) thereof; and
including, without limitation, all cash or securities deposited thereunder to
secure performance by the lessees of their obligations thereunder.

      

      9.           All
of the Debtor's rights, options, powers and privileges in and to (but not the
Debtor's obligations and burdens under) any construction contract, architectural
and engineering agreements and management contract pertaining to the
construction, development, repair, operation, ownership, equipping and
management of the Property and all of the Debtor's right, title and interest in
and to (but not the Debtor's obligations and burdens under) all architectural,
engineering and similar plans, specifications, drawings, reports, surveys,
plats, permits and the like, contracts for construction, development, repair,
operation, management and maintenance of, or provision of services to, the
Property or any of the other property described herein, and all sewer taps and
allocations, agree­ments for utilities, bonds and the like, all relating to
the Property.

      

      10.           All
intangible personal property, accounts, licenses, permits, instruments, contract
rights, chattel paper and general intangibles of the Debtor, including but not
limited to cash; accounts receivable; bank accounts; certificates of deposit;
securities; promissory notes; rents; rights (if any) to amounts held in escrow;
insurance proceeds; condemnation rights; deposits; judgments, liens and causes
of action; warranties and guarantees.

      

      11.           The
interest of the Debtor in any cash escrow fund and in any and all funds,
securities, instruments, documents and other property which are at any time paid
to, deposited with, under the control of, or in the possession of the Secured
Party, or any of its agents, branches, affiliates, correspondents or others
acting on its behalf, which rights shall be in addition to any right of set-off
or right of lien that the Secured Party may otherwise enjoy under applicable
law, regardless of whether the same arose out of or relates in any way, whether
directly or indirectly, to the Project located upon the Property.

      

      12.           The
interest of the Debtor in and to any and all funds created or established and
held by the Trustee pursuant to any indenture of trust or similar instrument
authorizing the issuance of bonds or notes for the purpose of financing the
Project located upon the Property.

      

      13.           All
inventory, including raw materials, components, work-in-process, finished
merchandise and packing and shipping materials.

      

      14.           Any
and all of the above arising or acquired by the Debtor or to which the Debtor
may have a legal or beneficial interest in on the date hereof and at any time in
the future.

      

      15.           Any
and all of the above which may become fixtures by virtue of attachment to
Property.

      

      16.           The
interest of the Debtor, as lessee, in any and all of the above which may be
leased by the Debtor from others.

      

      17.           All
of the records and books of account now or hereafter maintained by or on behalf
of the Debtor and/or its agents and employees in connection with the
Project.

      

      18.           All
names now or hereafter used in connection with the Project and the goodwill
associated therewith.

      

      19.           Any
and all other Collateral of the Debtor as defined in the Uniform Commercial Code
adopted in the State.

      

      20.           Proceeds,
products, returns, additions, accessions and substitutions of and to any and all
of the above.

      

       

    

    DEBTOR:

    GLENEAGLES
APARTMENTS, LLC

    a
Delaware limited liability company

    

    
      	
               
      

            	
              By:

            	
              AMERICAN
      HOUSING MANAGEMENT COMPANY

            

    

    a
Delaware corporation

    its
Manager

    

    
      	
              By:

            	
              _____________________________

            

    

                    Matthew
Martin

    
      	
               
      

            	
              Chief
      Financial Officer

            

    

                   

    
      
      

    

     

     

    Attachments:

    Exhibit
“A”  [Legal Description]

    Exhibit
“B”  [Description of Collateral]EMPLOYMENT AGREEMENT

                  THIS EMPLOYMENT AGREEMENT  ("Agreement") made and entered into
as of the 1st day of March 2009 to be effective as of the 1st day of March, 2009
(the  "Effective  Date"),  by and  between  Bedrock  Energy,  Inc.,  a  Colorado
corporation (the "Company") and Herbert T. Sears (the "Executive").

