Shortfall, Fee And Collateral Agreement

Exhibit 10(a)




SHORTFALL, FEE AND COLLATERAL AGREEMENT





among





BANK OF AMERICA, N.A.,





as Bridge Loan Lender, LOC Provider and TOB Liquidity Provider,





BANC OF AMERICA SECURITIES LLC,





as TOB Placement and Remarketing Agent,





AMERICA FIRST TAX EXEMPT INVESTORS, L.P.,





as Obligor





and





DEUTSCHE BANK TRUST COMPANY AMERICAS,





as Collateral Agent





Dated as of June 26, 2008



















TABLE OF CONTENTS








ARTICLE I





CERTAIN DEFINED TERMS



SECTION 1.01. Definitions 2
SECTION 1.02. Accounting Matters 7
SECTION 1.03. Use of Phrases 7
SECTION 1.04. Computation of Time Periods 7
SECTION 1.05. Statutory References 7




ARTICLE II





ISSUANCE OF LETTERS OF CREDIT; TERM; BRIDGE LOAN



SECTION 2.01. Issuance of Letters of Credit 7
SECTION 2.02. Term of Letters of Credit 7
SECTION 2.03. Bridge Loan 7




ARTICLE III





ISSUANCE OF LETTERS OF CREDIT AND TOB LIQUIDITY FACILITIES; REIMBURSEMENT; FEES AND EXPENSES; OTHER PAYMENTS



SECTION 3.01. Letters of Credit; Letter of Credit Shortfall Obligations 8
SECTION 3.02. TOB Liquidity Shortfall Obligations 8
SECTION 3.03. Letter of Credit Fee 8
SECTION 3.04. Remarketing and Liquidity Charges 9
SECTION 3.05. Notice of Fee Amounts Payable 9
SECTION 3.06. Letter of Credit Drawing Fee 9
SECTION 3.07. Waiver and Amendment Fee; Courier Fee 9
SECTION 3.08. Interest on Obligations 9
SECTION 3.09. Place, Time and Manner of Payment; Maximum Interest Rate 9
SECTION 3.10. Obligations Unconditional; Preference Amounts. 9
SECTION 3.11. Acquisition of Eligible Bonds and Collateral Bonds 9




ARTICLE IV





SECURITY; COLLATERAL AGENT



SECTION 4.01. Appointment of Collateral Agent; Collateral Agent Fee 10
SECTION 4.02. Security 10
SECTION 4.03. Representations and Warranties of the Collateral Agent 11
SECTION 4.04. Collateral Agent's Standard of Care, Liabilities and Indemnity 11
SECTION 4.05. Termination; Successor Collateral Agent 12
SECTION 4.06. Duties of the Collateral Agent 12
SECTION 4.07. The Collateral Agent in Other Capacities 12







ARTICLE V





CONDITIONS PRECEDENT



SECTION 5.01. Effective Date 12
SECTION 5.02. Documents to be Received 12
SECTION 5.03. Additional Conditions Precedent for Issuance of Letters of Credit and TOB Liquidity Facilities 13
SECTION 5.04. Additional Conditions Precedent for Bridge Loan 14
SECTION 5.05. Additional Conditions Precedent 14




ARTICLE VI





OBLIGATIONS ABSOLUTE



SECTION 6.01. Obligations Absolute 14




ARTICLE VII





REPRESENTATIONS AND WARRANTIES OF THE OBLIGOR



SECTION 7.01. Organization, Powers, Etc 15
SECTION 7.02. Authorization; Absence of Conflicts, Etc 15
SECTION 7.03. Binding Obligation 15
SECTION 7.04. Governmental Approvals 15
SECTION 7.05. Compliance with Applicable Law 15
SECTION 7.06. Absence of Litigation 15
SECTION 7.07. Absence of Defaults 16
SECTION 7.08. Good Title 16
SECTION 7.09. Eligible Bond Representations 16
SECTION 7.10. Environmental Matters 16
SECTION 7.11. Related Documents 16



