Exhibit 10.8

 
RATE CAP AGREEMENT (BMA)
 
THIS RATE CAP AGREEMENT (this “Agreement”) is dated as of August 25, 2010
between ROYAL BANK OF CANADA (the “Seller”) and ATAX TEBS I, LLC (the “Buyer”),
whereby the parties agree as follows:
 
Section 1. Definitions and Incorporated Terms.  For purposes of this Agreement,
the terms set forth below in the Cap Transaction Profile or in Exhibit A shall
have the meanings there indicated and capitalized terms that are used and not
otherwise defined herein shall have the meanings given to them (as completed
herein, where applicable) in the 2000 ISDA Definitions as published by the
International Swaps and Derivatives Association, Inc. and the 1992 ISDA U.S.
Municipal Counterparty Definitions as published by the International Swaps and
Derivatives Association, Inc. (to the extent any term is defined in the
1992 ISDA U.S. Municipal Counterparty Definitions such definition shall apply
instead of any definition of the same term in the 2000 ISDA Definitions). In
addition, the provisions in the booklet of 1992 ISDA U.S. Municipal Counterparty
Definitions are incorporated by reference herein and shall apply hereto except
as otherwise expressly provided herein.
 
Cap Transaction Profile
 
Notional Amount:
USD $ 31,936,666.67 amortizing as per attached Exhibit A

 
Trade
Date:                                                                          
August 25, 2010
 
Effective
Date:                                                                    
 September 2, 2010
 
Termination
Date:                                                                September
15, 2017
 
Fixed Amount:
 
        Fixed Rate Payer:                                                  Buyer
 
        Buyer’s Payment Date:                                        September
2, 2010
 
        Fixed Amount:                                                       USD
$928,000
 
Floating Amounts:
 
Floating Rate Payer:                                             Seller
 
Cap Rate:                                                               3.00%
per annum
 
 
Payment Dates:
Fifteenth calendar day of each month, commencing on October 15, 2010, and ending
on the Termination Date, subject to adjustment in accordance with the Following
Business Day Convention.

 
 
Period End Dates:
Fifteenth calendar day of each month, not subject to adjustment.

 
 
Floating Rate Option:
USD-BMA Municipal Swap Index

 
 
Count Fraction:
Actual/Actual

 
 
Reset Dates:
Effective Date and thereafter Weekly on Thursday.

 
 
Weighted Average Method:
Applicable

 
Business Days:
A day other than (a) a Saturday or a Sunday, (b) any day on which banking
institutions located in the city of New York, New York are authorized or
required by law to close, (c) a day on which the New York Stock Exchange is
closed or (d) any day on which Freddie Mac is closed.

 
Rounding Convention:
The simple arithmetic mean of rates expressed as a percentage rounded to five
decimal places.

 
Calculation Agent:
The Seller

 
Additional Defined Terms
 
“Credit Support Document” means the Guaranty of the Credit Support Provider, if
any, and the Credit Support Annex, each as identified in Exhibit A hereto.
 
“Credit Support Provider” means the Person (if any) identified as such in Part 3
of Exhibit A.
 
“Damages” means an amount determined as provided in Section 11(b).
 
“Early Termination Date” has the meaning given to that term in Section 10(b).
 
“Local Business Day” in relation to a party means a day on which commercial
banks in the city indicated in that party’s address for notices hereunder are
open for business.
 
“Market Quotation” means an amount determined as provided in Section 12.
 
“Person” means an individual, an estate, a trust, a corporation, a partnership,
a limited liability company, or any other organization or entity, whether
governmental or private.
 
“Reference Market-maker” has the meaning given to that term in Section 12(a).
 
“Taxes,” with respect to payments hereunder by the Seller, means any present or
future taxes, levies, imposts, duties or charges of any nature whatsoever that
are collectible by withholding except for any such tax, levy, impost, duty or
charge that would not have been imposed but for the existence of a connection
between the Buyer and the jurisdiction where the Tax is imposed.
 
“Termination Event” has the meaning given to that term in Section 9.
 
Section 2. Payments.  On the Payment Date for the Buyer, it shall pay the Fixed
Amount and, on each Payment Date for the Seller, it shall pay the Floating
Amount for the Calculation Period ending on that Payment Date.  The Seller’s
obligation to make any payment hereunder shall be subject to the condition
precedent that the Buyer have paid the Fixed Amount.  If the Buyer fails to pay
the Fixed Amount to the Seller as and when due hereunder and does not remedy the
failure on or before the third Local Business Day after notice from the Seller,
the Seller may, by notice to the Buyer given not later than the fifth Local
Business Day after the end of the Buyer’s cure period, declare this Agreement to
be terminated, whereupon neither party shall have any further obligation
hereunder, except for the Buyer’s obligation to pay interest pursuant to
Section 4.  Notwithstanding the foregoing, the Buyer shall, upon failure to pay
the Fixed Amount, remain liable to the Seller to pay the value of this
Agreement, calculated, on the date Seller declares this Agreement terminated, on
the basis of Market Quotation, which, for purposes of this Section 2 only, shall
be determined pursuant to Section 12, substituting the word “Seller” in each
instance when the word “Buyer” is utilized in such section and the quotation
referred to in Section 12(b) shall be the amount in Dollars that a Reference
Market-Maker would charge as a Fixed Amount on such date of declaration of
termination.  The value of this Agreement, if any, shall be the original Fixed
Amount less the amount of the Market Quotation determined in the manner
described in the previous sentence.  If the difference is a negative number, the
value of this Agreement shall be zero.
 
