LOAN AND SECURITY AGREEMENT

1.

Definitions .

(a)

Addendum . “Addendum” shall mean the Addendum described in Subsection 3(c).

(b)

AFREG . “AFREG” means America First Real Estate Group, LLC, a Nebraska limited liability company.

(c)

AFREG Note. “AFREG Note” means that certain promissory note issued by Borrower in favor of AFREG in the initial principal amount of three hundred twenty thousand dollars ($320,000).

(d)

America First Lockbox Agreement . “America First Lockbox Agreement” shall mean that Lockbox Agreement entered into by and between Lender, Borrower and U.S. Bank National Association as lockbox agent effective September 15, 2005. “America First Lockbox” shall mean that Lockbox created pursuant to such agreement.

(e)

Applicable Laws . “Applicable Laws” shall mean any applicable law, regulation, ordinance, rule, decision, order, request or similar directive or pronouncement of a domestic or foreign court or governmental authority, each an “Applicable Law”.

(f)

Bond Documents . “Bond Documents” shall mean each and every of those documents referenced in the Preliminary Limited Offering Memorandum relating to the Offutt AFB America First Communities, LLC Taxable Military Housing Revenue Bonds-First Mortgage Lien Bonds Series 2005 Offutt Air Force Base Privatized Military Housing Project (Series A and B, in the aggregate amount of One Hundred Thirty-Eight Million, Three Hundred Fifty Thousand Dollars ($138,350,000)) and as otherwise necessary to the issuance of such bonds, as such documents may be executed and/or amended, modified or restated from time to time.

(g)

Bond Trustee . “Bond Trustee” shall mean U.S. Bank National Association as Trustee under that Trust Indenture by and between Bond Trustee and Subsidiary.

(h)

Borrower LOC . “Borrower LOC” shall mean the Master Letter of Credit as defined in the Borrower’s Operating Agreement that is to be delivered in accordance with the terms of the Master Lockbox Agreement.

(i)

Borrower’s Operating Agreement . “Borrower’s Operating Agreement” shall mean Borrower’s Amended and Restated Operating Agreement dated effective September 1, 2005.

(j)

Borrower’s Irrevocable Direction of Payment . “Borrower’s Irrevocable Direction of Payment” shall mean the Borrower’s direction of payment described in Subsection 2(c)(16).

(k)

Business Day . “Business Day” shall mean any day except Saturday, Sunday and any day which shall be in New York City a legal holiday or a day on which banking institutions are authorized or required by law or other governmental action to close.

(l)

Change of Control . “Change of Control” of the Borrower shall mean (a) each and every issue, sale, transfer or other disposition, directly or indirectly, of membership units of Borrower that, after giving effect thereto, results in America First Real Estate Group, LLC, (“AFREG”) and John L. Hoich – Offutt, LLC owning or controlling in the aggregate less than One Hundred Percent (100%) (by number of votes) thereof of the Class I Membership Interests, (b) AFREG is replaced as the controlling (managing) member of Borrower, (c) liquidation or dissolution of the Borrower or (d) the conveyance, transfer or leasing of all or substantially all of the assets of the Borrower.

(m)

Class I Member . “Class I Member” shall mean the Class I Members of Borrower pursuant to the Operating Agreement and as otherwise described in “Change of Control”, each a “Member”.

(n)

Collateral . “Collateral” shall mean the security for repayment of the Obligations, as described in Section 3 and in the Loan Documents.

(o)

Compliance Certificate . “Compliance Certificate” shall mean a certificate of Borrower (executed by its President), certifying that (1) Borrower is in compliance with the provisions of this Agreement, (2) all representations and warranties of Borrower are true and correct as of the date of such certificate and (3) no Event of Default has occurred or no event has occurred that with the giving of notice, passage of time or happening of any further condition, event or act would constitute an Event of Default.

(p)

Construction Management Agreement . “Construction Management Agreement” shall mean the Construction Management Agreement by and between the Borrower and Subsidiary dated effective September 1, 2005.

(q)

Construction Management Fees . “Construction Management Fees” shall mean the “Construction Management Fee” as defined in the Construction Management Agreement.

