Exhibit 10.7
Loan No. V_64151
GUARANTY
     THIS GUARANTY (“Guaranty”) is executed as of June 29, 2007, by AMERICA
FIRST TAX EXEMPT INVESTORS, L.P., a Delaware limited partnership (“Guarantor”),
for the benefit of JPMORGAN CHASE BANK, N.A., a banking association chartered
under the laws of the United States of America (“Lender”).
     A. (i) CRESCENT VILLAGE TOWNHOMES LIMITED PARTNERSHIP, an Ohio limited
partnership (“Crescent Village”), (ii) EAGLE RIDGE TOWNHOMES LIMITED
PARTNERSHIP, an Ohio limited partnership (“Eagle Ridge”), (iii) WILLOW BEND
TOWNHOMES LIMITED PARTNERSHIP, an Ohio limited partnership (“Willow Bend”),
(iv) POST WOOD TOWNHOMES LIMITED PARTNERSHIP, an Ohio limited partnership (“Post
Wood”), (v) POST WOODS TOWNHOMES II LIMITED PARTNERSHIP, an Ohio limited
partnership, (“Post Woods II”), and (vi) MEADOWBROOK APARTMENTS LIMITED
PARTNERSHIP, an Ohio limited partnership (“Meadowbrook”) (Crescent Village,
Eagle Ridge, Willow Bend, Post Wood, Post Woods II, and Meadowbrook are
hereinafter referred to individually as a “Borrower” or collectively, as
“Borrower” or “Borrowers” as the context may require), is indebted to Lender
with respect to a loan (“Loan”) pursuant to that certain Note dated of even date
herewith, payable to the order of Lender in the original principal amount of
$19,920,000.00 (together with all renewals, modifications, increases and
extensions thereof, the “Note”), which is secured by the liens and security
interests created by the Security Instrument (as defined in the Note) and
further evidenced, secured or governed by the other Loan Documents;
     B. Lender is not willing to make the Loan, or otherwise extend credit, to
Borrower unless Guarantor unconditionally guarantees payment and performance to
Lender of the Guaranteed Obligations (as hereinafter defined); and
     C. Guarantor is the owner of a direct or indirect interest in Borrower, and
Guarantor will directly benefit from Lender’s making the Loan to Borrower.
     NOW, THEREFORE, as an inducement to Lender to make the Loan to Borrower
thereunder, and to extend such additional credit as Lender may from time to time
agree to extend under the Loan Documents, and for other good and valuable
consideration, the receipt and legal sufficiency of which are hereby
acknowledged, the parties do hereby agree as follows:
ARTICLE 1
NATURE AND SCOPE OF GUARANTY
     Section 1.1 GUARANTY OF OBLIGATIONS. Guarantor hereby absolutely,
irrevocably and unconditionally guarantees to Lender (and its successors and
assigns), the payment and performance of the Guaranteed Obligations as and when
the same shall be due and payable, whether by lapse of time, by acceleration of
maturity or otherwise. Guarantor hereby absolutely, irrevocably and
unconditionally covenants and agrees that it is liable, jointly and

 

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severally, for the Guaranteed Obligations as a primary obligor, and that such
Guarantor shall fully perform each and every term and provision hereof.
     Section 1.2 DEFINITION OF GUARANTEED OBLIGATIONS. As used herein, the term
“Guaranteed Obligations” shall (i) mean each of the obligations of Borrower
under the Environmental Indemnity (as defined in the Security Instrument),
including without limitation the indemnification provisions contained therein,
and (ii) be deemed to include, and Guarantor shall also be liable for, and shall
indemnify, defend and hold Lender harmless from and against, any and all Losses
(as hereinafter defined) incurred or suffered by Lender and arising out of or in
connection with the matters listed below:
          (a) the misapplication or misappropriation of Rents (as defined in the
Security Instrument);
          (b) the misapplication or misappropriation of insurance proceeds or
condemnation awards;
          (c) Borrower’s failure to return or to reimburse Lender for all
Personal Property (as defined in the Security Instrument) taken from the
Property (as defined in the Security Instrument) by or on behalf of Borrower and
not replaced with Personal Property of the same utility and of the same or
greater value;
          (d) any act of actual waste or arson by Borrower, any principal,
affiliate, general partner or member thereof or by any Indemnitor (as defined in
the Security Instrument) or any Guarantor;
          (e) any fees or commissions paid by Borrower to any principal,
affiliate, general partner or member of Borrower, any Indemnitor or any
Guarantor in violation of the terms of this Guaranty, the Security Instrument or
the other Loan Documents; or
          (f) Borrower’s failure to comply with the provisions of Section 11 of
the Security Instrument.
     In addition, in the event (i) of any fraud, willful misconduct or material
misrepresentation by Borrower, its general partners, if any, its members, if
any, its principals, its affiliates, its agents or its employees or by any
Guarantor or Indemnitor in connection with the Loan, (ii) of a breach or default
under Sections 4.3 or 8.2 of the Security Instrument, or (iii) the Property or
any part thereof becomes an asset in a voluntary bankruptcy or voluntary
insolvency proceeding, then the Guaranteed Obligations shall also include the
unpaid balance of the Debt (as defined in the Security Instrument).
     For purposes of this Guaranty, the term “Losses” includes any and all
claims, suits, liabilities (including, without limitation, strict liabilities),
actions, proceedings, obligations, debts, damages, losses, costs, expenses,
diminutions in value, fines, penalties, charges, fees, expenses, judgments,
awards, amounts paid in settlement, punitive damages, foreseeable and
unforeseeable consequential damages, of whatever kind or nature (including but
not limited to attorneys’ fees and other costs of defense).