ARTICLE VIII





COVENANTS



SECTION 8.01. Compliance with Agreements 16
SECTION 8.02. Compliance with Applicable Laws 16
SECTION 8.03. Accounting, Reports and Other Information 16
SECTION 8.04. Financial Covenants 16
SECTION 8.05. Cap on Issuance of TOB Floaters 16
SECTION 8.06. Notice of Default 16
SECTION 8.07. Preservation of Existence; General Partners 17
SECTION 8.08. Depository Relationship 17
SECTION 8.09. Liquidation 17
SECTION 8.10. Merger 17
SECTION 8.11. Liens; Collateral 17
SECTION 8.12. Post-Closing Covenant 17
SECTION 8.13. Custodian Fees 17







ARTICLE IX





EVENTS OF DEFAULT; ADDITIONAL TERMINATION EVENTS; AND REMEDIES



SECTION 9.01. Events of Default 17
SECTION 9.02. Additional Termination Events 18
SECTION 9.03. Remedies 18




ARTICLE X





INDEMNIFICATION; NATURE OF THE OBLIGOR'S DUTIES; SURVIVAL OF PROVISIONS



SECTION 10.01. Indemnification 19
SECTION 10.02. Environmental Indemnity; Defense of Claims 19
SECTION 10.03. Survival of Provisions 20




ARTICLE XI





DISPUTE RESOLUTION



SECTION 11.01. Arbitration 20
SECTION 11.02. Special Rules. 20
SECTION 11.03. Reservations of Rights 20
SECTION 11.04. Conflicting Provisions for Dispute Resolution 21
SECTION 11.05. Jury Trial Waiver in Arbitration 21




ARTICLE XII





MISCELLANEOUS



SECTION 12.01. Waivers, Amendments 21
SECTION 12.02. Survival of Representations and Warranties 21
SECTION 12.03. Termination of Agreement 21
SECTION 12.04. Notices 21
SECTION 12.05. Continuing Obligation 23
SECTION 12.06. Satisfaction Requirement 23
SECTION 12.07. Governing Law 23
SECTION 12.08. Waiver of Jury Trial 23
SECTION 12.09. Consent to Jurisdiction, Venue and Service of Process 23
SECTION 12.10. Counterparts 23
SECTION 12.11. Complete and Controlling Agreement 24
SECTION 12.12. Severability 24
SECTION 12.13. Business Days 24
SECTION 12.14. Headings 24
SECTION 12.15. USA PATRIOT Act 24
SECTION 12.16. Confidentiality; Publicity Releases 24


SCHEDULES :
SCHEDULE I Summary of Eligible Bonds and Custody Receipts


SCHEDULE II List of Collateral Bonds

SCHEDULE III Collateral Unenhanced Custody Receipts

SCHEDULE IV Specific Information Regarding Each Enhanced Custody Receipt

SCHEDULE V Remarketing and Liquidity Charge Payment Dates

SCHEDULE VI Payment Account Information

SCHEDULE VII Additional Eligible Collateral

SCHEDULE VIII Description of the Properties



SCHEDULE IX List of Pledged Notes, Recorded Second Lien Properties and Additional Second Lien Properties



EXHIBITS :

EXHIBIT A Copies of Pledged Notes












This SHORTFALL, FEE AND COLLATERAL AGREEMENT , dated as of June 26, 2008 (this " Agreement "), is among BANK OF AMERICA, N.A. (the " Bank "), as Bridge Loan Lender, LOC Provider (in such capacity, the " LOC Provider ") and as TOB Liquidity Provider (in such capacity, the " TOB Liquidity Provider "), BANC OF AMERICA SECURITIES LLC, as TOB Placement and Remarketing Agent (the " TOB Placement and Remarketing Agent "), AMERICA FIRST TAX-EXEMPT INVESTORS, L.P., a Delaware limited partnership (the " Obligor "), and DEUTSCHE BANK TRUST COMPANY AMERICAS, as Collateral Agent (the " Collateral Agent ").