(r)

Critical Path . “Critical Path” shall mean the schedule for completion of the Project attached hereto as Exhibit “B” .

(s)

Development Agreement . “Development Agreement” shall mean that Development Agreement entered into by and between the Borrower and Subsidiary dated effective September 1, 2005.

(t)

Development Fees . “Development Fees” shall mean the “Development Fee” as defined in the Development Agreement.

(u)

Direct Loan Documents . “Direct Loan Documents” shall mean the Forward Commitment as well as any other document pertaining to or evidencing advances on the related government direct loan of Seventy-Two Million, Six Hundred Five Thousand Dollars ($72,605,000) and, including such documents described in the Forward Commitment (the form of which are attached to the Forward Commitment) and such other documents as may be executed, amended, modified or restated from time to time, any of the foregoing being individually a “Direct Loan Document.”

(v)

Event of Default . “Event of Default” shall have the meaning described in Section 12 .

(w)

Financing Fee . “Financing Fee” shall have the meaning described in Subsection 2(b).

(x)

Forward Commitment . “Forward Commitment” shall mean the Forward Commitment dated effective September 1, 2005 made by the Secretary of the Air Force to Subsidiary and agreed to by the Trustee and Bondholder Representative under the Bond Documents.

(y)

Generally Accepted Accounting Principles (“GAAP”) . “GAAP”, as used herein, shall be deemed to refer to generally accepted accounting principles in effect in the United States at the time of application thereof; unless otherwise specified herein, all accounting terms used herein shall be interpreted, all determinations with respect to accounting matters hereunder shall be made, and all unaudited financial statements and certificates and reports as to financial matters required to be furnished hereunder shall be prepared, in accordance with generally accepted accounting principles, applied on a basis consistent with the most recent financial statements of Borrower and Subsidiary delivered pursuant to Section 9 hereof or, if no such statements have been so delivered, the most recent audited financial statements of Borrower and Subsidiaries prepared prior to the date hereof.

(z)

Hoich . “Hoich” means John L. Hoich – Offutt, LLC, a Nebraska limited liability company.

(aa)

Hoich Note . “Hoich Note” means that certain promissory note issued by the Company in favor of Hoich in the initial principal amount of fifty five thousand dollars ($55,000).

(bb)

Interest Rate . “Interest Rate” shall have the meaning described in Subsection 2(a)(2).

(cc)

Lease . “Lease” shall mean the Lease Of Property entered into by and between Subsidiary and the Secretary of the Air Force dated effective September 1, 2005 in regard to the Project and shall include the Operating Agreement referred to and incorporated therein.

(dd)

Legal Proceedings . “Legal Proceedings” shall mean any court proceeding, as well as any formal or informal administrative action or proceedings before any Regulatory Authority.

(ee)

Loan Documents . “Loan Documents” shall mean this Agreement, the Note, the Assignment of Construction Management Agreement, the Assignment of Development Agreement, the America First Lockbox Agreement, the Irrevocable Direction of Payment and the related documents referred to herein as executed by Borrower or other parties in favor of Lender in regard to the Loan including but not limited to the respective forms of Member Pledge and Security Agreement and the Addendum and any writings, records or documents evidencing any advances, including such documents as the same may be from time to time amended, modified or restated, together with such other documents as Borrower shall enter into to evidence or secure the Obligations, any of the foregoing being individually a “Loan Document.”

(ff)

Manager’s Certificate . “Manager’s Certificate” shall mean a certificate signed in the name of AFREG by the President or other designated officer of the same.

(gg)

Master Lockbox Agreement . “Master Lockbox Agreement” shall mean the Lockbox Agreement entered into by and between the Secretary of the Air Force, Subsidiary and U.S. Bank National Association dated effective September 1, 2005.

(hh)

Maturity Date . “Maturity Date” shall mean September 1, 2009.

(ii)

Member LOC’s . “Member LOC’s” shall mean those Letters of Credit or the posting of collateral in lieu of the Letter of Credit delivered by the Class I Members pursuant to Section 6.02 of the Operating Agreement, each a “Member LOC.”

(jj)

Member Security and Pledge Agreements . “Member Security and Pledge Agreements” shall mean the pledges by the Class I Members of their respective membership interests in the Borrower as security for repayment of the Obligation, each a “Member Security and Pledge Agreement”.