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     Section 1.3 NATURE OF GUARANTY. This Guaranty is an irrevocable, absolute,
continuing guaranty of payment and performance, is joint and several and is not
a guaranty of collection. This Guaranty shall continue to be effective with
respect to any Guaranteed Obligations arising or created after any attempted
revocation by Guarantor and after (if Guarantor is a natural person) Guarantor’s
death (in which event this Guaranty shall be binding upon Guarantor’s estate and
Guarantor’s legal representatives and heirs). The fact that at any time or from
time to time the Guaranteed Obligations may be increased or reduced shall not
release or discharge the obligation of Guarantor to Lender with respect to
Guaranteed Obligations. This Guaranty may be enforced by Lender and any
subsequent holder of the Note and shall not be discharged by the assignment or
negotiation of all or part of the Note.
     Section 1.4 GUARANTEED OBLIGATIONS NOT REDUCED BY OFFSET. The Note, the
Guaranteed Obligations, and the liabilities and obligations of Guarantor to
Lender hereunder shall not be reduced, discharged or released because or by
reason of any existing or future offset, claim or defense of Borrower, or any
other party, against Lender or against payment of the Guaranteed Obligations,
whether such offset, claim or defense arises in connection with the Guaranteed
Obligations (or the transactions creating the Guaranteed Obligations) or
otherwise.
     Section 1.5 PAYMENT BY GUARANTOR. If all or any part of the Guaranteed
Obligations shall not be punctually paid when due, whether at maturity or
earlier by acceleration or otherwise, Guarantor shall, immediately upon demand
by Lender, and without presentment, protest, notice of protest, notice of
non-payment, notice of intention to accelerate the maturity, notice of
acceleration of the maturity, or any other notice whatsoever, pay in lawful
money of the United States of America, the amount due on the Guaranteed
Obligations to Lender at Lender’s address as set forth herein. Such demand(s)
may be made at any time coincident with or after the time for payment of all or
part of the Guaranteed Obligations, and may be made from time to time with
respect to the same or different items of Guaranteed Obligations. Such demand
shall be deemed made, given and received in accordance with the notice
provisions hereof.
     Section 1.6 NO DUTY TO PURSUE OTHERS. It shall not be necessary for Lender
(and Guarantor hereby waives any rights which Guarantor may have to require
Lender), in order to enforce this Guaranty against Guarantor, first to
(i) institute suit or exhaust its remedies against Borrower or others liable on
the Loan or the Guaranteed Obligations or any other person, (ii) enforce
Lender’s rights against any collateral which shall ever have been given to
secure the Loan, (iii) enforce Lender’s rights against any other guarantors of
the Guaranteed Obligations, (iv) join Borrower or any others liable on the
Guaranteed Obligations in any action seeking to enforce this Guaranty,
(v) exhaust any remedies available to Lender against any collateral which shall
ever have been given to secure the Loan, or (vi) resort to any other means of
obtaining payment of the Guaranteed Obligations. Lender shall not be required to
mitigate damages or take any other action to reduce, collect or enforce the
Guaranteed Obligations.
     Section 1.7 WAIVERS. Guarantor agrees to the provisions of the Loan
Documents, and hereby waives notice of (i) any loans or advances made by Lender
to Borrower, (ii) acceptance of this Guaranty, (iii) any amendment or extension
of the Note or of any other Loan Documents, (iv) the execution and delivery by
Borrower and Lender of any other loan or credit agreement or of Borrower’s
execution and delivery of any promissory notes or other documents

