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  Exhibit 10(b)
 

 
Promissory Note

 
$65,091,371.66 June 26, 2008
 

FOR VALUE RECEIVED, AMERICA FIRST TAX EXEMPT INVESTORS, L.P., a Delaware limited
partnership (“Borrower”), hereby promises to pay to the order of Bank of
America, N.A., a national banking association (together with any and all of its
successors and assigns and/or any other holder of this Note, “Lender”), without
offset, in immediately available funds in lawful money of the United States of
America, at 600 Wilshire Boulevard, Los Angeles, California 90017 (or at such
other place as the Lender hereafter may designate), the principal sum of
Sixty-Five Million Ninety-One Thousand Three Hundred Seventy-One Dollars and
66/100 ($65,091,371.66) (or the unpaid balance of all principal advanced against
this Note, if that amount is less), together with interest on the unpaid
principal balance of this Note from day to day outstanding as hereinafter
provided.
 
Section 1                      Payment Schedule and Maturity Date.  Prior to
maturity, accrued and unpaid interest shall be due and payable in arrears on the
first day of each month commencing on August 1, 2008.  The entire principal
balance of this Note then unpaid, together with all accrued and unpaid interest
and all other amounts payable hereunder and under the other Loan Documents (as
hereinafter defined), shall be due and payable in full on the earlier of (a)
September 26, 2008 (the “Maturity Date”), the final maturity of this Note, or
(b) the date on which the Lender issues any letters of credit for the account of
the Borrower pursuant to the Shortfall, Fee and Collateral Agreement of even
date herewith (as the same may from time to time be amended, restated, modified
or supplemented, the “Shortfall Agreement”)  among the Lender, Bank of America,
N.A., as LOC Provider and TOB Liquidity Provider, Bank of America Securities
LLC, as TOB Placement and Remarketing Agent, and the Obligor.  Capitalized terms
used and not defined in this Agreement herein shall have the meanings given such
terms in the Shortfall Agreement.
 
Section 2                      Security; Loan Documents.  The security for this
Note includes certain Collateral, as defined in the Shortfall Agreement.  This
Note, the Shortfall Agreement and all other documents now or hereafter securing,
guaranteeing or executed in connection with the loan evidenced by this Note (the
“Loan”), as the same may from time to time be amended, restated, modified or
supplemented, are herein sometimes called individually a “Loan Document” and
together the “Loan Documents.”
 
Section 3                      Interest Rate
 
(a)           BBA LIBOR Daily Floating Rate.  The unpaid principal balance of
this Note from day to day outstanding which is not past due, shall bear interest
at a fluctuating rate of interest per annum equal to the BBA LIBOR Daily
Floating Rate plus Two Hundred Twenty-Five (225) basis points per annum.  The
“BBA LIBOR Daily Floating Rate” shall mean a fluctuating rate of interest per
annum equal to the British Bankers Association LIBOR Rate (“BBA LIBOR”), as
published by Reuters (or other commercially available source providing
quotations of BBA LIBOR as selected by Lender 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 the date in question, for U.S. Dollar deposits (for
delivery on the first day of such interest period) with a one month term, as
adjusted from time to time in Lender’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 Lender.  A “London Banking Day”
is a day on which banks in London are open for business and dealing in offshore
dollars.  Interest shall be computed for the actual number of days which have
elapsed, on the basis of a 360-day year.
 
(b)           Alternative Rates.  If Lender determines that no adequate basis
exists for determining the BBA LIBOR Daily Floating Rate or that the BBA LIBOR
Daily Floating Rate will not adequately and fairly reflect the cost to Lender of
funding the Loan, or that any applicable Law or regulation or compliance
therewith by Lender prohibits or restricts or makes impossible the charging of
interest based on the BBA LIBOR Daily Floating Rate and Lender so notifies
Borrower, then until Lender notifies Borrower that the circumstances giving rise
to such suspension no longer exist, interest shall accrue and be payable on the
unpaid principal balance of this Note from the date Lender so notifies Borrower
until the Maturity Date of this Note (whether by acceleration, declaration,
extension or otherwise) at a fluctuating rate of interest equal to the Prime
Rate of Lender plus Two Hundred Twenty-Five (225) basis points per annum.  The
term “Prime Rate” means, on any day, the rate of interest per annum then most
recently established by Lender as its “prime rate.”  Any such rate is a general
reference rate of interest, may not be related to any other rate, and may not be
the lowest or best rate actually charged by Lender to any customer or a favored
rate and may not correspond with future increases or decreases in interest rates
charged by other lenders or market rates in general, and that Lender may make
various business or other loans at rates of interest having no relationship to
such rate.  Each time the Prime Rate changes, the per annum rate of interest on
this Note shall change immediately and contemporaneously with such change in the
Prime Rate.  If Lender (including any subsequent holder of this Note) ceases to
exist or to establish or publish a prime rate from which the Prime Rate is then
determined, the applicable variable rate from which the Prime Rate is determined
thereafter shall be instead the prime rate reported in The Wall Street Journal
(or the average prime rate if a high and a low prime rate are therein reported),
and the Prime Rate shall change without notice with each change in such prime
rate as of the date such change is reported.
 
