PURCHASE AND SALE AGREEMENT

PURCHASE AND SALE AGREEMENT

THIS PURCHASE AND SALE AGREEMENT (this “ Agreement ”) is executed by and between THE R & S APARTMENT LAND, LLC, a Missouri limited liability company (“ Seller ”), and AMERICA FIRST APARTMENT INVESTORS, INC., a Maryland corporation, or its permitted assigns (“ Purchaser ”).

In consideration of the mutual covenants and representations herein contained, and other good and valuable consideration the receipt and sufficiency of which are hereby acknowledged, Seller and Purchaser agree as follows:

1.

PURCHASE AND SALE

1.1 Purchase and Sale . Subject to the terms and conditions of this Agreement, Seller hereby agrees to sell, transfer, assign and convey to Purchaser, and Purchaser hereby agrees to purchase from Seller, all of the Membership Interests, as defined herein, in CSI, L.L.C., a Missouri limited liability company (the “ Company ”). The “ Membership Interests ” shall include collectively and without limitation, any and all rights to receive any participation, allocations or distributions from the Company, any and all voting rights, and any and all other benefits to which such members may be entitled pursuant to the Articles of Organization and Operating Agreement of the Company dated February 5, 2001, a true and complete copy of which, together with all amendments, is attached hereto as Exhibit “B” (the “ Organizational Documents ”), together with the obligations of such members to comply with the terms and provisions of the Organizational Documents .

1.2 Assets of the Company Seller represents and warrants that the Company owns all of the following described property (herein collectively called the “ Property ”):

(a) Land . That certain tract of land (the “ Land ”) located in Independence, Missouri, being more particularly described on Exhibit “A” attached hereto and made a part hereof.

(b) Easements . All easements, if any, benefiting the Land or the Improvements (as defined in Section 1.1(d) of this Agreement).

(c) Rights and Appurtenances . All rights and appurtenances pertaining to the Land, including any right, title and interest of the Company in and to adjacent streets, alleys or rights-of-way included in the Land and all benefits under the Tax Increment Financing documents and instruments applicable to the Land and Improvements.

(d) Improvements . All buildings, improvements and related amenities known as “Cornerstone Apartments” (the “ Improvements ”) in and on the Land, consisting of a total of 420 apartment units and related amenities.

(e) Leases . All right, title and interest under all leases (the “ Leases ”) of space in the Property, concession leases, and all tenant security deposits (whether refundable or non-refundable) held by the Company on the Closing Date (as defined in Section 6.1 of this Agreement).

(f) Tangible Personal Property . All appliances, fixtures, equipment, machinery, furniture, carpet, drapes and other personal property, if any, owned by the Company and located on or about the Land and the Improvements (the “ Tangible Personal Property ”), including, without limitation, those items of personal property set forth on Exhibit “D” attached hereto and excluding property owned by tenants.

(g) Contracts . The Company’s right, title and interest (to the extent the same is assignable) under the Contracts (as defined in Section 4.1(c) of this Agreement), other than the Rejected Contracts (as defined hereinafter).

(h) Intangible Property . All intangible property (the “ Intangible Property ”), if any, owned by the Company and pertaining to the Land, the Improvements, or the Tangible Personal Property including, without limitation, the name “Cornerstone Apartments,” transferable utility contracts, transferable telephone exchange numbers and all assignable warranties and guarantees relating to the Property or any part thereof. The Seller will furnish Purchaser with copies of the blueprints, plans and specifications, engineering plans and studies, floor plans and landscape plans for use with respect to the Land and Improvements only, but is not selling copyrights and rights to reproduce such items for use elsewhere, the ownership of which is being retained.

1.3 Retained Assets and Liabilities .

(a) In addition to items described in Section 1.2 (h), the Seller retain the following assets of the Company:

(i) All rights against former tenants of the Property (not in possession on the date of Closing) for the collection of rents and any other amounts due for time periods prior to Closing.

(ii)  The rights to duplicate and reuse the design, specifications, blueprints and plans for the Property at other locations are retained by the Seller; provided, however, Seller is selling and expressly shall not be permitted to use the name “Cornerstone Apartments”, all rights to which shall be transferred by Seller to Purchaser hereunder as an asset of the Company.