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arising under the Loan Documents or in connection with the Property, (v) the
occurrence of any breach by Borrower or Event of Default (as defined in the
Security Instrument), (vi) Lender’s transfer or disposition of the Guaranteed
Obligations, or any part thereof, (vii) sale or foreclosure (or posting or
advertising for sale or foreclosure) of any collateral for the Guaranteed
Obligations, (viii) protest, proof of non-payment or default by Borrower, or
(ix) any other action at any time taken or omitted by Lender, and, generally,
all demands and notices of every kind in connection with this Guaranty, the Loan
Documents, any documents or agreements evidencing, securing or relating to any
of the Guaranteed Obligations and the obligations hereby guaranteed.
     Section 1.8 PAYMENT OF EXPENSES. In the event that Guarantor should breach
or fail to timely perform any provisions of this Guaranty, Guarantor shall,
immediately upon demand by Lender, pay Lender all costs and expenses (including
court costs and reasonable attorneys’ fees) incurred by Lender in the
enforcement hereof or the preservation of Lender’s rights hereunder. The
covenant contained in this section shall survive the payment and performance of
the Guaranteed Obligations.
     Section 1.9 EFFECT OF BANKRUPTCY. In the event that, pursuant to any
insolvency, bankruptcy, reorganization, receivership or other debtor relief law,
or any judgment, order or decision thereunder, Lender must rescind or restore
any payment, or any part thereof, received by Lender in satisfaction of the
Guaranteed Obligations, as set forth herein, any prior release or discharge from
the terms of this Guaranty given to Guarantor by Lender shall be without effect,
and this Guaranty shall remain in full force and effect. It is the intention of
Borrower and Guarantor that Guarantor’s obligations hereunder shall not be
discharged except by Guarantor’s performance of such obligations and then only
to the extent of such performance.
     Section 1.10 DEFERMENT OF RIGHTS OF SUBROGATION, REIMBURSEMENT AND
CONTRIBUTION.
          (a) Notwithstanding any payment or payments made by any Guarantor
hereunder, no Guarantor will assert or exercise any right of Lender or of such
Guarantor against Borrower to recover the amount of any payment made by such
Guarantor to Lender by way of subrogation, reimbursement, contribution,
indemnity, or otherwise arising by contract or operation of law, and such
Guarantor shall not have any right of recourse to or any claim against assets or
property of Borrower, whether or not the obligations of Borrower have been
satisfied, all of such rights being herein expressly waived by such Guarantor.
Each Guarantor agrees not to seek contribution or indemnity or other recourse
from any other guarantor. If any amount shall nevertheless be paid to a
Guarantor by Borrower or another Guarantor prior to payment in full of the
Obligations (hereinafter defined), such amount shall be held in trust for the
benefit of Lender and shall forthwith be paid to Lender to be credited and
applied to the Obligations, whether matured or unmatured. The provisions of this
paragraph shall survive the termination of this Guaranty, and any satisfaction
and discharge of Borrower by virtue of any payment, court order or any
applicable law.
          (b) Notwithstanding the provisions of Section 1.10(a), each Guarantor
shall have and be entitled to (1) all rights of subrogation otherwise provided
by applicable law in respect of any payment it may make or be obligated to make
under this Guaranty and (2) all claims it would have against any other Guarantor
in the absence of Section 1.10(a) and to assert

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and enforce same, in each case on and after, but at no time prior to, the date
(the “Subrogation Trigger Date”) which is 91 days after the date on which all
sums owed to Lender under the Loan Documents (the “Obligations”) have been paid
in full, if and only if (x) no Event of Default of the type described in
Section 9.1(d) or Section 9.1(e) of the Security Instrument with respect to
Borrower or any other Guarantor has existed at any time on and after the date of
this Guaranty to and including the Subrogation Trigger Date and (y) the
existence of each Guarantor’s rights under this Section 1.10(b) would not make
such Guarantor a creditor (as defined in the Bankruptcy Code, as such term is
hereinafter defined) of Borrower or any other Guarantor in any insolvency,
bankruptcy, reorganization or similar proceeding commenced on or prior to the
Subrogation Trigger Date.
     Section 1.11 BANKRUPTCY CODE WAIVER. It is the intention of the parties
that the Guarantor shall not be deemed to be a “creditor” or “creditors” (as
defined in Section 101 of the Bankruptcy Code [hereinafter defined]) of
Borrower, or any other guarantor, by reason of the existence of this Guaranty,
in the event that Borrower or any other guarantor, becomes a debtor in any
proceeding under the Bankruptcy Code, and in connection herewith, Guarantor
hereby waives any such right as a “creditor” under the Bankruptcy Code. This
waiver is given to induce Lender to make the Loan evidenced by the Note to
Borrower. After the Loan is paid in full and there shall be no obligations or
liabilities under this Guaranty outstanding, this waiver shall be deemed to be
terminated.
     Section 1.12 “BORROWER.” The term “Borrower” as used herein shall include
any new or successor corporation, association, partnership (general or limited),
limited liability company, joint venture, trust or other individual or
organization formed as a result of any merger, reorganization, sale, transfer,
devise, gift or bequest of Borrower or any interest in Borrower.
ARTICLE 2
EVENTS AND CIRCUMSTANCES NOT REDUCING
OR DISCHARGING GUARANTOR’S OBLIGATIONS
     Guarantor hereby consents and agrees to each of the following, and agrees
that Guarantor’s obligations under this Guaranty shall not be released,
diminished, impaired, reduced or adversely affected by any of the following, and
waives any common law, equitable, statutory or other rights (including without
limitation rights to notice) which Guarantor might otherwise have as a result of
or in connection with any of the following:
     Section 2.1 MODIFICATIONS. Any renewal, extension, increase, modification,
alteration or rearrangement of all or any part of the Guaranteed Obligations,
Note, Loan Documents, or other document, instrument, contract or understanding
between Borrower and Lender, or any other parties, pertaining to the Guaranteed
Obligations or any failure of Lender to notify Guarantor of any such action.
     Section 2.2 ADJUSTMENT. Any adjustment, indulgence, forbearance or
compromise that might be granted or given by Lender to Borrower or any
Guarantor.