RECITALS



WHEREAS , the Obligor has arranged for the delivery into custody of certain tax-exempt bonds owned by the Obligor (or with respect to certain bonds, participation interests therein) and the issuance of Unenhanced Custody Receipts (hereinafter defined) evidencing portions of interests in such bonds or participation interests;



WHEREAS , the Obligor has requested the LOC Provider to deliver letters of credit to secure the repayment of such of the Unenhanced Custody Receipts that are intended to be deposited into Tender Option Bond Trusts (hereinafter defined);



WHEREAS , such Unenhanced Custody Receipts designated for Tender Option Bond Trust deposit and related letters of credit will be deposited into custody with an Enhancement Custodian (hereinafter defined) under an Enhancement Custodial Agreement (hereinafter defined) pursuant to which the Enhancement Custodian will issue Enhanced Custody Receipts (hereinafter defined), each evidencing an interest in such designated Unenhanced Custody Receipt and its related letter of credit;



WHEREAS , the Enhanced Custody Receipts will be deposited into certain Tender Option Bond Trusts and each Tender Option Bond Trust will issue floating rate receipts to unrelated investors and residual receipts to the Obligor;



WHEREAS , the Obligor has requested the TOB Liquidity Provider to provide a liquidity facility for the floating rate receipts issued by each Tender Option Bond Trust;



WHEREAS , the Obligor has requested the TOB Placement and Remarketing Agent to act as remarketing agent for the floating rate receipts issued by each Tender Option Bond Trust;



WHEREAS , the Obligor has requested the Bank to provide bridge financing to enable the Obligor to purchase the bonds prior to the issuance of any Unenhanced Custody Receipts, Enhanced Custody Receipts or receipts to be issued by the proposed Tender Option Bond Trust, if ratings on the Enhanced Custody Receipts and receipts to be issued by the proposed Tender Option Bond Trust cannot be obtained in time to provide funds for such bond purchases by the applicable deadlines for purchase;



WHEREAS , to induce the LOC Provider and the TOB Liquidity Provider to execute and deliver such letters of credit and liquidity facilities, respectively, to induce the TOB Placement and Remarketing Agent to provide remarketing services, and to induce the Bank to provide bridge financing, if necessary, the Obligor, among other things, has agreed to reimburse the LOC Provider for all drawings under each letter of credit and the TOB Liquidity Provider for all drawings under each liquidity facility not otherwise immediately reimbursed, to pay to the LOC Provider, the TOB Liquidity Provider and the TOB Placement and Remarketing Agent certain fees, to repay any bridge financing that is provided, and to provide security for such reimbursement and other payment obligations;



WHEREAS, the LOC Provider and the TOB Liquidity Provider have agreed to issue such letters of credit and liquidity facilities in accordance with, and subject to the terms and provisions of, this Agreement, the TOB Placement and Remarketing Agent has agreed to provide its remarketing services in accordance with, and subject to the terms and provisions of, each TOB Placement and Remarketing Agreement, and the Bank has agreed to provide bridge financing if needed; and



WHEREAS , the Bank has requested the Collateral Agent to act as collateral agent with respect to all items of Collateral posted by the Obligor hereunder.



NOW , THEREFORE , as consideration for the mutual promises contained herein and other valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound hereby, the parties hereto agree as follows:





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ARTICLE I



CERTAIN DEFINED TERMS



SECTION 1.01. Definitions . The following terms, as used herein, shall have the following meanings:



" AAA " means the American Arbitration Association.