(kk)

Obligated Party . “Obligated Party” shall mean the Class I Members as counterparties to the Member Security and Pledge Agreements and America First Apartment Advisory Corporation as counterparty to the Addendum.

(ll)

Obligations . “Obligations” shall mean and include all loans, advances, debts, liabilities, covenants and duties owing to Lender from Borrower of any kind or nature, present or future, whether or not evidenced by any promissory note, guarantee or other instrument, whether arising under this Agreement or under any other agreement, instrument or document, whether or not for the payment of money, whether arising by reason of an extension of credit, opening of a letter of credit, loan, guarantee, overdraft, indemnification or in any other manner, whether direct or indirect (including those acquired by assignment), absolute or contingent, due or to become due, now existing or hereafter arising and however acquired.

(mm)

Operating Agreement . “Operating Agreement” shall mean that Operating Agreement incorporated in the Lease.

(nn)

Person . “Person” shall mean and include an individual, a partnership, a joint venture, a corporation, a trust, an unincorporated organization and a government or any department or agency thereof.

(oo)

Project . “Project” shall mean the real estate project as referred to the recitals above.

(pp)

Project Documents . “Project Documents” shall mean the Lease, Bond Documents, Direct Loan Documents, Borrower LOC, Development Agreement, Construction Management Agreement, Operating Agreement, Master Lockbox Agreement and any other agreement entered into by Borrower or Subsidiary related to the Project.

(qq)

Property Management Agreement . “Property Management Agreement” shall mean that agreement dated September 1, 2005 by and between the Property Manager and Subsidiary.

(rr)

Property Management Fees . “Property Management Fees” shall mean all fees due to Property Manager under the Property Management Agreement.

(ss)

Property Manager . “Property Manager” shall mean America First Properties Management Company, L.L.C., a Delaware limited liability company.

(tt)

Property Manager’s Irrevocable Direction of Payment . “Property Manager’s Irrevocable Direction of Payment” shall mean the Property Manager’s direction of payment described in Subsection 2(c)(17).

(uu)

Regulatory Authorities . “Regulatory Authorities” shall mean all domestic and foreign governmental authorities, including, but not limited to, any agency, commission or department thereof, each a “Regulatory Authority.”

(vv)

Subsidiary . “Subsidiary” shall mean Offutt AFB America First Communities LLC, a Nebraska limited liability company, the owner of the Project and a wholly owned subsidiary of Borrower.

2.

The Loan .

(a)

Note .

(1)

Advance . Subject to the provisions hereof, Lender shall extend to Borrower credit under the Note in a single advance not to exceed Seven Million Four Hundred Forty-Three Thousand Nine Hundred Forty-Eight Dollars $7,443,948, for the purpose of financing Borrower’s activities in relation to the Project and as otherwise described in the Operating Agreement.

(2)

Interest Rate . The unpaid principal balance of the Note shall accrue interest in accordance with this Subsection 2(a)(2) (the “Interest Rate”):

(i)

Variable Rate . The unpaid principal balance of the Note shall accrue interest at a variable interest rate, which is a rate per year, equal to the LIBOR Daily Floating Rate plus nine (9) percentage points. The “LIBOR Daily Floating Rate” is a fluctuating rate of interest equal to the average per annum interest rate (rounded upwards to the nearest 1/100 of one percent) at which U.S. dollar deposits would be offered for one month by major banks in the London inter-bank market, as shown on Telerate Page 3750 (or any successor page) as determined for each Business Day at approximately 11:00 a.m. London time two (2) London Banking Days prior to the date in question. If such rate does not appear on Telerate Page 3750 (or any successor page), the rate will be determined by such alternate method as reasonably selected by Lender. A “London Banking Day” is a day on which the major banks in the London inter-bank market are open for business and dealing in offshore dollars. Interest will accrue on any day which is not a London Banking Day at the rate in effect on the immediately preceding London Banking Day.

(ii)

Accrual; Calculation . Interest shall accrue on the unpaid principal balance of the Note from and including the day of the initial advance of the Note (and from the date of any protective advance) to but excluding the day the Note is paid in full. All interest and fees will be computed on the basis of a 360-day year and the actual number of days elapsed.