Section 3. Making of Payments.  All payments hereunder shall be made to the
account of the intended payee specified in Exhibit A, or to such other account
in New York City as that party may have last specified by notice to the party
required to make the payment.  All such payments shall be made in funds settled
through the New York Clearing House Interbank Payments System or such other
same-day funds as are customary at the time for the settlement in New York City
of banking transactions denominated in Dollars.
 
Section 4. Interest on Overdue Amounts.  If any amount due hereunder is not paid
when due, interest shall accrue on that amount to the extent permitted by
applicable law at a rate per annum equal for each day that amount remains unpaid
to the sum of 1% and the rate per annum equal to the cost (without proof or
evidence of any actual cost) to the intended payee (as certified by it) if it
were to fund or of funding the relevant amount for that day.
 
Section 5. Supervening Illegality.  If it becomes unlawful for either party to
make any payment to be made by it hereunder, as a result of the adoption of, or
any change in, or change in the interpretation of, any law, regulation or
treaty, that party shall give notice to that effect to the other party and shall
use reasonable efforts (a) to assign or transfer its rights and obligations
under this Agreement, subject to Section 14, to another of its branches, offices
or affiliates, or to any leading participant in the interest rate cap market,
that may make those payments lawfully and without withholding for or on account
of Taxes or (b) to agree with that other party to modify this Agreement or
change the method of payment hereunder so that the payment will not be
unlawful.  If an assignment or agreement is not made as provided herein on or
before the tenth Business Day after that notice becomes effective, either party
may give notice of termination as provided in Section 10.
 
Section 6. Taxes.
 
(a) For the purpose of this Agreement, each of the Buyer and Seller hereby
represent, respectively, that it is a “United States person” for purposes of the
United States Internal Revenue Code of 1986, as amended.  Except as otherwise
required by law, each payment hereunder shall be made without withholding for or
on account of Taxes.  If a party is required to make any withholding from any
payment under this Agreement for or on account of Taxes, it shall:
 
(i) make that withholding;
 
(ii) make timely payment of the amount withheld to the appropriate governmental
authority;
 
(iii) forthwith pay the other party such additional amount as may be necessary
to ensure that the net amount actually received by it free and clear of Taxes
(including any Taxes on the additional amount) is equal to the amount that it
would have received had no Taxes been withheld; and
 
(iv) on or before the thirtieth day after payment, send the payee the original
or a certified copy of an official tax receipt evidencing that payment;
provided, however, that if the representation and warranty made by a party in
Section 7(c) proves not to have been true when made or, if repeated on each
Payment Date, would not then be true, or if a party fails to perform or observe
any of its covenants set forth in Section 7 or Section 8, the other party shall
be under no obligation to pay any additional amount hereunder to the extent that
the withholding would not have been required if the representation and warranty
had been true when made, or would have been true if so repeated, or if the
failure had not occurred.
 
(b) If a party would be required to make any withholding for or on account of
Taxes and pay any additional amount as provided in Section 6(a) with respect to
any payment to be made by it in accordance with Section 2, it shall give notice
to that effect to the other party and shall use reasonable efforts
 
(i) to assign or transfer its rights and obligations under this Agreement,
subject to Section 14, to another of its branches, offices or affiliates, or to
any leading participant in the interest rate cap market, that may make the
payments to be made by it hereunder lawfully and without withholding for or on
account of Taxes; or
 
(ii) to agree with that other party to modify this Agreement or change the
method of payment hereunder so that those payments will not be subject to the
withholding.  If an assignment or agreement is not made as provided herein on or
before the tenth day after that notice becomes effective, the party that would
be required to make the withholding may give notice of termination as provided
in Section 10.
 
Section 7. Representations and Warranties.
 
(a) Each of the parties makes the representations and warranties set forth below
to the other as of the date hereof:
 
(i) It is duly organized and validly existing and has the corporate, partnership
or other power as a company and the authority to execute and deliver this
Agreement and to perform its obligations hereunder;
 
(ii) It has taken all necessary action to authorize its execution and delivery
of this Agreement and the performance of its obligations hereunder;
 
(iii) All governmental authorizations and actions necessary in connection with
its execution and delivery of this Agreement and the performance of its
obligations hereunder have been obtained or performed and remain valid and in
full force and effect; and
 
(iv) This Agreement has been duly executed and delivered by it and constitutes
its legal, valid and binding obligation, enforceable against it in accordance
with the terms of this Agreement, subject to all applicable bankruptcy,
insolvency, moratorium and similar laws affecting creditors’ rights generally;
 
(b) The Seller makes the following additional representations and warranties to
the Buyer:
 
(i) No event or condition that constitutes (or that with the giving of notice or
the lapse of time or both would constitute) a Termination Event with respect to
it has occurred and is continuing or will occur by reason of its entering into
or performing its obligations under this Agreement;
 
(ii) There are no actions, proceedings or claims pending or, to its knowledge,
threatened, the adverse determination of which might have a materially adverse
effect on its ability to perform its obligations under, or affect the validity
or enforceability against it of, this Agreement; and
 
(iii) Each of the documents delivered by the Seller hereunder is, as of the date
stated in such document, true, accurate and complete in every material respect
or, in the case of financial statements, fairly presents the condition of the
Person indicated therein.
 
(c) In addition, if an Exhibit B on Tax Representations and Covenants is made a
part of this Agreement, each of the Buyer and the Seller makes the
representations and warranties set forth therein to the other and covenants as
set forth therein with the other with respect to certain matters relating to
Taxes.
 