(iii) All bank accounts and cash on hand, exclusive of tenant deposits and Seller shall retain all of its original accounting and bank records and tax returns for the Company for the time periods prior to Closing, but Seller shall provide copies of such records and returns to Purchaser upon request if needed for Company or tax purposes after Closing.

(b) Except as herein stated, Seller shall also retain the following “Liabilities” of the Company pertaining to the development, ownership, and financing of the Property up to the date of Closing, including, without limitation the following:

(i) All liabilities pertaining to the existing loan documents and instruments evidencing and securing the Company’s existing loan for the Property, which shall be paid in full at Closing.

(ii) Any and all claims, losses, liabilities, damages, obligations, fines, penalties, suits, actions, proceedings, costs or expenses of any nature whatsoever (including, without limitation, reasonable attorneys’ fees and expenses and court costs), whether now known or unknown, asserted or unasserted, accrued or unaccrued, liquidated or unliquidated or due or to become due, including, without limitation, any liabilities in respect of any applicable laws other than (w) trade payables not yet due which have been disclosed to the Purchaser and any other obligations which have been subject to proration under Section 6.3 of this Agreement; (x) obligations under the Leases with tenants arising from and after the date of Closing; (y) obligations under the Contracts arising from and after the date of Closing; and (z) any and all tax obligations for the Company arising from and after the date of Closing

2.

PURCHASE PRICE

2.1 Purchase Price . The purchase price (the “ Purchase Price ”) for the Membership Interests shall be Thirty Seven Million Five Hundred Thousand and no/100 Dollars ($37,500,000.00), less the total amount of all concessions to tenants under the Leases in effect at Closing for the remainder of their existing terms, and further subject to prorations and adjustments as set forth in this Agreement. Concessions for this purpose shall mean discounts from the stated rent amount in such leases for free rent or reduced rent for a stated time period below the regular rent amount stated in such Lease. The Purchase Price, as adjusted, shall be paid by Purchaser to Seller at the Closing by wire transfer of immediately available funds to the “Escrow Company” (as defined below) on the Closing Date in accordance with wire transfer instructions to be provided by the Escrow Company.

3.

EARNEST MONEY

3.1 Earnest Money . Earnest Money shall be received and paid as set forth below.

(a) Purchaser shall deliver an earnest money deposit in the amount of Two Hundred Thousand and no/100 Dollars ($200,000.00) to Chicago Title Insurance Company, 106 W. 11 ^th Street, Kansas City, Missouri 64105, Attn: Kathy Thompson (“ Escrow Company ”), within two (2) business days after the date a fully-executed copy of this Agreement is delivered to Escrow Company by Seller. Such deposit, together with all interest accrued thereon and any additional amounts under (c) below, is herein collectively called the “ Earnest Money ”, and shall be invested by the Escrow Company in an FDIC-insured, interest-bearing account as Purchaser shall direct.

(b) If the sale of the Membership Interests is consummated under this Agreement, the Earnest Money shall be paid to Seller and applied to the payment of the Purchase Price at Closing. If Purchaser terminates this Agreement in accordance with any right to terminate granted to Purchaser by the terms of this Agreement, the Earnest Money shall be returned to Purchaser, without the consent or joinder of Seller being required, and no party hereto shall have any further obligations under this Agreement except for such obligations which by their terms expressly survive the termination of this Agreement for a period of one year (the “ Surviving Obligations ”). If Purchaser fails to consummate this Agreement and is in default pursuant to Section 8.2 of this Agreement, Seller may terminate this Agreement and thereupon the Earnest Money shall be paid to the Seller by the Escrow Company as liquidated damages, without the consent or joinder of Purchaser being required.

(c) If the Purchaser delivers an Approval Notice as evidence that it elects to proceed with this transaction, within two (2) business days of that event it will deliver One Hundred Seventy Five Thousand Dollars ($175,000.00) to the Escrow Company as additional Earnest Money for total Earnest Money of $375,000.00. All of this Earnest Money shall be disbursed in accordance with this Agreement.

4.