(c)           Past Due Rate.  If any amount payable by Borrower under any Loan
Document is not paid when due (without regard to any applicable grace periods),
such amount shall thereafter bear interest at the Past Due Rate (as defined
below) to the fullest extent permitted by applicable Law.  Accrued and unpaid
interest on past due amounts (including interest on past due interest) shall be
due and payable on demand, at a fluctuating rate per annum (the “Past Due Rate”)
equal to the BBA LIBOR Daily Floating Rate plus four hundred (400) basis points.
 
Section 4                      Prepayment.  Borrower may prepay the principal
balance of this Note, in full at any time or in part from time to time, without
fee, premium or penalty, provided that: (a) no prepayment may be made which in
Lender’s judgment would contravene or prejudice funding under any applicable
take-out financing; (b) Lender shall have actually received from Borrower prior
written notice of (i) Borrower’s intent to prepay, (ii) the amount of principal
which will be prepaid (the “Prepaid Principal”), and (iii) the date on which the
prepayment will be made; (c) each prepayment shall be in the amount of $1,000 or
a larger integral multiple of $1,000 (unless the prepayment retires the
outstanding balance of this Note in full); and (d) each prepayment shall be in
the amount of 100% of the Prepaid Principal, plus accrued unpaid interest
thereon to the date of prepayment, plus any other sums which have become due to
Lender under the Loan Documents on or before the date of prepayment but have not
been paid.  If this Note is prepaid in full, any commitment of Lender for
further advances shall automatically terminate.  The Borrower hereby authorizes
the Placement and Remarketing Agent and the Lender to prepay this Note in full
from the proceeds of the TOB Floaters on the Letter of Credit Issuance Date.
 
Section 5                      Late Charges.  If Borrower shall fail to make any
payment under the terms of this Note (other than the payment due at maturity)
within fifteen (15) days after the date such payment is due, Borrower shall pay
to Lender on demand a late charge equal to four percent (4%) of the amount of
such payment.  Such fifteen (15) day period shall not be construed as in any way
extending the due date of any payment.  The late charge is imposed for the
purpose of defraying the expenses of Lender incident to handling such delinquent
payment.  This charge shall be in addition to, and not in lieu of, any other
amount that Lender may be entitled to receive or action that Lender may be
authorized to take as a result of such late payment.
 
Section 6                      Certain Provisions Regarding Payments.  All
payments made under this Note shall be applied, to the extent thereof, to late
charges, to accrued but unpaid interest, to unpaid principal, and to any other
sums due and unpaid to Lender under the Loan Documents, in such manner and order
as Lender may elect in its sole discretion, any instructions from Borrower or
anyone else to the contrary notwithstanding.  Remittances shall be made without
offset, demand, counterclaim, deduction, or recoupment (each of which is hereby
waived) and shall be accepted subject to the condition that any check or draft
may be handled for collection in accordance with the practice of the collecting
bank or banks.  Acceptance by Lender of any payment in an amount less than the
amount then due on any indebtedness shall be deemed an acceptance on account
only, notwithstanding any notation on or accompanying such partial payment to
the contrary, and shall not in any way (a) waive or excuse the existence of an
Event of Default (as hereinafter defined), (b) waive, impair or extinguish any
right or remedy available to Lender hereunder or under the other Loan Documents,
or (c) waive the requirement of punctual payment and performance or constitute a
novation in any respect.  Payments received after 2:00 p.m. shall be deemed to
be received on, and shall be posted as of, the following Business Day.  Whenever
any payment under this Note or any other Loan Document falls due on a day which
is not a Business Day, such payment may be made on the next succeeding Business
Day.
 
Section 7                      Events of Default.  The occurrence of any one or
more of the following shall constitute an “Event of Default” under this Note:
 
(a)           Borrower fails to pay when and as due and payable any amounts
payable by Borrower to Lender under the terms of this Note.
 