Section 8. Documents.  At or before the time of execution of this Agreement by
the Buyer, the Seller shall deliver to the Buyer evidence of the truth and
accuracy of the Seller’s representations in subsections (ii) and (iii) of
Section 7(a) as well as evidence of the authority, incumbency and specimen
signature of each Person authorized to execute and deliver this Agreement or any
other document to be delivered by the Seller under this Agreement on behalf of
the Seller.  In addition, the Seller shall deliver to the Buyer at the times
specified in Part 2 of Exhibit A, each of the documents there specified.
 
Section 9. Termination Events.  For purposes of this Agreement, “Termination
Event” means each of the events and circumstances listed below:
 
(a) The Seller fails to pay any amount payable by it hereunder as and when that
amount becomes payable and does not remedy that failure on or before the third
Local Business Day after notice from the Buyer of the failure;
 
(b) Any representation or warranty made by the Seller in this Agreement, other
than in Section 7(c), or made by any Credit Support Provider in any Credit
Support Document (or document related thereto) delivered hereunder proves to
have been incorrect, incomplete or misleading in any material respect at the
time it was made, or the Seller fails to deliver any document it is required to
deliver as provided in Part 2 of Exhibit A and does not remedy that failure on
or before the thirtieth day after notice from the Buyer of the failure or, in
the case of failure to deliver a Credit Support Document, does not remedy that
failure immediately;
 
(c) The Seller or any Credit Support Provider becomes the subject of any action
or proceeding for relief under any bankruptcy or insolvency law or any law
affecting creditors’ rights that is similar to a bankruptcy or insolvency law or
law relating to the composition of debts or seeks or becomes subject to the
appointment of a receiver, custodian or similar official for it or any of its
property or fails or is unable to pay its debts generally as they fall due;
 
(d) The Seller or any Credit Support Provider fails to pay any amount payable by
it to the Buyer under any other agreement or under any instrument of the Seller
or any Credit Support Provider held by the Buyer and does not remedy that
failure during any applicable cure period;
 
(e) (i) There occurs a default, an event of default or another similar condition
or event (however described) in respect of the Seller or any Credit Support
Provider for the Seller under one or more agreements or instruments relating to
Specified Indebtedness in an aggregate amount of not less than the Threshold
Amount and as a result such Specified Indebtedness has been or may be declared
due and payable before it would otherwise have been due and payable or (ii)
there occurs a default by the Seller or any such Credit Support Provider in
making one or more payments on the due date thereof in an aggregate amount of
not less than the Threshold Amount under any such agreements or instruments or
under any Specified Transaction (after giving effect to any applicable notice
requirement or grace period) or (iii) the combined amounts of Specified
Indebtedness covered by clauses (i) and (ii) at least equal the Threshold
Amount.
 
For this purpose, “Specified Indebtedness,” with respect to any Person, means
all obligations of that Person (whether present or future, contingent or
otherwise, as principal or surety or otherwise) in respect of borrowed money;
“Specified Transaction” means any rate swap, currency swap, cross-currency swap,
commodity-price swap, equity, equity-index, debt-linked or debt-index-linked
swap, rate cap, floor or collar, forward rate agreement, forward or spot foreign
exchange transaction, interest rate, currency or commodity-price option, any
cash-settled option on a security or index or group of securities, any
combination of any of the foregoing and any similar transaction; and “Threshold
Amount” means U.S. $10,000,000 (or the equivalent in any other currency or
currencies);
 
(f) Any Credit Support Provider fails to comply with or perform any agreement or
obligation to be complied with or performed by it in accordance with any Credit
Support Document to which it is a party if the failure is not remedied during
any applicable cure period; or any Credit Support Document expires or terminates
or fails or ceases to be in full force and effect (in either case, other than in
accordance with its terms) prior to the satisfaction of all obligations of the
Seller under this Agreement; or any Credit Support Provider or any Person
purporting to act on its behalf disaffirms, disclaims, repudiates or rejects, in
whole or in part, or challenges the validity of, any Credit Support Document to
which it is a party;
 
(g) The Seller or any Credit Support Provider consolidates or amalgamates with,
or merges with or into, or transfers all or substantially all its assets to,
another entity, and the creditworthiness of the resulting, surviving or
transferee entity is materially weaker than that of the Seller or such Credit
Support Provider (as the case may be) as determined by the Buyer or Freddie Mac
immediately prior to such action; or
 
(h) If at any time the unsecured, unsubordinated long term obligations of the
Seller are rated below A+ by S&P (or such rating is suspended or withdrawn) or
below A1 by Moody’s (or such rating is suspended or withdrawn), and within five
Business Days of the issuance of such a rating, either (a) Seller fails to post
collateral to Buyer pursuant to the Credit Support Annex delivered concurrently
herewith sufficient to secure Seller’s obligation hereunder or (b) either Buyer
or Seller, each using its good faith efforts, fails to find a party acceptable
to the other party hereto and to Freddie Mac, which acceptance shall not be
unreasonably withheld, to which all of Seller’s interests and obligations under
this Agreement shall be assigned at no cost to Buyer, and following which Seller
shall be released from all obligations hereunder. In the event that S&P or
Moody's ceases to provide rating services generally, or ceases to provide rating
services specifically in regard to long-term unsecured, unsubordinated debt, the
parties hereto, and Freddie Mac so long as the Buyer’s rights under this
Agreement are collaterally assigned to Freddie Mac, shall mutually agree upon
one or more alternate rating agencies and shall designate the rating level
issued by such alternate rating agency or agencies for the purpose of this
provision.
 
Section 10. Early Termination.
 