                              W I T N E S S E T H:

                  WHEREAS,  the  Company  wishes to secure the  services  of the
Executive subject to the contractual terms and conditions set forth herein; and

                  WHEREAS, the Executive is willing to enter into this Agreement
upon the terms and conditions set forth herein.

                  NOW,  THEREFORE,  in  consideration of the mutual promises and
agreements set forth herein, the parties hereto agree as follows:

1.   Employment.  The Company hereby agrees to employ the Executive,  and the
Executive hereby agrees to accept such employment with the Company, all upon the
terms and conditions set forth herein.

2. Term of Employment.  Subject to the terms and  conditions of this  Agreement,
the Executive  shall be employed for a term commencing on the Effective Date and
ending on December 31, 2009 (the "Term")  unless  sooner  terminated as provided
for herein. The Term shall renew automatically for additional one (1) year term,
unless either party gives written  notice no less than ninety (90) days prior to
the expiration of the Term that it does not intend to extend the Term.

3.       Duties and Responsibilities.

     A. Capacity.  During the Term, the Executive shall serve in the capacity of
CFO/ Treasurer.

     B.  Part-time  duties.  During  the Term,  and  excluding  any  periods  of
disability,  vacation  or sick leave to which the  Executive  is  entitled,  the
Executive  shall  devote  such time as  necessary  to perform  the duties of the
offices assumed.

     C. Standard of  Performance.  The  Executive  will perform his duties under
this Agreement with fidelity and loyalty, to the best of his ability, experience
and talent and in a manner consistent with his duties and responsibilities.

4.       Compensation.

<PAGE>

     A.  Salary.  For  services  to be  preformed  for the first Term under this
Agreement the Executive  shall receive the sum of $5,000 which shall be pre-paid
by the issuance of 100,000  shares of  restricted  stock upon  execution of this
Agreement.

     B. The Executive shall be entitled to prompt reimbursement from the Company
for reasonable  out-of-pocket  expenses  including cell phone incurred by him in
the  course of the  performance  of his duties  hereunder,  upon  submission  of
appropriate  documentation  in  accordance  with  the  practices,  policies  and
procedures applicable to other executives of the Company.

     C.  Compensation  for  subsequent  terms  shall be  negotiated  between the
parties.

5. Termination of Employment.

     Notwithstanding  the  provisions  of  Section  2  hereof,  the  Executive's
employment hereunder shall terminate under any of the following conditions:

     A. Death.  The Executive's  employment under this Agreement shall terminate
automatically upon his death.

     B. Total  Disability.  The Company  shall have the right to terminate  this
Agreement  if the  Executive  becomes  Totally  Disabled.  For  purposes of this
Agreement,  "Totally  Disabled"  means that the  Executive is not working and is
currently  unable to perform the substantial and material duties of his position
hereunder  as a result of  sickness,  accident or bodily  injury for a period of
three months.  Prior to a determination that Executive is Totally Disabled,  but
after Executive has exhausted all sick leave and vacation  benefits  provided by
the Company,  Executive shall continue to receive his Base Salary, offset by any
disability benefits he may be eligible to receive.

     C. Termination by Company for Cause. The Executive's  employment  hereunder
may be terminated for Cause upon written notice by the Company.  For purposes of
this Agreement, "Cause" shall mean:

          (1)  conviction of the Executive by a court of competent  jurisdiction
     of any felony or a crime involving moral turpitude;

          (2) the  Executive's  willful and  intentional  failure or willful and
     intentional  refusal to follow  reasonable and lawful  instructions  of the
     Board;

          (3) the  Executive's  material breach or default in the performance of
     his obligations under this Agreement;
                                    or

          (4) the Executive's act of misappropriation, embezzlement, intentional
     fraud or similar conduct involving the Company.

(5)

<PAGE>

Executive may not be terminated for Cause  pursuant to  subsections  (2) and (3)
above unless Executive is given written notice of the circumstances constituting
"Cause" and a reasonable period to cure such  circumstances,  which period shall
be no less than thirty (30) days.