CONDITIONS TO CLOSING

4.1 Seller’s Obligations . Seller has delivered or shall deliver to Purchaser (at Seller’s expense), within five (5) days after the Effective Date, true, correct and complete legible copies of the following, except that items marked with [*] shall be made available to the Purchaser at the Seller’ office, for review and copying by Purchaser, during business hours with reasonable prior notice:

(a) Title . A copy of the most recent title policy regarding the Property in the possession of Seller, together with all documents in Seller’ possession referenced therein as exceptions to title.

(b) Survey . A copy of the most recent existing “as built” survey of the Property which is in Seller’ possession.

(c) Contracts . Copies of all contracts pertaining to the Property (the “ Contracts ”), including, but not limited to, service contracts, equipment leases and maintenance contracts. These are listed on attached Exhibit E.

(d) Rent Roll . A current rent roll of the Property, certified by Seller to be true, correct, and complete in all material respects, describing all Leases of space in the Improvements as of the calendar month immediately preceding the calendar month in which the Effective Date occurs, listing, for each apartment unit at the Property, each apartment number, unit type, unit status, tenant name, commencement and termination dates, market rent, lease rent, deposits, current balance of rent owed, and details of all rental concessions or specials.

(e) Operating Statements . Operating statements of the Property for calendar years 2003, 2004 and 2005, if applicable, and for the trailing twelve (12) month period immediately preceding the Effective Date, in form routinely prepared by or for the benefit of Seller. Prior years were prepared with information by prior management company.

(f) * Utility Bills . All utility bills relating to the operation of the Property (including, but not limited to, gas, electric, water and sewer) for each of the three (3) calendar months immediately preceding the calendar month in which the Effective Date occurs.

(g) Tax Bills . All tax bills relating to the Property (including, but not limited to, property, personal and rental taxes, and any special assessments) for calendar years 2002 through and including 2004, and any valuation notices received with respect to the current calendar year.

(h) * Accounting Records . All accounting records of Seller for each of the twelve (12) calendar months immediately preceding the calendar month in which the Effective Date occurs.

(i) Inventory . A current inventory of all Tangible Personal Property owned by Seller as listed on attached Exhibit D.

(j) Employee Roster . A listing of all employees of Seller engaged in the operation, maintenance and/or management of the Property, showing, for each such employee, annual compensation, years of service, job title, and discounts, free apartments and other such benefits.

(k) * Property Condition Reports . All soils reports, environmental reports, sound/acoustic reports, structural reports, engineering data and related materials relating to the Property in Seller’s possession or control.

(l) Appraisals . The most recent appraisal relating to the Property in Seller’s possession or control.

(m) Plans and Specifications . Subject to the provisions of Section 1.1 (h), copies of the final plans and specifications pursuant to which the Improvements were constructed, all final architectural renderings, drawings and blueprints related to the Property, all construction contracts, architectural contracts, engineering contracts and third-party warranties and guaranties related to the construction of the Improvements, and all construction inspection reports and related materials relating to the construction of the Improvements, to the extent in Seller’s possession or control.

(n) Certificates of Occupancy and Permits; Zoning . All certificates of occupancy and all other related permits, licenses, and other approvals issued by the appropriate governmental authorities relating to the Property, and evidence of compliance of the Property with current zoning ordinances.

*(o) Construction Capital Improvements . Copies of maintenance records and a list of all capital improvements made for the calendar years 2002, 2003, 2004, if applicable, and for 2006 year-to-date, and scheduled but not yet made for the year 2006.

(p) Insurance . Copies of insurance policies currently in force and effect with respect to the Property, and copies of all loss runs for calendar years 2002 through and including 2006 to date.

* (q) Leases . Copies of the Leases.

(r) Other Information . Such other information related to the Property as Purchaser may reasonably request, if available to Seller without material cost.

4.1.1 Approval Period . During the period (the “ Approval Period ”) commencing on the Effective Date and expiring at 5:00 p.m. Central Standard Time 30 days thereafter (the “ Due Diligence Date ”) the following matters shall be conditions precedent to Purchaser’s obligations under this Agreement:

(a) Purchaser’s being satisfied in Purchaser’s sole discretion that the Property is suitable for Purchaser’s intended uses; and

(b) Purchaser’s being satisfied, in Purchaser’s sole discretion, with the items listed in Section 4.1(a) through Section 4.1(r) above, including the information reflected therein.