(a) At any time while a Termination Event is continuing, the Buyer may, with the
prior written consent of Freddie Mac, or Freddie Mac may, in its absolute
discretion, give notice of termination in accordance with this Section.  If a
party gives notice of supervening illegality, either party may give notice of
termination in accordance with this Section in the circumstances described in
Section 5.  If a party is required to pay any additional amount pursuant to
Section 6, it may give notice of termination in accordance with this Section in
the circumstances described in Section 6.
 
(b) Any notice of termination hereunder
 
(i) shall state the grounds for termination;
 
(ii) shall specify a date that is not before, nor more than 10 days after, the
date the notice of early termination is given on which the payments required by
Section 11 shall be made as provided therein (the “Early Termination Date”); and
 
(iii) shall declare the obligations of the Seller to make the payments required
by Section 2 that are scheduled to be made after the Early Termination Date to
be terminated as of that date, and those obligations shall so terminate and be
replaced by the parties’ obligations to make the payments specified in
Section 11.
 
Section 11. Payments Upon Early Termination.
 
(a) If notice of termination is given pursuant to Section 10, the Seller shall
pay the Buyer its Damages.
 
(b) The Buyer’s Damages in the event of early termination shall be the Market
Quotation, if it can be determined.  If it cannot be determined, the Buyer’s
Damages shall be an amount in Dollars equal to the sum of the losses (including
loss of bargain) that it may incur as a result of the early termination or as a
result of the event that served as the ground for early termination.
 
(c) Payments to be made in accordance with this Section shall be made on the
Early Termination Date.  If the Buyer is entitled to be paid any amount in
respect of its Damages in accordance with this Section, it shall submit to the
Seller a statement in reasonable detail of those Damages.
 
Section 12. Market Quotation.
 
(a) For the purpose of determining the Market Quotation, the Buyer shall select,
with the consent of Freddie Mac, four leading participants in the interest rate
cap market (each a “Reference Market-maker”), in its sole discretion and in good
faith, with a view to minimizing the Market Quotation (to the extent required by
law); provided, however, that in doing so the Buyer shall be entitled to select
market participants that are of the highest credit standing and that otherwise
satisfy all the criteria that the Buyer applies generally at the time in
deciding whether to enter into an interest rate protection transaction.
 
(b) The Buyer shall request from each of the Reference Market-makers it has
selected a quotation of the amount in Dollars which that Reference Market-maker
would charge on the Early Termination Date as a flat amount for entering into an
agreement, effective on the Early Termination Date, pursuant to which it would
be obligated to make all the payments scheduled to be made by the Seller under
Section 2 of this Agreement after the Early Termination Date.
 
(c) The Market Quotation shall be the arithmetic mean (rounded up, if necessary,
to the nearest cent) of the amounts described in Section 12(b) that are quoted
to the Buyer by the Reference Market-makers it has selected or, if only one
Reference Market-maker will quote such a fee, the Market Quotation Value shall
be the amount quoted by that Reference Market-maker.
 
Section 13. Costs and Expenses.
 
(a) Each of the parties shall pay, or reimburse the other on demand for, all
stamp, registration, documentation or similar taxes or duties, and any penalties
or interest that may be due with respect thereto, that may be imposed by any
jurisdiction in respect of its execution or delivery of this Agreement.  If any
such tax or duty is imposed by any jurisdiction as the result of the conduct or
status of both parties, each party shall pay one half of the amount of the tax
or duty.
 
(b) The Seller shall pay, or reimburse the Buyer on demand for, all reasonable
costs and expenses incurred by the Buyer in connection with enforcement of its
rights under this Agreement or as a consequence of a Termination Event,
including, without limitation, fees and expenses of legal counsel.
 
Section 14. Nonassignment. Neither party shall assign or otherwise transfer its
rights or obligations hereunder or any interest herein to any other Person or
any of its other branches or offices without the prior written consent of the
other party to this Agreement and Freddie Mac, unless the assignment or transfer
by the Seller is pursuant to Section 5 or Section 6 and provided that:
 
(a) the Seller gives the Buyer 10 Business Days’ prior written notice of the
assignment or transfer;
 
(b) the assignee or transferee meets the criteria set forth in Section 5(a) or
Section 6(b), as the case may be;
 
(c) the credit policies of the Buyer or Freddie Mac at the time would permit the
Buyer to purchase an interest rate cap from the assignee or transferee without
credit support;
 
(d) a Termination Event does not occur as a result of such transfer;
 
(e) on or prior to the effective date of the transfer, this Agreement
(including, without limitation, any Tax covenants (if any) in Exhibit B to this
Agreement) and all other related documents shall have been amended to reflect
the transfer in a manner reasonably satisfactory to Buyer; and
 
(f) on or prior to the effective date of the transfer, Seller shall have agreed
in writing to indemnify and hold harmless Buyer in a manner reasonably
satisfactory to Buyer from and against any adverse tax consequences and any
related fees, expenses and other losses resulting from the transfer, subject to
the following conditions:  (i) notwithstanding Seller’s duty to indemnify Buyer,
Buyer shall at all times retain sole control and decision-making authority with
regard to any tax issues affecting Buyer or related litigation arising from or
in connection with said transfer; and (ii) such indemnification shall be made as
such expenses are incurred by Buyer and at such time as Buyer is required to pay
any such tax liability, provided that Seller shall not be required to make such
indemnification until five Business Days after it has received written notice
from Buyer of expenses or liabilities for which Buyer seeks reimbursement.
 
Any purported transfer in violation of this Section shall be void.  The parties
are acting for purposes of this Agreement through their respective branches or
offices specified in Exhibit A.
 