" Act of Bankruptcy " means (a) the filing of a petition in bankruptcy or other initiation of a bankruptcy proceeding by or against a debtor under the federal Bankruptcy Code or under any applicable state insolvency code, as now or hereafter in effect; (b) the entry against a debtor of a decree or order of a court or agency or supervisory authority having jurisdiction in the premises for the appointment of a conservator, receiver or liquidator in any insolvency, readjustment of debt, marshalling of assets and liabilities or similar proceeding, or for the winding up or liquidation of its affairs; (c) the appointment of, or the taking of possession by, a receiver, custodian, trustee or liquidator of the debtor or of a substantial part of its property for purposes of distributing the debtor's assets or winding up a debtor's affairs; or (d) any of the following actions by a debtor: (i) any formal action which results in a publicly available written statement of action duly approved by an authorized committee or governing body of the debtor, as appropriate, that admits without condition the debtor's inability to make payments on its debts as they become due, (ii) any failure to generally pay principal of or interest on its material obligations as they become due (except as a result of a dispute regarding such obligations), (iii) a general assignment for the benefit of creditors, or (iv) the adoption of a resolution or other approval by its board of directors, executive committee or other governing body for the filing of an action by the debtor under bankruptcy laws or the appointment of a receiver, custodian, trustee or liquidator of the debtor for purposes of distributing the debtor's assets or the winding up of the debtor's affairs.



" Additional Eligible Collateral " means cash and securities described and valued as provided in Schedule VI attached hereto.



" Additional Second Lien Mortgage " means an unrecorded second lien mortgage granted by the Property Owner of each Additional Second Lien Property in favor of the Obligor to secure repayment of the Pledged Note executed and delivered by such owner in favor of the Obligor and assigned by the Obligor to the Collateral Agent to secure the Obligations.



" Additional Second Lien Property " means each of the three Properties for which an unrecorded second lien will be delivered on the date of this Agreement, as indicated in Schedule IX attached hereto.



" Additional Termination Event " has the meaning set forth in Section 9.02 hereof.



" Affiliate " means any Person directly or indirectly controlling, controlled by or under common control with the Obligor. For purposes of this definition, the term "control" shall mean the direct or indirect ability to determine the direction of management and policies through ownership, contract or otherwise.



" Applicable Law " means all applicable provisions of all constitutions, statutes, rules, regulations and orders of all governmental bodies, all Governmental Approvals and all orders, judgments and decrees of all courts and arbitrators.



" Applicable Rate " means the Reimbursement Rate until such time as an Event of Default or Additional Termination Event has occurred hereunder, after which interest shall accrue on all Obligations outstanding hereunder at the Default Rate.



" Bankruptcy Code " means the Bankruptcy Reform Act of 1978, as amended from time to time, and any Federal law with respect to bankruptcy, insolvency, reorganization, liquidation, moratorium or similar laws affecting creditors' rights generally.



" BBA LIBOR " means the British Bankers Association LIBOR Rate.



" Bond Documents " means, with respect to any Bond, the Bond Indenture and any other related documents.



" Bond Indenture " means, with respect to any Bond, the indenture, trust agreement or other primary issuance document pursuant to which such Bond was issued.



" Bond Payment Drawing " means a drawing on a Letter of Credit to pay any principal or redemption price of and/or interest on the related Unenhanced Custody Receipt.



" Bonds " means, collectively, (a) the Eligible Bonds and (b) the Collateral Bonds.



" Bond Trustee " means, with respect to each Bond, the trustee under the Bond Indenture pursuant to which such Bond was issued, or if there is a participation interest in any underlying bond, the custodian under the applicable custody arrangement creating the participation, as the context may require ..



" Bridge Loan " means a loan in the amount of $65,091,371.66 from the Bank to the Obligor pursuant to the provisions of this Agreement.





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" Bridge Loan Commitment Fee " means a commitment fee in the amount of $65,091.37 (10 basis points (0.10%) multiplied by the principal amount of the Bridge Loan).



" Bridge Loan Maturity Date " means September 26, 2008.



" Bridge Loan Note" means the promissory note of even date herewith executed and delivered by the Obligor to the Bank to evidence the Bridge Loan.



" Bridge Loan Rate " means LIBOR plus 2.25% per annum.



" Business Day " means any day on which banks or trust companies located in New York, New York are not required or authorized by law to remain closed or on which the New York Stock Exchange is not closed.