(b)           Any covenant, agreement or condition in this Note is not fully and
timely performed, observed or kept, subject to any applicable grace or cure
period.
 
(c)           An Event of Default (as therein defined) occurs under any of the
Loan Documents other than this Note (subject to any applicable grace or cure
period).
 
Section 8                      Remedies.  Upon the occurrence of an Event of
Default, Lender may at any time thereafter exercise any one or more of the
following rights, powers and remedies:
 
(a)           Lender may accelerate the Maturity Date and declare the unpaid
principal balance and accrued but unpaid interest on this Note, and all other
amounts payable hereunder and under the other Loan Documents, at once due and
payable, and upon such declaration the same shall at once be due and payable.
 
(b)           Lender may set off the amount due against any and all accounts,
credits, money, securities or other property now or hereafter on deposit with,
held by or in the possession of Lender to the credit or for the account of
Borrower, without notice to or the consent of Borrower.
 
(c)           Lender may refuse to issue the Letters of Credit and the TOB
Liquidity Facilities.
 
(d)           Lender may exercise any of its other rights, powers and remedies
under the Loan Documents or at law or in equity.
 
Section 9                      Remedies Cumulative.  All of the rights and
remedies of Lender under this Note and the other Loan Documents are cumulative
of each other and of any and all other rights at law or in equity, and the
exercise by Lender of any one or more of such rights and remedies shall not
preclude the simultaneous or later exercise by Lender of any or all such other
rights and remedies.  No single or partial exercise of any right or remedy shall
exhaust it or preclude any other or further exercise thereof, and every right
and remedy may be exercised at any time and from time to time.  No failure by
Lender to exercise, nor delay in exercising, any right or remedy shall operate
as a waiver of such right or remedy or as a waiver of any Event of Default.
 
Section 10                                Costs and Expenses of
Enforcement.  Borrower agrees to pay to Lender on demand all costs and expenses
incurred by Lender in seeking to collect this Note or to enforce any of Lender’s
rights and remedies under the Loan Documents, including court costs and
reasonable attorneys’ fees and expenses, whether or not suit is filed hereon, or
whether in connection with bankruptcy, insolvency or appeal.
 
Section 11                                Service of Process.  Borrower hereby
irrevocably designates and appoints the law offices of Kutak Rock LLP, Suite
1100, 1100 Connecticut Avenue, N.W., Washington, D.C. 20036-4374, as Borrower’s
authorized agent to accept and acknowledge on Borrower’s behalf service of any
and all process that may be served in any suit, action, or proceeding instituted
in connection with this Note in any state or federal court sitting in the
District of Columbia.  If such agent shall cease so to act, Borrower shall
irrevocably designate and appoint without delay another such agent in the
District of Columbia satisfactory to Lender and shall promptly deliver to Lender
evidence in writing of such agent’s acceptance of such appointment and its
agreement that such appointment shall be irrevocable.
 
Borrower hereby consents to process being served in any suit, action, or
proceeding instituted in connection with this Note by (a) the mailing of a copy
thereof by certified mail, postage prepaid, return receipt requested, to
Borrower and (b) serving a copy thereof upon the agent, if any, hereinabove
designated and appointed by Borrower as Borrower’s agent for service of
process.  Borrower irrevocably agrees that such service shall be deemed to be
service of process upon Borrower in any such suit, action, or
proceeding.  Nothing in this Note shall affect the right of Lender to serve
process in any manner otherwise permitted by law and nothing in this Note will
limit the right of Lender otherwise to bring proceedings against Borrower in the
courts of any jurisdiction or jurisdictions, subject to any provision or
agreement for arbitration or dispute resolution set forth in the Shortfall
Agreement.
 
Section 12                                Heirs, Successors and Assigns.  The
terms of this Note and of the other Loan Documents shall bind and inure to the
benefit of the heirs, devisees, representatives, successors and assigns of the
parties.  The foregoing sentence shall not be construed to permit Borrower to
assign the Loan except as otherwise permitted under the Loan Documents.
 