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     Section 2.3 CONDITION OF BORROWER OR GUARANTOR. The insolvency, bankruptcy,
arrangement, adjustment, composition, liquidation, disability, dissolution or
lack of power of Borrower, Guarantor or any other party at any time liable for
the payment of all or part of the Guaranteed Obligations; or any dissolution of
Borrower or Guarantor, or any sale, lease or transfer of any or all of the
assets of Borrower or Guarantor, or any changes in the shareholders, partners or
members of Borrower or Guarantor; or any reorganization of Borrower or
Guarantor.
     Section 2.4 INVALIDITY OF GUARANTEED OBLIGATIONS. The invalidity,
illegality or unenforceability of all or any part of the Guaranteed Obligations,
or any document or agreement executed in connection with the Guaranteed
Obligations, for any reason whatsoever, including without limitation the fact
that (i) the Guaranteed Obligations, or any part thereof, exceed the amount
permitted by law, (ii) the act of creating the Guaranteed Obligations or any
part thereof, is ultra vires, (iii) the officers or representatives executing
the Note or the other Loan Documents or otherwise creating the Guaranteed
Obligations acted in excess of their authority, (iv) the Guaranteed Obligations
violate applicable usury laws, (v) Borrower has valid defenses, claims or
offsets (whether at law, in equity or by agreement) which render the Guaranteed
Obligations wholly or partially uncollectible from Borrower, (vi) the creation,
performance or repayment of the Guaranteed Obligations (or the execution,
delivery and performance of any document or instrument representing part of the
Guaranteed Obligations or executed in connection with the Guaranteed
Obligations, or given to secure the repayment of the Guaranteed Obligations) is
illegal, uncollectible or unenforceable, or (vii) the Note or any of the other
Loan Documents have been forged or otherwise are irregular or not genuine or
authentic, it being agreed that Guarantor shall remain liable hereon regardless
of whether Borrower or any other person be found not liable on the Guaranteed
Obligations or any part thereof for any reason.
     Section 2.5 RELEASE OF OBLIGORS. Any full or partial release of the
liability of Borrower on the Guaranteed Obligations, or any part thereof, or of
any co-guarantors, or any other person or entity now or hereafter liable,
whether directly or indirectly, jointly, severally, or jointly and severally, to
pay, perform, guarantee or assure the payment of the Guaranteed Obligations, or
any part thereof, it being recognized, acknowledged and agreed by Guarantor that
Guarantor may be required to pay the Guaranteed Obligations in full without
assistance or support of any other party, and Guarantor has not been induced to
enter into this Guaranty on the basis of a contemplation, belief, understanding
or agreement that other parties will be liable to pay or perform the Guaranteed
Obligations, or that Lender will look to other parties to pay or perform the
Guaranteed Obligations.
     Section 2.6 OTHER COLLATERAL. The taking or accepting of any other
security, collateral or guaranty, or other assurance of payment, for all or any
part of the Guaranteed Obligations.
     Section 2.7 RELEASE OF COLLATERAL. Any release, surrender, exchange,
subordination, deterioration, waste, loss or impairment (including without
limitation negligent, willful, unreasonable or unjustifiable impairment) of any
collateral, property or security, at any time existing in connection with, or
assuring or securing payment of, all or any part of the Guaranteed Obligations.