" Collateral " means (a) for such period of time as the Bridge Loan is outstanding, all Eligible Bonds and any related "securities entitlements" (as such term is defined in the UCC) therein, (b) all Collateral Unenhanced Custody Receipts, (c) all TOB Residuals, (d) all Collateral Bonds, (e) all Pledged Notes, (e) all Additional Eligible Collateral delivered by the Obligor pursuant to Section 4.02(b) hereof, (f) the Recorded Second Lien Mortgages, and (g) the Additional Second Lien Mortgages.



" Collateral Bond " means a tax-exempt bond identified in Schedule II attached hereto.



" Collateral Unenhanced Custody Receipts " means each Unenhanced Custody Receipt identified in Schedule III attached hereto as a "Collateral Unenhanced Custody Receipt", which will not be deposited into custody with the Enhancement Custodian under the Enhancement Custodial Agreement but will be Collateral delivered to the Collateral Agent.



" Commitment Fee " means the commitment fee payable by the Obligor to the Bank pursuant to the Commitment Letter.



" Commitment Letter " means the commitment letter from the Bank to the Obligor dated June 3, 2008 and accepted by the Obligor.



" Collateral Agent Fee " shall mean a fee equal to $1,000 per annum per Eligible Bond, Collateral Bond, Collateral Unenhanced Custody Receipt, Pledged Note and TOB Residual held by the Collateral Agent hereunder.



" Debt Service Coverage Ratio " means, with respect to each Property, the net operating income of such Property divided by the total annual debt service payable in respect of all senior debt outstanding in respect of such Property, whether or not such debt is secured by a lien on such Property.



" Default " means an event which, with notice or lapse of time or both, would constitute an Event of Default.



" Default Rate " means the Reimbursement Rate plus 2.00% per annum.



" Designated Deposit Unenhanced Custody Receipt " means an Unenhanced Custody Receipt designated for deposit into the Enhancement Custodial Agreement with a related Letter of Credit, as set forth on Schedules I and IV attached hereto.



" Dispute " means any controversy, claim or dispute between Bank of America and the Obligor, including any such controversy, claim or dispute arising out of or relating to (a) this Agreement or (b) the transactions contemplated herein (including any claim based on or arising from an alleged personal injury or business tort).



" Eligible Bond " means a tax-exempt bond or participation interest in a tax-exempt bond, as applicable, identified in Schedule I attached to this Agreement.



" Eligible Bond Payment Date " means the date on which principal, redemption price or interest is payable on an Eligible Bond in accordance with its terms.



" Enhanced Custody Receipt " means an Enhanced Custody Receipt issued by the Enhancement Custodian on the Letter of Credit Issuance Date to represent an interest in an Unenhanced Custody Receipt and its related Letter of Credit, as identified on Schedules I and IV attached hereto.



" Enhanced Custody Receipt Mandatory Tender Date " means the date on which any Enhanced Custody Receipts are subject to mandatory tender pursuant to the provisions of the Enhancement Custodial Agreement after the occurrence of an Enhanced Custody Receipt Mandatory Tender Event.



" Enhanced Custody Receipt Mandatory Tender Drawing " means a drawing on a Letter of Credit to pay the purchase price of the related Enhanced Custody Receipts upon the occurrence of an Enhanced Custody Receipt Mandatory Tender Event.



" Enhanced Custody Receipt Mandatory Tender Event " shall have the meaning given to term "Mandatory Tender Date" in the Enhancement Custodial Agreement.



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" Enhanced Custody Receipt Mandatory Tender Price" shall have the meaning given the term "Mandatory Tender Price" in the Enhancement Custodial Agreement.



" Enhancement Custodial Agreement " means the Enhancement Custodial Agreement to be dated the Letter of Credit Issuance Date between the Bank, as Administrator, and the Enhancement Custodian.





" Enhancement Custodian " means Deutsche Bank Trust Company Americas and any substitute or successor custodian under the Enhancement Custodial Agreement.



" Environmental Claim " means any complaint, action, notice, order, claim, investigation, judicial or administrative proceeding or action, or similar claims or communications from any Person involving or alleging any non-compliance with any Environmental Requirement or the existence of any unsafe or hazardous condition resulting from or related to the Release of any Hazardous Material.