The Seller shall not withhold its consent to an assignment or transfer proposed
by the Buyer, or by any subsequent assignee or transferee of the Buyer, if the
Seller would be entitled to make the payments it is required to make pursuant to
Section 2 to the proposed assignee or transferee lawfully and without
withholding for or on account of Taxes and the proposed assignee or transferee
assumes the obligations of the Buyer under the Tax covenants (if any) of the
Buyer in Exhibit B to this Agreement to the satisfaction of the
Seller.  Notwithstanding the provisions of this Section 14 to the contrary, the
Seller consents to the assignment of the Buyer’s interest herein ultimately to
Freddie Mac.  Accordingly, all payments hereunder shall be made in accordance
with Section 3 hereof and to the account of  Freddie Mac as specified in
Exhibit A hereto.  The Seller agrees that Freddie Mac may exercise the rights of
the Buyer hereunder from time to time, and Buyer agrees that the Seller may rely
conclusively on the written instructions of Freddie Mac to Seller made pursuant
to this Agreement.
 
Section 15. Waivers: Rights Not Exclusive.  No failure or delay by a party in
exercising any right hereunder shall operate as a waiver of, or impair, any such
right.  No single or partial exercise of any such right shall preclude any other
or further exercise thereof or the exercise of any other right.  No waiver of
any such right shall be effective unless given in writing.  No waiver of any
such right shall be deemed a waiver of any other right hereunder.  The right to
terminate provided for herein is in addition to, and not exclusive of, any other
rights, powers, privileges or remedies provided by law.
 
Section 16. Interpretation.  The section headings in this Agreement are for
convenience of reference only and shall not affect the meaning or construction
of any provision hereof.
 
Section 17. Notices.  All notices in connection with this Agreement shall be
given by telex or cable or by notice in writing hand-delivered or sent by
facsimile transmission or by airmail, postage prepaid.  All such notices shall
be sent to the telex or telecopier number or address (as the case may be)
specified for the intended recipient in Exhibit A (or to such other number or
address as that recipient may have last specified by notice to the other
party).  All such notices shall be effective upon receipt, and confirmation by
answerback of any notice sent by telex as provided herein shall be sufficient
evidence of receipt thereof, and telephone confirmation of receipt of any
facsimile transmission in accordance with Exhibit A shall be sufficient evidence
of receipt thereof.
 
Section 18. Amendments.  This Agreement may be amended only by an instrument in
writing executed by the parties hereto.
 
Section 19. Survival.  The obligations of the parties under Section 6, Section
11 and Section 13 shall survive payment of the obligations of the parties under
Section 2 and Section 4 and the termination of their other obligations
hereunder.
 
Section 20. Jurisdiction; Governing Law.
 
(a)           Any action or proceeding relating in any way to this Agreement may
be brought and enforced in the courts of the State of New York or of the
United States for the Southern District of New York, and each of the parties
irrevocably submits to the nonexclusive jurisdiction of each such court in
connection with any such action or proceeding.
 
(b)           This Agreement shall be governed by, and construed in accordance
with, the law of the State of New York without reference to its choice of law
doctrine.
 
Section 21. Independence of this Agreement. It is the parties’ intention that no
other agreements or arrangements between them or any of their affiliates affect
the transaction provided for herein except as expressly provided
herein.  Therefore, except as expressly provided herein, the Seller’s obligation
to make payments to the Buyer hereunder shall not be subject to early
termination or to any condition precedent, no such payment obligation shall be
netted against any payment due from the Buyer or any third party under any other
agreement or instrument, and neither the Seller nor any third party shall have
any right to set off any such payment due from the Seller to the Buyer or
withhold any such payment, in whole or in part, pending payment of any amount
payable by the Buyer or any third party to the Seller or any third party.  In
addition, the terms set forth in this provision may not be modified except in a
written amendment to this Agreement executed by both parties hereto that (i) is
expressly identified in capital letters as modifying this provision (identified
by its title) and (ii) deals only with such modification.
 
Section 22. Waiver of Jury Trial. Each of the Buyer and the Seller,
respectively, hereby waives, to the fullest extent permitted by applicable law,
any right it may have to a trial by jury in respect of any suit, action or
proceeding relating to this Agreement or any Credit Support Document.  Each of
the Buyer and the Seller (i) certifies that no representative, agent or attorney
of the other party or any Credit Support Provider has represented, expressly or
otherwise, that such other party would not, in the event of such suit, action or
proceeding, seek to enforce the foregoing waiver and (ii) acknowledges that it
and the other party have been induced to enter into this Agreement and provide
for any Credit Support Document, as applicable, by, among other things, the
mutual waivers and certifications in this Section.
 
Section 23. Setoff.  The obligation to pay amounts due hereunder shall be
absolute and unconditional and shall not be subject to diminution by set-off,
recoupment, counterclaim, abatement or otherwise.
 
Section 24. Counterparts: Integration of Terms.  This Agreement may be executed
in counterparts, and the counterparts taken together shall be deemed to
constitute one and the same agreement.  This Agreement contains the entire
agreement between the parties relating to the subject matter hereof and
supersedes all oral statements and prior writings with respect thereto.
 
Section 25. Contractual Currency.  The provision on Contractual Currency set
forth in Part 4 of Exhibit A will apply if the Seller or any Credit Support
Provider for the Seller is not organized in the U.S. or is acting through any
office outside the U.S.
 

 
 

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF the parties have caused this Agreement to be duly executed
and delivered as of the day and year first written above.
 