Purchaser may (but shall not be obligated to) terminate this Agreement by written notice thereof to Seller at any time on or before the expiration of the Approval Period, if, in Purchaser’s sole and absolute discretion, Purchaser decides not to consummate the purchase of the Membership Interests contemplated hereby. In such event, then this Agreement will be deemed to have terminated as of the date of such notice and, in such event, neither party shall have any further obligation hereunder except for the Surviving Obligations. If, in Purchaser’s sole and absolute discretion, Purchaser determines that Purchaser desires to consummate the purchase of the Membership Interests contemplated hereby, then Purchaser will give written notice thereof (the “ Approval Notice ”) to Seller on or before the expiration of the Approval Period.

In the event that Purchaser timely gives Seller the Approval Notice, Purchaser will be deemed to have waived any objection with respect to the inspections under this Section 4.1.1 , and this Agreement will proceed to Closing, subject to all other terms and conditions of this Agreement. If Purchaser does not give Seller the Approval Notice on or before the expiration of the Approval Period and has not previously terminated this Agreement by written notice to Seller, then this Agreement will be deemed to have terminated as of the expiration of the Approval Period and, in such event, neither party shall have any further obligation hereunder except for the Surviving Obligations. In either of such events terminating the Agreement, within three (3) business days following written request from Purchaser to the Escrow Company without joinder by Seller, the Escrow Company shall return all of the Earnest Money to Purchaser. In the event that this Agreement is terminated without Closing for any reason, the Purchaser shall return, at its sole cost and expense, all documents and copies thereof which it has received from the Seller in regard to the Property or its title within five (5) business days of the termination date.

4.1.2 Title Commitment . The Company shall own at Closing good and marketable title to the Property subject only to the “Permitted Encumbrances” (defined below). Within ten (10) Business days following the Effective Date, Seller shall obtain from the Escrow Company’s National Business Unit at 830 East Main Street, Richmond, Virginia 23219, Attn: Michelle S. McQueen, at its sole cost and expense, and deliver to Purchaser, a commitment for an ALTA Owner’s Policy of Title Insurance (the “ Title Commitment ”) insuring good and marketable fee simple title to the Property, together with legible copies of all exceptions listed therein. The Seller’s premium cost of the Owner’s Policy of title insurance shall not exceed the price quoted by the Kansas City, Missouri office of the Escrow Agent.

Purchaser shall have ten (10) days following its receipt of the last of the Title Commitment, legible copies of all exceptions listed therein and the “Survey” (defined below), to deliver to Seller written notice of Purchaser’s objections to title and matters shown on the Survey (the “ Title Objection Letter ”). Seller shall have the right, but not the obligation, to cure Purchaser’s objections to title and matters shown on the Survey; subject, however, to Seller’s obligation to remove all “Monetary Liens” (as defined below) by Closing. Seller shall notify Purchaser in writing within five (5) days following Seller’ receipt of the Title Objection Letter concerning which title and survey objections, if any, Seller has agreed to cure. In the event that Seller does not undertake to cure all of the objections in the Title Objection Letter to Purchaser’s sole satisfaction (or does not timely respond to the Title Objection Letter), then Purchaser shall have the right for five (5) days after receipt of Seller’ response to the Title Objection Letter (or five (5) days following the expiration of the period within which Seller was to so respond) to either (i) waive any such title and survey objection in writing and proceed to Closing (in which event such waived title and survey objection shall be deemed to be a “Permitted Encumbrance”, as defined below), or (ii) terminate this Agreement and receive an immediate refund of the Earnest Money.

All exceptions set forth in the Title Commitment, including leasehold rights of tenants in possession as tenants only, and matters shown on the Survey which are not objected to by Purchaser (including matters initially objected to by Purchaser which objections are subsequently waived in writing) are herein collectively called the “ Permitted Encumbrances ”. In the event that any update to the Title Commitment indicates the existence of any liens, encumbrances or other defects or exceptions (the “ Unacceptable Encumbrances ”) which are not shown in the initial Title Commitment and that are unacceptable to Purchaser, Purchaser shall within five (5) days after receipt of any such update to the Title Commitment notify Seller in writing of its objection to any such Unacceptable Encumbrance (the “ Unacceptable Encumbrance Notice ”).