(3)

Default Interest . The Default Interest rate shall be the lesser of (a) the Interest Rate plus four (4) percentage points or (b) the highest rate allowed by Applicable Law. Lender may, at its option and upon any Event of Default, assess and accrue interest at the Default Rate on the Note without declaring the Note in default.

(4)

Principal and Interest.

(5)

Prepayment . If any prepayment of principal on the Note occurs on or prior to the second anniversary of the date of this Note, there shall then be immediately due and payable a prepayment fee of 1.25% of such prepayment amount.. If any prepayment occurs after the second anniversary of the date of the Note there shall then be immediately due and payable a prepayment fee of         .75% of such prepayment amount. Borrower acknowledges that the prepayment fee represents a reasonable estimate of the loss that may be sustained by Lender due to the payment of any of the indebtedness evidenced hereby prior to the due date. The prepayment fee shall be paid without prejudice to the right of Lender to collect any other amounts provided to be paid hereunder or under the Note. Borrower hereby expressly: (i) waives any statutory and common law rights it may have to prepay the Note, in whole or in part, without penalty, upon acceleration of the maturity date; and, (ii) agrees that if, for any reason, a prepayment of any or all of the Note is made, whether voluntary or upon or following any acceleration of the maturity date by Lender on account of any default by Borrower under the terms of the Note, then Borrower shall be obligated to pay the applicable prepayment fee concurrently therewith. No tender of a prepayment of the Note with respect to which a prepayment fee is due shall be effective unless such prepayment is accompanied by the applicable prepayment fee.

(b)

Financing Fee . Borrower agrees to pay Lender a financing fee of one percent (1%) of the amount of the Note (the “Financing Fee”) upon execution of this Agreement. Borrower agrees and acknowledges that payment of such financing fee is a condition precedent to the disbursement of the Loan to Borrower.

(c)

Conditions to Advance . The Loan is made solely for the purposes designated in Subsection 2(a)(1) and the advance of the Loan is further conditioned on and restricted by the following:

(1)

No material adverse change in the financial condition of Borrower or Subsidiary prior to the advance;

(2)

Borrower is not currently in default under this Agreement (including any event, which would constitute an Event of Default with the giving of notice, passage of time or happening of any further condition, event or act);

(3)

Receipt by Lender of a duly executed Compliance Certificate, in form and content acceptable to Lender;

(4)

Absence of intervening or conflicting liens on or claims to Collateral;

(5)

Execution and delivery of the Operating Agreement;

(6)

Execution and delivery of the Lease;

(7)

Execution and delivery of the Forward Commitment;

(8)

Execution and delivery of the Bond Documents;

(9)

Execution and delivery of the Construction Management Agreement;

(10)

Execution and delivery of the Development Agreement;

(11)

Execution and delivery of the Master Lockbox Agreement;

(12)

Execution and delivery of the American First Lockbox Agreement;

(13)

Execution and delivery of the Assignment of the Borrower’s rights under the Construction Management Agreement in form and content acceptable to Lender;

(14)

Execution and delivery of the Assignment of the Borrower’s rights under the Development Agreement in form and content acceptable to Lender;

(15)

Execution and delivery of the Assignment of the Property Manager’s rights under the Property Management Agreement;

(16)

Receipt by Lender of the acknowledgement by U.S. Bank National Association, lockbox agent under the Master Lockbox Agreement of Borrower’s irrevocable direction (the “Borrower’s Irrevocable Direction of Payment”) to pay all Development Fees and Construction Management Fees payable to or for the benefit of Borrower under the Master Lockbox Agreement to U.S. Bank National Association, as lockbox agent under the America First Lockbox Agreement, each of such acknowledgement and direction to be in form and content acceptable to Lender;

(17)

Receipt by Lender of an executed letter to U.S. Bank National Association, lockbox agent under the Master Lockbox Agreement of Property Manager’s irrevocable direction (the “Property Manager’s Irrevocable Direction of Payment”) to pay all amounts payable to or for the benefit of Borrower under the Master Lockbox Agreement to U.S. Bank National Association, as lockbox agent under the America First Lockbox Agreement, in form and content acceptable to Lender to be delivered at Lender’s discretion after an Event of Default;

(18)

Receipt by Lender of a legal opinion from Kutak Rock LLP, in form and content reasonably acceptable to Lender, opining as to the (i) existence and organizational authority of Borrower and Subsidiary; and (ii) the due authorization, delivery and enforceability of the Operating Agreement, the Project Documents, and the Loan Documents.