ROYAL BANK OF CANADA
 
By      /s/ Irene
Klausmann                                                                      
Name    Irene
Klausmann                                                                      
Title      Authorized
Signatory                                                                      
 
ATAX TEBS I, LLC, a Delaware limited liability company
 
 
By: AMERICA FIRST TAX EXEMPT INVESTORS, L.P., a Delaware limited partnership

Its:  Member
 
 
By: AMERICA FIRST CAPITAL ASSOCIATES LIMITED PARTNERSHIP TWO, a Delaware limited
partnership

        Its:  General Partner

 
By:   THE BURLINGTON CAPITAL GROUP LLC, a Delaware limited liability company

            Its:    General Partner

            By:     /s/ Michael J. Draper                  
                     Michael J. Draper
                     Chief Financial Officer

 [Signature Page to ATAX TEBS I, LLL  Rate Cap Agreement]

 
 

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EXHIBIT A
 

 
NOTICE ADDRESSES AND OTHER MATTERS
 
Part 1:                                Addresses for Notices and Accounts for
Payments:
 
The Seller:
 
Address:
ROYAL BANK OF CANADA
2nd Floor
Royal Bank Plaza
200 Bay Street
Toronto, Ontario  M5J 2W7
Attention:  Managing Director, Global Middle Office
Facsimile:  (416) 842-4839
Payments to Seller:
Bank Name:  JPMorgan Chase Bank, New York
ABA#: 021000021
Account Name: Royal Bank of Canada, Toronto
Account Number: 001-1-153004
Beneficiary Swift No.: ROYCCAT3IMM

The Buyer:
 
Address:
ATAX TEBS I, LLC
1004 Farnam Street, Suite 400
Omaha, NE  68102
Attention:  Chad L. Daffer, Fund Manager
Telephone:  402-930-3085
Facsimile:  402-930-3047

copies to Freddie Mac:
 
Address:
Federal Home Loan Mortgage Corporation
8100 Jones Branch Drive
McLean, Virginia 22102
Attention: Multifamily Management and Information Control
Facsimile:  (703) 714-3273
Telephone:  (703) 903-2000
 
                       and
 
 
Federal Home Loan Mortgage Corporation
8200 Jones Branch Drive
McLean, Virginia 22102
Attention:  Associate General Counsel – Multifamily (Legal Division)
Facsimile:  (703) 903-2885
Telephone:  (703) 903-2000
 
                       and
 
 
Federal Home Loan Mortgage Corporation
8100 Jones Branch Drive
McLean, Virginia 22102
Attention: Multifamily Servicing
Facsimile:  (703) 714-3003
Telephone:  (703) 903-2000
 

Payments to Buyer (pursuant to Section 3, payments are to be made as will be
specified):
 
Bank Name:                                                         FRB New York
 
Bank ACCT Name:                                            FHLMC Investor PI
 
ABA
#:                                                                  021039513
 
Bank ACCT #:                                                     380530
 
Reference:                                                            MFTEBS
 
ATTN:                                                                   MFRRO –
Loan Accounting 714-4177
 
Part 2:                                Documents to be delivered by the Seller
to the Buyer contemporaneously with this Rate Cap Agreement:
 
(a)
Credit Support Document to be delivered by the Seller:  Credit Support Annex on
standard ISDA form with paragraph 13 in the form attached as Exhibit C hereto

 
(b)
[RESERVED]

 
(c)
[RESERVED]

 
(d)
[RESERVED]

 
Part 3:                                Credit Support Provider for the
Seller:  NONE
 
Part 4:                                Each reference in this Agreement to
Dollars (the “Contractual Currency”) is of the essence.  The obligation of each
party in respect of any amount due under this Agreement in the Contractual
Currency is, notwithstanding any payment in any other currency (whether pursuant
to a judgment or otherwise), be discharged only to the extent of the amount in
the Contractual Currency that the intended payee may, in accordance with normal
banking procedures, purchase with the sum paid in that other currency (after any
premium and costs of exchange) on the Business Day in New York City immediately
following the day on which that payee receives the payment.  If the amount in
the Contractual Currency that may be so purchased for any reason falls short of
the amount originally due, the party owing that amount shall pay such additional
amount, in the Contractual Currency, as is necessary to compensate for the
shortfall.  Any obligation of that party not discharged by that payment shall,
to the fullest extent permitted by applicable law, be due as a separate and
independent obligation and, until discharged as provided herein, shall continue
in full force and effect.
 

 
 

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EXHIBIT B
 
TAX REPRESENTATIONS AND COVENANTS
 
A.           Tax Representations and Covenants
 
Representations of each of the Seller and the Buyer
 
It is not required by any applicable law, as modified by the practice of any
relevant governmental authority, to make any deduction or withholding for or on
account of any Tax from any payment (other than interest under Section 4 to be
made by it to the other party) under this Agreement.  In making this
representation, it may rely on (i) the accuracy of any representation made by
the other party below in this Exhibit and (ii) the satisfaction of the covenant
of that other party contained below in this Exhibit and the accuracy and
effectiveness of any document provided by that other party pursuant to any such
covenant.
 
B.           Payee Tax Representations
 
Of the Seller:
 
Seller is a federally chartered bank organized under the laws of Canada.
 
Of the Buyer:
 
Buyer is a United States person for purposes of the United States Internal
Revenue Code of 1986, as amended, and is not acting as an agent or intermediary
for a foreign Person.
 
C.           Covenants
 
Of Each Party:
 
If a party is required at any time to execute any form or document in order for
payments to it hereunder to qualify for exemption from withholding for or on
account of Taxes or to qualify for such withholding at a reduced rate, that
party shall, as soon as practicable after request from the other party, execute
the required form or document and deliver it to that other party.
 