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     Section 2.8 CARE AND DILIGENCE. The failure of Lender or any other party to
exercise diligence or reasonable care in the preservation, protection,
enforcement, sale or other handling or treatment of all or any part of such
collateral, property or security, including but not limited to any neglect,
delay, omission, failure or refusal of Lender (i) to take or prosecute any
action for the collection of any of the Guaranteed Obligations, or (ii) to
foreclose, or initiate any action to foreclose, or, once commenced, prosecute to
completion any action to foreclose upon any security therefor, or (iii) to take
or prosecute any action in connection with any instrument or agreement
evidencing or securing all or any part of the Guaranteed Obligations.
     Section 2.9 UNENFORCEABILITY. The fact that any collateral, security,
security interest or lien contemplated or intended to be given, created or
granted as security for the repayment of the Guaranteed Obligations, or any part
thereof, shall not be properly perfected or created, or shall prove to be
unenforceable or subordinate to any other security interest or lien, it being
recognized and agreed by Guarantor that Guarantor is not entering into this
Guaranty in reliance on, or in contemplation of the benefits of, the validity,
enforceability, collectibility or value of any of the collateral for the
Guaranteed Obligations.
     Section 2.10 MERGER. The reorganization, merger or consolidation of
Borrower into or with any other corporation or entity.
     Section 2.11 PREFERENCE. Any payment by Borrower to Lender is held to
constitute a preference under bankruptcy laws, or for any reason Lender is
required to refund such payment or pay such amount to Borrower or someone else.
     Section 2.12 OTHER ACTIONS TAKEN OR OMITTED. Any other action taken or
omitted to be taken with respect to the Loan Documents, the Guaranteed
Obligations, or the security and collateral therefor, whether or not such action
or omission prejudices Guarantor or increases the likelihood that Guarantor will
be required to pay the Guaranteed Obligations pursuant to the terms hereof, it
is the unambiguous and unequivocal intention of Guarantor that Guarantor shall
be obligated to pay the Guaranteed Obligations when due, notwithstanding any
occurrence, circumstance, event, action, or omission whatsoever, whether or not
contemplated, and whether or not otherwise or particularly described herein,
which obligation shall be deemed satisfied only upon the full and final payment
and satisfaction of the Guaranteed Obligations.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
     To induce Lender to enter into the Loan Documents and extend credit to
Borrower, Guarantor represents and warrants to Lender as follows:
     Section 3.1 BENEFIT. Guarantor is an affiliate of Borrower, is the owner of
a direct or indirect interest in Borrower, and has received, or will receive,
direct or indirect benefit from the making of this Guaranty with respect to the
Guaranteed Obligations.
     Section 3.2 FAMILIARITY AND RELIANCE. Guarantor is familiar with, and has
independently reviewed books and records regarding, the financial condition of
Borrower and is familiar with the value of any and all collateral intended to be
created as security for the payment

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of the Note or Guaranteed Obligations; provided, however, Guarantor is not
relying on such financial condition or the collateral as an inducement to enter
into this Guaranty.
     Section 3.3 NO REPRESENTATION BY LENDER. Neither Lender nor any other party
has made any representation, warranty or statement to Guarantor in order to
induce Guarantor to execute this Guaranty.
     Section 3.4 GUARANTOR’S FINANCIAL CONDITION. As of the date hereof, and
after giving effect to this Guaranty and the contingent obligation evidenced
hereby, Guarantor is, and will be, solvent, and has and will have assets which,
fairly valued, exceed its obligations, liabilities (including contingent
liabilities) and debts, and has and will have property and assets sufficient to
satisfy and repay its obligations and liabilities.
     Section 3.5 LEGALITY. The execution, delivery and performance by Guarantor
of this Guaranty and the consummation of the transactions contemplated hereunder
do not, and will not, contravene or conflict with any law, statute or regulation
whatsoever to which Guarantor is subject or constitute a default (or an event
which with notice or lapse of time or both would constitute a default) under, or
result in the breach of, any indenture, mortgage, deed of trust, charge, lien,
or any contract, agreement or other instrument to which Guarantor is a party or
which may be applicable to Guarantor. This Guaranty is a legal and binding
obligation of Guarantor and is enforceable in accordance with its terms, except
as limited by bankruptcy, insolvency or other laws of general application
relating to the enforcement of creditors’ rights.
     Section 3.6 SURVIVAL. All representations and warranties made by Guarantor
herein shall survive the execution hereof.
     Section 3.7 REVIEW OF DOCUMENTS. Guarantor has examined the Note and all of
the Loan Documents.
     Section 3.8 LITIGATION. Except as otherwise disclosed to Lender, there are
no proceedings pending or, so far as Guarantor knows, threatened before any
court or administrative agency which, if decided adversely to Guarantor, would
materially adversely affect the financial condition of Guarantor or the
authority of Guarantor to enter into, or the validity or enforceability of this
Guaranty.
     Section 3.9 TAX RETURNS. Guarantor has filed all required federal, state
and local tax returns and has paid all taxes as shown on such returns as they
have become due. No claims have been assessed and are unpaid with respect to
such taxes.
ARTICLE 4
SUBORDINATION OF CERTAIN INDEBTEDNESS
     Section 4.1 SUBORDINATION OF ALL GUARANTOR CLAIMS. As used herein, the term
“Guarantor Claims” shall mean all debts and liabilities of Borrower to
Guarantor, whether such debts and liabilities now exist or are hereafter
incurred or arise, or whether the obligations of Borrower thereon are direct,
contingent, primary, secondary, several, joint and several, or otherwise, and
irrespective of whether such debts or liabilities be evidenced by note,