(19)

Receipt by Borrower of the Member LOC’s in form and content acceptable to Lender;

(20)

Delivery by Borrower of the Borrower LOC in full compliance with the provisions of the Forward Commitment, Bond Documents and Lease;

(21)

Receipt by Lender of the Financing Fee;

(22)

Receipt by Lender of any and all documents or other items reasonably required by Lender.

(d)

Protective Advances . Lender may make additional or protective advances, at its option, whether the Note is in good standing or in default. All such advances will become part of the principal indebtedness, be immediately due and payable, and be charged interest at the Default Rate from the date of advance until payment is received from Borrower. Such additional or protective advances may be made to (1) protect the Collateral, as well as payments to protect the Collateral from claims of other creditors, diminution in value, waste, destruction, or abandonment; (2) pay costs and expenses (including but not limited to attorney fees and court costs) incurred by Lender in connection with enforcement of any rights granted herein, in any documents granting rights in Collateral, or under any agreement, document or instrument executed in connection with any Note or any litigation to collect any Obligation, protect its rights and ability to collect any Obligation, or protect any Collateral (whether the litigation is instituted by Borrower, Lender, or a third party); and (3) pay for optional financial services or for other services or items required as a condition to advancing the Loan.

(e)

Changes in Law Rendering Certain LIBOR Rate Loans Unlawful . In the event that any change in any Applicable Law (including the adoption of any new Applicable Law) or any change in the interpretation of any Applicable Law by any judicial, governmental or other regulatory body charged with the interpretation, implementation or administration thereof, should make it (or in the good-faith judgment of the Lender or its source of funding should raise a substantial question as to whether it is) unlawful for the Lender or its source of funding to make, maintain or fund LIBOR rate loans, then (1) the Lender shall promptly notify the Borrower, (2) the obligation of the Lender to offer the Loan at a LIBOR rate shall, upon the effectiveness of such event, be suspended for the duration of such unlawfulness, and (3) the interest rate on the Loan shall convert to a substantially similar interest rate as determined by Lender.

(f)

Payment Dates . Payments due and unpaid on a date which is not a Business Day shall be payable on the next Business Day and the amount of such payment shall accrue interest at the Interest Rate until received by Lender.

(g)

Application of Payment . Except as otherwise provided herein, payments, collections, proceeds of Collateral or other amounts received by Lender under or in regard to the Note will, unless Lender may otherwise determine in its sole discretion, be applied first to protective advances and fees, then to accrued interest on the Note and then to principal on the Note, all to the extent of any such amount. In the Event of Default (including any event, which would constitute an Event of Default with the giving of notice, passage of time or happening of any further condition, event or act), amounts to be applied to interest and/or principal shall be applied to the Note.

(h)

Fees and Lockbox Payments . Except as otherwise provided in Subsection 2(j), the Construction Management Fees or Development Fees under the Master Lockbox Agreement shall be forthwith delivered to or at the direction of Lender for application to the Obligations. Further, upon, or anytime after, an Event of Default (including any event that would constitute an Event of Default with the giving of notice, passage of time or happening of any further condition, event or act), Lender may at its sole discretion deliver the Property Manager’s Irrevocable Direction of Payment executed by the Property Manager simultaneous with the Assignment of Property Management Agreement and attached thereto as Exhibit “C” . Upon Lender’s delivery of the Property Manager’s Irrevocable Direction of Payment, the Property Management Fees shall be forthwith delivered to or at the direction of Lender for application to the Obligations.

(i)

Equity Payments . All dividends, interest, distributions or other amounts and all property received in respect of the equity interest of Borrower in Subsidiary shall be forthwith delivered to Lender for application to the Obligations.