Of the Seller:
 
W-8BEN
 
Of the Buyer:
 
W-9
 

 Freddie Mac Form:  Revision January 23, 2006
4832-6767-5904.4
 
 

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EXHIBIT C
 

 
FORM OF PARAGRAPH 13 OF CREDIT SUPPORT ANNEX
 
Paragraph 13.  Elections and Variables
 
(a)
Security Interest for “Obligations.”  The term “Obligations” as used in the
Annex includes the following additional obligations:  Not Applicable.

 
(b)
Credit Support Obligations.

 
 
(i)
Delivery Amount, Return Amount and Credit Support Amount.

 
 
(A)
“Delivery Amount” has the meaning specified in Paragraph 3(a), unless otherwise
specified here:  None Specified

 
 
(B)
“Return Amount” has the meaning specified in Paragraph 3(b), unless otherwise
specified here:  None Specified

 
 
(C)
“Credit Support Amount” means, for any Valuation Date (i) the Secured Party’s
Exposure for that Valuation Date plus (ii) the aggregate of all Independent
Amounts applicable to the Pledgor, if any, minus (iii) the Pledgor’s Threshold;
provided, however, that (x) in the case where the sum of the Independent Amounts
applicable to the Pledgor exceeds zero, the Credit Support Amount will not be
less than the sum of all Independent Amounts applicable to the Pledgor and (y)
in all other cases, the Credit Support Amount will be deemed to be zero whenever
the calculation of Credit Support Amount yields an amount less than zero.

 
 
(ii)
Eligible Collateral.  Debt obligations of the Federal Home Loan Mortgage
Corporation shall not qualify as “Eligible Collateral”.  The following items
will qualify as “Eligible Collateral”:

 

 
Remaining Maturity
 
 
 
 
ICAD Code
 
 
One (1) year or under
More than one (1) year up to and including five (5) years
More than five (5) years up to and including ten (10) years
 
 
More than ten (10) years
 
US-CASH
 
100%
 
N/A
 
N/A
 
N/A
US-TBILL
99%
N/A
N/A
N/A
US-TNOTE
99%
98%
95%
N/A
US-TBOND
99%
98%
95%
95%

 
 

 
 
(iii)
Other Eligible Support.  There shall be no “Other Eligible Support” for either
Party A or Party B.

 
 
(iv)
Thresholds.

 
 
(A)
“Independent Amount” for Pledgor means, with respect to each Transaction, zero.

 
 
(B)
“Threshold” for the Pledgor means the amounts determined on the basis of the
lower of the Long Term Debt Ratings set forth in the following table, provided,
however, that if (i) the Pledgor has no Long Term Debt Rating, or (ii) an Event
of Default has occurred and is continuing with respect to the Pledgor, the
Threshold shall be USD$0.

 
Long Term Debt Rating
(the higher of S&P/Moody’s)
Threshold
   
A+/A1 or above
Infinity
A/A2
$1,000,000
At or below A-/A3
$0

As used herein:
 
“Long Term Debt Rating” means with respect to the Pledgor, the public or private
rating assigned by S&P or Moody’s, to the extent the Pledgor is rated by such
organization, to the long term, unsecured and unsubordinated indebtedness of
such party, or, if applicable, the Credit Support Provider.  If a party has been
assigned a private rating by S&P or Moody’s, such party is responsible to advise
such private rating and any changes to such private rating to the other party
and to provide any relevant credit reports to the other party.
 
“S&P” means Standard & Poor’s Ratings Group.
 
“Moody’s” means Moody’s Investors Service.
 
 
(C)
“Minimum Transfer Amount” means, with respect to Pledgor, USD$10,000; provided,
that if an Event of Default has occurred and is continuing with respect to
Pledgor, the Minimum Transfer Amount with respect to Pledgor shall be zero.

 
 
(D)
Rounding.  The Delivery Amount and the Return Amount will be rounded up or down
respectively to the nearest integral multiple of USD$1,000.

 
(c)
Valuation and Timing.

 
 
(i)
“Valuation Agent” means the Secured Party.

 
 
(ii)
“Valuation Date” means each Local Business Day.

 
 
(iii)
“Valuation Time” means the closing of business in the city of the Valuation
Agent on the Local Business Day preceding the Valuation Date or the date of
calculation, as applicable, provided that the calculations of Value and Exposure
will be made as of approximately the same time on the same date.

 
 
(iv)
“Notification Time” means by 10:00 a.m., New York time, on a Local Business Day.

 
(d)
Conditions Precedent and Secured Party’s Rights and Remedies.  Each of the
following Termination Events will be a “Specified Condition” for the Pledgor if
the Pledgor is an Affected Party with respect for such Termination Event:

 
Credit Event Upon
Merger                                                                                [X]
 
Additional Termination Events (if
any)                                                           [X]
 
(e)
Substitution.

 
 
(i)
“Substitution Date” has the meaning specified in Paragraph 4(d)(ii) unless
otherwise specified here:  None

 
 
(ii)
Consent.  The Pledgor does not need to obtain the Secured Party’s consent for
any substitution pursuant to Paragraph 4(d).

 
(f)
Dispute Resolution.

 
 
(i)
“Resolution Time” means 1:00 p.m., New York Time, on the fifth Local Business
Day following the date on which notice of a dispute is given under Paragraph 5.