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contract, open account, or otherwise, and irrespective of the person or persons
in whose favor such debts or liabilities may, at their inception, have been, or
may hereafter be created, or the manner in which they have been or may hereafter
be acquired by Guarantor. The Guarantor Claims shall include, without
limitation, all rights and claims of Guarantor against Borrower (arising as a
result of subrogation or otherwise) as a result of Guarantor’s payment of all or
a portion of the Guaranteed Obligations to the extent the provisions of
Section 1.10 hereof are unenforceable. Any indebtedness of Borrower to Guarantor
now or hereafter existing (including, but not limited to, any rights to
subrogation Guarantor may have as a result of any payment by Guarantor under
this Guaranty), together with any interest thereon, shall be, and such
indebtedness is, hereby deferred, postponed and subordinated to the prior
payment in full of the Debt. Until payment in full of the Debt (and including
interest accruing on the Note after the commencement of a proceeding by or
against Borrower under the Bankruptcy Reform Act of 1978, as amended, 11 U.S.C.
Sections 101 et seq., and the regulations adopted and promulgated pursuant
thereto (collectively, the “Bankruptcy Code”) which interest the parties agree
shall remain a claim that is prior and superior to any claim of Guarantor
notwithstanding any contrary practice, custom or ruling in cases under the
Bankruptcy Code generally), Guarantor agrees not to accept any payment or
satisfaction of any kind of indebtedness of Borrower to Guarantor and hereby
assigns such indebtedness to Lender, including the right to file proof of claim
and to vote thereon in connection with any such proceeding under the Bankruptcy
Code, including the right to vote on any plan of reorganization.
     Section 4.2 CLAIMS IN BANKRUPTCY. In the event of receivership, bankruptcy,
reorganization, arrangement, debtor’s relief, or other insolvency proceedings
involving Guarantor as debtor, Lender shall have the right to prove its claim in
any such proceeding so as to establish its rights hereunder and receive directly
from the receiver, trustee or other court custodian dividends and payments which
would otherwise be payable upon Guarantor Claims. Guarantor hereby assigns such
dividends and payments to Lender. Should Lender receive, for application upon
the Guaranteed Obligations, any such dividend or payment which is otherwise
payable to Guarantor, and which, as between Borrower and Guarantor, shall
constitute a credit upon the Guarantor Claims, then upon payment to Lender in
full of the Guaranteed Obligations, Guarantor shall become subrogated to the
rights of Lender to the extent that such payments to Lender on the Guarantor
Claims have contributed toward the liquidation of the Guaranteed Obligations,
and such subrogation shall be with respect to that portion of the Guaranteed
Obligations which would have been unpaid if Lender had not received dividends or
payments upon the Guarantor Claims.
     Section 4.3 PAYMENTS HELD IN TRUST. In the event that, notwithstanding
anything to the contrary in this Guaranty, Guarantor should receive any funds,
payment, claim or distribution which is prohibited by this Guaranty, Guarantor
agrees to hold in trust for Lender an amount equal to the amount of all funds,
payments, claims or distributions so received, and agrees that it shall have
absolutely no dominion over the amount of such funds, payments, claims or
distributions so received except to pay them promptly to Lender, and Guarantor
covenants promptly to pay the same to Lender.
     Section 4.4 LIENS SUBORDINATE. Guarantor agrees that any liens, security
interests, judgment liens, charges or other encumbrances upon Borrower’s assets
securing payment of the Guarantor Claims shall be and remain inferior and
subordinate to any liens, security interests, judgment liens, charges or other
encumbrances upon Borrower’s assets