     D.  Termination  in the  event  of a change  of  control.  The  Executive's
employment  hereunder  may be terminated by the Company in the event of a Change
of Control.  " Change of Control"  means:  (a) the  consummation  of a merger or
consolidation  of  the  Company  with  or  into  another  entity  or  any  other
transaction,  in which the  stockholders of the Company  immediately  after such
merger,  consolidation or other  transaction own or beneficially own immediately
after such merger,  consolidation  or other  transaction less than 50 percent or
more of the voting power of the outstanding  securities (i) in the continuing or
surviving  entity  and  (ii)  any  direct  or  indirect  parent  entity  of such
continuing or surviving  entity (b) the sale,  transfer or other  disposition of
all or substantially  all of the Company's assets to a Person which is not owned
or controlled by the Company or its stockholders immediately prior to such sale,
transfer or other dispositions.

6.       Confidentiality, Return of Property, and Covenant Not to Compete.

     A. Confidential Information.

          (1) Company  Information.  The Company agrees that it will provide the
     Executive with Confidential Information,  as defined below that will enable
     the Executive to optimize the performance of the Executive's  duties to the
     Company.  In  exchange,  the  Executive  agrees  to use  such  Confidential
     Information solely for the Company's benefit. The Company and the Executive
     agree and acknowledge that its provision of such  Confidential  Information
     is not contingent on the Executive's continued employment with the Company.
     Notwithstanding  the  preceding  sentence,  upon  the  termination  of  the
     Executive's employment for any reason, the Company shall have no obligation
     to provide the Executive with its Confidential  Information.  "Confidential
     Information"  means any Company  proprietary  information,  technical data,
     trade secrets or know-how, including, but not limited to, research, product
     plans, products services,  customer lists and customers (including, but not
     limited to,  customers of the Company on whom the Executive  called or with
     whom the Executive  became  acquainted  during the term of the  Executive's
     employment),   markets,  software,  developments,   inventions,  processes,
     formulas,   technology,    designs,   drawings,    engineering,    hardware
     configuration information, marketing finances or other business information
     disclosed to the Executive by the Company either  directly or indirectly in
     writing,  orally  or by  drawings  or  observation  of parts or  equipment.
     Confidential  Information does not include any of the foregoing items which
     has become publicly known and made generally  available through no wrongful
     act  of  the  Executive  or  of  others  who  were  under   confidentiality
     obligations  as to the  item  or  items  involved  or  improvements  or new
     versions.

<PAGE>

                           The Executive agrees at all times during the Term and
                  thereafter,  to hold in strictest confidence,  and not to use,
                  except  for  the  exclusive  benefit  of  the  Company,  or to
                  disclose to any person or entity without written authorization
                  of the Board of  Directors of the  Company,  any  Confidential
                  Information of the Company.

          B. Returning Company  Documents.  At the time of leaving the employ of
     the Company,  the Executive  will deliver to the Company (and will not keep
     in  the  Executive's  possession)   specifications,   drawings  blueprints,
     sketches,   materials,   equipment,   other   documents  or  property,   or
     reproductions  of any  aforementioned  items  developed  by  the  Executive
     pursuant  to the  Executive's  employment  with the  Company  or  otherwise
     belonging to the Company, its successors or assigns.

7. Arbitration.  Any dispute or controversy  arising under or in connection with
this Agreement  (other than any dispute or controversy  arising from a violation
or alleged  violation by the Executive of the  provisions of Section 7) shall be
settled  exclusively by final and binding  arbitration in Denver,  Colorado,  in
accordance  with the Employment  Arbitration  Rules of the American  Arbitration
Association ("AAA"). The arbitrator shall be selected by mutual agreement of the
parties, if possible. If the parties fail to reach agreement upon appointment of
an  arbitrator  within thirty days  following  receipt by one party of the other
party's notice of desire to arbitrate,  the arbitrator  shall be selected from a
panel or panels of persons  submitted by the AAA. The selection process shall be
that which is set forth in the AAA Employment Arbitration Rules then prevailing,
except  that,  if the  parties  fail to  select an  arbitrator  from one or more
panels,  AAA shall not have the power to make an appointment  but shall continue
to  submit  additional  panels  until  an  arbitrator  has been  selected.  This
agreement  to  arbitrate  shall  not  preclude  the  parties  from  engaging  in
voluntary, non-binding settlement efforts including mediation.