Section 13                                General Provisions.  Time is of the
essence with respect to Borrower’s obligations under this Note.  If more than
one person or entity executes this Note as Borrower, all of said parties shall
be jointly and severally liable for payment of the indebtedness evidenced
hereby.  Borrower and each party executing this Note as Borrower hereby
severally (a) waive demand, presentment for payment, notice of dishonor and of
nonpayment, protest, notice of protest, notice of intent to accelerate, notice
of acceleration and all other notices (except any notices which are specifically
required by this Note or any other Loan Document), filing of suit and diligence
in collecting this Note or enforcing any of the security herefor; (b) agree to
any substitution, subordination, exchange or release of any such security or the
release of any party primarily or secondarily liable hereon; (c) agree that
Lender shall not be required first to institute suit or exhaust its remedies
hereon against Borrower or others liable or to become liable hereon or to
perfect or enforce its rights against them or any security herefor; (d) consent
to any extensions or postponements of time of payment of this Note for any
period or periods of time and to any partial payments, before or after maturity,
and to any other indulgences with respect hereto, without notice thereof to any
of them; and (e) submit (and waive all rights to object) to non-exclusive
personal jurisdiction of any state or federal court sitting in the state and
county in which payment of this Note is to be made and any other jurisdiction
permitted under the Shortfall Agreement for the enforcement of any and all
obligations under this Note and the other Loan Documents; (f) waive the benefit
of all homestead and similar exemptions as to this Note; (g) agree that their
liability under this Note shall not be affected or impaired by any determination
that any title, security interest or lien taken by Lender to secure this Note is
invalid or unperfected; and (h) hereby subordinate to the Loan and the Loan
Documents any and all rights against Borrower and any security for the payment
of this Note, whether by subrogation, agreement or otherwise, until this Note is
paid in full.  A determination that any provision of this Note is unenforceable
or invalid shall not affect the enforceability or validity of any other
provision and the determination that the application of any provision of this
Note to any person or circumstance is illegal or unenforceable shall not affect
the enforceability or validity of such provision as it may apply to other
persons or circumstances.  This Note may not be amended except in a writing
specifically intended for such purpose and executed by the party against whom
enforcement of the amendment is sought.  Captions and headings in this Note are
for convenience only and shall be disregarded in construing it.  This Note and
its validity, enforcement and interpretation shall be governed by the laws of
the State of New York (without regard to any principles of conflicts of laws)
and applicable United States federal law.  Whenever a time of day is referred to
herein, unless otherwise specified such time shall be the local time of the
place where payment of this Note is to be made.  The term “Business Day” shall
mean a day on which Lender is open for the conduct of substantially all of its
banking business at its office in the city in which this Note is payable
(excluding Saturdays and Sundays).  Capitalized terms used herein without
definition shall have the meanings ascribed to such terms in the Shortfall
Agreement.  The words “include” and “including” shall be interpreted as if
followed by the words “without limitation.”
 
Section 14                                Notices.  Any notice, request, or
demand to or upon Borrower or Lender shall be deemed to have been properly given
or made when delivered in accordance with the terms of the Shortfall Agreement
regarding notices.
 
Section 15                                No Usury.  It is expressly stipulated
and agreed to be the intent of Borrower and Lender at all times to comply with
applicable state law or applicable United States federal law (to the extent that
it permits Lender to contract for, charge, take, reserve, or receive a greater
amount of interest than under state law) and that this Section shall control
every other covenant and agreement in this Note and the other Loan
Documents.  If applicable state or federal law should at any time be judicially
interpreted so as to render usurious any amount called for under this Note or
under any of the other Loan Documents, or contracted for, charged, taken,
reserved, or received with respect to the Loan, or if Lender’s exercise of the
option to accelerate the Maturity Date, or if any prepayment by Borrower results
in Borrower having paid any interest in excess of that permitted by applicable
law, then it is Lender’s express intent that all excess amounts theretofore
collected by Lender shall be credited on the principal balance of this Note and
all other indebtedness secured by the Mortgage, and the provisions of this Note
and the other Loan Documents shall immediately be deemed reformed and the
amounts thereafter collectible hereunder and thereunder reduced, without the
necessity of the execution of any new documents, so as to comply with the
applicable law, but so as to permit the recovery of the fullest amount otherwise
called for hereunder or thereunder.  All sums paid or agreed to be paid to
Lender for the use or forbearance of the Loan shall, to the extent permitted by
applicable law, be amortized, prorated, allocated, and spread throughout the
full stated term of the Loan.
 
Section 16                                Arbitration.  This Note is subject to
arbitration as provided in the Shortfall Agreement.
 
 
 

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IN WITNESS WHEREOF, Borrower has duly executed this Note under seal as of the
date first above written.
 
Borrower:
 

AMERICA FIRST TAX EXEMPT INVESTORS, L.P.,
a Delaware limited partnership

 
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_______________________

 
 
Name: Michael J. Draper

 
 
Title:   Chief Financial Officer