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securing payment of the Guaranteed Obligations, regardless of whether such
encumbrances in favor of Guarantor or Lender presently exist or are hereafter
created or attach. Without the prior written consent of Lender, Guarantor shall
not (i) exercise or enforce any creditor’s right it may have against Borrower,
or (ii) foreclose, repossess, sequester or otherwise take steps or institute any
action or proceedings (judicial or otherwise, including without limitation the
commencement of, or joinder in, any liquidation, bankruptcy, rearrangement,
debtor’s relief or insolvency proceeding) to enforce any liens, mortgages, deeds
of trust, security interest, collateral rights, judgments or other encumbrances
on assets of Borrower held by Guarantor.
ARTICLE 5
FINANCIAL REPORTS
     (a) Guarantor shall keep adequate books and records of account in
accordance with methods acceptable to Lender, consistently applied and furnish
to Lender:
     (i) an annual balance sheet and income statement of Guarantor in the form
required by Lender, prepared and certified by Guarantor, within ninety (90) days
after the close of each fiscal year of Guarantor;
     (ii) copies of all federal tax returns filed by Guarantor, within ninety
(90) days after the filing thereof; and
     (iii) such other financial statements as may, from time to time, be
required by Lender.
     (b) Lender and its accountants shall have the right to examine the records,
books, management and other papers of any Guarantor which reflect upon its
financial condition, at the Property or at any office regularly maintained by
any Guarantor where the books and records are located. Lender and its
accountants shall have the right to make copies and extracts from the foregoing
records and other papers. In addition, Lender and its accountants shall have the
right to examine and audit the books and records of any Guarantor pertaining to
the income, expenses and operation of the Property during reasonable business
hours at any office of Guarantor where the books and records are located.
ARTICLE 6
MISCELLANEOUS
     Section 6.1 WAIVER. No failure to exercise, and no delay in exercising, on
the part of Lender, any right hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise thereof preclude any other or further
exercise thereof or the exercise of any other right. The rights of Lender
hereunder shall be in addition to all other rights provided by law. No
modification or waiver of any provision of this Guaranty, nor consent to
departure therefrom, shall be effective unless in writing and no such consent or
waiver shall extend beyond the particular case and purpose involved. No notice
or demand given in any case shall constitute a waiver of the right to take other
action in the same, similar or other instances without such notice or demand.

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     Section 6.2 NOTICES. All notices or other written communications hereunder
shall be deemed to have been properly given (i) upon delivery, if delivered in
person or by facsimile transmission with receipt acknowledged, (ii) one
(1) Business Day (hereinafter defined) after having been deposited for overnight
delivery with any reputable overnight courier service, or (iii) three
(3) Business Days after having been deposited in any post office or mail
depository regularly maintained by the U.S. Postal Service and sent by
registered or certified mail, postage prepaid, addressed as follows:

         
 
  Guarantor:   America First Tax Exempt Investors, L.P.
 
      1004 Farnam Street, Suite 400
 
      Omaha, Nebraska 68102
 
      Facsimile No.: (402) 930-3047
 
       
 
  Lender:   JPMorgan Chase Bank, N.A.
 
      c/o Centerline Servicing Inc.
 
      5221 North O’Connor Boulevard, Suite 600 Irving, Texas 75039
 
      Attention: Wesley Wolf
 
      Senior Vice President, Asset Management
 
      Facsimile No.: (972) 868-5493
 
       
 
  With a copy to:   Stites & Harbison
 
      400 W. Market Street
 
      Suite 1800
 
      Louisville, Kentucky 40202
 
      Attention: Barry A. Hines, Esq.
 
      Facsimile No.: (502) 587-6391

or addressed as such party may from time to time designate by written notice to
the other parties. For purposes of this Section 6.2, the term “Business Day”
shall mean a day on which commercial banks are not authorized or required by law
to close in New York, New York.
     Any party by notice to the other parties may designate additional or
different addresses for subsequent notices or communications.
     Section 6.3 GOVERNING LAW; JURISDICTION. This Guaranty shall be governed by
and construed in accordance with the laws of the State of Ohio and the
applicable laws of the United States of America. Guarantor hereby irrevocably
submits to the jurisdiction of any court of competent jurisdiction located in
the state of Ohio in connection with any proceeding out of or relating to this
Guaranty.
     Section 6.4 INVALID PROVISIONS. If any provision of this Guaranty is held
to be illegal, invalid, or unenforceable under present or future laws effective
during the term of this Guaranty, such provision shall be fully severable and
this Guaranty shall be construed and enforced as if such illegal, invalid or
unenforceable provision had never comprised a part of this Guaranty, and the
remaining provisions of this Guaranty shall remain in full force and effect and
shall not be affected by the illegal, invalid or unenforceable provision or by
its severance from