8. Notices. All notices and other  communications  hereunder shall be in writing
and shall be given (and shall be deemed to have been duly given upon receipt) by
delivery in person,  by registered or certified mail (return  receipt  requested
and with postage prepaid thereon) or by facsimile transmission to the respective
parties at the  following  addresses  (or at such other  address as either party
shall have  previously  furnished to the other in  accordance  with the terms of
this Section):

<PAGE>

                  If to the Company

                  Bedrock Energy, Inc.

                  8950 Scenic Pine Drive

                  Parker, Colorado 80134

                  If to the Executive:

                  Herbert T. Sears

                  33 Pine Street

                  Exeter, NH 03833

..

9. Amendment; Waiver. The terms and provisions of this Agreement may be modified
or amended only by a written instrument  executed by each of the parties hereto,
and  compliance  with the terms and  provisions  hereof may be waived  only by a
written instrument  executed by each party entitled to the benefits thereof.  No
failure  or delay on the part of any party in  exercising  any  right,  power or
privilege  granted  hereunder shall  constitute a waiver thereof,  nor shall any
single or partial  exercise of any such right,  power or privilege  preclude any
other or further exercise  thereof or the exercise of any other right,  power or
privilege granted hereunder.

10. Entire Agreement. This Agreement and all Exhibits attached hereto constitute
the entire  agreement  between the parties  with  respect to the subject  matter
hereof and  supersede all prior  written or oral  agreements  or  understandings
between the parties relating thereto.

11.  Severability.  In the event that any term or provision of this Agreement is
found to be  invalid,  illegal or  unenforceable,  the  validity,  legality  and
enforceability  of the remaining terms and provisions hereof shall not be in any
way affected or impaired  thereby,  and this Agreement  shall be construed as if
such  invalid,  illegal or  unenforceable  provision  had never  been  contained
therein.

<PAGE>

12. Binding Effect;  Assignment.  This Agreement shall be binding upon and inure
to the benefit of the parties and their  respective  successors  and assigns (it
being understood and agreed that, except as expressly  provided herein,  nothing
contained  in this  Agreement  is intended  to confer  upon any other  person or
entity any rights,  benefits or remedies of any kind or  character  whatsoever).
The Executive may not assign this Agreement without the prior written consent of
the Company.  Except as otherwise  provided in this  Agreement,  the Company may
assign this Agreement to any of its  affiliates or to any successor  (whether by
operation of law or otherwise) to all or  substantially  all of its business and
assets  without the consent of the  Executive.  For purposes of this  Agreement,
"affiliate"  means any entity in which the Company owns shares or other  measure
of ownership representing at least 40% of the voting power or equivalent measure
of control of such entity.

13.  Governing  Law.  This  Agreement  shall be  governed  by and  construed  in
accordance  with the laws of the State of Colorado  (except that no effect shall
be given to any  conflicts  of law  principles  thereof  that would  require the
application of the laws of another jurisdiction).

14. Headings.  The headings of the sections  contained in this Agreement are for
convenience  only and shall not be deemed to control  or affect  the  meaning or
construction of any provision of this Agreement.

15.  Counterparts.  This Agreement may be executed in one or more  counterparts,
each of which  shall be  deemed an  original,  but all of which  together  shall
constitute one and the same instrument.

                                  [END OF PAGE]

<PAGE>

                  IN WITNESS  THEREOF,  the Company has caused this Agreement to
be executed by its duly  authorized  officer and the  Executive  has signed this
Agreement as of the Effective Date.

                                                     Bedrock Energy, Inc.

                                                     By:
                                                     Title:  Chairman

                                                     EXECUTIVE
                                                     Herbert T. Sears

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