(j)

America First Lockbox . In furtherance of the provisions or Subsections 2(a)(4), 2(h) and 2(i) above, Lender, Borrower and U.S. Bank National Association have executed the America First Lockbox Agreement for purposes of the collection, deposit and application of all such amounts to the Obligations; provided, however, in the absence of an Event of Default (including any event which would constitute an Event of Default with the giving of notice, passage of time or happening of any further condition, event or act), Lender agrees to allow the release of certain amounts from the America First Lockbox Agreement to (1) reimburse to Borrower or otherwise fund Borrower’s payment of such operating expenses reasonably and necessarily incurred by Borrower and approved by Lender, all in an amount not to exceed $150,000 per calendar year (or prorata portion thereof), any such release to be conditioned upon Lender’s receipt of an itemized request from Borrower and such supporting documentation as Lender may request and Lender written instruction to the lockbox agent to release such amount to Borrower. as Lender may in its discretion approve and (2) reimburse (once the Property Management Fees are being deposited to the America First Lockbox) to Property Manager or otherwise fund Property Manager’s payment (from the Property Manager’s Fees so deposited) of such operating expenses reasonably and necessarily incurred by Property Manager in the performance of its obligations under the Property Management Agreement and approved by Lender, all in an amount not to exceed 25% of the Property Management Fees deposited in the America First Lockbox Account, any such release to be conditioned upon Lender’s receipt of an itemized request from the Property Manager and such supporting documentation as Lender may request and Lender written instruction to the lockbox agent to release such amount to the Property Manager as Lender may in its discretion approve.

(k)

Borrower authorizes Lender to fund the Loan by wire transfer of the initial advance to the lockbox agent under the Master Lockbox Agreement pursuant to the following wire instructions:

3.

Security .

(a)

As security for the payment and/or performance of all Obligations, Borrower hereby grants to Lender, a security interest in and lien on all right, title and interest of the Borrower in the following described property wherever located and whether now or hereinafter existing or now owned or hereafter created, acquired or arising (the “Collateral”):

(1)

All assets of the Borrower , including but not limited to:

(i)

all goods, machinery, equipment, furniture, furnishings, fixtures, inventory, and other tangible personal property and all accessories and parts relating thereto;

(ii)

all accounts, accounts receivable, payment intangibles, lease payments, rental payments, lease rights, contract rights and other rights to the payment of money, including all rights and all fees or other amounts received by or payable to the Borrower pursuant to the Construction Management Agreement, the Development Agreement, the Master Lockbox Agreement or the America First Lockbox Agreement;

(iii)

all general intangibles of any kind or nature whatsoever, including, without limitation, all payment intangibles, all patents, trademarks, copyrights and other intellectual property, and all applications for, registrations of and licenses of the foregoing and all computer software, product specifications, trade secrets, licenses, trade names, service marks, goodwill, tax refunds, rights to tax refunds, franchises, rights related to prepaid expenses, rights under executory contracts, causes of action and rights under partnership, joint venture, co-ownership, management and/or similar agreements and/or arrangements;

(iv)

all investment property and financial assets of any kind or type, whether certificated or uncertificated, including, without limitation, all securities, securities accounts, securities entitlements, stocks, bonds, options, warrants, commodity contracts, futures contracts, commodity accounts, commodity options, commercial paper, money market funds and/or accounts, Treasury bills, notes and bonds, instruments, certificates of deposit, mutual fund shares, cash and money, together with all rights, income, revenues, proceeds and profits therefrom, including, without limitation, all dividends, distributions (cash or stock, extraordinary as well as ordinary), interest and other payments, all additions thereto, substitutions or replacements thereof, any goods or other property to be delivered thereunder, and any exchanges for or changes in any of the foregoing;

(v)

all monies, reserves, deposits, cash, cash equivalents and other property now or at any time or times hereafter in the possession or under the control of U.S. Bank National Association pursuant to either the Master Lockbox Agreement or the America First Lockbox Agreement, as well as any interest of Borrower in or under such lockbox agreements;

(vi)

all deposit accounts and certificates of deposit and all interest or dividends thereon;

(vii)

all commercial tort claims;

(viii)

all supporting obligati