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this Guaranty, unless such continued effectiveness of this Guaranty, as
modified, would be contrary to the basic understandings and intentions of the
parties as expressed herein.
     Section 6.5 AMENDMENTS. This Guaranty may be amended only by an instrument
in writing executed by the party or an authorized representative of the party
against whom such amendment is sought to be enforced.
     Section 6.6 PARTIES BOUND; ASSIGNMENT. This Guaranty shall be binding upon
and inure to the benefit of the parties hereto and their respective successors,
assigns and legal representatives; provided, however, that Guarantor may not,
without the prior written consent of Lender, assign any of its rights, powers,
duties or obligations hereunder.
     Section 6.7 HEADINGS. Section headings are for convenience of reference
only and shall in no way affect the interpretation of this Guaranty.
     Section 6.8 RECITALS. The recital and introductory paragraphs hereof are a
part hereof, form a basis for this Guaranty and shall be considered prima facie
evidence of the facts and documents referred to therein.
     Section 6.9 COUNTERPARTS. To facilitate execution, this Guaranty may be
executed in as many counterparts as may be convenient or required. It shall not
be necessary that the signature or acknowledgment of, or on behalf of, each
party, or that the signature of all persons required to bind any party, or the
acknowledgment of such party, appear on each counterpart. All counterparts shall
collectively constitute a single instrument. It shall not be necessary in making
proof of this Guaranty to produce or account for more than a single counterpart
containing the respective signatures of, or on behalf of, and the respective
acknowledgments of, each of the parties hereto. Any signature or acknowledgment
page to any counterpart may be detached from such counterpart without impairing
the legal effect of the signatures or acknowledgments thereon and thereafter
attached to another counterpart identical thereto except having attached to it
additional signature or acknowledgment pages.
     Section 6.10 RIGHTS AND REMEDIES. If Guarantor becomes liable for any
indebtedness owing by Borrower to Lender, by endorsement or otherwise, other
than under this Guaranty, such liability shall not be in any manner impaired or
affected hereby and the rights of Lender hereunder shall be cumulative of any
and all other rights that Lender may ever have against Guarantor. The exercise
by Lender of any right or remedy hereunder or under any other instrument, or at
law or in equity, shall not preclude the concurrent or subsequent exercise of
any other right or remedy.
     Section 6.11 ENTIRETY. THIS GUARANTY EMBODIES THE FINAL, ENTIRE AGREEMENT
OF GUARANTOR AND LENDER WITH RESPECT TO GUARANTOR’S GUARANTY OF THE GUARANTEED
OBLIGATIONS AND SUPERSEDES ANY AND ALL PRIOR COMMITMENTS, AGREEMENTS,
REPRESENTATIONS, AND UNDERSTANDINGS, WHETHER WRITTEN OR ORAL, RELATING TO THE
SUBJECT MATTER HEREOF. THIS GUARANTY IS INTENDED BY GUARANTOR AND LENDER AS A
FINAL AND COMPLETE EXPRESSION OF THE TERMS OF THE GUARANTY, AND NO COURSE OF
DEALING BETWEEN GUARANTOR AND LENDER, NO COURSE

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OF PERFORMANCE, NO TRADE PRACTICES, AND NO EVIDENCE OF PRIOR, CONTEMPORANEOUS OR
SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS OR OTHER EXTRINSIC EVIDENCE OF ANY
NATURE SHALL BE USED TO CONTRADICT, VARY, SUPPLEMENT OR MODIFY ANY TERM OF THIS
GUARANTY AGREEMENT. THERE ARE NO ORAL AGREEMENTS BETWEEN GUARANTOR AND LENDER.
     Section 6.12 WAIVER OF RIGHT TO TRIAL BY JURY. GUARANTOR HEREBY AGREES NOT
TO ELECT A TRIAL BY JURY OF ANY ISSUE TRIABLE OF RIGHT BY JURY, AND WAIVES ANY
RIGHT TO TRIAL BY JURY FULLY TO THE EXTENT THAT ANY SUCH RIGHT SHALL NOW OR
HEREAFTER EXIST WITH REGARD TO THIS GUARANTY, THE MORTGAGE, OR THE OTHER LOAN
DOCUMENTS, OR ANY CLAIM, COUNTERCLAIM OR OTHER ACTION ARISING IN CONNECTION
THEREWITH. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS GIVEN KNOWINGLY AND
VOLUNTARILY BY GUARANTOR, AND IS INTENDED TO ENCOMPASS INDIVIDUALLY EACH
INSTANCE AND EACH ISSUE AS TO WHICH THE RIGHT TO A TRIAL BY JURY WOULD OTHERWISE
ACCRUE. LENDER IS HEREBY AUTHORIZED TO FILE A COPY OF THIS PARAGRAPH IN ANY
PROCEEDING AS CONCLUSIVE EVIDENCE OF THIS WAIVER BY GUARANTOR.
     Section 6.12 BENEFICIAL OWNERSHIP. Guarantor represents and warrants that
Guarantor is a publicly-traded partnership and no individual or entity owns or
controls more than twenty percent (20%) of the beneficial ownership interests of
the Guarantor.

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EXECUTED as of the day and year first above written.

                         
 
                            GUARANTOR:    
 
                            AMERICA FIRST TAX EXEMPT INVESTORS, L.P., a Delaware
partnership    
 
                            By:   AMERICA FIRST CAPITAL ASSOCIATES LIMITED      
  PARTNERSHIP TWO, a Delaware limited partnership,         its General Partner
 
                                By:   BURLINGTON CAPITAL GROUP, LLC, a Delaware
                limited liability company, its General                 Partner,
f/k/a AMERICA FIRST COMPANIES                 L.L.C., a Delaware limited
liability company    
 
                       
 
          By:   /s/ Lisa Roskens        
 
                       
 
              Lisa Roskens, President        

Guaranty Agreement