Notwithstanding anything to the contrary contained herein, Seller shall have no obligation to take any steps or bring any action or proceeding or otherwise to incur any expense whatsoever to eliminate or modify any of the Unacceptable Encumbrances; provided, however, that Seller shall, prior to Closing, eliminate by paying, bonding around or otherwise discharging in a manner reasonably satisfactory to Purchaser (i) any Unacceptable Encumbrances that arise by, through or under Seller, and (ii) any mortgages, deeds of trust, deeds to secure debt, mechanics’ liens or monetary judgments that appear on the Title Commitment (“ Monetary Liens ”). In the event Seller is unable, unwilling or for any reason fails to eliminate or modify all of the Unacceptable Encumbrances to the sole satisfaction of Purchaser (other than the Monetary Liens which shall be removed by Seller in accordance with the preceding sentence), Purchaser may terminate this Agreement by delivering notice thereof in writing to Seller by the earliest to occur of (i) the Closing Date, (ii) five (5) days after Seller’ written notice to Purchaser of Seller’s intent to not cure one or more of such Unacceptable Encumbrances, or (iii) ten (10) days after the Unacceptable Encumbrance Notice, in the event Seller does not timely respond thereto. Upon a termination of this Agreement pursuant to the immediately preceding sentence, the Earnest Money shall be returned to Purchaser and neither party shall have any obligations hereunder other than the Surviving Obligations.

4.1.3 Survey . Seller will provide Purchaser with the most current survey it possesses without any duty of supplementation. Purchaser may, at its sole cost and expense, obtain an updated as-built survey of the Property by a registered surveyor acceptable to the Escrow Company, which may be an update of the existing survey delivered by Seller to Purchaser pursuant to Section 4.1 above and which shall be sufficient for purposes of deleting any “survey exceptions” from the title policy to be issued pursuant to the Title Commitment (such new or updated survey being referred to herein as the “ Updated Survey ”). The specifications for a Updated Survey are entirely at the discretion of the Purchaser. No delay in the delivery of the Updated Survey, which is under the control of the Purchaser, shall extend the Approval Period.

4.1.4 Contracts . Purchaser shall notify Seller prior to the expiration of the Approval Period which Contracts Purchaser will require Seller to cancel at Closing (the “ Rejected Contracts ”), and Seller hereby agrees to cancel same not later than Closing. However, if any of the Contracts may not be terminated on thirty (30) days notice without payment of a fee or penalty, then Purchaser agrees to assume such Contracts at Closing or deduct the full amount of such penalty from the Purchase Price.

4.2 Inspection . During the Approval Period, at any time and from time to time during normal business hours (and thereafter through the Closing Date), Purchaser may inspect, test, and survey: (a) the Property and any and all portions thereof, including physical and mechanical inspections, (b) all financial and other records pertaining to the operation of the Property, including, but not limited to, all books, records, documents, accounting and management reports of Seller, and (c) originals of all Leases and Contracts. Notwithstanding the foregoing, Purchaser must obtain Seller’s prior written approval of the scope and method of any environmental testing or investigation (other than a Phase I environmental site assessment, which shall require no consent or approval of any kind), prior to Purchaser’s commencement of such inspections or testing.

Seller shall cooperate in good faith with Purchaser, Purchaser’s agents and independent contractors in connection with all such inspections, tests and surveys, including obtaining all necessary tenant consents and/or providing adequate notice to tenants regarding Purchaser’s entry into leased areas on the Property upon reasonable notice, and making available during normal business hours all relevant personnel to answer any questions which Purchaser may reasonably ask regarding the Property. Purchaser, at Purchaser’s sole expense, shall repair any and all damage resulting from any of the tests, studies, inspections and investigations performed by or on behalf of Purchaser pursuant to this Section 4.2 , and Purchaser shall indemnify, defend and hold Seller, its members and their respective officers, directors, shareholders, employees and agents harmless from and against all claims for bodily injury or property damage which may be asserted or recovered against any of the foregoing indemnitees arising by reason of the tests, studies, inspections and investigations performed hereunder, which obligation of indemnification shall survive the Closing or any expiration or termination of this Agreement, however caused. If the sale fails to close for any reason, the Purchaser agrees to provide the Seller with copies of all tests and studies done pursuant to this Section.