" Environmental Law " means any and all applicable federal, state or local laws, statutes, ordinances, rules, regulations, orders, principals of common law, judgments, permits, licenses or other determinations of any judicial or regulatory authority, now or hereafter in effect, imposing liability, establishing standards of conduct or otherwise relating to protection of the environment (including natural resources, surface water, groundwater, soils and indoor and ambient air), health and safety, land use matters or the presence, generation, treatment, storage, disposal, Release or threatened Release, transport or handling of any Hazardous Material.



" Environmental Requirement " means any Environmental Law, or any other applicable agreement or restriction (including any condition or requirement imposed by any third party or insurance or surety company), now or hereafter in effect, which relates to any matters addressed by any Environmental Law, Hazardous Material or the prevention of any unsafe or hazardous condition resulting from or related to the Release of any Hazardous Material.



" Event of Default " has the meaning set forth in Section 9.01 hereof.



" Fee Payment Date " means each Letter of Credit Fee Payment Date and each Remarketing and Liquidity Charge Payment Date.



" Governmental Approval " means an authorization, permit, consent, approval, license or exemption from, registration or filing with, or report to, any Governmental or regulatory unit.



" Hazardous Material " means any substance, material, element, compound, waste or chemical, whether solid, liquid or gaseous, which is defined, listed, classified or otherwise regulated in any way under any Environmental Laws, or any other such substances or conditions (including mold and other mycotoxins or fungi) which may create any unsafe or hazardous condition or pose any threat to health and safety.



" Letter of Credit " means each letter of credit identified on Schedule I attached hereto issued by the LOC Provider to the Enhancement Custodian as beneficiary in the form attached to the Enhancement Custodial Agreement.



" Letter of Credit Drawing " means a Bond Payment Drawing or Enhanced Custody Receipt Mandatory Tender Drawing.



" Letter of Credit Expiration Date " means initially the date that is 364 days after the Letter of Credit Issuance Date, as such date may be extended for any particular Letter of Credit pursuant to Section 2.01(b) hereof.



" Letter of Credit Fee " means on each applicable Letter of Credit Fee Payment Date with respect to each Letter of Credit, a fee in an amount equal to 1.35% per annum multiplied by the sum of the amount available to be drawn under such Letter of Credit on such Letter of Credit Fee Payment Date plus any amount then subject to reinstatement in accordance with the provisions of the Letter of Credit.



" Letter of Credit Fee Payment Date " means, with respect to each Letter of Credit, the Letter of Credit Issuance Date and quarterly thereafter beginning on the first day of the third calendar month following the Letter of Credit Issuance Date and on the first day of each third calendar month thereafter (the exact dates to be included in the Enhancement Custodial Agreement on the Letter of Credit Issuance Date).



" Letter of Credit Issuance Date " means the date on which the Letters of Credit are issued pursuant to this Agreement.



" Letter of Credit Shortfall Amount " means the amount of a Letter of Credit Drawing honored by the LOC Provider that is not immediately reimbursed to the LOC Provider by the Enhancement Custodian.



" LIBOR " means for any day, a fluctuating rate of interest per annum equal to BBA LIBOR, as published by Reuters (or other commercially available source providing quotations of BBA LIBOR as selected by the Bank from time to time) as determined for each Business Day at approximately 11:00 a.m. London time two (2) London Banking Days prior to such day, for U.S. Dollar deposits (for delivery on such day) with a one month term, as adjusted from time to time in the Bank's sole discretion for reserve requirements, deposit insurance assessment rates and other regulatory costs. If such rate is not available at such time for any reason, then the rate will be determined by such alternate method as reasonably selected by the Bank.





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If the Bank determines that no adequate basis exists for determining BBA LIBOR or that BBA LIBOR will not adequately and fairly reflect the cost to the Bank of funding Letter of Credit Drawings or TOB Liquidity Drawings, or that any Applicable L ...