 
 
(ii)
Value.  For the purpose of Paragraph 5(i)(C) and 5(ii), the Value of Eligible
Collateral other than Cash will be calculated as follows:

 
the sum of (i) (x) the arithmetic mean of the closing bid prices quoted on the
relevant date of three nationally recognized principal market makers (which may
include an affiliate of Party A) for such security chosen by the Valuation Agent
or (y) if no quotations are available from such principal market makers on the
relevant date, the arithmetic mean of the closing bid prices on the next
preceding date, multiplied by the appropriate Valuation Percentage set forth in
subsection (b) of this Paragraph 13, plus (ii) the accrued interest on such
security (except to the extent Transferred to a party pursuant to any applicable
provision of this Agreement or included in the applicable price referred to in
(i) of this clause) as of such date.
 
 
(iii)
Alternative.  Not Applicable.

 
(g)
Holding and Using Posted Collateral.

 
 
(i)
Eligibility to Hold Posted Collateral; Custodians.  Secured Party will be
entitled to hold Posted Collateral only through its Custodian pursuant to
Paragraph 6(b), provided that the following conditions applicable to it are
satisfied:

 
(1)           The Secured Party:  The Secured Party is not a Defaulting Party;
and
 
(2)           The Custodian:  The Custodian is Freddie Mac or a bank or trust
company designated by the Secured Party and having total assets of at least USD
$10,000,000,000.  The Custodian shall be designated by Freddie Mac if this
Agreement is collaterally assigned to Freddie Mac.
 
Initially the Custodian shall be The Bank of New York Mellon Trust Company, N.A.
 
 
(ii)
Use of Posted Collateral.  The provision of Paragraph 6(c) will not apply.

 
(h)
Distributions and Interest Amount.

 
 
(i)
Interest Rate.  The Interest Rate will be the rate per annum equal to the
overnight Federal Funds Rate for each day cash is held by the Secured Party as
reported in Federal Reserve Publication H.15-519.

 
 
(ii)
Transfer of Interest Amount.  The Transfer of the Interest Amount will be made
on the last Local Business Day of each calendar month and on any Local Business
Day that Posted Collateral in the form of Cash is Transferred to the Pledgor
pursuant to Paragraph 3(b).

 
 
(iii)
Alternative to Interest Amount.  Not Applicable.

 
(i)
Additional Representation(s).  Not Applicable.

 
(j)
“Other Eligible Support and Other Posted Support.”

 
 
(i)
“Value” with respect to Other Eligible Support and Other Posted Support
means:  Not Applicable.

 
 
(ii)
“Transfer” with respect to Other Eligible Support and Other Posted Support
means:  Not Applicable.

 
(k)
Demands and Notices.  All demands, specifications and notices made by one party
to this Annex will be made pursuant to the Notices Section of this Agreement,
unless otherwise specified here:

 
Party A:                                To be provided
Party B:                                To be provided
 
(l)
Address for Transfers.  Not Applicable.

 
(m)
Other Provisions.

 
 
(i)
Agreement as to Single Secured Party and Pledgor.  Party A and Party B agree
that, notwithstanding anything to the contrary in the recital to this Annex,
Paragraph 1(b) or Paragraph 2 or the definitions in Paragraph 12, (a) the term
“Secured Party” as used in this Annex means only Party B, (b) the term “Pledgor”
as used in this Annex means only Party A, (c) only Party A makes the pledge and
grant in Paragraph 2, the acknowledgement in the final sentence of Paragraph
8(a) and the representations in Paragraph 9 and (d) only Party A will be
required to make Transfers of Eligible Credit Support hereunder.

 
 
(ii)
FIRREA.  Party A, if an FDIC-insured depository institution, represents that (i)
this Annex has been executed and delivered by a duly appointed or elected and
authorized officer of Party A of the level of vice president or higher and (ii)
Party A has taken all necessary action to authorize the execution, delivery and
performance of this Annex.

 
 
(iii)
Posted Collateral.  The definition of Posted Collateral shall also include any
and all accounts in which Cash Collateral is held.

 
 
(iv)
Additions to Paragraph 3.  The following subparagraph (c) is hereby added to
Paragraph 3 of this Annex:

 
No Offset.  On any Valuation Date, if (i) each party is required to make a
Transfer under Paragraph 3(a) and (ii) each party is required to make a Transfer
under Paragraph 3(b), then the amounts of those obligations will not offset each
other.

 
(v)
Fees of Custodian and Valuation Agent.  Notwithstanding any other provision
contained in this Annex, Pledgor shall pay all fees and charges of the Custodian
related to the holding and maintenance of the Posted Collateral.

 
 
(vi)
Exposure.  The definition of the term “Exposure” contained in Paragraph 12 of
this Annex is deleted in its entirety and the following language is substituted
therefor:  “Exposure” means for any Valuation Date or other date for which
Exposure is calculated and, subject to Paragraph 5 in the case of a dispute, the
amount, if any that would be payable to Party B pursuant to Section 11 of this
Agreement as if this Agreement were being terminated as of the relevant
Valuation Time.

 
 
(vii)
Agreement.  Any reference herein to the “Agreement”, “Master Agreement” or
“Schedule” shall be deemed to refer to the Rate Cap Agreement between Party A
and Party B dated as of even date herewith.

 
(viii)
Freddie Mac Shall Act on Behalf of the Secured Party. Party A and Party B
acknowledge and agree that, so long as the Cap Agreement is collaterally
assigned to Freddie Mac, Freddie Mac  shall act as Valuation Agent hereunder on
behalf of Party B and shall act as the Secured Party for purposes of making
demands for and holding collateral and receiving demands for any Return Amount.