4.3 Purchaser’s Representations and Warranties . Purchaser represents and warrants to Seller that:

(a) Purchaser has the full right, power and authority, without additional approvals or the joinder of any other person or entity, to enter into, execute and deliver this Agreement and to perform all duties and obligations imposed on Purchaser under this Agreement;

(b)  Neither the execution nor the delivery of this Agreement, nor the consummation of the purchase and sale contemplated hereby, nor the fulfillment of or compliance with the terms and conditions of this Agreement conflict with or will result in the breach of any of the terms, conditions, or provisions of any agreement or instrument to which Purchaser, or any partner or related entity or affiliate of Purchaser, is a party or by which Purchaser, any partner or related entity or affiliate of Purchaser, or any of Purchaser’s assets is bound; and

(c) Purchaser has not relied upon Seller or Seller’s counsel for any legal, tax or accounting advice.

The Purchaser’s representations and warranties set forth in this Section 4.3 shall survive the Closing or termination of this Agreement for a period of one (1) year.

4.4 Seller’s Representations and Warranties and Covenants .

(i) Seller has the full right, power, and authority, without the joinder or consent of any other person or entity, to enter into, execute and deliver this Agreement, and to perform all duties and obligations imposed on Seller under this Agreement,

(ii) neither the execution nor the delivery of this Agreement, nor the consummation of the purchase and sale contemplated hereby, nor the fulfillment of or compliance with the terms and conditions of this Agreement conflict with or will result in the breach of any of the terms, conditions, or provisions of any agreement or instrument to which Seller or the Company is a party or by which either of them or any of their assets are bound,

(iii) there is no existing or pending (or to Seller’s knowledge threatened) litigation affecting Seller, the Company or the Property other than normal collection actions against tenants,

(iv) Neither the Company nor the Seller has knowledge of or has received any written notice of, any violation of any governmental requirements (including zoning regulations, health and safety regulations, building and fire codes and “Environmental Requirements”, as defined below) concerning the Property, which have not been remedied,

(v) Neither the Company nor the Seller has knowledge of or has received any written notice from any governmental authority regarding any change to the zoning classification of the Property, any condemnation proceedings or proceedings to widen or realign any street or highway adjacent to the Property or that otherwise affects the Land or the Improvements,

(vi) the list of the Contracts attached hereto as Exhibit “E” is true, correct and complete in all material respects as of the date hereof, and there are no other service contracts, equipment leases or maintenance agreements affecting the Property except as listed thereon,

(vii) Seller is not a “foreign person” within the meaning of Sections 1445 and 7701 of the Internal Revenue Code of 1986, as amended,

(viii) except for those tenants in possession of the Property under written leases for space in the Property, as shown on the rent roll attached hereto as Exhibit “F” (the “ Rent Roll ”), there are no parties in possession of, or claiming any possession to, any portion of the Property,

(ix) at Closing there will be no unpaid bills or claims in connection with any repair of the Property by or on behalf of Seller or the Company that could result in the filing of a lien against the Property,

(x) the Rent Roll (which is effective as of the date indicated thereon), and as the same shall be updated and recertified at Closing by Seller, is and shall be true, correct and complete in all material respects and no concessions, discounts or other periods of free or discounted rent have been given other than those reflected on such Rent Roll,

(xi) the Company’s financial statements delivered by Seller to Purchaser pursuant to Section 4.1(e) hereof, and all other information delivered by Seller to Purchaser pursuant to Section 4.1 hereof, are true, correct and complete in all material respects,

(xii) Neither the Company nor the Seller has knowledge of or has received any written notice regarding any environmental contamination on, at or adjacent to the Property,

(xiii) Neither the Company nor the Seller has knowledge of or has received any written notice or request from any insurance company or board of fire underwriters (or any organization exercising functions similar thereto) requesting the performance of any work or alterations with respect to the Property, except those as to which the Company has completed remedial action which has been formally accepted as sufficient by such authority or insurer,

(xiv) there are no employment agreements of any kind to which the Company is a party, including union or collective bargaining agreements, which will be binding on Purchaser or